Full text of Economic Report of the President : 1975
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ECONOMIC
TRANSMITTED
TO THE CONGRESS
FEBRUARY 1375
Economic Report
of the President
Transmitted to the Congress
February 1975
TOGETHER WITH
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS
UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON
: 1975
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $3.25
CONTENTS
Page
ECONOMIC REPORT OF THE PRESIDENT
1
ANNUAL REPORT OF THE COUNCIL OF ECONOMIC
ADVISERS*
9
CHAPTER 1. ECONOMIC POLICY AND OUTLOOK
19
CHAPTER 2. ECONOMIC DEVELOPMENTS AND POLICY IN 1974
35
CHAPTER 3. UNEMPLOYMENT
86
CHAPTER 4. INFLATION DURING THE PAST DECADE
, .
128
CHAPTER 5. GOVERNMENT REGULATION
147
CHAPTER 6. FOOD AND AGRICULTURE
160
CHAPTER 7. THE INTERNATIONAL ECONOMY IN 1974
187
APPENDIX A. INFLATION CONTROL UNDER THE ECONOMIC STABILIZATION ACT
219
APPENDIX B. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1974
231
APPENDIX C. STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION
243
*For a detailed table of contents of the Councils Report, see page 13.
(Ill)
ECONOMIC REPORT
OF THE PRESIDENT
ECONOMIC REPORT OF THE PRESIDENT
To the Congress of the United States:
The economy is in a severe recession. Unemployment is too high and
will rise higher. The rate of inflation is also too high although some
progress has been made in lowering it. Interest rates have fallen from
the exceptional peaks reached in the summer of 1974, but they reflect
the rate of inflation and remain much too high.
Moreover, even as we seek solutions to these problems, we must also
seek solutions to our energy problem. We must embark upon effective
programs to conserve energy and develop new sources if we are to reduce
the proportion of our oil imported from unreliable sources. Failure or
delay in this endeavor will mean a continued increase in this Nation's
dependence on foreign sources of oil.
We therefore confront three problems: the immediate problem of
recession and unemployment, the continuing problem of inflation, and
the newer problem of reducing America's vulnerability to oil embargoes.
These problems are as urgent as they are important. The solutions we
have proposed are the result of careful study, but they will not produce
swift and immediate results. I believe that these programs and proposals
will be effective. I urge the Congress to adopt them and to help me
follow through with further measures that changing circumstances may
make desirable. In our efforts we must recognize that the remedies we
devise must be both effective and consistent with the long-term objectives that are important for the future well-being of our economy. For
the sake of taking one step forward we must not adopt policies which
will eventually carry us two steps backward.
As I proposed to you in my State of the Union message, the economy
needs an immediate 1-year tax cut of $16 billion. This is an essential
first move in any program to restore purchasing power, rebuild the confidence of consumers, and increase investment incentives for business.
Several different proposals to reduce individual taxes were considered
carefully in our search for the best way to help the economy. We chose
the method that would best provide immediate stimulus to the economy
without permanently exacerbating our budget problem. Accordingly, I
recommended a 12 percent rebate of 1974 taxes, up to a maximum of
$1,000. The rebate will be paid in two large lump-sum payments totaling
$12 billion, the first beginning in May and the second by September.
I have also proposed a $4-billion investment tax credit which would
encourage businessmen to make new commitments and expenditures now
on projects that can be put in place this year or by the end of next year.
The prompt enactment of the $16-billion tax reduction is a matter of
utmost urgency if we are to bolster the natural forces of economic recovery. But in recognizing the need for a temporary tax cut, I am not unmindful of the fact that it will increase the size of the budget deficit. This
is all the more reason to intensify our efforts to restrain the growth in
Federal spending. I have asked Congress to institute actions which will
pare $17 billion from the fiscal 1976 budget. Even so, we foresee a deficit
of more than $50 billion for the fiscal year beginning July 1. Moreover, even without new expenditure initiatives, the budget deficit is likely
to remain excessively large in fiscal 1977. As a consequence, I will propose no new expenditure programs except those required by the energy
program.
I am also asking the Congress to join me in finding additional ways to
slow the rate of increase in Federal spending. Budget outlays for new
programs or for expansion of existing ones would have their economic
effect long after the economic recovery gets under way. It is essential that
the deficit be reduced markedly as the economy begins to return toward
full employment. Control of expenditures is the only way we can halt an
extraordinary increase in the portion of our incomes which Government
will take in the future.
A simple calculation shows the size of the problem which we face.
Transfer payments to individuals by the Federal Government have increased, after adjustment for inflation, by almost 9 percent annually during the past two decades. A continuation of this trend for the next two
decades, along with only modest increases in other Federal expenditures
and in those of State and local governments, would lift the expenditures
by government at all levels from about one-third of the gross national
product to more than one-half. Spending on this scale would require
a substantial increase in the tax burden on the average American family.
This could easily stifle the incentive and enterprise which is essential to
continued improvements in productivity and in our standard of living.
The achievement of our independence in energy will be neither quick
nor easy. No matter what programs are adopted, perseverence by the
American people and a willingness to accept inconvenience will be
required in order to reach this important goal. The American economy
was built on the basis of low-cost energy. The design of our industrial
plants and production processes reflect this central element in the Amer-
ican experience. Cheap energy freed the architects of our office buildings
from the need to plan for energy efficiency. It made private homes cheaper
because expensive insulation was not required when energy was more
abundant. Cheap energy also made suburban life accessible to more citizens, and it has given the mobility of the automobile to rural and city
dwellers alike.
The low cost of energy during most of the twentieth century was made
possible by abundant resources of domestic oil, natural gas, and coal. This
era has now come to an end. We have held the price of natural gas
below the levels required to encourage investment in exploration and
development of new supplies, and below the price which would have
encouraged more careful use. By taking advantage of relatively inexpensive foreign supplies of oil, we improved the quality of life for Americans and saved our own oil for future use. By neglecting to prepare for
the possibility of import disruptions, however, we left ourselves overly
dependent upon unreliable foreign supplies.
Present circumstances and the future security of the American economy leave no choice but to adjust to a higher relative price of energy
products. We have, in fact, already begun to do so, although I emphasize
that there is a long way to go. Consumers have already become more
conscious of energy efficiency in their purchases. The higher cost of
energy has already induced industry to save energy by introducing new
production techniques and by investing in energy-conserving capital
equipment. These efforts must be stimulated and maintained until our
consumption patterns and our industrial structure adjust to the new
relationship between the costs of energy, labor, and capital.
This process of adjustment has been slowed because U.S. energy costs
have not been allowed to increase at an appropriate rate. Prices of about
two-thirds of our domestic crude oil are still being held at less than half
the cost of imported oil, and natural gas prices are being held at even
lower levels. Such artificially low prices encourage the wasteful use of
energy and inhibit future production. If there is no change in our pricing
policy for domestic energy and in our consumption habits, by 1985 onehalf of our oil will have to be imported, much of it from unreliable
sources. Since our economy depends so heavily on energy, it is imperative
that we make ourselves less vulnerable to supply cutoffs and the monopolistic pricing of some foreign oil producers.
The need for reliable energy supplies for our economy is the foundation
of my proposed energy program. The principal purpose is to permit and
encourage our economy to adjust its consumption of energy to the new
realities of the market place during the last part of the twentieth century.
The reduction in our dependence on unreliable sources of oil will require
Government action, but even in this vital area the role of Government
in economic life should be limited to those functions that it can perform
better than the private sector.
There are two courses open to us in resolving our energy problem: the
first is administered rationing and allocation; the second is use of the
price mechanism. An energy rationing program might be acceptable for
a brief period, but an effective program will require us to hold down
consumption for an extended period. A rationing program for a period
of 5 years or more would be both intolerable and ineffective. The costs
in slower decision making alone would be enormous. Rationing would
mean that every new company would have to petition the Government
for a license to purchase or sell fuel. It would mean that any new plant
expansion or any new industrial process would require approval. It
would mean similar restrictions on homebuilders, who already find it
impossible in much of the Nation to obtain natural gas hookups. After
5 or 10 years such a rigid program would surely sap the vitality of the
American economy by substituting bureaucratic decisions for those of the
market place. It would be impossible to devise a fair long-term rationing
system. The only practical and effective way to achieve energy independence, therefore, is by allowing prices of oil and gas to move higher—
high enough to discourage consumption and encourage the exploration
and development of new energy sources.
I have, therefore, recommended an excise tax on domestic crude oil
and natural gas and an import fee on imported oil, as well as decontrol
of the price of crude oil. These actions will raise the price of all energyintensive products and reduce oil consumption and imports. I have
requested the Congress to enact a tax on producers of domestic crude oil
to prevent windfall profits as a result of price decontrol.
Other aspects of my program will provide assurances that imports
will not be allowed to disrupt the domestic energy market. Amendments
to the Clean Air Act to allow more use of coal without major environmental damage, and incentives to speed the development of nuclear
energy and synthetic fuels will simultaneously increase domestic energy
production.
Taken as a whole, the energy package will reduce the damage from
any future import disruption to manageable proportions. The energy
program however will entail costs. The import fee and tax combination
will raise approximately $30 billion from energy consumers. However,
I have also proposed a fair and equitable program of permanent tax
reductions to compensate consumers for these higher costs. These will
include income tax reductions of $16 billion for individuals, along
with direct rebates of $2 billion to low-income citizens who pay little or
no taxes, corporate tax reductions of $6 billion, a $2-billion increase in
revenue sharing payments to State and local governments, and a $3-billion increase in Federal expenditures.
Although appropriate fiscal and energy policies are central to restoring
the balance of our economy, they will be supplemented by initiatives in
a number of other areas. I was pleased to sign into law in December
unemployment compensation legislation which provides extended benefits
and expanded coverage for the unemployed. The budget also provides for
a significant expansion in public service employment. I also urge the
Congress to remove the remaining restrictions on agricultural production and enact legislation to strengthen financial institutions and assist the
financial position of corporations. I have also asked for actions to
strengthen the Administration's antitrust investigative power and to
permit more competition in the transportation industry.
We sometimes discover when we seek to accomplish several objectives
simultaneously that the goals are not always completely compatible.
Action to achieve one goal sometimes works to the detriment of another.
I recognize that the $16-billion anti-recession tax cut, which adds to an
already large Federal deficit, might delay achieving price stability. But
a prompt tax cut is essential. My program will raise the price of energy
to consumers; but when completed this necessary adjustment should not
hamper our progress toward the goal of a much slower rate of increase
in the general price level in the years ahead.
As we face our short-term problems, we cannot afford to ignore the
future implications of our policy initiatives. Fiscal and monetary policies
must support the economy during 1975. In supporting the economy,
however, we must not allow victory in the battle against inflation to slip
beyond our grasp. It is vital that we look beyond the unemployment problem to the need to achieve a reduction in inflation not only in 1975 but
also in 1976 and beyond.
The future economic well-being of our Nation requires restoring a
greater measure of price stability. This will call for more responsible
policies by your Government. The stakes are high. Inflation reduces the
purchasing power of our incomes, squeezes profits, and distorts our capital markets. The ability of our free economy to provide an ever higher
standard of living would be weakened. We must not be lulled into a belief
that inflation need no longer be a major concern of economic policy now
that the rate at which prices are increasing appears to be slowing.
The proposals I have made to deal with the problems of recession,
inflation, and energy recognize that the American economy is more and
more a part of the world economy. What we do affects the economies of
other nations, and what happens abroad affects our economy. Close
communication, coordination of policies, and consultations with the
leaders of other nations will be essential as we deal with our economic
and financial difficulties, many of which are common to all the industrial
countries of the Western World.
We are already cooperating to ensure that the international monetary
system withstands the pressures placed on it by higher oil prices. The
passage of the Trade Reform Act of 1974 will make it possible to begin
critical negotiations this year on further liberalizing the international
trading system, and we will continue to work with other countries toward
solutions to the special problems of food and energy.
The economic problems that have emerged during the 1970's are difficult. Some of them reflect years of misdirection. Our efforts to solve the
Nation's economic difficulties must be directed toward solutions that will
not give rise to even bigger problems later. The year 1975 must be the
one in which we face our economic problems and start the course toward
real solutions.
FEBRUARY 4,
1975.
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS
LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D.C., January 31,1975.
T H E PRESIDENT:
SIR: The Council of Economic Advisers herewith submits its Annual
Report, January 1975, in accordance with Section 4(c) (2) of the Employment Act of 1946.
Respectfully,
ALAN GREENSPAN,
Chairman.
b
WILLIAM J. FELLNER.
GARY L. SEEVERS.
11
CONTENTS
Page
CHAPTER 1. ECONOMIC POLICY AND OUTLOOK
The Programs to Stimulate the Economy and Conserve Energy.
The Energy Tax Offsets
Summary
The Fiscal 1976 Budget
Financing the Deficit
Aid to the Unemployed
The Outlook With New Policies
Nonresidential Fixed Investment
Inventories
Housing
Government Purchases
Consumption
Economic Aspects of the Energy Program
Short-Run Policies
Longer-Run Measures
International Economic Relations
CHAPTER 2. ECONOMIC DEVELOPMENTS AND POLICY IN 1974
Demand and Output
Business Fixed Investment
Inventory Investment
Housing
Consumer Income and Spending
Net Exports
Comparisons of Output Change
Prices, Wages, and Profits
Prices
Wage Rates
Nonfinancial Corporations
Real Income
Labor Market Developments
563-280 O - 75 - 2
13
19
20
22
23
24
25
26
26
27
28
28
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29
29
30
31
32
35
37
38
40
41
41
45
45
47
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50
52
54
56
Page
2. ECONOMIC DEVELOPMENTS AND POLICY IN 1974—
Continued
Fiscal Policy in 1974
Federal Expenditures
Federal Receipts
Balances of the Federal Budget
The State and Local and the Combined Budget Balances.
Money and Credit
Monetary Aggregates
Interest Rates
Credit Markets
Assistance to the Mortgage Market
Energy Developments in 1974
Costs of Higher Energy Prices
Prices
Production
Consumption
Imports and Exports
Inventories
Natural Gas: A Special Case
CHAPTER
CHAPTER 3. UNEMPLOYMENT
86
Definition and Measurement of Unemployment
Sources and Nature of Unemployment
Frictional Unemployment
Structural Unemployment
Seasonal Unemployment
Cyclical Unemployment
Inflation and Unemployment
Duration of Unemployment
International Comparisons
The Distribution of Unemployment
Differentials Due to Labor Force Turnover
The Male-Female Differential for Experienced Workers. .
Student and Nonstudent Teenagers
Veterans and Nonveterans
Unemployment Differentials by Education
Unemployment Differences by Race
Unemployment of Persons of Spanish Origin
Unemployment and Income Maintenance Programs
Unemployment, Income, and Poverty
Unemployment Insurance System
Public Service Employment
59
60
61
62
65
66
66
68
70
72
73
73
75
77
80
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14
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98
102
102
105
106
107
108
110
114
116
116
119
124
Page
CHAPTER 4. INFLATION DURING THE PAST DECADE
128
Periods of Price Instability
Excessive Growth in Aggregate Demand, 1965-74
The Unstable Tradeoff
Special Factors and the Lagged Price Response
Indexation and the Tax Structure
130
131
136
139
141
CHAPTER 5. GOVERNMENT REGULATION .
The Rationale for Regulation
The Federal Antitrust Laws
Regulation of Monopoly
Regulation of Competition
Examples of Economic Regulation
Transportation
Financial Institutions
Natural Gas
Regulatory Reform
147
..
CHAPTER 6. FOOD AND AGRICULTURE
Developments in 1974
Long-Term Changes in Agriculture
The Decline in Excess Capacity
A Changing World Agriculture
Greater Price Instability
Policy Challenges and Options
Agricultural Development
The Instability Problem
Food Assistance
Guidelines for Domestic Farm Policy
Farm Policy in 1975 and Beyond
CHAPTER 7. T H E INTERNATIONAL ECONOMY IN 1974
Stagnation and Inflation in the Industrial World in 1974
International Repercussions of the Oil Price Increases
The Less Developed Countries in 1974
Recent Developments in International Finance
Managed Floating
Recent Exchange Rate Developments
Changes in International Reserves
U.S. International Transactions in 1974
The Balances
Supplement—The Eurocurrency and Eurodollar Markets
147
149
150
151
152
152
155
156
159
160
161
165
165
170
173
177
178
180
183
184
185
187
188
190
196
197
200
203
205
208
212
212
APPENDIXES:
A. Inflation Control Under the Economic Stabilization A c t . . . .
B. Report to the President on the Activities of the Council of
Economic Advisers During 1974
C. Statistical Tables Relating to Income, Employment, and
Production
15
219
231
243
List of Tables and Charts
Tables
1. Federal Budget Receipts and Expenditures Associated With
Stimulus and Energy Programs, National Income Accounts
Basis, 1975-76
2. Changes in Gross National Product in Current and Constant
Dollars, 1968 to 1974
3. Change in Nonfarm Business Inventories in Constant (1958)
Dollars, 1973-74
4. Personal Consumption Expenditures in Constant Prices, 1973-74.
5. Disposition of Real Disposable Personal Income, 1960-74
6. Changes in Industrial Production and Nonfarm Payroll Employment and Man-Hours Associated With Two- and ThreeQuarter Declines in Real Gross National Product, Selected
Periods, 1948-74
7. Changes in Selected Price Measures During 1974
8. Components of Percent Change in Compensation Per ManHour in the Private Nonfarm Sector, 1965-74
9. Changes in Major Collective Bargaining Settlements, 1973-74. .
10. Changes in Prices, Costs, and Profits Per Unit of Output for
Nonfinancial Corporations, 1969 to 1974
11. Changes in Selected Measures of Income, Earnings, and Taxes,
1969-74
12. Labor Market Indicators, 1973-74
13. Changes in Employment in the Private Nonfarm Economy:
Total and Selected Energy-Related Industries, November
1973 to March 1974
14. Federal Government Receipts and Expenditures, National Income Accounts Basis, Calendar Years 1973-74
15. Actual and Full-Employment Federal and State and Local
Government Receipts and Expenditures, National Income
Accounts Basis, Calendar Years 1971-74
16. Measures of Monetary Growth and Monetary Policy, 1972-74.
17. Net Funds Raised in U.S. Capital Markets by Nonfinancial
Sectors, 1968-74
18. Refiner Acquisition Cost of Crude Petroleum and Percent of
Imported and Domestic Crude Petroleum in Refinery
Inputs, 1973-74
19. Changes in Wholesale Prices of Selected Fuels, 1964 to 1974...
20. Indicators of Domestic Petroleum Industry Investment, 196974
21. Gross Consumption of Energy by Major Source, 1965-74
22. Petroleum Inventories Expressed as Days of Consumption,
1972-74
23. Average Price Paid by Utilities for Major Fuels, 1972-74
16
page
24
38
40
43
45
46
48
51
52
53
55
57
59
60
64
68
71
76
77
78
80
83
84
Tables
24. Dimensions of Unemployment and Weekly Hours Worked:
Comparison of Selected Years of High and Low Unemployment, 1957-74
25. Unemployment Rates by Selected Demographic and Industrial
Groups: Comparison of Selected Years of High and Low
Unemployment, 1957-74
26. Unemployment Rates in the United States and Seven Other
Developed Countries, Selected Periods, 1969-74
27. Long-Term Unemployment in the United States and Six Other
Developed Countries, Selected Periods, 1970-74
28. Distribution of Unemployed by Reason for Unemployment, by
Age and Sex, 1973-74
29. Civilian Unemployment Rates by Age and Sex, Under Alternative Definitions, 1969-74
30. Reason for Separation From Last Job for Persons Not in the
Labor Force but who Worked During the Previous 12 Months,
by Age and Sex, 1973...
31. Unemployment Rates for Male Vietnam Era Veterans and
Nonveterans 20 to 34 Years, by Age, 1970-74
32. Unemployment Rates by Education, Sex, and Age, 1962 and
1972
33. Unemployment Rates by Race, Spanish Heritage, and Sex,
March 1970
34. Unemployment Rates for Males in the Urban South and Urban
Non-South, by Race and Age, Selected Years, 1940-70
35. Work Experience of Family Heads Below the Low-Income
Level, by Sex, 1959 and 1972
36. Insured Unemployment as Percent of Total Unemployment
and Unemployment Benefits as Percent of Average Weekly
Earnings, 1948-73
37. Changes in the GNP Implicit Price Deflator and the Consumer
Price Index, 1930-74
38. Growth Rates of Consumer Prices and Money Stock for the
United States and Five Other Developed Countries, 1965-74.
39. Comparisons of Behavior of Selected Variables Before and
After Cyclical Peaks, 1947-74
40. Profits of Nonfinancial Corporations, Selected Periods, 1965-73.
41. Farm Output and Productivity, Selected Years, 1940-71
42. Farm Population and Farm Employment, Selected Years,
1930-74
43. World Net Imports and Exports of Grain, Selected Periods,
1934-73
44. Indicators of the Variance of Farm Prices in Constant Dollars,
Selected Periods, 1910-71
17
92
93
99
100
103
103
104
108
109
Ill
113
118
122
130
133
140
144
166
168
172
176
Tables
Page
45. Changes in Real Gross National Product and Major Components for Selected Industrial Countries, 1962 to 1974
46. Balance on Current Account of Major Areas, 1973-74
47. Composition and Distribution of International Reserve Assets,
Selected Months, 1973-74
48. U.S. Merchandise Trade by Principal End Use Categories,
1973-74
49. U.S. Balance of Payments Transactions, 1973-74
50. External Liabilities Denominated in Foreign Currencies of
Banks in Selected Countries, 1970-73
51. Foreign-Currency Denominated Claims of Banks in Reporting
European Countries, 1973
Charts
1. Changes in GNP, Real GNP, GNP Price Deflator, and the
Unemployment Rate
2. Prices of Raw and Crude Industrial Commodities
3. Changes in Wholesale Industrial Prices
4. Unemployment Rate
5. Interest Rates
6. Domestic Energy Production
7. Unemployment Rate and Prices
8. Inflation and the Unemployment Rate
9. Farm Prices of Wheat and Corn in Constant Dollars
10. Farm Prices of Beef Cattle and Hogs in Constant Dollars
11. Change in the Value of the U.S. Dollar Relative to Select d
Foreign Currencies
18
189
192
206
209
210
215
216
36
49
49
58
69
79
95
138
174
175
205
CHAPTER 1
Economic Policy and Outlook
T
HE STORY OF THE PAST YEAR was one of inflation and
recession. Several of the forces that added to the rate of inflation also
exerted downward pressure on economic activity. The sharp rise in oil
prices resulted in a large transfer of purchasing power to the oil-producing
countries. Inflation, strong demands for credit, and the unwillingness of the
monetary authorities to underwrite a continued acceleration of inflation
drove interest rates upward, causing a slump in housing. Another debilitating effect of the higher and variable rate of inflation was the sharp rise in
uncertainty regarding future rates of price increase. The general rise in
prices was instrumental in reducing real incomes in another way. Inflation
pushed individuals into higher tax brackets thereby causing a significant
transfer of real income from individuals to the government sector. Inflation also caused a similar updrift in the tax liabilities of business. The result
was to shift the budget in the direction of restraint, by considerably more
than had been anticipated at this time last year.
As 1975 begins, the unemployment rate stands at its highest level since
1958 and production and employment are declining sharply. The decline
in activity during the closing months of the year gathered so much momentum that developments beyond the current quarter are difficult to gauge.
It is quite likely, however, that the contraction of business activity and
rising unemployment will continue for several more months. Although the
rate of inflation is still high, it has begun to moderate. One can observe
actual declines in prices of crude industrial materials and a slowdown in
the rate of price advance among important categories of goods sold in
wholesale and retail markets.
The most pressing concern of policy is to halt the decline in production
and employment so that growth of output can resume and unemployment
can be reduced. The momentum of the decline is so great that a quick turnaround and a strong recovery in economic activity are not yet assured. But
prompt action on the Administration's proposals to stimulate the economy
should hasten the end of the recession and contribute to the pace of recovery
during the second half of the year. The policies that we use to support
the economy in 1975 must be consistent with a further reduction in inflation
in 1976 and thereafter. This will obviously require discipline both in the
Federal budget and in the monetary policies of the Federal Reserve.
19
The formulation of economic policy is complicated by the need for
much stronger actions to tackle the Nation's energy problems. New energy
policies have been proposed which will provide an enduring framework for
the adjustment that began after the oil embargo. The adjustment to lower
levels of consumption and importation will impose further costs upon the
economy in the short run in order to avoid mounting political and economic
costs in the long run. The energy program will raise prices at a time when
inflation is serious. On balance, however, the program will provide important benefits. Moreover, as formulated it is consistent with the values and
the objectives of an efficient market-oriented economy.
THE PROGRAMS TO STIMULATE THE ECONOMY AND
CONSERVE ENERGY
To provide support for the economy, the President on January 13 proposed tax relief for individuals and business. For individuals the program
calls for a tax rebate equivalent to 12 percent of total 1974 personal tax
liabilities up to a limit of $1,000 per return. The rebate would total
approximately $12 billion and would be paid in two instalments, the first
in May and the second in September.
For business the President proposed a 1-year increase in the investment tax
credit to 12 percent. Except for utilities, which now have a 4 percent credit,
the present credit is equal to 7 percent of investment in equipment. For
electric utility investment in generating capacity that does not use oil or
gas, the higher tax credit would remain in force through 1977. The increase
in the tax credit is expected to reduce tax liabilities of businesses by approximately $4 billion during 1975. The credit will apply to machinery and
equipment put into service during 1975, as well as to orders placed during
1975 and put into service by the end of 1976.
The tax cut will not prevent a decline in real output from 1974 to
1975 but it will reduce the extent of the year-over-year decline—perhaps by
one-half of 1 percent to 1 percent in terms of real GNP—and will contribute to the recovery in the second half of 1975. An assessment of the
economic effects of the stimulus program is complicated by a number of
factors. We cannot be certain 'how much of the tax cut will be saved rather
than spent, but past experience suggests that most of the tax cut will be spent,
and a large fraction of it this year. Saving will be high initially, but as the
year progresses spending will increase.
The investment tax credit may have some immediate effect in stimulating
purchases of certain types of equipment, but it is most likely to begin to affect
spending appreciably in the second half of 1975. Because of the time limitations applicable to the tax credit, businessmen have an incentive to undertake
some investment now that they would otherwise have undertaken only later.
In view of the fact that new orders for durable goods generally and for
machinery and equipment specifically have fallen rapidly in recent months,
20
any addition to orders at the present time is quite important in itself, even if
it does not raise fixed investment immediately.
The Administration's energy program aims at discouraging energy consumption and encouraging domestic production by raising the relative price
of energy. Prices are increased through removal of controls in combination
with a series of taxes, but the tax proceeds are refunded so as to keep consumer purchasing power roughly unchanged once the program has become
fully effective. The major components of the Administration's energy program are:
—Price decontrol for crude oil and deregulation for new natural gas.
—A windfall profits tax on crude oil.
—An import fee which will rise to $2 per barrel on imported oil, accompanied by an excise tax of $2 per barrel on domestic oil and an equivalent tax of 37 cents per thousand cubic feet on natural gas.
—Creation of a strategic oil reserve of up to 1.3-billion barrels with early
action to require the stepped-up holding of private oil inventories.
—Protection of domestic energy producers against excessive risks from
abrupt declines in prices of imported petroleum.
—Expanded production from the Naval Petroleum Reserves and other
Federal oil deposits.
—Expanded production and use of coal and nuclear energy.
—Development of a synthetic fuels industry.
—Various measures designed to increase the efficiency of energy7
consumption.
An important source of uncertainty regarding the stimulus program concerns the timing of the energy package. The reasoning behind the decision
to embark on an energy conservation program is outlined further on. Here
we note some of the price and fiscal aspects of the energy program.
It is estimated that the imposition of import fees, excise taxes on crude
oil and natural gas, and the decontrol of domestic crude oil by April 1, 1975,
will directly add about $30 billion (annual rate) to the Nation's oil and gas
bill. Ultimately prices should rise by an equivalent amount. The windfall
profits tax (WPT) is designed to capture the increase in profits of domestic
oil producers attributable to decontrol. The increase in receipts from import
fees, excise taxes, and the windfall profits tax will be returned to individuals,
businesses, and governments mainly through a set of tax reductions, with a
portion taking the form of increased Federal Government expenditures.
The energy program will be introduced gradually. On February 1 an
import fee of $1 per barrel was imposed through Presidential action. This
fee will rise to $2 on March 1 and to $3 on April 1. However, for purposes
of economic projections the Administration has assumed that Congress
will levy a $2 tax on domestic crude oil and pass the balance of the energy program with an effective date of April 1 of this year. This would make the
final increase in the import fee unnecessary.
21
The initial effect of the import fee will be to raise prices of imported oil
and of domestic oil that is now uncontrolled. Together these constitute some
60 percent of total U.S. oil consumption. This effect will be reinforced on
April 1 by the decontrol of the remaining part of domestic petroleum production. In the second quarter of the year, the average price of crude oil
is expected to rise by approximately $4.20 per barrel over current levels as a
result of decontrol and the $2 per barrel excise tax. It is expected that the
increase will be reflected with a lag in higher prices for gasoline, fuel oil, and
other petroleum products and eventually in higher electricity prices. By the
end of the second quarter of 1975, when all of the program will be effective, the consumer price index is estimated to be 1.3 percent higher than it
would be without the proposed program. Not all of the higher price of crude
oil and natural gas will affect prices in final markets this quickly. At first
some of the higher petroleum prices will reduce profits rather than increase
the prices charged by users of refined petroleum inputs, especially where
prices are regulated. The profits squeeze is not expected to last long, however, and by the latter part of 1976 all of the increased cost should show up
in the form of higher prices of those goods and services that consume crude
oil and natural gas directly and indirectly. The $30-billion impact is estimated to be about 2 percent of GNP. About 90 percent of it will be reflected
in higher prices by the fourth quarter of this year. For all of 1975 we estimate that the GNP deflator will be about 1 percent higher than it would
have been without the program.
Rising prices not compensated for by offsetting tax cuts will reduce real
incomes to a slight extent in the first half of 1975. Consequently, the effect
of the stimulus proposals will be partially offset by the energy proposals
during the first half of the year. On the other hand, to the extent that oil
imports and hence the transfer of purchasing power to foreign oil producers are reduced the demand for domestic goods would be increased.
By the third quarter the stimulus from both programs will be substantially
greater.
THE ENERGY TAX OFFSETS
The energy taxes are to be turned back to the economy in a variety of
ways. (Estimates below are annual rates based on calendar year 1975.)
—For individual taxpayers, rates are being reduced and the lowincome allowance is being raised in such a way that total taxes
will be cut by an estimated 12 percent from what they would
otherwise be in 1975. The increase in the low-income allowance
to $2,600 for joint returns from its present level of $1,300 means
that a family of four will pay no taxes if its income is $5,600
or less. This part of the program, which would involve a reduction in withholding schedules starting June 1, would return an
estimated $16 billion.
22
—Low-income households that pay no taxes and certain low-income
taxpayers will receive a special distribution of up to $80 per adult
after application to the Internal Revenue Service. This would return
$2 billion. Disbursements are expected to start in the summer of this
year.
—The program calls for a tax credit of 15 percent of expenditures—
up to a maximum expenditure of $1,000 per homeowner—for outlays that improve residential thermal efficiency. Credits could be
claimed during the next 3 years. This aspect of the program would
return $0.5 billion per year.
—The Federal Government would use $3 billion to cover its share
of the costlier energy bill, while State and local governments would
receive an additional $2 billion in revenue sharing grants.
—Business would receive $6 billion through a reduction in the corporate tax rate from 48 percent to 42 percent.
SUMMARY
Table 1 brings together the various parts of the Administration's stimulus
and energy programs. Receipts and expenditures, defined on the national
income accounts (NIA) basis, are shown as seasonally adjusted quarterly
totals, not at annual rates.
The stimulus or temporary part of the combined program appears as reductions in personal and corporate tax receipts. In addition to refunds to
individuals of part of their 1974 tax liabilities, personal tax receipts include
an allowance for the investment tax credit applicable to unincorporated
business. This credit is considered a reduction in liabilities for the entire
year and consequently is spread over -all quarters of 1975.
The import fees, excise taxes, and windfall profits taxes, which are viewed
as permanent, are all treated as indirect business taxes. The permanent
offsets to these taxes appear as reductions in personal and corporate income
taxes and as increases in Government expenditures.
Proceeds from the energy taxes are returned to those individuals who pay
income taxes primarily by reductions in withholding schedules. Withholding schedules will be adjusted in the second quarter of 1975 in such a way
that an entire year's reduction in tax liabilities will be made over a 7-month
period. Consequently, withholding will be increased after the fourth quarter
of 1975 but not up to the rates of early 1975.
Low-income households, who pay less than $80 per adult in income taxes,
will receive transfer payments starting in the third quarter. Government
purchases are increased in the budget to cover the Federal share of the
higher oil bill, while State and local governments are the beneficiaries of
increased grants from the Federal Government.
These figures are an accounting of receipts and expenditures and do not
necessarily reflect their impact on the behavior of individuals and businesses.
Nonetheless they demonstrate that energy taxes partially offset tax cuts
23
in the spring and that the impact of the program is greatest in the second
half of 1975, especially in the third quarter.
THE FISCAL 1976 BUDGET
Because of concern that a too expansionary budget carries the risk of
worsening the inflation, the Administration has proposed a slower rate of
increase in spending from fiscal 1975 to fiscal 1976 than from fiscal 1974
to fiscal 1975. The new budget calls for outlays of $349.4 billion, a rise of
11.5 percent compared to a rise of 16.8 percent from fiscal 1974 to fiscal
1975. The President has proposed a moratorium on new spending programs
except for energy as well as numerous actions to reduce spending in existing programs. The reductions total $17.5 billion and embrace $7.8 billion
in proposals made last year and $9.7 billion in new reductions. Taking into
account the $16 billion in tax cuts to stimulate the economy, receipts are
expected to total $297.5 billion, a rise of 6.7 percent over fiscal 1975.
The deficit is expected to rise from an estimated $34.7 billion to $51.9
billion. These are large deficits but they reflect the shortfall in receipts
and increased unemployment benefits stemming from the weak economy.
TABLE
1.—Federal
budget receipts and expenditures associated with stimulus
programs, national income accounts basis, 1975—76
and energy
[Billions of dollars; seasonally adjusted quarterly totals]
1975
1976
Receipt or expenditure
III
By type:
Total receipts.
Personal taxes.
Stimulus..
Energy....
Indirect business taxes.
Corporate taxes..
Stimulus
Energy
Total expenditures.
Purchases of goods and services
Grants-in-aid to State and local
governments
Transfer payments
Total expenditures minus total receipts
-0.1
-1.6
-9.7
-3.0
0.4
0.0
0
0
0
-7.7
-5.1
-2.6
-15.4
-7.3
-8.1
-8.4
0
-8.4
-4.8
-.3
-4.5
-4.9
-.3
-4.6
2.2
8.3
8.1
7.9
7.7
7.6
-2.2
-2.2
-.8
-1.4
-2.4
-.8
-1.5
-2.5
-.8
-1.7
-2.6
-.8
-1.8
-2.7
-.8
-2.0
.5
1.8
1.8
1.8
1.8
-1.4
0
0
.8
.8
0
0
.5
.5
.5
.5
o"
.1
2.1
11.4
4.8
1.4
1.7
-1.1
By program:
Stimulus taxes
Net energy taxes
Import fees, excises, and windfall
profits taxes...
Tax offsets
-5.9
-8.1
-.8
-1.1
.8
4.3
-1.5
-2.2
1.4
1.0
2.2
-1.4
8.3
-4.0
8.1
-9.6
7.9
-10.1
7.7
-6.3
7.6
-6.6
.5
1.8
1.8
1.8
1.8
4.8
1.4
1.7
Energy expenditures
Total expenditures minus total receipts
.1
2.1
11.4
Note.—Detail may not add to totals because of rounding.
Sources: Department of the Treasury, Department of Commerce (Bureau of Economic Analysis), and Council of Economic
Advisers.
24
For the calendar year the full-employment surplus on a national income
accounts basis is expected to decline by $9 billion from 1974 to 1975.
FINANCING THE DEFICIT
The financing of the large deficits will pose problems which are not
easy to evaluate. The economic circumstances of 1975 are quite different
from those encountered in past recessions, like the recession of 1958.
If prices are stable, any large decline in output lowers the demand for
private credit, and this slack is taken up only in part by the normal
increase in the budget deficit resulting from lower tax collections and
higher unemployment benefits. Even a discretionary stimulus that would
partly counteract rather than merely cushion a large decline of aggregate
demand would probably not create serious financing problems under such
conditions. The reason is that if unemployment is widespread and factors
of production are in highly elastic supply, cost pressures are minimal and
private investment and credit demands are likely to be low.
The present situation is far different from past recessions, but the deficit
as presently estimated can probably be financed without serious problems
in 1975. The private demand for credit will decline at least somewhat, and
probably substantially, as the direct result of the low level of housing, reduced
consumer purchases of durable goods, and the sharp swing from inventory
accumulation to inventory liquidation. The drop in real output, however,
has brought less relief in the credit markets than it would have under less
inflationary conditions. Furthermore, imbalances have developed in the
financial structure of businesses in recent years because of the disproportionate reliance on debt financing in general and short-term debt in particular. As the desired private refinancing is made more difficult by the deficit
financing, businesses may abandon investment projects more readily than
in the past, rather than risk further unbalancing their capital structure and
increasing their credit market exposure.
One way of preventing significant displacement of private investment in a
substantially underemployed economy would be to increase the rate of money
supply growth to reduce Federal financing pressures. Under such conditions, an increase in monetary growth need not be inflationary in the short
run, especially if there is a large unsatisfied demand for liquidity. On the
other hand, should large deficits continue well after the recovery has taken
hold, maintaining such a course of monetary accommodation could spark
an increase in the rate of inflation. For this reason it is essential that any
monetary accommodation to large fiscal deficits be permitted only so long
as the effective underemployment of resources remains large and there is
ample room for above-average growth. Otherwise, future price level trends
will be affected adversely and the deficit will become increasingly "unproductive" in real terms.
25
Monetary policy faces great difficulties in the year ahead and will require
careful and continuous evaluation by the Federal Reserve. The uncertainties that underlie the outlook for 1975 add to the importance of a flexible
monetary policy. Monetary policy must be conducted so as to encourage
a near-term recovery in the economy and a resumption of sustainable
economic growth. Toward this end, reasonable growth in money and credit
will be required—growth which, one hopes, will encourage a freer flow of
credit and lower interest rates in private credit markets. Whether more
accommodating credit conditions will in fact develop depends importantly
on the ease with which the enlarged Federal deficit is financed, and also on
the progress that is achieved in moderating the Nation's rate of inflation as
1975 progresses.
A special problem for monetary policy is posed by the energy conservation
program, the initial effects of which will be to raise the price level. To a
degree, this one-time increase in prices will require additional financing,
so as to avoid a contractive effect on the real economy. However, rapid
monetary growth would run the risk that inflationary pressures would once
again be increased, later on if not in 1975, undermining the Nation's
fundamental need to regain the basis for reasonable price stability. That
must not be permitted to happen.
AID TO THE UNEMPLOYED
In response to the sharp rise in unemployment in the latter part of
1974, and in anticipation of further increases in 1975, the Administration
initiated legislation to increase the duration and coverage of unemployment
insurance benefits and to create employment by funding additional public
service jobs. In December 1974, the President signed the Emergency Unemployment Compensation Act, which extends the duration of benefits by 13
weeks beyond the prevailing limits. Unemployed workers can now receive
up to 52 weeks of benefits. The Emergency Jobs and Unemployment Assistance Act, also signed in December, grants unemployment benefits, for up
to 26 weeks, for the first time to workers in occupations and industries that
were not covered by the regular State or Federal programs. This act provides coverage for an estimated 12 million workers, primarily agricultural,
domestic, and State and local government employees. While these programs
are administered by the States, the funds are entirely from Federal sources.
The Emergency Jobs and Unemployment Assistance Act also amends
the Comprehensive Employment and Manpower Training Act (1973) to
expand Federal funding for State and local public service jobs. The budget
provides funds that will permit an increase in the number of public service
jobs from 85,000 in fiscal 1974 to 280,000 in 1975 and 1976.
THE OUTLOOK WITH NEW POLICIES
Given the above assumptions regarding energy, fiscal, and monetary
policies, the economy is likely to continue its downward course in the first
half of 1975 and to move onto the road of recovery in the second half. The
26
first-half decline is likely to be severe, however, and the subsequent recovery
will still leave the level of output in the fourth quarter about the same as
a year earlier. For 1975 as a whole real GNP will probably be about
3 percent below the average of 1974. The rate of inflation will be very high
in the first half of the year—higher than it would be in the absence of the
energy policy—but it should subside in the second half. For all of 1975,
prices as measured by the GNP deflator should be 11 percent higher than
prices in 1974. By the final quarter an inflation rate of about 7 percent is
projected, not counting the pay increase scheduled for Federal civilian
and military personnel. The projections of real GNP and the deflator yield
a nominal GNP of about $1,500 billion, which is some 7% percent greater
than the 1974 figure. Given the large decline in real output, the unemployment rate should average about 8 percent for the year, moving above
that level before midyear but coming down from the peak in the second
half.
The uncertainties are so great at the present time that the projections
cited above, although presented as specific numbers, are subject to an
unusually wide margin of error. The past several months have witnessed a
progressive scaling down of output projections and a scaling up of unemployment projections.
NONRESIDENTIAL FIXED INVESTMENT
Early in January the Department of Commerce published a survey of
plant and equipment plans that projected a rise of 4J4 percent in nominal
outlays from 1974 to 1975. In view of the prospective rise in capital goods
prices the survey results imply a sizable decline in real outlays. Large nominal
increases ranging from 14 to 28 percent were scheduled by producers of
basic materials, such as steel, paper, chemicals and petroleum, and by mining firms, railroads, and gas utilities. Very small rises or decreases were
projected by electric utilities, air transport, and commercial firms. The
deterioration of sales, output, and profits since this survey was taken will
probably lead to a scaling down of even this small overall planned increase,
although the large expansion plans of a number of basic industries will
provide an element of stability. The plans reported in this survey came
in too early to be affected by the proposed investment tax credit.
There seems little likelihood of preventing a decline in real nonresidential
investment in the first half of 1975. The pronounced slump in real outlays
for producers' durable equipment in the final quarter of 1974 was heavily
concentrated in outlays for automobiles and trucks. But the closing months
of the year also witnessed decreases in the production of a broad range of
machinery and equipment as businessmen canceled orders or delayed deliveries on contracts made earlier. These cutbacks will take the form of
reduced deliveries in the first half. The liberalization of the investment
tax credit, coupled with the turnaround in economic activity and a rebound
in profits, should bring rising real outlays in the second half. The main
impact of a liberalized investment tax credit will be felt late in the year. For
27
1975 the projection foresees nominal investment about 4 percent above the
1974 total but real investment down approximately 9 percent.
INVENTORIES
The behavior of inventory investment is likely to be the dominant influence on the course of production over the coming year. At the start of 1975
the ratio of nonfarm inventories to GNP in real terms was the highest since
the end of World War II. It seems fairly likely that the physical volume of
inventories will fall during most and perhaps all of the coming year, with
especially large reductions in the first half. Even with a decline in stocks and
above average growth in demand in the second half of the year, the ratio of
stocks to output at year-end would still be high by post-World War II standards. Although stocks may well decline throughout the year, the impact of
inventory behavior on the change in output should be greatest early this year,
when inventory investment turns negative following a high rate of involuntary accumulation in the fourth quarter of 1974. What is already happening
to automobile stocks will be reinforced by similar but less pronounced adjustments in other industries. By midyear, shifts in inventory investment should
be contributing to rising overall production. All told, current dollar inventory
liquidation could approach $5 billion in 1975.
HOUSING
Underlying conditions seem ripe for a reversal of the housing decline, even
though the prospect of a sharp upturn appears small at this time. The stock
of housing increased very little during the past year because of the low rate of
starts. Despite very weak demand the low rate of housing completions kept
vacancy rates from rising; the vacancy rate in rental housing, for example,
stabilized from the first to the fourth quarter of 1974. The rate of housing
starts in the fourth quarter of 1974 was about one-half the estimated underlying demand indicated by prospective household formation and replacement
demand.
The projection for 1975 calls for private starts to begin rising this spring
up to an annual rate of 1.6 to 1.7 million units in the final quarter, with
single-family homes likely to be in the forefront of the recovery. Because of
financing problems and reduced profitability, apartment house construction
is not likely to recover until the second half of 1975, although it may show a
very weak recovery in the first half. Real outlays for residential construction in 1975 are projected to be about 15 percent below those of 1974,
and current dollar outlays, about 5 percent.
GOVERNMENT PURCHASES
Federal outlays for goods and services are expected to rise by about 8 / 2
percent from 1974 to 1975, while State and local purchases are expected to
rise by about 12 percent. Each includes an allowance for the higher cost
of energy under the new energy program. In real terms, combined government purchases are expected to show little change from 1974 to 1975, with
offsetting decreases and increases in the Federal, and State and local totals.
28
CONSUMPTION
Consumers hold the key to the strength of the economic recovery. If they
respond as expected to the stimulus of the tax cuts proposed by the Administration for the spring and summer, real GNP should record a good-sized
advance in the second half, but if not, the 1975 recovery could be a sluggish
one. The effect of the tax cut on consumer incomes should be reinforced by
a turnaround in gross private domestic investment, which has undergone a
steep decline since the final quarter of 1973. In the meantime the loss of
earned income is being cushioned by increases in unemployment benefits.
Last year such benefits totaled more than $7 billion, but with this year's high
unemployment they are projected to total more than $18 billion. The latter
figure includes, in addition to regular State programs, about $2^4 billion
of extended State benefits and $3j4 billion in special unemployment benefits for those not previously eligible for unemployment compensation.
Consumer income will be bolstered on July 1, 1975, by a scheduled increase of $3.0 billion (annual rate) in social security benefits (excluding
medicare benefits). One offset is the increase in social security taxes due to
the rise in the taxable earnings base from $13,200 to $14,100 effective January
1, 1975. This tax increases Federal receipts by about $1^2 billion, about
half of which represents a reduction in personal income.
Consumers should be aided by a slower rate of inflation in the second
half of 1975 compared with the first. The rate of inflation will be highest
at midyear because it will reflect the main impact of the higher energy
prices. The rate of increase should taper off considerably, even though
the energy program will be adding to the level of prices throughout the
year. The rise in disposable income and the slower rise in prices yield a substantial increase in real income in the second half.
Despite the possible negative aspects of the energy program this spring,
we foresee some improvement in consumer spending in the second quarter
occasioned by the refunds of 1974 tax liabilities. To some extent the refunds
will induce additional purchases of automobiles, furniture, and appliances,
even though initially the greater part of the refunds is likely to be saved.
In the third quarter, however, the further stimulus scheduled for September, coupled with the rebates of the windfall profits tax and the
stronger recovery, should bring a step-up in consumption that carries into the
fourth quarter. For all of 1975 the personal saving rate is likely to be higher
than in 1974.
Real consumer spending in 1975 may fall slightly below the corresponding total for 1974. If so, this would mark the second year of decline in real
consumer spending. In nominal terms the increase over 1974 should be close
to 10 percent.
ECONOMIC ASPECTS OF THE ENERGY PROGRAM
The economy surmounted the energy crisis with which 1974 began,
but the energy problems of 1975 and beyond may prove more intransigent.
563-280 O - 75 - 3
29
Now, a year after the embargo, there is widespread agreement that the
oil-exporting nations will maintain restrictions on oil supplies and thus be
able to hold prices far above the pre-embargo level for at least the period immediately ahead. It is also agreed that the demand for goods and services by
the oil exporters will rise, but not enough to offset the large money flows
received in exchange for oil exports. Finally, it is realized that supplies of oil
from foreign sources are unreliable and will remain so into the indefinite
future. For these reasons, the Administration's energy policy is designed to
lower imports and thereby reduce our vulnerability to interruptions in the
supply of petroleum. In achieving this goal, the Administration is placing
maximum reliance on creating market conditions that will have a lasting influence, rather than relying on allocations and rationing which at best are
only short-term solutions.
An acceptable level of security can be achieved in the longer run with a
combination of measures, including standby domestic capacity and strategic
oil reserves for an emergency, as well as reduced consumption and increased
production from conventional and new energy sources. Except for reduced
consumption, none of these measures will increase security quickly. Consequently, it is essential that we begin to reduce import vulnerability by
reducing demand, and that we promptly initiate programs to establish
standby capacity and to increase energy production and stocks.
SHORT-RUN POLICIES
To curtail petroleum imports in the short run, the energy program would
reduce total energy consumption by raising its price to the equivalent of
the world market price plus $2 per barrel. This policy is better than
restricting petroleum imports directly. If petroleum imports are rigidly controlled, unexpected variations in energy supply or demand would cause large
disruptive effects because oil imports could not serve their usual role of offsetting these fluctuations. Restraining general energy consumption by
raising its price is more equitable and more efficient than restraining specific
energy uses. The diverse uses to which energy is put and the complex patterns of its consumption create extraordinary difficulties, administrative
costs, and inefficiencies when administrative allocation is attempted. The
burden falls more broadly and is handled more efficiently by the economy
when it is imposed through the operation of market forces. Purchasers of
energy can decide for themselves where they can best reduce consumption.
The elimination of price controls on crude oil (effective April 1) will
increase the price of energy and reduce its consumption. The Administration has renewed its recommendation that the price of new natural gas be
freed from controls, and that prices of regulated gas be decontrolled when
existing contracts expire under their own terms. This will lead to a gradual
but eventually large increase in natural gas prices. These actions will have
some effect on the price of substitute fuels, such as coal, but price increases
will come with some delay and will gradually induce additional supplies
of energy.
30
The windfall profits tax in the President's energy program is designed
tc prevent increases in profits on existing oil production that would have
little, if any, short-term impact on production. The tax is levied on the
difference between a base price and the price actually received. The marginal tax rate rises with the size of the gap, reaching 90 percent on that
portion of the price received which is more than $3 per barrel greater than
the base price. The tax will be phased out over a period of several years,
as the base is gradually adjusted upward.
In the near term, oil producers will not receive additional revenues on
existing production from the combination of decontrol and the WPT. But
they will have a powerful incentive to make new investments, because they
will receive higher prices when new ventures come into production.
Decontrol of old oil will be insufficient in the short run to bring about the
reduction in imports that energy security requires. The $2 per barrel tax
on crude oil and the 37 cents per thousand cubic feet tax on natural gas
will raise the price paid by consumers above that received by producers in
order to reduce consumption and imports further. The revenue from this
tax, like other proposed energy tax revenues, would be returned to consumers of energy so that they would have roughly as much purchasing
power as they had before the tax.
LONGER-RUN MEASURES
The costs of energy security are lower in the long run than in a short
period because security can be achieved by measures that do not rely so
heavily on demand restraint. The keystone to long-run policy is a storage
program of up to 1.3 billion barrels, a strategic reserve which is large
enough to replace imports for an extended period. This will permit the
Nation to continue to import some oil from unreliable sources indefinitely
without the potential costs of interruption.
Domestic production, encouraged by eliminating both price controls and
relaxing restrictions on exploration in promising areas, would respond still
more if investors were assured that the price they would receive for oil would
not be temporarily driven below the long-run supply price by events in
the world market. For this reason protection against large downside price
risks for conventional oil production are proposed. Producers would thus be
assured that large drops in the world price of oil would not disrupt the
domestic market. Businesses that invested in energy-saving equipment would
also be protected against competitors who avoided such expenditures.
A reduction in standards of living and potential output compared to what
we would otherwise enjoy is inevitable with a program to achieve a greater
degree of energy security, though the program announced by the Administration is designed to hold such effects to a minimum. The alternative approach—allocations and rationing—would give rise to structural changes in
the economy that could have serious, long-run consequences.
A productive economy is one which readily responds to change and
is open to growth, development, and new initiatives. Those characteristics
31
are weakened when market allocation of resources is supplanted by administrative control. The restrictions on individual choice that are
caused by further centralization of decision making are obvious. Not so
obvious, but potentially far larger, are the economic losses if the economy
becomes bound to rigid patterns by these measures. An allocation system
tends to favor large and established entities. It is likely to discriminate against
small firms and the potential entrants from whom innovation could otherwise be expected. With quasi-permanent controls, the benefits of competitive
markets would be lost, superior performance might not be rewarded; inefficiency would not be punished by losses or bankruptcy. The Administration's
program emphasizes the creation of incentives for individuals and firms to act
in a way consistent with energy security, rather than mandating particular
behavior.
There are risks in the Administration's energy program. If the world
price of energy were to fall dramatically, the United States would be left with
high energy costs relative to those of other countries. If the demand and
supply response to higher energy prices is far lower than predicted, then
additional actions may be necessary. If the response is higher, of course,
the oil tax can be reduced or eliminated. If the world price of oil fell to
acceptable levels, and if imports were never interrupted, the program would
have caused unnecessary costs. The program balances the extra costs from
lack of preparation for import disruptions against the costs of preparing
for them. The balance struck does not protect against all contingencies, but
it will lead to less vulnerability to import cutoffs.
The energy program will speed the transition to a new energy reality
that was started by the embargo. The energy situation in 1975 and beyond
is markedly different from that of 1973 and before, because energy prices
are much higher. These higher prices will call forth substantial increases
in investment for both greater energy production and for producing less
energy-intensive goods and services.
INTERNATIONAL ECONOMIC RELATIONS
Rising unemployment, rapid inflation, and the energy crisis have placed
heavy strains on the fabric of international economic relationships. The
pressures on the world capital markets resulting from the financing of
large deficits of the oil-importing countries are growing and may threaten
to undermine the past liberalization of capital flows among the industrial countries. The acquisition of large amounts of liquid assets by
the Organization of Petroleum Exporting Countries (OPEC) has posed a
risk of financial and exchange rate instability that must be contained through
increased cooperation among the oil-importing countries as well as with the
OPEC countries. Some encouraging steps have been taken in this direction.
These efforts to deal cooperatively with the international financial problems
created by the energy crisis are discussed in Chapter 7.
32
Economic problems experienced by many countries have created pressures
for governments to adopt restrictive trade measures. The resolve of government leaders to avoid such self-defeating measures was considerably strengthened by a decision 3 years ago among U.S., Canadian, Japanese, and
European leaders to convene a new round of multilateral trade negotiations to continue the process of trade liberalization begun after World War
II. U.S. participation, however, was contingent upon passage of legislation
by the Congress granting the President authority to undertake such negotiations. The Congress passed the Trade Reform Act of 1974 at the end of
last year, opening the way for full-scale multinational negotiations to begin
later this year.
The recent decline in economic growth around the world and the parallel
increase in unemployment might make it more difficult for most governments to commit themselves in the coming year to major reductions in
trade barriers. It is generally recognized, however, that any reductions
resulting from such commitments will be sufficiently gradual to allow firms
and workers to adjust to the change in competitive conditions over a period
of years. Finally, the major focus of a new round of multilateral negotiations is likely to be on nontariff barriers, which are frequently motivated by
objectives other than the protection of domestic industries. While the reduction of such barriers can make an important contribution to a more efficient
allocation of world resources, it will frequently not require major changes
in the structure of domestic industry.
33
CHAPTER 2
Economic Developments and Policy in 1974
AST YEAR WAS VERY DIFFICULT for the American economy. The decline in output and the rise in prices were the greatest for
any peacetime year since the early post-World War II period. Unemployment rose and living standards fell (Chart 1). The year started with the
economy in the grip of an energy crisis brought on by the Arab oil embargo
and by the spiraling price of imported oil. The decline in output attributable
to the embargo was subsequently halted and partly reversed. That recovery
was not strong enough to overcome forces of contraction, some of which
had been present earlier and some of which emerged only late in the year.
In the closing months of 1974, demand and output were falling rapidly and
unemployment was climbing sharply. The overall rate of inflation continued
to be very high, although signs of a slower price rise could be seen in wholesale and retail markets.
The pronounced deterioration in demand and the severe recession have
been the dominant events of the past few months, but for most of 1974
aggregate demand reflected numerous crosscurrents. Demand by business
for new plant and equipment was strong for a good part of the year, especially
in industries producing basic materials that had been in short supply. Supply
shortages provided business with a potent stimulus to build up inventories,
but this influence diminished as the year progressed and disappeared after
the summer. Homebuilding suffered its worst decline in 30 years, mainly
but not entirely because of disrupted mortgage markets. Consumers sustained large reductions in real income and cut back their real expenditures,
especially for energy and automobiles.
At the start of 1974, economic policy makers found that the scope of
policy had been stretched far beyond the traditional issues of demand
management. In the forefront was energy policy, which sought to concentrate the embargo-caused shortage within the household sector in order to
minimize the impact on the industrial sector and employment. Because of the
worsening inflation, demand management continued to aim at restraint,
even though it was recognized that the oil embargo and the steep rise in
oil prices would mean a loss of real income. Much of this loss was already
showing up at the start of 1974 in the form of reduced purchases of energy
and energy-related goods and services by consumers, businesses, and
governments.
L
35
Chart 1
Changes in GNP, Real GNP, GNP Price
Deflator, and the Unemployment Rate
PERCENT CHANGE FROM PRECEDING YEAR
4 -
_ REAL GNP
-4
_ GNP IMPLICIT PRICE DEFLATOR
4 -
1965
1966
1967
1968
1969
1970
1971
SOURCES: DEPARTMENT OF COMMERCE AND DEPARTMENT OF LABOR.
36
1972
1973
1974
Looking at prospects for 1974 a year ago, the Administration saw a weak
first half and a recovery setting in by midyear, led by an upturn in housing
and a recovery of the automobile industry from its depressed condition at
the start of 1974. The Administration also expected a slower rate of inflation
after early 1974, associated with a deceleration of the price rise in petroleum
and in farm and food products.
The recovery in the homebuilding industry did not materialize despite
special efforts by the Administration—notably in May—to bolster mortgage
markets. Housing starts sank progressively lower as interest rates soared to
record highs in midsummer, draining funds out of thrift institutions. Consumers obtained no relief from inflation and continued to sustain cuts
in real income despite an acceleration of the rise in wages. Although some
recovery in the automobile industry occurred, the upturn was abruptly reversed in the final quarter of 1974. With domestic and foreign demand
softening during the summer, supply conditions improved noticeably. Many
basic materials that were in short supply at prices prevailing in midsummer
could be obtained with little difficulty by the start of the fourth quarter,
steel being a major exception.
The severe weakening of demand and the sharp decline in output in the
fourth quarter came suddenly. By midsummer there had been a scaling
down of expectations regarding the strength of demand in the near term; but
the common expectation, shared by the Administration, was for slow growth.
For example, at the time of the Summit Conference on Inflation in September there was a fairly broad consensus among economists that little
change in output would occur in the ensuing few quarters, and most projections of real gross national product (GNP) fell within the narrow range
of a small increase and a small decrease. That meant rising unemployment.
There was little anticipation of the collapse of demand, output, and
employment in the motor vehicle industry, or the less severe but widespread
declines elsewhere that marked the closing months of 1974 and the start
of 1975.
DEMAND AND OUTPUT
GNP in 1974 was 8 percent greater than it was in 1973, with a 10 percent rise in prices (as measured by the GNP deflator) and a 2 percent decline in output (Table 2). From the fourth quarter of 1973 to the fourth
quarter of 1974, the price rise was 11.8 percent and the output decline, 5.0
percent. The pattern of overall demand and output change within the year
shows pronounced decreases in the opening and closing quarters, but if
attention is confined to real final sales the fourth quarter decrease dwarfed
those in the first 3 quarters. Over half of that decrease was in consumer and
business purchases of automobiles and trucks. Consumer spending apart from
automobiles also slumped noticeably after having remained about unchanged
in the first 3 quarters of 1973. The bulk of the fourth quarter drop in
purchases of producers' durable equipment reflected lower purchases of
autos and trucks, but spending on other types of equipment also declined.
37
The decrease in residential construction was substantial. One important
reason for the smaller drop in total output than in total final sales from
the third to the fourth quarter was the inability of motor vehicle producers
to liquidate unwanted stocks of recently built automobiles.
TABLE 2.—Changes in gross national product in current and constant dollars, 1968 to 1974
[Percent]
1969
to
1970
1968
to
1969
Component
1970
to
1971
1971
to
1972
1972
to
1973
1973
to
19741
CURRENT DOLLARS
Percent change:
7.6
5.0
8.0
9.8
11.8
7.9
8.1
8.1
6.5
9.7
6.6
.6
7.3
8.2
8.0
13.8
5.5
8.5
9.3
14.0
7.7
9.2
10.5
10.1
12.8
8.4
8.9
-1.9
12.5
9.6
Gross private domestic investment
Business fixed investment
Residential structures
10.3
10.9
8.3
-1.9
2.1
-4.3
12.8
4.0
37.2
16.7
11.7
26.2
16.8
17.1
5.9
-.2
9.4
-19.6
Government purchases
Federal purchases
_ .
State and local purchases
5.2
.0
10.3
4.5
-2.6
10.9
6.7
1.5
10.8
9.2
7.5
10.4
8.1
1.6
12.6
11.7
9.2
13.3
_ .
7.6
7.7
5.4
5.3
7.8
8.2
9.6
10.2
11.3
10.4
8.1
8.3
Inventory accumulation
Net exports of goods and services
.7
-.6
-3.3
1.7
1.8
-3.8
2.2
-5.8
6.9
9.9
-2.0
-1.9
Total GNP
Personal consumption expenditures...
Durable goods
Nondurable goods
Services
Addendum:
Final sales
Domestic final sales
Change in billions of dollars:
CONSTANT (1958) DOLLARS
Percent change:
2.7
-.4
3.3
6.2
5.9
-2.2
Personal consumption expenditures...
Durable goods
Nondurable goods .
Services.
__
3.6
5.3
2.1
4.5
1.8
-2.1
2.6
2.7
4.0
10.4
2.3
2.9
6.2
13.4
4.2
5.0
4.7
8.3
3.8
3.8
-2.2
-9.0
-2.1
1.4
Gross private domestic investment
Business fixed investment
Residential structures._.
5.0
6.0
2.2
-6.4
-3.6
-6.3
7.4
-.6
31.1
12.5
9.1
17.9
10.5
12.8
-4.1
-27.1
-1.2
-5.9
4.0
-4.5
-12.5
3.6
.0
-5.3
4.5
2.7
.2
4.7
.9
-6.1
6.0
1.0
-1.7
2.9
27
2.8
-.1
-.3
3.1
3.5
6 0
6.3
5.5
4.5
-1.9
-2.4
.3
-.8
-2.8
2.1
1.4
-2.8
1.7
-2.5
3.8
7.6
-2.6
4.4
Total GNP
Government purchases
Federal purchases
State and local purchases
-8.5
Addendum:
Final sales
Domestic final sales.
Change in billions of dollars:
Inventory accumulation
Net exports of goods and services
1
Preliminary.
Source: Department of Commerce, Bureau of Economic Analysis.
BUSINESS FIXED INVESTMENT
Demand for capital goods held up well into the summer but weakened
considerably late in the year. Many capital goods industries were producing
38
at capacity last year, as were industries like steel, which are very heavily dependent on capital goods production. Large backlogs led to long waiting
times for equipment deliveries. The strength of demand showed up in rising
investment starts (in real terms) by manufacturers and public utilities from
the first half to the third quarter, and by rising real appropriations by large
manufacturers. New orders for capital goods in real terms remained high
through July but declined after that, especially in the final quarter. Increasing
costs of materials and labor were reflected in sharply accelerating price
increases for capital goods, which were particularly large in the 6 months
following the end of price controls on April 30.
Business held fairly closely in overall terms to the annual plant and equipment expenditure plans projected early in 1974. On the basis of 3 actual quarters and 1 anticipated quarter it appeared that companies in the Department
of Commerce survey were raising outlays by 12 percent from 1973 to 1974,
compared to a rise of 13 percent projected in the survey published in early
March. It is possible that the very small shortfall in current dollars is larger
in constant dollars, but the figures needed for a careful comparison in real
terms are not available. In addition, data for the fourth quarter submitted
by companies in October and November suggest that projected outlays
were being scaled back from plans for the last quarter made earlier last year.
Because of the need to expand capacity, demand by manufacturing
companies showed the greatest strength last year, with outlays up some 20
percent over 1973. About half represented a real increase, and most
of it came from work started prior to 1974. Starts of new manufacturing
projects in the first 3 quarters of 1974 were up about 11 percent over the 1973
average in current dollars, or approximately 3 percent in real terms. This
followed real increases in starts amounting to 23 percent and 30 percent in
L972 and 1973. Several factors contributed to the deceleration. Profits
(inclusive of the inventory valuation adjustment, or IVA) of manufacturing
companies in the first 3 quarters of 1974 were unchanged from 1973 and were
down substantially, excluding profits of domestic petroleum firms. Capacity utilization in 1974, while high, was a little lower than in 1973. Extremely
high interest rates also discouraged new investment.
Electric and gas utilities substantially increased the physical volume of
new projects started in the first 3 quarters of 1974. At the same time they
made little change in the physical volume of plant and equipment outlays,
scaling back those they had intended to make early last year. Data
on backlogs suggest that the utilities have been stretching out projects
already started and scheduled to be completed over the next few years. The
utilities have suffered a sharp reduction in profits—the worst since before
World War II—as a result of the leveling in energy consumption and the
lag of rate adjustments behind cost increases. High interest rates have also
led to deferrals of expenditures until financing conditions are more favorable. In addition, utilities have completely eliminated some projects from
their long-term plans, but the magnitude of such cutbacks is uncertain.
39
The complete elimination of projects, particularly those scheduled to be
started some years from now, probably reflects a reconsideration of the
expected growth rate in energy consumption in the light of the rise in
energy prices.
INVENTORY INVESTMENT
It is difficult to analyze the course of inventory investment over the past
year or so because the official estimates themselves are subject to more than
the usual uncertainties. During 1974 there were very large revisions in the
statistics for 1973 and early 1974. Prior to the revision of the income and
product accounts in July 1974, total inventory investment for 1973 was estimated to be $8.0 billion, whereas the current estimate for 1973 is $15.4 billion. The corresponding figures for the first quarter of 1974 are $5.5 billion
a.nd $16.9 billion. Before the revision the ratio of nonfarm stocks to output
or to final sales in real terms as of the second quarter appeared to be close to
the post-World War II average. After the revision the ratio looked clearly
high. The difficulties with the statistics stem from inadequacies in the
basic data pertaining to inventory book values and from difficulties in
adjusting book values to GNP concepts. The problem has become complicated recently because, with the rapid rise in prices, many companies have
been shifting their accounting systems to the last in, first out (LIFO)
method. When prices are rising, the shift has the effect of reducing inventory
book values, profits, and profits tax liabilities from what they are under the
more commonly used first in, first out (FIFO) or average cost methods. The
issue is discussed more fully below in connection with profits and the inventory valuation adjustment.
Changes in the accumulation of automobile stocks (treated more fully
in connection with consumer spending) had a pronounced influence on the
rate of nonfarm accumulation (Table 3). The general explanation of the
nonauto inventory investment total is that stocks were low in relation to outTABLE 3.—Change in nonfarm business inventories in constant (1958) dollars, 1973-74
[Billions of dollars; seasonally adjusted annual rates]
Total
nonfarm
Period
1973: 1.
_
IV
_
II
III
1974:
1
II
III
IV
.
Source: Department of Commerce, Bureau of Economic Analysis.
40
Auto
Other
5.4
6.3
6.2
17.9
0.4
.7
-.7
3.8
5.0
5.6
6.9
14.1
8.7
6.4
3.9
8.8
-5.1
-2.7
-.3
4.5
13.8
9.1
4.2
4.3
put or sales through 1972 and 1973, and so businessmen made special efforts
to increase their holdings. Expectations of further price increases strengthened the motive for further accumulation. The buildup of stocks appears
especially heavy in late 1973 and early 1974; the latter period coincided with
the phasing out and elimination of price controls. When final sales failed to
improve after the first quarter, businessmen, realizing that stocks on hand
and on order were too high, began to reduce their commitments and in the
summer were making small production adjustments. Aggregate stocks were
not cut in any quarter of 1974, however, and as sales weakened the pace of
production cutbacks accelerated in the closing months of the year.
HOUSING
Despite initiatives by the Administration and Congress to support mortgage markets the downturn in starts and homebuilding that began in early
1973 continued last year. Housing accounted for fully half of the decline in
real output from 1973 to 1974 and was the only major market sector to
decline throughout the year. The current decline, which has clearly been
the most pronounced since the end of World War II, followed one of the
most extended rises in housing activity on record.
In the spring of 1974 there were signs that the housing downturn might
be coming to a halt. The outflow of funds from thrift institutions during
the summer of 1973—the process known as disintermediation—reversed in
late 1973 and early 1974 as short-term interest rates declined. On a seasonally
adjusted basis, starts leveled out in the neighborhood of 1.6 million units
in the first half, while sales of single-family homes in the March-May
period were almost one-fourth greater than they had been in the DecemberFebruary period. The recovery was aborted, however, when market interest
rates turned up again, reaching historical highs in July and August. Outflows
from thrift institutions were heavier and lasted longer than they had in
1973, mortgage commitments were cut back, and starts fell to an average of
989,000 units in the fourth quarter. The large overhang of unsold units
undoubtedly contributed to the low rate of starts.
CONSUMER INCOME AND SPENDING
From 1973 to 1974 real disposable income fell 2^4 percent, the first annual decline since 1947. Both the decline and its magnitude were highly
unusual. In other recession years real after-tax income rose by varying
amounts, ranging from 0.4 percent in 1949 to 4.1 percent in 1970. The
consequence of last year's real income reduction was a decline in real consumer spending of 254 percent, the first decrease since 1942. It is also possible that last year's drop in real spending was affected by the decline in real
money balances and the stock market.
The decline in real disposable income occurred in spite of a 9.0 percent
rise in nominal personal income and a rise of 8.6 percent in wages and
salaries. Large as these increases were, they were smaller than the 11.4
percent increase in consumer prices (as measured by the deflator for per-
41
sonal consumption expenditures). Part of the rise in consumer prices was a
reflection of the increased cost of energy to the Nation. The value of U.S.
imports of crude oil and refined products alone rose by $18 billion last year,
and a significant portion of that was reflected in higher consumer prices.
The transfer of real income from U.S. residents to foreigners might have
been compensated for by offsetting policies of demand management, but
the Administration did not choose that course because of the seriousness of
the inflation problem and the expectation of a recovery in economic activity
during 1974.
There was also a shift of income last year from consumers to domestic
oil producers; and to the extent that some of this did not return to the
personal income stream via dividends and wages and salaries of workers
newly employed by the oil companies or their suppliers and contractors, consumers sustained at least a temporary loss of purchasing power.
Last year's decline in real disposable income was greater than the decline
in real personal income. Despite declines in real personal income in some
earlier recessions, real disposable income has never declined (annually)
because of the automatic working of the tax system. Last year's perverse
behavior of the tax system reflected the unusual coincidence of a decline in
real income in a period of rapid inflation. As inflation increased nominal
income, taxpayers were drawn into higher brackets under the progressive
tax system and were thus required to pay a larger share of their total income
in taxes.
Last year's decline in aggregate real consumer spending was concentrated
on expenditures for automobiles and parts and for energy. On balance, all
other real spending was about the same as in 1973. Shifts in consumer
spending during 1974 were dominated by the effects of the oil crisis in early
1974, by a partial recovery from those effects in the middle of the year, and
by a sharp reduction in auto demand coinciding with the price increases for
the new 1975 models in the last quarter of the year (Table 4).
Real consumer expenditures for energy (gasoline and oil, fuel oil and coal,
electricitv, and natural gas, measured in 1958 prices) fell about 7 percent
from 1973 to 1974 after having risen every year in the postwar period. In
the 3 preceding years these real outlays had risen at an annual rate of
4^2 percent. The 1974 decline in energy consumption accompanied a 29
percent rise in energy prices as measured in the consumer price index
(GPI), or 30 percent as measured by the applicable consumption deflator.
The energy price rise was 16 percent greater than the rise in the overall
GPI. This too was a reversal of postwar experience, which had seen fairly
steady declines in the relative price of energy products. Real energy outlays
declined in the first quarter of 1974 to a level 12 percent below the 1973
average. They increased steadily thereafter so that by the fourth quarter the
decrease from the 1973 average was only V/2 percent.
On the surface the data for relative energy prices and real personal
consumption expenditures for energy suggest a much greater price elasticity
42
TABLE 4.—Personal consumption expenditures in constant prices, 1973-74
[Seasonally adjusted annual rates]
Addendum: Dealer sales of new cars3
(millions of units)
Personal consumption expenditures
(billions of 1958 dollars)
Period
Total
Autos
and parts
Energy i
All other
Total
Domestics
Imports
552.1
539.9
50.8
40.8
42.6
39.6
458.7
459.5
11.5
8.9
9.7
7.5
1.8
1.4
552.9
553.7
555.4
546.3
54.0
52.4
51.7
44.9
42.3
42.6
43.6
42.1
456.6
458.7
460.1
459.3
12.5
12.2
11.7
9.8
10.5
10.3
10.0
8.2
1.9
1.8
1.7
1.7
1974: 1
II
III
IV»
539.7
542.7
547.2
530.1
41.8
42.5
45.0
33.8
37.839.1
40.5
41.1
460.1
461.1
461.7
455.2
9.2
9.2
10.3
7.1
7.7
8.0
8.8
5.8
1.6
1.2
1.5
1.3
Percent change:
1973 to 1974 3....
-2.2
1973
19743
1973:
1
II
III
IV
1
3
3
..._
-19.7
-7.0
.2
-22.6
-23.0
-20. 4
Gasoline and oil, electricity and gas, and other fuel.
Total dealer sales, including sales to persons, business, and government.
Preliminary. Percent change for sales of new cars based on unrounded data.
Source: Department of Commerce, Bureau of Economic Analysis.
than had been widely expected at the end of 1973 and early 1974. As is
pointed out elsewhere in the Report, part of the price increase was not
measured, insofar as people had to wait in line to buy gasoline. In addition,
part of the consumption response represented voluntary conservation efforts
and the effect of Government regulations limiting automobile speeds to
55 miles per hour. Also, a milder than normal winter in 1973-74 caused fuel
oil consumption to be abnormally low. One should note that the full consumption-dampening effects of higher oil prices have not yet occurred, since
in the long run consumers have greater opportunities to adapt their consumption habits to the higher energy costs.
After having weathered the energy crisis in late 1973 and early 1974,
auto demand in the fourth quarter of 1974 was in a state of collapse. Why
this happened is still not entirely clear. About a year earlier, at the start
of the 1974 model year, the consensus forecast projected a decline in auto
sales from the boom rates of the 2 preceding years. The outbreak of the war
in the Middle East in early October 1973, the embargo in late October,
and the oil price rise in late December raised concern among consumers about
the availability of gasoline and led to sharper than anticipated cutbacks in
purchases, particularly for larger cars. Their concern was exacerbated by the
gasoline shortages of January and February 1974. Gasoline, which was subject to price ceilings and to allocation by the Federal Energy Administration, could be purchased in much of the country only by waiting in line for
long periods, and frequently it could not be obtained at all. Sales of new
large cars were especially poor. Consumer resistance to large cars on the
used car market was manifested in an unusual 15 percent decline in prices
from September 1973 to March 1974. Increased supplies of gasoline at filling stations during March and an end to the embargo in late March brought
43
a pickup in domestic car sales and in car output as well. The sales improvement was concentrated in the larger cars, partly at the expense of small cars.
Sales of imported cars, which had held up well during the winter, declined.
It was common knowledge during the summer that the new 1975 models
would show large price increases. Purchasing of the lower-priced 1974
models was consequently quite heavy. In October, when the new models were
introduced, sales fell far more than expected, and in November and December sales fell still more. With production substantially above the sales rate,
auto manufacturers initiated massive production cuts and layoffs in order to
reduce inventories.
The sales drop of late 1974 cannot be adequately explained by variables,
such as income, income change, relative prices, and automobile stocks held by
consumers, that have been used with some success in econometric estimates
in the past. One suggested explanation is the extremely low state of consumer confidence late in 1974, but this would imply a lack of confidence
over and above the uncertainties engendered by declining real incomes,
rising unemployment, and rising prices. Two peculiarities of the data are
worth pointing out. Suggested retail prices for new 1975 cars introduced in
October 1974 were about $400 higher than prices for the outgoing 1974
models. Only two-thirds of the price rise is included in the price indexes, the
other one-third representing federally mandated "quality improvement"
associated with emission controls. Consumers may have viewed the entire
amount of the rise as pure price increase. The second point concerns social
security taxes. In 1974, the taxable earnings base under social security was
raised by law from $10,800 to $13,200. This tax rise added $4.2 billion
(annual rate) to Federal receipts, half of which affected personal income.
According to the conventions used in the income and product accounts, the
increase in taxes became fully effective in the first quarter of 1974. In actual
practice, however, the increase in the tax meant larger payroll deductions in
the fall of the year for persons affected by the rise in the base.
In terms of full-year changes consumers reduced their real spending on
nondurable goods other than gasoline and fuel oil and on furniture and
appliances but raised their spending on services. Purchases of clothing and
shoes declined throughout the year, especially in the fourth quarter, while
spending on furniture and appliances weakened after midyear.
Table 5 shows the distribution of real disposable income into saving,
autos and parts, energy, and all other personal outlays. The slight increase in
outlays other than for autos and parts and energy, in the face of declining real income from 1973 to 1974, raises this share at the expense of
savings, energy, and autos and parts. The adjustment seems to have been
facilitated by the fact that the 1973 share of income devoted to saving
and to autos and parts, which are sometimes viewed as a form of saving
and investing, was high by historical standards.
44
TABLE 5.—Disposition of real disposable personal income, 1960—74
[Percent]
1960-72
average
Disposition of real income
Total disposable income.
Personal saving..
Personal outlays.
Personal consumption expenditures.
Autos and parts
Energy 2
All other
Transfers and interest
Addendum: Personal saving plus expenditures for autos and parts
1
Preliminary.
2
Gasoline and oil, electricity and gas, and other fuel.
1973
19741
100.0
100.0
100.0
6.6
93.5
8.2
91.8
7.8
92.2
91.0
6.8
6.9
77.4
89.1
8.2
6.9
74.0
89.5
6.8
6.6
76.2
2.5
2.7
2.7
13.3
16.4
14.6
Note.—Detail may not add to totals because of rounding.
Source: Department of Commerce, Bureau of Economic Analysis.
NET EXPORTS
Exports of goods and services rose 39 percent from 1973 to 1974, while
imports increased by 43 percent according to preliminary estimates. As a
consequence, net exports fell from $4 billion to $2 billion. In real terms
exports rose by 8 percent while imports were up only 1 percent. The stability in real imports reflected the weak domestic economy and the reduction
in petroleum imports. Implicit in the figures just cited is a worsening of the
terms of trade as import prices rose 41 percent and export prices 29 percent. This deterioration in the terms of trade provides part of the answer
to the decline in real incomes last year. The GNP deflator, which measures
the price of domestic output, rose 10.2 percent from 1973 to 1974. However,
prices of supplies available for U.S. purchasers (the implicit deflator of
GNP less exports plus imports) rose 11 percent.
COMPARISONS OF OUTPUT CHANGE
More than a usual amount of uncertainty surrounds the behavior of real
output in the first 3 quarters of 1974. The economic facts of these quarters
and their interpretation are of some importance because they had a bearing
on the stance of policy makers. The Administration believed that the growth
of output was being constrained by supply factors as well as by weak demand.
Despite the reduction in automobile production and in homebuilding, the
steel industry, to cite one important example, was operating at capacity for
much of the year, mainly because of high demand for capital goods. Consequently, given the behavior of other major indicators, there were genuine
questions about how much output fell in the first quarter and whether it did
not rise at all after that. Solid evidence supporting another pattern of real
GNP behavior is not available, but there are suggestions that output possibly
behaved a little differently, and that the recession phase of the cycle started
later in the year. Table 6 compares growth rates (annualized) for real GNP
and for the Federal Reserve Board (FRB) index of industrial production.
Compared to real GNP the FRB index fell half as much over the 3 quarters.
45
563-280 O - 75 - 4
TABLE 6.—Changes in industrial production, and nonfarm payroll employment and man-hours
associated with two- and three-quarter declines in real gross national product, selected periods,
1948-74
Percent change
Period
Real
GNP
Industrial
production
Nonfarm
payroll
employment
Private
nonfarm
employee
man-hours
TWO-QUARTER CHANGES
1948 IV to 1949 II
1953 II to 1953 IV
1957 III to 1958 1
1960 1 to 1960 III
1969 III to 1970 1
1973 IV to 1974 I I . .
-4.0
—2.4
-4.2
-.4
-1.9
-1.8
-3.9
-.6
-1.1
-2.2
-6.3
—4.7
-9.6
-3.7
-3.3
-1.2
-2.7
-1.1
-2.6
-.3
-3.2
-1.3
-2.7
-7.6
-6.0
-1.3
-2.3
1.1
-.4
-1.8
-1.7
.2
-.4
.6
.7
-.3
-.5
THREE-QUARTER CHANGES
1953 II to 1954 1
1960 1 to 1960 IV
1973 IV to 1974 III
1973 IV to 1974 1
1974 1 to 1974 II
1974 II to 1974 III
-.4
-.5
-.1
-.9
.4
.4
-4.4
-1.9
.1
Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics),
and Board of Governors of the Federal Reserve System.
It declined less than GNP in the first and third quarters of 1974, and in the
second quarter rose rather than declined. The behavior of the two measures
through the first 2 or the first 3 quarters of 1974 stands in marked contrast
to other periods when real GNP has declined.* On those occasions the decline in industrial production was always sharper than the decline in real
GNP. The behavior of real output in the first 3 quarters of 1974 also appears
puzzling when labor market behavior is examined. Employment in nonfarm
establishments rose by 1.1 percent from the fourth quarter of 1973 to the
third quarter of 1974, whereas during the output declines of 1960 and
1953-54 employment also declined.
It might be argued that, even though the industrial sector held up relatively well in the first 3 quarters of 1974, output in the nonindustrial sector
of the economy was weaker than in the past, partly because of the energy
crisis. Quarterly output data by detailed industry are not available. The only
comprehensive independent data are man-hours, which rose 0.3 percent
in the nonindustrial sector from the fourth quarter of 1973 to the third
quarter of 1974, in contrast to a 1.3 percent decline in man-hours in the
industrial sector. This comparison as well as those cited above raise the
possibility of labor hoarding. Many industries were unable to meet production schedules in 1974 because of various disruptions: materials shortages
were common for much of the year, skilled labor was scarce in certain occupations, and strike activity rose. It is not clear why labor hoarding should
have been especially large in the nonindustrial sector. Bottlenecks were
*The 3-quarter pattern would not be altered if real gross domestic product (GDP)
were substituted for real gross national product. It should be noted that from the
first to the second quarter, when GNP declined, GDP was unchanged.
46
presumably greatest in manufacturing, but manufacturing output and
productivity held up better in the first 3 quarters of 1974 than did real GNP.
No indicator of output is free of measurement problems. The FRB index,
for example, had problems last year associated with efforts by business to conserve electric power consumption because in some industries production is
measured by power consumption. The measurement of changes in real GNP
becomes very difficult when rates of inflation are very high and particularly
when they change. This is especially so when output is not changing very
much in either direction, which was the case for several quarters of 1973 and
1974. For the most part, real output is obtained by deflating various series
measured in current dollars. Particularly in nonconsumption sectors there are
numerous problems with the current dollar series. The deflation process itself
also poses difficulties in these sectors. The various wholesale price indexes
leave much to be desired, and the time distribution of prices embodied in the
current dollar series takes an uncertain shape, subject to change from one
quarter to another. As noted below, the measurement of inventory changes
is an especially acute problem.
PRICES, WAGES, AND PROFITS
The 11.0 percent rise in the GPI from 1973 to 1974 was the largest annual
increase since 1947 (Table 7). Although the rate of increase during the year
was fairly steady from quarter to quarter, there were important shifts in the
composition of the rises. Following the termination of controls on April 30,
1974, increases in food and fuel prices, which dominated changes in the GPI
early in the year, gave way to increases over a broader range of goods and
services. At the same time increases in wage rates began to accelerate, and
since output per man-hour was falling, unit labor costs rose rapidly. But
price increases for nonfinancial corporations as a group nearly kept pace
with unit labor and nonlabor costs over the 3 quarters for which data are
available, with the result that profits per unit almost matched those of 1973.
PRICES
Although prices of goods and services sold in final markets and measured
by both the CPI and the GNP deflator advanced at consistently high rates
from one quarter to the next during 1974 (Table 7), price weakness—in the
form of slower rates of increase and, to some extent, price reductions—developed in the spring and summer in crude and intermediate industrial product
markets. By late 1974 these changes were showing up to some degree in prices
of finished goods. From September to December, prices of finished goods
other than food in the wholesale price index (WPI) rose more slowly than
in the preceding 3 months. So did the nonfood commodity component of the
CPI, which reflected both the slower price rise at earlier stages of fabrication
as well as some shading of trade margins associated with the softening in
consumer demand. Still it will take several more months before the weakness in crude and intermediate industrial commodity prices is fully transmitted and reflected in the CPI and the GNP deflator.
47
TABLE 7.—Changes in selected price measures during 1974
[Seasonally adjusted]
1974
1973 IV
to
1974 IV i
Price measure
1973
to
19741
Percent change; annual r a t e 2
GNP implicit price deflator:
Total G N P . .
Private GNP
12.3
12.9
9.4
9.9
11.9
12.6
13.7
13.7
11.8
12.2
10.2
10.6
12.7
14.6
11.1
12.0
12.7
12.3
11.9
9.2
12.0
12.0
10.6
11.4
14.2
10.3
14.2
10.1
12.2
11.0
19.4
70.7
8.6
3.1
22.3
11.9
12.3
3.7
15.3
14.6
1.2
9.6
12.2
21.6
11.3
14.4
29.3
8.3
GNP fixed (1967) weight price deflator:
Total GNP
Personal consumption expenditures
Consumer price index:
All items
Food..
Directly purchased energy3
All other items
Percent contribution to change 4
Consumer price index:
All items
Food...
Directly purchased energy 3
All other items
100.0
100.0
100.0
100.0
100.0
100.0
38.6
27.8
33.6
7.2
12.4
80.4
22.1
3.5
74.4
28.1
.4
71.5
24.6
11.4
64.0
31.5
16.2
52.4
1 Preliminary for GNP price deflators.
2 Changes in GNP price deflators based on quarterly data; changes during 1974 are from preceding quarter. Changes
in consumer price indexes based on data for last month in quarter: for example, 1974 I change is change from December
1973 to March 1974.
3 Gas and electricity, fuel oil and coal, and gasoline and motor oil.
4
Detail may not add to totals because of rounding.
Source: Department of Labor, Bureau of Labor Statistics.
Crude and Intermediate Materials
Some slowdown in crude industrial commodity prices began to occur in
August 1973, when the rate of growth of output was slowing, but it came to
an abrupt end with the outbreak of war in the Middle East in October.
From then until the spring of 1974, crude industrial materials prices rose
sharply even though industrial output fell. Several measures of these prices
appear in Chart 2. The continued existence of shortages and their role in
limiting increases in output in early 1974 perhaps explain the continued
rise in crude commodity prices in the face of the drop in production.
Chart 3 plots 6-month rates of change in the WPI indexes for intermediate
industrial goods and for producer finished goods, and consumer finished
goods other than foods. The rise in the intermediate materials price index
began to slow in September. In the last 4 months of 1974 it rose at an
annual rate of 9.6 percent, compared to 39.5 percent in the first 8 months
of the year. This marked slowdown in the intermediate industrial commodity index, which accounts for 59 percent of the relative importance of
the WPI industrial component, reflects widespread deceleration in many
price series and absolute declines in others. Sizable declines were registered
from September to December in such commodity categories as cotton, wool
48
Chart 2
Prices of Raw and Crude
Industrial Commodities
INDEX, 1971=100
300
250
.
•
*
*
*
*
•
•
....-•••••••
THE ECONOMIST
INDUSTRIAL
MATERIALS
/ ' * \
\
—
/
/
200
./
BLS
SPOT MARKET
RAW INDUSTRIALS
/ -
150
100
FRB
INDUSTRIAL
MATERIALS
^ »
y
Z^L/--
_/ ^^l-~'
1
^>/ / , ' »•
1 1 1 1 I
,„
' '
1 1 1 1 1
I1
BLS
CRUDE MATERIALS
EXCLUDING FOOD
1 1 1 1 1
1973
1
1
1
1974
SOURCES: DEPARTMENT OF LABOR, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM,
AND THE ECONOMIST.
Chart 3
Changes in Wholesale Industrial Prices
PERCENT CHANGE FROM 6 MONTHS EARLIER
50
SEASONALLY ADJUSTED ANNUAL RATES
40
INTERMEDIATE MATERIALS,
SUPPLIES, A N D COMPONENTSJ/
/
30
20
CONSUMER FINISHED G O O D S i /
10
'
1972
1973
PRODUCER FINISHED
GOODS
1974
J/EXCLUDES INTERMEDIATE MATERIALS FOR FOOD MANUFACTURING AND MANUFACTURED ANIMAL FEEDS.
2/EXCLUDES FOOD.
SOURCE: DEPARTMENT OF LABOR.
49
1
and manmade textile products, leather, lumber and wood products, building paper and board, and nonferrous metals.
These developments at the intermediate stage of production began to be
reflected in finished goods prices late in the year. On the basis of 6-month
spans, the WPI for consumer nonfood finished goods reached a peak rate of
change of 26.8 percent in June, then slowed to about half that pace by the
end of the year. At first the slowdown reflected the leveling and subsequent
decline in gasoline prices and a marked slowdown in the rate of increase
of apparel prices. By year-end the slowdown became more pervasive, extending to other consumer nondurable goods and to consumer durables,
whose price increases had continued to accelerate generally for most of 1974.
Prices of foods at the farm level showed substantial increases in 4 of the
last 6 months of 1974, caused largely by the bad weather that cut harvests
below expectations. Between July and November sugar prices rose by 123
percent.
The decline in crude and intermediate industrial commodity prices together with the decline in manufacturing and trade margins more than
offset the rise in food prices in the latter part of the year. This fact is reflected in the overall slowdown in the rise in prices of commodities in the
GPI market basket during the last 3 months of the year. From September
to December they increased at an annual rate of 10.3 percent compared to
14.0 percent in the preceding 3 months. The decline in the rate of increase
for nonfood commodities was especially pronounced—7.3 percent as against
16.2 percent over the preceding 3 months.
Prices of services, the other major CPI component, also rose somewhat
more slowly late in the year. They had accelerated to a rate a little over
13 percent in the summer, as a result of sharp increases in prices of medical
care and other labor-intensive services, a marked boost in gas and electricity
rates, and the rise in mortgage interest rates.
The deflator for gross national product is derived in large part from the
GPI and to a lesser extent from various WPI components. It is calculated as a
quarterly average, and during 1974 its movements roughly paralleled those
of quarterly changes in the CPI, particularly when adjustments are made
to hold constant the weights in the deflator. For the year as a whole the
deflators on various bases increased somewhat less than the 11.0 percent
advance registered by the CPI.
WAGE RATES
Private nonfarm wage rates, the major element in employee compensation
per man-hour, rose 8.0 percent from 1973 to 1974 as measured by the Labor
Department's adjusted average hourly earnings index for production and
nonsupervisory workers. This was substantially less than the rise in consumer prices, and it followed a year of virtually no change in real wages similarly measured. The hourly earnings index (first column of Table 8) holds
constant the mix of employment by industry and excludes the effect that
50
T A B L E 8.—Components of percent change in compensation per man-hour in the private
sector,
1965-74
nonfarm
[Percent]
Production workers
Period
Hourly
earnings i
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
4.1
4.9
6.3
6.6
0.1
.3
-.3
.2
-.1
0.0
.1
.1
-.2
.2
-0.4
.7
.9
1970
1971..
1972
1973..
19742
6.6
7.1
6.5
6.4
8.0
-.2
.0
.1
.2
-.2
-.5
-.3
-.8
.2
-.1
5.3
6.5
7.7
7.2
.4
.3
-.4
-.3
6.3
9.7
11.0
9.8
-.3
-.1
.3
g
0.2
.6
.0
.3
.3
3.6
5.8
5.6
7.3
6.7
.7
-.9
-.4
-.2
.7
.3
.7
.7
.8
6.9
6.6
6.1
7.4
8.7
-1.0
.8
.8
.4
2.8
-1.6
-1.3
.8
3.9
.3
-.7
.4
11.4
6.3
6.1
8.5
-.6
-.8
-.3
.1
2.1
2.6
-1.1
-1.5
.4
-.1
.2
1.8
7.9
11.3
10.1
9.3
-.3
Change from preceding quarter: 3
1973: 1
II
Ill
IV
1974: 1
II
Ill
|V2
1
Adjusted for overtime in manufacturing and interindustry shifts.
Preliminary.
> Seasonally adjusted annual rates.
2
Source: Department of Labor, Bureau of Labor Statistics.
changes in overtime in manufacturing have on average hourly earnings. In
the 4 quarters ending in the first quarter of 1974, increases in the index
averaged 6.9 percent, fluctuating between annual rates of 6.3 percent and
7.7 percent. The rate of increase accelerated markedly after the end of
controls on April 30, and averaged 10.2 percent during the last 3 quarters
of 1974. The acceleration was widespread, affecting all major industry
groups.
The wage-rate increases in the last two-thirds of 1974 reflected pressures
placed on employers by workers whose real incomes had not kept pace
with inflation during 1973 and early 1974. The high rate of past inflation,
besides inducing a sharp rise in strikes, led to a considerable step-up in the
size of first-year wage increases (Table 9 ) . It also led workers and their
unions to raise their expectations about the size of future price increases.
To hedge against such prospects, broadened use was made of escalator
clauses in labor agreements. During 1974, such clauses were newly incorporated in agreements covering 869,000 workers, the largest increase in workers so covered since 1971. At the end of December 1974, 5.3 million workers
of the 10.3 million covered by private nonfarm collective bargaining agreements affecting 1,000 or more workers had escalator clauses in their contracts,
the largest percentage of such workers ever covered by these clauses.
51
T A B L E 9.—Changes in major collective bargaining settlements, 1973-74
1973
19741
Type of change and industry group
III
III
IV
Percent
Current quarter settlements:
First year wage change (annual rate).
5.5
6.2
5.8
5.5
6.2
9.2
11.1
10.3
Percent of workers covered by current quarter settlements a
12
18
10
13
5
15
16
5
Quarterly percent changes
3
Effective wage-rate change:
Total effective changes
Adjustment resulting from:
Current decision
Prior decision
Escalator provision
Manufacturing
Nonmanufacturing excluding con
struction
_
Construction
Transportation and public utilities..
Wholesale and retail trade
Services
1.2
1.9
2.3
1.2
1.2
2.9
3.4
1.5
.3
.6
.1
1.0
.7
.3
.9
.9
.5
.5
.3
.3
.3
.6
.3
1.6
.9
.5
1.9
.9
.5
.7
.3
.5
1.0
1.9
2.1
1.6
1.4
3.5
3.0
1.9
1.4
1.6
2.9
1.5
1.9
1.8
2.9
1.0
4.0
2.0
2.0
.8
.3
.5
1.0
1.2
1.3
.6
1.3
1.4
.9
1.7
4.3
.9
3.7
1.9
3.9
3.1
4.7
3.1
2.5
1.2
.8
.6
1.8
1.0
L3
1.3
1.4
1
Preliminary.
Percent of estimated number of workers under major collective bargaining settlements.
Effective wage-rate changes are wage-rate changes actually going into effect per worker under major contracts in the
respective quarters resulting from major collective bargaining settlements, made that calendar year, plus deferred increases in accordance with prior year contracts plus escalator adjustments.
2
3
Note.—Data relate to settlements covering 1,000 or more workers in private nonfarm industries.
Detail may not add to totals because of rounding.
Source: Department of Labor, Bureau of Labor Statistics.
The effect of broadened use of escalators and the sharp rise in 1974 in
the CPI made wage increases effected through cost-of-living clauses a somewhat more important element in total wage increases in 1974 compared to
1973. The full effects of last year's record inflation on escalator clauses will
not be evident until the final quarter of the current year.
Compensation per man-hour (last column of Table 8) is not adjusted for
changes over time in manufacturing or for interindustry shifts, but it is
a more useful indicator of labor costs to employers than adjusted hourly
earnings because of its comprehensiveness. Despite the shift in employment
away from high-wage industries in 1974 and the decline in manufacturing
over time, compensation per man-hour rose more rapidly than adjusted
hourly earnings in 1974. This was mainly a reflection of rapid wage increases
for employees other than production workers.
NONFINANGIAL CORPORATIONS
Some perspective on recent wage changes and their relation to profits and
prices is provided by Table 10, which pertains to nonfinancial corporations.
The table shows first of all that unit labor costs rose almost three times as
52
TABLE 10.—Changes in prices, costs, and profits per unit of output for nonfinancial corporations,
1969 to 1974
(Percent change]
1969
to
1970
Item
1970
to
1971
1971
to
1972
1972
to
1973
1973
to
19741
Percent change per unit of output:
Prices
_
Employee compensation...
Compensation per man-hour.
Output per man-hour
Other costs.
Capital consumption allowances.
Indirect business taxes 2
Net interest
Profits plus inventory valuation adjustments
Percent change in output
3.4
9.5
4.0
7.4
3.2
11.3
9.0
-2.0
-1.0
.7
9.5
.8
-2.4
—2.6
9.8
8.1
12.5
9.8
-.8
.0
8.1
4.1
8.5
7.8
-2.4
4.5
3.6
6.3
7.1
.8
11.9
2.2
7.1
4.8
1.9
1.8
6.3
4.4
4.6
9.6
9.2
31.0
4.8
5.9
.0
-17.9
10.9
—1.4
3.2
-.7
1
2
3
Preliminary. Compensation per man-hour and output per man-hour estimated by the Council of Economic Advisers.
Includes business transfer payments less subsidies.
Before taxes.
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor
Statistics).
fast in 1974 as in 1973, a result not so much of rising compensation
per man-hour as of the decline in productivity. The year-over-year
decrease was the first since 1958, when this productivity series was begun. A
second contrast with 1973 is the sharp rise in costs other than labor costs.
Many of these in aggregate tend to be relatively fixed and consequently rise
most rapidly per unit when output rises more slowly or declines. Third, even
though real wages declined, so did profits. According to preliminary estimates, profits before taxes and including IVA fell about 3 percent, of which
about 2j4 percent represented the drop in output while the remainder reflected lower profits per unit. The profits performance is much poorer
when allowance is made for petroleum profits. Domestic profits of oil companies approximately doubled from 1973 to 1974, while those of all other
nonfinancial corporations fell by about 11 percent.
Last year was the second successive year in which the performance of both
profits plus IVA and real nonfarm wages was mediocre or poor. The reason
is that key elements of the 1973 and 1974 price rises reflected in the consumer prices originated outside the corporate sector. In 1973, a good part
of the price rise reflected increased income of farm proprietors, while in
1974 the further rise was significantly affected by prices paid to foreign oil
producers.
The profits just cited are those as measured in the national income
accounts, and they include the IVA. Profits before taxes as reported by nonfinancial corporations to stockholders and used as the basis for calculating
tax liabilities—that is, profits excluding the IVA—rose 16 percent, following
increases of 21 percent in 1972 and 26 percent in 1973.
53
Profits data are currently subject to a good deal of uncertainty, whatever
basis is used, because many companies are changing their methods of accounting. Even if there were no changes in accounting, the large increases in
prices and shifts in their rate of increase would make the calculation of the
IVA more difficult than usual.
Recent shifts in accounting methods for the purpose of reducing tax liabilities involve large sums and are probably more widespread than at any time
since the years following the end of World War II. Most companies use the
FIFO or average cost method of accounting, under which items are charged
out to costs of goods sold in the same order that they are charged in to inventories. When prices are rising, the prices at which items are charged to
costs will ordinarily be lower than the prices of items in closing inventories,
that is, those purchased in the most recent period. The FIFO method has
the effect of inflating closing inventories and profits. Under an alternative
system, LIFO, the items bought in the most recent period are the first to
be charged to costs, so that what is left in closing inventories will be lower in
price. In periods of rising prices, profits will be lower in this system than
those calculated under FIFO.
In calculating the inventory change component of GNP, the Department
of Commerce attempts to estimate the change in the physical volume of inventories during a quarter and to value the change at prices current during
the quarter. This calculation is an approximation of the results obtained
through the LIFO system. The difference between the GNP inventory
change figure and the change in the book value of inventories is the inventory valuation adjustment, and it has ordinarily been deducted from corporate profits and proprietors' income for purposes of national income
calculation. It is sometimes referred to as "inventory profit." This portion
of profit can be used for other investment or dividend payments only if the
inventories are liquidated.
Profits are also affected by inflation through the use of historical costs
rather than replacement costs in calculating depreciation. The Department
of Commerce has estimated that, other things being equal, the use of replacement rather than historical costs to calculate depreciation would reduce
the share of profits as a percentage of gross corporate product in 1974 by
approximately 3 percentage points.
REAL INCOME
Table 11 brings together several measures of nominal and real income and
earnings, some of which were discussed earlier in this chapter. From 1973 to
1974, per capita personal income in real terms (1958 dollars) declined 2.8
percent, by far the largest of the four annual declines since the earlv postWorld War II period. For reasons already noted, real taxes per capita also
rose so that real per capita disposable income declined bv 3.4 percent.
Transfer payments on a per capita basis continued to increase rapidly
from 1973 to 1974, although the increase in real terms (5.7 percent) was
54
TABLE 11.—Changes in selected measures of income, earningsy and taxes; 1969—74
[Percent change; annual rate]
Current dollars
Constant dollars *
Measure
1969
to
1973
1972
to
1973
1973
to
19742
1969
to
1973
1972
to
1973
1973
to
1974 2
Per capita personal income measures:
7.9
10.9
8.3
3 5
5 0
-2 8
7.2
9.5
8.0
7.7
14.6
18.9
14.5
11.8
5.7
8.2
15.9
13.4
-23.1
15.4
23.0
5.4
11.8
4.9
17.9
70.0
15.9
11.3
12.1
7.6
2 8
3.4
9.9
15.0
9.9
7.3
1.4
3.8
3 8
9.9
7.6
-26.3
9 1
16.8
.0
6.0
—3 0
-5.8
5.7
50.0
4.1
.0
.6
-3.4
Compensation per man-hour:
Private nonfarm employees *
6.8
7.4
8.7
1.7
1.1
-2.1
Earnings of production or nonsupervisory workers in private
nonfarm industries:
Average hourly earnings
Average weekly earnings
6.6
6.1
6.8
6.8
7.7
6.2
1.6
1.1
.7
.5
-3.1
-4.3
Median usual weekly earnings of full-time wage and salary
workers;*
All 16 years and over
Males 25 years and over
Females 25 years and over
*6.0
•6.3
«7.7
Personal income
Wage and salary disbursements and other labor
income
All other earned income
Transfer payments.
State unemployment insurance
other
.
::::"
Personal contributions to social insurance
Personal taxes..
__
Disposable personal income
Median annual family income:
All families
Families with male head
Families with female head
Addendum:
Personal consumption expenditures deflator
Consumer price index
6.3
7.9
8.3
6.3
6.8
8.4
9.3
4.7
8.5
4.3
4.9
5.6
6.2
8
1.2
•1.7
«2.8
1.3
1.8
—.2
-4.1
-1.9
-2.2
2.1
2.9
2.2
11.3
11.0
1
Per capita personal income measures deflated by the personal consumption expenditures deflator. All other measures
deflated by the consumer price index.
2 Preliminary.
8
Compensation excludes employer contributions to social insurance.
* Data related to earnings in May of each year.
' Changes from 1969 to 1972. Data for 1973 not exactly comparable with data for earlier years because of changes introduced in 1973 in the collection and tabulation of the May data.
Sources: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census), Department of Labor
(Bureau of Labor Statistics), and Council of Economic Advisers.
below the average for recent years. Transfers now make up more than
12 percent of personal income. To some extent the rise in transfer payments
reflected the onset of the recession. The increase in unemployment not only
led to a 50 percent increase in real unemployment insurance benefits, but it
also probably increased the number of persons eligible for welfare benefits
such as food stamps arid Aid to Families with Dependent Children (AFDC).
Excluding unemployment benefits, real per capita transfers rose by 4.1
percent.
The major factor underlying the decline in real per capita personal income
was the sharp decline in real earnings of wage and salary workers, whose income makes up about 70 percent of personal income. This decrease in real
earnings of wage and salary workers is also evident in other available measures of earnings from various sources.
55
Real hourly earnings of production or nonsupervisory workers in private
nonagricultural establishments fell, and their real weekly earnings fell
still more, since hours worked per week for this group declined from 37.1
in 1973 to 36.6 in 1974. The more comprehensive measure of employees' real
earnings, compensation per man-hour, declined by 2.1 percent excluding
employers' contributions for social insurance.
Since information is not given on the characteristics of persons holding the
jobs included in the establishment series, one cannot tell to what extent
average earnings are affected by changes in the experience or skill mix of
workers. Over the past decade the rapid rise in the proportion of workers
with less market experience—young people and women—had a depressing
effect on average annual earnings.
What the monthly establishment data do not show can be seen in earnings
data that are now being collected each May from households. They provide
information on all wage and salary workers, with specific demographic
breakdowns. As indicated in Table 11, from May 1973 to May 1974 the
usual weekly earnings of all full-time workers declined on the average by
about the same amount as weekly earnings of production workers. However,
the decline for adult men and adult women was not as great as the overall
drop.
Data on earnings or income of families and individuals are not yet available for 1974. Undoubtedly the real income of most groups fell and probably
by more than weekly earnings would suggest, because of the increase in unemployment and the resulting decline in weeks worked per year. Income data on
an annual basis are now available for 1973, which was a year of strong
increase in real family income compared to the whole period 1969-73.
The gains of 1973 may well have been canceled, however, by the losses of
1974.
LABOR MARKET DEVELOPMENTS
Labor markets underwent major changes last year (Table 12). From the
fourth quarter of 1973 to the fourth quarter of 1974 unemployment increased
by 1.8 million and the unemployment rate increased from 4.7 to 6.6 percent
(Chart 4). Accompanying this rise was a continued strong growth in the
civilian labor force participation rate, particularly among women and
youths. Civilian employment rose through most of the year but fell very
sharply in the last 2 months of 1974, so that in December it was half a million lower than a year earlier. An analysis of the general nature of unemployment appears in Chapter 3.
The rise in unemployment during 1974 was not continuous, but
occurred mainly in two separate spurts, from the fourth quarter of 1973 to
January 1974 and in the 4 months after August 1974. The year started
with a sharp rise in the unemployment rate, from 4.7 percent in the fourth
quarter of 1973 to 5.2 percent in January 1974, largely as a result of layoffs
attributable directly or indirectly to the energy crisis. The employment effects
56
TABLE 12.—Labor market indicators, 1973-74
[Percent; seasonally adjusted]
1974
1973
Indicator
1974
1973
IV
III
Millions of persons
88.7
84.4
4.3
Civilian labor force
Employment
Unemployment
91.0
85.9
5.1
89.8
85.6
4.3
90.5
85.8
4.7
90.6
86.0
4.7
91.4
86.4
5.0
91.8
85.7
6.1
Percent
Civilian labor force participation rate >
60.8
61.2
61.1
61.3
61.1
61.4
61.4
4.9
5.2
.9
2.7
5.6
6.1
1.0
3.6
4.7
5.2
.9
2.7
5.1
5.6
.9
3.2
5.1
5.6
1.0
3.3
5.5
6.0
1.1
3.4
6.6
7.2
1.2
4.3
2.9
5.3
3.3
6.7
2.9
5.4
3.1
6.0
3.1
6.1
3.3
6.6
3.7
8.3
4.8
8.8
4.3
3.9
4.9
3.0
5.6
4.3
2.7
5.7
10.6
5.7
5.4
6.2
3.2
6.4
4.6
3.0
4.8
8.8
4.2
3.9
4.8
3.0
5.5
4.3
2.6
5.3
8.6
5.0
4.8
5.4
2.9
6.0
4.6
2.7
5.3
10.0
5.0
4.7
5.3
3.1
6.1
4.3
3.1
5.6
11.3
5.6
5.0
6.5
3.4
6.4
4.5
3.0
6.9
13.4
7.5
7.3
7.9
3.6
7.3
5.2
3.2
1.9
.8
2.2
2.4
.8
2.3
1.8
.8
2.1
2.2
.8
2.1
2.2
.8
2.2
2.3
.8
2.4
3.1
.9
2.6
.14
.24
.16
.09
.34
.33
UNEMPLOYMENT RATES
All civilian workers
Labor force time lost2
Unemployed 15 weeks or longer3
State insured *
._
Occupation
White-collar workers.
Blue-collar workers
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
REASON FOR UNEMPLOYMENT 6
Job losers
Job leavers.
Reentrants and new entrants
_
STRIKE ACTIVITY
Days idle as percent of estimated working days 7 ..
1
2
Civilian labor force as percent of civilian noninstitutional population.
Hours lost by the unemployed and persons on part-time for economic reasons as a percent of potentially available labor
force
hours.
3
Unemployment rate calculated as a percent of civilian labor force.
4
Insured unemployment understate programs as a percent of covered employment.
5
Includes mining not shown separately.
8
Unemployed as percent of civilian labor force.
7
Not seasonally adjusted. 1974 is preliminary.
Source: Department of Labor, Bureau of Labor Statistics.
of the energy crisis tended to be highly concentrated. During the period of
the embargo, from November 1973 to March 1974, the number of private
nonfarm payroll jobs fell by 8,000, but the declines in energy-related sectors
were substantially greater (Table 13).
A partial recovery from the worst effects of the energy crisis helped
stabilize the unemployment rate at approximately 5.2 percent in the first
half of 1974. In the spring and summer quarters employment showed
moderate increases that reflected divergent trends. Continued weakness in
housing brought steady decreases in employment in contract construction,
57
Chart 4
Unemployment Rate
PERCENTJ/
10
SEASONALLY ADJUSTED
0
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974
^/UNEMPLOYMENT AS PERCENT OF CIVILIAN LABOR FORCE; QUARTERLY.
SOURCE: DEPARTMENT OF LABOR.
and sluggish demand and the need to trim inventories brought decreases in
employment in nondurable manufacturing. Employment in motor vehicles
regained some of the ground lost in the winter, but durable goods employment was otherwise almost unchanged. The rise in nonfarm employment that
did occur was attributable largely to trade, services, and State and local
governments.
The unemployment rate increased rapidly during the last few months in
the year, rising from 5.4 percent in August to 7.2 percent in December. In
the fourth quarter the general weakening in demand and output brought
widespread layoffs in both nondurable and durable manufacturing—notably
in motor vehicles—as well as in trade. The continuing decline in construction exacerbated the deteriorating situation.
The increase in unemployment in the last quarter was very large among
blue-collar workers, particularly operatives, for whom the jobless rate increased by 2.5 percentage points to 9.6 percent. However, even wholesale and
retail trade experienced a sharp seasonally adjusted increase in unemployment, especially in December, a reflection of the weakness in retail sales.
From 1973 to 1974 the civilian labor force rose by 2.6 percent, a very
large increase by postwar standards. The 2.2 percent rise from the fourth
quarter of 1973 to the fourth quarter of 1974 was less than the increases
during 1972 and 1973 but slightly above the trend rate. Continuing past
58
T A B L E 13.—Changes in employment in the private nonfarm economy: total and selected energy-related
industries, November 1973 to March 1974
[Seasonally adjusted]
Change in employment
Industry
Total private nonfarm
Energy-using:
Motor vehicles and equipment
Gasoline service stations
Motor vehicle dealers, retail
Other transportation
Hotel and other lodging places..
Substitutes for imported oil:
Oil and gas extraction
Coal mining
_.
_.
Source: Department of Labor, Bureau of Labor Statistics.
trends, the civilian labor force participation rate increased in 1974. It rose
0.4 percentage point to the post-World War II record high level of 61.2
percent. Participation rates did not increase among all demographic
groups. The rate decreased for men, aged 55 and over, chiefly as a consequence of earlier retirement. However, the trend toward earlier retirement
was slowed, presumably because of the effects of inflation on fixed incomes,
including private pensions. Participation rates for women aged 25 to 54
continued their dramatic long-run increase, with the rate of increase somewhat higher than in recent years. As writh older men, labor force participation rates decreased for women over 55 years of age. The rate increased
sharply for young persons aged 16 to 24 of both sexes, reflecting the continued increase in participation for students, later marriage for women,
a later age at which they begin childbearing, and greater participation
among young mothers.
FISCAL POLICY IN 1974
Fiscal policy turned out to be tighter during 1974 than was anticipated
last February in the 1975 budget, largely because the unanticipated acceleration of inflation lifted Federal revenues. In February 1974, a rising
budget deficit was projected for calendar 1974. The projected increase in the deficit from 1973 to 1974, however, was not due to an expansionary shift in fiscal policy. Rather, the operation of the automatic
stabilizers was expected to raise the budget deficit because it was
anticipated that the economy would grow at less than its potential. The fact
that economic activity was weaker than projected should have caused an
even larger deficit automatically at given rates of inflation. In fact, however,
there was no automatic fiscal stabilization to cushion the decline in real
income since the revenue-reducing effect of lower real incomes was offset
59
by the revenue-increasing effect of inflation. Furthermore, the growth in real
Federal spending was reduced. As a result, the actual deficit remained small
and showed no tendency to rise until the fourth quarter of 1974.
In February 1974, the Administration estimated that unified budget outlays would be $274/ 2 billion and receipts $270 billion for fiscal 1974, leaving
a deficit of $4/ 2 billion. While the deficit turned out to be only $1 billion
lower, actual outlays fell $6 billion below the February estimate. The $3billion increase in proprietary receipts, primarily oil and gas royalties and
lease payments, is treated as an offset to outlays in the unified budget, and
this accounts for part of the decline. Although the rate of growth of outlays
was 1 percentage point less than that of GNP from fiscal 1973 to fiscal 1974,
receipts grew by 4 percentage points more. The disproportionate rise in
receipts is attributable largely to high rates of inflation.
FEDERAL EXPENDITURES
On the national income accounts (NIA) basis, actual Federal expenditures
rose from $264 billion in calendar 1973 to $298/ 2 billion in 1974 (Table 14),
a rise of 13 percent. This increase was unusually large in nominal terms and
exceeded the rise in GNP; but it was small in real terms, considering
the 10 percent rise in the GNP price deflator from 1973 to 1974. In fact, the
use of specific deflators appropriate for the major components of Federal
spending suggests that real Federal expenditures increased by only 2 percent from 1973 to 1974. Furthermore, even in nominal terms most of the
TABLE 14.—Federal Government receipts and expenditures, national income accounts
basis, calendar years 1973-74
[Billions of dollars]
1974
Receipt or expenditure category
1973
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.
Purchases of goods and services
Defense
._
Other
Tra nsfer payments
Grants-in-aid to State and local governments
Net interest paid
Subsidies less current surplus of government enterprises.
Less: Wage accruals less disbursements
Surplus or deficit ( — ) .
February
1974 budget1
projection
Actual 2
258.5
289.8
291.1
114.1
43.7
21.2
79.5
131.8
43.3
26.9
88.6
131.2
49.1
22.0
88.7
264.2
301.5
298.6
106.6
74.4
32.2
95.5
40.5
16.3
5.3
.0
117.0
78.4
38.6
116.8
45.9
20.5
1.4
.0
116.4
78.6
37.9
117.0
43.7
18.8
2.1
-11.7
-7.6
-5.6
1
February 1974 projected percent changes applied to revised 1973 actual data. Excludes transfer of $2.1 billion worth
of rupees to the Indian Government, which was included in the February budget. This transfer was not included in NIA
expenditures
as was originally anticipated.
2
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.
60
major expenditure components turned out to be lower than projected in
February; only transfer payments were slightly higher.
The distribution of Federal expenditures in 1974 continued to shift toward transfer payments and away from purchases of goods and services,
especially for defense. While purchases rose 9 percent from 1973 to 1974,
transfer payments increased by 23 percent. The small rise that did occur in
defense purchases was due largely to increased costs of operation and maintenance, including higher fuel costs. As in the previous year, the effect of pay
increases on personnel expenditures was offset to some extent by the continuing reduction in the size of the Armed Forces, as the transition to an allvolunteer system was completed. Federal nondefense purchases rose, in
part because of the 4.8 percent pay increase for civilian employees
in October 1973 and the 5.5 percent increase in October 1974. While net
purchases by the Commodity Credit Corporation declined, other nondefense purchases, including expenditures for medical research and veterans'
hospitals, rose.
Several factors contributed to the large rise in Federal transfer payments
to persons from 1973 to 1974. Old-age, survivors', and disability (OASDI)
benefit rates were increased by 7 percent in April and by an additional 4
percent starting in July 1974. From 1973 to 1974, the number of beneficiaries of old-age and survivors' insurance rose by 3J/2 percent while the number
of disabled beneficiaries climbed by more than 9 percent. The increase in
social security benefits under the OASDI programs thus accounted for
almost one-third of the $21-billion increase in Federal transfer payments to
persons. In addition, hospital and medical insurance benefits (medicare)
increased by $2.5 billion. The supplemental security income program,
which was initiated in 1974 to replace federally aided State programs of
assistance to the aged, blind, and disabled, increased Federal transfer payments by $4 billion while reducing grants to State and local governments
by $1}4 billion. The costs of the Food Stamp Program climbed by over $1
billion to $35/2 billion in 1974. Unemployment insurance benefits jumped
by $3 billion, and smaller increases occurred in veterans' benefits and in
civil service and military retirement programs. Net transfer payments to
foreigners increased little.
As a result of nonrecurring factors, mainly the shift to transfers under
the supplemental security income program, Federal grants-in-aid to State
and local governments grew at a slower rate than total expenditures from
1973 to 1974, increasing from $401/2 billion to $44 billion. Increases in education programs, some of which had been deferred in 1973, and in medicaid accounted for most of the $35/2 -billion rise. Grants for general revenue
sharing continued at the rate of $6 billion per annum.
FEDERAL RECEIPTS
Federal receipts (NIA) rose from $258/ 2 billion in calendar 1973 to an
estimated $291 billion in calendar 1974, an increase of I2/2 percent compared to the 8 percent rise in nominal GNP. The rise in receipts during a
http://fraser.stlouisfed.org/
563-280
O - 7 5 - 5
Federal Reserve Bank of St. Louis
61
period when real GNP declined by 2 percent is explained by the disproportionate impact of 10 percent inflation on the tax liabilities of individual
taxpayers and corporations.
In particular, inflation has raised the share of personal income that is
paid in Federal income taxes because personal exemptions, low-income
allowance and standard deduction limits, and tax brackets are fixed in
nominal terms. Income taxes account for about 95 percent of personal tax
and nontax payments in Table 14. Personal income minus transfer payments—a rough proxy for income subject to the personal income tax—
rose 8 percent from 1973 to 1974, but this increase produced a 15 percent
jump in personal tax receipts. The 6/ 2 percent rise in the real Federal tax
burden of persons was distributed regressively by income classes, because
those generally low- and moderate-income taxpayers who do not itemize deductions are subject to larger percentage increases than most higher-income
individuals.
Inflation may have increased the average tax rate of corporations even
more than that of persons. As explained earlier in this chapter, during
periods of rising prices, taxable book profits tend to be overstated because
the cost of goods sold does not fully reflect the current replacement costs
of inventories and of capital goods used in production. Even though profits
as measured on the NIA basis did not rise from 1973 to 1974, and although profits, including not only the inventory valuation adjustment
but also a "depreciation valuation adjustment," have fallen, corporate profits
tax accruals rose by 12^2 percent because book profits increased by 15 percent. The shift of many firms to LIFO inventory accounting prevented this
disparity from being even greater and is estimated to have reduced corporate
profits tax accruals by $2 billion belowr what they would otherwise have been
in 1974.
Federal contributions for social insurance rose by 11J/2 percent in 1974.
Social security contributions (OASDHI) account for about three-fourths
of the receipts for social insurance, with other retirement programs and unemployment insurance taxes making up the bulk of the remainder. Since the
number of workers contributing to social security at any time during
the year is estimated to have increased by 2 percent from 1973 to
1974, almost all the rise in contributions for social security was due to the
increase in taxable wages and salaries per employee. The maximum amount
of annual earnings subject to the 11.7 percent payroll tax on employers and
employees combined was raised from $10,800 in 1973 to $13,200 at the
beginning of 1974. This statutory increase accounted for about $4 billion
of the $9-billion increase in contributions for social insurance. The tax base
was raised to $14,100 at the start of 1975.
BALANCES OF THE FEDERAL BUDGET
Actual Federal budget deficits (NIA) remained remarkably small and constant until late in 1974. From the third quarter of 1973 through the third
62
quarter of 1974 the seasonally adjusted quarterly deficits clustered in the $1billion to $3-billion range (Table 15), even though the unemployment rate
rose from 4.8 percent to 5.5 percent.
The full-employment surplus continued to rise through the third quarter
of 1974 as it had throughout 1973, with full-employment receipts rising by
about 2 percentage points faster per quarter than full-employment expenditures. Over the entire 6 quarters from the first quarter of 1973 to the third
quarter of 1974 the full-employment surplus rose by $35 to $36 billion. The
increase was equivalent to 12 percent of 1974 full-employment expenditures.
Only once since the Korean war was there a comparable rise in the full-employment surplus relative to expenditures, and this occurred between the final
quarter of 1958 and the first quarter of 1960. However, very little of the shift
in 1958-60 was due to inflation. When the rate of inflation is low, changes in
the full-employment surplus are a measure of the budgetary implications of
shifts in discretionary fiscal policy at the constant level of resource utilization
expressed in official estimates of potential GNP at current prices. The higher
the rate of inflation, the less this interpretation applies, since the effect of
inflation on either the actual budget or the full-employment budget is
generally not neutral.
In fact, changes in the full-employment budget surplus in the last 2
years have not been due mainly to discretionary fiscal policy shifts but to
changes in the relation between Federal expenditures and receipts that have
resulted from high and variable rates of inflation. Since the first quarter of
1973 there have been no major statutory tax changes, apart from annual
increases in the taxable earnings base under social security. Hence, most of
the increase in the Federal full-employment budget surplus has been
due to the slow growth of real Government expenditures in 1973 and in
the first half of 1974, and to unlegislated increases in taxation through the
rise in average tax rates induced by inflation.
If inflation had continued at the same 7.4 percent annual rate that was
registered in the GNP deflator from the fourth quarter of 1972 to the fourth
quarter of 1973, and if the actual IVA is used, then estimated full-employment receipts would have been $8/ 2 billion lower in the third quarter of
1974 (annual rate). Since the IVA would, in fact, have been considerably
less than the $51.2 billion recorded in the third quarter if the rate of inflation
had not risen, allowing for this fact would reduce full-employment tax
receipts by another $5 to $7 billion in that quarter, because taxable corporate profits would have been lower. (Taxable corporate profits at full
employment since 1973 are estimated at 8% percent of potential GNP
in current dollars plus the actual IVA.) If prices had risen less rapidly
in 1974, the measured shift toward restraint would have been less, since
unanticipated increases in inflation initially raise Federal expenditures
much less than Federal taxes, which respond almost immediately.
Uncertainty about the rate at which potential output grew in 1974 affects
the reliability of the full-employment budget estimates more than in pre-
63
vious years. If potential GNP in constant dollars, that is, the output normally
consistent with 4 percent unemployment, grew by only 3 percent from the
fourth quarter of 1973 to the fourth quarter of 1974 because of the reduced
availability of energy supplies, the full-employment budget surplus would be
$2/2 billion lower in the third quarter of 1974 than currently estimated. In
the full-employment estimates in Table 15, potential output growth was
assumed to be 4 percent each year through 1974.
After adjusting for increases in the rate of inflation and the possibility of reduced potential growth at the rate of 3 percent in 1974, the fullemployment budget surplus would still have grown by between $17 billion
and $20 billion from the first quarter of 1973 to the third quarter of 1974,
or by around $3 billion per quarter. Even at its 1973 rate, inflation would
have caused the increase in full-employment receipts greatly to exceed the
rise in full-employment expenditures last year.
An additional complication arises because the composition of expenditures
has changed increasingly from purchases of goods and services to transfers.
As recently as 1969, Federal purchases were more than half of expenditures;
TABLE
15.—Actual and full-employment
Federal and State and local government
and expenditures, national income accounts basis, calendar years 1971—74
receipts
(Billions of dollars; seasonally adjusted annual rates]
State and local government
Federal Government
Calendar ysar
Expenditures
Surplus
or deficit
(-)
Receipts
198.5
227.2
258.5
291.1
220.3
244.7
264.2
298.6
-21.9
-17.5
-5.6
-7.6
249.1
255.0
261.8
268.3
260.2
262.4
263.4
270.6
278.1
288.6
302.8
Combined
surplus
or
deficit
Expenditures
Surplus
or deficit
152.2
177.2
193.5
207.7
148.8
164.9
184.4
206 0
12.3
9.2
1.7
3.4
-18.5
-5.1
3.5
-5.9
-11.2
-7.4
-1.7
-2.3
190.3
192.0
194.6
197.3
177.0
181.7
186.2
192.7
13.2
10.4
8.4
4.6
2.1
3.0
6.7
2.3
281.0
291.6
304.7
-2.8
-3.0
-1.9
200.6
205.3
210.9
197 4
203.3
208.8
32
2.0
2.1
.4
-1.0
.2
216.4
232.4
265.9
319.9
217.9
242.7
263.1
296.5
-1.5
-10.3
28
23.4
159.3
182.0
196.0
220.5
148.8
164.9
184.4
206.0
10.5
17.2
11.6
14.5
9.0
6.9
14.4
37.9
253.8
261.2
270.2
278.3
258.9
261.2
262.5
269.7
-5.1
-.1
7.7
8.6
191.7
194.0
197.4
200.8
177.0
181.7
186.2
192.7
14.7
12.3
11.2
8.1
9.6
12.2
18.9
16.7
296.1
312.9
333.0
279.4
290.1
302.6
16.6
22.9
30.4
208.3
215.9
224.2
197.4
203.3
208.8
10.9
12.6
15.4
27.5
35.5
45.8
Receipts
(-)
(-)
Actual:
1971
1972
1973
1974 1
.
.
.
..
..
1973: 1
II
III
IV
1974: 1
II
III
Full-employment: *
1971
1972
1973
19741
1973: 1
II
Ill
IV
1974: 1
II
III
1 Preliminary.
3 The net increase in overwithholding 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.
64
by 1974 they had fallen to less than 40 percent. Transfer payments to persons have a smaller impact on aggregate demand than purchases because
not all of the transfer payments are spent by the recipients. Thus the aggregate demand resulting from a given total of Federal expenditures is less if
these expenditures are weighted increasingly toward transfer payments.
While the previous adjustments would make the shift in the Federal fullemployment budget surplus considerably smaller than shown in Table 15,
this adjustment would work in the opposite direction by showing less growth
in the weighted than in the unweighted expenditures.
THE STATE AND LOCAL AND THE COMBINED BUDGET BALANCES
In fiscal 1973, State and local governments registered a surplus of $12
billion (NIA basis), while the Federal Government had a deficit of $15
billion. The advent of general revenue sharing and the rapid growth of
the economy may have boosted the State and local government surpluses
temporarily during this time. As expenditures accelerated subsequently,
State and local surpluses declined from a record $19 billion in the fourth
quarter of 1972—the first quarter in which a general revenue sharing payment was made—to $2 billion in the second and third quarters of 1974.
The surplus of less than $2 billion registered for calendar 1974 was
far from sufficient to meet the actuarial funding obligations imposed on
pension plans for the employees of State and local governments. Since the
surplus of the social insurance funds approached $10 billion, other State
and local funds had a deficit of $8 billion.
Budgetary reserves are now so tight that the rise in State and local
expenditures will have to slow considerably to adjust to the reduced growth of
receipts, or taxes will have to be raised in a declining economy. The
full-employment surplus of State and local governments that held fairly
steady in 1973 and in the first half of 1974 is thus expected to rise sharply
in 1975.
While inflation has caused a disproportionate rise in Federal receipts,
State and local government receipts have grown little if any in real terms.
Though the relative importance of indirect business tax and nontax
accruals is falling rapidly, such receipts still account for more than 50
percent of total receipts of State and local governments. These taxes have
barely kept up with inflation. Losses in receipts from the lag in property tax
assessments and collections rise with the rate of inflation, and items whose
prices have risen disproportionately in recent years, such as food, are frequently exempt from sales taxation. Finally, the yield of ad rem taxes, which
are levied, for instance, in the form of a given number of cents per gallon of
gasoline or spirits, is invariant to inflation by definition, unless the tax laws
are changed.
At all levels of government combined, fiscal activity has become significantly less expansionary since the end of 1972. In 1972 the increase in the
full-employment surplus of State and local governments offset much of the
65
expansionary thrust of Federal fiscal policies. This surplus then changed
little from the second quarter of 1973 to the second quarter of 1974. It did
not begin to reinforce the increasing thrust of Federal fiscal policy toward
restraint until the second half of 1974.
MONEY AND CREDIT
Inflation and recession were reflected in the money and credit markets
last year. As the year began, interest rates were declining from the peaks
reached in the summer of 1973. The decline continued until March, and then
most interest rates rose steadily until August, when they began to decline
again. Interest rates typically decline in the early stages of recession. What
was not typical was that even after declining, interest rates remained high,
probably because of the persistent anticipation of high rates of inflation.
Stock prices also fell in 1974. By the end of the year, stock price indexes
stood well below the lowest point reached during the 1970 recession.
There exists no dependable theory of stock market prices. Yet last year's
trend in the market probably had to do with the high level of interest rates
as well as with a profits record that has been poor for some time, if adjustments are made for specific components of book profits that reflect merely
the inflationary revaluation of inventories and of fixed capital consumption.
Mortgage-lending thrift institutions suffered a contraction in deposits as
depositors shifted to higher-yielding assets, particularly during the summer
months. By late in the year, however, deposits were again flowing into thrift
institutions as market rates of interest fell relative to rates paid on deposits.
Until late in the year commercial banks faced rapidly growing loan demands
that led them to borrow heavily from the Federal Reserve at times and to
keep their reserve holdings close to the legal minimum. The ability of banks to
expand deposits further or to absorb drains of reserves was impaired. Along
with a number of other factors this liquidity squeeze contributed to a few
bank failures both here and abroad.
MONETARY AGGREGATES
The goals of monetary policy underwent several important changes during
1974. The aim of Federal Reserve operations, at least until late in the
year, was to moderate further the growth rates of the monetary aggregates
in order to slow both the expansion of total spending in the economy and the
rapid rise in bank credit. Growth rates in monetary aggregates and in total
spending tend to move in similar patterns, and the underlying policy objective
was to provide monetary and financial conditions that would be consistent
with an abatement of inflationary pressures. Because of the uncertainties
associated with the economic effects of the oil embargo, monetary policy
actions in late 1973 and early 1974 were allowed to depart temporarily from
the longer-term monetary objectives. During the second and third quarters
of the year, as the economy was recovering from the initial impact of the
embargo, the Federal Reserve acted to bring down the growth rates of the
66
aggregates, so that they would be more in keeping with the longer-term
targets. By October, however, the signs of weakness developing in the economy began to prompt a return to a slightly more expansive set of monetary
actions. These actions, including reductions of legal reserve requirements,
first led to a reduction of the outstanding borrowings of the commercial banks
from the Federal Reserve but are expected to show soon in the monetary
aggregates.
For the year as a whole the growth of the monetary aggregates decelerated
significantly, as is indicated in Table 16. From the fourth quarter of 1973 to
the fourth quarter of 1974, monetary aggregates, as measured by either Mi,
Ms, or Ma grew at rates that were 1 to 2 percentage points lower than the
rates of the preceding year. The acceleration in prices last year meant a
somewhat more pronounced effect than is indicated by the numerical size of
the monetary deceleration. Real balances declined as a result of a monetary
policy that was unwilling to accommodate economic expansion until the
steepness of the price trend was reduced.
The policy of monetary restraint did cause strains in credit markets. Yet
even if monetary policy had been such as to permit rapid inflation, large
strains would have developed. If lenders fear long-lasting steep inflation
they insist on interest rates that rise steeply with the maturity of the loan,
but given the uncertainties of the outlook, such terms entail large risks for
the borrower.
Monetary policy actions are the major determinant of growth in monetary
aggregates. One measure of monetary policy is the rate at which the Federal
Reserve System adjusts member bank reserves available to support private
deposits. A more comprehensive measure of policy actions, the adjusted
monetary base (defined in footnote 1 to Table 16) has served as a guide to the
effects of policy actions on monetary aggregates in recent years. Money
growth rates sometimes diverge from growth rates in these measures of
monetary policy, but money does tend to grow rapidly when reserves and
base money grow rapidly. This is true, as is the inverse, even for short periods such as from the first to the second half of 1974.
Several developments beyond the control of policy makers affected growth
rates in monetary aggregates during 1974. One such factor was the remarkable growth in large negotiable certificates of deposit (CD's) issued by
banks—42 percent from December 1973 to December 1974. Banks are permitted to pay competitive interest rates on these deposits, and they were
induced to do so last year by the strong demand for bank loans. Although
large certificates of deposit are not included in M1? M., or M.{, reserves that
the banks must hold against them do reduce the amount of reserves available
to support deposits that are included in measures of the money stock. Thus,
given the rate of expansion in bank reserves, the rapid growth in CD's led to
slower growth in M1; M2? and M:{.
The public also increased its holdings of currency relative to its holdings
of demand deposits and total deposits during 1974, a shift that reduced
67
TABLE 16.—Measures of monetary growth and monetary policy, 1972—74
[Percent; seasonally adjusted annual rates]
Measures of monetary growth
Measures of monetary policy
Mi
M2
M3
Demand
deposits
plus
currency
Mi plus
time deposits
other than
large CD's
M2 plus
deposits at
nonbank
thrift
institutions
Period
Adjusted
member bank
reserves
available
to support
private
deposits 1
Adjusted
monetary
base 2
Change from corresponding period a
year earlier:
1972: IV
1973: IV
1974: IV3
7.7
6.3
5.1
10.9
8.9
7.8
12.9
8.9
7.0
9.1
9.4
9.1
8.0
7.6
8.4
5.9
7.4
3.6
3.5
9.9
8.5
6.4
6.6
9.4
7.5
5.3
6.0
5.3
16.1
12.7
2.7
8.6
9.1
5.4
10.4
Change from preceding quarter:
1974: 1
II
Ill
IV 3
1 Adjusted by Federal Reserve Board to reflect the effects on available reserves of changes in required reserve ratios.
2 "Adjusted monetary base" is member bank reserves plus currency held by the public and by nonmember banks,
adjusted for reserve requirement changes and shifts in deposits.
3 Preliminary.
Sources: Board of Governors of the Federal Reserve System and Federal Reserve Bank of St. Louis.
the growth rates of Mi, M 2 , and M 3 . While currency grew at a 9.9 percent
rate from December 1973 to December 1974, demand deposits grew at
only 2.9 percent, and total deposits—excluding large CD's—at 7.3 percent.
Currency tends to grow faster than demand deposits when interest rates
rise, because demand for currency is less interest-elastic than the demand
for demand deposits.
Concurrently, the public increased its holdings of time and savings
deposits relative to demand deposits. The rise in interest rates paid on time
and savings accounts relative to the zero legal rate paid on demand deposits
probably played a large role in this development. The smaller required
reserve ratios on time and savings deposits permitted banks to increase the
stock of these deposits much more than they curtailed the stock of demand
deposits. The result was that M 2 and M 3 , which include time and savings
deposits other than large CD's, grew much faster than Mi, which does not.
INTEREST RATES
Interest rates on most of the debt instruments included in Chart 5 rose in
1974 to the highest levels ever recorded in the United States. Inflation and,
more importantly, the expectation of continuing rapid inflation were major
factors underlying these high interest rates. When lenders of money expect
prices to rise, they demand an inflation premium—a higher rate of interest—
to protect the real value of their loans. Borrowers, also expecting higher
prices and incomes, are willing to pay interest rates that would force them out
of the market in periods of stable prices.
68
Chart 5
Interest Rates
PERCENT PER A N N U M
14
SHORT-TERM
12
FEDERAL FUNDS
10
3-MONTH TREASURY BILLS
(New issues)
0
I I I I II 1I I I I I I i I I I II I I I I I I II 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 l I I I I I I I I I I I
1969
12
1970
1971
1972
1973
1974
LONG-TERM
10
-
NEW HOME MORTGAGES
(FHLBB)
^ ^ ^
CORPORATE Aaa BONDS
,,,1^^^
8
6
U.S. GOVERNMENT BONDS
A
4
2
0
HIGH-GRADE
MUNICIPAL BONDS
-.
-
I I 1 111 I I I I I I I | | I 11 1 1 1 I 1 1 1 1 1 I 1 I I 1 1 I 1Mill
I I I I I 1 1 1 II 1 1 1 1 1 1 1 1 1 1 1 1 1
1969
1970
1971
1972
1973
1974
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.
69
Although interest rates reached unprecedented heights in 1974, they generally remained well below the rate of inflation. For instance, 3-month
Treasury bill rates averaged well below 9 percent for 1974, while prices rose
an average of more than 10 percent. The real rate of interest on bills was
thus negative, and those who held bills through the year transferred real
wealth to the borrower, the U.S. Treasury in this case. Although similar
transfers occurred throughout the financial markets, the largest were probably transfers from owners of ordinary deposits in thrift institutions to some
of the mortgage holders who borrow from these institutions.
Legal interest rate ceilings for deposits of banks and thrift institutions
(regulation Q) placed these institutions at a competitive disadvantage, particularly during the summer and early autumn months when market interest
rates were highest. Commercial banks were generally more successful than
thrift institutions in paying competitive interest rates to their depositors, mainly by issuing large certificates of deposit on which they legally
could pay a competitive rate of interest. These deposits, as noted earlier,
grew very rapidly during 1974. Thrift institutions issued similar instruments
on a much smaller scale. Since their portfolios contained a large proportion
of old mortgages yielding low-interest returns, they were less able than banks
to compete for funds by paying higher interest rates to depositors. Some
banks also attracted funds by issuing variable interest rate bonds through
their holding company affiliates. Legislation passed in October enables the
Federal Reserve Board and the Federal Deposit Insurance Corporation
(FDIC) to apply regulation Q to obligations issued by all federally insured
depository institutions, but neither the Federal Reserve Board nor the FDIC
has yet adopted regulations in this regard.
CREDIT MARKETS
Transactions in U.S. credit market in 1974 reflected the rapidly changing economic climate. The nominal value of net new funds raised in 1974
(annual rate for first 3 quarters) increased to $194 billion from the $187billion rate of 1973. The proportions of funds raised by categories of
borrowers also changed. As shown in Table 17, corporations and foreigners
increased their shares of total borrowings in 1974 while other borrowers,
notably governments at all levels and households, decreased theirs.
The increase in corporate borrowing reflected a more rapid increase in
requirements to finance fixed capital investment and inventories than in internal funds available for such expenditures. Nearly all of the large rise in
profits from 1973 to the first 3 quarters of 1974 was in the form of inventory
profits and was not available for new fixed capital investment.
The increase in corporate borrowing was concentrated in the short-term
markets. The strained liquidity of the banking system caused a sharp slowdown in the expansion of business borrowing from the banking system, and
a large increase in business borrowing through the commercial paper market.
Total corporate borrowings from longer-term capital markets rose slightly
70
TABLE 17.—Net funds raised in U.S. capital markets by nonfinancial
sectors, 1968-74
Period
Total
State
and
local
government
U.S.
Government
Households
Farm
and
nonfarm
noncorporate
business
Corporate
business1
Foreign *
Federally
sponsored
credit
agencies *
Billions of dollars; seasonally adjusted annual rates
1968-73 average
131.7
12.5
12.7
43.5
12.3
46.5
4.3
8.4
1973
187.4
9.7
12.3
72.8
17.9
67.2
7.5
19.6
194.3
8.6
14.5
54.2
15.5
84.1
17.5
18.3
177.3
206.5
199.1
8.7
2.1
15.1
14.5
17.4
11.5
51.4
53.6
57.6
10.7
18.7
17.0
78.0
89.7
84.6
14.1
25.1
13.3
9.3
24.3
21.2
1974: average of 3
quarters3r
I
II
111 3_
Percent of total
1968-73 average
100.0
9.5
9.6
33.0
9.3
35.3
3.3
6.4
1973
100.0
5.2
6.6
38.8
9.6
35.9
4.0
10.5
100.0
4.4
7.5
27.9
8.0
43.3
9.0
9.4
100.0
100.0
100.0
4.9
1.0
7.6
8.2
8.4
5.8
29.0
26.0
28.9
6.0
9.1
8.5
44.0
43.4
42.5
8.0
12.2
6.7
5.2
11.8
10.6
1974: average of 3
quarters'
L...
II.
111 3
1
Includes equity issues.
Not included in total since these agencies function as financial intermediaries between borrowers and lenders, and are
not final borrowers.
Includes issues of the Federal Home Loan Banks (FHLB), Federal Home Loan Mortgage Corporation (FHLMC), Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage Association (FNMA), and the guaranteed
securities
(backed by mortgage pools) of the Government National Mortgage Association (GNMA).
3
Preliminary.
3
Note.—Detail may not add to totals because of rounding.
Sources: Board of Governors ofthe Federal Reserve System, FHLB, FHLMC, and GNMA.
as a significant increase in corporate bond issues was only partly offset by a
decline in both corporate mortgage and equity financing.
The substantial increase in foreign debt raised in the credit markets in
1974 was related to two factors. The first was the use of U.S. banks as intermediaries in channeling funds from the Organization of Petroleum Exporting
Countries (OPEC) to the oil-importing nations. The second factor was the
removal in January 1974 of several regulations by the United States, including the Interest Equalization Tax and the Federal Reserve Voluntary
Foreign Credit Restraint Program, which had been designed to discourage
or restrict foreigners from raising funds in U.S. capital markets.
To the extent that increased foreign borrowing represents a "recycling" of
oil money, foreign participation in U.S. credit markets is likely to remain
high and will probably increase, at least for some time, beyond
the level reached during the first 3 quarters of 1974. To the extent that
this increase represents the effect of eliminating controls on foreign lending,
foreign participation is likely to remain above the levels prevailing when
controls were in force. Activity is likely to decline from its current high
71
levels, however, as the portfolio adjustment part of the increase stemming
from the removal of the controls is dissipated.
ASSISTANCE TO THE MORTGAGE MARKET
In response to the deteriorating conditions in the housing industry, the
Federal Government has provided substantially increased assistance to the
mortgage market through its sponsored credit agencies. Typically these
agencies increase liquidity in the mortgage market by providing advances
to, and purchasing mortgages from, mortgage lenders. They do this with
funds raised either by issuing debt instruments or by selling interests in pools
of mortgages they have purchased. As a result of these activities, thrift institutions and other mortgage lenders obtain funds at federally subsidized interest rates and thus are able to make additional mortgage loans.
Prior to 1973, net mortgage purchases by the federally sponsored credit
agencies had never amounted to more than $6.5 billion in any one year. In
1973 net purchases were $10 billion, and it is estimated that mortgage purchases of $15 billion or more were made by these agencies in 1974. Part of the
substantial increase in 1974 is attributable to special programs authorized
during the year for the purchase of up to $16 billion in residential mortgages, primarily on new homes, at interest rates below the market. Under
the so-called Tandem Plan the Government National Mortgage Association
(GNMA) was twice authorized to purchase FHA/VA home mortgages—
200,000 units valued up to $6.6 billion on January 21 and 100,000 units
valued up to $3.3 billion on May 10. Under the January 21 program commitments amounting to $4.8 billion were made for 200,000 units. On May
10 the Federal Home Loan Mortgage Corporation (FHLMC) was authorized to purchase $3 billion of conventional mortgages from the member
institutions of the Federal Home Loan Bank system. On October 18 purchases of $3 billion in conventional mortgages were authorized under the
auspices of a new GNMA Tandem-type plan that utilizes the services of
FNMA and FHLMG.
By the end of 1974 commitments to purchase roughly $ 1 0 ^ billion in
mortgages had been made under these programs, while $3^2 billion remained to be committed. Of the $10^2 billion, purchases amounting to over
$4 billion had actually been made.
In 1974, the Federal Home Loan Banks (FHLB) provided assistance to
the mortgage market by making net advances of $6.5 billion to savings and
loan associations. Included in this total is nearly the full amount of $4 billion
in internally subsidized advances authorized on May 10. These advances,
while substantial, were down slightly from the record $7 billion in net advances made during 1973. Several times during 1974 the Federal Home
Loan Bank Board also lowered the required liquid asset ratio for its member
thrift institutions, freeing additional funds for mortgage investment.
The maximum allowable interest rate on Veterans' Administration (VA)
and Federal Housing Administration (FHA) guaranteed mortgages was
72
increased administratively in several steps after January 21, 1974, from 8^4
percent to 9}4 percent, in response to rising market interest rates. It was
then lowered to the 9 percent rate permitted at the end of the year, as market
rates declined. Maximum loan ceilings and coverage rates for VA and FHA
guaranteed mortgages were also raised by the Housing and Community Development Act of 1974.
Finally, the Administration has continued to press for passage of the
Financial Institutions Act, first introduced in 1973. This act would, among
other things, broaden the lending powers of thrift institutions and phase out
interest rate ceilings on deposits at commercial banks and thrift institutions.
ENERGY DEVELOPMENTS IN 1974
The oil embargo of October 1973 and the energy price changes which
accompanied and followed it helped shape the performance of the economy
during 1974. The embargo was over in March, the shortages it created had
mostly passed by midyear, but adjustments to higher prices will continue
for some time.
In economic terms, the embargo and the accompanying reductions in
OPEC output were restrictions of supply which supported the announced
price increases for exported oil. The U.S. Government used price controls
and a quantitative allocation program at the wholesale level to dampen the
price increase. These actions did not necessarily reduce the harmful effects
of the embargo, but they did change the form in which those effects were
imposed on the public. Instead of paying still higher prices for oil, consumers suffered inconvenience and uncertainty in obtaining supplies and paid
higher prices for substitutes. As a whole, the Nation used available fuel supplies less efficiently and thus obtained less benefit from them because
price controls and allocation were imposed. Because of these actions the
United States may have experienced less inflation and probably achieved
lower unemployment than would otherwise have occurred. Analysis of this
period thus requires examination of the change in the cost of energy and its
effects on production, consumption, net energy imports, and inventories.
COSTS OF HIGHER ENERGY PRICES
One of the costs incurred because of the large increase in the relative
price (including inconvenience and unavailability) of energy was the loss
in current output. The higher energy price was transmitted into greater
price changes for some products than for others. Sales of the products bearing relatively greater price increases, and of complements to them, declined, causing unemployment and excess capacity in some industries. Some
of those unemployed resources could not be transferred easily to the production of less energy-intensive goods, even if demand for those products existed.
The more specialized the labor and capital services, the longer the delay
before they can adjust to new patterns of demand and production. Some of
the highly specialized factors of production thus may have become perma-
73
nently unemployed because they had no alternative uses. In terms of
labor, this unemployment sometimes took the form of destruction of human
capital because skills were no longer marketable. The increase in the
price of energy also led to a reduction in aggregate demand which, because
it was not offset by macroeconomic actions, lowered output as well. Expenditures fell because the income that was transferred abroad as a result of
higher oil prices was not fully matched by an increase in foreign demand
for goods and services. Additionally, the change in the relative price of
energy was so large that it may have disrupted consumption and investment
plans and lowered actual expenditures. Given sufficient demand, the loss
per unit of time declines as resources gradually adjust, but the loss in
accrued output is permanent. When resources are unemployed, net capital
formation is depressed along with current consumption. To some degree
then, the large increase in the price of imported energy led to some permanent reduction in the potential output of the economy.
Beyond the sharp short-run losses in output, consumption and investment
are lowered even when employment rebounds. Resources are diverted to
adjusting the economy to patterns of production and consumption that
accord with the new relative price of energy. Expansion of energy production, the substitution of capital for energy, and the "premature" replacement of a portion of the capital stock all absorb resources. These adjustments make the shortfall in production less than if the adjustments were
not made. However, the added output is at the expense of consumer and
alternative investment goods that could otherwise be produced. These adjustments are still in progress, and will continue so long as they lead to fuller
and more effective employment of resources. The largest part of the loss in
output from this process occurs in the intermediate period when the capital
stock is being revised, but to the extent that capital formation is reduced,
there is again a permanent loss in the ability of the economy to satisfy wants.
The economy is, of course, constantly in the process of adjusting to changed
relative prices. The energy episode requires comment only because of the
size and suddenness of the change which took place.
The above effects reduce the total output of the economy. In addition,
the increase in the bill for imported energy means that the benefit the
domestic economy derives from its production is reduced because greater real
resources are relinquished to the oil exporters. If oil exporters increase their
current imports of goods produced in the United States, this transfer is
immediate. To the extent that oil exporters hold dollars in banks or invest
in assets (stocks, bonds, certificates of deposit, real estate, and the like) formerly held by U.S. citizens, they secure claims to future output of this economy. Most of the increase in oil revenues of the exporting countries has taken
this latter, capital account form in various Western countries.
The shift in the relative price of all energy was initiated by the change in
the price of imported oil. The structure of the U.S. energy market is such
that the price of the approximately 15 percent of energy imported as oil sets
74
the unconstrained domestic energy price as well. Average domestic oil and
natural gas prices, however, have not been allowed to rise to the price of
imported oil and gas. Prices to consumers instead reflect the composite of
imported and controlled domestic prices. The result has been that the amount
of energy demanded has been larger than it would otherwise have been.
Most of the additional energy demanded is supplied by imports of oil.
Because of price controls more oil is imported, and it is consumed in producing goods and services of less value than those which must be surrendered to
acquire it.
More extensive analysis of the way the change in the price of energy
affected the major industrialized countries is found in Chapter 7. At this
point, however, examination of the course of energy prices since January 1,
1973, is useful in understanding these and other energy developments
during 1974.
PRICES
The recent rise in all energy prices was caused by the increase in the price
of imported oil, a result of the increase in payments to oil-exporting
governments. The pattern of increase in these payments per barrel is shown
by the tax-paid f.o.b. cost of "Saudi Arabian Light," a common reference
for world crude oil prices. The tax-paid cost of this oil was approximately
$1.10 per barrel in January 1971, $1.55 the following January, and $1.62
in January 1973. The cost rose to $3.15 in October 1973 and to $7.11 in
January 1974. Changes in pricing and sales arrangements after the first of
1974 make it difficult to compare current Persian Gulf prices with those
of earlier periods. Some inferences may be drawn, however, from the
change in the landed cost of crude as reported by the Federal Energy Administration (FEA). The oil from Saudi Arabia that landed in the United States
in December 1973 (presumably shipped prior to the embargo) carried an
estimated landed cost of $5.49. The estimated comparable cost after the
embargo ranged from $11.50 to $12.00. The effect of this pattern of changes
as it was carried through to the average refiner acquisition cost of imported
crude is shown in Table 18. The percentage of total refinery inputs from
foreign and domestic sources is also indicated.
The average refiner acquisition cost of domestic oil was affected also by
the price control program. The wellhead price of controlled oil was set at
$5.25 throughout 1974, but the price of domestically produced oil was not
subject to control if it fitted one of three categories: new, released, or
stripper. New oil is the amount produced from a property in excess of
the amount produced during the same month of 1972, subject to some
adjustments. Released oil is old oil from the same property equal to the
amount of new oil produced. Stripper oil is that produced from properties
where the average production during the previous month was less than 10
barrels per well per day. The proportion of uncontrolled crude tended to
decline during 1974, falling from 40 percent in January to 33 percent in
September and 34 percent in October.
75
TABLE
18.—Refiner
acquisition cost of crude petroleum and percent of
crude petroleum in refinery inputs^
1973-74
Cost (per barrel)
imported and
domestic
Percent of refinery inputs
1
Month
Composite
1973: September
October.
November
December
1974: January..
February
March.
April
May
June
July
August
September
October
November 2
Imported
Domestic
Imported
Domestic
$5.44
6.54
$4.54
4.91
6.49
8.22
$5.65
5.95
28
29
27
24
72
71
73
76
7.46
8.57
8.68
9.13
9.44
9.45
9.59
12.45
12.73
12.72
13.02
13.06
6.72
7.08
7.05
7.21
7.26
7.20
22
20
22
26
30
31
78
80
78
74
70
69
9.30
9.17
9.13
9.22
9.41
12.75
12.68
12.53
12.44
12.53
7.19
7.20
7.18
7.26
7.46
32
30
30
31
32
68
69
70
69
68
1
Stocks are assumed to be in the refinery stream and do not figure in this calculation. The base is the sum of imports and domestic production.
2
Preliminary.
Sources: Department of the Interior (Bureau of Mines) and Federal Energy Administration.
The rise in the proportion of domestic oil subject to control occurred in
part because properties were unable to maintain the production increases
over the same month in 1972 that were initially induced by greater demand
and the higher oil prices of 1973 and 1974. In time, as new oil discoveries
come into production, uncontrolled oil will rise as a proportion of the total.
Meanwhile the controls system explains the pattern in the cost of acquiring
domestic oil reported in Table 18. The price of uncontrolled oil did not rise
fast enough to offset all of the decline in its part of the total. This price
ranged between a low of $9.82 and a high of $9.98 during the first 8 months
of 1974. It rose rapidly in the next 3 months, however, reaching $10.83 in
November.
The price of coal, which is not controlled, rose rapidly during 1974. It
was pulled upward by the increase in the price of its major substitute,
residual fuel oil. The price of residual fuel oil is not controlled because most
of it is imported. The price of the other major fuel, natural gas, also increased, but not as much as that of petroleum or coal. Because most natural
gas is sold under long-term contracts, its average price is slow to respond to
an increase in demand. Federal controls on the price of gas sold for interstate
resale restricted the price change still further. Because of price control provisions that permit only the pass-through of costs, the price of refined
petroleum products rose approximately with the cost of crude oil to refineries. Electric power prices responded largely to increases in the cost of fuel
inputs. Table 19 shows that there were substantial increases only in coal
prices from 1964 to 1972. Prices rose fastest for refined petroleum products
in the last quarter of 1973 and the first quarter of 1974. The bulge in coal
prices occurred 2 quarters later. Natural gas prices have risen less than those
of the other two primary fuels.
76
TABLE 19.—Changes in wholesale frices of selected fuels, 1964 to 1974
[Percent change; quarterly rate]
Natural
gas
Coal
Period
Refined
petroleum
products^
Electric
power
Average quarterly change:
1964
1969
1972
1973
to
to
to
to
1969
1972
1973
1974
.
0.9
4.6
3.0
11.1
0.3
1.4
2.3
0.5
.7
5.1
0.1
1.5
1.7
.9
3.7
3.5
8.1
3.0
3.3
1.6
7.1
9.5
6.0
3.2
24.2
3.1
1.1
2.4
4.1
7.7
24.0
15.6
15.2
3.3
3.0
12.2
29.7
10.9
2.0
11.6
9.3
6.4
Change from 3 months earlier:
1973: March
June
September
December
1974: March....
June.
September
December
. .
.
...
1
Through February 1973 there were no lags in this series. Since March 1973, index numbers of the major products in
this series refer to prices of the previous month. The unlagged portion of the series has a very small weight.
Note.—The price changes shown in this table have been calculated from the wholesale price index, adjusted for the
lags embodied in some fuel price series. For example, changes shown in this table from June to September 1973, would be
presented in the wholesale price index as changes in natural gas prices from August to November, in refined petroleum
products and electric power prices from July to October, and in coal prices from June to September.
Source: Department of Labor, Bureau of Labor Statistics.
The price increases at the wholesale level were carried forward to consumers, though the proportional increases obviously were smaller. Gasoline
prices rose 35 percent from September 1973 (before the embargo) to December 1974. The increase for home heating oil was significantly greater—
69 percent—primarily because crude oil cost makes up a much larger part
of the final price of home heating oil than it does of gasoline. The price
of residential gas heating service rose 28 percent and of residential electricity
25 percent over the same September 1973-December 1974 period.
PRODUCTION
The increase in the relative price of energy during the past 2 years
and the expectations that preceded it have induced additional investment in energy-producing industries. Still more investment would have been
forthcoming had there been greater certainty about government policy
here and abroad and if specialized resources had been available. The situation in the petroleum industry, which includes natural gas as well as crude
oil, is indicative. Activity takes place in four stages: geological (seismic) exploration and selection of sites, exploratory drilling, development drilling, and
production. Table 20 presents data on drilling for the past 6 years and some
information on geological activity, which serves as a leading indicator for
drilling. The low point for seismic exploration came in 1970 and for drilling
in 1971. The increase in drilling in late 1973 and in 1974 was substantial.
In addition to the increases in wells actually drilled, still more drilling
would have taken place if shortages of equipment and skilled labor had not
restrained investment during late 1973 and all of 1974. Very little well-
http://fraser.stlouisfed.org/
563-280 O - 75 - (
Federal Reserve
Bank of St. Louis
77
TABLE
20.—Indicators of domestic petroleum ndustry investment, 1969—74
Crews
engaged
in seismic
exploration
Period
Exploratory
wells
Development
wells
Monthly average:
1969
1970
246
190
221
1971
1972
1973
19741
252
250
300
1974: 1
II
Ill
IV i
808
641
577
628
622
727
1.874
1,702
,577
,646
1,594
1,924
666
679
724
,869
1,895
838
2,194
1
Preliminary.
Sources: American Petroleum Institute and Society of Exploration Geophysicists.
drilling capacity (rotary rigs) was idle for lack of work, but shortages of
pipe idled or slowed some rotary rigs and delayed completion of some wells.
The backlog of orders for rigs and other oilfield equipment increased during
much of this period because production facilities were working at capacity.
The equipment shortages in part were the result of the general price control
system, that inhibited production and prevented efficient allocation of the
material that was available. To some extent they also resulted from the
lags inherent in expansion of large, capital-intensive production facilities.
The long decline in oilfield activity from its peak in 1956, when 58,000
wells were drilled, to 1971, when a low of only 27,000 wells of all types
were completed, left the oilfield equipment industry unprepared to meet the
requirements placed upon it.
Investment in the past has not been large enough to prevent the recent
decline in crude oil and natural gas output. Crude oil production in 1974
totaled 3.2 billion barrels, nearly 4 percent less than in 1973. Marketed production of natural gas in 1974 is estimated to be 3.3 percent lower than in
1973. Preliminary estimates show a 2.3 percent decline in the production
of natural gas liquids from 1973 to 1974. Increased drilling so far has only
slowed the rate of decline from what it otherwise would have been. It now
appears that domestic petroleum output may stabilize or even rise in 1977
when Alaskan reserves begin to produce, but no turnaround can be expected
before then. Natural gas supplies will not be forthcoming from Alaska until
the 1980's. Oil and gas production rates at the end of this decade, however,
can be strongly influenced by Government policy and by price behavior
during 1975 and 1976. The pattern of fuel production since 1963 is shown
in Chart 6.
Coal prices rose earlier than the prices of other fuels and on average have
risen more, but the increased revenues per ton did not flow through in their
entirety to incentives to expand production. In part they were absorbed by
increased costs due to the changes in health and safety standards. In addition,
when these standards were introduced, production capacity was lost because
78
Chart 6
Domestic Energy Production
INDEX, 1967=100
140
130
120
110
100
90
80
J
1964
I
|
1966
|
|
1968
I
I
1970
I
I
1972
1974
* COAL INDEX FOR 1974 EXCLUDES STRIKE MONTHS OF NOVEMBER AND DECEMBER.
SOURCE: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
some mines could not profitably comply and were abandoned. In part the
price increases were also offset by uncertainty due to legislation designed to
reduce industrial pollution. Because of this legislation, the anticipated market
for high-sulfur coal fell. Potential producers may have anticipated that Federal pollution standards could not be met by coal-burning facilities or that
States might impose more stringent controls. Finally, uncertainty about the
costs of possible mandated standards for strip mine reclamation discouraged
the opening of new mines and induced equipment manufacturers to defer
expansion of their production facilities. Despite these factors, the higher
prices for coal have elicited expanded capacity and greater output. New
mines have opened, and during October, the month prior to the 1974 strike,
total output reached a modern peak, the highest output since 1947. Production in 1974 was estimated to be 590 million tons, almost the same as in 1973.
Labor disputes and the unscheduled memorial walkout lasted approximately 7 weeks and resulted in the loss of an estimated 35 million tons of coal
production, about 5 to 6 percent of potential. Until the last quarter of 1974
coal production had been running 5.5 percent ahead of 1973. The gain was
more than eliminated in the last 3 months when output fell to about fourfifths of the comparable period in 1973. Inventories were somewhat depleted
because of the strike, and some export sales were lost, but the strike's disruptive effect was minimal except for the steel and railroad industries. Indus-
79
trial production losses from the strike were reduced by the planned overhauls
which took place in some of the major coal-using industries and by the softening of the economy.
Output from the other major sources of energy—nuclear power plants
and hydro stations—was constrained by capacity limitations. Production was
not affected during 1974 by changes in the relative price of fossil fuels.
The role of hydropower and nuclear power in U.S. energy production
remains small.
CONSUMPTION
A combination of increasing relative energy prices (including supply constraints during the embargo), declining economic activity, and voluntary
conservation measures caused a drop in energy consumption in 1974 compared to the previous year—the first since 1958. Total annual consumption
of energy for the past 10 years and year-to-year rates of increase are shown
in Table 21.
T A B L E 21.—Gross consumption of energy by major source, 1965—74
Total energy
consumption
Year
Percent of total energy consumption
Amount
(quadrillion
Btu's)
Percent
changel
1965
1966
1967..
1968
1969
53.3
56.4
58.3
61.8
65.0
41
5.8
3.3
6.0
5.2
100.0
100.0
100.0
100.0
100.0
43 6
43.2
43.5
43.8
43.8
30 2
30.9
31.3
31.7
32.3
22 3
22.1
21.0
20.5
19.6
3.9
3.7
4.0
3.8
4.1
0.1
1970.
1971
1972
1973
1974 a
67.1
68.7
71.9
74.7
72.7
3.3
2.3
4.7
3.9
-2.7
100.0
100.0
100.0
100.0
100.0
44.0
44.5
45.8
46.4
46.0
32.8
33.2
32.0
30.6
30.1
18.9
17.6
17.3
17.9
18.3
4.0
4.1
4.1
3.9
4.2
.3
.6
.8
1.2
1.4
Petroleum
Total
Natural
gas
Coal
Hydropower
Nuclear
.1
.2
1 Based on unrounded data.
2 Preliminary estimate by Council of Economic Advisers.
Note.—Detail may not add to totals because of rounding.
Source: Department of the Interior, Bureau of Mines (except as noted).
The use of primary energy for the production of electric power was significantly depressed. The consumption of electric power historically has
risen at a rate of about 7 percent per year. In 1974, however, there was no
increase at all over 1973. This absence of usual growth occurred despite the
fact that some of the fuel price increases have yet to flow through to electric
utility rates.
The consumption of coal was about the same in 1974 as in 1973, despite
the fact that energy use in aggregate declined. Coal use in electric utilities
was increased by 5 to 6 million tons, roughly 1 percent, through special
efforts to convert facilities from oil to coal and through more intense use of
coal generating plants. In addition to the oil shortage, the gap between the
80
cost of oil used by electric generating stations and the cost of coal widened,
increasing the incentive to use coal. Nevertheless there have been generally
adequate supplies of coal for electric generation. The major market for coal
has been steam electric plants, and air quality controls have made the economic use of much additional steam coal impractical or impossible in existing
facilities.
The consumption of oil, on the other hand, was restricted by lack of supply during the embargo and by lack of markets afterward. The allocation
policies in force during the embargo required reductions in consumption,
first to maintain and then to increase inventories. Some of the reduction in oil
usage was later made up; most was not. Other fuel developments, especially
the growing shortages of natural gas, increased the quantity of petroleum
consumed. In late 1974, when oil was freely available, more petroleum and
petroleum products were used directly and for generating electricity than
would have been used had natural gas been available. Despite these stimuli
to demand, total consumption of petroleum fell during 1974, reflecting both
its increased price and the economy-wide decline in output. One major
source of this decline was in motor vehicle fuel use. Gasoline consumption
fell by about 2 percent as miles traveled on highways declined by approximately 3 percent, the first year-to-year decline since World War II. The drop
in fuel consumption and miles driven occurred despite the fact that there
were 5.3 million more registered vehicles in 1974 than in 1973.
The pattern of consumption of energy by source over the past 10 years is
shown in Table 21. The striking shift evident there is in the role of natural
gas. After years of rapid growth, natural gas has been losing its market share
since 1971. The shift against natural gas has been caused by lack of supply,
not by a change in consumer preference or price. The relative price of gas,
already lower than other fuels on an energy-contained basis because of
regulation, fell even further against its competitors during 1974. As a consequence, the amount demanded, shortages, and nonmarket allocation all
reached higher levels in the gas industry in 1974 than before. The natural
gas situation is discussed below.
IMPORTS AND EXPORTS
The United States, a net importer of petroleum and natural gas and an
exporter of coal, has been a net importer of energy for two decades.
For a decade and a half petroleum imports were restricted to protect domestic oil producers against low-priced foreign oil. Since May 1973, however, no
quantitative restrictions have been in force. High-priced foreign petroleum
now supplements domestic supplies and fills the gap between energy demand
and domestic energy supply. For this reason, increases in U.S. energy production (except for coal) relative to energy consumption lead directly to reductions in oil imports. Gross imports of petroleum and petroleum products rose
from about 21 percent of consumption in 1965 to 36 percent in both 1973
and 1974. In absolute terms, imports in 1974 fell to 6.0 million barrels a day,
3 percent below 1973.
81
Goal is the only fuel the United States now exports on balance, with shipments of from 10 to 12 percent the size of the domestic market. Metallurgical
coal has found large and expanding markets abroad. Steam coal has moved
into foreign markets to some degree, and development of lower-sulfur
western mines may increase this trend. Exports of coal have not interfered
with the meeting of energy demand through domestic supplies, though the
external market has raised the price of coal inputs for both steam and metallurgical coal uses.
Natural gas is imported by pipeline and in minor amounts in liquefied
form. The primary source of pipeline imports is Canada; small quantities
are exported to Mexico and in a liquefied form from Cook Inlet, Alaska, to
Japan. The imports from Canada have played an important role in the
energy supply of some regions. According to some interpretations of recent
Canadian policy announcements, however, those imports (as well as imports
of oil from that nation) may be restricted in the future unless substantial
discoveries of new Canadian reserves are made. Already pipeline companies
have been required to accept sharply higher prices as of the first of 1975 or
face supply cutoffs at the end of 1976. The restriction of gas exports would
create serious problems for West Coast consumers, just as restriction of Canadian oil exports will harm the "Northern Tier" refiners of the Midwest.
INVENTORIES
The disruption in the petroleum supply in 1973-74 and the coal strike of
1974 made it clear how important adequate fuel inventories are to the continued smooth functioning of the economy. The adequacy of inventories is
partly a function of the consumption rate. More importantly it is a function
of the probability of unpredictable variations in consumption or in the rate at
which supplies are made available. End-of-month primary inventories for
the past 3 years, as measured by the number of days' consumption they represent, are shown for crude oil and important petroleum products in Table
22. These data indicate that inventories measured in this way did not
decline during 1974 even though the embargo lowered total oil supplies. The
regulations imposed by Government, voluntary conservation, a warmer than
normal winter, and the expectation of even higher prices in the future contributed to maintaining inventories at pre-embargo levels. A drawdown of
inventories would have reduced the actual cost of the embargo to the economy. However, it would also have increased the vulnerability of the United
States to a further tightening of the embargo, a sudden deterioration in the
weather, or an embargo which persisted beyond the actual termination point
of the 1973-74 episode.
Both crude oil and product stocks approached new highs for the season
as 1974 drew to a close. If inventories retain their current relation
to consumption, an embargo during early 1975 would find the United
States better prepared than it was in October 1973. Unfortunately, these
inventories may be drawn down for commercial reasons. A change in price
82
TABLE 22.—Petroleum inventories expressed as days of consumption, 1972-74
[Days]
Month
Crude i
Gasoline
Distillate
Residual
March:
1972
1973
1974
21.6
18.9
20.4
37.0
31.9
35.8
29.2
33.6
41.0
19.2
14.6
18.8
June:
1972
1973
1974
21.8
18.3
19.9
29.4
29.9
32.9
58.7
57.1
77.2
25.6
19.9
31.5
19.6
18.2
20.4
31.0
32.0
34.5
86.3
71.5
91.8
28.5
20.7
30.1
19 2
18.9
19.6
33.4
33.7
34.7
36.5
53.3
59.9
17.5
18.4
25.7
18.3
19.2
18.9
32.1
30.4
33.7
69.6
57.1
53.3
21.6
16.7
18.4
19.2
20.5
20.4
20.6
37.5
35.9
35.8
34.7
47.4
38.9
41.0
44.1
15.3
15.0
18.8
21.1
September:
1972
1973
1974
.
December:
1972
1973
19742.
Months of oil embargo:
1973: October
November
December
__
1974: January
February
March
April.
1
Crude stocks divided by average daily runs to stills.
2 Preliminary.
Sources: Department of the Interior (Bureau of Mines) and Federal Energy Administration.
expectations or in world oil market conditions may bring a rapid deterioration of the national petroleum inventory position. The threat of disrupted
supplies does not by itself guarantee retention of "excess" inventories by
commercial firms. Even though firms might expect a disruption, there is no
incentive for them to maintain expensive inventories to be used in that event
so long as they expect Government allocation and price controls to deny
them the inventory profits that might be earned. Consequently, although
inventories are now high, they cannot be considered secure.
Coal inventories were depleted during the coal strike but not dangerously so. By year-end, inventories were being rebuilt at a satisfactory rate.
The other fuels are not subject to inventory or else, like natural gas, inventories are limited to working stocks and some supplies for seasonal balance.
NATURAL GAS: A SPECIAL CASE
The only fuel in seriously short supply at the end of 1974 was natural
gas. The shortage of natural gas became more severe during 1974 and is
likely to get still worse in 1975. The shortage is taking the form of curtailments of deliveries under existing contracts and of failure among potential
consumers to obtain supplies at the going price.
The shortage of natural gas exists because the price of gas has been held
below the market-clearing level by Federal Power Commission (FPC) regulations. The FPC is required by statute to regulate the wellhead price of
natural gas sold for resale in interstate commerce. It controls the price of
83
approximately 60 percent of the gas produced in the United States. The
average price paid by interstate pipeline companies for regulated gas was
27 cents per thousand cubic feet in October 1974. That price was clearly
belqw the market-clearing level, as indicated by the higher price of gas sold
under unregulated conditions (though that price too is held down indirectly
by regulation), and by the price of natural gas substitutes.
The price of natural gas was below the price of its substitutes prior to the
energy price escalation of 1973, and the differential increased markedly
during the succeeding period. A rough measure of the price differential
is seen in the price difference in terms of energy content of coal, oil, and
gas in electric power plant use (Table 23). These data are the more
striking because gas requires no on-site storage and burns more cleanly
than other fuels. Buyers would be willing to pay a slight premium for gas
if it were available. Instead, as shown in the table, the average price of gas
is below the price of both coal and oil
TABLE 23.—Average price paid by utilities for major fuels,
1972-74
{Cents per million Btu's]
Period
Oil
Coal
Gas
37.0
37.3
57.7
61.0
30.3
1973:1
II
III
38.7
39 6
40.1
66.2
70 5
77.4
31.2
33 6
34.2
1973: October
November
December
41 9
44.0
45.5
88.9
104.0
121.1
35.5
35.7
1974: January _ .
February
March
April
.
May
June
51.4
56.9
60 8
64.0
65.8
69.5
162.7
187.3
189 1
187.2
187.9
195.1
42.5
43.6
44.0
47.9
72.9
77.3
79.1
196.4
196.2
195.4
49.8
51.8
52.4
CO 00
July
August . September
CO
1972: III
IV
Source: Federal Power Commission.
Because consumers were increasingly unable to obtain all the gas they
would have liked at the regulated price, nonprice rationing of natural gas
increased during 1974. Precise estimates of the quantity of gas which would
have been consumed if supply had been forthcoming are not available.
Recorded shortfalls of contractually obligatory sales amounted to about
9.6 percent of the volume called for during September 1973-August 1974.
These curtailments are expected to reach about 16 percent during the like
1974-75 period. The sales forgone under contractually "interruptible"
contracts were approximately 38 percent of the contract volumes during
the September-August period of 1973-74 and are expected to reach 58
percent in the same 1974-75 period. Because of the priority allocation system
adopted by the Federal Power Commission most of these shortages are
borne by industrial consumers, including electric utilities.
84
The effect of regulating the price of natural gas has been to increase the
demand for its substitutes, especially imported oil. The reasons are twofold:
First, the quantity of natural gas consumed by those who have preferential
access to it has been increased, leaving less for other consumers. Those thus
denied gas by regulation consequently consume more oil than they otherwise
would. Second, the lower price for natural gas has caused less of it to be
produced. Because imported oil makes up the difference between the demand for and the domestic supply of energy, the gas shortfall during 1974
was made up partially through greater consumption of higher-priced oil.
85
CHAPTER 3
Unemployment
EMPLOYMENT ACT OF 1946, which created the Council of
•*• Economic Advisers, set forth the goal of maintaining "maximum employment." The extent to which this objective is achieved is usually measured
by the unemployment rate, which has come to serve as a measure of the
extent of resource underutilization in the economy. For many it is also a
measure of economic and social hardship.
We are starting 1975 with the highest unemployment rate since 1958.
The story of the deterioration in the economy during 1974 and its effects
on the labor market is given in Chapter 2. This chapter examines the various
types of unemployment and unemployment rates at different points in time
and among demographic groups. It also looks at the welfare implications of
unemployment, and at Government measures to ameliorate the difficulties
caused by unemployment.
It is important to emphasize, because the point is often misunderstood,
that to analyze unemployment is not to provide excuses for it or deny the personal and social problems associated with it. The unemployment of persons
who seek work is costly to the workers themselves, their families, and the Nation as a whole. Our goal should be to reduce unemployment whenever this
can be done by means which are not more costly than the unemployment itself. It is therefore important to understand the different kinds of unemployment so that the effectiveness of alternative Government policies can be
properly evaluated. This chapter is intended to be a guide to the formulation
of constructive policies toward unemployment over the long run.
Unemployment is not as simple a concept as is often believed. The meaning
of any particular unemployment rate depends on the way unemployment
is defined and measured, and on the sources and composition of the unemployment. Although it is generally clear when we are at points of very high
unemployment and widespread underutilization of productive capacity, it
is much more difficult to determine when we are at "maximum employment." The unemployment rate of 7.2 percent reached in December
1974 clearly represents a substantial departure from maximum employment.
At the other extreme, under current definitions, a zero rate of unemployment
is impossible to attain, and efforts to do so would have undesirable consequences. Although the period following World War II was one of rapid
86
economic growth and rising levels of real income, the unemployment rate
averaged 4.7 percent from 1947 through 1973. Only during World War II
(1944), when 17 percent of the total labor force were in the Armed Forces,
did the rate ever fall close to 1 percent. An understanding of the issues
related to unemployment is needed to determine the extent to which a
particular rate is too high, or when the goal of maximum employment is
attained.
DEFINITION AND MEASUREMENT OF UNEMPLOYMENT
The major source of information on unemployment is a monthly Government survey of about 47,000 households, the Current Population Survey
or CPS. The survey includes detailed questions about the labor force status
of household members aged 16 and over, with the object of identifying
those who are employed, unemployed, or out of the labor force.
Persons are classified as employed if during the survey week they did
any work as a paid employee or in their own enterprise, or if they worked
15 hours or more as an unpaid employee in a family enterprise. Those temporarily absent from jobs because of labor-management disputes, bad weather,
vacation, or illness and other personal reasons are counted as employed,
regardless of whether they were paid during the week.
Persons are classified as unemployed if they were not employed during
the survey week but were available for work and had made a specific effort
to find a job at some time within the preceding 4 weeks, or if they were
waiting either to report to a new job within 30 days or to be recalled to a
job from which they were laid off.
The civilian labor force is the sum of those who are employed (excluding
the Armed Forces) and those who are unemployed. The unemployment rate
commonly reported is the number of unemployed persons as a percentage
of the civilian labor force.
The unemployment rate is, of course, a function of the specific definitions used and the manner in which the questionnaire is administered.
For example, in 1967 it was first stipulated that unemployment should
include those seeking work at any time during the preceding 4-week period
rather than the previously implied 1-week period. This change in definition
is believed to have increased the measured unemployment rate of women,
because many women are on the margin between being out of the labor force
and unemployed. The unemployment rate may also be affected by the expedient of relying on only one adult member of the household to report
for all members. The respondent may not be accurately informed about the
jobs held or sought by all household members. There is, for example, some
evidence from special surveys that teenagers give a different impression of
their unemployment and labor force participation when they respond directly
to the survey.
87
SOURCES AND NATURE OF UNEMPLOYMENT
Unemployment has several aspects that shift in relative importance from
time to time. Some portion of unemployment is cyclical; that is, it is
associated with the business cycle. Other unemployment is primarily a
consequence of frictional, structural, and seasonal factors. These components
of unemployment are analytical concepts and are difficult to identify empirically. It is nevertheless important to understand their differing nature.
FRICTIONAL UNEMPLOYMENT
The economy always generates a considerable amount of unemployment
resulting from the multiplicity of random events that occur in labor markets. Such unemployment arises partly as a by-product of normal economic
change—the closing of some firms, a slowdown in others, the opening and
expansion of still others, and changing production techniques within firms.
Partly in response to these changes, some workers are laid off and others quit
or enter or reenter the labor force. Many become unemployed during this
process because the matching of workers to the changing job openings is
seldom accomplished instantaneously. Unemployment may also arise as a byproduct of personal considerations, quite independent of the fortunes of
firms. Thus, events such as the completion of school or of service in the
Armed Forces and the lessening of household responsibilities often lead to a
movement into the labor force. A preference for a different job environment
or geographic area also frequently results in job change, as does an employer's dissatisfaction with a worker's performance.
There is substantial turnover among both the employed and the unemployed. Employment in 1973 averaged 84 million persons per month, but
about 100 million different persons worked at some time during the year.
Similarly, unemployment averaged 4 million persons per month in 1973,
while at least 14 million persons experienced some unemployment in the
year. About one-fourth of all those holding jobs in January 1973 had begun
their job during the preceding 12 months.
Job loss is usually taken to be an involuntary separation, and quitting a
voluntary one. During 1974, 43 percent of the unemployed cited job loss as
the immediate reason for unemployment; 15 percent said they had quit their
jobs; but 42 percent had just entered or reentered the labor force. In 1973,
a year of lower unemployment, the percentage citing job loss was smaller,
39 percent; and the percentage citing quits, or labor force entry or reentry,
was greater, 16 percent and 46 percent respectively. Thus, while separation
from a job accounts for much unemployment, a similar amount is often
the by-product of movement into the labor force.
Entering the labor force usually entails search for a job. Since entrants
are by definition not working at a paid job (though they may be fully employed in a real sense as students or housewives), they will usually be counted
as unemployed, unless they found a job before becoming technically avail-
88
able for work. Starting in the 1950's the composition of the labor force began
to change as middle-aged married women increased their participation. Since
the 1960's the increasing tendency of younger married women to work, and
the increase in the teenage labor force because of the post-World War II
"baby boom," resulted in rapid increases in the size of the labor force and in
the proportion of the labor force comprised of teenagers and married women
aged 20 or over (from 20 percent in the labor force in 1950 to 31 percent in
1974). Both groups have relatively high rates of labor force entry and reentry because of school or home responsibilities. As a result, labor force entrants and reentrants have probably accounted for an increasing proportion
of the labor force and of the unemployed during the post-World War II
period, and hence for a higher level of frictional unemployment. The unemployment of entrants and reentrants, however, is not always entirely frictional. For example, during a recession one sees a cyclical component in the
unemployment of entrants and reentrants that is reflected by longer duration.
In a dynamic economy, wage rates, skill requirements, and other job
characteristics are constantly changing. As such changes occur, the information about the labor market that people have acquired depreciates in
value. Because it takes time to acquire new and useful information, instantaneous job change is seldom feasible. Individuals looking for more rewarding work and firms looking for more productive employees invest time and
other resources in the search process. Thus job mobility and the ensuing
frictional unemployment are essential consequences of economic change. To
the extent that job mobility increases economic efficiency through a better
matching of workers and jobs, it helps promote economic growth.
This is not to say, however, that the actual amount of frictional unemployment necessarily equals the optimal amount required to promote efficient economic growth. That is, it is not known whether labor markets
in a private enterprise economy will allocate an optimal amount of resources
to the dissemination of job information. Periodic surveys in which workers
are asked how they located their current job always show that informal
sources of information, such as friends and relatives, are more important
than such formal sources as private and public employment agencies. Informal networks seem to provide detail about the tangible and intangible
characteristics of job vacancies and of job applicants that workers and
firms value highly. Because such detail is much less readily obtained through
formal channels, it has been difficult for the Government to devise improvements over the existing system.
STRUCTURAL UNEMPLOYMENT
Even during periods of low unemployment, some groups have persistently
high unemployment that tends to be of long duration, occurring either in a
single spell or in a sequence of spells. Such unemployment is often referred
to as structural, in contrast to frictional unemployment, which tends to be of
89
shorter duration, although there is no hard and fast line between these two
classifications.
Structural unemployment represents imperfect labor market adjustment
as a result of some barrier to the mobility of resources. For example, the high
unemployment in Appalachia during the 1950's and 1960's was initially a
consequence of a decline in the demand for coal and of union wages and
fringe benefits that were pushed substantially above the competitive level,
and thus led to greater mechanization. The resources of the region were
not readily adaptable to other industries, and the personal and financial
costs of moving to a different area, combined with a chance of obtaining
a high-paying job in Appalachia, impeded migration from the region. Since
then, the migration out of the region by younger workers, the retirement of
older workers, and the improvement of transportation systems which facilitated the development of new industries have dramatically reduced the
unemployment rate in Appalachia. As a result, although the unemployment
rate in the Appalachian region was 8.6 percent in 1962 compared to the
national rate of 5.5 percent, by 1971 it had fallen to 5.9 percent—the same
as the national unemployment rate.
The high unemployment rate of teenagers and of workers with little skill
may also be partly attributable to structural factors, but of a different sort.
In 1974 the unemployment rate of teenagers aged 16 to 19 was 14 percent
for white youths and 33 percent for black youths, compared to 3.8 percent
for all males aged 20 and over. These higher rates may to some extent result
from such artificial barriers to wage rate adjustment as legislated minimum
wages; in this sense they can be said to have structural elements. The Federal
minimum wage at present is $2.10 per hour for workers covered by the legislation before 1966, and $1.80 per hour for workers who were covered later,
mainly some agricultural workers, domestics, and employees of small retail
chains. Some employment not covered by the Federal minimum wage is
covered by various State and local legislation. In some instances, State and
local minimums exceed the Federal level. For example, the current minimum wage in the District of Columbia is $2.50 per hour in some industries.
Other legislation adds to the minimum cost of employing a low-wage worker
by requiring, for example, employers' expenditures for social security, unemployment insurance, and workers' compensation insurance.
Some adults, but more teenagers, do not have the skills to command a wage
that equals or exceeds this minimum cost of employment for other than peak
periods of demand in the business of a particular firm. The knowledge that
some job openings exist at the minimum wage may encourage some to continue searching, thus adding to the number of unemployed. Others may drop
out of the labor force altogether. Since the minimum wage reduces wage
differentiation among workers, it will generate a greater decline in employment for the less skilled and for those subject to discrimination in the labor
market. These effects explain part of the substantially higher unemployment
90
rate for teenagers compared to adults and for black teenagers compared to
white teenagers. Racial differences in unemployment are discussed in greater
detail below.
SEASONAL UNEMPLOYMENT
Seasonal fluctuations in the demand for and supply of labor cause large
flows of persons into unemployment. The seasonal nature inherent in some
production processes, such as agriculture and construction, and in some consumption—visiting beach resorts in the summer and ski resorts in the
winter—can create seasonal fluctuations in employment and unemployment. For example, the unemployment rate of construction workers in
February tends to be 133 percent larger than in August. Changes in technology, such as mechanical harvesting equipment and new methods which
permit all-weather construction, may have reduced some seasonal fluctuations in employment. Some industries diversify their product lines or
use fluctuations in inventories to reduce the costs associated with seasonal
variations in demand.
Seasonal fluctuations can also arise on the labor supply side. The unemployment of young people has a strong seasonal component, related mainly
to the search for jobs during school vacations. The school calendar was originally designed to fit seasonal demands for young workers in agriculture,
but such employment has declined in relative importance.
If the seasonal pattern is regular from year to year, and if data are available for several years, "seasonal factors" can be computed. Indeed, many of
the basic monthly unemployment statistics are "seasonally adjusted" by the
Bureau of Labor Statistics to show the month-to-month change
in unemployment due to factors other than the change in the season.
Adjusting the basic data with the standard statistical technique, however,
does not remove the impact of seasonality from the average level of unemployment; rather, it spreads the effects of seasonality uniformly throughout
the year. Thus, groups with relatively high seasonal unemployment will, on
an annual basis, have a relatively high unemployment rate, other things
being the same. For example, the higher annual unemployment rates of bluecollar workers compared to white-collar workers, of Alaska compared to the
other States, of teenage males compared to adult males, are in part attributable to greater seasonality of employment.
CYCLICAL UNEMPLOYMENT
During a downturn in economic activity the rate of plant closings accelerates and the rate of openings or expansions of firms declines. The rise in
unemployment accompanying such a general decline in business activity
is referred to as cyclical unemployment and is associated with the underutilization of economic resources, both human and physical. The rise in the
unemployment rate from 4.7 percent in the fourth quarter of 1973 to 6.6
percent in the fourth quarter of 1974 is, of course, the most recent example
of a cyclical increase in unemployment.
91
The unemployment resulting from a general business recession differs from
unemployment attributable to other causes. As the rate rises during the cycle,
there is an increase in the incidence of unemployment, that is, in the proportion of those who are unemployed during some part of the year (Table 24).
This increase accounts for only part of the increase in unemployment, however. For example, the unemployment rate in 1971 was 69 percent
greater than in 1969; but the incidence of unemployment was only 30 percent greater. The total number of weeks of unemployment experienced during
the year by the average unemployed person also increases during a
recession, and this is an additional factor increasing the unemployment rate.
Available data on the unemployment of persons with work experience during the year indicate that for adult males, in the period 1964 to 1973, 28
percent of the annual variation in the unemployment rate can be explained
by the duration of unemployment over the year, 24 percent by the incidence
of unemployment, and 48 percent by their joint effects. During a recession
the greater average duration of unemployment over the year seems to be
largely due to more weeks of unemployment per spell, rather than to more
frequent spells per unemployed person.
TABLE 24.—Dimensions of unemployment and weekly hours worked: comparison of selected
years of high and low unemployment, 1957—74
Item
1957
1958
1960
1961
1969
1971
1973
1974
Percent
Unemployment rate:*
All civilian workers
Long duration unemployment2
4.3
.8
Percent unemployed at any time during
year 84
.
. . .
Percent of those with unemployment
with two or more spells* 8
6.8
2.1
5.5
1.4
6.7
2.2
3.5
5.9
1.4
4.9
.9
5.6
1.0
14.7
17.9
17.2
18.4
12.5
16.3
14.2
41.1
41.1
36.6
37.0
32.3
32.5
32.5
100.0
35.9
15.4
48.7
100.0
46.3
11.8
41.9
100.0
38.7
15.7
45.7
100.0
43.4
14.9
41.6
9.7
Unemployed by reason:6
Total unemployed
Job losers
.
Job leavers
Reentrants and new entrants
,.
Weeks
Average duration of unemployment:
Currently unemployed
Completed spell of unemployment 7 ..
Sum of spells of unemployment
during the year **
Average hours worked per week
10.5
5.7
13.9
7.4
12.8
6.0
15.6
7.2
7.9
4.6
11.3
6.6
10.0
13.1
15.6
14.1
14.5
9.8
14.2
12.0
41.0
40.6
40.5
40.5
39.9
39.3
39.3
39.0
1
Percent of civilian labor force.
* Unemployed for 15 weeks or longer.
3
Percent of those in the civilian labor force at anytime during the year.
< Data from the Work Experience Survey and relate to persons 14 years of age and over for 1957-61 and 16 years and
over for other years.
6
Data relate only to persons with work experience during the year.
« Data are not available for 1957-61.
* Estimate.
Note.—Data are from the Current Population Survey and relate to persons 16 years of age and over (except as noted).
Detail may not add to totals because of rounding.
Source: Department of Labor, Bureau of Labor Statistics.
92
As unemployment rises during the cycle, layoffs account for a larger proportion of unemployment, while voluntary separation and entry and reentry
into the labor force decline in relative importance. Most workers who quit
their jobs presumably do not return to them. However, a substantial proportion of those on a layoff do return to their former jobs, rather than take new
jobs, and this proportion is greater for layoffs attributable to a recession.
Not all workers are equally likely to experience the effects of cyclical unemployment (Table 25). Cyclical fluctuations generally have a small amplitude in the service sectors and a wide amplitude in manufacturing, particularly of durable goods. Within industries, cyclical fluctuations in employment tend to be greater for blue-collar or production workers than for
white-collar or supervisory workers. The differences, however, vary from
one cycle to another.
TABLE 25.—Unemployment rates by selected demographic and industrial groups: comparison of
selected years of high and low unemployment, 1957-74
[Percent!
Group
All civilian workers
1957
1958
1960
1961
1969
1971
1973
IVi
1974
4.3
6.8
5.5
6.7
3.5
5.9
4.7
6.6
3 8
7.9
6.1
12.6
4.9
10.2
6 0
12.4
3.1
6.4
5.4
9.9
4 3
8.6
5.9
11.7
3.6
4.1
11.6
6.2
6.1
15.9
4.7
5.1
14.7
5.7
6.3
16.8
2.1
3.7
12.2
4.4
5.7
16.9
3.1
4.7
14.4
4.7
6.5
17.5
RACE
White
Negro and other races
AGE-SEX
Men 20 years and over..
.
Women 20 years and over
Both sexes 16-19 years . . . . .
OCCUPATION
White-collar workers
.
Professional and technical
Managers and administrators, except
farm
Sales workers..
Clerical workers
1.9
1.2
3.1
2.0
2.7
1.7
3.3
2.0
2.1
1.3
3.5
2.9
2.9
2.2
3.7
2.5
1.0
2.6
2.8
1.7
4.1
4.4
1.4
3.8
3.8
1.8
4.9
4.6
.9
2.9
3.0
1.6
4.3
4.8
1.3
3.6
4.0
2.2
5.2
5.0
Blue-collar workers .
Craft and kindred workers
Operatives.
Nonfarm laborers
6.0
3.8
6.3
9.4
10.2
6.8
11.0
15.1
7.8
5.3
8.0
12.6
9.2
6.3
9.6
14.7
3.9
2.2
4.4
6.7
7.4
4.7
8.3
10.8
5.4
3.5
5.7
8.4
8.3
5.4
9,6
11.6
Service workers
4.7
6.9
5.8
7.2
4.2
6.3
5.6
6.9
Farm workers.
1.9
3.2
2.7
2.8
1.9
2.6
2.4
2.6
4.9
10 9
7.9
15.3
6.2
13.5
7.5
15.7
3.5
6.0
6.2
10.4
4.8
8.8
6.9
13.4
4.9
5.3
4.2
10.6
7.7
5.7
6.4
6.1
5.1
8.5
6.8
6.2
3.0
3.7
3.5
7.0
6.5
5.6
3.9
4.8
4.3
7.3
7.9
1.9
2.5
2.4
2.5
1.9
2.9
2.6
3.2
INDUSTRY
Nonagricultural private wage and salary
workers
.
Construction
Manufacturing:
Durable goods .._
Nondurable goods
Service industries2
Government workers
1
3
5.2
Seasonally adjusted.
Quarterly data are for service and finance industries.
Note.—Data relate to persons 16 years of age and over except for 1957 occupation data, which relate to persons 14 years
of age and over.
Source: Department of Labor, Bureau of Labor Statistics.
93
563-280 O - 75 - 7
To a large extent the demographic characteristics of the unemployed vary
over the business cycle because of differences in industry and occupation.
Blue-collar workers in goods-producing industries are more likely than
white-collar and service industry workers to be adult males and union
members and less likely to be college graduates. Groups with these characteristics will therefore generally experience greater fluctuations in unemployment over the business cycle.
Even within an industry-occupation sector, the incidence of unemployment is uneven. Some workers undergo a sharp decline in their weeks or
hours of employment during the year, while many others experience little or
no decrease. This unequal sharing of unemployment results in greater inequality in the distribution of personal income during a recession.
INFLATION AND UNEMPLOYMENT
It has been suggested that there is a negative relation between the
unemployment rate and the rate of increase in wages and prices, and that
such a relation exists in the long run as well as over the business cycle.
During a period of cyclical expansion, an increase in aggregate demand
leads to a greater demand for labor, which is expressed by increases in
wages (or in the rate of increase in wages) or by the hiring of less skilled
workers at the same wage. This increase in demand for labor will result
ultimately in a reduction in unemployment. Thus, in a cyclical expansion
one observes a negative relation between wage-rate increases and unemployment. On the downside of a business cycle, firms with a decreased
demand for labor lay off workers and lower the rate of increase in money
wages. The unemployment rate will increase, accompanied by a decline in
the rate of wage increase.
In the long run, however, there would not appear to be a mechanism
linking the rate of unemployment to any one rate of stable wage or price
increase. One would expect the unemployment rate to be determined by
the magnitude of frictional, structural, and other basic forces which are
independent of the particular level of a stable rate of inflation. The rate
of unemployment that the economy tends to generate when the rate
of inflation has no tendency to accelerate is sometimes referred to as the
"natural" rate of unemployment. This is a misnomer, however, since the
"natural" rate may vary over long periods in response to changes in the
underlying factors which determine its level.
During the 1960's many economists believed that there was a long-run,
negative relation between the unemployment rate and the rate of increase
in wages or prices, initially described by the "Phillips curve" and later by
functions involving additional variables and equations. Empirically, simple
charts relating the U.S. rate of increase in prices or wages to the unemployment rate did show a downward-sloping relation for the 1960's, although
by the 1970's there was clear evidence that the relation was not stable across
decades (Chart 7, top panel).
94
Chart 7
Unemployment Rate and Prices
PERCENT CHANGE IN
PERSONAL CONSUMPTION
EXPENDITURES DEFLATOR
1
1
1
1
I
1
1
12
1
1
74
-
-
10 h
-
-
8
'5J
-
'7. 3
'48
6
-
'70
'69
71
4
'6*8
'52
2
'67
•
'66
'57
•
72
'58
'56
•
'50 '6j)'59
'53.
\/L #
'65
'61
63
'49
-2
1
1
1
1
1
1
1
1
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
1
1
1
1
2.5
7.0
UNEMPLOYMENT RATE (PERCENT)
i
12
i
1
1
1
1
74
10
-
-
_
8
'51
6
-
'48
7
-
.3
70
•
'69
71
4
'57
72
'67
'58
'56
'52
'66
2
•)
'65
53
5 (
•64 ' .
'60
'59.
J63
V
'61
'54
'55
•
0
-2
-
'68
'49
1
2.5
I
3.0
1
1
1
1
1
1
1
3.5
4.0
4.5
5.0
5.5
6.0
6.5
FIXED (1956) WEIGHT UNEMPLOYMENT RATE (PERCENT)
NOTE: WAGE AND PRICE CONTROLS WERE IN EFFECT JANUARY 1951-FEBRUARY 1953
AND AUGUST 1971-APRIL 1974. DURING THESE PERIODS, HOWEVER, THE CONTROLS
VARIED IN COMPREHENSIVENESS.
SOURCES: DEPARTMENT OF COMMERCE, DEPARTMENT OF LABOR, AND COUNCIL OF ECONOMIC ADVISERS.
95
7.0
One explanation for the instability across decades is that a long-run
Phillips curve exists but that the curve has been shifting outwards. Some
have suggested that this shift is in response to an increase in labor force
turnover resulting from the increasing proportion of women and teenagers
in the labor force. Even if the tightness of the labor market for each age-sex
group were unchanged—that is, if age-sex specific unemployment rates were
unchanged—an increase in the proportion of the labor force comprised of
adult women and teenagers would increase the measured overall unemployment rate. Hence the same rate of inflation would be associated with a
higher level of unemployment.
The lower panel in Chart 7 presents data relating the rate of change in a
price index to the unemployment rate, adjusted for changes in the age-sex
composition of the labor force by the use of 1956 labor force weights. The
adjusted unemployment rate has been falling relative to the measured rate.
For example, the 1974 unemployment rate of 5.6 percent is reduced to
4.8 percent if the age-sex weights of the 1956 labor force are used. The
adjustment reduces but does not eliminate the impression of outward movement of the points during the 1970's; and the pattern of points suggests
that the irregularity persists. Despite considerable empirical work allowing
for the role of further variables and of lags, it has proved difficult to defend
the claim of a long-run Phillips tradeoff between inflation and unemployment.
It should also be noted that a series of shifting, negatively sloped short-run
curves relating inflation and unemployment is theoretically consistent with
the concept of a "natural" rate of unemployment which is independent of
the rate of inflation in the long run. As the short-run curves shift, the
observed points on the curves trace out a long-run curve, which becomes more
nearly vertical as more time is given to the process. Thus, no stimulus toward
lowering unemployment can be derived from a higher inflation rate once
the public has adjusted to it. The long-run vertical line originates at a
point on the unemployment axis corresponding to the level of the "natural"
unemployment rate, a rate which, as noted earlier, depends on the level of
frictional and structural unemployment and on other fundamental characteristics of the economy. The changing composition of the labor force
would then be one reason to expect an increase in frictional unemployment,
and hence a rightward shift of the vertical line in question, that is, a rise in
the "natural" rate of unemployment.
Other factors may also have induced a higher natural rate of unemployment over time. The increase in wealth and the accompanying
growth of consumer credit have made it easier to maintain consumption
during periods of unemployment and may have thereby promoted more
job search. Similarly, changes in the welfare program, particularly the
availability of food stamps and the program in Aid to Families with Dependent Children (AFDC) for unemployed fathers, available in 23
States and the District of Columbia, now provide additional support for
96
unemployed persons from families with few assets and little income from
other sources.
Finally, the decline in the proportion of the employed who are selfemployed or unpaid family workers, from 21.5 percent in 1948 to 9.6 percent in 1974, would also tend to increase the measured unemployment rate,
since both groups typically report very low unemployment, presumably because their earnings are residual and not contractual. For example, in 1974
the unemployment rate for these two groups was 0.9 percent, and the rate
for wage and salary workers, 5.3 percent.
Other factors, however, would have tended to decrease the unemployment rate over time. For example, rising wage rates increase the opportunity
cost of absence from a job, although this effect may have been neutralized
by proportionate increases in unemployment compensation benefits. In addition, the occupational-industrial composition of employment has shifted
toward white-collar jobs in the service and government sectors, and these
ordinarily have lower rates of unemployment.
In summary, although there does generally appear to be an inverse relation between unemployment and inflation in the short run, the stability of
such a long-run relation has been challenged. Much evidence suggests that
in the long run the rate of unemployment is consistent with any fully anticipated rate of inflation. Continued research on this topic should eventually
provide a more definitive answer.
DURATION OF UNEMPLOYMENT
For the average worker a spell of unemployment lasts only a fewr weeks.
From 1948 through 1969 the average completed spell was estimated at
5.5 weeks, though it tended to be longer during a recession. It was 3.7
weeks in 1953 (unemployment rate, 2.9 percent) and 7.4 weeks in 1958
(unemployment rate, 6.8 percent).
One should note that the duration of unemployment commonly calculated from the GPS refers to a different measure, the number of weeks of
unemployment experienced by those who are currently unemployed. Calculated this way, the average duration of unemployment tends to be considerably longer than the average completed spell of unemployment
during the year. The difference arises because the probability of leaving unemployment the following week is related to the number of weeks
the individual has been unemployed: the longer one has already been unemployed, the greater the probability of remaining unemployed. The proportion with long-term unemployment will, therefore, be greater among the
currently unemployed than among those who are completing spells of unemployment. In 1969 about 4.7 percent of the currently unemployed in an
average month had been unemployed for 27 weeks or more, while only 1.8
percent of all those who experienced a spell of unemployment at any time
during the year were unemployed for 27 weeks or more.
97
The duration of unemployment can be viewed still a third way. Some
persons experience several spells of unemployment in a year, which together add up to a considerable length of time. Indeed those who have
completed a spell of unemployment are more likely to become unemployed
again than are those who have not been unemployed. In 1973, 13 percent
of those working at some time during the year had one or more spells of unemployment, but 32 percent of those with at least one spell had two or more
spells, and 52 percent of those with at least two spells had three or more
spells. Counting all spells, 11 percent of the experienced workers who had
some unemployment reported that they were unemployed for a total of 27
weeks or more in 1973. On the average, workers who had been unemployed
at some time reported 12.0 weeks of unemployment during the year. For
this group, which excludes persons who were seeking jobs at some time in
the year but did not work, the average length of a completed spell was 8.5
weeks and the average number of spells was about 1.7.
Estimates of the duration of unemployment from the work experience survey may be biased upwards because the survey is conducted in March but
relates to the previous year and hence must rely on the respondent's memory.
Retrospective reporting may be particularly faulty about brief episodes of
unemployment and among those who did not receive unemployment insurance. The number of spells may thus be underestimated and their average
length overestimated, particularly for women and teenagers. This would
explain why the duration of a completed spell obtained from the work
experience survey exceeds estimates of the duration of a completed spell
based on the data in the monthly CPS.
The duration of a spell of unemployment seems to vary among demographic groups. Among the currently unemployed, the duration of unemployment is somewhat lower for women than for men, and it increases
markedly with age for both sexes. In 1973 the group aged 55 and over made
up 9 percent of all the unemployed, but 19 percent of those who were unemployed 27 weeks or more.
Older workers usually have longer tenure on the job and greater job
security, and thus a low incidence of unemployment. Once they lose a job,
however, it is much more difficult for them to find a comparable one. Older
workers are likely to have had much training that was useful to their
previous employer but would not necessarily be of value to any other; and
because their general training was received at an earlier time their general
skills may have become obsolete. Firms are reluctant to invest in an older
worker whose remaining work life is shorter and whose retirement with
pension is more imminent. Finally, geographic mobility is much more costly
at older ages. The closing of a firm or a decline in an industry or an area may
thus result in severe problems for older workers.
INTERNATIONAL COMPARISONS
Generally the United States and Canada have higher measured rates of
unemployment than most other developed countries with market economies
98
(Table 26). The sources of unemployment, its duration, and the hardship
associated with it differ greatly from country to country, and an understanding of these factors is needed to interpret the differences.
The definition of unemployment also varies among countries, and this can
cause differences in the measured unemployment rate. In some countries
measured unemployment represents the number of persons registered with
government unemployment exchanges; such a procedure usually produces
lower rates than the one used in the United States. The U.S. Department
of Labor has adjusted the unemployment rates of major developed countries
to conform more closely to U.S. concepts. However, although the greatest
care is taken in making these difficult adjustments, it is probably impossible
to achieve full comparability. The adjustments must depend on labor force
surveys which differ in the wording and sequence of questions, and the true
effect of these differences cannot be determined. Moreover, the vast institutional differences among countries would raise serious questions about the
comparability of data even if the questionnaires were identical.
TABLE 26.—Unemployment rates in the United States and seven other developed countries,
selected periods, 1969-74
[Percent; seasonally adjusted)
Adjusted to U.S. concepts»
Country
As published'
1974
1969
1974
1969
1973
1973
November
III
November
III
United States
3.5
4.9
5.5
6.6
3.5
4.9
5.5
6.6
Canada
France
West Germany..
Great Britain 3
Italy
Japan
Sweden.
4.7
3.1
.8
3 0
3.7
1.1
1.9
5.6
3.5
1.0
3 0
3 8
1.3
2.5
5.4
4 1
2.6
3 2
3.2
1.4
2.1
5.5
5.6
3.1
3 1
«3. 5
4.7
1.7
.9
2.4
3 4
1.1
1.9
5.6
2.1
1.2
2.6
3.5
1.3
2.5
5.4
2.5
3.1
5.5
3.4
3.7
3.0
1.4
2.1
*3.2
1.7
2.7
2.7
1.7
1 With the exception of Canada, labor force and unemployment data are adjusted where possible to be made more
comparable to U.S. definitions and concepts. Age limits roughly approximate the age at which compulsory schooling ends.
For the United States and Canada published and adjusted data are identical.
2 For Great Britain and West Germany, registered unemployed as a percent of employed wage and salary workers plus the
unemployed. For others, unemployment as a percent of the civilian or total labor force. With the exception of France, w hich
does not publish an unemployment rate, these are the rates most usually published in the country.
3 Data as published exclude school leavers and adult students. Including such persons, the unemployment rate was
2.7 in 1973.
* October 1974.
Note.—The quarterly and monthly adjusted data are estimates based on annual adjustment factors and should be
viewed as approximate indicators of unemployment under U.S. concepts.
Source: Department of Labor, Bureau of Labor Statistics.
The Labor Department adjustments (Table 26) bring the unemployment
rates of some countries closer to the U.S. level, although for West Germany
the differential widens. Significant differentials still remain. Although international data on duration of unemployment are less comparable, the United
States appears to have more short-term frictional unemployment, but a
relatively low rate of long duration unemployment compared to several
99
other countries (Table 27). It is not known to what extent differences.in
the proportion of those unemployed for long periods can be attributed to
differences in the duration of unemployment benefits or in other provisions
of unemployment compensation systems.
TABLE 27,—Long-term unemployment in the United States and six other developed
countries•, selected periods, 1970—74
Unemployment rate 1
Percent of unemployed
who have been seeking
work for: l
Long-term unemployment
rate (percent) i- 2
Country and period
Relative to
average
1968-1973
Percent
3 months
or more 3
6 months
or more 4
3 months
or more
6 months
or more
United States:
1970
.
1973
1974: III
4.9
49
5.5
1.04
1 04
1.17
16.2
18 9
19.0
5.7
78
7.6
0.8
9
1.0
0.3
4
.4
Canada:
1970
1973
5.9
5.6
1.05
1.00
33.1
35.4
15.6
15.6
2.0
2.0
.9
.9
France:
1970: March
2.2
.85
56.3
40.6
1.2
.9
West Germany:
1970: April
1972: April
.5
.9
.63
1.06
69.9
63.4
50.5
41.4
.2
.6
.2
.4
Great Britain:
1971
1973
1974: July
3.3
26
2.7
1.18
.93
.93
47.0
28.2
41 6
33.7
1.2
.9
1.1
.9
. .
3.1
1.09
73.0
42.8
2.4
1.4
. .
1.5
2.5
.68
1.14
21.8
36.7
9.8
18.7
.3
.9
.1
.5
Italy:
1970
Sweden:
1970
1973
. .
1
Data for Canada, France, West Germany, Italy and Sweden are based on labor force surveys and are fairly comparable to
U.S. data. However, they have not been adjusted to U.S. concepts. Data for Great Britain are from the series on registered
unemployed
and are not comparable to the United States.
2
Percent of civilian or total labor force, except in Great Britain where it is a percent of registered unemployed plus
employed wage and salary workers.
3 Fifteen weeks or more in the United States, 4 months or more in Canada, and 13 weeks or more in Great Britain and
Sweden.
4
Twenty-six weeks or more in the United States, 7 months or more in Canada, 26 weeks or more in Great Britain, and
27 weeks or more in Sweden.
Sources: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers.
One reason for the greater frictional unemployment in the United States
and Canada, compared to many countries in Western Europe, may be the
rapid rate of growth in the labor force and in employment, primarily
because of their more rapidly growing populations. From 1962 to 1972, the
civilian labor force increased at annual rates of 2.1 percent in the United
States and 3.0 percent in Canada; but the civilian labor force (adjusted to
U.S. concepts) increased only 1.3 percent in Japan, 1.0 percent in France,
and 0.7 percent in Sweden; and it declined by 0.1 percent in West Germany
and by 0.7 percent in Italy. A more rapidly growing labor force may imply
a larger proportion of recent entrants who have a high incidence of unemployment, though often of short duration. In addition, employers may be
less reluctant to lay off workers when there is a steady flow of new workers
into the market.
100
The relatively high level of frictional unemployment in the United States
is also reflected in comparatively high rates of job turnover. For example,
turnover rates in manufacturing, measured as the number of separations
(quits and layoffs) per 100 employees per year, were 55 and 65 respectively
in the United States and Canada in the 1960's—from 70 percent to more
than 100 percent higher than in countries such as West Germany, Great
Britain, or Italy, even in years of very low unemployment. Institutional and
cultural factors may account for these differences in turnover. In many
Western European and Asian countries worker-employer relationships discourage layoffs and quits. A distinctive characteristic of Japanese labor markets is the system of "lifetime employment," in which many workers are
felt to be committed to employment by a single firm throughout their careers.
The firms with such arrangements are usually large, and intrafirm job
mobility replaces interfirm mobility. Available data indicate very low rates of
job change in Japan^ even for young workers. Among young graduates of
manpower training programs in 1968, only 28 percent changed employers
during the next 3 years. Among U.S. youths aged 15 to 20 who had left school
and entered the labor force, however, about 53 percent of whites and 66
percent of blacks changed employers between 1966 and 1967, according to
the National Longitudinal Survey. It is difficult to evaluate the efficiency
of intercountry differences in job mobility, but the variation in behavior is
striking.
Another factor in the differing measured unemployment among some
countries is the extent of self-employment. Self-employed persons and unpaid workers in family enterprises, mainly farms, are seldom reported as
unemployed. In the United States, about 10 percent of the employed
are self-employed or unpaid family workers. Although in Sweden the
proportion is similar to that in the United States, it is considerably higher
in several other countries: 32 percent in Japan, 29 percent in Italy, 21 percent
in France, and 16 percent in West Germany. Thus, relative to the United
States, unemployment appears lower in these countries than it would be if
only wage and salary workers were considered.
Finally, government actions can influence the extent to which measured
unemployment varies over the business cycle. In Sweden, for example, extensive expenditures on training and public employment programs during
recessions reduce the cyclical increase in measured unemployment. During
1973, a year of cyclical downturn in Sweden, an annual monthly average of
79,000 persons were in training or public employment programs and hence
were counted as employed or out of the labor force. Since this group is
large compared to the monthly number of persons reported unemployed,
about 98,000, it is clear that without the programs, or if persons in the
programs were counted as unemployed, the measured rate would have been
substantially higher than the reported rate.
In West Germany, some adjustment to the business cycle has been made
through the migration of foreign workers who now comprise about 10 per-
101
cent of the civilian labor foro . 1 hiring slack times the foreign workers, who
are more prone to layoff, usually returned to their home countries. In 1974,
however, this pattern seems to have changed, perhaps partly because of
recent restrictions on new migrant labor: and fewer unemployed foreign
workers left the country. Thus, in October 1974 foreign workers made up
13 percent of the registered unemployed, compared to 6 percent in March
1973. In January 1975 renewed government efforts were made in West
Germany to encourage the emigration of unemployed migrant workers.
THE DISTRIBUTION OF UNEMPLOYMENT
The U.S. data for 1974 show a wide disparity in unemployment among
demographic groups. The unemployment rate is higher for teenagers than for
adults, for women than for men, for blacks than for whites, and for unskilled
workers than for the skilled. These differentials have endured in U.S. labor
markets for a long time. Even in 1969, a year of extremely tight labor markets, when the unemployment rate for adult men was 2.1 percent, the unemployment rate was 3.7 percent for adult women, 6.4 percent for blacks,
and 12.2 percent for teenagers. The development of efficient public policy
requires an understanding of the nature and causes of these unemployment
differentials.
DIFFERENTIALS DUE TO LABOR FORCE TURNOVER
Labor force turnover seems to explain much of the unemployment of
women and teenagers. Some teenagers and more women have a continuous
attachment to the labor force; others are just beginning such an attachment;
and still others enter and leave the labor force, sometimes more than once
during the year. For example, although more than half the women and teenagers were in the labor force at some time in 1973, only 31 percent and 22
percent respectively were in the labor force for 50-52 weeks. Of all males
aged 25 to 54, however, 87 percent were in the labor force for the entire year.
As noted above, high rates of labor force turnover generally have the
effect of increasing measured unemployment, while job-to-job mobility does
not always have such an effect. In our unemployment statistics, persons
with a job are not classified as unemployed, even though they may be
searching for another. During the recession year of 1961 less than half
the persons who changed jobs for any reason, including job loss,
experienced unemployment as it is defined here. In a year of normal unemployment the proportion is likely to be still lower. Entry and reentry into
the labor force, on the other hand, is subject to a more direct translation into
measured unemployment, since search by those working as students or in the
home is counted as unemployment. Not surprisingly, a large amount of
unemployment among teenagers and women is accounted for by labor force
entrants and reentrants (Table 28).
In 1974, 44 percent of the unemployed adult women and 68 percent of
the unemployed teenagers had been out of the labor force before becoming
102
TABLE 28.—Distribution of unemployed by reason for unemployment, by age
and sex, 1973-74
(Percent)
Men 20 years and over
Women 20 years and over
Both sexes 16 to 19 years
Reason
1973
1974
1973
1974
1973
1974
100.0
100.0
100.0
100.0
100.0
100.0
Job separations
Job losers
Job leavers
75.0
59.1
15.9
79.4
65.4
14.1
53.2
34.6
18.6
56.5
38.6
18.0
29.0
17.2
11.8
31.9
19.7
12.2
Previously out of labor force..
Reentrants
New entrants
25.0
21.6
3.4
20.5
18.2
2.4
46.8
41.5
5.3
43.5
37.9
5.6
71.1
29.5
41.5
68.1
30.6
37.4
3.2
3.8
4.8
5.5
14.5
16.0
Total unemployed
Unemployment rate J
1
Unemployment as percent of civilian labor force.
Note.—Detail may not add to totals because of rounding.
Source: Department of Labor, Bureau of Labor Statistics.
unemployed, compared to only 21 percent of unemployed adult men. We
can exclude both new entrants and reentrants from the unemployed and
from the civilian labor force to compute an unemployment rate referring
only to persons who are unemployed because they lost or quit their jobs. The
resulting unemployment rate for adult women declines almost to that for
adult males, and the differential between adults and teenagers is substantially narrowed (Table 29).
TABLE 29.—Civilian unemployment rates by age and sex, under alternative definitions, 1969-74
[ Percent!
Unemployment rate
Sex, age, and year
All
unemployed
Unemployed
plus
discouraged
workers 4
l
Job losers and
job leavers 2
Job losers 3
Men 20 years and over:
1969
1970
1971
1972
1973
1974
2.1
3.5
4.4
4.0
3.2
3.8
1.6
2.7
3.4
3.0
2.4
3.0
1.2
2.3
2.9
2.5
1.9
2.5
2.4
3.8
4.7
4.3
3.5
4.1
Women 20 years and over:
1969
1970
1971
1972
1973
1974
3.7
4.8
5.7
5.4
4.8
5.5
1.9
2.7
3.3
3.1
2.6
3.2
1.3
2.0
2.5
2.2
1.7
2.2
4.9
6.0
7.2
6.9
6.0
6.6
Both sexes 16 to 19 years:
1969
1970
1971
197?
1973
1974
12.2
15.3
16.9
16.2
14.5
16.0
3.6
5.0
5.3
5.3
4.7
5.7
2.0
3.2
3.6
3.5
2.8
3.6
13.4
16.6
18.4
17.6
15.8
17.2
1
Percent of civilian labor force.
2 Percent of civilian labor force excluding new entrants and reentrants.
3
Percent
of civilian labor force excluding new entrants, reentrants, and job leavers.
4
Percent of civilian labor force plus discouraged workers. Discouraged workers are defined here as those not in the
labor force because they believe they cannot find a job.
Sources: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers.
103
Labor force turnover has another side, exits from the labor force; and
some suggest that many of those who leave the labor force are discouraged
workers who cannot find jobs. The flows of women and teenagers out
of the labor force are large; quantitatively they can be expressed as the
percentage of those in the labor force who withdrew. Withdrawals represented 33 percent of the teenage labor force in 1973; 24 percent of the labor
force for women aged 20 to 24 and 13 percent for women aged 25 to 59;
and 1.8 percent for men aged 25 to 59. Only a small proportion cited economic factors as the reason for leaving the labor force, however; and among
this group still fewer cited "slack work" as opposed to what would seem
to be a planned short-term job—"seasonal or temporary job" (Table 30).
"Discouraged workers" are often defined more broadly to include all
persons outside the labor force who would like a job but think it is useless
to seek one. Some of the people so classified in 1973, about 14 percent, have
never worked. Most, about 77 percent, intend to seek work within a year,
and about 40 percent had looked for a job at some time but could not find
TABLE 30.—Reason for separation from last job for persons not in the labor force but who worked
during the previous 12 months, by age and sex, 1973
Age in years
Reason tor separation
Total
16 to 19
20 to 24
25 to 59
60 and over
MEN
Number (thousands)
3,714
1,427
776
660
849
100 0
41.6
12.0
14.4
16.2
11.8
4.3
15.9
100 0
61.8
1.6
100.0
64.0
2.3
100.0
2.8
21.1
55.4
14.3
10.7
3.5
6.5
Percent distribution by reason:
Total
School, home responsibilities
111 health, disability
Retirement, old age _
Economic reasons
End of seasonal or temporary job
Slack work
All other reasons
15.1
3.9
17.6
13.9
9.9
4.0
19.7
100.0
21.2
34.0
9.5
15.0
8.5
6.5
20.3
6,329
1,360
1,348
2,994
626
100.0
51.4
7.9
4.4
18.9
14.4
4.4
17.4
100.0
63.9
1.8
100.0
68.8
3.0
100.0
46.1
10.9
1.3
22.8
17.2
5.7
18.9
100.0
12.3
18.0
38.4
18.5
13.5
4.9
12.9
0)
.,n
0)
WOMEN
Number (thousands)
.
Percent distribution by reason:
Total
School, home responsibilities
III health, disability
Retirement, old age
Economic reasons .
End of seasonal or temporary job
Slack work
All other reasons
1
(i)
(i)
16.5
13.8
2.7
17.9
12.8
9.7
3.1
15.4
Not applicable.
Note.—Detail may not add to totals because of rounding.
Source: Department of Labor, Bureau of Labor Statistics.
one. One can calculate an unemployment rate in which those who are out
of the labor force because they believe they cannot find a job are added to
the unemployed and to the labor force. This change increases the unemployment rate for adult men by 0.3 percentage point and for adult women
104
by 1.1 to 1.5 percentage points, and hence increases the male-female
unemployment differential (Table 29).
When discouraged workers are included in the unemployment data, the
increment in the unemployment rate fluctuates somewhat with the business
cycle for adult women (by 0.3 percentage point from 1969 to 1971), but
not for adult males. It is thus not the business cycle but rather demographic
or structural economic factors, such as age, skill, and region, that account
for most of the "discouraged worker" phenomenon.
THE MALE-FEMALE DIFFERENTIAL FOR EXPERIENCED WORKERS
When entrants are excluded from the data, as in Table 29, the sex differential in unemployment becomes very small. When the comparison is
confined only to those among the unemployed who lost their jobs, the
unemployment rate for women is about that of men during times of low
unemployment; but it is lower than the rate for men during times of higher
unemployment.
In principle, women would be more vulnerable to layoffs than men,
because on average they do not have as many years of work experience
as men of the same age. They are therefore likely to have accumulated fewer
seniority rights and to have received less training or other investment in
skill specific to the firm. In addition—and it is difficult to separate this
factor from the preceding one—employers may discriminate against married
women when reducing the firm's payroll. On the other hand, a smaller
proportion of employed women are in occupations and industries with sharp
cyclical fluctuations. Women are more likely to be employed in white-collar
jobs—62 percent of women and 40 percent of men were in such jobs in
1974—and in service industries like government where unemployment fluctuates less over the business cycle. The industrial-occupational mix factor
seems to dominate, since during recessions the unemployment differential by
sex narrows for experienced workers. In addition, the slower rate of entry of
women into the labor force during a recession narrows the sex differential in
the overall unemployment rate (including labor force entrants).
Another factor that tends to increase the unemployment rate of married
women is the migration of families, who generally move where the husband's
job opportunities are better. Although in some cases this migration may
also improve the wife's job opportunities, it more often results initially in
her unemployment in a new labor market. Thus in 1970, married women
aged 25 to 34 who had moved to a different county within the year had an
unemployment rate of 11 percent, compared to 5 percent for nonmigrants;
among married men of the same age the rates for migrants and nonmigrants
were 4.8 percent and 2.1 percent respectively. This effect diminishes, however, in the course of time.
Women differ from men in the way they search for jobs. Among married
women, this difference may well be a function of their dual responsibilities
in the labor market and at home. In 1973, a sample of workers who had taken
105
their current jobs within the year responded to a survey about job search
methods. Men spent more time in search: 40 percent of the men and 29
percent of the women usually spent 6 or more hours per week looking for
work. Men searched over a wider area: 67 percent of the men and 45 percent
of the women reported that they had traveled 11 or more miles from home
in search of a job. Men also used more methods of search than women.
STUDENT AND NONSTUDENT TEENAGERS
The unemployment of teenagers who have ended their schooling is quite
different from that of students seeking part-time or summer jobs often
unrelated to their eventual careers.
The proportion of teenagers aged 16 to 19 who are enrolled in school in
October has increased from 58 percent in 1956 to 66 percent in 1973. The
proportion of students who participate in the labor force during the school
year has also been increasing—from 32 percent in October 1956 to 41 percent in October 1973. As a result, 52 percent of the teenage labor force were
enrolled in school in 1973 compared to only 39 percent in 1956.
Every June brings a large increase, usually a 30—40 percent increase, in
the teenage labor force, which currently averages 8.1 million youths during
the school months. The economy manages to absorb most of this influx. In
1969, as many as four out of five teenage students were reported in the labor
force at some time during the summer; all but 11 percent eventually found
jobs. About one-third of the unsuccessful jobseekers searched only 2 weeks
or less, and 68 percent searched 4 weeks or less. During the summer the teenage unemployment rate rises sharply, thereby increasing the average annual
rate of teenage unemployment.
In the second half of the 1960's the unemployment rate among teenage
students increased in relation to the rate for nonstudents and responded
little to the expansion in the economy. Because of students' increased participation in the labor force, however, employment ratios of students (employed students as a percentage of the population) also increased in comparison with those of nonstudents. Thus unemployment rates should be
evaluated in conjunction with employment ratios or labor force participation rates for teenagers or any other group whose participation rate is substantially below 100 percent.
Since the middle 1950's the labor force participation rate of nonstudents
aged 16 to 19 has been around 70 percent. Many of these young people are
interested in full-time jobs and remain in the labor force all year. Since they
are learning about the labor market, more of their unemployment arises
from changing jobs than from the movement into the labor force that characterizes student unemployment.
Although youths out of school have above average layoff and quit rates,
the resulting job changes may have beneficial consequences. New or relatively new members of the labor force search extensively for desirable conditions of employment, experimenting among different occupations and
106
employers. Moreover, since young workers do not have a work history,
employers have less information about teenagers than they have about older
workers, and this makes the hiring process more difficult. Information from a survey of out-of-school male youths between 1966 and 1968
suggests that job changing may be a good investment. Those who changed
employers generally obtained larger pay gains over the period than those
who did not; and among black youths the pay increases during the period
rose consistently with the number of changes.
The unemployment rate of all teenagers has risen sharply relative to the
rate of adult men since the late 1950's. This rise is due partly to the increase
in school enrollment and to the changing participation pattern of students,
both of which result in higher turnover. Part of this relative rise in teenage
unemployment may stem from the extension of minimum wage coverage
and from the growth of social legislation that raises the cost to the firm of
teenage compared to adult labor.
The minimum wage may also have a more insidious long-run effect on
the careers of youths, particularly teenagers out of school. Traditionally,
on-the-job training has done much to improve skills. Such job training may
be unprofitable for employers if they must pay higher minimum wage
rates. The youths who suffer most would be precisely those who might
need the most help—youths with little schooling and greater learning difficulties and those subject to discrimination.
VETERANS AND NONVETERANS
The higher unemployment rate of male veterans of the Vietnam era compared to nonveterans has been a matter of public concern. When the rate
is disaggregated by age, however, it is clear that only veterans aged 20 to 24
have significantly higher rates of unemployment than nonveterans
(Table 31). The relative and absolute difference in unemployment declines
with age and disappears for those aged 30 to 34. The relative unemployment
rate of veterans aged 20 to 34 has fallen since 1971, largely because of a
decline in discharges and the consequent increasing average age of veterans
compared to nonveterans.
Since young veterans include most of those recently discharged from the
Armed Forces, they are likely to be new entrants or reentrants to the civilian
labor force. As discussed above, entry is generally associated with higher
unemployment. Veterans may also be less informed about the current
civilian labor market than other entrants whose activities have been largely
centered in the home and school. After being away for a number of years,
veterans may find that previously acquired information about the labor
market has become obsolete, and new information is difficult to acquire
because of weakened ties with friends and home. This drawback disappears
as the veterans acquire information relevant to job search in the civilian
sector.
Under the federally financed program of Unemployment Compensation
for Ex-Servicemen (UCX), newly discharged veterans with at least 90
107
TABLE 31.—Unemployment rates for male Vietnam era veterans and nonveterans
20 to 34 years, by age, 1970-74
[Percent
Age and veteran status
1970
20 to 34 years:
Veterans
Nonveterans.
Ratio2
20 to 24 years:
Veterans
Nonveterans
Ratio 2
_
25 to 29 years:
Veterans
Nonveterans
Ratio2
30 to 34 years:
Veterans
Nonveterans
Ratio2
.
.
.
1971
1972
1973
1974
6.7
5.3
1.26
8.3
6.3
1.32
6.7
5.7
1.18
4.9
4.9
1.00
5.3
6.0
.88
9.5
8.1
1.17
12.3
9.5
1.29
10.6
8.7
1.22
8.8
6.8
1.29
10.9
8.2
1.33
4.5
3.9
1.15
5.8
4.7
1.23
4.9
4.2
1.17
3.7
4.3
.86
4.3
4.9
.88
3.2
3.1
1.03
3.5
3.7
.95
3.0
3.0
1.00
2.6
2.4
1.08
2.7
3.4
.79
1
Except as noted.
Ratio of rate for veterans to that for nonveterans.
Note.—Vietnam era veterans are those who served after August 4, 1964. In 1973, of the Vietnam era veterans of all
ages, 91 percent were 20 to 34 years of age.
Source: Department of Labor, Bureau of Labor Statistics.
2
days of continuous active service and a discharge other than dishonorable
are eligible for unemployment compensation in any State where they wish
to file a claim, under the conditions and benefits prevailing in that State.
In fiscal 1974 there were 527,000 military separations and 342,000 initial
claims for UCX, a claim rate of 65 percent. The average weekly benefit
was $66, and benefits were received for an average of 13.6 weeks in a benefit
year, about the same as for all insured unemployed.
The UCX program may encourage unemployed veterans to spend more
time searching for a job; and among veterans who become students it
may encourage a period of unemployment rather than withdrawal from
the labor force. Most young nonveterans, on the other hand, have too
little work experience to qualify for substantial unemployment insurance
benefits, if any. Again, as the cohort ages, the veterans exhaust their eligibility
for UCX, nonveterans acquire more job experience, and the gap in eligibility
for unemployment benefits narrows. These developments also narrow the
unemployment differential.
UNEMPLOYMENT DIFFERENTIALS BY EDUCATION
A pronounced inverse relation exists between education and unemployment (Table 32). The differential varies among demographic groups and
over time. For example, the differential narrowed perceptibly in the last
decade for males aged 35 to 54.
There is a presumption that firms would be most reluctant to lose, through
a layoff or a quit, those workers in whom they had made the largest investments. Among such investments are hiring costs (such as the cost of evaluating prospective employees), and the cost of training that is specific to the
108
TABLE 32.—Unemployment rates by education, sex, and age, 1962 and 1972
[Percent]
Age
Sex and years of school completed
20 years and over
1962
Men: Total
8 years
9 to 11 years
12 years
16 years or more
Women: Total
8 years
9 to 11 years
12 years
16 years or more . . .
_.
20 to 34 years
1972
1962
35 to 54 years
1972
1962
1972
5.7
4.9
7.1
6.8
4.8
3.4
7.3
7.3
4.3
1.5
5.8
6.4
4.8
2.2
11.4
11.2
5.7
1.9
10.0
11.0
6.9
2.9
7.3
5.7
3.0
.9
6.2
4.0
3.0
1.7
5.6
5.4
8.0
7.2
4.9
4.7
6.2
8.3
5.5
7.5
13.6
13.0
8.7
14.4
6.4
7.0
5.6
5.4
5.2
1.5
5.1
3.0
7.2
1.9
6.6
4.0
4.0
1.6
4.3
2.4
Note.—Data relate to March of each year.
Source: Department of Labor, Bureau of Labor Statistics.
particular firm (that is, training useful almost exclusively in the firm where
it is acquired). Workers with more education tend to be less homogeneous,
and the less homogeneous the class of workers, the greater the resources devoted by the firm to acquiring information about the characteristics of particular individuals. More educated workers also appear to receive more
training on the job, because their prior education facilitates further training
and because they are more likely to have characteristics such as ability,
steadfastness, and good health which firms find desirable in their trainees.
Thus one expects a lower incidence of turnover (layoffs plus quits) among
more educated workers. Related to these points is the different occupational
and industrial distribution of those with more schooling: a greater concentration in white-collar jobs and in the service sector. As indicated above,
these occupational and industrial characteristics are associated with a reduced amplitude of cyclical fluctuations in unemployment.
Workers with more education are more likely to change jobs without
undergoing unemployment. It may be easier for them to search for a
new job while employed because their more cerebral and portable work
permits more flexible work schedules, or because prospective employers can
evaluate their qualifications initially without their presence. Moreover, unemployment is more expensive for those with higher levels of schooling; as a
result of their higher wages, unemployment benefits replace a lower proportion of their lost wages.
Data on job mobility which are available for 1961 by occupation but
not by education support these hypotheses. Job turnover was generally much
lower in the highly skilled occupations associated with more education.
Thus, only 4.7 percent of male nonfarm managers and 8.5 percent of male
professionals changed jobs in 1961. The rate of job change increased consid109
563-280 O - 75 - *
erably for those with less skill, reaching 16.4 percent for laborers. When the
number of changes made by those who changed jobs is also considered, the
differentials in total turnover become even more pronounced; the job
changers with lower skills were more likely to have made more than one
change (40 percent for laborers), while a smaller proportion of the highly
skilled had changed jobs more than once (22 percent for professionals). The
proportion of males who changed jobs without any unemployment was 55
percent for professionals, 37 percent for operatives, and 32 percent for
laborers.
It has been suggested that the increase in education over the past three
decades may have reduced overall unemployment. The reasons why unemployment differs among education groups, however, need not apply to unemployment over time. For example, the amount of training specific to the
firm would not necessarily respond proportionately to increases in the education of the population, although at a given moment training and education may be strongly linked. In addition, increases in education over time result in increases in schooling levels within occupations, as well as an increase
in the proportion of the labor force in more skilled occupations. If unemployment is more strongly associated with occupation than with education, secular increases in the level of education would result in less than proportionate declines in the unemployment rate. For a rising level of education to
have no effect on the overall unemployment rate would require an increase
in unemployment rates within at least some education groups. It is not
possible to test this hypothesis adequately since unemployment rates by education, controlling for demographic characteristics, are not available
for the years before 1962, and hence there are not enough data points to
separate cyclical from longer-term effects.
UNEMPLOYMENT DIFFERENCES BY RAGE
The rate of unemployment among blacks has been about double that of
whites in the post-World War II period. From 1948 through 1973 the unemployment rate averaged 8.6 percent for blacks and 4.3 percent for whites.
Although the black-white differential in earnings has narrowed over the past
20 years, no such narrowing is as evident in the unemployment differential.
The race difference in unemployment may be attributed to differences in
demographic and socioeconomic characteristics, as well as to current discrimination in the labor market. Some demographic and socioeconomic differences, however, may themselves be consequences of past discrimination.
Among whites, unemployment rates vary across groups with different characteristics; for example, rates are higher for teenagers than for adults, for
high school dropouts than for college graduates, for laborers than for professionals; and they are higher in the West than in the South. Because
these characteristics differ by race, unemployment rates for blacks and whites
with the same characteristics could be the same although their overall rates
differed. The younger average age and lower levels of schooling and occu-
110
pation of blacks would imply higher black unemployment rates. The greater
residential concentration of blacks in the South would, on the other hand,
imply lower black unemployment rates.
The extent to which racial differences in unemployment can be attributed
to various measurable factors has been computed for March 1970 from data
collected in the 1970 Census of Population. As reported in the census, the
unemployment rate for persons aged 16 and over was 6.3 percent for black
men and 3.6 percent for white men; 7.7 percent for black women and
4.8 percent for white women (Table 33). The computations were performed separately for the more restricted group of men and women aged
25 to 64 who were experienced workers, that is, who had worked at some
time during 1969. For this group the civilian unemployment rate for men
was 3.5 percent for blacks and 2.5 percent for whites. By excluding young
persons, those aged 65 and older, and those who had been out of the labor
force the preceding year, the unemployment rate is reduced, and more so
for blacks. The rate differential is thereby reduced, especially for men. It
is primarily the exclusion of young workers which accounts for this effect.
TABLE 33.—Unemployment rates by race, Spanish heritage, and sex, March 7970
[Percent]
hComparison of persons of
| [Spanish heritage and whites
I not of Spanish heritage
Comparison of
blacks and whites
Item
Men
Women
Women
Men
Persons 16 years of age and over:
White or white not of Spanish heritage.
Black or Spanish heritage
3.6
6.3
4.8
7.7
3.5
5.8
4.7
8.1
2.5
3.5
3.1
5.2
2.4
3.7
3.0
5.4
3.4
3.8
3.3
3.0
2.6
4.7
4.9
4.2
4.1
3.9
3.7
4.6
3.9
2.5
2.5
2.1
Persons 25 to 64 years of age who worked in 1969:
White or white not of Spanish heritage.
Black or Spanish heritage
Predicted black or Spanish heritage rate if blacks or
persons of Spanish heritage had the white or white not !
of Spanish heritage distribution of: 1
|
Age
Plus:
Plus:
Plus:
Plus:
Region
Schooling
Marital status
Occupation
3.1 I
2.5
2.6
2.5
i Using micro-data from the 1/1,000 sample of the 1970 Census of Population, the dichotomous variable unemployedemployed in the survey week in March 1970 was regressed for each group on the control variables. The mean values of
the control variables for whites or whites not of Spanish heritage of the same sex were inserted into the regression for blacks
or persons of Spanish heritage to obtain the predicted value for blacks or persons of Spanish heritage.
Note.—The unemployment status refers to the week prior to Census Day, April 1. 1970. For those who returned the
forms late, the data may refer to April. The data, therefore, are not strictly comparable to unemployment rates obtained
from the Current Population Survey and reported by the Bureau of Labor Statistics. Data relate to persons living in
the 50 States and the District of Columbia.
Sources: Department of Commerce (Bureau of the Census) and Council of Economic Advisers.
The remaining race differential in unemployment rates of 1.0 percentage
point for March 1970 among males aged 25 to 64 who worked in 1969
would be increased to 1.3 percentage points if adult blacks had the same
distribution of age and region of residence as whites (Table 33). This
111
arises primarily because blacks are more concentrated in the South, where
unemployment is lower. When control for the race difference in schooling
is added, the differential is reduced to 0.8 percentage point; and 20 percent
of the original differential is explained. A substantial reduction in the differential is obtained, however, only when marital status and occupation (10
broad categories), are introduced. With these five variables, one can account
for 90 percent of the differential in unemployment. Under the same stepwise
procedure as for men, 62 percent of the larger race differential for women
is accounted for by the five control variables. Among women, however, age,
region, and schooling have a larger effect on the differential than among
men.
These results cannot easily be used to determine the extent to which the
racial differences in unemployment are due to current discrimination in the
labor market. Race differences in some of the control variables, such as
marital status and occupation, may themselves be partly attributed to the
effects of current discrimination. For example, unemployment and low
income due to discrimination in employment could lead to higher rates of
marital separation; employers may bar some persons from particular occupations on the grounds of race. However, other relevant variables which were
not measured—such as the quality of schooling and the extent of training
on the job—could also have important effects and help to explain race
differences in unemployment.
Differences between blacks and whites in their basic education and other
skills may also have arisen indirectly through discrimination. Labor market
discrimination can lower or make more uncertain the monetary return from
schooling and consequently lower the incentive for additional schooling.
Perhaps more important, past discrimination, unrelated to the current labor
market, clearly lowered the quantity and quality of schooling for blacks.
Several decades ago when the older workers in today's labor market were of
school age, the quality of schooling for blacks was vastly inferior by almost
any measure. There has been considerable progress in this area, so that today
available measures of schooling resources, such as expenditures per pupil,
have been brought to approximate equality.
Even if discrimination in the labor market were widespread, it could
result in lower wages instead of higher unemployment for blacks relative to
whites with the same skill and other relevant characteristics. If there were no
equal opportunity legislation or other restrictions on wages, and if employers
discriminated against blacks, blacks might work for less pay than similarly
qualified whites; this would provide an incentive for employers to hire them,
although the incentive might not always be sufficient. If white employees
were to refuse to have a black supervisor, employers might hire blacks for
jobs below their skill level or maintain segregated work forces. If, because
of racial tension, it were too costly to employ black and white workers of
similar skill levels in an integrated work force, segregated work forces may
112
also develop. In each case, discrimination could take the form of reduced
compensation, inferior jobs, or segregation, rather than higher unemployment.
Discrimination is more likely to lead to unemployment differentials when
employers are prevented from paying different wages for equal work, because
of legal, union, or social pressure. Discrimination may then to a greater
extent take the form of restricted job openings for blacks, because it is sometimes more difficult to prove discrimination in hiring or promotion than in
overt pay differences. Such a development could increase the difficulty of
finding and maintaining employment, and hence increase the unemployment rate for blacks. Moreover, the prospect of equal pay may encourage
blacks to quit jobs with low pay and search longer for more promising
positions.
Empirical studies have estimated the extent to which differences in State
laws requiring "equal pay for equal work" (prior to the national Civil Rights
Act of 1964) affect race differences in income and unemployment, when
other economic variables are held constant. The results indicate that State
equal pay lawrs reduced the gap between the wage rates of equally skilled
blacks and whites but increased the difference in unemployment. The wage
effect was greater than the unemployment effect, however, and annual
earnings differentials between blacks and whites consequently narrowed.
The ambiguity of the relation between discrimination and unemployment
is further illustrated by a comparison of the unemployment differential
between the urban South and the urban non-South during the decennial
census years 1940 through 1970 (Table 34). The unemployment differential between white and black men tends to be larger in the non-South, particTABLE 34.—Unemployment rates for males in the urban South and urban non-South, by race
and age, selected years, 1940—70
North and West
(percent)
Difference
between black
and white rates
(percentage points)
South
(percent)
Ratio of black
to white rate
Age group and year
Black
White
Black
White
North
and
West
South
North
and
West
South
Males 14 to 24 years:
1940
1950
1960
1970
. .
34.7
22.9
18.5
16.7
22.6
10.7
9.0
8.6
23.1
14.0
13.4
12.4
14.7
8.0
7.7
6.7
12.1
12.2
9.5
8.1
8.4
6.0
5.7
5.7
1.54
2.14
2.06
1.94
1.57
1.75
1.74
1.85
16.5
10.6
9.8
5.5
9.4
4.7
3.9
2.9
11.6
7.0
7.0
3.5
6.4
3.4
3.3
1.9
7.1
5.9
5.9
2.6
5.2
3.6
3.7
1.6
1.76
2.26
2.51
1.90
1.81
2.06
2.12
1.84
Males 25 years and
over:
1940
1950
1960
1970
Note.—In 1940 black includes Negro and other nonwhite races; in 1950, 1960, and 1970 Negro only.
In 1970 white includes some races other than Negro and American Indian usually classified as nonwhite. These other
races made up 0.6 percent of the combined group "white and other" in the South and 1.8 percent in the North and West.
Source: Department of Commerce, Bureau of the Census.
113
ularly in 1950 and 1960. Since the black-white difference in education has
been larger in the South than in the non-South, unemployment rate differentials adjusted for education would show an even more exaggerated tendency
for the South to display a smaller race differential in unemployment. On the
other hand, broadly considered, economic opportunities have generally been
greater for blacks outside the South both absolutely and relative to whites;
this is reflected in the much smaller differences in earnings in the non-South
between blacks and whites of the same education.
By 1950 eight States had passed enforceable fair employment laws, and
by 1960 eight more had such legislation. All were outside the South. Perhaps
for this reason the unemployment differential by race became much more
pronounced in the non-South than in the South in 1950 and 1960. By 1970,
however, the national Civil Rights Act (1964) prohibited discrimination in
all States, and the regional difference in the unemployment differential
became much smaller.
Factors other than equal opportunity legislation may also have influenced
the regional pattern of unemployment by race. A large proportion of black
workers in the North and West migrated from the South as young adults.
As relative newcomers, they had less access to information about job opportunities than whites, who were more likely to have an established network
of information among friends and relatives. Among blacks new to an area,
information about where to expect discrimination would be gained primarily by experimentation. In the South, although many blacks migrated
to urban areas, the available opportunities were probably much better
known to the black community.
The persistence of a differential in unemployment between blacks and
whites, after adjustment for skill and other factors, is therefore not easily
explained. In part, the direct influence of discrimination may be greater on
unemployment but less on wage rates now than in previous periods because
of nationwide equal employment legislation. Moreover, ending all forms
of current labor- market discrimination would not necessarily affect unemployment in the short run. It could increase unemployment for a time as
blacks found it worthwhile to search more widely for new and unfamiliar,
but potentially highly rewarding, opportunities. On the other hand, groups
that have been discriminated against for a long time may not immediately
believe that a change has taken place, and therefore only gradually respond
to the new opportunities. One would not, of course, expect substantial new
investments or changes in occupation by older blacks in response to a decrease in current labor market discrimination, because they have already
made investments specific to their job or occupation, and the length of
their future work life is shorter.
UNEMPLOYMENT OF PERSONS OF SPANISH ORIGIN
Another group which has been subject to discrimination in the United
States is made up of persons of Spanish descent who comprise about 5 per-
114
cent of the population and of whom about 95 percent are white. In 1974
the unemployment rate for men classified as of Spanish origin was 7.3 percent, compared to 4.8 percent for all white men. For women, the comparison was 9.4 percent and 6.7 percent respectively.
Persons of Spanish origin differ from whites as a whole in characteristics
that are likely to influence their unemployment rates. For example, among
men aged 25 and over in 1974, the median years of school completed by
men of Spanish origin was 9.7 years, compared to 12.4 years for all white
men. Difficulties in communicating in English may affect employment opportunities, although this factor interacts with level of schooling. About
16 percent of persons classified as of Spanish heritage in the 1970 Census
of Population were foreign-born, compared to 5 percent for all whites. Persons of Spanish origin are also more likely to be young and to live in the
western regions of the country, two categories associated with higher unemployment. For example, about 30 percent of all persons of Spanish origin in
the United States live in California, compared to about 10 percent for
all whites in the United States; and the unemployment rate for California
tends to be higher than the national average—44 percent higher in the
period 1969 through 1973.
To determine the extent to which particular demographic and economic
characteristics account for the difference in unemployment between those
of Spanish heritage and whites not of Spanish heritage, an analysis similar
to that for the black-white comparison was made on the basis of data from
the 1970 Census of Population (Table 33). Although in the census (March
1970), men of Spanish heritage aged 16 and over had substantially higher
unemployment rates than other white men, the differential of 2.3 percentage
points is nearly halved when the data are restricted to men aged 25 to 64
who worked in 1969. The decline in the differential is largely due to the
exclusion of youths aged 16 to 24, who make up a greater proportion of
the Spanish heritage labor force than of the white labor force. Of the 1.3
percentage point differential in unemployment rates for adult men wrho
worked in 1969, 0.6 percentage point, or nearly half, is attributable to region,
that is, to the greater relative concentration of men of Spanish heritage in
the West, where unemployment is high. Nearly all (92 percent) of the
differential in unemployment rates of adult men is explained by the three
variables: age, region, and schooling.
In March 1970 women of Spanish heritage aged 25 to 64 who worked
in 1969 had higher unemployment rates than white women not of Spanish
heritage, although 63 percent of the differential is due to differences in
age and region (Table 33). After adjusting for differences in schooling,
as well as in age and region, one finds that women of Spanish heritage
actually have lower unemployment rates than other white women with
the same characteristics—2.5 percent compared to 3.0 percent.
The analysis of unemployment differences between persons of Spanish
heritage and other whites suggests that the significantly higher unemploy-
115
ment rate of the former is due to differences in age, region, and schooling.
The extent to which these differences in characteristics are attributable
to historical discrimination in the United States is not known, but it would
seem that differences in unemployment rates are not a consequence of current labor market discrimination. This analysis does not, however, shed
light on the magnitude of discrimination against persons of Spanish origin
in other phases of their economic and social life.
UNEMPLOYMENT AND INCOME MAINTENANCE PROGRAMS
Assistance to the unemployed has been widely accepted on grounds of
equity and economic efficiency as an appropriate Government function since
the Great Depression of the 1930's. Greater equity can be achieved by
increasing the income of the unemployed through transfers which spread the
cost of unemployment among the public. In addition, the transfers may stimulate the employment of otherwise idle resources by increasing the aggregate
demand for goods and services. Two major Government programs of the
last four decades to provide income support for the unemployed are the
unemployment insurance system and public service employment.
UNEMPLOYMENT, INCOME, AND POVERTY
A cyclical downturn in business activity is associated with lower employment and a shorter average workweek for the employed. The effect of a
downturn is to change the level and distribution of aggregate earnings.
Because approximately 95 percent of the labor force is employed, however,
even a sharp rise in the unemployment rate means a relatively small decline
in employment and therefore in earnings. For example, from 1969 to 1971
the unemployment rate increased from 3.5 to 5.9 percent, with little change
in the rate of labor force participation; employment as a percentage of the
labor force decreased from 96.5 percent to 94.1 percent, or by 2.5 percent.
The average length of the workweek decreased by 0.6 hour (1.5 percent)
to 39.3 hours. Thus, aggregate hours worked per member of the labor force
decreased by approximately 4 percent. In the most recent cyclical downturn,
from the fourth quarter of 1973 to the fourth quarter of 1974, the aggregate
hours worked per member of the labor force fell by approximately 3 percent.
This decrease in the hours of employment during a cyclical downturn is
not shared equally throughout the labor force. Rather, for most workers
little or no decline occurs in their hours of work, while for others the decrease
is large. The result is more inequality in the distribution of income from
employment. Empirical studies of income inequality among families and
adult males in the post-World War II period demonstrate that inequality
increases in recessions and decreases during cyclical expansions, but there
has been no secular trend.
Because many unemployed individuals are eligible for income transfers,
the decline in income for those who become unemployed is smaller than
116
might be suggested by the decline in hours of work or in labor market earnings. In 1974 experienced workers who became unemployed because of layoffs (and in some cases because they quit their jobs) generally received unemployment insurance benefits for up to 26 or 39 weeks; and if income were
sufficiently low, they qualified for income maintenance programs. Those
who remained employed, though their hours of work fell, and those who were
unemployed but ineligible for unemployment benefits could have received
assistance from other income maintenance programs if their incomes were
sufficiently low. Temporary legislation enacted in December 1974 increases
the proportion of workers covered by unemployment insurance and extends
the benefits up to a maximum of 52 weeks during this period of high
unemployment.
Recent studies based on 1971 survey data have estimated the extent to
which transfer programs replace income losses associated with rising overall
unemployment. The transfer programs include unemployment insurance,
Aid to Families with Dependent Children, food stamps, and social security.
Among households headed by a person aged 65 or under and at the poverty
level before receiving the transfers, the programs were estimated to replace
31 percent of the lost earnings of male-headed households and 56 percent of
the lost earnings of female-headed households. The replacement ratios were
lower for higher-income families.
One study also calculated the average family income loss, after taking
account of transfer benefits and changes in work participation of other
family members, arising from unemployment of the family head. Among
households experiencing some unemployment and headed by a man aged
65 or under, the average annual family income loss (net of transfers) associated with a 1 percentage point higher unemployment rate was estimated to
be 5.7 percent for those at the poverty level. At five times the poverty level,
the loss was 4.9 percent of the family income. Among households headed
by a woman aged 65 or under, the estimated loss was approximately 3 percent
for all income levels. There was, of course, considerable variation in income
loss within these groups.
These estimates of income loss may be biased upward for several reasons.
In surveys there is much more underreporting of transfer income than of
earned income. Moreover, the appropriate comparison is with income
after deduction of payroll and income taxes and of work-related expenses; and, although transfers are not subject to payroll and income taxation, the estimates were made for pretax earnings. In addition, no estimate
was made of the value of extra home productivity or leisure arising from
the reduced work time, a value that may not be negligible during brief
spells of unemployment. The study is especially likely to underestimate replacement of lost earnings by transfers when the increased unemployment
results from the business cycle, because the estimates were based on differences
in income and unemployment between households at a moment in time.
Cyclical increases in unemployment involve a larger proportion of workers
eligible for unemployment compensation, because the unemployment is more
117
heavily weighted toward layoffs than quits or labor force entry, and toward
the covered sector of the work force. In addition, the maximum number of
weeks for which benefits are available generally increases in a recession. For
example, 64 percent of the unemployed received benefits in the high unemployment year of 1961, compared to 39 percent in the low unemployment
year of 1966. On the other hand, additional factors may lead to a downward
bias. The study could not account for the loss of employees' fringe benefits
when they are unemployed, or for the adverse psychological and other effects
due to the greater uncertainty among both the employed and the unemployed
when unemployment rises. However, it would appear that the transfer programs may replace a substantial proportion of the loss in after-tax earnings,
particularly during cyclical increases in unemployment.
Even during times of relatively low unemployment, more weeks of unemployment and lower incomes are associated with each other. Contrary to
common belief, however, unemployment is no longer a major cause of poverty. Although during the Great Depression the relation between unemployment and poverty was undoubtedly strong, in the postwar period the relation
weakened. Table 35 shows data on the work experience of persons who
headed poverty households in 1959 and 1972, years with roughly the
same level of unemployment (5.5 percent) although the number and percentage of the population in poverty declined considerably over the period.
Although failure to work a full year was strongly associated with poverty
in both years, only a minority of the heads of households in poverty cited
TABLE 35.—Work experience of family heads below the low-income level, by sex,
1959 and 1972
Male head
Total
Female head
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
61.5
76.0
54.7
65.4
84.2
90.4
15.6
13.2
18.4
16.8
6.4
8.4
14.4
1.2
11.1
2.2
17.3
1.0
14.9
1.9
4.9
1.5
5.8
2.6
Did not work full year.
Unemployment a main reason for not working a full
year..
Worked 1-49 weeks
Did not work, unable to find a job.
Unemployment not a main reason for not working
a full year
1972
45.9
62.7
36.3
48.5
77.9
82.0
Worked 1-49 weeks.
16.5
19.1
14.8
16.4
22.3
22.7
Did not work and did not seek a job
Keeping house
III, disabled
Retired, going to school, and other reasons.
29.4
10.9
9.5
8.9
43.7
19.0
14.6
10.1
21.5
32.2
55.6
47.5
5.4
2.7
59.3
44.7
11.3
3.3
38.5
24.0
15.8
9.6
Worked a full year (50-52 weeks) 2
&•
10.7
0)
17.1
15.1
34.6
45.3
1 Not applicable.
2 Includes head in Armed Forces.
Note.—Persons below the low-income level are those falling below the poverty index adopted by the Federal Interagency Committee in 1969.
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.
Sources: Department of Commerce (Bureau of the Census) and Council of Economic Advisers.
118
inability to find work as the reason for working less than a full year. In 1959,
only 15.6 percent of the heads of poverty households worked less than a full
year because they could not find work, and by 1972 this percentage had
decreased to 13.2 percent.
An increasing proportion of poor families are headed by someone who
works only part of the year—or more often, who does not work at all—
because of ill health, old age, or home responsibilities, not from inability to
find a job. Low wage rates, however, remain an important cause of poverty.
The decline in the relative importance of unemployment as a reason for
poverty is primarily related to rising real wage rates during periods of employment and to increased real income supplements for the unemployed. In
addition, for the same overall unemployment rate, the proportion of male
heads of households experiencing unemployment has been declining.
There is some increase, or a slowing rate of decrease, in poverty during
recessions. The increase in poverty is greater, the deeper the recession. For
those with fixed incomes, poverty increases as the rate of inflation rises.
Data for 1974 are not yet available; but it can be anticipated that because
of the cyclical rise in unemployment and the high rate of inflation, poverty
is likely to have increased over the year and may increase still further in 1975.
UNEMPLOYMENT INSURANCE SYSTEM
The nationwide unemployment insurance system, initiated by the Social
Security Act of 1935, is a joint program administered by the States within
broad Federal guidelines. As a result of Federal tax law, private nonfarm
wage and salary workers (except domestics and employees of very small
nonprofit organizations) and certain State employees are covered by the
unemployment compensation system. In some States, agricultural, domestic,
local government, and additional State workers are also covered. Separate
Federal programs exist for unemployed Federal employees and unemployed
persons recently discharged from the Armed Forces. A temporary, wholly
federally financed program for employees not covered by the State or other
Federal programs was enacted in December 1974. (See the discussion of
the Unemployment Assistance (UA) program below.)
A worker must satisfy several "tests" to be eligible for unemployment benefits. These tests refer to cause of unemployment, duration of covered employment, earnings in covered employment, and availability for work. The worker
usually cannot receive benefits unless he or she is available for, actively
searches for, and does not reject, suitable employment. Benefits are available
in all States for those unemployed because of a job layoff. A waiting period
of 1 week after the filing of the claim is required before benefits begin in
most States. In some States and under certain circumstances, benefits are
also available to those discharged for misconduct and to those who voluntarily left a job with "good cause." In the latter two situations, the conditions
of eligibility, the length of the waiting period before benefits can begin, and
the extent of benefit reduction vary considerably from State to State. Strikers
are generally not eligible for unemployment compensation, although in New
119
York and Rhode Island they become eligible after a waiting period of several
weeks. There arc many other specific provisions for eligibility, and they too
vary from State to State.
The duration of regular benefits usually increases with the length of the
worker's past employment in jobs covered by the program, up to a maximum
of 26 weeks of benefits in most States. Extended benefits have been granted
for up to an additional 13 weeks in States with high rates of unemployment,
for a maximum of 39 weeks. Public Law 91-373 requires that States provide
these 13 weeks of additional compensation for those who have exhausted
their regular State benefits if two conditions are satisfied. First, the average
State-insured unemployment rate for the 3 most recent calendar months must
equal or exceed 4.0 percent. Second, the average rate for this 3-month period
must be at least 120 percent of the average of such rates for the same weeks in
the prior 2 years. Under Public Law 93-368, however, States can elect to
waive the "120 percent rule" to extend benefits. By the end of December
1974, 11 States were providing extended benefits, one under this waiver.
New Legislation
In response to the sharp rise in unemployment in the second half of 1974,
two new laws that affect the unemployment insurance program were enacted
in December 1974. The Emergency Unemployment Compensation Act provides for an additional 13 weeks of benefits, for a maximum of 52 weeks. The
new benefits go into effect in a State when the insured unemployment rate
averages 4 percent or more over the preceding 1 3 weeks, either nationally
or in the particular State. Benefits cease when neither condition is satisfied.
The program became operative in January 1975. Using general funds, the
Federal Government reimburses the States for 100 percent of the benefits
paid under this program, which lasts through 1976.
Under Title II of the Emergency Jobs and Unemployment Assistance
Act of 1974 a special unemployment compensation program was established
to provide benefits lasting up to 26 weeks for some unemployed workers
who are ineligible for the regular State or Federal programs. Unemployment
Assistance benefits are available to workers who would satisfy the State
requirements when two modifications are made in the regulations. One
is that all wage and salary employment is treated as covered, a benefit
to those who have had part or all of their previous employment in industries
not covered by the State program (12 million wage and salary workers).
The other modification is that the most recent 52 weeks can be used to satisfy
the employment requirement, replacing the usual practice in the State programs of using the 52 weeks prior to the most recent 3-month period. This
primarily benefits recent entrants to the labor force. When employment records are not immediately available, claims for Unemployment Assistance
may be evaluated on the basis of an affidavit filed by the applicant.
Unemployment Assistance, which is fully federally financed from general
revenues, becomes operative in a local area when for 3 consecutive months
the national unemployment rate averages 6.0 percent or more, or the local
120
area unemployment rate averages 6.5 percent or more. The program ceases
in a State when these conditions are no longer satisfied. The program started
accepting claims in January 1975; the legislation terminates in December
1975.
Farm and domestic workers had generally been excluded from regular
State unemployment coverage, largely because of the substantial administrative difficulty in verifying previous employment, previous wages, availability for work, and search for work, and in experience rating of employers. These problems unavoidably remain in the UA program. One study
estimated that the two new unemployment compensation laws would induce
an increase in the measured unemployment rate by about 0.7 percentage
point. However, because of the expected high level of unemployment in
1975, the social benefit of extending income support to a broader group of
unemployed workers was considered of greater value than the difficulties
created by the programs.
Benefits
The average weekly number of persons receiving unemployment benefits
was 2.3 million and the average check was $64 in 1974. Some received
benefits for less than a full week because they started a job or had a part-time
job. Benefits are related to earnings and range among the States from onehalf to two-thirds of the worker's recent average weekly wage, up to a State
maximum. The maximum basic benefit varies from about $60 to $117 per
week. The percentage of unemployed claimants who are at the maximum also
varies widely from State to State. For example, in 1972 the percentage of
newly insured claimants eligible for the maximum ranged from 12 to 73
percent, while the average for the country was 44 percent. Ten States and
the District of Columbia provide "dependents' allowances" for children, and
some of these States also provide them for a nonworking spouse. These benefits can amount to a maximum of an additional $46 per week. State unemployment compensation benefits are not subject to taxation.
Some union contracts have provisions for private supplements to State
unemployment compensation. For example, United Auto Workers' contracts
have established Supplemental Unemployment Benefit Funds (SUB Funds)
to which the employer contributes. A worker with at least 3 years' experience
could receive a stipend from the fund for up to 52 weeks which would make
his total State plus SUB Fund compensation approximately 95 percent of
his regular take-home earnings, less $7.50. In January 1975 the average
weekly SUB Fund benefit was approximately $100 for a worker receiving
State unemployment insurance benefits and $185 for a worker who had
exhausted the State benefits. SUB Fund benefits are subject to income
taxation.
Changes in Coverage and Benefits
Although coverage under the unemployment insurance program has been
extended periodically since its inception, the percentage of the unemployed
121
who receive benefits has declined (Table 36). This seeming paradox is
explained by the changing composition of the unemployed. Over the postWorld War II period, there has been a large increase in the proportion of
recent entrants in the labor force. Recent entrants have high unemployment
but are less likely to meet the eligibility requirements of the unemployment
insurance system, and this accounts for the increasing proportion of the
unemployed who do not receive benefits. Unemployed youths and women
are more likely to be entrants or reentrants and therefore are less likely to
receive benefits. Moreover, the increase in school attendance among those
aged 16 to 24 has led to a change in work behavior: students enter and
reenter the labor force, often more than once during the year, taking shortterm jobs, and quitting more often than older wmkers. For these reasons, the
percentage of unemployed youths receiving benefits under State programs
has declined since 1960. Adult men, in contrast, are more likely to qualify
for unemployment benefits because they have sufficient work experience and
because a layoff more frequently precipitates their unemployment. The extenTABLE 36.—Insured unemployment as percent of total unemployment and unemployment benefits
as percent of average weekly earnings, 1948-73
Insured unemployment as percent of total ijnemployment
State insureda
Year
Total
insured l
Women
Men
Total
16 years
and over
16 to 24
years
25 years
and over
16 to 24
years
25 years
and over
Average
weekly
State unemployment
benefits
as percent
of average
weekly
earnings
in covered
employment
1948
1949
63 5
68.0
43 1
54.2
34 1
36.0
1950
1951
1952
1953
1954
1955
1956
1957.
1958
1959
48 8
48.7
56 8
58.2
58.1
49.1
48.1
54 9
71. C
56 1
46 0
47.2
55 4
54.0
52.9
44.4
44.2
50 6
54.9
45 0
34 4
32.2
33 0
32.3
33 5
32.1
33.3
33 5
35.3
33 4
1960
1961. .
1962
1963 3
1964 . _
1965
1966
1967.. . . .
1968
1969
53 8
63.5
49.8
48.5
46.3
43.1
39.3
42.7
42.1
41.6
49 5
48.6
45.6
44.4
42.4
39.5
36.9
40.5
39.4
38.9
24 0
25.3
20.9
19.5
16.8
14.6
11.9
13.6
11.7
10.7
63 3
62.8
60.3
59.4
60.9
59.9
61.0
72.4
74.0
76.6
19 2
19.2
17.1
16.7
14.8
12.3
9.8
11.8
9.8
9.3
63 9
58.6
58.3
58.6
56.5
54.6
53.3
53.2
56.9
57.3
35 2
35.4
34.9
34.6
33.8
33.8
34.7
34.7
34.3
34.4
1970
1971
1972
1973
50.6
46.3
45.1
41.4
44.2
43.1
38.2
37.8
16.0
17.6
15.7
15.7
76.9
74.2
70.6
71.7
12.8
13.4
11.2
11.2
65.1
58.6
52.6
53.8
35.7
36.5
35.9
36.0
_.
.
1
Includes persons covered under the following unemployment compensation programs: State, Federal employee,
Railroad Retirement Board, and veterans. Also includes Federal and State extended benefit programs.
2
Includes only persons covered under the State programs and excludes all other programs as well as Federal and State
extended benefit programs.
3 Totals include Puerto Rican sugar cane workers beginning July 1963; but they are excluded from data by sex and age
Note.—State insured unemployment data are not available by age and sex prior to 1960.
Source: Department of Labor, Manpower Administration.
122
sions of coverage are reflected in the rising proportion of adult men who
receive benefits. Thus, even though the proportion of adult men receiving
benefits has risen, two factors have caused a reduction in the proportion of
the total unemployed receiving benefits: an increase in the proportion of the
unemployed who are young workers and women; and a decline in the proportion of unemployed youth receiving benefits.
During recessions, an increased proportion of the unemployed receive
benefits, especially when the data include recipients of extended benefits. In
part this reflects the greater proportion of job losers and adult men among
the unemployed. Due to the new legislation, an unusually high proportion
of the unemployed will receive benefits in 1975.
As indicated in Table 36, the average weekly unemployment insurance
benefit has ranged from 32 to 37 percent of average gross weekly wages in
covered employment. This ratio underestimates the actual replacement of
the earnings loss of the insured unemployed because they usually earn less
than the average covered worker, and unemployment benefits are not taxed.
It has been estimated that for unemployed insured male family heads in
families with income below 150 percent of the poverty line, benefits may
replace about 70 percent of lost income after taxes; for those with higher
income, the replacement ratio may be about 40 percent.
Effects of Unemployment Insurance
The unemployment compensation system may itself influence the frequency
and duration of unemployment, and hence the measured unemployment
rate. The State unemployment insurance system is funded by taxes levied on
employers in proportion to their wage bill. The tax rate varies according to
the employers' experience rating, which is based on the extent to which
their workers draw benefits from the system. Because the variation in tax
rates is set within narrow margins, however, the experience rating is not
closely matched to benefits. Thus, in firms with high layoff* rates the benefits
to employees over a long period are likely to exceed the employers' contribution to the fund. In effect then, the tax and benefit structure tends to
subsidize seasonal and casual employment relative to stable employment.
For example, it makes the planned annual layoff an attractive alternative to
the paid vacation for employers of lower-wage workers. This in turn
may induce an increase in the frequency of measured unemployment and
thereby lead to an increase in the unemployment rate.
Unemployment benefits may also tend to lengthen the duration of insured
unemployment. The system partially compensates for the time spent searching for employment, thereby reducing the cost of longer unemployment.
The system clearly makes it easier for a worker to maintain his accustomed
pattern of consumption during a longer search period.
Studies of interstate differences in unemployment have found that the
rate is higher where benefits are high relative to wages. The denial rate,
based on administrative decisions regarding eligibility, is also important
123
in explaining interstate differences in insured unemployment. The denial
rate appears to be higher in States devoting more resources to administering
the program.
The longer period of unemployment stimulated by unemployment compensation may represent a worthwhile investment for society. If a longer
search leads to a job with higher wages and fringe benefits, more pleasant
working conditions, or a longer expected tenure, it benefits both the individual and society. Some unemployed persons, however, may have no intention of accepting a job—perhaps because they are planning to leave the
labor force or simply because they want a vacation—but go through the
necessary steps to collect benefits.
Some have questioned the equity of the unemployment compensation program largely because its benefits are tax free. The greater the family's other
income, the larger is the benefit net of taxation that a family receives from a
member who gets unemployment compensation rather than wages. A lowrpaid worker in a high income tax filing unit could actually receive more
income net of taxes and work-related expenses by being unemployed than by
being employed.
In spite of the difficulties inherent in the current unemployment compensation program, it is nevertheless the most effective w7ay of providing financial support for those who suffer a loss in income due to unemployment.
PUBLIC SERVICE EMPLOYMENT
Federal public service employment programs are a means of increasing
employment opportunities, particularly during periods of high unemployment. It is intended that Federal revenues will be used to employ persons
who would otherwise be jobless, in government jobs that would not otherwise exist.
The Emergency Employment Act of 1971 (EEA) provided the first largescale public employment program broadly applicable to the unemployed
population since the Works Progress Administration (WPA) of the 1930's.
Special types of public employment programs for particular target groups,
however, have been funded on a more limited scale since the 1960's, for
example, the summer employment of youth in the Neighborhood Youth
Corps and the subsidized employment of the elderly in Operation Mainstream. In contrast to the WPA, which was administered by separate Federal agencies created for the task, the Public Employment Program (PEP)
under EEA was essentially a form of revenue sharing, with the Federal
Government supplying the funds and State and local governments actually
administering the program.
PEP was conceived as a countercyclical program to provide "transitional"
jobs at a time when the unemployment rate was about 6 percent. PEP participants were more likely than the average unemployed person to be veterans,
male, and well educated (75 percent had graduated from high school).
In fiscal 1973, when the program was in full operation, an estimated 150,000
124
man-years of employment were funded by the PEP program. The extent to
which these numbers reflect net additions to State and local employment—
that is, employment that would not have occurred without the program—
can only be estimated. Studies indicate that each PEP job created less than
a job, and that this "displacement effect" increased as time passed and as the
possibility of substituting Federal for State and local funds increased. Several estimates put the displacement effect after 2 years in the range of 50
percent.
The Comprehensive Employment and Training Act (CETA), which
became operative in 1974, provides public employment funds in two forms
to States and localities acting as prime sponsors. Under Title I, bloc
grants for manpower programs allocated to the sponsor may at the sponsor's
discretion be applied to public service employment or to any other activity
related to manpower. Title II is labeled Public Employment Programs, but
the funds can be used for either public service employment or traditional
manpower programs, such as on-the-job training. Title II funding is to be
provided only to areas where the unemployment rate has averaged 6.5 percent or higher for 3 consecutive months.
Estimated outlays on the various parts of CETA for fiscal 1975 are:
Title I, $1.6 billion; Title II, $585 million; Titles III and IV (Indians,
migrants, Job Corps), $342 million. An additional $250 million will be spent
in fiscal 1975 for public service employment from 1974 CETA authority that
allowed a one-time appropriation for continuing programs under the EEA.
Of this estimated total of $2.8 billion, $380 million was spent on summer
youth programs in 1974. It is expected that the number of CETA public
service jobs will increase from approximately 85,000 in fiscal 1974 to 170,000
during 1975 and 1976. Compensation and administrative costs per man-yearare anticipated to be about $9,000.
New Legislation
The Emergency Jobs and Unemployment Assistance Act of 1974 supplements CETA by providing a public service employment program known as
the Temporary Employment Assistance (TEA) program. Under this new
legislation an additional $875 million will be available during fiscal 1975 to
State and local government prime sponsors to create as many as 97,000
jobs. The funds may be used for projects that extend over a 12-month
period and employ persons who have been unemployed for at least 30 days,
or at least 15 days in areas of excessively high unemployment. "Preferred
consideration" is to be given to those who have exhausted their unemployment compensation. The Administration has also requested that $125 million be restored to the TEA program in fiscal 1975. The TEA program together with CETA would then provide up to 280,000 jobs when both
programs are in full operation.
125
563-280 O - 75 - 9
Effects of Public Employment Programs
Public employment has been suggested as a way of reducing unemployment during recessions. Some argue that public employment, whereby people
are directly hired by the government, is superior to other macroeconomic
instruments with respect to creating more employment per dollar spent. Estimates have been made of the net employment generated by a given expenditure on public employment, compared to that generated by an equal expenditure on government purchases from the private sector or by an equal reduction in the tax bill. On the basis of the PEP experience, public employment
was found to create rnore additional jobs in the very short run (1 or 2 quarters
after the program begins) than either of the other two policies. After 5 or 6
quarters have passed, however, the superiority of public employment as a
tool for creating jobs was found to diminish as State and local governments
substitute Federal funds for their own funds. Eventually, this displacement of
State and local funds with Federal funds would allow State and local taxes
to be reduced (or grow at a slower rate) and in turn stimulate economic
activity, including employment. Then, in effect, the public employment
funds can be viewed as generalized revenue sharing funds, with Federal
sources (taxes, deficits) replacing local funding of local projects.
The reduction in unemployment due to public service jobs would depend
partly on the effect of the program on the size of the labor force. If public
service jobs could be confined only to persons with previous work experience
and with a proved period of unemployment, then the employment-generating
effects would be directly translated into reduced unemployment.
There are other advantages, and these are frequently cited to support
public service employment. For some workers the jobs may provide training
and, by allowing a regular work schedule and environment, slow the depreciation of prior training and work habits. Some useful output is produced;
income maintenance is provided without the welfare stigma. Critics of public
employment have noted, however, that a public service job reduces the time
available for seeking more permanent private sector employment, and for
many workers it would lengthen the time away from usual employment. Time
away from usual work may increase the depreciation of skills specific to
particular jobs.
Although public employment appears to have a short-run advantage over
other policy tools in creating jobs, it also appears more likely than other
policies to put pressure on the price level. Indeed, the more successful the
program is in employing individuals who would normally be seeking jobs
or working in the private sector, the tighter the private sector labor market
will be; and rising wages and prices will result. The inflationary impact
would be smaller if the program were financed by an increase in taxes rather
than by an increase in the debt. The jobs lost as a result of the tax increase,
however, are likely to be more productive than the jobs created by the public
126
employment program, both because of the difficulty of matching the skills of
the unemployed with those required for public service jobs and because the
assigned tasks are often ones that would otherwise be given low priority.
In summary, a public employment program that is effective as a countercyclical measure would presumably provide jobs that State and local governments would not otherwise create, that can be established quickly, and that
can be readily eliminated as job opportunities in the private sector increase.
To ensure that jobs are net additions to employment, it may be necessary to
create distinct tasks in separate and visible agencies set up for the purpose.
To provide productive employment, the jobs have to be suitable for persons
of diverse prior training, employment experience, and age; and they must
require at most a very short period of training. These sometimes conflicting
conditions may increase the difficulty of creating a successful program.
127
CHAPTER 4
Inflation During The Past Decade
T
HE PAST 10 YEARS HAVE BEEN CHARACTERIZED by an average growth rate of aggregate expenditures that is very high by historical
standards and that has substantially outstripped the sustainable growth of
supply of real goods and services. Contributing significantly to the growth in
aggregate demand were rapidly increasing Government expenditures along
with monetary policies that were appreciably more expansionary than those
in earlier post-World War II periods. In addition, a sharp rise has occurred
in foreign expenditures on American goods in recent years. Supply reductions
also contributed to imbalances between aggregate supply and demand, particularly in the past few years: crop failures and reduced oil supplies are the
most notable examples. Without neglecting specific features, the U.S. inflation since the mid-1960's can nevertheless be analyzed in terms of a general
conception of the inflationary process that emphasizes the role of monetary
and fiscal policies, and the decision-making process that leads to these policies.
A brief outline of this conception will be useful.
Governments can achieve certain short-term objectives by following policies that allow the aggregate demand for goods and services to rise faster
than the supply can rise in view of the available resources. One such objective
is to keep the rate of resource utilization very high and to postpone the
temporary underutilization that occurs in some phases of the business cycle.
Another objective is to embark on spending programs without making the
burden explicit to the public by correspondingly higher taxation, and thus
without raising the question of the distribution of this burden. At high rates
of resource utilization, however, such policies Will provide a stimulus only so
long as the public expects less inflation than will actually be developing, and
so long as the public therefore acts as if more real income were available
than will in fact be earned. Concerning the recent inflationary period, opinion
surveys as well as actual trends in real wage rates and real profits suggest a
substantial underestimate of the future inflation rate and a corresponding
overestimate of prospective real incomes by the public. Since people learn
from their experience, efforts to continue providing such stimulus require
generating an inflationary process that will show a strong tendency to
accelerate. At some stage it becomes imperative to put an end to such a
process.
When the inflationary phase has lasted so long that expectations of further
inflation are firmly embedded in the cost trend, a shift to policies of restraint
128
first exerts an adverse influence on output and the desired price deceleration
effect materializes only with a lag. Any convincing interpretation of the
events during 1970 and 1973-74 must stress this difficulty.
During 1973 and 1974 this difficulty was magnified by a steep increase in
raw material prices and by the price effects of specific capacity shortages in
a number of industries. Even when major specific cost increases occur,
monetary and fiscal restraint can prevent a lasting acceleration of the
general price trend; yet such policies will not be able to prevent a temporary
steepening of the rate of general price increase, especially in an environment
influenced by inflationary expectations. The explanation here also is that the
adverse effect of policies of restraint on output will precede their desired
effect on prices. Policies of restraint could keep even permanently tighter
supplies, resulting from "natural" or from "institutional" factors, from
touching off continuing inflation, though when changes of this sort occur no
policy may be capable of preventing a lasting adverse effect on output.
Lags of price response behind output response are among the characteristics of adjustment periods which may bring substantial discomfort, even if
methods are now available for greatly reducing the hardships suffered in
such phases of development. During these phases political pressures become
strong to adopt stimulative policies prematurely on a scale that would
rule out any appreciable decline of the rate of inflation. Since it is impossible to live indefinitely with an explosive inflationary process, the resumption
of expansionary policies is in turn apt to evoke strong pressures to adopt
comprehensive wage and price controls. These controls would allegedly enable us to follow the desired expansionary policies under circumstances in
which prices and wrages are directly regulated according to acceptable norms.
However, if after much unsuccessful experimentation that approach were to
be followed through with the consistency needed to make it effective, it
would lead to an economic and political system the basic characteristics of
which are very different from those under which we now live. Rigorously
controlled systems cause a loss of basic freedoms, and they have proved seriously deficient on grounds of economic efficiency as it reflects itself in the
living standards of the population. Which way history will move in this
regard remains an open question, and it is the most dramatic question posed
by the present difficulties.
The possibility remains of trying to attain a steadily rising general price
trend to which the other economic variables adjust. Not to allow such a
trend to steepen would require the same effort—the same resistance to
temptation—as would have been required for keeping to the near-zero
inflation path of the 1952-65 period. It could be argued that once we are
in the two-digit range a greater effort is needed for gradually reducing
inflation to negligible size than for achieving a much less ambitious longrun objective, such as that of a significant but nonaccelerating inflation
rate. Yet this would be an unconvincing argument because no policy
directed at a steady price trend can be successful unless it is credible to the
129
public, and the more policy makers adjust their initial objectives to the
upward deviations that have occurred in the past the less credible they
become in their promise not to accommodate accelerating inflation in the
future.
PERIODS OF PRICE INSTABILITY
Since 1929 the United States has experienced several periods of substantial price instability as measured by such general price measures as the
gross national product (GNP) price deflator or the consumer price index
(CPI). During the Great Depression of the early 1930's prices fell sharply,
declining by more than 20 percent from 1929 to 1933 (Table 37). Price
increases of a similar magnitude occurred following the outbreak of World
War II in Europe, before wartime price controls took effect. Prices rose even
faster on the average in 1946, 1947, and 1948, after these controls had been
lifted. The outbreak of the Korean war in 1950 also brought a brief but
significant price spurt. The largest year-to-year price increase since 1947
occurred in 1974, when the GNP deflator rose 10.2 percent over its 1973
level and the GPI rose 11.0 percent. This happened after inflationary antecedents that started developing about 1965.
TABLE 37.—Changes
in the GNP
implicit price deflator and the consumer price index, 1930-74
Percent change from
preceding year
Percent change from
preceding year
Year
Year
GNP implicit
price
deflator
1930
1931 _
1932
1933
1934
-2.7
-9.1
—10.1
-2.4
7.3
GNP implicit
price
deflator
Consumer
price
index
-2.5
-8.8
—10.3
-5.1
3.4
Consumer
price
index
1955
1956
1957
1958.
1959
1.4
3.4
3.7
2.5
1.7
-.4
1 5
36
2.7
8
1.1
.3
4.1
—1.4
-1.5
2.5
1.0
3.6
—1.9
-1.4
1960
1961
1962
1963
1964
1.6
1.3
1.1
1.3
1.6
1 6
1.0
1 1
1 ?
1.3
1940
1941
1942
1943
1944
1.5
7.7
12.3
7.2
2.3
1.0
5.0
10.7
6.1
1.7
1965
1966
1967
1968
1969
1.8
2.8
3.2
4.0
4.8
1 7
2.9
? ff
4.2
5.4
1945
1946
1947
1948
1949
2.6
11.8
11.9
6.6
-.6
1970
1971
1972
1973
1974
5.5
4.5
3.4
5.6
10.2
5 9
4.3
3 3
6.2
11.0
1935 _
1936
1937 __
1938
1939
1950
1951
1952_ . .
1953
1954._ _
1.3
6.8
2.1
1.0
1.5
2.3
8.5
14.4
7.8
-1.0
1.0
7.9
2.2
.8
.5
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics)
The 1965-74 inflation, taken as a whole, also reflects the consequences of
too rapid an expansion of aggregate demand. However, at least two further
considerations are relevant to the explanation of why inflation continued in
130
years like 1970 and 1974 after policy restraint had been applied. One is that
such interludes clearly demonstrate the difficulty which policy makers encounter in trying to reduce the rate of inflation after the preceding inflationary trend and its expected continuation have entered into cost trends.
But the experience of 1974 also shows something else that had already been
observed in 1973. If forces operating from the supply side significantly
raise the prices of specific raw materials and of products of industries with
capacity shortages, then even if policies of restraint are applied to prevent a
permanent steepening of the general price trend, the specific price increases
will show nevertheless for a while in the behavior of the general price level.
These difficulties become greater the longer the preceding inflationary
development has lasted and the more the public suspects that the same political considerations which induced governments to engage in inflationary
practices in the past will lead them in the future to retreat from a policy of
restraint prematurely.
EXCESSIVE GROWTH IN AGGREGATE DEMAND, 1965-74
Economic theory suggests that many factors, domestic and foreign, private
and governmental, can affect aggregate demand. The two that receive most
attention, however, are monetary and fiscal policy actions. Fiscal policy
can stimulate consumption and investment demand through tax cuts and
by increases in government expenditures. Even if the growth rate of the
money supply remained at a level which would be consistent with noninflationary growth at given fiscal receipts and expenditures, an increased
fiscal deficit could bring about price inflation. Interest rates would be raised
and the cost of holding currency and demand deposits would be increased.
For this reason the public would wish to decrease its average money holdings
in relation to its expenditures, and total expenditures could increase beyond
the noninflationary rate.
Yet price inflation caused by deficits with unchanging money supply
would be of limited significance. Rapid and sustained inflation requires
a continual inflationary increase of the supply of money. The main reason
why expansionary fiscal operations are among the factors generating sustained inflation is that when fiscal deficits are large the monetary authorities, in an attempt to offset the interest rate and credit availability effects of
large increases in government debt, tend rapidly to increase their security
holdings and hence to inject new money into the economy. Thus expansionary fiscal policies are often accompanied by expansionary monetary policies,
with a correspondingly rapid growth of aggregate demand even at high
levels of resource utilization.
Of course, rapid increases in aggregate demand are not always inflationary. When aggregate demand increases by the same amount as real aggregate
supply, markets can clear at the current price level. Although many individual
prices may move up or down, these changes tend to balance out, leaving the
general price level unchanged. Sometimes, however, aggregate demand and
131
supply do not mesh, and if they are not brought into balance at given prices,
then the price level will move. The maximum feasible growth of the supply
of goods and services over any period is limited by the existing quantity of
labor, capital, and natural resources, and by the rate at which new physical
and human capital and new knowledge can be acquired. The increase in
demand depends on demand management policies and is subject to no such
limits. Over the past 10 years the effect of technological progress and the
growth in the quality and size of the labor force and of the capital stock
have been such as to raise potential output on the average by 4 percent a
year in constant dollars. Hence whenever at high levels of resource utilization aggregate demand grows by more than an annual rate of 4 percent, the
faster growth of demand must be reconciled with the slower growth of real
supply through the process of inflation.
During the period from 1965 to 1973, for example, real output grew by
36 percent, or at a compound annual rate of about 4 percent. Largely as the
result of expansionary policies, however, aggregate demand in money terms
grew by 89 percent, or at a compound annual rate of 8 percent. Hence prices
had to rise by about 4 percent a year on the average to make the 8 percent
growth in aggregate expenditures consistent with the 4 percent growth in
real output. By 1973 the rate of increase in the price level had become much
larger than the average during the 8 years, and in 1974 inflation had moved
into the two-digit range, as special factors reinforced a strong underlying
trend.
Any explanation of inflation must therefore come to grips with the questions of why, about 1965, aggregate demand started to grow so much faster
in nominal terms than real output, and why it has continued to grow at a
faster rate subsequently.
The observed steep rise of aggregate expenditures could not have taken
place had monetary aggregates not grown very rapidly after 1965. While
there are no hard and fast rules to define excessive versus noninflationary
growth rates in monetary aggregates, recent experience does provide some
guidelines. The periods of rapidly rising prices have been periods in which
Mi (currency plus demand deposits) and M 2 (Mi plus time deposits except
large certificates of deposit) grew at high average yearly rates.
Over a limited period, which until now has lasted about 12 years,
aggregate demand as measured by the money GNP has tended to grow
in the same proportion as M2, although short-run deviations from this
relationship have occasionally been very large. This suggests that a rate of
growth in M 2 of about 5 to 6 percent over the 1965-74 period would have
been consistent with a rate of growth in aggregate demand of about the
same magnitude. Further, if real supply over the 1965-74 period had grown
at its long-run annual average of about 4 percent, then the price level would
have risen very little. In fact, from 1965 to 1970, M 2 increased at an average
yearly rate of more than 7 percent, and from 1970 to 1974 it increased at a
rate of about 10 percent. Given our economy's inability to sustain a real
132
growth rate of more than about 4 percent, the rapid rates of growth of the
money aggregates since 1965 were not consistent with reasonably stable
prices.
Other countries have also experienced a recent acceleration in money and
in prices, as shown in Table 38. However, the rates of monetary expansion
that are consistent with the mild price increases of the 1960's and with the
much more rapid inflation of the 1970's will vary from country to country.
One reason for this is that the money supply is not defined the same way
in the various countries. Another reason is that the countries differ in the
types and quantities of other liquid assets which the public holds along
with its stock of money. Also, trends in velocity differ across countries.
But what probably matters most is that in rapidly growing economies, such
as those of Japan or Germany, a relatively large proportion of a given
increase in aggregate demand has been satisfied by increases in real goods
and services. The same rate of growth in money and expenditures in less
rapidly growing countries, such as the United Kingdom or the United
States, would lead to higher rates of inflation. Generally the range of
money growth rates that is consistent with stable prices will be different
in each country. The central conclusion remains, however, that when
money growth rates proceed at a rate far exceeding that with which output could keep pace, the price level too will rise sharply.
Considering that our monetary authority, the Federal Reserve System,
creates the quantity of reserves which is a basic determinant of how much
money can be created in addition to hand-to-hand currency, one is led
to ask why the regulation of the money supply has not prevented these
undesirable price trends.
We may begin by recognizing that the rate of monetary expansion is
influenced by several factors which result in a rather flexible relation
TABLE 38.—Growth rates of consumer prices and money stock for the United States and five
other developed countries, 1965-74
[Percent change; annual rate]
Consumer prices
Country
1965
to
1970
Money stock»
1970
to
19742
1965 tc> 19703
1970 to 1974 MI
M,
M2
United States
4.2
6.0
5.2
7.1
5.9
9 8
Canada
France
Germany..
Italy
Japan
3 8
4.4
2.4
30
5.4
64
8.0
6.2
95
11.0
8 1
5.3
6.4
15.8
M6.2
10 6
10.8
12.7
13.7
6 16.5
19.7
4 12.1
9.2
21.9
24.4
16 8
M7 1
14. 4
.
1
22.
Mi = "Money" and M2 = "Money" plus "Quasi-Money" as they appear for each foreign country in International
Financial Statistics, International Monetary Fund. These data are roughly equivalent in all countries.
2
Change from June" 1970 to June 1974.
3 Based on average of end-of-month figures; average of first 6 months for 1974 and 12-month average for other years
(except for the United States, which are based on averages of daily figures for December 1965 and 1970 and June 1974).
* Change from 1970 to 1973.
5 Change from 1966 to 1970.
Sources: Department of Labor (Bureau of Labor Statistics), Board of Governors of the Federal Reserve System, and
International Monetary Fund (International Financial Statistics).
133~
between the variables under the control of the Federal Reserve and the
money aggregates themselves. This is so, quite aside from the fact that
approximately 25 percent of total demand and time deposits are held in
banks that are not members of the Federal Reserve System. For example,
the public may decide to hold less currency relative to total deposits, as
has been the case during most of the period with which we are concerned,
or it may move in the opposite direction as it has since December 1973.
When people exchange currency for deposits at their banks, the banks gain
reserves, and the converse is true in the contrary case. Increased reserves
can be and usually are used to expand loans and investments and hence
deposits, thus generating increases in Mx and M 2 .
Another factor is that banks need to hold reserves also for purposes other
than incurring those types of deposit liability which economists have found
most useful to include in the concept of money. The public's increasing
preference for interest-bearing assets led to a very rapid increase of the
volume of large-denomination certificates of deposit which are not defined
as "money" but are nevertheless subject to reserve requirements. In addition,
the deposits held by the Treasury are also subject to reserve requirements,
though they are not "money." Moreover a given quantity of reserves supports more money in the sense of M 2 if that aggregate consists to an increasing extent of time deposits, as has been the case in recent years, because
reserve requirements are smaller for time deposits than for demand deposits.
Finally, given the legally required minimum reserve ratios, banks find it
convenient to hold more reserves per dollar of deposits during some periods
than in others. For these and other reasons a given amount of total reserves
will correspond to a different amount of total deposits in different periods of
time. The money supply corresponding to any particular amount of reserve
creation by the Federal Reserve is not precisely predictable.
Nevertheless, the long-run growth in monetary aggregates is determined
largely by the rate at which the monetary authority injects "high-powered
money," defined as the sum of total reserves and currency, into the system.
The Federal Reserve can inject high-powered money into the banking system by acquiring Treasury securities from banks or from other businesses
or individuals, or by making advances to banks, or by discounting eligible
securities, although other factors too can affect the growth rates in this
policy-controlled aggregate.
High-powered money grew at a 3.9 percent annual rate from 1960 to
1965, at 5.0 from 1965 to 1970, and at a 7.7 percent rate from 1970 to 1974.
This acceleration reflects itself in those of Mi and M2, although M 2 has
grown faster than Mi.
The question therefore remains why the Federal Reserve System did not
prevent this sustained period of steepening inflation.
A reason mentioned earlier is the relationship between monetary and
fiscal policies. Large fiscal deficits express themselves in large fiscal borrowing, and they are apt to squeeze out a good deal of private borrowing
134
unless the actions of the monetary authority speed the growth of the money
supply. Yet if the supply of resources is not sufficiently elastic, such accommodation by the monetary authority will lead subsequently to the inflationary difficulties discussed in this chapter.
In most years since 1965 Federal Government borrowings have been
substantial. Government expenditures rose steeply after 1965 as a result
of the costs of the Vietnam war and of greatly expanded social welfare
programs. In the 4 fiscal years from 1965 to 1969, defense outlays increased
by $31.6 billion (64 percent) and nondefense outlays by $34.5 billion
(50 percent), while money GNP increased $243.4 billion (37 percent). In
the following 5 fiscal years, from 1969 to 1974, money GNP rose by 50
percent and Government outlays by 45 percent, with defense outlays remaining unchanged but nondefense outlays, prominently including transfer
payments, rising by about 84 percent. Resources were fully, if not "overfully," used in the 1965-69 period, during which the large increase in
Government spending was already associated with a substantial increase
in Government debt. The unified budget deficit, which is the deficit concept
that comes closest to showing the net financing needs of the Treasury,
reached $25 billion in fiscal 1968 and $23 billion in fiscal 1971 and 1972;
it was also of appreciable size in other years since 1965. Much of the resulting debt was financed by the Federal Reserve so that monetary policy was
expansionary enough not to force a reduction of other money expenditures
to offset increased Government spending. The results were overrapid expansion in total expenditures and a significant rise in the general price level.
Deficits, however, represent only part of the total borrowing operations
involving the Federal Government. In recent years, the rapid growth
in the borrowings of federally sponsored credit agencies greatly added to
the Government-induced financing pressures on credit markets, even though
a large part of the funds thus raised was lent again to borrowers whose
demand for credit would otherwise have been satisfied by private lenders.
Outstanding agency borrowing increased by $3.5 billion in calendar 1968,
when total funds raised by nonfinancial sectors amounted to $95.9 billion,
but this net borrowing jumped to $19.6 billion in 1973 when the budget
deficit was $8 billion and total funds raised by nonfinancial sectors
amounted to $187.4 billion. Partly to avoid a tightening of the market to
other borrowers, the Federal Reserve System bought Government securities
and thereby monetized Federal debt in response to Federal financing pressures. Given the inflationary consequences of such a policy, it could bring
only temporary relief because the steepening of inflationary expectations
tightened the markets again by increasing the demand for credit relative
to the supply.
Another important reason for the high average rates of monetary expansion during the past 10 years was the effort of policy makers to play safe
against recessions or at least to postpone them and to promote a very rapid
rate of cyclical expansion in the advanced stages of the recovery after the
135
recession of 1970. In an attempt to achieve these objectives, money growth
rates were allowed to climb farther and farther above their noninflationary
ranges.
These growth rates, however, did not increase steadily. On three occasions
policy actions contributed to substantial slowdowns in money expansion.
Each such action attempted to deal with the worsening inflation, first and
most briefly in 1966-67, then in 1969-70, and most recently in 1973-74. The
first two periods of tightening were soon followed, however, by reversals in
policy that led to substantially higher rates of money growth than those
preceding the slowdowns and hence carried us even further above noninflationary growth rates in money aggregates. The pressures on the
monetary authority to return to policies of rapid expansion were strong in
1966 and in the recession of 1970, and they became increasingly strong again
recently. These are pressures to "validate" the already observable rate of
inflation by a policy that would lead to the expectation that on the next
occasion an even higher inflation rate will be validated.
Yet, showing substantially increased resistance against these pressures,
Federal Reserve policy has moderated monetary growth in 1974. From
December 1973 to December 1974 the increase in the narrowly defined
money supply, Mi, was kept to about 4.5 percent, and the increase in the
broadly defined money supply, M2, to about 7.3 percent, that is, to 1.6 percentage points less than the year before for both, and to 4.2 and 3.8
percentage points less than during 1972. Indeed, the steeper price trend
of 1974 has turned the 1974 increase in the nominal money supply into a
decline in real balances. Even though the prospective money growth rates
of the near future are somewhat higher, this policy reflects determination
to accommodate growth of output only as the inflation rate declines.
As for fiscal policy, even the actual budget deficit remained small for the
fiscal year 1974, though it was larger for calendar 1974; in view of the rise
of the unemployment rate from about 5 percent to over 7 percent during
the calendar year, the same fiscal policy would have produced a large
surplus at high levels of employment (see Chapter 2).
THE UNSTABLE TRADEOFF
By the time the inflation problem became acute in most Western countries,
the conviction had spread both within and outside the Government that a
tradeoff between inflation and unemployment—the so-called Phillips tradeoff—was of considerable importance. A stable downward-sloping "Phillips
curve" with rates of price or wage inflation plotted against the unemployment rate was often used to illustrate this thinking. Policy makers were
supposed to have a choice as to how much inflation they would accept for
achieving low unemployment rates. As discussed in Chapter 3, the shortcomings of such simple presentations were soon recognized. For instance,
it was pointed out that, in view of changes in the composition of the labor
136
force, more refined measures than the official unemployment rate are needed
for measuring the tightness of the labor market. It was suggested also that
allowances need to be made for the role of further variables and of lags. The
analysis would then show that a given increase in appropriately defined
labor market tightness, if maintained, will gradually lead to a stable, though
higher inflation rate to which the other economic variables could adjust.
However, the ideas underlying the work of researchers who have suggested
this conclusion are not easily reconciled with each other.
While econometric work on this question has yielded valuable by-products,
the results remain far too inconclusive to serve as a basis for policy. There
comes a point at which there is reason to return to the direct observation of
simple facts, and what these show is that in the period following 1965 the
relation between inflation and unemployment has been distinctly unstable.
As can be seen from Chart 8, when similar unemployment rates recur, they
tend to be accompanied by appreciably higher inflation rates.
When statistical testing of econometric models leads to inconclusive results,
there is all the more reason to reexamine the basic logical underpinnings of
the hypotheses. No convincing case can be made for the hypothesis that if
inflation were fully anticipated, a higher anticipated rate of inflation to
which all variables have adjusted would stimulate a higher level of activity
and thus more employment than a lower rate. Inflationary policies can
drive the actual rate of price increase temporarily above the expected rate
so that greater real income gains are anticipated than will in fact be forthcoming. It is this unrealistic expectation of higher real incomes that results
in an increased level of activity, thus giving rise to a Phillips tradeoff between
inflation and unemployment in the short run. But such a tradeoff will be
unstable when the expected rate of inflation is rising, so that a stimulative
policy can be maintained only by allowing the actual rate of inflation to
increase further. If the process were allowed to proceed far enough, price
acceleration might even become associated with rising unemployment. This
could happen because by then inflationary expectations would be rising
even more rapidly than actual inflation, or because the uncertainties surrounding the decision-making processes in markets would reduce economic
activity.
Since the tradeoff between unemployment and inflation lacks stability,
trying to base policy on it compels one eventually to face the fact that the true
choices or tradeoffs are of a different kind. In the first place, before the resulting process of accelerating inflation approaches its limits in a state of socalled hyperinflation, there is always a choice between accepting the difficulties of adjustments "now" or moving toward even greater future difficulties. Secondly, after an extended inflationary span there is a choice between facing the lag between output and price response or engineering a
transition into a "controlled" system, the deficiencies of which are very
severe even if the symptoms are different.
137
Chart 8
Inflation and the Unemployment Rate
PERCENT
10
CHANGE IN
CONSUMER PRICE INDEXJ/
1957
1958
SEASONALLY ADJUSTED
UNEMPLOYMENT RATE
1959
1960
1961
1962
PERCENT
10
SEASONALLY ADJUSTED
UNEMPLOYMENT RATE
CHANGE IN
CONSUMER PRICE INDEXJ/
\
1963
1964
1965
1966
1967
1968
PERCENT
15
SEASONALLY ADJUSTED
CHANGE IN
CONSUMER PRICE INDEXJ/
UNEMPLOYMENT RATE
H
/
/
'
s
s"
/ / /
/. /- /
p' j (7' •
•
>
/
/
'
/ ' •
/
/
/
•
/
•
'
y
/
* ' •
'•
/
'
/
^
^
/
/
'
y
^
^
/
/
Jinns,
' H h h ^ ^ h h r ^"
"
P"
/
•
/
:
•
/
•
•
/
/
/
'•
/
'
•
'
/
'
•
/
'•
' '•'
/ i •
y:
/
'
'/ '<,
^ ^
i
/ •
/
_
\ | l f M-
10 -
/
V\
/
:
•
/
/
/
o JJ.LJIJJLLL
1969
Ifllj I! || jill ifJiliiij i III
1970
1971
1972
J/CHANGE FROM PRECEDING QUARTER AT AN ANNUAL RATE.
SOURCE: DEPARTMENT OF LABOR.
138
1973
1974
SPECIAL FACTORS AND THE LAGGED PRICE RESPONSE
There are a number of possible explanations for the unusual degree of
the acceleration of price inflation during 1973, when after the first quarter
the rate of increase of output was declining significantly, and during 1974
when output itself was declining. The termination of wage and price controls on April 30, 1974, needs to be mentioned even though opinions differ
concerning the significance of decontrol for price acceleration. Controls had
been imposed on a wide range of wages and prices in August 1971; they
gradually came to operate against the increasing pressure of market forces,
and they caused an increasing amount of distortion before being phased
out. Wages and prices bulged to some extent in the month immediately
after controls ended. The controls and their removal had an effect on the
timing of price increases.
By the spring of 1973 another type of price fixing—the fixing of exchange
rates in the currency markets—had been abandoned as most of the major
trading countries had switched from fixed exchange rates to managed
floating. This led to the depreciation of the dollar against most major
currencies, continuing with some interruptions until July 1973. As American
goods and services became more competitive in the world markets, the net
exports of the United States increased by almost $10 billion from 1972 to
1973. From the first of these years to the second, net exports turned from
significantly negative to significantly positive, and remained very high
through the first quarter of 1974, after which the consequences of the
oil price increase started to show. While an increase in net exports tends to
raise real GNP when resources are underutilized, it lowers the domestic
availability of goods when resources are already approximately fully utilized,
as they were through much of 1973, or if there exist shortages in specific
areas of the economy, as was the case through part of 1974. For this reason,
an increase in net exports has contributed to inflation.
Important special factors in the recent inflation were the unanticipated
decision of the Arab countries to place an embargo on crude oil exports to the
United States and the decision of the Organization of Petroleum Exporting
Countries (OPEC) steeply to increase the price of oil. The precipitous
increase of foreign crude oil prices during the year, similar price movement
of "new," "released," and "stripper" domestic crude oil (which by October
1974 jointly accounted for 34 percent of U.S. domestic production), and the
concurrent increase in the prices of other energy materials had a substantial cost-raising impact in 1974. Until the spring, crude material prices
other than crude foodstuffs and feeds also continued to rise steeply. Large
price increases in a number of important intermediate products continued
even longer as capacity shortages persisted until midyear and inventory
demand remained strong. Such industries as primary metals, chemicals,
stone, clay and glass, and paper provide prominent illustrations of these
specific shortages.
139
After increasing sharply in 1973, farm product prices behaved erratically
during 1974. On the whole, however, the price-raising effect of shortages
originating in specific sectors played a role in 1974 as well as in the preceding
year. This statement must be understood in the context of the lag problem
more generally discussed before. Even if a monetary and fiscal policy does
not provide for a permanent speeding up of the general price trend, it will
not prevent a temporary rise in general price indexes when raw material
prices rise sharply.
The problem of lags has become more troublesome than it had been in
earlier periods. The available data suggest that, particularly since 1965,
prices and wages have responded less quickly to declining demand in the
product and labor markets. For instance, Table 39 points in this direction
by showing various rates of change, including changes in compensation per
man-hour and in the private nonfarm deflator, for 4-quarter periods before
and after cyclical peaks. Both compensation and the deflator show more
resistance to moderating cyclical forces after the downturn in recent cycles
than in earlier ones. Admittedly this statement is based on a rigid definition
TABLE 39.—Comparisons of behavior of selected variables before and after cyclical peaks, 1947-74
Percent change to or from peak
Period
Cyclicai
peak*
Private nonfarm
economy3
GNP implicit
price deflator
Real
GNP
Civilian
unemployment
rates
(percent)
Output
per manhour
Compensation
per
man-hour
2.8
3.1
.3
-7! 6
5.8
-1.2
-7.0
-16.8
-13.8
3.0
4.5
-1.6
-6.1
3.8
7.0
3.2
Private
nonfarm
Farm
Four-quarter change:
Before peak...
After peak
Difference*.
1948 IV
Before peak..
After peak...
Difference .
1953 11
3.5
1.5
-2.0
6.0
3.3
-2.7
2.3
1.8
-.5
-14.4
-3.5
10.9
6.9
-3.4
-10.3
2.6
5.8
3.2
Before peak..
After peak...
Difference.
1957 III
2.8
3.0
5.4
3.8
-1.6
3.5
1.4
-2.1
2.3
6.2
3.9
2.4
-1.0
-3.4
4.2
7.3
3.1
Before peak..
After peak...
Difference.
1960 II
.7
2.7
2.0
4.3
3.0
-1.3
1.6
1.0
-.6
-1.7
-1.3
.4
2.0
.6
-1.4
5.2
7.0
1.8
Before peak..
After peak«..
Difference.
1969 IV
-1.1
2.5
3.6
6.7
7.4
.7
4.8
5.8
1.0
10.4
-7.8
-18.2
1.2
.4
-.8
3.6
6.0
2.4
Before peak...
After peak 7...
Difference 7 .
1973 IV«
.4
-3.6
-4.0
8.0
9.7
1.7
5.9
13.7
7.8
54.8
-11.1
-65.9
3.9
-5.0
-8.9
4.7
6.6
1.9
8.0
1 Quarter designated as cyclical peak by National Bureau of Economic Research (NBER), except as noted.
All persons.
Rate for peak quarter and 4 quarters after peak.
All differences in this table are changes 4 quarters after peak minus changes 4 quarters before peak.
«Change from 1969 IV to average of 1970 IV and 1971 I to smooth effect of auto strike.
« Peak quarter of real GNP used as NBER has not yet designated this quarter as a cyclical peak.
7 Preliminary.
3
3
4
Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics) ,
and National Bureau of Economic Research.
140
of the time periods used for comparison and is so aggregative as to preclude
consideration of special developments in various sectors of the economy.
Nor does it take into account economic developments subsequent to the
year following a peak or preceding the year leading up to the peak. Still this
and other evidence points to less prompt deceleration of prices and wages in
recent downturns.
As mentioned before, some of the increasing downward rigidities of the
wage and price trends have resulted from the firming up of inflationary
expectations. Past developments as well as observable political pressures
may have made it more difficult even for the most determined policy makers
to establish the credibility of their anti-inflationary policies.
By late 1974 various components of the wholesale price index started to
signal impending general price deceleration, and so did some other measures
of general price change, such as the fixed-weight GNP deflator. Even the
present money wage trend is compatible with a reduction of the current
rate of general price increase, though not to a level that could be considered acceptable. On the other hand, in the weakened commodity and
labor markets of the near future, with the unemployment rate expected to
rise to above 7.5 percent, price deceleration is very likely in time to result
in wage deceleration with a feedback on prices. Still, after an unusually
protracted period of inflation, the lags between the effect of restrictive
policies on output and the desired effect on prices will prove to be long.
INDEXATION AND THE TAX STRUCTURE
The length of these lags has awakened interest in suitable mechanisms
that can take into account the inevitable gradualness of the unwinding
process, without preventing or even markedly slowing the process of unwinding the inflation. Opinions differ on whether "indexing" the commitments
involving future payments of fixed dollar amounts meets these requirements.
When such commitments are indexed, they are expressed in constant rather
than in current dollars; that is, the amounts paid at a later date are adjusted
for changes in a general price index.
Recently the question of formal indexation in this sense has attracted
considerable attention. There is wide agreement that truly comprehensive
indexing is not feasible immediately. A major obstacle is that many currentdollar payment obligations have been incurred in past periods. Furthermore,
individuals can hardly be forced to index their future contracts if, instead
of relying on some index number formula, they wish to make other allowances for the price movements they expect. But one has good reason to
believe that during the phase of unwinding an inflation the automatic
response of indexed wages to price deceleration, and the feedback of that
response on prices, would indeed be helpful, since there would be no need to
anticipate the future course of inflation to obtain the desired real wage bargain. On the other hand, the view has been expressed that in past phases
of accelerating inflation such automatic responses would have further steep141
563-280 O - 75 - 10
ened the inflation rate and that they also might be damaging in future phases
of inflationary processes.
The expectation of rising prices can be reflected in allowances made in
current-dollar contracts as well as through formal indexation of contracts.
At present, however, a spreading of the practice of formal indexation is
evident. In spite of the significant shortcomings of all available index numbers that may be selected for indexing payments, many parties to wage
and other contracts rely on indexing instead of merely on current-dollar
allowances for presumptive price movements. Various payment obligations of the Government, such as social security benefits and food stamps,
are also indexed. Furthermore, automatic adjustments over the term of a
contract are sometimes tied not to a price index but to some economic
variable tending to move in the same direction as price expectations. For
loan contracts the Treasury bill rate or the prime rates of banks have been
used as such variables. These rates are influenced by inflation not because
of indexation but because inflation expectations are among the factors
determining their levels.
However, given present regulations, not all interest rates are allowed to
move freely, nor can some interest rates be tied to other rates which would
reflect market forces. This is illustrated by regulations applying to savings
accounts. Thrift institutions characteristically lend long, mainly by acquiring
mortgages at fixed interest rates, and they borrow short, mainly from small
savers. The average mortgage in the portfolio of these institutions is several
years old and was originated at a time when the rate of inflation, and hence
money rates of interest, were lower. As interest rates rose in the free market,
interest rate ceilings were maintained on the deposits of the thrift institutions,
and also on the conventional time deposits of commercial banks, in an attempt
to prevent a sharp squeeze on the thrift institutions, resulting from higher
borrowing than lending rates.
One of the highly undesirable consequences of these regulations is that the
small saver, to whom other outlets are rarely available, earns interest at an
artificially reduced rate that is far below the current rate of inflation, and is
grossly unrealistic by the standards of the markets for short-term instruments
in general. When securities are issued in the money market on conditions
attractive to small savers and at interest that would adjust to future rates
of inflation, the thrift institutions and homebuilders feel threatened. Policy
makers are strongly influenced by this resistance. The Administration's
proposals for financial reform would gradually change (essentially diversify) the type of operations in which the thrift institutions are engaged
and would gradually eliminate the interest rate ceilings on deposits. Until
interest rate ceilings are removed, the present regulations remain disadvantageous to small savers.
Not even those savers and managers of funds who are able to make use of
the facilities of major financial markets have been receiving interest at a rate
which compensates for inflation and yields the kind of real rate of interest
142
that obtained in the past. However, for short rates this reflects either an
underestimate of inflation or the low and uncertain real return on investment corresponding to the present business outlook, or some combination
of these. For long rates it may also reflect the expectation that inflation
will decrease in the future. The rates at which business borrows from banks
are now often made to vary with the prime rate over the term of the
loan. While, as was noted, this does not change the loan into one made in
"constant dollars"—it is not indexation in the proper sense—the objectives
which such arrangements attempt to achieve are similar to those of
indexation.
Tax payments to the Government do not adjust for inflation under
current tax laws. If during an inflationary period the definition of taxable
income is unchanged in nominal terms, individuals move from tax exempt
into taxable brackets, and from lower into higher tax brackets, merely
because their money incomes are rising, though their real incomes are
rising much less or may even be declining. In addition, capital gains computed in terms of money enter into the tax base, even though such nominal
gains can represent very much smaller real gains, or possibly real losses. Such
distortions call for adjustments, only a few of which have so far been undertaken, and even these are likely to become inadequate before inflation can be
reduced to a negligible size.
The effect of inflation on the real Federal tax and nontax receipts from
persons, predominantly Federal income taxes, can be shown as follows.
From 1973 to 1974 personal income minus transfer payments rose by
8 percent, 3 percent less than the rise in the personal consumption expenditures deflator. Total real adjusted gross income reported on tax returns
probably declined as well. Nevertheless Federal personal tax and nontax
receipts rose by 15 percent, suggesting that the elasticity of Federal receipts
from persons with respect to inflation is at least 1.6 in the aggregate. For
individual returns it may in fact be even larger, considering that as more
returns are filed, income reported per return rises less than total adjusted
gross income. In any event, inflation raises personal taxes by a much
larger percentage than nominal incomes, causing the average tax rate
to rise and tax payments to increase in real terms.
While itemized deductions claimed on tax returns reflect price increases,
individual exemptions and the low-income allowance and standard deduction limits have not been raised in nominal terms since 1972. Thus the taxraising effect is strongest for low- and moderate-income taxpayers not itemizing deductions, as shown by the following example. Assume that consumer
prices and a family's adjusted gross income both rise by 30 percent from
1972 to 1975, leaving their real income unchanged, and further assume
that this is a family of four filing a joint return for an income that in 1972
was $10,000. In 1972 this family would have paid Federal income taxes of
$905, while at current tax rates it would pay $1,391 on $13,000 of income in
1975. Its average tax rate would rise from 9.1 to 10.7 percent of adjusted
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gross income because 30 percent inflation would cause tax liabilities to jump
by 54 percent in this illustration. Stated differently, while the real before-tax
income of this hypothetical family remains unchanged, its real after-tax
income declines by almost 2 percent in 3 years. Thus, the effect of inflation
on individual income taxes under existing tax schedules is to increase
average tax rates or to increase the Government's share of personal income.
Similar problems have developed in the corporate sector. Here two types
of inflationary tax-raising effects had reached considerable magnitudes by
1973. Both arise from standard accounting methods for computing business
costs and profits. These accounting procedures understate costs, and hence
overstate profits, except if we include in the concept of profits an inflationary
period's capital gains, computed in terms of money, which are locked in for
going enterprises as these need to replace their inventories and fixed capital
at higher prices. Such capital revaluations are included in the concept of
taxable profits, unless they are reflected in higher taxable interest payments
to creditors.
Consider first the method of accounting for the value of inventories in
the cost of goods sold. As was explained in Chapter 2, FIFO, the first in, first
out method, includes in the tax base the kind of locked-in capital gain
which was described in the preceding paragraph and is reflected in the
rising valuation of the inventories held by the enterprise. Another accounting
procedure, LIFO, or last in, first out, values an item taken from inventory at
the price of the last unit added to the inventory, thus more accurately
reflecting the prices at which replacement takes place. While firms have a choice between using FIFO and LIFO and many are
switching to LIFO, they are required to value their plant and equipment
for tax purposes on the basis of the historical cost of acquisition rather than
at replacement cost. In inflationary periods this has consequences of the same
kind as the FIFO method of valuing inventories, assuming the service-life
guidelines and depreciation rules currently used are correct. If straight-line
depreciation is arbitrarily taken to reflect the actual depreciation processes,
then accelerated depreciation gives firms tax advantages. However, Table 40
TABLE 40.—Profits of nonfinancial corporations,1 selected periods, 1965-73
[Billions of dollars]
Item
1965-69
average
1965
1973
After reported depreciation charges based on historical costs:
1. Profits before taxes, before inventory valuation adjustment (IVA).
2. Profits before taxes and after IVA
65.3
63.6
68.1
65.5
95.1
77.5
65.8
38.4
66.8
36.3
73.4
32.9
After straight line replacement-cost depreciation involving 285 percent
of Bulletin F service lives and "current price (2)" valuation:
3. Profits before taxes and after IVA
4. Profits after taxes*....
i Excludes profits originating in rest of world and profits on residential properties owned by nonfinancial corporations
J
Eliminates the difference between "current price (2)" replacement-cost and historical-cost depreciation.
' Profits before taxes and after IVA minus tax liabilities.
Source: Department of Commerce, Bureau of Economic Analysis.
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suggests that this advantage has by now been significantly outweighed by the
disadvantages of having to compute depreciation allowances on the basis of
historical costs, and thus of prices at which plant and equipment cannot be
replaced.
Aggregate taxable book profits as well as aggregate profits adjusted for
the two inflationary effects mentioned above are presented in Table 40.
After eliminating the understatements of replacement costs that result from
inflation, the before-tax profit trend (row 3) is, of course, very different from
the unadjusted book-profit trend (row 1), and this for a capital stock that
rose substantially from 1965 to 1973. This contributes a good deal to the
understanding of the rising indebtedness of the corporate sector, the accounts of which include in net corporate savings large amounts that are
unavailable for investment in any sense other than that of replacing inventories and fixed capital at inflated prices. The point to be mainly stressed
in the present context is, however, that once the adjustments are made for
inflated replacement prices (as they are both in row 3 and row 4) a comparison of the trend in bef ore-tax profits (row 3) with the trend in after-tax
profits (row 4) shows the consequences of allowing the difference between
past prices and the prices at which replacement takes place to boost taxable
profits. Taxes are levied on the unadjusted book profits, and these have
risen much faster than the adjusted profits. As we move forward in time,
the fieures in row 4 are becoming considerably smaller in relation to the
figures in row 3. Preliminary data for 1974 suggest that this trend has
continued to the present.
Thus, individuals and corporations alike are now exposed to substantial
and haphazard tax-raising effects produced by inflation, even during a period
of falling real incomes. One manifestation of this is that while in earlier
recessions the temporary reduction of tax revenues in relation to Government expenditures provided a cyclical cushioning effect even without
changes in tax schedules, this effect now is forcefully counteracted by the
disproportionate tax-raising effect of inflation. In this regard and in others,
adjustments in tax laws will be called for during the gradual process of price
deceleration toward which we are heading.
Along these lines a strong case can be made for adopting statutory tax
reductions during the present recession. Yet in view of the recently increased
dependence of business and also of households on borrowed funds, the
financing of large recession deficits might after a while create more tension
in the credit markets than it had created in the past. Given the size of the
output stimulus provided by some combination of expansionary monetary
and fiscal policies, interest rates decline less to private borrowers during a
recession if more of the stimulus results from fiscal policies involving a large
increase in the quantity of government securities. This implies greater tightness of the credit markets in the subsequent recovery. Pressures may then be
exerted on the monetary authority to try to reduce this tightness and to promote rapid expansion without sufficient regard to price-trend objectives.
145
The success of our anti-inflationary efforts would in this event depend
essentially on the determination to resist these pressures, even if the recovery
should proceed less rapidly than would otherwise be desirable.
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CHAPTER 5
Government Regulation
U
NTIL AFTER THE END OF THE CIVIL WAR, the Federal Government's policy toward the economy involved little or no direct
regulation. Although some States experimented with railroad regulation as
early as the 1840's, only toward the end of the century did the Federal Government undertake any significant economic regulation. The first steps
toward regulation were designed to deal with problems of monopoly. In 1887
the Act to Regulate Commerce set up an Interstate Commerce Commission
(ICC) to regulate the railroads, which eventually led to reduced competition throughout the surface transportation sector. In 1890 the Sherman Act
outlawed contracts and activities designed to create monopolies in restraint
of interstate trade, intending thereby to promote competition. In succeeding years the transportation and antitrust statutes were amended and
complemented, and direct economic regulation spread to other industries.
There has been a marked trend toward more rather than less governmental
regulation, and this trend has been particularly evident in recent years. More
requirements have been placed on the private sector, often to achieve
objectives such as safety, health, and pollution control which are not included in conventional measures of economic output. The continuation of
long-standing regulation as well as the recent proliferation of regulation
have raised questions about the efficacy of regulation: in particular, what
costs and benefits the various forms of regulation impose in the light of
today's economic difficulties.
THE RATIONALE FOR REGULATION
Government regulation of business has been established for a number of
reasons, all of which merit continued reexamination. At one extreme is the
case of "natural monopoly"—a situation in which economies of scale (that is,
falling unit costs with increasing output) are so pervasive that free competition might lead to a single firm in the market, able to exercise monopoly
power. An unregulated monopolist may be in a position to charge excessive
prices, restrict output, and discriminate among buyers. The cases of such
natural monopolies are probably quite limited in the American economy,
with certain utility services appearing to be the major exception.
In contrast to monopoly and inadequate competition, regulation is often
considered justifiable to prevent excessive or "destructive" competition. One
form of the argument is that in markets where there may be a tendency
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toward natural monopoly a preferable course would be to avoid the costs
of monopoly pricing or of monopoly regulation by maintaining several competitors, even though a perfectly regulated monopolist could provide services
at lower cost. Another consideration is that even though competition may be
viable it might result in swings in output and prices which some would
judge too severe and too costly to consumers and producers. Regulation is
thus said to be necessary to maintain stability and protect the equity of firms
in the industry.
Another rationale often raised on behalf of regulation is that ill-defined
property rights make it necessary for the Government to allocate certain
"public" resources in order to prevent their overuse. The airwaves are one
example of a scarce resource that would be rendered much less useful without some controls over its use. The environment is another example of a
resource where there are conflicting claims on its use and where governments
have intervened to allocate resources.
It is also asserted that in some markets the government should intervene
between the seller and the consumer in order to protect either, or both, from
certain conditions that might emerge in the absence of regulation. Since
information is expensive to collect and once collected is "free" but costly to
disseminate, the ideal government serves as a surrogate for the well-informed
market participant by prohibiting certain transactions. For example, those
selling their labor, according to this argument, must be protected from unsafe
working conditions by the government's requiring employers to maintain
certain safety standards. To protect consumers, it has been made unlawful
for a firm in the United States to market certain drugs until they have been
approved by the Federal Drug Administration (FDA). Likewise, the
Consumer Product Safety Commission is authorized to establish mandatory standards and require the labeling of products which are found to
be unsafe.
Government regulation may also serve as a convenient avenue for redistributing income. In regulated "competitive" markets less efficient producers
are protected, and in effect are subsidized, by lower-cost producers who
would expand their output in the absence of regulation and by consumers
who end up paying higher prices and buying less. Rate regulation often leads
to rate structures that "cross-subsidize" markets by requiring firms to charge
prices that are above their costs in some markets and to use the extra profits
to offset losses in more "deserving" markets. For example, telephone rates in
any given region often do not differentiate between residential users in urban
areas and those in sparsely populated localities where unit costs are usually
higher. In transportation, "common-carrier obligations" are often enforced
to assure below-cost service to some users, financed by higher prices to other
users.
Whatever the rationale for regulation, once established it has a tendency
not only to be maintained but to become more rigid with time, even if its
economic costs become great and its effects differ from those originally
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intended. The uncertainty associated with significant regulatory change can
deter needed reform. Also, those who would be adversely affected by regulatory reform often are relatively few and have strong incentives to resist
change. On the other hand, those who stand to gain from regulatory reform
tend to be numerous (and thus the potential gain per person is relatively
small) and seldom well organized; they may be unaware of the potential
gains and thus less effective in obtaining reform. For these reasons, it is
particularly important to view critically any proposals for increased regulation. It is equally important to look for ways of lessening regulation when the
benefits of improved economic performance outweigh any sacrifice of other
objectives.
THE FEDERAL ANTITRUST LAWS
Under the antitrust laws the Government is concerned with industry conduct, such as price fixing, and with industry structure which might foster
monopoly power. With respect to price fixing, the most difficult problem is
detection, and for this purpose antitrust authorities have relied primarily
on informants. While industrial concentration is relatively easy to discover,
it does not follow that monopoly power exists whenever concentration exceeds some arbitrary level. Each case must be judged on its own merits, and
exclusive adherence to a "market share" approach may lead to unnecessary
interference with ordinary business activities and to less efficient markets.
In encouraging economic efficiency, the enforcement of the antitrust laws
raises obvious problems of balance. On the one hand, it would be possible
for a misguided antitrust activity to inhibit innovation and cost-cutting
action in the private sector; in this respect antitrust activity could constrain
economic efficiency. On the other hand, antitrust activity that promotes
competition will encourage resources to be used more efficiently. To further the second result, the Antitrust Division's Economic Policy Office was
recently expanded, and the Division's funding for antitrust enforcement was
increased.
Until lately the penalties for antitrust violation appear to have been too
low. In weighing the costs and benefits of engaging in illegal activities,
potential violators take into account the punishment if they are caught as
well as the prdbability of successful prosecution. Increasing the penalty or the
probability of apprehension, or both of these, raises the expected cost of
illegal activity and should reduce its extent. Recent legislation (Public Law
93-528) substantially raised the penalties for violation and made certain
activities felonies rather than misdemeanors. The additional deterrent may
have a marked effect. This makes it even more important to allocate
enforcement resources efficiently, since ill-defined and badly administered
antitrust policies, backed by forceful penalties, might stifle business initiative
and otherwise reduce economic efficiency.
The ability of the antitrust laws to improve market efficiency is limited
by numerous exemptions. For example, the Miller-Tydings Act (1937) and
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the McGuire Act (1952) allow States to establish "fair trade laws,"
which prevent retail establishments from selling merchandise at lower than
manufacturers' suggested retail prices. In those situations, retailers are not
allowed to engage in price competition, and consumers must frequently pay
higher prices. At present such laws are in effect in States that comprise
approximately half the U.S. population. Another example is the CapperVolstead Act (1922) which exempts agricultural cooperatives from certain
provisions of the Federal antitrust laws; among other things, this exemption
has given producers greater control over marketing agricultural products.
Some of the larger cooperatives may have gone beyond the original intent
of the legislation, however, and with the aid of agricultural marketing orders
may have been able to maintain certain commodity prices above competitive
levels.
Some antitrust powers seem to limit competition rather than promote
market efficiency. For example, the Robinson-Patman Act (1936), which
limits certain forms of price discrimination, is almost universally criticized
by economists as unduly protecting small firms from competition by larger
firms. Two recent Presidential commissions on the antitrust laws, the Neal
Commission appointed by President Johnson and the Stigler Commission
appointed by President Nixon, recommended that this law be reformed.
REGULATION OF MONOPOLY
As mentioned earlier, some industries are characterized by economies of
scale over relevant ranges of output. Among the examples frequently cited
are local distribution systems for telephone service and electric power transmission, where the high fixed costs associated with fixed facilities tend to preclude viable competition. Under such circumstances, it is argued, the establishment of a regulated monopolist would be a more efficient way of
organizing the market. Such regulation, however, is inherently limited in
its ability to promote efficient production and resource allocation.
Effective regulation depends on a great deal of information which is
often difficult to obtain and interpret. In practice, neither the judgment nor
the information of those responsible for regulation can be perfect. For example, even under the best of conditions it is difficult to ascertain the true cost
base of a regulated monopolist, and often it is not very easy to determine
the firm's cost of capital for the purpose of regulating its return on
investment.
Idealized regulation also presumes that firms are passive with respect to the
restraints imposed by the regulations. Recent studies suggest that a regulated
monopolist will overcapitalize or undercapitalize, depending on the relation
between the regulator's "guaranteed" return on investment and the firm's
perceived cost of capital. Moreover, by forbidding the regulated firm to
raise prices during times of excess demand, regulation reduces the incentive
for the monopolist to maintain sufficient excess capacity. On the other hand,
the assurance that regulation will shelter the firm from the costs associated
150
with scheduling too much excess capacity will act in the opposite direction,
so the net effect is open to question.
During times of rapidly rising or falling prices, strict adherence to historical costs may have significant adverse effects. The delays necessary in
regulatory proceedings frequently cause regulated prices to be held down
unduly during times of rapidly rising costs. Unless the firm has a considerable degree of flexibility in altering production costs by reducing the quality
of service—and even here demand must not respond too negatively to this
diminution in quality—relying on historical costs may erode the firm's cash
flow position and possibly even lead to bankruptcy. Although the results are
seldom so severe, regulatory delays often cause deterioration of service and
costly deferments in investment and maintenance expenditures.
REGULATION OF COMPETITION
Most governmental regulation is now concerned with the regulation of
competition rather than with the regulation of monopoly. This change has
come partly as a result of historical and technological evolution. For example, the ICG was understandably concerned with railroad monopoly power
during the first years of its existence. In the first part of this century, however, technological advances brought about considerable competition for the
railroads from trucking. Because of cross-subsidy, some railroad rates were
unduly high, and truckers tended to concentrate on this kind of traffic. If
the system of regulation were to be preserved, there had to be ways of administering it without bankrupting the railroads. Therefore, in 1935 the
ICG and the railroads were successful in bringing most trucking under
the regulatory umbrella, despite objections at that time from some truckers.
In 1940, coverage was extended to inland water carriers. Thus, an opportunity to deregulate railroads made possible by new competition was sacrificed,
and the scope of regulation was expanded.
As opposed to monopoly, markets with significant competition present the
regulator with a slightly different set of problems. Although as a matter of
law the regulator must still determine the rate base and the "fair" profit element, the more important problem is to understand and assess the way rate
changes affect service under these quasi-competitive conditions, and how
policies regarding price, entry, and exit affect the financial viability of the
regulated firms.
In regard to financial viability, although exit from an industry via bankruptcy is a normal characteristic of efficient competitive markets, the bankruptcy of a regulated firm tends to be viewed as a sign of regulatory failure.
To prevent bankruptcies, regulators are thus prone to protect firms from
competition—frequently to the detriment of efficient service. For example,
since the establishment of the Civil Aeronautics Board (CAB) in 1938, not
a single trunk air carrier has gone bankrupt, although several trunk airlines
at the brink of bankruptcy have merged with stronger carriers. For the purpose of limiting institutional failures, the Federal Reserve Board (FRB), the
151
Federal Deposit Insurance Corporation (FDIC), and the Federal Home
Loan Bank Board (FHLBB) have set maximum rates of interest that may be
paid on deposits and on savings and loan shares. A policy of protection can
lead to knotty problems when the competitors employ different production
techniques—as, for example, with trucking and railroading. ICG regulation
has not been able to prevent (and probably has contributed significantly
toward) the bankruptcy of several rail carriers in the northeastern part of
the country. Protection is also difficult when technology changes. Thus,
some regulated competitive industries are slow in introducing innovations.
The second major problem for the regulator of a quasi-competitive industry derives from the fact that, depending on technical feasibility and how
firms view the response patterns of their rivals, there will be a tendency for
changes in the extent of nonprice competition to raise or lower costs to match
the regulated price. In such cases, cost tends to be determined by price,
rather than the other way around, and the regulator's control over price
amounts to regulating the extent of nonprice competition in the industry—
and thus the quality and price choices available to buyers. Since higher
quality will be associated with higher costs, a broad range of combinations of
price and quality is often consistent with reasonably competitive returns to
the individual firms, or at least to the firms as a group. In these circumstances the regulatory commission, in effect, serves as a surrogate for the
general public, choosing the price and quality option which will be offered.
One ramification of this behavior among regulated competitive industries
is that explicit regulation of the industry's rate of return may not be possible
without additional controls, such as direct restraints on the extent of nonprice competition. Another aspect is that, whatever its justification, crosssubsidy may not be feasible. Purported "high-profit" markets will realize
more costly, higher-quality service rather than excess profits; in alleged
"losing* - markets firms will restrict the quality of service to where average
cost is in line with the low price.
EXAMPLES OF ECONOMIC REGULATION
Each regulated industry has different economic characteristics and ways
of behaving under regulation. In several areas the economic costs of regulation have become apparent and are indeed significant.
TRANSPORTATION
Of all sectors of the American economy, few are more important than
transportation, and none is more affected by Federal economic regulation.
Trucking
In interstate trucking an antitrust exemption allows carriers to agree upon
rates in secret, through rate-bureau negotiations. Although these rates are
subject to review by the ICC, they are seldom challenged except in cases
152
of general across-the-board increases. For example, during fiscal 1974, only
5 percent of motor common carrier rates were even challenged, and fewer
than one-third of those challenged were ultimately disapproved. As a result
of this process, rates tend to be set so as to cover the costs of less efficient
carriers. The consequences are windfall profits to more efficient truckers
and higher prices to consumers. In trucking markets with two or more carriers, service competition—for example, providing more frequent schedules
or larger trucks—tends to eliminate the potential excess profits. However,
the reduction in profits results not from lower rates but from the creation
of excess capacity which has a lower value to the shipper than the extra
price paid. In those markets where only one trucker has a certificate to serve,
this process of rate setting helps the carrier to earn excess profits by offering
poorer service, at the regulated price, than would be the case if other firms
were allowed to compete.
The problems of excess capacity in "competitive'1 markets and of poor
service in "monopoly" markets would both be eliminated if entry into the
trucking industry were not restricted and if the ICG encouraged meaningful
price competition. A monopolist earning excess profits would attract new
firms; the result, in turn, would be lower rates and improved service. In
those previously regulated competitive markets which had excess capacity,
incumbent carriers would offer lower rates consistent with higher average
loads. If they did not, new carriers would enter and force rates downward;
the incumbent carriers would then have to respond with rate reductions or
else lose out to the new competition. The ICG, however, has stringently controlled entry and price competition in trucking. Opportunities for profits
attract many potential entrants, and during fiscal 1974 more than 70 percent
of the Commission's case workload consisted of processing motor carrier
operating permits.
Railroads
In railroad freight transportation, the problem is exit rather than entry.
As outlying areas of the country gained access to good highways, and especially interstate highways, firms began to utilize trucks for much of their
transport. This meant that low-density rail lines were used less and less,
until many of them were no longer economical to operate. Nevertheless,
regulation has prevented the railroads from discontinuing such services as
fast as would seem warranted. The losses on unprofitable lines have impaired
the overall financial position of the railroads and have reduced needed maintenance and capital investments elsewhere.
The structure of railroad rates often provides incentives that are inconsistent with an efficiently organized transport sector. Regulation enforces a
considerable amount of cross-subsidy among commodities—to the point
where certain high-valued items, such as machinery and equipment, are
hauled at rates greatly exceeding their transport costs, while the rates for
other items, such as crude ores, are much less than their transport costs. Simi-
153
larly, regulation attempts to maintain an elaborate system of discriminatory
rate "equalizations" which tend to favor certain regions over others.
Rates that rail carriers pay for the use of other carriers' cars (called per
diem) and the rates shippers pay carriers when they hold freight cars for
extended periods (demurrage) are maintained at levels far below the opportunity cost on rail cars. As a result, freight cars are retained by carriers and
are used excessively by shippers for warehousing. On average, a rail boxcar'
moves only 1 hour in 8, and its average speed while moving is less than 20
miles per hour.
Air Travel
In the domestic airline industry, regulation has served primarily to bring
about a nonoptimal choice of price and quality. Because the CAB had a
fairly liberal policy during the 1950's and 1960's toward the entry of existing
carriers into city-pair markets, the principal markets are now served by two
or more airlines. However, since their fares are regulated by the GAB, the
airlines tend to compete on the basis of scheduling, over which the Board
does not exercise direct control. The result is "excess capacity," and efforts
to raise the regulated fares in order to assure a return on investment greater
than the industry's perceived cost of capital serve only to set the stage for
further capacity augmentation.
Carriers as a group have consequently tended to earn neither excess profits
nor losses, but the traveling public has paid higher fares because of the
regulation-induced excess capacity. While excess capacity does yield some
benefit in the form of more frequent departures, less crowding, and a better
chance of obtaining a seat on the preferred departure, the value of this
excess capacity is almost surely less than its cost. As evidence, in the relatively unregulated California and Texas intrastate markets the competitively determined (higher-load factor) service has historically been sold at
prices some 40 percent below the prices of comparable interstate (CABregulated) services. Moreover, a recent study reports that in 1969 domestic
air passengers paid "excess fares" ranging between $366 million and $538
million, for which they received service quality improvements valued at between $118 and $182 million. The difference, between $248 million and
$356 million, represents a deadweight loss to society.
In its recent Domestic Passenger Fare Investigation the CAB established
target load factors of 55 percent. Since the prevailing load factors were
around 50 percent, this policy had the effect of reducing excess capacity
and lowering fares. However, it wrould appear that a much higher load factor standard is justified, especially in view of the recent increases in fuel
prices. The Board's new policy of encouraging agreements among carriers
to limit capacity is not an appropriate way of dealing with this problem. In
markets covered by agreements, the passenger's total cost of service is increased because of increased delays, but the fare is not reduced.
Airline regulation imposes other costs, which are not generally well
perceived. For instance, through the regulatory process, fares have tended
154
to be set at levels and with a structure that maximizes total seat capacity, as
opposed to maximizing total passenger traffic, the result being added congestion and environmental costs, as well as increased costs of airports and
airways. By restricting the entry of new firms into trunk carrier service in
order to protect less efficient incumbent firms, regulation has also penalized
potentially more efficient firms and has resulted in higher fares for a given
quality of service.
These costs of airline regulation could be reduced substantially or even
eliminated if entry into and exit from markets were made easier and if
control over fares were liberalized so as to encourage price competition.
Under such circumstances an individual airline could attract more passengers by lowering its price rather than increasing its total capacity.
FINANCIAL INSTITUTIONS
Banks and thrift institutions are among the most highly regulated businesses in the United States. The FRB, the FDIC, and the FHLBB, together
with a host of other Federal and State agencies, regulate virtually every
aspect of financial intermediation: entry, expansion, and exit, as well as
pricing practices and allowable assets and liabilities. Opening a new bank,
for instance, requires a charter that can be obtained from the appropriate
State or Federal agency only if the applicant can demonstrate that a new
bank would be in the public interest. Opening a new branch of an existing
bank requires similar evidence in those States which permit branch banking.
Comparable entry tests exist for thrift institutions.
Financial institutions are subject to a number of regulations when they
issue liabilities (deposits) or buy assets. Banks, for example, are required to
hold cash reserves for their deposits, and they are precluded from holding
certain assets, including common stocks. Thrift institutions are subject to
similar restrictions; in addition they are not permitted to issue checking
accounts. Finally, and perhaps most importantly, except on large certificates
of deposit, financial institutions may not pay interest to their depositors at
rates that exceed maximums imposed by law or by regulation.
Although the rationale for regulating financial institutions is to safeguard deposits and assure market stability, in recent years the desirability of
some forms of financial regulation has been increasingly questioned. This
is particularly true of those regulations that were established before the
1930's, when Federal insurance of deposits greatly increased the security
of banks and thrift institutions. One suggested reform is to reduce the restriction on the types of assets that banks and thrift institutions may hold
and to allow thrift institutions to issue checking accounts. These changes
would make financial institutions more flexible in their adjustments to changing market conditions and would also make the industry more competitive.
An even more important proposed reform would eliminate interest rate
ceilings on all deposits. Depositors could then enjoy competitive rates of
return (especially during high interest rate periods like 1969 and 1973-74),
and the flow of loanable funds for such purposes as housing would increase.
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NATURAL GAS
Regulation of the field price of natural gas by the Federal Power Commission illustrates the problems of controlling the price of a commodity when
entry into and exit from the industry are free. It also illustrates the sometimes illogical results when statutory requirements are divorced from
the economic rationale behind their enactment. In this case, the price
of gas, a commodity, is regulated because of its connection with transporting
gas, a service; the price of a similar commodity, oil (perhaps produced from
the same well), is not similarly regulated, though it is a close substitute for
gas in final use markets. Results contrary to intentions could have been expected and at least one such result has been perverse: instead of assuring
consumers access to supplies of gas, regulation has done exactly the reverse.
By holding the price of gas below the market-clearing levels, regulation
has created chronic and growing shortages in the regulated interstate market
beginning in the late 1960's. The shortages have resulted partly because of
inadequate incentives for producers to explore for gas and bring it to market.
Additionally, consumers are charged a price based upon the average cost of
gas, and this price is lower because of the large volumes of gas flowing at the
lower prices established in the past. Consumers therefore base their purchase
decisions on a price below the regulated price for gas currently coming on
the market, which itself is below the market-clearing level. Consumers respond to this energy "bargain" by seeking to use more gas than if they had
to pay the full cost of replacing the gas reserves they consume.
The final factor in the interstate gas shortage is the diversion of gas supplies to the intrastate market where the price is higher. Onshore producers
of gas usually have the legal option to sell it into either the regulated or the
unregulated market. (Producers from Federal offshore leases must sell
into the regulated market.) Even at comparable prices the intrastate market
would be preferred by on shore producers because the absence of
Federal jurisdiction gives them more certainty. The interstate market has
thus always been the residual market for producers. Consequently, the price
for intrastate gas rose little with the increase in total gas demand relative
to supply; instead a larger proportion of the available gas went to intrastate
sales. When no more gas could be diverted, the intrastate price began to rise
rapidly. Producers who had a choice ceased selling into the regulated market
except under special emergency provisions which allow higher prices.
The interstate shortage of natural gas induced by regulation has led to
losses in output and to unintended redistributions of income. For example,
many gas distributors have been unable to add new customers. In this situation a loss occurs because the value of the gas to the customers willing to
bid some of it away would outweigh that realized by consumers who use it
at volumes based on its constrained lower price. Income is redistributed
toward those who consume gas at a subsidized price and away from those
who are unable to obtain gas at all.
156
Interstate shortages, accompanied as they have been by adequate gas
intrastate, have led industries to move to gas-producing States merely to
obtain fuel. Greater quantities of other resources are used when gas regulation induces these otherwise uneconomic changes in industry location. Potential output for the economy is again reduced, while some regions are benefited and others harmed.
Another result of regulation has been a deterioration of the reserve base
underlying gas consumption, and especially of the gas deliverable in the
interstate market. The full requirements of already connected customers
cannot now be met. Consequently, regulatory authorities must decide which
parties get gas and which do not, even though each potential purchaser has
equal contractual standing.
The effect of these shortfalls is exacerbated because of the way authorities
allocate the available gas. Residential and some commercial customers, for
whom a shift to alternative fuels would be impractical, are given the highest
priority of service. Other firms are granted different priorities on the basis
of the end use to which gas is put. Under this method, firms which have high
priorities in the curtailment scheme do not shift to alternative fuels, even
if a switch is practical. For them, natural gas remains the cheapest fuel.
They have no incentive to make even a minor adjustment. While some
customers would find a loss of gas supply only moderately damaging, curtailed supplies may force other users out of business altogether because
fuel substitution is either impossible or prohibitively expensive. Yet, under
current regulatory practice, there is no opportunity for mutually beneficial
exchanges to redirect the available gas to its most valuable use. Output falls
as a result; even the shortage is not allocated efficiently.
Importation of natural gas in liquefied form and its manufacture from
other fossil fuels have also been encouraged by regulation. These expedients
would have been either uneconomic or less significant if the natural gas
price had not been held below equilibrium. A higher field price would have
restricted demand, slowed the depletion of existing reserves, and raised supply, with the result that shortages would not exist at prices below the cost
of alternatives.
Finally, imports of petroleum and petroleum products have been increased because of the natural gas shortage. Regulation of natural gas increases the demand for fuels as a whole. It also decreases the supply of
domestic natural gas and, to some extent, of crude oil and natural gas liquids.
The unsatisfied demand for natural gas in part is shifted to its closest substitute, oil. Because domestic oil supplies are limited, this demand is largely
translated into increased oil imports.
The examples of regulation discussed above are primarily Federal regulation by independent commissions. There are other types of regulation that
deserve close scrutiny for the costs they may impose on the economy.
157
563-280 O - 75 - 11
State and local governments also practice the commission form of regulation, particularly with respect to insurance and financial institutions. Another pervasive form of State and local regulation is occupational licensure.
Depending on the State, people in an extremely broad range of occupations
must obtain licenses: accountants, architects, attorneys, automobile mechanics, barbers, beauticians, chiropractors, electricians, embalmers, opticians, pharmacists, physicians, plumbers, radio/TV repairmen, surveyors,
and others. In a similar vein, State and local governments often acquiesce
in price-fixing arrangements, such as real estate settlement fees and fee
schedules by professional associations. Often too, local codes of ethics and
State statutes prohibit sellers of professional services from advertising or
competing on the basis of price.
Federal, State, and local governments are also involved in regulating the
use of so-called public resources. With regard to social costs and benefits,
perhaps the most important example is regulation of the environment.
There are two issues here: first, balancing the polluting uses against the
nonpolluting uses, and second, choosing the appropriate instruments in
order to minimize the cost of achieving this balance.
Both points are illustrated in the Federal Government's control of automobile emissions under the 1970 Glean Air Act Amendments. A recent report
sponsored by the National Academy of Sciences and the National Academy of
Engineering estimates the annual benefits of the existing program at $5 billion, but the annual cost at $11 billion (assuming that catalytic converters are
replaced after 50,000 miles). According to the study, however, if the longterm standards on oxides of nitrogen (NOX) were relaxed, from 0.4 grams
to 2.0 grams per mile, that cost would fall to only $5 billion. Alternatively,
a policy of applying the long-term standards only to automobiles operated principally in seriously polluted or impacted areas, 37 percent of the
total, also would lower the cost from $11 billion to approximately $5 billion.
In either case, the reduction in benefits would not be substantial, and if the
NOX standard were relaxed, changing technology might ultimately render
the program's cost negligible.
Governments also regulate product and input standards. For example, in
the case of drugs the costs of regulation include not only the direct costs of
testing (borne by the FDA and private drug manufacturers) but also its side
effects: fewer new drugs and delays in the introduction of those drugs
which ultimately get to the market. In 1962 Congress amended the Food,
Drug, and Cosmetic Act of 1938 to require that new drugs be proved effective as well as safe. Since then, the rate of introduction of new drugs has
fallen more than 50 percent and the average testing period has more than
doubled. Moreover, it is not clear that the average efficacy of drugs introduced after 1962 is any higher than that of drugs previously introduced.
One recent study estimates that the 1962 drug amendments cost consumers,
on balance, beween $300 million and $400 million during 1970.
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REGULATORY REFORM
This discussion of governmental regulation suggests that existing laws and
institutions are imposing significant costs on the economy. In surface transportation alone, one study puts the cost of regulation at between $4 billion
and $9 billion annually. Precise estimates of the total costs of regulation are
not available, but existing evidence suggests that this may range up to 1
percent of gross national product, or approximately $66 per person per year.
Reforming regulation to eliminate these costs would undoubtedly entail
some income transfers. Those favored by regulation (particularly existing
regulated firms, their owners, and their employees) would lose somewhat
and some others (particularly ultimate consumers) would gain. For that
reason and to minimize other transitional difficulties it might be desirable
to provide certain kinds of adjustment assistance and to introduce changes
over a period of several years. But enacting such reforms could save billions
of dollars by releasing resources for other uses, helping combat inflation,
and making the economy more efficient and more productive in future years.
The Administration is moving forward to accomplish such needed reforms. During 1975 it plans to submit legislation to reform the regulation
of airlines, railroads, trucking, and related areas. These legislative initiatives
will call for a program which includes: more freedom for carriers to raise
and lower rates without regulatory interference, greater freedom to enter
markets and to exit from uneconomic services, and a narrowing of the
regulator's power to grant antitrust immunity.
To address other regulatory issues, the Administration has taken or has
in prospect several actions. First, the President has endorsed legislation to
repeal the antitrust exemption that allows fair trade laws. Second, the
Administration will resubmit proposals to reform the regulation of financial institutions. Third, the Administration's proposal for a National Commission on Regulatory Reform is being resubmitted. Fourth, the Administration plans to explore with State and local officials various concrete ways
of reducing the anticompetitive effects of State and local regulations. Fifth,
the Administration has created a high-level task force to examine the entire
range of antitrust exemptions and to make recommendations to the President within 90 days. Finally, the President will shortly outline to the public
his more detailed program of regulatory reform and may include additional
proposals which are now under review.
159
CHAPTER 6
Food and Agriculture
T THE BEGINNING OF 1974 it was expected that tight food supplies would boost retail food prices in the early months of the year, but
domestic and world food production was also expected to expand later in
the year. Barring unfavorable weather, a significant increase in American
grain production was anticipated, which would improve the food outlook,
enable some rebuilding of grain inventories, and help remove the upward
pressure on prices in the second half of 1974.
Food prices, as expected, increased sharply in the early months, rising at
an annual rate of 20 percent in the first quarter. The predicted leveling off
began in the spring and continued until midsummer, but it was short-lived.
Unfortunately, the anticipated increase in grain production did not materialize. Crop production was severely reduced in the major grain-producing
areas of the United States by poor weather. Instead of the bumper harvests
that had been forecast, crop production as a whole suffered the largest
setback in nearly 40 years. Instead of substantially slower increases in the
second half of 1974, retail food prices advanced at a 13.4 percent annual
rate between June and December 1974. During all of 1974, food prices rose
12.2 percent, the same as all consumer prices.
Two other developments had a significant impact on retail food prices last
year. First were the exceptionally large increases in charges for off-farm food
processing and distribution in the first half of the year, partly because margins had lagged behind increasing costs during the period of price controls.
Estimates of the spreads between farm and retail prices for farm foods consumed at home indicate that they rose at a 27 percent annual rate from the
final quarter of 1973 to the second quarter of 1974. The second development
v/as the extremely steep rise in sugar prices. Nearly half of U.S. sugar supplies are imported, and the price rise was mainly triggered by events outside
this country. Wholesale prices of raw sugar jumped from 11 cents per pound
at the start of 1974 to a peak exceeding 60 cents per pound in late November.
This increase alone would have prolonged the upward pressures on retail
food prices in the second half of 1974, even without the weather-induced
setbacks in crop production.
At the end of 1974 the food supply situation was as tight as a year earlier,
and the prospects for 1975 were uncertain because the full impact of reduced
A
160
grain and feedstuff output was not yet reflected in supplies of animal products. Although further increases in retail food prices were in prospect, reduced economic activity appeared to be dampening the demand for food.
Indeed, by year-end, wholesale prices of farm products had actually
fallen below those of a year earlier. Crop prices were up substantially; but
livestock prices declined nearly 15 percent compared to the previous year.
DEVELOPMENTS IN 1974
Last year's events have demonstrated again the benefits to our economy
and the world from good American harvests. Crop setbacks have affected the
course of food prices, imposed stresses on the livestock industry, limited
the capacity of the United States to provide food aid to developing countries, and prompted close monitoring and some limitations on commercial
export sales. From the standpoint of the agricultural economy, 1974 was an
uneven year. On the favorable side were these developments:
Foreign Demand
Foreign demand for agricultural products continued strong. The value
of exports in fiscal 1974 reached a new high of $21.3 billion, more than
double the value only 2 years earlier. In the current fiscal year the volume
of exports is expected to decline, primarily because of reduced crop supplies,
but the associated higher prices should maintain the value of shipments near
the previous year's record. The increasing role of foreign markets has become central to policy matters concerning food and agriculture.
Farm Income
Total farm income remained high in 1974. Preliminary estimates indicate
that aggregate net farm income fell some 15 percent short of the record
$32.2 billion in 1973, but was nonetheless 50 percent higher than in 1972.
In the past 3 years as a whole, returns to farm resources have been sufficiently
high to encourage the expansion of productive potential, but the year-to-year
changes in incomes emphasize the increased uncertainty of earnings, which
is itself a deterrent to additional investment and production.
Food Consumption
Food demand was strong despite higher prices, and preliminary estimates
indicate that consumption per person rose slightly above 1973. Per
capita consumption of all animal products advanced 2.5 percent, reflecting the large increase in domestic production of red meats and poultry.
Although meat production was down early in the year, from April through
October it averaged a full 10 percent above the 1974 average. In contrast
to meats, consumption of dairy products declined 2 percent for the year;
retail prices rose sharply as the year began; later the increased supplies of
other animal products and lowrer consumer income reduced demand. Despite
their significance, the grain crop setbacks had little direct impact on the
quantity of food consumed in 1974.
161
Three significant adverse developments last year will have consequences
in 1975 and beyond:
Costs of Production
The costs of production inputs purchased from the nonfarm economy,
particularly fertilizer, rose very sharply. The impact of general inflation on
the agricultural economy has increased, along with the increased importance
of nonfarm purchases for farm production. In 1974 the impact was particularly large: the cost index for purchased inputs increased 18 percent in
1974. Fertilizer prices were up more than 75 percent, partly in response to
rising demand and partly because of a series of supply bottlenecks. The
future availability of natural gas to produce fertilizer continues to be uncertain. The major significance of the steep rise in farm costs is that they
are unlikely to decline, or they will do so only with a lag, if and when there is
a significant decline in farm prices. As a consequence, the total cropproducing sector, which has enjoyed an extended period of increasing prices
and returns, faces a possible deterioration in its current profitability at some
point in the future.
Livestock Sector
The livestock-producing sector is undergoing large adjustments because of two related factors. First, the U.S. feed grain supply for 1974-75 is
estimated to be the lowest since 1957, while the demand for feed grains
is substantially greater. Supplies of other feedstuff's, such as oilseed meals,
are also down. The situation is especially serious for hog and poultry producers who have little flexibility in feeding practices. Both are planning
significant production cutbacks, and pork production is expected to be the
lowest in many years. High feed costs have also reduced the number of
cattle in feedlots, where feeding margins have been depressed for over a
year. At latest count, cattle in feedlots were about one-fourth fewer than a
year earlier, and prices of feeder cattle have consequently been driven down
sharply.
The reduced profitability of cattle herds has, in turn, intensified a more
fundamental adjustment problem in the cattle industry. A steady and
large buildup in cattle numbers has been taking place since the early 1960's.
Incentives to expand herds were especially great in recent years, and the
buildup has averaged 3.2 percent annually from 1969 to 1974. In contrast to extremely tight beef supplies in 1973, cattle herds appear to be overexpanded under today's conditions. If herds expand more slowly, or if they
should be cut back significantly, extra supplies of beef will reach the market
in addition to the output of the herd itself. Total beef production would
consequently increase markedly, even though the weight at which the animals are marketed declines. For instance, if the 1975 expansion in cattle
inventories is reduced, as expected, to 2.4 percent from the 3.2 percent
average rate of the past 5 years, beef production would increase 6.5 percent. A reduction to zero in the expansion of cattle inventories could mean
162
an increase in beef output by 15 percent. A slower rate of expansion in
cattle inventories was already evident in 1974. Despite reduced marketing
of cattle from feedlots, total marketings were up 9.0 percent in 1974; and
the proportion of cows in total slaughter was substantially higher by
year-end.
The American situation is replicated in many other beef-exporting nations as well as in traditional importing countries. The European Community, Canada, and Japan instituted embargoes or restraints on meat imports during 1974. Stocks of beef in the European Community, acquired
to support prices to producers, are considered excessive. Australia has a very
large potential supply of meat. During 1974, cattle were withheld from
slaughter because of favorable pasture conditions in Australia, and also
because of low meat prices and restricted markets outside Australia. American meat imports during 1974 fell rather sharply, even though they were
not subject to quantitative restrictions. However, at the start of 1975 the
Department of Agriculture announced plans to negotiate agreements with
supplying countries designed to limit imports to about the same quantities
as in 1974.
The appearance of a worldwide excess supply of beef, along with extremely large advances in food prices, was one of the paradoxes of 1974.
Countries concerned with inflation were at the same time restricting meat
imports to shield their beef producers. At year-end much of the oversupply
had not yet been marketed and will be available in 1975 to offset reduced
supplies of pork and poultry, which are more dependent than beef on grains
and other feedstuff's.
Poor Crops
The poor crops in the United States during 1974 will have repercussions not only on our own economy but throughout the world. The 1974—75
world production of all grains is estimated to be down 5.0 percent from the
previous year, a considerably larger drop than the 1.3 percent decline in
1972. Unlike those of 1972, the setbacks were mainly confined to the United
States, and the losses were concentrated in feed grains rather than food
grains.
In the spring of 1974 there seemed to be good reason to expect excellent
U.S. grain production even if weather conditions were to be somewhat
below average. Much field preparation had been completed the previous
fall. Surveys showed that farmers were planning increases in their plantings
because of favorable prices and the removal of Government acreage diversion programs. Fertilizer supplies were tight, but they exceeded the previous
year; and efforts were under way to minimize bottlenecks in production
and distribution. Then wet weather delayed spring plantings—which itself
slightly reduced yields and made crops more vulnerable to early frosts—and
prevented some fields from being planted at all. But the summer's dry and
hot weather was the major setback. Preliminary official estimates of the
163
feed grain crop fell from 234 million (short) tons in March to 215 million
tons in July, and then to 175 million tons in August, when the first survey
based on actual yield estimates became available. Significant though smaller
reductions occurred for wheat (from 2.1 billion bushels in March to 1.8
billion bushels in August) and soybeans (from 1.5 billion bushels in March
to 1.3 billion bushels in August). Severe frosts in September and early
October further damaged the feed grain and soybean crops.
This development created several problems. First, it reversed the expectation of price relief from improving food supply in the second half of 1974.
Much of the adverse impact on food supplies will occur in 1975, however,
as producers of livestock, poultry, and dairy products cut back their output
in response to higher feed costs.
For this reason, it is important that the severe adjustments expected in
the United States not be worsened by policies in other countries. Few countries permit agricultural markets to operate in an unrestricted way. If international markets were less restricted, however, the U.S. crop shortfall would
result in higher feed costs to livestock producers abroad and in reduced feed
consumption. Moreover, grain stocks would not be built up under such
tight supply conditions. Consultations based on these principles were held
with Japan, the European Community, the Soviet Union, and several other
countries, the aim being to seek cooperation so that these countries would
attempt neither to build stocks this crop year nor to insulate their economies
from the adjustments to tight world grain supplies.
Further deterioration of U.S. crops in the fall of 1974, setbacks in other
key countries, and speculation that the United States might impose export
controls resulted in an upsurge of export orders reported under the Department of Agriculture's export monitoring system. Although pressures to
control exports were intense, formal controls were resisted because the previous year's experience with soybean export controls demonstrated the
serious impact of such a policy on our foreign customers. The prudent
course consistent with international and domestic objectives seemed to be
minimum Government interference with the flow of exports.
The Soviet Union, which had not been expected to purchase substantial
quantities of grain from the United States, entered the market for larger
quantities than had been anticipated. When this became evident, the Soviet
sales were at first canceled; subsequently officials of both countries agreed
that U.S.S.R. purchases would be limited to 1.0 million tons of corn and
1.2 million tons of wheat from the 1974 crops. A voluntary daily reporting
system for larger orders was soon established under which approval is required before orders can be finalized. A number of other countries, including the European Community, have been requested to restrain their imports voluntarily during the current crop year.
Another related consequence of the crop shortfall has been the emergence, particularly in connection with the World Food Conference, of
extraordinary pressures to increase substantially the volume of food aid
164
shipments under Public Law 480. The U.S. crop shortfall placed two new
strains on the capacity to supply food aid. It first raised the opportunity costs
of any given quantity of food aid, since any incremental exports would only
aggrevate the adjustments required in the United States. It also raised the
budgetary costs of any given volume of food aid during a period of concerted
effort to hold down Federal expenditures. At the same time, however, the
immediate benefits to recipient countries from more food aid would be
significant. The great difficulties in resolving the conflicting objectives have
shown the pitfalls in existing food aid programs, which have been a byproduct of U.S. surplus disposal programs and closely tied to supply conditions for particular commodities.
LONG-TERM CHANGES IN AGRICULTURE
American agriculture finds itself in the mid-1970's at a watershed. A
number of economic forces have converged to change substantially the
economic environment in which the agricultural sector operates. Some of
these forces are new, while others have been operating for some time to
change the economic conditions faced by agriculture.
Agricultural policy underwent considerable evolution during the 1960's.
In the early years of the decade agriculture was characterized by excess productive capacity and burdensome stocks that were primarily the consequence
of price support programs. Crop prices were sustained in nominal terms
during the decade, but rising prices in the nonfarm sector meant a downward drift in real prices. Agricultural production was brought into better
balance with demand by the late 1960's, although this result was achieved
in part through land retirement programs and direct cash payments to producers that reached nearly $4.0 billion per year.
Both the economic environment and the conditions in U.S. agriculture
have since undergone substantial change. Excess capacity has declined,
crop reserves have been drawn down, the world agricultural situation seems
to have worsened, and agricultural products again appear to be subject
to the unstable price conditions of an earlier era.
THE DECLINE IN EXCESS CAPACITY
Four major developments suggest that the excess capacity which characterized U.S. agriculture during much of the post-World War II period has
declined. First, there appears to have been a decline in the growth rate of
productivity of the combined factors used in farm production. Second, after
many decades of excess labor in agriculture, the supply of labor appears to
be moving into balance with demand. Third, what was believed to be a large
acreage reserve withheld from production turned out to be in part illusory.
Finally, there has been an increase in the demand for U.S. agricultural
output, partly because of the two devaluations of the dollar and a shift to
floating exchange rates, which have improved the competitive position of
U.S. farm products in foreign markets.
165
Changing Sources of Growth
Contrary to the common notion that agriculture is a natural resourcebased industry, the expansion of U.S. agricultural output since the 1920's
has borne little relation to the total stock of physical resources used in agriculture. Major changes have taken place, however, in the proportions in
which resources are used. For example, the stock of land in agriculture has
remained relatively stable, while labor has moved out of agriculture at a
rapid rate; the use of capital in the form of mechanization has increased, as
has the use of modern inputs such as fertilizers and pesticides. Agricultural
output has become progressively more dependent on resources produced in
the nonfarm sector, and less dependent on land and labor.
Although the total stock of measured inputs has remained relatively stable, increasing productivity permitted fairly steady and sometimes burdensome increases in output. The source of improving productivity has been
a subject of much debate. Public and private investments in research and
development have led to better plant varieties, production techniques, and
animal husbandry, and have improved the productivity of machinery, fertilizer, and other supplies purchased from the nonfarm sector. Better methods of production in the nonfarm sector have reduced the relative price of
these inputs, causing them to be substituted for land and labor. Education
has added greatly to the quality of labor and management in agriculture.
The changes in resource use and other indexes for the agricultural sector
are shown in Table 41. The index of farm real estate, which reflects a charge
for grazing fees and the use of land and service buildings, declined about 6
percent from 1950 to 1969-71. (Total land in farms remained virtually constant from 1940 to 1969, and land used for crops declined 10 percent.) But
the application of fertilizer—an important land substitute—has increased
rapidly, partly because successive technological breakthroughs in the fertilizer industry reduced fertilizer prices relative to the prices of output and
TABLE 41.—Farm output and productivity, selected years, 1940-71
[1967 = 100]
Category
1950
1940
1969-71
average
1960
Selected inputs:
Labor
Farm real estate
Mechanical power and machinery...
Agricultural chemicals *_
Feed, seed, and livestock purchases
Taxes and interest
Miscellaneous
Tota I i n p ut
Total output
Productivity 2
Number of farms
1
Fertilizer, lime, and pesticides.
Farm output per unit of total input.
Source: Department of Agriculture.
2
166
288
102
41
13
43
68
84
214
104
83
30
64
77
93
143
99
95
50
84
87
109
92
98
102
113
107
105
106
97
60
62
101
74
73
98
91
93
101
105
103
201
179
125
93
other factors of production. The use of fertilizer had increased 129 percent
from 1940 to 1950. This rise was from a relatively low base, but fertilizer use
increased 69 percent from 1950 to 1960, and another 113 percent during
the 1960's.
The use of labor has declined fairly steadily from 1940 through 1969-71.
A reduction of 26 percent in the 1940's was followed by a 33 percent reduction in the 1950's and an additional 36 percent reduction in the 1960's.
However, the quality of the labor force has improved substantially. The
reduction in the measured labor force therefore overstates the true decline
taking place in labor use as skills and knowledge become an increasingly
important component of the total.
The decline in the labor input has been offset at least in part by
mechanization. Mechanical power and machinery in Table 41 represent depreciation and a use charge on the mechanical inputs, expenditures for maintenance, and fuel and energy. The most rapid increase in this category took
place in the 1940's (102 percent) and was partly a war-induced phenomenon that resulted from labor mobilization for the war effort. The increase was
substantially lower in the 1950's (14 percent) and still lower in the 1960's (7
percent). However, the measurement of this input probably does not fully
capture the improvements in the efficiency of machinery in the last two
decades, and hence understates the true increase.
Associated with these large changes in resource proportions have been a
large and persistent decline in the number of farms and fairly steady advances in productivity, as it is conventionally measured. Total factor productivity has risen over each of the past three decades. It grew most rapidly
during the 1950ss, showing an increase of 27 percent compared to an increase
of 18 percent in the 1940's and of only 11 percent in the 1960's. The extent to
which the dramatic decline in productivity growth in the 1960's represents a
real and enduring decline is not clear, but the answer is of critical importance to the future trends of U.S. and world food supply. Growth in productivity has been an important source of output growth in the past. It has enabled the United States to be one of the best-fed countries in the world, yet
provide substantial food aid to other countries and simultaneously increase
commercial exports. At the same time it has enabled the agricultural sector
to supply large quantities of labor to an expanding economy.
The Agricultural Labor Market
A major share of the so-called farm problem in the last 20 to 25 years was
a consequence of excess labor in the agricultural sector. Historically, the
rapid increase in farm productivity, compared to other sectors, and the slower
relative increase in the demand for farm products have required a transfer
of labor to the nonfarm sector. Farm incomes, of course, lag behind nonfarm
incomes as long as transfers are continuing. For all practical purposes, however, this process appears to be nearing an end.
The Nation's farm population reached a peak of 32 million in the
depression years of the early 1930's. Since that time the trend has been
167
downward, except for a brief period following World War II, with steep
declines for each decade starting in 1940 (Table 42). This decline, which
took place at a rate of 4.6 percent per year during the 1960's, has slowed
substantially since 1970 to an average of only 1.2 percent a year, marking
the first extended period since the late 1940's that the reduction of the farm
population has slowed.
TABLE 42.—Farm population and farm employment, selected years, 1930—74
Farm population*
Year
Number
(thousands)
1930
1940
1950
1960
1970
.
..
Farm employment
Percent
change
(annual rate)2
Number
(thousands)
Percent
change
(annual rate)2
30,529
30, 547
23,048
15,635
9,712
0.0
-2.8
—3.8
-4.6
12, 497
10,979
9,926
7,057
4,523
—1.3
—1.0
—3.4
—4.4
9,264
-1.2
4,294
—1.3
1974
1
Farm population includes people residing on units officially defined as farms. Since many of these "farms" are little
more than rural residences for people attached to urban labor markets, the data overstate the number of people actually
engaged in agricultural production.
3
Annual rate of change from preceding year shown.
Source: Department of Agriculture.
Farm employment declined during the 1950's and 1960's at about the
same rate as farm population, and has also declined at a much slower rate
since 1970. Another indication of the increased balance between the farm
and nonfarm labor markets is that the rise between 1970 and 1973 in median
family income (measured in 1973 dollars) has been much more rapid among
farm families, amounting to about 30 percent, compared to an increase of
about 6 percent for nonfarm families in the same period. In 1970 the median
income of farm families was about $3,700 less than that of nonfarm families;
by 1973 the differential had been reduced to about $2,100.
The transfer of labor from agriculture to the nonfarm sector has been an
important source of growth for the economy at large. Even if the aggregate
farm population and labor force continue to decline, the movement of
labor from the farm sector will probably make much smaller net contributions to a growing nonfarm labor force in the future. Average annual net
outmigration during the 19505s and 1960's was 741,000 and 592,000 respectively, with a much larger gross outflow because of a considerable reverse movement. From 1970 to 1974, however, the average net outmigration
was only slightly over 110,000 per year. The population base in agriculture
is no longer large enough to provide outmigrants on the same scale as in the
past, even with significant mechanical innovations and reorganizations within
agriculture.
The problem of low relative incomes in agriculture has been the justification for many of the farm policy measures over the last 40 years. If the
agricultural labor market is indeed near equilibrium, low farm incomes
168
should play a smaller role in shaping future farm policy. Certain groups
in agriculture will continue to be disadvantaged, however, because of continuing regional imbalances and because certain components of the farm
labor force do not have the skills to compete in nonfarm labor markets.
An Illusory Land Reserve
It was believed until recently that about one-sixth of the Nation's cropland was being withheld from production by Government programs and
constituted reserve capacity. When these acres were released in 1973 and
1974, however, it became clear that many of them were unprofitable to bring
back into production, even at higher prices. Crop acreage rose by only 37
million acres between 1972 and 1974, even though about 60 million acres
were released from acreage controls. Thus, the actual excess capacity from
this source was not nearly as large as the data suggested.
Undoubtedly the United States has additional land that could be brought
into production. Substantial new investments will often be required, however,
and such investments are unlikely to be made unless prices remain at higher
levels than in the past. Moreover, for the most part such land will be marginal to that now in production, with the result that its contribution to output expansion will be less than that of land now being used.
Devaluation of the Dollar
American agriculture has benefited from an unprecedented export boom
in the 1970's. The volume of exports averaged 39 percent higher in the 1972—
74 period than in the previous 3 years (fiscal year basis). Part of this increased demand may be temporary. Demand for U.S. feed grains and soybeans was growing rapidly in 1972 and 1973 because of the rapid and
simultaneous economic growth in Western Europe and Japan, and the consequent upgrading of their diets with more meat products. In addition,
world output of grains declined in 1972 for the first time in 9 years. The bulk
of the decline was outside of the United States; this situation, along with a
shift in Soviet policy to maintain food consumption when output in their
own agricultural sector declined, generated additional demand for U.S.
exports.
Part of the increase in foreign demand for U.S. agricultural products was
also due to the devaluations of the dollar in late 1971 and early 1973 and
the shift to a system of floating exchange rates. Between May 1971 and the
end of 1974 the dollar fell 13 percent relative to other currencies weighted
by trade in our agricultural products.
The devaluations produced a once-and-for-all increase in the foreign demand for U.S. exports, although the effect is spread over several years. In
addition, they caused imports of agricultural products—which grew substantially during the 1960's and early 1970's—to become less competitive in
the U.S. market. The combination of greater foreign demand for U.S. agricultural output and a decline in competitive imports contributed to an increase in demand for U.S. products.
169
The depreciation of the dollar ended a period during which the overvaluation had reduced exports and kept domestic prices of agricultural
products lower than they otherwise would have been (an effect that was offset at least in part by price supports, export subsidies, and other programs).
During this period the United States sacrificed from a trade standpoint part
of the comparative advantage that U.S. technological superiority in agriculture would have given it in world markets. Reduced exports also meant
lower prices for U.S. consumers. The overvaluation of the dollar also intensified the normal need for resource adjustment that rapid increases in agricultural productivity had caused, and thereby contributed to the relatively
low returns to resources employed in agriculture.
Owners of agricultural resources in the aggregate have benefited from the
devaluation just as they had been penalized by the overvaluation, but the
benefits have not been uniform. Grain producers have received significantly
higher prices in the short term, but livestock producers have suffered because the prices of feeds tuffs have increased. Once the increased demand has
worked through the system, a new equilibrium will be established with higher
prices for both grains and livestock products. The effect on factor returns
will be determined largely by their relative elasticity of supply. The presumption is that the bulk of the benefits will be reflected in higher land values
and larger returns to managerial skills, both of which are quite inelastic
in supply.
Prices of grains are currently at relatively high levels, in part because of
the shortfall in production of grains in the United States. As output recovers, prices should decline, but not to their pre-1972 levels unless there are
other basic changes in demand and supply. Owners of agricultural resources
will receive a larger share of the benefits of technical change in U.S. agriculture than they have in the past, as will foreign consumers. U.S. consumers, on the other hand, will receive a smaller share. The proportion of U.S.
output that is exported should be larger than before the devaluations, and
the price of food to U.S. consumers will be more heavily influenced by
supply-demand conditions abroad.
A CHANGING WORLD AGRICULTURE
The capacity of the world to feed a growing population adequately has
been a continuing concern. Beginning in the late 1960's, the world food
situation began to improve markedly, and by 1971 considerable optimism
was felt around the world. The so-called "Green Revolution" of miracle
wheat and rice varieties and the greater use of fertilizer had increased
the output of food grains, especially in Asia. Countries that had become
traditional importers suddenly became self-sufficient or net exporters. India
was even able to accumulate sizable reserves.
In sharp contrast, much has been made during this past year about a
possible Malthusian crisis in the less developed countries. Population is
growing at quite high rates in these countries and has done so since World
170
War II. Unless the growth of population slows, many question whether
the necessary large increases in agricultural output can be achieved in the
future. The upsurge in commodity prices these last 2 years and the famine
conditions in the African Sahel and in South Asia bolster these fears.
This concern may be exaggerated, although there are a number of troublesome developments in world agriculture. One is a decline of approximately one-fourth in the growth rate of world agricultural production (excluding Communist Asia), from 3.0 percent in 1964-68 to 2.3 percent in
1968-73, or little more than the growth rate in the world's population. The
decline is largely accounted for by a slowing of the growth of production in
the developed countries, however, and was the result of explicit policies designed to bring the agricultural sectors of these countries into balance prior
to 1973. Output increased at a rate of only 2.0 percent per year in the developed countries in the more recent period, a decline of one-third from
their growth rate of 3.0 percent in 1964-68. In the less developed countries,
on the other hand, where population pressures are greatest, output increased
at 2.6 percent in the earlier period compared to 2.8 percent in the latter.
Viewed from a longer perspective, world agriculture has performed
reasonably well. Prior to 1972 there had been 20 years of uninterrupted
increases in output; as a result a population that was growing at unprecedented rates by historical standards was provided a small but significant
increase in consumption per capita. During 1954-73 per capita food production in the developed countries increased about 1.8 percent annually.
In the less developed countries, where the population was increasing most
rapidly, the increase per capita was smaller, about 0.4 percent per year, but
still significant.
Despite this relative success in feeding a larger population with increasing
quantities of food, total agricultural output declined in 1972 after two
decades of steady growth, and preliminary data for 1974 indicate no increase
over 1973. Some attribute this to a fundamental change in the weather. Although climatic conditions may have been favorable in recent decades, 3
years are not enough to permit final conclusions about a shift in the weather.
Whether output growth returns to sustained rates of increase will be a critical issue in the years ahead.
A second change is a reduction in the supply of new land that can be
brought into production, at least at supply prices of the past. This fact is
especially important for the developing countries, where the increases in output have been largely the result of increases in the area of land under cultivation. Grain yields in the developing regions, for example, were only 32
percent above the 1948-52 level in 1966-70. Over the same period, grain
yields had increased by 63 percent in the industrial regions, with very little
increase in land under cultivation. In countries like India, moreover, the
land resource has been damaged by water and wind. Much land around
the world can clearly be brought into production, but to do so requires
investments in roads, transportation, land reclamation, and drainage.
171
The emerging land constraint need not limit increases in output, as the
experience of the United States and other developed countries demonstrates.
But the ability to achieve more rapid increases in yields will require the
development and adoption of improved techniques of production and abundant quantities of modern agricultural inputs. This, in turn, will require
greatly expanded public and private investments in research and development, as well as enlarged production capacity to provide adequate supplies
of fertilizers. With rising costs of energy, at least nitrogen fertilizer is likely
to be more expensive than in the past.
A third change in world agriculture is the increased dependence on the
United States as a supplier of agricultural products (Table 43). As recently
as the late 1930's, North Africa, the Middle East, and Asia were net exporters of grains. Now these regions are consistently net importers. Similar
trends elsewhere have made the United States the dominant exporter of
grains, responsible for more than 50 percent of the total.
A number of recent studies have projected a growing imbalance in food
supplies between the developed and the developing economies. Unless production accelerates, the developing countries are expected to have growing
food deficits well into the 1980's. The developed countries, on the other hand,
are expected to have growing surpluses.
The post-World War II increase in overall trade has largely been among
the developed countries, with a decline in the share of trade between the
developed and developing countries. This trend must be reversed if the projected imbalance is to be accommodated. The developed countries may
have to import more raw materials and industrial products from the developing countries in exchange for agricultural products.
TABLE 43.—World net imports and exports of grain, selected periods, 1934-73
[Millions of metric tons; annual averages]
Net imports (—) or net exports
Country
1934-38
1948-52
1960-621
1969-711
1972-731
Developed countries:
United States
Canada
South Africa
Oceania
Western Europe
Japan
2.8
-23.8
-1.9
14.0
6.6
.0
3.7
-22.5
-2.3
32.8
9.7
2.1
6.6
-25.6
-5.3
39.8
14.8
2.5
10.6
-21.4
-14.4
73.6
14.8
3.1
8.9
-21.0
-18.5
4.7
-1.0
2.7
-.4
.5
-3.6
-3.6
-3.1
-14.2
-6.3
9.0
1.0
2.4
2.1
-.1
-3.3
.8
-4.6
-5.6
3.2
-9.2
-11.0
.6
-13.7
-14.8
0.5
4.8
Centrally planned countries:
U.S.S.R. and Eastern Europe
China
Developing countries:
Latin America
North Africa and Middle East
Asia
i Fiscal years.
Note.—Grain includes wheat, milled rice, corn, rye, barley, oats, sorghum, and millet.
Source: Department of Agriculture. Economic Research Service.
172
GREATER PRICE INSTABILITY
A number of factors suggest that the U.S. food and agriculture sector has
entered a period of greater price instability. The large stocks of agricultural
products in Government hands, which reflected the excess capacity at prevailing prices, were largely liquidated during 1972 and 1973. These stocks provided a stabilizing influence on the market, since they offered a means of
dampening and offsetting year-to-year fluctuations in production both in
the United States and abroad. Similarly, a land reserve, withheld from
production during the late 1950's and 196O's5 provided another means
of offsetting changing conditions of demand and supply. Without these
cushions, agricultural prices are more subject to changing market conditions
both at home and abroad. Moreover, the expectation that a larger share of
U.S. output will go to export markets will further expose the agricultural
sector to the vagaries of world markets.
A number of conditions have intensified the effects in the United States
of fluctuations in world agriculture. The domestic agricultural policies of
the European Community and Japan inhibit the adjustments that can take
place in their agricultural markets. Consequently, the burden of adjustment
to changing conditions of demand and supply is pushed onto the United
States and other exporting countries. In addition, the growing involvement
of the U.S.S.R. in world trade in recent years has transmitted to world markets the shocks stemming from fluctuations in the relatively unstable agricultural sector of that country. Some 80 percent of the year-to-year fluctuations in the world wheat trade since 1960 have been accounted for by swings
in Soviet wheat trade.
Charts 9 and 10 provide a historical perspective of the price instability
problem for four important agricultural products. Actual prices have been
deflated by the wholesale price index (1967=100) for all commodities in
order to express them in real terms. Compared to prices before 1950, agricultural prices were much less volatile from 1950 to 1971, w7hen there were
larger reserves in the form of excess productive capacity and actual stocks
of grain. The extent to which the price variability declined from 1910-49 to
1950-71 is shown in Table 44 for six important products. Measures of variability (variance and coefficient of variation) declined in every case except
the coefficient of variation for wheat; and in some cases the decline was
quite large.
Factors other than reserves undoubtedly influenced the degree of instability in the two periods. Recessions in the post-1950 period were mild
compared to those earlier, and built-in stabilizers acted to cushion the declines in income when a recession did occur. Income-induced fluctuations in
demand were therefore milder in the more recent period. Barriers to trade
were relatively high from 1920 to 1950 but lower after World War II, despite
the previously mentioned foreign agricultural policies which affect trade. A
greater integration of countries by means of trade has taken place in the
173
Chart 9
Farm Prices of Wheat and Corn
in Constant Dollars
1967 DOLLARS PER BUSHELJ/
4.00
3.00 "
2.00 -
1.00 -
1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970
3.00 -
2.00 -j
1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970
j / C U R R E N T DOLLAR PRICES RECEIVED BY FARMERS DEFLATED BY THE WHOLESALE PRICE INDEX
FOR ALL COMMODITIES (1967=100).
SOURCES: DEPARTMENT OF AGRICULTURE, DEPARTMENT OF LABOR, AND COUNCIL OF ECONOMIC ADVISERS.
174
Chart 10
Farm Prices of Beef Cattle and Hogs
in Constant Dollars
1967 DOLLARS PER HUNDREDWEIGHTJ/
40
10 "
1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970
Hogs
30
(\ 1
20
\ A 1 \l\ 1"
10
0
i
i
i
i
i
i
i
i
i
i
i
i
1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970
J / CURRENT DOLLAR PRICES RECEIVED BY FARMERS DEFLATED BY THE WHOLESALE PRICE INDEX
FOR ALL COMMODITIES (1967=100).
SOURCES: DEPARTMENT OF AGRICULTURE, DEPARTMENT OF LABOR, AND COUNCIL OF ECONOMIC ADVISERS.
175
TABLE 44.—Indicators of the variance offarm pricesin constant dollars, selected periods, 1910-71
Mean»
Commodity and period
Wheat:
1910-49
1950-71
. . .
Corn:
1910-49
1950-71
Cotton:
1910-49
1950-71
Soybeans:
1910-49
1950-71
.
.
Beef cattle:
1910-49
1950-71
..
. .
Hogs:
1910-49
1950-71
Variance
Coefficient of
variation
2.31
1.84
0.279
.190
0.229
.236
1.73
1.31
.227
.072
.276
.206
33.8
32.3
92.9
50.2
.285
.219
3.08
2.56
.914
.091
.311
.118
16.43
22.36
17.9
13.2
.258
.162
19.88
19.13
23.7
.245
.154
8.7
1
Annual averages: Dollars per bushel for wheat, corn, and soybeans; cents per pound for cotton; dollars per hundred
pounds for beef cattle and hogs.
Sources: Department of Agriculture and Council of Economic Advisers.
recent period, and transportation and communication systems are greatly
improved. These improvements not only diffuse shocks from the supply side
somewhat more broadly, but also make for a quicker adjustment to changing
economic conditions.
Although the stocks in Government hands during 1950-71 were acquired
as a means of supporting prices above market-clearing levels, not as a stabilization reserve, their acquisition and release appear to have provided an
important stabilizing influence on commodity markets. This stability was
not without its costs, however. The stocks were quite large, and consequently
they were costly both to acquire and to maintain. Since they were acquired
as a by-product of programs designed to support farm prices, the increased
stability was also a by-product. But the maintenance of comparable reserves
for stability purposes would have similar costs.
A key question is whether we have returned to a period of increased
price variability comparable to that prior to 1950. Grain prices have increased very greatly in 1973 and 1974. Yet normal weather in the United
States and around the world will enable grain output to recover sharply
in 1975. This increased supply would come into the market under conditions of weakened demand both from cyclical downturns in the economies
of the developed countries and from a reduction in livestock enterprises.
The consequence could be an abrupt reversal of the present situation, with
much lower grain prices and higher prices for livestock products.
Certainly there are some elements in the present situation that are comparable to the period prior to 1950, especially the absence of large stocks.
On the other hand, as noted above, important differences exist in the
current situation which should serve to attenuate the price fluctuations.
176
Without a significant rebuilding of stocks, more price instability should be
expected than during the 1950's and logo's, but it seems unlikely that yearto-year changes will be as large as in the earlier era.
POLICY CHALLENGES AND OPTIONS
U.S. agricultural policy has in the past been dominated by two somewhat
contradictory themes. The first has been the attempt to increase agricultural
output, largely through public investments in agricultural research, the
dissemination of new agricultural techniques, and in some cases the subsidization of inputs. The second theme has been a concern with the problem
of low relative incomes in agriculture, which led to programs aimed at supporting farm prices above market-clearing levels and holding production
down through restricting acreage and at times marketings.
An unintended by-product of these programs was the accumulation of
sizable stocks of agricultural products in Government hands. These stocks
and the recently diverted acres provided a degree of increased stability
to commodity markets. They were also the means by which considerable
amounts of food aid were provided to foreign countries, aid that eventually
became an important component of the Nation's foreign assistance programs. But these benefits were obtained at considerable cost: less efficient
use of the Nation's resources and heavy Government involvement in the
agricultural sector.
The changed conditions of agriculture and the shift to market-oriented
domestic farm policies that took place during the 1960's and early 1970's
have solved many of the earlier difficulties, but new issues have emerged.
The decline in excess capacity in agriculture and the sharp increase in
food prices have added to the importance of obtaining low-cost increases in
agricultural output. Moreover, with the growing interdependence between
U.S. and foreign markets, the U.S. consumer may for the first time have
an obvious interest in expanding the agricultural output in developing countries and improving the stability of international markets.
The rise in incomes in agriculture has reduced the importance of the farmincome problem. There will undoubtedly be an increased concern about
instability, however, with the danger that in attempting to deal with this
problem we will return to policies that created other problems in the past.
If prices t should decline precipitously from their current high levels, the
temptation will be great for the Government to intervene by raising price
supports above market-clearing levels.
The return of the dollar to near equilibrium exchange rates and the shift
to floating rates place the United States in a better position to capitalize on
the considerable comparative advantage that it has in agricultural products.
To do so, however, will require continued emphasis on trade liberalization.
Parallel to this is the need to encourage more market-oriented agricultural
policies among our trading partners in order that the United States need not
carry a disproportionate share of the adjustment to changing conditions of
177
demand and supply in world markets. Further adjustments in our own agricultural and trade policies will also contribute to a more flexible agricultural
sector.
AGRICULTURAL DEVELOPMENT
The World Food Conference held in Rome in November 1974 had the
primary objective of devising means of coming to grips with the emerging
world food problem. The United States proposed to the Conference a comprehensive program of urgent, cooperative worldwide action on five points:
1.
2.
3.
4.
5.
Increasing production in food-exporting countries.
Accelerating production in developing countries.
Improving the means of food distribution and financing.
Enhancing food quality.
Ensuring security against food emergencies.
Increasing agricultural output both at home and abroad is probably the
critical issue on this agenda. Our state of knowledge with respect to ways of
fostering agricultural development has advanced considerably in the last
decade. Studies have shown that investments in developing and disseminating new production technology tend to have a high rate of social return. The
adoption of new production technology involves increased use of modern
inputs, such as fertilizer and machinery, which are produced in the nonfarm
sector. The capacity to produce these inputs usually needs to be increased if
generalized modernization is to take place, and adequate price incentives
are important for their adoption. Similarly, improvements in the human
agent through investments in schooling and training programs are required
for the rural population.
Many developing countries have tended to underinvest in agricultural research and in the schooling of their rural population. Moreover, they have
often concentrated their industrialization efforts on steel mills and the accoutrements of a modern mass-consumption society, to the neglect of industries which would have provided expanded supplies of modern agricultural
inputs. In addition, they have discriminated against their agricultural sectors
by means of trade and domestic price policies, thereby reducing the incentives to adopt modern inputs.
If these policies are changed, there is good reason to expect food output to
keep up with increasing population and growing demand into the foreseeable future. To change the policies, however, will require considerable
political courage and the ability to focus on longer-run requirements rather
than short-term exigencies.
Even with changed policies by the developing countries, there is still a
role for assistance by the advanced countries to facilitate the modernization
of world agriculture. The United States has a tradition of providing such
assistance, starting with President Truman's Point IV program. However,
foreign assistance provided through that program concentrated on the
transfer of our own knowledge rather than the development of new knowl-
178
edge, and therefore placed undue emphasis on strengthening farm extension
programs in developing countries. The limitations on the transfer of agricultural production technology from one area to another were not adequately
recognized, nor was the importance of strengthening the capability for agricultural research under ecological and economic conditions similar to those
in which the new production technology was to be used.
In recent years the United States has shifted a larger portion of its diminishing foreign aid budget toward agricultural development, with particular
emphasis on assisting small producers and landless workers. The United
States has also supported since its inception*the Consultative Group on International Agricultural Research, which allocates resources to the International Centers for Agricultural Research, and more recently it has agreed to
establish an International Fertilizer Development Center in the United
States.
The immediate challenge in strengthening world agriculture is to develop the national capabilities for agricultural research in the low-income
countries. The generation and application of new production technology
are the keys to agricultural development, particularly where land constraints
exist. Although basic principles and basic plant material can usefully be
transferred, new production technology for the most part has to be developed
under tne conditions in which it will be used.
There is also continued need to support agricultural research in the United
States, as well as a need to make more effective use of existing resources.
The private sector can and does support a great deal of agricultural research, and its expenditures for this purpose have grown. However, the
private sector can be expected to undertake only that research from
which it will be able to capture a return. Much of the knowledge produced from agricultural research is a public good, and private entities cannot capture the full benefits from it. This is especially true of basic research.
There has been a shift toward more applied research in recent years,
partly because of budget measures and partly to make the research effort
both more visible and more accountable. In fact, however, publicly supported
research might better concentrate on basic research, leaving the applied research to the private sector. At the same time, attention might be directed to
the efficiency of the current research establishment. The appropriate number of research stations, the division of labor between the universities and
other research institutions, and the priorities in the research program itself
are questions that should be examined.
Public support (State and Federal) for agricultural research in the United
States has increased only slightly (1.6 percent) in constant dollar terms from
1968 through 1973, with a somewhat larger increase in scientific man-years
devoted to such research. As a fraction of the gross national product frorr
agriculture, however, public expenditures on research have declined from
1.4 percent in 1968 to 1.2 percent in 1973. At the same time there has
179
been a shift away from output-increasing research and toward a greater
emphasis on social and environmental problems.
THE INSTABILITY PROBLEM
Changes in relative prices are desirable because they provide important
signals to both consumers and producers about changes in relative scarcity
of products. They help ration limited supplies among competing uses in
times of short supply and encourage consumption when supplies are large.
Agricultural prices are subject to larger fluctuations than many other products, mainly because production is subject to unpredictable shocks from the
weather. Moreover, the biological nature of the production process results
in a considerable lag between the time resources are committed to production and the time output is forthcoming, and the climatically induced production cycle limits the extent to which crop shortfalls can be replenished.
In contrast, many other sectors of the economy have a continuous production process and output can more easily be adjusted to changes in demand.
Large swings in agricultural prices result in a loss in resource efficiency,
since producers will frequently have made the wrong decision ex post. In
addition, wide fluctuations in agricultural prices lead to transfers of income
between producers and consumers. While these shifts will be offsetting over
several years, they can be severe from the standpoint of either group in a
particular year.
For producers, part of the problem is obtaining adequate information. If
at the time of committing resources to production they knew what the
demand would be when their output was expected to be sold, they could adjust their production decisions accordingly. Hence, information has value to
society, and both producers and society at large can afford to use resources
to improve that information, although there are obvious limits to predicting
the weather and to a lesser extent Government policy.
Institutions have developed which provide protection to participants in
unstable agricultural markets. An important example is futures markets,
which offer a way of reducing uncertainty through hedging operations.
Futures markets furnish an efficient means of pooling informed judgments
about what prices will be. But because they cannot remove the source of
price instability, they do not remove the basic resource misallocation that
results from widely fluctuating prices. The farmer who makes production
decisions based on $3 corn can protect that price through an appropriate
hedging operation. However, if his corn is valued at $1 when it is sold, the
cost from producing inappropriate quantities will still be there.
Government policy can help alleviate the instability problem in many
ways, through: (1) improved information and analysis, (2) greater coordination of domestic agricultural policies among countries, (3) freer trade
in agricultural products, and (4) building and maintaining greater grain
reserves or stocks for use in years of crop shortfall. Whether the latter is
required will depend in part on success in the other endeavors.
180
Improved Information and Analysis
The traditional Government role of providing information and analysis
is an essential component of a free market philosophy. The importance of
both is now greater than ever, especially in view of the interdependence
of the U.S. food and agriculture sector with the world economy. With increased instability, more accurate forecasts of future market conditions will
lead to a more rational allocation of resources. But improved forecasting
will require an improved data base both here and abroad, the cooperation
of other governments, and a strengthened and expanded capability to analyze
these data. During the past year several significant steps have been taken to
upgrade the statistical programs and forecasting work of the Department of
Agriculture.
Coordination of Domestic Agricultural Policies
The Government has also sought to improve coordination among countries in the conduct of their domestic agricultural policies. For example,
consultations were held in 1974 with many countries in order to obtain
adjustments in domestic policies that would help alleviate the pressures
from reduced U.S. grain output and large worldwide supplies of beef.
Greater coordination in the future can cushion the shocks imposed on UTS.
agriculture from abroad.
Trade Liberalization
Trade liberalization is an essential element in providing increased stability
in world markets and in assuring food security for all countries. Weatherinduced fluctuations in production could be offset through changes in exports
and imports, thereby evening out the supply for any one country. The larger
market area that would result from freer trade would increase the chance
that the effects of bad weather in one location would be offset by good
weather in other areas.
Efforts to liberalize trade are hampered by domestic agricultural policies
designed to fix prices either above or below what would be market-clearing
levels in the absence of such policies. Both kinds of policies have trade
implications and are potentially destabilizing to world markets. If prices
are set above market-clearing levels, restrictions on imports have to be
imposed. If they are set below market-clearing levels, then exports have
to be limited in order to provide adequate supplies to the domestic market
if the country is on balance a net exporter, or imports must be subsidized
if the country is to attain its domestic price goals. Such policies in effect
push adjustment problems onto other countries, thereby making their agricultural sectors more unstable.
The intertwined nature of trade policy, domestic agricultural policies, and
reserves policies is illustrated by the experience of the last 2 years. The
sharp rise in grain prices, combined with weakening prices for livestock and
poultry products and unacceptable rates of inflation, gave rise to pressures to
control and limit exports. With freer trade, a larger area of supply might
181
have been tapped to accommodate the demand. Similarly, with more flexible
domestic prices in some countries, price increases would have dampened
some of the demand. In either case there would have been a more general
sharing of the burden.
Grain Reserves
In the absence of more flexibility on the side of trade and domestic
agricultural policies, the availability of contingency reserves can serve to
cushion price rises. The experience since 1972, however, points up that
reserves would have had to be very large to provide a stabilizing influence,
larger than any one country or even a few countries would be willing
to carry.
For this reason, and to achieve greater world food security, the United
States has proposed an international system of nationally held grain reserves.
In the past, the exporting countries—primarily the United States—have carried the bulk of the grain reserves. Since reserves may also benefit importing countries, a greater sharing of the costs among countries seems justified
in the future.
Negotiations on grain reserves will be held in 1975. These discussions are
likely to be protracted, since there is little agreement either on who benefits
and who loses from stabilization or on the appropriate quantities of contingency reserves. Similarly, agreement on rules and criteria for managing
the stocks is lacking.
There are several additional difficulties in developing an international
system of nationally held grain reserves. One problem is that the benefits
will accrue partly to those who have not paid for them. A possible solution
is to negotiate a system that includes penalties and sanctions for those who do
not participate. For instance, such countries could be denied access to the
reserves in a period of tight supplies. Alternatively, reserves that participant
countries accumulate and pay for might be made available to nonparticipants on less attractive terms, perhaps by an export tax at least equal to the
accumulated carrying charges.
The acquisition and maintenance of grain reserves will have a variety of
costs. While stocks are being accumulated, consumers pay higher prices
than they otherwise would; and when they are released, producers in a
similar way receive lower prices. Unless stocks are managed properly, they
can be destabilizing by untimely release or accumulation. Moreover, there
is the danger that a reserve program will again, as in almost all past attempts,
become a price-propping program, used largely to insulate one sector or
another from market forces.
There are two reasons why the United States should build grain stocks
above their current low levels. First, conditions of free trade do not prevail in
the world, and the United States provides freer access to its supplies than most
other countries do. Under these conditions contingency reserves, if correctly
managed, would provide a means of offsetting the shocks that come from
abroad and furnish some protection to U.S. consumers and producers
182
(especially livestock producers). Second, ample stocks are one way to
maintain confidence among foreign customers that this country will be able
to meet its export commitments. If access to supplies cannot be assured,
countries have a tendency to diversify their supply sources, turn to selfsufficiency, or perhaps resort to both of these.
FOOD ASSISTANCE
The United States provides food assistance to low-income groups through
a variety of programs, especially the Food Stamp Program. This program
has been greatly expanded and extended in recent years. Although not all
the families eligible for such assistance have made use of it, budget costs to
the Government have grown from only $250 million in fiscal 1969 to $4.0
billion in fiscal 1975. Moreover, it is estimated that food stamp bonus dollars
raise food expenditures by 60 to 65 cents per dollar in contrast to an increase
of from 20 to 30 cents per dollar in food expenditures that would be expected
from comparable cash income supplements to this low-income group. An
additional demand therefore has been placed in the market for food at
the very time that food prices were rising sharply.
There is serious question as to whether the distribution of stamps is an
efficient means of income transfer under current circumstances. A possible
reform of the Food Stamp Program would be to replace the food stamps
with direct transfers of money income to provide the recipient more freedom
of choice and lead to a more efficient welfare program.
Large quantities of food aid have been supplied to foreign countries as
part of our foreign aid program. This program has provided a convenient
means of disposing of stocks accumulated in Government hands as a byproduct of price support programs, and has thereby helped to reduce the costs
to the taxpayer of carrying large stocks.
In contrast to the Food Stamp Program, food aid shipments under the
Public Law 480 program have declined in recent years. Shipments fell from
10 million tons in fiscal 1972 to slightly over 7 million tons in 1973 and less
than 4 million tons in 1974.
The objectives of food aid can be to alleviate human suffering caused
by shortfalls in production in developing countries to furnish more limited
relief when such natural disasters as earthquakes or hurricanes occur, or to
supply continuous food aid as a means of balance of payments support or
foreign aid to individual countries. The negotiations evolving out of the
World Food Conference will attempt to solve the more persistent food security
problems.
A country with a comparative advantage in agriculture might want to
provide some fraction of its foreign aid in the form of agricultural products.
With the decline in excess capacity in the U.S. agricultural sector, however,
and the changes in domestic farm policy, such aid is no longer the "free" good
that it was once imagined to be. Except to the extent that it substitutes for
commercial sales, every incremental increase in tonnage shipped for this
183
purpose represents a corresponding reduction in the supply available to
the domestic economy—and an increase in prices to the domestic economy.
The costs of the program have now become more explicit, with the result
that more rational policy choices may be made. The question is how desirable it is to provide food aid beyond the commitment to promote food security under conditions of stress, since continuing food aid can reduce incentives to strengthen the agricultural sector of the recipient country.
GUIDELINES FOR DOMESTIC FARM POLICY
Since the mid-1960's commercial farm policy has evolved toward much
greater market orientation. The previous commodity programs, dating back
to the 1930's, were built around a system of mandatory acreage allotments,
marketing quotas, and high price supports for individual field crops. Today
only a few crops (rice, peanuts, tobacco, and long-staple cotton) continue
under such rigid programs. The difficulties with these programs were
enormous: they were mandatory and inflexible to changes in supply and
demand; they overstimulated the production of particular crops and led
to the excess Government stocks of the 1950's and early 1960's; they provided "artificial" benefits, or subsidies, which became locked into land values; by holding up domestic prices, they conflicted with a liberal trade
policy, requiring restrictions on imports and subsidies to make American
products competitive in world markets.
The first major step in the transition was to reduce (market) price supports
on individual crops and replace them with direct cash payments which were
contingent on diverting land from crop production. Gradually the emphasis
on individual crops was discontinued, allowing producers discretion to plant
crops they considered most profitable. The principles that have guided the
transition are economically sound.
1. Market prices should not be supported above market-clearing levels.
Price supports to prevent excessive downside price declines in surplus
years should be relatively low and cover only variable production
costs. While providing an element of guarantee to producers, low
floors avoid any need for export subsidies and encourage expanded
domestic consumption and exports when supplies are large.
2. Production of individual crops should be free of controls. Controls
interfere with producers' ability to make the best use of resources in
response to changing conditions. If needed at all, production controls
should be through general land diversion.
3. Direct cash payments are more efficient than high price supports as
a means of providing income support to producers. Such payments
are only warranted because of the volatility of agricultural markets,
which can create excessive financial losses. In most years they should
be unnecessary and should be limited to providing guarantees against
the exceptional years of oversupply, thereby shifting some risk from
184
producers to taxpayers but permitting consumers to benefit from
lower prices.
The agricultural developments beginning in 1972 enabled the principles
to be implemented: almost all diverted land was released for production;
export subsidies were phased out; import restrictions were relaxed to some
degree; prices moved not only well above market supports but sufficiently high
that direct payments under the provisions in the 1973 act were limited to
wool and soil conservation. In effect, developments in the market contributed
to a fairly dramatic move toward a policy of increased reliance on the market.
These principles were, to a substantial degree, embraced in the Agriculture
and Consumer Protection Act of 1973.
FARM POLICY IN 1975 AND BEYOND
In considering policy in 1975 and beyond, the principles that have guided
farm policy in the past decade still apply. Government policy can function
in complementary ways, as discussed above, through participation in a
constructive international system of grain reserves, improvements in domestic and international information and analytical systems, measures to make
international trade in agricultural products more flexible, and efforts to
expand food production in developing countries. It is important, however, not
to change farm policy in ways that are inconsistent with these principles.
Efforts to raise price or income guarantees to producers, if successful, might
have some small temporary effect in 1975 by reducing uncertainty and encouraging all-out production. However, even though market prices are
expected to remain well above current guarantees in the immediate future,
any substantial increase now would be a move backward for farm policy.
When food supplies become more abundant in relation to demand, higher
price supports would prompt a return to substantial land diversion, large
Government payments, export subsidies, and import restrictions—and possibly even to the mandatory production controls of the past.
Current problems with dairy programs illustrate the pitfalls in heavy
Government involvement. State and Federal marketing order programs
institutionalize a higher price of milk for fluid consumption than for processing, and they restrict the free movement of raw milk. Together with
import quotas and a relatively high Federal minimum price support, these
measures place the dairy industry under heavy regulation and discourage
efficient production. Consumers eventually pay extra for milk; and, because
imports are usually limited to less than 2 percent of total consumption, trade
in dairy products has become a constant source of dispute in trade policy.
The dairy producers5 welfare, on the other hand, is dependent on and
affected by decisions setting Federal regulations. For many dairy farmers
production is often unprofitable, and their numbers have been diminishing.
Although there would be serious adjustment costs in reforming dairy programs according to the principles set forth above, the dairy industry could
185
in time become more efficient and prosperous, and consumers would purchase more milk and dairy products at lower prices.
*
*
*
*
*
*
*
Although economic circumstances have permitted a desirable move to a
market-oriented commercial farm policy, they have also brought out a basic
characteristic of agricultural markets: large price fluctuations and the uncertainty that these fluctuations generate. Producers, consumers, and Government policy makers will learn to adjust to the increased uncertainty. As this
happens the instability itself will be diminished, but learning is not an instant
process. In the meantime, steps that would return the agricultural sector to a
more regulated basis in response to short-term or temporary problems should
be avoided.
186
CHAPTER 7
The International Economy in 1974
T N 1974, THE WORLD ECONOMY experienced severe setbacks. Infla•*• tion in most major industrial countries reached the highest level in more
than 20 years. The rate of real economic growth declined. Sharp price
increases in energy, food, and other basic materials distorted price relationships and created new and large payments imbalances, affecting nearly all
countries. Massive international capital movements of unusual complexity
were required to continue the financing of world trade, which in terms of
dollars rose by about 50 percent from mid-1973 to mid-1974.
Specifically, consumer prices in the industrial countries comprising the
Organization for Economic Cooperation and Development (OECD) rose
by almost 14 percent on the average from 1973 to 1974. This rate of advance
was nearly double the average rise of 1lA percent from 1972 to 1973, and
nearly four times as high as the annual rate of increase of 3 5/2 percent during
the period 1959-72.
Economic growth came to a virtual standstill as the growth of real GNP
in the OECD countries, which had averaged about 5.4 percent per annum
from 1959 to 1972, fell nearly to zero in 1974. Efforts to check the acceleration of inflation coincided with ongoing cyclical downturns in many countries, and the high costs and reduced availability of energy reinforced the
adverse development of both prices and output.
In international trade, the sharp rise in the prices of crude oil implemented in October 1973 and January 1974 by the countries belonging to the
Organization of Petroleum Exporting Countries (OPEC) created massive
deficits in the current account balances of the oil-importing countries. This
placed strains on the world's financial markets and raised the prospect for the
long term of a large transfer of real resources or of ownership of nonfinancial assets from the oil-importing to the oil-exporting countries. Nonindustrial
countries, particularly in Asia and Africa, were in many cases seriously
afflicted by food shortages and the slowdown in world economic activity.
The international financial and economic system displayed a notable resilience in adjusting to some of these disturbances. Broadly speaking, countries have refrained from beggar-my-neighbor policies through which they
might have tried to shift some of their domestic and international problems
to other countries at the cost of a shrinkage in world trade and a loss in
economic welfare. In the financial sphere, the world capital markets ab-
187
sorbed and recycled massive amounts of petro-dollars and provided most of
the financing of international payments deficits and surpluses, with some
assistance from official lending operations conducted either by the International Monetary Fund (IMF) or between governments. The existing system of floating exchange rates helped countries avoid massive movements
of speculative funds.
The international monetary system was thus able to cope with differing
rates of domestic inflation, the increased costs of energy and other basic
goods, and the heavy capital movements associated with the accumulation
of large amounts of liquid assets by OPEC countries.
STAGNATION AND INFLATION IN THE INDUSTRIAL
WORLD IN 1974
The stage for "stagflation" during 1974 was largely set in 1970-71.
Beginning in late 1969, a slowdown in economic activity occurred in industrial countries that, while relatively mild, was more widespread than any
downturn in the postwar period. The stimulative measures which a majority
of countries adopted almost in unison in 1971 and maintained well into 1972
resulted in a strong upswing in economic activity in 1972-73 throughout
the industrial world.
The expansion in demand added to the inflationary tendencies; the rise
in consumer prices in the seven largest OECD countries, that had been
4 percent from 1971 to 1972, was ll/2 percent from 1972 to 1973. Moreover,
the coincident upswing in business activity led to a sharp increase in demand for industrial commodities and strained the capacity of producers to
supply that demand. The index of spot prices of world industrial materials
(excluding fuel) rose by 80 percent between 1971 and 1973. Poor harvests
in the Soviet Union and other parts of the world added to the emerging
price pressures on food. World food prices almost doubled as the world
commodity index for food (1970—100) gradually rose from 95 in 1971
to 173 in 1973.
The policy makers in most major industrial countries were confronted
early in 1974 with the difficult task of dealing simultaneously with high
inflation and slackening economic growth. Superimposed on these problems
were domestic and international dislocations created by the sharp rise in the
prices of crude oil. Deep concern about inflation prompted fairly restrictive
fiscal and monetary policies to be maintained in most countries throughout
the first half of the year.
The resulting pattern of economic change has been remarkably uniform in the major industrial countries during 1974. Table 45 highlights
some measures of the economic performance of these countries. The growth
of private consumption expenditures that had been the dynamic factor in the
economic expansion in virtually all major countries during 1973 slowed
down sharply in 1974.
188
TABLE 45.—Changes in real gross national product and major components for selected industrial
countries, 1962 to 1974
[Seasonally adjusted annual rate]
Percent change
From preceding
year
Country and component
1962
to
1971
average
From preceding
half year
1974
1972
1973
1st half
2d half i
France:
RealGDP2__
Private consumption
Government current expenditures..
Gross fixed capital formation
5.7
5.5
3.3
8.2
5.5
5.8
4.0
7.6
6.0
6.0
3.4
6.5
4.5
4.6
2.6
5.6
4.2
3.5
2.5
5.0
4.7
4.9
4.4
5.3
3.5
4.2
4.1
2.7
5.3
2.9
3.8
1.1
2.0
1.0
3.0
-5.3
.0
2.2
1.5
-8.5
5.0
5.6
3.9
3.7
3.1
3.3
4.6
.4
6.0
6.2
3.3
9.0
4.9
4.0
3.6
4.7
.0
-1.0
.0
-2.2
2.6
2.3
2.1
4.0
3.1
6.0
4.0
2.4
5.3
4.6
3.7
4.8
-3.4
-2.0
—.4
-5.7
5.0
4.5
—.5
-7.5
10.3
8.9
6.7
13.0
8.9
9.1
9.6
9.5
10.2
8.6
6.9
15.2
-9.3
—6.6
—1.2
—28.2
3.0
5.5
7.0
3.2
5.5
4.9
5.8
5.8
5.8
6.9
4.0
5.3
6.8
8.0
4.1
10.4
5.6
6.6
8.6
8.4
2.5
3.0
5.0
.0
Germany:
RealGNP
Private consumption
Government current expenditures..
Gross fixed capital formation
Italy:
RealGNP
Private consumption
Government current expenditures..
Gross fixed capital formation
United Kingdom:
RealGDP2
Private consumption
Government current expenditures..
Gross fixed capital formation
Japan:
Real GNP____
Private consumption
Government current expenditures..
Gross fixed capital formation
Canada:
RealGNP
Private consumption
Government current expenditures..
Gross fixed capital formation
1
Estimate.
Gross domestic product.
Source: Organization for Economic Cooperation and Development.
2
With few exceptions, the tight monetary policies of early 1974 caused
severe declines in residential construction in virtually all countries. Industrial
investment in machinery and equipment, which had risen vigorously during
1973, dropped off sharply in response to much higher long-term interest
rates and the deterioration of the business outlook.
The softening in economic activity was accompanied by rising unemployment; the 1974 unemployment rate exceeded the average of the past
decade in most major industrial countries. Recent changes in unemployment
in several OEGD countries are summarized in Chapter 3.
In late 1974 the demand management policies in a number of countries
began to move cautiously toward greater ease; but inflation continued to
be of major concern to the policy makers. Assessing these policies, the OECD
http://fraser.stlouisfed.org/
563-280 O - 75 - 13
Federal Reserve Bank of St. Louis
189
in its Economic Outlook of December 1974 has projected a moderate upturn in economic growth and some easing of inflationary pressures in all
major countries by the second half of 1975.
INTERNATIONAL REPERCUSSIONS OF THE OIL
PRICE INCREASES
The oil embargo and the subsequent fivefold increase in the Persian
Gulf price of crude over September 1973 levels imparted the most severe
shocks to the world economy since World War II. The broad economic
implications of these developments for production, consumption, and economic growth in the United States are discussed in Chapter 2. For other
industrial and developing countries of the world the implications were
qualitatively similar, but the force of the impact varied in proportion to the
dependence of individual countries on imported oil as a source of energy.
In analyzing the effects of the increase in the price of oil on the world
economy, one can single out four broad areas: income and output, prices,
the current account, and the capital account.
Income and Output Effects
Given the relatively low short-run price elasticity of demand for oil, the
economic consequence of the oil price rise was a diversion of consumption
expenditures in the oil-importing countries from domestically produced
goods to imported petroleum products. To the extent that prices of other
consumer goods did not decline, the immediate result of such a diversion was
a reduction in the real income of consumers in the oil-importing countries.
When the purchasing power created in the production of domestic goods and
services is transferred to the oil-exporting nations, and these nations do not
increase their imports correspondingly, aggregate demand would tend to
decline in the short run unless the reduction is offset by domestic policy
action.
The gross transfer of purchasing power realized through export receipts of
the OPEC countries in 1974 has been estimated at nearly $100 billion, all
but about $5 billion of which were received in payments for exports of oil.
This represented a more than threefold increase in revenues over 1973.
The increased exports to OPEC countries could offset only a small part of
the reduction in aggregate demand stemming from the increase in the oil
bill borne by the oil-importing countries. All estimates of non-oil transactions by the OPEC countries are subject to a great deal of uncertainty. It
appears, however, that OPEC imports of goods and services increased by
about $15 billion in 1974 to about $35 billion—approximately a third of the
OPEC revenues. After subtracting grants to developing countries and adding
income on their investments, the OPEC countries were left with roughly $60
billion as current account surplus in 1974.
The nature and direction of investment of the surplus funds by the OPEC
countries in 1974 are discussed below. As far as the immediate impact of
190
the oil price increase on income and output in the oil-consuming world is
concerned, the surplus may be viewed as increased "saving" that resulted
from the shift of world income from economic units with a relatively high
average propensity to consume (consumers in the oil-importing countries)
to economic units with an extremely high average propensity to save (oil
exporters). The OPEC savings were made available to the oil-importing
countries through the reflow of funds. To the extent that such funds were
channeled toward financing current consumption or real investment in
individual oil-importing countries, the reflow of financial capital into the
credit markets of those countries has cushioned the demand-dampening effect of the higher bill for oil imports. How far the slack in demand created
by the oil price rise was offset either by the return flow of OPEC funds or by
the internal demand management policies of individual countries cannot be
precisely determined. Domestic policies to dampen inflationary pressures, and
the depressed state of the economies in many of the oil-importing countries
provided little incentive for using the inflow of the OPEC funds to increase
real investment or consumption.
In addition to the demand-dampening effects of the increase in "saving,"
the high price of energy reduced demand for goods that use energy intensively. This shift created structural unemployment of resources, since many
factors of production are highly specialized in the short run and yield low
productivity in other uses. The demand for autos, for instance, fell sharply
in virtually all major countries, causing widespread unemployment in the
world auto industry.
In the longer run, as the OPEC countries develop the capacity to increase
their imports of goods and services, further structural changes will have to
take place in the economies of the oil-importing nations: resources must be
shifted to increase the production of goods and services for export. Thus,
the real income of consumers in the oil-importing countries will be reduced
as more domestically produced goods and services are exchanged for imports
from the OPEC countries. Unlike the reduction in real income experienced
in the short run, this reduction cannot be offset by domestic monetary or
fiscal policies, since it represents the "real" payment for oil.
Price Effect
In general, a direct link between the increase of a specific price and that of
the general price level exists only in the short run. For practical purposes the
duration of the "short run" depends on the monetary and fiscal restraint
accompanying the price rise. It is therefore difficult to quantify precisely
the contribution that the rise in the oil price made to the inflation in the oilimporting countries during 1974.
The short-run effects of increased oil prices on the general price level
in different countries occurred through several channels. The most obvious
one was the direct impact arising from the higher prices that consumers
in individual countries must pay for petroleum products like gasoline and
heating oil. This effect is directly evident in the consumer price index (CPI)
191
of individual countries, depending on the weight these commodities are given
in the market basket.
An indirect impact also occurs as increases in the prices of other goods
and services follow from the rise in the price of petroleum products used in
production. The strength of this indirect effect depends on the extent
to which oil price increases are passed through to the prices of final products, absorbed by the producers, or amplified under a system of markup
pricing. Finally, the higher prices of oil heighten the demand for substitute
sources of energy, driving up their price and raising production costs.
How long the effect on the general price level lasts and how output develops
under such strains depend on the way in which demand management
policies react to the dilemma, as discussed in Chapter 4.
While it would be hard to establish the total effect of these influences
on price behavior, the direct effect of price increases for gasoline alone leaves
no doubt that the oil price increase contributed significantly to the price
pressures in the world economy during 1974. For example, the increase in
the price of gasoline from October 1973 to August 1974 added between 1
and 2 percentage points to the rise of the consumer price index in Great
Britain, Italy, and the United States.
Current Account Effect
The increase in the price of oil by the OPEC countries led to a large deficit
in the current account of the oil-importing countries, and a matching surplus in the current account of the oil-exporting nations. Table 46 highlights
the change that occurred between 1973 and 1974.
The magnitude of the imbalance has been and will continue to be the
result of interaction among the following factors: the quantity of oil imported
by the oil-consuming nations; the price of oil set by the OPEC cartel; the
value of their imports of goods and services from the rest of the world; the
flow of earnings on the financial assets of the OPEC countries; and the
grants and aid donations they choose to make to the developing countries
of the world.
TABLE 46.—Balance on current account of major areas, 1973-74
[Billions of dollars]
Area
19741
1973
Chance,
1973
to 1974»
OPEC countries2
5.0
60.0
55.0
Industrial countries *
2.5
-37.5
-40.0
-7.5
-22.5
-15.0
Rest of world
1
Preliminary.
2 Organization of Petroleum Exporting Countries.
3 The 24 countries of OECD.
Sources: Department of the Treasury and Organization for Economic Cooperation and Development (OECD).
192
The ability of the oil-consuming nations to lower their oil imports in
response to the higher price has been limited. Oil represents an important
source of energy for industrial countries and for many developing nations.
The growth in world oil consumption came to a halt during 1974; a substantial reduction, however, must await implementation of further measures
and development of alternative sources of energy.
The power to raise prices has been derived from the strong monopolistic
position of the OPEC countries. An individual country cannot increase the
price of a homogeneous commodity without facing sharply reduced exports
and lower revenues, if there are alternative sources of supply. If a number
of exporting countries act jointly to drive up the price, however, and the
supply forthcoming from the remaining exporting countries cannot readily
be increased, output restrictions can indeed be effective. With respect to
the OPEC, this has clearly been the case so far, although the growing responsiveness of non-OPEG output and total import demand to the higher prices
set by tihe OPEC should make maintenance of these relative prices more
difficult over time.
The highly unequal distribution of income characteristic of the OPEC
countries and the confinement of income gains from trade to narrow segments of the population precluded significant increases in demand for many
imported products in the short run. For other countries in the OPEC group,
the long lead time required in developing major projects was the main
constraint limiting their ability to increase imports by the full amount of the
increase in revenues. Most OPEC countries, particularly those with relatively small populations like Saudi Arabia and Kuwait, have been spending
only a fraction of their additional oil revenues on imports of goods and services, because their ability to absorb additional imports has so far been
limited. Thus it may be several years before the OPEC countries develop the
capacity to increase imports of goods and services substantially.
Finally, while actual grants and commitments for future donations by
the OPEC countries have risen sharply, current and prospective grants
still represent only a small portion of their total revenue derived from
oil. Furthermore, the flow of investment income from the financial and real
assets acquired by the OPEC countries has been growing rapidly.
Given these factors, the elimination of the deficit poses special problems.
Some of these can be identified conceptually by contrasting the increase in
the price of oil with a hypothetical revaluation of the OPEC currencies.
Analytically the oil price increases may be viewed as if they had been
produced by an export tax. For the importing countries, the administrative
increase in the price of foreign oil caused current account deficits that were
larger than those that would have materialized if, instead of imposing an
"export tax," the OPEC countries had chosen to revalue their currencies
to achieve the same increase in the price of oil to importers. Given the low
price responsiveness of demand by oil importers, even a revaluation might
have the abnormal effect of raising the OPEC surplus if the import
193
demand of the OPEC countries is also quite unresponsive to any change in
the domestic price of their imports. Conceptually, a revaluation is equivalent
to a tax on all exports plus a subsidy of all imports. Compared to this, the
OPEC countries chose to tax only the oil exports and not to subsidize imports,
thus assuring that increased revenue from oil exports would not be accompanied by revenue losses from other exports and increased spending on
imports due to lower prices.
Under present circumstances a current account deficit of the oil-consuming nations as a group vis-a-vis the oil-exporting nations must be accepted.
Efforts by one of the oil-consuming nations to reduce the deficit, either by
currency depreciation or by special measures designed to boost exports or
reduce imports from other oil-importing countries, would inevitably mean
an increase in the current deficits of others, leaving the total deficit of the oilconsuming nations largely unchanged. For the time being, oil-induced current account deficits must therefore be financed by drawing on reserves,
by selling equities, or by accumulating international indebtedness.
To supplement the capacity of the world's money and capital markets to
finance the deficits experienced by individual countries, special financial
arrangements have been put into effect and are being developed further.
Also, in May 1974 the OECD nations pledged not to take unilateral measures
which would tend to shift deficits to other nations. Specifically, the governments of 24 member countries agreed, for one year, to avoid introducing
restrictive measures affecting trade or other current account flows. The
pledge will very likely be renewed in May 1975. In the United States, passage of the Trade Reform Act by Congress at the end of 1974 signified
that pressures to restrict trade, which have been intensified by the oil crisis,
will be resisted. Moreover, the act assures that the long-delayed multilateral
trade negotiations can get under way. The purpose of these negotiations is
to improve access to international markets for both buyers and sellers by
reducing restrictions on imports and by limiting any restrictions on exports
that prevent foreign buyers from competing with domestic buyers for certain
basic materials, food, and feedstuff's on an equal footing.
The Capital Account Effect
The current account surplus experienced by the OPEC countries in 1974
was matched by the accumulation of financial claims on the oil-consuming
\vorld. This, of course, follows as a balance of payments accounting identity:
funds received in payment for goods and services or as aid, and not spent on
goods and services or given away as aid, must simply end up as financial
claims or real assets of various forms in the hands of countries in the surplus
area. What was true as an accounting identity for the oil-importing world
as a whole, however, was not true for individual countries: there is no a
priori reason why the oil-related current account deficit of an individual
country should be matched by an inflow of funds directly from the oil-exporting countries. As expected, given a choice of where and how to invest their
surplus funds, the oil-exporting countries have turned to those national mar-
194
kets that best meet their objectives with respect to security, return, and
maturity.
Preliminary estimates for 1974 indicate that about $11 billion of the $60billion surplus accruing to the OPEC countries has been invested directly in
the United States. This was less than the increase in the U.S. bill for oil
imports from the OPEC countries. Roughly half of this investment in the
United States was in short- or long-term marketable Government and agency
securities. Less than a billion was placed in U.S. real estate and private securities, and the remainder in banking and money market liquid assets, such
as large negotiable certificates of deposit.
About $7/ 2 billion of the OPEC surplus was invested in the United Kingdom in pound sterling assets such as bank deposits, other money market instruments, and government securities. About $5j/2 billion was lent by the
OPEC countries to official and quasi-official institutions in other industrial
countries, around $2^2 billion to the developing countries, and about $3 l/i
billion to international financial institutions. At least $21 billion of the
OPEC surplus was held as Eurocurrency deposits in banks in London and in
other financial centers around the world. (The functioning of the Eurocurrency and Eurodollar markets is discussed in the supplement to this chapter.) The remainder, about $9 billion, includes investment in European investment management accounts, in real estate and corporate securities in
Europe and Japan, and in direct loans to private industry.
The financial intermediation by the world's commercial banks through
both domestic and Eurocurrency markets has played an important role in
financing the large current account deficits in the oil-importing countries
during 1974. Such activity, in effect, accommodated the preferences of the
OPEC countries for investment of their surplus funds, then redistributed
these funds to countries where funds were needed. Banks operating in the
Eurocurrency market publicly announced more than $15 billion of Eurocurrency credits to developed countries during the first 3 quarters of 1974, $4
billion more than was announced during all of 1973. Announced credits to
developing countries were about $7/2 billion. Some of these credits were not
actually drawn during the period; but it is assumed that sizable loans for
which details are not available have been made by the Eurocurrency banks
without prior, publicly announced commitments. International lending by
U.S. banks also rose sharply in 1974, following the removal of restrictions on
such activity and termination of the Interest Equalization Tax in January
1974. U.S. banks increased their claims on foreigners by about $14.5 billion
during the first 3 quarters of the year.
The recycling of OPEC funds by the international banking system has not,
however, been accomplished without some strains. The concentration of
liquid OPEC investments in a relatively small number of banks has raised
questions about the absorptive capacity of some of these institutions under
their present capital structures. Because the deposits by OPEC governments
195
in some banks are so large, and because they are concentrated among few
depositors, the risk associated with the traditional banking practice of borrowing short and lending long is significantly increased. At the same time,
the growing indebtedness of some borrowers increases the risk of default.
Thus, questions have also been raised about the ability of the private banking system to continue to accommodate adequately the financial needs
created by the oil crisis.
To supplement private market channels a special lending facility was
established in June 1974 in the International Monetary Fund and
expanded in January 1975. Loans are approved by the Fund after assessment
of the balance of payments needs of deficit countries. Borrowers are expected
to cooperate with the Fund in resolving difficulties in their balance of payments. The Fund had lent approximately $2 billion by the end of 1974.
The pattern of international payments for 1975 is not easy to foresee. It is
widely recognized, however, that additional reinforcement of the private
financial markets may be required to provide for the financing needs of
individual countries. The United States accordingly has advocated a threetrack approach to official multilateral arrangements:
1. Financing under the regular procedures of the International Monetary Fund should be expanded, and the Fund should make fuller and
more effective use of the currency resources which it now possesses.
2. A temporary trust fund should be established to provide longerterm, concessional assistance to a few of the very low-income countries
which have special problems in adjusting to the current situation.
The United States has proposed that this trust fund be financed by
contributions from those individual countries which are in a position
to help, as well as through the use of part of the IMF's gold holdings.
3. Resources of the IMF and other institutions should be supplemented
by a new financial support arrangement of $25 billion. The arrangement is designed to encourage cooperation in energy matters and to
provide a financial "safety net" for participating OECD members. Early
establishment of this support fund has been agreed to by the major industrial countries.
THE LESS DEVELOPED COUNTRIES IN 1974
Although many of the problems created by the oil price increases are common to both developed and less developed economies, there are several important differences. The less developed oil-importing countries are obviously
far less able to afford the higher current prices, but their diversity makes
generalizations difficult.
Developing countries that export primary products, such as iron ore and
bauxite, for which demand was strong, have been able to offset a part of their
increased oil bill with additional export earnings. A commodity boom which
began in late 1972 drove up the prices of many primary products, but the
prices of most of these commodities declined in the second half of 1974 with
196
the worldwide slowing of business activity. Moreover many countries which
are heavily dependent on imports of oil, food, and fertilizer have not experienced increases in prices of their primary exports, and droughts and floods
have compounded their problems.
The surplus revenue of the OPEC countries is derived in part from sales to
other less developed nations that import oil; but relatively little of this surplus has yet been recycled directly by OPEC countries to the less developed
ones. Partly because of the limited capital markets in these countries, initial
placements of funds by oil producers have not been large. The consequences
of the failure to recycle funds to the less developed countries are qualitatively similar to those facing the industrialized nations: if they cannot finance
their deficits, they must cut back on imports. However, many less developed
countries can reduce imports of oil or other inputs only at the immediate expense of their industrialization programs.
As has been true for many years, some form of foreign aid may be the
only way to alleviate the deficiencies in financing and resources of the poorest
countries. Special arrangements such as the IMF facility have helped in
some measure and will probably continue to do so. At a time when even
many industrial nations are in difficulty, more of the surplus of OPEC
nations should be mobilized to help countries most in need of the funds, and
these funds should be available at rates which do not further increase the
already heavy burdens of debt service in developing nations.
RECENT DEVELOPMENTS IN INTERNATIONAL FINANCE
The international financial system has been fundamentally changed since
August 1971, when the United States announced suspension of the convertibility into gold of dollars held by foreign monetary authorities. Following this action, major exchange rate realignments, coupled with devaluation
of the dollar in terms of gold, were negotiated in December 1971 and February 1973; and negotiations were launched on a comprehensive reform of the
international monetary system with establishment of the Committee of
Twenty (C-20) under the auspices of the International Monetary Fund in
July 1972. In March 1973, in response to great uncertainty and speculation
in the foreign exchange markets following the second realignment, virtually
all of the major industrial countries abandoned efforts to confine exchange
rate movements within a narrow band around established par values. When
the C-20 met during the IMF annual meetings in September 1973, it set
July 31, 1974, as its target date for agreement on comprehensive monetary
reform.
The oil price increases announced in October and December 1973, the
acceleration of worldwide inflation, and de facto adoption of widespread
floating radically altered the circumstances surrounding the C-20 negotiations. At its Rome meeting in January 1974, the C-20 shifted the focus of its
negotiations. Instead of the early development of a comprehensive reform
agreement, it began to work out a series of individual, less comprehensive
197
steps that were of particular importance in the current economic situation.
In mid-June the C-20 Ministers agreed on a program for immediate action
and released the Outline of Reform and accompanying annexes that described both the status of the negotiations on longer-term reform and the
direction in which the Ministers believed the system could evolve in the future.
The program of immediate action was consistent with the longer-term
Outline of Reform, constituting in essence a proposed first step in the evolution toward a fundamentally reformed system. It included:
1. Creation of an Interim Committee of the IMF with advisory powers
to guide the adjustment process and oversee the operations of the
system pending the establishment, through amendment of the IMF
Articles of Agreement, of a Ministerial Council with decision-making
powers.
2. Establishment of a Development Committee, also at the ministerial
level, under the joint auspices of the IMF and the International Bank
for Reconstruction and Development, to deal with questions relating
to the transfer of resources to developing countries.
3. Establishment of guidelines for floating exchange rates.
4. An interim change in the method of valuation of special drawing
rights (SDR's) to widen the base for calculating the transactions
value of SDR's so that currencies other than the dollar are included.
5. Provision for IMF members to subscribe to a declaration against
taking restrictive trade or other current account measures for balance
of payments purposes without IMF approval.
6. Improved measures for surveillance of the adjustment process and
of developments in global liquidity.
7. A request that the Executive Directors of the IMF prepare a series
of amendments to the IMF Articles of Agreement for consideration
when IMF quotas are reviewed early in 1975.
Among other items on which draft amendments wrere to be prepared were:
establishment of a permanent IMF Council; "legalization" of floating exchange rates; a permanent declaration against trade restrictions for balance
of payments purposes; the role of gold; and various modifications of the general and SDR accounts of the IMF.
The longer-term Outline of Reform put forward by the C-20 called for
a more effective and symmetrical system of adjustment, in which efficient
operation of the adjustment mechanism would not be obstructed by controls
or restrictions on current or capital account transactions for balance of payments purposes. The Outline envisaged that the role of the SDR would be
enhanced and that the roles of gold and reserve currencies in international
reserves would be reduced. At the end of 1974, the transactions value of
SDR's was around $1.22 per unit of SDR.
Recognition that exchange rate flexibility must play a greater part in an
efficient economic adjustment process was a key element of the reform
198
proposals. In sharp contrast to the central role of fixed par values and narrow margins of exchange rate fluctuations around par values in the Bretton
Woods system, the Outline called for a system in which countries could either
establish adjustable par values or allow their currencies to float in response
to market forces. Agreement was lacking, however, on the relative roles of
floating and par values, the conditions under which the par values would
be adjusted, and the provisions for authorization of floating in the future
system. The United States favors provisions that would permit a country
to float its currency so long as it adhered to internationally agreed rules of
conduct, without the need for further authorization or approval by the IMF.
Some others favor a more constrained "floating option" under which floating would be limited to specified situations and subject to specific authorization by the IMF.
At its first session during the IMF annual meetings in early October 1974,
the new Interim Committee of the IMF approved a work program focusing on energy-related financial problems and balance of payments adjustment in the light of the energy crisis. Pursuant to this work program, the
Interim Committee, meeting in mid-January 1975, reached agreement on
a broad range of key issues. The Committee agreed on:
1. A limited extension of the IMF oil facility in 1975, with borrowings
of up to SDR 5 billion and with an indication that it would be appropriate to make greater use of the Fund's own resources. In conjunction
with the Development Committee, the Interim Committee also endorsed a suggestion by the IMF's Managing Director that special provision be made to reduce the interest burden on oil facility borrowing
by the poorest developing countries.
2. An IMF quota increase of 32.5 percent overall, "rounded up" to a
new quota total of SDR 39 billion, with a doubling of the quota shares
of the major oil-exporting countries as a group and no reduction of
the collective share of other developing countries. No agreement was
recorded on quota shares for other groups or for individual countries.
It was agreed, however, that since an important purpose of increasing
quotas is to strengthen the Fund's liquidity, arrangements should be
made to ensure usability of all IMF currency holdings in accordance
with Fund policies.
3. A request that the Executive Directors continue work on a narrowed
range of amendments to the IMF Articles of Agreement and submit
drafts to the Committee on: establishment of the Ministerial Council;
legalization of floating; improvements in the general account, including elimination of requirements to make gold payments to the IMF
and establishment of arrangements to ensure the usability of IMF
currency holdings; and improvements in the characteristics of the SDR.
Progress was made toward agreement on a comprehensive set of
amendments on gold, including abolition of the official price and freedom
199
for national monetary authorities to enter into gold transactions under
certain specific arrangements with each other in order to ensure that the
role of gold in the international monetary system would be gradually
reduced. Additional agreements related to the financial support arrangement among the members of the OECD, described earlier in this chapter,
and to other matters.
MANAGED FLOATING
The interim guidelines that have been recommended by the C-20 for the
present situation of widespread floating represent a first effort to address
in a formal way the complex issues that can arise under a floating system,
as well as to develop codes of behavior that might apply under a regime of
managed floating over the longer term. Under the guidelines, countries with
floating rates may intervene to moderate sharp and disruptive fluctuations
from day to day and from week to week in the exchange value of their currencies. Intervention should not be used, however, to moderate movements in
the exchange value of any currency over longer periods like months or
quarters, unless such official intervention is consistent with actual and expected world market conditions, and unless it accords also with a pattern
of exchange rates considered reasonable as a medium-term norm by that
country and the international community. For example, a rate of inflation
substantially higher than that of a country's main trading partners or competitors would normally lead to expectations of a further depreciation of its
currency. In that case, attempts to fix the exchange rate for an extended
period, whether undertaken by the country itself or by its trading partners,
might be viewed as violating the intent of the guidelines, since intervention
for this purpose would be disequilibrating.
Even without imposing direct controls on the flow of goods and capital
in international trade, official monetary agencies can modify the course of
exchange rates, at least temporarily, under a system of managed floating.
The techniques of management can take a variety of forms. The most
common is for central banks to intervene in the international money markets by selling domestic currency for foreign currencies, thereby leaning
against an appreciation of their currency. Alternately they may engage
in the converse operation, possibly with exchange reserves that are supplemented through official borrowing of foreign currencies, to slow a
depreciation of their currency. If, however, in the attempt to slow movements of the exchange rate in either direction by "leaning against the wind,"
intervention continues on the same side of the market for an extended
period, the level of the exchange rate may be affected even after intervention has ceased. This would occur if persistent one-sided intervention
repressed exchange rate movements substantially. Since any lasting distortion of the exchange rates achieved through one-sided intervention
influences the pattern of international trade and investment after a lag, this
changed pattern may reflect back on subsequent exchange rate levels.
200
Foreign Exchange Management Since March 1973
Although attempts to fix the exchange rates of all major countries within
narrow ranges vis-a-vis the dollar were officially abandoned in March 1973,
a group of European countries agreed on new sets of exchange rates, which
they would maintain within 2% percent of the agreed parities relative to
each other. The United Kingdom and Italy did not join this group, however,
and the joint float was further eroded When France withdrew from the
group in January 1974. By the end of 1974 only Germany, the Benelux
countries, Denmark, Norway, and Sweden floated jointly against the dollar;
and some other nations tied their exchange rates to those of other countries.
Managed floating had thus become the rule among the industrial countries.
Since the start of generalized floating, the pattern and net amount of
official intervention have not been the same as those prevailing before
1973. The direction of official intervention has changed more frequently.
As exchange reserve decumulations were followed by accumulations, U.S.
liabilities to foreign official institutions were only slightly higher at the
end of the third quarter of 1974 than at the end of the first quarter of
1973. From that time until February 1974, the drop in U.S. liabilities to
the official agencies of other industrial countries outweighed the increase
in liabilities to the OPEC governments, so that total U.S. liabilities actually
declined. By comparison, official claims on U.S. residents had more than
quadrupled from the end of 1969 to the end of March 1973, and industrial
countries accounted for almost all of this increase.
The reserves of industrial countries remained relatively stable, but only
because of substantial international borrowing on the part of deficit countries. Some of this borrowing was carried out by the domestic banking system
without direct governmental action; in other cases credits were raised by
official entities either in the private money market or with foreign monetary
authorities. Most deficit countries have used the proceeds of loans from
official and private sources to counteract any large decline in their international reserves. Government-to-government loans by surplus countries
to deficit, countries may be treated as foreign exchange reserves by the former,
whether or not they result in marketable claims on the latter. Still there
was little growth in the official reserves of industrial surplus countries as
exchange rates were allowed to rise to dampen inflows of funds. Specifically,
of the countries whose currencies appreciated against the dollar, Canada,
Germany, and Switzerland had approximately the same amount of reserves
at the end of the third quarter of 1974 as at the end of the first quarter of
1973, and only a few of the countries with depreciating currencies, most
notably Japan, lost reserves.
The pattern of reserve movements suggests a change in central bank
behavior compared to the period prior to 1973, but a number of countries
have continued to influence movements of their exchange rate through
indirect forms of intervention in 1974. To slow the rise of its franc,
201
Switzerland discouraged interest payments on nonresident deposits and
maintained higher reserve requirements on nonresident than on resident
deposits. In October, Switzerland lifted the interest ban but soon afterwards
imposed taxes at the rate of 3 percent per quarter on nonresident deposits in
excess of normal working balances, in order to discourage the inflow of funds.
Other countries, however, discouraged capital outflows. For instance, France
took steps to reduce franc loans to nonresidents, and Japan required the sale
of private dollar holdings to the central bank for use in foreign exchange
intervention. Among the deficit countries, only Italy imposed direct restrictions affecting international trade and payments when it imposed a 50 percent deposit requirement on most categories of imports in May 1974.
For short periods during 1974 disturbances originating in the private
market prevented foreign exchange markets from functioning efficiently.
When daily fluctuations in exchange rates become large, and severe losses
by various market participants add to the uncertainty, broad participation
in the exchange markets may be discouraged and the fulfillment of contracts
may become less certain. Risk premiums were raised by the failure of the
German Herstatt bank in June 1974 and the disclosure that large losses from
private exchange trading had occurred, involving a number of other institutions not only in Germany but also in Switzerland, Britain, Italy, and the
United States. Banks were less willing to take foreign exchange positions;
and official efforts to discourage participation even further—for instance in
Germany—made the markets thinner. Under such conditions markets are
less efficient in smoothing out temporary imbalances in spot offerings or in
contracts for future delivery, bid-ask spreads are likely to widen, and hence
the costs of financing international trade may rise.
On the whole, however, the fact that a number of important exchange
rates were no longer fixed brought several distinct advantages. With no
formal commitments about exchange rates or margins, the authorities have
much more flexibility in dealing with speculative exchange pressures. That
is, those interested in shifting funds from one currency to another can no
longer make massive purchases or sales of foreign currencies at set prices
in a short period and count on the country's monetary authorities' being
committed to meeting exchange demands without allowing the rate to
move, as was the case in earlier years. Rather, authorities can let their rates
adjust to eliminate exchange rate imbalances.
The new system has also enabled countries to manage their money supply
with a greater degree of independence. Prior to the adoption of generalized
floating there were periodic complaints, particularly from some European
countries, that efforts to achieve domestic monetary policy objectives were
being overwhelmed by movements in dollar reserves occasioned by the official intervention required to maintain the exchange rates. The system of
quasi-fixed exchange rates still existed among the major trading countries
at that time; and when the dollar came under pressure, foreign central banks
found it difficult to offset the growth in domestic bank reserves resulting
202
from their dollar purchases. It was therefore argued that inflation was transmitted between countries by reserve asset acquisitions on the part of the surplus countries causing their rates of monetary growth to rise while money
supply growth was not allowed to fall symmetrically in the deficit countries.
Yet around $30 billion, or over 40 percent of the dollars held by foreign official agencies at the end of March 1973, were acquired after the summer of
1971, when the convertibility of the dollar into gold had already been suspended. In the interim, many countries appeared disinclined to have their
currencies appreciate relative to the dollar, thus revealing more concern
about promoting exports than avoiding the inflationary consequences of the
dollar inflows.
Since March 1973, changes in official reserve holdings have shown no
consistent relation to changes in the monetary base of most countries, and
official intervention has been entirely discretionary. Hence, even if international reserve flows might have raised the monetary rates of growth more
than some countries desired during the period of fixed exchange rates, they
cannot have had this effect since that time unless countries chose to make
exchange rate objectives paramount.
RECENT EXCHANGE RATE DEVELOPMENTS
Foreign central banks as a group ceased to observe formal intervention
limits against the dollar after the international currency exchanges reopened
on March 19, 1973, and the dollar declined soon afterwards. After falling
through the first week of July, the value of the dollar increased in terms of
most foreign currencies through August and then changed little through
October.
With the cutback in oil supplies by the OPEC, the dollar soon strengthened relative to all major European currencies and the yen, since it was known
that the United States was far less dependent on imported oil than Western
Europe or Japan. Not only was the impact of the oil price increase on the
U.S. trade balance and the domestic rate of inflation initially expected to be
less, but it was widely anticipated abroad that a major share of the additional
OPEC revenues would eventually be reinvested in the United States. This
market assessment prompted a strong movement of short-term funds into
the dollar and out of the major European currencies and the yen. Even
though foreign central banks sold dollars to moderate the decline in their
currencies, by mid-January the dollar prices of the German mark and the
Swiss franc had fallen roughly 20 percent from their peak levels of early July
1973. Other major currencies had also declined sharply, and both the British
pound and the Japanese yen were about 15 percent lower. Only the Canadian dollar remained approximately unchanged against the U.S. dollar.
The strengthening of the dollar did not continue past January 1974, because both the arrangement of substantial Eurocurrency loans to finance payments imbalances and the ending of capital controls by the United States
began to depress the exchange value of the dollar. During the first half of
203
1974 the rate of inflation remained considerably lower in both Germany
and the Netherlands than in the United States; and the trade surplus of these
countries continued while the U.S. trade balance registered increasingly
large deficits. The German mark, the Dutch guilder, and the Belgian and
Swiss francs appreciated by about 14 percent against the dollar from midJanuary to mid-May.
During the first half of 1974 the value of the dollar rose on balance in
terms of the currencies of France, Italy, and Japan, because the rise of the
dollar in late spring and early summer more than offset any earlier decline.
The trade balances of these countries had deteriorated abruptly after the
turn of the year, and inflation was much higher than in the United States. In
spite of the high rates of inflation prevailing in the United Kingdom, the
pound sterling rate deviated from this pattern because of unusually high
short- and long-term interest rates in London and because the oil companies
had expanding needs for sterling to meet tax and royalty payments to oilexporting countries.
Around the middle of the year the United States and France were implementing some measures to reduce domestic rates of monetary growth in the
hope of eventually lowering their rates of inflation, while other countries,
particularly Germany, began to shift to more expansionary fiscal policies to
combat rising unemployment. The French trade deficit fell and the German
surplus declined, but the U.S. deficit grew little from the second to the
third quarter. With interest rates reaching record levels in the United
States, the dollar steadied or rose against all major currencies except the
French and Swiss francs.
During the last quarter of the year, however, the dollar again declined
against most currencies. The German mark recovered to its previous peak
reached in May 1974, the French franc continued to rise, the Italian
lira and British pound appreciated slightly, and only the Japanese yen
continued to decline. Toward the end of the year the pound was jolted,
but only temporarily, when Saudi Arabia announced that it would abandon
its practice of taking about 25 percent of its oil payments in sterling. The
effect of this statement was soon softened, however, by the Saudi announcement that it planned to continue investing in the London market. In addition, the Swiss franc rose sharply, by about 17 percent, during the fourth
quarter.
Chart 11 shows that for the year as a whole the dollar depreciated against
the German mark and the French franc, while it remained approximately
unchanged against the British pound and appreciated against the Japanese
yen. These movements were far from steady, however, during the course of
the year. The Department of the Treasury's index of the change in the value
of the U.S. dollar in terms of a trade-weighted basket of 22 foreign currencies indicates that the average value of the dollar declined from the end of
January to May 1974; it then recovered most of its earlier losses before slipping again in the fourth quarter. At the end of 1974, the Treasury index
204
Chart 11
Change in the Value of the U.S. Dollar
Relative to Selected Foreign Currencies
PERCENT CHANGE FROM MARCH 20, 1973
20
JAPANESE YEN
TRADE-WEIGHTED AVERAGE
VALUE OF THE DOLLAR*
- 2 0
I I i i i I i i i I I i i I i i i 1 i I i I 1 I I i 1 I i i i I i I I I I I i 1 i I I I I i i i I i I I
JAN.
FEB. MAR. APRIL
MAY JUNE JULY
1974
AUG. SEPT.
OCT. NOV. DEC
• R E L A T I V E TO THE 22 OECD CURRENCIES; COMPUTED BY DEPARTMENT OF THE TREASURY.
NOTE: FOR INDIVIDUAL CURRENCIES, WEDNESDAY PRICES WERE USED. FOR TRADE-WEIGHTED INDEX,
THURSDAY PRICES WERE USED UNTIL JULY 17; THEREAFTER WEDNESDAY PRICES WERE USED.
SOURCE: DEPARTMENT OF THE TREASURY.
shows the value of the dollar to have been about the same as on March 20,
1973, just after the system of managed floating had come into full operation.
CHANGES IN INTERNATIONAL RESERVES
From September 1973 through the end of March 1974, total international
reserves grew very little; they subsequently increased by $22.5 billion from
the end of March to the end of September (Table 47). All but $3.1 billion
of this increase accrued to the OPEC countries, mostly in the form of increased foreign exchange reserves held outside the United States. Thus, while
the OPEC countries held a stable 7 percent of the world's reserves from
March through September 1973, their holdings had increased to 10 percent
by the end of March 1974 and to 18 percent by the end of September 1974.
The shift was mainly at the expense of the industrial countries, whose share
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205
reserve assets, selected months, 1973-74
TABLE 47.—Composition and distribution of international
Value of reserve assets
(billions of U.S. dollars) i
Percent of total reserve
assets
Type of reserve asset
March
1973
September
1973
March
1974
September
1974
March
1973
September
1973
March
1974
179.2
43.2
10.5
7.5
118.0
71.3
187.6
43.2
10.6
7.5
126.3
69.8
187 8
43.1
10.6
7.5
126.5
65.5
210.3
42.4
10.5
9.0
148.3
72.5
100
24
6
4
66
40
100
23
6
4
67
37
100
23
6
4
67
35
100
20
5
4
71
34
11.9
1.4
.4
.3
9.8
13.2
1.4
.4
.4
11.0
19.0
1.4
.4
.4
16.8
38.4
1.4
35.6
100
12
3
3
82
100
11
3
3
84
100
8
2
2
88
100
4
1
3
93
120.8
35.9
7.9
5.7
71.3
121.2
35.9
8.0
5.6
71.8
113 5
35.9
8.0
5.4
64.2
117 9
35.3
8.0
6.6
67.9
100
30
7
5
59
100
30
7
5
59
100
32
7
5
57
100
30
46.6
5.8
2.2
1.5
36.9
53.1
5.8
2.3
1.6
43.4
55.3
5.7
2.3
1.7
45.6
53.9
5.7
2.1
1.4
44.8
100
13
5
3
79
100
11
4
3
82
100
10
4
3
82
100
11
4
3
83
September
1974
All countries: 2
Total reserve assets
Gold stock
SDR
Reserve position in IMF
Foreign exchange
U.S. liabilities
OPEC countries:3
Total reserve assets
Gold stock
SDR
Reserve position in IMF
Foreign exchange
i!o
Industrial countries:4
Total reserve assets
Gold stock
SDR.
Reserve position in IMF
Foreign exchange
6
58
Other countries: 5
Total reserve assets
Gold stock
SDR
Reserve position in IMF
Foreign exchange.. .
1
End of period.
Total of groups of countries listed in this table. Excludes Communist countries except Yugoslavia.
Algeria, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, and Venezuela. Qatar and the United
Arab
Emirates are not included because the IMF does not publish data for these countries.
4
United States, Canada, Japan, Austria, Norway, Sweden, Switzerland, and all EEC countries except Ireland.
8
Nonindustrial countries other than OPEC countries.
2
3
Note.—Detail may not add to totals because of rounding.
Source: International Monetary Fund (IMF).
of the enlarged global reserves declined from 65 to 56 percent although the
dollar value of their reserves did not decline significantly. The share held
by the nonindustrial countries outside OPEC fell from 28 to 26 percent.
Globally, the liabilities of the United States and Britain to foreign official
institutions have risen little since March 1973, but official holdings by the
OPEC countries both in the United States and in the United Kingdom, as
well as holdings in the form of Eurodollar and other Eurocurrency claims on
private foreigners, have risen rapidly. This increase accounted for most of
the growth in international reserves in the second and third quarters of
1974, and it changed the composition of reserves substantially as the share
of official claims on private institutions increased relative to claims on other
official institutions, including the IMF.
Another shift in the composition of international reserves could occur in
1975 if the quantity or valuation of monetary gold holdings were to
change. At the end of September 1974 the industrial countries still owned
83 percent of the world's stock of monetary gold. The price of gold in the
206
free market has been subject to large fluctuations. At the end of 1974, the
London price per ounce was $186*/2 as compared with $112^4 at the end of
1973. Compared to alternative forms in which international reserves can be
held, however, gold yields no interest, nor has it yielded liquidity services in
recent years. When the two-tier gold system was adopted in March 1968,
central banks agreed to refrain from buying or selling gold in the private
market. Neither has it been used in official settlements since the official
accounting price fell to a fraction of its free-market price. From February
1973 through June 1974, monetary gold was valued at $42.22 per ounce,
while the free-market price was three to four times as high. No significant
changes occurred in the distribution of gold reserves from the time that
convertibility of the U.S. dollar into gold was suspended officially on
August 15, 1971, until the end of 1974.
Several steps have been taken to help countries mobilize their gold
holdings to assist in financing balance of payments deficits. Termination
of the 1968 two-tier gold agreement in November 1973 permitted countries
to sell gold on the private market, although official purchases of
gold at prices above the official price of 35 SDR per ounce continued to
be prohibited by the IMF. In June, 10 major industrial countries agreed
in principle that gold could be used as collateral for international borrowing at a price to be determined by the borrower and the lender. Soon
afterwards, Germany extended a $2-billion loan to Italy that was backed
by gold valued at approximately $120 per ounce. Later in the year some
countries discussed the possibility of valuing monetary gold at market prices,
and France indicated that it planned to do so early in 1975. Also in January 1975, the United States sold a small amount of its monetary gold to
private purchasers to satisfy demand that might have materialized after
removal of the prohibition against private ownership of gold bullion, which
had been in effect since 1934. Nevertheless, both the transactions value and
the effective liquidity of gold in international reserves remained uncertain
at the start of 1975.
From their inception the value of special drawing rights has been
set at one ounce of gold equals 35 SDR's. From January 1970 through June
1974, the conversion of SDR's into dollars was made at the official U.S.
price of gold. When this official price was raised from $35 to $38 per
ounce as of December 1971, the transactions value of 1 SDR therefore
rose from par with the dollar to $1.0857, and it rose to $1.20635 after the
official price of gold had been raised to $42.22 per ounce in February 1973.
In order to enhance the transferability of SDR's and to move away from
exclusive reliance on the official dollar price of gold in determining the
value of SDR's, the IMF decided to widen the base for calculating the
transactions value of SDR's by including currencies other than the dollar
after July 1, 1974. Since that date, the currencies of 16 IMF member countries whose export trade amounted to more than 1 percent of the world
207
total in the 5-year period from 1968 through 1972 have entered into the
"standard basket" valuation of the SDR. Countries whose currencies appreciate against the dollar consequently no longer find that the domestic book
value of their SDR holdings with the IMF is reduced regardless of whether
their currencies depreciate against third currencies that are now included in
the standard basket. The relative weight of these currencies in the basket is
proportional to each country's share in the world's total exports, but with
some modification. Weights do compensate for the fact that the share of exports does not always accurately measure the importance of some currencies
in the wrorld economy. This applies particularly to the dollar, whose share
is set at 33 percent. However, the standard basket valuation technique
adopted in July 1974 represents only an interim agreement without prejudice
to a new system of SDR valuation that may be negotiated in 1975.
U.S. INTERNATIONAL TRANSACTIONS IN 1974
The impact of world inflation, recession, and oil-related financing on flows
of trade and capital was reflected in the international accounts of the United
States in 1974. The physical volume of U.S. exports grew less than in
the previous year because of the slowdown in economic growth in many
foreign countries. Higher import prices, particularly for oil, led to a sharply
higher value of U.S. imports despite a slightly decreased physical volume.
These trends combined to push the merchandise trade account into deficit
in 1974, after a surplus in 1973. In the monetary arena, the U.S. financial
system was called upon to play a major role as intermediary, since U.S.
capital markets were an important depository of the oil revenues which
the foreign producers could not spend on imports from oil-consuming
nations.
Merchandise Trade
The increasing deficit in the trade account during 1974 came after a
strengthening of the U.S. trade position in the previous year. Cumulative
depreciation of the dollar, combined with special factors such as shortfalls in
foreign crop production and domestic price controls, produced a trade surplus in 1973. This surplus declined in January and February of 1974, and in
March the United States registered the first deficit since June 1973.
During the first 3 quarters of 1974 the United States imported $4.3
billion more than it exported, and by the third quarter the quarterly trade
deficit had risen to $2.6 billion. Although both imports and exports rose
in current dollars, price increases were greater for the imported goods
than for exports. As indicated in Table 48, from the first 3 quarters of
1973 to the first 3 quarters of 1974, the value of all merchandise exports
grew 42 percent, and the value of imports 48 percent. The more rapid
growth in the value of imports is attributable largely to the sharp rise in
the price of imported oil; the value of all other imports increased only 24
percent during the year. The effect of higher oil prices is reflected in the 17
208
percent decline in the U.S. terms of trade from the pre-embargo third
quarter of 1973 to the third quarter of 1974.
Table 48 also presents percentage changes in trade volume. The volume
of exports was 11 percent greater in the first 9 months of 1974 than in the
same period in 1973. While the rate of increase was less than in the preceding year, it was still remarkably high in view of the weakening world economy. Imports in constant dollars actually declined 1 percent in response to
both the general decline in U.S. demand and the higher relative prices of
imported goods.
TABLE 48.—U.S. merchandise trade by principal end use categories, 1973-74
Value 1st 9 months
1974 (billions of
dollars)»
Percent change, 1st 9 months 1973 to
1st 9 months 19742:
Category
Volume
Value
Exports
Imports
Exports
Total.
Agricultural goods
Nonagricultural goods.
Foods, feeds, and beverages..
Industrial supplies
Petroleum and products...
Capital goods, except autos..
Automobiles and parts
Consumer goods
Allother
Imports
Exports
Imports
-1
71.0
75.3
48
16.7
54.3
7.8
67.4
28
51
-6
17
-3
0
13.8
22.6
.6
21.5
5.8
4.7
2.6
8.0
38.4
18.8
7.0
8.9
11.0
2.0
22
95
250
23
17
12
35
10
-19
21
14
29
-2
-4
-3
10
9
-10
1
Seasonally adjusted; detail may not add to totals because of rounding.
Based on seasonally adjusted data.
Note.—Bureau of the Census trade data have been reconciled to balance of payments basis.
Source: Department of Commerce (Bureau of the Census and Bureau of Economic Analysis).
2
Considering the value of exports by major categories, agricultural items
rose, but solely because of higher prices. World production of grains during 1974 declined for the second time in 3 years, reducing the available
supply and driving up the price. The major food-exporting countries suffered declines in output. The shortfall in the United States—where late
planting, summer drought, and early frost led to a 20 percent decline in
feed grain production—had a major impact on world prices.
Exports of industrial materials, particularly coal, paper, and steel,
remained strong throughout the first 3 quarters of 1974 despite the worldwide slowdown in economic growth. Exports of capital goods remained
especially strong in the first 9 months of 1974; sales in this category were
sustained by a continued demand from abroad for specialized equipment
such as computers and machinery used in construction, mining, agriculture,
and communications.
Imports were influenced by many of the same factors as exports, particularly by higher prices. Oil was the major cause of increases in import value,
although volume in this commodity declined 3 percent. Despite the weakening U.S. economy, strong demand for capital goods throughout the first 3
209
quarters resulted in a 10 percent volume increase in this category compared
to the same period the year before.
Services
Investment income, the major component of the services account, rose
in the first 9 months of 1974 compared to the same period a year earlier.
Higher earnings among foreign affiliates of U.S. oil companies accounted
for most of the rise, but this effect was partially offset by the impact of
foreign takeovers on the U.S. capital account. Interest income from loans to
foreign borrowers increased because of higher U.S. rates and larger loan
volume, but this effect too was countered by higher rates abroad and by the
increase in U.S. liabilities to foreigners.
Long-Term Private Capital Flows
The net outflow of total long-term capital was $0.5 billion in the first
9 months of 1974, compared to an inflow of $0.8 billion in the same period
a year earlier.
TABLE 49.—U.S. balance of payments transactions, 1973-74
[Billions of dollars; seasonally adjusted]
1974
First 3 quarters
1973
Type of transaction
IW
Goods*..
1
1974
1973
III
II
-2.6
-0.7
-4.3
1.2
-0.1
-1.6
2.3
6.6
1.5
3.0
1.4
2.2
Military transactions2
Investment income
Other 3
-2.1
3.9
.6
-1.6
7.1
1 i
-.1
1.4
3
-.5
3.1
4
3
-.5
2.2
.5
GOODS AND SERVICES.
1.6
2.4
2.7
2.9
-.2
-.3
Unilateral transfers, net 4
-2.7
-6.1
-1.2
-3.0
-1.9
-1.2
CURRENT ACCOUNT
-1 1
-3.7
1.6
-.1
-2.1
-1.6
.8
—.5
—2.3
1.8
—.4
-2.0
-.7
-1.7
3.2
1.9
-1.2
-1 2
-.9
-.7
- 8
1.3
.7
_ l
.6
.2
-1.1
.0
-2.0
.0
Services *__
Long-term capital_
U.S. Government5
Direct investment
Other private
CURRENT
ACCOUNT
CAPITAL
and
LONG-TERM
-.3
-4.3
—.7
1.8
-2.5
-3.6
Nonliquid short-term private capital, net
-3.0
-11.1
-1.3
-4.0
-5.4
-1.7
Errors and omissions
-3.4
3.6
1.1
1.1
1.7
.8
NET LIQUIDITY BALANCE
-6.7
-11.7
-1.1
-6.2
-4.5
-.9
Liquid private capital, net . . .
-1.2
7.9
3.5
2.1
1.7
OFFICIAL RESERVE TRANSACTIONS BALANCE.
-8.0
-3.8
2.7
1.0
-4.5
7.7
5.4
-1.6
-2.6
.0
-.8
-.2
4.9
4
4.1
-.3
Financed by:
Liabilities to foreign official agencies
U.S. official reserve assets
1
Excludes military grants of goods and services.
Excludes direct investment fees and royalties, included under other.
3 Includes travel and transportation and other services, net.
Excludes transfers under military grants.
2
4
6
Excludes official reserve transactions and includes transactions in some short-term U.S. Government assets.
Note.—Detail may not add to totals because of rounding.
Sources: Department of Commerce, Bureau of Economic Analysis.
210
1.3
-1.0
Much of the turnaround represents reductions in purchases of U.S. stocks
and bonds by foreign investors, traceable to the poor outlook for stock and
bond prices during much of 1974. Although foreign purchases of U.S.
equities declined, foreign direct investment in the United States increased;
takeovers involving U.S. corporations engaged in petroleum operations
abroad accounted for much of the increase. There was also a substantial rise
in U.S. residents' purchases of foreign securities, primarily bonds issued by
Canada. Despite the January 1974 removal of the Interest Equalization Tax,
purchases of other foreign securities showed little change from 1973. Bank
loans to foreigners reflected the greater demand for credit to finance higher
oil bills, and they contributed to the outflow of long-term capital.
Short-Term Private Capital Flows
During 1974 there were substantial inflows of private capital into readily
marketable assets. At the same time, large outflows of short-term capital took
place in the form of bank loans and acceptance credits. Net nonliquid shortterm private capital outflow was $11.1 billion in the first 9 months of 1974,
$8.1 billion more than in 1973. Nonliquid claims on foreigners increased
sharply in the first 2 quarters of the year, but the increase was reduced in
the third quarter. The large outflow in the first part of the year was a reflection of the removal of restrictions on foreign lending by U.S. banks in
January 1974. The diminished outflow later in the year may be attributable
to higher U.S. interest rates.
Official Capital Flows
Official agencies of foreign governments purchased $5.4 billion of U.S.
assets during the first 3 quarters of 1974. Since OPEC government purchases
during the period are estimated at $7.2 billion, liabilities to official agencies
of other nations declined during this time by $1.8 billion. The preference
for U.S. dollar reserves revealed by the official agencies of oil-exporting
countries has implications for the U.S. balance of payments measures discussed below.
The Net Asset Position of the United States
Figures compiled during 1974 indicate that U.S. net assets increased during 1973 by $11.8 billion, after declining $6.4 billion in 1972 and $11.5 billion in 1971. The value of U.S. assets abroad at the end of 1973 was $226
billion, compared to $163 billion in U.S. liabilities to foreigners.
The net asset position is affected not merely by balance of payments transactions, but also by factors not included in the balance of payments accounts.
For instance, earnings reinvested by U.S. firms abroad (less earnings reinvested by foreign firms in the United States) added more than $7 billion to
the net asset position during 1973. Adjustments for price changes in the
foreign securities held by U.S. residents and in the U.S. securities held by
foreign residents also affect the net asset position. Data on reinvested earnings and valuation adjustments for 1974 are not yet available.
211
THE BALANCES
Under the regime of fixed exchange rates, foreign monetary authorities
were required to intervene in foreign exchange markets to maintain the
value of their currency within a narrow band. A deficit in the official reserve
transactions balance of the United States then indicated that foreign central
banks had purchased dollars, because at the parity rates (plus or minus a
narrow margin) the private demand for dollar holdings by foreigners had
been less than the available supply. The accumulation of these assets by
foreign monetary authorities was taken as a gauge of pressure on the dollar
in foreign exchange markets.
The net liquidity balance, which takes into account the net change in
liquid liabilities to private parties as well as to official agencies in other
countries, was designed as a broader indicator of potential as well as actual
pressures on the U.S. currency.
The trend toward flexible exchange rates has made these two measures of
the balance of payments unsuitable for analyzing exchange rate pressures.
Since intervention has become discretionary, pressures on exchange rates are
in large part allowed to move the exchange rates instead of being reflected
in reserve movements. While official intervention under managed floating can
be used to dampen exchange rate fluctuations, the balances do not serve as
acceptable indicators even of these limited actions to remove pressure.
Because of the huge surplus of investable funds accruing to the oilexporting countries, a large negative shift in the U.S. official reserve transactions balance can now result on account of the preference of the oil-exporting
countries for placing their funds in the United States. Moreover, the net
liquidity balance is far less significant than under the regime of fixed
exchange rates, since the foreign central banks are not obligated to acquire
dollars from private holders. Finally, the distinctions between liquid and
nonliquid assets and liabilities and between private and official foreign exchange assets have become increasingly blurred.
Thus, reliance on these balances could lead to serious analytical misjudgments. The question of how the organization of our balance of payments
data can be made more useful is currently under review.
SUPPLEMENT
The Eurocurrency and Eurodollar Markets
The discussion of the international financial aspects of the "energy crisis"
brought into public focus the Eurodollar market as an important channel for
moving funds from the oil-exporting countries to borrowers. The recycling
of "petro-dollars" has been merely one of many functions performed by the
Eurodollar market over the years of its existence.
212
The Eurodollar market, as such, has no specific location. Its physical
dimension is a network of international telecommunications media which
link financial centers around the world and through which Eurodollar
transactions are conducted. Eurodollars are dollar-denominated claims on
commerical banks located outside the United States, largely but not exclusively in Europe. They are dollar funds placed with foreign banks by either
U.S. or foreign residents, and maintained on the books of these banks as
dollar-denominated liabilities to the depositors. Dollars deposited with the
foreign banks may be in the form of U.S. currency, but they seldom are. In
virtually all instances, they are dollars held on deposit in U.S. banks. In establishing a Eurodollar deposit, the depositor, in effect, transfers the ownership
of his deposit in a U.S. bank to the receiving foreign bank. When the foreign
bank lends these dollars, it transfers their ownership to the borrower. Finally,
when the original depositor "withdraws" the deposit, he in effect exchanges
the dollar-denominated claim on the foreign bank for a dollar-denominated
claim on a U.S. bank.
Eurodollars, while by far the largest, are merely one of several types of
foreign-currency denominated deposits maintained by commercial banks
around the world in currencies other than that of the country where the
bank is located. Deposits denominated in British pounds (Eurosterling),
German marks (Euromarks), Swiss francs (Eurofrancs), and others are also
held and traded by banks domiciled outside the countries issuing these
currencies.
The emergence and growth of the Eurodollar market may be viewed as a
classic example of free market forces at work, overcoming obstacles created
by regulations, and responding to market incentives to accommodate various
needs. After World War II, when the dollar emerged as the major trading
currency, the initial impetus to the growth of the Eurodollar market was
given by certain Eastern European countries. Anxious to hold dollars to
finance their badly needed imports from the West, but concerned that their
dollar balances might be blocked or confiscated in retaliation for their expropriation of American-owned properties if such balances were held in
banks under U.S. Government jurisdiction, these countries began placing
their dollar balances with commercial banks in Western Europe. Since the
late fifties, when most major countries removed restrictions on the holding
of foreign exchange (including dollars) by their residents, higher interest
rates offered by foreign banks, relative to interest rates offered by the U.S.
banks, provided the main incentive for holders of dollar funds to place these
with foreign banks rather than banks located in the United States.
The ability and willingness of foreign banks to offer a more attractive
return than U.S. banks has been predicated on several factors. The U.S. banking authorities do not allow commercial banks in the United States to pay
interest on deposits of less than 30 days, and they regulate the rate of interest
that may be paid on deposits of longer maturity. Commercial banks abroad
213
are mostly exempt from such restrictions. Also, unlike U.S. banks, commercial
banks in countries where the growth of the Eurodollar market has been the
most spectacular are not subject to reserve requirements on their dollardenominated liabilities. As a result, the net cost of such funds to these banks is
reduced, and they can offer a higher yield. On the other hand, the
willingness of foreign banks to offer a higher return has been predicated on
the strong demand for dollar loans that has not been fully met by the U.S.based banks, particularly when such lending was impeded by the existence of
the Voluntary Foreign Credit Restraint Program and the Interest Equalization Tax.
Given these constraints, the U.S.-based banks were able to compete for
dollar deposits with foreign-based banks through foreign subsidiaries and
branches that were not subject to the same restraints as their parent institutions in the United States. Through these media, the U.S. banks have
maintained significant participation in the Eurodollar market. The elimination or suspension of certain U.S. regulations in 1970 and 1974 has removed
most of the impediments to the direct participation of U.S. banks in the
global trade in dollars. By this time, however, the Eurodollar market had
acquired a momentum of its own that assured its continued existence for
years to come.
MEASURING THE SIZE OF THE EURODOLLAR MARKET
For a number of years, the Bank for International Settlements (BIS) in
Basle, Switzerland, has been providing the most comprehensive set of statistics on the Eurodollar market, based on reports of foreign-currency denominated assets and liabilities of commercial banks in Belgium-Luxembourg,
France, Germany, Italy, the Netherlands, Sweden, Switzerland, the United
Kingdom, Canada, and Japan. The original reports include all foreigncurrency denominated liabilities to residents (banks, individuals, and corporations) of countries other than the country in which the reporting bank
is located, that is, all external liabilities. These totals are published as gross
Eurocurrency positions.
Table 50 shows the size of the external Eurocurrency liabilities by the
individual reporting countries. For the end of 1973, the BIS reported that
total external liabilities in foreign currencies of banks in the reporting European countries identified in the table amounted to $191 billion; roughly twothirds of these liabilities were denominated in dollars.
214
TABLE 50.—External liabilities denominated in foreign currencies of banks in selected countries,
1970-73
[Billions of U.S. dollars; end of period)
1970
Country
Selected countries.
Reporting European countriesBelgium-Luxembourg.
France
_.
Germany
Italy
Netherlands
Sweden
Switzerland
United Kingdom
Canada.
Japan...
1973
1972
1971
85.8
110.8
147.5
215.7
75.3
97.9
131.9
191.4
6.8
9.2
2.9
9.4
4.0
.5
6.1
36.4
10.5
13.9
3.1
12.4
4.9
.6
6.5
45.9
14.8
19.2
4.0
18.8
6.4
.7
8.5
59.8
24.0
27.2
5.8
24.1
9.6
.9
9.2
90.7
5.5
5.0
6.3
6.6
8.1
7.5
11.5
12.8
Note.—Detail may not add to totals because of rounding.
Source: Bank for International Settlements.
In addition to gross figures, the BIS publishes data on net Eurocurrency
liabilities. The net liability measure is an estimate of the amount of credit
outstanding in the Eurocurrency market, after an adjustment to exclude
interbank deposits. Deposits by one Eurobank at another are made for several
reasons. First, banks usually observe limits on loans to particular borrowers
or markets. When limits are reached, many banks will lend to another bank
which wants to increase the supply of loans to its nonbank borrowers. A
second reason is that many banks whose lending is specialized by either
function or region will supply funds to another intermediary for more general operations. The redepositing gives rise to double counting when the
same funds pass through several banks on their way to final borrowers. The
practice of the BIS has been to net out of the gross figure all interbank deposits within the reporting area, on the assumption that they result in duplication along the credit chain. Interbank deposits between this area and the
areas not covered by the BIS reports, however, are assumed to derive from
actual credit flows initiated by nonbank market participants and carried out
by the banking intermediaries. Thus, interbank deposits between banks within the European countries comprising the reporting area are excluded, while
deposits of banks outside the area are included in the net measure. Also included in the net measure are Eurocurrency liabilities of the area banks to
the residents of the country in which the bank is located. On this net basis,
the BIS had estimated the size of the Eurocurrency market at $132 billion
in the reporting European countries at the end of 1973. Of that total the
Eurodollar component was estimated at $97 billion.
In recent years banks in other financial centers such as Singapore and
the Bahamas sharply increased their Eurocurrency deposits. Data on these
liabilities are not included in the BIS figures. However, the Morgan Guaranty
215
Trust Company of New York, utilizing published national banking statistics
of various countries, has been compiling data on the world Eurocurrency
market. According to their estimates, the gross foreign currency liabilities of
banks around the world (including interbank deposits and foreign-currency
denominated liabilities to residents) amounted to $295 billion at the end
of 1973. Of the world total, $215 billion were Eurodollar deposits; about
$80 billion of these were held at foreign branches of U.S. banks. After an
adjustment for double counting resulting from interbank deposits, the net
size of the world Eurocurrency market at the end of 1973 was estimated
by Morgan Guaranty at $155 billion, of which $115 billion consisted of
liabilities denominated in U.S. dollars.
In the first 3 quarters of 1974 the world Eurocurrency market expanded
considerably. On a net basis it has been estimated that the deposits rose
globally by some $35 billion, from $155 billion at the end of 1973 to $190
billion at the end of September 1974. A large portion of that increase apparently took place at banks in the United Kingdom where gross Eurocurrency deposits rose by $16 billion to $106 billion.
Receiving foreign currency deposits and establishing foreign-currency
denominated liabilities is, of course, only one side of the Eurobanks' activities.
Lending the funds received and establishing foreign-currency denominated
claims represents the other phase of their operations. The BIS also collects
and publishes data on the asset side of the balance sheet of Eurobanks
for the European countries comprising the reporting area. Table 51 shows
the distribution of such assets around the world.
TABLE 51.—Foreign-currency denominated claims of banks in reporting European countries, 1973
[Billions of dollars »; end of 1973]
Foreign-currency denominated claims
Area and country
Total
Dollars
All other
currencies
Claims on residents of
Reporting European countries3
Other areas
Other Western Europe.
Eastern Europe
Canada
Japan
Latin America
Middle East
United States
Other
1
106.6
67.3
39.3
81.3
66.5
14.8
11.4
7.8
5.1
8.1
11.3
2.5
14.5
2\6
6.6
4.9
4.4
7.5
10.3
2.0
13.8
17.0
4.8
2.9
.7
(
1.0
.5
.7
3.7
Foreign currencies expressed in billions of U.S. dollars.
* Belgium-Luxembourg, France, Germany, Italy, Netherlands, Sweden, Switzerland, and United Kingdom.
Note.—Detail may not add to totals because of rounding.
Source: Bank for International Settlements.
216
Eurodollars are not included in the U.S. monetary aggregates (Mi, M 2 ,
M 3 ) ; only dollars held by foreigners as currency or as deposits in U.S. banking institutions are included. Indeed, Eurodollar deposits must first be "converted" into deposits in U.S. banks before they can become means of payment in the United States. In general, such "conversion" has no impact on
the U.S. money supply. On the other hand, owners of Eurodollar deposits
undoubtedly consider them highly liquid dollar-denominated assets, and
some degree of arbitrariness inevitably enters into distinctions between such
assets and money.
217
Appendix A
INFLATION CONTROL UNDER THE ECONOMIC
STABILIZATION ACT
219
CONTENTS
Page
INFLATION CONTROL UNDER THE ECONOMIC STABILIZATION
ACT
223
T H E CONTROLS PROGRAM IN 1974
EFFECTIVENESS OF THE CONTROLS PROGRAM IN 1974
Tables
List of Tables
A-l. Selected Exemptions of Industrial Sectors from Wage and
Price Controls, 1974
A-2. Coverage of Price and Wage Controls Under the Economic
Stabilization Program, Selected Dates During Phase IV. .
A-3. Measures of Price and Wage Change During and After
the Economic Stabilization Program
563-280 O - 75 - 15
224
226
221
225
226
227
Inflation Control Under the Economic
Stabilization Act
Public Law 93-28, the Economic Stabilization Act Amendments
of 1971, 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 appendix 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.
Price and wage controls were administered by the Cost of Living
Council (CLC) under authority of the Economic Stabilization Act until
April 30, 1974, when the act expired.* The Administration did not propose that authority for mandatory controls be extended (except in the
construction and health sectors), nor was there substantial support in the
Congress for extension. The Administration did propose, however, that Congress adopt legislation continuing certain functions of the CLC, including
monitoring of compliance by firms which had made commitments when
exempted from controls; review of Government and private actions which
might inhibit the supply of materials; working with labor and management
in sectors having special problems; conducting public hearings to highlight
inflationary problems; focusing public attention on the need to increase
productivity; and requiring business to report data relating to inflationary
factors. At the request of President Ford, legislation was passed in August
1974, establishing the Council on Wage and Price Stability with authority to
conduct several monitoring functions.
*The existence of the Cost of Living Council was extended to June 30, 1974,
by Executive Order 11781, to permit orderly termination of the stabilization programs, including monitoring of voluntary commitments made by companies prior
to decontrol. After June 30, the remaining legal activities and records of the stabilization program were transferred to a small staff in the Office of Economic Stabilization,
Department of the Treasury. This organization in turn was terminated at the end
of 1974.
223
THE CONTROLS PROGRAM IN 1974
At the start of 1974 the CLC was administering a controls program
known as Phase IV, which had been established in August 1973 following
the temporary price freeze begun on June 13, 1973. In general, standards of
Phase IV limited price increases in most manufacturing and service industries to the dollar-for-dollar pass-through of allowable cost increases incurred
since the last fiscal quarter ending prior to January 11, 1973. Profit margin
limitations related to base-year averages remained in effect for the most
part. Prenotification of price increases was required of firms with annual
sales exceeding $100 million; implementation was permitted after 30 days
unless the CLG ruled otherwise. Firms with annual sales of more than $50
million were required to file quarterly reports with the CLC.
The dollar-for-dollar pass-through and limitation of cost reach-back to
late 1972 made price regulations in Phase IV more restrictive than earlier
phases which had permitted maintenance of profit margins. In another
respect, however, Phase IV was designed to be more flexible through a program of regulation more closely adapted to conditions in each sector and
through progressive decontrol of industries.
For employees, the general standard of an annual 5.5 percent increase for
wages and an additional 0.7 percent for qualified fringe benefits, adopted in
Phase II and put on a self-administered basis in Phase III, remained in
effect. But after the beginning of 1973 the operating philosophy of the wage
control program had been to achieve a moderation of wage rate increases
entailing less disruption of industrial peace or interference with the collective bargaining process than would result from uniform application of a
mechanical standard. Emphasis was therefore placed on restraining settlements which might have had major "ripple effects" on the wage structure
through their influence on bargaining situations in related industries, areas,
and occupations, rather than on rigid adherence to a simple standard. The
Labor-Management Advisory Committee had recommended this policy to
the Cost of Living Council on February 26,1973.
An important part of the work of the CLC in 1974 was its program of
progressive decontrol (Table A - l ) . A major objective of the decontrol program was to provide for a smooth transition to free markets. By making decontrol a selective process and spreading the impact of large price increases
over time, it was thought that the extent of any "bulge" in prices when controls ended could be lessened. Another objective was to avoid or reduce
adverse effects of controls on the supply of products. Decontrol began in
1973 when Phase IV was put in place; but the process was accelerated
toward the end of the year and into 1974.
Two approaches to decontrol that were considered were sector-by-sector
decontrol and decontrol through a gradual easing of Phase IV rules. The
sector-by-sector approach was adopted on a flexible basis related both to the
particular conditions in each sector, and to voluntary company commitments
224
A - l .—Selected exemptions of industrial sectors from
TABLE
Date
January:
4
14
21....
30
1
11....
12
15....
19....
20
22....
26....
March:
1
5
6
7
8....
13....
15....
18
on
£u_...
22 16 .. ,. .. ..
27
28....
29....
April:
1974
Exemption
23....
25....
February:
wage and price controls,
Nonferrous alloys
Ferronickel (prices only)
Mobile homes and recreational vehicles
Semiconductors
Miscellaneous health service providers
Nonprofit tax exempt organizations
Selected steel products
Rubber tires and tubes
Most basic petrochemical feedstocks
Retail trade except: food; petroleum products; motor vehicles, parts, and equipment; large eating and
drinking facilities
Checker Motors Corporation
Steel drum reconditioners
Stevedoring and marine terminal services (prices only)
Rendering industry
Ferrous and ferroalloy scrap metal
Nonrubber shoes
Postcards
Iron and steel foundries
Furniture
Valves
Mining and oilfield machinery
Toys
Opthalmic goods: scientific, mechanical and optical instruments
Jewelry and silverware
Fabricated lumber and wood products
Engineered fastener products
Paper and allied products
Fabricated rubber products
Petrochemicals (medium- and small-sized firms)
Printing, publishing, broadcasting, advertising, and other communications media
Canned fruits and vegetables
ociccieQ macninciy
Ferroalloy metals (prices only)
Cordage and twine
Coal
Aluminum
Musical instruments
Aerospace and general aviation
1 5 . . . . Food retailing and wholesaling
Source: Cost of Living Council.
to restrain prices for specified periods after decontrol, or in some cases to expand production capacity. Both wages and prices were usually decontrolled
simultaneously in each sector. Many sectors had, of course, been exempted
from controls prior to Phase IV. Less than half the value of items included in
the consumer price index (CPI) and of wages and salaries were subject to
Phase IV on September 10, 1973; on the other hand, 69 percent of the wholesale price index (WPI) was covered, with farm products the major exemption. The speed at which decontrol progressed is shown in Table A-2.
As noted above, a major concern was that widespread maintenance of
controls until their legal termination on April 30 would result in a post-control bulge of price increases. The progressive decontrol program was designed
to spread the bulge in two ways. First, price increases that were likely to be
bunched just after that date were instead phased over the preceding several
months. Second, in exchange for earlier decontrol, commitments were obtained from some companies to restrict price increases to specified amounts
at the time of decontrol, with no further price increases to be implemented
for various periods extending beyond April 30; the GLC thus sought to defer
further into the future some of the post-control price increases. (In some
225
TABLE A-2.—Coverage of price and wage controls under the Economic Stabilization Program,
selected dates during Phase IV
Percent covered
Consumer
price
index
(CPI)
Wholesale
price
index
(WPI)
1973: September 10..
42.6
69.4
44.1
1974: March 1 .
Apri. 3 l . ;
28.0
24.2
2 8.6
54.2
37.4
2 27.6
37.4
26.8
24.1
Date during Phase IV
Civilian
labor
force»
* Percent of the civilian
an labor
labor force
force whose
whose wages
wages and
and salaries
salaries were
were covered.
covered.
2 An
Anadditional
additional3.5
3.5 percent
percentof
ofthe
theCPI
CPI and
d 40
4.0 percent
t of
f th
theWPI
WPI were under
d price controls of the Federal Energy Office,
which
i h remained
d in
i effect
effect after
f t April
A i l 30
30.
Source: Cost of Living Council.
cases other commitments were obtained, such as agreements to allocate supplies to unaffiliated domestic firms, even though such supplies could command higher prices in export markets, and to make certain efforts to expand
production capacity.) Most such commitments relating to actions subsequent to controls were kept, but later on some prices rose more than had been
anticipated in the commitments.
EFFECTIVENESS OF THE CONTROLS
PROGRAM IN 1974
The last two Reports have made clear the difficulty of assessing the effectiveness of controls in 1972 and 1973. In trying to provide an assessment for
a period so short as the 4 months of 1974 when controls were in effect, these
difficulties are magnified, particularly since this was the period in which the
economy sustained the impact of the oil embargo and the approximate
tripling of the landed price of imported crude oil. This increase and the
steep rise in farm prices at the beginning of 1974 led to an acceleration in
the pace of inflation. The Phase IV regulations may have played a role in
delaying the pass-through of increases in prices of these two major raw
commodity-producing sectors to the prices of final goods.
However, the special inflationary impact of the oil price increase and its
effect on aggregate output during the first half of 1974 make it unrealistic
to attempt an assessment of the stabilization program in the final months.
More significantly, economic conditions of both 1973 and 1974 differed
markedly from those prevailing when the Economic Stabilization Program
was introduced, and no feasible controls program could have significantly
restrained the resulting inflation. The conclusion of last year's Report on
this point must apply to 1974 with even more relevance: although inflation
might have been more rapid in the absence of controls, in the light of the
actual experience both before and after their termination, it is difficult to
226
accept that thesis. The lack of widespread support for extension of the controls program, not only in Congress but among business and labor representatives and the general public, suggests broad acceptance of this judgment.
Probably a more meaningful assessment relates to the results of a major
thrust of the 1974 program, the phased sector-by-sector decontrol of prices
and wages aimed at facilitating the return to free markets, and in particular
at leveling the bulge in prices and wages that was feared when controls were
terminated on April 30, 1974. Price increases as measured by the CPI component for commodities other than foods and the WPI industrial commodities component (generally the controlled prices) showed little acceleration in
the May-August period as compared with the first 4 months of the year
(Table A-3). However, increases in various measures of wage rates and the
TABLE A—3.—Measures of price and wage change during and after the Economic Stabilization
Program
[Percent change; seasonally adjusted annual rate]
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
Apr. 1974
Phase IV
Dec 1973 to
Apr. 1974
1974
Apr. to
Aug.
Aug. to
Dec.
PRICES
Consumer price index:
All items
Food
All items lessfood
Commodities
food...
Services^
3.4
5.9
2.7
8.3
20.2
5.0
10.7
16.2
8.7
12.2
12.8
11.8
12.7
7.0
15.3
11.8
17.0
9.7
2.2
3.5
4.8
4.3
9.2
8.6
14.9
8.8
16.4
13.3
8.6
11.7
2.8
6.7
10.8
13.9
11.8
11.4
5.9
22.2
15.2
21.9
31.8
10.2
24.5
35.5
9.5
9.4
less
Personal consumption expenditures deflator2
Wholesale price index: 3
All commodities
Farm products and processed foods and feeds.
Industrial commodities 4 .
Finished goods, consumer 5 and producer
Crude and inter- 5
mediate materials
13.4
2.9
48.9
12.3
6.3
19.6
.4
33.9
1.9
7.2
13.4
23.4
25.8
14.6
40.9
7.1
3.6
15.1
23.3
39.1
Average hourly earnings, piivate
nonfarm economy:'
Monthly series
Quarterly series 2
6.2
6.4
6.3
5.9
6.9
7.0
6.5
6.3
11.9
10.3
9.3
9.7
Average hourly compensation:
2
Total private economy
Nonfarm 2
5.8
5.9
8.9
8.8
7.0
7.5
7.0
7.9
11.2
10.7
9.0
9.3
WAGES«
* Not seasonally adjusted.
2
Percent changes based on quarterly data: 1971-111 to 1972-IV (col. 1), 1972-IV to 1973-11 (col. 2), 1973-11 to 1974-1
(col.
3), 1973-1V to 1974-1 (col. 4), 1974-1 to 1974-111 (col. 5), 1974-111 to 1974-1V (col. 6).
3
Seasonally adjusted percentage changes in components of the WPI do not necessarily average to the seasonally adjusted percentage change in the total index because adjustment of the components and the total are calculated separately.
*Includes
a small number of items not shown separately.
4
Excludes foods but includes a small number of items not in the industrial commodity index.
6
Average hourly earnings are for production workers or nonsupervisory employees and average hourly compensation
for all employees.
7
Adjusted for overtime (in manufacturing only) and interindustry shifts.
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).
227
WPI farm and food component (generally uncontrolled) did speed up
markedly in the 4 months after decontrol. The GNP deflator, the most comprehensive measure of prices of final goods and services, rose more slowly in
the second quarter of 1974 than in the first, but then more rapidly in the
third. It would appear, therefore, that no pronounced increase in the aggregate inflation rate for all goods and services was directly traceable to the
April 30 termination.
But the comparatively constant rate of inflation in 1974 both before and
after decontrol does not justify the conclusion that there was no price bulge.
With output weakening throughout the year, the rate of inflation might have
been expected to slow. Indeed most forecasters thought it would slow after
the initial effects of the winter increases in crude oil and farm prices were
reflected in final markets. However, the prices of goods and services other
than agricultural products and fuel accounted for a substantial part of the
inflation after controls ended.
Part of these increases reflected the pass-through of earlier increases in
prices of fuels and petrochemical feedstocks and other crude materials.
The acceleration in wage increases, coupled with the decline in output per
man-hour, also contributed to the widespread price increases following the
end of controls. In addition, capacity shortages continued in certain primary
producing industries like paper and chemicals. In such industries, output
continued strong into the third quarter, even though overall economic
activity was declining throughout 1974. Earlier shortages in these industries
had apparently reduced inventories to levels below those desired; and purchases of materials were intended to rebuild stocks, in many cases to hedge
against shortages or price increases. Finally, it is possible that frequent discussion about reimposing controls led to price and wage increases in anticipation of such an eventuality.
*
*
*
*
*
*
*
The final judgment on the effects of price and wage controls imposed
under authority of the Economic Stabilization Act beginning in August 1971
and continuing for more than 32 months will be long debated and may never
be resolved. The primary reason for an inconclusive judgment is that there is
no way of accurately simulating the course of events which would have
evolved in the absence of controls.
However, the evidence of the controls period—including not only the
behavior of the recorded rate of inflation but also materials shortages and
other significant market events—does support a partial but important judgment about the experience with the controls system: regardless of the overall
effect of the program, whatever contribution it may have made was probably concentrated in its first 16 months, when the economy was operating well
below its potential. As various industrial sectors reached capacity operations
in 1973 under the stimulus of a booming domestic and world economy, the
controls system began to obstruct normal supplier-purchaser relationships,
228
and in some cases the controls became quite unworkable. The sharply rising
costs of basic materials, often reflecting world market influences and dollar
devaluation, were largely uncontrolled; and when passed through to consumers, they resulted in accelerating inflation. Thus, the net benefit of the
controls system, however evaluated, had become extremely small by the
beginning of 1974, and legal termination of controls only ratified the inevitable process of dismantling them in response to public and market pressures.
229
Appendix B
REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1974
231
LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, B.C., December 31,1974.
T H E PRESIDENT:
Sir: The Council of Economic Advisers submits this report on its activities during the calendar year 1974 in accordance with the requirements of
the Congress, as set forth in Section 4(d) of the Employment Act of 1946.
Respectfully,
ALAN GREENSPAN,
Chairman.
WILLIAM J. FELLNER.
GARY L. SEEVERS.
233
Report to the President on the Activities of the
Council of Economic Advisers During 1974
The Council of Economic Advisers was created by the Employment Act
of 1946 to provide economic analysis and advice to the President and thus
assist him in establishing and maintaining conditions under which the objectives of the act can be secured.
Alan Greenspan became Chairman of the Council on September 4, 1974,
succeeding Herbert Stein, who had served as Council Chairman since January 1, 1972. Mr. Stein has taken up his duties as A. Willis Robertson Professor
of Economics at the University of Virginia. William J. Fellner and Gary L.
Seevers served as Council Members throughout 1974.
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. Bums
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.
James S. Duesenberry..
MertonJ. Peck
Warren L Smith
HendrikS. Houthakker.
Paul W. McCracken
Herbert Stein
Ezra Solomon
Marina v.N. Whitman..
Position
Separation date
Oath of office date
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...
Chairman
Member
Member
November 1,1949.
August 9,1946
August 9,1946
November 2,1949
May 10,1950
Augusts 1946
May 10,1950
June 29,1950
September8, 1952
March 19,1953
September 15, 1953
December 2, 1953
April 4, 1955...
December 3,1956
May 2, 1955..
December 3, 1956
November 1, 1958
May 7, 1959
January 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.
January 29,1961
January 29,1961
January 29, 1961
August 3, 1962.
November 16,1964
May 17,1963.
September 2,1964
November 16,1964
February 15,1968
February 2,1966
February 15,1968
July 1,1968
February 4,1969
February 4, 1969
February 4,1969
January 1,1972
September 9, 1971
March 13, 1972
235
...
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.
August 31, 1974.
March 26, 1973.
August 15,1973.
RESPONSIBILITIES OF THE COUNCIL
The principal directive of the Employment Act is that the Federal Government "use all practicable means consistent with its needs and obligations . . . for the purpose of creating and maintaining . . . conditions . . .
to promote maximum employment, production, and purchasing power."
The basic responsibility of the Council of Economic Advisers is the
analysis and interpretation of trends and changes in the economy and the
development and evaluation of national economic policies to assist the
President in reaching the goals specified in the act. The Council prepares
regular reports on current economic conditions and forecasts of future
economic developments, and its recommendations are an integral part of
economic policy making.
The Council also has a responsibility "to appraise the various programs
and functions of the Federal Government." The Council thus performs a
direct advisory role involving a wide range of economic problems both
within the Executive Office of the President and through participation in
interagency study groups in which representatives of various departments,
agencies, and offices in the executive branch evaluate current programs and
consider and develop new ones.
During 1974 the Council and its staff shared in the analysis and examination of many different economic issues incident to the formulating of programs and policies. These included policy issues and proposals regarding
agricultural and food policy; measures and programs to support housing
construction; a wide range of programs and measures affecting environmental quality; alternative means of dealing with the energy problem; the
evaluation of future supplies of strategic materials; exploitation of the
resources of the seas; management of the Nation's timber resources; transportation problems and policies; measures to improve the functioning of the
labor market and to alleviate the impact of the recession upon the unemployed ; proposals for more effective health insurance and income maintenance; and needed improvements in the Government's economic statistics.
International trade and investment problems and policies continued to be
a major concern of the Council, and during 1974 it examined the strains
placed upon the world's international trade and financial mechanism by the
large capital flows related to oil payments.
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.
The Chairman is a member of the Economic Policy Board, which directs
the formulation, coordination, and implementation of economic policy. The
Chairman is also a member of the Executive Committee of the Economic
236
Policy Board, which serves as the focal point for economic policy decision
making and meets daily to address current issues of economic policy.
The Economic Policy Board operates with a high degree of flexibility,
requesting analyses of economic problems and recommendations from the
various agencies and departments of the executive branch. The Executive
Committee, often augmented by the Chairman of the Board of Governors
of the Federal Reserve System, meets regularly with the President to review
economic conditions, make recommendations, and discuss possible changes
in economic policy.
The review and analysis of the overall performance of the economy is
conducted and coordinated through a series of "Troika" working groups,
comprising representatives of the Council, the Treasury, and the Office of
Management and Budget (OMB). At regular intervals economists from
these agencies evaluate recent economic performance and formulate economic forecasts which are then reviewed by a second group, chaired by a
Council Member and including the Assistant Secretary of the Treasury for
Economic Policy and the Economist for OMB. The analysis and projections
are then reviewed and cleared through the Chairman of the Council for
presentation and consideration by the Executive Committee, which is chaired
by the Secretary of the Treasury and consists of the Chairman of the Council
of Economic Advisers, the Director of OMB, the Executive Director of the
Council on International Economic Policy, and the Assistant to the President for Economic Affairs, who is the Executive Director of both the Economic Policy Board and its Executive Committee.
The Chairman of the Council is a member of the President's Energy
Resources Council, which was formed in October 1974 to formulate and
coordinate energy policy. The Chairman is the head of the U.S. delegation
to the Economic Policy Committee of the Organization for Economic Cooperation and Development, and he also serves as vice chairman of the
Committee. Council Members and staff economists attended meetings of
various working parties of the Committee during the year. The Chairman
of the Council served as Chairman of the Advisory Committee on the Economic Role of Women, which on April 30, 1974, issued its recommendations for advancing women in industry; the Advisory Committee ended its
term in August 1974.
In April Mr. Fellner and several staff economists from the Council
visited the Economic Planning Agency for Japan to continue the exchange
of information on economic problems and policies that was initiated during
1972. In November the Council was host to a delegation of economists
from the Economic Planning Agency.
The Chairman and Council Members appeared before the full Joint
Economic Committee (JEC) of the Congress three times during 1974. The
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." On Febru-
563-280 O - 75 - 16
237
ary 7 the Council presented testimony before the JEC on the Economic
Report and appeared again on July 30 to review economic developments
during the first half of 1974. The Chairman presented testimony on September 26 regarding developments during the third quarter. The Council
also appeared before the JEC Subcommittee on Consumer Economics on
May 10. The Chairman presented testimony on the budget before the Senate Appropriations Committee on February 27 and appeared before the
Senate Committee on Commerce and Government Operations on May 9.
He also presented testimony before the JEC Subcommittee on Economic
Growth on June 12, before the House Budget Committee on September 25,
and before the Senate Permanent Subcommittee on Investigations on October 16. Mr. Seevers presented testimony on the Federal budget before the
House Committee on Appropriations on February 20 and appeared before
the Senate Government Operations Committee on November 26 to discuss
regulatory reform.
PUBLIC INFORMATION
The Annual Report of the Council of Economic Advisers, contained in the
Economic Report of the President, is the main vehicle through which the
Council informs the public of its work and its views. It presents a comprehensive review and analysis of economic conditions, forecasts, and projections
for the coming year, as well as an explanation of the Administration's economic policy. In recent years about 50,000 copies of the Economic 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 also presents information on and analyses of current economic
problems and developments through occasional press briefings, testimony
before various congressional committees, and speeches and papers presented
by the Chairman and the Members of the Council. The Council answers
numerous requests for information from the Congress, the press, and individual citizens, and receives individual visitors as well as business, academic,
and other groups as often as is possible without interfering with other duties.
ORGANIZATION AND STAFF OF THE COUNCIL
OFFICE OF THE CHAIRMAN
The Chairman is responsible for communicating the Council's views to
the President. This duty is performed both through direct consultation with
the President and through regular reports on economic developments. The
Chairman also represents the Council at Cabinet meetings, at the Executive
Committee of the Economic Policy Board, and at many other formal and
238
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
Council at numerous meetings, where they assume major responsibility for
the Council's involvement. Whenever the Chairman is absent from Washington, one of the Council Members becomes Acting Chairman.
In practice the Chairman and the Council Members work as a team. For
operational reasons, however, subject matter is divided informally between
the Council Members. Mr. Fellner is responsible for analysis of business
conditions, short-term forecasting, and matters related to monetary and
fiscal policy; international finance; manpower employment and developments in the labor market; financial markets; housing; health, education,
and welfare; taxation; and social security. Mr. Seevers is responsible for the
areas encompassing international trade; energy and natural resources; food
and agriculture; urban and national growth policy; environmental problems; transportation; regulated industries; and antitrust questions.
PROFESSIONAL STAFF
At the end of 1974 the professional staff consisted of 13 senior staff economists, two statisticians, and seven members of the junior research staff.
The professional staff and their special fields of economic analysis at the end
of the year were:
Senior Staff Economists
Barry R. Chiswick
John D. Darroch
John M. Davis, Jr
Murray F. Foss
Joseph G. Kvasnicka
James C. Miller III
Labor, Human Resources, and Income Distribution
Prices and Industry Studies
Special Assistant to the Chairman
Business Conditions, Analysis, and Forecasting
International Finance and Trade
Regulated Industries, Transportation, and Economic Analysis
June A. O'Neill
Labor, Human Resources, and Income Distribution
Allan G. Pulsipher
Economic Analysis, Environment, Science, and
Technology
Milton Russell
Energy Analysis and Policy
G. Edward Schuh
Agriculture and Food
George M. von Furstenberg . . Fiscal Policy, Public Finance, and Housing
J. Richard Zecher
Monetary Policy, Financial Institutions, Capital
Markets, and Interest Rates
Statisticians
Frances M. James
Catherine H. Furlong
Senior Staff Statistician
Statistician
Staff Economist
David Munro
Business Conditions, Analysis, and Forecasting
239
Junior Staff Economists
David B. Crary
Joseph P. Kalt .
Leroy O. Laney
Rosemary Quintano
Robert J. Schanzmeyer
Robert S. Stillman
Monetary Policy and Financial Markets
Fiscal Policy, Housing, and Capital Markets
International Trade and Finance
Economic Analysis, Prices, and Forecasting
Labor Markets, Manpower, Health, and Education
Energy and Agriculture
Research Assistant
Mary P. Kane
Frances M. James, Senior Staff Statistician, is in charge of the 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 directs 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 graduate and undergraduate students of economics for temporary periods, particularly during the summer months. Interns who served
during 1974 were Robert S. Dohner (Harvard University) and M. Cary
Leahey (Clark University).
Consultants who provided services to the Council during 1974 included
Richard N. Cooper (Yale University), Sidney Cottle (FRS Associates),
Otto Eckstein (Harvard University), Gottfried Haberler (American Enterprise Institute), Gabriel Hauge (Manufacturers Hanover Trust Company),
Walter W. Heller (University of Minnesota), Hendrik S. Houthakker (Harvard University), Paul W. McCracken (University of Michigan), Allan
Meltzer (Carnegie Mellon University), Robert A. Mundell (Columbia University), Arthur M. Okun (The Brookings Institution), George L. Perry
(The Brookings Institution), Paul Samuelson (Massachusetts Institute of
Technology), W. Allen Wallis (University of Rochester), Murray L.
Weidenbaum (Washington University), and Marina v.N. Whitman (University of Pittsburgh). Joel Popkin and Carl I. Van Duyne provided assistance with the Economic Report.
Kenneth J. Fedor served as a senior staff economist during the summer,
working on matters relating to food and agriculture.
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, which includes 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, reports, and congressional testimony. During 1974 James H. Ayres
240
served as Administrative Officer, assisted by Nancy F. Skidmore, Elizabeth A.
Kaminski, and Margaret L. Snyder. The duplicating, mail, and messenger
department was operated by James W. Gatling, Frank C. Norman, and
Jerry W. Gatling.
The secretarial staff for the Chairman and Council Members consisted
of Anne V. Jackson, Joyce A. Pilkerton, Patricia A. Lee, and Alice H. Williams. Secretaries for the professional staff included Ruth Ann Butler, Mary
C. Fibich, Dorothy L. Green, Bessie M. Lafakis, Earnestine Reid, Linda A.
Reilly, and Lillie M. Sturniolo. Special assistance in connection with the Report was furnished by Dorothy L. Reid, a former member of the Council
staff.
DEPARTURES
The Council's professional staff members are 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
George A. Akerlof (University of California, Berkeley), Geza M. Feketekuty (Office of the Special Representative for Trade Negotiations), Mary
W. Hook (Department of Commerce), Benton F. Massell (Office of Management and Budget), Leo V. Mayer (Library of Congress), Joel Popkin
(National Bureau of Economic Research, Washington), and Sung W. Son
(Northwestern National Bank, Minneapolis).
Junior economists who resigned in 1974 were Lydia Segal, Eric B. Herr
(Data Resources, Inc.), James S. Fackler (Indiana University), Laura B.
Peterson (Department of the Treasury), and Carl I. Van Duyne (Stanford University). Other resignations included D. Carolyn Fletcher, secretary, and Kharl A. Williams, student aide. Jean P. Noll, secretary, retired
from the Federal service during 1974.
241
Appendix C
STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION
243
CONTENTS
NATIONAL INCOME OR EXPENDITURE:
G-l. Gross national product or expenditure, 1929-74
,
G-2. Gross national product or expenditure in 1958 dollars, 1929-74
G-3. Implicit price deflators for gross national product, 1929-74
G-4. Implicit price deflators and alternative price measures of gross
national product and gross private product, 1939-74
C-5. Gross national product by industry in 1958 dollars, 1947-73
C-6. Gross national product by major type of product, 1929-74
C-7. Gross national product by major type of product in 1958 dollars,
1929-74
C-8. Gross national product: Receipts and expenditures by major economic
groups, 1929-74
C-9. Gross national product by sector, 1929-74
C-10. Gross national product by sector in 1958 dollars, 1929-74
C-ll. Gross product originating in nonfinancial corporations and dollar
costs per unit of output, 1948-74
C-12. Personal consumption expenditures, 1929-74
G-l 3. Gross private domestic investment, 1929-74
C-14. Relation of gross national product and national income, 1929-74
C-15. National income by type of income, 1929-74
C-16. Relation of national income and personal income, 1929-74
G-l 7. Disposition of personal income, 1929-74
G—18. Total and per capita disposable personal income and personal consumption expenditures in current and 1958 dollars, 1929-74
C-19. Sources of personal income, 1929-74
C-20. Sources and uses of gross saving, 1929-74
C-21. Saving by individuals, 1946-74
G-22. Number and money income (in 1973 dollars) of families and unrelated
individuals, by race of head, 1947-73
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, 1929-74
Noninstitutional population and the labor force, 1929-74
Civilian employment and unemployment by sex and age, 1947-74. .
Selected unemployment rates, 1948-74
Unemployment by duration, 1947-74
'
Unemployment insurance programs, selected data, 1946-74
Wage and salary workers in nonagricultural establishments, 1929-74.
Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-74
C—31. Average weekly earnings in selected private nonagricultural industries, 1947-74
C-32. Output per man-hour and related data, private economy, 1947-74. .
C-33. Changes in output per man-hour and related data, private economy,
1948-74
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—74.. . .
C—35. Industrial production indexes, market groupings, 1947—74
C—36. Industrial production indexes, selected manufactures, 1947—74
C-37. Capacity utilization rate in manufacturing and major materials
industries, 1948-74
C-38. New construction activity, 1929-74
C-39. New housing starts and applications for financing, 1929-74
C-40. Business expenditures for new plant and equipment, 1947-75
C-41. Sales and inventories in manufacturing and trade, 1947-74
C-42. Manufacturers' shipments and inventories, 1947-74
C-43. Manufacturers' new and unfilled orders, 1947-74
PRICES:
C-44. Consumer price indexes by expenditure classes, 1929-74
C—45. Consumer price indexes by commodity and service groups, 1939—74.
C—46. Consumer price indexes, selected commodities and services, 1939—74.
C—47. Consumer price indexes, seasonally adjusted, 1971-74
C—48. Percent changes in consumer price indexes, major groups, 1948-74..
C—49. Wholesale price indexes by major commodity groups, 1929—74
C-50. Wholesale price indexes by stage of processing, 1947-74
C—51. Percent changes in wholesale price indexes, major groups, 1948—74..
MONEY STOCK, CREDIT, AND FINANCE:
C-52. Money stock measures, 1947-74
C—53. Commercial bank loans and investments, 1930—74
C—54. Total funds raised in credit markets by nonfinancial sectors, 1966—74.
C-55. Private liquid asset holdings, nonfinancial investors, 1959—74
C—56. Federal Reserve Bank credit and member bank reserves, 1929—74. .
C-57. Aggregate reserves and member bank deposits, 1959—74
C-58. Bond yields and interest rates, 1929-74
C—59. Short-and intermediate-term consumer credit outstanding, 1929—74.
C-60. Instalment credit extended and repaid, 1946-74
C-61. Mortgage debt outstanding by type of property and of financing,
1939-74
C-62. Mortgage debt outstanding by lender, 1939-74
C-63. Net public and private debt, 1929-73
GOVERNMENT FINANCE:
C-64. Federal budget receipts and outlays, fiscal years 1929-76
C-65. Federal budget receipts, outlays, and debt, fiscal years 1965-76..
C-66. Relation of the Federal budget to the Federal sector of the national
income and product accounts, fiscal years 1973-76
C-67. Receipts and expenditures of the government sector of the national
income and product accounts, 1929-74
C-68. Receipts and expenditures of the Federal Government sector of the
national income and product accounts, 1949-76
C—69. Receipts and expenditures of the State and local government sector of
the national income and product accounts, 1946-74
C—70. State and local government revenues and expenditures, selected fiscal
years, 1927-73
C-71. Public debt securities by kind of obligation, 1946-74
C-72. Estimated ownership of public debt securities, 1946-74
C—73. Average length and maturity distribution of marketable interestbearing public debt, 1946-74
246
Page
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, 1929-74
C-75. Sales, profits, and stockholders' equity, all manufacturing corporations, 1947-74
C-76. Relation of profits after taxes to stockholders' equity and to sales, all
manufacturing corporations, 1947-74
C-77. Relation of profits after taxes to stockholders' equity and to sales, all
manufacturing corporations, by industry group, 1973-74
C-78. Sources and uses of funds, nonfarm nonfinancial corporate business,
1946-74
C-79. Current assets and liabilities of U.S. corporations, 1939-74
C-80. State and municipal and corporate securities offered, 1934—74
C-81. Common stock prices, earnings, and yields, and stock market credit,
1949-74
C-82. Business formation and business failures, 1929-74
Page
335
336
337
338
339
340
341
342
343
AGRICULTURE:
C-83.
C-84.
C-85.
C-86.
Income of farm people and farmers, 1929-74
Farm production indexes, 1929-74
Farm population, employment, and productivity, 1929-74.
Indexes of prices received and prices paid by farmers, and parity ratio,
1929-74
C-87. Selected measures of farm resources and inputs, 1929-74
C-88. Comparative balance sheet of the farming sector, 1929-75
344
345
346
347
348
349
INTERNATIONAL STATISTICS:
C-89. U.S. balance of payments, 1946-74
C—90. U.S. merchandise exports and imports by commodity groups,
1958-74
C-91. U.S. merchandise exports and imports by area, 1968-74
C-92. U.S. overseas loans and grants, by type and area, fiscal years,
1962-74
C-93. International reserves, 1949, 1953, and 1969-74
C-94. U.S. reserve assets, 1946-74
C—95. International investment position of the United States at year-end,
1960 and 1969-73
C-96. Price changes in international trade, 1966-74
C-97. Consumer price indexes in the United States and other major industrial countries, 1955-74
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, 1929-74
Year or quarter
Total
gross
national
product
Personal
consumption
expenditures 1
Gross
Net
private exports
of goods
doand
mestic
servinvestices 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.. J
7.2
1933..
55.6
45.8
1.4
.4
8.0
2.0
2. )
6.0
1939..
90.5
66.8
9.3
1.1
13.3
5.1
-4.2
8.2
6.9
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
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
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
96.2
97.6
104.9
106.6
116.4
74.6
71.2
74.8
74.4
78.6
21.6
26.5
30.1
32.2
37.9
123.3
136.6
150.8
169.8
192.4
5.0
8.0
9.8
11.8
7.9
75.9
75.9
72.6
74.7
29.7
30.0
30.1
30.5
145.5
147.9
152.4
157.4
12.2
10.5
9.5
12.7
106.4
106.2
105.3
108.4
75.0
74.0
73.3
75.3
31.4
32.2
32.0
33.1
162.6
167.1
171.6
177.9
15.5
9.6
10.1
11.2
111.5
114.3
117.2
122.8
75.8
76.6
78.4
83.5
35.7
37.7
38.8
39.3
184.8
190.1
195.1
199.6
4.5
7.6
9.7
3.3
1.2
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
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
I960..
1961.
1962.
1963.
1964.
1965.
1966.
1967.
1968.
1969.
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
1970...
1971...
1972...
1973...
1974 p..
977.1
054.9
158.0
294.9
396.7
617.6
667.1
729.0
805.2
877.0
136.3
153.7
179.3
209.4
208.9
3.6
-.2
-6.0
3.9
2.0
219.5
234.2
255.7
276.4
308.8
1972: l___.
II...
III..
IV...
,115.0
, 143.0
., 169. 3
, 204.7
701.5
720.6
736.8
757.2
169.4
175.5
182.1
190.2
-7.1
-6.9
-4.8
-5.3
251.1
253.8
255.1
262.6
105.6
105.9
102.7
105.2
1973: I....
II...
IIIIV...
, 248.9
, 277.9
,308.9
,344.0
781.7
799.0
816.3
823.9
199.0
205.1
209.0
224.5
-.8
.5
6.7
9.3
269.0
273.3
276.9
286.4
1974: I....
II —
III..
IV*.
,358.8
,383.8
, 416.3
1,428.0
840.6
869.1
901.3
896.8
210.5
211.8
205.8
207.6
11.3
-1.5
-3.1
1.2
296.3
304.4
312.3
322.4
3.9
i\
5.3
5.2
1.4
8.2
Seasonally adjusted annual rates
i See Table C-l2 for detailed components.
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
for the Fiscal Year ending June 30,1976."
• Changes are based on unrounded data and therefore may differ slightly from those obtained from published data,
shown here.
3
3
Source: Department of Commerce, Bureau of Economic Analysis.
249
TABLE C-2.—Gross national product or expenditure in 1958 dollars, 1929-74
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-
209.4
148.2
14.5
81.2
52.5
24.7
23.5
15.3
5.9
9.4
8.2
1.2
19401941..
1942..
19431944..
19451946194719481949-
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..
1951195219531954..
1955195619571958..
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..
19641965..
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 95.5
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
1974 v
722.5
746.3
792.5
839.2
821.1
477.5
496.4
527.3
552.1
539.9
83.8
92.5
104.9
113.6
103.4
206.5
211.3
220.2
228.6
223.8
187.2
192.6
202.2
209.9
212.8
103.4
111.1
125.0
138.1
126.3
77.2
76.7
83.7
94.4
94.1
23.7
23.2
23.8
25.4
26.2
53.5
53.5
59.8
69.0
67.8
22.2
29.1
34.3
32.9
24.0
3.9
5.3
7.0
10.8
8.2
99.5
105.8
118.0
127.3
118.1
Seasonally adjusted annual rates
1972:1
II —
III...
IV...
770.9
786.6
798.1
814.2
512.8
523.2
531.2
542.2
99.8
103.0
106.8
110.1
214.4
219.8
221.3
225.4
198.6
200.4
203.0
206.6
119.4
123.2
126.6
130.9
115.2
116.6
118.1
122.0
81.3
82.4
83.8
87.2
23.9
24.0
23.5
23.9
57.4
58.4
60.3
63.3
33.8
34.2
34.3
34.8
4.2
6.6
8.5
8.8
1973:1
II
III
IV...
832.8
837.4
840.8
845.7
552.9
553.7
555.4
546.3
117.2
115.7
114.3
107.2
228.7
228.3
230.0
227.4
207.1
209.7
211.2
211.7
134.4
136.3
135.8
145.8
127.1
128.4
127.7
125.8
92.2
94.3
95.1
96.0
24.7
25.1
25.6
26.0
67.4
69.2
69.5
70.0
35.0
34.1
32.6
29.8
7.3
7.8
8.0
20.0
1974:1....
II —
III...
IV p . .
830.5
827.1
823.1
803.7
539.7
542.7
547.2
530.1
105.2
106.8
107.8
93.7
223.9
223.6
225.8
221.7
210.6
212.2
213.7
214.7
133.3
130.3
122.7
118.9
122.7
122.2
117.7
109.7
96.3
96.5
94.1
89.3
26.7
26.6
25.4
26.2
69.7
69.9
68.7
63.1
26.4
25.7
23.6
20.4
10.6
8.2
5.0
9.1
See footnotes at end of table.
250
TABLE C-2.—Gross national product or expenditure in 1958 dollars, 1929-74—Continued
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
Addendum:
Gross
private
product
Percent change from
preceding period3
Total
gross
national
product
Gross
private
product
Billions of 1958 dollars
1929
1.5
11.8
10.3
22.0
3.5
18.5
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
94
1940
L941
1942
1943
1944
1945
1946
L947
1948
1949
2.1
.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
72
-1.7
-12.0
_ 9
4.4
.2
9.0
15.0
88
6.1
52
-1.5
-2.6
23
4.8
-.3
1950
1951
L952
L953
1954
L955
1956
1957
1958
1959
2.7
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
M.I
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
5.1
4.5
5.6
8.3
6.2
4.2
3.6
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
- 5
-3 0
4.6
9.0
52.2
52 2
55.7
66.6
71.6
50.0
52 6
58.7
62.0
62.6
139.3
139 3
143.1
144.4
145.9
64.3
60 9
61 0
57.3
56.3
75.0
78 4
82 1
87.0
89.5
661.7
685 6
731 7
776.9
757.0
-.4
3.3
6.2
5.9
-2.2
-.5
3.6
6.7
6.2
-2.6
1970
1971
1972
1973
1974 v
190.9
Seasonally adjusted annual rate:>
-4.9
-3 6
-1.4
-1.9
54 3
53 3
56.2
59.0
59.2
56 9
57.6
60.9
143 8
143 8
141 8
143.0
62 9
62 5
59.5
59.2
80.9
81 3
82.4
83.8
710.2
726 2
737.5
753.0
6.4
8.4
6.0
8.3
7.0
9.3
6.4
8.7
1973: 1
II . .
Ill
iV
14
3.5
5.8
7.9
64 8
65.9
66.9
68.9
63 4
62.4
61.1
61.0
144 1
143.9
143.7
145.7
58 9
57.7
56.2
56.4
85 2
86.2
87.5
89.3
771 2
775.3
778.4
782.8
9.5
2.2
1.6
2.3
10.0
2.1
1.6
2.3
1974: 1
II
Ill
IV* .
11.5
8.2
73
8.9
73.3
73.4
70 9
68.9
61.8
65.1
63.6
60.0
146.0
145.8
145 9
145.8
56.3
56.3
56.5
56.3
89.7
89.5
89.4
89.5
767.0
763.2
758.8
738.9
-7.0
-1.6
-1.9
-9.1
-7.8
-2.0
-2.3
-10.1
1972: J
II
III
IV
» Net of Government sales.
s Changes are based on unrounded data and therefore may differ slightly from those obtained from published data,
shown here.
Source: Department of Commerce, Bureau of Economic Analysis.
251
TABLE C-3.—Implicit price deflators for gross national product, 1929-74
[Index numbers, 1958=100]
Gross private domestic investment *
Persona consumption
expenditures
Year or quarter
Total
gross
national
product i
Fixed investment
Nonresidential
Total
Durable
goods
Nondurable
goods
Services
Structures
Producers'
durable
equipment
Total
Total
Residential
structures
1929..
50.64
55.3
56.4
54.5
56.1
39.4
39.9
35.7
44.6
1933..
39.29
40.6
41.9
38.0
43.6
30.6
31.6
27.9
34.5
27.1
1939..
1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
1948..
1949..
43.23
45.1
46.0
43.2
47.7
37.7
38.7
33.1
42.2
35.7
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...
1974 *_
135.24
141.35
146.12
154.31
170.11
129.3
134.4
138.2
145.9
162.4
108.9
112.3
112.9
114.7
123.6
127.8
131.8
136.1
147.9
169.9
140.2
147.9
153.8
160.5
173.4
132.5
139.3
144.8
152.4
165.6
130.2
136.3
139.6
144.9
159.0
152.6
163.5
172.6
185.4
199.1
120.3
124.5
126.5
130.0
143.5
140.2
147.4
157.4
174.0
191.5
38.1
Seasonally adjusted
1972:1...
IL.
III.
IV..
144.62
145.31
146.50
147.96
136.8
137.7
138.7
139.7
112.4
112.8
113.4
112.9
134.5
135.3
136.5
137.9
151.6
153.2
154.4
155.9
142.8
143.8
145.6
146.9
138.5
139.3
140.2
140.5
170.1
171.3
172.8
176.2
125.4
126.1
127.5
127.0
153.2
154.6
158.9
162.8
1973:1—
II..
III.
IV..
149.95
152.61
155.67
158.93
141.4
144.3
147.0
150.8
113.0
114.2
115.9
116.0
141.4
145.7
149.5
154.8
157.4
159.4
161.0
164.1
148.7
151.4
154.3
155.4
141.7
143.9
146.1
147.9
180.4
184.1
187.1
189.7
127.5
129.2
131.1
132.3
167.1
172.1
178.1
179.7
1974:1.....
II...
III...
IV*..
163.61
167.31
172.07
177.68
155.8
160.2
164.7
169.2
117.8
121.3
126.3
129.7
162.7
168.0
172.3
176.6
167.3
171.4
176.1
178.7
157.8
162.3
167.5
176.0
150.7
154.9
160.4
170.9
192.2
196.2
200.6
207.5
134.8
139.2
145.5
155.8
183.8
190.0
195.9
198.3
See footnotes at end of table.
252
TABLE C-3.—Implicit price deflators for gross national product, 1929-74—Continued
[Index numbers, 1958=1001
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
Private2
State and
local
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
78.5
79.2
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
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
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
147.7
159 1
171.0
120.5
125.5
130.0
150.6
194.7
118.6
124.7
133.7
155 6
219.5
157.6
168.1
178.6
191.5
211.7
149.5
160.3
171.9
185 9
206.6
164.6
174.2
183.7
195 1
214.9
130.32
135.70
139 61
147 56
163.27
130.8
136.4
139 8
145 4
162.1
188.9
205 1
224 6
238 5
250.9
. .
.
..
1970
1971
1972
1973
1974 v
Seasonally adjusted
1972: 1
II
III
.
..
IV
1973- 1
II
III
IV
1974- 1
II
III
IV p
127.2
129 1
130.4
133.0
128.6
133 0
135.5
137.6
174.6
176 5
179.9
183.6
168.0
169 4
172.7
177.7
179.8
181 9
185.0
187.8
138. 31
138 92
139.95
141.16
138.8
139 3
139.9
140.9
218.4
222 1
226.1
231.8
137.1
144.8
155.0
164.8
141.2
152.2
158 7
170.9
186.7
189.9
192.6
196.5
180.5
184.0
187 3
192.1
190.9
193.9
196.0
199.3
143.22
145.90
148 96
152.10
142.2
144.2
146 1
149.2
234.3
236.3
239 3
244.0
179.0
188.7
202.5
209.6
194.0
214.9
230.8
238.8
202.9
208.8
214.1
221.0
198 0
203.0
207.4
218.1
206.0
212.4
218.3
222.9
156.77
160.51
165. 35
170.72
154.3
159.8
164.8
169.6
246.2
248.5
251.5
257.1
1
Separate deflators are not available for total gross private domestic investment, change in business inventories, and
net exports of goods and services,
s 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.
563-280 O - 75 - 17
253
TABLE C-4.—Implicit price deflators and alternative price measures of gross national product and
gross private product, 1939—74
Gross national product price
measures, 1958=100
Year or
quarter
Total
Percent change from preceding periodl
Private
Total
Price Implicit Price
Implicit index.
index,
price
price
1967
1967
deflator weights
deflator weights
Implicit
price
deflator
Price
index,
1967
weights
Private
Chain
price
index
Implicit
price
deflator
Price
index,
1967
weights
Chain
price
index
1939
43.23
43.93
-1.5
-1.6
1940
1941
1942
1943
1944
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
1.7
8.9
14.1
9.6
1.9
1945
1946
1947
1948
1949
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
1962
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
.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
1974*
135. 24
141.35
146.12
154.31
170.11
135.60
142.18
148.03
157. 36
174.12
130.32
135.70
139.61
147. 56
163.27
130.67
136.34
140. 77
149. 63
166.68
5.5
4.5
3.4
5.6
10.2
5.4
4.9
4.1
6.3
10.6
5.3
4.8
3.9
6.0
10.0
4.8
4.1
2.9
5.7
10.6
4.8
4.3
3.3
6.3
11.4
4.7
4.3
3.2
5.9
10.6
.
l!l
1.3
1.6
Seasonally adjusted annual rates
1972:1
II
Ill
IV
144.62
145.31
146. 50
147.96
146.05
147.12
148.57
150.33
138.31
138.92
139.95
141.16
139.17
140.02
141.26
142.59
5.5
1.9
3.3
4.1
5.6
3.0
4.0
4.8
5.4
2.9
4.0
4.3
4.4
1.8
3.0
3.5
3.7
2.5
3.6
3.8
3.8
2.3
3.6
3.5
1973:1
II
III
IV
149.95
152.61
155.67
158.93
152.87
155.65
158.68
162.23
143.22
145.90
148.96
152.10
145.14
148.00
151.02
154.36
5.5
7.3
8.3
8.6
6.9
7.5
8.0
9.3
6.4
7.1
8.1
8.5
6.0
7.7
8.7
8.7
7.4
8.1
8.4
9.1
6.7
7.5
8.4
8.6
1974:1
II
III
IV*
163.61
167.31
172.07
177.68
167.17
171.64
176.63
181.66
156.77
160.51
165.35
170.72
159.54
164.22
169.40
174.25
12.3
9.4
11.9
13.7
12.7
11.1
12.7
11.9
11.6
9.8
12.7
11.3
12.9
9.9
12.6
13.7
14.1
12.3
13.8
12.0
12.6
10.6
13.8
11.5
1
Changes are based on unrounded data and therefore may differ slightly from those obtained from published indexes,
shown here.
Source: Department of Commerce, Bureau of Economic Analysis.
254
TABLE C-5.—Gross national product by industry in 1958 dollars, 1947-73
[Billions of 1953 dollars]
Manufacturing
AgriTotal culture
gross forestry,
naand
tional
product fisheries
Year
Contract
construction
Total
Transportation,
comNonDumunirable durable cation,
goods goods
and
indus- indus- utilitries
tries
ties
GovernWhole- Finance,
insurment
sale
ance, Servand
All
and
and
ices govern- otheri
retail
real
ment
trade
estate
enterprises
6.7
7.1
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
10.6
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
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...
1973
722.5
746.3
792.5
839.2
26.2
27.7
27.4
28.9
23.6
24.0
25.7
25.7
217.5
223.1
245.4
272.4
125.1
127.1
141.6
159.7
92.4
96.0
103.8
112.7
77.4
80.1
85.3
90.1
126.5
131.2
141.2
146.1
96.4
101.0
105.2
1C8.3
69.2
69.8
73.2
77.5
70.0
70.3
70.8
72.7
15.8
19.2
18.1
17.5
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957..
1958
1959
.
.
.
.
1
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 O6.—Gross national product by major type of product, 1929-74
[Billions of dollars]
Goods output
Year or
quarter
Total
gross
national
product
Durable goods
Total
Nondurable goods
Final
sales
Serv- Struc
ices tures
Final
Total sales
Is
Total
Final
sales
ll
Total
Final
sales
II
<u m
55
1.4
38.5
38.2
0.3
35.6
11.4
22.1
23.2 - 1 . 1
25.7
2.9
36.3
36.2
.1
34.0
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
23.8 3.0 45.6 44.2
34.5 1.0 58.1 57.4
54.2
.0 66.2 66.8
58.5 - . 6 74.4 74.8
50.2 -1.3 80.0 79.7
31.6 5.3 88.0 86.9
44.3 1.7 93.7 95.9
48.0
.7 105.5 101.5
49.9 -2.1 99.7 100.6
1.0
1.4
35.4
40.3
50.3
62.5
71.8
76.5
68.0
70.2
75.7
80.8
8
11.8
14.0
8.7
6.1
6.5
15.6
21.4
27.7
28.3
7.2
8.8
11.9
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 87.0
66.8 6.9 116.0 112.6 3.4 101.2
73.5 1.1 121.0 119.1 2.0 110.
78.5
.9 124.8 125.2 - . 5 118.8
74.6 -2.5 125.0 124.1 1.0 123.5
82.7 3.0 130.7 127.7 2.9 132.6
87.5 2.8 135.1 133.2 1.9 142.3
.0 154.2
93.1 1.3 140.2 140.2
86.4 -2.8 147.2 145.9 1.3 163.4
93.2 2.3 153.6 151.1 2.4 176.2
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
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
3.3
4.0
1.4
6.0
6.9
410.3
446.0
488.1
534.4
589.1
95.6
111.0
126.1
137.8
137.1
30.7
40.8
43.9
49.9
40.8
1929..
103.1
1.7
56.1
54.3
1.7
17.5
16.1
1933..
55.6
57.2 -1.6
27.0
28.6 - 1 . 6
4.9
5.4
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
6.4
-.5
4.7
-3.1
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
129.9
118.5
140.1
149.4
150.5
2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
-.5
4.7
-3.1
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
278.0 6.8
318.1 10.3
342.4 3.1
364.1
.4
366.4 -1.5
392.0 6.0
414.5 4.7
439.8 1.3
448.8 -1.5
478.9 4.8
162.4
189.7
195.6
204.1
197.1
216.4
225.4
234.6
230.8
249.1
155.6 6.8
179.4 10.3
192.5 3.1
203.7
.4
198.6 - 1 . 5
210.4 6.0
220.7 4.7
233.3 1.3
232.3 - 1 . 5
244.4 4.8
1960.
1961.
1962.
1963.
1964.
1965.
1966.
1967.
1968.
1969.
503.7
520.
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 2.1 160.1 158.6
518.1 2.0 262.3 260.2 2.0 96.5 96.6 - . 1 165.8 163.7
554.3 6.0 284.5 278.5 6.0 109.0 106.2 2.8 175.5 172.2
584.6 5.9 298.6 292.7 5.9 116.1 113.3 2.8 182.5 179.4
62fi.6 5.8 319.4 313.6 5.8 127.0 122.8 4.2 192.4 190.7
675.3 9.6 347.2 337.6 9.6 139.6 133.0 6.7 207.6 204.7
735.1 14.8 383.3 368.5 14.8 156.7 146.2 10.5 226.6 222.3
785.7 8.2 398.9 390.7 8.2 161.1 156.5 4.7 237.7 234.2
857.1 7.1 429.5 422.4 7.1 174.5 169.6 4.9 255.0 252.9
922.5 7.8 457.5 449.7 7.8 187.3 182.3 5.0 270.2 267.4
1.5
2.1
3.2
3.1
1.6
3.0
4.3
3.5
2.1
2.8
284.1
299.8
321.0
366.5
407.1
1970.
1971.
1972.
1973.
1974i
101.4
977.1 972.6 4.5
1,054.L91, .
,, 048.6 6.3
1,158.01,, 149.5 8.5
1,294.'" ,279.6 15.4
1, 396.7 1,383.3 13.4
471.2
497.9
543.8
622.7
670.4
Gross
auto
product
466.7 4.5 183.7
491.6 6.3 194.2
535.2 8.5 221.4
607.3 15.4 250.3
657.1 13.4 256.4
182.5
191.8
214.3
240.9
249.9
.3
1.2
2.4
7.1
9.4
6.5
287.5
303.7
322.4
372.4
414.0
-'.%
-.3
.2
1.1
-2.2
4.0
-1.0
Seasonally adjusted annual rates
1972: L .
IIIII.
IV.
1,115.0 1,110.0 5.0 519.2
1,143.0 1,135.1 8.0 537.4
1,169.3 1,159.1 10.2 551.2
1,204.7 1,193.7 11.0 567.2
514.3 5.0 207.3
529.4 8.0 216.4
541.0 10.2 225.1
556.2 11.0 236.8
204.6 2.7
210.6 5.8
218.3 6.8
223.6 13.2
311.9
321.0
326.1
330.4
309.7 2.2
318.9 2.2
322.7 3.4
332.6 - 2 . 2
472.1
481.5
492.4
506.5
123.6
124.1
125.6
130.9
40.3
42.1
46.5
46.6
1973: I . .
II..
III.
IV.
1,248.9 1,238.9
1,277.9 1, 267.2
1, 308.9 1, 297.0
1,344.0 1,315.1
585.8
600.9
618.0
624.7
351.8
362.7
377.1
398.2
347.9 3.9
359.7 3.0
374.2 2.9
384.1 14.1
516.0
528.3
540.2
553.2
137.1
138.0
138.8
137.2
51.5
50.8
50.3
47.0
392.8 8.2 569.7 137.1
402.9 15.4 579.2 139.7
413.2 3.0 597.8 136.7
419.5 1.2 609.8 135.0
33.5
38.6
48.3
42.9
10.0
10.7
11.8
28.9
595.8
611.6
629.9
653.6
10.0
10.7
11.8
28.9
244.0
248.9
252.8
255.4
237.8 6.1
241.2 7.7
243.9 9.0
240.6 14.8
1974: I . . . 1, 358.8 1,341.9 16.9 651.9 635.0 16.9
1,383.8 1, 370.3 13.5 664.9 651.3 13.5
1, 416. 3 1, 407.6 8.7 681.7 673.0 8.7
1,428.0 1,413.5 14.4 683.2 668.8 14.4
251.0
246.6
265.5
262.5
242.3 8.7 401.0
248.5 - 1 . 8 418.2
259.8 5.7 416.2
249.3 13.2 420.7
Source: Department of Commerce, Bureau of Economic Analysis.
256
TABLE C-7.—Gross national product by major type of product in 1958 dollars, 1929-74
[Billions of 1958 dollars]
Goods output
Year or
quarter
Total
InTotal
gross
na- Final ventional sales tory
change
prodFinal
uct
Total sales
Durable goods
Nondurable goods
Serv- Strucices tures
II
Total
Final
sales
II
Total
Final
sales
II
Gross
auto
product
30.3
3.5
33.6
30.9
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
9.8
1.2
27.6
27.0
.6
83.0
82.5
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 88.4 86.2 2.2 80.0
43.5 6.6 93.4 90.3 3.1 89.8
54.4 2.9 100.9 99.7 1.2 107.7
.4 101.7 102.4 - . 6 131.8
85.2
97.4 -1.5 108.8 109.3 - . 4 144.0
87.4 -3.1 113.7 113.6
.2 144.3
46.1 8.6 117.4 116.0 1.4 113.3
58.6 1.5 112.2 113.8 -1.7 106.5
60.0 1.2 117.1 113.8 3.3 109.3
61.0 -3.0 116.2 117.1 - . 9 112.4
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
355.3
383.4
395.1
412.8
407.0
438.0
446.1
452.5
447.3
475.9
222.3
4.9 124.0 119.0 4.9
254.1
9.6 143.4 133.8 9.6
293.8
4.0 158.1 154.1 4.0
337.3 - . 2 187.4 187.6 - . 2
363.2 - 1 . 9 204.8 206.7 - 1 . 9
358.2 - 2 . 9 198.0 201.0 -2.9
302.6 10.0 172.1 162.1 10.0
172.4 - . 2
310.1
2 172.2
178.4 173.8
319.1
4! 6 174.2 178.1 4.6
328.1
-3.9
-3.9
347.0
8.3 192.6 184.3 8.3
372.5 10.9 208.4 197.5 10.9
391.8
3.3 214.0 210.7 3.3
.9
411.8
.9 225.4 224.5
409.0 - 2 . 0 215.1 217.1 - 2 . 0
431.6
6.4 236.1 229.7 6.4
441.2
4.8 239.0 234.2 4.8
451.2
1.2 239.8 238.5 1.2
448.8 - 1 . 5 230.8 232.3 - 1 . 5
471.1
4.8 247.7 242.9 4.8
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
89.9 1.2 134.4 134.6 - . 2 140.3
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
95.0 1.2 143.6 143.6
.0 160.1
86.4 -2.8 147.2 145.9 1.3 163.4
91.6 2.4 153.7 151.2 2.5 171.2
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
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
484.2
495.2
523.8
545.2
575.2
608.8
644.2
667.5
700.2
718.9
3.5
2.0
6.0
5.8
5.8
9.0
13.9
7.7
6.4
6.7
256.0
257.3
277.3
289.7
308.6
330.7
356.8
363.1
379.7
390.0
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
2.0
.0
2.8
2.8
4.1
6.5
9.8
4.3
4.4
4.3
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
249.1
259.7
268.2
55.0
55.8
58.8
60.4
61.6
65.2
65.0
63 0
67.2
67.3
21.0
17.5
22.0
24.7
25.5
31.8
30.6
29.0
35.4
35.0
1970
1971
1972
1973
1974 v
722.5
746.3
792.5
839.2
821.1
718.5
741.0
785.4
828.4
812.9
3.9
5.3
7.0
10.8
8.2
385.4
396.3
425.5
459.1
443.0
381.4 3.9 159.0
391.0 5.3 163.6
418.5 7.0 185.8
448.3 10.8 206.0
434.8 8.2 195.6
.9
1.9
5.7
7.5
4.2
226.4
232.7
239.7
253.1
247.4
223.4
229.3
238.4
249.9
243.3
3.0
3.4
1.3
3.3
4.0
273.3
279.7
291.4
304.5
310.5
63.8
70.3
75.6
75.5
67.6
28.5
36.2
39.1
44.2
33.6
1929.
203.6 200.1
19 33
141.5 145.9 - 4 . 3
3.5
19 39
209.4 208.2
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
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1.2
103.9 100.4
68.8
110.7 109.5
158.0
161.7
180.1
198.5
191.4
.6
Seasonally adjusted annual rates
1972:1....
II...
III...
IV...
770.9
786.6
798.1
814.2
766.7
780.0
789.7
805.3
4.2
6.6
8.5
8.8
409.2
422.1
430.2
440.4
405.0
415.5
421.8
431.6
4.2
6.6
8.5
8.8
174.5
182.1
188.2
198.6
172.3 2.2
177.2 4.8
182.8 5.4
188.1 10.5
234.7
240.1
242.1
241.9
232.7 2.0
238.3 1.8
239.0 3.1
243.5 - 1 . 6
286.2
289.0
292.8
297.5
75.5
75.5
75.1
76.3
36.1
37.5
40.9
41.8
1973: L...
II...
III...
IV...
832.8
837.4
840.8
845.7
825.5
829.6
832.7
825.7
7.3
7.8
8.0
20.0
455.1
457.6
458.8
465.1
447.8 7.3
449.8 7.8
450.8 8.0
445.1 20.0
204.6
206.7
206.3
206.3
199.5 5.1
200.5 6.2
199.0 7.2
194.9 11.5
250.4
250.8
252.6
258.7
248.3
249.3
251.7
250.2
2.2
1.6
.8
8.5
299.9
303.5
306.9
307.8
77.8
76.3
75.1
72.8
46.3
45.2
43.6
41.6
1974:1...
II...
III..
IV p.
830.5
827.1
823.1
803.7
819.9
818.9
818.1
794.6
10.6
8.2
5.0
9.1
449.1
448.9
446.0
427.8
438.5 10.6 200.2 194.3 5.8 248.9
440.8 8.2 195.4 196.6 - 1 . 2 253.6
441.0 5.0 200.2 196.6 3.6 245.8
418.7 9.1 186.7 178.2 8.5 241.1
244.2
244.2
244.4
240.5
4.7
9.4
1.4
.6
310.7
308.3
310.7
312.2
70.7
69.8
66.4
63.7
29.2
32.6
38.9
33.8
Source: Department of Commerce, Bureau of Economic Analysis.
257
TABLE O8.—Gross national product: Receipts and expenditures by major economic groups, 1929-74
[Billions of dollars]
Persons
Government
Disposable personal
income
Year or
quarter
Less:
Interest
paid
and
Total i transfer
payments
to foreigners
Net receipts
Expenditures
PerPerTax
Less:
Less: Equals:
Equals: sonal
sonal
and Transcon- saving
TransPurTotal sumpnonfers,
Equals:
Total
fers, chases
or
exclud- tion
tax
interNet
exinterof
ing indisreex- saving
est,
pendi- est,
regoods
terest pendiceipts
and
tures
ceipts
and
and
and
or ac- subsubservtrans- tures
cruals sidies3
sidies2
ices
fers
Surplus
or
deficit
(-),
national
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
2.6
15.4
4.2
11.2
17.6
4.2
13.3
-2.2
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
1.0
1.1
.8
.8
.8
1.0
1.4
1.8
2.2
2.4
74.7
91.6
116.1
132..7
145.5
149.3
158.6
168.0
186.9
186.2
70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8
3.8
11.0
27.6
33.4
37.3
29.6
15.2
7.3
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
18.8
21.3
13.3
21.0
28.2
44.4
44.7
42.8
32.4
39.5
40.1
34.7
18.4
28.8
64.0
93.3
103.0
92.7
45.5
42.4
50.3
59.1
4.4
4.0
4.4
4.7
6.5
10.4
18.5
17.3
18.8
21.3
14.0
24.8
59.6
88.6
96.5
82.3
27.0
25.1
31.6
37.8
-31.4
-44.1
-51.8
-39.5
5.4
14.4
8.5
-3.2
1950
1951
1952
1953
1954
1955....
1956—.
1957
1958
1959
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
191.0
206.3
216.7
230.0
236.5
254.4
266.7
281.4
290.1
311.2
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
25.5
28.7
33.0
34.0
45.8
64.9
70.8
74.8
67.8
76.9
83.5
86.8
81.6
95.0
60.8
79.0
93.7
101.2
96.7
97.6
104.1
114.9
127.2
131.0
22.9
19.9
19.0
19.5
21.9
23.4
25.5
28.7
33.0
34.0
37.9
59.1
74.7
81.6
74.8
74.2
78.6
86.1
94.2
97.0
-12! 5
-2.1
I960....
1961
1962
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
7.8
8.1
8.6
9.7
10.7
12.0
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
325.2
335.2
355.1
375.0
401.2
432.8
466.3
492.1
536.2
579.5
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
136.1
149.0
159.9
166.9
175.4
186.9
212.3
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
99.6
107.6
117.1
122.5
128.7
137.0
156.8
180.1
199.6
210.0
3.7
-4.3
-2.9
1.8
-1.4
2.2
1.1
-13.9
-6.8
8.8
1970
1971
1972
1973....
1974 v
691.7
746.4
802.5
903.7
979.7
17.9
18.8
20.9
24.1
26.0
673.8
727.6
781.6
879.6
953.7
617.6
667.1
729.0
805.2
877.0
56.2
60.5
52.6
74.4
76.7
302.5
321.6
367.0
411.5
455.0
93.2
105.9
116.5
131.6
152.0
209.4
215.7
250.5
279.9
303.1
312.7
340.2
372.1
408.0
460.9
93.2
105.9
116.5
131.6
152.0
219.5
234.2
255.7
276.4
308.8
-10.1
-18.5
-5.1
3.5
-5.9
7.9
5.8
-3.8
-6.9
-7.0
2.7
4.9
Seasonally adjusted annual rates
1972:1
II
111
IV...
774.7
790.0
807.2
838.1
19.9
20.5
21.2
22.0
754.8
769.5
786.0
816.1
701.5
720.6
736.8
757.2
53.3
49.0
49.3
58.9
355.3
362.4
369.8
380.5
112.5
113.8
115.3
124.4
242.8
248.7
254.5
256.2
363.5
367.6
370.4
387.0
112.5
113.8
115.3
124.4
251.1
253.8
255.1
262.6
-8.2
-5.2
-.6
-6.5
1973:1
869.5
892.1
913.9
939.4
22.5
23.5
24.3
26.2
847.0
868.6
889.6
913.2
781.7
799.0
816.3
823.9
65.3
69.6
73.2
89.3
398.1
406.9
416.5
424.6
127.2
130.7
133.0
135.9
271.0
276.2
283.6
288.7
396.1
403.9
409.8
422.3
127.2
130.7
133.0
135.9
269.0
273.3
276.9
286.4
2.1
3.0
6.7
2.3
1974:1....
950.6
1 1 . . . 966.5
I I I . . . 993.1
IV P . . 1,008.7
25.6
25.8
26.2
26.4
925.0
940.7
966.9
982.3
840.6
869.1
901.3
896.8
84.4
71.5
65.5
85.4
435.9
450.7
470.3
139.3
147.4
157.8
163.9
296.5
303.3
312.4
435.5
451.7
470.0
486.2
139.3
147.4
157.8
163.9
296.3
304.4
312.3
322.4
.4
-1.0
.2
IL—
III...
IV...
See footnotes at end of table.
258
TABLE C-8.—Gross national product: Receipts and expenditures by major economic groups,
1929-74—Continued
[Billions of dollars]
International
Business
Gross
retained
earnings 3
Gross
private
lomestic
investment*
Excess
of investment
(
1929
11.2
16.2
-5.1
1933
3.2
1.4
l.P
1939
8.4
9.3
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
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
Year
or
quarter
Net
transfers to
forigners
>y persons
and
Government
Net exports of goods
and services
Excess
of
transfers
or
of net
exports
()5
Total
income
or receipts
Statistical
discrepancy
Gross
national
product
or expenditure
Exports
Less:
Imports
Equals:
Net
exports
0.4
7.0
5.9
1.1
-0.8
102.4
0.7
103.1
.2
2.4
2.0
.4
-.2
55.0
.6
55.6
-.9
.2
4.4
3.4
1.1
-.9
89.2
1.3
90.5
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
.2
.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
3.6
4.6
4.8
6.5
7.1
7.3
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
.2
2.2
2.1
1.4
-4.6
-8.9
-1.9
-.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
.3
99.7
124.5
157.9
191.6
210.1
211.9
208.5
231.3
257.6
256.5
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
.5
.5
-1.5
-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
-.8
284.8
328.4
345.5
364.6
364.8
398.0
419.2
441.1
447.3
483.7
1960
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
4.0
5.6
5.1
5.9
8.5
6.9
5.3
5.2
2.5
1.9
504.8
520.8
559.8
590.8
633.7
688.0
750.9
794.6
866.9
936.3
-1.0
-.8
.5
-.3
-1.3
-3.1
-1.0
-1.1
-5.1
503.7
520.1
560.3
590.5
632.4
684.9
749.9
793.9
864.2
930.3
1970
1971
1972
1973
1974 P
97.0
110.2
125.9
136.5
136.5
136.3
153.7
179.3
209.4
208.9
-39.3
-43.5
-53.5
-72.9
-72.4
3.2
3.6
3.8
3.9
3.6
62.9
65.4
72.4
100.4
139.4
59.3
65.6
78.4
96.4
137.5
3.6
-.2
-6.0
3.9
2.0
-1.7
-3.0
-2.5
-3.1
-5.7
-4.1
-2.4
-2.2
.4
1.0
4
18
9.8
-.1
1.6
983.5
1,057.2
1,161.8
1,299.9
1, 396.7
-6.4
-2.3
-3.8
-5.0
.0
977.1
1,054.9
1,158.0
1,294.9
1,396.7
-j
Seasonally adjusted annual rates
1972: L IL.
III.
IV..
119.3
125.6
126.4
132.2
169.4
175.5
182.1
190.2
-50.1
-49.9
-55.7
-58.0
4.0
3.8
3.8
3.6
69.1
68.8
73.3
78.5
76.1
75.7
78.1
83.8
-7.1
-6.9
-4.8
-5.3
11.0
10.7
8.6
8.9
1,120.9
1,147.6
1,170.8
1, 208.0
-5.9
-4.5
-1.5
-3.3
1,115.0
1,143.0
1,169.3
1,204.7
1973: I...
133.7
135.3
137.1
140.0
199.0
205.1
209.0
224.5
-65.3
-69.8
-71.9
-84.5
3.0
4.2
3.6
4.7
88.8
95.4
103.7
113.6
89.5
94.9
96.9
104.3
-.8
.5
6.7
9.3
3.8
3.7
-3.1
-4.7
1,254.7
1,284.4
1,313.8
1,346.6
-5.9
-6.5
-4.9
-2.6
1,248.9
1,277.9
1, 308.9
1,344.0
139.7
135.7
130.6
210.5
211.8
205.8
207.6
-70.8
-76.1
-75.2
3.7
3.7
3.3
3.6
131.2
138.5
143.6
144.3
119.9
140.0
146.7
143.2
11.3
-1.5
-3.1
1.2
-7.7
5.2
6.5
2.4
1, 365.1
1, 383. 5
1,413.3
-6.3
.3
3.0
1,358.8
1,383.8
1,416.3
1,428.0
Ill
IV
1974: I.
II
III
IV p_...
12 Personal income less personal tax and nontax payments (fines, penalties, etc.).
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.
* 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 product by sector, 1929-74
[Billions of dollars]
Gross domestic product
Year or quarter
Total
gross
national
product
Business
Total
Total
Nonfarm1
General government2
Households
and
insti- Total Fed- State
Farm tutions
and
eral
local
Rest
of the
world
Addendum:
Gross
private 3
product
1929
103.1
102.3
95.1
85.4
9.7
2.9
4.3
0.9
3.5
0.8
98.8
1933
55.6
55.3
48.9
44.3
4.6
1.7
4.7
1.2
3.5
.3
50.9
1939
90.5
90.2
80.3
74.0
6.3
2.3
7.6
3.4
4.2
.3
82.9
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
99.3
124.2
157.5
191.2
209.7
211.6
207.9
230.5
256.6
255.5
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
7.8
9.4
15.1
25.6
32.2
35.2
20.8
16.7
17.4
19.4
3.5
5.0
10.6
20.9
27.3
29.8
14.6
9.4
8.9
10.0
4.3
44
45
4 7
4.9
5 4
6.2
73
85
9 4
.4
.4
.4
.4
.4
.4
.6
.8
1.0
1.0
91.9
115.1
142.8
166.0
177.9
176.8
187.7
214.6
240.1
237.0
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
283.6
327.1
344.2
363.3
363.2
396.2
417.2
438.9
445.3
481.5
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
20.9
27.4
31.2
31.9
32.5
34.2
36.6
39.1
42.1
44.3
10 8
16.3
18.9
18.6
17.8
18.4
19.0
19 6
20.6
21.0
10 1
11.1
12 2
13.3
14 7
15 8
17.6
19 5
21.5
23.3
1.2
1.3
1.3
1.3
1.6
1.8
2.1
2.2
2.0
2.2
263.9
301.0
314.3
332.7
332.4
363.8
382.6
402.0
405.2
439.4
1960...
1961
1962
1963..
1964
1965
1966
1967
1968
1969
503.7
520.1
560.3
590.5
632.4
684.9
749.9
793.9
864.2
930.3
501.4
517.2
557.1
587.1
628.5
680.7
745.8
789.4
859.5
926.0
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
47.5
50.9
54.7
58.1
63.0
67.8
76.6
85.1
94.9
103.8
21.9
22.9
24.3
25.3
27.1
28.4
32.6
35.9
39.5
42.2
25.6
28.0
30.4
32.9
35.9
39.3
44.0
49.2
55.4
61.6
2.4
2.9
3.3
3.4
4.0
4.2
4.1
4.5
4.7
4.3
456.3
469.2
505.7
532.4
569.4
617.1
673.3
708.8
769.3
826.5
1970 .
1971
1972...
1973
1974*
977.1
1,054.9
1,158.0
1,294.9
1, 396.7
972.5
1,048.9
1,151.5
1, 286.5
1,385.6
827.0
890.5
977.9
1,096.8
1,177.9
797.9
859.6
942.6
1,040.3
1,124.1
29.0
30.9
35.3
56.5
53.8
30.8
33.7
37.2
41.3
47.0
114.7
124.6
136.4
148.5
160.8
45.2
47.3
50.7
52.8
55.7
69.6
77.4
85.7
95.7
105.1
4.6
6.0
6.5
8.4
11.1
862.4
930.3
1,021.6
1,146.5
1,235.9
.
.
Seasonally adjusted annual rates
1972: 1
II
III..
IV_
1973: 1
II
III...
IV
1974: 1
II
III
IV p
.
1,115.0
1,143.0
1,169.3
1,204.7
1,109.2
1,137.1
1,162.4
1,197.4
940.5
965.9
987.4
1,017.7
907.2
931.6
952.9
978.9
33.3
34.4
34.6
38.8
36.0
37.0
37.8
38.0
132.6
134.2
137.1
141.7
50.4
49.9
50.2
52.5
82.2
84.3
87.0
89.2
5.8
5.9
6.9
7.4
982.3
1,008.9
1, 032.1
1, 063.0
1, 248.9
1,277.9
1,308.9
1,344.0
1, 240. 5
1, 269.9
1,300.6
1,335.2
1,056.7
1,082.4
1,109.2
1,138.8
1,008.8
1,029.0
1,049.0
1,074.5
47.9
53.4
60.2
64.4
39.5
40.7
42.0
43.0
144.3
146.8
149.4
153.4
52.5
52.1
52.4
54.3
91.8
94.7
97.1
99.1
8.4
8.0
8.3
8.9
1,104.6
1,131.1
1,159.5
1,190.7
1,358.8
1, 383.8
1,416.3
1,428.0
1,344.0
1, 374.1
1, 405.2
1,419.2
1,143.1
1,168.8
1,195.7
1, 203.8
1,082.6
1,117.8
1,144.4
1,151.7
60.5
51.1
51.3
52.1
44.6
46.5
48.0
48.9
156.3
158.8
161.6
166.5
54.8
55.0
55.3
57.9
101.5
103.9
106.3
108.6
14.7
9.7
11.1
8.8
1, 202. 5
1, 225.0
1, 254.7
1,261.5
1
Includes compensation of employees in government enterprises.
* Compensation of general government employees.
* Gross national product less compensation of general government employees.
Source: Department of Commerce, Bureau of Economic Analysis.
260
TABLE G-10.—Gross national product by sector in 1958 dollars, 1929-74
[Billions of 1958 dollars]
Gross domestic product
Year or
quarter
Total
gross
national
product
Business
Total
Total
Nonfarm i
Farm
Households
and
institutions
General government 2
Total
Federal
State
and
local
Rest
of the
world
Addendum:
Gross
private
product^
1929
203.6
202.2
182.1
165.1
17.0
7.4
12.7
2.6
10.1
1.4
190.9
1933
141.5
140.3
120.6
103.0
17.5
5.7
14.0
3.3
10.7
1.2
127.5
1939
209.4
208.4
180.7
162.5
18.2
7.1
20.6
8.5
12.2
.9
188.7
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
226.3
262.8
296.9
336.3
360.4
354.5
311.7
308.9
322.5
322.9
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
7.8
7.2
7.1
7.1
7.1
7.5
7.9
8.2
21.6
27.2
40.5
64.3
74.4
72.8
37.5
28.6
28.7
30.1
9.3
14.8
28.4
52.5
62.6
60.9
24.9
14.9
14.3
15.0
12.3
12.4
12.1
11.8
11.7
11.9
12.6
13.7
14.4
15.1
1.0
.9
.8
.8
.9
.8
.9
1.1
1.2
1.2
205.6
236.6
257.3
272.8
286.9
282.5
275.1
281.4
295.0
294.1
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
354.0
382.2
393.9
411.5
405.5
436.2
444.1
450.4
445.3
473.7
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
31.1
38.8
41.8
41.7
40.9
40.7
41.3
41.9
42.1
42.5
15.5
22.9
25.4
24.6
23.0
22.2
21.7
21.5
20.6
20.2
15.6
15.9
16.4
17.1
17.8
18.6
19.6
20.5
21.5
22.3
1.3
1.2
1.2
1.3
1.6
1.8
2.0
2.1
2.0
2.2
324.2
344.6
353.2
371.1
366.2
397.2
404.8
410.5
405.2
433.4
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
485.4
494.2
526.4
547.6
577.2
613.7
654.1
670.8
702.2
721.6
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
43.7
44.8
46.9
47.8
49.1
50.8
54.6
57.3
59.7
60.7
20.4
20.6
21.8
21.6
21.6
21.8
23.9
25.7
26.3
26.0
23.3
24.2
25.1
26.2
27.4
29.0
30.7
31.9
33.4
34.7
2.3
2.9
3.4
3.4
3.9
4.1
3.9
4.3
4.5
4.0
444.0
452.3
482.9
503.2
532.0
567.0
603.5
617.5
647.0
664.9
1970
1971
1972
1973
1974*
722.5
746.3
792.5
839.2
821.1
718.5
741.5
787.7
833.9
817.1
641.1
663.7
709.4
753.1
734.1
616.4
637.4
683.4
725.8
706.6
24.8
26.3
26.0
27.4
27.5
16.6
17.0
17.6
18.5
18.9
60.7
60.8
60.7
62.3
64.1
24.5
23.0
21.8
21.3
21.1
36.2
37.8
38.9
41.0
43.1
4.0
4.9
4.7
5.2
4.0
661.7
685.6
731.7
776.9
757.0
Seasonally adjusted annual rates
1972: I
IV . .
770.9
786.6
798.1
814.2
766.5
782.3
793.2
809.0
688.3
704.3
714.8
730.3
661.8
677.8
690.2
704.0
26.5
26.5
24.6
26.3
17.4
17.6
17.7
17.5
60.7
60.4
60.6
61.1
22.1
21.7
21.7
21.7
38.6
38.7
39.0
39.4
4.5
4.4
5.0
5.2
710.2
726.2
737.5
753.0
1973: I.....
II —
III...
IV ..
832.8
837.4
840.8
845.7
827.0
832.4
835.7
840.7
747.3
751.8
754.4
759.2
719.2
724.3
728.6
731.0
28.1
27.5
25.8
28.2
18.1
18.5
18.8
18.7
61.6
62.1
62.4
62.9
21.5
21.3
21.1
21.1
40.1
40.8
41.3
41.7
5.8
5.0
5.1
5.0
771.2
775.3
778.4
782.8
1974: I
IL...
III...
830.5
827.1
823.1
803.7
823.5
824.1
819.8
800.9
740.9
741.4
736.6
717.3
713.9
712.7
708.0
691.6
27.0
28.7
28.6
25.7
19.1
18.8
18.9
18.9
63.5
63.9
64.2
64.8
21.1
21.1
21.0
21.0
42.3
42.8
43.2
43.7
7.0
3.0
3.3
2.8
767.0
763.2
758.8
738.9
IV p . .
1
2
3
Includes compensation of employees in government enterprises.
Compensation of general government employees.
Gross national product less compensation of general government employees.
Source: Department of Commerce, Bureau of Economic Analysis.
261
TABLE C-l 1.—Gross product originating in nonfinancial corporations and dollar costs per unit of
output, 1948-74
Gross product
originating in
nonfinancial
corporations (billions of dollars)
Year or quarter
Current dollar costs per unit of 1958 dollar gross product (dollars)
Corporate profits and inventory valuation adjustment
Total
costsi
Capital
consumption
allowances
Indirect
business
taxes 2
Compensation of
employees
Net
interest
Profits
after
taxes
plus inventory
valuation
adjustment
Total
Profits
tax
liability
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
1.055
1.073
1.104
1.132
L. 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
1.258
1.282
L. 325
L.451
.126
.132
.133
.132
.145
.119
.126
.123
.123
.133
.812
.830
.845
.879
.978
.038
.038
.037
.040
.045
.119
.132
.145
.151
.150
.064
.067
.070
.079
.091
.055
.065
.075
.073
.059
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
1.000
1.011
.072
.076
.082
.091
.088
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
1.022
1.029
1.034
.039
L. 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
1974*
519.1
555.1
614.3
684.3
731.8
427.7
441.5
479.0
516.4
504.2
Seasonally
adjusted
annual rates
Seasonally adjusted
1972: 1
...
II .
III
IV
591.4
607.4
618.6
639.7
463.6
475.0
482.0
495.3
1.276
1.279
1.284
1.292
0.132
.134
.133
.132
0.124
.123
.123
.122
0.843
.843
.846
.848
0.037
.037
.037
.037
0.140
.142
.144
.152
0.067
068
.070
.074
0.074
074
.075
.078
1973: 1
II . .
Ill
IV
..
663.5
678.6
690.0
704.9
510.1
516.1
518.7
520.6
1.301
1.315
1.330
1.354
.130
.131
.132
.134
.122
.122
.124
.124
.858
.870
.884
.905
.038
.039
.040
.041
.153
.152
.151
.150
.079
.081
.078
.077
.074
.071
.072
.073
1974: 1
II...
Ill
709.3
727.9
743.5
509.7
507.9
505.2
1.391
1.433
1.472
.139
.142
.146
.128
.131
.136
.937
.964
.993
.043
.045
.046
.145
.152
.151
.083
.090
.104
.062
.061
.047
1
This is equal to the deflator for gross product of nonfinancial corporations, with the decimal point shifted two places to
the left.
3 Also includes business transfer payments less subsidies.
Source: Department of Commerce, Bureau of Economic Analysis.
262
TABLE C-12.—Personal consumption expenditures, 1929-74
[Billions of dollars]
Nondurable goods
Durable goods
Year
or
quarter
2
Services
Is
ii
li
Q.
co x
• S CD
1929...
77.2
9.2
3.2
4.8
1.2
37.7
19.5
9.4
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
11.0
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..
1956..
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
9.5
10.4
11.1
12.0
12.6
14.0
15.2
16.2
17.3
18.5
6.2
6.7
7.1
7.8
7.9
8.2
8.6
9.0
9.3
10.1
25.4
26.9
28.7
30.8
33.2
35.5
38.6
41.3
44.3
48.0
I960..
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
128.7
135.1
143.0
152.4
163.3
175.5
188.6
204.0
221.3
242.7
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...
1974 P..
617.6
667.1
729.0
805.2
877.0
91.3
103.9
118.4
130.3
127.8
37.3
46.6
53.1
57.5
49.6
39.6
42.3
48.7
55.0
58.9
14.4
15.0
16.6
17.8
19.2
263.8
278.4
299.7
338.0
380.2
130.0
135.9
143.7
165.1
187.8
52.8
57.3
63.0
70.2
74.1
22.2
23.5
25.0
28.3
35.9
58.7
61.8
67.9
74.4
82.3
262.6
284.8
310.9
336.9
369.1
90.9
99.1
107.9
116.4
126.4
36.4
39.4
43.3
47.3
52.9
18.3
20.4
21.8
23.4
26.1
117.0
125.9
137.9
149.9
163.6
12.2
Seasonally adjusted annual rates
1972:
I—
701.5
'20.6
'36.8
'57.2
112.1
116.2
121.2
124.3
49.4
51 5
55 3
56 4
47.2
47.9
49.3
50.7
15.6
16.8
16.7
17.2
288.4
297.4
302.0
310.9
139.3
142.4
144.7
148.5
60.0
62.5
63.7
66.0
24.6
24.5
25.1
25.8
64.6
68.1
68.5
70.7
301.0
307.0
313.6
322.0
105.1
106.9
108.9
110.7
41.2
42.6
43.9
45.5
21.5
21.6
21.9
22.3
133.1
135.9
138.8
143.6
781.7
\~\~.~.799.0
I I I . 816.3
IV.. 823.9
132.4
132.1
132.4
124.3
60 4
59 2
59 3
51. 2
54.3
54.9
55.5
55.4
17.7
18.0
17.6
17.7
323.3
332.7
343.8
352.1
155.9
160.9
169.1
174.5
69.1
70.1
70.6
70.9
26.8
28.0
28.7
29.8
71.5
73.6
75.4
77.0
325.9
334.2
340.1
347.4
113.1
115.6
117.0
119.7
45.6
46.6
48.3
48.7
22.8
23.1
23.6
24.1
144.5
148.8
151.2
155.0
1974:
I — 840.6 123.9
II.. 869.1 129.5
III. 901.3 136.1
IV v 896.8 121.5
48.0
50.6
56. 2
43. 7
57.5
59.5
60.4
58.4
18.3
19.4
19.4
19.5
364.4
375.8
389.0
391.5
180.1
183.5
191.3
196.6
72.8
74.4
75.7
73.5
31.5
36.8
37.9
37.5
80.0
81.1
84.2
84.0
352.4
363.8
376.2
383.8
122.2
124.9
127.7
130.9
49.2
51.7
54.6
56.2
25.0
25.6
26.5
27.5
156.0
161.6
167.5
169.3
IV..
1973:
1
Includes consumer purchases of mobile homes.
* Includes imputed rental value of owner-occupied dwellings.
Source: Department of Commerce, Bureau of Economic Analysis.
263
TABLE C-13.—Gross private domestic investment, 1929-74
[Billions of dollars]
Change in
business
inventories
Fixed investment
Year or
quarter
Total
gross
private
domestic
i nvestment
Nonresidential
Producers'
durable
equipment
Structures
Total
Total
1929
1933....
Residential structures
Total
Nonfarm
Total
Nonfarm
Total
Total
Nonfarm
Farm
Nonfarm
16.2
14.5
10.6
5.0
4.8
5.6
4.9
4.0
3.8
0.2
1.7
1.8
1.4
3.0
2.4
.9
.9
1.5
1.3
.6
.5
.0
-1.6
-1.4
1939...
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
2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
-.5
4.7
-3.1
1.9
4.0
.7
-.6
g
—.6
6.4
1.3
3.0
-2.2
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
6.8
10.3
3.1
.4
-1.5
6.0
4.7
1.3
-1.5
4.8
6.0
9.1
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
1970
1971
1972
1973
1974 v_
136.3
153.7
179.3
209.4
208.9
131.7
147.4
170.8
194.0
195.6
100.6
104.6
116.8
136.8
149.6
36.1
37.9
41.1
47.0
52.2
35.3
37.1
40.4
45.7
50.3
64.4
66.6
75.7
89.8
97.4
58.9
61.1
69.4
81.4
86.8
31.2
42.8
54.0
57.2
46.0
30.7
42.3
53.4
56.7
45.2
.1
.1
.9
.8
.6
.7
.6
.6
.6
.6
.6
.6
.5
.5
.6
.6
.5
.6
.6
.7
1.1
5.5
5 1
-2.3
4.8
3.6
2.0
6.0
5.9
5.8
9.6
14.8
8.2
7.1
7.8
3.3
1.7
5 3
5 1
6.4
8 6
15.0
7.5
6.9
7.7
4.5
6.3
8.5
15.4
13.4
4.3
4.9
7.8
11.4
11.0
Seasonally adjusted annua rates
1972: 1
II
III
IV
169.4
175.5
182.1
190.2
164.5
167.6
171.9
179.2
112.7
114.7
117.5
122.5
40.7
41.0
40.6
42.2
39.9
40.3
39.9
41.3
72.0
73.7
76.8
80.3
66.5
68.0
70.1
72.9
51.8
52.9
54.5
56.7
51.2
52.3
53.9
56.2
0.6
.6
.5
5.0
8.0
10.2
11.0
4.1
7.0
9.6
10.4
1973:1
II
Ill
IV
199.0
205.1
209.0
224.5
189.0
194.4
197.1
195.5
130.5
135.6
139.0
141.9
44.6
46.2
47.9
49.3
43.6
44.9
46.4
47.8
85.9
89.4
91.1
92.6
78.5
81.1
82.6
83.5
58.5
58.7
58.1
53.6
58.0
58.4
57.6
53.0
.5
.4
.5
.6
10.0
10.7
11.8
28.9
6.5
7.7
7.4
24.0
1974: 1
II
Ill
IV»____
210.5
211.8
205.8
207.6
193.6
198.3
197.1
193.2
145.2
149.4
150.9
152.7
51.3
52.2
51.0
54.3
49.5
50.4
49.2
52.3
93.9
97.2
99.9
98.4
84.6
86.9
89.2
86.3
48.4
48.8
46.2
40.5
47.8
48.0
45.4
39.8
.7
.8
.8
16.9
13.5
8.7
14.4
13.1
10.4
6.6
13.8
Source: Department of Commerce, Bureau of Economic Analysis.
264
T A B L E C—14.-—Relation of gross national product and national income, 1929—74
[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 Statistical
transfer
discreppayments
ancy
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
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
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
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
.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
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
10
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
1.0
45.2
47.7
51.5
54.7
58.4
62.5
65.7
70.4
78.6
85.9
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
-.7
-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
1,054.9
1,158.0
1,294.9
1,396.7
87.3
93.7
102.9
110.8
119.5
889.8
961.2
1,055.1
1,184.1
1,277. 2
1.7
1.1
2.3
.6
-2.9
93.5
102.7
110.0
119.2
126.9
4.0
4.3
4.6
4.9
5.2
-6.4
-2.3
-3.8
-5.0
.0
800.5
857.7
946.5
1,065.6
1,142.2
. ...
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
.. .
1960
1961
1962
1963
1964
1965
1966. .
1967
1968
1969
1970
1971
1972
1973
1974 v
._.
86.8
Seasonally adjusted annual rates
1972: 1
II
III
IV
1,115.0
1,143.0
1,169. 3
1,204.7
98.9
103.7
103.3
105.8
1,016.1
1,039.3
1,066.0
1,098.9
1.5
2.1
2.5
2.9
106.7
109.0
111.1
113.4
4.5
4.5
4.6
4.6
-5.9
-4.5
-1.5
-3.3
912.3
932.5
954.3
987.0
1973: 1
II
III...
IV
1,248.9
1,277.9
1, 308.9
1,344.0
107.4
110.5
111.5
113.9
1,141.5
1,167.4
1,197.4
1,230.1
1.5
.7
.3
-.1
116.5
118.6
120.4
121.3
4.7
4.8
4.9
5.0
-5.9
-6.5
-4.9
-2.6
1,027.6
1,051.2
1,077.3
1,106.3
1,358.8
1, 383.8
1,416.3
1, 428.0
115.8
118.6
120.7
123.0
1,243.0
1,265.2
1,295.6
1, 305.0
-2.7
-3.7
-2.4
-2.7
122.6
125.9
129.5
129.8
5.1
5.2
5.3
5.3
-6.3
1,118.8
1,130.2
1,155.5
1974: 1
II
III
IV P
.
Source: Department of Commerce, Bureau of Economic Analysis.
265
3.*0
TABLE CM 5.—National income by type of income, 1929-74
[Billions of dollars]
Compensation of
employees
Total
national
income1
Year or
quarter
Total
Corporate profits
and inventory
valuation
adjustment
Business and professional income
InSupcome Invenpleof
tory
Wages ments
unin- valuand
to
sala- wages Total corpo- ation
rated adjustries
and
enter- ment
sala-2
prises
ries
Income
of
farm
proprietors'
Rental
inNet
come
interof
Corpo- Invenest
pertory
rate
sons Total profits
valuation
before
taxes« 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
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
-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
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
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
43.9
38.9
40.6
38.3
48.6
48.8
47.2
41.4
52.1
—5.0
-1.2
1.0
-1.0
-.3
-1.7
-2.7
-1.5
-.3
-.5
2.0
2.3
2.6
2.8
3.6
4.1
4.6
5.6
6.8
7.1
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
294.2
302.6
323.6
341.0
365.7
393.8
435.5
467.2
514.6
566.0
270.8
278.1
34.2
35.6
34.3
35.6
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
37.9
40.2
42.4
45.2
47.3
49.5
50.5
37.9
40.3
42.8
45.6
47.6
50.3
51.2
.0
.0
.0
.0
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
-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
1970
1971
1972
1973
1974 v
800.5
857.7
946.5
1,065.6
1,142.2
603.9
643.1
707.1
786.0
855.7
542.0
573.6
626.8
691.6
750.6
61.9
69.5
80.3
94.4
105.0
50.0
52.0
54.9
57.6
61.2
50.7
52.7
56.0
59.8
64.7
16.9
17.2
21.0
38.5
31.8
23.9 69.2
25.2 78.7
25.9 92.2
26.1 105.1
26.5 105.4
74.0 - 4 . 8
83.6 - 4 . 9
99.2 - 7 . 0
122.7 -17.6
141.0 -35.5
36.5
41.6
45.6
52.3
61.6
1940
1941
1942
1943
1944
1945
1946
1947..
1948
1949
..
1950
1951
1952
1953
1954
1955
1956 .
1957
1958
1959
.
296.1
37.1
37.1
-'.2
-.2
-.5
-.1
-.1
-.4
-.3
-.7
-.8
-.7
-- 23 .. 53
Seasonally adjusted annual rates
1972' 1
II
III
IV..
1973: I . .
683 8
699.0
712 6
732.9
606 6
619.7
631 2
649.6
77.1
79.3
81.4
83.4
53.7
54.3
55.5
56.1
19.2
20.3
20.3
24.0
25.5
24.4
26.8
26.7
86.5
89.5
92.9
99.8
92.3
96.0
100.2
108.2
-5.8
—6.5
—7.3
-8.4
43.6
44.9
46.2
47.5
1,027.6 759.1
1,051.2 776.7
667.6
683.6
698.2
717.0
91.5
93.1
95.1
97.7
57.0
57.1
57.7
58.4
32.1
35.6
41.5
44.9
26.3
25.7
26.2
26.4
103.9
105.0
105.2
106.4
120.4
124.9
122.7
122.7
-16.5
-20.0
-17.5
-16.3
49.2
51.1
53.2
55.5
1 118 8 828 8
1,130.2 848.3
727.6
744.6
761.5
768.8
101.2
103.7
106.7
108.5
59.3
60.7
62.3
62.5
39.1
29.1
29.8
29.1
26.4 107.7
26.3 105.6
26.6 105.8
26.8
135.4
139.0
157.0
-27.7
-33.4
-51.2
-29.8
57.5
60.1
62.8
65.9
912 3
932.5
954 3
987.0
III. 1,077.3 793.3
IV. 1,106.3 814.8
1974- 1
II
III. 1,155.1 868.2
IV p
877.3
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.
3
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.
» 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
T A B L E C—16.—Relation of national income and personal income, 1929—74
[Billions of dollars]
Plus
Less:
Year or quarter
National
income
Corporate
profits
and inventory
valuation
adjustment
Contri- Wage
Govbutions accruals ernment
for
transfer
less
social
payments
disinsur- burseto perance
sons
ments
Equals:
Interest
paid
by
government
(net)
and by
consumers
Dividends
Business
transfer Personal
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
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
44
4.6
46
5.6
6.3
70
7.2
4
.5
.8
78.3
96.0
122.9
151.3
165.3
171 1
178.7
191.3
210 2
207.2
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
88
9.8
11.1
12.6
14.5
14.8
17.6
.0
.1
.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
12
1.1
1.2
14
15
1.6
1.7
227.6
255.6
272.5
288.2
290.1
310.9
333.0
351.1
361.2
383.5
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
o
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
19
20
2.1
23
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
800.5
857.7
946.5
1,065.6
1,142. 2
69.2
78.7
92.2
105.1
105.4
57.7
63.8
73.0
91.2
101.5
.0
.6
.0
-.1
-.5
75.1
89.0
98.6
113.0
134.6
31.0
31.2
33.0
38.3
42.3
24.7
25.0
27.3
29.6
32.7
4.0
4.3
4.6
4.9
5.2
808.3
864.0
944.9
1,055.0
1,150.4
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
. .
.
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974*
.0o
.0
.0o
.0
.0
.0
.0
.0
.0
*5
.5
5
.6
Seasonally adjusted annual rates
1972: 1
II
Ill
IV
912.3
932.5
954.3
987.0
86.5
89.5
92.9
99.8
71.2
72.3
73.8
74.9
-1.4
-.4
-.2
2.1
94.5
95.5
96.9
107.6
31.8
32.7
33.2
34.4
26.4
27.1
27.8
28.2
4.5
4.5
4.6
4.6
913.3
930.9
950.3
985.0
1973: 1
II
III
IV
,027.6
,051.2
,077.3
, 106.3
103.9
105.0
105.2
106.4
88.7
90 2
92.1
93.9
.0
_ 3
.0
.0
109.3
111 3
114.1
117.1
35.9
37.7
39.3'
40.4
28.7
29 1
29.8
30.7
4.7
48
4.9
5.0
1,013.6
1,039.2
1,068.0
1,099.3
1974: 1
II
ML. .
,118.8
, 130.2
, 155.5
107.7
105.6
105.8
99.1
100 8
103.0
103.2
.0
- 6
-1.5
.0
123.1
130 6
138.7
145.8
40.8
41.9
42.7
43.6
31.6
32 5
33.2
33.3
5.1
52
5.3
5.3
1,112.5
1,134.6
1,168.2
1,186.4
-
IVP
Source: Department of Commerce, Bureau of Economic Analysis.
267
TABLE C-17.—Disposition of personal income, 1929-74
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 payconments
tion
expend- sumers to foreigners
itures
Equals:
Personal
saving
Personal
outlays
Total
Billions of dollars
Consumption
expenditures
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.
1940.
1941.
1942.
1943.
1944.
1945.
1946.
1947.
1948.
1949.
72.8
2.4
70.3
67.7
66.8
.7
.2
2.6
96.3
95.0
3.7
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
1974
808.3
864.0
944.9
1,055.0
1,150.4
116.6
117.6
142.4
151.3
170.7
691.7
746.4
802.5
903.7
979.7
635.5
685.9
749.9
829.4
903.0
617.6
667.1
729.0
805.2
877.0
16.8
17.7
19.8
22.9
25.0
1.0
1.1
1.1
1.3
1.0
56.2
60.5
52.6
74.4
76.7
91.9
91.9
93.4
91.8
92.2
89.3
89.4
90.8
89.1
89.5
8.1
8.1
6.6
8.2
7.8
Seasonally adjusted annual rates
Seasonally adjusted
913.3
930.9
950.3
985.0
138.6
140.9
143.1
147.0
77'4.7
790.0
807.2
838.1
721.4
741.1
757.9
779.2
701.5
720.6
736.8
757.2
18.9
19.5
20.1
20.9
1.0
1.0
1.1
1.1
53.3
49.0
49.3
58.9
93.1
93.8
93.9
93.0
90.6
91.2
91.3
90.3
6.9
6.2
6.1
7.0
1 9 7 3 : I . . . . 1,013.6
I I . . . 1,039.2
1,068.0
IV." 1,099.3
144.1
147.2
154.2
159.9
869.5
892.1
913.9
939.4
804.2
822.5
840.7
850.1
781.7
799.0
816.3
823.9
21.6
22.5
23.4
24.0
.9
1.0
.9
2.2
65.3
69.6
73.2
89.3
92.5
92.2
92.0
90.5
89.9
89.6
89.3
87.7
7.5
7.8
8.0
9.5
161.9
950.6
168.2
966.5
175.1
993.1
177.8 1, 008.7
866.2
894.9
927.6
923.3
840.6
869.1
901.3
896.8
24.4
24.8
25.3
25.5
1.2
1.0
.9
.9
84.4
71.5
65.5
85.4
91.1
92.6
93.4
91.5
88.4
89.9
90.8
88.9
8.9
7.4
6.6
8.5
1972:1....
II...
ML.
IV..
1974:1
II
lll__
IV*.
1,112.5
1,134.6
1,168.2
1,186.4
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, 1929-74
Disposable personal income
Year or quarter
Total (billions
of dollars)
Current
dollars
1958
dollars
Personal consumption expenditures
Per capita
(dollars)
Current
dollars
Total (billions
of dollars)
1958
dollars
Current
dollars
1958
dollars
Population
(thousands)^
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
,582
,629
,673
,642
,606
,513
,567
,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
855
1,014
M15
,184
,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
1950..
1951..
1952..
1953..
1954..
1955..
1956..
1957..
1958..
1959..
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
,646
,657
,678
,726
,714
,795
,839
,844
,831
,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
,259
,337
,381
,441
,456
,539
,585
,643
,666
,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
I960..
1961..
1962.
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
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
,883
,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
,800
,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
1970...
1971...
1972...
1973...
691.7
746.4
802.5
903.7
979.7
534.8
555.4
580.5
619.6
603.2
3,376
3,605
3,843
4,295
4,623
2,610
2,683
2,779
2,945
2,846
617.6
667.1
729.0
805.2
877.0
477.5
496.4
527.3
552.1
539.9
3,015
3,222
3,491
3,827
4,139
2,331
2,398
2,525
2,624
2,548
204,875
207,045
208,842
210, 396
211,909
1974 p..
Seasonally adjusted annual rates
1972: l . _
II.
III
IV.
774.7
790.0
807.2
838.1
566.2
573.6
581.9
600.1
3,720
3,787
3,861
4,000
2,719
2,749
2,784
2,864
701.5
720.6
736.8
757.2
512.8
523.2
531.2
542.2
3,368
3,454
3,524
3,614
2,462
2,508
2,541
2,588
208, 259
208,634
209,054
209, 505
1973: I . .
II.
III
IV
869.5
892.1
913.9
939.4
615.1
618.2
621.8
622.9
4,143
4,244
4,339
4,452
2,931
2,941
2,952
2,952
781.7
799.0
816.3
823.9
552.9
553.7
555.4
546.3
3,725
3,801
3,876
3,904
2,635
2,634
2,637
2,589
209,852
210,205
210,610
211,030
1974: I.
11.
III
IV
950.6
966.5
993.1
1,008.7
610.3
603.5
602.9
596.2
4,497
4,565
4,681
4,744
2,887
2,850
2,842
2,804
840.6
869.1
901.3
896.8
539.7
542.7
547.2
530.1
3,977
4,105
4,249
4,218
2,553
2,563
2,579
2,493
211,381
211,721
212,139
212,600
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
563-280 O - 75 - 18
TABLE C-19.—Sources of personal incomet 1929-74
[Billions of dollars]
Wage and salary disbursements*
Year or quarter
Total
personal
income
Total
Commodityproducing
industries
Total
Manufacturing
Propr etors'
incc>me
Distrib- Service
utive
indus- industries
tries
Government
Other
labor
income i
Business
and
professional
Farm*
1929
85.9
50.4
21.5
16.1
15.6
8.4
4.9
0.6
9.0
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
74
44
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
98
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
1970
1971
1972
1973
808.3
864.0
944.9
1,055.0
1,150.4
542.0
573.0
626.8
691.7
751.1
200.9
206.2
225.4
251.9
270.9
158.3
160.5
175.8
196.6
211.3
129.3
138.3
151.0
165.1
178.9
96.6
104.6
115.3
128.2
142.6
115.1
123.9
135.0
146.6
158.8
32.2
36.4
41.7
46.0
51.4
50.0
52.0
54.9
57.6
61.2
16.9
17.2
21.0
38.5
31.8
1974P
6.2
Seasonally adjusted annual rates
913.3
930.9
950.3
985.0
608.1
620.1
631.4
647.5
217.8
223.0
226.6
234.3
168.9
173.8
176.8
183.6
147.0
149.5
151.9
155.5
111.2
114.3
117.0
119.0
132.1
133.3
135.9
138.8
39.6
41.2
42.6
43.7
53.7
54.3
55.5
56.1
19.2
20.3
20.3
24.0
1973: 1
II ._
Ill
IV
1,013.6
1,039. 2
1,068.0
1,099. 3
667.6
683.8
698.2
717.0
241.8
248.5
254.6
262.6
188.9
194.4
198.3
204.6
159.7
163.8
166.5
170.4
123.5
126.6
129.7
132.8
142.6
145.0
147.4
151.3
44.6
45.4
46.3
47.6
57.0
57.1
57.7
58.4
32.1
35.6
41.5
44.9
1974- 1
||
III
IV* . .
1,112.5
1.134.6
1,168. 2
1,186.4
727.6
745.2
763.0
768.8
264.0
270.0
276.0
273.4
204.8
210.1
215.8
214.3
172.9
177.4
181.6
183.8
136.9
140.9
144.9
147.5
153.8
156.9
160.5
164.0
48.9
50.5
52.3
54.0
59.3
60.7
62.3
62.5
39.1
29.1
29.8
29.1
1972: 1
II
III...
IV _
:...
See footnotes at end of table.
270
TABLE C-19.—Sources of personal income, 1929-74—Continued
[Billions of dollars]
Transfer payments
Old age,
Less:
Personal
contributions
social
Other forinsurance
Nonagricultural
personal3
income
Rental
income
of persons
Dividends
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
.8
.8
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
\968
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
1974 v
23.9
25.2
25.9
26.1
26.5
24.7
25.0
27.3
29.6
32.7
67.5
72.8
78.6
90.6
103.8
79.1
93.3
103.2
117.8
139.8
38.5
44.5
49.6
60.4
69.8
3.9
5.7
5.5
4.2
7.1
9.7
11.2
12.7
13.9
16.1
27.1
31.9
35.4
39.3
46.8
28.0
30.7
34.5
42.8
47.9
784.8
840.0
916.5
1,008.0
1,108.9
Year or
quarter
P
1
interest
income
survivors,
disability,
and health
insurance
benefits
Total
State
unemployment insurance
benefits
Veterans
benefits
77.6
Seasonally adjusted annual rates
1972:1
II
III...
IV....
25.5
24.4
26.8
26.7
26.4
27.1
27.8
28.2
75.4
77.5
79.5
81.9
99.0
100.1
101.4
112.2
46.5
47.2
48.0
56.6
5.9
6.3
5.3
4.6
12.0
12.2
12.6
14.1
34.7
34.4
35.5
37.0
33.6
34.1
34.9
35.2
886.8
903.3
922.6
953.4
1973:1
II..III
IV
26.3
25.7
26.2
26.4
28.7
29.1
29.8
30.7
85.1
88.8
92.5
95.9
114.1
116.1
119.0
122.1
58.4
59.9
61.0
62.3
4.2
4.1
4.2
4.4
13.4
13.5
14.2
14.5
38.1
38.7
39.6
40.9
41.8
42.5
43.3
43.8
973.3
995.3
1.018.0
1, 045.3
1974:1
26.4
26.3
26.6
26.8
31.6
32.5
33.2
33.3
98.2
102.0
105.5
109.5
128.2
135.8
144.0
151.1
63.6
68.7
72.5
74.3
5.4
6.3
7.3
9.4
15.0
15.2
16.6
17.5
44.1
45.7
47.7
49.9
46.8
47.6
48.5
48.6
1,064.0
1,096.0
1,128.6
1.147.1
III. .
IV P . .
i 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.
1
Includes change in inventories.
* 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, 1929-74
[Billions of dollars)
Gross private saving and government surplus or deficit,
national income and product accounts
Government surplus
or deficit ( - )
Private saving
Year or
quarter
Total
Total
Personal
saving
Gross
business
saving
Total
Federal
State
and
local
Gross investment
Capital
grants
received
by the
United
States *
Total
Gross
private
domestic investment
Net
foreign
investment*
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
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
-44.1
-51.8
-39 5
5.4
14.4
8.5
-3.2
-1.3
-5.1
-33.1
-46.6
-54.5
-42.1
3.5
13.4
8.4
-2.4
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
-.2
-2.2
-2.1
—1 4
4.6
8.9
1.9
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
4.9
49.8
49.4 - 1 2 5
56.8 - 2 . 1
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
-2.2
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
3.5
3.7
58.7 - 4 . 3 - 3 . 8
66.3 - 2 9 - 3 . 8
68.8
1.8
.7
76.2 - 1 . 4 - 3 . 0
1.2
84.7
2.2
91.3
1.1
93.0 - 1 3 . 9 - 1 2 . 4
95.4 - 6 . 8 - 6 . 5
97.0
8.8
8.1
74.8
71.7
83.0
87.1
94.0
108.1
121.4
116.6
126.0
139.0
1.7
3.0
2.5
3.1
5.7
4.1
2.4
2.2
—.4
-1.0
- 3
-1.3
-3.1
—1.0
0.0
76.5
74.7
85.5
90.3
99.7
112.2
123.9
118.8
125.6
137.9
143.1
152.2
173.3
214.4
207.3
153.2
170.7
178.5
210.9
213.2
56.2
60.5
52.6
74.4
76.7
97.0 -10.1
110.2 -18.5
125.9 —5 1
136.5
3.5
136.5 - 5 . 9
.9
.7
.7
.0
«-2.0
137.6
150.6
170.2
209.4
205.3
136.3
153.7
179 3
209.4
208.9
1.3
-3.1
—9.1
.1
-3.6
-6.4
-2.3
—3 8
-5.0
.0
164.4
169.4
175.0
IV.T." 184.6
172.6
174.6
175.6
191.1
53.3
49.0
49.3
58.9
119.3
125.6
126.3
132.2
1973:1
201.1
II
207.9
III.... 217.0
I V . . . . 231.7
199.0
204.9
210.3
229.4
65.3
69.6
73.2
89.3
133.7
135.3
137.1
140.1
1974:1
224.5
II
206.3
III.... 196.4
IV p . . .
224.1
207.3
196.2
84.4
71.5
65.5
85.4
139.7
135.8
130.7
1960
1961
1962
1963..
1964
1965
1966
1967
1968
1969.
...
1970
1971
1972
1973
1974 v
9.1
6.2
-3.8
-7 0
-5.9
4.0
5.7
2 1
-10.2
-1.2
-11.9
-21.9
-17.5
-5.6
-7.6
.6
1.3
1.8
2.5
2.7
2.6
1.9
1.0
-'.7
IIIIIIII
------
-1.2
-.4
-1.1
-1.3
-.9
-1 4
-2.3
-.8
.2
-.5
.9
1.2
1.7
1.0
1.3
-1.6
—.3
1.8
3.4
12 3
9.2
1.7
0.7
1.0
-ill
-2.0
2.5
3 9
.3
-21
1.5
34
—.2
-2.3
1.5
33
2.2
30
2.7
2 1
-l.l
o
16
-.8
-1.0
-.8
g j
Seasonally adjusted annual rates
1972:1
II
-14.9
-19.6
-9.8
-25.6
6.7
14.4
9.2
19.1
0.7
'.7
.7
159.1
165.6
174.2
182.0
169.4
175.5
182.1
190.2
-10.3
-10.0
-7.9
-8.2
-5.9
-4.5
-1.5
-3.3
2.1 -11.2
3.0 - 7 . 4
6.7 - 1 . 7
2.3 - 2 . 3
13.2
10.4
8.4
4.6
.0
.0
.0
.0
195.2
201.4
212.1
229.1
199.0
205.1
209.0
224.5
-3.8
-3.7
3.1
4.7
-5.9
-6.5
-4.9
-2.6
3.2
2.0
2.1
8-8.1
.0
.0
.0
210.1
206.6
199.3
205.2
210.5
211.8
205.8
207.6
-.4
-5.2
-6.5
-2.4
-6.3
.3
-8.2
-5.2
-.6
-6.5
.4
-1.0
.2
-2.8
-3.0
-1.9
1
Allocations of special drawing rights (SDR).
' Net exports of goods and services less net transfers to foreigners.
* Surplus of $32 million.
< Deficit of $41 million.
6
In February 1974, the U.S. Government granted to India $2,015 million (quarterly rate) in rupees under provisions
of the Agricultural Trade Development and Adjustment Act. Tentatively, this transaction is being treated as capital grants
paid to foreigners, and is included in the first quarter of 1974 as -$8.1 (annual rate) in capital grants received by the
United States.
Source: Department of Commerce, Bureau of Economic Analysis.
272
TABLE C-21.—Saving by individuals, 1946-74
l
[Billions of dollars]
Increase in financial assets
Year or
quarter
Total
Securities
Currency Savand
ings Gov- CorpoTotal» deacern- rate Corpomand counts
rate
ment and
defor- equisecu- eign
posits
ties*
rities* bonds
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
2.5
4.9
7.8
8.3
9.3
.7
1.6
1.6
.9
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
1.1
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
8.0
.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
10.8
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
18.9
13.2
9.0
10.0
-2*. 9
-2.0
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
1955. . .
1956....
1957....
1958....
1959....
34.1
36.0
34.1
33.0
34.7
28.4
30.0
28.6
31.6
36.5
1.2
1.8
1960.
1961....
1962....
1963....
1964.
32.3
31.7
37.1
39.1
49.5
31.6
35.1
39.1
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
55.4
65.1
65.0
68.3
60.6
58.2
62.6
69.0
73.3
62.1
7.8
3.9
11.3
12.5
1.6
28.0
20.5
34.8
30.3
6.0
4.3
11.3
76.2 80.6
87.4 99.7
97.9 124.4
120.2 138.2
11.3
11.1
12.1
13.1
3.8
InsurNon- Mortance
gage
Con- corand Non- sumer
po- debt Con- Other
pen- farm durate
on sumer
sion homes rables busi- non- credit debt«
reness farm
serves
assets homes
1.1
1.1
1.0
25.7
20.8
23.3
18.9
5.6
Less:Increase in
debt
6.3 - 1 . 4 -0.9
1.6
3.4
1.3 - . 1
2.3
1.8 - . 4
2.7
1946....
1947....
1948
1949
1970
1971
1972
1973
Net investment in
-.1
-.4
1.9
2.3
8.8
6.0
9.6
3.9
12.1
2.2
14.1 - 2 . 4
11.3
9.0
.0
.0
-.1
-.3
1.0
.9
1.1
1.3
4! 8
22.5
1.0
2.0
4.6
4.7
6.6
-2.2
-.9
-4.3
-6.5
-3.8
17.0
19.4
19.6
20.1
21.3
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
13.7
12.4
18.9
17.7
13.5
44.4 -10.4
70.3 -14.5
75.4
1.6
67.7 24.7
10.7
9.3
5.2
1.1
-1.7
-5.3
-5.4
-8.2
24.3
27.7
30.3
31.6
10.6
17.6
24.3
27.2
10.6
16.5
24.4
27.1
6.6
11.0
10.6
15.4
12.5
24.2
38.4
44.2
6.0
11.2
19.2
22.9
13.7
21.9
28.2
20.5
Seasonally adjusted annual rates
1973:1-...
II.__
III —
IV...
106.8
131.9
116.7
125.4
124.3
148.1
141.4
138.8
10.6
10.3
5.4
26.0
83.8
74.2
50.8
61.9
15.7 - 0 . 5 - 9 . 3
30.7
.0 - 3 . 1
36.0 - 1 . 4
16.4
6.1 -20'. 0
31.9
32.3
32.8
29.8
27.0
27.4
27.7
26.6
32.1
28.6
27.5
20.0
15.2
14.3
15.4
16.6
41.4
47.2
47.8
40.4
25.6
24.6
22.3
19.2
24.9
14.6
25.3
17.1
1974:1
II
lll
123.3 137.1
131.3 147.5
120.5 127.8
4.1
.9
-4.6
74.4
73.9
22.9
20.0
20.0
49.3
3.4 - 2 . 7
.3 - 4 . 1
4.9
3.2
27.3
46.6
34.3
22.4
19.9
22.5
19.6
25.0
31.7
9.5
12.2
10.6
35.2
39.9
31.7
8.2
17.2
15.8
22.0
16.0
24.5
1 Savi ug 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.
* Includes investment company shares.
* 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.
Source: Board of Governors of the Federal Reserve System.
273
TABLE C-22.—Number and money income (in 1973 dollars) offamilies and unrelated individuals
by race of head, 1947-73
Total
White
With i ncomes
under $3,000 Total
number
Number
Per- (mil(milcent lions)
lions)
Total
number
(millions)
Median
income
FAMILIES^
1947
1948
1949
37.2
38.6
39.3
$6,032
5,876
5,783
6.9
7.6
8.3
18.6
19.6
21.1
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
6,146
6,349
6,523
7,054
6,884
7,354
7,825
7,837
7,812
8,261
7.8
7.1
6.9
6.8
7.5
6.7
6.0
6.1
6.2
6.0
19.5
17.6
17.0
16.5
17.9
15.7
13.9
14.0
14.0
13.2
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
45.5
46.4
47.1
47.5
48.0
48.5
49.2
50.1
50.8
51.6
8,436
8,523
8,757
9,067
9,413
9,792
10, 269
10, 571
11,024
11,433
5.9
6.0
5.6
5.3
4.9
4.8
4.3
4.2
3.6
3.6
1970
1971
1972
1973
52.2
53.3
54.4
55.1
11,277
11,249
11,813
12,051
3.8
3.7
3.5
3.3
Year
UNRELATED
INDIVIDUALS 3
1947
1948
1949
34.1
35.3
Median
income
$6,285
6,124
6,026
Negro and other races
With incomes
under $3,000 Total
number
Number
Per- (mil(milcent lions)
lions)
5.4
6.0
15.9
17.0
18.3
10.9
11.0
10.2
9.3
8.7
8.4
7.4
7.1
6.1
5.9
4.3
4.5
4.6
4.8
4.8
4.8
5.0
5.0
5.1
5.2
4,848
4,739
4,889
5,033
5,510
5,677
6,394
6,777
7,145
7,513
..4
..4
.3
1.3
1.1
1.1
1.0
.9
.8
.8
31.7
31.0
29.1
26.9
23.2
22.6
19.9
18.0
16.4
16.0
6.1
5.9
5.3
4.9
5.4
5.7
5.9
6.1
7,454
7,361
7,534
7,596
.9
1.0
1.0
.9
17.0
16.8
16.2
15.4
11,671
11,628
12,273
12, 595
2.8
2.8
2.6
2.4
7.2
7.0
6.4
6.0
46.5
47.6
48.5
48.9
46.6
46.4
48.9
.5
1.4
.4
.4
.4
.5
4.5
4.6
4.3
4.0
3.7
3.7
3.3
3.2
2.8
2.7
41.1
41.9
42.4
42.7
43.1
43.5
44.1
44.8
45.4
46.0
1.4
1.5
Percent
3.8
3.9
4.0
4.0
4.0
4.2
8,758
8,891
9,163
9,502
9,827
10,210
10,670
10, 960
11,425
11,869
13.0
13.0
11.9
11.2
10.2
9.8
8.7
8.3
7.0
7.0
$3,212
3,264
3,076
Number
(millions)
43.8
43.2
36.4
35.2
39.3
36.3
34.3
34.4
35.3
35.5
6.0
5.3
4.7
4.7
4.7
4.4
38.2
39.0
39.5
39.7
40.2
40.9
Median
income
3,449
3,479
3,915
4,112
3,996
4,236
4,310
4,362
4,174
4,445
17.4
15.0
14.8
14.7
15.6
13.6
12.0
11.9
11.8
10.8
6,405
6,609
6,890
7,335
7,187
7,673
8,178
8,160
8,146
8,606
3.1
3.3
With incomes
under $3,000
With incomes
under $1,500
With incomes
under $1,500
With incomes
under $1,500
Number
(millions)
Percent
Number
(millions)
Percent
Number
(millions)
2.9
2.9
40.0
40.4
38.9
8.2
8.4
9.0
$1,953
1,891
1,973
3.4
3.5
3.6
41.4
41.6
40.4
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
1,959
2,044
2,359
2,321
2,021
2,188
2,337
2,393
2,339
2,402
3.9
3.8
3.5
3.6
4.0
3.8
3.6
3.7
3.9
3.8
41.1
41.5
36.0
38.1
40.9
37.9
36.5
35.5
36.1
35.2
I960..
19611962..
1963..
1964..
1965..
1966..
1967..
1968..
1969..
2 11.1
2 11.2
2 11.0
2 11.2
2 12.1
2 12.2
2 12.5
2 13.2
2 13.9
2 14.6
2,582
2,605
2,578
2,619
2,851
3,031
3,113
3,182
3,552
3|557
3.7
3.7
3.3
3.3
3.3
3.1
2.9
3.1
2.7
2.9
1970..
1971..
1972..
1973..
215.5
16.3
16.8
18.3
3,588
3,647
3,770
4,134
2.9
2.9
2.8
2.6
7.2
7.3
$2,061
1,962
2,114
3.2
3.1
3.0
3.0
3.2
3.1
39.7
40.3
34.7
37.4
38.8
36.0
35.3
33.5
34.3
33.3
2,791
2,803
2,764
2,753
2,994
3,161
3,241
3,316
3,742
3,740
3.0
2.9
2.6
2.6
2.7
2.5
2.4
2.5
2.2
2.3
3,754
3,822
3,915
4,270
2.3
2.3
2.2
2.0
8.3
8.5
8.5
8.9
9.2
9.3
2,058
2,153
2,544
2,450
2,177
2,326
2,401
2,523
2,462
2,537
33.6
32.6
29.6
29.3
27.5
25.0
23.4
23.3
19.7
19.8
9.6
9.6
9.5
9.7
10.4
10.5
10.7
11.3
12.0
12.5
18.8
17.9
16.5
14.0
13.4
14.2
14.5
15.8
1.0
1.0
$1, 484
1,457
1,527
0.5
.5
Percent
50.4
51.2
49.3
1.4
1.4
1.3
1.5
1.6
1.6
1,509
1,632
1,771
1,941
1,444
1,575
1,857
1,677
1,677
1,658
49.8
47.8
43.6
41.0
51.9
48.5
44.2
46.8
46.7
47.5
31.1
30.5
27.5
27.3
25.9
23.7
22.1
22.2
18.4
18.2
1.5
1.6
1.5
1.5
1.6
1.7
1.6
1.8
1.8
2.0
1,602
1,719
1,839
1,878
2,084
2,339
2,361
2,425
2,569
2,631
48.3
45.6
41.9
42.0
37.3
33.0
32.4
31.0
27.7
29.8
17.4
16.4
15.2
12.6
1.9
2.1
2.3
2.5
2,575
2 562
2,905
3,191
29.2
27.9
24.7
22.4
1
The term "family" refers to a group of two or more persons related by blood, marriage, or adoption and residing
together; all such persons are considered members of the same family.
2 Revised using population controls based on the 1970 Census. Population controls based on the 1970 Census not available
by 3race.
The term "unrelated individuals" refers to p ersons 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 O23.—Population by age groups, 1929-74
[Thousands of persons]
Age (years)
Total
July 1
Under 5
5-15
16-19
20-24
25-44
45-64
65 and
over
1929.
121,767
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.
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.
132,122
133, 402
134, 860
136, 739
138, 397
139,928
141, 389
144,126
146,631
149,188
12,979
13, 244
14,406
14,919
15, 607
23,907
24,103
24, 468
25, 209
25, 852
9,361
9,119
9,097
8,952
8,788
12,036
12,004
11,814
11,794
11,700
42, 521
43, 027
43,657
44, 288
44,916
28,630
29, 064
29,498
29,931
30,405
10,494
10,828
11,185
11,538
11, 921
1950
1951
1952
1953
1954
152, 271
154, 878
157, 553
160,184
163, 026
16,410
17, 333
17,312
17,638
18, 057
8,542
8,446
8,414
8,460
8,637
11,680
11,552
11,350
11, 062
10,832
45,672
46,103
46,495
46,786
47, 001
30,849
31, 362
31, 884
32,394
32,942
12,397
12,803
13, 203
13,617
14, 076
1955
1956
1957
1958
1959
165, 931
168,903
171, 984
174,882
177, 830
18,566
19, 003
19,494
19,887
20,175
26,721
27, 279
28, 894
30, 227
31,480
32,682
33,994
35, 272
36, 445
37, 368
8,744
8,916
9,195
9,543
10, 215
10,714
10,616
10,603
10,756
10, 969
47,194
47, 379
47, 440
47, 337
47,192
33,506
34, 057
34, 591
35,109
35, 663
14,525
14, 938
15, 388
15, 806
16, 248
1960.
1961.
1962.
1963.
1964.
180,671
183,691
186, 538
189, 242
191,889
20, 341
20, 522
20,469
20, 342
20,165
38, 494
39, 765
41,205
41,626
42, 297
10,683
11,025
11,180
12, 007
12,736
11,134
11,483
11,959
12,714
13,269
47,140
47,084
47,013
46, 994
46, 958
36,203
36,722
37,255
37, 782
38, 338
16,675
17, 089
17,457
17, 778
18,127
1965.
1966.
1967.
1968
1969.
194, 303
196,560
198,712
200, 706
202,677
19, 824
19, 208
18,563
17,913
17,376
42,938
43, 702
44, 244
44,622
44, 840
13, 516
14,311
14, 200
14, 452
14, 800
13, 746
14,050
15,248
15,786
16, 480
46, 912
47, 001
47,194
47, 721
48,064
38, 916
39,534
40,193
40,846
41, 437
18, 451
18,755
19,071
19, 365
19,680
1970
1971
1972
1973
1974
i 204, 875
207, 045
208, 842
i 210, 396
211,909
17,156
17,174
17,006
16,714
16,304
44, 774
44, 441
43, 948
43,227
42, 547
15, 274
15,635
15,945
16, 307
16, 588
17,180
18, 086
18,021
18, 331
18, 733
48, 435
48, 809
50,250
51,412
52, 593
41,974
42, 413
42,789
43,084
43, 328
20,085
20,487
20,883
21,329
21,815
1
Age detail does not add to total because total was computed using revised components of change for the period.
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, 1929-74
Civilian labor force
Year or month
Noninstitutional
population 1
Total
labor
force
(includ- Armed
ing
Forces *
Armed
Forces)
Employment
I
Total
Total
Agricultural
Nonagricultural
Unemployment
Thousands of persons 14 years of age and over
1933
49,440
260 49,180
51,840
250
55,600
370 55, 230 45, 750
47,630
51, 590 38, 760
Labor
force
particiUnempation
rate
ploy(total
ment
labor
rate
(percent force as
percent
?f.
civilian of noninstitulabor
tional
force)
population)
Percent
37,180
1,550
3.2
10, 090 28, 670
12,830
24.9
10,450
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
1939
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 57,039
60,621 58,344
61, 286 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
1960 2
1961..
1962 2
1963..
1964..
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
1965..
1966.
1967..
1968..
1969.
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..
19722.
1973 2
1974..
140,182
142,596
145,775
148,263
150,827
85,903
86,929
88,991
91,040
93,240
3,188
2,817
2,449
2,326
2,229
82,715 78,627
84,113 79,120
86,542 81, 702
88,714 84,409
91, 011 85,936
3,462
3,387
3,472
3,452
3,492
75,165
75,732
78,230
80,957
82,443
4,088
4,993
4,840
4,304
5,076
4.9
5.9
5.6
4.9
5.6
61.3
61.0
61.0
61.4
61.8
See footnotes at end of table.
276
TABLE C-24.—Noninstitutional population and the labor force,
1929-74—Continued
Civilian labor force
Year or month
Noninstitutional
population i
Total
labor
force
(includ- Armed
ing
Forces»
Armed
Forces)
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
1973: Jan..
Feb..
Mara
Apr..
May.
June.
147,129
147,313
147, 541
147, 729
147, 940
148,147
89,368
90,095
90,404
90,646
90,659
91,106
2,404
2,392
2,361
2,350
2,334
2,315
86,964
87, 703
88,043
88,296
88,325
88, 791
82,633
83, 276
83,686
83, 877
84,021
84,487
3,451
3,413
3,430
3,356
3,352
3,465
79,182
79,863
80,256
80, 521
80,669
81,022
4,331
4,427
4,357
4,419
4,304
4,304
5.0
5.0
4.9
5.0
4.9
4.8
60.7
61.2
61.3
61.4
61.3
61.5
July.
Aug.
Sept.
Oct__
Nov..
Dec.
148, 361
148, 565
148, 782
149, 001
149,208
149, 436
91,212
91,123
91,515
91, 857
92,136
92, 330
2,310
2,307
2,292
2,289
2,284
2,282
88, 902
88, 816
89, 223
89, 568
89,852
90,048
84, 679
84, 582
84,983
85, 452
85, 577
85, 646
3,535
3,434
3,357
3,428
3,571
3,635
81,144
81,148
81,626
82, 024
82, 006
82,011
4,223
4,234
4,240
4,116
4,275
4,402
4.8
4.8
4.8
4.6
4.8
4.9
61.5
61.3
61.5
61.6
61.8
61.8
1974: Jan..
Feb.
Mar.
Apr.
May.
June.
149,656
149, 857
150, 066
150, 283
150, 507
150, 710
92, 723
92,809
92,632
92, 567
92,982
93,069
2,258
2,258
2,251
2,243
2,229
2,212
90,465
90, 551
90, 381
90, 324
90, 753
90,857
85, 800
85, 861
85, 779
85, 787
86, 062
86, 088
3,749
3,811
3,653
3,515
3,497
3,333
82, 051
82,050
82,126
82, 272
82, 565
82, 755
4,665
4,690
4,602
4,537
4,691
4,769
5.2
5.2
5.1
5.0
5.2
5.2
62.0
61.9
61.7
61.6
61.8
61.8
July.
Aug.
Sept.
Oct..
Nov.
Dec.
150,922
151,135
151,367
151, 593
151,812
152,020
93, 503
93, 419
93,922
94, 058
93, 921
94, 015
2,220
2,220
2,217
2,214
2,213
2,212
91, 283
91,199
91, 705
91, 844
91, 708
91, 803
86,
86,
86,
86,
85,
85,
3,433
3,451
3,489
3,440
3,375
3,339
82, 970
82, 823
82, 913
82, 864
82,314
81, 863
4,880
4,925
5,303
5,540
6,019
6,601
5.3
5.4
5.8
6.0
6.6
7.2
62.0
61.8
62.0
62.0
61.9
61.8
1
403
274
402
304
689
202
Not seasonally adjusted.
2 Not strictly comparable with earlier data due to population adjustments as follows: Beginning 1953, introduction of
1950 Census data added about 600,000 to population and about 350,000 to labor force, total employment, and agricultural
employment. Beginning I960, inclusion of Alaska and Hawaii added about 500,000 to population, about 300,000 to labor
force, and about 240,000 to nonagricultural employment. Beginning 1962, introduction of 1960 Census data reduced population by about 50,000 and labor force and employment by about 200,000. Beginning 1972, introduction of 1970 Census
data added about 800,000 to civilian noninstitutional population and about 333,000 to labor force and employment. A
subsequent adjustment based on 1970 Census in March 1973 added 60,000 to labor force and to employment. Overall
categories of the labor force other than those noted were not appreciably affected.
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, 1947-74
[Thousands of persons 16 years of age and over]
Employment
Unemployment
Males
Year or
month
Females
20
Total
Total
16-19
years
years
and
over
Males
20
Total
20
Total
years
and
over
16-19
years
Females
Total
16-19 years
years and
over
20
Total
16-19 years
years and
over
1 9 4 7 . . . 57,039
1 9 4 8 . . . 58,344
1 9 4 9 . . . 57,649
40,994
41,726
40,926
2,218 38,776
2,345 39,382
2,124 38,803
16,045
16,618
16,723
1.691 14,354
1,683 14,937
1,588 15,137
2,311 1,692
2,276 1,559
3,637 2,572
270 1,422
619
255 1,305
717
1,065
2,219
352
144
152
223
475
564
841
1950...
1951...
1952...
19531..
1954...
58,920
59,962
60,254
61,181
60,110
41,580
41, 780
41,684
42,431
41,620
2,186
2,156
2,106
2,135
1,985
39,394
39,626
39,578
40,296
39,634
17, 340
18,182
18, 570
18,750
18,490
1,517
1,611
1,612
1,584
1,490
15,824
16,570
16,958
17,164
17,000
3,288
2,055
1,883
1,834
3,532
2,239
1,221
1,185
1,202
2,344
318
191
205
184
310
1,019
2,035 1,188
195
145
140
123
191
854
689
559
510
997
1955...
1956...
1957...
1958...
1959...
62,171
63,802
64,071
63,036
64,630
42,621
43,380
43,357
42,423
43,466
2,095
2,164
2,117
2,012
2,198
40,526
41,216
41,239
40,411
41,267
19,550
20,422
20,714
20,613
21,164
,548
,654
1,663
1,570
1,640
18,002
18,767
19,052
19,043
19,524
2,852
2,750
2,859
4,602
3,740
1,854
1,711
1,841
3,098
2,420
274
269
299
416
398
1,580
1,442
1,541
2,681
2,022
1,039
1,018
1,504
1,320
176
823
209
832
197
821
262 1,242
256 1,063
19601..
1961...
1962...
1963!._
1964...
65,778
65,746
66,702
67,762
69,305
43,904
43,656
44,177
44,657
45,474
2,360
2,314
2,362
2,406
2,587
41,543
41,342
41,815
42,251
42,886
21,874
22,090
22,525
23,105
23,831
1,769
1,793
1,833
1,849
1,929
20,105
20,296
20,693
21,257
21,903
3,852
4,714
3,911
4,070
3,786
2,486
2,997
2,423
2,472
2,205
425
479
407
500
487
2,060
2i 518
2,016
1,971
1,718
1,366
1,717
1,488
,598
1,581
286
349
313
383
386
1965...
1966...
1967...
1968...
1969...
71,088
72,895
74,372
75,920
77,902
46,340
46,919
47,479
48,114
48,818
2,918
3,252
3,186
3,255
3,430
43,422
43,668
44,293
44,859
45,388
24,748
25,976
26,893
27,807
29,084
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 1,452
432 1,120 1,324
448 1,060 1,468
427
993 1,397
441
963 1,429
395 1,056
404
921
391 1,078
412
985
412 1,016
1970...
1971...
1972L.
19731..
1974...
78,627 48,960
79,120 49,245
81,702 50,630
84,409 51,963
85,936 52, 519
3,407
3,470
3,750
4,017
4,074
45,553 29,667
45, 775 29,875
46,880 31,072
47,946 32,446
48,445 33,417
2,734
2,725
2,972
3,219
3,329
26,933
27,149
28,100
29,228
30,088
4,088
4,993
4,840
4,304
5,076
2,235
2,776
2,635
2,240
2,668
599
691
707
647
749
1,636
2,086
1,928
1,594
1,918
1,853
2,217
2,205
2,064
2,408
506
567
595
579
660
1,347
1,650
1,610
1,485
1,748
1,922
1,029
980
1,049
834
698
632
998
1,080
1,368
1,175
1,216
1,195
Seasonally adjusted
1973:
Jan..
Feb..
Mar 3.
Apr..
MayJune.
82,633 51,188
83,276 51,464
83,686 51,688
83, 877 51, 687
84, 021 51,673
84, 487 51, 876
3,805
3,935
4,036
3,980
3,926
4,021
47,383
47, 529
47,652
47, 707
47,747
47,855
31,445
31,812
31,998
32,190
32,348
32,611
3,039
3,077
3,166
3,162
3,200
3,324
28, 406
28, 735
28,832
29, 028
29,148
29, 287
4,331
4,427
4,357
4,419
4,304
4,304
2,237
2,297
2,290
2,335
2,309
2,227
589
643
626
690
659
630
1.648
1,654
1,664
1,645
1,650
1,597
2,094
2,130
2,067
2,084
1,995
2,077
549
637
568
605
594
567
,545
,493
,499
,479
,401
,510
July.
Aug.
Sept.
Oct__
Nov.
Dec.
84,679
84, 582
84,983
85,452
85, 577
85,646
52,113
51,965
52,197
52,498
52,541
52,663
3,996
3,953
4,100
4,162
4,152
4,173
48,117
48,012
48,097
48, 336
48, 389
48, 490
32,566
32,617
32,786
32,954
33,036
32,983
3,135
3,210
3,299
3,327
3,346
3,340
29,431
29,407
29, 487
29,627
29,690
29,643
4,223
4,234
4,240
4,116
4,275
4,402
2,183
2,190
2,163
2,159
2,207
2,237
647
654
644
655
684
657
1,536
1,536
L, 519
1,504
1,523
1,580
2,040
2,044
2,077
1,957
2,068
2,165
545
545
592
576
593
603
,495
,499
,485
,381
,475
,562
1974:
Jan..
Feb.
Mar_
Apr.
May.
June.
85, 800
85,861
85, 779
85,787
86, 062
86. 088
52,845
52, 731
52, 502
52, 430
52, 740
52, 492
4,197
4,177
4,148
4,089
4,118
4,042
48,648
48, 554
48, 354
48, 341
48,622
48,450
32,955
33,130
33,277
33,357
33, 322
33, 596
3,361
3,358
3,361
3,324
3,277
3,341
29, 594
29, 772
29,916
30,033
30, 045
30,255
4,665
4,690
4,602
4,537
4,691
4,769
2,383
2,458
2,385
2,440
2,415
2,505
688
703
691
684
707
748
1,695
1,755
1,694
1,756
1,708
1,757
2,282
2,232
2,217
2,097
2,276
2,264
694
631
631
518
664
637
1,588
1,601
1,586
1,579
1,612
1,627
July.
Aug.
Sept.
Oct..
Nov.
Dec.
86,403
86, 274
86,402
86, 304
85,689
85,202
52, 473
52,522
52,671
52,674
52,410
51,953
4,022
4,007
4,088
4,090
4,031
3,992
48, 451
48, 515
48, 583
48, 584
48, 379
47,961
33,930
33,752
33,731
33,630
33,279
33, 249
3,246
3,300
3,441
3,393
3 334
3,257
30,684
30, 452
30,290
30, 237
29,945
29,992
4,880
4,925
5,303
5,540
6,019
6,601
2,528
2,628
2,784
3,004
3,191
3,523
733
727
832
807
833
842
1,795
1.901
1,952
2,197
2,358
2,681
2,352
2,297
2,519
2,536
2,828
3,078
671
597
680
734
714
765
1,681
1,700
1,839
L,802
>,114
?, 313
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, 1948-74
[Percent]
By sex and age
Year or month
All
workers
Both
sexes
16-19
years
Men
20
years
and
over
By color
Women 20
years
and
over
White
By selected groups
Negro
and
other
races
Experienced
wage
Houseand
hold
salary
heads
work-
Married
men*
Fulltime
workers 2
Bluecollar
workers 3
3.5
5.4
4.2
8.0
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
Labor
force
time
lost <
ers
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
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
5.3
3.3
3.0
2.9
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
5.1
4.0
3.2
2.9
5.5
4.9
9.0
5.3
5.4
4.5
9.9
8.7
8.3
7.9
6.0
3.7
3.3
3.2
6.2
4.8
1960 .
1961
1962
1963...
1964
1965. .
1966
1967
1968...
1969
5.5
6.7
5.5
5.7
5.2
14.7
16.8
14.7
17.2
16.2
14.8
12.8
12.8
12.7
12.2
1970
1971
1972
1973
1974
4.9
15.2
16.9
16.2
14.5
16.0
4.0
3.2
4.4
4.1
4.3
6.8
5.5
4.5
3.8
3.8
3.6
3.5
5.9
5.6
4.9
5.6
4.2
3.1
2.8
2.7
5.0
3.9
3.6
4.1
3.8
6.1
5.2
6.1
4.8
12.6
10.7
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
4.9
10.2
12.4
10.9
10.8
3.5
4.4
4.8
5.7
5.4
2.4
2.5
4.9
3.8
3.4
3.6
6.2
4.7
3.8
4.4
3.8
3.7
4.8
5.5
6.0
4.9
5.0
9.6
8.1
7.3
7.4
6.7
4.6
4.1
3.4
3.4
3.2
3.1
6.4
8.2
4.5
5.4
5.0
4.3
5.0
9.9
10.0
8.9
9.9
4.4
4.6
7.2
5.7
5.7
6.8
5.6
5.5
5.0
3.7
4.6
3.5
3.6
3.4
3.3
3.7
3.2
2.7
2.2
2.1
1.9
1.8
4.8
5.7
5.3
4.5
2.9
3.6
3.3
2.9
4.3
4.9
3.3
3.6
3.4
2.8
2.4
1.9
1.8
1.6
1.5
5.2
3.8
3.7
4.0
7.2
6.7
5.5
4.9
4.2
3.5
3.4
3.1
3.1
7.2
3.9
3.6
3.4
7.2
5.8
5.1
6.2
4.8
5.1
5 3
7.6
8.1
6.6
7.8
9.2
7.4
7.3
6.3
5.3
6.7
8.0
6.7
6.4
5.8
5.0
10.2
4.2
4.4
4.2
4.2
4.1
3.9
4.0
3.9
6.2
7.4
6.5
5.3
6.7
5.3
6.4
6.0
5.2
6.1
5.3
5.3
5.3
5.3
5.2
2.6
3.2
2.8
2.3
2.7
4.5
2.4
2.4
2.4
2.4
2.3
4.5
4.5
4.4
4.4
5.6
5.5
4.3
5.4
5.3
2.1
2.1
4.2
4.2
4.2
4.1
4.3
4.4
5.3
5.3
5.2
5.1
5.1
5.2
5.4
4.6
4.6
4.6
4.6
4.6
4.7
5.9
6.0
6.0
6.3
5.8
5.6
5.6
5.6
5.7
5.7
6.2
5.6
4.8
4.8
5.3
5.8
6.2
6.6
5.5
4.3
5.1
Seasonally adjustec
1973: Jan
Feb.
Mar
Apr
May
June
5.0
5.0
4.9
5.0
4.9
4.8
14.2
15.0
14.3
15.3
14.9
14.1
July
Aug
Sept
Oct
Dec
4.8
4.8
4.8
4.6
4.8
4.9
14.3
14.3
14.6
14.1
14.6
14.5
1974:Jan
5.2
Nov
. .
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov......
Dec
5.2
5.1
5.0
5.2
5.2
5.3
5.4
5.8
6.0
6.6
7.2
3.4
5.2
4.6
4.9
4.9
4.5
4.5
4.4
8.8
3.4
3.4
3.3
3.3
9.0
8.9
4.8
4.6
4.4
4.4
9.3
9.1
4.7
4.6
4.7
4.5
4.9
4.3
3.1
3.1
3.1
3.0
3.1
4.8
4.9
4.8
4.5
4.7
3.2
15.4
14.8
15.0
13.9
15.7
15.8
3.4
3 5
3.4
3.5
3.4
16.2
15.3
17.0
17.0
17.4
18.2
3.6
3.8
3.9
3.2
3.5
2.9
3.0
3.0
2.9
2.9
8.9
4.4
9.2
8.9
9.3
8.4
5.0
4.2
4.2
4.2
4.1
4.2
4.4
4.4
4.5
4.4
4.3
4.5
4.6
2.9
5.1
5 1
5.0
5.0
5.1
5.1
4.7
4.6
4.6
4.5
4.7
4.8
9.2
4.7
4.9
4.8
4.9
4.9
5.0
2.9
3 0
3.0
3.0
3.0
3.1
2.3
2.4
2.3
2.4
5.2
5.3
4.8
4.9
5.3
5.5
5.9
6.4
5.1
3.0
3.2
3.4
3.7
3.9
2.7
2.7
2.8
3.0
3.3
3.8
4.3
4.6
5.7
5.6
6.6
5.3
7.2
8 8
8.4
9 2
9.2
8.8
9.3
9.0
9.4
9.4
9.9
10.9
11.6
12.5
5.2
5.5
5.7
6.2
6.9
2.9
2.8
2.8
2.7
2.7
2.8
4.6
2.2
2.1
2.1
2.2
2.2
2.2
2.6
4.3
6.2
6.8
5.4
5.3
5.2
5.2
5.5
7.0
7.4
8.3
9.3
5.3
5.2
5.2
5.8
5A
6.4
6.6
7.2
7.9
* Married men living with their wives. Data for 1949 and 1951-54 are for April; 1950, for March.
2 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.
* 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 C--27.— Unemployment by duration, 1947-74
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
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
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 1
12.1
9.7
8.4
8.0
11.8
1955
1956
1957
1958
1959
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
1960
1961
1962
1963
1964
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
1974
4,088
4,993
4,840
4,304
5,076
2,137
2,234
2,223
2,196
2,567
1,289
1,578
1,459
1,296
1,572
427
665
597
475
563
235
517
562
337
373
8.7
11.3
12.0
10.0
9.7
1947
1948
1949
1950
1951
1952
1953
1954
.
.
..
.
.
.
Seasonally adjusted i
1973-Jan
Feb
Mar
Apr
May
June
..
July
Aug
Sept
Oct
Nov
Dec
1974: Jan
Feb
Mar
Apr
May
June
-
. . .
July
Aug
Sept
Oct
Nov
Dec
- - --
. . .
4,331
4,427
4,357
4,419
4,304
4,304
2,037
2,250
2,143
2,234
2 218
2,250
1,344
1,254
1,340
1,466
1,304
1,227
526
515
494
467
469
457
404
365
377
335
347
326
11.0
10.5
10.6
10.0
10.1
9.7
4,223
4,234
4,240
4,116
4,275
4,402
2 225
2,220
2,165
2,069
2,240
2,305
1 273
1,228
1,345
1,299
1,239
1,255
476
444
468
435
470
427
278
328
292
320
343
322
9.7
9.9
9.5
10.1
10.0
9.3
4,665
4,690
4,602
4 537
4 691
4,769
2,408
2,411
2,434
2 312
2,481
2,378
1,405
1,414
1,398
1,444
1,378
1,489
454
488
504
528
527
565
326
324
316
347
350
369
9.5
9.6
9.5
9.8
9.6
9.8
4 880
4,925
5 303
5,540
6 019
6,601
2,472
2,506
2,654
2,765
2 981
3,077
1,522
1,449
1 701
1,754
1 931
2,062
546
560
603
640
691
782
381
380
386
376
426
537
10.1
9.9
9.7
9.8
9.8
10.0
i Because of independent seasonal adjustment of the various series, detail will not add to totals.
N ote.—See footnote 2 and Note, Table C-24.
Source: Department of Labor, Bureau of Labor Statistics.
280
TABLE C-28.—Unemployment insurance programs, selected data, 1946-74
State programs
All programs
Year or month
Covered
employment i
Insured Total
unem- benefits
Insured
paid
ployunem(milment
ploylions
(weekly
ment8
of
dolaverlars) a 4
age)"
Initial
claims
Exhaustions *
Unadjusted
Weekly average, thousands
Thousands
Insured unemployment as percent of covered
employment
Benefits paid
AverTotal
weekly
(millions of check
Seasondol(dolally ad- lars)*
justed
lars)*
Percent
1946
1947
1948
1949
31,856
33,876
34,646
33,098
2,804
1,793
1,446
2,474
2,878.5
1,785.5
1,328.7
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
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
I960..
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
2,994
1,946
U.973
1,753
1,450
1,129
1,270
1,187
1,177
3,022.8
4,358.1
3,145.1
3,025.9
2,749.2
2,360.4
1,890.9
2, 221.5
2,191.0
2,298.6
1,908
2,290
1,783
71,806
1,605
1,328
1,061
1,205
1,111
1,101
236
208
215
218
304
226
227
270
369
277
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
1970
1971
1972
1973 *
1974 9
59,526
59,375
66,900
170,379
2,070
2,313
2,185
1,783
2,578
4,209.3
6,214.9
5,510.5
4,527.0
6,987.9
1,805
2,150
1,848
1,632
2,269
296
295
261
246
361
25
38
35
29
39
3.4
4.1
3.5
2.7
3.6
3,848.5
4,957.0
4,471.0
4,007.6
4,521.1
50.34
54.02
56.76
59.00
63.97
1973: Jan..
Feb..
Mar..
Apr..
May..
JuneJuly..
Aug..
Sept.
Oct__
Nov..
Dec.
2,333
2,250
2,075
1,828
1,610
1,523
523.7
461.3
492.1
404.7
379.2
315.6
2,124
2,062
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
2.9
2.9
2.9
2.7
2.7
2.7
466.6
417.2
444.8
363.8
339.1
286.7
59.17
59.56
58.95
59.58
58.44
58.12
1,640
1,572
1,441
1,452
1,667
2,093
326.9
353.5
281.8
322.9
332.5
378.2
1,505
1,436
1,299
1,299
1,503
1,922
275
212
186
210
266
395
27
27
25
24
25
27
2.5
2.4
2.1
2.1
2.4
3.1
2.7
2.6
2.6
2.6
2.7
2.8
296.3
316.3
248.3
280.7
289.4
335.8
57.42
57.46
58.13
58.97
59.61
60.40
1974: Jan
Feb...
Mar...
Apr...
May...
June_.
2,740
2,824
2,751
2, 564
2,278
2,161
622.7
599.3
652.4
639.3
584.5
472.4
2,561
2,630
2,502
2,217
1,934
1,834
32
32
35
38
39
40
4.1
4.2
4.0
3.5
3.0
2.9
3.1
3.3
3.4
3.3
3.3
3.3
570.8
553.3
593.9
552.7
486.4
383.4
62.28
63.35
63.85
63.62
62.69
62.50
July...
Aug...
Sept..
Oct*-.
Nov *_.
Dec*..
2,290
2,153
2,081
2,247
2,826
3,913
541.6
522.3
478.1
530.2
561.3
781.8
1,989
1,874
1,783
1,947
2,499
3,552
446
359
293
263
237
269
340
283
274
348
480
703
41
40
35
36
43
45
3.1
2.9
2.7
3.0
3.8
5.4
3.3
3.2
3.4
3.7
4.2
4.9
459.1
444.9
381.0
442.0
489.7
675.3
62.93
64.14
64.23
65.20
65.46
65.51
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.
s Covered workers who have completed at least 1 week of unemployment.
* Annual data are net amounts and monthly data are gross amounts. Monthly data exclude extended benefit payments.
* Individuals receiving final payments in benefit year. Data for New Jersey not available for April-June 1971.
*7 For total unemployment only. Excludes data for New Jersey for April-December 1971.
Programs include Puerto Rican sugarcane workers for initial claims and insured unemployment beginning July 1963.
s 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, 1929-74
(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
Wholesale
and
retail
trade
Government
Finance,
insurance,
and
real
estate
Services
Federal
State
and
local
1929
31,339
10.702
1,087
1,497
3,916
6,123
1,509
3,440
533
2,532
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
5,363
13,192
6,968
15, 280 8,823
17,602 11,084
17,328 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
1945
1946
1947
1948
1949
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
2,254
1,892
1,863
1,908
3,137
3,341
3,582
3,787
3,948
1950
1951
1952
1953
1954
45,222 15,241
47,849 16,393
48,825 16,632
50, 232 17,549
49,022 16,314
8,094
9,089
9,349
10,110
9,129
7,147
7,304
7,284
7,438
7,185
901
929
898
866
791
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
1955
1956
1957
1958
1959...,.
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
828
751
732
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
I960.....
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
712
672
650
635
634
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
7,248
1965
1966
1967
1968
1969
60,815
63,955
65,857
67,951
70,442
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
627
613
606
619
3,186
3,275
3,208
3,306
3,525
4,036
4,151
4,261
4,311
4,435
12,716
13, 245
13,606
14,099
14,704
3,023 9,087
3,100 9,551
3,225 10,099
3,381 10,622
3,562 11,228
2,378
2,564
2,719
2,737
2,758
7,696
8,227
8,679
9,109
9,444
70,920
71,216
73,711
___ 76,833
78,337
19,349
18,572
19,090
20,054
20,017
11,195
10, 597
11,006
11,814
11, 838
8,154
7,975
8,084
8,240
8,179
623
603
622
638
672
3,536 4,504
3,639 4,457
3,831 4,517
4,028 | 4,646
3,984 I 4,699
15,040
15,352
15,975
16,665
17, 010
3,687
3,802
3,943
4,075
4,161
2,731
2,696
2,684
2,663
2,725
9,830
10,192
10,656
11,079
11,561
1970
1971
1972
1973
1974 v
See footnotes at end of table.
282
11,621
11,903
12,392
12,986
13, 508
TABLE C-29.—Wage and salary workers in nonagr{cultural establishments•, 1929-74—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
FiWholesale
and
retail
trade
nance,
insurance,
and
real
estate
Services
Federal
State
and
local
Seasonally adjusted
1972: Jan.__ 72,350
Feb... 72,490
Mar.. 72,831
Apr... 73,093
May.. 73,386
June.. 73,637
18,645
18,733
18,827
18,910
19,001
19,082
10,651
10,721
10,787
10,850
10,927
10,976
7,994
8,012
8,040
8,060
8,074
8,106
617
615
617
621
621
622
3,846
3,749
3,787
3,806
3,836
3,846
4,465
4,455
4,494
4,488
4,501
4,506
15,645
15, 710
15, 789
15,841
15, 887
15,970
3,877
3,885
3,897
3,907
3,925
3,942
12,117
12,165
12,209
12,273
12,328
12,403
2,703
2,695
2,688
2,692
2,686
2,670
10,435
10,483
10, 523
10,555
10,601
10,596
73,697
74,054
74,307
74,646
74,916
75,118
19,059
19,149
19,249
19,395
19,487
19, 599
10,996
11,064
11,137
11,255
11,330
11,421
8,063
8,085
8,112
8,140
8,157
8,178
620
622
628
629
629
628
3,800
3,863
3,876
3,897
3,872
3,785
4,506
4,508
4,531
4,562
4,583
4,596
15,986
16, 067
16,102
16,151
16, 231
16, 291
3,947
3,960
3,973
3,989
4,000
4,011
12,441
12,487
12,491
12, 548
12,595
12,650
2,653
2,669
2,674
2,680
2,680
2,684
10,685
10,729
10, 783
10, 795
10,839
10,874
1973: Jan... 75,472
Feb... 75,851
M a r . . 76,111
Apr... 76,339
May.. 76, 508
June.. 76, 787
19,683
19,814
19,888
19,950
19,994
20,083
11,500
11,609
11,661
11,708
11,766
11,826
8,183
8,205
8,227
8,242
8,228
8,257
631
634
633
631
629
632
3,908
3,931
3,953
3,963
3,996
4,034
4,596
4,599
4,609
4,628
4,632
4,638
16,358
16, 467
16, 529
16, 577
16,615
16, 641
4,018
4,034
4,045
4,052
4,064
4,068
12,724
12,788
12,829
12,878
12,887
12,954
2,673
2,662
2,661
2,661
2,662
2,649
10,881
10,922
10,964
10,999
11,029
11,088
July..
Aug..
Sept..
Oct...
Nov..
Dec...
July..
Aug..
Sept..
Oct...
Nov..
Dec...
76,867
77,163
77,315
77,649
77,915
77,924
20,064
20,124
20,155
20, 252
20,314
20,323
11,842
11,892
11,914
11,979
12,021
12,036
8,222
8,232
8,241
8,273
8,293
8,287
637
640
640
644
648
652
4,063
4,063
4,091
4,083
4,099
4,115
4,642
4,657
4,667
4,696
4,692
4,688
16, 688
16, 746
16, 777
16, 847
16, 904
16,826
4,077
4,092
4,102
4,110
4,116
4,121
12,978
13,058
13,110
13,160
13,221
13,236
2,632
2,650
2,660
2,665
2,673
2,680
11,086
11,133
11,113
11,192
11,248
11,283
1974: J a n . . .
Feb...
Mar..
Apr...
May..
June..
77,925
78,053
78, 089
78,226
78, 357
78,421
20,253
20,155
20,116
20,147
20,151
20,184
11,968
11,883
11,862
11,913
11,908
11,959
8,285
8,272
8,254
8,234
8,243
8,225
658
661
662
665
668
669
4,098
4,127
4,102
4,087
4,066
3,994
4,710
4,717
4,708
4,704
4,701
4,698
16,851
16, 871
16,914
16, 945
16, 994
17,031
4,132
4,142
4,145
4,154
4,161
4,156
13,236
13,313
13,339
13,367
13,429
13,488
2,680
2,696
2,699
2,705
2,711
2,715
11,307
11,371
11,404
11,452
11,476
11,486
July..
Aug..
Sept..
Oct .v.
Nov .
Dec *_
78,479
78,661
78,844
78, 865
78,400
77, 726
20,169
20,112
20,112
19,982
19,646
19,141
11,959
11,899
11,906
11,841
11,626
11,290
8,210
8,213
8,206
8,141
8,020
7,851
675
676
682
692
696
666
3,920
3,965
3,939
3,911
3,852
3,802
4,693
4,701
4,679
4,699
4,693
4,680
17,107
17,140
17,166
17,160
17,042
16, 906
4,157
4,168
4,176
4,185
4,179
4,178
13, 516
13, 573
13,647
13, 705
13, 726
13, 754
2,735
2,740
2,747
2,748
2,746
2,744
11,507
11,586
11,696
11,783
11,820
11,855
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-27), 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 nonaericultural
industries, 1947-74
(For production or nonsupervisory workers]
Average gross hourly earnings,
current dollars
Average weekly hours
Year
or
month
Total
private Manuno n ag- facturriculing
tural*
Contract
construction
Total
private ManuRetail
nontrade* agri- facturing
cultural 1
Contract
construction
Adjusted hourly earnings,
total private nonagricultural '
Index,
1967 = 100
Retail
trade 2
Current
dollars
1967
dollars*
Percent
change
from
preceding
period
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
.328 1.713
.901
40.4 1.275
.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
.440
.56
.65
1.74
1.78
1.863
2.02
2.13
2.28
2.39
.983
1.06
.09
.16
.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
1955..
1956..
1957..
1958..
1959..
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
.25
.30
.37
.42
.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
I960..
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
.52
.56
.63
.68
.75
78.4
80.8
83.5
85.9
88.3
88.4
90.2
92.2
93.7
95.1
3.4
3.1
3.3
2.9
2.8
1.8
2.0
2.2
1.6
1.5
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
37.3
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
.82
.91
2.01
2.16
2.30
91.6
95.4
100.0
106.3
113.3
97.0
98.1
100.0
102.0
103.2
3.7
4.1
4.9
6.3
6.6
2.0
1.1
1.9
2.0
1.2
1970..
1971..
1972..
1973..
1974 p.
37.1
37.0
37.1
37.1
36.6
39.8
39.9
40.6
40.7
40.0
37.3
37.2
36.9
37.0
36.9
33.8
33.7
33.7
33.3
32.7
3.22
3.44
3.67
3.92
4.22
3.36
3.57
3.81
4.07
4.40
5.24
5.69
6.03
6.38
6.74
2.44
2.57
2.70
2.87
3.09
120.8
129.4
137.8
146.6
158.3
103.9
106.7
110.0
110.1
107.2
6.6
7.1
6.5
6.4
8.0
.7
2.7
3.1
.1
-2.6
Seasonally
adjusted
annual rates*
Seasonally adjusted
1973: Jan...
Feb...
Mar...
Apr...
May..
JuneJuly..
Aug..
Sept..
Oct...
Nov..
Dec...
37.0
37.1
37.1
37.2
37.1
37.1
40.5
40.9
40.9
40.9
40.7
40.6
36.1
36.0
36.7
36.9
37.1
37.1
33.6
33.5
33.5
33.4
33.4
33.4
$3.79
3.80
3.83
3.86
3.87
3.90
$3.97
3.98
3.98
4.02
4.03
4.05
$6.34
6.24
6.27
6.29
6.30
6.36
$2.77
2.79
2.80
2.82
2.83
2.86
142.3
142.7
143.5
144.4
144.8
146.0
111.2
110.8
110.5
110.5
110.2
110.4
3.9
2.9
6.9
8.5
2.9
10.3
-2.2
-4.7
-3.5
.4
-3.7
2.5
37.1
37.0
37.1
36.9
36.9
37.0
40.7
40.6
40.7
40.7
40.6
40.6
37.1
36.9
36.7
36.8
37.9
37.2
33.3
33.1
33.1
33.0
33.1
33.0
3.93
3.95
3.98
4.00
4.03
4.04
4.08
4.10
4.13
4.15
4.17
4.19
6.37
6.40
6.46
6.45
6.46
6.48
2.87
2.89
2.91
2.93
2.95
2.96
146.8
147.7
148.9
149.6
150.3
151.1
110.8
109.4
109.9
109.5
109.2
109.1
6.9
7.3
10.2
6.0
6.3
6.4
4.8
-14.1
4.9
-3.9
-3.2
-1.0
1974: Jan___
Feb...
Mar..
Apr...
May..
June
36.7
36.8
36.7
36.6
36.7
36.7
40.4
40.4
40.3
39.3
40.3
40.1
36.4
37.6
36.7
36.3
36.7
36.9
32.9
32.9
32.9
33.0
32.9
32.7
4.05
4.08
4.10
4.11
4.17
4.21
4.19
4.22
4.24
4.25
4.33
4.38
6.48
6.52
6.57
6.60
6.62
6.74
2.98
2.98
3.00
3.00
3.07
3.10
151.7
152.7
153.6
154.3
156.1
158.2
108.4
107.7
107.3
107.2
107.3
107.8
4.4
8.1
8.1
5.5
14.8
17.3
-8.0
-6.6
-4.8
-1.4
1.1
5.5
36.7
36.7
36.7
36.6
36.2
36.4
40.2
40.2
40.0
40.1
39.5
39.4
36.9
36.4
36.5
37.2
37.2
37.8
32.6
32.6
32.5
32.4
32.4
32.3
4.23
4.27
4.32
4.35
4.36
4.39
4.43
4.48
4.53
4.57
4.58
4.61
6.75
6.89
6.94
6.90
6.88
6.96
3.12
3.14
3.15
3.18
3.19
3.19
158.7
160.2
162.1
163.3
164.0
165.1
107.4
107.0
106.8
106.7
106.2
106.2
3.8
12.2
14.8
9.3
5.2
8.2
-4.5
-4.4
-1.9
-1.2
-5.6
.0
July
Aug
Sept___
Oct .
Nov p..
Dec »..
1 Also includes other private industry groups shown in Table C-29.
> Includes eating and drinking places.
»Adjusted for overtime (in manufacturing only) and for interindustry employment shifts.
« Current dollar earnings index divided by the consumer price index.
' 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, 1947-74
[For production or nonsupervisory workers]
Average spendable weekly earnings, total
private nonagricultural *
Average gross weekly earnings
Total private
nonagricultural i
Year or month
Current
dollars
Manu- Contiact
facturing construction
1967
dollars 2
Retail
trade»
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
53.12
53.88
$58.87
65.27
67.56
$33.77
70.36
36 22
38.42
$44.64
48.51
49.74
$66.73
67 28
69.66
8 7
2.5
6 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
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
4 6
2.3
—7
- 6
3.1
1960
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
113 04
118.08
72 96
74.48
76.99
78 56
82.57
82 25
83.13
2.1
122.47
127.19
132.06
57.76
58.66
60.96
62 66
64.75
84.98
85 67
3.4
2 0
88.88
5.1
1965
1966
1967
1968
1969
95.06
112.34
114.90
114.61
103. 39
104.38
122.51
129.51
138.38
146. 26
154.95
164.49
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
98.82
101 84
107.73
100.59
101.67
101.84
1970
1971
1972
1973 .
1974 v
119.46
127. 28
136.16
145. 43
154.45
102.72
104. 93
108.67
109. 26
104.57
133.73
142. 44
154.69
165. 65
176.00
195.45
211.67
222. 51
236. 06
248. 71
82.47
86.61
90.99
95.57
101.04
104.61
112.41
89.95
92.67
96.64
95.73
90.97
$49.17
102.97
107. 53
121. 09
127. 41
134.37
Mar
Apr
May
June
Oct
_
..
Nov
Dec
. _ ..
1974:Jan
Feb
Mar
Apr
May
June
..
July
Aug
Sept...
Oct
Nov p
Dec p
2.7
2 5
4.9
4.9
4.6
7.5
7.7
5.2
5.5
_ 1
1 1
2.2
8
3 7
2 7
-.1
- 4
.6
-.4
-1.2
3.0
4.3
-.9
-5.0
$93.07
93.47
93.80
94.19
94.52
95.52
$123. 39
123. 98
124. 83
125. 99
125.98
126. 84
$96.44
96.28
96.39
95.84
95.91
5 3.5
5.9
8.5
11.7
-.1
8.5
5-2.6
-2.0
96.11
110.06
108. 30
108 97
108. 05
108 02
107. 93
166. 06
166. 46
168 09
168. 91
169 30
170.11
236. 33
236.16
237.08
237. 36
244. 83
241. 06
95.57
95.66
96.32
96.69
97.65
97.68
127.69
127.96
129 13
129. 08
129 94
130. 53
96.39
94.82
95 30
94.49
94 39
94.25
8.3
2.6
11 5
-.5
8 3
5.6
6.2
-17.9
6 2
-9.7
-1 3
-1.8
148. 64
150.14
150. 47
150. 43
153. 04
154. 51
106.19
105. 97
105. 08
104. 53
105. 23
105.30
169. 28
170.49
170.87
167. 03
174. 50
175.64
235. 87
245.15
241.12
239. 58
242.95
248. 71
98.04
98.04
98.70
99.00
101. 00
101.37
129. 89
131. 04
131.30
131. 27
133. 28
134.41
92.80
92.49
91.70
91.22
91.64
91.60
5-5.7
11.2
2.4
-.3
20.0
10.7
-3.9
-9.8
-6.1
5.7
155. 24
156. 71
105.07
104.65
104. 51
104.06
102.23
102.83
178. 09
180.10
181. 20
183. 26
180.91
181.63
249. 08
250. 80
253. 31
256.68
255.94
263.09
101.71
102.36
102.38
103.03
103.36
103.04
134.98
136.11
137.52
138.04
136.98
138. 50
91.36
90.90
90.65
90.22
5.2
10.5
13.2
4.6
-8.8
14.2
145. 80
146.15
147. 66
147.60
148. 71
149. 48
Aug
1 5
$228. 87
224.64
230.11
232.10
233. 73
235. 96
$109. 61
109.48
109. 40
109. 85
109. 23
109. 41
Sept
4.0
79
78
78
42
02
43
$140.23
140. 98
142. 09
143. 59
143. 58
144.69
July
2.1
Seasonally adjusted
annual rates
Seasonally adjusted
1973:Jan. .
Feb
.9
158. 54
159.21
157.83
159.80
$160.
162.
162.
164.
164.
164.
88.73
89.12
-2.1
3.6
-6.6
.9
-.5
-3.1
-5.9
-3.3
-5.5
-18.1
5.4
1 Also includes other private industry groups shown in Table C-29.
*8 Earnings in current dollars divided by the consumer price index.
Includes eating and drinking places.
* Average gross weekly earnings less social security and income taxes for a worker with three dependents.
* In annualizing the rates of change, the effect of the change in tax rates at the beginning of 1973 and 1974 is taken into
account separately.
Note.—See Note, Table C-29.
Source: Department of Labor, Bureau of Labor Statistics.
285
563-280 O - 75 - 19
TABLE C-32.—Output per man-hour and related data', private economy, 1947—74
[1967 = 100]
Output1
Year or quarter
Man-hours3
Output per
man-hour
Compensation
per man-hour3
Unit labor
costs
Implicit price
deflator*
Total Private
Total Private
Total Private
Total Private
Total Private
Total Private
non- private
nonnonnonnonnonprivate farm
farm private farm private farm private farm private farm
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
35.3
86.8
88 3
1960
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
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
102 0
104.4
96.3
99.5
100.0
102 3
105.3
94.2
98.0
100.0
102.8
103.2
95.1
98.4
100.0
102.7
102.5
88.4
94.5
100.0
107.8
115.6
89.2
94.6
100.0
107 5
114.6
93.8
96.5
100.0
105 0
112.1
93.9
96.2
100.0
104.6
111.8
94.8
97.2
100.0
103 6
108. 3
94.8
96.8
100.0
103 5
108.1
107.2
111.0
118.5
125.8
122.6
107.3
111.1
118.9
126.3
122.9
103.0
102.7
106.0
109.6
109.7
104.2
103.9
107.3
111.3
111.4
104.0
108.2
111.8
114.8
111.7
103.0
106.9
110.8
113.4
110.3
124.0
132.1
140.2
151.0
164.0
122.6
130.6
138.7
149.0
162.0
119.3
122.2
125.3
131.5
146.8
119.0
122.2
125.1
131.3
146.9
113.5
118.2
121.6
128.6
142.2
113 5
118.4
121.2
126.2
140.6
1947
1948
1949
1965
1966
1967
1968
1969
... .
.
1970
1971
1972
1973
1974 v
Seasonally adjusted
1972: 1
II
III
IV
115.0
. . 117.6
119.4
121.9
115.2
117.9
120.1
122.4
104.6
105.6
106.4
107.2
105.8
107.1
107.6
108.6
110.0
111.3
112.3
113.7
108.8
110.0
111.6
112.7
137.4
139.2
140.8
143.2
135.9
137.5
139.5
141.7
125.0
125.1
125.4
125.9
124.9
125.0
125.0
125.7
120.5
121.0
121.9
123.0
120.4
120.8
121.4
122.3
1973: 1
II
III
IV
124.9
125.6
126.1
126.8
125.2
126.0
126.8
127.1
108.3
109.3
110.2
110.7
109.9
111.0
111.9
112.3
115.3
114.9
114.4
114.5
113.9
113.4
113.3
113.2
147.6
149.6
151.6
154.9
145.5
147.6
149.7
153.0
128.0
130.3
132.5
135.2
127.8
130.1
132.1
135.2
124.8
127.1
129.8
132.5
123.4
125. C
126.7
129.5
1974- 1
II
III
IV*
124.2
123.6
122.9
119.7
124.7
123.7
123.0
120.2
110.6
109.9
109.9
108.5
111.8
111.7
111.8
110.2
112.3
112.4
111.8
110.3
111.5
110.7
110.1
109.0
157.3
162.5
166.5
170.0
156.0
160.3
164.2
167.9
140.1
144.5
148.9
154.1
140.0
144.7
149.2
153.9
136.6
139.8
144.0
148.7
133.9
138.7
143.0
147.1
i Output refers to gross product originating in the sector in 1958 dollars.
1
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' contributions 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-how and related data, private economy, 1948-74
[Percent change from preceding period]
Man-hours 2
Output i
Year or quarter
Total
private
Output per
man-hour
Compensation
per man-hour*
Implicit price
deflator*
Unit labor
costs
Private
Private Total Private Total Private Total Private Total
Total
nonnon- private non- private non- private non- private
farm
farm
farm
farm private farm
Private
nonfarm
1948..
1949..
4.8
-.3
4.4
-.1
0.4
3.4
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
1950..
1951..
1952..
1953..
1954..
10.2
6.3
2.5
5.1
-1.3
10.6
7.0
2.5
5.1
-1.5
2.0
3.2
.5
.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
1955..
19561957..
1958..
1959..
8.5
1.9
1.4
-1.3
7.0
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
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
I960..
1961..
1962..
1963..
1964..
2.4
1.9
6.8
4.2
5.7
2.4
1.9
7.1
4.3
6.1
-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
2.8
.2
-.5
L0
1.4
.9
.9
1.0
1.2
1.4
.9
.9
1.2
1.3
1965..
1966..
1967..
1968..
1969..
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
2.0
2.4
3.6
3.3
3.4
4.0
2.1
2.8
.4
2.9
3.5
1.6
2.7
-.2
4.1
6.9
5.8
7.8
7.2
3.7
6.1
5.7
7.5
6.7
2.2
.3
-.3
.4
1.1
.7
2.8
3.7
5.0
6.8
2.5
4.0
4.6
6.9
1.7
2.5
2.9
3.6
4.5
1.4
2.2
3.3
3.5
4.5
1970..
1971.
1972.
1973.
1974i
-.5
3.6
6.7
6.2
-.6
3.5
7.1
6.2
-2.7
-1.3
-.4
3.2
3.5
.1
-1.0
-.3
3.3
3.7
.1
4.0
3.4
2.6
.4
3.8
3.6
2.4
-2.8
7.2
6.5
6.1
7.7
8.7
6.9
6.6
6.2
7.4
6.4
2.5
2.6
4.9
11.6
6.5
2.6
2.4
4.9
11.9
4.8
4.1
2.9
5.7
10.6
5.0
4.3
2.4
4.1
11.4
-2.6
2^3
2.9
-2.7
g
Seasonally adjusted annual rates
1972: I
II
III
IV
1973: I.
I!
II!....
IV
1974: I.
7.1
9.3
6.4
8.7
7.0
9.7
7.8
8.0
4.5
4.1
2.8
3.2
4.5
5.0
1.8
3.9
2.5
5.0
3.5
5.3
2.5
4.5
5.9
3.9
8.9
5.2
4.7
7.1
8.7
4.8
5.9
6.4
6.2
.2
1.1
1.7
6.1
.3
.0
2.4
4.3
1.8
3.0
3.5
4.2
1.4
1.9
2.9
10.0
2.1
1.6
2.3
9.4
2.5
2.5
1.1
4.1
3.9
3.3
1.7
4.9
4.1
3.0
1.6
5.7
-1.7
-1.6
.5
4.3
-1.5
-.5
-.5
12.9
5.5
5.3
9.1
11.2
5.9
5.9
9.1
6.7
7.3
7.0
8.5
6.7
7.6
6.4
9.6
6.0
7.6
8.7
8.7
3.6
5.6
5.6
9.0
-7.8
-2.0
-2.3
-10.1
-7.5
-2.9
-2.3
-9.0
-.3
-2.3
.0
-5.2
- 1 . 8A
-7.5
.3
-2.3
-5.1
-5.9
-2.5
-2.4
-3.7
6.5
13.7
10.2
8.8
8.1
11.3
10.2
9.1
15.1
13.3
12.8
14.7
14.9
14.2
13.0
13.3
12.9
9.9
12.6
13.6
14.2
15.1
13.1
12.0
'A
-5.5
1
Output refers to gross product originating in the sector in 1958 dollars.
2 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.
s Wages and salaries of employees plus employers' contributions 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, 1929-74
[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
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
124.8
105.2
105.2
114.0
125.1
124.5
101.4
99.4
108.4
122.0
120.8
110.6
113.5
122.1
129.7
129.9
109.7
107.0
108.8
110.3
109.1
128.3
133.9
143.4
152.6
149.4
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
... .
.
. .
.
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
-
-
1970 .
1971
1972-1973
1974*
Seasonally adjusted
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
July
Aug
Sept
Oct
Nov.
Dec.
126.7
126.5
126.8
127.0
127.5
126.5
126.5
126.1
126.3
126.4
127.4
126.4
123.8
122.6
123.3
123.6
124.3
123.1
130.6
130.9
130.7
130.4
131.3
131.2
111.0
111.5
111.8
111.9
111.3
110.4
154.8
154.8
155.8
156.2
154.6
147.6
125.4
124.6
124.7
124.9
125.7
125.8
125.3
124.5
124.6
124 8
125.7
125.6
121.0
119.4
120.4
120.7
122.1
122.1
131.4
131.5
131.0
130.4
130.9
130.7
109.9
111.7
112.2
111.3
111.0
110.2
144.9
146.1
146.5
148.7
149.1
150.6
125 5
125.2
125.6
124.8
121.7
118.3
125.2
125.2
125.5
124.5
121.0
117.6
121.6
121.6
122.1
121.4
117.8
113.5
130.8
130.4
130.5
129.0
125.7
123.5
110.2
107.3
109.2
109.1
104.0
104.0
152.4
152.7
153.1
152.2
151.9
151.2
1974: Jan
Feb. . .
Mar
Apr
May
June_- . . .
July
Aug
Sept
Oct "___'_
Nov»
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—74
[1967=1001
Final products
Year or
month
Total
industrial
production
Consumer goods *
Total
Total
Materials'
Equipment
Automotive
products
Home
goods
Total
Intermediate
products
Total
Business
Durable
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
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
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
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
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
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
1970
1971
1972
1973
1974 P .
106.6
106.8
115.2
125.6
124.8
104.5
104.7
111.9
121.3
123.1
110.3
115.7
123.6
131.7
121.8
99.9
119.5
127.7
136.6
110.5
107.6
112.6
124.5
140.1
138.3
96.3
89.4
95.5
106.7
118.8
101.4
96.8
106.1
122.6
129.6
111.7
112.5
121.1
131.0
128.2
107.7
107.4
117.4
129.3
127.6
103.2
101.7
113.5
130.0
127.7
Seasonally adjusted
1973: Jan...
Feb..
Mar .
Apr..
May..
June.
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
July..
Aug...
Sept..
Oct...
Nov
Dec...
126.7
126.5
126.8
127.0
127.5
126.5
122.1
121.4
122.4
122.7
123.6
122.6
132.9
131.2
132.3
132.6
133.5
131.3
141.7
121.1
129.8
131.4
133.7
120.6
142.9
141.1
142.8
140.9
141.1
138.7
107.3
107.6
108.5
108.9
110.1
110.1
123.0
124.6
125.8
126.2
127.8
126.9
132.5
132.1
131.0
130.6
131.1
129.1
130.9
130.9
131.3
131.1
131.5
130.6
131.6
131.8
132.3
132.2
133.0
132.7
125.4
124.6
124.7
124.9
125.7
125.8
121.3
120.6
121.0
120.7
122.4
122.5
129.2
128.3
128.5
128.5
129.6
130.3
108.0
106.6
108.0
113.8
116.1
117.3
139.6
137.5
140.1
140.6
142.4
142.7
109.8
109.9
110.1
110.1
112.2
112.0
126.8
127.3
127.6
127.9
130.3
130.2
129.2
129.1
128.1
129.4
129.2
128.9
129.7
128.3
128.9
128.7
129.1
128.8
129.8
127.3
127.2
127.3
128.3
127.6
125.5
125.2
125.6
124.8
121.7
118.3
122.8
122.1
122.6
122.4
120.9
118.7
130.0
129.8
128.8
128.3
126.4
123.5
113.5
114.9
111.6
114.7
104.0
91.1
141.8
141.2
139.0
133.2
129.7
125.7
113.0
111.4
113.8
113.9
113.2
112.0
131.3
128.8
132.3
131.9
130.9
128.9
127.8
128.6
127.6
125.3
122.0
120.6
128.0
128.5
129.3
128.0
122.7
117.5
125.8
128.1
129.2
129.4
124.0
117.8
1974: J a n . .
Feb..
Mar
Apr..
May..
JuneJuly..
Aug
Sept..
Oct..
Nov J>_
Dec p_
1
Also includes clothing and consumer staples, not shown separately.
2 Also includes industrial fuel and power, not shown separately.
Source: Board of Governors of the Federal Reserve System.
289
TABLE O36.—Industrial production indexes, selected manufactures, 1947-74
[1967=100]
Durable manufactures
Nondurable manufactures
Ordnance,
private
Instruand
ments
government
Lumber,
clay,
and
glass
TexFurniPaper
tiles,
ture
and apparel, and
printmiscel- and
ing
laneous leather
Chemicals,
petro- Foods
leum,
and
and
tobacco
rubber
Primary
metals
Fabricated
metal
products
TransportaMachinery tion
equipment
1947..
1948..
1949..
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
I960..
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
55.5
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
1974 v
106.9
100.9
113.1
127.0
124.4
109.4
107.4
114.8
130.5
131.3
100.3
96.2
107.5
125.8
129.8
90.4
92.9
99.0
109.1
97.0
110.8
108.5
120.2
138.3
144.1
95.3
86.1
86.0
85.7
86.3
106.3
111.5
120.0
129.1
123.8
108.8
111.7
122.7
135.1
135.9
100.2
100.7
108.1
115.0
108.8
107.8
107.8
116.1
122.2
121.1
118.2
124.7
137.8
149.3
151.9
110.8
113.7
117.6
121.9
124.8
Year or
month
Seasonally adjusted
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
July
Aug
Sept
Oct
Nov
Dec
128.1
125.6
127.8
128.7
128.9
130.7
133.5
133.8
131.5
132.4
133.1
130.0
127.6
128.5
130.0
129.3
130.4
130.9
112.1
105.7
107.3
108.8
109.8
103.0
140.8
140.9
141.5
141.0
142.6
142.7
86.7
83.8
83.7
83.8
84.3
86.1
129.8
129.2
128.8
129.7
129.3
127.8
135.9
137.5
138.2
136.1
136.3
135.3
114.5
115.4
117.5
116.8
116.7
118.8
123.8
124.5
122.1
121.3
121.9
121.2
151.8
151.0
15D.9
151.1
151.6
151.6
121.3
122.0
122.2
121.7
124.7
123.0
1974:Jan
Feb
Mar
Apr
May
June
129.5
125.0
125.3
124.0
124.6
124.7
131.4
130.6
131.6
131.3
131.9
132.5
128.6
127.2
128.4
128.2
129.7
130.4
95.7
93.9
95.0
97.8
100.6
99.4
143.0
142.8
142.8
143.8
146.1
147.5
85.2
84.2
84.9
84.3
86.1
86.4
129.7
127.4
128.1
128.9
128.0
126.4
133.4
135.2
136.8
136.8
138.9
138.5
116.2
115.3
112.4
109.3
109.8
108.5
121.7
122.2
122.5
121.2
121.3
122.3
151.5
151.2
151.2
153.5
153.0
153.8
125.4
126.2
125.3
124.3
126.5
125.3
123.2
121.9
123.0
124.2
120.6
112.3
131.1
131.6
132.0
129.3
127.1
124.3
129.9
130.5
132.5
130.7
128.9
125.8
98.7
99.9
100.4
102.0
93.9
85.3
146.7
146.7
144.9
142.0
142.7
141.5
87.2
87.1
87.5
87.4
87.2
87.7
125.5
123.4
120.6
117.7
114.9
112.2
139.7
140.1
138.8
136.7
128.3
126.8
108.1
107.4
106.5
104.7
101.6
99.8
122.4
121.0
122.7
120.6
115.7
114.7
153.9
154.4
154.7
153.0
147.7
142.9
124.8
124.8
124.3
123.6
123.7
123.7
July
Aug
Sept
Oct
Nov v
Dec v
Source: Board of Governors of the Federal Reserve System.
290
TABLE C—37.—Capacity utilization rate in manufacturing and major materials industries, 1948-74
Manufacturing
Major materials industries
Utilization rate2
Period
1
Output
Capacity
Primary Advanced
processing processing
Total
1967 output=iOO
Percent
Output
Capacity
1967 output = 100
Utilization
rate 2
Percent
1948
1949
41.5
39.1
44.8
47.3
92.7
82.7
98.1
83.8
89.8
82.1
42.2
39.7
49.9
52.1
84.5
76.1
1950
1951
1952
1953
1954
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
46.4
50.1
48.7
52.6
50.8
54.2
56.3
58.4
61.2
64.6
85.6
89.1
83.3
86.0
78.6
1955
1956
1957..
1958
1959
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
60 4
62.4
62.2
58.8
66.2
67 7
70.7
74.6
78.6
82.5
89 2
88.3
83.4
74.7
80.2
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
67.3
69.7
74.6
79.4
87.2
85.5
88.4
92.0
94.9
98.4
78.7
78.8
81 1
83.7
88.6
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
93.8
100.5
100.0
107.1
113.6
103.4
109.1
114.3
119.9
126.2
90.8
92.1
87.4
89.3
90.0
1970
1971....
1972
1973
1974 p
105.3
105.2
114.0
125.1
124.1
134.6
140.3
145.0
150.7
157.1
78.3
75.0
78.6
83.0
79.0
81.5
79.3
84.6
89.7
84.6
76.5
72.7
75.4
79.4
76.0
112.7
115.3
126.2
136.3
133.8
130.7
135.1
140.8
146.5
153.3
86.2
85.3
89.6
93.0
87.4
1960.
1961
1962
1963
1964
..
.
Seasonally adjusted
1969: 1
II
III. .
IV
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
110.9
112.8
114.6
116.1
124.3
125.5
126.9
128.1
89.2
89.9
90.3
90.7
1970: L...
II
III
IV .
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
112.7
111.9
113.3
113.1
129.0
130.3
131.5
132.2
87.3
85.9
86.2
85.5
1971: 1 . . .
II
III
IV
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
115.0
117.3
113.1
115.6
133.1
134.4
135.9
137.2
86.4
87.3
83.2
84.3
1972: 1
II
III
IV..
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
120.9
124.2
128.1
131.6
138.8
140.1
141.4
142.9
87.1
88.7
90.6
92.1
1973: 1 .
II..
III
IV
122.5
124.8
126.2
126.7
148.0
149.8
151.6
153.4
82.8
83.3
83.3
82.6
89.6
90.1
90.0
89.0
79.1
79.7
79.7
79.2
134.2
136.1
137.6
137.2
144.3
145.9
147.2
148.7
93.0
93.4
93.5
92.3
1974: 1 v
II v
III v
IV p
124.8
125.3
125.3
121.0
155.0
156.4
157.9
159.3
80.5
80.1
79.4
75.9
87.3
86.3
85.1
79.9
76.9
76.8
76.3
73.8
135.6
137.3
136.5
125.8
150.4
152.3
154.2
156.2
90.2
90.2
88.5
80.6
1
2
..
May differ slightly from data shown in Table C-34 because of rounding.
Output as percent of capacity.
Note.—For description of series, see "Federal Reserve Bulletin," October 1971 and November 1966 issues for manufacturing series and April 1974 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 O-38.—New construction activity, 1929-74
[Value put in place, billions of dollars]
Private construction
Total
new
construction
Year or month
Residential
buildingsi
Public construction
Nonresidential buildings and other
constructionl
Total
Total»
New
housing
units
Total
Total
Commercials
Industrial
Other*
erally
owned
State
and
locally
owned 5
2.3
1929
10.8
8.3
3.6
3.0
4.7
1.1
0.9
2.6
2.5
0.2
1933
2.9
1.2
.5
.3
.8
.1
.2
.5
1.6
.5
1.1
1939
8.2
4.4
2.7
2.3
1.7
.3
.3
1.2
3.8
.8
3.1
1940
1941
1942
1943
1944
8.7
12.0
14.1
5.1
6.2
3.4
2.0
2.2
3.0
3.5
1.7
.9
.8
2.6
3.0
1.4
.7
.6
2.1
2.7
1.7
1.1
1.4
.3
.4
.2
.0
.1
.4
.8
.3
.2
.2
1.3
1.5
1.2
.9
1.1
10.7
3.6
5.8
6.3
3.1
1.2
3.8
9.3
5.6
2.5
2.4
2.0
1.3
.7
.6
3.4
.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
4.8
7.8
1.2
0
4
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
8.3
5.3
..
12.6
10.4
1.3
4.8
14.3
20.0
26.1
26.7
12.1
16.7
21.4
20.5
13.1
12.4
10.5
10.0
5.8
6.9
8.2
8.0
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
4
10.3
10.2
11.3
11.5
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
10.8
11.2
11.7
6.9
9.3
1.6
3.0
4.2
4.1
3.4
5.2
6.3
6.6
7.1
8.3
1955
1956 .._
1957
1958
1959
46.5
47.6
49.1
50.0
55.4
34.8
34.9
35.1
34.6
39.3
21.9
20.2
19.0
19.8
24.3
18.2
16.1
14.7
15.4
19.2
12.9
14.7
16.1
14.8
15.1
3.2
3.6
3.6
3.6
3.9
2.4
3.1
3.6
2.4
2.1
7.3
8.0
9.0
8.8
9.0
11.7
12.7
14.1
15.5
16.1
2.8
2.7
3.0
3.4
3.7
10.0
11.1
12.1
12.3
1960
1961
1962
1963
1964
54.7
56.4
60.2
64.8
67.7
38.9
39.3
42.3
45.5
47.3
23.0
23.1
25.2
27.9
28.0
17.3
17.1
19.4
21.7
21.8
15.9
16.2
17.2
17.6
19.3
4 2
4.7
5.1
5.0
5.4
2.9
8.9
8.7
9.2
9.7
10.3
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
73.7
76.4
78.1
87.1
93.9
51.7
52.4
52.5
59.5
66.0
27.9
25.7
25.6
30.6
33.2
21.7
19.4
19.0
24.0
25.9
23.8
26.7
27.0
28.9
32.8
4.0
4 0
7 8
9.4
6 0
6.8
15.1
16.6
22.1
24.0
25.5
27.6
28.0
18.0
20.0
22.1
24.2
24.7
94.9
110.0
124.1
135.5
134.4
66.8
80.1
93.9
102.9
96.1
31.9
43.3
54.3
57.6
46.5
24.3
35.1
44.9
47.8
37.0
34.9
36.8
39.6
45.3
49.6
9.8
11.6
13.5
15 5
16.0
6.5
5.4
18.6
19.8
21.5
23.6
25.9
28.1
29.9
30.2
32.6
38.3
3.3
4.0
5.8
1945
1946
New series
1946
1947. .
1948
1949.
1965
1966
1967
1968
1969
.
.
_.
1970 .
1971 . .
1972
1973
1974 p
„
6.2
9.9
See footnotes at end of table.
292
2.8
2.8
2.9
3.6
4.7
6.2
7.7
3.5
3 4
3.3
4.4
4.9
5.4
8.9
24.8
25.9
25.8
27 7
TABLE C-38.—New construction activity, 1929-74—Continued
[Value put in place, billions of dollars]
Private construction
Year or month
Total
new
construction
Residential
buildings i
Total
Total »
Public construction
Nonresidential buildings and other
constructionl
New
housing
units
Total
Commercials
Industrial
Total
Other*
State
Fedand
erally locally
owned owned 5
I
Seasonally adjusted annual rates
134.5
136.1
136.5
134.0
134.5
134.7
101.7
104.0
103.3
101.7
101.9
103.2
59.3
60.8
60.3
58.4
57.6
58.2
48.4
49.2
49.4
49.0
49.3
49.7
42.4
43.2
43,0
43.3
44.3
45.0
14.5
15.0
14.8
15.0
15.4
15.6
5.4
5.4
5.5
5.5
5.8
6.0
22.5
22.8
22.7
22.8
23.1
23.4
32.8
32.1
33.3
32.4
32.6
31.5
4.9
4.9
5.4
4.7
5.2
4.9
27.9
27.2
27.8
27.7
27.4
26.6
July...
Aug...
Sept..
Oct.—
Nov...
Dec..
137.2
137.4
137.3
136.4
135.7
133.2
105.6
105.5
104.1
103.3
102.3
100.1
59.1
59.3
58.0
56.3
54.5
52.4
49.7
49.5
48.2
46.2
44.2
42.1
46.4
46.2
46.1
47.0
47.7
47.8
16.0
15.8
15.4
15.8
16.1
15.9
6.5
6.4
6.8
6.7
7.1
7.3
24.0
24.0
23.8
24.5
24.6
24.5
31.6
31.9
33.2
33.2
33.4
33.1
4.8
4.7
4.8
4.8
4.9
4.8
26.8
27.2
28.4
28.3
28.5
28.3
1974:Jan...
Feb...
Mar...
Apr
May..
June..
132.6
136.3
135.1
136.4
138.2
136.9
97.8
98.8
98.6
97.4
97.9
98.4
49.7
48.9
48.6
48.2
48.0
48.3
39.8
38.9
39.1
39.3
39.7
39.5
48.1
49.9
50.0
49.3
49.9
50.1
15.8
16.7
16.7
16.3
16.4
16.4
6.8
7.9
7.5
6.9
7.6
8.0
25.5
25.4
25.8
26.1
25.9
25.7
34.8
37.5
36.4
39.0
40.3
38.5
4.7
5.1
5.4
5.7
5.3
5.8
30.1
32.4
31.0
33.2
35.0
32.7
Juiy..
Aug...
Sept..
Oct*_
Nov p.
Dec p..
137.9
134.5
132.9
133.0
130.1
129.1
98.0
96.3
94.6
94.2
92.1
90.1
48.9
48.3
45.9
43.3
40.9
38.9
38.9
37.5
35.5
33.7
31.7
29.7
49.0
48.0
48.7
50.9
51.2
51.2
16.0
15.1
15.7
16.3
16.0
15.4
7.2
7.6
7.7
8.3
8.7
8.7
25.9
25.4
25.4
26.3
26.5
27.1
40.0
38.2
38.3
38.9
38.0
39.0
5.1
4.9
5.4
5.5
5.4
6.2
34.9
33.3
32.9
33.4
32.6
1973:Jan...
Feb...
Mar...
Apr
May..
June..
i Beginning 1960, farm residential buildings included in residential buildings; prior to 1960, included in nonresidential
buildings
and other construction.
3
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.
«Includes Federal grants-in-aid for State and locally owned projects.
Source: Department of Commerce, Bureau of the Census, except as noted.
293
TABLE C—39.—New housing starts and applicationsJcor financing, 1929-74
[Thousands of units]
Housing starts
Private and
public i
Proposed
home construction e
Private»
Total (farm and nonfarm)
Year or month
Total
(farm
and
nonfarm)
Type of
structure3
Nonfarm
Government
home programs
(nonfarm) 3
New
private
housing
units
authorized s
Total
One
unit
Two or
more
units
FHA*
VA
Applications
for
FHA
commitments 4
Requests
for
VA
appraisals
509.0
1929
1933
93.0
1939
515.0
144.7
179 8
1940.
1941
1942
1943.
1944
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
1945
1946.
1947
1948
1949
326.0
1,023.0
1,268.0
1,362.0
1,466.0
38.9
67.1
178.3
216.4
252.6
78.8
91.8
160.3
71.1
90.8
56 6
121.7
286 4
293 2
327 0
1950
1951
1952
1953
1954
1955
1956
1957
1958..
1959
1,553.7
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
1,531.3 1,517.0
1,234.0
283.0
328.2
186.9
229.1
216.5
250.9
268.7
183.4
150.1
270.3
307.0
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
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
1,252.2
1,313.0
1,462.9
1,603.2
1,528.8
1,472.8
1,164.9
1,291.6
1,507.6
1,466.8
994.7
974.3
991.4
1,012.4
970.5
963.7
778.6
843.9
899.4
810.6
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
1,469.0
2,084. 5
2, 378. 5
2, 057. 5
1, 351. 0
(8)
(8)
(•)
(8)
(8)
620.7
812.9
1,433.6
901.2
2,052.2 1,151.0
2,356.6 1,309.2 1,047.5
2, 045. 3 1,132.0
913.3
1,336.3
448.8
887.4
233.5
301.2
198.4
73.6
56.8
61.0
94.0
104.0
86.1
72.8
1,351.5
1,924.6
2,218.9
1,819.5
1,051.8
315.0
366.8
225.2
83.2
87.1
143.7
217.9
209.4
161.9
160.1
.
New series
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972 .
1973
1974 P
.
.
.
.
..
See footnotes at end of table.
294
TABLE C-39.—New housing starts and applications for
financing,
1929-74—Continued
[Thousands of units]
Housing starts
Private and
public i
Proposed
home construction •
Private i
Total (farm and nonfarm)
Government
home programs
(nonfarm) 3
Year or month
Total
(farm
and
nonfarm)
Type of
structure2
Nonfarm
New
private
lousing
units
authorized s
Total
One
unit
Two or
more
units
FHA 4
VA
Applications
for
FHA
commitments4
Requests
for
VA
appraisals
Seasonally adjusted annual rates
1,088
1,013
922
89
110
92
75
82
79
96
105
100
98
109
89
2,267
2,256
2,121
1,987
1,902
2,070
124
102
94
71
91
99
217
216
200
168
166
166
920
921
854
718
737
636
81
69
66
52
57
37
88
92
71
62
57
68
1,814
1,777
1,656
1,379
1,351
1,285
92
69
94
51
56
30
136
141
137
142
134
124
1,014
671
866
537
634
540
582
39
48
48
41
63
57
61
64
72
74
79
75
1,282
1,325
1,410
1,296
1,120
1,106
46
62
71
71
89
91
124
163
144
150
157
185
958
812
844
777
788
678
380
322
306
332
202
190
54
58
61
73
71
67
71
69
75
79
71
77
1,017
106
83
97
127
105
73
159
184
167
187
158
127
1973: Jan..
Feb..
Mar..
Apr..
May .
June.
147.3
139.5
201.1
205.4
234.2
203.4
2,472
2,423
2,283
2,153
2,330
2,152
1,418
1,363
1,244
1,231
1,243
1,140
1,054
1,060
1,040
July..
Aug..
Sept.
Oct..
Nov..
Dec.
203.2
199.9
148.9
149.5
134.6
90.6
2,152
2,030
1,844
1,674
1,675
1,403
1,232
1,108
1974: Jan...
Feb...
Mar...
Apr...
May...
June..
86.2
109.6
127.2
160.9
149.9
149.5
1,464
1,922
1,499
1,630
1,471
1,596
July...
Aug...
Sept..
Oct...
Nov " .
Dec p.
127.2
114.0
99.6
97.2
74.9
54.6
1,338
1,134
1,150
1,109
990
990
957
938
767
793
1,056
962
993
931
900
823
782
730
802
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.
s Data are not available for new homes started under the Department of Agriculture, Farmers Home Administration
program.
* For 1- to 4-unit structuies.
5
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.
7
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, 1947-75l
[Billions of dollars]
Nonmanufacturing
Manufacturing
Year
or Quarter
Transportation
Total
Total
Durable
goods
Nondurable
goods
Total
Railroad
Air
Other
Public
utilities
Mining
Communication
Commercial
and
others
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
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
1965
1966
1967 .
1968
1969
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
1970
1971
1972
1973
1974 3
79.71
81.21
88.44
99.74
111.92
31.95
29.99
31.35
38.01
45.80
15.80
14.15
15.64
19.25
22.67
16.15
15.84
15.72
18.76
23.13
47.76
51.22
57.09
61.73
66.12
1.89
2.16
2.42
2.74
3.10
1.78
1.67
1.80
1.96
2.48
3.03
1.88
2.46
2.41
1.97
1.23
1.38
1.46
1.66
2.03
13.14
15.30
17.00
18.71
20.60
10.10
10.77
11.89
12.85
13.86
16.59
18.05
20.07
21.40
22.08
1975 3
117.09
49.92
23.08
26.83
67.17
3.67
3.17
1.78
2.34
21.46
1960
1961
1962
1963
1964
. .
. .
«.
34 75
Seasonally adjusted annual rate >
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
1973: 1
II....
III...
IV...
96.19
97.76
100.90
103. 74
35.51
36.58
38.81
40.61
17.88
18.64
19.73
20.48
17.63
17.94
19.08
20.13
60.68
61.18
62.09
63.12
2.59
2.77
2.82
2.76
2.11
1.75
1.95
2.05
2.21
2.72
2.49
2.20
1.53
1.62
1.79
1.73
18.38
18.08
18.58
19.80
12.34
12.70
13.12
13.24
21.53
21.55
21.36
21.35
1974: 1
IL...
III...
107.27
111.40
113.99
42.96
45.32
47.04
21.43
22.50
23.08
21.53
22.82
23.96
64.31
66.08
66.94
2.80
3.07
3.27
2.10
2.42
2.68
2.13
2.21
1.84
1.63
1.84
2.16
20.12
20.97
20.16
13.83
13.94
14.01
21.69
21.63
22.84
114.40
47.33
23.45
23.88
67.06
3.24
2.79
1.70
2.38
21.11
35.83
1975: | 3 _ _ _ 118.06
II 3 . . . 119.47
50.68
52.62
24.09
24.50
26.59
28.12
67.38
66.85
3.34
2.68
1.91
2.42
21.68
35.36
!V3._
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 1974. 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, 1947-74
[Amounts in millions of dollars]
Total manufacturing
and trade
Manufacturing
Merchant wholesalers
Retail trade
Year or month
Sales i
Inventories 2
Ratio
Sales
tories2
Ratio
Sales
Inventories 2
Ratio 3
15,513 25,897
1947.
1948.
1949.
35,260 52,507
33,788 49,497
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
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
9,893
10,513
10, 475
10,257
11,491
1960..
19614
1962..
1963..
1964..
60, 746
61,133
65, 417
68,969
73,687
94, 747
95,648
101, 090
105,477
111,480
1.56
1.54
1.51
1.49
1.47
30, 796
30,896
33,113
35, 032
37,335
45.069
50, 642
51,871
50.070
52, 707
53, 814
54,939
58, 213
60, 043
63,386
1965..
1966..
1967..
1968..
1969_.
80,292
87,186
89, 707
97,138
103,134
120,943
136, 803
145, 492
155, 845
167,360
1.45
1.47
1.57
1.55
1.57
41,003
44,869
46,449
50,282
53,555
1970...
1971...
1972...
1973...
1974«..
104,736 175, 561
112,315 184,401
124,244 197, 087
143,742 224, 004
.64,-'
344 267,818
1.64
1.61
1.53
1.45
1.48
6,808
6,514
1.42 17,316 28,543
1.53 16,126 26,321
7,957
7,706
7,695 9,284
8,597 9,886
8,782 10,210
9,052 10,686
8,993 10,637
Sales i
Inventories 2
Ratio 3
10,200 14, 241
1.13 11,135 16,007
1.19 11,149 15,470
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
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
22f 769
23,402
24,451
24,113
25, 305
11,656
11,988
12,674
13,382
14, 529
14,120
14,488
14, 936
16,048
17,000
1.22
1.20
1.16
1.15
1.14
18, 294
18,249
19,630
20, 556
21.823
26, 813
26,221
27, 941
29, 386
31, 094
68,221
77,965
84,655
90,875
97,074
15,611
16,987
17,108
18,366
19,756
18,317
20,765
21,885
22,997
24,910
1.15
1.15
1.23
1.22
1.21
23,677
25,330
26,151
28,490
29.824
34, 405
38,073
38,952
41,973
45,376
52,859 101 ,645
55,917 102,445
62, 017 107,719
71, 398 120,870
82,078 147,135
20, 583
22,327
24,862
30, 400
37,394
27,290
29, 695
32,817
38,302
45, 847
1.26
1.27
1.24
1.16
1.12
31,294
34,071
37, 365
41,943
44,872
46, 626
52,261
56,551
64, 832
74,836
Seasonally adjusted
1973:Jan...
Feb..
Mar...
Apr...
May...
June..
July...
Aug...
Sept...
Oct...
Nov...
Dec...
1974:Jan...
Feb...
Mar...
Apr
May...
June..
July...
Aug...
Sept..
Oct._.
Nov VDec v_.
135,848 198,939
138,047 ""1,887
200',
140,074 202,524
140,022 203,912
203, '
141, 726 -206,
1,228
141, 354 208,
\ 770
1.46
1.46
1.45
1.46
1.46
1.48
67,639 108,
^,187
68,496 109,082
1
"1,174
69,166 no;:
1,577
69,627 110,!
,
111,625
70,376
703
70,639 113,025
1.60
1.59
.59
L59
L. 59
1.60
27, 502
28,309
28,929
29,210
29,627
29, 548
33, 503
33,897
34,128
34,476
35,029
35,335
1.22
.20
.18
.18
.18
.20
40,707
41,242
41,979
41,185
41, 723
41,167
57,249
57,908
58, 222
58,859
59,574
60,410
145.583
145.584
145, 679
149,789
152,335
150,711
210,
1,773
212,
!,765
214,
t, 645
216,
,,889
219,
1,867
224,
i,004
1.45
1.46
1.47
1.45
1.44
1.49
72,257 113,910
72,290 114,907
72,146 116,114
74, 581 117,224
76,178 118,435
74; 617 120,870
58
59
61
57
55
62
30, 559
30,939
31,004
32, 238
33,181
33,978
35,770
36,238
36, 588
36,809
37, 509
38,302
61,093
61,620
61,943
62,856
63,923
64,832
154,064 226,918
156;098 230,140
'"" 239 233,120
675 235,216
924 239,217
052 243,831
1.47
1.47
1.46
1.46
1.47
1.50
76,389 122,570
76,978 124,831
78,197 126, 500
79,050 128,438
81,117 130,936
81,166 133,541
60
62
62
62
.61
65
34,743
35,986
37,170
37,342
36,913
37,293
38,986
39, 640
40,425
40,423
41,203
42,347
.17 42,767
:. 17 42,355
1.18 42,529
.14 42,970
L 13 42,976
1.13 42,116
42,932
L. 10 43,134
.09 43,872
.08 44,283
.12 44, 894
1.14 44, 593
168,824
171,644
170,862
171,647
.68,751
1.47
1.48
1.51
1.54
1.59
84,019 136,731
85,760 139,727
85,937 142,975
8 8 "093
- 145,062
86', 152 147,135
80,009 150,059
63
63
..66
.65
38,449
38,828
38,748
37,751
38,109
43,171
43,704
44, 500
45,642
45, 847
1.12
1.13
1.15
1.21
1.20
248,
1,775
253,
1,308
t, 622
258,
t, 612
264,
,818
267,
65,362
65,669
66,195
66,355
67,078
67,943
46, 356 68,873
47, 056
46.177
45,803
44,490
44,808
69,877
71,147
73,908
74,836
1 Monthly average for year and total for month.
3
Seasonally adjusted, end of period.
Inventory/sales ratio. For annual periods, ratio of weighted average inventories to average monthly sales; for monthly
data, ratio of inventories at end ct 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.
5
Based on seasonally adjusted data through November. (See Table C-42 for manufacturing data through December.
Based on those data, manufacturing ratio for 1974 is 1.64.)
3
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 G-42.—Manufacturers* shipments and inventories, 1947-74
[Millions of dollars]
Inventories8
Shipments *
Durable goods industries
Year or month
Total
Durable
goods
i nd ustries
Nondurable
goods
industries
19471948..
1949..
15,513
17,316
16,126
6,694
7,579
7,191
1950..
1951..
1952..
1953..
1954..
18,634
21,714
22,529
24,843
23,355
8,845
10,493
11,313
13,349
11,828
9,789
11,221
11,216
11,494
11,527
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
1960...
1961»_
1962...
1963...
1964...
30,796
30,896
33,113
35,032
37,335
1965..
1966..
1967..
1968.
1969.
1970—
1971...
1972...
1973...
1974 P..
Materials
and
supplies
Total
Total
FinWork
ished
in
process goods
Nondurable goods industries
Total
Materials
and
supplies
FinWork
in
ished
process goods
8,819 25,897 13,061
9,738 28,543 14,662
8,935 26,321 13,060
12,836
13,881
13,261
31,078
39,306
41,136
43,948
41,612
15,539
20,991
23,731
25,878
23,710
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
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
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
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
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
18,152
21,978
25,017
27,605
29,175
10,488
11,220
11,746
12, 299
12, 823
3,823
4,237
4,434
4,849
5,152
28, 229
29,948
33, 443
38, 724
42,648
24,629
25,969
28, 573
32,674
39,111
101,645
102,445
107,719
120, 870
150,059
66,768
66,050
70,218
79, 441
97,630
10,776
12,339
13, 469
14, 089
15,528
17, 375
17,638
18,134
18. 940
23; 141
25,994
28,147
29,724
31,763
33,703
52,859
55,917
62,017
71, 398
81,759
13,299
15, 501
16, 445
17,418
18,668
19,000
19,270
20, 010
24, 423
32,758
34,877
36, 395
37, 501
41,429
52,429
13,130
13,578
13, 865
15,818
20,698
5,278
5,647
5,968
6,597
8,228
11,683
12,690
13, 544
14, 615
15,728
16, 469
17f170
17,668
19,014
23,503
5,960
5,999
6,061
6,110
6,151
6,170
17,672
17, 753
17,980
17,871
18,097
18,197
8,966 10,720
7,894 9,721
30, 393
29,142
32,074
3G, 078
41,731
18,664
20,195
20,143
19,975
20,868
2,935 9,353
3,193 9,773
3,304 10,463
3,410 10,817
3,519 11,246
Seasonally adjusted
1973:Jan....
Feb....
Mar....
Apr....
May....
June...
67,639
68,496
69,166
69,627
70,376
70,639
37,011
37, 373
37,511
37, 810
38,376
38, 280
30,628 108,187
.
31,123 109,
109,082
31,655 110,174
31,817 110,577
32,000 111,625
32,359 113,025
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
14.194
14,261
14, 383
14,510
14, 857
July
Aug—
Sept
Oct....
Nov....
Dec.--.
72, 257
72,290
72,146
74, 581
76,178
74,617
39, 788
38,902
39, 248
40, 879
41, 055
39,465
32,469 113,910
33, 388 114,907
32,898 116,114
33,702 117,224
35,123 118,435
35,152 120, 870
74, 278
75,213
76, 249
76,951
77, 645
79,441
21,721
22,080
22,621
23,064
23,444
24,423
33,944
34,461
34,742
35,082
35, 519
36, 078
18,613
18,672
18, 886
18,805
18, 682
18, 940
39,632
39,694
39, 865
40,273
40, 790
41, 429
15.195 6,196 18, 241
15, 358 6,270 18,066
15, 395 6,320 18,150
15,613 6,347 18,313
15, 704 6,442 18,644
15,818 6,597 19,014
1974: Jan....
Feb....
Mar....
Apr
May...
June...
76, 389
76,978
78,197
79,050
81,117
81,166
39, 994
40,073
40,635
41,232
42, 538
42,785
36, 395 122, 570
36, 905 124, 831
37, 562 126, 500
37,818 128, 438
38, 579 130, 936
38,381 133, 541
80, 541
81, 925
83,014
84,108
85,715
87,366
36, 285
36, 942
37, 264
37, 721
38,335
38,870
19, 333
19,489
19,415
19,474
19,641
20,025
42,029
42, 906
43, 486
44,330
45, 221
46,175
16, 335
16,751
17, 062
17, 535
18, 046
18, 506
6,568
6,754
6,732
6,922
7,056
7,307
19,126
19, 401
19, 692
19,873
20,119
20,362
July...
Aug...
Sept...
Oct....
Nov p.
Dec p..
84,019
85, 760
85,937
88,093
86,152
80, 009
44,122
44,825
45,016
46,548
44,752
40,778
39,897 136, 731
40, 935 139, 727
40,921 142,975
41,545 145,062
41, 400 147,135
39,231 150,059
89,286
91,004
93,184
94,680
95, 787
97,630
24, 923
25, 494
26, 335
26, 913
27, 739
28,471
29,439
30, 416
31,102
31,846
32,164
32,758
39, 341
39, 913
40, 488
40, 848
41,121
41,731
20, 506
20, 675
21,594
21, 986
22,502
23,141
47, 445
48, 723
49, 791
50,382
51, 348
52,429
19,111
19, 623
20, 226
20,273
20, 353
20,698
7,503
7,681
7,748
7,823
7,917
8,228
20,831
21,419
21,817
22, 286
23,078
23, 503
1
Monthly average for year and total for month.
Book value, seasonally adjusted, end of period, except as noted.
Data prior to 1961 not completely comparable with later data. See Department of Commerce, Bureau of the Census,
"Series M3-1.1," September 1968.
2
3
Source: Department of Commerce, Bureau of the Census.
298
TABLE C-43.—Manufacturers'
new and unfilled orders, 1947-74
{Amounts in millions of dollars]
New orders t
Unfilled orders 2
Unfilled ordersshipments ratio 3
Durable goods
industries
Year or month
Total
Total
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
I960
1961
1962
1963
1964
1965
1966.
1967
1968
1969
1970
1971
1972
1973
1974
Capital
goods
industries,
nondefense
Nondurable
goods
industries
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
27,465
28,368
27, 559
26, 903
30,672
30,115
31,086
33,005
35,322
37,952
41, 803
45, 944
46,763
50, 243
53, 646
52,118
55, 726
62, 922
73, 836
83,330
14,996
15, 365
14,111
13,171
15, 948
15, 223
15,699
17,025
18,521
20,258
6,971
7,694
7,055
27,486
29, 745 7,324
34, 274 8,487
41,098 10,310
44,291 11,465
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
18,817
20, 224
21, 238
22, 577
24,097
24, 632
25, 981
28, 648
32, 738
39, 038
69,164
70, 274
72,184
72, 599
73, 600
74, 291
74, 288
75, 407
74, 024
77, 025
78, 601
76, 292
78,139
79,127
79, 547
82,059
85, 264
85,176
87, 517
90, 393
87,147
86,369
84,282
76,935
33,366
39,017
40, 399
40,615
41, 514
41, 946
41, 840
41, 983
41,154
43, 304
43, 475
41,027
41,515
42, 267
41, 974
44,124
46, 730
46, 848
47, 709
49,463
46, 402
45,084
43,182
37,946
30, 798
31,257
31,785
31, 984
32,086
32, 345
32, 448
33, 424
32, 870
33,721
35,126
35,265
36, 624
36, 860
37, 573
37,935
38, 534
38, 328
39, 808
40, 930
40,745
41, 285
41,100
38,989
22,986
25, 720
25, 526
27, 666
29, 549
Total
Durable
goods
industries
34,473
30,736
24,045
41,456
67,266
75,857
61,178
48,266
60,004
67,375
53,183
48,882
54,494
28,579
26,619
19,622
35,435
63, 394
72,680
58,637
45,250
56,241
63,880
50,352
45,739
50,654
46,133 43,401
48,395 45,241
47,307 44,485
50.940 47,958
58, 506 55,623
68,146 64,920
81,029 77,964
84,994 81,904
84,146 81, 209
85,265 82,313
76,272 73,286
73, 928 70, 798
84, 948 80,914
114,694 109,862
133,796 129,825
Nondurable
goods
industries
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
2,732
3,154
2,822
2,982
2,883
Total
3.42
Durable
goods
industries
Nondurable
goods
industries
4.12
4.27
4.55
4.00
3.49
3.44
0.96
.63
.72
.65
.63
.57
2,986
3,130
4,034
4.832
3,971
2.62
2.93
2.81
2.71
2.59
2.41
2.17
2.19
2.64
2.97
3.21
3.01
2.95
2.89
2.99
3.12
3.51
3.38
3.27
3.13
2.92
2.62
2.61
3.14
3.59
4,204
4,338
4,468
4,635
4,720
4,708
4,686
4,723
4,694
4,712
4,718
4,832
5,061
5,015
5,028
5,144
5,098
5,047
4,956
4,951
4,772
4,514
4,213
3,971
2.19
2.20
2.25
2.30
2.34
2.43
2.44
2.53
2.57
2.53
2.55
2.64
2.63
2.64
2.64
2.68
2.69
2.76
2.81
2.87
2.87
2.76
2.81
2.97
2.59
2.61
2.67
2.73
2.79
2.89
2.89
3.01
3.06
3.00
3.04
3.14
3.13
3.16
3.15
3.21
3.22
3.30
3.38
3.44
3.45
3.30
3.38
3.59
3,226
3,065
3,090
2,937
2,952
3.63
3.87
3.35
2.60
2.85
2.58
2.52
2.46
2.40
2.49
1.12
1.04
.85
.55
.60
.56
.52
.47
.45
.45
.44
.52
.57
.45
Seasonally adjusted
1973: Jan.
Feb.
Mar.
Apr.
May.
June
July.
Aug.
Sept
Oct.
Nov.
Dec
1974: Jan.
Feb.
Mar.
Apr.
May.
June
July.
Aug.
Sept
Oct..
Nov
Dec
9,567
9,449
10,035
9,945
10, 044
10,564
10,571
10, 283
10, 389
10, 928
11,160
10, 943
11,003
11,415
11,300
11,925
11, 804
12,011
12, 800
11,805
11,832
11,383
10,623
10,108
1
86, 473
88, 251
91, 269
94, 239
97,460
101,120
103,145
106, 268
108,144
110, 586
113,015
114,694
116,445
118,599
119,955
122, 961
127,114
131,129
134,623
139, 256
140,467
138, 738
136,869
133,796
82,269
83, 913
86, 801
89, 604
92, 740
96, 412
98, 459
101,545
103, 450
105, 874
108, 297
109,862
111,384
113,584
114,927
117,817
122,016
126,082
129,667
134,305
135,695
134,224
132,656
129,825
0.53
.54
.55
.57
.57
.57
.57
.57
.60
.56
.54
.57
.57
.56
.57
.56
.54
.54
.52
.52
.50
.47
.44
.45
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
M 3 - 1 . 1 , " September 1968, for these data.
3
3
Source: Department of Commerce, Bureau of the Census.
299
PRICES
T A B L E C—44.—Consumer price indexes by expenditure classes, 1929—74
For urban wage earners and clerical workers
11967=1001
Year or month
All
items
Housing
Food
Total
Rent
Apparel Transand
portaupkeep
tion
Reading Other
Medical Personal and
goods
recreacare
care
and
tion
services
1929
51.3
48.3
76.0
48.5
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
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. T
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
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
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
116.3
121 3
125.3
133.1
147.7
114.9
118.4
123.5
141.4
161.7
118.9
124.3
129.2
135.0
150.6
110.1
115.2
119.2
124.3
130.2
116.1
119.8
122.3
126.8
136.2
112.7
118.6
119.9
123.8
137.7
120.6
128.4
132.5
137.7
150.5
113.2
116.8
119.8
125.2
137.3
113.4
119.3
122.8
125.9
133.8
116.0
120.9
125.5
129.0
137.2
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
July
Aug
Sept
Oct
Nov
Dec
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
140.6
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
1974: Jan.
Feb
Mar
Apr
May
June
139.7
141.5
143.1
143.9
145.5
146.9
153.7
157.6
159.1
158.6
159.7
160.3
142.2
143.4
144.9
146.0
147.6
149.2
127.3
128.0
128.4
128.8
129.3
129.8
128.8
130.4
132.2
133.6
135.0
135.7
128.1
129.3
132.0
133.7
136.3
138 8
142.2
143.4
144.8
145.6
147.2
149.4
129.8
130.8
131.8
133.1
134.9
136.5
128.3
128.9
129.5
130.4
132.0
133.5
131.8
132.3
132.8
133.6
134.4
135.8
148.0
149.9
151.7
153.0
154.3
155.4
160.5
162.8
165.0
166.1
167.8
169.7
150.9
152.8
154.9
156.7
158.3
159.9
130.3
130.9
131.4
132.2
132.8
133.5
135.3
138.1
139.9
141.1
142.4
141.9
140.6
141.3
142.2
142.9
143.4
143.5
151.4
153.7
155.2
156.3
157.5
159.0
137.8
139.3
141.2
143.0
144.2
145.3
134.6
135.2
137.0
137.8
138.8
139.8
137.7
139.4
140.4
141.4
142.7
143.9
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
. . .
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
. . . .
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
.
.
..
1973- Jan
Feb... .
Mar
Apr
May
June
July
Aug .
Sept
Oct
Nov
Dec
Source: Department of Labor, Bureau of Labor Statistics.
300
TABLE O-45.—Consumer price indexes by commodity and service groups, 1939-74
For urban wage earners and clerical workers
[1967=1001
Commodities
All
items
Year or
month
Services
Special indexes
Commodities less food
All
commodities
Food
All
Durable
Nondurable
All
ervices
Rent
Services
less
rent
All
items
less
food
All
items
less
shelter
Nondurable
commodities
1939
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
82.5
83.7
86.3
88.6
88.2
88.7
89.6
90.6
91.7
92.9
94.5
97.2
100.0
104.2
109.8
91.5
92.0
92.8
93.6
94.6
95.7
98.2
100.0
103.7
108.4
88.0
89.1
89.9
91.2
92.4
94.4
99.1
100.0
103.6
108.9
93.1
93.4
94.1
94.8
95.6
96.2
97.5
100.0
103.7
108.1
96 7
96.6
97.6
97 9
98.8
98.4
98.5
100.0
103.1
107.0
90.7
91.2
91.8
92.7
93.5
94.8
97.0
100.0
104.1
108.8
83.5
85.2
86.8
88.5
90.2
92.2
95.8
100.0
105.2
112.5
91.7
92.9
94.0
95.0
95.9
96.9
98.2
100.0
102.4
105.7
81.9
83.9
85.5
87.3
89.2
91.5
95.3
100.0
105.7
113.8
88.8
89.7
90.8
92.0
93.2
94.5
96.7
100.0
104.4
110.1
88.9
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
116.3
121.3
125.3
133.1
147.7
113.5
117.4
120.9
129.9
145.5
114.9
118.4
123.5
141.4
161.7
112.5
116.8
119.4
123.5
136.6
111.8
116.5
118.9
121.9
130.6
113.1
117.0
119.8
124.8
140.9
121.6
128.4
133.3
139.1
152.0
110.1
115.2
119.2
124.3
130.2
123.7
130.8
135.9
141.8
156.0
116.7
122.1
125.8
130.7
143.6
114.4
119.3
122.9
131.1
146.1
114.0
117.7
121.7
132.8
151.0
1973: Jan
Feb
Mar
Apr
May
June
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
July
Aug
Sept
Oct
Nov
Dec
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
134.8
131.0
133.5
133.6
134.5
135.6
136.5
132.4
136.6
136.5
137.4
138.9
140.3
1974: Jan
139.7
Feb
141.5
Mar
143.1
Apr..... 143.9
May
145.5
June
146.9
137.0
139.3
141.0
141.8
143.4
144.8
153.7
157.6
159.1
158.6
159.7
160.3
127.9
129.2
131.1
132.6
134.5
136.2
123.3
123.4
124.3
125.6
127.5
129.7
131.3
133.5
136.1
137.7
139.5
141.0
144.8
145.8
147.0
147.9
149.4
150.9
127.3
128.0
128.4
128.8
129.3
129.8
148.0
149.1
150.4
151.4
153.1
154.7
135.6
136.8
138.4
139.6
141.3
142.9
137.8
139.8
141.5
142.3
144.0
145.4
142.1
145.2
147.2
147.8
149.3
150.4
145.6
147.6
149.4
150.7
152.0
153.0
160.5
162.8
165.0
166.1
167.8
169.7
137.5
139.3
140.9
142.2
143.3
143.9
131.5
133.2
134.8
136.8
138.0
138.8
141.8
143.7
145.3
146.1
147.2
147.7
152.5
154.2
155.9
157.3
158.6
160.0
130.3
130.9
131.4
132.2
132.8
133.5
156.6
158.4
160.3
161.9
163.3
164.8
144.4
146.1
147.8
149.1
150.4
151.3
146.4
148.3
150.0
151.2
152.5
153.5
150.9
153.0
154.8
155.8
157.2
158.3
.
.
.
.
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
. .
July
Aug
Sep
Oct
Nov
Dec...
148.0
149.9
151.7
153.0
154.3
155.4
Source: Department of Labor, Bureau of Labor Statistics.
301
563-280 O - 75 - 20
TABLE C-46.—Consumer price indexes, selected commodities and services, 1939-74
For urban wage earners and clerical workers
[1967=100]
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
89.2
75.9
71.8
69.1
77.4
80.2
89.5
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
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
(s)
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
90.8
91.2
92.0
92.8
93.6
96.0
100.0
105.6
111.9
90.9
91.3
92.1
93.1
93.9
95.5
97.5
100.0
103.3
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
85.3
86.6
87.5
89.6
92.9
96.8
100.0
104.0
111.3
74.9
77.7
80.2
82.6
84.6
87.3
92.0
100.0
107.3
116.0
80.8
83.4
85.6
87.7
90.1
92.6
96.2
100.0
105.6
110.6
111.8
116.5
118.9
121.9
130.6
107.6
112.0
111.0
111.1
117.5
104.3
110.2
110.5
117.6
122.6
110.2
112.9
115.0
118.8
128.9
113.1
117.0
119.8
124.8
140.9
116.5
120.1
122.7
127.1
136.1
111.2 123.7
115.2 130.8
118.2 135.9
123.4 141.8
143 8 156.0
126.8
132.6
139.2
146.8
166.0
123.1
133.0
136.0
136.9
141.9
124.2
133.3
138.2
144.3
159.1
116.7
122.5
125.8
131.6
141.7
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
124.4 126.0
124.7 126.6
125.5 128.7
127 0 130 0
128.5 130.8
130.0 130.7
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
154.3
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
1974: Jan
Feb
Mar
Apr
May
June
123.3
123.4
124.3
125.6
127.5
129.7
112.9
112.7
112.8
113.3
114.6
116.4
107.0
103.0
102.2
107.0
114.4
122.2
121.8
122.5
123.7
125.1
126.5
128.2
131.3
133.5
136.1
137.7
139.5
141.0
128.6
130.3
132.1
133.6
135.0
135.6
132.9
135.5
138.5
140.1
142.2
144.3
143.0
149.1
150.4
151.4
153.1
154.7
155.8
157.1
158.8
160.1
162.1
164.0
138.8
139.1
139.6
140.1
140.5
141.5
149.7
151.1
152.7
153.6
155.4
158,0
135.9
136.8
137.6
138.4
140.2
141.1
July
Aug
Sept
Oct
Nov
Dec
131.5
133.2
134.8
136.8
138.0
138.8
118.0
118.1
118.4
123.7
124.5
124.9
127.9
132.0
135.9
139.4
141.6
138.4
129.5
131.5
133.0
134.1
135.4
136.0
141.8
143.7
145.3
146.1
147.2
147.7
135.0
138.0
139.8
141.0
142.3
141.6
145.9
147.2
148.6
149.2
150.2
151.3
156.6
158.4
160.3
161.9
163.3
164.8
166.5
169.0
171.5
173.8
175.7
177.5
142.3
142.7
143.4
144.0
144.9
146.0
160.2
162.8
164.5
165.6
167.0
168.5
142.1
143.0
144.7
145.5
146.7
147.7
.
1950
1951
1952
1953
1954
1955
1956 .
1957
1958
1959
1960
1961
1962
1963.
1964
1965 . .
1966 .
1967
1968
1969
1970
1971
1972.. .
1973
1974
.
.
,
Other *
1
Includes certain items not shown separately.
2 Includes the services components of apparel, personal care, reading and recreation, and other goods and services,
s Not available.
Source: Department of Labor, Bureau of Labor Statistics.
302
T A B L E C—47.—Consumer price indexes, seasonally adjusted,
For urban wage earners and clerical
1971—74
workers
[1967=100, seasonally adjusted!
Special indexes
Year and month
!
All
All
All
items
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- Medand
porical
up- tation
keep
1971: Jan.
Feb.
Mar.
Apr.
May.
June
120.4
120.6
120.7
120.9
121.6
122.1
117.2
117.6
118.0
118.5
119.1
119.6
119.1
119.3
119.5
119.8
120.4
121.0
115.7
115.8
116.2
116.6
117.1
117.7
116.0
116.1
116.9
117.7
118.2
118.8
115.5
115.5
115.7
115.9
116.5
116.7
115.3
115.5
115.8
115.9
116.5
116.9
115.8
115.7
115.8
116.0
116.5
116.8
128.0
127.4
126.8
126.6
127.6
128.6
112.0
112.8
113.3
113.8
114.3
114.8
118.4
118.8
118.8
119.1
119.7
120.0
117.3
117.9
118.2
118.2
118.6
119.0
125.2
125.9
126.7
127.2
128.0
128.5
July.
Aug.
Sept.
Oct..
Nov.
Dec.
122.5
122.9
123.2
123.3
123.5
123.7
119.9
120.2
120.2
120.3
120.5
121.0
121.3
121.5
121.7
122.0
122.2
122.7
117.9
118.1
118.1
118.4
118.5
118.9
119.0
119.2
118.9
119.4
120.0
120.
117.1
117.3
117.5
117.6
117.6
117.7
117.1
116.9
116.8
116.9
116.9
117.1
117.1
117.8
118.0
118.2
118.1
118.4
128.8
129.4
129.9
130.3
131.0
131.3
115.7
116.1
116.3
116.6
116.5
117.6
120.3
120.2
120.4
120.6
120.7
120.8
119.0
119.3
119.6
119.2
118.7
118.4
129.2
129.9
130.3
129.9
130.0
130.4
1972: Jan..
Feb.
Mar.
Apr.
May.
June.
124.1
124.4
124.6
124.9
125.3
125.6
121.3
121.7
121.8
121.9
122.3
122.5
123.0
123.6
123.7
123.9
124.2
124.5
119.2
119.8
119.8
119.9
120.2
120.5
120.
122.4
122.3
122.2
122.3
122.6
118.1
118.3
118.6
118.6
119.0
119.0
117.4
117.7
117.9
118.1
118.3
118.6
118.6
118.8
119.1
119.1
119.6
119.4
132.4
132.7
132.9
133.2
133.9
134.4
118.3
118.6
118.8
119.1
119.6
120.0
121.2
121.4
121.5
121.8
122.0
122.0
118.7
118.7
118.9
118.7
119.1
119.2
130.8
131.1
131.3
131.4
131.9
132.3
July.
Aug.
Sept.
Oct..
Nov.
Dec.
126.0
126.4
126. 7
126.8
127.1
127.3
123.0
123.2
123.8
124.2
124.7
124.9
125.0
125.2
125.9
126.2
126.6
126.9
121.0
121.3
122.0
122.3
122.7
122.9
123.2
123.7
124.6
125.5
126.4
126.5
119.5
119.9
120.4
120.4
120.5
120.7
119.2
119.6
120.2
119.9
119.9
120.2
119.8
120.0
120.4
120.8
121.1
121.3
135.1
135.5
135.6
135.7
135.9
136.5
120.2
120.3
120.9
121.2
121.7
121.9
122.1
122.0
122.9
123.3
123.6
124.0
119.7
120.5
122.0
121.1
121.4
121.2
132.6
132.8
133.0
134.2
134.4
134.7
1973: Jan..
Feb.
Mar.
Apr..
May.
June.
127.6
128.2
128.5
129.1
129.6
130.2
125.7
126.5
127.8
128.8
129.4
130.3
127.6
128.3
129.6
130.5
131.2
132.1
123.9
124.9
126.2
127.4
128.2
129.1
129.2
131.4
134.2
136.1
137.8
139.5
120.9
121.4
121.9
122.4
122.8
123.3
120.1
120.5
120.8
121.4
121.7
121.7
121.4
122.0
122.6
123.3
123.8
124.6
136.9
137.5
137.8
138.4
139.1
139.7
122.7
123.6
124.0
124.6
125.1
125.9
124.0
124.3
125.1
125.8
126.2
126.7
120.8
121.5
122.0
122.7
123.1
124.0
135.2
135.4
135.7
135.9
136.5
136.9
July.
Aug.
Sept.
Oct..
Nov.
Dec.
130.5
131.2
131.9
132.8
133.7
134.5
130.9
133.5
133.6
134.5
135.7
136.6
132.2
134.9
135.4
136.4
137.5
138.4
129.3
132.7
132.7
133.5
134.7
135.7
139.9
148.4
148.0
149.1
151.2
151.9
123.6
124.0
124.4
125.0
125.9
126.7
121.9
122.5
122.8
123.0
122.9
123.1
124.9
125.3
125.1
126.5
127.9
129.5
139.8
141.1
142.8
144.4
145.2
146.0
126.0
126.6
127.3
129.2
132.2
136.0
126.9
127.9
128.0
128.6
129.1
129.5
124.3
124.4
124.9
125.0
125.8
126.6
137.2
137.5
138.3
140.9
141.2
141. 7
1974: Jan..
Feb..
Mar.
Apr.
May.
June
135.7
137.
138.5
139.6
141.2
142.8
138.2
139.9
141.5
142.2
143.7
145.1
140.0
141.6
143.2
143.9
145.3
146.7
137.6
139.7
141.1
141.8
143.3
144.5
154.5
157.9
158.8
158.1
159.5
160.0
128.3
129.7
131.5
132.7
134.2
135.8
123.5
124.0
124.9
126.0
127.4
129.1
131.8
133.9
136.4
137.7
139.2
140.9
147.3
148.4
149.5
150.5
151.8
153.1
140.7
142.9
144.2
146.3
148.3
149.7
129.8
131.2
132.5
133.6
134.5
135.6
127.8
129.7
132.5
133.8
135.9
138.1
142.5
143.5
144.7
145.3
147.1
149.3
July.
Aug.
Sept.
Oct..
Nov.
Dec
144.5
146.4
147.9
148.8
150.1
151.0
146.3
148.3
150.0
151.2
152.7
153.7
147.6
149.6
151.5
152.8
154.2
155.3
145.2
147.5
149.3
150.7
152.0
153.0
159.4
161.7
164.7
166.9
169.2
170.4
137.6
139.6
141.0
141.8
142.9
143.5
131.0
133.1
135.1
136.5
137.6
138.7
142.4
144.4
144.9
145.5
146.5
147.1
154.6
156.1
157.9
159.6
160.7
162.5
151.2
152.9
154.6
156.0
157.3
158.6
136.5
139.6
139.6
140.0
140.9
140.8
140.0
141.2
143.3
142.9
143.4
143.4
151.2
153.5
155.2
156.6
157.8
159.3
Source: Department of Labor, Bureau of Labor Statistics.
303
TABLE C-48.—Percent changes in consumer price indexes, major groups, 1948-74
[Percent change]
Year or month
Dec.
to
Dec. 2
Commodities less
food
Food
All items
Dec.
to
Dec. 2
Year
to
year
Year
to
year
Dec.
to
Dec. 2
Year
to
year
Services^
Year
to
year
Dec.
to
Dec.
1948
1949
2.7
-1.8
7.8
-1.0
-0.8
-3.7
8.5
-4.0
5.3
-4.8
7.7
-1.5
6.1
3.6
6.3
4.8
1950
1951
1952
1953
1954
5.8
5.9
.9
.6
1.0
7.9
2.2
.8
.5
9.6
7.4
-1.1
-1.3
-1.6
1.4
11.1
1.8
-1.5
-.2
-5.7
4.6
-.5
-1.4
-.1
7.5
.9
.2
-1.1
3.6
5.2
4.6
4.2
1.9
3.2
5.3
4.4
4.3
3.3
1955
1956
1957
1958
1959
.4
2.9
3.0
1.8
1.5
-.4
1.5
3.6
2.7
.8
-.9
3.1
2.8
2.2
-.8
-1.4
.0
2.5
2.2
.8
1.5
-.7
1.0
3.1
1.1
1.3
2.3
3.1
4.5
2.7
3.7
2.0
2.5
4.0
3.8
2.9
1960
1961
1962
1963
1964
1.5
.7
1.2
1.6
1.2
1.6
1.0
1.1
1.2
1.3
3.1
-.9
1.5
1.9
1.4
1.0
1.3
.9
1.4
1.3
-.3
.6
.4
.3
1.2
.4
.7
.8
2.7
1.9
1.7
2.3
1.8
3.3
2.0
1.9
2.0
1.9
1965
1966
1967
1968
1969
1.9
3.4
3.0
4.7
6.1
1.7
2.9
2.9
4.2
5.4
3.4
3.9
1.2
4.3
7.2
2.2
5.0
.9
3.6
5.1
.7
1.9
3.1
3.7
4.5
.6
1.4
2.6
3.7
4.2
2.6
4.9
4.0
6.1
7.4
2.2
3.9
4.4
5.2
6.9
1970
1971
1972
1973
1974
5.5
3.4
3.4
8.8
12.2
5.9
4.3
3.3
6.2
11.0
2.2
4.3
4.7
20.1
12.2
5.5
3.0
4.3
14.5
14.4
4.8
2.3
2.5
5.0
13.2
4.1
3.8
2.2
3.4
10.6
8.2
4.1
3.6
6.2
11.3
8.1
5.6
3.8
4.4
9.3
3.3
4.2
-1.6
Change from preceding month
UnSeasonally
adjusted adjusted
0.2
.4
.4
.4
.3
.4
0.2
.4
.3
.4
.4
.4
.2
.3
.3
.5
.2
2.1
1.9
2.6
1.5
1.0
1.4
2.1
1.7
2.1
1.4
1.2
1.2
-0.5
.3
.5
.7
.2
1.8
.3
.8
.2
1.9
.4
.8
6.0
-.7
.1
1.1
.9
.3
6.1
-.3
.7
1.4
.5
CMCM«<*
July
Aug
Sept....
Oct
Nov. .
Dec
Unadjusted
0.5
.6
.9
.6
.6
.6
.9
.7
.6
1.6
2.5
1.0
-.3
'A
1.7
2.2
.6
-.4
.9
.3
.6
1.0
1.5
1.1
1.4
1.3
1.3
1.1
1.4
.9
1.1
1.2
.7
.7
.8
.6
1.0
1.0
.1
1.4
1.4
.7
1.0
1.1
-.4
1.4
1.9
1.3
1.4
.7
1.0
1.3
1.1
.9
.8
.4
1.3
1.5
1.0
.6
.8
.4
1.1
LI
1.1
.9
.8
.9
'.7
.9
1.3
1.1
,6
1.1
1.0
.7
1.3
1.2
.9
.8
.8
—
1974: Jan . .
Feb
Mar
Apr
May
June
Seasonally
adjusted
0.3
.7
.9
.7
.6
ooco
July
Aug
Sept
Oct
Nov
Dec
Unadjusted
1.2
1.1
.5
.9
.7
1.3
1.3
.9
.9
.7
1
.fi
CD
1973: Jan
Feb . . .
Mar
Apr
May..
June
UnSeasonally
adjusted adjusted
1.1
.6
.6
Percent changes for services are based on unadjusted indexes since these prices have little seasonal movement.
Changes from December to December based on unadjusted indexes.
Note.—The seasonally adjusted changes for the all items index are based on seasonal adjustment factors and seasonally
adjusted indexes to two decimal places.
2
Source: Department of Labor, Bureau of Labor Statistics.
304
TABLE C-49.—Wholesale price indexes by major commodity groups, 1929-74
[1967 = 100]
Farm products and processed
foods and feeds
Year or month
All commodities
Total
Farm
products
Processed
foods
and
feeds
Industrial commodities
Total
Textile
products
and
apparel
Hides,
Fuels
skins,
and
Chemicals
leather,
related and allied
and
products,
products1
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
47.4
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
44.0
47.3
50.7
94.3
101.5
89.6
41.4
50.3
64.
75.0
75.5
78.5
90.9
109.4
117.5
101.6
82.9
88.7
80.6
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
72.6
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
I960..
1961..
1962..
1963..
1964..
1965..
1966 _.
1967..
1968..
1969..
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..
1974..
110.4
113.9
119.1
134.7
160.1
111.7
113.8
122.4
159.1
177.4
111.0
112.9
125.0
176.3
187.7
112.1
114.3
120.8
148.1
170.9
110.0
114.0
117.9
125.9
153.8
107.1
108.6
113.6
123.8
139.1
110.3
114.0
131.3
143.1
145.1
106.2
114.2
118.6
134.3
208.3
102.2
104.2
104.2
110.0
146.8
1973: Jan...
Feb...
Mar..
Apr...
May..
June..
124.5
126.9
129.8
130.5
133.2
136.0
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
122.8
124.2
125.3
126.0
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
127.4
129.2
131.1
133.4
105.1
105.6
106.7
107.7
109.3
110.4
July..
Aug..
Sept..
Oct...
Nov..
Dec...
134.3
142.1
139.7
138.7
139.2
141.8
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
126.1
126.7
127.4
128.5
130.1
132.2
124.2
125.2
126.8
128.5
130.0
131.4
141.4
143.0
143.8
143.8
143.0
141.9
134.7
135.2
137.4
139.3
144.1
151.5
110.8
111.0
111.5
112.7
113.5
115.6
1974: Jan...
Feb...
Mar..
Apr...
May..
June..
146.6
149.5
151.4
152.7
155.0
155.7
177.8
180.6
176.2
169.6
167.4
161.7
202.6
205.6
197.0
186.2
180.8
168.6
162.1
164.7
163.0
159.1
158.9
157.4
135.3
138.2
142.4
146.6
150.5
153.6
133.8
135.2
136.1
137.5
139.1
141.7
142.6
143.4
143.4
145.4
146.3
146.0
162.5
177.4
189.0
197.9
204.3
210.5
118.2
120.2
127.3
132.3
137.0
142.8
July..
Aug..
SepL.
Oct...
Nov..
Dec.
161.7
167.4
167.2
170.2
171.9
171.5
172.7
183.4
179.1
185.1
189.0
186.5
180.8
189.2
182.7
187.5
187.8
183.7
167.6
179.7
176.8
183.5
189.7
188.2
157.8
161.6
162.9
164.8
165.8
166.1
142.1
142.3
142.1
140.5
139.8
138.4
146.6
146.2
148.1
145.2
144.5
143.2
221.7
226.0
225.0
228.5
227.4
229.0
148.4
158.5
161.7
168.5
172.9
174.0
51.5
52.3
53.0
See next page for continuation of table and for footnotes.
305
TABLE C-49.— Wholesale price indexes by major commodity groups, 1929-74—Continued
11967=1001
Industrial commodities—Continued
Transportation
FurniequipMachin- ture
and Nonmement:
Miscelery and housetallic
Motor
laneous
equipmineral
hold
products
vehicles
ment
durables products
and
equip-2
ment
and
plastic
products
products
Pulp,
Metals
paper,
and
and
metal
allied
products
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
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
I960..
1961..
1962..
1963..
1964..
1965..
1966.
1967.
1968..
1969..
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
98.6
98.6
97.8
98.3
98.5
98.6
100.0
102.8
104.8
1970
1971
1972
1973
1974
108.3
109.2
109.3
112.4
136.2
113.6
127.0
144.3
177.2
183.6
108.2
110.1
113.4
122.1
151.7
116.6
119.0
123.5
132.8
171.9
111.4
115.5
117.9
121.7
139.4
107.5
109.9
111.4
115.2
127.9
112.9
122.4
126.1
130.2
153.2
108.7
114.7
118.0
119.2
129.2
1973: Jan...
Feb...
Mar...
Apr...
May_.
June..
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
July..
Aug...
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
117.7
119.8
123.8
129.4
133.7
135.6
183.7
184.1
191.3
200.2
198.0
192.2
131.8
132.9
137.2
144.4
146.6
147.5
145.0
148.0
154.7
161.2
168.7
174.0
126.0
127.0
129.0
130.8
134.1
137.2
119.0
120.2
121.3
122.9
124.5
126.1
138.7
142.1
144.2
146.7
150.7
152.3
122.9
123.1
123.2
123.3
124.9
126.1
139.5
143.4
145.6
147.5
148.5
149.4
188.6
183.7
180.4
169.4
165.8
165.4
153.3
162.9
164.2
166.0
166.9
167.2
180.3
185.6
187.1
186.9
186.7
184.6
140.3
144.3
146.8
150.0
152.7
154.0
128.2
129.8
132.8
135.5
136.9
137.7
156.4
157.6
159.8
162.2
163.4
164.3
128.5
130.1
130.6
138.1
138.9
140.7
Year or month
Rubber
IT;.
Nov...
Dec...
1974: Jan...
Feb...
Mar..
Apr...
May..
June..
July..
Aug..
Sept..
Oct...
Nov..
Dec.
Lumber
and
wood
1
Prices for most items in this grouping are lagged and refer to 1 or 2 months earlier than the index month.
2 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, 1947-74
(1967=100]
Intermediate materials, supplies, and components i
Crude materials
Materials and components for
manufacturing
Year or month
All
commodities
Materials
and
components
for conFor
For
Com- strucnonurable durable Donents tion
manu- manufactur- facturing
ing
Materials
Total
Foodstuffs
and
feedstuffs
Nonfood
materials
except
fuel
Fuel
Total
Total
For
food
manufacturing
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
111.7
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
I960..
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
109.1
104.5
106.7
100.0
102.1
106.8
93.5
96.3
100.0
102.3
106.4
96.8
99.2
100.0
102.3
105.9
97.4
99.3
100.0
102.2
105.8
97.6
101.9
100.0
101.5
107.0
100.0
100.8
100.0
101.3
102.5
96.8
98.6
100.0
103.3
109.3
93.8
97.1
100.0
102.3
105.6
96.2
98.8
100.0
104.9
110.9
1970..
1971..
1972..
1973..
1974..
110.4
113.9
119.1
134.7
160.1
112.2
115.0
127.6
174.0
196.1
112.1
114.2
127.5
180.0
189.4
109.8
110.5
121.9
161.5
205.2
122.3
138.5
148.7
164.5
219.4
109.8
114.0
118.7
131.6
162.9
110.0
113.0
117.0
127.7
162.2
112.9
116.2
119.9
146.0
209.2
104.0
105.6
109.4
121.2
155.0
115.1
118.8
123.8
133.7
171.7
111.1,
114.7
117.6
121.4
139.9
112.6
119.5
126.2
136.7
161.6
1973:Jan...
Feb...
MarApr...
May...
June..
124.5
126.9
129.8
130.5
133.2
136.0
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
128.4
131.3
134.0
119.7
121.1
123.5
125.0
126.5
127.7
126.9
130.8
136.0
136.4
138.1
142.6
112.6
113.6
115.7
117.8
119.8
121.7
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...
134.3
142.1
139.7
138.7
139.2
141.8
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
131.7
135.8
133.7
134.3
135.4
138.5
128.1
130.6
130.7
131.7
132.6
135.4
143.3
163.5
157.6
158.7
156.0
162.6
122.5
123.4
124.9
126.0
127.0
129.3
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
1974:Jan...
Feb...
Mar...
Apr...
May...
June..
146.6
149.5
151.4
152.7
155.0
155.7
201.3
205.6
200.6
192.9
186.5
178.5
203.2
207.2
197.6
182.6
176.6
164.6
201.4
206.8
210.4
214.1
203.7
202.3
182.4
186.3
190.3
205.4
207.4
213.6
142.0
144.6
149.1
152.8
157.6
160.9
138.9
141.6
146.8
150.9
156.6
160.7
173.5
184.0
186.4
180.4
187.0
191.5
132.6
135.0
140.8
146.4
147.9
154.1
144.7
146.5
154.0
161.1
169.6
174.7
126.1
127.2
129.4
131.1
135.2
138.2
145.0
147.0
151.1
156.0
160.7
163.0
July—
Aug...
Sept..
Oct...
Nov
Dec...
161.7
167.4
167.2
170.2
171.9
171.5
194.5
203.5
196.8
200.3
198.2
193.9
184.9
196.5
187.4
192.9
190.9
187.8
210.0
213.1
206.1
205.4
200.7
188.8
222.0
228.4
236.8
244.3
251.9
263.7
166.3
174.0
173.8
176.8
178.6
178.4
166.7
172.7
174.1
176.6
180.7
179.8
205.9
221.2
222.6
234.5
265.8
257.3
159.8
166.0
166.6
169.5
171.
170.7
180.2
184.9
186.5
185.9
186.2
185.5
141.6
145.6
148.0
150.2
152.6
153.6
166.6
169.3
170.9
169.7
169.7
170.1
See next page for continuation of table and for footnotes.
307
TABLE C-50.—Wholesale price indexes by stage of processing, 1947-74—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 3
InterConmediate * sumer
materials,
finished
supplies,
goods
and com- excluding
ponents 3
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
106.5
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
96.7
98.1
100.0
102.1
104.6
1970.
1971.
1972.
1973.
1974.
110.4
113.5
117.2
127.9
147.5
109.9
112.7
116.6
129.2
149.3
113.5
115.2
121.7
146.4
166.9
108.3
111.3
113.6
120.5
146.8
107.0
110.9
113.2
115.8
126.3
111.9
J16.6
119.5
123.5
141.0
118.8
122.7
131.1
155.2
219.1
110.0
114.3
118.9
128.1
159.5
107.7
111.2
113.5
118.6
138.6
1973:Jan...
Feb..
Mar..
Apr..
May..
June.
121.0
122.5
124.7
125.4
126.2
127.4
121.2
122.9
125.7
126.3
127.1
128.6
131.8
134.1
140.2
140.7
141.9
145.0
115.4
117.4
118.1
118.8
119.5
120.2
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
126.4
127.9
128.6
114.8
116.0
116.6
117.4
118.0
118.4
July..
Aug_.
Sept..
Oct...
Nov..
Dec.
127,7
131.9
131.2
131.2
132.0
133.6
128.9
134.2
133.2
133.0
133.6
135.5
145.4
158.6
156.1
153.6
153.7
155.7
120.5
120.9
121.2
122.6
124.4
126.6
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
128.5
129.3
130.1
131.0
132.4
134.8
118.7
119.0
119.0
120.2
121.4
123.1
1974:Jan...
Feb..
Mar..
Apr..
May...
June.
137.4
140.1
141.0
142.1
143.8
144.0
139.9
143.2
143.8
144.7
146.0
145.4
162.7
167.0
164.6
163.1
162.4
157.0
130.2
134.0
137.8
141.2
144.3
147.7
119.6
120.2
120.9
122.0
123.7
125.0
128.3
129.3
130.9
132.4
135.9
138.7
188.2
202.7
212.2
224.8
216.5
217.5
137.9
140.6
145.8
150.8
156.1
159.6
125.6
128.4
131.0
133.5
136.0
138.6
July..
Aug..
Sept..
Oct...
Nov..
Dec.
148.1
150.6
152.1
155.2
157.7
158.0
149.9
152.1
153.2
156.0
158.6
158.7
164.6
167.7
168.7
171.4
177.4
175.9
150.6
153.0
154.2
155.7
156.2
156.9
126.8
127.3
128.4
133.1
133.8
135.3
141.5
145.2
148.0
151.9
154.1
155.3
228.9
229.5
229.8
229.0
228.7
221.2
164.5
169.6
170.6
172.1
173.0
173.2
141.1
142.7
143.9
146.7
147.2
148.3
* Includes, in addition to subgroups shown, processed fuels and lubricants, containers, and supplies.
> Excludes crude foodstuffs and feed stuffs, plant and animal fibers, oilseeds, and leaf tobacco.
1
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
Indexes," January-February 1967.
Source: Department of Labor, Bureau of Labor Statistics.
308
TABLE C-51.—Percent changes in wholesale price indexes, major groups, 1948-74
[Percent change]
Farm products
and processed
foods and feeds
All
commodities
Industrial
commodities
Dec.
to
Dec1
Year
to
year
Dec.
to
Dec1
Year
to
year
Dec.
to
Dec1
1948
1949.
1.5
-6.1
8.2
-5.0
5.0
-5.0
8.6
-2.1
1950
1951..
1952
1953
1954
14.7
1.2
-3.4
.5
-.6
3.9
11.4
-2.7
-1.4
.2
14.0
.4
-1.4
1.4
.2
1955..
1956
1957
1958
1959
1.6
4.5
2.0
.5
-.3
.2
3.3
2.9
1.4
.2
1960
1961..
1962
1963
1964
.5
-.2
.0
-.1
.4
.1
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
Year or month
Consumer finished goods
Total
Foods
All except foods
Dec.
to
Dec.1
Year
to
year
Dec.
to
Dec1
Year
to
year
Dec.
to
Dec1
Year
to
year
-6.8
7.6
- 8 . 9 -11.7
1.11
-5.6
7.5
-4.6
-2.4
-7.4
9.2
-8.1
4.C
-4.5
6.3
-2.1
3.6
10.4
-2.3
.8
.2
17.0
3.5
-8.2
-2.3
-2.6
4.8
13.8
-3.9
-6.5
10.2
2.7
-3.1
-.1
- 6
1.7
9.4
-1.2
-1.7
- l
13.3
5.3
-5.9
-2.2
-1.9
1.9
12.4
-.9
-5.2
g
8 2
.9
-1.1
1.6
3
1.6
7.2
-1.3
.9
.3
4.3
4.2
1.1
.9
1.2
2.2
4.5
2.8
.3
1.8
-6.4
6.0
4.2
-.2
-4.4
-4.7
1
3.4
4.7
-4.7
-.1
3.1
3.0
.2
-.7
1 5
2.9
22
-.8
-2.9
3.6
5.3
.4
-3.7
-2.b
1.7
2.5
1.7
.2
.8
.8
2.4
2.5
.1
1.3
.0
-.5
.0
3.9
-.6
.6
-2.1
.C
.2
.0
1.1
-1.0
-.6
2 1
-.8
.1
-.4
.2
1.0
2.2
-.4
.9
-1.2
.5
.4
-.3
\l
5.2
-1.8
.5
-1.3
.4
.4
.3
-.3
.2
-.6
-.1
-.2
.5
.6
.1
.1
-.2
.0
-.1
3.4
1.7
1.0
2.8
4.8
2.0
3.3
.2
2.5
3.9
1.4
2.2
1.9
2.7
3.9
1.3
2.2
1.5
2.5
3.4
9.5
.2
-1.8
3.5
7.5
4.2
6.6
-3.4
2.4
5.5
4.C
1.6
1.2
3 1
4.9
1.9
34
.6
27
3.7
9.1
1.4
-.4
4.8
8.2
3.8
6.5
-1.6
3.7
6.1
.9
1.7
2.1
2 0
2.9
.8
1.4
1.9
2.1
2.4
2.2
4.0
6.5
15.4
20.9
3.7
3.2
3.6
3.2
3.6
10.7
25.6
3.8
3.6
3.4
6.8
22.2
-1.4
6.0
14.4
26.7
11.0
3.4
1.9
7.6
30.0
11.5
1.4
3.3
4 5
13.6
17.1
3.2
2.5
3 5
10.8
15.6
-2.5
5.9
8 0
22.5
13.0
3.2
1.5
b6
20.3
14.0
3 9
1.8
22
7.4
2G.5
3.0
3.2
2.1
4.5
16.9
4.D
13.1
18.9
Year
to
year
.3
3.5
5.8
-4.7
Change from preceding month
SeaSeaSeaUnad- sonally Unad- sonally Unad- sonally
adjusted
justed
adadjusted
justed
justed
justed
0.5
1 l
1.2
1 l
.9
.6
0.2
1 l
1.1
9
1.0
.7
3.3
3 9
4.6
1
4.7
5.6
2.3
2 8
4.6
.6
3.8
5.0
1.6
1 4
2.3
5
.6
1.2
1.1
1 l
2.5
1.0
.1
.6
.8
1.6
.1
.5
.6
.9
1 2
1.6
15
1.4
-4.1
17.6
-6.0
-3.9
—1 4
2.2
-4.4
19.1
-5.6
-2.2
-1 0
1.0
3.4
2.0
1.3
.9
1.5
.5
2.9
1.5
1.2
1.1
1.3
.5
2.3
2.1
3.0
2.9
2.7
2.1
2.0
2.1
2.9
2.8
2.7
2.2
5.8
1.6
-2.4
-3.7
-1.3
-3.4
4.6
.4
-2.4
-2.4
-2.2
-4.0
3.9
3.5
-.1
1.8
1.0
-.2
3.7
3.9
.1
2.5
1.2
2.7
2.4
.8
1.2
.6
.2
2.7
2.5
1.0
1.1
.9
.0
6.8
6.2
-2.3
3.4
2.1
-1.3
6.4
7.6
-1.9
5.1
2.5
-2.5
1973:Jan
Feb
Mar
Apr
May
June
1.3
1 9
2.3
5
2.1
2.1
July
Aug
Sept
Oct
Nov
Dec
-1.3
5.8
-1.7
-.7
4
1.9
-1 4
6.2
-1.5
1974:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1
SeaSeaSeaUnad- sonally Unad- sonally Unad- sonally
justed
adadjusted
adjusted
justed
justed
justed
0.9
1 4
2.2
8
1.9
2.1 -
2.3
1 5
4.7
1.1
.6
1.8
0.2
1 0
i!o
3.7
17
4.5
.4
.9
2.2
.2
4.1
-.7
-.2
6
1.3
.0
4.4
-.6
.6
.3
9.1
-1.6
-1.6
.3
.8
1.3
-.9
10.5
-2.5
1.0
.1
.9
1.0
1 0
1.4
.3
.4
.3
.8
1.2
1.0
3.2
2.4
2.6
2.1
.6
.9
-.4
1.0
.6
4.5
2.6
-1.4
-.9
-.4
-3.3
3.0
2.4
-1.3
-.1
-.6
-3.8
2.0
2.2
2.0
1.9
1.9
1.9
2.0
2.1
2.2
1.9
1.7
2.1
3.1
1.5
2.8
1.7
.8
2.7
1.8
-.4
4.8
1.9
.6
1.6
3.5
-.8
3.6
3.2
-.3
4.3
3.5
-1.2
1.8
1.1
.8
1.9
.3
.7
1.8
1.3
1.2
1.7
.4
.4
L8
1.7
.1
.7
.5
.3
!o
0.2
1.0
.6
.7
.4
.4
Changes from December to December are based on unadjusted indexes.
Note.—The seasonally adjusted changes for all commodities and industrial commodities are based on seasonal adjustment factors and seasonally adjusted indexes to two decimal places.
Source: Department of Labor, Bureau of Labor Statistics.
309
MONEY STOCK, CREDIT, AND FINANCE
TABLE C-52.—Money stock measures, 1947-74
[Averages of daily figures; billions of dollars, seasonally adjusted]
Components and related items
Overall measures
Mj
Year and
month
Mi
(Currency
plus
demand
deposits)
(Mi plus
time
deposits
at commercial
banks
other than
large CD's)
M3
( M j plus
deposits
at nonbank
thrift
institutions)
Deposits at commercial banks
Currency '
Time and savings 3
Demand 2
Total
Large
CD's*
Other
Deposits
at nonbank
thrift
institutions*
U.S.
Government
demand
deposits
(unadjusted) s
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
1.0
1.8
2.8
1950:
1951:
1952:
1953:
1954:
1955:
1956:
1957:
1958:
1959:
116.2
122.7
127.4
128.8
132.3
135.2
136.9
135.9
141.1
143.4
25.0
26.1
27.3
27.7
27.4
27.8
28.2
28.3
28.6
28.9
91.2
96.5
100.1
101.1
104.9
107.4
108.7
107.6
112.6
114.5
36.7
33.2
41.1
44.5
48.3
50.0
51.9
57.4
65.4
67.4
87.4
88.5
2.4
2.7
4.9
3.8
5.0
3.4
3.4
3.5
3.9
4.9
2.8
5.7
9.6
12.8
16.2
15.4
20.5
23.5
11.0
72.9
79.9
92.0
102.3
113.4
130.1
142.5
162.7
180.6
183.5
97.3
107.9
120.1
134.4
149.2
161.3
167.4
183.0
194.5
201.3
4.7
4.9
5.6
5.1
5.5
4.6
3.4
5.0
5.0
5.6
Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
210.9
299.4
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
201.7
208.7
217.1
228.6
242.8
258.9
277.1
301.3
317.8
349.6
382.3
392.2
314.4
336.5
362.9
393.2
426.3
462.6
485.2
532.6
576. ff
593.5
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
158.2
162.7
72.9
82.7
97.6
112.0
126.2
H6.3
157.9
183.1
204.1
194.5
1970:
1971:
1972:
1973:
1974:
Dec...
Dec...
Dec...
Dec...
Dec*..
221.4
235.3
255.8
271.5
283.8
425.3
473.1
525.7
572.2
613.9
642.8
727.9
823.2
895.3
955.0
49.1
52.6
56.9
61.6
67.7
172.3
182.7
198.9
209.9
216.1
229.3
271.2
313.8
364.5
420.4
25.4
33.5
43.9
63.8
90.3
203.9
237.7
269.9
300.7
330.1
217.5
254.9
297.5
323.1
341.1
7.3
6.9
7.4
6.3
4.6
1973: Jan
Feb...
Mar
Apr
May
June
256.9
257.9
258.0
259.4
262.3
265.3
529.8
532.9
535.3
538.8
544.2
549.5
830.5
836.2
840.9
846.5
854.4
862.6
57.2
57.5
57.9
58.6
58.9
59.3
199.8
200.4
200.1
200.8
203.4
206.0
318.1
324.4
331.7
337.1
341.5
344.9
45.2
49.4
54.4
57.7
59,6
60.6
272.9
275.0
277.3
279.4
281.9
284.2
300.7
303.3
305.6
307.8
310.2
313.1
8.1
9.9
10.4
8.3
8.7
7.1
July
Aug
Sept
Oct
Nov
Dec
266.1
266.0
265.7
266.6
269.4
271.5
551.9
555.1
557.2
561.6
567.2
572.2
866.8
870.7
873.9
880.0
887.8
895.3
59.5
59.8
60.2
60.5
61.0
61.6
206.6
206.2
205.5
206.1
208.4
209.9
348.3
354.3
357.6
359.6
360.8
364.5
62.5
65.3
66.1
64.7
63.1
63.8
285.8
289.0
291.5
295.0
297.7
300.7
314.9
315.6
316.7
318.4
320.6
323.1
6.5
4.1
5.3
6.0
4.3
6.3
1974: Jan
Feb
Mar
Apr
May
June
270.9
273.1
275.2
276.6
277.6
279.7
575.5
580.8
585.5
589.4
591.5
596.7
900.7
907.7
914.9
920.5
923.0
929.5
62.0
62.7
63.3
63.9
64.3
64.6
208.9
210.4
211.9
212.8
213.2
215.0
371.0
375.9
378.3
386.7
392.5
398.4
66.4
68.2
68.0
73.9
78.5
81.3
304. 6
307.7
310.3
312.7
314.0
317.0
325.2
326.9
329.5
331.1
331.5
332.7
8.1
6.6
6.4
6.0
7.6
6.1
July
Aug
Sept
Oct
Nov
Dec*
280.2
280.5
280.8
281.7
283.3
283.8
599.4
602.0
603.6
607.8
612.6
613.9
933.4
936.6
938.9
944.3
951.1
955.0
64.8
65.4
65.8
66.4
67.3
67.7
215.4
215.1
215.0
215.3
216.0
216.1
402.8
405.3
407.6
412.3
414.9
420.4
83.6
83.8
84.8
86.2
85.5
90.3
319.2
321.5
322.8
326.1
329.3
330.1
334.0
334.5
335.3
336.6
338.5
341.1
5.4
4.0
5.4
3.7
3.3
4.6
1
2
Currency outside the Treasury, the Federal Reserve Banks, and the vaults of all commercial banks.
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).
4
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, 1930-74
[Billions of dollars1
Loans
Total loans
and investments 2
End of year
or month i
Total 2
Investments
Commercial
and
industrial
U.S. Government securities
Other
securities
Loans plus
loans sold to
bank affiliates 2
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
114.2
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
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
1959 3
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
1969 *
197.4
212.8
231.2
250.2
272.4
300.1
4 316 1
352.0
390 2
401.7
116.7
123 6
137.3
153.7
172.9
198.2
4 213 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
1970
1971
1972
1973
1974 p
435.5
484.8
556.4
630.3
s 681.2
291.7
« 320. 3
377.8
447.3
8 494.1
110.0
115.9
f 129.7
155.8
s 180. 5
57.9
60.1
61.9
52.8
48.8
85.9
« 104. 4
8 138. 3
29*. 7
• 323.1
380.4
451.6
s» 498. S
638.9
647.4
657.5
666.9
673.4
s 677. 5
452.9
458.3
468.2
476.3
481.4
s 484.5
157.9
159.5
165.1
169.5
172.9
174.6
54.5
56.4
56.4
57.1
57.2
56.4
131.5
132.7
132.9
133.5
134.8
8 136.6
457.3
463.3
473.1
481.7
487.1
8 489.9
686.6
P92.0
687.0
687.1
s 688. 5
681.2
494.3
500.2
498.2
499.5
s 500.9
494.1
177.9
180.7
180.8
182.5
8 183.0
180.5
55.8
55.3
52.2
49.7
49.3
48.8
136.5
136.5
136.6
137.9
8 138.3
138.3
499.7
9 505.5
503.5
504.7
s 505.8
498. S
1940
1941
1942
1943-.
1944...
1945
1946..
1947
1948
.._
7.3
8.1
9.0
9.2
Seasonally adjusted
1974: Jan
-
Feb
Mar
Apr
May
June
July p
Aug p
Sept p
Oct p
NOVP.
Dec p
_
_.
116.7
130.2
283.0
1 Data are for last Wednesday of month or year (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
a t o n e large bank.
8
Beginning June 1974, the merger of a large mutual savings bank and a nonmember commercial bank increased total
loans and investments by $0.6 billion, loans by $0.5 billion, and other securities by $0.1 billion.
Beginning November 1974, the liquidation of one large bank reduced total loans and investments by $1.5 billion, total
loans by $1.0 billion, commercial and industrial loans by $0.6 billion, and other securities by $0.5 billion. In addition, commercial and industrial loans were increased by $0.1 billion due to loan ^classifications at one large bank.
9
Beginning August 1974, reflects new definition of affiliates included and different group of reporting banks. Amount of
total loans sold was reduced by $0.1 billion.
2
3
Source:
Board of Governors of the
Federal Reserve System.
311
TABLE C-54.—Total funds raised in credit markets by nonfinancial sectors, 1966-74
[Billions of dollars]
Item
Total funds raised
U.S Government
.
.
. . . .
Public debt securities _
Agency issues and mortgages
All other nonfinancial sectors
Corporate equities
Debt instruments
.
Debt capital instruments .
State and local government securities
_ .
Corporate and foreign bonds
Mortgages
Home
Other residential
Commercial
Farm..
Other private credit
Bank loans n.e.c.
Consumer credit
Open-market paper
Other
1966
1967
1968
67 9
82 4
3.6
13.0
2.3
1.3
1969
1970
1971
1972
1973
95 9
91 8
98 2
147 4
169 4
187 4
13 4
—3 6
12 8
25 5
17 3
9 7
8.9
4.1
10.3
3.1
—1.3
2 4
12.9
— 1
26.0
_ 5
13.9
3 4
7.7
2 0
64.3
69.4
82 5
95 5
85 4
121 9
152 1
177 7
1.0
63.3
2.4
67.0
.0
82.6
3.9
91 6
5.8
79 7
11.5
110 4
10.5
141 6
7.2
170 4
38 9
45 7
50 6
50 6
57 6
84 2
94 9
97 1
5.6
11.0
22 3
7,8
15.9
22 0
9.5
14.0
27 1
9.9
13.0
27 7
11.2
20.6
25 7
17.6
19.7
46 9
14.4
13.2
67 3
13.7
10.2
73 2
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
19
12.8
5.8
5.3
1.8
26.1
8.8
10.0
2.0
39.6
10.3
14.8
2.6
43.3
8.4
17.0
44
24.4
21.3
32.0
41 0
22 1
26.3
46 7
73 4
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
64
6.0
3.8
5 9
9 3
11.2
—.9
6.6
21 8
19.2
—1.6
7 3
38 6
22.9
1.8
10 0
64.3
69.4
82.5
95.5
85.4
121.9
152.1
177.7
1.5
6.3
22.7
33.8
4.0
7.9
19.3
38.1
2.8
9.8
30 0
39.9
3.7
10.7
31 7
49.4
2.7
11.3
23 4
48 0
4.6
17.8
39 8
59 6
4.3
14.2
63 1
70.5
7.5
12.3
72.8
85.1
3.1
5.4
25 3
3.6
5.0
29.6
2.8
5.6
31.5
3.2
7.4
38 9
3.2
5.3
39 5
4.1
8.7
46.8
4.9
10.4
55.3
8.6
9.3
67.2
67.9
82.4
95.9
91.8
98.2
147.4
169.4
187.4
41.3
50.5
61.4
47.7
63.3
83.1
105.8
124.3
24.4
52.1
48.3
5 4
66 6
93.7
101.9
88.8
4.1
20.3
12.8
39.3
14.5
33.9
7.7
-2.3
10.5
56.1
12.7
81.0
16.7
85.2
12.6
76.3
13.0
7 3
22.6
16 7
21.0 - 1 0 . 3
12 9
8 0
39.2
16 9
40.6
40 4
39.3
45 9
48.1
28.2
16.9
—1.5
13.0
42.3
—3.4 —10.6
3.8
35.5
8.4
—1.4
8.1
17.0
—9.0 —14.0
1.6
9.2
-.9
—.3
5.7
—4.3
1.5
12.3
—6.5
.8
27.5
—3.8
—1.6
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
Demand deposits and currency..
Time and savings accounts
At commercial banks „
At savings institutions
.
Credit market instruments, net~_
U.S. Government securities
Private credit market instruments...
Corporate equities
Less security debt.
6.5
-1.7
—.9
18. S
10.7
-5.3
2.1
12.1
—5.4
4.5
20.5
—8.2
—4.4
Other sources:
Foreign funds..
At banks
Direct
. ..
.
Change in U.S. Government cash
balance
U.S. Government loans r
Private insurance and pension reserves
Other
1.8
4,9
5.1
10.6
2.4
23.9
15.8
10.1
3.7
—1.9
2.3
2.7
2.6
2.5
9.3
1.3
—8.5
10.9
-3.2
27.2
5.2
10.6
6.E
—.4
4.9
1.2
4.6
—1.1
4.9
.4
2.9
2.8
2.8
3.2
3.2
-.3
2.6
-l.i
18.1
2.2
18.2
3.0
18.8
6.9
19.7
10.6
21.8
5.1
24.8
9.1
27.1
18.4
29.5
22.;
See footnotes at end of table.
312
3.e
3.C
TABLE G-54.—Total funds raised in credit markets by nonfinancial sectors, 7966-74—Continued
[Billions of dollars]
1974 unadjusted
quarterly flows
Item
1974 seasonally
adjusted annual rates
III
III
Total funds raised.._
35.0
52.0
177.3
206.5
199.1
U.S. Government
3.4
-6.2
4.5
8.7
2.1
15.1
3.0
.4
-6.4
.2
4.9
-.4
7.0
1.7
1.3
.8
16.6
-1.5
31.6
58.2
44.0
168.7
204.5
184.0
Corporate equities
1.6
30.0
1.1
57.1
1.4
42.6
6.3
162.4
4.5
200.0
5.4
178.6
Debt instruments
20.2
29.3
23.9
92.7
110.8
87.7
4.0
4.3
11.9
4.9
5.9
18.5
3.2
5.5
15.2
15.8
19.6
57.3
19.7
20.9
70.2
12.3
21.8
53.5
6.6
1.4
2.9
1.0
11.0
2.4
3.7
1.4
9.4
2.3
2.4
1.1
33.0
7.1
13.4
3.8
41.7
8.7
15.1
4.8
31.1
9.2
8.8
4.4
9.8
Public debt securities...
Agency issues and mortgages
All other nonfinancial sectors
Debt capital instruments
State and local government securities
Corporate and foreign bonds..
Mortgages.
Home
Other residential
Commercial
Farm...
Other private credit
Bank loans n.e.c
Consumer credit
Open-market paper
Other
48.5
27.7
18.7
69.7
89.1
90.8
6.1
-2.9
3.6
3.0
16.2
5.9
3.6
2.1
5.7
4.5
5.9
2.7
41.7
8.2
11.4
8.4
47.1
17.2
18.0
6.8
35.2
15.8
22.5
17.3
31.6
58.2
44.0
168.7
204.5
184.0
3.4
* 3.7
6.0
18.5
6.5
4.4
15.8
31.6
3.0
3.0
13.9
24.1
14.1
14.5
51.4
88.7
25.1
17.4
53.6
108.3
13.3
11.5
57.6
101.5
1.7
-.4
17.2
3.1
3.1
25.4
1.8
2.2
20.2
6.3
4.4
78.0
8.5
10.2
89.7
8.7
8.3
84.6
35.0
52.0
48.5
177.3
206.5
199.1
22.9
33.0
26.7
132.8
124.7
127.7
11.4
30.7
3.1
89.7
105.9
38.7
-12.9
24.3
8.2
22.5
8.8
7.1
82.6
9.3
96.5
36.3
13.9
10.4
18.1
4.4
8.4
.4
45.1
37.6
81.0
15.5
28.7
11.6
2.3
23.6
43.1
18.8
89.0
5.2
5.7
.9
.2
-1.0
4.7
-1.2
.2
11.4
10.4
19.0
27.8
-2.7
.9
5.3
18.6
-4.1
1.0
37.4
44.0
2.7
6.7
5.6
12.4
28.8
15.9
2.3
.4
2.7
3.9
3.2
2.4
11.1
1.4
9.5
19.3
14.2
1.7
-1.6
.4
6.6
4.0
.4
.5
9.0
2.5
-.6
1.1
8.8
6.9
.2
2.2
-3.8
1.7
36.9
18.3
1.6
4.3
35.0
14.5
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
Demand deposits and currency.
Time and savings accounts..
At commercial banks
At savings institutions
Credit market instruments, net.
U.S. Government securities
Private credit market instruments...
Corporate equities
Less security debt
-5.7
2.4
7.6
3.2
-4.5
Other sources:
Foreign funds
At banks
Direct
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
25.6
4.0
TABLE C-55.—Private liquid asset holdings, nonfinancial investors, 1959-74
[Averages of daily figures; billions of dollars, seasonally adjusted)
Currency and deposits
Time deposits
Year
and
month
Total
liquid
assets
Total
Currency i
Demand
deposits 1
NonCombank
merthrift
cial
institubanks» tions 2
U.S. Government
securities
Shortterm
Sav- marketings
bonds 3 able
securities *
Negotiable
certificates
of de-8
posit
Commercial
papers
1959: Dec
375.4
290.6
28.9
104.1
64.7
92.9
46.1
37.7
1.0
1960:
1961:
1962:
1963:
1964:
Dec
Dec.
Dec
Dec
Dec
388.1
412.5
444.5
482.5
518.4
305.7
326.3
352.3
382.3
415.1
29.0
29.6
30.6
32.5
34.3
104.6
106.3
106.5
109.8
114.6
69.9
77.0
88.8
98.6
108.9
102.2
113.5
126.4
141.5
157.3
45.7
46.5
46.9
48.0
48.9
34.0
34.0
36.1
38.5
35.7
2.7
5.3
9.0
11.6
2.8
3.1
3.9
4.7
7.0
1965: Dec
1966: Dec
1967: Dec
1968: Dec
1969: Dec
562.9
593.5
643.2
704.1
737.1
451.5
474.3
520.9
564.5
583.0
36.3
38.3
40.4
43.4
46.1
119.6
121.7
130.0
140.1
144.7
125.2
137.0
156.3
174.3
177.3
170.4
177.3
194.2
206.7
215.0
49.5
50.1
51.0
51.4
51.1
38.4
43.8
39.5
46.8
64.9
15.0
14.5
19.2
22.5
9.1
8.4
10.7
12.7
18.8
28.9
786.. 5
868.3
979.8
1, 093.3
1,197.2
634.4
721.0
815.9
885.4
945.6
49.1
52.6
56.9
61.6
67.7
153.2
161.7
175.1
181.3
186.7
199.2
233.6
264.7
294.8
322.8
232.8
273.1
319.1
347.6
368.4
51.3
53.7
57.0
59.9
62.8
53.2
39.5
39.7
52.0
60.6
23.1
30.3
39.9
58.0
80.2
24.5
23.9
27.4
38.0
47.9
1973:Jan
Feb
Mar
Apr
May
June
988.7
997.9
1,008. 5
1,019.7
1,031.3
1, 042.5
823.2
828.7
833.8
839.1
846.6
854.8
57.2
57. b
57.9
58.6
58.9
59.3
175.7
175.9
175.7
176.1
178.1
180.2
267.7
269.7
272.1
273.9
276.3
278.6
322.7
325.6
328.1
330.6
333.3
336.6
57.3
57.6
57.9
58.2
58.5
58.8
39.8
39.9
41.2
43.3
45.0
46.0
40.8
44.6
49.2
52.4
54.1
54.8
27.6
27.0
26.5
26.6
27.2
28.2
July
Aug
Sept
Oct.
Nov
Dec
1,050.8
1,061.1
1,068.8
1,074.6
1, 083.1
1,093.3
858.8
862.2
865.4
870.9
878.2
885.4
59.5
59.8
60.2
60.5
61.0
61.6
180.5
179.6
178.6
178.7
180.5
181.3
280.2
283.3
285.9
289.2
291.8
294.8
338.6
339.4
340.7
342.5
344.9
347.6
59.0
59.2
59.3
59.5
59.7
59.9
46.4
48.6
50.5
50.4
51.1
52.0
56.9
59.7
60.3
58.8
57.2
58.0
29.7
31.4
33.2
35.1
36.9
38.0
1,102.7
1,113.2
1,123.2
1,137.6
1,145.3
1,155.0
890.5
897.6
904.6
910,1
912.3
918.5
62.0
62.7
63.3
63.9
64.3
64.6
180.0
181.4
182.4
183.0
182.9
184.2
298.6
301.6
304.1
306.4
307.6
310.5
350.0
351.9
354.8
356.8
357.5
359.1
60.0
60.3
60.5
60.8
61.0
61.3
52.1
52.1
53.7
55.7
56.3
56.8
60.6
62.5
62.4
68.3
72.8
75.1
39.5
40.8
41.8
42.6
43.0
43.3
1,163.3
1,168.2
1,173.4
1,182.8
1,189.2
1,197.2
922.3
925.0
927.3
933.6
941.4
945.6
64.8
65.4
65.8
66.4
67.3
67.7
184.7
184.4
184.2
185.1
186.4
186.7
312.3
314.1
315.3
318.6
322.1
322.8
360.5
361.1
362.0
363.5
365.6
368.4
61.5
61.7
62.0
62.3
62.5
62.8
58.2
59.3
60.2
61.4
61.0
60.6
76.7
76.1
76.4
77.3
76.0
80.2
44.7
46.2
47.5
48.3
48.2
47. S
1970:
1971:
1972:
1973:
1974:
Dec
Dec.
Dec
Dec
Dec v
1974:Jan
Feb
Mar
Apr
MayJune
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 M? 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.
s 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, 1929-74
[Averages of daily figures; millions of dollars]
Reserve Bank credit outstanding
Year and month
Total
U.S.
Government securities
Member bank
borrowings
Total
Seasonal
Memb sr bank reserves
All
other,
mainly
float
Total
Required
Excess
1929: Dec
1,643
446
801
396
2,395
2,347
48
1933: Dec
2,669
2,432
95
142
2,588
il,822
1766
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
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
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
Dec
Dec
Dec
Dec
Decp
66, 708
74, 255
76,851
85,642
93,993
61,688
69,158
71,094
79,701
86,679
321
107
1,049
1,298
704
41
31
4,699
4,990
4,708
4,643
6,610
29,265
31,329
3 31,353
3 35,068
3 36,960
28,993
31,164
31,134
34,806
36,621
111
165
3 219
3 262
3 339
78, 057
77,594
79, 219
80,542
81,831
80, 547
72,194
72, 307
74,019
75, 353
76,758
75, 355
1,164
1,593
1,858
1,721
1,786
1,788
5
30
77
4,699
3,694
3,342
3,468
3,287
3,404
3 32, 950
31,734
31,969
32,275
32,336
32, 029
32, 601
31, 537
31,682
32,126
32,277
31,970
3 349
197
287
149
59
59
July
Aug
Sept
Oct
Nov
Dec .
1974: Jan
Feb
Mar
Apr
May
June
83,929
82,443
81,810
83,644
83,756
85,642
86, 568
85,493
84,943
86,907
89,405
89, 254
77,448
76,653
76,073
78,042
78, 457
79,701
80, 793
80,801
80,686
81, 567
83,434
82, 812
2,051
2,144
1,861
1,465
1,399
1,298
1,044
1,186
1,352
1,714
2,580
3,000
124
163
147
126
84
41
18
17
32
50
102
130
4,430
3 646
3,876
4,137
3,900
4,643
4,731
3,506
2,905
3,626
3,391
3,442
33, 590
33,783
34, 020
34,913
34, 725
35,068
36, 655
35,242
34,966
35,929
36,519
36, 390
33,199
33, 540
33,775
34,690
34, 543
34,806
36,419
35,053
34, 790
35,771
36, 325
36, 259
391
243
245
223
182
262
236
189
176
158
194
131
July
Aug
Sept
Oct
Nov
Dec P
91, 554
91, 367
91,617
90,971
91, 302
93,993
84,313
84,493
84, 384
83, 735
84,052
86,679
3,308
3,351
3,285
1,793
1,285
704
149
165
139
117
67
31
3,933
3,523
3,946
5,443
5,965
6,610
37,338
37,029
37,076
36,796
36,837
36,960
37,161
36, 851
36, 885
36, 705
36, 579
36,621
177
178
191
91
258
339
1939: Dec
1940:
1941:
1942:
19431944:
1945'
19461947:
1948:
1949:
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
1950:
1951:
1952:
1953:
1954:
1955:
1956:
19571958:
1959:
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
1960:
19611962:
1963:
1964:
1965:
1966:
1967:
1968:
1969:
1970:
1971:
1972:
1973:
1974:
1973:Jan
Feb
Mar
Apr
May
June .
. .
. .
_.
. . .
.
1
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 million. Beginning
1974 allowable deficiencies included are: first quarter, $67 million and second quarter, $58 million. Transition period
ended after second quarter 1974.
Source: Board of Governors of the Federal Reserve System.
315
TABLE C-57.—Aggregate reserves and member bank deposits, 1959-74
[Averages of daily figures; i billions of dollars, seasonally adjusted]
Deposits subject to reserve
requirements *
Member bank reserves 2
Demand
Year and
month
Total
Nonborrowed
Required
Available 3
Total
Time
and
savings
Private
U.S.
Government
Total
member
bank
deposits
plus
nondeposit
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
21.17
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
18.24
19.09
162.5
175.5
189.0
203.2
218.7
58.8
67.7
79.9
92.1
103.7
99.1
102.9
103.3
105.9
109.1
4.6
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
20.20
21.40
22.49
24.85
25.39
238.5
246.7
275.5
299.6
287.7
120.5
128.6
148.8
164.3
150.5
112.8
113.9
121.2
130.3
131.9
5.1
4.3
5.5
5.0
5 3
240 0
250.9
279.9
306.6
307 0
1970:
1971:
1972:
1973:
1974:
Dec.
Dec
Dec
Dec
Deep
29.20
31.33
31.46
35.16
36.92
28.87
31.20
30.41
33.87
36.19
28.95
31.15
31.17
34.86
36.66
27.13
29.03
29.09
32.97
34.63
321.3
360.3
402.0
442.2
485.9
178.9
210.7
242.0
280.0
323.3
136.0
143.8
154.5
158.2
160.8
6.4
5.8
5.6
3.9
1.8
333.4
365.2
406.4
448.7
494.3
32.17
31.67
31.94
32.27
32.43
32.46
31.01
30.08
30.12
30.56
30.59
30.61
31.92
31.46
31.73
32.05
32.28
32.22
29.45
29.43
29.63
29.89
30.09
30.51
404.7
409.4
416.3
421.0
425.1
428.9
244.5
249.7
255.9
260.6
263.9
266.2
154.2
154.0
153.3
153.4
154.8
156.3
6.0
5.7
7.1
6.9
6.4
6.4
409 2
413.9
421.1
426.1
430.3
433.9
33.57
33.92
34.19
34.93
34.87
35.16
31.62
31.76
32.34
33.45
33.48
33.87
33.29
33.75
33.97
34.70
34.63
34.86
31.27
31.99
32.37
32.83
32.78
32.97
431.1
436.7
438.6
439.7
440.4
442.2
268.8
274.2
277.0
277.9
277.8
280.0
156.9
156.8
156.2
156.5
157.5
158.2
5.4
5.7
5.4
5.2
5.1
3.9
437.0
443.5
445.3
446.2
446.8
448.7
35.82
35.12
34.98
35.88
36.52
36. 74
34.77
33.92
33.66
34.15
33.93
33. 73
35.66
34.93
34.84
35.70
36.34
36.54
32.82
32.90
33.13
33.66
34. 26
34.71
446.8
447.5
450.4
461.2
467.0
472.9
284.1
287.4
288.6
296.6
302.3
307.0
157.5
157.9
158.7
160.0
159.1
160.6
5.1
2.2
3.2
4.6
5.6
5.3
453.3
454.4
457.9
469.2
475.8
481.2
37.40
37.27
37.28
36.86
36.87
36.92
34.10
33.93
34.00
35.04
35.62
36.19
37.24
37.08
37.09
36.73
36.67
36.66
34.96
35.27
35.30
34.89
34.87
34.63
475.7
478.5
480.6
480.5
483.6
485.9
310.7
312.4
314.4
317.2
318.4
323.3
160.7
159.9
159.9
159.5
160.6
160.8
4.2
6.2
6.3
3.7
4.6
1.8
484.9
487.5
489.1
488.3
491.2
494.3
1973- Jan
Feb
Mar
Apr
May
June
. .
July
Aug..
Sept
Oct
Nov
Dec
1974: Jan
Feb
Mar
Apr
May
June
July.
Aug
Sept
Oct
Nov
Dec p
...
1
2
Except as noted in footnote 5.
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.
4
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.
5 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, 1929-74
[Percent per annum]
U.S. Government securities
Year or month 3-month
3-5
Treasyear Taxable
bonds 3
ury
bills i issues 2
1929
Corporate
bonds
(Moody's)
Aaa
Baa
Average
High- rate on Prime
Fedgrade
shortFHA
comeral
municterm
new
Reserve
merFederal home
ipal
bank
Bank
cial
funds
bonds
loans
mortdisrates
(Stand- to busi- paper,
gage
count
ard & n e s s yields«
Poor's) selected months rate*
cities
4.73
5.90
4.27
5.85
5.16
1933
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
.50
.73
1.46
1.34
1.33
2.46
2.47
2.48
2.84
2.77
2.83
2.73
2.72
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
7
1.00
7
1.00
M.00
1945
1946
1947
1948
1949
.375
.375
.594
1.040
1.102
1.18
1.16
1.32
1.62
1.43
2.37
2.19
2.25
2.44
2.31
2.62
2.53
2.61
2.82
2.66
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
M.00
71 00
1.00
1.34
1.50
4.34
1950
1951
1952 .
1953.
1954
1.218
1.552
1.766
1.931
.953
1.50
1.93
2.13
2.56
1.82
2.32
2.57
2.88
2.94
2.55
2.62
2.86
2.%
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
4 21
4.29
4.61
4.62
1955
1956
1957
1958
1959
1.753
2.658
3.267
1.839
3.405
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
«5.00
2.18
3.31
3.81
2.46
3.97
1.89
2.77
3.12
2.15
3.36
1.78
2.73
3.11
1.57
3.30
4.64
4.79
5.42
5 49
5.71
I960
1961
1962
1963
1964
2.928
2.378
2.778
3.157
3.549
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.Q0
3.00
3.23
3.55
3.22
1.%
2.68
3.18
3.50
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
4.22
5.16
5.07
5.59
6.85
4.21
4.66
4.85
5.25
6.10
4.49
5.13
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
8 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
4.07
5.11
4.22
5.66
8.21
5.46
6.29
6.55
7.13
8.19
1970
1971
1972
1973
1974
6.458
4.348
4.071
7.041
7.886
7.37
5 77
5.85
6.92
7.81
6.59
5.74
5.63
6.30
6.99
8.04
7.39
7.21
7.44
8.57
9.11
8.56
8.16
8.24
9.50
6.51
5.70
5.27
5.18
6.09
8.48
8 6.32
5.82
8.30
11.28
7.72
5.11
4.69
8.15
9.87
5.95
4.88
4.50
6.44
7.83
7.17
4.67
4.44
8.74
10.51
9.05
7.78
7.53
8.08
9.47
.
See next page for continuation of table and for footnotes.
317
563-280 O - 75 - 21
TABLE C-58.—Bond yields and interest rates, 1929-74— Continued
[Percent per annum]
U.S. Government securities
Year or month
3-month
3-5
Taxable
Treasyear
bonds 3
ury
issues 2
bills i
Corporate
bonds
(Moody's)
Aaa
Baa
Average
Highrate on
shortgrade
Prime
term
communicipal
merbank
bonds
cial
loans
(Stand- to busi- paper,
ard & nessPoor's) selected months
cities
Ma/;::::
June
3 403
3.180
3.723
3 723
3.648
3.874
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
July
Aug
Sept
Oct
Nov
Dec
4.059
4.014
4 651
4.719
4.774
5.061
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
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
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
1974- Jan
Feb
Mar
Apr
May
June
7 755
7.060
7 986
8.229
8.430
8.145
6.94
6.77
7.33
7.99
8.24
8.14
6.56
6.54
6.81
7.04
7.07
7.03
7.83
7.85
8.01
8.25
8.37
8.47
8.58
8.59
8.65
8.88
9.10
9.34
5.20
5.19
5.36
5.67
5.%
6.08
July
Aug
Sept
Oct
Nov
Dec
7.752
8.744
8.363
7 244
7.585
7.179
8.39
8.64
8.38
7.98
7.65
7.22
7.18
7.33
7.30
7.22
6.93
6.78
8.72
9.00
9.24
9.27
8.90
8.89
9.55
9.77
10.12
10.41
10.50
10.55
6.54
6.58
6.65
6.46
6.47
6.93
1972' Jan
Feb
Mar
ADT
5.52
5.59
5.84
6.33
6.52
7.35
9.24
10.08
9.91
11.15
12.40
11.64
Federa!
Reserve
Bank
discount4
rate
Federal
funds
rates
4.08
3.93
4.17
4.58
4.51
4.64
4.50
4.50
4.50
4.50
4.50
4.50
3 50
3.29
3.83
4 17
4.27
4.46
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
4.55
4.80
4.87
5.04
5.06
5.33
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
5 94
6.58
7.09
7.12
7.84
8.49
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
10.40
10.50
10.78
10.01
10.03
9.95
7.89
8.19
8.66
7.83
8.42
9.79
10.62
10.%
7.50
7.50
7.50
7.60
8.00
8.00
9.65
8.97
9.35
10.51
11.31
11.93
8.78
11.72
11.65
11.23
9.36
8.81
8.98
8.00
8.00
8.00
8.00
8.00
7.81
12.92
12.01
11.34
10.06
9.45
8.53
9.46
9.85
10.30
10.38
10.13
FHA
new
home
mortgage
yields«
9.18
8.97
8.86
8.54
8.66
9.17
9.46
1
Rate on new issues within period. First issued in December 1929.
2 Selected note and bond issues.
3 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.
* Average effective rate for the period.
6 Based on seven-day averages for weeks ending Wednesday. Beginning with statement week ending July 25, 1973,
weekly averages are based on the daily average of the range of rates on a given day weighted by the volume of transactions at these rates. For earlier statement weeks, the averages were based on the daily effective rate—the rate considered most representative of the day's transactions, usually the one at which most transactions occurred.
« Data for first of the month, based on the maximum permissible interest rate (9 percent beginning November 25, 1974).
Through July 1961, computed on 25-year mortgages paid in 12 years and thereafter, 30-year mortgages paid in 15 years.
7 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 jess.
s Series revised. Not strictly comparable with earlier data.
Mote.—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
T A B L E C—59.—Short- and intermediate-term consumer credit outstanding,
1929—74
[Millions of dollars]
Instalment credit
End of year or
month
Total
Noninstalment credit
Other I Home
consumer improvement
goods
loans i
paper
Total
Automobile
paper
7,116
3,524
1,384
1,544
27
3,885
1,723
493
799
15
7,222
Personal
loans
Total
569
416
1,088
1,245
1,322
974
832
869
1,009
1,496
1,910
2,224
2.431
3,592
2,162
2,719
2,824
3,087
2,817
2,765
2,935
3,203
4,212
4,903
5,451
5,774
6,768
7,418
8,117
8,388
8,896
9,924
10,614
11,103
11,487
12,297
Addendum:
Policy
loans by
life insurance
companies 3
Charge
accounts
Other 2
1,996
1,596
2,378
1,286
876
3,769
1,414
1,305
3,248
1,471
1,645
l t 444
1,440
1,517
1,612
2,076
2,381
2,722
2,854
1,353
1,442
1,373
1,325
1,418
1,591
2,136
2,522
2,729
2,920
3,091
2,919
2,683
2,373
2,134
1,962
1,894
1,937
2,057
2,240
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
5,129
5,619
5,957
6,427
7,193
2,413
2,590
2,713
2,914
3,127
3,290
3,519
3,869
4,188
4,618
7,844
8,767
9,417
10,350
11,381
12, 560
13,308
14,285
15,832
16,668
5,231
5,733
6,234
6,655
7,140
7,678
9,117
10,059
11,306
13,825
17,131
18, 749
21, 230
23,220
23,800
21, 502
21,977
22,243
22,433
22, 427
22,510
22,457
22,563
22,607
22,640
22,784
23,220
16,064
17,065
18, 003
20,199
1929..
1933..
1939..
1940..
1941..
1942..
1943,.
1944..
1945..
1946..
1947..
1948..
1949..
4, 503
1,497
1,620
298
8,338 5,514
9,172 6,085
5,983 3,166
4,901 2,136
5,111 2,176
5,665 2,462
8,384 4,172
11, 598 6,695
14, 447 8,996
17,364 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
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
14,703
15, 294
19,403
23,005
23, 568
28, 906
31, 720
33, 868
33,642
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
8f116
9,386
I960..
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
62,692
70,893
76, 245
79,428
87, 745
97,105
17,658
17,1?5
198 381
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
3f 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
1970...
1971...
1972..
1973..
1974 4.
102,064
111,295
127, 332
147, 437
156,200
35,184
38,664
44.129
51.130
51,800
July..
Aug..
Sept..
Oct...
Nov..
Dec.
169,148
171,978
173, 035
174,840
176,969
180,486
127, 368
127,959
129,375
131,022
133, 531
136, 018
138,212
140, 810
142,093
143,610
145,400
147,437
44,353
44,817
45,610
46, 478
47, 518
48,549
49,352
50,232
50,557
51,092
51,371
51,130
31,465
34,353
40,080
47, 530
51,900
39,952
39,795
39,951
40,441
41,096
41,853
42,575
43, 505
44,019
44,632
45,592
47, 530
5,070
5,413
6,201
7,352
8,200
1973: Jan...
Feb..
Mar..
Apr..
May..
June.
127,163
138,394
157, 564
180,486
190,400
157,227
157, 582
159, 320
161,491
164,277
167, 083
6,845
7,009
7,120
7,235
7,321
7,352
30,345
32,865
36,922
41,425
44,300
36,870
37,108
37,486
37,695
38, 376
38,928
39,440
40,064
40,397
40,651
41,116
41,425
13,173 5,329
14,091 5,324
15,101 5,684
16,253 5,903
17,576 6,195
18,990 6,430
19,994 6,686
21,355 7r070
23, 025 7,193
24, 041 7,373
25,099 7,968
27,099 8,350
30,232 9,002
33,049 9.829
34,200 10; 400
29,859
8,357
29,623
7,646
29,945
7,702
30t 469
8,036
30,746
8,319
31,065
8,555
30,936 8,479
31,168 8,605
30,942 8,335
31,230 8,590
31,569 8,785
33,049 9,829
1974: Jan...
Feb...
Mar..
Apr..
May..
June..
178,686
177, 522
177,572
179, 495
181,680
183,425
146, 575
145,927
145,768
147,047
148, 852
150,615
50,617
50, 386
50,310
50,606
51,076
51,641
47, 303
46,781
46,536
47,017
47, 588
48,099
7,303
7,343
7,430
7,573
7,786
7,930
41,352
41,417
41,492
41, 851
42,402
42,945
32,111
31, 595
31,804
32,448
32,828
32,810
8,875
8,018
7,939
8,434
8,947
9,106
23,236
23, 577
23,865
24,014
23,881
23,704
20,242
20,382
20,538
20,830
21,067
184,805
187,369
187,906
188,023
188,084
190,400
152,142
154,472
155,139
155,328
155,166
156,200
52,082
52,772
52,848
52,736
52,325
51,800
48,592
49,322
49,664
49,986
50,401
51,900
8,068
8,214
8,252
8,287
8,260
8,200
43,400
44,164
44,375
44,319
44,180
44,300
32,663 9,140
32,897 9,265
32,767 9,153
32,695 9,183
32,918 9,318
34,200 10,400
23,523
23,632
23,614
23, 512
23,600
23,800
21, 581
21,888
22,202
22,503
22, 710
July
Aug
Sept
Oct
Nov
Dec*
_
1
6,193
6,239
6,328
6,408
6,541
6,688
Holdings of financial institutions only; holdings of retail outlets are included in other consumer goods paper.
2 Single-payment loans and service credit
34 Data are annual statement asset values. These loans are not included in consumer credit series.
Preliminary; by Council of Economic Advisers.
Sources: Board of Governors of the Federal Reserve System and Institute of Life Insurance (except as noted).
319
18,080
18,163
18, 284
18,425
18,556
13,713
18,895
19,252
19,597
19,870
20, 039
20,199
21, 321
TABLE C-60.—Instalment credit extended and repaid, 1946-74
[Millions of dollars]
Automobile
paper
Total
Other consumer
goods paper
Home improvement loans
Extended
Personal
loans
Year or month
Expended
Repaid
Extended
Repaid
Extended
Repaid
Repaid
Extended
Repaid
1946..
1947..
1948..
1949..
8,495
6,785
12,713 10,190
15, 585 13, 284
18,108 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
1950..
1951..
1952..
1953..
1954..
21, 558
13, 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 16,734
37,056 15,515
39, 870 16, 465
40, 339 14, 226
42,603 17,779
49, 793 46,073 17,657
49,048 48,124 16, 029
56,191 51, 360 19,694
63, 591 56,825 22,126
70,670 63,470 24,046
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
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
22,857
26,329
29, 504
33,507
38,332
I960..
1961..
1962..
1963..
1964..
1965..
1966..
1967..
1968..
1969.
78,661 70,463
82, 832 77,480
87,171 83,988
99,984 91,667
109,146 99,786
27,208
27,192
26,320
31,083
32, 553
23,706
25,619
26,534
27,931
29,974
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..
19711972..
1973..
1974 i.
112,158
124,281
142. 951
165,083
165,850
107,199
115,050
126,914
144,978
157,075
29,794
34, 873
40,194
46,453
42,625
30,137 43, 873 40,721
31, 393 47,821 44,933
34, 729 55, 599 49,872
39,452 66,859 59,409
41,950 70, 525 66,150
2,963
3,244
4,006
4,728
4,650
2,506
2,901
3,218
3,577
3,8C0
35, 528
38,343
43,152
47,043
48,050
33,835
35, 823
39,095
42,540
45,175
Seasonally adjusted
1973: J a n . .
Feb..
Mar..
Apr..
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.
14, 542
14,294
13,691
14,149
14,275
12,677
12, 544
12,399
12, 332
12,449
12,549
12,267
3,930
3,968
3,939
3,912
3,819
3,315
3,334
3,293
3,406
3,427
3,471
3,338
5,943
5,961
5, 537
5,911
5,978
5,254
5,141
5,168
5,072
5,149
5,154
5,001
433
408
410
415
402
429
308
298
322
308
301
332
4,236
3,957
3,805
3,911
4,076
3,679
3,761
3,640
3,532
3,565
3,623
3,596
1974: Jan_.
Feb..
Mar_.
Apr..
May.
June.
13,714
13, 541
13, 823
14,179
14,669
14, 387
12,797
12,870
13,206
13,026
13,407
13,301
3,492
3,389
3,484
3,545
3,769
3,731
3,433
3,394
3,544
3,498
3,601
3,577
5,662
5,647
5,933
6,034
6,156
6,043
5,193
5,340
5,596
5,483
5,607
5,615
373
409
424
447
468
425
356
323
308
312
315
335
4,187
4,096
3,982
4,153
4,276
4,188
3,815
3,813
3,758
3,733
3,884
3,774
July.
Aug..
Sept.
Oct..
Nov.
Dec*
14, 635
14,394
14,089
13,626
12,609
12,700
13,310
12,882
13,412
13,224
13,009
13,000
3,812
3,887
3,835
3,369
3,062
3,100
3,563
3,443
3,604
3,470
3,423
3,400
6,164
5,993
5,935
5,948
5,7C0
5,700
5,610
5,444
5,700
5,499
5,561
5,600
416
388
302
348
321
300
320
309
279
321
325
300
4,243
4,126
4,017
3,961
3,526
3,600
3,817
3,686
3,829
3,934
3,700
3,700
* 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 offinancing,1939—74
[Billions of dollars]
Nonfarm properties
Nonfarm properties by type of mortgage
Conventional2
Government underwritten
End of year
or quarter
All
properties
Farm
properties
Total
1- to 4family
houses
Multi- Comfamily mercial
prop- properties erties i
1- to 4-family houses
Total
Total
FHA
insured
Total
VA
guaranteed
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
3.7
4.1
4.2
2.3
3.0
3.7
4.1
4.2
27.7
28.2
27.1
25.8
25.5
15.1
15.4
14.5
13.7
13.7
1945
1946
1947
1948
1949
35.5
41.8
48.9
56.2
62.7
4.8
4.9
5.1
5.3
5.6
30.8
36.9
43.9
50.9
57.1
18.6
23.0
28.2
33.3
37.6
5.7
6.1
6.6
7.5
8.6
6.4
7.7
9.1
10.2
10.8
4.3
6.3
9,8
13.6
18.1
4.3
6.1
9.3
12.5
15.0
4.1
3.7
3.8
5.3
6.9
0.2
2.4
5.5
7.2
8.1
26.5
30.6
34.1
37.3
39.0
14.3
16.9
18.9
20.8
22.6
1950
1951
1952
1953
1954.
72.8
82.3
91.4
101.3
113.7
6.1
6.7
7.2
7.7
8.2
66.7
75.6
84.2
93.6
105.4
45.2
51.7
58.5
66.1
75.7
10.1
11.5
12.3
12.9
13.5
11.5
12.5
13.4
14.5
16.3
22.1
26.6
29.3
32.1
36.2
18.9
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
1955
1956
1957
1958.
1959
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
1974 »
451.7
499.8
564.8
635.0
686.9
31.2
32.9
35.4
39.3
44.2
420.5
466.9
529.4
595.6
642.8
280.2
307.2
345.4
386.2
414.8
58.0
67.4
76.5
85.4
92.2
82.3
92.3
107.5
124.0
135.8
109.2
120.7
131.1
135.0
97.3
105.2
113.0
116.2
59.9
65.7
68.2
66.2
37.3
39.5
44.7
50.0
311.3
346.2
398.3
460.6
182.9
202.0
232.4
270.0
1972: 1
If
III
IV
511.6
528.9
546.9
564.8
33.5
34.4
35.0
35,4
478.1
494.5
511.9
529.4
313.8
324.2
335.2
345.4
69.1
71.6
73.8
76.5
95.2
98.8
102.9
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
354.4
367.9
382.9
398.3
206.3
214.5
223.7
232.4
1973: 1
II
ML...
IV
579,3
600.0
619.8
635.0
36.4
37.7
38.6
39.3
542.9
562.3
581.2
595.6
353.8
366.0
378.2
386.2
78.4
81.1
83.5
85.4
110.7
115.2
119.5
124.0
132.5
133.6
133.8
135.0
113.7
114.7
115.1
116.2
67.9
67.5
66.9
66.2
45.8
47.2
48.2
50.0
410.4
428.7
447.4
460.6
240.0
251.4
263.1
270.0
1974:1
II . _ . .
Ill
IV P. .
645.9
663.4
677.2
686.9
40.2
41.6
42.9
44.2
605.7
621.8
634.4
642.8
391.7
402.0
410.1
414.8
86.7
88.4
90.4
92.2
127.2
131.4
133.8
135.8
136.6
137.7
117.7
118.4
66.0
65.5
51.7
52.9
469.0
484.1
274.0
283.6
1
Includes negligible amount of farm loans held by savings and loan associations.
> 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, 1939-74
[Billions of dollars]
Private financial institutions
End of year
or quarter
Total
Total
Savings
and
loan
associations
Mutual
savings
banks
Com*
mercial
banksi
Other lenders
Life
Federal
insurance
and
comrelated
panies agencies3
Individuals
and
others
1939
35.5
18.6
3.8
48
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
4 6
4.6
4.8
4.9
\8
1 6
1 4
1.3
4.6
4.9
4 7
4.5
4.4
6.0
6.4
6.7
6*7
6.7
4.9
4.7
43
3 6
3.0
12.0
12.2
11 7
11.5
11.5
35.5
41.8
48.9
56.2
62.7
21.0
26.0
31.8
37.8
42.9
5.4
7.1
8.9
10.3
11.6
U
1.4
iq
5.8
6.7
4.8
7.2
9.4
10.9
11.6
6.6
7.2
8.7
10.8
12.9
2.4
2.0
1.8
1.9
2.4
12.1
13.8
15.3
16.5
17.4
72.8
82.3
91.4
101.3
113.7
51.7
59.5
f<\
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
34
4.0
44
4.6
18.4
19.4
20.5
21.8
23.4
129.9
144.5
156.5
171.8
190.8
99.3
111.2
119.7
131.5
145.5
31.4
35.7
40.0
45.6
53.1
17 5
19.7
21.2
23 3
25.0
21.0
22.7
23.3
25.5
28.1
29.4
33.0
35.2
37.1
39.2
5 2
6.0
7.5
7.8
10.0
25.4
27.3
29.3
32.5
35.4
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
1974 »
451.7
499.8
564.8
635.0
686.9
355.9
394.2
450.0
505.4
541.4
150.3
174.3
206.2
231.7
249.4
57.9
62.0
67.6
73 2
75.0
73.3
82.5
99.3
119.1
130.7
74.4
75.5
76.9
81.4
86.3
33.0
39 4
45.8
55.7
72.3
62.8
66.2
69.0
73.9
73.2
1972: 1
II
III
IV
511.6
528.9
546.9
564.8
404.0
418.7
434.3
450.0
180.0
188.8
197.7
206.2
63 0
64.4
65 9
67.6
85 6
90.1
95.0
99.3
75 4
75.4
75.6
76.9
41 2
42.7
44 3
45.8
66.4
67.5
68.3
69.0
1973: 1
II
Ill
IV
579.3
600.0
619.8
635.0
462.6
480.1
494.9
505.4
212.9
222.3
228.9
231.7
68.9
70.6
72.0
73.2
103.5
109.1
114.8
119.1
77.2
78.0
79.2
81.4
47.3
49.0
53.0
55.7
69.5
71.0
71.9
73.9
1974: 1
II
III
IV*
645.9
663.4
677.2
686.9
513.7
527.4
536.2
541.4
236.1
243.4
247.6
249.4
74.0
74.3
74 8
75.0
121.7
126.5
129.3
130.7
82.0
83.2
84.5
86.3
58.4
62.5
67.7
72.3
73.7
73.5
73.3
73.2
...
1945
1946
1947
1948
1949
.
..
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
I960
1961
1962
1963
1964
.
.
.......
1
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 Mortgag e
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, 1929-73 *
[Billions of dollars]
Public
Private
Individual and noncorporate
End of year
Total
FedFederal
eral
finanGovcial
ernment 2 agencies'
State
and
local
governments
Total
Nonfarm
Corporate
Total
Total
Mortgage
Commercial
and
financial 8
Farm*
Consumer
1929
191.9
16.5
13.6
161.8
88.9
72.9
12.2
60.7
31.2
22.4
7.1
1933... .
168.5
24.3
16.3
127.9
76.9
51.0
9.1
41.9
26.3
11.7
3.9
1939._. .
183.3
42.6
16.4
124.3
73.5
50.8
8.8
42.0
25.0
9.8
7.2
1940
1941
1942
1943... .
1944
189.8
211.4
258.6
313.2
370.6
44.8
56.3
101.7
154.4
211.9
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
9.1
9.3
9.0
8.2
7.7
43.9
46.3
40.9
40.5
42.9
26.1
27.1
26.8
26.1
26.0
9.5
10.0
8.1
9.5
11.8
8.3
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
229.5
221.7
215.3
217.6
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
10.8
12.0
47.4
52.3
60.7
69.7
78.4
27.0
31.8
37.2
42.4
47.1
14.7
12.1
11.9
12.9
13.9
5.7
8.4
11.6
14.4
17.4
1950
1951
1952
1953
1954
486.2
519.2
550.2
581.6
605.9
217.4
216.9
221.5
226.8
229.1
.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
12.3
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
15.8
16.2
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
229.6
224.3
223.0
231.0
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
23.2
23.8
161.4
176.1
187.4
199.7
221.2
98.7
109.4
118.1
128.1
141.0
24.0
24.4
24.3
26.5
28.7
38.8
42.3
45.0
45.1
51.5
1960 . .
1961
1962
1963
1964
874.2
930.3
996.0
1,070.9
1,151.6
239.8
246.7
253.6
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
25.1
27.5
30.2
33.2
36.0
238.2
257.3
281.7
312.6
344.1
151.3
164.5
180.3
198.6
218.9
30.8
34.8
37.6
42.3
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
1,736.0
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
133.3 1,282.9
454.3
506.6
553.7
631.5
734.2
415.7
444.2
476.2
513.9
548.7
39.3
42.4
48.3
51.8
55.5
376.4
401.8
427.9
462.1
493.2
236.8
251.6
266.9
284.9
303.9
49.7
53.9
60.2
66.4
68.1
89.9
96.2
100.8
110.8
121.1
1970.
1971
1972
1973
1,868.9
2,045.8
2,270.2
2, 525.8
301.1
325.9
341.2
349.1
38.8
39.9
41.4
59.8
145.0
162.4
175.0
184.5
1,384.0
797.7
1,517.6
869.3
1,712.7
978.3
1,932.4 1,111.1
586.3
648.3
734.4
821.3
58.7
63.2
67.8
77. 3
527.6
585.1
666.6
744.0
332,1
373.4
426.0
480.1
68.3
73.4
82.9
83.4
127.2
138.4
157.6
180.5
i Net public and private debt is a comprehensive aggregate of the indebtedness of borrowers after eliminating certain
types of duplicating governmental and corporate debt.
3 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 30,1976."
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.
« 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, Department of Housing and Urban Development, and Federal National Mortgage Association.
323
GOVERNMENT FINANCE
TABLE C-64.—Federal budget receipts and outlays,fiscalyears 1929-76
[Millions of dollars]
Receipts
Fiscal year
Outlays
Surplus or
deficit ( - )
1929...
3,862
3,127
734
1933...
1,997
4,598
-2,602
1939...
4,979
8,841
-3,862
1940..
1941..
1942..
1943..
1944..
6,361
8,621
14,350
23,649
44,276
9,456
13,634
35,114
78, 533
91,280
-3,095
-5,013
-20,764
-54,884
-47,004
1945..
1946..
1947..
1948..
1949..
45,216
39,327
38,394
41,774
39,437
92,690
55,183
34, 532
29,773
38,834
-47,474
-15,856
3,862
12,001
603
1950..
1951..
1952..
1953..
1954...
42,597
45, 546
67,721
76,107
70,890
-3,112
6,100
-1,517
-6,533
-1,170
1955...
1956-.
1957...
1958...
1959...
39,485
51,646
66,204
69,574
69,719
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
-1,596
-3,796
-8,702
-25,161
3,236
1970..
1971..
1972..
1973..
1974..
193,743
188,392
208,649
232,225
264,932
278,750
297, 520
118,430
134,652
158,254
178,833
184,548
196,588
211,425
231,876
246, 526
268,392
313,446
349, 372
-34,696
- 5 1 , 852
19751.
19761.
-2,845
-23,033
-23,227
- 1 4 , 301
-3,460
i Estimate.
Note.—Data for 1929-39 are according to the administrative budget and those for 1940-76 according to the unified budget.
Certain tnterfund 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, and debt,fiscalyears
1965-76
[Millions of dollars; fiscal years]
Actual
Description
1965
1966
1967
116,833
130,856
149, 552
153,671
187, 784 193,743
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
118,430
134,652
158,254
178,833
184, 548 196,588
94,807
26,962
-3,339
106,512
31,708
- 3 , 568
126,779
36,693
-5,218
143,105
41, 499
-5,771
148,811 156,301
43, 284 49,065
-7,547 -8,778
1968
1969
1970
BUDGET RECEIPTS AND OUTLAYS:
Total receipts
Federal funds
Trust funds
_
Interfund transactions.
Total outlays.
Federal funds
Trust funds.
Interfund transactions.
Total surplus or deficit ( - ) _
Federal funds..
Trust funds...
143,158
59,362
-8,778
- 1 , 596
-3,796
-8,702
-25,161
-3,864
2,268
-5,085
1,289
-14,944
6,242
-28, 379
3,217
323,154
329,474
341,348
369,769
367,144
382,603
61, 540
261,614
64,784
264,690
73,819
267, 529
79,140
290,629
87,661
279,483
97,723
284,880
39,100
222,514
42,169
222, 521
46,719
220,810
52, 230
238,399
54, 095 57,714
225, 388 227,166
116,833
130,856
149,552
153,671
187,784
193,743
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
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
90,412
32,829
45,298
15,705
3,644
2,430
1,372
222
1,713
162
1,805
303
2,091
400
2,662
247
3,266
158
118,430
134,652
158,254
178,833
184, 548
196, 588
48,581
4,121
5,890
2,968
3,948
6,894
1,255
2,104
1,790
25,741
5,722
529
1,460
55,856
4,554
6,790
3,074
2,441
8,956
1,540
4,093
2,638
28,895
5,921
554
1,426
69,101
4,695
6,311
3,379
2,982
9,205
1,651
6,023
6,759
30,821
80,207
3,784
5,108
3,503
5,779
7,065
2,531
6,871
11,758
37,281
7,640
761
1,649
79,284
3,564
4,611
3,611
5,164
9,090
3,495
610
1,569
79,409
4,612
5,610
3,624
4,541
10,637
2,189
7,004
9,708
33,680
6,882
650
1,684
229
10, 359
242
11,286
288
12,533
311
13,751
365
15,793
451
18, 312
-3,162
-3,613
- 4 , 573
-5,460
- 5 , 545
- 6 , 567
-1,329
-1,780
-1,447
-1,917
-1,661
-2,275
-1,825
-2,674
-2,018
-3,099
-2,444
- 3 , 936
-53
-248
-637
-961
-428
-187
3,236
-2,845
-5, 490 -13,143
8,725
10, 297
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
General science, space, and technology
Natural resources, environment, and energy.
Agriculture
Commerce and transportation
Community and regional development
Education, manpower, and social services..
Health
Income security
Veterans benefits and services
Law enforcement and justice.._
General government
Revenue sharing and general purpose fiscal
assistance
Interest
Allowances
Undistributed offsetting receipts
Composition of undistributed offsetting re
ceipts:
Employer share, employee retirement..
Interest received by trust funds
Rents and royalties on the Outer Conti
nental Shelf..
See next page for continuation of table and for footnotes.
325
33,349
6,899
7,888
13,051
43,066
8,683
952
1,934
TABLE C-65.—Federal budget receipts, outlays, and debt,fiscalyears 1965-76—Con.
[Miiiions of dollars; fiscal years]
Actual
Estimate
Description
1971
1972
1973
1974
1975
188,392
133,785
66,193
-11,586
208,649
148,846
72,959
-13,156
232,225
161,357
92,193
-21, 325
264,932
181,219
104,846
-21,133
278,750
185,966
118,681
-25,897
297,520
199,278
126,510
-28,268
211,425
231,876
246,526
268,392
313,446
349,372
163,651
59,361
-11,586
-29,866
6,832
177,959
67, 073
-13,156
-23, 227
-29,114
5,886
186,403
81, 447
-21,325
-14,301
-25,046
10,746
198,692
90,833
-21,133
-3,460
-17,473
14,013
229,005
110,338
-25,897
-34,696
-43,039
8,343
254,215
123,425
-28,268
-51,852
-54,937
3,085
409,467
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
486,247
140,194
346,053
80,649
265,404
538,541
148,988
389,553
605,925
152,872
453,053
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
264,932
118,952
38,620
76,780
16,844
5,035
3,334
278,750
117,700
38,500
86,225
19,947
4,800
3,910
297,520
106,300
47,700
91,550
32,145
4,600
4,300
3,533
325
211,425
3,252
381
231,876
3,495
426
246,526
4,845
524
268.392
5,700
1,968
313,446
6,100
4,825
349,372
National defense.
76,807
International affairs
3,093
General science, space, and technology
4,294
Natural resources, environment, and energy.
4,449
Agriculture
4,288
Commerce and transportation
_
10,397
Community and regional development
4,010
Education, manpower, and social services..
9,045
Health
14, 716
Income security
_.
55, 423
Veterans benefits and services
9,776
1,299
Law enforcement and justice
2,159
General government..
Revenue sharing and general purpose fiscal
assistance
_
Interest
19,609
Allowances....
Undistributed offsetting receipts
"-8,427
77,356
3,723
4,299
5,019
5,279
10,601
4,699
11,696
17, 471
63,911
10, 730
1,650
2,466
75,072
2,956
4,169
5,461
4,855
9,938
5,869
11,874
18,832
72, 958
12,013
2,131
2,682
78,569
3,593
4,154
6,390
2,230
13,100
4,910
11,600
22,074
84,431
13,386
2,462
3,327
85,276
4,853
4,183
9,412
1,773
11,796
4,887
14,714
26,486
106,702
15,466
3.026
2; 646
94,027
6,294
4,581
10,028
1,816
13,723
5,920
14,623
28,050
118,724
15,592
3,288
3,180
531
20, 582
7,222
22, 813
6,746
28,072
-8,137
-12,318
-16,650
7,033
31,331
700
-16,839
7,249
34,419
8,050
-20,193
-2,611
- 4 , 765
- 2 , 768
-5, 089
-2,927
-5,436
-3,319
-6,583
-4,070
-7,769
-3,888
-8,305
-1,051
-279
-3,956
-5,478
-5,000
-8,000
BUDGET RECEIPTS AND OUTLAYS:
Total receipts
Federal funds...„
Trust funds
Interfund transactions
Total outlays.
Federal funds
Trust funds._
Interfund transactions.
Total surplus or deficit ( - )
Federal funds
Trust funds
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
Aliother
_
BUDGET OUTLAYS
Composition of undistributed offsetting
receipts:
Employer share, employee retirementInterest received by trust funds
Rents and royalties on the Outer Continental Shelf
-23,033
Sources: Department of the Treasury and Office of Management and Budget.
326
1976
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
1973-76
[Billions of dollars; fiscal years]
Actual
Estimate
Receipts and expenditures
1973
1975
1974
1976
RECEIPTS
Total receipts, budget..
232.2
264.9
278.8
297.5
Government contribution for employee retirement (grossing)
Other netting and grossing
Adjustment to accruals
Other
3.8
1.6
3.3
-.5
4.3
1.9
3.1
-.6
5.0
2.1
2.6
-.8
5.4
2.2
1.1
-1.1
Federal sector, national income and product accounts,
receipts
240.4
273.6
287.6
305.1
246.5
268.4
313.4
349.4
-1.7
-2.9
-1.2
-4.2
3.8
1.6
2.7
3.6
-1.2
4.3
1.9
6'.0
.2
5.0
2.1
-.3
4.2
.5
5.4
2.2
.3
6.9
1.0
255.4
278.3
323.7
361.0
EXPENDITURES
Total outlays, budget
Lending and financial transactions
Government contribution for employee retirement
(grossing)
Other netting and grossing
Defense timing adjustment
Bonuses on Outer Continental Shelf land leases...
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, 1976,"
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, 1929-74
[Billions of dollars]
Total government
Surplus or
deficit
Calendar year or quarter
Receipts
Expenditures
11.3
10.3
9.3
10.7
1939
15.4
17.6
1940
1941— .
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
1929
1933. .
1950
1951—
1952
1953. .
1954
1955
1956
1957
1958
1S59
1960
1961
1962
1963 .
1964
1965
1966 .
1967
1968
1969
.
.
.
1970 . . . .
1971
1972
1973
1974*
Federal Government
State and local
government
Surplus or
deficit
Surplus or
deficit
Receipts
Expenditures
Receipts
Expenditures
national
income
and
product accounts
1.0
3.8
2.6
-1.4
2.7
4.0
1.2
7.6
7.8
-0.2
-1.3
7.2
7.2
-2.2
6.7
8.9
-2.2
9.6
9.6
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
8.5
-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
—5.1
-33.1
-46.6
-54.5
—42 1
3.5
13 4
8.4
-2.4
10.0
10.4
10.6
10.9
11.1
11 6
12.9
15 3
17.6
19.3
9.3
9.1
8.8
8.4
8.5
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
27
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
6.2
-3.8
-7.0
-5.9
4.0
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
37
—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
2
—.5
.9
1.2
1.7
1.0
1.3
-1.6
302.5
321 6
367.0
411.5
455.0
312.7
340.2
372.1
408.0
460.9
-10.1
-18.5
-5.1
3.5
-5.9
192.0
198.5
227.2
258.5
291.1
203.9
220.3
244.7
264.2
298.6
-11.9
-21.9
-17.5
-5.6
-7.6
135.0
152.2
177.2
193.5
207.7
133.2
148.8
164.9
184.4
206.0
1.8
3.4
12.3
9.2
1.7
national
income
and
product accounts
national
income
and
product accounts
-.1
0)
.6
1.3
1.8
2.5
2.7
2.6
1.9
10
-.7
-1.2
.4
(2)
.1
-1.1
—1.3
—.9
—1 4
—2.3
-.8
.7
Seasonally adjusted annual rates
1972: l._.
Ill
IV
1973: 1
HI
IV
1974: 1
II
Ill
IV*
355.3
362.4
369 8
380.5
363.5
367.6
370.4
387.0
—8.2
-5.2
— 6
-6.5
220.9
224.1
228.4
235.6
235.8
243.7
238.2
261.2
-14.9
-19.6
—9.8
-25.6
166.1
176.2
175.8
190.8
159.5
161.7
166.5
171.7
6.7
14.4
9.2
19.1
398.1
406.9
416.5
424.6
396.1
403.9
409.8
422.3
2.1
3.0
6.7
2.3
249.1
255.0
261.8
268.3
260.2
262.4
263.4
270.6
-11.2
-7.4
-1.7
-2.3
190.3
192.0
194.6
197.3
177.0
181.7
186.2
192.7
13.2
10.4
8.4
4.6
435.9
450.7
470.3
435.5
451.7
470.0
486.2
.4
—1.0
278 1
288.6
302.8
281 0
291.6
304.7
317.3
—2.8
-3.0
-1.9
200 6
205.3
210.9
197.4
203.3
208.8
214.4
3.2
2.0
2.1
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.
328
TABLE C-68.—Receipts and expenditures of th& Federal Government sector of the national income
and product accounts, 1949—76
[Billions of dollars]
Expenditures
Receipts
Year or quarter
Total
Indirect
Per- Cor- busi- ConPursonal poness tribuchases
tax
tions
rate
tax
of
and
for
Total i goods
non- profits and
social
tax
nonand
tax
insuractax
servreance
ices
ceipts cruals accruals
Fiscal year:
1949....
40.0 16.3
1950....
42.0 16.5
1951....
60.8 23.2
1952....
65.1 28.8
1953....
69.3 31.4
1954....
65.8 30.3
1955....
67.2 29.7
1956....
75.8 33.6
1957....
80.7 36.7
1958....
77.9 36.3
1959....
85.4 38.2
I960....
94.8 42.5
1961....
95.3 43.6
1962....
104.2 47.3
1963....
110.2 49.6
1964....
115.5 50.7
1965....
120.5 51.3
1966....
132.8 57.6
1967....
147.2 64.5
1968....
160.6 71.4
1969....
190.4 90.0
1970
195.2 93.6
1971
192.5 87.5
1972
213.2 100.7
1973....
240.4 106.8
1974
273.6 123.
19752
287.6 122.
1976 2
305.1 111.
Calendar year:
1949
38.9 16.
1950
49.9 18.
1951.......
64.0 26.
1952
67.2 31.0
70.0 32.2
1953
63.8 29.0
1954
72.1 31.4
1955..
77.6 35.2
1956
81.6 37.4
1957
78.7 36.8
1958
89.7
39.9
1959
96.5 43.6
1960
98.3 44.7
1961
106.4 48.6
1962
114.5 51.5
1963
115.0 48.6
1964
124.7 53.8
1965
142.5 61.7
1966
151.2 67.5
1967
175.0 79.7
1968
197.3 94.8
1969
192.0 92.2
1970
198.5 89.9
1971
227.2 108.2
1972
258.5 114.1
1973
291.1 131.2
1974 P
Transfer
payments
To
per-
Grantsin-aid
to
State
To
and
forlocal
eign- governers
(net) ments
Net
interest
Subsidies
less
current
surplus
of
government
enterprises
Surplus
or
deficit
<-),
national income
and
product
accounts
0.4
-.5
16.2
-1.0
-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
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
32.3
34.1
41.2
45.6
41.0
39.9
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
20.0
20.7
21.6
33.1
54.7
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
52.6
58.5
71.7
83.3
91.4
99.4
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
212.4
232.9
255.4
278.3
323.7
361.0
8.1
19.3
19.0 11.3
8.1
25.1
8.5
46.6
9.3
56.1
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
95.8 67.4
103.2 75.7
105.3 86.7
110.3 101.3
121.1 128.2
136.1 143.0
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
2.7
2.9
3.5
4.0
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
32.6
40.2
41.5
47.0
50.8
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
10.9
12.3
14.0
14.3
13.4
14.5
17.4
19.8
23.0
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
5.7
5.3
6.7
4.7
3.7
4.1
-19! 8
-19.7
-15.0
-4.7
-36.1
-55.9
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
33.4
36.6
43.7
49.1
8.0
8.9
9.4
10.3
10.9
9.7
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
20.0
21.2
22.0
4.9
5.9
7.1
7.4
7.4
8.1
9.3
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
54.6
62.5
79.5
88.7
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
220.3
244.7
264.2
298.6
20.1
8.7
18.4 10.8
37.7
8.5
51.8
8.8
57.0
9.5
47.4 11.5
44.1 12.4
45.6 13.4
49.5 15.7
53.6 19.5
53.7 20.1
53.5 21.5
57.4 24.9
63.4 25.5
64.2 27.0
65.2 27.8
66.9 30.3
77.8 33.4
90.7 40.0
98.8 46.1
98.8 50.3
96.2 61.0
97.6 72.3
104.9 80.1
106.6 92.9
116.4 114.4
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
2.6
2.6
2.2
2.3
2.5
2.6
2.8
2.9
3.1
3.3
4.2
5.6
6.8
6.5
7.2
8.0
9.1
10.4
11.1
14.4
15.8
18.7
20.3
24.4
29.0
37.4
40.5
43.7
4.4
4.5
4.7
4.7
4.9
5.0
4.9
5.3
5.7
5.6
6.4
7.1
6.6
7.2
7.7
8.3
8.7
9.5
10.2
11.7
13.1
14.6
13.6
13.5
16.3
18.8
.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
5.2
6.6
5.3
2.1
-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
-21.9
-17.5
-5.6
-7.6
42.8
44.7
43.8
43.5
45.9
49.2
55.4
20.9
21.4
21.0
21.3
21.5
21.9
22.5
22.2
77.4
78.6
80.2
81.8
86.7
88.1
90.0
90.0
41.2
40.1
39.8
41.0
42.9
43.2
43.4
45.5
14.8
15.9
16.8
17.6
17.9
18.7
19.1
19.7
6.1 -11.2
5.4 - 7 . 4
5.0 -1.7
4.8 - 2 . 3
2.2 - 2 . 8
1.3 - 3 . 0
2.7 - 1 . 9
2.3
Seasonally adjusted annual rates
1973: I
II....
III...
IV...
1974: I . . . .
II....
III . .
IV p . .
249.1
255.0
261.8
268.3
278.1
288.6
302.8
107.9
110.3
116.7
121.6
124.1
129.4
134.8
136 6
260.2
262.4
263.4
270.6
281.0
291.6
304.7
317.3
106.4
106.2
105.3
108.4
111.5
114.3
117.2
122.8
89.9
91.5
93.9
96.3
104.0
110.8
118.4
124.4
2.1
3.3
2.7
2.5
2.5
2.7
2.4
2.7
1 Wage accruals less disbursements have been subtracted from total. These were (in billions of dollars at seasonally
adjusted annual rates) .1, — . 1 , .0, and .0 in the 4 quarters of 1973 and .0, —.6, —1.5, and .0 in the 4 quarters of 1974.
2 Estimates.
Sources: Department of Commerce (Bureau of Economic Analysis) and Office of Management and Budget.
563-280 O - 75 - 22
329
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—74
[Billions of dollars]
Receipts
Calendar
year or
quarter
Total
Subsidies
Pur- Transndirect Contriless
Perchases
busi- butions Fedfer
Corcurrent
sonal porate
of
ness
payNet surplus
tax
for
eral
tax
ments nterest of govprofits
and
social grants- Total * goods
and
and insurto
tax
paid
ernnontax ccruals
n-aid
servnontax
perment
eceipts
ices
ccruals ance
sons
enterprises
.8
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
—8
— 8
-.9
1.9
10
1
-.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
-.9
1 i
—1 1
-1.2
—1 4
-1.2
4
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
.3
.3
.3
.3
.4
.5
.5
.5
.6
-1.6
—1 7
-1 8
—1 8
—2 0
-1.3
_ 9
—1 4
23
—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
§
12
17
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
10
13
-1 6
- 3
.7
24.4
27.7
34.2
37.2
39.5
3.8
4.1
5.0
6.1
6.7
74.1
82.2
90.0
98.0
104.9
8.3
9.2
10.6
11.7
12.8
24.4
29.0
37.4
40.5
43.7
133.2
148.8
164.9
184.4
206.0
123.3
136.6
150.8
169.8
192.4
14.1
16.7
18.6
20.1
20.2
-.4
-.2
-.3
-.8
-1.6
-3.8
-4.1
-4.4
-4.7
-5.0
1.8
3.4
12.3
92
1.7
0.5
.6
.6
.8
.9
.8
.8
.8
14.5
15.8
17.3
18.7
19.7
4.1
4.7
5.2
5.6
6.3
1.0
1.0
1.0
10
1.2
49.9
53.6
58 6
63.4
69.5
7.3
7.7
8.7
9.4
10.8
75.5
85 2
93.5
107.1
119.7
135.0
152.2
177.2
193 5
207.7
1.5
1.8
2.1
2.4
0.5
.6
1950
1951
1952
1953
1954
21.1
23 3
25.2
27.2
28.8
2.6
29
3.1
3.4
3.7
1955
1956
1957
1958
1959
31.4
34.7
38.2
41 6
46.0
.. ... .
- .
1960
1961
1962
1963
1964
. .
1965
1966
1967
1968
1969
---
1970
1971
1972
1973
1974 v
Surplus
or
deficit
(->,
national
ncome
and
product accounts
1.1
1.7
2.0
2.2
9.3
10.6
12.1
13.3
12.9
15.3
17.6
19.3
1946
1947
1948
1949
Expenditures
.1
1 i
Seasonally adjusted annual rates
1972- 1
II
III
IV
166.1
176.2
175.8
190.8
32.7
33.9
34.6
35.5
4.6
4.8
5.0
5.4
87.0
89.2
91.0
93.0
10.1
10.4
10.7
11.0
31.7
37.8
34.4
45.8
159.5
161.7
166.5
171.7
145.5
147.9
152.4
157.4
17 9
18.4
18.9
19.2
-0.2
-.3
-.3
-.3
-4.2
-4.3
-4.4
-4.5
6.7
14.4
9.2
19.1
1973: 1 .
II
III
IV
190.3
192.0
194.6
197.3
36.2
36.9
37.4
38.2
6.0
6.2
6.1
6.0
95.6
97.2
99.4
100.0
11.3
11.6
11.9
12.1
41.2
40.1
39.8
41.0
177.0
181.7
186.2
192.7
162.6
167.1
171.6
177.9
19.5
19.9
20.3
20.8
-.5
-.7
-.9
-1.2
-4.6
-4.7
-4.8
-4.9
13.2
10.4
8.4
4.6
1974: 1
11......
III
200.6
205.3
210.9
37.8
38.8
40.3
41.1
6.3
6.7
7.3
101.2
104.0
107.0
107.6
12.4
12.7
13.0
13.3
42.9
43.2
43.4
45.5
197.4
203.3
208.8
214.4
184.8
190.1
195.1
199.6
19.1
19.8
20.4
21.4
-1.5
-1.6
-1.6
-1.5
-4.9
-5.0
-5.0
-5.0
3.2
2.0
2.1
IVP
1
Wage accruals less disbursements have been subtracted from total. These were (in billions of dollars, at seasonally
adjusted annual rates) - . 6 , - . 1 , .0, and .0 in the 4 quartets of 1972; .0, - . 1 , .0, and .0 in the 4 quarters of 1973;
and .0 in each of the 4 quarters of 1974.
2 Deficit of $41 million.
Source: Department of Commerce, Bureau of Economic Analysis.
330
T A B L E C-70.—State and local government revenues and expenditures, selected fiscal years, 1927—73
[Millions of dollars]
General revenues by source 2
Fiscal year 1
Total
1927
7,271
Property
taxes
4,730
Sales
and
gross
receipts
taxes
470
General expenditures by function *
ReveCorpoIndinue
All
vidual ration
from
other
net
:
ncome
ederal revetaxes income Govern- nues 3
taxes
ment
70
92
116
1, 793
232
Total
1, 809
151
3,
7,765
1 741
1, 509
1, 4?5
1, 650
444
889
827
1,069
3, ?69
?, 95?
3 ?15
3, 547
2,638
2,586
2,793
3, 356
573
1, 490
1, ?00
1, 67?
3, 86?
3 889
3 737
4 591
7, 170
1,016
948
800
1,982
2,351
2,289
2,986
4,442
224
276
342
422
156
111
451
447
945
858
954
855
543
592
1,861
1, 87? 9, ??9
?, \n 9, 190
?, ?69 8, 863
? 661 11. f)?8
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
1955
1956
1957
1958
1959 .
31,073 10,735 7,643
34,667 11,749 8,691
38,164 12,864 9,467
41,219 14,047 9,829
45,306 14,983 10,437
1,237
1,538
1,754
1,759
1,994
744
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
1960
1961...
1962
1963
50,505
54,037
58,252
62,890
11,849
12,463
13,494
14,456
2,463
2,613
3,037
3,269
1962-63 5
1963-64 5 .
1964-65 5
62,269 19,833 14,446
68,443 21,241 15,762
74,000 22,583 17,118
1,008
1,484
1,794
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
1950 .
1952..
1953
1954
20,911
25,181
27,307
29,012
7,349
8,652
9,375
9,967
1965-66 5 .
1966-67 5
1967-68 5
1968-69 5
1969-70 5
1970-715
1971-72 5
1972-73 5
. . 83,036
91,197
101,264
114,550
130,756
16,405
18,002
19,054
20,089
24,670
26,047
27,747
30,673
34,054
All
other <
? 311
1, 831
?, 177
2, 491
79
49
113
165
4,487
4,076
4,093
4,440
Public
welfare
?, ? ^
74
80
153
218
752
7,267
7,678
8,395
9,228
Highways
7, ?m
1, 643
1. 449
1, 604
1( 811
1932
1934
1936—
1938
Education
7, 181
7, 644
R, 757
01S
5, 379
3, 036
1,156
1,225
1,133
1,409
2,099
787 7, 177
098 8, 318
910 9,390
701 10, 557
3, 803
4, 650
4,987
5,527
2,940 8, 867
2,788 10 34?
2,914 10 619
3,060 11 557
11,907
13, ??0
14,134
15,919
17, 283
6,452
3,168
3,139
3,485
3,818
4,136
1?
7 816
8, 567
9, 592
1 180
1,266
1,308
1,505
6 974 11 634 51 876 18 71Q 9 4?8
7,131 12 563 56,201 20,574 9 844
489 60,206 22,216 10 357
7,871
8,722 14 850 64 816 23 776 11 136
4,404
4,720
5,084
5,481
19 3?5
21 063
22 549
24,423
3,267
3,791
4,090
1,505
1,695
1,929
8,663 14 556 63 977 23 7?9 11 150
10,002 15,951 69 302 26,286 11,664
11,029 17,250 74 546 28,563 12,221
19,085 4,760
20, 530 5,826
7,308
22,911
26,519 8,908
30,322 10,812
2,038
2,227
2,518
3,180
3,738
13,214
15,370
17,181
19,153
21,857
144,927 37,852 33,233 11,900
166,352 42,13
37,488 15,237
190,177 45,28 42,047 17,994
890
3, 685
17, 684
4, 541
»>, 763
6, 252
6, 897
22,
?fi.
27
30
33 7?4
36 711
40,375
44 851
48,887
6, 953
n
19,269
21,197
23,598
26,118
29,971
82
93
102
116
131
843
350
411
728
332
33,287
37,919
41,158
47,238
52,718
197
n14 399
940
16
17
547
876
5,420 23,678
5,766 25 586
6,315 27 447
12,770 6,757 30
13,932 8,218 33
14,481 9,857 36
15,417 12,110 41
16,427 14,679 47
0?9
281
915
963
508
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
5,425 39, 256 40,172 181 086 69,573 18,615 23, 582 69 316
1
Fiscal years not the same for all governments. See footnote 5.
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.
5 Data for fiscal year ending in the 12-month period through June 30. Data for 1963 and earlier years include local government amounts grouped in terms of fiscal years ended during the particular calendar year.
3
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, 1946-74
[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
Government
account
series*
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
6.7
7.4
6.3
9.3
24.6
29.0
31.7
33.9
15
2.7
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
2.4
2.3
2.1
2.3
3.0
3.0
2.4
2.0
2.1
3.1
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
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
0.5
.7
1.3
1.8
2.4
1.5
3.2
4.4
4.7
63
5.3
4.6
3.8
3.5
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
3.5
4.3
4.1
4.4
4.4
4.3
3.5
2.9
2.0
1970
1971
1972
1973
1974
389 2
424.1
449.3
469.9
2 492.7
123.4
119.1
130.4
141.6
148.1
104 9
123.0
117.7
106.8
113.2
19 4
19.9
21.4
21.8
21.6
52.5
54.9
58.1
60.8
63.8
6.5
17.4
21.3
26.9
22.8
2.4
2.4
2.4
2.8
3.0
78.1
85.7
95.9
107.1
119.1
1.9
1.8
2.0
2.1
2 1.1
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
1.8
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
1.9
2.0
1.9
2.0
2.1
..
468.2
470.7
474.5
471.9
474.7
475.1
141.6
141.4
145.5
140.9
142.9
139.9
106.8
106.0
106.0
107.5
104.1
104.2
21.7
22.2
22.1
22.0
22.6
22.5
61.0
61.3
61.6
61.9
62.1
62.4
26.2
26.3
26.1
26.6
26.9
25.9
2.8
2.8
2.9
2.9
2.9
2.9
106.2
108.6
108.5
108.4
111.3
115.4
1.9
2.1
1.9
1.8
1.9
1.8
.-
2 475.3
481.8
481.5
480.2
485.4
492.7
142.2
142.9
143.4
144.4
143.4
148.1
104.2
108.4
108.4
108.4
112.6
113.2
22.4
20.8
20.8
20.8
21.5
21.6
62.7
62.8
63.0
63.3
63.6
63.8
24.4
23.2
23.2
23.1
23.1
22.8
3.0
3.0
3.0
3.0
3.0
3.0
115.5
119.6
118.3
116.2
116.9
119.1
21.0
1.1
1.4
1.1
1.2
1.1
1973:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct_
Nov
Dec
_
. .
1974: Jan
Feb
Mar
.
Apr
May _ .
June
July
Aug
Sept
Oct
Nov
Dec
1
Prior to July 1974, this series was shown as "Speciaj issues."
2 Beginning July 1974, excludes the non-interest-bearing notes issued to International Monetary Fund to conform with
Budget presentation.
Source: Department of the Treasury.
332
TABLE C-72.—Estimated ownership of public debt securities, 1946-74
[Par values,i billions of dollars]
Total public debt securities 2
Held by private investors
End of year or
month
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968 . . .
1969
1970
1971
1972
1973
1974
1973: Jan
Feb
Mar
Apr
May
June
July
Aug
SeDt
Oct
Nov
Dec
1974: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
.-
.
Held
Total
259.1
256 9
252.8
257.1
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
8 492.7
_ 450.1
454.8
458.6
457 1
457.3
458.1
459.0
_ 461.8
461.4
462.5
464.0
469.9
468.2
470.7
474.5
471.9
474.7
475.1
s 475.3
481.8
481.5
480.2
485.4
492.7
Held by
Federal
n ^
Govern- Reserve
Banks
ment
accounts
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
141.2
116.2
117.1
117.9
117.9
120.1
123.4
125.0
128.7
127.8
127.4
127.1
129.6
128.7
131.3
131.2
131.1
133.9
138.2
137.5
141.6
140.6
138.4
139.0
141.2
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
80.5
72.0
72.6
74.3
75 5
74.1
75.0
77.1
76.1
76 2
78.5
77.2
78.5
78.2
78.2
79.5
80.0
81.4
80.5
78.1
81.1
81.0
79.4
81.0
80.5
Total
208.3
203 6
195 8
202.4
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
8 271.0
261.8
265.1
266.4
263 7
263.1
259.7
256.9
257.1
257.4
256.5
259.8
261.7
261.2
261.1
263.8
260.7
259.4
256.4
s 259.7
259.0
260.1
262.5
265.3
271.0
Mutual
savings
MiscelState
Other
Combanks
local Indi- B laneous
mercial and in- corpo-4 and
invesgovernviduals
banks a surance rations ments «
tors i
companies
74.5
68 7
62 4
66.8
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
60.3
55.5
66.4
62.8
62.0
60.5
58.9
58.8
56.5
55.1
55.4
56.3
58.5
60.3
60.2
59.0
59.5
56.8
54.4
53.2
53.9
53.0
52.9
53.5
54.5
55.5
36 7
35 9
32 7
31.5
29.6
26 2
25 5
25.1
24 1
23 1
21.2
20 1
19 8
19.4
18.1
17 6
17.6
17 0
16 8
15.8
14 5
13 2
12.2
10.7
10 5
10.1
10 0
9.3
8.4
10.0
9.9
9.9
9.7
9.6
9.6
9.5
9.2
9.2
9.2
9.1
9.3
9.1
8.8
8.9
8.6
8.6
8.5
8.3
8.3
8.3
8.4
8.4
8.4
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
10.9
11.5
10.3
10.9
11.2
10.0
10.8
9.8
10.3
11.5
9.2
10.2
11.1
10.9
10.7
10.9
11.7
10.5
11.2
10.8
11.3
11.0
10.5
11.2
11.0
11.5
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
21.1
22.9
24 3
24.1
24.9
27.2
27.8
25.4
28.9
29.2
29.5
30.0
29.4
29.4
29.2
28.6
28.8
28.4
27.7
29.0
28.5
28.9
29.2
29.9
30.7
30.6
30.1
29.2
28.3
28.8
29.2
29.3
28.8
28.7
29.5
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
65.8
65.9
68.0
69.5
71.9
74.2
73.5
75.1
80.8
81.2
73.2
73.9
77.3
84.6
74.9
75.0
75.3
75.4
75.7
75.9
76.7
77.0
77.2
77.0
77.2
77.3
77.4
77.9
78.4
79.2
80.0
80.7
81.6
82.6
83.3
83.8
84.3
84.6
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
72.3
74.8
881.5
70.1
77.1
78.6
78.9
79.5
76.8
75.5
76.5
77.4
75.4
75.1
74.8
73.9
73. S
74.7
75.6
75.9
75.0
8 75.7
75.0
75.7
76. i
78.4
81.5
12 U.S. savings bonds, series A-F and J, and U.S. savjngs notes are included at current redemption value.
Not all of total shown is subject to statutory debt limitation.
3
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.
* Exclusive of banks and insurance companies.
* Includes trust, sinking, and investment funds of State and local governments and their agencies, and of Territories
and
possessions.
s
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 International
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. See also footnote 8.
8
Beginning July 1974, excludes non-interest-bearing notes issued to International Monetary Fund to conform with
Budget presentation.
Source: Department of the Treasury.
333
TABLE C-73.—Average length and maturity distribution of marketable interest-bearing
public debt, 1946-74
End of year or month
Amount
outstanding
Maturity class
Within
1 year
Ito5
years
5 to 10
years
10 to 20
years
20 years
Millions of dollars
Fiscal year:
1946
1947
1948
Average length
Years
Months
1949.—
189,606 I
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
1
5
2
9
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
2
8
4
6
1955..
19561957..
19581959..
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
10
4
9
3
7
I9601961..
196219631964..
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
6
11
1
0
1965..
1966196719681969-
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
4
11
7
2
0
197019711972..
1973..
1974.
232,599
245,473
257, 202
262,971
266,575
105,530
112,772
121,944
122, 803
139,942
89,615
89,074
89,004
88, 223
77,199
15, 882
24, 503
26,852
31,111
26,957
10, 524
8,455
9,343
14,477
17,403
11,048
10,670
10,059
6,357
5,074
8
6
1973:Jan...
Feb..
MarAprMay^June.
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
1
1
0
0
3
2
July—
AugSept.
Oct..
Nov..
Dec.
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
2
3
2
1
1
0
1974: Jan—
Feb.Mar..
AprMay..
June..
270,131
269,650
273,596
270,452
269,550
266, 575
141,590
141,444
145,453
140, 905
142,864
139,942
81,716
79,045
79,045
80,570
77,165
77,199
25,132
26,968
26,965
26,961
26,960
26,957
15, 596
16,129
16,092
16,036
17,458
17,403
6,098
6,063
6,040
5,981
5,103
5,074
0
0
11
11
0
0
July..
Aug..
Sept..
Oct...
Nov..
Dec.
268,782
272,111
272,608
273, 529
277,538
282,891
142,245
142,900
143,400
144,373
143,381
148,122
77,200
79,366
79,361
79,369
84,730
85,273
26,953
28,997
29,044
29,027
27,916
27,899
17,346
14,952
14,924
14,894
14,865
14,832
5,039
5,897
5,879
5,866
6,645
6,765
11
0
0
11
0
11
2
0
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 G-74.—Profits before and after taxes, all private corporations, 1929-74
[Billions of dollars]
Corporate profits (before taxes) and
inventory valuation adjustment
Corporate profits
after taxes
All
other
industries
Corporate
profits
before
taxes
Corporate
tax
liability i
3.4
10.0
1.4
8.6
5.8
2.8
4.2
1.0
.5
.4
2.0
-1.6
3.8
Manufacturing
Year or
quarter
All
industries
DurTotal
ind ustries
Transportation,
Noncomdurmuniable cation,
goods
and
inpublic
dus- utilities
tries
Total
UndisDivi- tribdends uted
profits
Corporate
capital
consumption
allowances 2
1929.
10.5
5.2
2.6
2.6
1.8
1933.
-1.2
-.4
-.4
.0
.0
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
1940.
1941.
1942.
1943.
1944.
1945.
1946.
1947.
1948.
1949.
9.8
15.2
20.3
24.4
23.8
19.2
19.3
25.6
33.0
30.8
5.5
9.5
11.8
13.8
13.2
9.7
9.0
13.6
17.6
16.2
3.1
6.4
7.2
8.1
7.4
4.5
2.4
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
6.2
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
20.2
22.7
18.5
4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2
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
1950.
1951.
1952
1953
1954.
1955
1956.
1957.
1958
1959
37.7
42.7
39.9
39.6
38.0
46.9
46.1
45.6
41.1
51.7
20.9
24.6
21.6
22.0
19.9
26.0
24.7
24.0
19.3
26.3
12.0
13.2
11.7
11.9
10.5
14.3
12.8
13.3
9.3
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
12.7
13.5
13.3
12.6
13.4
15.2
15.6
15.8
15.9
18.4
42.6
419
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
24.9
21.6
19.6
20.4
20.6
27.0
27.2
26.0
22.3
28.5
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
14.2
10.8
15.9
8.8
10.3
11.5
13.2
15.0
17.4
18.9
20.8
22.0
23.5
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
49.9
50.3
55.7
58.9
66.3
76.1
82.4
78.7
84.3
79.8
24.4
23.3
26.6
28.8
32.7
39.3
42.6
38.7
41.7
36.6
12.0
11.4
14.1
15.8
17.8
22.8
24.0
20.7
22.4
18.8
12.4
11.9
12.5
13.0
14.9
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
19.1
20.5
20.6
23.5
25.6
27.9
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
27.2
31.2
33.1
38.4
46.5
49.9
46.6
47.8
44.8
13.4
13.8
15.2
16.5
17.8
19.8
20.8
21.4
23.6
24.3
13.2
13.5
16.0
16.6
20.6
26.7
29.1
25.3
24.2
20.5
24.9
26.2
30.1
31.8
33.9
36.4
39.5
43.0
46.8
51.9
1970
1971
1972
1973
1974
69.2
78.7
92.2
105.1
105.4
27.8
32.3
40.8
47.6
46.8
10.5
14.5
21.8
26.1
16.0
17.3
17.8
19.0
21.5
30.8
7.8
8.3
9.2
9.2
8.7
33.7
38.1
42.2
48.3
49.9
74.0
83.6
99.2
122.7
141.0
34.8
37.5
41.5
49.8
55.8
39.3
46.1
57.7
72.9
85.2
24.7
25.0
27.3
29.6
32.7
14.6
21.1
30.3
43.3
52.5
56.0
60.4
66.3
71.2
76.7
Seasonally adjusted annual rates
1972:1.
II
III
IV
86.5
89.5
92.9
99.8
37.7
39.6
40.8
45.1
19.3
21.5
21.4
25.1
18.4
18.1
19.4
20.0
8.5
8.9
9.5
40.3
41.0
42.6
44.8
92.3
96.0
100.2
108.2
38.9
40.3
41,8
45.2
53.4
55.7
58.4
63.1
26.4
27.1
27.8
28.2
27.1
28.6
30.6
34.9
63.9
66.4
66.7
68.2
1973: I
103.9
105.0
105.2
106.4
48.6
48.4
47.1
46.4
27.6
26.9
25.7
24.3
20.9
21.5
21.4
22.1
9.4
8.8
9.5
9.2
45.9
47.8
48.6
50.8
120.4
124.9
122.7
122.7
48.9
50.9
49.9
49.5
71.5
74.0
72.9
73.2
28.7
29.1
29.8
30.7
42.8
44.9
43.1
42.5
69.2
70.8
71.6
73.1
1974: I
107.7
II
105.6
III—_ 105.8
IV p . .
46.2
46.8
48.6
19.3
17.1
15.3
26.9
29.7
33.3
7.1
8.0
8.6
54.5
50.8
48.7
135.4
139.0
157.0
52.2
55.9
62.7
83.2
83.1
94.3
31.6
32.5
33.2
33.3
51.6
50.5
61.1
74.1
75.7
77.6
79.4
IV
i Federal and State corporate income and excess profits taxes.
> includes depreciation and accidental damages.
3 Corporate profits after taxes plus corporate capital consumption allowances.
Source: Department of Commerce, Bureau of Economic Analysis.
335
Profits
plus
capital
consumption
allowances3
T A B L E C-75.—Sales, profits, and stockholders* equity, all manufacturing corporations, 1947—74
[Billions of dollars]
All manufacturing
corporations
Profits
Profits
Year or
quarter
Sales
(net)
Nondurable goods
industries
Durable goods industries
Profits
StockStockStockBefore After holders' Sales Before After holders' Sales Before After holders'
Federal Federal equity1 (net) Federal Federal equity1 (net) Federal Federal equity *
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
122.0
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
9.6
6.1
5.7
5.2
5.5
5.6
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
7.0
7.8
7.5
6.9
8.3
61.3
66.4
70.6
74.6
79.2
1960
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
175.2
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
9.2
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
257.0
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
708.8
751.4
849.5
1,017.2
48.1
53.2
63.2
81.4
28.6
31.3
36.5
48.1
306.8
320.9
343.4
374.1
363.1
382.5
435.8
527.3
23.0
26.5
33.6
43.6
12.9
14.5
18.4
24.8
155.1
160.6
171.4
188.7
345.7
368.9
413.7
489.9
25.2
26.7
29.6
37.8
15.7
16.7
18.0
23.3
151.7
160.3
172.0
185.4
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
232.5
256.3
253.2
275.1
18.3
22.2
19.5
21.4
10.5
13.0
11.6
13.0
361.1
370.8
378.3
386.4
121.2
136.5
129.5
140.1
10.3
12.7
9.9
10.8
5.7
7.1
5.7
6.3
181.9
187.1
191.3
194.7
111.3
119.9
123.7
135.0
8.0
9.5
9.7
10.6
4.8
5.8
5.9
6.7
179.2
183.7
186.9
191.7
1973:IV
236.5
20.6
13.1
367.5 122.7
10.1
6.2
185.8 113.9
10.5
7.0
181.7
1974:1.
II
Ill
242.2
269.6
271.9
21.1
25.8
25.0
13.5
16.3
15.5
378.7 120.6
389.6 137.1
401.8 134.7
9.4
12.5
10.5
5.7
7.5
6.2
190.6 121.6
195.3 132.5
201.0 137.2
11.7
13.4
14.5
7.8
8.8
9.3
188.0
194.2
200.8
1970
1971
1972
1973
1972:1..
II
III
IV
..
1973:1
II
Ill
IV
New series: 2
1
Annual data are average equity for the year (using four end-of-quarter figures).
2 See "Quarterly Financial Report for Manufacturing Corporations, First Quarter 1974," Federal Trade Commission.
Note.—Data are not necessarily comparable from one period to another due to changes in accounting procedures,
industry classifications, sampling procedures, etc. For explanatory notes concerning compilation of the series, see "Quarterly Financial Report for Manufacturing Corporations," Federal Trade Commission.
Source: Federal Trade Commission.
336
TABLE C-76.—Relation of profits after taxes to stockholders' equity and to sales, all manufacturing corporations, 1947-74
Ratio of profits after Federal
income taxes (annual rate)
to stockholders' equity—percent1
Profits after Federal income taxes
per dollar of sales—cents
Year or quarter
All
manufacturing
corporations
Durable
goods
industries
Nondurable
goods
industries
All
manufacturing
corporations
Durable
goods
industries
Nondurable
goods
industries
1947
1948
1949
15.6
16.0
11.6
14.4
15.7
12.1
16.6
16.2
11.2
6.7
7.0
5.8
6.7
7.1
6.4
6.7
6.8
5.4
1950
1951
1952
1953
1954
15.4
12.1
10.3
10.5
9.9
16.9
13 0
11.1
11.1
10.3
14.1
11 2
9.7
9.9
9.6
7.1
48
4.3
4.3
4.5
7.7
53
4.5
4.2
4.6
6.5
4 5
4.1
4.3
4.4
12.6
12.3
10.9
8.6
10.4
13.8
12.8
11.3
8.0
10.4
11.4
11.8
10.6
9.2
10.4
5.4
5.3
4.8
4.2
4.8
5.7
5.2
4.8
3.9
4.8
5.1
5.3
4.9
4.4
4.9
1960
1961
1962
1963
1964
9.2
8.9
9.8
10.3
11.6
8.5
8.1
9.6
10.1
11.7
9.8
9.6
9.9
10.4
11.5
4.4
4 3
4.5
4.7
5.2
4.0
3.9
4.4
4.5
5.1
4.8
4.7
4.7
4.9
5.4
1965
1966
1967
1968
1969
13.0
13.4
11.7
12.1
11.5
13.8
14.2
11.7
12.2
11.4
12.2
12.7
11.8
11.9
11.5
5.6
5.6
5.0
5.1
4.8
5.7
5.6
4.8
4.9
4.6
5.5
5.6
5.3
5.2
5.0
9.3
9.7
10.6
12.8
8 3
9.0
10.8
13.1
10.3
10.3
10.5
12.6
4.0
4.1
4.3
4.7
3.5
3.8
4.2
4.7
4.5
4.5
4.4
4.8
1972: 1 .
II
III
IV
9.5
11.3
10.1
11.5
9.3
12.4
9.7
11.6
9.8
10.2
10.5
11.4
4.0
4.5
4.2
4.4
3.9
4.7
4.0
4.3
4.2
4.3
4.4
4.6
1973- 1
II
III
IV
11.6
14.0
12.3
13.4
12.5
15.3
11.8
12.9
10.8
12.7
12.7
14.0
4.5
5.1
4.6
4.7
4.7
5.2
4.4
4.5
4.3
4.9
4.8
5.0
1973: IV
14.3
13.3
15.3
5.6
5.0
6.1
1974: I
II
III.
14.3
16.7
15.5
12.0
15.4
12.4
16.5
18.0
18.6
5.6
6.0
5.7
4.8
5.5
4.6
6.4
6.6
6.8
1955
1956
1957
1958
1959
1970
1971
1972
1973
.
_ .
... _
New series: 2
1
Annual ratios based on average equity for the year (using four end-of-quarter figures). Quarterly ratios based on equity
at end of quarter only.
2 See "Quarterly Financial Report for Manufacturing Corporations, First Quarter 1974," Federal Trade Commission.
Note.—Based on data in millions of dollars.
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.
337
TABLE C-77.—Relation of profits after taxes to stockholders* equity and to sales, all manufacturing corporations, by industry group, 1973-74
Ratio of profits after Federal
income taxes
(annual
rate) to stockholders'
equity—percent 1
Profits after Federal
income taxes per dollar
of sales—cents
Industry
1974
1973
IV
All manufacturing corporations.
14.3
16.7
15.5
1974
1973
IV
5.6
III
5.6
6.0
5.7
4.6
13.3
12.0
15.4
12.4
5.0
4.8
5.5
11.5
12.7
6.0
13.7
14.8
19.5
15.0
19.0
5.0
5.6
2.8
5.9
6.0
7.4
5.9
7.6
11.1
15.3
11.3
17.3
18.5
20.9
20.8
16.3
4.7
7.0
4.7
7.6
6.7
8.5
7.5
7.6
14.4
13.9
14.6
10.9
14.2
13.4
12.0
8.0
20.1
15.3
12.5
11.2
18.5
12.1
10.7
4.7
4.2
6.7
5.1
3.7
4.2
6.3
4.3
3.0
5.4
6.6
4.2
3.7
5.1
5.6
3.8
1.7
Motor vehicles and equipment
Aircraft, guided missiles, and parts..
12.0
9.6
7.2
11.3
10.1
12.6
2.5
9.8
4.3
2.8
3.0
3.4
3.8
3.4
1.0
2.9
Instruments and related products
Other durable manufacturing products..
16.5
14.6
16.6
14.4
16.5
17.3
15.2
11.1
9.4
4.1
10.2
4.5
9.3
4.8
8.5
3.3
15.3
16.5
18.0
18.6
6.1
6.4
6.6
6.8
15.0
17.0
8.1
13.0
15.0
15.5
12.5
13.8
10.1
15.8
11.6
18.1
13.6
17.2
12.0
20.5
14.8
21.3
15.5
15.9
7.2
20.1
13.0
18.9
3.0
8.9
2.5
5.6
5.3
7.9
2.5
8.7
3.1
6.6
4.1
8.7
2.7
10.8
3.5
7.9
5.3
9.6
3.0
9.0
2.3
7.8
4.7
8.3
13.7
18.7
16.6
20.1
21.3
20.0
19.4
19.0
7.3
12.6
8.3
12.9
9.7
13.3
8.6
12.2
17.0
14.6
13.4
20.5
14.0
11.1
20.0
17.6
11.5
23.2
14.4
14.2
13.8
5.0
2.6
13.4
5.0
2.4
11.7
5.6
2.4
13.7
4.6
2.9
Durable goods industries..
Stone, clay, and glass products.
Primary metal industries
Iron and steel
Nonferrous metals..
Fabricated metal products
__
Machinery, except electrical
Electrical and electronic equipment..
Transportation equipment
Nondurable goods industries
Food and kindred products
Tobacco manufactures
Textile mill products
Paper and allied products
Printing and publishing
Chemicals and allied products..
Industrial chemicals and synthetics..
Drugs
Petroleum and coal products
Rubber and miscellaneous plastics products..
Other nondurable manufacturing products
1
14.3
III
Ratios based on equity at end of quarter.
Note.—Industry data are not available prior to 1973 IV on a basis comparable with figures shown here. Beginning 1973
IV, there are fewer industry categories because of the recent merger movement and other forms of corporate diversification. See "Quarterly Financial Report for Manufacturing Corporations, First Quarter 1974," Federal Trade Commission.
Source: Federal Trade Commission.
338
T A B L E G—78.—Sources and uses of funds, nonfarm nonfinancial corporate business,
1946-74
[Billions of dollars]
Sources
Uses
IIxternal
Period
Credit market funds
Total Internal1
Total
Long- Shortterms term3
Total
Total
Purchase
of
physical 4
assets
Increase
in
financial
assets
Other
Discrepancy
(sources
less
uses)
1946
1947
1948
1949
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
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
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
4.6
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
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
47.4
54.5
59.2
65.0
72.4
91.3
97.3
94.0
113.6
118.1
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
36.1
32.5
51.9
57.4
11.9
12.3
12.5
12.1
14.5
20.4
25.3
29.6
31.5
38.9
7.5
10.8
9.5
8.2
8.8
9.2
15.7
21.6
18.4
20.0
4.5
1.5
2.9
3.9
5.6
11.2
9.6
8.0
13.2
18.9
1.0
6.7
4.9
9.0
7.4
14.4
10.9
3.0
20.4
18.5
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
8.2
5.8
9.6
6.0
1970
1971
1972
1973
103.7
120.4
148.0
176.2
59.4
68 0
78.7
84.6
44.2
52 5
69.3
91.6
39.5
46 8
55 3
67.2
30.7
41 8
39.3
34.5
8.8
50
16.0
32.7
4.8
5.7
14.0
24.5
97.0
110.3
133.3
162.4
84.0
87.2
102.5
121.5
12.9
23.1
30.8
40.9
6.7
10.2
14.8
13.8
Seasonally adjusted annual rates
1973: 1
II
Ill
IV
175.6
182.3
173 4
173.6
83 7
83.6
84 8
86.3
91 9
98.7
88 6
87.3
73 9
70.7
66 1
57.9
31.3
38.9
35.3
32.5
42 5
31.7
30 7
25.5
18 0
28.1
22 4
29.3
159.8
167.9
158.1
163.7
112.7
117.7
120 4
135.2
47.1
50.2
37 7
28.5
15.7
14.3
15.3
10.0
1974: 1
!l
III
200.1
206.7
204.4
83.8
78.5
72.8
116.3
128 2
131.6
78.0
89.7
84.6
36.7
41.3
35.3
41.4
48 3
49.2
38.3
38 5
47.1
187.1
192.4
189.7
128.8
131 4
123.4
58.3
61 0
66.3
13.1
14.3
14.7
* 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.
« Plant and equipment, residential structures, and inventory investment.
Source: Board of Governors of the Federal Reserve System.
339
TABLE C-79.—Current assets and liabilities of U.S. corporations, 1939-74
[Billions of dollars]
Current liabilities
Current assets
End of year
or quarter
U.S.
Cash
Govon
ernhand
Total and
ment
securiin
banks* ties 2
Receivables
from
U.S.
Govern- 3
ment
Advances
FedNotes
Net
and
Notes
Other
eral Other workand
preand
Incurincuracing
payacrent Total
come rent
counts vencapiments, counts
astax
liareceiv- tories sets
tal
U.S.
pay- liabili- bili*
able
Govable
ties
ties
ernment3
All corporations »
54.5
10.8
2.2
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
.7
23.9
27.4
23.3
21.9
21.8
23.2
30.0
1950
1951.
1952
1953....
1954
1955
1956
1957
1958
1959
161.5
179.1
186.2
190.6
194.6
224.0
237.9
244.7
255.3
277.3
28.1
30.0
30.8
31.1
33.4
34.6
34.8
34.9
37.4
36.3
19.7
20.7
19.9
21.5
19.2
23.5
19.1
18.6
18.8
22.8
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
254.7
269.7
288.2
305.6
336.0
364.0
386.2
426.5
473.6
34.8
37.1
39.8
40.5
42.8
41.9
45.5
48.2
47.9
1970
1971
1972
1973....
492.3
518.8
563.1
631.4
1973:1
II..
Ill
IV
1974:1
II
III
1939
1.2
6.9
24.5
2.5
7.1
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
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
1.8
1.8
105.0
112.8
13.5
14.1
40.1
42.5
128.6
135.6
123.7
132.4
145.5
156.6
178.8
199.4
211.3
244.1
287.9
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
149.0
157.2
164.6
174.9
182.4
185.7
35.0
39.7
43.6
49.3
304.9
313.9
338.8
386.1
6.6
4.9
4.0
4.3
204.7
207.3
221.6
251.9
10.0 83.6
12.2 89.5
14.1 99.1
16.6 113.3
187.4
204.8
224.3
245.3
45.5
46.0
46.6
49.3
347.4
359.1
371.7
386.1
4.1
4.5
4.4
4.3
222.8
232.5
240.8
251.9
15.7
13.9
15.3
16.6
104.7
108.1
111.2
113.3
231.8
237.7
241.9
245.3
51.6 400.7
48.8 415.8
51.1 432.4
4.5
4.7
5.1
256.7
268.3
276.6
18.7 120.7
17.4 125.3
20.5 130.2
253.2
257.4
263.6
18.0
1.4
30.0
19.8
25.6
27.3
27.6
26.8
26.3
37.6
44.6
48.9
45.3
1.5
1.4
1.3
1.3
1.4
2.4
1.7
1.6
1.6
1.4
32.8
40.7
47.3
51.6
51.7
45.8
51.9
61.5
64.4
60.7
0.6
.8
2.0
2.2
1.8
.9
.1
55.7
58.8
64.6
65.9
71.2
86.6
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
3.1
3.4
126.1
135.8
91.8
95.2
10.6 160.4
11.4 171.2
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
95.0
100.5
106.8
113.1
126.6
142.8
153.1
166.0
186.4
10.5
12.1
14.4
16.3
18.1
19.7
22.0
26.9
31.6
50.2
55.7
60.5
65.2
7.7
10.7
9.9
10.7
4.2
3.5
3.4
3.5
201.9
208.8
230.5
255.8
193.3
200.3
215.1
247.0
579.2
596.8
613.6
631.4
61.2
62.3
62.2
65.2
10.8
9.6
9.5
10.7
3.2
2.9
3.0
3.5
235.7
245.6
254.2
255.8
222.8
230.3
238.2
247.0
653.9
673.3
696.0
62.8
62.2
63.9
11.7
10.4
10.7
3.2
3.4
3.5
265.6 258.9
278.7 269.7
284.1 282.7
38.3
42.4
43.0
22.6
25.6
24.0
24.1
25.0
24.8
31.5
37.6
39.3
37.5
Nonfinancial corporations«
i3 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'books or 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'
books.
4
1 ncludes marketable investments (other than Government securities and time certificates of deposit) as well as sundry
current
assets.
s
Excludes banks, savings and loan associations, and insurance companies.
° 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 1970 are based on "Statistics of Income" (Department of the Treasury), covering virtually
all corporations in the United States. "Statistics of Income" data may not be strictly comparable from year to year because
of changes in the tax laws, basis for filing returns, and processing of data for compilation purposes. All other figures shown
are estimates based on data compiled from many different sources, including data on corporations registered with the
Securities and Exchange Commission.
Source: Securities and Exchange Commission.
3
340
TABLE C-80.—State and municipal and corporate securities offered, 1934-74
[Millions of dollars]
Corporate securities offered for cash
Year or quarter
State and
municipal
securities
offered
for cash
(principal
amounts)
Type of corporate security
Total
corporate
offerings
Common
stock
Bonds
and
notes
Preferred
stock
Industry of corporate issuer
Manufacturing^
Electric,
Transportation »
water >
Communication
Other
1934
939
397
19
371
67
133
1939
1,128
2,164
87
98
1,980
604
1,271
186
103
1940
1941
1942
1943
1944
1,238
956
524
435
661
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
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
1954
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
1955
1956
1957
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
1971
1972
1973
1974 »._
17,762
24,370
22,944
22,953
22,726
38,943
43,446
39,888
32,128
37,611
7,238
9,561
10,723
7,741
4,082
1,393
3,682
3,340
3,375
2,235
30,312
30,203
25,825
21,012
31,294
10,513 11,016
11,624 11,746
6,482 11,314
4,837 10,270
10, 316 12,785
2,218
1,314
937
1,127
1,032
5,138
5,815
4,835
4,905
3,915
10,058
12,947
16,320
10,989
9,563
1973: I.
IL
III
IV
5,629
5,589
5,096
6,639
7,968
8,133
6,231
9,796
2,733
1,819
1,296
1,893
1,141
597
447
1,190
4,094
5,717
4,488
6,713
1,366
1,115
1,490
2,428
2,904
2,041
2,897
185
234
340
368
1,212
962
869
1,862
3,277
2,667
1,866
3,179
1974: I.
II.
III
IV
6,349
6,441
4,063
5,873
9,246
9,199
7,453
11,713
959
1,002
835
1,286
818
534
459
424
7,469
7,663
6,159
10,003
1,926
2,534
1,865
3,991
3,569
3,190
2,349
3,677
171
70
147
644
874
1,313
999
729
2,706
2,092
2,093
2,672
176
* Prior to 1948, also includes extractive, radio broadcasting, airline companies, commercial, and miscellaneous company
issues.
* 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
commercial 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-81.—Common stock prices, earnings,and yields, and stock market credit, 1949-74
Margin credit at brokers and banks
(end of period) *
Standard & Poor's common stock data
Price indexes i
Regulated«
Year or month
Total
(500
stocks)
Industrials
(425
stocks)
Public
utilities
(55
stocks)
Railroads
(20
stocks)
Dividend
yield
(percent) 2
Price/
earnings
ratios
Total
Brokers
Millions of dollars
1941-43=10
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
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
55
66
62
69
81
88
85
91
98
97
85
27
38
87
37
17
26
93
70
84
59 43
69 99
65 54
73 39
86 19
93 48
91 08
99.18
107 49
107 13
46
60
59
64
69
76
68
68
66
62
86
20
16
99
91
08
21
10
42
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
1974
83 22
98.29
109 20
107.43
82.85
91 29
108.35
121 79
120.44
92.91
54 48
59.33
56 90
53.47
38.91
32 13
41.94
44.11
38.01
37.53
3 83
3.14
2.84
3.06
4.47
15 69
18.50
18.20
14.22
6,535
9,045
6,382
5,700
8,180
5,251
1973: Jan
Feb.
Mar
Apr
118.42
114 16
112.42
110.27
107 22
104.75
132.55
127 87
126.05
123.56
119 95
117.20
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
8,840
8,640
8,347
8,165
7,650
7,369
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
45.73
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 10
96 11
93.45
97.44
92 46
89.67
89.79
107 18
104.13
108.98
103 66
101.17
101.62
48 60
48.13
47.90
44 03
39 35
37.46
44 37
41.85
42.80
40 26
37.04
37.31
3 64
3.81
3.65
3.86
4.00
4.02
11.16
82.82
76.03
68 12
69 44
71.74
67.07
93.54
85.51
76 54
77 57
80.17
74.80
35.37
34.00
30 93
33 80
34.45
32.85
35 63
35.06
31 55
33 70
35.95
34.81
4.42
4.90
5 45
5 38
5.13
5.43
May
June
July
Aug .
Sept
Oct
Nov
Dec
1974: Jan
Feb .
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
.
.
Banks
Unregulated;
nonmargin
stock
credit
at
banks •
835
865
1 131
1,866
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
7,299
7,081
6,954
7,093
6,774
6,382
6,243
6,056
5,949
5,912
5,671
5,251
1,056
1,025
1 005
1,181
1,103
1,131
1,957
1,952
1,909
1,878
1,917
1,866
9.71
6,343
6,462
6,527
6,567
6,381
6,297
5,323
5,423
5,519
5,558
5,361
5,260
1,020
1,039
1,008
1,009
1,020
1,037
1,845
1,843
1,869
1,868
1,858
2,072
5,948
5,625
5,097
4,925
4,672
4,173
4,080
4,103
1,023
6.86
2,091
2,119
2,060
14.42
11 95
953
924
> Monthly data are averages of daily figures and annual data are averages of monthly figures,
a 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.
* Ratio of price index for last day of quarter to quarterly earnings (seasonally adjusted annual rate). Annual ratios are
averages of quarterly data.
* 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 fcr banks represent estimates for all commercial banks,
which accounted for 60 percent of security credit outstanding at banks on June 30,1971.
* In 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.
* 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.
Sources: Board of Governors of the Federal Reserve System, New York Stock Exchange, and Standard & Poor's Corporation.
342
TABLE C-82.—Business formation and business failures,
1929-74
Business failures 1
Index
of net
business
formation
(1967-100)
Year or month
1929
19333
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
1974
112.6
87.8
93.1
93.3
98.2
94.4
91.3
99.1
95.2
90.4
89.5
96.8
92.4
88.3
90.7
93.3
97.2
98.6
98.2
100.0
109.8
116.2
108.0
111.0
117.9
117.9
^113.4
New
business
rations
(numk or \
132.916
112,897
96,346
85,640
93,092
83,778
92,946
102,706
117,411
139,915
141,163
137,112
150 781
193,067
182,713
181,535
182,057
186,404
197, 724
203,897
200,010
206,569
233,635
274,267
264,209
287,577
316,601
329,358
4294,279
Amount of current
liabilities (millions
of dollars)
Number of failures
ness
failure
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
38.4
Liability size
class
Under $100,000
and
$100,000 over
22,909 22,165
19,859 18,880
14,768 14,541
13,619 13,400
11,848 11,685
9 405
9 282
3,155
3,221
1,222
1,176
809
759
1 129
1 003
3 474
3 103
4,853
5,250
8,708
9,246
9,162
8,746
7,626
8,058
7,081
7 611
8,075
8,862
11 086 10 226
10 969 10 113
12,686 11,615
13, 739 12,547
14 964 13 499
14,053 12,707
15 445 13 650
17 075 15,006
15, 782 13,772
14 374 12 192
13 501 11,346
13 514 11,340
13,061 10,833
12 364 10 144
7,829
9 636
7,192
9 154
8,019
10 748
10 326 7 611
7 040
9 566
6,627
9 345
6,733
9,915
Total
Under $100,000
and
$100,000 over
744
979
227
219
163
123
66
46
50
126
371
397
538
416
432
530
787
860
856
1,071
1,192
1 465
1,346
1 795
2,069
2,010
2 182
2,155
2,174
2,228
2 220
1,807
1,962
2,729
2 715
2,526
2,718
3,182
483.3
457.5
182.5
166.7
136.1
100.8
45.3
31.7
30.2
67.3
204.6
234.6
308.1
248.3
259.5
283.3
394.2
" 462.6
449.4
562.7
615.3
728.3
692.8
938.6
1, 090.1
1,213.6
1,352.6
1,329.2
1,321.7
1,385.7
1,265.2
941.0
1,142.1
1,887.8
1,916.9
2,000.2
2,298.6
3,053.1
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
256.9
221.8
242.0
49.7
46.8
35.4
20.5
15.1
17.1
18.8
51.6
140.9
140.7
146.7
97.1
128.0
151.4
226.6
251.2
243.0
322.9
348.2
430.7
413.9
611.4
720.0
867.1
1,031.6
1,015.6
1,000.0
1,064.1
967.3
699.9
910.8
1,618.4
1,645.6
1,741.5
2,063.0
2,796.3
238
196
205.8
137.2
252.3
119.3
167.9
180.2
206.2
190.1
189.5
185.7
218.7
245.6
337.3
213.1
204.6
209.8
375.7
215.5
153.4
232.7
217.0
306.8
344.7
242.6
19.1
19.3
23.1
20.7
19.0
20.4
19.6
20.4
18.5
18.7
19,6
17.2
19.3
22.2
25.5
22.1
23.6
19.8
19.8
18.1
22.5
23.9
21.8
18.3
186.7
117.9
229.2
98.7
149.0
159.8
186.6
169. £
171.0
167.0
199.1
228.4
317.9
191.0
179.1
187.7
352.1
195.7
133.6
214.6
194.5
282.9
322.9
224.3
Seasonally adjusted
1973:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1974:Jan
Feb. .
Mar
Apr
May
June
July
Aug
Sept..
Oct
Nov
Dec...
...
.
119.1
119.9
120.8
119.3
118.8
118.5
118.2
117.2
115.6
116.2
117.6
113.8
113.0
113.1
114.0
116.1
116.7
115.8
118.8
114.8
110.5
106.9
107.4
27, 796
28,752
28,964
28, 522
28, 286
27,999
27,477
26,689
26, 240
26, 809
26,718
24, 627
26,209
27,142
26,578
29,406
28,012
25, 877
28,036
26,139
26,143
25,303
25,434
34.9
36.0
35.9
35.2
36.3
38.2
35.7
39.1
38.6
37.0
34.7
35.7
35.5
37.5
40.8
34.1
39.7
37.0
37.7
33.4
45.2
47.0
36.3
37.0
772
753
874
796
838
840
714
837
717
772
739
693
795
797
971
802
925
789
782
709
839
993
785
728
534
557
647
598
559
608
520
580
502
519
513
490
505
559
686
606
619
521
522
474
559
634
544
503
in
198
279
232
194
257
215
253
226
203
290
238
285
196
306
268
260
235
280
359
241
225
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.
3
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 & Bradstreet, Inc.
343
AGRICULTURE
TABLE G-83.—Income offarm people and farmers,
Income received from farming
Personal income
received by total
farm population
Year or
quarter
1929-74
Net to farm
operators
Realized gross
ProducCash tion ex- Exclud- IncludFrom
From
receipts penses ing net ing net
From
nonall
Total 3 from
inven- invenfarm
farm
tory
sources sources1 sources
markettory
2
ings
change change *
Billions of dollars
Net income per
farm, including
net inventory
change
Current
dollars
1967
dollars 5
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
1950
1951
1952
1953
1954
1955
1956
1957
1958_.
1959
20.3
22.7
22.0
19.7
18.3
17.4
17.6
17.5
19.2
17.4
14.1
16.1
15.3
13.3
12.4
11.2
11.1
10.8
12.5
10.4
6.3
6.5
6.7
6.4
5.9
6.2
6.6
6.6
6.7
7.1
32.3
37.1
36.8
35.1
33.7
33.3
34.4
34.2
38.1
37.9
28.5
32.9
32.5
31.0
29.8
29.5
30.4
29.7
33.5
33.6
19.5
22.3
22.8
21.5
21.8
22.2
22.7
23.7
25.8
27.2
12.8
14.8
14.0
13.6
11.9
11.1
11.7
10.5
12.3
10.7
13.6
15.9
15.0
13.0
12.4
11.3
11.3
11.1
13.2
10.7
2,417
2,936
2,878
2,604
2,579
2,429
2,493
2,536
3,111
2,606
3,180
3,537
3,426
3,100
3,070
2,892
2,933
2,882
3,496
2,928
1960
1961
1962
1963
1964
1965 .
1966
1967_ .
1968
1969
18.2
19.0
19.8
19.8
19.7
22.6
23.7
22.6
23.9
26.6
11.1
11.4
11.4
11.1
10.1
12.1
12.7
11.0
11.3
12.9
7.1
7.6
8.4
8.8
9.7
10.5
11.0
11.6
12.7
13.7
38.5
40.2
41.7
42.7
43.1
45.5
50.6
49.9
51.7
56.3
34.2
35.2
36.5
37.5
37.3
39.4
43.4
42.8
44.2
48.2
27.4
28.6
30.2
31.5
31.7
33.5
36.4
38.3
39.5
42.2
11.1
11.6
11.5
11.2
11.4
12.0
14.1
11.6
12.2
14.2
11.5
12.0
12.1
11.9
10.6
13.0
14.1
12.3
12.3
14.3
2,896
3,127
3,277
3,318
3,064
3,883
4,316
3,877
4,018
4,753
3,218
3,474
3,601
3,607
3,295
4,087
4,404
3,877
3,863
4,361
27.1
28.2
33.7
50.4
46.7
12.9
13.2
16.5
31.3
25.8
14.2
15.0
17.2
19.0
20.9
58.6
60.6
69.9
97.0
102.0
50.5
52.9
61.0
88.6
95.0
44.6
47.6
52.4
64.7
74.8
14.0
13.0
17.5
32.2
27.2
14.0
14.4
18.4
36.2
29.6
4,752
4,957
6,410
12,744
10,460
4,168
4,166
5,169
9,235
6,500
1970
1971
1972
1973
1974 P
..-.
.
. .
.. _
..
Seasonally adjusted annual rates
1972: 1
II
III
IV
66.0
68.9
69.5
75.4
57.4
60.0
60.2
66.4
50.5
52.1
52.5
54.6
15.5
16.8
17.0
20.8
16.6
17.7
17.8
21.5
5,780
6,170
6,200
7,490
4,740
4,980
4,960
5,940
1973: 1
II
III
IV
86.2
93.2
101.8
106.7
77.5
84.8
93.6
98.5
60.1
62.9
67.0
69.0
26.1
30.3
34.8
37.7
29.6
33.3
39.3
42.7
10,410
11,710
13,820
15,010
7,950
8,610
9,870
10, 350
1974: 1
II
III
IV v
105.0
98.4
102.1
102.5
98.0
91.3
94.5
96.2
72.1
74.5
76.5
76.1
32.9
23.9
25.6
26.4
36.9
26.9
27.6
26.9
13,040
9,500
9,750
9,500
8,580
5,970
5,950
5,590
1
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 and other farm income furnished by farms
(excluding
net inventory change).
4
Includes net value of physical change in inventory of crops and livestock valued at average prices for the year.
5
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-84.—Farm production indexes, 1929-74
[1967=100]
Crops 2
Year
Farm
output!
Feed
Total 3 grains
Hay
and
forage
Livestock and products 2
Food Vege- Fruits
and
grains tables nuts
Cotton
ToOil
bacco crops Total 3
Meat
animals
Dairy Poultry
prod- and
ucts eggs
1929....
53
62
48
69
52
73
70
204
77
10
54
52
76
1933....
51
56
44
61
35
65
72
178
70
9
57
58
80
32
1939....
58
64
51
66
48
72
91
162
97
25
59
59
82
35
1940.._
1941...
1942...
1943...
1944...
60
63
70
69
71
67
68
76
72
75
52
56
64
58
61
76
75
82
80
79
52
59
62
54
66
74
75
79
86
82
88
93
92
80
92
173
148
176
157
168
74
64
72
71
99
27
29
40
41
36
61
64
71
77
74
60
63
72
81
73
85
89
92
91
93
36
39
45
52
52
1945...
1946 ...
1947__.
1948.__
1949...
70
72
69
76
74
73
77
73
84
79
59
64
49
71
63
82
77
74
73
73
69
72
84
81
69
84
93
81
86
83
84
100
95
87
92
124
119
163
205
220
101
118
107
101
100
35
34
39
47
45
73
71
70
68
72
70
68
67
66
69
95
94
93
90
93
54
50
50
49
54
1950...
1951...
1952...
1953...
1954...
74
76
79
80
80
77
78
82
81
80
63
59
62
61
64
78
81
79
81
81
65
64
82
75
66
85
80
80
84
82
93
94
91
93
93
137
208
208
208
226
103
119
114
105
114
46
47
46
47
49
75
78
79
80
82
74
79
79
78
81
93
92
92
97
98
57
59
60
61
64
1955...
1956...
1957...
1958...
1959...
83
83
81
87
89
83
82
81
89
89
68
67
73
80
83
86
82
89
89
85
63
65
62
91
73
85
91
88
90
89
93
97
89
96
99
188
202
183
150
157
112
111
85
88
91
53
60
58
69
64
84
85
83
85
89
86
83
80
82
88
99
101
101
101
100
63
69
70
74
76
1960...
1961...
1962...
1963...
1964...
91
92
92
96
95
93
92
92
96
93
86
77
78
85
74
90
90
93
94
94
86
79
74
77
85
90
96
94
94
90
93
97
97
95
95
170
195
204
211
232
99
105
118
119
113
68
77
78
81
81
88
91
92
95
98
85
89
90
95
98
101
104
105
104
105
76
82
82
84
87
1965...
1966...
1967...
1968...
1969...
98
95
100
102
102
99
95
100
103
104
87
89
100
95
99
98
96
100
99
101
88
88
100
105
98
96
97
100
104
101
100
98
100
98
116
205
130
100
148
137
94
96
100
87
91
95
97
100
114
116
95
97
100
100
101
92
96
100
101
102
104
101
100
99
98
90
96
100
98
100
1970...
1971...
1972...
1973...
1974 P..
101
111
110
112
109
101
112
113
119
110
89
116
112
115
92
100
106
105
110
104
91
107
102
112
120
101
100
101
103
110
109
116
104
124
122
139
145
187
174
157
97
86
88
89
100
117
121
131
155
129
105
108
108
105
109
108
112
110
109
117
100
101
102
98
98
106
107
109
106
106
32
1
Farm output measures the annual volume of net farm production available for eventual human use through sales from
farms or consumption in farm households.
2
Gross production.
3
Includes certain items not shown separately.
Source: Department of Agriculture.
345
563-280 O - 75 - 23
TABLE C-85.—Farm population, employment, and productivity, 1929-74
Farm population
(April l ) i
Farm employment
(thousands) 3
Farm output
Per man-hour
Year
Number
(thousands)
As percent of
total
population »
Total
Hired
Family
workers workers
Per
unit of
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
55
16
17
25
50
1939.
30,840
23.5
11,338
8,611
2,727
61
20
21
27
60
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
70
68
69
21
22
24
24
25
22
24
26
26
27
27
28
30
32
31
62
63
70
64
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
73
70
76
73
27
29
29
32
33
29
31
31
35
36
31
32
33
34
36
67
71
67
75
70
1950..
1951..
1952..
1953..
1954..
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
73
73
76
77
78
34
35
38
40
42
37
36
40
41
43
37
39
40
41
43
69
70
73
72
71
1955..
1956..
1957..
1958..
1959..
19, 078
18, 712
17,656
17,128
16,592
11.5
11.1
10.3
9.8
9.4
8,381
7,852
7,600
7,503
7,342
6,345
5,900
5,660
5,521
5,390
2,036
,952
,940
,982
,952
80
82
82
89
89
45
48
51
57
60
46
50
54
62
63
46
48
50
54
58
74
76
77
86
85
I960..
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
5,172
5,029
4,873
4,738
4,506
,885
,890
,827
,780
,604
93
94
95
99
98
65
68
72
77
81
68
70
74
79
81
62
66
71
77
82
89
92
95
97
95
1965..
1966..
1967..
1968..
1969..
12,363
11, 595
10, 875
10,454
10, 307
6.4
5.9
5.5
5.2
5.1
5,610
5,214
4,903
4,749
4,596
4,128
3,854
3,650
3,535
3,419
,482
,360
,253
,213
,176
102
97
100
101
101
91
93
100
106
109
93
95
100
105
106
86
93
100
105
112
100
97
100
105
106
1970...
1971...
1972...
1973...
1974 P..
9,712
9,425
9,610
9,472
9,264
.7
4,523
4,436
4,373
4,337
4,?94
3,348
3,275
3,228
3,169
3,116
,175
,161
,146
,168
,178
100
108
107
106
103
111
123
126
129
125
106
115
119
126
116
121
130
138
144
140
104
112
115
115
104
56
i Farm population as defined by Department of Agriculture and Department of Commerce, i.e., civilian population
living on farms, regardless of occupation.
' 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-86.—Indexes of prices received and prices paid by farmers, and parity ratio, 1929-74
[Index, 1967 = 100, except as noted]
Year or month
All farm
products
Crops
Parity ratio *
Prices paid by farmers
Prices received by farmers
Livestock
and
products
All items,
interest,
taxes, and
wage rates
Family
living
items
Production
items
Actual
Adjusted 2
1929
58
65
57
47
48
51
92
1933
28
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
116
110
111
115
116
111
100
1950
1951
1952.. .
1953
1954
1955
1956
1957
1958
1959.
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
93
94
95
94
96
99
100
102
106
80
79
80
78
76
77
80
74
73
74
82
83
83
81
80
82
86
79
79
80
1970
1971.
1972
1973.
1974
110
112
126
172
183
100
107
115
164
212
118
116
134
179
163
114
120
127
145
168
114
119
124
138
161
110
115
122
146
172
72
69
74
88
81
77
74
79
91
81
1973:Jan 15
Febl5. . ...
Mar 15
Apr 15.
May 15
June 15
145
149
159
158
163
172
131
131
138
143
154
170
155
162
174
169
170
174
134
136
138
141
143
146
129
131
133
134
136
138
132
134
138
139
143
149
80
82
85
83
85
87
83
84
88
86
88
90
173
208
191
184
181
185
162
196
182
180
181
195
181
218
198
188
183
179
146
151
150
151
152
154
138
141
142
143
146
147
148
157
154
153
153
156
88
102
95
91
89
90
91
105
97
94
92
92
1974: Jan 15
Feb 15
Mar 15
Apr 15
May 15
June 15
198
202
194
183
175
165
208
220
216
205
201
199
193
190
179
169
158
142
157
159
161
164
165
166
149
153
155
157
159
160
161
161
162
167
166
168
94
94
90
83
79
74
94
94
90
83
79
74
July 15
Aug 15
Sept 15
Oct 15
Nov 15
Dec 15
175
181
178
185
182
177
204
214
211
228
224
211
155
160
154
155
153
153
168
173
175
176
178
179
161
164
166
167
171
173
170
178
182
183
183
184
77
78
75
78
76
73
78
78
75
78
76
73
.
.
July 15
Augl5
Sept 15
Oct 15
Novl5
Dec 15
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-87.—Selected measures offarm resources and inputs.
1929-74
Index numbers of inputs (1967=100)
ManCrops
hours
harof
vested
farm
(milwork
lions
(bilof
acres) i lions)
Year
Total
Farm
labor
Farm
real
estate
MeFeed,
chaniseed,
Agrical
and
Taxes Miscelpower cultural
liveand
chemi- stock
laneous
and
interest
cals 2
purmachases 3
chinery
23.2
100
324
102
38
10
31
69
92
340
22.6
94
316
96
32
6
28
71
88
1939
331
20.7
96
290
101
39
12
41"
67
83
1940
1941
1942
1943
1944
341
344
348 '
357
362
20.5
20.0
20.6
20.3
20.2
97
98
101
102
103
288
284
291
287
285
102
101
99
97
97
41
44
51
54
57
13
14
15
17
20
43
46
49
53
53
68
68
69
72
74
84
84
82
84
88
1945
1946
1947
1948
1949
354
352
355
356
360
18.8
18.1
17.2
16.8
16.2
100
99
99
100
102
267
256
242
236
228
97
101
102
102
103
58
57
63
71
79
20
21
24
26
28
55
54
56
57
63
75
76
76
74
77
85
87
88
93
98
1950
1951
1952
1953
1954
345
344
349
348
346
15.1
15.2
14.5
14.0
13.3
101
104
105
104
103
214
214
205
197
189
104
104
103
103
104
83
89
94
95
95
30
33
36
37
38
64
68
70
70
72
77
77
79
80
80
93
100
99
99
96
1955
1956
1957
1958
1959
340
324
324
324
324
12.8
12.0
11.1
10.5
10.3
103
101
98
98
100
182
172
160
153
149
103
101
101
99
100
96
97
96
97
97
40
41
41
44
50
73
76
75
81
84
82
82
81
82
86
100
96
100
105
109
1960
1961
1962
1963
1964
324
302
295
298
298
9.8
9.4
9.0
8.7
8.2
98
97
97
97
97
143
137
131
127
120
99
99
99
99
99
95
93
94
92
93
50
54
59
66
72
84
87
89
89
91
87
89
90
92
94
109
108
110
110
112
298
294
306
300
290
7.4
6.9
6.8
6.5
6.4
96
98
100
101
101
108
102
100
97
94
99
99
100
99
98
94
99
100
102
101
77
86
100
106
92
97
100
101
104
95
98
100
103
105
109
104
100
106
105
293
305
296
322
326
6.2
6.1
5.9
5.9
5.9
101
102
102
106
105
92
90
87
87
87
98
97
95
97
97
101
103
101
111
109
110
120
125
131
135
109
109
110
109
108
106
104
107
105
104
107
105
113
120
120
1929
365
1933
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974 v
.
-
.
..
..
no
in fruits, tree nuts, and farm gardens.
1 Acreage harvested (excludini
2 Fertilizer, lime, and pesticides.
3 Nonfarm portion of feed, seed, and livestock purchases.
Source: Department of Agriculture.
348
TABLE C-88.—Comparative balance sheet of the farming sector, 1929-75
[Billions of dollars]
Assets
Claims
Other physical assets
Beginning of
year
Financial assets
MaHouseReal Live- chinhold
DeTotal estate
equip- posits
stock^ ery
and Crops 2 ment
and
motor
and
curvehifurnish- rency
cles
ings
ProInvest- Total Real Other prieestate debt tors'
U.S.
ment
equidebt
savings in coties
bonds operatives
1929
48.0
6.6
3.2
9.8
1933
30.8
3.0
2.5
8.5
1939
34.1
5.1
3.2
6.8
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
4.9
5.0
5.3
3.2
3.5
4.2
5.4
6.6
0.2
.4
.5
1.1
2.2
0.8
.9
.9
1.0
1.1
52.9
55.0
62.9
73.7
84.6
6.6
65
6.4
6 0
5.4
3.4
3.9
4.1
40
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
9.9
9.6
3.4
4.2
4.2
4.4
4.6
1.2
1.4
1.5
1.7
1.9
94.2
103.5
116.4
127.9
134.9
49
4.8
4.9
5.1
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
6.7
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
1957
1958
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
5.0
5.2
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
203.5
204 2
212.8
221.4
229.3
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
9.0
8.9
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
229.3
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
194.4
. 237.3
253.8
266.8
280.3
295.2
160.9
172.2
181.7
191.9
201.4
14.4
17.5
18.9
18.8
20.2
24.8
25.9
27.4
29.8
31.3
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
3.8
5.6
5.9
6.2
6.5
6.8
237.3
253.8
266.8
280.3
295.2
18.9
21.2
23.3
25.5
27.4
18.6
20.4
22.4
24.9
27.6
199.8
212.2
221.1
229.9
240.2
1970
1971
1972
1973
1974
306.0
317.5
343.1
386.8
478.8
206.9
214.9
231.5
260.6
325.3
23.4
23.8
27.3
34.1
45.8
32.3
34.4
36.6
39.1
43.6
10.9
10.7
11.8
14.5
22.1
9.7
10.1
11.0
11.9
13.6
11.9
12.4
13.2
14.0
14.9
3.7
3.6
3.7
4.0
4.0
7.2
7.6
8.0
8.6
9.5
306.0
317.5
343.1
386.8
478.8
29.2
30.3
32.2
35.8
41.3
29.7
31.6
35.6
39.1
42.8
247.1
255.6
275.3
311.9
394.7
1975 v
530.9 374.1
530.9
47.4
47.5
436.0
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
. .
...
. .
30.0
126.8
1
Beginning with 1961, horses and mules are excluded.
2 Includes all crops held on farms and crops held off farms by farmers as security for Commodity Credit Corporation
loans. The latter on January 1,1975 totaled approximately $0.3 billion.
Note.—Beginning 1969, data include Alaska and Hawaii.
Source: Department of Agriculture.
349
INTERNATIONAL STATISTICS
TABLE C-89.—U.S. balance of payments, 1946-74
[Millions of dollars]
Merchandise 13
Year
or
quarter
Exports
Military transactions
Net
balance
Imports
Direct
expend- Sales
itures
-493
-455
-799
-621
(10)
(10)
(10)
(10)
1,122
3,067
2,611
1,437
2,576
-576
-1,270
-2,054
-2,615
-2,642
(10)
-11,527
-12,803
-13,291
-12,952
-15,310
2,897
4,753
6,271
3,462
1,148
-14,758
-14,537
-16,260
-17,048
-18,700
1 9 6 5 . . . 26,461 - 2 1 , 5 1 0
1 9 6 6 . . . 29, 310 - 2 5 , 493
1 9 6 7 . . . 30,666 - 2 6 , 8 6 6
1 9 6 8 . . . 33,626 - 3 2 , 9 9 1
1 9 6 9 . . . 36, 414 - 3 5 , 807
11,764
16,097
13, 265
12,213
1950...
1951...
1952...
1953...
1954...
10, 203
14, 243
13,449
12,412
12, 929
-9,081
-11,176
-10,838
-10,975
-10,353
1955...
1956...
1957...
1958...
1959...
14,424
17, 556
19, 562
16,414
16,458
1960...
1961...
1962...
1963...
1964...
19,650
20,108
20,781
22,272
25, 501
1970...
1971...
1972 . . .
1973...
41,947
42, 754
48, 768
70,277
197412.. 94,696
Privates
U.S.
Government
Net
travel
and
transportation expenditures
Other
services,
net 3
RemitBal- tances,
penance
sions,
on
goods
and
other
and
servuniices 14 lateral
transfers i
Balance
on
current account
-493
-455
-799
-621
554
807
975
989
6
50
85
73
733
946
374
230
-576
-1,270
-2,054
192 - 2 , 4 2 3
182 - 2 , 460
1,146
1,317
1,267
1,283
1,594
78
151
140
166
213
-120
298
83
-238
-269
242
254
309
307
305
1,892
3,817
2,356
532
1,959
- 4 , 017 - 2 , 1 2 5
- 3 , 515
302
- 2 , 531
-175
-2,481 -1,949
-2,280
-321
-2,901
-2,949
- 3 , 216
-3,435
-3,107
200
161
375
300
302
- 2 , 701
- 2 , 788
- 2 , 841
-3,135
-2,805
1,775
2,054
2,174
2,008
2,147
180
40
4
168
68
-297
-361
-189
-633
-821
299
447
482
486
573
2,153
4,145
5,901
2,356
310
-2,498
-2,423
-2,345
-2,361
-2,448
-345
1,722
3,556
-5
-2,138
4,892
5,571
4,521
5,224
6,801
- 3 , 087
- 2 , 998
-3,105
-2,961
-2,880
335
402
656
657
747
-2,753
- 2 , 596
- 2 , 448
- 2 , 304
-2,133
2,270
2,832
3,177
3,227
3,926
632
17 - 9 6 4
105 - 9 7 8
649
134 — 1,155
860
98 1,312 1,007
9 - 1,149 1,088
4,094
5,584
5,088
5,941
8,542
-2,300
- 2 , 514
-2,628
- 2 , 742
-2,754
1,794
3,070
2,460
3,199
5,788
4,951
3,817
3,800
635
607
-2,952
830 - 2 , 1 2 2
- 3 , 764
829 - 2 , 935
- 4 , 378 1,150 - 3 , 228
- 4 , 535 1,392 - 3 , 1 4 3
- 4 , 8 5 6 1,512 - 3 , 344
4,143
3,728
4,087
4,207
3,655
26 _ 1,284
55 — 1,332
41 — 1,751
63 1,548
156 - 1 , 7 6 3
7,140
4,868
4,657
1,980
1,344
-2,853
-2,925
-3,113
-2,943
-2,978
4,287
1,943
1,544
-962
-1,633
- 5 , 0 6 7 6,697
- 5 , 9 7 3 10,124
- 7 , 557 5,708
- 6 , 874 5,339
1946...
1947...
1948...
1949...
Net
balance
Net investment income
- 3 9 , 788 2,159
- 4 5 , 476 - 2 , 722
- 5 5 , 754 - 6 , 986
-69,806
471
-100,379 - 5 , 6 8 3
-4,855
-4,819
- 4 , 759
-4,620
-4,989
(10)
1,478
1,912
1,154
2,354
2,839
- 3 , 377
-2,908
-3,604
-2,266
-2,150
3,895 - 1 1 1
5,976 - 9 5 5
6,413 - 1 , 8 8 7
8,298 - 3 , 008
12,649 - 3 , 1 3 3
-2,023
-2,341
- 3 , 055
-2,710
-2,355
310 7,807 - 2 , 9 2 2
145 11,617 - 2 , 6 2 5
175 6,518 - 4 , 5 2 5
208 6,218 - 5 , 6 3 8
1,426
1, 536
1,710
1,766
2,034
4,885
8,992
1,993
580
2,388 2,932 - 3 , 2 5 6
-324
2,781 - 1 7 0 - 3 , 6 4 7 - 3 , 8 1 7
3,110 - 6 , 0 1 0 - 3 , 797 - 9 , 8 0 7
3,540 4,327 - 3 , 8 7 6
450
3,837 3,165 13-8,136 13-4,971
Seasonally adjusted
1972:
1
II
IIL'I
IV..-
11,655
11,534
12, 357
13,222
-13,482
-13,329
-13,953
-14,990
-1,827 -1,222
-1,795 -1,242
-1,596 -1,109
- 1 , 7 6 8 14-1,185
326 - 8 9 6
281 - 9 6 1
252 - 8 5 7
295 " - 8 9 0
1,426
1,466
1,702
1,819
-406
-448
-490
-543
-807
-737
-741
-770
747 - 1 , 7 6 3
753 - 1 , 7 2 2
788 - 1 , 1 9 4
822 - 1 , 3 3 0
-954 -1,175
342 - 8 3 3 2,081
- 3 6 3 .14-1,209
446 H-763 1,968
578 - 1 , 067
520 - 5 4 7 2,052
1,210 - 1 , 1 6 9 1,046
- 1 2 3 2,197
-634
-760
-795
-819
-686
-781
-613
-630
-767
-789
-794
-533
-730
-503
-990
-954
-958
-896
- 2 , 753
-2,676
-2,152
-2,226
841
815
984
901
-185
-761
116 - 1 , 0 5 6
1,659
-897
2,736 - 1 , 1 6 4
-946
-940
762
1, 572
921
995
962
2,897 13-2,951 13-54
- 1 8 4 - 1 , 9 0 2 - 2 , 086
-339 -1,249 -1,588
1973:
15,230 - 1 6 , 1 8 4
IL.II 16,679 - 1 7 , 0 4 2
111... 18,152 - 1 7 , 5 7 4
I V . . . 20, 216 - 1 9 , 0 0 6
1974:
1
22, 299 - 2 2 , 373
-74 -1,166
24, 089 - 2 5 , 720 - 1 , 6 3 1 - 1 , 3 1 9
l i b . . 24,634 - 2 7 , 1 9 1 - 2 , 557 - 1 , 2 5 7
IV*.. 26,109 - 2 7 , 6 3 1 - 5 , 7 6 3
nV.'.I
673
655
801
- 4 9 3 3,843
- 6 6 4 2,635
- 4 5 6 3,009
i Excludes military grants.
Adjusted from Census data for differences in timing and coverage.
3 Fees and royalties from U.S. direct investments abroad or from foreign direct investments in the United States are
excluded from net investment income and included in other services, net.
4
In concept, equal to net exports of goods and services in the national income and product accounts, although the two
series may differ because of revisions, special handling of certain items, etc.
& Excludes liabilities to foreign official reserve agencies.
6 Private foreigners exclude the International Monetary Fund (IMF), but include other international and regional
organizations.
i Includes liabilities to foreign official agencies reported by U.S. Government and U.S. banks and U.S. liabilities to the
IMF arising from reversible gold sales to, and gold deposits with, the United States.
s Official reserve assets include gold, special drawing rights, convertible currencies, and the U.S. gold tranche position
in the IMF. Minus sign indicates increase.
3
(Footnotes continued on following page.)
350
TABLE G-89.—U.S. balance of payments,
1946-74—Continued
[Millions of dollars]
Year or
quarter
AlloBalNoncaance
tions
on cur- liquid
shortof
rent
term
speaccount private
cial
and
drawlong- capital
flows,
Priing
term
net«
rights
vates capital
(SDR)
Long-term
capital
flows,
net
U.S.
Governments
Errors
and
omissions,
net
Net
liquidity
balance
**
1946...
1947
1948
1949
-253
-236
-131
158
155
861
1,115
717
1950 .
1951....
1952
1953
1954
75
-227
-41
183
-556
-124
354
497
220
60
1955....
1956
1957
1958....
1959
-328
-479
-174
-145
-89
371
390
1,012
361
260
-2,100 -1,191 n-1,405
2 n-1,200
-2,182
- 2 , 6 0 6 - 1 , 0 2 8 ii - 6 5 7
- 3 , 376 - 1 , 3 2 8 ii - 9 6 8
- 7 5 -1,643
-4,511
-1,081
-1,053
-1,179
-418
-978
"-3,677
"-2,252
n-2,864
n-2,713
-2,696
-494
64
-439
94
-1,805
-2,478
-2,151
- 4 , 683
-1,611
- 6 , 081
I960....
-884
1961....
-886
1962..... - 8 8 2
1963 . . . - 1 , 1 5 1
1964.... -1,353
1965
1966...
1967
1968.
1969....
- 1 , 5 3 9 - 4 , 577
-1,479 -2,575
- 2 , 336 - 2 , 9 3 2
- 2 , 1 6 4 1,191
-1,933
-70
-1,829
-2,110
-3,723
-1,935
-3,637
-154
-104
-522
231
-640
1970....
1971
1972....
1973
1974 12..
-2,025 -1,429 -3,778
- 2 , 3 6 2 - 4 , 381 -10, 559
-1,330
- 9 8 -11,235
-1,539
62 - 1 , 0 2 6
3 2, 571 - 3 , 2 8 7 - 5 , 6 8 7
-482
- 2 , 347
-1,541
-4,276
-14,751
Liquid
private
capital
flows,
net*
Official
reserve
transactions
balance
•*
Changes
in liabilities
to
foreign
official
agencies,
net 7
Changes
in U.S.
official
reserve
assets,
net 8
U.S.
official
reserve
assets,
net
(end of9
period)
-623
-3,315
-1,736
-266
20,706
24,021
25,758
26,024
1,758 24,265
- 3 3 24, 299
- 4 1 5 24,714
1,256 23,458
480 22,978
182
-869
-1,165
2,292
1,035
22,797
23,666
24,832
22, 540
21, 504
2,145
606
1,533
377
171
19, 359
18,753
17, 220
16, 843
16,672
1,188 - 1 , 2 9 0
67 1,222
568
2,370
219 -787
52
1,265 - 3 , 4 1 8 3,366
3,252
1,641
-761 -880
8,820
2,739 -1,552 -1,187
15, 450
14, 882
14,830
15,710
16, 964
- 9 , 839 7,362 2,477
- 2 9 , 753 27,405 2,348
32
-10,354 10, 322
209
-5,304
5,095
- 5 , 0 8 2 7,176 - 2 , 095
14,487
12,167
13,151
14,378
15,883
H273
H904
ii 214
ii 779
1,162
- 4 5 8 -3,851 - 5 , 988
867
111 - 9 , 776 - 2 1 , 965 - 7 , 788
710 - 1 , 7 9 0 -13,856 3,502
- 2 , 3 0 3 - 7 , 6 0 6 2,302
4,783 -15,655 10, 573
-3,403
-1,348
-2,650
-1,934
- 1 , 534
1,258
742
1,117
1,557
1,363
Unadjusted
Seasonally adjusted
1972:
1
II
III....
IV....
-309
-105
-370
-544
-423
301
-42C
-99S
178
816
178
-442
177 - 1 , 2 9 4
177
-870
1973:
1
IL-.
III....
IV....
-371
309 -1,008 -1,663
94 -324 -1,170 -1,457
97
-398 1,527 1,891
-862 - 1 , 4 5 1 - 7 4 1 -1,253
-3,943
850
-336
1,125
1974:
1
II . . .
Illp
31, 34C
58(
i
-836
398
-386
726
-3,
-2,
-2,
-2,
898
383
908
044
506 1,79* -3,966
- 9 7 3 -2,47$ —5,42S
-1,998 - 3 , 581 -1,66*
1,118
1,686
783
IVJ>
2,718
1,103
4,777
1,722
429
-231
-55
-111
12,270
13, 339
13, 217
13,151
-6,614 - 3 , 581 -10,195 9,975
286
-303
-1,777 2,063
290
1,942 - 1 , 9 2 9
1,652
2,661 - 2 , 6 4 6
-869 3,530
220
17
-13
-15
12,931
12,914
12,927
14, 378
-210
-832
4,883 - 3 5 8
1,331 -1.C03
14, 588
14,946
15,893
15, 883
- 3 , 327
- 2 , 346
-4,445
-3,736
-1,053
-6,222
-4,466
180 -3,147
1,474
-872
-277 - 4 , 7 2 2
2,125 - 1 , 6 1 1
2,095
1,042
1,697 - 4 , 5 2 5
4,138
-328
9
Includes increases as follows: for 1969, $67 million resulting from revaluation of the German mark in October 1969;
for 1971, $28 million in dollar value of foreign currencies revalued to reflect market exchange rates as of December 31,
1971; for second quarter and year 1972, $1,016 million resulting from change in par value of the dollar on May 8, 1972;
and for fourth quarter and year 1973, $1,436 million resulting from change in par value of the dollar on October 18,1973.
Beginning July 1974, valuation of SDR and reserve position in the IMF based on a weighted average of exchange rates
for the currencies of 16 member countries. On a pre-July 1974 basis, reserve assets for September 30, 1974 are $15,949
million and for December 31,1974, $15,812 million.
i° Not available separately.
n Coverage of liquid banking claims for 1960-63 and of nonliquid nonbanking claims for 1960-62 is limited to foreign
currency
deposits only; other liquid items are not available separately and are included with nonliquid claims.
123 First 3 quarters on a seasonally adjusted annual rates basis (except reserve assets are for end of December).
114 Includes extraordinary U.S. Government transactions with India.
Includes return import into the United States, at a depreciated value of $21 million in 1972 IV, and $22 million in 1973 I I ,
of aircraft originally reported in 1970 III sales as a long-term lease to Australia.
**These balances have been used to measure exchange market pressures on the dollar. Under current floating exchange
rate conditions, these pressures are inadequately reflected in the balances.
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of the Treasury.
351
TABLE C-90.— U.S. merchandise exports and imports by commodity groups, 1958-74
[Millions of dollars]
Merchandise exportsl
Total, including reexports 2
Year or quarter
Merchandise imports
General imports s
Domestic exports
Total s
Food, Crude
Food, Crude ManSeamatebever- mate- Manbeverufacsonally Unad- Totaj 2 a ages,
Seaages,
rials
rials
ufactured 6 sonally Unad- and
adjusted
to- and
and to- and goods
tured
justed
bacco fuels*
adjusted bacco fuels * goods6
justed
Gross
merchandise
trade
balance,
seasonally
adjusted i
16,375 16,211
16,426 16,243
2,688
2,852
3,052 11,547
2,996 11,179
13, 392 3,550
15,690 3,580
4,164
4,615
5,311
7,117
2,983
736
19,659
20, 226
20,986
22,467
25,832
19,459
19,982
20,717
22,182
2i5,479
3,167
3,466
3,743
4,188
4,637
3,942
3,864
3,356
3,775
4,337
12,583
12,784
13,668
14,297
16,529
15,073
14,761
16,464
17,207
18,749
3,392
3,455
3,674
3,863
4,022
4,418
4,334
4,691
4,755
5,029
6,863
6,537
7,649
8,070
9,106
4,586
5,465
4,522
5,260
7,083
1965
1966
1967
1968
1969
26,742
29,490
31,030
34,063
37,332
26,399
29,054
30,646
33,626
36,788
4,519
5,186
4,710
4,592
4,446
4,273
4,404
4,726
4,865
5,006
17,433
19,218
20,844
23,818
26,785
21,427
25,618
26,889
33,226
36,043
4,013
4,590
4,701
5,365
5,308
5,440
5,718
5,367
6,031
6,391
11,244
14,446
15, 756
20,624
23,011
5,315
3,872
4,141
837
1,289
1970
1971
1972._
1973
1974.
42,659
43,549
49,199
70,823
97, 907
42,025 5,058 6,692
42,911 5,076 6,441
48,399 6,569 7,091
69,730 12,938 10,735
96, 544 15, 231 15, 800
29,344
30,443
33,740
44,731
63, 526
1958
1959
1960
1961
1962
1963
1964
. ..
39,951 6,230 6,542
45, 563 6,404 7,268
55, 583 7,379 8,838
69.476 9,235 13, 446
100, 972 10, 701 31, 809
25,907
2,708
30,414 - 2 , 0 1 4
37,767 - 6 , 384
1,348
45, 001
56, 210 - 3 , 065
1972:
1
II
III
IV
11,767
11,673
12,442
13,333
11,890
12,040
11,570
13,700
11,724
11,826
11,371
13,479
1,416
1,432
1,625
2,095
1,704
1,688
1,536
2,163
8,340
8,430
8,009
8,960
13,424
13,370
13,903
14, 888
13,302
13,743
13,532
15,006
1,810
1,769
1,807
1,993
2,130 8,985
2,105 9,478
2,195 9,135
2,408 10,169
1973:
1
II. .
Ill
IV
15,337
16,783
18,327
20,413
15, 523
17,448
17, 081
20,771
15, 288
17,145
16, 817
20, 481
2,382
2,773
3,558
4,225
2,572
2,745
2,216
3,202
10, 068
11, 256
10, 730
12,677
16,140
16, 839
17,483
18, 972
15,969
17,301
16,983
19,223
2,084
2,318
2,190
2,644
2,780
3,076
3,340
4,251
10,663
11,472
10,998
11, 868
1974:
I
II
III
IV
22, 358
24,212
24, 958
26,455
22, 615
25,128
23,192
26, 972
22, 329
24, 761
22, 858
26, 597
3,861
3,651
3,373
4,345
3,695
4,214
3,533
4,359
14, 334
16,398
15, 443
17, 352
21,713
25,161
27, 060
27,145
21,173
25, 827
26, 614
27, 358
2,726
2,772
2,542
2,661
6,082
8,374
8,760
8,592
11,894
645
14,146
-949
14, 729 -2,102
15, 441
-690
-1,657
-1,697
-1,462
-1,555
-804
-56
844
1,441
1
2
Beginning 1960, data have been adjusted for comparability with the revised commodity classifications effective in 1965.
Totals exclude Department of Defense shipments of grant-aid military supplies and equipment under the Military
Assistance
Program.
3
Total includes commodities and transactions not classified according to kind.
*5 Includes fats and oils.
Includes machinery, transportation equipment, chemicals, metals, and other manufactures. Export data for these items
include military grant-aid shipments.
«7 Total arrivals of imported goods other than intransit shipments.
Exports, excluding military grant-aid, less general imports; quarterly data seasonally adjusted.
Note.—Data are as reported by the Bureau of the Census adjusted to include silver ore and bullion reported separately
prior to 1969. Export statistics cover all merchandise shipped from the U.S. customs area, except supplies for U.S. Armed
Forces. Export values are f.a.s. port of export and include shipments under Agency for International Development and
Food for Peace programs as well as other private relief shipments. Import values are defined generally as the market
value in the foreign country, excluding the U.S. import duty and transportation costs such as ocean freight and marine
insurance.
Source: Department of Commerce (Bureau of the Census and International Economic Policy and Research).
352
TABLE C-91.—U.S. merchandise exports and imports by area, 1968-74
[Millions of dollars]
Area
1968
1969
1970
1971
1972
1973
Exports (including reexports and special category
shipments): Total
34,636
38,006
43,224
@FedFRASER