Full text of Economic Report of the President : 1981
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Economic Report
of the President
Transmitted to the Congress
January 1981
TOGETHER WITH
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS
UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 1981
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402
CONTENTS
Page
ECONOMIC REPORT OF THE PRESIDENT
ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS*
3
21
CHAPTER 1. INFLATION AND GROWTH IN THE 1 9 8 0 S
29
CHAPTER 2. IMPROVING THE ADAPTABILITY OF THE ECONOMY
89
CHAPTER 3. T H E ECONOMY: REVIEW AND PROSPECTS
131
CHAPTER 4. T H E WORLD ECONOMY: COPING WITH TRANSITION ...
182
APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF
THE COUNCIL OF ECONOMIC ADVISERS DURING 1980
APPENDIX B.
215
STATISTICAL TABLES RELATING TO INCOME, EM-
PLOYMENT, AND PRODUCTION
227
*For a detailed table of contents of the Council's Report, see page 25.
(in)
ECONOMIC REPORT
OF THE PRESIDENT
ECONOMIC REPORT OF THE PRESIDENT
To the Congress of the United States:
Over the next few years our country faces several economic challenges that will test the will of our people and the capability of our
government. We must find ways to bring down a stubborn inflation
without choking off economic growth; we must channel a much
larger share of our national output to investment and reverse a
decade-long decline in productivity growth; and we must continue to
reduce the Nation's dangerous vulnerability to disruptive changes in
the world supply and price of oil.
In this Economic Report I set forth my views on how we can best
meet those problems. The following Annual Report of the Council of
Economic Advisers discusses the challenges and the policy responses in
greater detail. It is useful to start by recognizing that in many respects we approach these challenges from a position of strength, with
a record of significant economic progress, and the knowledge that
over the past 4 years our people and our government have successfully resolved a number of difficult and potentially divisive economic
issues. While it would be folly to close our minds to the stubbornness of the problems we face, it would serve the Nation equally ill to
underrate our strengths and our proven ability to handle difficult
issues.
Strengths and Accomplishments
During the economic turmoil that characterized the decade of the
1970s, and especially during the past 4 years, the American economy
succeeded in providing additional jobs for its people on a scale unsurpassed in our history. Employment grew by almost 25 percent
over the decade, and by more than 11 percent in the past 4 years
alone. Not only were jobs provided for a sharply rising population
reaching working age, but job opportunities were opened up by the
millions for new second earners, principally women. Neither Europe
nor Japan came even close to the job performance of the American
economy.
Along with employment, real per capita incomes grew during the
past 4 years, despite the losses forced on the Nation by the huge increases in world oil prices and the effects of a slowing growth in productivity. As the year 1980 ended, per capita income, after taxes and
adjusted for inflation, was some 8 percent higher than it was in 1976.
We have heard much about American industry losing its competitive edge in international markets and about the "deindustrialization"
of America. In fact, during the 3 years prior to the onset of the 1980
recession—and the effects of that recession will be transient-^the
growth of industrial production in the United States was larger than
it was in Germany, France, or the United Kingdom. The volume of
American nonfarm exports rose by 35 percent between 1977 and the
middle of 1980, and the share of U.S. exports among the total exports of the industrial countries rose by about 1 Vi percentage points,
reversing a declining trend that had been underway since the 1950s.
America's balance of payments is strong in large part because of its
superior export performance. Despite a massive $40-billion annual
drain of funds to pay for the oil-price increases of 1979 and 1980, our
exports of goods and services now exceed our imports. Unlike the
situation in most other oil-importing nations, our country's external
balance is in surplus.
The dollar is also strong. After a period of weakness in its value
abroad, we took decisive action 2 years ago to stabilize the dollar.
Since then, in a world of sharply changing circumstances and disruptions of oil supply, the dollar has remained strong, and has risen in
value compared to most major currencies.
While it is imperative that our country increase the share of its national output devoted to investment, the reason is not that investment has been weak in recent years. Between 1976 and 1980, real
business investment grew almost 6 percent a year, substantially faster
than GNP as a whole. Because of that rapid growth the share of business investment in GNP during the past 3 years exceeded that of any
other 3-year period in the last three decades.
There are other areas where the Nation has made more progress
than we sometimes realize. While we are properly concerned to limit
the growth in Federal spending and voice our impatience with the
waste and inefficiency that often exist in government programs, we
should not forget the good that has been accomplished with these
programs. Examples abound. In the early 1960s, for instance, infant
mortality in the United States was scandalously high compared to
other countries, and most of that high mortality was concentrated
among the poor. Due in large part to programs like Medicaid, infant
mortality has fallen sharply. More generally, we have dramatically improved access to medical care for the poor and the aged. Through
Federal grants we have strengthened the mass transit systems of our
major cities and helped our municipalities install critically needed
waste treatment plants. We have helped millions of young people,
who could not otherwise have afforded it, get a college education.
and we have provided job training for workers who needed new
skills.
Much attention is now focused on how to reduce the costs and
ease the burden of Federal regulation to protect the environment,
health, and safety. Concern about excessive regulatory costs is surely
warranted, and my Administration has taken a number of specific
steps to deal with the problem. In focusing attention on the burden
of regulation, however, we should not lose sight of the substantial
progress that has been made in enriching our lives, improving our
health, and beautifying our country.
Tackling Difficult Issues
During the past 4 years the Nation has taken a series of important
and in some cases painful steps to deal with its energy problems.
Starting almost 2 years ago, we began to phase out controls on domestic oil and natural gas prices. We thus moved to end the dangerous practice of holding U.S. energy prices below the world market
price, a practice which tended to subsidize wasteful consumption and
perpetuate our excessive dependence on oil imports.
Working with the Congress we also put in place the other principal
elements of a comprehensive program to increase energy production
and conserve energy use. We levied a windfall profits tax to divert the
inevitable windfalls from oil decontrol to pay for the National Energy
Program initiatives and to reduce the impact of decontrol on the poor.
Partly as a result of these policies we have begun to see dramatic
results in both the supply and conservation of energy. There are now
70 percent more drilling rigs in operation than when my Administration took office, and the number of oil and gas wells being drilled
has reached a new record. By late 1980 the United States was importing almost 30 percent less oil than it did 2 years ago and our gasoline use had dropped by more than 10 percent over the same period.
While some of the reduction in energy use was due to the recession,
most of it reflects real energy conservation.
What has happened in energy policy over the past 4 years augurs
well for our country's future. Decontrolling domestic oil and gas was
painful. It pushed up the prices each of us pay for driving and for
heating our homes and added to our immediate inflation difficulties.
But we showed that we were willing to take such painful steps when
they were necessary in our Nation's longer-run interest. Because we
are large-scale producers as well as consumers of energy, the energy
problem was potentially a highly divisive issue in our country, involving the redistribution of hundreds of billions of dollars, pitting producer against consumer and one region of the Nation against another. But after prolonged and sometimes heated debate, we arrived
at an approach that took account of the legitimate concerns of all
groups and at the same time furthered the national interest. Dealing
with the Nation's remaining economic problems will also require
painful measures and the reconciliation of a number of different interests. Our handling of the energy problem should raise our confidence that we can be successful elsewhere.
We have also had major successes in other fields. After decades of
inaction, the past 4 years have seen the elimination of price-propping
and competition-deadening regulations in a number of American industries. In these 4 years we witnessed more progress in economic
deregulation than at any other time in the century. In the face of
great skepticism and initial opposition, the executive branch, the
Congress, and some of the independent regulatory agencies have
deregulated or drastically reduced regulation in the airline, trucking,
and railroad industries, and in banking and other financial institutions. We have also made a promising start in the communications
industry. The transportation, communications, and finance industries
comprise a triad that links the various strands of our economy together. Better performance in these industries should have effects far
beyond their own boundaries.
The gains from deregulation will be substantial. For example, productivity and efficiency will be directly increased as transportation
load factors are improved and empty backhauls reduced. One survey
of studies estimates that reform in the trucking industry alone will
lead to $5 billion in annual cost reductions. Even more important
will be the longer-run spur to innovation and the increased flexibility
that comes from opening up these industries to the fresh winds of
competition.
Population trends will be working to help the country deal with
some of its economic problems in the 1980s, whereas in the late
1960s and 1970s these trends required some difficult adjustments.
The generation of the postwar baby boom began entering the labor
market in the 1960s and the influx of new workers continued during
the 1970s. The percentage of the population aged 16 to 24 rose
sharply. And as birth rates slowed, women entered the labor force in
ever increasing numbers. On average, the labor force became less experienced, and average productivity per worker suffered. The increased proportion of women and young people in the labor force
also contributed to an increase in the average unemployment rate because the transition from school or home to job takes time and because these new workers sometimes had periods of unemployment as
they explored different career possibilities.
Because of the slowdown in birth rates in the past 15 years, the
1980s will see about half as fast a growth in the labor force as in the
1970s. The proportion of experienced workers will rise, contributing
to an increase in productivity, while the proportion of young people
will fall, leading to a drop in unemployment.
There are a number of reasons, therefore, to confront with hope
the economic challenges that face us. We have a solid record of
achievement. In the fields of energy and deregulation we have already laid the foundations on which the future can build. And there
are some favorable trends underway that should help raise productivity and reduce unemployment in the years ahead.
Unresolved Problems
Despite much progress in recent years, we are faced with some serious problems. An inflation that was already bad became worse after
the 1979 oil-price increase. Productivity growth, which had been declining sporadically for a decade, virtually ceased in the last several
years. And although we have made substantial progress in adapting
our economy to a world of higher oil prices, we remain dangerously
vulnerable to serious supply disruptions originating abroad.
These problems are closely related to each other. Our inflation
stems in part from our oil vulnerability and our slowing productivity
growth. High and rising inflation, in turn, tends to cause economic
reactions that depress productivity. As we make progress in one of
these areas, we will also make progress in the others.
None of the problems is so intractable that we cannot overcome it.
But all are so deep-seated that progress will come slowly, only with
persistence, and at the cost of some sacrifice on the part of us all.
Inflation
In the first half of the 1960s inflation averaged about 1 percent a
year, so low as to be virtually unnoticeable. In the past 15 years,
however, the underlying rate of inflation has risen sporadically but
inexorably and it is now running at about 10 percent a year.
During those 15 years there have been three major episodes in
which the rate of inflation surged upward. The first came in the late
1960s, when the Vietnam war and the Great Society programs were
financed for a number of years without a tax increase. The consequent high budget deficits during a period of economic prosperity
generated strong inflationary pressures as total spending became excessive relative to the Nation's productive capacity. The second inflationary surge, which came in the early 1970s, was associated with the
first massive oil-price increase, a worldwide crop shortage which
drove up food prices, and an economy which again became somewhat overheated in 1972 and 1973. The third inflationary episode
came in 1979 and 1980. It was principally triggered by another massive oil-price increase, but part of the rise in inflation may also have
been due to overall demand in the economy pressing on available
supply. Throughout the past decade, the slowing growth in productivity has pushed up the increase in business costs, adding its bit to the
rise of inflation.
Late in each of the three inflationary episodes monetary and fiscal
restraints were applied, and at the end of each a recession took place,
with rising unemployment and idle capacity. Inflation did fall back
somewhat, but at the end of each recession it had not declined to the
level from which it started. And so the inflationary process has been
characterized by ratchet-like behavior. A set of inflationary causes
raises the rate of inflation; when the initiating factors disappear, inflation does not recede to its starting position despite the occurrence
of recession; the wage-price spiral then tends to perpetuate itself at a
new and higher level. Instead of an occasional 3 percentage point
rise in inflation, which disappeared when the initial causes of the inflation were gone, our basic inflation rate rose first from 1 to 4 percent, then from 4 to 7 percent, and in this latest episode from 7 to
10 percent. It is this downward insensitivity of inflation in the face of
economic slack that has given the last 15 years their inflationary bias.
A number of facts that are important for economic policy can be
drawn from this history. First, excessive demand in the economy, fed
by an overly large Federal budget deficit or excess growth in the
money supply, was the major factor in one of the three inflationary
episodes and played a subsidiary role in the other two. Second, twice
in the last decade the tendency for government to stimulate the
economy somewhat too freely during the recovery from recession
probably played a role in retarding the decline of inflation or renewing its acceleration. That is why I was so insistent that a tax cut designed for quick economic stimulus not be enacted last year. Third,
because the rate of increase in wages and prices did not decline very
readily in response to the discipline of budgetary and monetary restraint, that restraint resulted only partly in reduced inflation; it also
tended to retard the growth of output and employment. Finally, massive increases in world oil prices have twice in the past 7 years helped
trigger a major inflationary episode. While we cannot eliminate Our
vulnerability to such shocks, a reduction in that vulnerability will improve our chances of avoiding new inflation in the future.
These realities dictate the broad tasks that economic policy must
accomplish over the years ahead:
Our monetary and fiscal policies must apply steady anti-inflationary restraint
to the economy. The restraint must be strong and persistent enough to
convince those who set wages and prices that the government means
to stand by its guns in the anti-inflation fight. But it must not be so
severe or so restrictive as to prohibit even moderate economic
growth and recovery, and thus collapse under its own political
unreality.
We must seek means to reduce inflation at a lower cost in lost output and
employment These include measures to increase investment, the
reform of regulation, and incomes policies. An increase in investment
raises productivity growth which, in turn, tends to slow the rise in
business costs and prices. Demand restraint will then produce more
reduction of inflation and less reduction in output. Measures to lower
regulatory costs and increase competition and flexibility in our economy will also directly lower inflationary pressures and let us have
more economic growth without sacrificing our inflation goals. An improved set of voluntary incomes policies can directly influence wages
and prices in the direction of moderation, and thereby bring inflation
down faster and at lower costs.
Finally, we must build upon the foundations already laid and hasten our
progress toward energy conservation and increased domestic energy supplies. W e
must also work to improve our capability of weathering a severe disruption in foreign oil supplies, since even a highly successful energy
program will still leave our economy vulnerable to such disruptions
over the coming decade.
Last August I outlined an Economic Revitalization Program that
would accomplish the tasks set forth above. The specific economic
policies I am recommending to the Congress in my 1982 Budget Message and in this Economic Report incorporate the elements of that revitalization program.
Budget and Tax Policies
It is now estimated that the Federal budget for the current fiscal
year 1981 will be in deficit by $55 billion, substantially more than I
had hoped or planned. In part the size of that deficit reflects the loss
of revenues induced by the recession from which our economy is
now beginning to recover. Had the unemployment rate remained at
the 6 percent level where it stood when I first submitted the 1981
budget last year, the deficit would now be less than $20 billion.
The size of the 1981 deficit also reflects three major factors which
have driven up the estimates of Federal spending in the past 12
months. First, higher interest rates since the budget was originally
submitted have added about $9 billion. Second, payments under many
Federal programs, such as social security, are indexed to the consumer price index, which has proven in recent years to overstate significantly the actual rise in the cost of living because of the way it treats
housing and mortgage interest costs. And third, defense spending was
increased above original estimates.
As part of a program of anti-inflationary fiscal restraint I am recommending a number of steps that will help to cut the deficit in half,
to $27.5 billion in the new budget for fiscal year 1982, and reduce it
still further to $8 billion in 1983, despite the substantial increases in
defense spending which I find it necessary to recommend for those
years:
• Beyond exerting strict control over requests for new appropriations for ongoing programs, my 1982 budget sets forth a detailed list of requests to the Congress for the legislation needed
to pare some $9 billion in spending in both fiscal 1982 and fiscal
1983. If enacted, these savings would help make possible a reduction in the share of GNP taken by Federal spending from
23.3 percent in 1981 to 23.0 percent in 1982 and 22.6 percent in
1983.
• The personal tax reductions which I am proposing should take
effect on January 1, 1982, rather than at some earlier date in
1981.
• I am renewing my request to the Congress for a modest increase
in the tax on gasoline; there is no better way to provide additional revenues for reducing the budget deficit than a measure
which simultaneously reduces our imports of foreign oil.
• I still strongly support the national health insurance proposal that I
earlier submitted to the Congress, but the need for budgetary
restraint to control inflation requires that its introduction be
delayed until more budgetary room is available and adequate cost
containment is in place.
In order to avoid repetition of the recent situation in which many
Federal payments rose too rapidly because they are tied to an index
which does not accurately reflect changes in the cost of living, I am
recommending that the Congress authorize use of a more representative index. I am informed by the Commissioner that the Bureau of
Labor Statistics is now producing an index of this type and that it can
quickly be made available on a timely basis.
Although my 1982 budget emphasizes the need for fiscal restraint,
and for reduction of the deficit, it also takes the first major step in a
long-term program of tax reductions aimed at increasing capital formation.
The causes of the longer-term slowdown in productivity growth are
many—and some of them are still unknown. But a major depressing
factor has been the failure of the Nation's capital stock to increase
relative to its rapidly growing labor force in the past 5 or 6 years.
Unlike earlier periods, American workers have not been working with
increasing amounts of capital. Improving the trend of productivity
growth will require restoring the growth of capital per worker.
Higher investment will also be critically required throughout
America's energy-using industries to speed up the replacement of
10
older energy-inefficient plant and machinery with newer energysaving capital. In addition, a large expansion of energy-producing industries—both conventional and nonconventional—will add further
to investment needs.
According to estimates made by my Council of Economic Advisers,
the combined tasks of restoring the earlier growth of capital per
worker and meeting the Nation's energy needs call for an increase in
the share of investment in GNP from its recent IOV2 percent to 12V2
or 13 percent during the 1980s. This would require an expansion in
investment by about one-fifth above the level that might normally be
expected. It will not occur without the introduction of policies to
make it happen.
To begin this task, my 1982 budget incorporates the two major
changes in tax laws that I outlined last August in my Economic Revitalization Program to improve incentives and provide increased
sources of financing for business investment. The first and most important proposal is a major liberalization of tax allowances for depreciation. Because tax depreciation is now based on the historic cost of
an asset, inflation reduces allowable tax deductions relative to the
cost of replacing an asset and thus lowers the profitability of investment. Inflation also distorts the tax treatment of assets with different
useful lives. I am proposing a new approach to depreciation worked
out "by the Department of the Treasury which substantially simplifies
depreciation accounting and increases the allowable rates of depreciation by about 40 percent. This approach, unlike sorjne other depreciation liberalization proposals that have been introduced in the Congress, tends to avoid major distortions of economic incentives since it
provides approximately equal percentage increases in allowable depreciation rates for each industry.
I also propose that the Congress expand investment incentives by
improving the investment tax credit. That credit is now only partially
available for short-lived assets; it should be made fully available.
Even more importantly, part of the investment tax credit should be
made refundable. Firms should be able to claim 30 percent of the
value of the credit even if they had no tax liabilities for the year. In
this way firms with substantial investment needs but with no current
earnings can be supported in their efforts to rejuvenate and expand
capital assets. Among these are younger and smaller firms that are
just beginning to grow, and larger industries undergoing transition,
such as autos and steel. The latter may temporarily be experiencing
depressed profitability but still have major investment needs for retooling or for new industrial facilities.
These two proposals would reduce business tax liabilities by $9 billion in calendar year 1981, $15 billion in 1982, and by 1985 the re-
11
ductions would amount to over $27 billion. We estimate that with enactment of these new incentives business investment should increase
5-10 percent above its normally expected level in 1982, with additional gains thereafter.
While providing additional incentives for business investment, we
can also move on a carefully phased basis to reduce other taxes in a
way that improves both economic efficiency and tax equity. The Congress should enact an income tax credit for both employers and employees that would approximately offset the scheduled rise in social
security payroll taxes that occurred in January of this year. To make
the benefits available to lower-income workers who have no tax liability, I also propose an increase in the earned income tax credit. But,
as I pointed out earlier in this Report, the critical importance of reducing the budget deficit as part of the fight against inflation has led
me to recommend that this reduction take effect at the beginning of
1982, by which time the growth of revenues will make such a reduction consistent with overall budgetary objectives.
At the present time one of the major inequities in our tax system is
the so-called marriage penalty. Under a wide range of circumstances
a husband and wife, each working, will together pay a higher tax than
if they were not married. I propose that this penalty be eased by
making a tax credit available to the lesser-earning spouse. The credit
should be introduced in two steps, half in 1982 and the other half in
1983.
I also propose that the Congress enact several important tax reforms: income from interest and dividends should be put on an equal
footing with wages and other incomes by withholding taxes at the
source; the excessive issuance of several types of tax-exempt bonds
should be curtailed; and the use of certain commodity futures transactions as a tax avoidance scheme should be prohibited.
The central feature of the tax policies I am proposing is their emphasis on increasing investment. By 1985, an unusually high 45 percent of the tax reductions will be directed toward spurring investment. But even this will not itself be sufficient to raise investment to
the levels our country will need in the decade ahead in order to improve its productivity growth and deal with its energy problems.
Careful control of Federal spending, however, will create the leeway
for additional investment-oriented tax reductions in later years,
within the framework of the overall budgetary restraint required to
fight inflation. I do not believe that we should now commit budgetary resources to large-scale personal tax cuts which will stimulate
consumption far more than investment and thereby foreclose the
possibility of meeting the Nation's critical investment requirements.
12
Monetary Policy
Monetary policy is the responsibility of the Federal Reserve
System, which is independent of the Executive. I respect that
independence. But there are several broad aspects of monetary policy
having to do with public perceptions that do fall within the purview
of the President in his role as national leader.
Sustained restraint in monetary policy is a prerequisite to lowering
inflation. The Federal Reserve exercises this restraint principally by
keeping a strict limit on the growth of the Nation's money supply. In
October 1979 the Federal Reserve modified its earlier policies and operating procedures to increase sharply the emphasis it gives to controlling the money supply. The Federal Reserve each year sets targets for monetary growth and seeks to hold the growth of the money
supply within the targets. Increasingly the public in general and the
financial community in particular have come to associate the credibility of the Federal Reserve and its determination to fight inflation with
its success in keeping money growth continuously within the preannounced targets. It is very important, however, that public opinion
not hold the Federal Reserve to such a rigid form of monetary targeting as to deprive it of the flexibility it needs to conduct a responsible monetary policy.
Temporary fluctuations in monetary conditions can sometimes
cause the money supply to overrun or underrun the targets for a
short period of time without any damage to anti-inflation objectives.
Furthermore, economic developments occasionally occur that may
make it appropriate for the Federal Reserve to modify the targets it
had originally set, or to deviate from its announced aim of lowering
the targets each year. If the public interprets occasional necessary
changes in the longer-run monetary target ranges or short-run deviations of actual money growth from those targets as evidence that the
Federal Reserve has lessened its determination to fight inflation and
as a reason to expect higher inflation in the future, the Federal Reserve is confronted with an untenable situation. If it fails to make the
adjustment in the monetary targets that is called for by a major
change in economic circumstances, monetary policy may produce unwanted results. But if the Federal Reserve does change the targets in
the face of public misunderstanding, it risks an impairment of its
credibility. The same dilemma exists with respect to allowing shortrun deviations in money growth from the target ranges.
Only if the public understands the realities, and the complexities,
of carrying out an anti-inflationary monetary policy can the Federal
Reserve successfully apply the measured restraint necessary to wring
out inflation at minimum cost in production and jobs. On the one
hand, the country must face the fact that in a world with a stubborn
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13
:QL
3
10 percent inflation rate, keeping a tight rein on the growth of the
money supply inevitably leads to interest rates that average significantly higher than those we were accustomed to in earlier periods of
lower inflation. On the other hand, the public and the financial community must not become so obsessed with the mechanics of monetary targeting that any change in targets or any short-run deviation of
money growth from those targets is taken as a sign that monetary restraint has been weakened.
Without reasoned and persistent monetary restraint, inflation
cannot be licked. Perhaps more than in any other area of economic
policy, however, achieving success in monetary policy depends on an
informed public opinion.
Incomes Policies
For the past 2 years my Administration has urged business and
labor to comply with a set of voluntary pay and price standards. Even
though it was introduced at a very difficult time—just before the oilprice explosion of 1979—this voluntary program of wage and price
restraint did moderate the pace of inflation. It significantly reduced—
although it could not eliminate—the effect of the oil-price rise on the
underlying inflation rate.
After 2 years of operation there is general agreement that the current pay and price standards would not continue to be effective in
their present form and without additional support. For this reason we
have carefully examined the possibility of strengthening a voluntary
incomes policy by using the tax system to provide incentives to firms
and workers to slow the rate of inflation. This approach has been labeled a tax-based incomes policy (TIP). The detailed results of our
review are contained in the accompanying Annual Report of the Council
of Economic Advisers.
Broadly, we have concluded that an approach which provided a tax
reduction to workers in firms whose average pay increase did not
exceed some standard, set as part of a voluntary incomes policy,
would be feasible and effective in helping to lower inflation. Two
major conditions apply, however. First, such a policy must be a supplement to, not a substitute for, fiscal and monetary restraint. Without such restraint an incomes policy will produce only fleeting reductions in inflation or none at all. Second, a TIP program is likely to be
desirable only on a temporary basis. After several years, such a program might cease to be effective and could induce significant distortions into wage relationships throughout the economy. But as an interim device to hasten the reduction in inflation and so shorten the
period of reduced output and employment growth, a TIP program
could serve the Nation well.
14
If the growth of Federal spending is restrained, periodic tax reductions will be both feasible and necessary in the years ahead as inflation and economic growth push taxpayers into higher brackets and
raise average effective tax rates. Tax-based incomes policies are
novel, and most people are unfamiliar with either the opportunities
they present or the difficulties they pose. It is therefore highly unlikely that a TIP program could take effect in 1981. But it would be useful
for the public in general, and the Congress in particular, to begin now
to evaluate the pros and cons of TIP programs so that when the time
comes for the next round of Federal tax cuts a TIP program will be
seriously considered.
Energy
I am once again proposing that the Congress increase the Federal
excise tax on gasoline by 10 cents per gallon as an additional incentive to cut petroleum consumption. The need for this tax is, if anything, even greater than it was 7 months ago when the Congress
overturned my action to impose a gasoline conservation fee administratively.
We have once more seen a tightening of world oil supplies. The
massive inventories built up in late 1979 and early 1980 have been
drawn upon to make up for the loss of exports from Iran and Iraq. If
that conflict should continue or if exports do not return to normal,
the buffer which those record high inventories provided will be exhausted. Even in the last 2 months, we have seen significant escalation in prices charged by some OPEC members. National security requires us to put additional downward pressure on consumption of
gasoline and other petroleum products. If we do not, OPEC may do
it for us.
Paradoxically, one of the reasons given earlier for rejecting my
proposed tax was that it was too small—some would have preferred a
tax of 50 cents or even a dollar per gallon. Whether, over time, this
Nation should move toward gasoline taxes that are comparable with
those of our Western European allies is not a question that has to be
answered now. In any event, to do so overnight would shock the
economy excessively. At current gasoline consumption levels, a 50cent per gallon tax would draw approximately $50 billion per year
out of consumers' pockets and require excessive adjustments by consumers and industry. It is much more sensible to start with the level I
have proposed.
There is other important unfinished business to attend to in
energy. The Congress failed to complete work on my proposed
Energy Mobilization Board, but events since August of 1979 have
only made the case for the Board's creation more persuasive. It is
equally important that we move ahead with the production of substi-
15
tutes for petroleum. The Synthetic Fuels Corporation is established
and operating. Its mission—to encourage commercial-scale production of synthetic fuels through risk-sharing with American industry—
is vital.
My program of phased decontrol of domestic crude oil, along with
the revamping of natural gas pricing policy contained in the Natural
Gas Policy Act, is paying rich dividends. Drilling and seismic exploration have reached near-record levels. The Natural Gas Policy Act
should be reviewed, however, to ensure that progress toward decontrol of new natural gas is not jeopardized by the increasing gap between oil prices and their natural gas equivalent, since world oil
prices are now about twice those assumed in the act.
Our contingency planning to deal with a severe oil-supply disruption needs to be improved, since the authorities upon which many of
the existing plans are based will expire at the end of September of
this year. We have had underway for some time an examination of
which, if any, of these authorities should be extended and what additional authorities might be required. This work should be completed
as soon as possible.
Filling of the Strategic Petroleum Reserve must continue. The rate
of fill should be at least the 100,000 barrels per day required by the
Energy Security Act, and should, beyond that, be as high as can be
accommodated without disrupting world oil markets.
Increasing the Flexibility of Our Economy
Energy is not the only area where we must take additional steps to
improve the ability of the economy to adjust to the changes that will
be demanded of it in the years ahead. To the extent that we can
reduce barriers to the flow of labor, capital, and other resources from
inefficient to efficient uses, we can reduce inflationary pressures that
arise from bottlenecks and economic rigidities and simultaneously
speed up the pace of productivity growth.
We should not lose the momentum that has developed over the
past 4 years in reducing obsolete and costly economic regulations.
The Congress should complete its deliberations and pass legislation
similar to that which I suggested last year to complete the task of
modernizing our system of telecommunications regulation.
In the broad area of environmental, health and safety regulation,
where deregulation is not an appropriate solution, we must expand
on the successful beginning that has been made in providing greater
flexibility and incentives for firms to meet environmental requirements in more cost-effective ways.
We must also continue our efforts to assure that the Nation's regulatory priorities are sensible. Our Nation can afford a cleaner environment, safer products, and healthier workplaces, but it does not
16
have unlimited resources. Other national goals cry out for attention,
and we cannot afford waste in attempting to achieve any of them.
During the coming years, when many of our most important industries will be facing difficult adjustment pressures, we must avoid
taking shortsighted actions which block rather than promote this adjustment. Federal policies should indeed cushion the blow when
sharp external shocks force an industry, its workers, and the communities within which it is located to undergo massive change in a short
period of time. The programs of economic development and trade
assistance which exist to meet these needs should be humanely and
effectively administered. But such aid must be aimed at facilitating
adjustment to change, not preventing it. While we can and should
demand that all nations abide by internationally agreed-upon rules of
trade, we must avoid the temptation to use the discretion open to us
to prop up weak industries.
Summing Up: The Need for Balance
In the years immediately ahead, our country will be wrestling with
two central domestic issues. The first is economic in nature: How can
we reduce inflation while maintaining the economic growth that
keeps our people employed? The second is even broader: What is
the proper role of government in our society as spender of tax revenues and regulator of industry?
I am confident we can successfully come to grips with both of
these issues. We would make a costly mistake, however, if we approached these problems with the view that there is some single
answer to the economic problem and a single criterion for determining the role of government. The resolution of both of these great
issues demands a balancing of many approaches and many considerations. Indeed, the only helpful simple proposition is the one which
states that any simple and quick answer is automatically the wrong
one.
The approach I have set forth in this Report will successfully meet
the economic challenge. But it relies on not one but a number of essential elements. To reduce inflation we must be prepared for a
period of sustained budgetary and monetary restraint. But since we
know that this also tends to depress the growth of output and employment, we must not conclude that the greater the restraint the
better. We want a degree of restraint that takes into account society's
interest in employment and production as well as its concern to
lower inflation. We can improve our prospects significantly by introducing investment-oriented tax cuts that increase supply and productivity. But the supply response will not be so quick or so great as to
constitute an answer in and of itself. And, in particular, it would be
very dangerous to make budgetary policy in the belief that the supply
17
response can be so large as to wipe out the need for fiscal prudence
and budgetary restraint. We can improve our prospects still further
by the use of voluntary incomes policies, strengthened when budgetary resources become available by tax incentives for wage moderation. But, again, incomes policies alone will not do the job. If we try
to rely on them excessively, we will do more harm than good. Only
with a balance among the various elements, and only with persistence
in the realization that sure progress will come gradually, can we have
both lower inflation and better growth.
Sorting out the proper role of government also requires us to
strike a balance. At times Federal spending has grown too rapidly.
But in recent years its growth did not result from the introduction of
a host of new government programs by spendthrift politicians or a
surge of profligacy by wasteful bureaucrats. It stemmed mainly from
two sources: first, increased military spending to meet national security goals that are overwhelmingly supported by the American
people; and second, the growth of long established and broadly accepted social security and social insurance programs that are directly
or indirectly indexed against inflation or automatically responsive to
an increase in unemployment.
There is some waste. There is some abuse. I have instituted a
number of reforms to cut it back. I am sure my successors will continue this important effort. But waste and abuse are not the fundamental issues. The essence of the challenge that faces us is how to
balance the various benefits that government programs confer on us
against their costs in terms of higher taxes, higher deficits* and sometimes higher inflation.
It is my view that we must strike the balance so as to restrict for
some time the overall growth of Federal spending to less than the
growth of our economy, despite the faster increase of the military
component of the budget. As a consequence, in my 1982 budget I
have proposed a series of program reductions. I have suggested a
delay in the effective date of new programs I believe important. I
have recommended improvements in the index we use to adjust Federal programs for inflation.
I think we will do a better job in striking the right balance over the
years ahead if we keep two principles in mind: The first is to recognize reality. The choices are in fact difficult, and we should not pretend that all we have to do is find wasteful programs with zero benefits. The second is to act with compassion. Some government programs
provide special benefits for the poor and the disadvantaged; while
these programs must not be immune from review and reform, they
should not bear the brunt of the reductions.
18
The same general viewpoint is appropriate when we approach the
problem of government as regulator, especially in protecting the environment, health, and safety. When we first awoke to the fact of
generations of environmental neglect, we rushed to compensate for
our mistake and paid too little attention to problems of cost and effectiveness. Sometimes the laws we passed and the deadlines we set
took too little account of their economic impact. For 4 years my Administration has been engaged in a major program of finding ways to
make regulations more cost-effective and to strike a reasonable balance between environmental concerns and economic costs. A strong
foundation has been laid. Much remains to be done. But lasting
progress will not come unless we realize that there is a balance to be
struck. Those who believe that virtually all regulation is bad and that
the best regulation is a dead regulation will come to grips with the
real problem no more successfully than the enthusiasts who believe
that concern with regulatory costs is synonymous with lack of concern for the environment.
I believe that the government has indeed overregulated and that
regulatory reform must continue to be a major objective of the Federal Government, as it has been during my Administration. But I also
believe that true reform involves finding better ways to identify and
to give proper consideration to gains as well as costs.
My reading of the distant and the nearby past gives me confidence
that the American people can meet the challenges ahead. There are
no simple formulas. There will be no quick victories. But an understanding of the diverse concerns we have, a pragmatic willingness to
bring to bear a varied array of weapons, arid persistence in the effort
will bring success.
January 17, 1981
19
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS
21
LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D.C.January 16, 1981.
MR. PRESIDENT:
The Council of Economic Advisers herewith submits its 1981
Annual Report in accordance with the provisions of the Employment
Act of 1946 as amended by the Full Employment and Balanced
Growth Act of 1978.
Cordially,
Charles L. Schultze
CHAIRMAN
Stephen M. Goldfeld
C O N T E N T S
Pdge
CHAPTER 1. INFLATION AND GROWTH IN THE 1 9 8 0 S
Inflation
Understanding Inflation
The Sources of Inflation
Managing Aggregate Demand
Broad Principles
The Role of Expectations and the Credibility of
Demand Restraint
Monetary Policy
Incomes Policies
The Pay and Price Standards
Tax-Based Incomes Policies
Price TIPs
Conclusions
Increasing Investment, Supply, and Productivity
Productivity
Investment Needs
Investment Determinants and Inflation
Tax Measures to Increase Investment
The Impact of the Administration's Investment Incentives
Saving
The Integration of Demand-Side and Supply-Side Policies.
Expected Productivity Gains
Demand Versus Supply Responses to Tax Cuts
The Supply-Side Response to Personal Tax Cuts
Business Tax Cuts
Conclusions
Technical Appendix to Chapter 1: MEASURING PAY INCREASES UNDER A TIP
48
50
57
59
60
65
67
68
68
70
73
74
76
77
78
79
79
80
82
83
84
CHAPTER 2. IMPROVING THE ADAPTABILITY OF THE ECONOMY
Adapting to Energy Uncertainty
Adjusting to Higher Energy Prices
Adjusting to Price and Supply Uncertainty
Improving Regulatory Practices
The Role of "Deregulation"
29
32
34
37
47
47
25
89
90
91
91
99
100
Page
Efforts to Improve the Process of Social Regulation ....
Efforts at "Smarter" Regulation
Financial Markets Adapting to Change
Adapting to Rising Interest Rates
Adapting to Greater Rate Variability
Pressures for Comprehensive Legislation
The Financial Structure of the 1980s: Benefits, Risks,
and Public Policy
The Altered Role of Agriculture
Expanding Agricultural Exports
Future Causes of Rising Food Prices
Policy Directions for the 1980s
Trends in Industrial and Labor Markets
Industrial Change
Changing Labor Force Composition
The Dilemma of Industrial Policy
Preferred Policy Approaches
CHAPTER 3. THE ECONOMY: REVIEW AND PROSPECTS
A Review of 1980
An Overview of the Year
The Major Sectors of Aggregate Demand
Labor Market Developments
Price Developments
Wages, Productivity, and Income Shares
Economic Policy
The Prospects for 1981 and 1982
Fiscal Policy
Monetary Policy
World and Domestic Oil Markets
The Economic Forecast
The Goals of Economic Policy
Supplement: National Income and Product Account Revisions
102
105
107
108
110
Ill
111
115
117
121
122
123
123
124
127
129
131
131
132
138
146
148
152
156
165
165
167
169
169
177
178
CHAPTER 4. THE WORLD ECONOMY: COPING WITH TRANSITION ...
182
The Industrial Economies: Trends and Prospects
Economic Activity
External Positions
Inflation,
Summary Assessment
Risks in the Outlook
The Global Oil Market
Directions for Economic Policy: Needs and Challenges
The Search for Solutions
Monetary Policy and Exchange Rates
183
183
186
187
189
190
191
193
194
198
26
Page
Challenges to the International Financial System
Financing the Deficits of the Non-Oil Developing
Countries
Challenges to International Trade Relations
Protection and Employment
Export Subsidies
Market Sharing
Needed Responses
201
203
207
209
211
212
213
APPENDIXES:
A. Report to the President on the Activities of the Council
of Economic Advisers During 1980
B. Statistical Tables Relating to Income, Employment, and
Production
215
227
List of Tables and Charts
Tables
1. Changes in Employment in Major Industrial Countries,
1970-80
2. Changes in Industrial Production in Major Industrial
Countries, 1970-80
3. Selected Indicators of Declining Demand Pressures
4. Governmental Surplus or Deficit and Gross National Product, 1958-80
5. International Comparison of Deficits and Inflation, 197779
rf..,
6. Monetary Growth Rates, 1975-80
7. Estimated Effects and Compliance Rates of Various Pay
TIPs
8. Labor Productivity Growth, 1948-80
9. The Investment Share, and Growth in the Capital-Labor
Ratio, 1949-79
10. Distribution of Workers by Percentage Change in Average
Establishment Wage, Selected Manufacturing Industries,
December 1978 to December 1979
11. Selected Financial Regulatory Changes, 1970-80
12. The Role of Agricultural Exports, 1930-80
13. Long-Term Unemployment as Percent of Labor Force,
1973-80
14. Growth in Major Components of Real Gross National
Product, 1976-80
15. Changes in Real Business Fixed Investment, 1975-80
16. Real Output, Sales, and Inventories, Nonfarm Business
Sector, 1974-75 and 1980
,
17. Labor Market Developments, 1976-80
27
30
30
39
41
42
53
65
69
71
86
110
117
127
138
142
144
147
List of Tables and Charts—Continued
Pa
%€
Tables
18. Measures of Price Change, 1976-80
19. Alternative Measures of Consumer Price Changes, 1980......
20. Measures of Compensation and Employment Costs, 197780
21. Alternative Measures of Changes in Real Earnings per
Hour, 1978-80
22. Shares of National Income, 1976-80
23. Actual and High-Employment Federal Receipts and Expenditures, National Income and Product Accounts, Calendar Years, 1973-80
24. Growth in Monetary and Bank Credit Aggregates, 1979-81
25. Economic Outlook for 1981
26. Economic Projections, 1981-86
27. Revised Potential GNP, 1973-80
28. Real GNP Growth in Major Industrial Countries, 1976-82..
29. Current-Account Balances in Major Industrial Countries,
1978-81
30. Inflation in Major Industrial Countries, 1976-82
31. Global Oil Balances, 1973-80
32. Global Current-Account Balances, Exclusive of Official
Transfers, 1978-81
33. Non-Oil Developing Countries: Current-Account Financing, 1973-79
149
150
153
154
155
157
158
170
178
181
183
187
189
191
202
204
Charts
1. Standard Unit Labor Costs
2. Price Index for Personal Consumption Expenditures Excluding Food and Energy
3. Changes in Consumer Prices Since 1913
4. Productivity Adjusted for Cyclical Variation
5. Prices Received by Farmers
6. Relative Food Prices
7. Selected Interest Rates and Bond Yields
8. Personal Saving Rate
9. Real Inventory-Final Sales Ratio, Nonfarm Business
10. Labor Costs, Value-Added Deflators, and Labor Share in
Six Major Foreign Countries
11. Wage and Price Changes in Seven Major Countries
28
35
35
38
70
116
116
135
139
143
185
188
CHAPTER 1
Inflation and Growth in the 1980s
IN THE 1980s THE UNITED STATES will confront a variety of
stubborn problems that have developed during the past 15 years.
Chief among these problems is one that is shared by most other industrial countries—the persistence of large wage and price increases,
even in the face of high unemployment and slack production. This
problem poses the single most important challenge to U.S. economic
policy—reducing inflation while maintaining a reasonably prosperous
and growing economy.
Many other problems are themselves closely related to inflation,
either as cause or as consequence. Our Nation's productivity growth
has virtually halted in recent years. The era of cheap energy has
ended, the world has grown vulnerable to supply disruptions, and the
course of domestic inflation and unemployment has become closely
dependent on economic and political developments in the oil-rich
but politically unstable Middle East. Meanwhile, the struggle to find a
proper balance between a clean, healthy, and safe environment, on
the one hand, and satisfactory economic growth with lower inflation,
on the other, will continue. All of these developments, together with
the growing interdependence of the world economy, have set in
motion major changes in economic structure, occupational skill requirements, and industrial location that will continue to pose sizable
adjustment problems to many industries, communities, and workers.
While the magnitude of these economic challenges is cause for serious concern, it does not warrant pessimism. During the 1970s the
U.S. economy performed quite well in many important respects. Over
that decade our country outperformed most other major countries in
providing jobs for its people (Table 1). Employment grew almost 25
percent as the American economy created jobs not only for millions
of youths entering the labor market for the first time but also for millions of women, who found job opportunities in growing numbers.
This performance continued through the last years of the decade at
an increased pace. While the growth in the number of employed persons was temporarily interrupted by the recession of 1980, the basic
performance was virtually unparalleled.
3 3 3 - 5 4 0 0 - 81 - 3
29
:QL 3
TABLE 1.—Changes in employment in major industrial countries, 1970-80
[Percent change]
To 1980 first quarter from
Country
Germany
France
United Kingdom.
Japan
United States
Note.—Data are for civilian employment.
Sources: Department of Labor (Bureau of Labor Statistics) and Organization for Economic Cooperation and Development.
Some of the rapid job creation was associated with the low rate of
productivity growth, but production also increased rapidly. As shown
in Table 2, the growth of industrial production in the United States,
both during the decade as a whole and in the last years of the
decade, compared favorably with that of other large industrial countries.
TABLE 2.—Changes in industrial production in major industrial countries, 1970-80
[Percent change]
To 1980 first quarter from
Country
Germany.
France
United Kingdom.
Japan....
United States.
Sources: Board of Governors of the Federal Reserve System and Organization for Economic Cooperation and Development.
Whatever the problems of the American economy, they do not
arise from an inability to generate large increases in jobs and production. But if the challenges raised by chronic high inflation, energy
and environmental problems, ebbing productivity growth, and structural readjustment are not faced, the potential for further growth will
not be realized.
In recent years the United States has successfully begun to tackle
some of its most difficult problems. After years of inaction followed
by several years of vigorous debate, and with some painful sacrifices,
we have put into place the major elements of an energy program
which is already paying dividends in the form of greater energy conservation and improved supply prospects. After decades in which the
documented evidence about the greater productivity and efficiency to
be gained from economic deregulation had been ignored, this Nation
finally acted during the past 4 years to deregulate its airline, trucking,
and railroad industries, and major elements of its financial industry.
And during the 1980 recession the executive branch and the Congress showed their willingness to maintain the restraint and discipline
30
needed to control inflation by resisting strong pressures for a hasty
and potentially inflationary fiscal stimulus.
As this Report will have several occasions to point out, there are no
simple and clear-cut answers to the complex economic problems confronting our country. Many of them will yield only gradually to persistent efforts pursued on many fronts. In some cases where our
knowledge is particularly uncertain, we may have to try several approaches before finding an effective solution. Nevertheless, the willingness to tackle difficult problems which this country has shown in
the last several years provides a reason to temper concern about the
seriousness of our economic problems with a belief that they can be
met successfully.
The first two chapters of this Report examine the major economic
challenges identified above and discuss appropriate policies to deal
with them. In most instances the Administration has already made
specific policy recommendations, and these are reflected here. But in
some cases the chapters identify and evaluate additional policy options on which decisions would have been made had this Administration continued in office. The third chapter of this Report examines the
Nation's general economic performance in 1980 and the outlook for
1981 and 1982, while the fourth chapter turns to issues pertaining to
the international economy.
Chapter 1 addresses the broad problem of reducing inflation while
achieving satisfactory growth in employment, output, and productivity. It considers selected aspects of both demand-side and supply-side
measures. After discussing the history and causes of inflation, the
chapter outlines the role and the limitations of demand management
policies, examines the special problems of setting and carrying out
anti-inflationary monetary policies in a world of high inflation and
frequent economic disturbances, and evaluates the potential usefulness of a tax-based incomes policy as a method for reducing inflation. The remainder of the chapter is devoted to supply-side policies
and pays particular attention to two subjects: first, the importance of
increasing the share of the Nation's output devoted to capital formation and the macroeconomic policies necessary to achieve that goal;
and second, the integration of supply-oriented tax reductions with
overall policies of demand restraint.
Chapter 2 deals with major problems in particular sectors or markets. Specifically, it covers six major topics: energy, regulation, banking, agriculture, the labor market, and the generic problems of structural adjustment among industries confronting economic change.
Broadly speaking, the policy measures discussed in Chapter 2 are
aimed at increasing supply and productivity by improving the efficiency with which particular markets work and adjust to change. Like
31
the macroeconomic policies examined in Chapter 1, these too are a
means of reducing inflation and speeding economic growth.
INFLATION
The Nation has for some time now experienced inflation that
would have been unimaginable in earlier days. Although people's
lives and the course of business may not, at first glance, appear radically different from what they were in 1960 before the recent inflation began, inflation has taken a very real toll. The uncertainty it has
brought with it cannot be measured, but the consequent anxiety has
torn at the fabric of our society. People feel less able to mark their
progress and fear that the next round of inflation will leave them
poorer. In a number of ways—such as introducing cost-of-living adjustments into wage contracts and indexing the benefits of social welfare programs—institutions have evolved to compensate for some of
the uncertainty. But these institutions may sometimes only heighten
the arbitrary redistribution of income brought on by inflation—redistribution that society often finds undesirable and unfair. In addition
to these painful effects, moreover, inflation reduces the Nation's
prospects for growth. The reduction may not appear dramatic, but it
impairs the efficiency of the free-enterprise system and discourages
capital investment, innovation, and risk-taking.
Rising prices, it should be remembered, are not in the aggregate
synonymous with a reduction in real income. When prices rise, someone receives the additional revenues. And for the economy as a
whole, rising prices have gone together with rising money incomes.
But a wage or salary increase comes infrequently and in a large lump,
while prices tend to increase all the time. Furthermore, a pay increase may be viewed as uncertain and as a reward for effort, but
price increases seem entirely beyond a consumer's control. As a
result, a recent wage increase may be forgotten when the grocery bill
rises. Thus rising prices are often treated as something that directly
lower real incomes, even when in fact for the Nation as a whole they
do not. Of course, the resulting anxiety is no less real.
But when the country pays sharply higher prices to foreign oil producers, that does indeed lower its real income. We are poorer because we receive less oil than we did previously for the same amount
of money. That would be true whether or not general inflation followed increases in the price of oil. The induced inflation, in the form
of generally higher wages, salaries, and prices, is not the cause of the
real income decline—the Nation's higher oil bill is.
A similar phenomenon occurs when growth in productivity slows.
Slower productivity growth leads to a slower rise in real incomes. A
32
decline in productivity growth may be accompanied by an unchanged
pace of wage and salary increases, in which case inflation will rise.
But a slackening of productivity growth may also result in lower wage
increases and an unchanged inflation rate. In either case the same
slowdown in the growth of real income would have occurred. It was
not caused by inflation.
Although some of the simpler notions that associate inflation with
real income loss are wrong, high and rising rates of inflation do
indeed weaken the Nation's macroeconomic performance. Inflation
can contribute to slower growth in productivity by discouraging investment in two ways. First, some evidence suggests that when inflation increases, not only do people's expectations of future inflation
rise, but their expectations tend to become much more uncertain. In
this climate, expectations depend less on fact and more on opinion,
rumor, and subjective perceptions. Innovative investments and other
higher-risk economic activities, the seedbeds of future productivity
growth, seem even riskier and are less likely to be undertaken. Meanwhile, businesses and households devote increasing effort to shielding themselves from the effects of inflation, often by speculating in
nonproductive assets. Second, as discussed later in this chapter, the
interaction between inflation and the tax system can indirectly discourage business investment and also affect the types of assets
chosen, thereby distorting investment decisions and resulting in a
less productive capital stock.
In a market economy the structure of relative prices and costs, and
the yardstick of business profits, provide signals to businesses about
what to produce, what inputs to buy, and when to buy them. The
system responds to changes in those signals—changes in the price of
aluminum relative to copper, of glass relative to tin, and in wages relative to prices. But in a period of high inflation, with a consequent
increase in uncertainty, it is much more difficult to distinguish signals
from random events. It is hard to know to what extent particular
wage and price increases simply represent general inflation or are
conveying a "real" message. As a consequence, it is easier to make
wrong decisions. Inefficiencies grow, and productivity falls.
The uncertainty created by inflation also obstructs the conduct of
economic policy. To the extent that high and rising inflation unhinges expectations from reality, the connection between economic
policies and their results is attenuated, and the difficulties of policymaking are increased. Inflation itself is then more difficult to control.
There is a temptation for macroeconomic policy to make announcements and take measures to impress the markets, but the intangible
gains so purchased tend to evaporate rapidly.
Uncertainty is in large part to blame for the damage done by inflation. In addition to causing serious worry among individuals planning
their economic futures, uncertainty interferes with the efficient operation of markets and thereby lowers the productive potential of the
economy. Although measures to cure inflation may themselves be
painful, over the longer term a reduction in inflation will yield rewards in terms of increased productivity growth and real income.
UNDERSTANDING INFLATION
To understand our persistent inflation, it is necessary to look
beyond the commonly cited price statistics. Such statistics as the consumer price index (CPI), the various producer price indexes, and the
national income account deflators are specialized measures of inflation, each with its own idiosyncrasies. They may be sharply influenced by fluctuations in food and energy prices or in mortgage interest rates and therefore sometimes exaggerate and sometimes understate the fundamental trend of inflation. As an example, in July 1980
the consumer price index showed inflation at zero while the producer
price index (PPI) for finished goods showed inflation at an annual
rate of almost 20 percent. It is therefore useful to construct measures
which better reveal the true course of inflation.
Charts 1 and 2 present two different statistical series which together approximate the basic trend, or "underlying rate," of inflation.
The underlying rate is the rate of inflation which today's economy
would tend to perpetuate if supply and demand remained roughly in
balance and no special factors came into play, such as a large rise in
oil or food prices.
Since payments to labor are estimated to account for almost twothirds of total production costs, prices over the longer term tend to
move in conjunction with changes in unit labor costs. Chart 1 shows
a special measure of that change—the rate at which wages and fringe
benefits are increasing minus the trend of growth in productivity.
Chart 2 is a version of the price index for personal consumption expenditures calculated by the Department of Commerce. It excludes
the volatile components of food and energy. Each series tells basically the same story.
34
Chart 1
Standard Unit Labor Costs
PERCENT CHANGE FROM 4 QUARTERS EARLIER^
-2
1...1...1...I...I...I...I...I...I...I...I...I...I..I1...I...I...I...1...I...1...I...
1960
62
64
66
68
70
72
74
76
78 80
^PERCENT CHANGE IN RATIO OF COMPENSATION PER HOUR TO CYCLICALLY ADJUSTED
PRODUCTIVITY, PRIVATE NONFARM BUSINESS, ALL PERSONS, UNREVISED.
SOURCES: DEPARTMENT OF LABOR AND COUNCIL OF ECONOMIC ADVISERS.
Chart 2
Price Index for Personal Consumption
Expenditures Excluding Food and Energy
PERCENT CHANGE FROM 4 QUARTERS EARLIER-!/
10
...I,..I..,!,..I,,.I...I...I..,!,..I.,,I...I.,.I...I...I...!.,,I...huh.. In.I
1960
62
66
68
70
72
74
78
J/PERCENT CHANGE IN FIXED-WEIGHT PRICE INDEX. DATA ARE PRELIMINARY AND SUBJECT
TO REVISION.
SOURCE: DEPARTMENT OF COMMERCE.
35
80
Over the past 15 years the underlying rate of inflation has risen
from about 1 percent in the first half of the 1960s to 9 or 10 percent
now. The increase has not been steady. Instead, there have been
three major episodes. Each period began with a sharp increase in the
underlying rate and ended with the rate falling only part way to its
original level. Thus, each new inflationary period has started from a
higher underlying level than its predecessor.
The first jump in the underlying inflation rate came during the
Vietnam war, when a large rise in both military expenditures and
outlays for Great Society programs was financed for several years
without a tax increase. This led to a very large Federal budget deficit
superimposed on an economy already operating at a high level. The
result was a classic example of an excess of demand over supply. The
underlying inflation rate rose from about 1 percent in the 1961-65
period to 4 or 5 percent by 1969. By the end of the decade the
forces pushing up the inflation rate receded as taxes were belatedly
raised and Vietnam war outlays declined. Although the economy entered a recession in 1970, the underlying rate of inflation continued
at about 4 to 5 percent until wage and price controls were introduced in August 1971. For a short period the controls held down inflation in prices but did not reduce the growth in costs.
Another inflationary episode began in late 1973 as the result of
two major developments. A poor crop year worldwide caused a sharp
surge in food prices, and the Arab oil embargo at the end of 1973
was followed by a threefold increase in world oil prices. Although the
full impact of the increase in world oil prices was muted in the
United States by price controls on domestically produced oil, energy
prices and the prices of energy-using products increased sharply. Aggregate demand grew sharply in 1972 and early in 1973. A worldwide boom led to a major inventory buildup and a widely based acceleration of raw materials prices in 1973-74. Finally, the distortions
and inequities brought on by wage and price controls created irresistible pressures for easing the controls in 1973 and eliminating them
in 1974. When this occurred, there was a burst of price and wage
increases.
When this burst receded, the U.S. economy entered its worst recession in 40 years. While the underlying rate of inflation fell back from
its late 1974 peak, it did not fall to its starting point. Aside from brief
fluctuations, it settled down in the 6 to 7 percent range from 1976
through 1978.
The most recent inflationary episode was triggered when the Organization of Petroleum Exporting Countries (OPEC) raised oil prices
in 1979 and early 1980. Relative to the size of the U.S. economy, the
recent price increase was larger than the 1973-74 increase. By the
36
end of 1974 the world price of oil had tripled from about $4 to
about $12 per barrel, thereby adding about $18 billion to our bill for
imported oil, or roughly 1.4 percent of gross national product
(GNP). Since the price of domestically produced petroleum (which at
that time accounted for about two-thirds of the petroleum used in
the United States) was restrained by controls, the average U.S. price
remained lower than prices throughout the rest of the world. Still,
domestic oil prices almost doubled, so that the total increase in consumer costs was almost 3 percent of GNP.
During the most recent shock the price of imported oil rose from
about $15 per barrel at the end of 1978 to $35 at the close of 1980.
This added about $50 billion to the cost of the oil we now import
into the United States, or about 2 percent of GNP. Since domestic
crude oil prices were in the process of being decontrolled during this
period, the price of domestic oil increased by about $15 per barrel,
adding another $60 billion to the oil costs paid by consumers.
The forces of inflation during this period were also strengthened
to some extent by the behavior of aggregate demand. There was
some acceleration of wages in 1978 as unemployment fell sharply.
And for a time in late 1978 and early 1979, there appeared to be some
excess demand in product markets.
Spurred by these developments, inflation surged in 1979 and early
1980. As measured by the CPI—which was also heavily influenced by
sharp increases in mortgage interest rates—inflation reached annual
rates of 15 to 20 percent in the first quarter of 1980. By the spring of
1980 the forces that had given rise to this inflationary episode subsided, and the economy entered a brief recession. The measured inflation rate receded from its peak, but the underlying rate appears to
have leveled off in the 9 to 10 percent range, up several notches
from the 6 to 7 percent level at which the period had started.
THE SOURCES OF INFLATION
The chief problem with respect to inflation is not the sporadic developments that generate inflationary impulses. Instead, it is the
ratchet-like nature of the inflationary process which makes it resistant
to downward pressures. Chart 3, which shows year-to-year changes in
the consumer price index since 1913, captures the essence of the inflation problem of the past two decades. The size of the inflationary
bursts of recent years has not been out of line with those which occurred earlier in the century, but recent inflation has had an upward
bias and has fluctuated around a rising trend line. An understanding
of the "causes" of inflation must therefore encompass not only the
various factors that give rise to particular inflationary episodes but
also the reasons why inflation has developed a ratchet-like character.
37
Chart 3
Changes in Consumer Prices Since 1913
PERCENT CHANGE
25
-5 -10 "
-15 1 1 i
1910
i 1 1 1 11 I i i 11 I i i 11 11 11 i 11 i 11 I i i 11 11 11 i E i 11 i 1 1 1 i i 11 i 11 1 1 1 1 i I i 11 i I i i i 11
1920
1930
1940
1950
1960
1970
1980
NOTE: PERCENT CHANGE FOR 1980 IS FROM DECEMBER 1979 TO NOVEMBER 1980 A T A
SEASONALLY ADJUSTED ANNUAL RATE.
SOURCE: DEPARTMENT OF LABOR.
The Role of Aggregate Demand in Creating Inflation
The inflation rate which occurs in any given year is a composite of
the individual wage and price decisions made by millions of businesses, unions, and workers. Those decisions are influenced by the
strength of demand relative to supply. As demand (or spending)—on
the part of consumers, business, and government—declines relative
to supply, there is pressure on workers to moderate their wage demands lest employment fall, and on producers to restrain prices for
fear of losing sales. The converse also holds true: the smaller the
number of unemployed people and the lower the amount of unused
industrial capacity, the greater the upward pressure on wages and
prices. Some evidence also suggests that a rapid rise in demand can
generate upward pressure on both wages and prices, even if the level
of demand is not excessive. In general, if demand is in rough balance
with supply, the underlying rate of inflation for the economy as a
whole will remain basically unchanged, even though prices and wages
in individual sectors may fluctuate in response to conditions in particular markets. If excess demand exists, or if the rate of increase in
demand is very large, the underlying rate of inflation will tend to
rise. If aggregate demand falls below supply, some downward pressure will be exerted on inflation.
Expectations about the future state of aggregate demand are also
an important determinant of inflation. Wage decisions and many
38
price decisions cannot easily be reversed. Wages are often set for at
least a year, and under most major union contracts they are set for 3
years. There are also many advantages to both buyers and sellers in
avoiding frequent product price changes. As a consequence, decisionmakers have to think not only about market conditions at present but
also about what they are likely to be in the future. Thus, both current
and expected,aggregate demand influence the rate of inflation. Moreover, a firm's decisions today about what wages to offer or what
prices to set for any future period will be conditioned by its expectations about the wages its competitors will pay and the prices its competitors will charge, and by the incomes that will be earned by its
customers. In short, today's inflation rate is strongly influenced by
what people expect it to be tomorrow.
It was excess aggregate demand during the Vietnam war that drove
up the underlying rate of inflation from 1 percent to 4 or 5 percent
by the end of the 1960s. Although increases in oil and food prices
were the principal causes of the next two inflationary surges, pressures from aggregate demand again played an identifiable role. The
most troublesome feature of the inflation of the past 15 years, however, has been the fact that after each of the three inflationary episodes the underlying rate of inflation did not fall back to its earlier
level. To what extent was this outcome a demand-related phenomenon?
TABLE 3.—Selected indicators of declining demand pressures
[Percent, except as noted]
Item
1969 peak ys 1970
recession
1973 peak ys 1975
recession
1980 peak ys 1980
recession
1968 1 1970 1
to
to
1969 IV 1971 IV
1973 I
to
1974 (I
1974 HI
to
1976 IV
1979 \
to
1980 I
1980 II
to
1980 IV *
Average level:
Manufacturing weekly overtime (hours)
3.6
2.9
3.7
2.9
3.3
2.7
Unemployment rate: Total
3.5
2.1
5.5
3.9
4.9
3.3
7.7
5.9
5.9
4.2
7.5
6.4
59
49
86
43
60
88.1
85.9
82.6
76.9
91.9
84.2
79.3
76.3
87.5
83.9
4.3
1.6
37.0
2.7
26.1
11.8
— .3
2.4
-.2
2.6
.3
1.3
Males 20 years and over
2
38
Vendors reporting slower delivery
Manufacturing capacity utilization:
Primary processing industries
Advanced processing industries
Change during period: 3
Producer prices for crude materials excluding food and
fuel4.....
*
Unemployment rate (percentage points)..
1
2
3
4
2
2
76.1
78.3
Preliminary.
fourth quarter 1980 not available; November used as fourth quarter average.
Change from quarter preceding start of period shown.
Annual rates. Data prior to 1973 from series seasonally adjusted by Council of Economic Advisers.
Note.—Based on seasonally adjusted data, except vendor performance.
Sources: Department of Labor (Bureau of Labor Statistics), Board of Governors of the Federal Reserve System, Purchasing
Management Association of Chicago, and Council of Economic Advisers.
39
At the end of each inflationary episode the economy entered a recession—in 1970-71, in 1974-75, and in 1980. Unemployment rose
steeply, and substantial amounts of idle capacity appeared (Table 3).
The failure of inflation to fall back to earlier levels is therefore not
attributable to excess demand. On the other hand, there clearly
would have been some level of demand low enough to have caused
business and labor to moderate the increase in wages and prices substantially so as to return to the earlier level of inflation. But for reasons discussed later, the rate of wage and price increase has become
relatively insensitive to a moderate degree of economic slack. As a
consequence, the cost of the necessary restraint—in terms of additional unemployment, idle capacity, and lost income, production, and
investment—would have been extremely high.
Federal Budget Deficits as a Cause of Inflation
The Federal budget balance at any given time is an important
factor in determining the level of current aggregate demand in the
economy. If the Federal budget is in deficit, total spending—private
and public—will be higher than it would be if taxes had been raised
or spending had been cut to produce a balanced Federal budget. Any
tax or spending measure that turned a budget deficit into a balanced
budget would tend to reduce demand relative to supply and put
downward pressure on the inflation rate. Furthermore, since businesses make wage and price decisions at least partly in the light of
what they expect market conditions to be, announcements of future
budget policies have a strong effect on current economic conditions
and on the rate of inflation. Thus budget deficits can contribute to
inflation both by being a part of current aggregate demand and by
Contributing to expectations about future aggregate demand.
The existence of important relationships between Federal budget
policy and aggregate demand that in turn affect inflation does not,
however, support the simple view that budget deficits cause inflation
and that inflation could be eliminated if Federal deficits were eliminated. Federal deficits are not the sole—or even the primary—determinant of aggregate demand. The Federal deficit is likely to be largest when private demand is weak, incomes are low, and inflationary
pressures from the private demand side are absent. That is the situation in a recession. In the second column in Table 4, which shows
the Federal budget deficit as a percentage of GNP, the effects of recession in 1958, 1970-71, 1974-75, and 1980 show up as large increases in the deficit in the fiscal years during and immediately after
the recession. Conversely, a truly inflationary budget may exhibit a
small deficit, or even a surplus, as a result of an inflation-caused increase in Federal revenues. In 1969, as inflation was surging, the
40
Federal budget achieved a surplus. In 1974, when another inflationary surge occurred, the deficit was quite small.
TABLE 4.—Governmental surplus or deficit and gross national product, 1958-80
[Amounts in billions of dollars]
Fiscal years—unified
budget
Federal surplus1or
deficit ( - )
Year
Amount
As percent
of GNP
Calendar years—government sector, national income and
product accounts
Federal surplus or
deficit ( - )
Amount
Federal and State and local
surplus or deficit ( - )
As percent
of GNP
Amount
As percent
of GNP
-2.9
-12.9
-0.7
-2.7
-10.3
-1.1
-2.3
-.2
-12.6
-1.6
-2.8
-.3
I960....
1961
1962
1963...
1964...
.3
-3.4
-7.1
-4.8
-5.9
.1
-.7
-1.3
-.8
-1.0
3.0
-3.9
-4.2
.3
-3.3
.6
-.7
-.7
.1
-.5
3.1
-4.3
-3 8
.7
-2.3
.6
-.8
-.7
.1
-.4
1965...
1966....
1967....
1968Z
1969«.
-1.6
-3.8
-8.7
-25.2
3.2
-.2
-.5
-1.1
-3.0
.4
.5
-1.8
-13.2
-6.0
8.4
.1
-.2
-1.7
-.7
.9
.5
-1.3
-14.2
-6.0
9.9
.1
-.2
-1.8
_J
1.0
1970
1971....
1972.... •••"
1973....
1974....
-2.8
-23.0
-23.4
-14.9
-6.1
-.3
-2.2
-2.1
-1.2
-.4
-12.4
-22.0
-16.8
-5.6
-11.5
-1.2
-2.0
-1.4
-.4
-.8
-10.6"
-19.4
-3.3
7.8
-4.7
-1.1
-1.8
-.3
.6
-.3
1975
1976
1977...
1978..
1979
-53.2
-73.7
-53.6
-59.2
-40.2
-3.6
-4.5
-2.9
-2.8
-1.7
-69.3
-53.1
-46.4
-29.2
-14.8
-4.5
-.3.1
-2.4
-1.4
-.6
-63.8
-36.5
-18.3
-.2
-11.9
-4.1
-2.1
-1.0
.0
.5
1980 \
-73.8
-2.9
-62.3
-2.4
-34.8
-1.3
1958
1959
•••••
' Includes off-budget outlays.
2
A 10-percent income tax surcharge was introduced in July 1968—thus entering calendar year 1968 but fiscal year 1969.
3
Preliminary.
Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and
Budget.
If government budget deficits are the cause of inflation, it should
make no difference whether the deficit occurs at the Federal, State,
or local level. For example, the Federal revenue-sharing program,
which grants Federal tax revenues to State and local governments,
has the effect of reducing State and local deficits (or increasing their
surpluses) by increasing the Federal deficit. If the program were
eliminated, but both levels of government continued to tax the same
amount and maintain the same level of services, the Federal deficit
would be reduced—but the total deficit, and its inflationary consequences, would be unchanged. In fact, principally because the State
and local governments accumulate funds to pay employee pension
costs, their budgets usually show a surplus. As the figures in the final
column in Table 4 show, the combined budgets of Federal, State,
and local governments have either showed a surplus or a very small
deficit during the past two decades, except during recessions and for
2 years when Federal spending on the Vietnam war was at its peak.
41
The notion that budget deficits are the chief cause of inflation also
founders on a comparison of budget deficits and inflation among different countries. Japan and Germany in recent years have had much
better success in combating inflation than the United States. Yet their
budget deficits, especially those of Japan, have been much higher relative to the size of their economies than has been the case in the
United States (Table 5).
TABLE 5.—International comparison of deficits and inflation, 1977-79
9 annual
avcrage
Country and item
United States:
Public sector surplus or deficit ( - ) as percent of GNP1..
Inflation rate 2
.
.
-0.1
8.4
Germany:
Public sector surplus or deficit (—) as percent of GNP1
Inflation rate 2
-2.7
3.5
Japan:
Public sector 2surplus or deficit (—) as percent of GNP1
Inflation rate
-4.8
5.1
1
a
Standardized national accounts basis.
Percent change in consumer price index.
Sources: Department of Labor (Bureau of Labor Statistics) and Organization for Economic Cooperation and Development.
Stating that deficits are not the sole cause of inflation does not, of
course, imply the opposite proposition—that the size of the budget
deficit is unimportant to the control of inflation. Subsequent sections
of this chapter emphasize the importance of fiscal restraint in a longterm program to reduce inflation.
Supply Shocks as a Source of Inflation
Sharply higher prices in one sector of the economy can lead to
surges in inflation even when excess aggregate demand is absent.
These sudden and massive changes generally spring from conditions
that cannot be controlled. The most important of these have been increases in food prices resulting from shortages and increases in oil
prices mandated by OPEC. These events are no different from such
common supply disruptions as strikes, accidents, and natural disasters, but they are much larger, and it is their size which makes their
effects exceptional.
Price shocks have both direct and indirect effects. Consumers feel
the price increases directly, and these direct effects may be magnified
by the brevity of the time in which they occur, resulting in extraordinary jumps in reported inflation rates. In addition, price increases in
agricultural or energy raw materials translate indirectly into price increases in the final products that utilize those materials, although the
degree and timing of the pass-through depend on market conditions.
This secondary impact is quite important in the case of petroleum,
half of which is used by businesses in production and transportation.
42
As an abrupt increase in the price of an important commodity
translates into an increase in the cost of living, pressure builds for
wage gains to match the new inflation. Some gains take place automatically where wages are linked to prices through cost-of-living
clauses in union contracts. Additional acceleration occurs as new contracts are negotiated. As businesses observe the rising wage-price
spiral, they are likely to expect a higher future level of inflation. They
are then somewhat more likely to grant larger wage increases, both
in the belief that rising inflation will make it possible to pass through
increases in higher prices and in order to avoid losing workers.
Through this process, a sharp increase in food or oil prices can lead
to a rise in the underlying inflation rate.
The magnitude of the inflationary process set in motion by an oilprice increase or some other supply shock depends on the state of
the economy. The more prosperous the economy and the lower the
unemployment level, the more likely it is that the initial increase in
prices will lead to higher wage increases and a higher underlying inflation rate.
In addition to their inflationary consequences, supply shocks also
create recessionary forces. The very large increases in oil prices in
1974 and 1979 not only spurred inflation but simultaneously depressed aggregate demand. They were therefore largely responsible
for the recessions of 1974-75 and 1980. After paying sharply higher
prices for petroleum products, consumers had less to spend on other
goods and services. But those who received the revenues from higher
oil prices—foreign and domestic oil producers—increased their demands for U.S. exports and investment goods only gradually. On balance, therefore, aggregate demand and spending fell, leading to
lower output and reduced employment.
Such a simultaneous increase in inflation and unemployment
brought on by supply shocks creates a dilemma for economic policy.
If monetary and fiscal policies produce additional aggregate demand
to "compensate" for the recessionary forces set in motion by a
supply shock, there is likely to be a large induced rise in inflation. If,
on the other hand, no effort is made to compensate, aggregate
demand will fall. But given the relative insensitivity of wage and price
decisions to moderate slack in the economy, some increase in the underlying inflation rate is nonetheless likely. Only sharply restrictive
monetary and fiscal policies, which strengthen the forces leading to
recession, can prevent an increase in the underlying inflation rate.
While recessionary forces came into play in 1974 and 1980, the slackening of aggregate demand was not sufficient to avoid another
upward ratcheting of the inflation rate.
43
The Role of Declining Productivity Growth
Over the past decade—and perhaps since the mid-1960s—the rate
of productivity growth in the United States has slackened. (A later
section of this chapter examines this trend in more detail.) This
slackening has been an unwelcome development, since productivity
growth can offset the effects of rising wages on business costs and
prices. When productivity growth slows but increases in wages continue, the rate of increase in costs and prices rises. While short-term
variations in productivity growth may not be recognized in setting
prices, a longer-lasting slowdown in productivity will be reflected in
higher prices. Once prices begin to rise in response to this pressure,
another round of wage demands is stimulated as workers try to offset
the increased cost of living. This raises the underlying inflation rate
yet again.
The Downward Insensitivity of Wages and Prices
If wages and prices were sensitive to a moderate degree of slack in
the economy, careful control of aggregate demand through monetary
and fiscal policy could bring rising inflation to a halt quickly and at a
modest cost. True, mistakes in policy might occur from time to time,
and supply shocks over which the government has no control would
still take place. But inflation could be brought down relatively quickly
and easily if it did not have—as it has now—a large degree of inertia.
Before World War II, and perhaps in the immediate postwar years,
wages and prices were more sensitive in a downward direction. (See
Chart 3, for example.) Several careful economic studies show that in
that earlier period a moderate or short-lived slackening of aggregate
demand tended to reduce the rate of inflation significantly. Those
who have compared that earlier era with more recent times differ in
their views as to precisely why things have changed, but the basic
causes are clear.
During the past several decades the vast majority of firms, labor
unions, and workers have come to expect that expansionary government policies will be applied sooner or later to reverse recessionary
tendencies in the economy. Since current wage and price decisions
are strongly influenced by what workers and firms think the future
will hold, the expectation of stimulus removes much of the motivation for moderating wage and price behavior. Businesses and unions
have also developed a growing tendency to turn to government for
relief, often with some success, when their high prices and wages
lead them into competitive difficulties. All of these factors have weakened the incentive for businesses and workers to restrain their wage
and price demands, even in the face of softening markets. These actions do not depend on specific knowledge about future government
44
policies but are based on the widespread view that "the government
won't allow things to get too bad."
Prior to World War II, however, popular expectations were different. The Federal Government had historically played little role in
smoothing the economic cycles, and substantial depressions as well
as mild recessions occurred periodically. Up until the 1930s there
was no unemployment insurance, social security, or deposit insurance
to ameliorate the consequences of economic downturns. When markets started to weaken, there was no reason to believe that any support—in the aggregate or for individuals—woul<j be forthcoming
from the government. As a consequence, wages and prices quickly
subsided as businesses and workers scrambled to survive. The cycle,
furthermore, was self-reinforcing. Because inflation often led to a
slump, followed by a speedy reduction in inflation, businessmen and
others came to expect that inflation would not last long; this expectation itself moderated their behavior with respect to wages and prices.
After World War II, however, the United States and other industrial countries decided that the costs of this kind of painful adjustment
were too high. Thus, countercyclical policy was founded. The success
of that policy, and the existence of various programs of income support to protect individuals in case of unemployment, have changed
the character of expectations. In the new environment the appearance of slack markets, idle capacity, and higher unemployment leads
to far less moderation in wage and price increases. Downward flexibility has not disappeared, but it has diminished.
Current wage and price behavior has deep-seated structural origins
and is not based solely on current expectations about governmental
behavior. Since most large wage contracts run for 2 or 3 years, the
rate of wage increase in any particular year will have been determined in part by negotiations in earlier years under different conditions. In addition, the expiration dates of multiyear wage contracts
for different industries are staggered, and the wage increases negotiated in any industry will be influenced to some extent by the size of
earlier increases won by unions in other industries. Moreover, the
prospect of further inflation over the life of these contracts has led to
the inclusion of cost-of-living clauses, which provide wage increases
even when markets are slack. Although union contracts cover less
than one-quarter of the civilian labor force, the partial insulation of
these contracts from current economic events has some effect on the
wages that nonunion firms must pay.
Quite apart from the existence of written contracts, there are
mutual advantages to both firms and workers from wage-setting practices that are relatively insensitive to economic slack. In complicated
modern societies the costs of acquiring information about alternative
333-5U0 0 - 81 - 4 : QL 3
45
job opportunities are very high for workers, and the costs of training
a skilled work force are very large for businesses. Both workers and
firms see benefits in establishing long-term relationships. One way
for a firm to attract and hold a skilled work force is an implicit agreement not to engage in extensive wage-cutting during periods of weak
markets. As a consequence, many firms are unwilling to take a chance
of losing out in the labor market by being among the first to reduce
wage increases.
Other institutions besides those of wage-contracting contribute to
the downward insensitivities of prices and wages. In the case of
prices, the downward pressure that would normally be exerted by
competitive forces in slack markets is significantly muted in large oligopolistic industries by market strategy considerations and various
forms of administered prices. Finally, government intervention in individual markets through regulation, which may fix wages, the price
or quality of the product, or the conditions under which production
takes place, adds further rigidity.
Some of the economic institutions and practices that contribute to
wage and price rigidity themselves evolved in response to expectations that government economic policy would continue to be supportive. Although the persistent application of demand restraint is
likely to reduce them, they should not be expected to disappear
easily or quickly.
Downward wage and price rigidity makes the costs of reducing inflation through monetary and fiscal restraint quite large. It is difficult
to estimate the costs with precision, but representative econometric
studies suggest that reducing inflation by 1 percentage point would
require a sacrifice of $100 billion in lost output (in 1980 pYices) and
a one-half percentage point rise in the unemployment rate over a
period of about 3 years. Most of the costs would be incurred in the
first half of the period. These statistical estimates, however, are based
on historical relationships. There has never been a period of sustained
economic restraint in recent times from which direct evidence of
the costs could be drawn. The possibility that they would grow
significantly smaller if restraint persisted is discussed later in this
chapter.
In sum, it is the costs imposed on society when demand restraint
clashes with the downward insensitivity of wages and prices that
makes it so difficult to reduce inflation by applying monetary and
fiscal restraint. Viewed in this perspective, the central problem of
economic policy is not how to reduce inflation. If that were the only
objective, a sufficiently draconian level of demand restraint could be
found to do the job. The real issue is twofold: How large are the
costs society is willing to bear to realize the benefits of lower infla-
46
tion, and can policies be designed to lower those costs so that inflation can be reduced faster with smaller losses in output and employment?
MANAGING AGGREGATE DEMAND
Monetary and fiscal policy must be designed to prevent aggregate
spending that is so high or growing so fast relative to the Nation's
productive capacity that it encourages a speedup in the rate at which
wages and prices are rising—i.e., an increase in inflation. To play a
role in lowering the underlying inflation rate, growth in aggregate
demand must be further restrained to a point where firms and workers reduce the rate at which they raise wages and prices.
This section starts by specifying a policy of demand management
that aims at a gradual reduction of inflation in a world where the inflation rate is highly resistant to downward pressures. Particular attention is paid to the problem of establishing the credibility of antiinflation policies so as to influence popular expectations in a favorable way. The section then considers some of the special problems of
managing monetary policy in a period of high inflation and frequent
economic disturbances.
BROAD PRINCIPLES
Three broad principles, discussed at length in last year's Report,
can guide monetary and fiscal policy as it seeks to reduce inflation
while providing for reasonable growth:
First, monetary and fiscal policy should aim for a long-term reduction in the growth of nominal GNP (aggregate spending). That reduction should not be abrupt, or it will produce large decreases in
employment and production while reducing inflation only modestly.
But the restraint must be maintained, since wages and prices tend to
resist the downward pressure.
Second, the pace of nominal GNP growth will undoubtedly need to
fluctuate along a declining trend. Realistically, even if there is a decrease in the inflation rate in 1981, for example, some rise in nominal GNP growth will be required to accommodate a modest recovery
from the 1980 recession. A policy of fiscal and monetary restraint to
produce a long-term reduction in the growth rate of nominal GNP
may thus need to be adjusted from time to time to take account of
short-term changes in economic conditions. But several cautions are
required. Unless clearly warranted and carefully explained, shorterterm adjustments to economic policy can threaten the credibility of
longer-term restraint. Moreover, because an increase in inflation
once underway is so very hard to eliminate, an inflationary mistake
takes much longer to reverse than its opposite. The risks that policy-
47
makers face are not symmetrical and, as a consequence, uncertainty
must be resolved in favor of caution.
Third, no matter how well designed, monetary and fiscal policies
cannot prevent large outside shocks to the economy from imposing
some damage on employment, price stability, or growth. A practical
approach would be to "accommodate" the direct inflationary effect
of external price shocks but restrain aggregate demand sufficiently to
minimize the indirect inflationary effects that would result if individuals attempted to raise wages and other incomes to "catch up" with
higher prices. Without huge costs in terms of lost production, however, it would probably be impossible to restrain demand sufficiently to
eliminate all induced increases in inflation. In these circumstances a
voluntary incomes policy may be able to make a significant contribution. This seems to have occurred in 1979, when the response of
wages to the large rise in inflation was substantially muted.
Because the rate of increase in wages and prices tends to resist
downward pressures, a policy of continued restraint on the growth of
aggregate demand sufficient to induce a decline in inflation will mean
sustained slack in the economy and will result in a period of relatively slow growth in production and employment. This outlook could be
improved if it were possible to change the behavior of wages and
prices so that they responded to demand restraint more rapidly and
by larger amounts.
THE ROLE OF EXPECTATIONS AND THE CREDIBILITY OF DEMAND
RESTRAINT
Earlier in this chapter the downward resistance of wage and price
inflation was attributed in part to a widespread expectation that expansionary government policies will rather quickly be applied to reverse recessionary tendencies. If firms and workers became convinced that the government meant business, that the markets for
their products would not be supported by easier money or fiscal
stimulus, and that they could continue raising wages and prices only
at their own peril, their decisions about wage demands and pricing
policies would undoubtedly be affected. The downward "stickiness"
of wage and price inflation would be eased.
Does the government need to put the economy through one or
more prolonged periods of economic slack in order to demonstrate
the firmness of its anti-inflation commitment? Or can it avoid that
necessity by somehow convincing the Nation in advance of its determination? Some observers have suggested, for example, that the government could show its resolve by announcing a target path for
nominal GNP or for money supply growth (or both) and by committing itself to pursuing those targets whatever the consequences for
unemployment and production. The target path would permit pro-
48
duction and employment to grow only if they were accompanied by
significant reductions in wage and price inflation. But simply announcing a set of targets does not guarantee that they will steadfastly
be pursued in the face of mounting losses in employment, profits,
and sales. Indeed, the tougher the targets and the greater the
demand restraint they seem to require, the less likely they are to be
credible, for their success will rely on an uncharacteristic willingness
on the part of the Administration, the Congress, and the public to
accept large reductions in employment and production rather than
abandon the targets.
The mere announcement of government intentions is, therefore,
unlikely to produce a significant change in wage and price behavior.
The actual experience of persistent demand restraint, followed by a
substantial number of individual firms and unions pricing themselves
out of the market, would almost certainly be necessary before the
credibility of the policy was established. In addition, the government would have to refuse pleas for trade restrictions, subsidies, or
other relief for those who failed to moderate their wage and price
increases.
Even if firms and workers became convinced that the government
was determined to persist in its demand restraint regardless of the
consequences, to what extent would they respond with a greater willingness to cut wage and price increases, especially if the demand restraint were moderate instead of very severe? The answer would
depend in part on whether they expected inflation or production to
fall first. If individual firms believed that demand restraint was synonymous with lower inflation, they would undoubtedly restrain their
own wage and price increases, since they would be reluctant to get
far out of line with the wages and prices of other firms and industries. But given the downward insensitivity of wages and prices experienced over the past several decades, demand restraint might at the
present time lead instead to expectations of lower output. It is not at
all clear, therefore, how sharply wages and prices would respond to a
moderate decline in demand even if it was expected to last for a long
while.
Equally important, strong structural components of wage and price
stickiness discussed earlier in this chapter would remain. These structural factors are, in the near term, independent of expectations. As a
consequence, other measures would also have to be pursued as a
means of speeding a reduction in inflation and raising the growth of
production and employment in th£ face of continued demand restraint.
The foregoing discussion suggests that one of the most critical
questions in designing anti-inflation policies is determining the
49
extent to which the downward stickiness of wage and price inflation
has been due to popular expectations rather than to structural factors. While there is no clear-cut answer to this question at the
moment, it is surely true that expectations about the persistence of
government policies of demand restraint affect the responsiveness of
wages and prices. To the extent that the credibility of government
policies can be strengthened, the reduction in inflation will come
more quickly and the social costs will be reduced. The fact of persistence in an anti-inflation policy—as happened in 1980, when no fiscal
stimulus was offered and a restrictive monetary policy was maintained in the face of a weakening economy—should gradually help to
modify business and worker behavior. But it would be imprudent to
expect entrenched expectations to be changed quickly.
MONETARY POLICY
The Federal Reserve bears a substantial share of the responsibility
for carrying out aggregate demand management. As discussed above,
the monetary authorities must first confront the question of the appropriate degree of economic restraint. The problem is to achieve
the proper balance in order to reduce inflationary pressures at a
minimum cost in lost jobs and production. Formulating and implementing policies to achieve this balance in a period characterized by
wide fluctuations in economic and financial conditions confronts the
monetary authorities with a number of serious additional challenges.
While these problems are generally technical in nature, the manner
in which they are resolved can have a significant impact on the
degree of monetary restraint.
Monetary policy can exert no direct control over aggregate
demand. It must exert its influence indirectly, that is, by affecting
actual and expected conditions in the money and credit markets. The
linkages between what it can control (the cost and availability of bank
reserves), its intermediate indicators of conditions in the money and
credit markets (the monetary aggregates and interest rates), and its
ultimate goals (the impact on real growth and prices) are imperfect
and often are not directly observable, even after the fact. In evaluating these linkages, the monetary authorities must rely on predicted
relationships based on economic theory and historical experience,
and there is plenty of room for slippage. These technical problems
create considerable uncertainty for the makers of monetary policy.
A related issue is that the effectiveness of the monetary authorities
in bringing down inflation depends on how firms and individuals perceive monetary policy. Private sector expectations of the likely success of monetary policy influence its actual success. Consequently, it
is important that the monetary authorities demonstrate that they have
chosen a strategy that will achieve their anti-inflation objectives.
50
Moreover, their actions must indicate that they have the technical capability to meet these objectives while responding forcefully to new
situations and to any divergence between desired and actual developments.
In recent years the debate on these issues has focused on the Federal Reserve's target growth ranges for monetary aggregates and on
the process of setting and implementing these targets. The targets
are defined in terms of the narrow measures of the money stock
(formerly M-l and now M-1A and M-1B, which include currency and
various types of checkable deposits), the broader measures of the
money stock (M2 and M3, which include currency and checkable deposits as well as time and savings deposits and other deposit-like instruments), and bank credit. The Federal Reserve has used monetary
growth targets internally since the early 1970s, and since 1975 it has
announced them publicly in testimony before the Congress.
In October 1979 the Federal Reserve modified its procedures for
implementing monetary policy in order to give greater emphasis to
keeping the growth of the aggregates within the target ranges, even if
that meant more variation in interest rates. By this change, the Federal Reserve was widely perceived as having established the realization of its targets as a benchmark for measuring the performance of
monetary policy.
While the notion of monetary targeting may appear quite straightforward, in practice there are a number of questions that must be resolved in carrying out a targeting strategy. Among these, three in
particular deserve attention here:
• How should the Federal Reserve set its monetary growth targets,
both in terms of choosing particular measures of money and
choosing numerical targets?
• What is the appropriate monetary policy response when the relationships among economic variables, on which the initial targets
were set, appear to shift?
• How rigidly should the Federal Reserve adhere to its longer-run
growth ranges over the short run?
Choosing the Appropriate Measure of Money
Debate over selection of the appropriate measure by which to
guide monetary policy must take into account the tradeoff between
the ability of the Federal Reserve to control any monetary aggregate
and the influence of that aggregate on overall demand. For example,
the monetary base, composed of currency held by the public plus
bank reserves, is probably the easiest for the Federal Reserve to control. But studies have shown that the relationship between the monetary base and aggregate demand is not very close. The narrow meas-
51
ures of the money stock (M-1A and M-1B) are somewhat harder to
control but in general have been more closely tied to aggregate
demand. Some economists argue that a broader measure of the
money stock, such as M-2, has the most stable relationship with aggregate demand, but the very breadth of this measure—including as
it does a mixture of the liabilities of several types of financial institutions—makes it rather difficult to control.
A related issue is how the various measures of the money stock
should be defined. The rapid evolution of the financial markets in
recent years (see the discussion in Chapter 2) has blurred the historical distinctions between the types of financial instruments and
rendered somewhat ambiguous what should be treated as "money."
These developments have been partly responsible for the recent instabilities in the relationship among the narrow monetary measures,
economic activity, and interest rates—instabilities commonly referred
to as shifts in money demand.
In light of these considerations, the Federal Reserve has chosen to
consider a family of monetary aggregates to impart a needed degree
of flexibility. Thus, while a narrow aggregate like M-1B has been accorded primary emphasis, there may be periods when it provides an
uncertain guide for monetary policy. At such times the Federal Reserve may put more emphasis on the broader measures of the money
stock, such as M-2.
Setting Numerical Targets
Once the Federal Reserve determines which monetary aggregates
to target, numerical target ranges must be set to achieve the appropriate degree of aggregate demand restraint. The targeting procedure could, for example, begin by determining the appropriate path
for nominal GNP that would be consistent with a gradual decline in
inflation. Abstracting from cyclical variations in real economic expansion, a steady reduction of inflation would imply a gradual decline in
nominal GNP growth.
Given this objective, the monetary authorities would need to estimate growth rates for the monetary aggregates that would satisfy the
needs of an economy moving along the presumed declining path of
nominal GNP. These would then become the basis for choosing the
target growth ranges. Over the past two decades a given growth rate
of the narrow measures of money has, on average, financed a 2 to 3
percentage point faster rate of expansion of nominal GNP, although
the pattern has varied from year to year. This relationship suggests
that the goal of a gradual decline in the growth of nominal GNP would
be consistent with a gradual lowering in the target ranges, although
not necessarily every year.
52
Starting with its 1975 targets as a base, the Federal Reserve has, in
fact, adhered to a policy of lowering the target ranges by a small
amount in each year (Table 6). What has been the result? In some
years (1977, 1978, and 1980) the targets were exceeded. In the
others there were apparent shifts in money demand such that actual
money growth was much lower than would be predicted on the basis
of historical relationships.
Predicted M-l growth for the last 5 years is shown in the third
column of Table 6, and the difference between predicted and actual
money growth is in the last column. As the figures indicate, those
years when actual money growth was in the target ranges (1976 and
1979) were periods in which there were the largest downward shifts
in money demand. In effect, actual money growth during these periods supported a greater-than-expected growth of nominal GNP. In
the remaining years money growth was nearer the rate expected from
historical money-demand relationships, but that growth was above
the target range. These two factors—money demand shifts and missing the targets—help to explain how such low values for the monetary growth targets could have persisted in a period of high nominal
GNP growth. Over the entire period more nominal growth was accommodated than is implied by the monetary targets and the historical relationships.
TABLE 6.—Monetary growth rates, 1975-80
Money growth (percent change from
Predicted
fourth quarter a year earner)
minus actual
growth
Target
Actual
Predicted1 (percentage
points)
Period
Fourth quarter:
1976 M-l
1977 M-l ..
1978 M-l ....
1979 M-l! ..
1980 M-lfe)..
4%6Vfe
4 -GYz
3 -6
3
4 -6Vfe
5.8
2 7.9
= 7.2
5.5
2*7.1
10.0
9.9
7.8
7.3
4.2
2.0
1.6
2.4
1
Predicted money growth based on Council of Economic Advisers money demand equation using actual historical data for GNP,
interest
rates, and prices.
2
Above
target range.
3
The target range for 1980 based on the newly defined aggregate M-1B was chosen to be consistent with a slowing in
monetary growth as compared to 1979.
* Preliminary.
Sources: Board of Governors of the Federal Reserve System (target ranges and actual money growth) and Council of Economic
Advisers (predicted money growth).
Although the continuing application of monetary restraint could
call for reductions of the monetary growth ranges over time, there
are a number of problems which have to be faced. In particular, the
question arises about the extent to which adjustments in monetary
targets ought to be made when structural changes occur in the economy.
In the last decade there have been several abrupt shifts in the relationships among important economic factors—disruptions related to
53
jumps in oil and food prices as well as to shifts in money demand.
The problem for the Federal Reserve is how, if at all, to adjust monetary growth targets in response to these changes. This requires an
evaluation of the likely direct impact of monetary and credit conditions on economic activity, as well as an assessment of how altering
the monetary targets would affect wages and prices.
Response to Supply-Side Shocks
When the economy experiences a supply shock such as the recent
surge in oil prices, the initial results are likely to be a reduction in
aggregate demand and a rise in unemployment and inflation. As discussed earlier, the Federal Reserve can respond in several ways. At
one extreme, the response would aim at accommodating the shock
completely, thus restoring real aggregate demand to its level before
the shock and avoiding any rise in unemployment. At the other extreme, the response would attempt to offset fully both the direct and
indirect inflationary effects. The intermediate position suggested earlier would be to accommodate the direct effects of the price shock
but seek to minimize indirect effects.
If the latter strategy were adopted, the monetary targets necessary
to pursue it would be identical to those prevailing before the shock
only by pure chance. Some adjustment would almost invariably be required, but whether the appropriate response entailed greater or less
monetary growth than the original target ranges would depend on
conditions prevailing in the economy at the time as well as on the
complex dynamic responses of wages and prices after the shock.
Moreover, the monetary authorities must remember that their credibility may be damaged if this strategy were to entail an upward adjustment in targets. Such a consideration may lead to a less accommodative position than analysis based strictly on aggregate demand
conditions would warrant.
Changes in Money Demand
Shifts in money demand confront the monetary authorities with a
different set of problems. Here the appropriate policy response is
clear in theory. For example, money-demand shifts have at times in
recent years resulted in sudden reductions in the amount of money
necessary to support a given amount of economic activity. Holding to
predetermined monetary targets in the face of such shifts would
mean a more accommodative policy than previously intended. Alternatively, by reducing monetary growth targets commensurate with the
demand shift, an unchanged degree of monetary restraint would be
maintained.
Although the response is clear in theory, in practice there are
many problems. It is difficult for the Federal Reserve to know until
54
well after the fact whether the money-demand relationship has
changed permanently. If one could observe money, interest rates,
and nominal GNP contemporaneously, one could judge whether
these developments were roughly in line with historical patterns. If
they appeared to be out of line, a shift in demand might be suspected. Two problems in ascertaining a shift are the long delay before
data on GNP are available, and the frequent revisions subsequently
undergone by both GNP and money data. Another problem is that
the "normal" demand for money cannot be estimated precisely, so
that even with timely data it may take several quarters before the
shift becomes evident.
Suppose that a money-demand shift is suspected of having occurred, but its magnitude is uncertain. How should the monetary authorities adjust the targets in a way that maintains a steady degree of
monetary restraint? First, the targets for the narrow aggregates might
be adjusted by shifting the midpoints of the longer-run target ranges
according to the "best guess" of how the structural shift will affect
the growth rate. Second, if the impact of the structural change is uncertain, the upper and lower bounds of the growth range may have
to be widened to reflect that uncertainty. Third, if—as in the past—
the broader money measures do not appear to be affected as much
by the structural changes, more emphasis could then be put on the
broader aggregates in guiding monetary actions. At such times the
relatively greater stability of the relationship of the broader aggregates to income and interest rates may give the monetary authorities
a somewhat better measure of monetary stringency. The risk in
making these adjustments is that the public may lose sight of why
such changes are being made—interpreting them as mere tinkering
or as devices aimed at loosening monetary restraint. Thus, the monetary authorities stand to lose credibility unless they can convince the
public of the need for such adjustments when they are appropriate.
Problems of Short-Run Variability
Once the annual numerical targets have been set, and adjusted for
major supply shocks or shifts in money demand if necessary, the next
question is how rigidly the targets should be followed during the
year. It is important to recognize that random and temporary fluctuations will inevitably occur, affecting both the demand and supply
sides of the financial markets. Empirical evidence suggests, however,
that deviations from a desired money growth path lasting as long as a
quarter do not destabilize aggregate demand if they are subsequently
corrected. Hence, rigid adherence to a longer-run target over periods
as short as a month or a quarter would require wide fluctuations in
interest rates, which could disrupt the economy unnecessarily. In
view of the importance of preserving Federal Reserve credibility, it is
55
essential for the public to understand that such short-run deviations
are not nearly as consequential as they are sometimes made out to
be.
The problem for the Federal Reserve is to distinguish these temporary disturbances from more permanent shifts in economic relationships for which some response may be necessary. Since the monetary
authorities cannot determine until well after the fact whether a divergence in money growth is permanent or self-correcting, they must establish short-run procedures that partially accommodate temporary
disturbances but respond with increasing intensity to systematic
trends. The current procedures for implementing the longer-run
growth target ranges include setting short-run money targets periodically during the year and managing reserves on a day-to-day basis to
meet those targets. These procedures are designed to achieve a
proper balance between avoiding unnecessary disturbances in the
money markets and responding in a timely fashion to sustained
movements of actual money growth away from the desired path.
In practice, this process is subject to a number of slippages, both
in the relationship between reserves and money and in the actual
control of reserves. Because different components of the money
stock are subject to different reserve requirement ratios—and some
are subject to no reserve requirements-r-the ratio of reserves to
money can vary unpredictably when funds are shifted among types of
deposits and among institutions. This hinders short-run monetary
control. Changes in reserve requirements and reserve coverage associated with the Depository Institutions Deregulation and Monetary
Control Act of 1980, discussed in Chapter 2, should reduce the variation in the money-reserve ratio, but only gradually. Until this transition period is completed, the variation in this crucial ratio will continue.
Even if the linkage between money and reserves were perfectly
stable and predictable, the Federal Reserve would still need to be
able to control total reserves. Current problems in forecasting the
various uncontrollable factors affecting reserves, in reserve accounting procedures, and in the management of the discount window
make it difficult to achieve the target for total reserves. The Federal
Reserve is working to improve its forecasting techniques and is considering other reforms that would increase its control over reserves.
Thus, one should not expect the Federal Reserve to adhere rigidly
to its annual monetary targets in every period during the year. Temporary and largely self-correcting disturbances will inevitably lead to
short-run deviations, but these deviations should have few permanent
economic consequences. The current targeting process of the Federal
56
Reserve provides some flexibility in the face of such temporary disturbances, even with unchanged annual monetary targets.
Conclusions
One of the major lessons that emerges repeatedly in the preceding
discussion is the need for understanding, by the public generally and
the financial community in particular, of the complexities of monetary policy. Monetary targeting provides an invaluable tool to increase monetary discipline, to communicate Federal Reserve intentions, and to evaluate performance. But the advantages of a semiautomatic rule to guide the monetary authorities are not absolute. In
a world where economic and financial markets are subject to major
and unpredictable changes, deviations from the Federal Reserve's announced intention to reduce steadily the annual target ranges may
sometimes be necessary. Targets, once set, may occasionally have to
be modified. And allowing short-run deviations of actual from targeted money growth may be called for if care is taken not to let them
persist. But if the public interprets occasional necessary changes in
the longer-run monetary target ranges, or short-run deviations of
actual money growth from those targets, as evidence that the Federal
Reserve has lessened its determination to fight inflation, the monetary authorities will be put in an untenable position. If they fail to
make the adjustment in the monetary targets that is called for by a
major change in economic circumstances, or if they attempt to avoid
all short-run deviations of actual from targeted money growth, monetary policy may produce unwanted results. If, on the other hand, they
do change the targets or allow temporary deviations, their actions may
be misunderstood by the public and their credibility consequently
impaired. The monetary authorities will face this problem once again
in 1981, as is discussed in Chapter 3.
INCOMES POLICIES
Even if they are followed with persistence and acquire a credibility
that favorably affects expectations, monetary and fiscal restraints are
likely to reduce inflation only slowly and at significant cost in lost
output and employment. Incomes policies attempt to lower these
costs. By directly influencing the setting of wages and prices, incomes
policies seek to decrease the inflation and increase the growth of
output and employment that result from any given degree of demand
restraint. A tight monetary target, for example, is compatible either
with a small reduction in inflation and zero economic growth or a
larger reduction in inflation and positive economic growth. By persuading workers and employers to accept lower pay and price in-
57
creases, an incomes policy tries to make the second combination possible.
Incomes policies range from the informal pressure on a few large
corporations and unions exerted by the Kennedy Administration to
the formal review of price and wage increases by the Council on
Wage and Price Stability (CWPS) to even more formal schemes based
on the tax system, examined in detail below. While mandatory wage
and price controls are the extreme form of an incomes policy, the
discussion in this chapter is confined to voluntary forms, that is,
forms which do not involve legal prohibition of excessive wage and
price increases.
An effective incomes policy encourages various groups in society to
accept lower wages and prices for the goods and services they supply
in the expectation that the wages and prices they pay will also be
lower. An incomes policy that gains widespread support can meet
these expectations. Workers agree to lower their wage demands, and
thus unit labor costs rise more slowly. Firms moderate their price increases, and therefore workers* costs of living rise more slowly. The
implicit agreement made among government, workers, and firms to
take simultaneous actions to slow the wage-price spiral through the
mechanism of the incomes policy is thus successful principally to the
extent that people believe it will be successful.
To have a lasting influence on inflation, an incomes policy must do
more than lower the current rate of increase in wages and prices. It
must also lower expectations about the future rate of inflation. Workers must believe that they can achieve their real wage demands with
lower nominal wage gains, and firms must believe that large nominal
wage gains or other cost increases will be hard to pass on into prices.
While our knowledge about the formation of expectations leaves
much to be desired, it does suggest that a short-lived reduction in
inflation may be insufficient to change expectations sharply. To be
successful in lowering inflationary expectations, therefore, an incomes policy probably has to be in effect for more than a single year.
Even more important, an incomes policy will have no hope of a
lasting effect unless it is accompanied by monetary and fiscal restraint. If there is excess demand in labor and product markets, or if
monetary and fiscal policies create expectations of excess demand,
the basic tenet of an incomes policy is destroyed. Individual employers or groups of workers cannot then assume that their own moderation will be matched by moderation from others.
Although incomes policies can help to reduce inflation, they also
tend to create losses of economic efficiency. Ideally, economic policy
seeks to lower the average rate of wage and price increase while leaving individual wages and prices to adjust freely around that average
58
in response to circumstances in particular markets. In reality, of
course, an incomes policy cannot operate on a statistical average but
must deal with the wages and prices of individual firms. Therefore,
incomes policies inevitably discourage to some extent movements in
prices and wages relative to each other. Over time, the failure of relative prices to adjust in response to changing conditions leads to
mounting losses of economic efficiency. The more rigid and mandatory in character the incomes policy, and the longer it is kept in
place, the greater will be the efficiency costs.
This Administration has judged the benefits of a relatively flexible
and voluntary incomes policy to be significantly greater than its costs.
In late 1978 the Administration set forth voluntary standards for pay
and price increases as the centerpiece of an incomes policy. This section of Chapter 1 briefly reviews that program, and then evaluates a
wide range of measures known as tax-based incomes policies (TIPs)
under which tax penalties or rewards are employed as a means of inducing moderation in wage and price increases.
THE PAY AND PRICE STANDARDS
For the past 2 years the Administration's incomes policy has centered on the voluntary pay and price standards. Administered by
CWPS, this program applied to firms of all sizes, but only large firms
were asked to submit data on pay and either prices or margins. The
standards set by CWPS were designed to reflect the structures of different industries. Compliance was encouraged by appealing to firms
and workers to restrain price and pay increases in the public interest.
CWPS also used public opinion and the threatened loss of government contracts to encourage compliance.
Although the standards were voluntary and were in place during
the difficult period of the 1979 OPEC oil price explosion, they
appear to have played a role in moderating inflation. Studies by
CWPS and the Council of Economic Advisers have estimated that
annual wage increases were 1 to IV2 percentage points lower during
1979 than they would have been without the standards. The consequent reductions in labor costs also appear to have been passed on
to consumers through lower price increases. A more recent evaluation of the pay and price standards by CWPS suggests that the program continued to have a moderating effect in the second year.
After 2 years of operation there seems to be general agreement
that the current pay and price standards could not continue to be effective if simply extended in their present form. Workers and firms
no longer appear to be willing to moderate wage and price rises in
the expectation that the standards will restrain inflation.
59
TAX-BASED INCOMES POLICIES
One way of strengthening a voluntary standards program would be
to supplement it with a tax-based incomes policy, or a TIP. Such a
policy would use the tax system to provide tangible incentives to
firms and workers to slow the rate of inflation.
As the discussion in this section later concludes, the most effective
kind of TIP would be one that rewarded employees of firms whose
rate of wage increase was below the standard. Such a program would
significantly reinforce the spirit of cooperation used in other voluntary forms of incomes policies without creating as many distortions as
a mandatory program. Firms and workers that agreed to moderate
their price and wage increases would be making less of a sacrifice
under a TIP than under other voluntary programs. And in sectors of
the economy in which relative prices and wages were too low, a TIP
would allow adjustments. The most serious distortions in relative
prices and wages that develop under mandatory controls would be
avoided under a TIP.
Several years ago the Carter Administration proposed to the Congress one particular version of a TIP—the "real wage insurance*'
program—but the proposal was not acted upon by the Congress, and
in fact was not subjected to widespread public discussion and debate.
TIPs continue to represent an important untried innovation in the
area of anti-inflation policy. While TIPs may impose administrative
and efficiency costs, those costs appear to be far less than would be
incurred by reducing inflation solely through restraining aggregate
demand.
Various kinds of TIPs have been suggested. Under a pay TIP, for
example, the government would set a standard for pay increases over
the coming year. Groups of workers whose average pay increase did
not exceed the standard would be in compliance. In one version of
the pay TIP, firms whose wage increases exceeded the standard
would be assessed a tax penalty. In another version, all workers in a
complying group would receive a tax credit, including individuals
within the group whose pay raises were above the standard. Similarly,
a price TIP would provide penalties or rewards to firms on the basis
of their average price increases relative to a set of standards.
In virtually all versions of the TIP it is the average rate of wage or
price increase within the firm that is compared with the standard for
purposes of determining tax penalties or rewards. With this approach, firms are able to change the relative pay and prices of subgroups of workers and products. Merit pay plans and promotions
that give individual pay raises in excess of the standard can still be
used to encourage productivity.
60
Although the flexibility of TIPs makes them attractive, using the
tax system to reduce inflation poses serious administrative problems.
These problems present the major obstacles to designing an effective
TIP program. The following sections discuss issues of design in some
detail, and a Technical Appendix to this chapter examines other
problems in measuring average pay increases.
Several choices must be made in designing a TIP. First, should it
dispense rewards or levy penalties? Second, should receiving the
penalty or reward depend only on being above or below the standard
(a "hurdle" TIP), or should the size of the penalty or reward be
graduated in accordance with the difference between the standard
and the actual pay or price increase (a "continuous" TIP)? Third,
should the TIP be a permanent or a temporary program? Finally,
should the TIP apply to pay, to prices, or to both? These choices require striking a balance among equity, efficiency, administrative ease,
and effectiveness in reducing inflation. The next section discusses the
first three choices in the context of a pay TIP, and presents estimates
of the cost and effect of a specific pay TIP. Another section discusses
price TIPs.
Varieties of Pay TIPs
For several reasons, a reward pay TIP is probably preferable to a
penalty pay TIP. A reward TIP encourages workers to cooperate with
a voluntary incomes policy by compensating them for accepting
lower nominal pay increases than they would otherwise receive. A
penalty TIP, whether levied on firms or on individuals, will tend to
undercut the spirit of cooperation necessary for a successful incomes
policy. This is especially true because incomes policies are often
thought to be more effective in restraining pay increases than in
limiting price or profit increases. In addition, although lower rates of
increase in wage rates and unit labor costs eventually result in lower
price increases, the effect is not immediate. In the short run, wages
may increase more slowly but prices might not. Workers would therefore be more willing to cooperate with an incomes policy that partially compensated them for accepting, at least in the short run, lower
real incomes than they would have earned in the absence of a TIP.
Since a reward TIP provides such compensation, at least in part if
not in full, it would be both more equitable and more acceptable to
workers than a penalty TIP.
Furthermore, a penalty TIP has other drawbacks. If levied against
firms, it might increase the rate of inflation. Some of these firms
would be able to pass on the cost of the TIP penalty to consumers,
especially if the above-standard increase were industry-wide. Some
prices therefore would rise as a result of the TIP. Levying the penalty
on individuals rather than firms raises different objections. Such a
333-5H0 0 - 81 - 5 : QL 3
61
penalty TIP would occasionally penalize employees who received
little or no pay increase but who worked for firms with large average
pay raises. For such individuals, a penalty TIP would add injury to
insult and would be perceived as very unfair.
A penalty TIP would raise government revenues, which could be
returned to the private sector through offsetting tax cuts. By contrast, a reward TIP would cost the Federal Government a substantial
amount in forgone tax revenues. In practice, this means that a
reward TIP would only be feasible when tax cuts were being considered. Since inflation and economic growth tend to drive up average
effective tax rates, however, periodic tax reductions will be feasible
if the share of Federal spending in GNP is kept from rising.
Therefore, the key budgeting issue posed by a reward TIP is its effectiveness, compared to other forms of tax reduction, in meeting
economic goals.
One difficult problem that must be addressed in designing a TIP is
the administrative burden it would impose on private firms and on
the government. A TIP limited to a few thousand large firms with
computerized personnel records would have much smaller public and
private administrative costs than a TIP that included millions of small
firms.
But limiting a pay TIP to large firms seems very unlikely to secure
the kind of support needed to enact and operate a successful incomes policy. A limited reward TIP would be vigorously opposed by
workers in small firms, who would argue, rightly, that they were
being deprived of a potential tax cut. But a limited penalty TIP
would tend to reduce the real income of workers in large firms and
would be vigorously opposed by large firms and large unions.
A second issue in the design of a pay TIP is whether the penalty or
reward should be a single amount based only on the wage increase
being above or below the standard (hurdle TIP), or whether it should
be graduated according to the difference between the standard and
the actual increase (continuous TIP). A hurdle TIP only encourages
firms and workers to have pay raises below the standard. It provides
no direct incentive to lower pay raises that were already below the
standard or, realistically, to reduce pay raises that were far above the
standard. In contrast, a continuous TIP whose penalty or reward depended on the difference between the standard and the actual pay
raise would provide an incentive to lower all pay increases. Lowering
a pay raise that was above the standard would result in a smaller penalty. Lowering a pay raise that was already below the standard would
mean a larger reward.
The main advantage of a hurdle TIP is administrative. Under a
hurdle TIP, firms that expected to grant pay raises above the stand-
62
ard or that thought the administrative costs of compliance were too
high would not be required to keep records. In contrast, under a
continuous TIP that penalized firms or workers above the standard
as well as rewarded those below, all firms would have to keep detailed records and would have to file additional schedules with their
tax returns.
A reward-only continuous TIP would eliminate record-keeping requirements for noncomplying firms, and, as emphasized above, it
would also be more equitable than a continuous TIP that included
penalties. Such a TIP could offer tax credits, for instance, of 3, 2, or
1 percent of earnings, to employees of firms with average pay raises
that did not exceed 50 percent, 75 percent, or 100 percent of the
standard. However, even this simple continuous TIP would probably
generate more disputes than a hurdle TIP, since firms would have incentives to understate their pay increases to appear to be in a lower
bracket. Under a hurdle TIP, only firms near the standard would face
such incentives.
The final major issue in designing a TIP is whether it should be
permanent or temporary. The answer seems to be that a permanent
TIP would not be feasible because of the distortions it would create
by discouraging changes in relative wages. A TIP might introduce
further distortions as people changed their behavior to circumvent
the intent of the policy while remaining technically in compliance
with the standard. For a while the distortions created by a carefully
designed TIP would probably be small. But as relative prices and
wages wandered farther from equilibrium levels, the distortions
would become larger and the effects on inflation smaller. The economic costs from the distortions of an effective temporary TIP would
be acceptable when balanced against the larger costs of relying solely
on demand restraint to lower inflation. Because the distortions would
build up over time, however, the costs of a permanent TIP would
eventually exceed benefits.
On balance, given all the foregoing economic and administrative
considerations, a temporary hurdle TIP—a tax credit to groups of
workers whose average pay increase does not exceed a specified
standard—seems superior to the other variants. Because keeping records and complying with the standard would be voluntary in this type
of TIP, firms that found the administrative costs too high could
choose not to participate. As with all forms of TIPs, relative wage
changes could still occur in response to economic and other developments, although increases in excess of the standard would "cost"
workers the TIP tax credit. The efficiency costs would be small at
first, but over time the distortions of the TIP would rise and its effectiveness would fall.
63
Together with a "jawboning" campaign aimed at producing widespread compliance with the standard by lowering expectations of inflation, such a TIP could lower the rate of inflation. Without jawboning, the cost of inducing compliance among workers with anticipated
pay raises far above the standard would be prohibitive. Even workers
who expected pay raises near the standard might be reluctant to sacrifice part of a pay raise that might be built into future wages in exchange for a small tax credit that only lasted for 1 or 2 years. The
major appeal of wage moderation is that if everyone cooperates by
accepting a smaller wage increase, the lower nominal wage gains will
be matched by lower price increases. Real wages will not fall, but inflation will. A TIP alone cannot provide sufficient economic incentives to make a low wage increase more attractive than a large one.
However, with public appeals to moderation and clear evidence of
fiscal and monetary restraint, a TIP can contribute to slowing the inflationary spiral.
Costs and Effects of a Reward Pay TIP
The preceding discussion concluded that the most desirable type
of pay TIP would be a temporary hurdle type that provided a reward
for keeping pay raises below the standard. To examine the possible
usefulness of such a TIP in dampening inflation, the Council of Economic Advisers attempted to estimate the costs and effects of a
reward TIP open to all employees, public and private. The reward
was assumed to be a fixed percentage of wage income, up to the
maximum social security wage base of $29,700. It was also assumed
to be taxable and to be refundable to workers whose income tax liability was less than the reward. The average rate of wage increase in
the absence of a TIP was assumed to be 9.7 percent.
The probability that a group of workers would accept a wage increase at or below the standard was assumed to depend upon the
size of the reward and the relationship of the group's potential wage
increase to the standard. The smaller the potential wage increase relative to the standard and the greater the reward, the higher the probability of compliance. The results of this estimating procedure obviously depend very heavily on the specific relationships used to calculate the probabilities of compliance for various groups of workers.
Since there is no historical experience on which to base these relationships, the estimates presented below are simply examples based
upon a considered judgment of the issues.
The costs, effects, and compliance rates that would result from various combinations of standards and rewards were estimated under
the assumptions mentioned above. Illustrative combinations of standards and rewards at two levels of cost to the Federal budget are presented in Table 7. These estimates suggest three things. First, for a
64
given standard, as the reward and the cost rise, so does the reduction
of wage inflation. Second, there is some tradeoff between standard
and reward. That is, a program with a high standard and a low
reward may cost the same as a program with a lower standard and
higher reward. Third, for a given budgetary cost, a low-standard, highreward combination tends to be more effective in reducing wage
inflation than a high-standard, low-reward combination. The selection
of that combination may create a problem of credibility. A TIP that is
relatively effective in restraining pay increases for a given cost will
tend to have lower compliance rates than a program with a higher
standard and lower reward but which has less of the desired effect on
compensation. This happens because higher standards put more
people in compliance who do not have to modify their wage behavior.
TIPs
TABLE 7 .—Estimated effects and compliance rates of various pay
Standard — Reward
(percent)
Compliance rate
(percent)*
Effect on
wage inflation
(percentage
points)
$12 billion budgetary cost:2
7
7y 2
8
— 2Y2
_ 2V*
2 .
50 2
55 9
61.8
-0
93
54.6
59.8
65.3
-1.09
-1.01
-.91
87
-.79
$16 billion budgetary cost:2
7
7y2
8
-
3
2%.
2V2 .
1
2
Percent of workers in establishments that have an average pay raise less than or equal to standard.
Net tax expenditure less reduction in Federal compensation. Federal Government pay increase assumed to comply with
standard—reduced from assumed economy-wide wage increase in absence of pay TIP.
Source: Council of Economic Advisers.
A TIP should be judged not only on its initial impact, but on its
full effect over a 2- or 3-year period. A TIP continued for 2 years
with a reduced pay standard in the second year could make a significant contribution to lowering inflation.
PRICE TIPS
Experience with incomes policies here and abroad, including the
pay and price standards, suggests that a pay TIP is easier to administer and likely to cause fewer distortions than a price TIP. Nevertheless, a price TIP may be a necessary complement to a pay TIP because restraints on pay alone, even with a reward TIP, might appear
inequitable. Furthermore, a price TIP could speed up the effect of a
pay TIP by shortening the lag between the lowering of pay increases
and their effect on price increases.
It would be unrealistic to set a single price standard for all firms.
Productivity growth among industries varies substantially, as do
changes in the prices of raw materials and other costs of production.
65
Recognizing this, CWPS in 1978 established a price deceleration
standard which called for all firms to reduce the rate of their average
price increases in the program year by one-half percentage point
below their increases in a base period. Systematically different movements in productivity and other cost elements among firms and industries should be at least roughly reflected in their base year experience. CWPS found, however, that it had to permit firms to devise
various ways of adjusting for uncontrollable cost increases and had to
provide separate standards for certain industries, like retailing and
food processing.
For several reasons, prices are more difficult to measure than pay.
In some industries, such as wholesale and retail trade, prices for the
same item vary from week to week. Some firms also give quantity discounts, so that prices for the same item vary from customer to customer. Even if the price of each item did not fluctuate, a small store
with only a few employees may sell thousands of different products.
Such a firm might have little trouble with the paperwork necessary
for a pay TIP, but a price TIP would probably be beyond its administrative capabilities.
Furthermore, a price TIP would face problems posed by new products and quality change in old products. Since new products do not
have old prices, no price increase can be calculated for them. Instead, a price standard might have to be based on the firm's average
markup over input costs or on the prices of similar products sold by
the same firm or other firms. A related issue is the treatment of quality changes. Disregarding these changes might be the best solution
for a temporary price TIP, even though doing so would tend to discourage innovation. Alternatively, a program that exempted goods
whose quality had changed, and therefore allowed price increases
above the standard, would encourage minor product changes that did
not really increase quality. Finally, products whose quality improved
could be treated like new products, with price increases based on
average markup or on the price changes of similar goods.
A price TIP would have to allow firms to pass through to consumers certain increases in the cost of their inputs. For instance,
a utility company could not be expected to keep price increases
below a TIP standard for long if the price of the oil it used to generate electricity suddenly doubled. To treat the utility fairly, a price
TIP would have to allow the firm to raise electricity prices to cover
the increased cost of oil. The problem in designing a price TIP is to
decide which costs should be granted exemptions, while still encouraging firms to substitute cheaper inputs for more expensive ones.
Given the greater complexity of devising a workable price standard, a price TIP should probably levy penalties and be confined to
66
large firms. Even among large firms it may be desirable to exempt
industries like retailing, in which competition is likely to keep average
prices in reasonable relationship to costs. Market forces also make it
unlikely that exempting small firms and competitive industries would
lead to substantial inequities or to a failure to pass on to consumers
the benefits of wage moderation.
CONCLUSIONS
There are no costless ways to reduce inflation. Using demand restraint alone imposes very large costs of forgone output and unemployment for modest reductions in inflation. A successful TIP can
shift more of the effect of demand restraint from output to prices
and thus can cut substantially the costs of reducing inflation. Although a TIP would itself impose administrative and efficiency costs
on the economy, the costs for a short period of time would be small.
They would surely be outweighed by the benefits in reduced inflation
and lower unemployment that a TIP would bring.
It is useful to distinguish between two broad types of TIP, each of
which would have quite different economic objectives. The first would
be a continuous TIP that would be made a permanent part of the tax
code and that would set graduated rewards and penalties according
to the size of a firm's wage (and possibly price) increases. Such a TIP
would be an attempt to make a major and permanent change in the
market system so as to encourage less inflationary wage and price behavior on the part of individual firms. This chapter has suggested
that the administrative problems and the distortions introduced into
the wage structure would tend to grow over time, while the effect on
inflation would decline. Thus, the costs of a permanent wage TIP
would soon exceed its anti-inflationary benefits.
A second form would be a temporary hurdle TIP based on rewards
for wage moderation and would be part of a broad public campaign
for voluntary restraint in wage and price increases. The objective of
such a TIP, perhaps applied for 2 successive years, would be to provide several downward shocks to the inflationary process, in effect reversing some of the upward shocks which contributed to today's inflation rate. Although such a TIP would also involve administrative
costs and distortions in labor-market behavior, these costs would initially be far less than the benefits of the TIP in shortening the period
of restraint and slow growth needed to reduce inflation.
As emphasized earlier, a TIP cannot substitute for demand restraint. The latter must also be present; otherwise, any gains produced by a TIP are likely to vanish quickly under the pressure of
excess demand. Since a reward TIP would reduce budget revenues
like any other tax cut, it must fit into a budget plan that makes tax
cuts possible. But if the growth of Federal spending is restrained, pe-
67
riodic tax reductions will be both feasible and necessary in the years
ahead as inflation and economic growth push taxpayers into higher
brackets and raise average effective tax rates.
TIPs are novel, and most people are unfamiliar with either the opportunities they present or the difficulties they pose. It is therefore
highly unlikely that a TIP could take effect in 1981. But it
would be useful for the public in general, and the Congress in particular, to begin evaluating the pros and cons of TIPs so that when the
time comes for the next round of Federal tax cuts a TIP program will
be seriously considered.
INCREASING INVESTMENT, SUPPLY, AND PRODUCTIVITY
Economic policy must place greater emphasis on supply-oriented
measures during the decade of the 1980s for a number of reasons.
First, an increase in the growth of aggregate supply, and especially in
the growth of productivity, can raise the growth of output and employment that is consistent with a steady reduction in inflation.
Second, reducing this country's vulnerability to higher oil import
bills will require a substantially increased investment in alternative
energy sources over the next 10 years. Finally, even if inflation
were not a problem, a speedup in the lagging rate of productivity
growth would be essential to maintain the historic advance in our
standard of living.
The remainder of the chapter summarizes what has been happening to productivity in the United States and briefly examines some of
the reasons why the rate of productivity growth has declined. It also
examines the need to increase the share of national resources allocated to capital formation and the Administration's response to that
need. Finally, it discusses the relationship between demand- and
supply-side policies, and suggests how they must be integrated.
PRODUCTIVITY
Advances in productivity are the foundation of advances in our
standard of living. Increases in output per worker lead to increases in
real income. Healthy increases in productivity can free the funds
needed to improve the conditions of disadvantaged groups while
lessening the need for sacrifice elsewhere. Thus, when productivity
growth declines, these other advances also are delayed. But expectations of a rising living standard persist. They perpetuate demands for
real income gains which can no longer be met and which lead to inflationary increases in wages and to growth in government spending.
Since the mid-1960s, the growth rate of labor productivity has
been declining from its postwar highs. In recent years the decline has
been so marked as to pose a major challenge to public policy. Be-
68
cause declining productivity growth brings with it prospects for
slower improvement in our standard of living and contributes to inflation, a program to stimulate productivity growth must be a keystone of economic policy.
Table 8 summarizes the postwar history of growth in productivity. The data show a gradual worsening of the productivity decline as
time has passed, with the last few years showing sharp declines. While
just completed revisions of the data may change the magnitude and
timing of the slowdown, its existence and its costliness are unarguable.
TABLE %.—Labor productivity growth,
1948-80
[Percent change per year]
1948 to
1965
Sector
Private business sector..
Nonfarm
1965 to
1973
1973 to
1979
1978 IV to 1979 III to
1979 IV
1980 III
3.2
0.8
-0.9
-0.1
2.6
.6
-1.1
.1
Note.—Data relate to output per hour for atl persons.
Source: Department of Labor, Bureau of Labor Statistics.
Some of the decline in productivity results from the way we measure it. In particular, productivity measurement counts as an input the
costs of governmental and private actions to ensure a cleaner environment, a healthier workplace, and safer consumer products, but it
does not count the benefits of these actions as forms of output.
It is difficult to interpret measures of productivity such as those in
Table 8 without first distinguishing between changes caused by the
business cycle and changes caused by longer-term factors. Because it
is costly to hire or to fire, businesses typically do not reduce their
work force proportionally when demand slackens or increase it proportionally when demand is expanding. Chart 4 presents the recent
history of productivity growth after correction for these cyclical influences. As the chart vividly shows, productivity grew very slowly
during most of the years since 1973, and on several occasions actually declined.
It would not be surprising to discover that the slowdown has many
causes. Measured productivity growth is a distillation of a number of
changes and influences. Many researchers have been in agreement
that a number of factors have contributed in roughly equal magnitude to the slowdown. These factors have been discussed in past Reports. In addition to increased governmental regulation, particular attention has focused on increases in energy prices, declines in the rate
of growth of capital relative to labor, and decreases in spending on
69
Chart 4
Productivity Adjusted for Cyclical Variation
PERCENT CHANGE FROM 4 QUARTERS EARLIER
-1
- 2 I • •. I . • i I • • • I • . . Ii • . I • i • I . . . I i . . I .i. I M ) I i • i L i > I • i • I • i i I
1965 66
67 68
69 70 71
72
73
74 75 76 77 78 79 80
NOTE.—DATA ARE FOR PRIVATE NONFARM BUSINESS, ALL PERSONS.
SOURCE: COUNCIL OF ECONOMIC ADVISERS.
research and development. But there has also been widespread
agreement that a large portion of the slowdown has not yet been explained.
INVESTMENT NEEDS
One of the causes of the decline in productivity growth has been
the decline in growth of the capital stock relative to the labor force.
Because a rising'share of capital formation has been devoted to adjustments to cope with higher energy prices and to complying with
environmental and safety regulations, a diminishing fraction of investment has been available to effect gains in productivity. Although
these developments may not have been the primary causes of the
productivity slowdown, increasing capital formation would nevertheless be an effective way of reversing the slowdown. Many of the factors affecting productivity cannot be directly or immediately influenced by the government, but economic policy—especially tax
policy—can influence the pace of capital formation.
As a general rule, an increase in the amount of capital invested per
worker is associated with an increase in output per worker—i.e., in
increased productivity. There are two reasons for this. First, processes that generate more output per worker usually require more capital
per worker, and second, increasing the ratio involves putting newer
capital into place. The newer capital is likely to* embody more ad-
70
vanced technology and will therefore increase the efficiency of the
capital stock.
During the decade of the 1960s the capital-labor ratio grew at an
average rate of about 3 percent per year; over the last 5 years, however, the ratio has remained roughly constant. This development has
been due to both the slower growth in the capital stock and to the
more rapid growth in employment and hours worked (Table 9). The
1974-79 deceleration in the growth of capital is somewhat at odds
with the rough stability in the investment share of GNP over the
same period and requires some explanation. A greater share of investment is now being spent on relatively short-lived assets. The
ratio of investment in equipment to investment in nonresidential
structures has increased in recent years. The result is that each dollar
of gross investment now yields less net investment because the capital
stock is depreciating more rapidly.
TABLE 9.—The investment share, and growth in the capital-labor ratio, 1949-79
Percent change, average annual rate
(end of year to end of year)
Real business fixed
investment as
percent of1 real
Net capital
Capital- CapitalGNP
stock
EmployHours3 employhours
(nonresi-s
ment 3
ment
ratio
dential)
ratio
Period
1949-59
9.1
4.0
1.1
0.7
2.9
3.2
9.8
4.6
1.6
1.2
3.0
3.3
1969-74
10.5
4.2
1.2
.5
2.9
3.7
1974-79
10.3
3.0
3.1
2.8
-.1
.2
1959-69
....
1
Average annual investment-GNP ratio, in percent.
Net fixed nonresidential business capital, 1972 dollars, end of year.
For private business, all persons. End of year calculated as average of year's fourth quarter and following year's first
quarter.
Sources: Department of Commerce (Bureau of Economic, Analysis) and Department of Labor (Bureau of Labor Statistics).
2
3
To restore the growth of the capital stock per worker to that of the
1960s would require that the share of investment in GNP rise by at
least 1 percentage point from its recent average of about 10 Vz percent. Such a development should, at a minimum, restore the productivity growth lost from this source. Further improvement would require yet more investment.
Apart from the necessity of improving the productivity growth rate,
there are other reasons why future economic policy should encourage increased investment. Last year's Report discussed these needs in
detail. The average age of the capital stock at the end of 1979 was
7.1 years. This suggests that much of our plant and equipment was
put in place when oil prices were much lower than they are now.
Higher energy prices have shortened the service life of older and less
energy-efficient capital and made it in the national interest to speed
up its replacement. The magnitude of these investments is difficult to
71
estimate, but it could represent perhaps another 1 percent of GNP
per year.
Additional investment requirements arise from the need to continue domestic production of oil, coal, and natural gas at sharply higher
investment costs per unit of energy produced, and to expand the investment devoted to alternative energy sources. Conservatively estimated, they amount to about another one-half percent of GNP.
During the late 1960s and early 1970s, before the first surge in oil
prices, real business fixed investment averaged about lOVfe percent of
GNP. In 1978-79, the investment share averaged slightly higher,
around 10% percent, probably reflecting additional investment in the
energy industries. On the basis of a rough judgment, continuation of
investment in the neighborhood of 10y2 percent of GNP would meet
the "normal" requirements of a moderately growing economy and
hold the capital stock per worker approximately constant, as it has
been in the past 5 years. But it would not provide for an expansion
of capital per worker or for the Nation's increased needs for energy
investment.
Meeting these objectives will require substantial additional investment. Since the growth of aggregate demand and total GNP will be
constrained in the years immediately ahead by the need to reduce inflation, the extra investment cannot come from additional GNP
growth but will have to displace consumption or government spending, the other major components of GNP. According to the estimates
presented earlier, the share that investment takes in total output will
have to rise substantially from a normally expected lOVa percent or
so to 12V2 to 13 percent, and the combined share of consumption
and government spending will have to fall by a corresponding
amount.
It is virtually certain that such a large increase in the investment
share will not be forthcoming without deliberate government policies. The major elements of such a policy lie in a combination of
Federal tax measures and expenditure control. In the future, Federal
personal tax receipts will take a steadily increasing share of personal
income as inflation pushes taxpayers into higher brackets. As oil
prices are decontrolled, revenues will be transferred from purchasers—who will pay the higher prices—to the Federal Government
through the windfall profits tax. For both of these reasons the ratio
of taxes to GNP will tend to rise and the growth of consumption will
be depressed. If Federal expenditures are controlled so that their
share of GNP does not rise, periodic tax reductions will be possible.
Indeed, they will be necessary to prevent even moderate economic
growth from being choked off. If a sizable fraction of those tax reductions are of a kind which concentrate on encouraging investment
72
rather than restoring the growth of consumption, the share of investment in GNP can be raised. Of course, if the share of Federal expenditures in GNP is not merely stabilized but reduced, the room for
increasing the investment share of GNP through investment-oriented
tax cuts will be even larger.
Within this framework, tax reductions designed to increase the
share of investment in GNP must meet two requirements: They must
increase the demand for investment goods, and simultaneously they
must increase saving—i.e., they should not increase consumption.
These two requirements are closely related, but they are not the
same. There are a number of measures that might seek to increase
saving but have little if any effect on the volume of business investment. Forgoing tax cuts, letting effective tax rates increase, and creating a large Federal budget surplus, for example, would appear to
be one way of increasing national saving. Although such a policy
would make possible a decline in interest rates, it would also create a
substantial fiscal drag, reduce economic growth and private saving,
and probably yield no increase in business investment spending.
Conversely, measures that increase investment demand without
making room for it with an increase in saving will yield an excessive
growth in total demand and renewed inflationary pressure. Both aspects of the problem are important. Given the determinants of investment, what tax policies can best increase the demand for investment goods? What form of tax reductions are most likely to be channeled into saving rather than consumption?
INVESTMENT DETERMINANTS AND INFLATION
Expectations about future growth are critical in determining the
volume of investment demand for the economy as a whole. But the
essence of the earlier discussion was that investment needs to increase by more than the amount that would be associated simply with
a normal expansion of output. A number of factors influence the
amount of capital that firms want to use to produce a given amount
of output. Chief among them are the attractiveness of the return on
capital investment as compared with other uses of investors' funds,
the perceived riskiness of corporate investment, and the cost and
availability of capital.
One lesson that has been learned in recent years is the deleterious
effect of inflation on investment. High inflation rates increase the
perceived riskiness of investment, and this increased uncertainty
makes planning for future capital needs more difficult. The information about relative demand that is contained in price changes becomes clouded when inflation is high. In addition, increasing rates of
inflation are ordinarily accompanied by the expectation of sharply
73
higher interest rates and monetary stringency. The expected slowing
of growth in demand reduces the incentive to add capacity.
But by far the most important effect of inflation on investment is
its impact on tax accounting provisions and depreciation allowances.
Depreciation is a cost of earning income from fixed capital assets.
This cost is the reduced value of the asset due to use, aging, and obsolescence. The depreciation allowed for tax purposes is based on
the historical cost of an asset. When inflation occurs, allowable depreciation is reduced relative to the cost of replacing the asset at
today's price. Inflation therefore raises the tax on capital and reduces
the rate of return on investment, and this problem worsens as the
rate of inflation increases.
The inflation-induced increase in the tax on income from business
plant and equipment is partly offset by the inflation-induced reduction in the tax burden of borrowers. Firms are allowed to charge the
full value of their interest payments against income, even though a
portion of these higher interest payments amounts to the repayment
of real capital to lenders. The effect on the return to investment of
this "excess" deduction varies with the proportion of investment that
is debt-financed. It also varies with the extent to which inflation is
reflected in interest rates. Since an important part of investment is
not debt-financed, it is clear that inflation's tax-increasing impact on
the value of depreciation allowances outweighs the tax-decreasing
impact of excess deductions on the return to business investment.
Some have suggested that the inflation-induced distortion of tax
depreciation could be corrected by indexing the value of existing
business assets to allow replacement—rather than historical—cost depreciation. But indexing the value of assets would ignore the interest
rate offset described in the prior paragraph. Moreover, as with all indexing schemes its administrative and accounting problems would be
quite severe, and almost any simple index imaginable would introduce distortions of its own. For these and other reasons, indexing is
not an attractive means of correcting the inflation-induced distortion
in depreciation allowances.
TAX MEASURES TO INCREASE INVESTMENT
Policymakers have three principal measures to influence investment
through the tax system: changes in depreciation allowances, changes
in the investment tax credit, and changes in the corporate income tax
rate.
Since the effect of inflation in depressing the value of depreciation
is such an obvious factor in the recent decline in after-tax rates of
return on capital assets, the liberalization of depreciation allowances
is an attractive way to enhance investment. It not only provides an
overall incentive for investment but, if carefully designed, it can also
74
correct some of the distortions in investment that accompany inflation. Under proposals for accelerated depreciation, the allowable depreciation on capital assets would be increased. This would permit
firms to write off their capital purchases faster. The changes would
affect two determinants of business investment. First, they would increase the after-tax yield of capital investment, and thus its attractiveness. Second, they would increase business cash flow and thereby
supply a portion of the funds needed to finance additional investment.
Increases in the investment tax credit would have a similar impact
on investment incentives. The investment tax credit reduces the purchase price of eligible equipment. It thus provides a direct incentive
by raising net return and by increasing after-tax cash flow.
A reduction in corporate income tax rates, on the other hand, influences investment by increasing after-tax profits. This tends to be a
less effective stimulus to investment than either accelerated depreciation or increases in the investment tax credit because it has a smaller impact on the net return from new purchases of capital assets. In
addition, depreciation liberalization or an increased investment tax
credit are only available to a firm to the extent it invests, but a corporate tax reduction would be available whether investment is undertaken or not.
The President's Economic Revitalization Program contains several
elements that would significantly improve the outlook for business
investment by offering direct incentives to invest in new plant and
equipment as well as support for business cash flow. The two major
investment incentives in the program are expansion in the coverage
of the investment tax credit and a simplified and liberalized form of
depreciation allowances.
The proposed changes in the investment tax credit would allow
firms to claim full credit for all equipment purchases, even shortlived assets that currently are allowed only a portion of the tax credit.
In addition, the investment tax credit would be made partially
refundable. Under the current law, the credit can be used to offset
the first $25,000 of tax liabilities plus up to 70 percent (rising to 90
percent by 1982) of liabilities in excess of $25,000. But the proposed
change would allow firms to claim 30 percent of the value of the
credit even if they had no tax liabilities for the year. In this way,
firms with substantial investment needs but with little or no current
earnings would be supported in their efforts to rejuvenate and
expand their capital assets. Among these are both younger and smaller firms that are just beginning to grow and larger industries undergoing transition, such as autos and steel.
75
The proposal for tax depreciation—the Constant Rate Depreciation
(CRD) proposal—would allow firms to accelerate depreciation on
new equipment and new structures. Under this proposal, the rate of
depreciation allowable over the life of the typical capital asset would
be roughly 40 percent larger. In addition, the CRD proposal would
greatly simplify depreciation accounting.
The President's proposed depreciation reforms share certain
common features with two recent tax proposals: the bill reported by
the Senate Finance Committee last fall, and the so-called "10-5-3"
proposal. Both proposals would liberalize depreciation allowances by
shortening the tax life of capital investments. Both would also simplify business accounting by significantly reducing the number of
asset categories that firms would have to keep track of. There are important differences, however. In the President's proposal the reductions in tax life have been designed so that there would be, on average, a similar increase in depreciation allowances across all kinds of
assets. The "10-5-3" proposal provides very large increases in the
allowed depreciation for longer-lived assets but little or no change in
the depreciation allowed for many shorter-lived assets. The tax life
for structures would be reduced from an average 30-35 years to just
10 years, but, for example, automobile purchases would be allowed a
lifetime of 3 years, exactly the same as under current tax laws. Because the "10-5-3" proposal would grant uneven benefits across
asset types, the demand for investment goods would be significantly
skewed from what would be dictated by economic considerations
alone. In addition, the "10-5-3" proposal includes a complex phasein schedule that may have the perverse effect of delaying capital investment.
Late in the last session of the Congress, the Senate Finance Committee reported a tax bill which also included a depreciation proposal. The Committee's bill would have established a limited number of
asset classes with shorter tax lives than under current law. While the
Committee's proposal differed from the open-end accounting of depreciation embodied in the President's proposal, its impact on the
value of depreciation and on investment incentives would have been
closer to that of the President's approach than is the "10-5-3" proposal.
THE IMPACT OF THE ADMINISTRATION'S INVESTMENT INCENTIVES
The investment tax credit and depreciation proposals in the Economic Revitalization Program would reduce the cost of capital to
firms by roughly 5 percent and increase corporate cash flow by $9
billion during 1981 through reduced tax liabilities. By 1985 the increases in cash flow would total nearly $30 billion annually. It is anticipated that business fixed investment will be 5 to 10 percent
76
higher than it would otherwise be by the end of 1982, with smaller
additional gains thereafter.
These estimates are derived from statistical relationships which link
business investment demand not only with investment incentives,
such as accelerated depreciation or increases in the investment tax
credit, but also with expected capacity needs and demands for
output. According to the historical experience which underlies these
estimates, increases in investment demand can be affected by accelerated depreciation even when capacity utilization is relatively low—as
it is forecast to be over the near term (Chapter 3). Indeed, the recent
historical evidence offers additional support for the view that investment spending could proceed at a rapid pace without extraordinary
tightness in industrial capacity. During 1976, the first full year of
growth following the 1974-75 recession, real business fixed investment grew 5.3 percent despite the relatively low (79.5 percent) rate
of manufacturing capacity utilization during that year. In the following year, growth in real business fixed investment was 11.9 percent,
while the utilization rate rose to only 81.9 percent.
SAVING
Any increase in the investment share of GNP must be accompanied
by a corresponding increase in the saving share of GNP. Total national saving comes from three sources: individuals save out of their
personal income; businesses retain, and thereby save, some of their
profit income; and governments save when they run a budget surplus, or dissave when they run a budget deficit. It is total national
saving that supports total investment. A portion of saving flows into
residential investment, investment in inventories, and net foreign investment. The remainder is available to finance business purchases of
plant and equipment.
The Federal Government has numerous policy options for changing the level of national saving and thereby supporting a higher level
of aggregate investment. But it is important to realize that no one
sector works in isolation. A given sector's increase in saving may be
partially or fully offset by another sector's dissaving.
Personal tax cuts designed to increase specific types of saving, such
as an increase in the amount of tax-free interest from passbook savings accounts, are likely to be the least effective ways to increase total
saving. They will increase the flow of saving into those instruments
whose after-tax returns have been raised, but they will do so primarily at the expense of those forms of household saving whose after-tax
returns have not been raised. They will reshuffle personal saving but
increase its amount very little.
General reductions in personal tax rates would increase personal
income, which would itself lead to higher saving. In addition, the
333-540
0 - 8 1 - 6
:
QL
3
77
higher after-tax return on saving may induce still further increases in
saving. This is more likely to occur if the personal tax cuts are directed at higher-income individuals who tend to save relatively more of
their additional after-tax income. But there is substantial evidence
that, in any case, the personal saving rate responds very little to
changes in rates of return or in the tax structure. A large part of the
personal tax reduction would therefore go toward increasing consumption.
The most effective avenue at the disposal of the Federal Government to increase the volume of saving is to reduce taxes on business
income. Cuts in business taxes would lower government saving, but a
large part of the tax cut would flow into business saving. Business
after-tax cash flow would be increased. In time, part of the increased
cash flow would lead to higher corporate dividends. A very large
part, however, would be allocated to an increase in retained earnings—i.e., saving. Evidence suggests, for example, that corporations
save more than 50 cents from every additional dollar of after-tax
income. Furthermore, some portion of any dividend increase would
find its way into personal saving. By contrast, giving the tax cut directly to households would have a smaller effect on saving because
households are likely to save a much smaller fraction of every dollar of
additional disposable income.
It seems wise, then, to focus government efforts on the sector most
likely to allocate a large part of any tax relief to saving—business. A
business tax cut would result in relatively large saving, and incentives
to expand investment demand would simultaneously be improved. It
is this approach that lies at the heart of the President's Economic Revitalization Program.
THE INTEGRATION OF DEMAND-SIDE AND SUPPLY-SIDE
POLICIES
Tax reductions which induce additional saving and investment will
contribute to faster productivity growth, and this in turn will help
reduce inflation. A number of critical questions arise, however, in determining the appropriate type, magnitude, and timing of any tax reductions. First, what kind of an increase in productivity might reasonably be expected from investment-oriented tax cuts of various sizes,
and what would be the associated reduction in inflation? Second, to
what extent would the improvements in productivity and other
supply-creating aspects of a tax reduction offset the increase in aggregate demand they would cause? More generally, how would tax
cuts aimed at increasing supply fit into the framework of fiscal restraint that is required to reduce inflation?
78
EXPECTED PRODUCTIVITY GAINS
Although the effect on investment from a given loss of tax revenues would vary with the form of the reduction (accelerated depreciation, larger investment tax credit, or lower corporate income tax
rates), the evidence suggests that each dollar of reduction in annual
business taxes might, at the outside and after several years, generate
slightly more than a dollar in business fixed investment. To increase
investment by 10 percent, a business tax reduction of at least $30 billion—or about 1 percent of GNP—would be necessary. This larger
volume of investment, maintained from 1981 through 1985, would
increase the capital stock by about 5 percent after allowing for depreciation. On the basis of the historical relationships between output
and capital, such an addition to the capital stock might generate a
total increase in the level of productivity of at most 1.5 percent by
1985, or about 0.3 percent per year. In view of the declining rate of
productivity growth which the Nation has experienced in recent
years, however, this small improvement would be significant.
Such a rise in the productivity growth rate would not be likely to
induce a faster rise in money wage demands. Therefore, since the
growth of unit labor costs is equal to the increase in compensation
per hour minus the rate of growth in productivity, the faster productivity growth rate should lead to a slower rise in costs and prices. In
turn, a slower rise in prices would help to reduce the growth of
wages, leading to a still further slowdown of inflation. All told, an investment-oriented tax cut amounting to about 1 percent of GNP
might produce a 0.3 percentage point rise in productivity growth that
would translate, after several years, to just over one-half percentage
point reduction in the inflation rate.
DEMAND VERSUS SUPPLY RESPONSES TO TAX CUTS
Tax reductions have two principal effects. On the one hand, individuals and firms will buy more goods and services. As a tax cut is
spent and respent throughout the economy, the resulting increase in
nominal GNP will exceed the original tax cut. As a result of this multiplier process, aggregate demand will rise by more than the tax cut.
But tax cuts also increase the supply of goods and services. Since
lower tax rates allow individuals and firms to keep a larger fraction of
their income after taxes, the lower rates affect incentives to work, to
save, and to invest the savings, increasing potential GNP.
Although the magnitude of the multiplier varies according to the
nature of the tax cut, aggregate demand typically rises by about twice
the size of a reduction in taxes. Thus, a tax cut equal to 1 percent of
GNP will increase aggregate demand by about 2 percent. To match
the increase in demand, a 2 percent increase in supply would also be
79
required. To the extent that its supply response is less than the additional demand it creates, any tax reduction adds to the pressures of
demand on the rate of inflation.
But there are two ways in which such tax cuts can be made while
still restraining demand. First, tax reductions may offset increases in
other taxes. As discussed earlier, inflation pushes taxpayers into
higher tax brackets, so that the average effective tax rate—the ratio
of tax revenues to GNP—rises. Consumption is depressed and economic growth reduced. In the years ahead, periodic tax reductions
will therefore be both possible and necessary to keep aggregate
demand from falling. Second, a tax reduction accompanied by Federal spending reductions of roughly the same magnitude will not
change aggregate demand; hence, even if the supply response to a
tax cut is smaller than the demand response, inflationary pressures
will not be generated.
Thus, it is clear that the design and timing of supply-oriented tax
cuts depend importantly on the specific relationship between the
demand-side and supply-side responses. If such tax reductions fail to
generate enough supply to offset the additional demand they
create—and the evidence discussed below suggests this to be the
case, particularly for personal tax reductions—they must then be integrated like any tax cut into policies of demand management.
THE SUPPLY-SIDE RESPONSE TO PERSONAL TAX CUTS
A 10 percent reduction in marginal tax rates on individuals (approximately a $30-billion personal tax cut in 1981) would increase
the total demand for goods and services by $60 billion, or 2 percent
of GNP. It could also lead to increases in individual work and saving
in response to the lower tax rates and thereby increase potential
GNP. How much of the increase in demand would be matched by
such increases in supply?
The Supply of Labor
The additional production that results from lowering taxes on
labor income depends both on changes in the quantity of labor supplied (i.e., the total number of hours worked) and on changes in the
average productivity of labor.
Higher after-tax wages make work more attractive. This encourages
new entrants to join the labor force and those already employed to
work longer hours. Since after-tax incomes have risen, however,
people can also afford to work less—to take longer vacations or to
shorten their workweeks. Whether the former effect would or would
not exceed the latter effect is hard to predict. A preponderance of
the evidence suggests that for adult men the two effects approximately offset each other; that is, a cut in income taxes increases the
80
supply of adult men in the work force only slightly, if at all. Women,
on the other hand, and particularly married women, respond much
more strongly to higher wages. In the past, the number of adult
women in the work force may have increased by as much as 1 percent for every 1 percent increase in take-home pay. Although women
are more responsive to changes in their wages than are men, men
still outnumber women in the labor force and on average earn substantially more. Therefore, a reduction in personal income tax rates
would increase the total supply of labor only slightly.
Whether an increase in the labor supply would be accompanied by
an increase in productivity is uncertain. While most business investment enhances productivity, an increase in the labor supply would
not improve productivity unless it increased the average quality of
work performed or the intensity of effort. Productivity might actually
fall as the supply of labor increased if the additional labor supply
consisted, on balance, of less skilled or less experienced workers.
Alternatively, some have argued that the increased supply of labor
from high-income, high-productivity workers would outweigh the increased supply from other workers, so that the average productivity
of the labor force would rise. This could happen if high-productivity
workers were more sensitive to a given percentage change in aftertax earnings, or if the tax reduction represented a larger percentage
change in their take-home pay. Since high-income workers are a
small fraction of the labor force, these influences would have to be
large to alter total productivity significantly. Studies of high-income
workers generally do not find them much more responsive to equal
percentage increases in after-tax income. However, a 10 percent
across-the-board reduction in tax rates would also mean a larger percentage increase in the after-tax earnings for these workers because
their households are in high marginal tax brackets. A 10 percent tax
cut is, therefore, likely to produce a somewhat larger change in the
supply of high-income workers. Still, even in high-income households
it is in fact second-income earners—generally those who have lower
productivity—who are apt to be the most responsive to lower tax
rates.
Balancing the two opposing forces—the lack of experience of new
workers and the possibility of a greater-than-average influx of higherincome workers—it seems unwise to assume that the average productivity of the labor force will be improved by a personal tax cut.
Taking all the relevant factors into account, the limited response of
the supply of labor and of productivity to a 10 percent reduction in
personal income tax rates is likely to produce an increase in potential
GNP of perhaps 0.2 percent to at most 0.6 percent. This result follows in part from evidence suggesting that such a tax cut would
81
induce an increase in labor supply between 0.3 and 1.0 percent. According to past relationships between labor and production, such an
increase in labor supply would lead to the modest increase in potential GNP mentioned above.
The Supply of Saving
A reduction in personal income tax rates increases both the income
out of which an individual worker can save and the after-tax return
to saving. It would also tend to discourage borrowing by reducing
the value of the income tax deduction for interest payments. If the
increases in personal saving find their way into additional business
investment, productivity will rise.
Most empirical studies have concluded that changes in personal
income tax rates would have only a small effect on personal saving.
At best, a 10 percent reduction in tax rates would increase personal
saving less than 3 percent. This means that the saving rate—the average share of personal saving in disposable income, which over the
last 5 years has averaged 5.7 percent—would rise by no more than
0.2 percentage point. The additional saving would at most be equivalent to only about 0.2 percent of GNP.
Even if every dollar of personal saving that resulted from a 10 percent tax cut were invested in business plant and equipment—and
some, in fact, would flow into housing—the effects on output and on
productivity would be small. If the tax cut and the higher saving continued for 5 years, the additional saving and investment would increase potential GNP by less than 0.3 percent and lead to a negligible increase in the annual rate of productivity growth.
This examination of likely responses thus suggests that even under
the most optimistic circumstances, a 10 percent reduction in tax rates
would not induce enough additional work, saving, or investment to
offset more than a fraction of the 2 percent increase in aggregate
demand that would accompany the tax cut.
BUSINESS TAX CUTS
It was pointed out earlier that a tax cut that liberalized the business depreciation allowance or increased the investment tax credit
could, after a time, have a fairly substantial effect on the Nation's
productive potential. Such a tax cut, amounting to 1 percent of GNP,
could raise potential output by perhaps \xk percent over a 5-year
period.
This would still be less than the 2 percent rise in aggregate
demand that would also be generated, however. More important, the
increase in demand would come relatively quickly, most of it within
lVa to 2 years. The increase in supply, on the other hand, would
occur very gradually. As a consequence, the tax cut would tend to
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increase demand pressures, especially in the years immediately following it. While tax reductions that are effective in raising investment
are essential in a long-term strategy to promote economic growth,
business tax cuts, like personal tax cuts, must be designed to fit into
an overall framework of fiscal restraint.
CONCLUSIONS
This analysis of the macroeconomic effects of Federal tax reductions suggests several conclusions for the development of fiscal
policy:
First, specific investment-oriented tax reductions for business are
likely to increase saving, investment, and productivity by a much
more significant degree than cuts in personal income taxes.
Second, productivity-oriented tax reductions will yield improvements
in the inflation rate that are helpful and significant, but still relatively
modest in the context of a 10 percent underlying inflation rate.
Third, the supply response, while a critically important feature of
any tax reduction, will be substantially less than the demand response, particularly in the short run.
Fourth, since reductions in both business and personal taxes will increase demand faster than supply, they must be designed and carried
out in ways that are consistent with the demand restraint needed to
reduce inflation.
It is sometimes alleged that the potentially inflationary effects of a
large tax cut can be avoided if the Federal Reserve steadfastly pursues its goal of keeping the growth of the monetary aggregates
within tight targets. But if taxes are reduced while the Federal Reserve pursues an unchanged monetary policy, aggregate demand will
nevertheless increase, especially in the short run. The increase in
demand would lead to a rise in interest rates that would dampen the
increase in aggregate demand but not eliminate it. Additional inflationary pressure would then result.
A very large tax cut unaccompanied by the necessary spending cuts
would lead to both an increase in inflation and a sharp rise in interest rates. Some, and perhaps all, of the stimulus to investment from
tax reductions would be undone by the higher interest rates and the
greater uncertainty engendered by a new round of inflation.
Monetary restraint is an absolutely essential element of inflation
control and reduction. Tax measures focused on increasing supply
can make a significant contribution. But there will be a continuing
need for careful and prudent fiscal policies to restrain demand. In
recent years the Nation has come to appreciate the potential value of
supply-oriented tax policies. In the process of learning some needed
lessons about supply-side economics, however, the Nation cannot
83
afford to forget its hard-learned lessons about the need for demandside restraint.
The three central elements of a macroeconomic policy to reduce
inflation and advance the Nation's prospects for healthy economic
growth have been set forth in this chapter: maintaining a persistent
and prudent course of demand restraint; putting in place an improved incomes policy using tax incentives to induce wage moderation; and increasing the share of the Nation's output going to investment. The next chapter deals with the challenge of inflation and
growth at the level of individual markets and sectors. It concentrates
on measures to increase the economy's flexibility and capacity for adjusting to change.
Carrying out these policies will require patience and, in the interim, some sacrifice. But if they are followed with persistence they
promise a substantial payoff in improved economic performance.
TECHNICAL APPENDIX TO CHAPTER 1
MEASURING PAY INCREASES UNDER A TIP
Once the basic features of a pay TIP have been chosen, several
problems in the measurement of average pay increases must be
solved. These problems arise from changes in the composition of a
firm's work force, from fringe benefits, and from multiyear union
contracts with cost-of-living adjustments. Resolving these problems
requires striking a balance among administrative convenience, equity,
efficiency, and the effect on inflation.
COMPOSITION OF THE WORK FORCE
Like any well-designed tax, a successful TIP must use a measure of
average pay increase that is unambiguous, that alters behavior in undesirable ways as little as possible, and that is fair in its treatment of
different types of firms and workers. The simplest indicator of average pay—total wages received by a group of workers divided by the
total number of hours they work—is a poor measure because it
changes both with hourly wage rates and with the number of overtime hours. Even if wage rates increased by less than the TIP standard, an increase in the average amount of overtime, paid at a premium, could put the group out of compliance. Using this measure
would therefore discourage overtime work, an undesirable distortion.
A better measure would use straight-time wages divided by straighttime hours, with adjustments to reflect changes in the length of the
standard workweek or the size of the overtime premium.
Because of possible changes in the composition of the group, however, a simple measure of straight-time wages divided by straight-
84
time hours also has drawbacks. For example, during a recession a
firm may grant a pay raise far below the TIP standard and also lay
off large numbers of low-seniority workers. Because low-seniority
workers tend to have below-average wages, the remaining workers
will have higher wages than the original group. Consequently, this
measure of wage change may well show that the increase in average
pay exceeded the standard even if no individual worker received such
a large raise. Conversely, when firms hire additional low-seniority,
low-wage workers during expansion, the group may appear to be in
compliance even if all continuing workers receive pay raises above
the standard.
This measure is also affected by changes in the skill-mix of the
work force. If a firm increases the proportion of low-wage, less
skilled workers in its work force, the measure will show a calculated
wage increase less than the "true" wage increase. A decrease in the
proportion of less skilled workers will show just the opposite. Because of these features, the measure also discriminates in favor of
growing firms and against declining firms, since new workers are, on
average, likely to be paid less than those already on the payroll.
More important, this measure introduces an element of uncertainty. A firm could agree with its workers to grant pay increases that
met the standard—citing the TIP reward as an offsetting factor—and
then unexpectedly discover at the end of the year that small changes
in the composition of the work force had put the group out of compliance. Firms and workers who had negotiated small pay raises in
anticipation of receiving a TIP reward or avoiding a penalty might
find themselves above the standard, while others who had ignored
the standards could be surprised to find themselves in compliance.
An unpredictable measure is not only unfair; it also will have less
effect, since firms and workers will tend to ignore the standard if
they cannot be sure that small pay raises will result in compliance.
Data collected by the Bureau of Labor Statistics from a large
sample of establishments suggest that significant changes in the composition of a firm's work force are common. As Table 10 shows, 22
percent of the workers in the motor vehicle industry were in establishments that experienced an increase in their calculated straighttime hourly earnings of more than 13 percent between December
1978 and December 1979. During this period the United Auto Workers' contract, which covered a majority of the workers in these establishments, provided for an increase of about 11 percent, including
cost-of-living adjustments (COLAs). Therefore, most of the establishments with increases in calculated average hourly earnings larger
than this must have experienced a change in the composition of their
work force.
85
TABLE 10.—Distribution of workers by percentage change in average establishment wage, selected
manufacturing industries, December 1978 to December 1979
Percentage change in average establishment wage
All
manufacturing
Motor vehicles
Food
processing
Percent distribution
5.1
Less than 0 .
5.9
8.5
0 to 6.9
18.6
7.8
24.8
7 0 to 9 9
27.4
19.3
28.6
10.0 to 12.9
25.4
44.8
17.8
17.2
13.7
13.2
6.3
8.5
7.1
13.0 to 19.9..
. ..
20 and over
Source: Department of Labor, Bureau of Labor Statistics.
Additional evidence suggesting large shifts in the composition of
the work force is provided by the percentage of workers in establishments who experienced actual declines in their average nominal
wage. For all manufacturing, 5.1 percent of workers were in establishments that reported declining money wage rates, and 8.5 percent
of those in food processing were in establishments that reported
nominal wage declines. It is hard to believe that such a large percentage of workers were in establishments that actually cut the average
nominal wage for their entire work force during a period in which
the CPI rose by 13.3 percent.
Clearly, a satisfactory measure of wage changes will be one that is
not affected by systematic changes in work force composition. The
problem can be solved either by a wage index or by a measure that
counts only the hours and payroll for those workers who were with
the firm throughout the year. A wage index, like a price index, combines the wage rates for specific types of jobs into one measure. The
weights used reflect the percentage of a firm's workers in each skill
or seniority level. A wage index reflects the "true" average pay increase for all employees and is not affected by changes in composition or seniority. Such an index would be relatively easy to construct
for many firms. Union contracts already set wage rates for specific
jobs. Some large nonunion firms and many States and local governments also have pay scales that list the salary levels of workers in
each job category and seniority step.
These union and nonunion pay scales could be used with the base
period percentages of workers in each job category to calculate a
firm's average pay raise, just as a price index is used along with a
base period market basket of goods to measure price increases. To
ensure that the firms did not give raises above the standard by promoting workers, rates of promotion above past experience would be
included in the calculation of pay raises. Doing so, of course, may
86
reintroduce the problem of changing skill mix if the additional promotions reflect an upgrading of skills.
Nonunion firms that do not have pay scales could calculate their
average pay raise from the wages and hours of those workers who
continued to work for the firm throughout the year. Such a measure
would not be affected by changes in the composition of the work
force, since the wage rates of former or new employees would not
enter into the calculation. Because firms generally hire new workers
at the bottom and retire or lose workers from the top, the average
pay raise for continuing workers will exceed the average pay raise for
all workers in a firm with stable composition but high turnover.
Therefore, measures for continuing workers must be adjusted to
allow for promotions.
MEASURING FRINGE BENEFITS
A critical element in the measurement of pay increases is the treatment of fringe benefits. The cost of a given package of fringe benefits can increase for either of two reasons: because the package has
become more generous (the employer is buying more services for the
employees) or because the price of a given set of services has risen.
For example, an employer who adds dental benefits onto the health
insurance provided for employees would increase the cost of health
insurance by improving the package of benefits. Health insurance
premiums might also rise for a given set of benefits simply because
medical care in general becomes more expensive.
Which increases in the costs of fringe benefits should the TIP include as increases in compensation? One approach is to include all
increases in the cost of fringe benefits, both those that reflect higher
prices for a fixed package as well as those that reflect improvements
in the package. This would treat each dollar paid in fringe benefits
exactly like a dollar paid in cash wages. Such an approach, however,
would require extensive work to evaluate the cost of all benefits. Although determining the cost of fringe benefits purchased from other
organizations, such as medical insurance, would be simple, determining the cost of other fringes, like unfunded pension benefits, would
be more difficult. Another drawback is that firms and workers might
object to being ruled out of compliance for cost changes they could
not control, such as the cost of employer health plans.
An alternative treatment would be to exclude fringe benefits completely from the calculation of a group's average pay raise. This
would involve the fewest administrative problems. It would, however,
provide a strong incentive for firms to give all increases above the
standard in the form of fringes rather than cash, since the group
would be in compliance as long as cash remuneration did not increase by more than the standard. This would defeat the purpose of
87
the TIP and would also distort the structure of labor compensation
for a long period.
A compromise solution would be to include only the cost of improvements in benefit packages. For example, the cost of new medical benefits would be charged against the standard but increases in
the cost of existing benefits would not. This would reduce the difficulty of estimating the costs of some types of fringes without creating
an incentive to divert all pay increases above the standard into benefit improvements. Although fringes would still be treated more generously than cash wages, this compromise would eliminate a certain
amount of paperwork.
MULTIYEAR CONTRACTS
A third problem in measuring wage increases is the evaluation of
new multiyear union contracts. A TIP will have its greatest effect on
the wage settlement if the firm and union know when they are bargaining whether the contract's provisions are in compliance with the
standard. For this reason, and to prevent firms and unions from postponing large wage increases to the later years of a contract in order
to be in compliance during the first year, the entire contract would
have to be evaluated in advance. Since most major union contracts
include COLAs, evaluating wage increases in new multiyear contracts
requires predicting future price inflation. (A TIP can have no direct
effect on pay increases in existing multiyear union contracts. Therefore, they can be evaluated at year-end like the pay increases of nonunion workers.)
Because the number chosen will affect expectations and thus will
affect the success of the TIP, there may could be a temptation to use
an overly optimistic prediction of future price increases. If this occurred, union workers with COLAs would often be judged to be in
compliance but then receive wage increases above the standard because the actual price increase exceeded the prediction used to evaluate the COLA. This would seem unfair to firms and workers who do
not have COLAs and, if substantial, would set in motion catch up
pressures on the part of nonunion workers that could increase inflation in subsequent years. To some extent, these considerations are
counterbalanced by the fact that union workers would have to restrain their wage increases for a 2- or 3-year contract period in order
to be in compliance with a TIP that may only last 1 year.
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CHAPTER 2
Improving the Adaptability of the
Economy
THE PAST DECADE witnessed a substantial expansion of Federal
involvement in many sectors of the economy. During this period
many economists devoted a good deal of attention to ascertaining the
benefits and costs of that involvement. Much less attention was paid
to the loss of flexibility that accompanied greater government influence over private economic decisionmaking. But as new government
programs increased the number of objectives to be satisfied in the
making of economic decisions, the net result was to restrict the Nation's ability to respond quickly to economic and technological
change.
Limitations on flexibility are sometimes desirable. Federal requirements for the safe disposal of toxic wastes, for example, are undoubtedly a legitimate way to reduce the flexibility of chemical manufacturers and users. But programs that are excessively complex or overly
stringent reduce flexibility unnecessarily. Efficiency suffers, productivity declines, and the economy becomes even less responsive to
change.
As government involvement in the economy has grown, so have
the overtly political aspects of economic decisions. Representative
government is quite responsive to claims from individuals, groups, or
regions that proposed policies will benefit them or do them harm.
Since all interventions, no matter how small, have the effect of harming some and benefiting others, there has been growing pressure to
"manage" these gains and losses to produce "fairness" rather than
economic efficiency. Many of the recent arguments over deregulation, for example, have tended to focus less on the benefits of deregulated markets than on the income losses of the persons or industries that have been protected in the past by Federal economic regulation. Similarly, discussions of the problems of declining industries
have concentrated on the immediate fate confronting the companies
and workers in those industries rather than on the more diffuse
benefits associated with greater national economic efficiency.
Compassion for the human problems that accompany rapid economic adjustment may often be a valid argument for policies which
89
slow the pace of adaptation. But excessive concern over who gets
what can add rigidities to the economy and lead to the result that
almost everyone gets less.
The shocks to the world economy that occurred in the 1970s—
huge and abrupt increases in energy prices, unprecedented strains on
the financial markets, major fluctuations in agriculture—would have
tested even the most flexible and adaptable of economies. Since the
adaptability of our economy was already less than ideal, these shocks
hurt us more than they might have in other circumstances. Similar
shocks are likely to occur in the next decade or two. The Nation
therefore must prepare itself to deal with these shocks by increasing
the adaptability of its economic institutions.
This will pay important dividends in the Nation's fight against inflation. As pointed out in Chapter 1, rigid economic institutions
sharply limit the effectiveness of macroeconomic policies. They can
turn what otherwise would be transitory pressures for higher prices
into permanent price increases. Public and private barriers that prevent resources from flowing out of inefficient sectors to more efficient ones help create bottlenecks that impede efforts to promote
economic growth.
The need, therefore, is for greater flexibility, not merely to permit
individual sectors to respond more effectively to rapid economic
change, but also to permit the economy as a whole to withstand such
change without continual increases in the rate of inflation.
Because energy markets are such an important example of an area
in need of added flexibility, this chapter first addresses energy problems. The second section addresses two major types of regulatory
reform: eliminating obsolete regulatory structures and improving the
functioning of necessary regulation. Both kinds of reform serve to
eliminate unnecessary costs and reduce unjustified rigidities. The
third section describes some of the far-reaching changes taking place
in the financial markets and the strains these changes are creating.
The fourth section describes the changed role of the agricultural
sector and the corresponding need for more flexible instruments of
agricultural policy. The fifth section addresses the problems of structural adjustment that are being created by changing demographic
and industrial conditions, while a final section discusses the growing
pressures on government to identify and aid promising industries
and sectors.
ADAPTING TO ENERGY UNCERTAINTY
No sector of the economy better illustrates the increasing need for
flexibility and adaptability than energy. The challenge is not only to
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use less and produce more energy in the face of higher energy
prices, but also to deal with the uncertainties of supply and price.
ADJUSTING TO HIGHER ENERGY PRICES
Available evidence suggests that the adjustment to higher energy
prices is well underway. Between 1973 and the third quarter of 1980,
real energy prices increased by 59 percent and the energy input per
dollar of real gross national product (GNP) dropped by 19 percent.
As energy prices rose, conservation of energy resources became increasingly attractive in economic terms. Shortages and uncertainty of
supply also induced conservation, sometimes very rapidly.
While many uses of energy can be adapted relatively quickly to
higher prices, others require more time. Consider the time required,
for example, for the economy to feel the full effect of a 10 percent
increase in the real price of gasoline. Studies suggest that the initial
adjustment of consumers to such a higher price—perhaps by carpooling or taking shorter recreational trips—would reduce gasoline use
by only 2 percent. But over a longer period, as consumers are able to
buy more fuel-efficient vehicles, change residential locations, and the
like, the fall in gasoline use may amount to perhaps 8 percent. Thus,
a major portion of the savings in energy use compelled by the substantial 1979-80 increases in oil prices is still before us.
Rising prices also encourage suppliers to develop new energy
sources. In the first 6 months of 1980, domestic oil producers drilled
19 percent more wells in the United States than they did during a
comparable period in 1979 and opened 15 percent more oil and gas
wells than they did in the entire year of 1973. For the first time in
years, additions to proven natural gas reserves may have exceeded
withdrawals. The development of nonconventional fuel sources—gasohol, solar energy, and so on—has also been occurring at a steppedup pace.
ADJUSTING TO PRICE AND SUPPLY UNCERTAINTY
Perhaps the biggest challenge in energy today is to minimize the
economy's vulnerability to disruptions in the supply of oil. Disruptions can vary both in size and duration. The ones experienced so
far, though painful to the world's economies, have been relatively
small. But much larger ones are conceivable. There is little doubt
that a prolonged reduction in Middle Eastern oil supplies could severely damage the U.S. economy. A recent simulation study by the
Congressional Budget Office (CBO) indicated that a yearlong cutoff
of oil supplies from the Persian Gulf might reduce oil supplies available to the United States by about one-third, and output by nearly 10
percent—almost $3,000 per household. Although estimates of this
sort are necessarily subject to a high degree of uncertainty, the con-
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sequences of such an interruption on employment, wages, and prices
clearly would be massive. Moreover, the threat of disruption, small or
large, hangs like a cloud over the economy and thus affects consumer
and investor expectations. It is therefore imperative that the Nation
have policies to reduce its vulnerability to oil supply disruptions and
to deal effectively with the consequences of any vulnerability that remains.
One simple and often-used measure of vulnerability is the level of
the Nation's dependence on imported oil. In 1977 the United States
imported a record average of 8.8 million barrels of crude oil and petroleum products per day. By late 1980, however, imports had fallen
to about 6.5 million barrels per day. Although some of this drop was
due to the recession and high inventory levels, a larger part of the
decline can only be accounted for by conservation and additional domestic production.
Dependence on imported oil, however, is not equivalent to vulnerability. If imported oil came from many small geographically dispersed producers, each unlikely to cease production suddenly, even a
high level of oil imports would mean little vulnerability to interruption. At the other extreme, even a zero level of oil imports would not
totally protect the U.S. economy in the event of extreme instability in
the world oil market. The United States could not stand by and
watch the rest of the world's economies collapse without suffering irreparable economic harm itself, and would not do so, even if it were
possible to isolate itself from such damage.
Thus, vulnerability is not easily measured. It is related in part to
the ability of the Nation's capital stock to adjust rapidly enough to
changes in the world price of oil, and in part to the fact that an oil
supply interruption would result in large domestic and international
transfers of wealth, large losses in output, losses of consumer and investor confidence, and a sharp surge in inflation.
The experience of past episodes of supply disruption has taught
policymakers to appreciate the limited ability of governments to allocate scarce petroleum supplies and the long-run problems that result
from attempts to shield consumers from the consequences of higher
prices. These same episodes have also shown that such disruptions
are accompanied by other impacts that private markets cannot be expected to take into account. For example, private economic decisionmakers—consumers and business firms—are unlikely or unable to
factor the substantial macroeconomic effects of an oil supply disruption into their individual responses. Therefore, they will tend to take
fewer preventive measures than is socially desirable. Moreover, the
expectation of government intervention is also likely to affect private
behavior. The experience of past disruptions may have created the
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expectation of price controls or fuel allocation in the event of another disruption and thus further reduced the incentive for individual
consumers or business firms to take steps to protect themselves.
Large disruptions would not only intensify these effects but pose
the added risk that energy markets would be overwhelmed—at least
for a while—by rapidly changing information, bottlenecks in distribution to industry, supply uncertainty, and the potentially destabilizing
influence of hoarding. Thus, the proper mix of public and private responses to an oil supply disruption will depend upon a number of
factors, including the magnitude and expected duration of the disruption and the steps taken in advance to reduce its impact.
Improving Adaptability
One way to reduce the economy's vulnerability to disruptions of
foreign oil supplies would be to increase the short-run responsiveness of domestic production and consumption to short-term changes
in price and supply. If domestic producers could easily expand
supply and users could easily reduce demand, large transfers of
income would not be generated by the price movements needed to
balance supply and demand. Thus, the more elastic the demand and
supply of energy are in the short run, the less vulnerable the economy
will be to a disruption in foreign oil supplies.
Flexibility in fuel use is one way to increase short-run elasticity in
demand. Today, for example, U.S. industrial facilities that burn over
one million barrels of oil per day have the technical capability to substitute domestic natural gas on very short notice. The potential flexibility of the country's industrial users of energy is apparently several
times this level, however. According to one source, it is possible to
develop the capability to substitute coal and natural gas for an additional four million barrels per day—for a total in excess of one-fourth
of present U.S. oil consumption.
Just what degree of fuel-switching capability is economically attractive is another matter. Building fuel-use adaptability into industrial
facilities is costly; it requires additional capital investment and may
increase operating expenses. Further, to utilize such flexibility, there
must exist both sufficient supplies of other fuels and the ability to
deliver them where needed.
The general dilemma is that the Nation's capital stock must be
sharply modified in the face of higher energy prices, but it also must
be enabled to function despite uncertainty of energy supply. As a
result, the energy-using capital stock of the future will embody a
compromise between greater productivity and fuel-use flexibility.
Actions can also be taken to increase the short-run elasticity of
energy supply. Sizable fuel inventories, in particular, would provide a
substantial degree of flexibility. At the outset of the Iran-Iraq war in
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September 1980, world oil stocks were at record levels. U.S. domestic stocks, including oil not yet ashore, were some 300-400 million
barrels above the minimum operating needs. In contrast, world reserves were quite low when the supply of Iranian oil was disrupted in
late 1978. The shortfall associated with the 1980 interruption was
comparable in size to the shortfall of 1978-79. Yet the earlier disruption resulted in a sudden and rapid escalation of world oil prices,
while no such shock occurred after the 1980 disruption. The substantial size of world and domestic oil reserves played an important role
in preventing panic and maintaining relative price stability.
Thus, private contingency stocks and public stocks such as the
Strategic Petroleum Reserve can provide an important buffer to
future disruptions. The strategic reserve is far less than adequate,
however, and an increase in its size is essential to reducing our vulnerability to foreign supply disruptions. But care must be taken to
assure that such a buildup, by its effect on the world oil market, not
be destabilizing. Furthermore, the reserve program should not
merely substitute a stockpile created at government expense for an
increase in private precautionary inventories. This could be partially
avoided by announcing a plan that would use the strategic reserve
only in the event of a relatively large disruption and allow market
forces to come into play during smaller ones.
To date, attention has focused on oil stockpiles. But the installation
of additional industrial facilities with the flexibility to use more than
one type of fuel would make stockpiles of other fuels equally useful
in reducing upward pressure on world oil prices.
Flexibility in fuel use would not reduce our vulnerability, however,
if constraints in the distribution network impeded the use of available
alternative fuels. Propane, for example, is a frequently used alternative to natural gas, but distribution problems limited its use during
natural gas curtailments in 1976 and 1977. One solution would be to
maintain supplemental distribution capacity: additional handling or
line-haul facilities in the case of coal, additional pipeline or surge
pumping capacity in the case of natural gas, and additional wheeling
and coal generating capacity in the case of electricity. Certain of
these strategies, particularly the wheeling of electricity, have been
utilized in the past to reduce the effects of temporary fuel curtailments.
Dealing with a Disruption
Increasing private and public stocks of the different types of fuels
and improving fuel-use flexibility cannot completely eliminate the
Nation's vulnerability to a major interruption in oil supply. Both international obligations and the high cost of any actions to reduce our
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dependence on foreign oil mean that some degree of U.S. vulnerability to oil supply disruptions will persist for a long time to come.
Even as a theoretical question, it is hard to know the level of oil
reserves that would be needed to totally insulate the United States
from a supply disruption. Present plans call for a Strategic Petroleum
Reserve of approximately one billion barrels, which is the equivalent
of about 150 days of imports at current import levels. But the reserve
is only intended to reduce our vulnerability, not to eliminate it. Let
us suppose that a publicly owned stockpile of oil equivalent to a
year's imports (about two billion barrels) would provide close to absolute protection from a disruption of Middle Eastern supplies. And
suppose further that the acquisition of such a stockpile would not
raise the world price of oil, although there can be no doubt that it
would. Such a stockpile would then cost approximately $70 billion to
acquire at the current price of about $35 per barrel. It would also
require the expenditure of about $9 billion per year in storage and
carrying costs. This is expensive insurance. Moreover, it would take
several years of uninterrupted accumulation to acquire such a stockpile.
Since it is impractical to eliminate our vulnerability, it is essential
to develop policies and programs that would assure fair and efficient
distribution of fuel supplies during a period of substantial disruption
and minimize the negative impact of such a disruption on the economy.
The Nation's current emergency plan, the authority for which expires on September 30, 1981, has two steps: a program of oil product allocation during the early stages of a major disruption, supplemented by a program of gasoline rationing if the disruption is large
enough and continues long enough. The operation of this plan requires either standby price control authority or the ability to grant
and implement this authority on extremely short notice.
The current plan is designed to reduce the large transfers of
income from domestic energy users to domestic energy producers
that would otherwise occur during a major disruption. The plan is
thus especially responsive to the goal of equity. By reducing transfers
of income the plan is also intended to meet the macroeconomic goals
of reducing the economic drag caused by increases in oil prices and
preventing temporary energy price surges from becoming permanent
through formal and informal wage and price indexing.
But the plan has many deficiencies, only some of which are administrative. Although the allocation part of the program would use an
existing bureaucratic structure—albeit one scheduled to expire in
September 1981—the rationing part of the plan would require the
creation of an untested bureaucracy that would use the postal system
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to distribute rationing coupons and the banking system to account
for them.
An even more important drawback is the plan's adverse impact on
efficiency. Its allocation and price control aspects may already have
had the effect of discouraging private parties from taking self-protective measures, since they would deny those who invest in emergency
fuel stocks or fuel flexibility the benefits of that investment. The
plan's intended reliance on historic patterns of fuel use in making allocations would reduce flexibility by preventing users from switching
to more abundant fuels because they had not previously used those
fuels in substantial quantities.
Finally, the plan emphasizes a reduction in gasoline use in the
event of a disruption. Gasoline alone, however, could not absorb the
brunt of a major emergency. If a complete cutoff of oil supplies from
the Persian Gulf were handled by reducing the amount of oil refined
into gasoline, the availability of gasoline in the United States would
be reduced by over 75 percent.
Thus, the present strategy for dealing with a major disruption is a
three-way compromise between the administrative problems of implementing an emergency plan, the allocation deficiencies of such a
plan, and the need to deal effectively with the severe macroeconomic
consequences of a major disruption.
One alternative plan would be to let uncontrolled market prices
apportion available supplies. Such a plan would eliminate the problems of bureaucratic administration, but it would expose the economy to the consequences which might result from the building of fuel
inventories at peak prices when the Nation's interests would be
served by drawing inventories down. Such hoarding, as well as other
complications, might occur because the problems of rapidly communicating market information during uncertain supply conditions
would make it difficult for the market to cope with a large disruption.
Furthermore, public declarations that the market would be permitted to operate without constraint during a large disruption would be
likely to lack credibility, since the market has not been permitted to
act freely during previous relatively small disruptions. Private parties
are likely to assume that the government will also intervene during a
major disruption, and they may modify their own actions accordingly.
For example, given their political visibility and small numbers, the
Nation's oil producers and distributors might pass up the opportunity to maximize short-run profit and engage instead in their own form
of product allocation. Thus, the choice might not be between a
market solution and government allocation, but between public and
private allocation plans.
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While the market solution might promise the greatest degree of allocative efficiency, it would not respond to the problems associated
with the transfer of tens of billions of dollars from domestic consumers to overseas producers. More importantly, a "business as usual"
strategy would fail to address any of the macroeconomic consequences associated with the large and sudden transfers of income
among sectors of the domestic economy—possibly amounting to
hundreds of billions of dollars—that would occur when business was
quite decidedly not "as usual/'
Another proposal—one that attempts to deal with the macroeconomic effects—would allow the market to allocate oil supplies during a
major disruption but tax the resulting windfalls reaped by domestic
suppliers and rebate these new tax revenues in a way that would address the income distribution and macroeconomic problems accompanying the disruption. Although attractive in theory, such a plan
would present many practical difficulties. For one thing, as already
noted, the magnitude of the fiscal drag that would occur from allowing the free play of the market to determine prices might be immense, and the amount of administrative effort that would be required to capture the windfall profits on such huge sums and recycle
them efficiently would be substantial. This administrative burden
might even rival that of the present rationing plan.
Neither the present plan nor the tax rebate alternative would limit
the large international transfers of wealth that would accompany a
severe oil-supply disruption. Some economists have recommended
the imposition of an import fee during a disruption to capture these
windfalls. The ability of such a plan to achieve this goal is uncertain,
however, since its success would depend a great deal both on precise
timing and on the response of the oil-supplying nations: major overseas suppliers, having political as well as economic goals, might
simply respond to such a fee by raising their prices and reducing
quantities in an attempt to maintain a constant net revenue. While
the success of an import tax or fee is not certain, it nonetheless
merits further exploration because it is presently the only proposed
method of responding directly to a,transfer of income from domestic
consumers to foreign producers.
Toward a Policy to Deal with Vulnerability
Developing an appropriate set of policies to deal with vulnerability
to energy price and supply shocks is an immense challenge. The dilemma facing the policymaker is when to rely on private market responses and when to take the risks that accompany government-operated price control, allocation, and taxation schemes. The answer
would appear to have three parts. First, use the superior allocative
abilities of private markets whenever possible. The markets appear
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capable of handling small- and medium-sized disruptions, such as
those experienced to date. Second, take technological and stockpiling
initiatives to increase short-run flexibility in energy use and supply.
This will increase the size of disruptions where a market response remains appropriate. To achieve such increased energy-use flexibility, it
would be beneficial to develop strategic stockpiles of fuels in addition
to oil. The use of these fuels during emergencies would require investments in supplementary distribution capacity. Finally, since measures to reduce vulnerability will take time to put into place, and since
the Nation will never be totally invulnerable, contingency plans must
be developed to deal with disruptions so large that they might overwhelm the private market.
For both political and economic reasons, a program of allocation
by price alone is unlikely to be adequate during a very large
disruption. Too many problems would flow from any policy that
placed a short-term "tax" amounting to as much as several thousand
dollars per year on each U.S. household. Although any nonmarket
mechanism would be administratively cumbersome and lack the allocative efficiencies of a pure market response, proper design could
materially reduce these administrative and allocative problems. The
present rationing scheme has much more precisely targeted distributional goals than most of the proposed programs of general tax rebates. Thus, differences in the value placed on achieving equity explain much of the difference in administrative complexity. A rationing plan that gave primary weight to minimizing the macroeconomic
consequences of a disruption, however, would have far fewer administrative complexities. Such a plan might forgo the establishment of
the hundreds of local boards that would otherwise be needed to adjudicate individual inequities.
Responding to the challenge of energy vulnerability will not be
made easier by ignoring the limits and complexities of alternative
policies. Thus, while the benefits of a large and well-managed Strategic Petroleum Reserve are very substantial, it is also true that a preoccupation with the reserve's potential may divert attention from the
fact that the acquisition of reserves takes time, and that even substantial reserves will not eliminate vulnerability. Similarly, the allocative
efficiency of the market would be superior to any government-run
price control and allocation scheme, yet the market alone would not
be able to cope with all of the problems associated with a major interruption. There is no doubt that the present contingency plan for
gasoline rationing has major shortcomings, but it is also true that
new and untested schemes for taxing and rebating windfall profits
could mirror in their complexity the rationing they seek to avoid.
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High energy prices and excessive dependence on imported oil supplies are two major dimensions of the energy problem. However, the
uncertain timing of increases in energy prices and the uncertainty of
supply are two other dimensions which must command the attention
of policymakers. Higher prices alone—if known in advance with a fair
degree of certainty—would pose a costly but otherwise straightforward problem of economic adjustment. Supply uncertainty, however,
adds a potentially dangerous complication. The Nation's capital stock
must be made more energy efficient, and the Nation must change its
energy-using habits, but both of these changes must be accomplished
in ways that assure the flexibility to respond to sporadic episodes of
price escalation and shortage. The challenge to policymakers is to
adopt energy policies which effectively respond to legitimate concerns about equity and macroeconomic problems but neither penalize private efforts to respond to energy uncertainty nor unduly rigidify economic decisionmaking.
IMPROVING REGULATORY PRACTICES
Over the past decade there has been a growing awareness that
Federal regulatory activities exert substantial influence on the economy. In trying to measure this influence, some have focused on the
amount of capital required to comply with Federal regulations, some
have focused on the rate and direction of technological change, and
still others have focused on the regulatory burden facing small business. None of these measures fully captures one of regulation's most
important consequences—its tendency to reduce the ability of the
economy to adjust efficiently and swiftly to change.
Regulation's tendency to produce rigidity has sometimes been directly observable. In the past, for example, the Interstate Commerce
Commission severely restricted common carrier trucking firms trying
to choose the most efficient routes for their trucks. The fuel-adjustment charges still permitted by State regulatory agencies have reduced the interest of electric utilities in making fuel-saving investments, while the Federal regulations that rigidly segmented both the
telecommunications and financial industries helped thwart innovations that would have improved productivity.
In other situations, however, the way in which regulation reduces
flexibility is less obvious but nonetheless real. Some legislation, for
example, prevents regulators from considering—much less balancing—competing national goals in establishing regulatory priorities.
There are Federal statutes that prescribe the specific dates at which
compliance with regulations must be achieved, and some statutes
even specify compliance methods. Furthermore, the compartmentaliz-
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ing of regulatory functions often prevents the different agencies responsible for regulating different aspects of a given industry's performance from developing mutually consistent regulatory strategies.
Once regulations are issued, they are seldom given a fresh look to
see if they should be altered in the light of new knowledge or new
conditions. Each of these facets of regulation has made our economic
system less flexible. During the coming decade, however, the need to
increase the economy's adaptability and flexibility will grow. Regulatory reform must play an important role in meeting this need.
THE ROLE OF "DEREGULATION"
In several industries—railroads, trucking, airlines, energy, telecommunications, banking—where the existing regulatory structures have
largely outlived their usefulness, this Administration has achieved significant reform. Regulatory bodies like the Interstate Commerce
Commission (ICC), the Civil Aeronautics Board (CAB), and the Federal Communications Commission (FCC), have acted administratively
to reduce the burden of regulation where their statutes allowed them
to do so, and new legislation has carried the process even further.
Since the passage of the Airline Deregulation Act of 1978, Congress
has also substantially deregulated common carrier trucking, interstate
movers of household goods, railroads, and financial institutions.
Meanwhile, the phased decontrol of natural gas and domestic crude
oil prices continued to provide a powerful spur to energy conservation and to the exploration and development of new domestic
sources of oil and natural gas. By the last quarter of 1980 an estimated 62 percent of all domestically produced crude oil was free of controls.
Transitions to Deregulation
As regulatory structures have been dismantled, the importance of
properly designing the regulatory transition—the period during
which an industry moves toward deregulation—has become more evident. Changing the "rules of the game" can cause serious dislocations in a previously regulated industry, and these dislocations must
be taken into account. Users of the industry's services have made investments on the basis of the prices regulation has produced. Even if
these price signals were in some sense "wrong," these investments
cannot easily be undone. Similarly, workers and stockholders in the
industry adapted their behavior to the realities of a regulated environment long ago, and changes in the industry's regulatory structure
will affect their earnings.
Legislative debates have been dominated by the desire to cushion
those with a stake in the existing system—customers, workers, and
shareholders alike—from the shock of deregulation. For the most
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part, the interests of these parties have been protected. Requirements for substitute service, provisions for notice of intention to suspend service, and provisions to protect the economic position of
workers have generally been written into deregulation legislation.
Unfortunately, much less care has been taken to make the course of
deregulation sufficiently flexible to withstand the shock of sharp
changes in the external environment.
The best example of this is the deregulation strategy chosen for
natural gas. The decontrol schedule adopted in the Natural Gas
Policy Act of 1978 will allow the price of "new" natural gas to gradually move up to the equivalent of $15 for a barrel of oil (in 1978 dollars) by 1985, a level thought at the time to be more than adequate
to permit a smooth transition to uncontrolled prices. By the end of
1980, however, the world price of oil (in 1978 dollars) had already
reached $28.50 per barrel. By 1985, oil prices will probably be more
than double the level anticipated when the natural gas decontrol legislation was enacted. Thus, there will still be a large gap between the
controlled price of "new" gas and the price of "decontrolled" gas.
There will then be an obvious temptation to delay complete decontrol in the hope of minimizing the shock that would occur if this
price gap was closed in one step. But delay would be unwise. A
better solution would be to reconsider the decontrol schedule soon
for the purpose of making the necessary alterations in the decontrol
path. The previous strategy of preventing windfall profits by ensuring
a slow transition to decontrol will probably have to be abandoned in
favor of a strategy which deals directly with the windfall issue.
The sharp increase in world energy prices has also placed strains
on the transition toward deregulation in other industries, particularly
airlines and railroads. The increase in energy prices has created the
inaccurate perception that the principal promise of deregulation of
the airlines—lower fares—was illusory. As discussed in last year's
Report, however, only the productivity improvements permitted by deregulation prevented the sharp rise in energy prices from resulting in
even larger increases in unit costs and thus in still higher air fares.
Higher energy prices have also made service to smaller communities by large aircraft an even less attractive financial proposition than
it was earlier. However, the increased flexibility permitted by deregulation has helped to preserve air service to smaller communities by
making it easier to substitute commuter carriers. Had this flexibility
been unavailable, the short-run consequences would have been an
enormous increase in Federal subsidies to the airlines, followed by
the termination of service to many smaller communities.
With the increased fare and route flexibility permitted by deregulation, the airline industry has been weathering the most recent reces-
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sion relatively well. Although substantial losses are being experienced
by many carriers, most analysts consider the general condition of the
industry to be sound. Most importantly, substantial investment in
more fuel-efficient aircraft is continuing.
Rising energy prices have caused a different problem for railroad
deregulation. Federal legislation enacted in 1976 provided the railroads with increased rate flexibility, but this initial dose of "deregulation" proved inadequate. In the meantime, the booming demand for
coal prompted the railroads to raise coal-hauling rates sharply. These
higher rates reflect the need to generate sufficient revenues to finance large investments in additional coal-hauling capacity, but they
may also reflect some exercise of monopoly power. In any case, the
rapid increase in coal-hauling rates, and the fear of even more rapid
increases if the ICC controls were lifted, caused opponents of further
deregulation to press for continuing ICC surveillance of coal-hauling
and other bulk commodity rates. A compromise was reached that
permitted a relaxation of the ICC's rate-approval authority on a prearranged schedule. The railroads have been given significant freedom to alter rates to meet shifting market conditions, while rail users
have been given some protection against abuse of this freedom. The
result should be better service and the substitution of coal for oil
where lower total coal costs (including the cost of transportation)
warrant.
Unexpectedly sharp increases in energy prices are not the only
factor that has complicated regulatory transitions. Any unforeseen alteration in economic conditions can produce tensions. For example,
the unprecedented swings in interest rates that occurred in 1980
placed additional strains on the .already complex deregulation process of eliminating statutory differences between the various types of
financial institutions.
This discussion leads to one conclusion. Inflexible transition paths
are likely to encounter problems, particularly if the period preceding
deregulation is stretched out to protect the economic positions of
workers, shareholders, or consumers. Flexible transition paths, on
the other hand, can allow industries to weather even large unanticipated shocks by permitting innovation. Transition paths should
therefore be made as flexible as possible. Although the political difficulties of doing so should not.be underestimated, it seems preferable
to dismantle the regulatory barriers to efficient pricing relatively
quickly and to take separate action to provide compensation for capital losses or to prevent windfall gains, if necessary.
EFFORTS TO IMPROVE THE PROCESS OF SOCIAL REGULATION
While much of the economic regulation placed on the statute
books over the years has been eliminated or substantially reduced,
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Federal regulations designed to protect the natural environment and
the health and safety of both workers and consumers are necessary,
and will remain so. The unaided market has not produced socially acceptable levels of pollution or worker exposure to hazardous conditions, and there is little evidence that it will.
But Federal regulation designed to protect the environment and
the health and safety of both workers and consumers has not always
produced the hoped-for results. The challenge to those who would
reform these regulations is to design regulatory systems which intrude only to the extent required to achieve their goals and which
use enforcement techniques that are appropriate, flexible, and efficient. Means must also be found to assure that the regulatory goals
themselves reflect a proper balancing of national priorities. This may
require new oversight methods or new regulatory tools.
Oversight Activities and Institutions
This Administration has utilized a number of methods to supervise
the regulatory process. By Executive order, any executive agency proposing a major new regulation must develop an analysis of the expected economic consequences of its preferred alternative and of
other possible approaches. Although this requirement only applies to
a relatively small number of the regulations issued by the Federal
Government each year, it has helped to upgrade the entire structure
of regulatory decisionmaking. Many agencies now estimate the costs
and benefits of all proposed regulations, even though these estimates
are not always made public.
The regulatory analyses prepared by the agencies are subjected to
independent review and comment by two institutions: the Regulatory
Analysis Review Group (RARG) and the Council on Wage and Price
Stability (CWPS). The RARG, an interagency body chaired by the
Council of Economic Advisers, is composed principally of representatives from the executive branch agencies with regulatory responsibilities. It reviews approximately 10 regulations per year, concentrating
on those that may impose especially large costs or that promise to be
precedent setting. CWPS reviews approximately 50 regulations per
year and is the only Executive Office unit having explicit statutory
authority to review and comment on the proposed regulations of the
independent regulatory agencies. This ability to provide credible estimates of the costs and benefits of proposed regulations, to suggest
alternatives that might not ordinarily be suggested during the course
of a rulemaking, and to serve as a source of quality control over
agency analytical activities has proved crucial to effective regulatory
oversight.
Whenever a RARG report has been filed, and in a small number of
additional executive branch rulemakings, the Council of Economic
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Advisers and other Presidential advisers have discussed the regulation with the agency prior to its issuance but after the period for
public comment has ended. The purpose has been to assure the
President that the agency head, in making the final decision, has considered the full range of alternatives allowed by statute and has taken
cost-effectiveness criteria into account.
The task of following the development of important regulations
has been made far easier by another innovation, the Regulatory Calendar. This list of important forthcoming regulations has become indispensable to understanding the cumulative impact of regulation on
the economy. The Regulatory Council, which publishes the Calendar,
has increased the amount of crosscutting analysis in it and is also developing industry-specific calendars. The first of these will catalog all
Federal activities intended to affect the manufacture, sale, or use of
automobiles. Through the use of the Calendar, the Council also seeks
to identify overlapping regulations and tries to improve coordination
between agencies where overlap is inevitable.
In addition to these regulatory oversight activities, there have been
special reviews of all of the significant regulations affecting a few
major industries. The most widely publicized of these were studies of
the steel and auto industries conducted, respectively, by the Environmental Subcommittee of the Steel Tripartite Committee and by an
interagency committee under the leadership of the Secretary of
Transportation. Another is the review of important regulations affecting the nonferrous metals industry, announced by the Regulatory
Council in October. Special reviews of this kind are likely to become
more common in the years ahead.
Further Improvements in Regulatory Oversight Activities
The oversight practices described above have been central to this
Administration's effort to develop new techniques in an area where
the proper relationship between centralized oversight and agency
decisionmaking is unclear and where analytical techniques require
further improvement. Both the relationship and the analytical tools
will be refined in the future.
Formal consideration of the anticipated costs of any regulation is
an obvious necessity. Our national resources are not infinite. There
must be some determination of whether the anticipated costs are
within our means and our willingness to pay. Moreover, it is clearly
desirable to maximize the benefits of any given level of regulation.
Although the preceding statements may seem elementary, consideration of the anticipated costs of a regulation is sometimes prohibited by statute. The Clean Air Act, for example, has recently been interpreted in court as prohibiting the Environmental Protection
104
Agency (EPA) from considering prospective costs in setting ambient
air quality standards.
Even when consideration of costs is permitted or required by statute, agencies and courts must still decide whether this has been done
in an appropriate manner. Agency procedures and court opinions on
this subject vary. There is no universal test of economic feasibility
and no agreed-upon "best" relationship between the economic costs
of a proposed regulation and its expected benefits.
For these reasons, any sustained effort to ensure formal consideration of costs in regulatory decisions must involve the Congress, the
courts, the White House, and the agencies charged with implementing regulatory statutes. Without such broad involvement, the matter
will only be resolved on a case-by-case basis over many years. That
slow process would provide no guarantee of uniformity, but it might
well produce a regulatory paralysis arising from delay and uncertainty.
One suggested device for reconciling regulatory priorities within
and between programs is the "regulatory budget." Most of its proponents envision this device as analogous to the Federal fiscal budget,
with specific amounts of "permissible regulatory expenditures" assigned to each program and each agency. Some even envision a process of formal congressional authorization.
Although economists have made considerable progress in estimating the direct costs of complying with regulation, it is not likely that
the techniques for a full-scale regulatory budget will exist soon. But
it is feasible—and necessary—to incorporate budgetary principles, especially the establishment of priorities, into regulatory programs.
This has been the aim of the Administration's regulatory oversight
activities.
EFFORTS AT "SMARTER" REGULATION
With the direct encouragement of the President and the Regulatory Council, regulatory agencies have been experimenting with different ways to reduce the cost burden of regulation.
A good example is EPA's "bubble concept." This concept is based
on the fact that it is often possible to reduce emissions of a given
pollutant from one source far less expensively than from another
source. Thus, instead of compelling each source to meet a standard,
EPA figuratively places a "bubble" over an area (a large industrial
plant, or, in some cases, an even larger geographic area) and lets private decisionmakers decide how to meet the standard for the area at
the lowest cost. EPA initially intended to apply the concept quite narrowly, but during 1980 it gradually found ways to broaden its application. Means were found to eliminate many time-consuming procedures. The ability to develop acceptable "bubbles" for sulfur oxides
105
and particulates was demonstrated. Finally, and perhaps most importantly, a solution to a problem once thought to be insurmountable—
namely, how to permit the concept to be applied in areas of the
country not already meeting ambient air quality standards—appeared
to be in sight. As the year came to an end, numerous "bubbles" were
in the final stages of design and approval.
In some situations where the bubble concept is applied the cost
savings will approach 60 percent. Furthermore, the concept so increases engineering flexibility that it offers the prospect of sharply
reduced emissions in some cases.
Experimentation with a second regulatory innovation—the use of
marketable permits—is just beginning. EPA recently suggested an
overall limit on fluorocarbon production (and, hence, fluorocarbon
emissions), combined with the creation of a market for buying and
selling emission rights. While this approach promises substantial savings in the cost of reducing emissions, it transfers income from fluorocarbon users and producers to the government. If ways can be
found to deal with the income transfer issues, and certain other technical difficulties overcome, the use of such a strategy would permit
the continued use of fluorocarbons in those products that consumers
value most while eliminating the need for administrative agency determinations of "essential" and "nonessential" uses. It will also stimulate the development of products that make more efficient use of these
chemicals.
A third kind of effort at "smarter" regulation is the attempt to
tailor regulations to the organization being regulated. The burden of
compliance (especially the paperwork burden) often falls disproportionately on small businesses, some local governments, and certain
nonprofit organizations. While a blanket exemption of small entities
from regulation would not be feasible, it is often possible to reduce
their regulatory burden. This approach was incorporated into statute
by the Regulatory Flexibility Act of 1980, which requires the Federal
Government to estimate the costs of new regulations for small organizations and to review its existing regulations to see whether the
burden could be reduced.
Another way of improving the regulatory process is to examine existing regulations in a systematic way and eliminate those that are
outmoded or unnecessary. On the basis of such a review, the Occupational Safety and Health Administration (OSHA) has eliminated
nearly one thousand regulations during the past 4 years. And in September the Department of Housing and Urban Development (HUD)
proposed to eliminate significant portions of its Minimum Property
Standards, a large body of regulations going back almost 40 years.
These regulations had been originally designed to ensure, among
106
other things, that federally assisted housing is safe and sanitary, and
that federally guaranteed mortgages are marketable. HUD's review of
the entire set of regulations was prompted by its belief that the private market now adequately performs some of these functions.
Still other alternatives to "command-and-control" regulation are
possible. In choosing among alternatives, policymakers should seek
the least intrusive ways of achieving regulatory goals. As a matter of
course, regulators should look for techniques closely matched to the
marketplace failure which was the original justification for regulatory
intervention. Resort to a command-and-control solution should be
the last step considered, not the first or second.
FINANCIAL MARKETS ADAPTING TO CHANGE
The financial markets have proved remarkably adaptable to changing economic conditions over the past two decades. In general, the
markets' adaptations have occurred despite a slow response on the
part of legislators and regulatory agencies.
In the mid-1960s there were many restrictions on depository institutions, including the following:
• limitation of the right to offer checking accounts to commercial
banks;
• prohibition of interest payments on checking account balances;
• interest rate ceilings on savings accounts and other deposits in
commercial banks and thrift institutions, with thrifts permitted to
pay a differential of as much as three-fourths of 1 percent more
on accounts of similar maturity;
• ceilings on the maximum interest rate that could be charged for
loans;
• limitations on the types of assets that could be held; and
• geographic limitations on the establishment of branch offices
and on the acquisition of other institutions.
These restrictions—motivated by such concerns as maintaining a
sound financial system and a sufficient flow of funds for home mortgages—helped sustain the compartmentalization of depository institutions, both by function and by geographic area. Commercial banks
provided "full service" banking to households and businesses, while
thrift institutions were the principal repository for household savings
and the dominant source of funds for residential mortgages.
This rigidly segmented system worked tolerably well from the
1940s through the mid-1960s. Market interest rates generally did not
rise much above the regulatory ceilings on interest rates on deposits,
107
and most depository institutions were able to maintain a general
degree of customer loyalty while still competing for deposit and loan
business.
ADAPTING TO RISING INTEREST RATES
Since the mid-1960s, however, sharp swings in market interest
rates and a general upward ratcheting of the interest rate cycle due
to inflation have induced sweeping changes in the financial markets.
Ceilings on deposit interest rates lagged behind rising market interest rates, creating gaps between the yields from deposits with regulated interest rates and the yields available on instruments with unregulated interest rates. Depository institutions then found it difficult
to attract enough funds in regulated deposit markets to sustain their
dominance in the lending markets. Moreover, member banks of the
Federal Reserve System were further disadvantaged because they had
to maintain a portion of their deposits as reserves in noninterest
bearing balances, and the burden of these reserve requirements grew
as interest rates rose.
Throughout the late 1960s and the 1970s, banks and thrifts sought
to hold their competitive position by finding ways to attract funds
less restricted by government regulations. For example, they developed a mechanism to sell U.S. Government securities to large corporate customers, agreeing to repurchase them later. Because this instrument (called a "repurchase agreement") was not subject to interest rate ceilings—and, for member banks, bore no reserve requirement—an institution could offer its corporate customers a competitive rate on short-term balances. By 1980, repurchase agreements
outstanding at commercial banks had grown in value to roughly $30
billion. In the early 1970s some State-chartered thrift institutions in
Massachusetts and New Hampshire found that they could legally
offer Negotiable Order of Withdrawal (NOW) accounts, which are
similar to demand deposit (checking) accounts. With NOWs, which
also can earn interest, the thrifts began to compete with commercial
banks for transactions balances. Meanwhile, many commercial banks
gave up their membership in the Federal Reserve in order to avoid
the burden of its reserve requirements.
Despite these actions, banks and thrifts still were unable to provide
a fully competitive range of financial services. Nondepository institutions, less burdened by regulation, found the banking market profitable as they began issuing deposit-like instruments and offering
bank-like services. Money-market mutual funds, for example, were
able to offer small savers substantial liquidity while offering a yield
competitive with market interest rates. Many of these funds allow
"deposits" (uninsured equity interests, called shares) to be maintained in almost any amount, and most of them offer limited check-
108
ing services. Money-market mutual funds did not exist until 1971,
but by August 1980 they had grown in value to over $80 billion.
Corporate borrowers found it cheaper to bypass their traditional
lending relationships with commercial banks and increased their reliance on nonbank sources of funds like the commercial paper market,
where corporations sell direct short-term liabilities. The issuance of
commercial paper by nonfinancial firms grew from 4 percent of the
total short-term debt of business firms in 1972 to 7 percent in 1979.
Meanwhile, foreign banks, which were not burdened by Federal Reserve requirements and which had well-developed foreign sources of
funds, also began moving into U.S. markets, especially business lending. By capitalizing on the expansion of international trade and by
pricing their loans aggressively, they increased their share of U.S.
business loans from 4 percent in 1972 to 9 percent in 1979.
U.S. banks have tried to keep their share of business loans by reducing
their interest rates on loans to corporations with access to such alternative sources of funds. While the so-called prime rate is still the
lowest rate offered to good customers lacking these alternatives,
loans made at rates less than the prime rate are now commonplace.
Nevertheless, the share of total short-term business debt held by domestic commercial banks shrank from 86 percent in 1972 to 60 percent in 1979.
Even as they sought innovative ways to bypass the regulatory structure and to maintain their markets, some depository institutions
urged regulatory agencies to loosen their restrictions. The call for
deregulation was less than unanimous, however, since many institutions believed that the regulatory structure still protected their profitable markets from encroachment by competitors. Nevertheless, experiments in deregulation were conducted by both Federal and State
financial regulators in the 1970s (Table 11). In the early 1970s, for
example, interest rate ceilings on large time deposits ($100,000 or
more) were removed, in part to permit banks to meet the strong
demand for bank credit that developed when the failure of the Penn
Central temporarily destabilized the commercial paper market. This
action provided banks and thrift institutions with new access to the
open market, and by the end of 1980 they held more than $250 billion in such deposits. More recent regulatory changes have allowed
banks and thrifts to compete for the funds of smaller savers by issuing 6-month money-market certificates (MMCs) and 2V2-year small
saver certificates (SSCs). These instruments, whose interest rate ceilings are adjusted frequently to keep pace with market interest rates,
had attracted roughly $475 billion to banks and thrift institutions by
the end of 1980.
109
TABLE 11.—Selected financial regulatory changes, 1970-80
Change
Date
June 1970
September 1970
June 1972
May 1973
January 1974
August 1974
November 1974
April 1975
November 1975..
February 1976
May 1976
June 1978
October 1978
November 1978
July 1979
January 1980
March 1980
Regulation Q ceilings on time deposits of $100,000 or more with maturities of 30-89
days suspended.
Federally chartered savings and loan associations permitted to make preauttiorized
nonnegotiable transfers from savings accounts for household-related expenditures.
State-chartered mutual savings banks in Massachusetts began offering NOW accounts.
Regulation Q ceilings on time deposits of $100,000 or more with maturities exceeding
90 days suspended.
All depository institutions in Massachusetts and New Hampshire authorized by
Congress to offer NOW accounts.
Selected Federal credit unions permitted to issue credit union share drafts, check-like
instruments payable through a commercial bank.
Commercial banks permitted to offer savings accounts to State and local government
units.
Member banks authorized by the Federal Reserve to make transfers from a customer's
savings account to a demand deposit account upon telephone order from the
customer.
. . ., Commerciat banks authorized to offer savings accounts to businesses.
Congress extended NOW accounts to all New England states.
New York permitted checking accounts at State-chartered mutual savings banks and
savings and loans.'
Six-month money market certificates (MMCs) introduced at banks and thrifts.
Congress extended NOW account authority to New York State.
Commercial banks and mutual savings banks authorized to offer automatic transfer
(ATS) from a savings account to a checking account or other type of transactions
account.
A floating ceiling for time deposits at banks and thrifts with a maturity of 4 years or
more established.
The floating ceiling extended to time deposits with a maturity of 2Vz years or more.
The Depository Institutions Deregulation and Monetary Control Act of 1980 enacted.
ADAPTING TO GREATER RATE VARIABILITY
While the depository institutions were adapting to greater competition and the high interest rate environment, they also faced the problem of growing interest rate risk. Increased rate variability and the
upward ratcheting of interest rates have been especially troublesome
to these institutions because their liabilities have traditionally matured more quickly than their assets. Moreover, while the new types
of variable-rate instruments have allowed them to keep many of their
depositors, these instruments have facilitated a shift of funds from
stable, low-interest savings accounts to more variable and higher interest liabilities. Consequently, as market interest rates rise, so do the
rates they must pay on their liabilities. When this happens, banks and
thrifts lose income because the yield on their longer-term assets does
not rise commensurately.
Depository institutions have responded to this problem by shortening the maturities of their loans and by offering loans whose interest
rates are frequently adjusted over the course of the loan to prevailing
market rates. In 1980, for example, almost 70 percent of term business loans extended by commercial banks had floating interest rates.
Similarly, banks and thrift institutions have introduced new mortgage
instruments—including the variable-rate mortgage and the rolloverrate mortgage—whose rates are adjusted every year or so—in stark
contrast to the traditional 30-year, fixed-rate mortgage. The thrift institutions also sought to remove the legislative restrictions on their
110
holdings of consumer and business loans, which have shorter maturities than mortgages.
PRESSURES FOR COMPREHENSIVE LEGISLATION
In the late 1970s there was a growing realization throughout the
financial community that despite piecemeal modernization, regulations affecting depository institutions needed more sweeping reform.
The regulatory structure no longer was satisfying its original objectives. Instead, it was creating inefficiencies and inequities. It even diminished the effectiveness of monetary policy as banks left the Federal Reserve System. Pressures from various sources finally resulted in
a compromise bank reform bill, the Depository Institutions Deregulation and Monetary Control Act of 1980.
Under this law, interest rate ceilings on time savings deposits will
be phased out over 6 years. Moreover, beginning December 31,
1980, all depository institutions were allowed to issue NOW accounts
to individuals and nonprofit organizations. In addition, uniform
reserve requirements will apply to all depository institutions
by the end of an 8-year transition period. As a result, the burden of
reserve requirements will be spread more equitably among all institutions, and the Federal Reserve's control over the deposit base will be
improved. The law also expands the asset flexibility of savings and
loan associations, which will now be allowed to place up to 20 percent of their assets in consumer loans, while mutual savings banks
will be allowed to invest up to 5 percent of their assets in business
loans. Finally, the act repealed State usury ceilings on mortgage interest rates and relaxed State usury ceilings on consumer and business loan interest rates. These ceilings had seriously depressed such
lending in certain States at various times during the past decade.
THE FINANCIAL STRUCTURE OF THE 1980s: BENEFITS, RISKS, AND PUBLIC
POLICY
Today's financial environment is very different from the placid
conditions of two decades ago, and it is likely never to revert
to that earlier state. Changes in the financial markets have had significant impacts on the behavior of depositors, borrowers, and depository institutions who—along with the financial regulatory agencies—will face further challenges in coming years.
Depositors
Higher and more volatile interest rates have increased depositor
awareness of the importance of actively managing their financial
assets. Moreover, the proliferation of savings alternatives has provided depositors with access to new markets where they can receive a
higher average return on their savings than previously. Even if inter-
111
est rates return to lower levels, it is likely that the market for deposits
will remain more competitive and that savers will continue to be
more interest-sensitive. This should work to encourage greater saving at a time when an increase in the Nation's rate of saving and
investment would be welcome.
While savers as a whole benefit from these reforms, however, not
all individual savers will achieve a higher overall rate of return. In
many cases the depository institutions have offset part of the increase
in interest which they must pay for deposit funds by raising the
prices of their checking and other financial services. Depositors who
maintain high balances but use relatively few services will benefit
considerably, while depositors who maintain relatively low balances
and who benefited in earlier years from free or low-cost services may
find these new practices to their disadvantage.
Borrowers
Many of the innovations adopted by depository institutions to
make loan rates vary in accordance with changes in market rates have
shifted the risk of interest rate variation to borrowers. As finance
costs have risen and become more variable, financial management
has assumed more prominence as a corporate management function.
In the past decade, corporations have significantly improved their
cash management and have increased their use of alternative sources
of funding, such as commercial paper. Meanwhile, corporations have
relied much more heavily on short-term debt to finance their activities and have shortened the maturities of their bond issues. Some observers have expressed concern that this tendency toward shorter maturities of liabilities could lead corporations to reduce their commitments to long-lived capital investments in plant and equipment,
which would limit the Nation's ability to improve productivity. It
should be recognized, however, that corporations are at least partially protected against inflation-induced changes in interest costs if borrowed funds are invested in real capital. That is, if changes in the
expected rate of inflation account for fluctuations in interest rates,
the expected nominal revenue from capital investment is likely to
shift in the same direction as nominal borrowing costs.
If corporations want further protection from changes in interest
rates, they can pay to get it. They might, for example, make use of
the financial futures markets which have developed quite rapidly in
recent years. The total volume of 3-month Treasury bill contracts on
the financial futures markets rose from $100 billion in 1976 to over
$2.7 trillion in the first 10 months of 1980.
One specific borrowing sector that has lost much of its protected
status as a result of the new competitive environment is housing. The
thrift institutions no longer enjoy many of the special advantages
112
they once had and thus cannot continue to channel funds to housing
at artificially low interest rates. Although changing competitive conditions may mean a somewhat higher and more variable cost of funds
for thrifts, the new regulatory environment should help to stabilize
their deposit flows and hence the supply of mortgage funds. Furthermore, the Federal Government has supported the expansion of secondary mortgage markets to attract additional capital into housing.
The secondary market institutions—the Federal National Mortgage
Association (FNMA), the Federal Home Loan Mortgage Corporation
(FHLMC), and the Government National Mortgage Association
(GNMA)—have expanded the scope and volume of their activities.
Market acceptance of new financial instruments like the mortgagebacked securities issued by these institutions has grown, thus cementing more firmly the link between capital markets and mortgage
credit. GNMA securities alone have increased to more than $90 billion in the past 3 years. While these developments in financial markets should tend to increase the variability of mortgage interest rates,
they should also tend to reduce the cyclical swings in mortgage
money availability. It is too early to tell whether these changes will
mean more or less cyclical variation in home sales and residential
construction.
Depository Institutions
Banks and thrift institutions now operate in a much more competitive environment, and the risks associated with interest rate swings
are much greater. Partially offsetting these developments are the
broader range of financial instruments they can offer and their expanded lending powers.
But legal and regulatory limitations still exist that, if liberalized,
would allow further adjustment to new financial conditions. Current
law, for example, restricts banks and thrifts from expanding into natural market areas. A recent Administration study concluded that a
liberalization of Federal restrictions on geographic expansion by
commercial banks would increase banking competition in local markets and result in more and lower priced services. Some tentative
steps toward the removal of the barriers to geographic expansion
likely will occur in coming years. There may also be a further loosening of the asset restrictions on thrifts and commercial banks—for instance, allowing thrift institutions more leeway to make business
loans or allowing both types of depository institutions broader
powers to hold financial futures contracts and stocks, and to underwrite bond issues and insurance.
Even with changes like these, however, some institutions will find it
difficult to adjust. Since the government shaped the financial world
that existed when these institutions were founded, it now faces the
113
task of helping them evolve in an orderly manner. Success will
depend in part on general economic conditions, and as these conditions change, the regulators must be prepared to react.
A case in point is the gradual removal in the last few years of ceilings on deposit interest rates. It was initially anticipated that relaxation of the ceilings, combined with an eventual liberalization of the
types of assets that could be held, would allow thrift institutions to
gradually correct imbalances in their portfolio maturities and thus
limit their exposure to rising interest rates. But quick acceptance of
floating-rate certificates by small savers at a time of rapidly rising interest rates has raised the interest expense of these institutions much
faster than they have been able to increase the revenues on their
loans. While most of the thrifts will achieve a better asset/liability
balance in the long run, the current squeeze on profits resulting from
rapidly rising market interest rates threatens some of them with serious financial difficulties.
One way to deal with this problem would be to subsidize endangered institutions, perhaps by buying their low-yield, long-maturity
assets (mortgages) at above-market prices. This would involve a substantial budgetary outlay, however. Another option would be to
permit the troubled institutions to fail outright, but this approach
would risk destabilizing the financial markets arid could result in significant losses to uninsured depositors and the Federal insurance organizations.
Neither of these approaches responds directly to the inefficiencies
created by remaining regulatory practices which continue to compartmentalize depository institutions. Thus, a third and preferred alternative would be to remove restrictions that now prevent efficient consolidation among financial firms. This would require further deregulation to allow mergers across State lines and between different types
of institutions, since these restrictions remain a major obstacle to the
efficient reorganization of financial institutions. As a result of these
changes, the weakest institutions would find more opportunities for
mergers. While this would not solve the problems of all endangered
institutions, it would allow a more stable reordering of the financial
sector where appropriate while minimizing the budgetary cost and
sharply reducing the risk to financial markets of policies aimed at the
remaining problem.
Conclusions
During the last two decades the pace of innovation in the financial
markets has been quite rapid as depositors, borrowers, and financial
institutions have sought new ways to adapt to high and variable interest rates. Unfortunately, a lag in both legislation and financial regulation meant that a considerable amount of innovation was applied to
114
finding ways around outdated regulatory barriers. But changes in the
regulatory structure in the seventies, culminating with the Depository
Institutions Deregulation and Monetary Control Act of 1980, have
aided greatly in making regulation compatible with the new financial
environment. The challenge for financial regulatory policy during the
1980s will be to rationalize regulation even further to achieve the appropriate balance between unnecessary restraints on the market and
the regulatory goals of preserving the safety and soundness of the financial system and providing the tools for an effective monetary
policy.
THE ALTERED ROLE OF AGRICULTURE
For decades, U.S. agriculture was a sector with chronic excess capacity and low returns. Productivity increases that exceeded growth
in demand resulted in declining real food prices for more than a
quarter of a century.
The decade of the seventies saw virtually all of these circumstances
change. Farm and food prices increased and became more volatile
(Charts 5 and 6). A modest shortfall in the world crop and major
trade policy changes in the United States and the Soviet Union contributed to the initial price shock in 1972, and the growing worldwide
demand for food helped sustain demand pressures from 1973 on.
The large surpluses of grain purchased by the Federal Government
in earlier years to increase farm income had been sold by 1973 and,
by 1974, for the first time in more than two decades, the cropland
base was nearly fully employed. It has remained that way since then.
To produce more from the available land, the use of industrial inputs
increased. Chemical use, for example, increased nearly 37 percent
from 1970 to 1980.
The cash receipts of farmers increased dramatically after 1972, but
production cost increases eroded much of the apparent gain in
purchasing power. Prices paid for production inputs in 1980 were
more than 2V2 times their 1970 levels. The price of agricultural real estate increased an average of 13 percent per year,
nearly twice the average annual inflation rate for the decade. Still,
the average per capita disposable income of all farmers during the
1970s from both farm and nonfarm sources was nearly 90 percent of
that earned by the nonfarm population, up sharply from the 65 percent average figure of the 1960s.
Meanwhile, the rapid exodus of labor from agriculture virtually
stopped as the farm labor force stabilized at about four million persons. Not only was there a substantially smaller and more stable farm
population, but there were substantially fewer farms, and a smaller
115
Chart 5
Prices Received by Farmers
1967=100
260
_ ALL FARM PRODUCTS
I
220
\
r
180
A
V
/
V 1970 80 V
*^
I
140
_
1960-70
100
>ffi^7ffT^hT^|
I
ln.nl
I.....I.....I
IM.MI
I
1960-1980 MONTHLY
SOURCE: DEPARTMENT OF AGRICULTURE.
Chart 6
Relative Food Prices
RATIOV
1.21
SEASONALLY ADJUSTED
9 lifl tilifilitiT
1947
1950
1955
1960
1965
1970
1975
OF IMPLICIT PRICE DEFLATOR FOR FOOD TO IMPLICIT PRICE DEFLATOR FOR
ALL PERSONAL CONSUMPTION EXPENDITURES.
SOURCE: DEPARTMENT OF COMMERCE.
116
1980
proportion of the existing farms produced most of the Nation's food
and fiber. In 1940, when there were more than six million farms, the
largest 2 percent accounted for about 25 percent of all sales. By 1980
less than half as many large farms accounted for nearly 40 percent of
all sales.
EXPANDING AGRICULTURAL EXPORTS
Perhaps the most significant change in American agriculture during
the seventies, however, was the huge expansion in exports. Grain exports tripled in volume, while the dollar value of all agricultural exports increased nearly sixfold. But this growth in value and volume
came with increased volatility in prices and production.
The present competitive advantage of U.S. agriculture is impressive. In the 1960s, exports represented 14 percent of total farm cash
receipts; in 1980, cash receipts from exports represented nearly 30
percent of the total (Table 12). To accommodate the increase in
export volume, the amount of land devoted to the production of
crops for export nearly doubled. Transport systems and storage facilities have been pushed to their limits at times. Nonetheless, agricultural exports have not increased their share of total U.S. exports.
Since the end of World War II, agriculture's share of total exports
has remained at approximately 20 percent.
TABLE 12.— The role of agricultural exports, 1930-80
[Calendar years]
Agricultural exports
Value
(millions of
dollars) 1
Period
1930-39
1940-49
1950-59
1960-69
1970-79
...
..
1976
1977
1978
1979
1980
2
As percent of
all exports
As percent of
farm cash
receipts
785
2,294
3,593
5,864
19,668
30.6
22.5
22.3
21.6
20.5
10.5
10.7
11.4
13.9
22.1
22,997
23,636
29,384
34,745
20.3
19.9
20.8
19.5
24.1
24.2
25.4
26.2
40,500
19.3
29.1
1
F.a.s. (free alongside ship) value.
2
Estimates.
Sources: Department of Agriculture and Council of Economic Advisers.
The increased importance of exports, coupled with the disappearance of surplus grain stocks and nearly full use of the cropland base,
has exposed U.S. farmers and consumers to an unaccustomed degree
of instability in commodity prices. Part of this instability comes about
because of unpredictable world weather, but much of it has been the
result of our own policies and those of our trading partners.
117
Many nations have policies to shelter their economies from extreme fluctuations in commodity prices. The European Community,
for example, maintains higher farm prices in member countries by
varying duties on farm commodity imports and the subsidies on exports. These practices tend to make world commodity prices more
variable by increasing the variability of European Community export
and import levels. European food prices are therefore more stable
than ours but are generally higher, with a resulting reduction in the
European standard of living.
Centralized trading decisions by other grain exporters and by most
of the grain-importing countries have also tended to increase the
volatility of world grain prices. Canada and Australia, for example,
routinely impose quantitative restrictions on grain exports when domestic price stability is threatened. Furthermore, an increasing proportion of exported grain is going to countries that do not allow the
free movement of prices to allocate resources internally. The centrally planned and certain developing countries, for example, rely on the
United States and other major exporters for marginal supplies,
making "needed" purchases without much apparent regard for price.
Taken together, the efforts by other countries to stabilize their domestic food prices and supplies have shifted the costs of increased
price variability onto farmers and consumers in the United States.
Prices and income may vary at times as a result of international political considerations. The January 1980 ban on the sale of certain agricultural products to the Soviet Union originated from considerations other than the typical tug-of-war between consumer prices and
farm income, namely, foreign policy considerations following the
Soviet invasion of Afghanistan. The Administration was obviously
aware of the potentially adverse economic effects of that sales suspension and took significant steps to minimize them.
Unpredictable actions of other countries can also impose price
shocks on the United States. A unilateral reversal in agricultural
policy by the Soviet Union or China or a deterioration in East/West
relations would have major implications for the U.S. farm sector.
Thus, the fact that our growing food trade is now affected by international political affairs is a source of added risk to private investors in
the agricultural sector.
The need for stabilization mechanisms in this environment should
be evident. Agricultural demand and supply are both quite inelastic
in the short run. Small changes in either can lead to large changes in
price. While such price movements serve the important economic
purpose of allocating available supplies, they can also have disruptive
consequences. Rising corn prices, for example, set in motion adjustments in the livestock sector that have implications for domestic meat
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prices for years in the future, regardless of the size of succeeding
corn harvests. The domestic livestock sector, in fact, is still making
adjustments stemming from the very high grain prices of 1972-74.
Grain Reserves
Reserve stocks stand as the only real source of protection against
inflationary rises in the price of food in market economies during periods of short supply. They also cushion farmers against declines in
the prices of agricultural commodities during temporary periods of
overproduction. If the flow of information and the credit markets
were perfect, private agricultural stocks might be expected to provide
the needed price stabilization. But the flow of information and the
credit markets are not perfect. Moreover, private holders of agricultural commodities are unlikely or unable to take account of macroeconomic effects when they make decisions on whether or not to
store commodities.
The program of farmer-owned grain reserves implemented by the
Administration in 1977 (discussed in the 1980 Report) has proved to
be a popular, flexible, and efficient mechanism to cushion price
shocks. The Administration's initial stock objective was achieved by
early 1979, when more than 11 million tons of wheat and 20 million
tons of feed grains had been placed in reserve. When prices then increased because of reports of a smaller-than-expected Soviet harvest,
the stocks were released. By mid-October 1979 farmers had withdrawn over 40 percent of the wheat and sorghum and more than 25
percent of the corn in the reserve. When sales to the Soviet Union
were halted in early 1980, stocks flowed back into the reserve and
helped keep farm prices from falling as much as they would have
without it. Those stocks are now available to help offset the adverse
effects of the 1980 summer drought.
Clearly, grain prices and farm income over the past 4 years would
have been more volatile without such a compensating mechanism. It
is also probable that export earnings were increased because more
grain was available for export during periods of high prices. In any
case, the availability of large reserves allowed us to retain our export
markets and enhance our reputation as a reliable supplier even in periods of short world supply and high prices. Moreover, the only nonrecoverable taxpayer costs of this program have been payments for
storage and interest costs on the Commodity Credit Corporation
(CCC) loans extended to farmers when grain was placed in the reserve.
The Reduced Need for Subsidies
The improving economic health of the Nation's farmers suggests
that subsidizing farm income is less essential today than it was in the
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past. The growing importance of exports makes it more likely that
the benefits of U.S. grain reserves will accrue disproportionately to
foreign customers. Together, these observations suggest two things:
first, that grain sold from the reserve should be priced high enough
to cover not only the cost of grain production but, if possible, program costs as well; and second, that the incentives to place grain in
reserve should be no greater than necessary to meet our objective of
price stabilization. Present policy, including administrative procedures and legal authority, does not serve either of these objectives as
well as it might.
Current law, for example, requires waiver of the interest that
would normally be paid by farmers on CCC loans and taxpayer payment of the storage costs. Thus, if the grain is sold at a lower price
than would be required to cover these carrying costs, export customers benefit because American taxpayers subsidize the storage of
grain. But if grain from the reserve is sold at prices high enough to
cover these costs, farmers receive a windfall profit that may be unnecessary to assure the accumulation of reserves that will accomplish
the price stabilization objective.
By requiring farmers to pay the storage costs and the interest on
the loans, the beneficiaries of the reserve (both U.S. and foreign customers) would be paying for the system's operation. Requiring farmers to pay such costs would, however, probably result in reserves too
small to accomplish the price stabilization objective. To attract the
desired stocks, farmers might be offered higher loans for grain entering the reserve. The most efficient way to acquire a reserve of a
given size would be to require farmers to bid for the right to place
grain into the reserve. Under such a plan, farmers offering to place
grain in reserve at the lowest loan rates would be authorized entry.
The flexibility granted by the Agricultural Act of 1980, which authorizes higher-than-normal loan rates for grain entering the reserve,
might be used to implement such a plan. Legislative changes would,
however, be required to allow the farmer to pay storage and interest
costs.
In addition to subsidizing the grain reserve, the Federal Government has subsidized the use of key agricultural inputs. Programs
under which the Federal Government has shared with farmers the
costs of soil conservation, land development, pest control, and the
like, have been commonplace. As farm exports grow, so will the
extent to which such subsidies transfer national wealth to export customers. To avoid unintended transfers, the resources committed to
agriculture must be properly priced. This means, for example, that
the price of exported grain should reflect the full costs of transporting it. Similarly, the Nation's limited natural resources, such as un-
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derground water resources once thought virtually unlimited, should
now be priced to more appropriately reflect their limited availability.
FUTURE CAUSES OF RISING FOOD PRICES
When food prices soared upward in 1973, many economists saw it
as a temporary deviation from the longer-term trend, and the apparent return of surplus production in 1976-77 helped support this
notion. But food prices did not fall to their earlier trend line (Chart
6). While exhibiting the same increase in variability as commodity
prices, food prices remained high relative to other prices throughout
the 1970s, and additional price increases are likely for at least the
first half of the 1980s.
The Rising Demand for Output
Projected increases in exports and in the use of grain domestically
for animal feed indicate sustained upward pressure on commodity
prices for the next several years. Other economic forces will place
still more pressure on agricultural resources, particularly cropland.
Rising energy prices, for example, are increasing the demand for natural fibers, primarily cotton. High sugar prices and the expanding
use of sugarcane for ethanol production in Latin America are expected to double the demand in the United States for corn as a sweetener by 1985.
But perhaps most important is current energy policy which encourages the production of alcohol fuels from corn. This policy implies the need for an additional 370 million bushels of corn and a 5
percent increase in corn cropland by the end of 1982. The ethanol
produced from the corn would replace about 60,000 barrels of oil
per day—about 1 percent of U.S. oil imports. Other things being
equal, such an increase in demand would increase the season average
price of corn about 10 percent. The high cost of producing ethanol
and the higher corn price, even when offset by the value of the ethanol by-products and an increase in export earnings, would mean
that the Nation was paying nearly twice the present world price for
each barrel of foreign oil displaced. The benefits of the gasohol program may be substantial and difficult to quantify, but its costs are
large and its pressures on cropland significant. Furthermore, given
the incentives already authorized, the amount of corn required for
gasohol could more than double by 1985.
Pressures on Farm Input Use
By itself, a growing demand for agricultural products would not
necessarily mean rising real prices. Advances in crop yield and other
productivity gains throughout much of the postwar period made it
possible to increase production in line with steadily growing demand
without bringing high-cost, marginal resources into use. But this is
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unlikely to happen in the future in part because of energy. In 1975,
when data first became available, energy-intensive inputs (excluding
fertilizer) accounted for 23 percent of the variable cost of producing
an acre of corn. Those same inputs accounted for 31 percent of the
variable cost in 1980. Higher real prices for these inputs will be a
disincentive to their use and intensify the pressure to use additional
land and water resources. These resources are also more limited. In
1972, for example, more than 16 percent of the cropland base was
being withheld from production by government policies. None is
being withheld today. To raise production further, land will have to
be diverted from other uses and developed for crop production. The
cost of doing so will be reflected in higher agricultural prices.
Changes in policy, however, could help to ameliorate future increases in food prices. Certain land-use patterns remain fixed by
acreage allotments. Fruit and vegetable growers sometimes restrict
output or otherwise control marketing to enhance prices and then
seek restrictive trade policies to protect those higher prices. Certain
regulatory procedures now impose economic penalties on the use of
technologies that would raise productivity in the food system. Such
policies deny both producers and consumers the benefits of technological change. Finally, certain price support decisions continue to be
statutorily dependent on movements in an outdated parity index that
has little relation to product-specific costs of production. The dairy
price support program is perhaps the best known example here. Such
policies enhance the economic position of some farmers, while they
perpetuate existing—but not necessarily efficient—patterns of resource use. Such inefficiency is particularly costly in a period of relative resource scarcity and limits agriculture's potential contribution to
economic growth.
POLICY DIRECTIONS FOR THE 1980s
Significant progress has been made over the past 30 years in adjusting U.S. agricultural policies to a changing world. More importance has been placed on the allocative function that can be performed by prices, and there is significantly less direct government interference with producer decisionmaking.
This Administration's farm policies have contributed to the evolutionary process. The implementation of a farmer-owned grain reserve
program stands out because of its flexibility and its success in moderating price fluctuations stemming from changes in production and
consumption levels. Additionally, the recent formation of a government-owned food reserve increases the likelihood that food will be
available to foreign nations during emergency situations, even when
world prices are high and commercial supplies are limited. The 1980
passage of a statute permitting the creation of a partially subsidized,
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comprehensive, actuarial crop insurance program means that there
will be a more equitable sharing of natural disaster risk between
farmers and taxpayers. Eventually this new program—which expands
the private sector's role in insuring farmers against such risks—will
replace the more limited free insurance that is now provided for certain farmers through the fully subsidized disaster payments program.
Future changes in agricultural policy must build on this foundation. In particular, attention must be given to the use of natural resources. Past agricultural policies have treated land and water as gifts
of nature. The need for pricing them in ways that more appropriately
reflect their true social value will intensify. Specific programs must be
developed for this purpose; conservation of soil and pricing of other
natural resources can no longer simply be by-products of programs
to enhance farm income.
Taken together, these policy issues point to a broader reliance on
market forces, but the critical importance of food to national security
will dictate a continued role for government in determining agricultural policy. Finding new and more flexible ways to use resources
more efficiently while guarding against price volatility will be the
principal farm policy challenge of the 1980s.
TRENDS IN INDUSTRIAL AND LABOR MARKETS
The preceding sections described developments in energy, regulation, the financial markets, and agriculture that have put severe pressure on the economy's adaptive capabilities. Each case illustrated the
need for policies that facilitate adaptation to future as well as current
developments. These four areas are not unique, however. Throughout the economy, deep-seated trends are increasing the need for
greater adaptability.
INDUSTRIAL CHANGE
One such trend is the elimination of previous competitive advantages in some sectors and the creation of new ones in others. In the
case of automobiles, for example, competition on the basis of technological advances and fuel economy is replacing competition based on
style and performance. Vehicles manufactured in large volume according to stringent quality standards and utilizing the latest technology are replacing vehicles whose style changed annually but whose
technology evolved more slowly. The emergence of the so-called
"world car," with its international sources of key components, is evidence that this remarkable change has not been limited to the United
States.
Nor are these kinds of competitive pressures new. Similar pressures over the years have occurred in textiles, apparel, and footwear.
123
In each of these industries today, the profitable U.S. producers compete in ways very different from their predecessors, whether by manufacturing specialty fabrics, blue jeans, or canvas shoes.
What is new, however, are the widespread pressures for substantial
adaptation due to recent changes in energy and capital markets.
These pressures are also occurring at a time when the economy is
growing slowly. In the past, growth has often served as a "shock absorber" to cushion change, but the slow pace of growth has made the
problems of readjustment more painful. Furthermore, some of the
industries experiencing intense change are large and highly visible
regional employers. There is simply no easy way to absorb the closing of an integrated steel facility or an automobile plant that dominates its local labor market. Lastly, these pressures for job protection
are occurring at a time when the changing composition of the labor
force may be tending to reduce mobility.
CHANGING LABOR FORCE COMPOSITION
During the past decade, the number of people with jobs grew at
record rates, and the average age and experience of workers fell.
During the coming decade, the growth of the labor force will slow
considerably, and the average worker will be older and more experienced.
Both of these changes result from two related demographic phenomena: the maturing of the baby-boom generation and the rise in
female labor force participation rates. From the end of World War II
until the beginning of the 1960s, the Nation experienced a sharp rise
in the number of births which temporarily reversed the long-term decline in birth rates. This generation began entering the labor market
in the 1960s and the influx of new workers continued during the
1970s. The percentage of the population aged 16 to 24 rose from
12.1 percent in 1960 to 15.8 percent in 1970 and 17.0 percent in
1979.
Female participation rates increased gradually during the babyboom years. An even greater increase in the number of women workers has occurred in more recent years. The rate of participation in
the labor force increased from 34 percent to 39 percent between
1950 and 1965; by 1980, more than 51 percent of the country's adult
women were in the labor market.
The maturing of the baby-boom generation and the sharp rise in
the number of working women meant that U.S. labor markets had to
absorb record numbers of new and inexperienced workers. During
the 1970s the civilian labor force increased at an average annual rate
of 2.5 percent, compared to 1.1 percent during the 1950s and 1.7
percent during the 1960s. The influx of young workers, combined
with an increase in the number of older workers retiring early, pro-
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duced a decline in the median age of the labor force from 39 years in
1965 to 34 years in 1980.
As discussed in Chapter 1, the economy did remarkably well in
providing jobs for these new workers. In fact, the unemployment
rates for white youths and adult women have not increased relative
to those of prime-age men. Unfortunately this success was not evenly
spread across demographic groups. The high unemployment rate for
young blacks, which has deteriorated considerably and is currently
well above 30 percent, indicates serious shortcomings in labor markets or other social institutions. This unemployment problem has
persisted in spite of substantial Federal efforts to improve the quality
of primary and secondary education for minorities, to expand postsecondary training programs, and to provide on-the-job training in
public sector jobs.
During the next decade the number of people reaching adulthood
will continue to be larger than the number reaching retirement age,
but the generation entering the work force will be considerably
smaller than the cohort which began work in the 1960s and 1970s.
Even if female labor force participation rates continue their rapid
rise, the Bureau of Labor Statistics (BLS) projects that labor force
growth will average only 1.3 percent per year during the 1980s.
The decrease in entrants into the labor force during the next
decade should have several effects. First, the increasing average age
of the labor force will tend to lower the aggregate unemployment
rate. The rate was higher during the 1970s at least in part because
the transition from school or home to a job takes time; young people
and women entering the labor market may be counted as unemployed during that search period. In addition, as they try out different career possibilities, new workers tend to change jobs more often
than experienced workers, often with spells of unemployment between jobs.
The transition to an older labor force will probably lead to some
increase in productivity as the average level of experience rises. One
estimate suggests that shifts in the age-sex composition toward
groups with below-average experience reduced productivity growth
by 0.4 percentage point per year between 1966 and 1973. Since then,
the reduction has been about 0.2 percentage point per year. During
the 1980s, changes in the age-sex ratio should raise productivity by
0.1 percentage point annually.
Demographic changes will also tend to raise productivity by
making it easier to increase the capital-labor ratio. Even if the capital
stock only grows at past rates during the 1980s, the amount of capital per worker will grow as the rate of growth in the number of workers falls. Moreover, the relative growth in the number of middle-aged
125
members of the population, who typically have higher rates of saving
than either the young or the elderly, should increase the Nation's
saving rate and facilitate growth in the capital stock.
But a third effect of the rising average age and experience of the
labor force will be a decrease in flexibility. Shifts in the demand for
labor by region, industry, and occupation are most easily met when
young workers just entering adulthood are available to move to areas
where the growing sectors of the economy are located. These younger workers are not tied to the skills gained from long experience in
one job, they generally do not own homes, and their ties to communities are weaker. Further, young workers normally have more years
over which to recoup the costs of acquiring new skills or moving to a
new community.
Older experienced workers and individuals in two-earner families
are often much less flexible in changing jobs, industries, occupations,
or communities. If there is a decline in the demand for the type of
labor they supply, they are less able and willing than younger workers to move or to abandon old skills or to learn new ones. Firms are
less interested in absorbing the costs of training older workers for
new careers. Therefore, although older workers are less likely to lose
their jobs, if their jobs do disappear they are likely to have a harder
time than young workers in finding a new job and are likely to be
unemployed for a longer time. Thus, although total unemployment
rates will tend to fall as the labor force ages, the percentage of workers unemployed for extended periods may rise.
Although U.S. labor markets may become less flexible in the
future, we currently appear to be able to find new jobs for displaced
workers more rapidly than several major European economies. The
more rapid the adjustment to employment shocks, the lower will be
the percentage of workers unemployed for extended^ periods. Table
13 presents the long-term unemployed as a percentage of the total
labor force for the United States, Germany, France, and the United
Kingdom. Although these percentages undoubtedly reflect international differences in definitions of employment and in stages of the
business cycle, they do suggest that American workers suffer less
long-term unemployment than their European counterparts.
However, the adjustment to new patterns of labor demand -in the
economy of the 1980s may be more difficult than it has been in the
past, and government assistance may be necessary to soften the
shocks of structural change while promoting flexibility. Such programs can be designed to move workers to jobs or jobs to workers.
The former include retraining programs for the unemployed as well
as relocation subsidies to encourage them to move from depressed
areas to communities with excess demand for labor. The latter in-
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elude government investments in local infrastructure and investment
subsidies to encourage expanding firms to replace contracting ones.
Whatever combination of policies is chosen, efforts to cushion the
shocks of adjustment should not themselves discourage adaptation.
TABLE 13.—Long-term unemployment as percent of labor force,
United
States
Year
1973
1974
1973-80
Germany
France
United
Kingdom
0.89
1.00
0.43
0.94
1.57
1.66
1.22
1.11
1975
1976
1977
1978
1979
2.63
2.41
1.92
1.34
1.14
2.38
2.40
2.34
2.25
1.92
2.64
3.06
3.47
3.72
4.42
1.80
2.73
3.25
3.40
3.35
1980
1.71
(M
n
0)
...
1
Not available.
Note.—Long-term unemployment is defined as 15 weeks or longer for the United States, 14 weeks for the United Kingdom,
and 3 months for France and Germany.
Source: Organization for Economic Cooperation and Devefopment.
THE DILEMMA OF INDUSTRIAL POLICY
Chapter 1 of this Report and the preceding sections of this chapter
describe an economy facing increased pressure to adjust to changing
economic circumstances in a period of restrained growth. The increase in Federal involvement in areas previously considered to be
the domain of private decisionmakers has also been detailed. The
recognition that increased adjustment is needed and that the resources to smooth the path of this adjustment are limited, has led
some to propose an explicit "industrial policy" to guide the broad
collection of Federal activities affecting individual industries and sectors. These proposals, and the conflicting pressures they have created, illustrate the dilemma stated at the beginning of this chapter:
Increased Federal involvement in the economy carries with it both
the potential to improve and the threat of reducing the economy's
efficiency and adaptability.
The steel industry, for example, faces a major financial burden in
complying with clean air and water mandates. It is also beset with
major problems of economic adjustment because of vigorous foreign
competition, technological evolution, changes in labor and raw material costs, and geographic and compositional shifts in the demand for
steel. Similarly complex circumstances have been developing in the
auto sector for several years. In 1980 the combination of recession
and sharply higher gasoline prices focused public attention on the
domestic industry's longer term problems of coping with foreign
competition, improving productivity, and retooling to meet the
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changed needs of customers. Rubber is a third large U.S. industry
that has been confronted by intense structural problems.
The realization that many of the dislocations brought about by new
conditions have been disproportionately concentrated in certain regions of the country, and growing recognition of the scale of investment in our industrial infrastructure necessary to meet all our social
and economic goals, led to a broad-scale Federal review of policies
for promoting and channeling investment, encouraging innovation,
and dealing with labor-market disruptions. The President's Economic
Revitalization Program, described in Chapter 3 of this Report,
emerged from this review.
Two central issues arose in these discussions: first, the extent to
which the Federal Government ought to be involved in determining
the pace of growth and decline in individual industries and regions—
in other words, the extent to which the government ought to be involved in "picking winners" or supporting older industries that are
faced with major adjustments; second, the extent to which the government ought to supplant the private sector in allocating capital if
that is required by the objectives of industrial policy.
The review concluded that either type of Federal intervention
would go beyond the legitimate needs for balance, consistency, and
flexibility in Federal actions affecting individual industrial sectors.
For one thing, it is presumptuous to assume that successful identification of winning and losing industrial sectors is possible. Moreover, even within so-called "losing" sectors, individual firms often
outperform many of the firms in "winning" sectors. As an example,
one need only compare the outstanding performance of many "minimill" operators in the beleaguered steel industry to that of many less
profitable firms in the highly touted semiconductor industry.
Attempts to pick winners or reinvigorate declining industries introduce considerations into strategic industrial decisions that, while not
now absent, are certainly less directly felt. Greater government involvement in the detailed workings of the economy has already increased the political aspect of economic decisionmaking and led to
constant pressures for the Federal Government to aid firms, regions,
and industries. Establishment of an explicit industrial policy, together
with the authorities for implementing it, would intensify these trends.
The consequences to the economy of reductions in efficiency and
flexibility that often accompany government intervention have already been detailed in this chapter. But at least three special dangers
would be associated with the development of an overt government
role in picking winners:
First, a successful policy of identifying and supporting promising
sectors implies a willingness on the part of the government to let
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some of the firms in the chosen sectors fail. A portfolio of venture
capital investments designed to pick only winners typically ends up
with a few large winners and many losers. However, the government's necessary sensitivity to income losses, intensified by the fact
that it would bear a special responsibility for a chosen sector, makes
it difficult, if not impossible, to tolerate such a portfolio. The more
likely outcome—one frequently observed in other countries—would
be a reluctance to abandon individual firms that fail. This could more
than offset any gains achieved by the successful few among the
chosen firms.
Second, there could be a tendency to implement a strategy of picking winners by excessive reliance upon policies where the government has broader discretion (e.g., trade policies) rather than designing policies specific to the problem at hand. The resulting use of
easily available, but not necessarily efficient, policy instruments
would create an unbalanced response and introduce additional distortions and rigidities into the economy. Adding to this tendency
would be the policymaker's inevitable recognition that a policy tool
designed for one purpose can often be used for another. For example, the economic prospects of an industry could be indirectly manipulated by changes in the stringency of government regulation. Such
changes, however, when motivated by objectives of industrial policy,
might be counterproductive to achieving the purpose for which the
regulation was intended.
Third, to avoid "wasteful duplication," the government would be
likely to centralize the process of picking winners. Such centralization
would forgo the advantages of risk-diversification that come from decentralized decisionmaking and would further heighten the pressures
to protect losers among the chosen sectors.
Similar arguments would apply to policies aimed at manipulating
the normal workings of capital markets. While prudence argues
strongly for policies which remove impediments to the efficient allocation of capital, prudence also suggests that a centralization of explicit allocation authority would run counter to the overriding need
for flexibility in the present economic environment.
PREFERRED POLICY APPROACHES
While it is inappropriate for the government to utilize its policy instruments to support winners and discourage losers or to centralize
the allocation of capital resources, government policies can be used
in appropriate ways to make a difference in the economy at large and
in individual industries. Tax policies, for example, can influence the
level of investment and risk-taking in the economy as a whole without
excessive intrusion into the affairs of individual firms or industries.
Although regulatory policies, by their very nature, constitute greater
129
involvement in the operation of individual firms or individual sectors,
they too can be designed to attain their goals with minimal intrusion
and can take into account the circumstances of individual industries.
Trade policies also shape decisions in individual markets. Without
choosing winners and losers, it is still possible for the government to
reduce constraints to free international transactions, to police these
transactions for violations of national law and international trade
agreements, and to screen individual cases carefully to afford relief
from unfair import competition.
Agricultural policy decisions can be designed to reduce instability
in that sector and to ensure that those receiving the benefits of such
policies also pay for the burden such policies impose. Similarly, the
continued deregulation of financial institutions can assure the aggressive pursuit of efficiency and innovation in that sector. Labor market
policies can try to help workers in declining regions or industries
adapt more rapidly and with less human suffering to changing conditions.
In sum, recognition that the numerous policies of the Federal Government exert a substantial influence on individual sectors of the
economy leads logically to a search for coherence in policy. The pursuit of such coherence is both justified and desirable when it involves
the thoughtful coordination of policies in areas where government
intervention is necessary. The danger lies in the unwise manipulation
of policy variables designed for one set of purposes to attain goals
which can be better achieved by the private market.
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CHAPTER 3
The Economy: Review and Prospects
THE U.S. ECONOMY IN 1980 felt the effects of the huge 1979
oil-price shock. The 5-year recovery and expansion that followed the
1974-75 downturn came to an end with a sharp but brief recession
and the underlying rate of inflation moved up to the 9- to 10-percent
range. The most striking feature of the year, however, was the volatility of economic developments. Real gross national product (GNP) declined at a record rate in the second quarter but advanced thereafter,
producing the briefest recession on record. Interest rates surged to
record heights, plunged downward, and then rose to new peaks and
declined again, all within the space of 9 months. Overall, these developments made for a historically unprecedented year.
While the outlook is for only a modest pace of recovery in 1981,
the persistence of unacceptably high inflation and the Nation's vulnerability to energy shocks call for continued restraint in both monetary and fiscal policy. A modest-sized tax cut combined with restraint
in Federal spending, however, would be compatible with this prudence. And if, as the Administration has proposed, a substantial part
of the tax cut is oriented toward business investment, we can help
support the recovery in a way that comes to grips with the country's
longer-run needs.
A REVIEW OF 1980
The resilience that had characterized the economy during 1979 ultimately gave way to pressures from sharply higher energy prices and
policy measures undertaken in the fight to cool inflation. Over the 4
quarters of 1980 real GNP fell 0.3 percent, but the pattern during
the year was quite uneven. The first quarter's 3.1 percent annual rate
of growth in real GNP was followed by a record 9.9 percent rate of
decline in the second. After midyear, much to the surprise of most
economic forecasters, the economy rebounded; real GNP grew at a
3.1 percent rate during the second half of the year. (All national
income and product account data for the fourth quarter of 1980 are
based on highly preliminary estimates.)
The weakness of the economy during the first half of 1980 led to
significant deterioration in labor markets. The unemployment rate
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rose from 6.0 percent in December 1979 to 6.3 percent in March and
then spurted to a peak of 7.6 percent in May. The rate remained between 7.4 and 7.6 percent for the rest of the year. During the first
half of the year, employment declined by 1.0 percent, a decline of 1
million jobs. From June to December, employment grew 0.5 million,
thus reversing a substantial portion of the first-half loss. The labor
force grew 1.3 percent over the 4 quarters of the year.
The rate of inflation increased in 1980. The implicit price deflator
for GNP rose 10.0 percent over the 4 quarters of 1980, a 1.9 percentage point increase over the 1979 rate. For the 12 months ending
November 1980 the consumer price index (CPI) for all urban consumers rose 12.6 percent—the same rate of increase as in the 12
months ending in November 1979. Due to the special circumstances
created by increases in the prices of food and energy, and the
treatment of home purchase and finance in the CPI, this latter comparison understates the rise in inflation in 1980. Excluding these
factors, the CPI rose 9.9 percent as compared with 7.2 percent in 1979.
Wage rates, which had shown moderation during 1979 despite the
rise in inflation, accelerated in 1980. Average hourly earnings grew
9.3 percent, up 1 percentage point from the 1979 rate. For the year
ending with the third quarter of 1980 productivity was virtually unchanged, although this was an improvement as compared with the
1-percent decline recorded in 1979.
The year saw continued improvement in the U.S. international position. After absorbing the huge 1979 increases in our foreign oil bill,
the U.S. balance of payments moved sharply into surplus in the
second half of the year. All other major oil-importing countries, by
contrast, are experiencing substantial current-account deficits. The
U.S. dollar remained strong in relationship to other currencies
throughout much of the year. At year-end, on an average weighted
basis, its value was 6 percent higher than at the beginning of the year.
The United States reduced its total energy use in 1980. In addition,
as compared with 1979, oil imports declined by 20 percent to about
6x/2 million barrels per day at year-end. In 1980 we imported less oil
than in any year since 1975. While a portion of this reduction can be
traced to weakness in economic activity, much was due to intensified
conservation efforts that have followed the recent rapid increases in
energy prices.
AN OVERVIEW OF THE YEAR
The slowing in the growth of the economy that occurred in 1980
was largely the consequence of events that began in 1979.
The first of these was the significant disruption in the world oil
market triggered by lost Iranian oil production. Extensive efforts to
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build up oil inventories and maintain adequate supplies boosted the
price of imported oil purchased by U.S. refiners by 94 percent during
1979. This, together with the phased decontrol of the prices of domestically produced oil, resulted in the average refiners* acquisition
price for all oil in the United States rising from $13 per barrel in January 1979 to $24 per barrel in December 1979. This huge increase
added to inflationary pressures and reduced purchasing power. The
Council of Economic Advisers has calculated that the drag on purchasing power due to these higher oil prices reached 2 percent of
GNP during 1979.
A second restraining force evident at the end of 1979 was the
stance of monetary and fiscal policy. A major goal of macroeconomic
policy since early 1979 has been to minimize the inflationary consequences of the oil-price shock by avoiding the spillover of accelerating consumer prices into wage demands, then higher business costs,
and eventually higher long-term inflation. The Federal high-employment budget surplus (discussed in more detail later in this chapter),
which had increased by $7V2 billion in 1978, tightened an additional
$13Y2 billion in 1979. Efforts to restrain growth in money and credit
resulted in rising short-term interest rates during 1979, especially in
the second half. From July to December 1979 the 91-day Treasury
bill rate rose from 9.3 to 12.1 percent, while the prime rate increased
from 11.5 to 15.5 percent.
A third source of potential demand restraint, which became evident
at year-end 1979, stemmed from imbalances in the spending behavior of households. In the last half of 1979 real disposable income
rose 1 percent, while real consumption spending advanced 2 percent.
As a consequence, the personal saving rate fell 0.9 percentage point
during the last half of 1979 to a 28-year low of 4.7 percent in the
fourth quarter. At the same time, consumer debt burdens remained
high and delinquency rates on consumer loans continued to rise. It
seemed clear that some significant retrenchment by the consumer
was likely, even in the absence of further oil drag and continued
policy restraint.
In light of these developments, it was expected that 1980 would be
a year of declining economic activity. Indeed, 1 year ago this Report
stated: "The expected recession is likely to be mild and brief. Declines in real gross national product (GNP) should not extend much
past midyear, and economic growth will resume later this year, albeit
slowly at first. Over the 4 quarters of 1980 real GNP is forecast to
decline by 1 percent . . . the unemployment rate is likely to rise . . .
to 7V2 percent in the fourth quarter . . . " Despite the general accuracy of last year's forecast, views about the likely course of the economy went through several rapid changes as the year unfolded.
133
Early in 1980 there were few signs of recession. If anything, activity seemed to be picking up. The evidence available at the time hinted
that households, far from retrenching, were on a buy-in-advance
spending spree. Retail sales, which had risen at an annual rate of 13
percent from October 1979 to December 1979, accelerated to an
annual rate of nearly 43 percent in January 1980. Auto sales, which
had been running at an annual rate of 9.4 million units in October
1979, spurted to 10.3 million units in December 1979 and to 11.9
million units in January 1980.
International events contributed to the sense that demand could be
stronger than anticipated. Continued Mideast instability, the unresolved issue of the American hostages in Iran, and the Soviet invasion of Afghanistan all raised the possibility of greatly expanded defense spending, perhaps enough to sustain economic growth despite
a predicted slowing in private demand.
The inflation data also seemed to reflect an apparent acceleration
in economic activity. The CPI, which had increased at an annual rate
of between 13 and 14 percent during the last 3 months of 1979, rose
at a rate of 18 percent in January and February. Although a large
part of this speedup was due to higher oil prices, other prices also
accelerated. For the 3 months ending in February, the CPI excluding
energy prices rose at an annual rate of 12.9 percent, in contrast to
the 12.2 percent rate during the 3 months ending in November 1979.
The producer price index (PPI) for finished goods other than energy
rose at an annual rate of 16% percent in January 1980. More ominously, wage rate increases, which had remained moderate throughout most of the year, accelerated in late 1979 and early 1980.
Meanwhile, business demand for credit accelerated, with business
loans growing at a rapid 24 percent annual rate from December 1979
to February 1980. Speculative activity in commodity and financial futures markets intensified, and interest rates continued their rapid
climb (Chart 7). In early March the 91-day Treasury bill rate rose to
15.7 percent while the prime rate hit 17.75 percent. Several forces
were apparently at work. Each new increase in short-term interest
rates brought fears of higher rates, and thus further pressures to
borrow immediately. In addition, hints of credit controls apparently
motivated firms to borrow in advance of actual need.
134
Chart 7
Selected Interest Rates
and Bond Yields
PERCENT PER ANNUM
20 -
1111 j i 1111111 u 111111111111111111
1973
I.,,,.111...Inn.lnn.l.ni.ini..In...l.nnln..^
1974
1975
1976
1977
1978
1979
1980
1974
1975
1976
1977
1978
1979
1980
LONG-TERM
14
12
10
1973
-L/EFFECTIVE RATE ON CONVENTIONAL MORTGAGES IN THE PRIMARY MARKET,
SOURCES: DEPARTMENT OF THE TREASURY, BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM, FEDERAL HOME LOAN BANK BOARD, AND MOODY'S INVESTORS
SERVICE.
135
By early March there was fear that inflationary pressures and inflationary expectations were mounting despite the restraining influences
of fiscal and monetary policy, and that without some additional
action these would validate and further accelerate wage demands and
ultimately lead to an explosion of prices. This would have ended any
chance of containing the 1979 oil-price shock. It was in this environment that the Administration and the Federal Reserve moved to suppress the speculative fever and return order to financial markets. On
March 14 the President announced a series of budgetary and administrative actions designed to stabilize the situation. These included
measures to reduce Federal expenditures, to strengthen wage and
price monitoring, and to encourage energy conservation. In addition,
the President authorized the Federal Reserve to institute a program
of selective controls on credit.
The controls program—explained in more detail below—induced
banks and other financial institutions to intensify actions to restrict
the availability of virtually all types of credit. The growth of bank
business loans and other lending covered by the program was curtailed sharply. The program also had the important psychological
effect of curtailing household borrowing, as many forms of credit not
explicitly covered by the program, such as home mortgages and auto
loans, also fell sharply. A good part of these declines, however, probably stemmed from the rapid rise in interest rates.
Economic activity was apparently beginning to slow even before
the imposition of the credit controls, but the subsequent decline in
consumer demand was intensified by the controls. The economy
reached its cyclical peak in January. Nevertheless, the first-quarter
growth in real GNP was at an annual rate of 3.1 percent. During the
second quarter real GNP dropped at an annual rate of 9.9 percent,
exceeding the previous record of 8.2 percent set in the first quarter
of 1975. Furthermore, the decline of 10.4 percent at an annual rate
in real final sales was far and away the sharpest postwar drop in that
category. Housing and automobile sales were the key sectors of
weakness, accounting for about two-thirds of this drop in final
demand. There was a modest amount of inventory accumulation but
it was surprisingly small given such a large decline in final sales.
Interest rates, which had continued to rise for a brief time after the
introduction of the credit controls program, fell sharply due to weakening loan demand and a declining economy. Rates peaked around
the end of March and then fell further and more quickly than they
136
had risen just 2 months earlier. By late June the credit controls were
no longer constraining the demand for credit, and by July the prime
rate had fallen to 11 percent, down from its peak of 20 percent. In
light of these developments, the controls were removed in early July.
After the second quarter's record drop in real GNP, most observers predicted that the economy would experience 2 more quarters of
decline. There were fears that the downturn might approach the severity of the 1974-75 recession. Indeed, the unemployment rate,
which had jumped to 7.6 percent in May, was forecast by many to be
between 8¥2 and 9 percent by year-end.
In fact, private demand rebounded with surprising alacrity. The
sharp decline in interest rates, combined with the absence of a significant stock of unwanted inventories, contributed to the brevity of
the recession. The two sectors that had led the decline in the second
quarter recovered quickly in the third. By September, housing starts
had increased 70 percent above their May low—by far the quickest
bounceback on record. Car sales also regained some of their lost
ground. October sales ran at an annual rate of 9.2 million units, still
lower than their year-earlier levels, but 28 percent above their May
low rate of 7.2 million units. The third quarter rebound in real final
sales was a strong 4.1 percent, but inventory liquidation held the
growth in real GNP to a more modest 2.4 percent.
In the fourth quarter real growth picked up to a 3.7 percent annual
pace, with continued strength evident in personal consumption and
housing. With the turnabout in economic activity in the second half
of the year, the labor market also improved.
At the same time that the recovery was taking place, tightening
monetary conditions produced another upswing in the interest rate
roller coaster (Chart 7). From July to December the prime rate advanced from 11 percent to a record level of 21% percent, while the
Treasury bill rate rose from 8 percent to 17 percent. Long-term interest rates also rose by about 2 to 3 percentage points over the
same period. After mid-December interest rates dropped sharply for
a time but nevertheless remained unusually high. These developments raise serious doubts about the future of the recovery and bring
prospects of a leveling off or possibly a decline in output during the
early part of 1981. Furthermore, the persistence of the Iran-Iraq war
raises the possibility of sharply higher energy prices during 1981. At
the end of 1980 the key features which had characterized the U.S.
economy over most of the previous 18 months remain dominant: a
surprising strength of demand straining against high interest rates, a
stubborn inflation, and continued vulnerability to external oil shocks.
137
THE MAJOR SECTORS OF AGGREGATE DEMAND
The decline of the economy during 1980 as a whole was dominated by drops in expenditures on real consumer durable goods (down
7.7 percent over the 4 quarters), residential structures (down 18.0
percent), and real business fixed investment (down 6.0 percent)
(Table 14). The sectors of real demand that grew during the year
were personal consumption of services, Federal Government purchases, and net exports. Service consumption grew 2.8 percent over
the 4 quarters of 1980. Federal Government purchases were up 4.7
percent. Real net exports grew from $42.2 billion in the fourth quarter of 1979 to $55.7 billion in the fourth quarter of 1980. A 6.7 percent reduction in imports combined with a 3.9 percent rise in exports
to produce this result.
TABLE 14.—Growth in major components of real gross national product, 1976-80
[Change, fourth quarter to fourth quarter]
,1976
Component
1977
1978
1979
Percent change:
Real gross national product
Personal consumption expenditures
Business fixed investment
Residential fixed investment
. ...
Government purchases of goods and services
Federal.
State and local
Real domestic final sales 2
4.4
5.8
5.3
1.7
-0.3
57
7.8
19.8
-1.3
50
13.5
12.5
3.6
48
9.0
-.0
1.6
20
2.9
-6.1
1.9
=6.0
-17.6
1.5
-.8
-1.7
5.0
2.7
-1.3
3.3
21
1.7
4.7
-.3
4.9
5.9
4.4
1.7
-1.3
.4
-.7
.4
.4
.2
.9
-.8
.8
.0
.9
Change as a percent of GNP:
Inventory accumulation
...
Net exports of goods and services
.
1
Preliminary.
GNP excluding change in business inventories and net exports of goods and services.
Source: Department of Commerce, Bureau of Economic Analysis.
2
Personal Consumption
Expenditures
The year 1980 began with the personal saving rate at a 28-year
low, with consumer debt burdens near record highs, and with attitude surveys showing consumer pessimism about the outlook. The
modest strength in consumption that had been evident in 1979 despite the deceleration in real incomes had worsened the budget position of households. This, together with high interest rates and the
imposition of credit controls, produced a retrenchment in consumer
outlays. Real personal consumption expenditures fell in 1980 for the
first time in 6 years. The 0.3 percent decline in consumption over the
year, combined with the modest 0.5 percent increase in disposable
income, helped to increase the saving rate from 4.7 percent in the
fourth quarter of 1979 to 5.7 percent in the fourth quarter of 1980
(Chart 8).
138
Chart 8
Personal Saving Rate
PERCENT
15.0
12.5 -
10.0 -
2.5 -
1969
70
71
72
73
74
75
76
77
78
79
80
SOURCE: DEPARTMENT OF COMMERCE.
The decline in consumption in 1980, which was largely the result
of a decline in credit-sensitive purchases—particularly durable
goods—was concentrated in the second quarter. In that quarter total
real consumption fell at a record rate of 9.8percent. The improvement
in household debt positions that had begun in late 1979 was accelerated during the late spring and early summer by the credit controls
program. Extensions of consumer credit in the second quarter fell at
nearly a 60 percent annual rate. Outstanding consumer debt declined
for 4 straight months from April to July, and for the second quarter
as a whole it fell at a record 13.8 percent annual rate.
The rapid drop in interest rates helped to bring a quick reversal of
the second quarter's consumption decline. In June real retail sales
grew at a 17.8 percent annual rate; the gain in July was at an even
greater 27.3 percent pace. For the third quarter as a whole real consumption advanced at an annual rate of 5.1 percent, regaining nearly
one-half of the second quarter's drop. In the fourth quarter real consumption grew at a 3.3 percent annual rate.
Durable Goods. Real expenditures on consumer durables fell 7.7 percent during 1980, their second year of decline. The consumer durables cycle during 1979 and 1980 was much like that of the 1974-75
recession. During the first half of 1980 real consumer durable goods
139
expenditures continued the virtually unbroken decline that had
begun after the fourth quarter of 1978. Over this period purchases of
real consumer durables declined 16.3 percent, with the steepest drop
concentrated in the second quarter of 1980. A long and gradual slide
culminating in 1 quarter of very steep decline was also the pattern
during 1974-75; the peak-to-trough decline then was also 16.3 percent. During the last half of 1980 real consumer durable expenditures regained nearly one-half of the second quarter's decline.
Growth in the third quarter was at an annual rate of 21.9 percent.
Growth in the fourth quarter was at a rate near 7 percent. Automotive purchases dominated quarter-to-quarter movements in consumer durables during the year, leading the first-half declines as well
as the last-half gains. By year-end car sales were running at a 9-million unit rate, but sales were apparently being held back by a combination of the high interest rates on consumer loans and high car
prices. Real automotive purchases fell 12.9 percent during 1980oas a
whole. Similar weakness was evident in real consumer demand for
other durable goods, which fell 4.0 percent over the 4 quarters of
1980.
Other Consumption. Real nondurable goods consumption fell 1.2 percent during 1980. Purchases of gasoline, oil, and other fuels fell 3.2
percent. In part this reflected the effects of the recession, but much
of the decline in these energy demands was due to conservation efforts in response to sharply higher prices. By year-end the consumption of these goods was 11 percent below the peak levels set in 1978.
Real consumption of services grew at a sluggish 2.8 percent over
the 4 quarters of 1980, down from the 1979 pace of 3.6 percent.
Service consumption tends to be much more stable than goods consumption over the business cycle because many of these expenditures, such as housing and medical care, cannot be delayed or postponed. Nevertheless, important cyclically sensitive components of
service consumption were quite weak during the year. Transportation
services, for instance, fell at an annual rate of 11.9 percent in the
second quarter and 2.0 percent over the entire year.
Residential Investment
The path of real investment in residential structures over the last 2
years was like that of consumer durables. It was marked by a slow
and gradual slide throughout 1979, ending with a very sharp decline
in the spring of 1980. Residential construction picked up rapidly
thereafter, but at year-end housing starts had leveled off in response
to higher mortgage interest rates. The pattern of housing activity in
1979 and 1980 reflected new developments in housing finance. As
noted in Chapter 2, mortgage lenders now compete for loanable
funds on a more even footing with other lenders. Consequently, the
140
chief cyclical determinant of housing activity has become interest
rates rather than credit availability. As events have demonstrated,
however, these institutional changes did not insulate housing from
tighter monetary conditions.
The financial environment that determines the health of the housing sector had been weakened by the sharp rise in interest rates that
began in 1979. By October of that year, most mortgage rates had
risen to around 13 percent, a level that discouraged many potential
home buyers. At the same time, increases in construction loan rates
stretched the ability of homebuilders to finance new construction and
carry inventories of unsold homes. This trend was accentuated in
early 1980 by a further rise in interest rates on mortgage commitments to a record 16 percent in April. The increased interest rates
pushed monthly mortgage payments higher than many could afford.
In addition, even though mortgage finance was largely exempt from
the provisions of the credit controls program, mortgage lenders were
less willing to commit long-term funds in such an uncertain environment. During the year State and local government housing authorities continued to provide a substantial amount of mortgage support
through purchase of residential mortgages at below-market interest
rates financed by tax-exempt bonds. But Federal and related agencies
provided only modest support to the mortgage market as compared
with the last cyclical downturn. Home sales reached their nadir by
late spring. Housing starts in May plummeted to a 906,000-unit
annual rate, down 36 percent from their January level and down
nearly 50 percent from their average 1979 level. During the second
quarter single-family starts averaged 671,000 units at an annual rate,
which was only slightly more than one-half 1979's total. Multifamily
units fell to a rate of 382,000 units in the second quarter after averaging 551,000 units during 1979.
The midyear decline in mortgage interest rates lagged somewhat
behind the drop in other long-term yields, but by August most mortgage rates had fallen to near 12 percent. Even with the high interest
rates, however, sales of new homes had begun to increase in May,
and construction activity followed quickly. Housing starts increased
in June for the first time in 6 months. The surprisingly quick increase
in starts probably stemmed from the relatively low level of new home
inventories during the spring. With very few houses for sale, the increase in sales provided the needed stimulus for new building.
During the fall and early winter of 1980 mortgage rates again
began to creep upward. Nonetheless, sales of new homes and total
housing starts remained moderately strong through November. Although some weakening in sales was evident during the fourth quar-
141
ter, the low level of inventories encouraged a continuation of building activity.
The average price of a new home (adjusted for changes in quality)
increased at an 11 percent annual rate in the first 3 quarters of 1980,
which was about as fast as in the preceding year. Many of the homes
built in 1980 were smaller and more austere than those constructed
in preceding years, reflecting the recession weakness in incomes and
the high cost of mortgage finance.
Business Fixed Investment
Real business fixed investment declined 6.0 percent over the 4
quarters of 1980. Business fixed investment averaged 10.7 percent of
GNP, somewhat lower than the 11.0 percent level in 1979. Producers* durable equipment declined 4.8 percent during 1980. The volatile automotive portion of equipment purchases fell 16.2 percent
during the year, its second year of very large declines. The remaining
components declined 2.4 percent. Investment in nonresidential structures dropped 9.1 percent over the same period (Table 15).
TABLE 15.—Changes in real businessfixedinvestment, 1975-80
[Percent change, fourth quarter to fourth quarter]
1975
1976
1977
1978
1979
1980 >
-7.4
7.8
13.5
9.0
2.9
-6.0
Structures
Producers' durable equipment
-56
-8.0
2.6
10.2
48
17.4
118
7.7
95
-91
-4.8
Autos, trucks, and buses
Other
2.0
-10.4
17.2
8.5
23.9
15.7
Nonresidential fixed investment
9.8 - 2 2 . 9 - 1 6 . 2
7.2
7.4 = 2.4
1
Preliminary.
Source: Department of Commerce, Bureau of Economic Analysis.
Several factors contributed to the decline in business fixed investment. First, the deceleration in final sales reduced the need for immediate additions to capacity. The Federal Reserve Board's index of
capacity utilization rates in manufacturing dropped from 83.9 percent
in January to a 5-year low of 74.9 percent following the spring decline. The sizable drop in this aggregate index, however, masked
some important differences among certain industries. In the durable
goods materials industries, for instance, capacity utilization rates fell
below 70 percent. Thus key suppliers of hard goods found themselves with plenty of capacity to satisfy demand over the near term.
In addition, forecasts of recession indicated that capacity needs
would not be rising until early 1981. These forecasts, in conjunction
with the high cost of funds during the early part of 1980—widely
perceived as temporary—made the delay of capital investment plans
more attractive.
Finally, shrinking sales and increasing debt service costs seriously
reduced corporate cash flow. Internally generated funds for invest-
142
ment were sharply diminished by the 13.3 percent decline in profits
during the second quarter of 1980. While aggregate measures of
profitability and corporate cash flow reflected cyclical weakness, these
measures understated the extent of the problem by masking important distributional imbalances. In particular, oil and coal industry
profits represent a growing share of the aggregate. From the first
quarter of 1979 to the third quarter of 1980 corporate profits in the
petroleum and coal industries grew from $15.0 billion, or 6.9 percent
of total corporate profits, to $22.2 billion, or 11.3 percent.
Inventory Accumulation
Cautious inventory policies continued throughout 1980. Real inventory accumulation in the fourth quarter was virtually unchanged
from its level in the fourth quarter of 1979 and thus had almost no
impact on the overall growth in real GNP over the 4 quarters of
1980.
Chart 9
Real Inventory—Final Sales Ratio,
Nonfarm Business
RATION
3.15
SEASONALLY ADJUSTED
3.10
3.05
3.00
2.95
2.90
2.85
2.80
275
<
y
Q <
,
,
.
1 .
.
.
1968 69
I
.
,
,
70
I
,
I
71
•
I
.
I
.
72
I
•
I
I
73
1 .
•
•
74
I
I
.
I
75
I
.
.
•
76
I
•
I
.
77
I
1 .
I
78
I
.
I
I
79
I
.
I
I
>
80
VRATIO OF REAL INVENTORIES AT END OF QUARTER TO REAL FINAL SALES AT MONTHLY
RATES.
SOURCE: DEPARTMENT OF COMMERCE.
As compared with the 1970s, inventory-to-sales ratios remained
relatively low during 1980 (Chart 9). What was more interesting was
the rapid response of production to the changes in final sales. As
143
Table 16 shows, the pattern of output, sales, and inventories in the
nonfarm business sector in 1980 was quite different from the pattern
of the 1974-75 recession. A sharp drop in final sales in the fourth
quarter of 1974 was accompanied by a smaller percentage reduction
in output. This resulted in an unintended accumulation of inventories, with real inventory investment of $13.3 billion at an annual
rate. The inventory-to-sales ratio rose markedly. This set off a sharp
adjustment in subsequent quarters, and over the first half of 1975 inventories were decumulated at a $13.9 billion annual rate.
TABLE 16.—Real output, sales, and inventories, nonfarm business sector, 1974-75 and 1980
[Seasonally adjusted annual rates]
Item
1974
III
1975
IV
1
||.
II
1980
|] 1
II
IV1
III
Percent change
Output
-2.8
-5.9
-10.6
6.1
1.7
-10.8
3.1
4.9
Contribution ofr32
Final safes
Inventory accumulation
-.9
-1.9
-8.0
2.2
-in
4.6
1.4
1.2
-11.4
4.3
-1.2
3.3
1.6
7.8
13.3
.6
=3.1
1.6
Billions of 1972 dollar
Inventory accumulation
-15.6
- 1 2 . 2 II - 1 . 4
1
Preliminary.
2
Change as percent
3
of output.
Includes a small amount of final sales by farms.
Source: Department of Commerce, Bureau of Economic Analysis.
This sharp inventory cycle was not in evidence in 1980. Final sales
fell at an annual rate of 10.8 percent in the second quarter, the most
rapid decline ever recorded. But the output response was nearly as
rapid and inventories increased at an annual rate of only $0.6 billion.
While inventories did decline in the third quarter of 1980, indicating
efforts to trim unwanted inventories, the swing was distinctly more
modest than in 1974-75.
Several factors account for the improved management of inventories. Inventory control and information systems continue to improve the ability of production managers to maintain the proper balance between raw material stocks and market demand. Also, unlike
the earlier period, there were no serious doubts about the availability
of raw materials and supplies this time around. Thus, precautionary
overstocking of inventories to ensure adequate supplies of inputs for
production was not apparent in 1979-80. In addition, high and volatile interest rates have increased both the cost and risk of holding
large inventory stocks.
The External Sector
Following 2 years of rapid expansion, the growth in the volume of
U.S. merchandise exports fell in 1980 as world economic activity
slowed. At the same time, however, the volume of U.S. imports
144
dropped even faster, in large part because of the recession here. As a
result, net exports measured in constant 1972 dollars showed a very
large $13.5-billion increase during the year.
In value terms, shifts in the U.S. trade balance were importantly
affected by payments for oil. From the third quarter of 1979 to the
first quarter of 1980 the oil import bill increased by about $20 billion
at an annual rate because of much higher oil prices. Other trade
flows only partially offset this increase, and the merchandise trade
deficit widened by $15 billion to an annual rate of $43 billion in the
first quarter. After the first quarter, however, the volume of oil imports declined sharply. Thus, despite some further increases in oil
prices, the oil bill fell, contributing to the marked narrowing of the
trade deficit. The merchandise trade deficit for the whole of 1980
was an estimated $26 billion, $3.5 billion smaller than in 1979. Invisibles transactions, which reached a record surplus of $33 billion at
an annual rate in the first quarter, more than offset the deficit on
merchandise trade during 1980.
For 1979 the U.S. current-account deficit was a small $788 million.
It was in deficit by about $10 billion at an annual rate in the first half
of 1980, moved sharply into surplus in the third quarter, and is likely
to show a surplus of $3-$6 billion for 1980 as a whole.
The most noteworthy feature of recent U.S. trade performance has
been its strength. From 1977 to the second quarter of 1980 the
volume of U.S. exports grew by 40 percent. More significantly, the
share of U.S. exports as a percentage of the total exports of the industrial countries over this period increased by about 1XA percentage
points, reversing a declining trend visible since the 1950s. At the
same time, the volume of U.S. imports showed almost no growth,
even though real GNP rose by about 7 percent. This was a major
break in longer-term trends, which have shown U.S. imports growing
at rates well above the growth of real GNP.
These aggregate indicators of recent trade performance are all the
more striking in view of the widespread popular notion that the
United States is losing its ability to compete in both foreign and domestic markets. It may be that these views stem from unwarranted
generalizations from particular sectors—such as automobiles, where
foreign pressure clearly has increased—to aggregate trade. In addition, it may be that losses in relative terms vis-a-vis certain trading
partners—most notably Japan and a certain number of newly industrializing developing countries—are viewed as more significant. Each
of these concerns is certainly legitimate to some extent, but they
should not obscure the overall success of the United States in foreign
trade. Encouragement can be drawn from our recent aggregate performance, which most analysts ascribe to the increased competitive-
145
ness of U.S. producers in the wake of the depreciation of the dollar
in 1977 and 1978,
Government Purchases of Goods and Services
Real government purchases of goods and services grew 1.5 percent
during 1980, as gains in Federal purchases more than offset the decline in State and local purchases. Over the 4 quarters of 1980 State
and local purchases fell 0.3 percent. Reduced purchases of durable
goods (down 1.6 percent) and structures (down 6.5 percent) were the
key factors. Real compensation of employees grew 0.7 percent in
1980, a significant deceleration from the 2.4 percent average rate in
the previous 3 years. There had been widespread expectations that
reductions in Federal grant-in-aid support, particularly for public
service employment payrolls, combined with the recession squeeze
on tax receipts and political pressures for reduced growth, would
force an even sharper cutback in the growth of State and local payrolls. Instead, State and local governments have attempted to insulate payrolls from the worst of the budget pressures while cutting expenditures elsewhere. The decline in structures investment over the
year was heavily concentrated in those areas dependent on the housing cycle: sewer system construction and highway and street construction and renovation.
Real Federal purchases of goods and services grew 4.7 percent
during 1980. Real defense spending grew 5.7 percent during 1980,
with the pace of spending picking up in the last half of the year. Real
nondefense purchases grew at a slower 3.2 percent for the year as a
whole.
LABOR MARKET DEVELOPMENTS
The volatility in demand for goods and services during 1980 produced similar swings in the demand for labor (Table 17). Civilian
employment peaked at 97.8 million in February 1980. Then during
the next 4 months employment fell sharply (1.1 percent) to 96.8 million in June. Over this same period unemployment rose from 6.5 million to 7.8 million. Automobile and construction employment were
especially hard hit. Although these two industries constituted only
about 6 percent of total payroll employment, they accounted for
nearly two-fifths of the decline in employment from February to
June.
Employment growth resumed at midyear. The magnitude of the
subsequent recovery differs, depending on which of the two standard
measures of employment is utilized. Judged by the household survey,
employment growth after midyear was relatively modest so that by
year-end total employment was still 500,000 lower than in December
1979. When measured by data from business payrolls, however, em-
146
ployment grew more vigorously after midyear and by December 1980
stood some 450,000 higher than a year earlier. Statistical discrepancies of this sort are not unusual for changes over short periods of
time. Even with this difference, both measures clearly indicate that
the decline in overall employment during 1980 ended quickly.
TABLE 17'.—Labor market developments, 1976-80
Component
1976 IV
1977 IV
1978 IV
1979 IV
Percent change from year earlier
Increase in civilian employment, total...
1980 IV
l
3.4
4.4
3.6
2.1
-0.3
Males 20 years and over
Females 20 years and over
Both sexes 16-19 years
2.6
4.6
3.0
3.3
5.2
8.0
2.5
5.4
2.6
1.3
3.9
-.7
1.5
-6.7
White
Black and other..
3.3
4.2
4.3
4.7
3.2
7.0
2.0
2.9
-.2
-.9
Percent
2
Unemployment rate, total 3 ....
7.8
6.6
5.9
5.9
7.5
Males 20 years and over
Females 20 years and over
Both sexes 16-19 years
6.0
7.4
19.1
4.8
6.7
16.6
4.1
5.7
16.3
4.4
5.7
16.2
6.3
6.7
18.3
White
Black and other....
7.0
13.3
5.7
13.3
5.1
11.5
5.2
11.3
6.6
14.1
Participation rate, total *
61.8
62.6
63.5
63.8
63.7
Males 20 years and over
Females 20 years and over..
Both sexes 16-19 years
79.9
47.4
54.4
79.9
48.6
56.8
79.8
50.1
58.4
79.6
51.0
58.1
79.2
51.4
56.4
White
Black and other..,
62.1
59.6
62.9
60.6
63.7
61.8
64.1
61.7
64.1
61.2
1
Changes for 1978 IV adjusted for the increase of about 250,000 in employment and labor force in January 1978 resulting
from
changes in the sample and estimation procedures introduced into the household survey.
2
Seasonally
adjusted.
3
Unemployment
as percent of civilian labor force.
4
Civilian labor force as percent of civilian noninstitutional population.
Source: Department of Labor, Bureau of Labor Statistics.
The impact of the year's labor-market weakness was spread unevenly across demographic groups. The unemployment rate for adult
men rose by a much greater percentage than did the unemployment
rates for women and teenagers. The total unemployment rate rose
from 5.9 percent in the fourth quarter of 1979 to 7.5 percent in the
fourth quarter of 1980. The unemployment rate for men 20 years
and over rose from 4.4 percent to 6.3 percent during this period. By
contrast, the unemployment rate for women 20 years and over only
increased from 5.7 to 6.7 percent. In the third quarter of 1980 the
adult male unemployment rate exceeded the adult female rate. While
this is highly unusual, adult male unemployment rates typically rise
more than adult female rates during recession. This is because
output declines tend to be concentrated in construction and durable
goods manufacturing, sectors with a much higher proportion of adult
male workers than, say, the relatively stable service sector. In the
fourth quarter employment recalls in such industries as autos, steel,
147
and construction helped to reduce the adult male unemployment rate
below that of adult females.
Unemployment duration lengthened significantly in 1980. In the
last quarter of 1979, before the recession began, 48 percent of the
unemployed had been looking for work for less than 5 weeks, and
only 8.5 percent, or 524,000 people, had been without jobs for 27
weeks or more. By the last quarter of 1980 about 1.1 million people,
or 14 percent of the unemployed, had been looking for work for 27
weeks or more. Many of these workers were eligible for up to 39
weeks of unemployment compensation, with additional benefits if
their job loss was due to foreign competition or if their firms or
unions provided supplemental unemployment benefits.
During the 4 years of economic expansion from 1976 to 1979 the
civilian labor force grew at an average annual rate of 2.8 percent.
The rise in unemployment during 1980 dampened this growth to 1.3
percent. After increasing by about 1 percentage point per year
during the last half of the 1970s, the female labor force participation
rate grew by about one-half, rising to 51.6 percent in 1980. The male
labor force participation rate of 77.4 percent was down slightly over
the year.
PRICE DEVELOPMENTS
Inflation dominated the economic news in 1980 as it did in 1979.
The implicit price deflator for GNP rose 10.0 percent over the 4
quarters of 1980, substantially faster than the 8.1 percent rate of increase in the deflator during 1979 (Table 18). The producer price
index for finished goods increased 11.7 percent from December 1979
to December 1980, following a 12.6 percent rise during the preceding 12 months. For the 12 months ending in November 1980, the
CPI increased 12.6 percent, the same as over the corresponding
period in 1979. These measures all reflected energy price
surges early in the year and farm price increases late in the year. The
most disappointing news, however, was the acceleration in various
price measures which exclude the direct effects of such special factors
as energy and food. As explained in Chapter 1, such measures are
often used as a proxy for the "underlying" rate of inflation. After remaining surprisingly stable during most of 1979 in the face of very
large oil-price increases, these measures showed significant increases
in 1980.
The spring decline in aggregate demand brought rapid changes in
the prices of certain sensitive industrial commodities. Sharp decreases were registered by producer prices of nonferrous metals as
well as lumber and wood products. These price reductions had an
important—if temporary—moderating influence on producer price
measures. Excluding food and energy, producer prices of crude ma-
148
terials fell for a full third of the year. One other measure, the Bureau
of Labor Statistics measure of spot market prices, fell 11.5 percent
from February 1980 to June 1980. The turnaround in activity in the
second half-year once again tightened industrial markets by enough
to erase the early-year declines. Producer prices for crude materials
excluding food and energy rose 10.6 percent in the 12 months
ending in December 1980.
TABLE 18.—Measures of price change, 1976-80
[Percent change, fourth quarter to fourth quarter]
Item
Implicit price deflators
1976
1977
1978
1979
1980 >
2
Gross national product
Personal consumption expenditures
Private nonfarm business output
Consumer prices, total
Farm value of food
Energy4
Home purchase and finance 5
All other
...
.. .
. . .
....
Producer prices of finished goods, total
Food
Energy
All other
....
. . .
. . . .
4.7
5.0
4.9
6.1
5.9
5.7
8.5
7.8
8.3
8.1
9.5
8.3
5.0
6.6
9.0
12.7
3
-12.9
6.2
3.8
63
6.4
8.2
8.9
61
17.5
7.5
13.4
73
7.4
36.5
19.8
79
•14.5
U8.9
=>17.7
3
98
2.7
6.9
8.7
12.6
12.0
-4.4
5.0
5.6
7.4
9.2
6.4
11.6
6.4
7.9
7.8
62.0
9.3
7.4
28.4
11.1
10.0
10.4
10.3
12.6
1
2
Preliminary.
Seasonally adjusted data.
November
1979 to November 1980.
4
Includes only prices for direct consumer purchases of energy for the home and for motor vehicles.
5
In both the table and the text, "home purchase and finance" consists of home purchase and financing, taxes, and insurance
on owner-occupied homes.
Sources: Department of Agriculture, Department of Commerce (Bureau of Economic Analysis), and Department of Labor
(Bureau of Labor Statistics).
Consumer Prices
As in 1979, the behavior of energy and food prices, together with
the effects of mortgage interest rates on the CPI, attracted attention
throughout the year. These are discussed in more detail below. Less
marked by the public, but of more concern for the longer-run outlook, was the increase in the underlying rate of inflation as evidenced
in the behavior of consumer prices after these special factors are excluded.
The underlying rate, as approximated by the CPI excluding food,
energy, and home purchase and finance, jumped from 7.2 percent in
the 12 months ending November 1979 to over 11 percent in December, and it stayed in the neighborhood of 12 percent during the first
quarter of 1980. From April to November the measure grew at an
average annual rate of 9.0 percent, a slowdown from the pace in the
first quarter, but noticeably above the 1979 performance.
A second measure of the underlying inflation rate is the fixedweight price index for personal consumption expenditures excluding
energy and food. This measure, shown in Table 19 along with the
149
previously discussed CPI measures, reflects a similar acceleration
over the year as a whole. Over the 4 quarters of 1980 the index rose
9.6 percent, up from the 7.2 percent increase over the 4 quarters of
1979.
TABLE 19.—Alternative measures of consumer price changes, 1980
[Percent change; seasonally adjusted annual rates]
1979
1980
Item
Consumer prices, total
Food 2
Energy
Home purchase and finance 3 ....
Other
137
16.9
13.6
7.2
12.1
10.2
25.6
26.7
7.6
5.9
53.3
25.9
11.3
6.5
22.5
27.4
9.3
13.3
3.8
.1
8.7
153
1.0
20.5
9.9
10.7
12.0
9.8
8.8
10.9
11.3
9.9
31.2
9.0
12.8
3.4
53.4
10.3
9.8
5.7
20.5
9.3
9.6
16.9
2.1
8.7
11.0
16.2
6.5
10.1
Personal consumption expenditures deflators:
Implicit deflator, total
price index, total..
Energy4
Other
1
Preliminary; changes for consumer prices based on
2
Includes only prices for direct consumer purchases
3
data through November.
of energy for the home and for motor vehicles.
In both the table and the text, "home purchase and finance" consists of home purchase and financing, taxes, and insurance
on owner-occupied homes.
* Gasoline and oil, fuel oil and coal, and electricity and gas.
Note.—Fixed-weight price indexes are preliminary and subject to revision.
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).
It is difficult to ascribe the acceleration of these measures at the
beginning of 1980 to any single factor. It is likely that the most important cause was the pass-through of oil-price increases into other
commodities. About half of all oil is used in the production and distribution of other goods and services. Oil-price increases therefore
must eventually be reflected in final product prices. Similarly, as described below, the rapid advance in unit labor costs during 1979 and
1980 exerted further upward pressures on prices. Finally, the latter
part of 1979 and the early months of 1980 saw an upsurge in expectations about inflation and an upsurge in consumer buying. In such
an atmosphere business may well have raised prices ahead of increases in costs. The relative improvement in the underlying rate following the spring's decline in demand offers some support for this
view.
Prices of Energy, Food, and Housing
The measures of the underlying rate of inflation omit the primary
sources of month-to-month variability in consumer prices. In particular, half of the CPI is accounted for by energy, food, and home purchase and finance. And 1980 saw very volatile movements in these
prices.
Energy. Energy prices as measured by the CPI, which had climbed
at a 55 percent rate in the 6 months between March and September
150
1979, slowed to a 19 percent annual rate in the last months of that
year. During the fall of 1979 the Organization of Petroleum Exporting
Countries (OPEC) announced an increase in the price of Saudi Arabian light crude oil of $6.00 per barrel. That was followed by a series
of $2.00 per barrel increases in January, April, and August. These
price increases were accompanied by the phased decontrol of domestic crude oil prices, which had begun in June 1979. The effect of
these actions was a burst of price increases for oil products during
the first 3 months of 1980, averaging an annual rate of almost 100
percent. Gasoline, for instance, which was priced at $1.04 per gallon
in December, moved up to $1.23 per gallon in March. Similar increases were registered in other oil-related energy components of the
CPI, in particular home heating oil.
By the second quarter the burst of OPEC-related energy price increases began to play itself out. In the 5 months between May and
October 1980 the energy component of the CPI grew at an average
annual rate of just 1.7 percent. This was in quite marked contrast to
the 40.4 percent average annual rate of increase experienced over
the prior 5 months. By November gasoline was actually 0.8 cents per
gallon lower than it had been in March, and heating oil was up only
1.9 cents during the same period. Thus, although the energy sector
spent the year in the limelight, it was a major direct source of inflation
only in the first quarter of the year.
Food. Food prices in the CPI increased 10.6 percent in the 12
months ending November 1980, as compared with a 9.8 percent rise
over the previous 12 months. The farm value of food increased
nearly 15 percent over the period. Marketing costs increased about 9
percent.
Over the course of 1980 the food price situation was quite volatile.
During the first half, food prices increased less than 5 percent at an
annual rate. During the second half, however, the rate of increase
more than doubled. Recession-induced weakness in demand during
the spring, followed by drought during the summer growing season,
contributed to the acceleration in monthly food price movements.
Prices of retail meat, which accounts for nearly 30 percent of all food
spending at home, actually fell at an annual rate of 11.8 percent
during the first half, and rose at a rate of 35 percent from June to
November.
The extended period of very hot and dry weather damaged crops
in the Southwest (cotton, soybeans, sorghum, and peanuts) during
the early summer. The adverse weather conditions persisted and
moved north and east affecting the corn crop and meat production in
July and August. As the summer progressed the full extent of the
151
crop damage became evident. Prices received for the major crops increased 20 to 30 percent during the second half of 1980.
Housing. The home purchase, finance, insurance, and taxes component of the CPI is a matter of controversy. Ideally, a cost-of-living
index should reflect the cost of shelter services provided by owneroccupied houses. For rented houses, this is precisely what is captured
by market rents. Under current practice, however, the home purchase
and finance component of the CPI in effect treats the purchase of a
house as it would any ordinary good. But houses do not only provide
shelter; they are also assets which yield a return. As a consequence,
the movement of house prices reflects not only the cost of shelter but
also the value of the investment. Since the CPI also assumes that part
of the mortgage used to finance a house is "purchased," the confounding of consumption and investment considerations is exacerbated by the treatment of mortgage interest costs. The Bureau of Labor
Statistics (BLS) has been concerned for some time with the adequacy
of the homeownership component of the CPI. BLS, in fact, currently
publishes several experimental indexes based on alternative treatments of homeownership.
For the present, at least, the CPI tends to overstate the importance
of home purchase and finance and, given the volatility of mortgage
rates, to produce startling monthly variations in the CPL During the
first 6 months of 1980 the home purchase and finance component of
the CPI increased at a 27.6 percent rate, adding about 3 percentage
points to the annual rate of inflation over the period. In July and
August the fall in mortgage rates dominated the index. The home
purchase and finance component fell at an annual rate of over 25
percent in July, and this decline was large enough to offset the increase in the other components of the index, resulting in an unchanged CPI from June to July. While this zero change in prices was
widely regarded as a statistical anomaly, it was no more or less
anomalous than the inflationary influence that the home purchase
and finance component had imparted to the CPI throughout the first
half of the year. This influence began to be felt again during the late
fall and early winter as mortgage rates climbed to near their spring
peaks. The home purchase and finance component promises to have
a heavy impact on the CPI in the early months of 1981.
WAGES, PRODUCTIVITY, AND INCOME SHARES
As discussed in Chapter 1, the primary goal of anti-inflation policy
during 1980 was to prevent the increase in oil prices from becoming
a stimulus to higher wage settlements. The policy was motivated by
the facts that the long-term behavior of prices of goods and services
closely reflects the behavior of business costs and that wages, salaries, and fringe benefits account for roughly two-thirds of the total
152
costs of production. The evidence suggests that while the policy was
partially successful, it was not able to prevent an acceleration of
wages. As shown in Table 20, all measures of labor compensation accelerated between 1979 and 1980 to a level of about 9 or 10 percent. The largest wage gains were in manufacturing, where average
hourly earnings grew 10.8 percent over the 12 months ending in December 1980. The smallest gains were in the construction industry
(7.2 percent over the same period).
TABLE 20.—Measures of compensation and-employment costs, 1977-80
[Percent change, third quarter to third quarter]
Measure
1977
Average hourly earningsl index
Compensation per hour . .
Employment cost index2
Union.
Nonunion
....
.
Union wage changes (total effective adjustment) .
Adjustment resulting from:...
Current settlement
Prior settlement
Escalator provision
1978
1979
1980
7.4
7.5
8.3
8.6
8.0
9.6
9.2
10.0
7.2
7.7
6.9
8.0
7.9
8.0
7.7
8.4
7.3
9.4
10.9
8.6
8.6
7.9
8.7
9.1
3.5
3.3
1.7
2.1
3.5
2.2
2.8
3.1
2.8
3.4
3.2
2.5
1
3
Data are for private nonfarm business sector, all persons.
Changes are from September to September.
Source: Department of Labor, Bureau of Labor Statistics.
Although acceleration in wages, salaries, and fringe benefits seems
to have taken place in both union and nonunion sectors, union wage
gains continued to exceed nonunion wage gains. Uncertainty exists as
to whether or not these results reflect the relative bargaining
strength of union over nonunion workers, as well as the extent to
which they mirror conditions specific to individual industries. These
differentials may also result from the more prevalent use of cost-ofliving adjustments (COLAs) in union contracts. To the extent that inflation is unanticipated, workers under contracts with COLAs will
tend to receive larger wage settlements than those without COLAs.
For this reason, sudden increases in inflation rates may tend to widen
union-nonunion wage differentials. Finally, the 1980 wage differentials may result from the fact that a number of important unions were
able to maintain wage gains even though aggregate labor markets
were slack. Major contracts were settled in 1980 in the aerospace,
steel, telephone, and clothing and apparel industries.
Despite the step-up in nominal wage increases, real wages continued to fall throughout 1980. However, as was pointed out in last
year's Report, customary calculations of the real wage which use the
CPI can be deceptive. Table 21 sets forth several calculations of real
wage change utilizing alternative price indexes.
The additional cost of imported energy was a major factor in real
wage declines in 1980, as it was in 1979. Increases in the price of
153
imported energy eventually will reduce real incomes in the United
States. This reduction must be achieved by some combination of
price inflation, wage moderation, or shrinking profit shares. Wage
bargaining aimed at preventing this can only transform the adjustment into a more inflationary one.
TABLE 21.—Alternative measures of changes in real earnings per hour, 1978-80
[Percent change, fourth quarter to fourth quarter]
Item
1978
1979
1980
l
Average hourly earnings index
Deflated by:
Consumer price index (CPI)
CPI with rent substituted for home-ownership
CPI with rent substitution and excluding energy...
Fixed-weight price index for personal consumption expenditures (PCE)..
Fixed-weight price index for PCE excluding energy
-4.3
-2.3
.1
=2.6
-1.1
-.2
-1.9
-1.1
-.2
-2.7
— 9
l!6
-2.5
Compensation per hour Deflated by:
Consumer price index (CPI)
CPI with rent substituted for home-ownership
CPI with rent substitution and excluding energy....
Fixed-weight price index for PCE
Fixed-weight price index for PCE excluding energy..
-.8
.9
~u
1
Preliminary: CPI for fourth quarter 1980 based on data through November.
Data are for the private nonfarm business sector, all persons. Changes for 1980 are third quarter to third quarter.
Note.—CPI for all urban consumers used.
Fixed-weight price indexes are preliminary and subject to revision.
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).
2
Incomes policies can help to moderate the inflationary response to
an oil-price increase, but only if business and labor cooperate to
achieve the necessary adjustment. Such a willingness supported the
Council on Wage and Price Stability (CWPS) standards program
through its first year, 1979. In that year, as was noted in the last
Report, evidence suggested that the standards had helped to restrain
wage inflation by 1 to IV2 percentage points. Since there was no evidence of widening profit margins, it appears that the CWPS program
contributed to smoothing the adjustment to higher oil prices. While
there is evidence that cooperation with the standards was also high in
its second year, a combination of several program features seems to
have reduced but not eliminated its impact. A widening of the allowable range of wage increase and an undervaluation of cost-of-living
adjustments in multiyear contracts were important factors.
Productivity
Productivity growth continued weak in 1980, advancing a tiny 0.1
percent over the year ending with the third quarter. In 1979 private
nonfarm business productivity had declined 1.1 percent.
During the course of 1980 productivity growth fluctuated sharply.
In the first quarter productivity was essentially unchanged. With the
154
sharp decline in output in the second quarter, productivity declined
at a rapid 3 percent annual rate. This marked the seventh consecutive quarterly drop. With the resumption of modest economic growth
in the third quarter, productivity rebounded sharply, rising at a 4
percent rate.
The faltering productivity during the first half of 1980, combined
with a more rapid rise in wages, resulted in an acceleration in unit
labor costs. However, with the improvement in productivity in the
third quarter, the increase in unit labor costs moderated substantially. For the year ending with the third quarter, unit labor costs rose 10
percent, a modest improvement from the increase recorded during
1979.
Distribution of National Income
The recession's impact was evident in the shifting distribution of
national income during 1980 (Table 22). Compensation of employees, which had averaged 74.6 percent of national income over the
years 1976-79, rose to 75.3 percent in 1980. This increase in the
share of national income going to wage earners is the normal pattern
in a recession. Employer contributions for social insurance continued
to account for a growing share of the compensation total. Corporate
profits and proprietors' income as a share of national income fell
sharply to 14.8 percent in 1980, down from the 17.1 percent average
share during 1976-79. The corporate profits share fell to 8.6 percent. The unusually high level of interest rates was responsible for
boosting the net interest share of national income to 8.5 percent, its
highest level in the postwar period. Net farm income fell in 1980
from its relatively high level in 1979. After adjusting for changes in
inventory, net income from farming was about $24 billion for the
TABLE 22.—Shares of national income, 1976-80
[Percent of total]
76
Item
1977
1978
1979
19801
Third quarter
1979
1980
Compensation of employees
75.1
74.5
74.5
74.4
75.3
74.3
75.3
Wages, salaries, fringe benefits, and other
Employer contributions for social insurance
Proprietors' income2
70.0
5.1
69.4
5.1
69.2
5.3
69.0
5.4
69.8
5.5
68.9
5.4
69.8
5.5
6.8
6.7
6.7
6.7
6.2
6.7
6.1
5.4
1.4
5.5
1.2
5.2
1.5
5.1
1.6
5.1
1.1
5.2
1.5
5.1
1.0
Nonfarm 2 ..
Farm 2
Rental income3
Corporate profits 2
1.7
1.6
1.6
1.6
1.5
1.5
1.5
10.0
10.7
10.6
10.0
8.6
10.0
8.4
6.3
6.5
6.6
7.3
8.5
7.4
8.7
Net interest
1
Preliminary,
2
With inventory
3
valuation and capital consumption adjustments.
Rental income of persons, with capital consumption adjustment.
Note.—Quarterly figures based on seasonally adjusted data.
Detail may not add to 100 percent because of rounding.
Source: Department of Commerce, Bureau of Economic Analysis.
155
year, 23 percent lower than in 1979. Net cash income, the cash available to farmers for capital expenditures and operator income, was
less affected and fell about 6 percent. The deceleration in cash receipts for livestock and continued inflation in farm production expenses were the principal factors in the decline.
ECONOMIC POLICY
As in 1979, economic policy in 1980 aimed at stemming an acceleration in prices and wages. Both fiscal and monetary policy sought
to restrain aggregate demand. As noted above, these policies were
supplemented by a program of voluntary standards for wage and
price behavior.
Fiscal Policy
Changes in the high-employment surplus (HES) are a useful measure of discretionary fiscal policy. The actual Federal budget deficit is
affected not only by changes in discretionary policy, such as changes
in tax rates or more rapid spending on defense programs, but also by
the state of the economy. In particular, cyclical swings in incomes
and employment affect tax receipts. Outlays for such programs as unemployment compensation and food stamps are similarly affected.
These changes in receipts and outlays alter the budget deficit without
any action by the Congress or the President. Thus, the actual surplus
or deficit is a poor measure of discretionary fiscal policy. The HES
measures what the surplus would be if the economy were at high employment. By evaluating the budget at a standard level of GNP, the
measure abstracts from those changes in budget receipts and outlays
that result from cyclical changes in GNP.
The High-Employment Budget. When judged by this measure, discretionary fiscal policy remained tight in 1979. The high-employment
surplus increased $13.5 billion in 1979 (Table 23). The chief factors
in the tightening were the sluggish pace of outlay growth during
1979 (particularly for grants-in-aid), the inflation-induced increases in
personal income taxes, and legislated increases in social insurance
taxes. Over the 4 quarters of 1980, however, the HES fell by $6.8
billion. Two unusual factors were responsible for the apparent move
toward expansion during 1980. First, the delayed effect on individual
tax refunds and final settlements from the Revenue Act of 1978 lowered the HES by roughly $8 billion, starting in the first quarter of
1980. Second, due to large increases in interest outlays caused by
156
record high interest rates during the year, discretionary outlay changes
appear larger than they actually were. By convention, interest payments are unadjusted in the calculation of high-employment outlays.
In other words, high-employment interest payments are defined to
be equal to actual interest payments. Thus, the high-employment surplus tends to understate the degree of discretionary fiscal restraint
when interest rates increase, and vice-versa. Excluding these two factors, the high-employment budget surplus actually tightened by
roughly $10 billion over the 4 quarters of 1980.
TABLE 23.—Actual and high-employment Federal receipts and expenditures, national income and
product accounts, calendar years 1973-80
[Amounts in billions of dollars; quarterly data at seasonally adjusted annual rates]
High-employment1
Actual
Calendar year or quarter
Receipts
Expenditures
Surplus or
deficit ( - )
Receipts
Amount
Percent
of 6NP
Expenditures
Surplus or
deficit {-)
Amount
Percent
of GNP2
1973
1974
258.6
287.8
264.2
299.3
-5.6
-11.5
-0.4
-.8
252.7
296.9
264.0
297.6
-1U
-.7
-0.9
-.1
1975
1976
1977
1978
1979
287.3
331.8
375.1
431.5
494.4
356.6
384.8
421.5
460.7
509.2
-69.3
-53.1
-46.4
-29.2
-14.8
-4.5
-3.1
-2.4
-1.4
315.8
354.7
390.7
441.1
504.2
344.9
374.8
413.8
456.8
506 5
29.1
201
23.1
-15.7
-2.2
-2.2
-1.5
-1.6
-1.1
3
538.9
601.2
-62.3
-2.4
573.2
591.6
-18.3
-1.2
I
II
|f|
488.4
494.0
515.8
538.6
-11.5
-8.1
-15.2
-24.5
-.5
IV
477.0
485.9
500.6
514.0
481.0
496.8
510.9
528.3
485.9
491.4
513.0
535.5
-2.1
-7.2
|
||
Ill
IV3
528.4
520.9
540.8
565.4
564.7
587.3
615.0
637.9
-36.3
-66.5
-74.2
-72.5
543.2
556.6
581.8
611.2
560.6
577.9
602 5
625.3
17 4
21.3
-20.7
-14.0
1980
...
-.6
_,1
1979:
1980:
-.3
-.6
-1.0
-1.4
-2.6
-28
-2.6
4.8
5.3
-.3
.4
-.1
-.5
-1.1
-1.4
-1.3
-.9
1
These totals differ from those published in the November 1980 Survey of Current Business because of revisions to both actual
and potential GNP. For more information on these revisions, see Ihe supplement to this chapter.
2
High-employment surplus or deficit as percent of high-employment gross national product.
3
Preliminary.
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.
Budget Outlays and Receipts. Federal budget outlays for fiscal 1980
were $579 billion, an increase of $85 billion, or 17 percent over the
fiscal 1979 level. This marked acceleration in budget outlays was due
largely to the combined impact of higher interest rates, growing unemployment, and increases in the cost of entitlement programs due
to cost-of-living increases. Interest outlays jumped 23 percent in
fiscal 1980, while outlays for income security and health, which include social security, unemployment insurance, and other major Federal entitlement programs, grew 19 percent. Together these three
areas—health, income security, and interest—accounted for 61 percent of the change. In addition, defense outlays grew 17 percent in
157
fiscal 1980, up sharply from the 10 percent growth of the prior fiscal
year.
Federal budget receipts rose by 12 percent compared to 16 percent during fiscal 1979. The recession-induced weakness in incomes
and the delayed impact of the Revenue Act of 1978 on individual tax
refunds and final settlements combined to produce this result. Individual tax receipts grew 12 percent in fiscal 1980, down sharply from
the 20 percent fiscal 1979 gain. Corporate tax receipts fell 2 percent
in fiscal 1980. The Federal budget deficit increased from $28 billion
in fiscal 1979 to $59 billion in fiscal 1980.
Monetary Policy and Financial Markets
As discussed in Chapter 1, the Federal Reserve adopted a new procedure in October 1979 to guide its daily open market operations.
Under the new procedure, designed to exert better control over the
growth of the monetary aggregates, the Federal funds rate is allowed
to vary over a much wider range. In a report submitted to the Congress in February 1980, the Federal Reserve set forth its objectives
regarding increases in the money and credit aggregates during 1980
(Table 24). These ranges called for a deceleration in monetary expansion in 1980 from the preceding year.
TABLE 24.—Growth in monetary and bank credit aggregates, 1979-81
[Percent change]
Federal Reserve longer-run ranges
Actual
1980 IV to 1981 IV
Item
1978 IV to 1979 IV to
1980 IV *
1979 IV
M-1A
M-1B
M-2
M-3
Bank credit
5.0
7.6
8.9
9.8
11.5
2
1979 IV to
1980 IV
Unadjusted
for
nationwide
NOWs
Adjusted for
nationwide
NOWs
5.1
7.1
9.6
9.7
3^
4
6
6V&
to 6
to SYz
to 9
to 9 ^
3 toSVfe
3% to 6
5Vfe to 8V6
6Y2 to 9%
0 to 2 %
5 to7Vi
5% to SYz
SYz to SYz
7.8
6
to 9
6
6
to 9
to 9
1
Preliminary.
2
Estimate for fourth quarter 1980 based on November data.
Note.—M-1A is currency plus private demand deposits, net of deposits due to foreign commercial banks and official
institutions.
M-1B is M-1A plus other checkable deposits (negotiable order of withdrawal accounts, accounts subject to automatic
transfer service, credit union share draft balances, and demand deposits at mutual savings banks).
M-2 is M-1B plus overnight repurchase agreements (RPs) issued by commercial banks, overnight Eurodollar deposits held by
U.S. nonbank residents at Caribbean branches of U.S. banks, money market mutual fund shares, and savings and small time
deposits at all depository institutions.
M-3 is M-2 plus large time deposits at all depository institutions and term RPs issued by commercial banks and savings and
loan associations.
Bank credit is total loans and investments plus loans sold at all commercial banks.
Source: Board of Governors of the Federal Reserve System.
Except for M-1B, the rates of growth of the various monetary aggregates during the year roughly matched or exceeded their 1979
pace. Some of the relative movements in the various monetary aggregates in 1980 were the result of special factors. At the beginning of
the year the Federal Reserve had anticipated that funds attracted to
158
automatic transfer services (ATS) nationwide and negotiable order of
withdrawal (NOW) accounts in the Northeast would cause M-1A to
grow about one-half percentage point slower than M-1B. In fact,
more funds flowed into these accounts from both regular savings accounts and demand deposits than was originally forecast. These developments boosted M-1B growth and lowered M-1A growth, each
by about three-quarters of a percent relative to what they otherwise
would have been.
For the year as a whole M-1B, M-2, and M-3 exceeded their target
ranges while M-1A did fall within its range. However, if one adjusts
the target ranges for M-1A and M-1B in light of the actual experience with NOW and ATS accounts, then both of these measures fall
roughly at the upper end of the adjusted range.
Within the year, money growth, credit flows, and interest rates experienced unusually wide variations. The year began with money and
credit demands apparently accelerating despite the sharp increase in
interest rates in the fourth quarter of 1979. In February the growth
of money and credit surged, boosting demand for reserves above the
level consistent with the Federal Reserve's monetary growth ranges.
The resulting pressures in money markets, combined with deteriorating inflationary expectations, forced both short- and long-term rates
up sharply.
Data available in early March suggested that credit growth had not
been deterred by the general monetary tightening and the sharp increases in interest rates. Moreover, the increasing speculative activity
in financial and commodities markets raised concern among many in
the financial community about the threat of a financial panic. Extraordinary measures were called for to dampen excessive credit demands, reduce the spiraling inflationary expectations, and ease the
strains in financial markets.
On March 14 the President announced an extensive anti-inflation
plan that included authorizing the Federal Reserve Board to implement certain types of credit controls under the provisions of the
Credit Control Act of 1969. Operating under its own authority, the
Federal Reserve also introduced a voluntary credit restraint program
and tightened some already existing regulations, as detailed below.
Taken together, the credit restraints were intended to reinforce traditional monetary policy measures that control overall money and
credit growth while limiting the burden on certain sectors hard hit by
high interest rates. Those sectors included small businesses, farmers,
home buyers and builders, and auto dealers and purchasers.
The measures were designed to restrain the growth of certain
types of consumer credit as well as those liabilities of large banks that
had been used to support a rapid buildjup in business loans. These
159
actions included: (1) a requirement that all types of lenders maintain
on deposit at a Federal Reserve Bank a certain percentage of increases in credit card lending and otfrer categories of unsecured consumer credit; (2) an increase in the marginal reserve requirement on
managed liabilities—including large time deposits ($100,000 or
larger) with maturities of less than a year, Eurodollar borrowings,
and security repurchase agreements—of large member banks and
U.S. branches and agencies of large foreign banks; (3) an extension
of special deposit requirements to increases in managed liabilities of
large nonmember banks and to increases in total assets of moneymarket mutual funds; and (4) a surcharge of 3 percentage points on
frequent borrowing by large member banks from Federal Reserve
Banks. In addition, the Board announced a voluntary program under
which commercial banks and finance companies would limit the
growth in total loans to U.S. customers to 6 to 9 percent for the
period from the fourth quarter of 1979 to the fourth quarter of 1980.
Expansion of credit and money slowed abruptly after these measures were announced. The reaction of financial institutions, households, and businesses was sharper than anticipated. Banks and other
financial institutions responded by accelerating and intensifying
measures to restrict credit availability already in train; consumers and
business sharply altered their credit behavior. Credit card sales and
applications dropped off abruptly in March. Consumer installment
credit outstanding declined in April for the first time in 5 years.
Commercial bank lending to businesses moderated in March and
then declined for the next 3 months. Over this same period the pace
of monetary expansion slowed. During April all the monetary aggregates actually fell below their target ranges. The narrower aggregates
declined for the second quarter as a whole.
As evidence mounted that credit growth had been arrested, the
Federal Reserve began to relax various provisions of the program. In
early July the Board ended the program entirely, and the President
revoked the Board's authority under the Credit Control Act.
In retrospect, it appears that another factor contributing to the
abrupt decline in credit growth was that interest rates finally had
reached levels in late February and early March which were sufficient
to discourage borrowing. However, data available at the time did not
show this development. For example, business loans at large banks
had increased rapidly from December to mid-February, in part due to
borrowing in anticipation of the rumored adoption of credit controls,
but in late February and early March business borrowing from these
large banks stagnated—a pattern that could not be discerned until
late March. Similarly, new home sales fell slightly in February and
160
plunged in March, although the only information available in early
March had shown that sales advanced in January.
The mid-March announcement of credit controls did not immediately break the upward spiral in interest rates. In late March and
early April the Federal funds rate came within a few basis points of
20 percent, and rates on most short-term and long-term market instruments rose to record highs before falling sharply over the course
of the second quarter. The Federal funds rate fell faster than other
short-term market rates from April to mid-June, but the funds rate
then stabilized for the next 2 months at around 9 percent. During
this period there were occasions when the Federal Reserve kept the
Federal funds rate from falling below the 8V2 percent lower bound
set in May by the Federal Open Market Committee. Longer-term
rates also declined as the spiral of inflationary expectations apparently was reversed in light of the growing slack in the economy and the
weakness in the monetary aggregates. Downward adjustments in administered rates, like the prime rate and home mortgage rates,
lagged the declines in market yields.
The downswing in most interest rates ended in June and July as
monetary aggregates accelerated and credit demands again surged.
The Federal Reserve did not accommodate the strong demand for
bank reserves associated with acceleration of the monetary aggregates through the summer and fall, and the rate of expansion of adjusted nonborrowed reserves slowed from 31 percent at an annual
rate in the second quarter to 4 percent in the third. Meanwhile, between late August and early December the discount rate was raised in
three steps to 13 percent, and the Federal Reserve reimposed an additional surcharge on frequent borrowings by large banks. The Federal funds rate increased to over 20 percent in December. Other
short-term market rates followed this upward climb. The prime rate
adjusted more rapidly on the upswing than it had when rates had
come down earlier in the year. Long-term rates, responding once
again to continued inflationary pressures, reached rates at the end of
the year near or above their March-April peaks. In mid-December
short-term interest rates reached new peaks and began to fall rapidly
once again. By early January the commercial paper rate, for instance,
had fallen 3% percentage points from its mid-December peak. Longterm interest rates fell about 1V4 percentage points over the same
period.
The volatile movements of the narrow monetary aggregates over
the course of the year reflected in part the pattern of economic activity. But the atypical behavior of the demand for money during 1980
also contributed to this volatility. As noted in Chapter 1, the demand
for money—which is used by economists to characterize the relation-
161
ship among money, interest rates, and economic activity—has shown
a tendency toward abrupt shifts in recent years. In particular, such
shifts in 1975 and in 1976 led to monetary growth in the narrower
aggregates, M-1A and M-1B, that was well below that expected on
the basis of the historical relationship between money, income, and
interest rates. While not fully understood, such shifts have followed
rapid increases in interest rates to record levels, which appear to
induce firms and households to adopt cash-economizing financial innovations. (These were discussed in detail in the 1978 Report.)
In the second quarter of 1980 another shift in money demand apparently took place. Declines in M-1A and M-1B were greater than
would have been expected even in the face of the sharp fall-off in
economic activity and high interest rates. But the current episode appears to differ somewhat from the previous shifts in that this time the
shift was largely offset in the subsequent 2 quarters. This offset suggests that some special factors may have been at work. One
hypothesis is that the imposition of credit controls may have
temporarily led holders of currency and demand deposits to draw
down these balances in the second quarter. With the end of the controls program in July this temporary depressant disappeared, and
households were able to rebuild their cash balances. Whether this explanation is correct or not, it seems likely that a temporary moneydemand shift contributed to the pattern of a decline in the money
supply in the second quarter followed by an unusually rapid money
growth in the second half of the year.
Thrift Institutions. In the first quarter of 1980, deposit flows to thrift
institutions—mutual savings banks and savings and loan associations—slowed to the lowest rate since the fall of 1974. But after
market interest rates peaked in late March and early April thrift deposits once more began to expand at the healthier pace registered in
the preceding year. From December through April the decline in
thrift deposit flows was softened by an inflow of funds attracted to
the variable rate instruments offered to savers—the 6-month money
market certificates (MMCs) and the new 2V2-year small saver certificates (SSCs). For the next 5 months, however, there were net withdrawals of MMCs as depositors shifted funds into the higher yielding
SSCs. From April to July funds were also shifted into money market
mutual funds, where the technical method for calculating return gave
these funds a temporary yield advantage over MMCs. By October
MMCs had resumed healthy expansion, and for the first 11 months
of the year MMCs and SSCs at thrift institutions together grew by
$115 billion.
The other major sources of funds for thrifts also had interest costs
tied to market rates. Members of the Federal Home Loan Bank
162
(FHLB) System increased their borrowing from the FHLB by over $7
billion to a level of about $47 billion. Many large institutions also
augmented their small-account deposit flows by issuing "jumbo"
($100,000 or larger) certificates of deposit. Small denomination accounts with interest rates fixed by regulation experienced net withdrawals throughout the year. By the end of 1980 these fixed-ceiling
deposits accounted for just over half of total thrift deposits, compared to roughly two-thirds at the end of 1979.
While the new deposit instruments and FHLB borrowings helped
the thrifts sustain asset growth by allowing them to compete for
funds at market interest rates, this new-found competitive status was
achieved at considerable peril to the short-run profitability of these
institutions. For much of last year the interest cost on such funds was
well above the return on the longer-term asset portfolios, thereby de-pressingTHrift industry profits.
In an environment of growing uncertainty regarding the direction
of interest rates and their ability to sustain deposit flows, thrifts apparently became somewhat more cautious in their asset management
in early 1980. When high interest rates curtailed deposit inflows in
earlier cycles, thrifts generally sustained their mortgage lending activity by selling off their liquid asset portfolios. From March to May
1980, however, savings and loans (S&Ls) reduced their home mortgage commitments at a record rate but continued to acquire liquid
assets. The percentage of assets held by insured S&Ls in liquid instruments actually increased over most of 1980—an unprecedented
development in a period of weak deposit flows.
Home mortgage commitments rebounded sharply from June
through September following the declines in interest rates and the
resumption of deposit flows. In the fourth quarter commitments fell off
slightly as rising mortgage interest rates once again led to a reduction
in housing sales.
Credit Flows. Credit extended to the nonfinancial sectors of the
economy during the first 3 quarters of 1980 was well below the pace
of the preceding year, even though Federal borrowing doubled.
Funds raised by private nonfinancial borrowers (including State and
local governments) plummeted in the second quarter in the face of
high costs, restricted credit availability, and the recession-induced reduction in demand. While private credit flows rebounded somewhat
in the third quarter, they continued to lag behind the 1979 pace.
The household sector experienced the sharpest reduction in borrowing during 1980. In late 1979 the ratio of consumer installment
and mortgage credit repayments to disposable personal income—a
common measure of the burden of household debt—reached its historical peak. Thereafter, the rate of increase of these household debt
163
categories gradually abated through the first quarter of 1980. As reported earlier, the credit controls program induced consumers to
reduce their installment debt sharply in the second quarter, and their
rate of mortgage borrowing nearly halved. Even with some recovery
of borrowing in the third quarter, required household debt repayments as a percent of disposable personal income continued to fall
throughout 1980. At year-end this measure of household debt burdens was well below the mid-1979 peak. Moreover, real financial net
worth per capita rose over the year. Taken together, these trends
suggest that the household debt burden may not be as serious a constraint on consumer spending in 1981 as it was in late 1979 and
1980.
Borrowing by nonfinancial businesses followed a pattern similar to
that of the household sector, though not as severe. Second quarter
borrowing fell much more sharply than the decline in the financing
gap (the excess of capital expenditures, including inventory accumulation, over internally generated funds), as businesses liquidated
some of the short-term assets built up over the previous 3 quarters.
In the third quarter businesses once again began to increase their
liquid asset portfolios, and corporate borrowing increased despite a
further reduction in the financing gap. Corporations took advantage
of the precipitous drop in long-term rates in May and June by issuing
a record volume of long-term bonds, but when long-term rates
moved upward later in the summer they returned to short-term
credit expansion to meet their financing needs.
The liquidity positions of nonfinancial corporations have deteriorated significantly since 1976, when the ratios of liquid assets and
long-term debt to short-term debt reached their cyclical highs. By the
end of the second quarter of 1980 the corporate liquidity ratio
(liquid assets relative to short-term debt) had reached an all-time
low, and long-term debt as a percent of total debt was considerably
lower than the previous low reached in early 1975. Historically, businesses have tended to restore their liquidity and move to a healthier
balance in their liability structures near the end of recessions, when
reduced credit needs and lower long-term rates allow them to liquidate their short-term borrowing and extend the maturity of their liability structure. This time, however, the sharper-than-usual increases
in interest rates have attenuated this normal restructuring process
and threaten to induce further deterioration of the financial health of
corporations in 1981.
164
THE PROSPECTS FOR 1981 AND 1982
In 1981 the economy should continue its modest recovery from the
1980 recession. Real growth is projected to be about 1% percent
over the 4 quarters of the year, with virtually all of it coming in the
last 2 quarters. Although both employment and the labor force are
expected to rise about Wz million during the year, the labor force
gain is likely to be a shade larger. In consequence, the unemployment at year-end 1981 is anticipated to be slightly above its current
level. The overall rate of inflation is forecast to be little changed
from its 1980 pace. Given public concern with inflation, both fiscal
and monetary policy are expected to be a restraining influence on
economic activity in 1981 and beyond. However, there is both need
and room for a prudently designed tax cut which would be phased in
gradually over the next 2 years.
Over the 4 quarters of 1982 real growth is expected to be 3Vz percent, with the proposed tax cuts providing significant stimulus. The
somewhat faster pace of economic activity should yield employment
gains of roughly 2 million during the year. The unemployment rate is
expected to decline gradually throughout 1982. The continued moderation in economic activity is projected to produce a slowing in the
overall rate of inflation of about Wz percentage points during 1982.
FISCAL POLICY
The forecast presented below is based on the economic policy
measures described in the 1982 budget. In fiscal 1981 Federal outlays are projected to be $662.7 billion. This amounts to a 14 percent
increase, a slowdown from the 17 percent growth in fiscal 1980. A
further slowdown is projected in fiscal 1982, with outlays rising 12
percent to $739.3 billion. Most of the increase in Federal outlays
over the 2 years stems from the effects of inflation. Adjusted for inflation, total outlays will increase about 2 percent, with sizable real
gains in defense spending partially offset by declines in nondefense
spending.
In fiscal 1981 receipts are projected to be $607.5 billion, rising to
$711.8 billion in fiscal 1982. Both these receipts, and to a lesser
extent expenditures, reflect the President's proposed Economic Revitalization Program (ERP), designed to moderate the rise of tax burdens and provide incentives for business capital investment. The
budget cost of the program is $3.3 billion in fiscal 1981, rising to
$22.5 billion in fiscal 1982. The fiscal 1982 budget also includes a
proposal to increase the Federal tax on motor fuels by 10 cents per
gallon on June 1, 198L Thereafter, the tax per gallon would increase
with inflation. The proposed increase in the motor fuels tax is expected
165
to yield approximately $13 billion in fiscal 1982 and larger amounts
thereafter.
The tax reductions embodied in the ERP will not totally offset increases in other taxes. Social security taxes, the windfall profits tax
on oil company revenues, and inflation-induced increases in personal
taxes will combine with the proposed motor fuels tax and withholding of tax on interest and dividends to produce a rising tax burden in
1981 and 1982 despite the ERP. In addition, even with the budgeted
acceleration in defense spending and continued increases in interest
outlays, overall growth in Federal spending will be relatively modest
in real terms. Thus, the high-employment surplus is expected to increase substantially in both 1981 and 1982, helping to moderate
demand and lower inflation.
The Economic Revitalization Program
The major focus of the ERP is on increasing investment and encouraging innovation. Depreciation rules would be both liberalized
and simplified under the plan. This would increase the rate of return
on new investment and the cash flow of firms making investments.
The program would also make the current investment tax credit
(ITC) partially refundable. The ITG and accelerated depreciation
proposals would be retroactive to January 1, 1981. These two proposals are explained in detail in Chapter 1.
To shift additional national resources into investment, a largerthan-usual share of the funds available for tax reduction will have to
be devoted to investment incentives. But some other forms of tax
relief are both feasible and desirable. The President's program proposes three principal areas of such relief. First, individuals and employers would receive an income tax credit sufficient to offset the rise
in social security taxes which took place at the start of the year. This
type of tax cut was chosen because it not only would reduce tax burdens but also lower business costs and thus help modestly with our
inflation problem. Second, for workers who face a growing social security tax burden but earn too little to pay income taxes, the program would expand the earned income tax credit. This would more
than offset the increase in social security taxes for our lowest-paid
workers. Third, the program proposes a phased reduction in the tax
burden on two-earner families by reducing the so-called "marriage
penalty" that taxes married couples with roughly equal incomes at
rates higher than unmarried couples with the same incomes.
These reductions in individual income taxes would not become effective until January 1, 1982. The program, as originally proposed in
August 1980, had provided for implementation of these tax cuts immediately upon passage. The delay in the effective date is dictated by
budgetary prudence and the desire to avoid rekindling inflationary
166
expectations. Of course, if the economy should weaken seriously
during 1981, the Congress would have reason to advance the effective date of these tax cuts.
MONETARY POLICY
In July 1980 the Federal Reserve tentatively set its monetary aggregate growth target ranges for the period from the fourth quarter of
1980 to the fourth quarter of 1981 generally one-half percentage
point below the previous year's targets (Table 24). As discussed in
Chapter 1, this reduction is intended to provide sustained monetary
restraint consistent with an eventual return to price stability. There is
little doubt that these target ranges will restrain the economy in
1981, but the amount of that restraint is less certain.
A rough method of assessing the restrictiveness of monetary policy
in the period ahead is the increase in velocity implied by keeping
monetary growth within the target ranges while still supporting expansion of nominal GNP sufficient to permit a modest recovery from
the 1980 recession. Given the likelihood that inflation will sustain
considerable momentum over the year, the implied increases in the
velocities of the key monetary aggregates are well above the longterm historical averages. Historically, such large increases in velocity
have been associated with a substantial rise in interest rates, a rise
that could threaten the prospects for a moderate economic recovery
in 1981.
Several potential developments during 1981 could alter the degree
of monetary restraint implied by the money growth targets. First, as
discussed earlier, in 1975 and 1976 there were sizable shifts in the
demand for money in a direction that tended to increase velocity and
thus accommodate more nominal GNP growth for a given monetary
growth. One factor thought by many to be associated with the earlier
shifts—a rapid runup in interest rates piercing previous peak levels—
occurred in late 1980. While a money-demand shift cannot be predicted with any confidence for 1981, the possibility that another shift
may materialize raises the difficulty of interpreting the degree of restrictiveness of the money growth ranges.
In addition, the introduction of NOW accounts on a nationwide
basis in January will alter to some degree the relationships among
the various aggregates and their relationship to economic activity.
Shifts out of demand deposits into NOWs will depress the rate of
growth of M-1A. On the other hand, NOW accounts probably will
attract some savings deposits and other interest-bearing deposits,
thereby boosting M-1B. The degree of the shift into NOW accounts
will depend on the aggressiveness with which depository institutions
price these new instruments and promote them, as well as on the
public response. Partly oh the basis of NOW account growth in New
167
England, the Federal Reserve has adjusted the midpoints of the
target ranges for these narrow aggregates in an attempt to account
for these structural changes (Table 24). But whether the adjusted targets will in fact yield the same degree of monetary restrictiveness in
1981 as the announced unadjusted targets would have yielded in the
absence of nationwide NOWs is unknown.
Shifts into NOWs from demand and most interest-bearing deposit
categories at banks and thrifts will have no impact on the rates of expansion of M-2 and M-3. However, other financial developments
could influence their growth patterns. In particular, there is considerable uncertainty about whether money-market mutual funds and the
variable rate SSCs—both of which are included in M-2 and M-3—
will continue their unusually rapid growth in 1981. There is also uncertainty as to whether these instruments will draw funds from deposit categories in M-2 and M-3 or from sources not included in
these broader aggregates.
Finally, several technical problems associated with the Monetary
Control Act of 1980 will confront the Federal Reserve in 1981, further complicating the implementation of monetary policy. As discussed in Chapter 2, the act requires a sweeping restructuring of reserve requirements and extends both reserve requirements and
access to the discount window to nonmember banks and thrift institutions. It will take some time for these institutions to develop a
stable pattern of reserve management and borrowing behavior.
During this transition period the Federal Reserve will find it more
difficult than usual to predict borrowings, excess reserves, and other
reserve measures. Thus, the relationship between reserves and
money, which is the key to controlling money growth, will probably
be less certain during 1981 and perhaps over a longer period.
In the face of all these technical difficulties and uncertainties, the
danger in rigidly keeping the growth of M-1A, M-1B, or any single
monetary aggregate within a narrow preset range regardless of other
developments is obvious. With the long-run monetary growth ranges
for 1981 already implying considerable tightness, there is a great risk
that developments unrelated to the basic course of economic activity
could artificially boost the growth rates of some of the aggregates
and induce excessive monetary stringency. The Federal Reserve has
attempted to account for the structural changes by adjusting the
ranges for the narrow aggregates. Another option could be to place
more emphasis on the broader aggregates like M-2, which are unlikely to be so greatly affected by the structural changes. An additional
adjustment that would reflect the greater uncertainty of financial relationships in 1981 would be to widen the limits of the longer-run
ranges.
168
The uncertainty of developments in 1981 calls for flexible response
on the part of monetary policy. Since the Federal Reserve began announcing its longer-run targets in 1975, it has been understood that
"The longer-run ranges will be reconsidered as conditions warrant."
In 1981, this statement assumes even greater importance than usual.
WORLD AND DOMESTIC OIL MARKETS
As has been the case in the recent past, developments in world oil
markets will continue to influence U.S. inflation and growth. World
oil demand is likely to remain weak during 1981 due to the sluggish
pace of economic activity in the industrialized nations and the continued adjustment to 1979's rapid increase in oil prices. In addition, oil
inventories, which prior to the outbreak of the war between Iran and
Iraq were very high by historical standards, may still insulate the consuming nations from limited supply disruptions. Nevertheless, even
with these elements tending to limit price pressures, the price of imported oil is expected to increase somewhat faster than inflation in
1981 and 1982.
Decontrol of U.S. oil prices will bring still sharper increases in domestic oil prices during 1981. In November 1980 the average price
of domestic oil was about $28 per barrel. That price will rise to the
world market level by October 1981, at which time the price is expected to be in the neighborhood of $40 per barrel.
The total burden to U.S. consumers of the relative price increases
in oil during 1981 is expected to reach about $30 billion by the end
of the year. The bulk of this will go to the Federal Government in
the form of higher receipts from the windfall profits tax and increased revenues from corporate taxes on the profits of oil companies. This increase in Federal revenues is one source of the estimated
increase in the high-employment surplus during 1981. Of the remaining total, roughly $3 billion will accrue to foreign producers and
about $8 billion to domestic producers. Some small fraction of these
amounts will be respent in the United States in 1981, but the economic drag caused by the increase in oil prices during 1981 will still
amount to roughly $10 billion.
THE ECONOMIC FORECAST
The economy has now experienced 2 quarters of moderate real
growth following the sharp decline in the second quarter of 1980. At
the same time there was a rapid runup in interest rates through midDecember. While significant declines in interest rates were recorded
thereafter, the effects of taut financial conditions during 1980 are
likely to weaken the pace of recovery during the first half of 1981.
These weak conditions should be particularly evident in housing and
in spending for consumer durables. Overall, it is likely that real GNP
169
will be essentially flat in the first half of the year, with a distinct possibility of 1 quarter of actual decline.
After midyear the pace of activity should pick up, although by historical standards growth will remain modest for a period of recovery
(Table 25). The restrictive stance of monetary and fiscal policy will
contribute to this result. In addition, consumers' real incomes will be
restrained by rising oil prices. Over the 4 quarters of 1981 the combination of fiscal and oil-price imposed restraint is estimated to rise
by about $60 billion, or 2 percent of GNP.
TABLE 25.—Economic outlook for 1981
Forecast range
1981
Item
Growth, fourth quarter to fourth quarter (percent):
Real gross national product
1V2 to 2
Personal consumption expenditures....
Presidential fixed investment
Residential investment
Federal purchases
State and local purchases
1 to Vh
1 to Wz
6 to 7
3 to ZVz
- % to 0
10 to 10 xh
GNP implicit price deflator..,
Compensation per hour
Output per hour 2
Level, fourth quarter: 3
2
IOY2 to 11
% to 1
Unemployment rate (percent)
Housing starts (millions of units) 4
7% to V¥A
lVMo 1%
1
2
Preliminary.
Private nonfarm business, all persons. Changes for 1980 are fourth quarter 1979 to third quarter 1980 at annual rates.
*4 Seasonally adjusted.
Annual rates. October-November average used for fourth quarter 1980.
Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), and
Council of Economic Advisers.
As the economy moves into 1982 it should maintain the momentum of the last half of 1981. Business fixed investment is expected to
be a particular source of strength because of the proposed tax incentives for capital spending.
Consumer Expenditures
Consumer spending in 1981 will be constrained by sluggish growth
in after-tax income due in part to inflation-induced increases in effective personal tax rates and the step-up in social security taxes. Overall, real after-tax incomes will show only a very small gain. Rising
energy prices will also continue to put pressure on consumer purchasing power. As a consequence, consumer spending is projected to
grow less rapidly than real GNP during 1981.
Last year the personal saving rate rose somewhat, ending the year
at 5% percent. Over the last 4 years the saving rate has averaged a
shade under SVfe percent, roughly 2 percentage points below the
average of the preceding 10 years. Nevertheless, the attempt to maintain living standards in the face of sluggish income growth is likely to
170
produce a slight decline in the saving rate during 1981. Despite this,
real consumer purchases of goods and services are only projected to
rise by slightly more than 1 percent over the 4 quarters of 1981.
Consumer spending is expected to be particularly sluggish in the
first half of the year. Purchases of autos and other credit-sensitive
goods are likely to be the most affected, leading to a decline in durables spending during 1981. In contrast, expenditures by consumers
on both nondurable goods and services are projected to rise during
the year. A somewhat healthier growth in real consumer spending
should be evident in 1982 partly due to the gains in disposable incomes that will follow the personal tax cuts proposed for the start of
that year.
Business Fixed Investment
Surveys of capital spending plans by business for 1981 are currently showing surprising strength. One private survey indicates that for
1981 as a whole real spending on plant and equipment will increase
2 percent. The most recent Department of Commerce survey is
slightly less optimistic, suggesting that business plans to increase real
investment outlays by about 1 percent. The year-over-year increase
indicated by these surveys would involve vigorous gains in investment during 1981.
These surveys need to be interpreted with, caution. Business spending plans tend to be revised downward when the economy weakens,
as it is projected to do in the first half of 1981. Thus despite the surveys, some continued weakness is expected during the first half of
1981. However, business capital spending should begin accelerating
in the second half of 1981. An important source of this growth will
be the proposed liberalization of both depreciation allowances and
the investment tax credit. These are assumed to go into effect in
mid-1981, retroactive to the start of the year. But given the lags in
the investment process, these tax incentives should have their major
impact in 1982 and beyond. Indeed, real business capital spending
during 1982 is expected to increase substantially faster than real
GNP. One further reason for the strength in this sector is the marked
increase in capital spending anticipated in the energy industry.
Housing
During the last several months of 1980 the short-term prospects
for the housing market worsened somewhat. After the swift rebound
during the summer, housing starts leveled off at roughly a 1.55-million unit annual rate for September through November. Many observers were surprised that housing starts were maintained at that
level, especially in November, in light of very high and rising interest
rates. Part of the explanation appears to be that multifamily starts—
171
which increased from September to November—were bolstered
somewhat by Federal subsidy programs. Single-family starts declined
during this period partly due to a reduction in the rate of new home
sales in September and October, but sales unexpectedly turned up
slightly in November despite a rise in mortgage rates to 14 percent
and above.
The high mortgage rates that are likely to prevail during much of
1981 will delay any further rebound in homebuilding activity. At current interest rates, many potential home buyers—especially those
looking for their first home—cannot afford the required monthly
mortgage payments. Nevertheless, with the continued high rate of
household formation by the postwar baby-boom generation and the
tax advantages of homeownership, potential housing demand is quite
strong. Moreover, new financing arrangements may help reduce the
problems of affordability. Thrift institutions are now offering several
versions of the graduated-payment mortgage and have begun to offer
shared-appreciation mortgages in which the lender receives an equity
interest in the house in exchange for lower mortgage rates. In addition, there have been reports of homebuilders offering to meet part
of the buyer's monthly mortgage payments in exchange for a higher
sales price.
These factors suggest that housing starts may fall somewhat during
the first half of 1981 in response to high mortgage rates. But thereafter, growing housing demand and the further development of innovative financing arrangements should lead to some rebound in homebuilding even if interest rates remain high. By the end of 1981 housing starts are expected to be in the range of 1.5 to 1.7 million units,
with further gains probable during 1982.
Inventories
As observed above, recent inventory behavior has been noteworthy
for its relatively quick adjustment to changes in final sales. As a consequence, unlike previous periods of recession and recovery, there
has been no major inventory cycle this time around. Over the coming
months the sluggish pace of economic activity will create continued
pressure for moderation in inventory accumulation. In addition, the
current high level of interest rates provides an additional incentive to
hold down inventories. This suggests that inventory investment will
be quite modest in the first half of 1981 and should gradually gain
thereafter, roughly in line with sales, as economic growth quickens.
The Foreign Sector
The pattern of economic growth projected for the other industrial
countries is quite similar to the one projected for the United States:
very slow growth in the first half of this year, followed by somewhat
172
more rapid growth thereafter. During this year and next, growth
abroad is likely to average between 2 and 3 percent—roughly comparable to average growth in this country. As a result of this similarity
in growth patterns, net exports are not expected to show major
swings over the coming 2 years. From the fourth quarter of 1980 to
the end of 1982 a modest decline in net exports—about $2 billion in
constant dollars—is projected. This decline will result primarily from
a somewhat more rapid rise in import volumes than in export volumes, although neither of these is projected to grow very strongly.
Some loss in U.S. competitiveness is implicit in these projections.
American goods are likely to become somewhat more expensive in
relation to foreign goods, both because of somewhat higher inflation
in the United States and because of the strength of the dollar in foreign exchange markets. The strength of the dollar is likely to persist
so long as interest rates in the United States remain high relative to
interest rates abroad and if, as predicted, the U.S. current account
remains in surplus. While the surplus is projected to diminish somewhat during the course of 1981 from the very high level reached in
the second half of 1980, it should remain large through 1982 in the
absence of any future oil-price shock.
Government Purchases
Real Federal purchases are projected to increase by about 3*A percent during the course of 1981, and by a smaller amount in 1982.
During both years real defense purchases are anticipated to increase
substantially, offsetting projected declines in real nondefense purchases.
State and local government spending in real terms fell in 1980 and
is forecast to decline again during 1981. The economy's sluggish
growth, continued taxpayer resistance to new spending programs,
and budget tightness will serve to hold down spending. With the resumption of healthier economic growth in 1982, State and local government purchases are expected to increase in real terms, although
substantially more slowly than GNP.
Employment and Unemployment
Employment is likely to increase by slightly less than IV2 percent
during 1981 and, with the pickup in economic activity in the following year, to advance by a shade more than 2 percent during 1982.
Growth in the labor force is projected to average about 1% percent over the next 2 years, advancing at a somewhat slower rate in
1981 and speeding up in 1982. This pace is in line with average
annual growth over the last 30 years, although it does represent a
distinct slowdown from the 2x/z percent annual gain recorded in the
1970s.
173
These projections for employment and the labor force imply that
the unemployment rate at year-end 1981 will be between 7V% and 7%
percent, although it is likely to be above this range in the early part
of 1981. During 1982 the unemployment rate is projected to decline
steadily, ending the year in the range of 7Vi to 7V2 percent.
Wage and Price Developments
Wages and prices should decelerate over the next several years.
Several factors will be at work. With both fiscal and monetary policy
aimed at continued restraint in aggregate demand, the prospects are
for modest economic growth through 1982. These developments
should limit demand relative to supply in both labor and product
markets, gradually reduce inflationary expectations, and ultimately
yield a better wage and price performance. At the same time, expanded tax incentives will spur investment and thus improve productivity growth. This too should contribute to moderating wage and
price increases.
As discussed in Chapter 1, however, reducing inflation via demand
restraint and increased productivity does not yield quick results. Furthermore, a number of factors will serve to keep inflation relatively
high in the near future. These will include higher food price inflation, the recent increases in social security taxes and the minimum
wage, and the continued rise in energy prices resulting from further
oil-price increases and the decontrol of domestic energy prices.
These factors suggest that wage and price increases during 1981 may
nearly match those recorded in 1980.
Wages and Unit Labor Costs. After showing moderation through most
of 1979, wage rates accelerated last year. While the relatively slack
labor market will limit further wage acceleration this year, there is
unlikely to be any noticeable slowdown. Both oil and food prices will
rise sharply in 1981, maintaining the pressure for sizable wage gains.
But by 1982, with continued restraint in aggregate demand and
lower food- and oil-price rises (decontrol will be completed), the rate
of pay increase should diminish, returning to the vicinity of wa^e
gains seen in 1979.
Private wages and fringe benefits are projected to increase 10 to
lOVfe percent during 1981. In addition, the jump in payroll taxes
which occurred on January 1, 1981 added slightly over one-half percent to the level of compensation. As a result, increases in total
hourly compensation should average about lOVa to 11 percent over
the 4 quarters of 1981, with a large bulge in the first quarter. With
only a modest boost in payroll taxes scheduled for 1982, the rate of
increase in total hourly payroll costs should slow noticeably.
In the face of sluggish economic activity in the first half of 1981,
productivity could well record a slight decline. Thereafter, with the
174
reemergence of modest but sustained economic growth, productivity
is projected to increase slightly faster than its underlying trend rate
of 1 to IV2 percent. This productivity performance, in conjunction
with the slowdown in the increase in hourly compensation projected
for late 1981 and into 1982, should substantially moderate increases
in unit labor costs.
Product Prices. The large share of wage and salary payments in total
business costs makes the advance of unit labor costs a fundamental
determinant of the trend increase in product prices. Thus, the prospects for product prices basically mirror those for unit labor costs,
with the overall rate of price inflation as measured by the GNP deflator expected to be noticeably improved by 1982. Over the 4 quarters
of 1982 the overall inflation rate is expected to drop to about 8%
percent. During 1981, however, the rise in the deflator should roughly match the 1980 increase of 10 percent. Adoption of the motor fuels
tax could add another one-fourth to one-half percentage point to
growth in the deflator. The near-term projection for inflation reflects
developments in energy discussed above and agricultural markets,
which deserve special attention.
Food Prices. Significantly higher prices for food are anticipated for
1981, with a rise of about 12 percent likely. The production adjustments already underway by meat producers, together with the effects
of the summer-long drought, will exert upward pressure on commodity prices. Continued increases in energy costs and labor wage rates
imply that food marketing costs will increase at about the rate of general inflation.
Meat price increases will probably be most visible to the average
consumer. After 5 years of steady increase, pork production is expected to fall 6 to 8 percent. Beef production is likely to be only
slightly higher than its low level in 1980. Live animal prices are forecast to be much higher than in 1980. High prices (and limited supplies) of feedgrains will limit increases in poultry production. Meat
supplies will also be tight on a world scale. While the seasonal pattern of the 1981 meat price increase is still in doubt, it appears that
retail meat prices will rise most notably from April through August
before stabilizing (and perhaps declining) late in the year. Crop conditions in the United States and worldwide will determine this pattern. Generally poor crop conditions early in the year could push
grain prices much higher. Under these conditions, retail meat prices
would be lower in the first half (as herds are liquidated) but higher in
the second half than is now expected.
Agricultural conditions also point to higher prices for most other
food items during 1981. Commodity price increases resulting from
175
the drought in 1980 will be reflected in food prices during most of
1981.
The Consumer Price Index. The CPI merits special attention because
of its high visibility and its key role in the indexing of both wage contracts and benefit levels under Federal entitlement programs. The
CPI is expected to increase by \2x/z percent over the 4 quarters of
1981, with roughly one-half percentage point of this increase accounted for by the proposed increase in the motor fuels tax. This increase, which is roughly the same as was registered during 1980, is
about 2 percentage points higher than the increase forecast for the
GNP deflator. Among other reasons for this difference, the CPI is
more sensitive to increases in oil and food prices. Further, mortgage
interest rates have no direct effect on the deflator. Although the increase in the CPI in 1981 is likely to match the 1980 increase, the
first quarter of the year is likely to see a surge of inflation in the CPI
due to already recorded mortgage interest rate increases. After this
effect has passed the outlook is for improvement during the remainder of the year and continuing through 1982. During 1982 CPI inflation is expected to decline to about 9 Vz percent.
Uncertainties in the Outlook
Among the various uncertainties in the outlook, two deserve particular attention: the possibility of a serious collision between the
demand for funds and the monetary targets of the Federal Reserve,
and the possibility of sharply higher oil prices should the continued
loss of Iraqi and Iranian oil, or some other shock, tighten oil markets.
Interest rates now appear to have peaked in mid-December of last
year. Most short-term rates have already fallen sharply, some by as
much as 3V2 percentage points. While long-term interest rates have
fallen by much smaller amounts, the peaks in these rates also seem to
have passed. But additional dramatic declines—like those of last
spring—are not likely this year. There remains considerable uncertainty as to what the Federal Reserve's operating targets imply for
the path of interest rates between now and the end of 1982. Furthermore, interest rates are still unusually high for the early stages of a
recovery. Should rates surge upward again, it is likely that housing
and other interest-sensitive sectors would suffer serious setbacks. In
this event, weakness in economic activity could continue past midyear, and the rise in the unemployment rate might continue throughout the year.
A second risk is the possibility of a major hike in oil prices. Such a
shock would contribute significantly to inflationary pressures at the
same time that it would depress real economic activity and drive up
the unemployment rate. The precise quantitative effects of such a
176
hike would depend on many factors, including the response of the
Federal Reserve. Under plausible assumptions, if in early 1981 the
world market price of oil were to rise $10 per barrel above that already assumed, then by year-end this would add about 2 percentage
points to the inflation rate and reduce the growth of real GNP from
what it otherwise would have been by 2 percentage points. Some
further effects would be felt in 1982, and by year-end the unemployment rate would be about 1 percentage point higher than it would
have been without this increase in oil prices.
While the two major uncertainties in the outlook raise the possibility that the recovery will be weaker than forecast, a stronger recovery
is entirely possible. Any improvement in the outlook must have at its
core a reduction in the rate of inflation. A better inflation performance could result from several causes, the chief among them being
improved productivity, more moderate wage gains, or favorable crop
developments. If, for example, that part of the slowdown in productivity which had remained ^a bit of mystery were to reverse itself, the
outlook for business costs and prices could be greatly improved. Reductions in inflationary expectations would follow, reinforcing the
direct effects of the productivity improvement. Presuming the Federal Reserve maintained its monetary targets, the improved inflation
outlook would tend to reduce interest rates and generally ease conditions in financial markets. As a consequence, real economic activity
could advance more rapidly than forecast.
THE GOALS OF ECONOMIC POLICY
The Humphrey-Hawkins Full Employment and Balanced Growth
Act sets forth both general and highly specific objectives for two of
the most important indicators of the country's economic health, the
unemployment rate and inflation, and establishes the target of reducing Federal outlays to 20 percent of GNP. The act establishes specific
milestones for the achievement of these objectives. An interim goal
of Federal outlays equal to 21 percent of GNP is set for 1981; interim goals of 4 percent for the overall unemployment rate (3 percent
for adults) and 3 percent inflation are both set for 1983.
According to the act, beginning with the 1980 Economic Report the
President may, if he deems it necessary, modify the timetable for
achievement of the interim and final goals for unemployment, inflation, and Federal outlays as a share of GNP. Last year's Economic
Report discussed in some detail the degree of progress toward these
goals and the reasons why their achievement by 1983 was not possible. The chief reason was the 1979 rise in oil prices. Federal policies
177
in 1979 and 1980 were of necessity aimed at limiting the negative
impact of these oil-price increases.
Economic policy now faces a stiff challenge: to reduce a stubborn
inflation, improve the growth of productivity, and expand output and
employment. The policies required to meet this challenge are discussed in Chapters 1 and 2 of this Report, and they will lead to substantial progress toward the goals of reduced inflation and lower unemployment over the next 5 years. Longer-term projections are
shown in Table 26. But even with this progress, it will not be simultaneously possible to achieve 4 percent unemployment and 3 percent
inflation in the time envisioned in the Humphrey-Hawkins Act or in
last year's Report Attempts to reach either goal on the act's timetable
would frustrate progress toward the other goal and could substantially impair the prospects for improved economic performance. In the
long run such attempts would prove self-defeating and result in very
harmful economic and social consequences. The more gradual path
shown in the table will allow us to make progress toward our goals
and to maintain them once achieved. Over the years ahead Federal
spending as a share of GNP will decline, but the level of spending
required to meet national needs and priorities, especially in the defense area, will not permit a reduction to the numerical target set
forth in the act.
TABLE 26.—Economic projections, 1981-86
Item
Unemployment rate (percent), fourth quarter1
1981
1982
7.7
7.4
1983
7.0
1984
1985
6.6
6.2
1986
5.9
Percent change, fourth quarter to fourth quarter
Consumer price index
Real GNP
12.6
9.6
8.2
7.5
6.7
6.0
1.7
3.5
3.7
3.7
3.7
3.7
1
Seasonally adjusted.
Source: Council of Economic Advisers.
SUPPLEMENT
National Income and Product Account Revisions
The national income and product accounts (NIPA), which provide data on
aggregate output and income, were substantially revised in 1980 by the
Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce.
The revisions included a refining of accounting concepts and estimation procedures, and introduced new and more recent sources of data. The last
178
major revision of the NIPA occurred 5 years ago and was reported in the
January 1976 Survey of Current Business published by the Commerce Department. The current revision will be described in an article in the December
1980 Survey. All of the NIPA data discussed in this Report are the revised data,
except as noted.
The major features of the revision are these:
• The data from three major new sources are now incorporated in the
NIPA. These are 3EA's 1972 input-output tables, the 1977 censuses,
and the 1973 and 1976 Compliance Measurement Program of the Internal Revenue Service (IRS).
• Normal data sources which would have been used in the postponed July
1980 annual revisions of the NIPA (e.g., IRS tax return information,
annual surveys of manufacturers, housing, and retail trade) were also
utilized in these revisions.
• The major conceptual change in the NIPA involves the treatment of certain international transactions. The reinvested earnings of incorporated
foreign affiliates of U.S. companies are now included in exports of services. The repatriated earnings of these affiliates were previously included
in exports of services. The reinvested earnings of incorporated foreignowned affiliates in the United States receive similar treatment thus
adding to imports of services. Because the U.S. earnings abroad are
larger than the foreign earnings here, the net result is higher net exports and gross national product especially since the late 1960s. Gross
domestic product is, of course, unaffected by the change. This change
makes the handling of foreign earnings in the NIPA consistent with that
used in the balance of payments accounts since 1978.
• The treatment of international transactions has also been changed by
using a new procedure for estimating the prices of service exports and
imports.
• More detailed analysis of Federal purchases has allowed separate constant dollar estimates for both nondefense and defense purchases beginning in 1972.
• The level of detail at which output is deflated has been increased.
• Estimating procedures now allow a more complete differentiation between dividend and interest income than was previously reported.
The revisions have raised estimates of real GNP by about 3 Vz percent for
1979, by about 2V2 percent for 1974, and by lesser amounts for earlier years.
About one-third of the upward revision for the years 1977-79 was due to the
conceptual change in the handling of foreign earnings. In addition, the revision in the deflators has, on balance, reduced estimates of prices, thus raising real output. Finally, estimates of real nonresidential fixed investment
have been substantially increased, especially since 1973. The ratio of real
179
nonresidential fixed investment to real GNP, which had previously averaged
9.9 percent between 1974 and 1979, now averages 10.4 percent.
Past business cycle patterns have been little changed by the revisions. The
GNP-measured turning points are all as previously reported. However, the
peak-to-trough declines have been reduced by one-half percent and 1 percent for the 1970 and 1974-75 contractions, respectively. The NIPA now
show the 1974-75 contraction being interrupted by 1 quarter of slight expansion in the second quarter of 1974, immediately following the period of
the Arab oil embargo.
Total compensation remained roughly the same as before revision, but its
composition changed. Wages and salaries in the most recent years are now
higher and supplements lower than had been previously reported. Business
net interest was revised upward by significant amounts especially in recent
years. These revisions rise to $13.7 billion for 1979. Corporate profits were
raised significantly, but chiefly because of the conceptual change in reinvested foreign earnings. Lowered estimates of corporate taxes contributed to
higher corporate retained earnings and saving estimates for the most recent
years. Personal saving estimates were also raised. This is because estimates
of personal consumption were barely changed, while personal income was revised upward considerably. The personal saving rate in the 1970s was revised
upward from an average 6.4 percent under the old estimates to 7.1 percent
under the new estimates.
Potential GNP
Until a formal reappraisal of the historical growth in real potential output
can be completed in the light of the 1980 benchmark revisions to the NIPA,
a provisional procedure has been used to estimate real potential GNP. The
provisional procedure includes two major changes. First, revised data on
business output indicate a somewhat more rapid gain in worker productivity
since 1973. As a result, the trend rate of growth in potential GNP has been
increased by one-fourth of a percentage point from 1973 on. Thus the onehalf percentage point deceleration in the old potential series that occurred in
1973, principally due to reduced productivity growth, has been changed to a
one-fourth point deceleration. The further one-half point deceleration in potential that had been assumed starting in the first quarter of 1979 is still
maintained. The second major change in the series was to add directly to
potential the dollar estimate of the conceptual change to rest of world output
that occurred from the revisions in the handling of reinvested foreign earnings. In this manner, the gap between actual and potential GNP is unaffected
by conceptual changes to the NIPA. The dollar amount of these conceptual revisions has been growing very rapidly recently. As a result^theseichanges actually increase the estimated growth of potential in recent years by nearly 0.2
percentage point. The newly-constructed series grows somewhat less than 3
percent since the first quarter of 1979. This growth rate is expected to continue through 1981. Thereafter the series is projected to grow at 3 percent
180
per year. This modest acceleration is due to the combined effect of a small
assumed increase in the growth rate of worker productivity offset by an expected decline in the contribution to growth of the conceptual changes to
the NIPA. On balance, these changes to actual and potential GNP result in
smaller output gaps over the recent past (Table 27).
TABLE 27.—Revisedpotential GNP,
1973-80
Potential
GNP
(billions
of 1972
dollars)
Year
1973
1974
....
1975
1976
1977
1978
1979
1980 2
1
Potential minus
2
Preliminary.
3
..
Prerevision
-1.6
2.3
-0.7
3.7
1,320.6
1,365.1
1,411.4
1,459.3
1,504.6
6.6
4.7
2.8
1.5
1.4
7.7
5.1
3.0
1.7
2.0
1,548.5
4.4
(3)
actual as a percent of potential.
181
Revised
1,234,9
1,277.5
Not available.
Sources: Department of Commerce (Bureau of Economic Analysis) and Council of Economic Advisers.
GNP gap (percent)'
CHAPTER 4
The World Economy: Coping with
Transition
The economic challenges facing the United States which have been
discussed in previous chapters of this Report are not unique to this
country. The problem of continuing high inflation is broadly shared
by many of the industrial (and developing) countries. The enormous
increase in the price of energy has created difficult problems of adjustment everywhere. Productivity growth has slowed not only in the
United States but also in other countries. At the same time that all
countries individually take actions to deal with these problems, cooperation among countries is required to manage the ever increasing
interdependence of the world's economies.
Over the next several years four major challenges will have to be
surmounted to bring about the transition to a world economy with
less inflation and higher growth.
First, a combination of demand restraint and vigorous efforts to
improve supply must be employed to bring down inflation and raise
productivity.
Second, the constraints placed on world economic expansion by
limited supplies of energy must be loosened by policies to increase
energy availability and reduce energy demand.
Third, continued close attention is needed to assure that the international financial system effectively handles the much enlarged flow
of financial resources among countries.
Finally, the open trading system that contributed so importantly to
rising prosperity in past decades must be strengthened in the face of
increasing pressures to adopt protective measures and the temptation
to indulge in "beggar-thy-neighbor" policies.
The energy challenge is well understood and its international aspects were discussed extensively in last year's Report. It will therefore
be dealt with only briefly in this chapter. Following an initial discussion of recent and prospective economic performance in the major
industrial countries, the chapter examines each of the remaining
three challenges—the challenge to the conduct of macroeconomic
and structural policies, the challenge to the financial system, and the
challenge to trade relations.
182
THE INDUSTRIAL ECONOMIES: TRENDS AND PROSPECTS
In 1974-75, following the tripling of oil prices by the Organization
of Petroleum Exporting Countries (OPEC), the industrial world experienced its largest recession since the second World War. In 1980,
following a second major rise in oil prices, economic expansion again
came to a halt. It is abundantly clear that price shocks of the size experienced in recent years cannot be absorbed without serious strains
and disruptive side effects: real incomes are squeezed, inflationary
forces are intensified, and output and employment are reduced.
Fiscal and monetary policies cannot substantially offset or counteract
all of these effects. Expansionary fiscal and monetary policies could
moderate the decline in output, but at the cost of building yet higher
inflation into the economy. Restrictive policies, on the other hand,
could limit the rise in inflation, but they would also tend to accentuate the decline in output and employment. Following the second oilprice shock, most countries have opted for policies of moderate restraint. This choice reflects the judgment that such policies would
stand the best chance of reducing secondary distortions in the structure of costs and prices and in the distribution of income among sectors, and thus would help speed the process of adjustment to the
higher oil prices. That judgment appears to have been correct.
ECONOMIC ACTIVITY
Although all the evidence is not yet in, it appears that the second
oil-price shock is being absorbed more smoothly than the first one
was. Recent indicators and current projections show a smaller swing
in output and a lesser surge in inflation for most countries. Table 28
shows recent growth rates and Organization for Economic Cooperation and Development (OECD) projections for the major countries.
Except for the United Kingdom, the general pattern is one of relatively mild and brief recession concentrated in the second half of
1980, followed by a very modest but strengthening recovery in 1981.
TABLE 28.—Real GNP growth in major industrial countries, 1976-82
[Percent change from previous period; seasonally adjusted annual rates]
Country
United States
Japan
Germany
France 3
United Kingdom
Italy 3
Canada
1976 to
1979
annual
average
3.9
5.9
3.8
3
12
2.9
3.9
Total of above countries
1
2
3
OECD estimate.
OECD projection.
Gross domestic product.
Source: Organization for Economic Cooperation and Development (OECD).
183
1981
1980
Year1
%
1%
1%
-2V*
3%
Second
half 1
First
half 2
2A
-1%
2%
4>/4
V/z
~ %
-2 l /2
2V4
2
-5%
-3>/2
-y2
-1V4
Second
half 2
1V4
2%
1982
first
half ^
3V2
4%
b
3V*
There are several reasons why the recession appears to have been
milder, and the rise in inflation less, after the second oil-price shock
than after the first. In the first place, inventory movements are substantially smaller in the current cycle than they were in 1974-75. The
massive inventory liquidation that marked the earlier recession is not
being repeated. As a result, the decline in output has been smaller
and the projected pace of recovery is initially slower.
Consumer spending also has been better maintained in relation to
income. Saving rates rose sharply in all countries following the first
oil-price shock, but they have not done so recently, except in the
United Kingdom. Slowing consumer demand is fully accounted for in
most countries by weakening household incomes, rather than by
marked changes in saving behavior.
Finally, real wages in most countries have adjusted downward more
rapidly in the wake of the recent oil-price rise than they did after the
first one, and they have done so with a smaller acceleration of nominal wages. Both the different response of real wages and that of
nominal wages have important consequences.
When the world price of oil rises, countries that import oil lose
real income. This loss can be absorbed in several ways. If nominal
wages rise in line with traditional productivity increments and also to
match all increases in consumer prices that result when higher
energy costs are passed through, then real wage incomes are protected. Corporate profits, however, are squeezed. In this case household
consumption opportunities are preserved, but investment demand is
likely to be curtailed as firms grapple with reduced cash flow and
lower returns on new investment. Alternatively, if nominal wages rise
by a lesser amount in relation to prices, then real wage incomes are
squeezed, but the associated decline in real labor costs provides firms
with a margin that offsets, in whole or in part, the increase in their
energy costs. In this case, consumption may be curtailed, but investment incentives are better maintained.
Chart 10 shows the difference in how the real income loss was absorbed abroad following the two oil-price shocks. In 1974-75 unit
labor costs rose much more than value-added deflators for manufacturing. This implied a sharp rise in the labor share of total value
added, and a corresponding fall in the profit share, which was only
gradually restored in subsequent years. The squeeze on profits was a
major cause of low rates of investment in most foreign countries
during the following years. And lagging investment largely explains
the "hesitant recovery" abroad that was described in the 1978 Report
In contrast to the experience abroad, real wages fell in the United
States in 1974-75, and investment demand grew apace during the
subsequent recovery.
184
Chart 10
Labor Costs, Value-Added Deflators, and Labor
Share in Six Major Foreign Countries
PERCENT CHANGE
PERCENT
20
UNIT LABOR
COSTS IN
MANUFACTURING
(Left scale)
VALUE-ADDED
DEFLATORS IN
MANUFACTURING
(Left scale)
LABOR SHARE OF
VALUE ADDED IN
MANUFACTURING
(Right scale)
\
1971
1973
1975
1977
1979
NOTE—INCLUDES JAPAN, GERMANY, FRANCE, UNITED KINGDOM, ITALY, AND CANADA.
SOURCE; ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT.
In 1979-80, the* increase in unit labor costs in major foreign countries remained less than the rise in value-added deflators, thus giving
manufacturers some room to absorb increased energy costs without a
major squeeze on profit margins. Largely for this reason, but also because the needs to modernize production and improve energy efficiency are substantial, business investment abroad may not weaken
unduly in the current recession and may begin to rise again at an
early stage of the projected recovery.
The necessary reduction in real incomes, whether it is initially absorbed by wage earners or by their employers, can be associated with
a larger or smaller acceleration in inflation. If nominal wages rise
sharply, and firms resist the erosion of profit margins by further raising prices, then the adjustment will take place in an environment of
rising inflation. By contrast, if nominal wages do not accelerate, then
real wages will initially fall as higher oil prices are passed through,
but the underlying rate of inflation will not accelerate. And once the
pass-through of higher oil costs is completed, actual price rises will
185
begin to moderate. The second pattern is preferable, not only because it is more likely to sustain investment but also because it generates less inflation. The relative moderation of nominal wage increases
in most countries recently, in sharp contrast to the nominal wage explosions that occurred in 1974, is therefore encouraging.
Despite these generally favorable developments, only sluggish
growth is now projected for most countries during 1981. Two major
factors account for this. First, as already noted, inventory building
will not provide added strength. Second, fiscal and monetary policies
will remain restrictive. Fiscal deficits in 1980 were little changed from
those of 1979 in the major foreign t countries, despite the slowing
revenue growth and expenditure increases associated with weakening
economic activity. Discretionary fiscal policy actions tended to work
toward restraint. Announced policy intentions in most countries suggest a further shift toward restraint in 1981. Growth in government
expenditures, in particular, is planned to stay below anticipated
growth in gross national product (GNP) in most countries, thus reducing the share of government and limiting the rise in budget deficits.
EXTERNAL POSITIONS
For the OECD countries as a group, the two oil-price shocks have
had similar effects on trade and current-account positions. In nominal terms, the current account of the OECD as a whole shifted from
surplus to deficit by about 1 percent of GNP in 1974 and by about
P/2 percent of GNP in 1979-80. In both periods, however, the
volume of real imports fell relative to exports; real trade balances
therefore rose, moderating the decline in GNP relative to domestic
demand.
But in one important respect the 1974-75 and 1979-80 periods
have been very different. Both the volume of imports and of exports
declined precipitously after 1974, even in relation to the large fall in
GNP. The current decline in trade volumes has been much more
moderate, and more nearly in line with the path of GNP. A renewed
expansion of world trade, albeit at moderate rates, is anticipated as
recovery proceeds.
Although the aggregate shift in current-account positions was
broadly similar after the two oil-price shocks, there are some important differences in the way this shift was distributed among the major
OECD countries (Table 29). In general, a larger share of the total
shift has been absorbed by those countries whose relatively good inflation performance and previously strong external positions made
them better able to finance these deficits. Most notably, the remarkable performance of Germany in 1974, when its surplus increased by
$5.7 billion despite the rise in its oil bill, has not been repeated.
186
Rather, the German current account shifted from a surplus of about
$9 billion in 1978 to an estimated deficit of $17 billion in 1980. The
Japanese current account also moved sharply, from a $17-billion surplus in 1978 to an estimated $13-billion deficit in 1980. This shift
reflected not only higher oil payments but also the adverse shortterm effect of yen depreciation during 1979 and the first quarter of
1980 on the nominal trade balance. These two effects more than
offset the strong Japanese trade performance, in volume terms,
during the past year.
TABLE 29.—Current-account balances in major industrial countries, 1978-81
[Billions of U.S. dollars >]
Country
United States
Japan . , .
Germany
France
United Kingdom
Italy
Canada .
.
Other OECD
Total OECO
1
2
3
1979
1978
1980 2
19813
19%
-6%
-14.3
16.5
8.7
3.7
1.2
6.2
-4.4
-8.7
-0.8
-8.8
-5.5
1.2
-3.9
5.1
-4.4
-18.4
-3%
-37
-IOV2
-6>/4
4>/4
-2>/4
—3
-35V4
9.0
-35.5
-73l/2
-40
5y 2
-13V4
-17V4
-7%
4%
-5V4
Current account balances inclusive of official transfers.
Preliminary OECO estimates.
OECO projection.
Source: Organization for Economic Cooperation and Development (OECD).
By contrast, the current account of the United States improved by
an estimated $20 billion over this same period, as discussed more
fully in Chapter 3. Similarly, the United Kingdom moved into substantial surplus during 1980, both because that country has become
largely self-sufficient in oil—so that its trade account was not strongly
affected by the rise in oil prices—and because the recession has been
relatively more severe in the United Kingdom than elsewhere, thus
limiting imports.
INFLATION
The different pattern of absorption of the recent oil-price shock
compared to the earlier one shows up clearly in the movements of
wages and prices. Chart 11 traces the movements of consumer prices
and hourly earnings in manufacturing over the past decade for the
major industrial countries. As measured by consumer prices, rates of
inflation outside the United States tended to decline during 1978 to
levels comparable to those prevailing in the early 1970s—though
with substantial dispersion among countries. But consumer price inflation accelerated everywhere during 1979 and into 1980 under the
impact of higher energy prices. In sharp contrast to the earlier
period, however, hourly earnings accelerated only moderately, and
lagged behind consumer prices in almost all countries. As oil prices
187
stabilized in mid-1980, inflation rates peaked and then began to
recede in the second half of the year. On current projections, and
assuming that oil prices do not again rise sharply, a continued reduction in inflation rates is in prospect for most countries during 1981 —
indeed, a somewhat more rapid reduction abroad than in the United
States (Table 30).
Chart 11
Wage and Price Changes in Seven Major Countries
PERCENT C H A N G E F R O M 4 Q U A R T E R S EARLIER
25
20
_
HOURLY EARNINGS
IN M A N U F A C T U R I N G
rCONSUMER
0
,
1971
I
•
,
•
I
72
,
.
73
.
I
•
.
74
.
I
,
.
.
I
75
•
•
76
.
PRICES
I
.
,
77
.
I
,
,
.
I
78
,
.
,
I
79
,
t
•
80
NOTE.—INCLUDES UNITED STATES, JAPAN, GERMANY, FRANCE, UNITED KINGDOM, ITALY,
AND CANADA.
SOURCE: ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT.
Substantial differences among the major countries will persist,
however. At one extreme, inflation rates in Germany and Japan
during 1981 are likely to return to the moderate levels that were
achieved in 1977-78. On the other hand, relatively high inflation is
likely to persist in a number of other countries—especially Italy, but
also the United States, France, and Canada—where wage rigidities
appear to be more significant. In the United Kingdom, the continued
adherence to restrictive fiscal and monetary policies, the strength of
the pound, and substantial slack in labor and product markets appear
to be causing a rapid decline in inflation from the high levels reached
in 1979 and early 1980. But even so, inflation in the United Kingdom
will remain relatively high.
188
TABLE 30.—Inflation in major industrial countries, 1976-82
[Percent change in prices *]
1976
to
1978
annual
average
Country
United States
Japan
Germany
France
United Kingdom.
Italy.
Canada. . .
Total of above countries..
1979
6.2
5.5
3.2
9.4
11.7
12.0
9.8
8.9
3.1
3.9
10.9
12.2
14.8
9.1
6.8
8.1
1980 2
1981 3
1982
first
half 3
5>/4
9%
5
13%
15 %
20%
93A
11%
12
15%
10
9
13 Vz
9%
10 »/2
9>/4
10%
6>/4
5>/4
10
9>/2
Change in implicit price deflator for private consumption expenditures for United States, Japan, Germany, United Kingdom,
and Canada. Change in consumer prices for France and Italy. Percent changes for first half 1982 are from previous half year at
seasonally
adjusted annual rates, except France and Italy, not seasonally adjusted annual rates.
2
Preliminary.
3
OECD
forecast.
4
Based on 1979 GNP/GDP weights and exchange rates.
Source: Organization for Economic Cooperation and Development (OECD).
SUMMARY ASSESSMENT
It is not possible to provide a definitive explanation of why the oilprice rise was absorbed more easily during the current cycle than it
was in 1974-75. Timing is certainly one important consideration.
The most recent runup in oil prices came at a time when most countries were still on an upswing from the previous recession, rather
than at a peak. Hence, cyclical factors tended to offset, rather than
accentuate, the 1979 price shock. In addition, the 1974 shock followed hard upon a major surge in industrial and agricultural commodity prices, which generated strong speculative pressures and excessive inventory accumulation. Commodity prices—except for the
explosion in prices of precious metals in 1979 and early 1980—have
shown a less marked upward trend in the recent period.
The key element promoting smoother adjustment, however, has
been the restrained response of nominal wages to rising prices in
most countries. This restraint has served a double furiction. It has
helped to preserve a relationship between costs and prices that will
encourage a more rapid resumption of growth by maintaining profitability and thus investment. It has also limited the rise in underlying
inflation rates and thus reduced the probable duration and severity
of the fiscal and monetary policy restraint that is required.
A number of factors may explain the moderate behavior of wages,
and different factors may be more important in some countries than
in others. The unambiguous adoption, in almost all countries, of
monetary policies that did not seek to finance the rise in oil prices
with faster rates of monetary expansion has certainly been an important factor, as has the pursuit of moderately restrictive fiscal policies.
"Jawboning" by government officials may also have had an effect in
189
some countries, and in the United States a more formal incomes
policy has played a role. Wage moderation may also have reflected
the higher average levels of unemployment and associated labor
market slack that prevailed in 1979. In some countries—especially
those where the oil-price shock has been absorbed most rapidly such
as Germany and Japan—wage moderation may reflect an implicit
social consensus under which unavoidable reductions in real incomes
are accepted by wage earners in the understanding that the distribution of income will not thereby be shifted to their disadvantage.
Although the adjustment to the recent runup in oil prices has proceeded relatively smoothly in most countries, it cannot be denied that
the process is very costly. While the increased oil bill due to the price
rises of 1979-80 amounts to about 2V2 percent of the combined GNP
of the OECD member countries, the cost in lost output is much
larger. Taking into account the effects of both the oil-price rise itself
and the restrictive monetary and fiscal policies it called forth, the
OECD estimates that the level of GNP in the OECD member countries may be some 6 percent, or about $500 billion, lower by the beginning of 1982 than it would have been in the absence of the oilprice rise. While this estimate might be somewhat on the high side, it
is nevertheless clear that even smooth adjustment cannot prevent
major secondary repercussions.
RISKS IN THE OUTLOOK
Excluding the United States, real GNP in the major industrial
countries is projected to rise at about a 2 percent annual rate from
the second half of 1980 to the first half of 1982—a pace unlikely to
be rapid enough to prevent some further increases in unemployment.
Inflation rates in the industrial countries outside the United States
are projected to slow—averaging about 8.5 percent by the first half
of 1982, as compared to 11 percent in the second half of 1980.
The possibility of worse outcomes cannot be dismissed, however.
In particular, one cannot be entirely confident that the pattern of
wage moderation will continue, inasmuch as the reasons for it are not
fully understood. A continuation of relatively restrictive monetary
and fiscal policies in most countries is widely viewed as necessary to
contain this risk, but these policies may also slow recovery by more
than is now projected. More critically, the situation in the oil market
is once again precarious following the interruption of supplies from
Iran and Iraq. A further large increase in oil prices in 1981 could undermine the still fragile process of consolidation and recovery. The
following section addresses this issue in more detail.
190
THE GLOBAL OIL MARKET
Table 31 summarizes world petroleum production and use patterns
over the past 8 years. The most striking aspect of the table is how
small the year-to-year fluctuations in production have been. The
major disruptions of 1974 and 1979 were associated with very
modest shifts in the balance between consumption and production. It
is the low price elasticities of supply and demand in the short run,
rather than wide fluctuations in the quantities supplied or demanded, that make disruptive price movements possible.
TABLE 31.—Global oil balances, 1973-80
[Millions of barrets per day, except as noted]
Item
1973
OECD consumption
Less: OECD production
Equals: Required OECD imports for consumption (A)
39.3
13.9
OPEC production
Less: Non-OECD consumption minus non-OPEC, non-OECD
production
Equals: Available to OECD from rest of world (B)
Balancing item (B minus A ) 3
1974
1975
1976
1977
1978
1979»
1980 *
40.4
14.8
38.0
15.0
37.6
13.4
36.3
12.8
38.5
12.7
39.4
13.3
40.3
14.2
25.4
24.2
23.5
25.8
26.1
26.1
25.6
23.0
31.3
31.1
27.6
31.2
31.8
30.5
31.5
27.8
5.4
5.2
4.8
4.9
4.9
5.0
4.8
25.9
25.9
23.3
26.4
26.9
25.6
26.5
23.0
1.7
-.2
.6
.8
-.5
.9
.0
(*)
3.6
4.0
3.9
4.2
4.2
.5
Estimated stock levels, end of year (billions of barrels)..
4.3
1
Preliminary.
2
Forecast.
3
Stock-buttding and/or statistical errors.
*Not available.
Source: Council of Economic Advisers.
The 1979 rise in oil prices occurred despite increased oil production. The curtailment of Iranian supplies in late 1978 was more than
made up in 1979 by production increases elsewhere. Nevertheless, a
number of prior developments had created conditions favorable to
price increases. First of all, world consumption of petroleum, though
rising more slowly after 1975 than in the previous decade, nonetheless increased steadily from 1975 to 1978, reducing the excess production capacity that had emerged after the first oil-price shock.
Second, the real price of oil fell during this period, thus encouraging
consumption and also reducing the real value of OPEC revenues. Finally, stocks were drawn down during the course of 1978—perhaps
because falling real oil prices had made stock building appear unprofitable. As a result, the margin of flexibility available to accommodate the curtailment of Iranian supplies was small, and the incentives
for OPEC countries to raise prices were strong.
It is clear that smaller price increases than actually occurred would
have been sufficient to balance consumption and production. Rising
demand for stocks, however, kept pushing prices higher well into
191
1980. After midyear, when consumption had fallen sufficiently to accommodate and moderate the stock buildup, price pressures began
to ease. In fact, excess supply conditions were avoided only because a
number of OPEC countries cut back their production.
Hindsight also shows that a less ambitious restocking pattern
during 1979 and up to mid-1980 would have made a smoother adjustment possible. One cannot be certain of all the reasons why this
restocking occurred, but several factors may have been important.
First, additional stocks may have been needed to keep the distribution system operating smoothly, given the growing fragmentation of
the world oil market and the resulting decreased ability of the major
oil companies to shift supplies around to accommodate shifting
needs. In addition, the disruption in late 1978 and early 1979 greatly
increased feelings of uncertainty about future supplies and thus
raised the precautionary demand for stocks. Finally, the rise in prices
itself tended to increase the incentives for stock accumulation in anticipation of capital gains—at least until prices had risen sufficiently
to make further price rises appear less probable. This speculative
motive may have been strengthened by the belief that OPEC countries respond asymmetrically to market conditions. If OPEC producers respond to tight market conditions by raising prices but cut back
on production when markets weaken rather than allowing prices to
fall, they in effect build a ratchet under existing prices. Stock building then becomes a particularly attractive form of speculation when
prices begin to rise, since the risk of major financial loss from a subsequent fall in prices is much reduced.
Although the massive buildup of stocks during 1979 and 1980 was
very costly because of the added pressure it placed on oil prices,
these stocks have subsequently proved valuable because they have
provided a cushion in the face of the Iran-Iraq war. The oil market
would in all probability have been slack in 1981, with little pressure
on oil prices, if the Iran-Iraq war had not occurred. Prior to the onset
of hostilities, consumption per day was several million barrels below
world capacity, and stocks were at very high levels. Now, however, the situation is more difficult to assess. The war has removed
nearly 4 million barrels a day from world oil supplies for an undetermined length of time, but some of this loss is being offset by increased production elsewhere. At the moment, stocks are still above
their normal historical levels, and severe market pressures have not
emerged.
The margin, however, is a narrow one. If oil consumption continues to decline as further adaptation to higher prices outweighs the
effects of resumed economic growth, if the war does not widen, and
if stock drawdowns are permitted to occur as needed, then a balance
192
may be preserved. Stocks are in fact being drawn down, consistent
with the objectives set for the major oil-consuming countries at the
meeting of the International Energy Agency late last year. But if the
disruption is more severe, or mismatches on a country-by-country
basis between demands and stocks induce a scramble for extra supplies and a bidding up of prices in spot markets, or if expectations of
price rises—warranted or not—induce speculative withholding of
stocks in anticipation of capital gains, then acute market pressures
could once again develop.
DIRECTIONS FOR ECONOMIC POLICY: NEEDS AND
CHALLENGES
Despite the progressive absorption of the 1979 oil shock and the
projected beginning of moderate recovery this year, the world economy will be grappling with several difficult problems in the years immediately ahead.
First, policies of demand restraint are needed in all countries to
fight inflation. This need is felt not only in those countries where inflation rates are highest, but also in those where considerable progress has already been made in bringing inflation down. For these
latter countries, the concern is that an early relaxation of restrictive
policies before inflationary expectations have been firmly laid to rest
would allow inflation to reaccelerate. This would not only undo the
progress achieved but would also undermine the credibility—and
hence the effectiveness—of subsequent anti-inflation policies. The
degree and duration of needed restraint, of course, varies among
countries. Where inflation rates have been persistently high, continued restraint for a number of years may be necessary to bring inflation down and to convince people that it will stay down. Where inflationary expectations are less deeply entrenched and where inflation is
lower, a shift to less restrictive policies may be possible sooner.
Because of the momentum of inherited inflation and rigidities in
the setting of wages and prices, restrictive demand policies that aim
to reduce inflation will also slow the growth of production and keep
unemployment relatively high for some time. In this way, the inflation problem gives rise to an unemployment problem. Unemployment rates have risen in most countries during the 1970s, and no
early reversal of this trend is in sight. High unemployment is costly
not only because it imposes hardships on those who do not have
jobs, but also because it fosters "preservationist" attitudes among society generally. Economic restructuring becomes more difficult when
workers in declining firms or industries fear they will be unable to
find other work, when pressure on governments to subsidize unprof-
193
itable activities intensifies, and when trade protection becomes more
attractive.
The second fundamental problem is that in most industrial countries the growth of potential output has fallen because of lower productivity gains. The decline in productivity growth has generally been
less marked abroad than in the United States, but it has occurred to
some extent in all countries. Although all the reasons for this decline
are not known, several common factors can be identified. Higher
energy prices lead to the substitution of labor for energy, and thereby induce a slowing in productivity. Productivity growth has been
slowed also by lower rates of investment in many countries, leading
to a smaller rise in capital per worker and a slower pace of adoption
of the technological innovations embodied in new capital goods. Finally, productivity growth outside the United States has been reduced because opportunities for technological borrowing have diminished as the "technology gap" between the United States and other
industrial countries has diminished or, in many sectors, disappeared.
The decline in productivity growth directly reduces the scope for
increases in real incomes and standards of living. Nevertheless, some
have argued that as long as the growth of production is also limited
by restrictive demand policies the decline in productivity is not all
bad because it leads to more employment, and hence less of an unemployment problem, than would be the case if productivity growth
remained higher. This argument, however, ignores the fact that lower
productivity growth increases cost-push inflation. Since wage demands do not adjust downward when productivity growth slows, unit
labor costs rise faster, putting increased upward pressure on prices.
If nominal wage demands then accelerate in an attempt to achieve
the real income gains obtained in the past when productivity growth
was higher, the underlying inflation rate is increased still further. As
a result, demand policies have to be more restrictive than otherwise
to achieve a deceleration of inflation. In this way a slowing of productivity imposes a double burden. It reduces the growth of potential
output, and at the same time it increases the degree of economic
slack that is needed to achieve a given deceleration of inflation.
THE SEARCH FOR SOLUTIONS
While restrictive demand policies are needed to fight inflation,
other policies must be put in place to reduce the costs that restrictive
demand policies inevitably impose on the economy and to restore
over time a more normal growth in productivity and living standards.
Three broad approaches need to be pursued. First, supply-oriented
policies that raise productivity and increase economic flexibility need
to be put in place. Second, policies to increase energy supply and to
reduce the demand for energy are needed to weaken the energy con-
194
straint on growth. Finally, policies that directly influence wage an
price setting can play a role in some nations in lowering actual an
expected inflation.
Supply-Oriented Policies
As discussed in Chapters 1 and 2 with respect to the U.S. econo
my, supply-side measures can make a significant contribution to improved economic performance. Beyond the direct benefits that such
measures can provide by increasing the efficiency with which resources are allocated, they can also serve to reduce the costs of restrictive demand policies. If flexibility in labor or product markets is
increased, the effectiveness of demand restraint in slowing inflation
also improves. If productivity growth is enhanced, not only does potential output rise but higher levels of capacity utilization can also be
achieved, since cost-push inflation is reduced.
There is no master plan of supply-side policies that will be equally
useful to all countries, given their different institutional arrangements and structural relationships. Earlier chapters of this Report discuss a number of policy approaches appropriate to the United States,
and many of these may also be useful in other countries. Two approaches, in particular, stand out as important in most countries.
First, policies are needed to raise the share of GNP that is invested
in new plant and equipment. Higher investment is necessary to raise
productivity growth, to increase domestic energy production, and to
accelerate the economic restructuring that higher oil prices and
global shifts in patterns of comparative advantage have made necessary.
A potential problem exists with respect to greater investment, a
problem which some have called the "low-growth trap." The argument is that if restrictive demand policies are used to fight inflation,
investment will also be reduced because the existence of unutilized
capacity will make companies unwilling to undertake investments that
may not be needed until the more distant future. Lower investment,
in turn, would reduce productivity growth and potential output, and
hence reinforce the need for demand restraint. Thus, the final outcome might be a prolonged period of stagflation.
While there are indeed difficulties in trying to increase investment
during a period of demand restraint, one need not accept the "lowgrowth trap" argument. Low rates of capacity utilization do, by themselves, have a negative effect on investment. Other factors, however,
are also important and can offset this effect. As was emphasized earlier in this chapter, the recent oil shock has been absorbed in a way
that has limited the erosion of profitability and cash flow to enterprises, and thus has supported investment. Moreover, the need for restructuring may require substantial investment even in sectors where
195
capacity utilization is low. The U.S. automobile sector is a clear example, and similar requirements exist in most countries. Finally, as
discussed in Chapter 1 with reference to the United States, there is a
good deal of evidence that policies to raise the return on capital investment or to lower the cost of capital can have substantial impacts
on investment demand even when significant excess capacity exists.
For all of these reasons it seems probable that countries can avoid a
low-growth trap and, by pursuing vigorous investment-oriented policies, raise the share of investment in GNP even while continuing with
policies of overall demand restraint.
The second supply-oriented approach is to increase the flexibility
of labor and product markets by reducing unnecessarily burdensome
regulation, by increasing competition within and across borders, and
by improving policies for structural adjustment in industry and agriculture. Policies, for instance, that improve flexibility in labor markets through job training or other programs, or which reduce the
downward rigidity of wages in the face of high unemployment,
achieve several important objectives simultaneously. They reduce unemployment directly by easing frictional unemployment and stimulating the demand for labor in sectors where prevailing wage rigidities
have made hiring unprofitable. Perhaps more important, greater
labor-market flexibility increases the speed with which restrictive
demand policies translate into lower rates of inflation. To the extent
that this occurs, higher rates of real growth can be accommodated.
Even if demand policies do not change so that nominal income
growth is limited, real income growth is larger to the extent that inflation is less. Moreover, if inflation declines more quickly in response to demand restraint, both the severity and the duration of the
needed demand restraint are reduced, thus further improving the
prospects for higher growth and a more rapid absorption of the unemployed.
Other examples of policies that enhance flexibility include U.S. efforts in deregulation and regulatory reform, the progressive dismantling of price controls in France during the past several years, and
the moves in some countries to allow more realistic pricing policies
in nationalized sectors.
There are serious difficulties to be overcome, however. In many
cases governments lack the tools for evaluating the costs and benefits
of structural policies. Divisions of authority among agencies with different objectives or loyalties make coherent policy formulation, implementation, or evaluation difficult. There is, in general, a need to
increase the "transparency" of government operations—both internally, so that governments themselves can come to a clearer perception of just what it is they are doing, and externally, so that those
196
outside government, both at home and abroad, can form a clearer
idea of what is to be expected. A further inescapable difficulty is that
strong political pressures arise to influence structural policies when
potential gains or losses to particular sectors are at issue. More powerful techniques to enhance transparency can serve not only to improve the quality of decisionmaking, but also—by making costs and
benefits clearer—to stiffen the resistance of governments to unbalanced political pressure.
Energy Policies
Increased investment in alternative energy sources, efforts to promote more efficient use of existing supplies, and measures to reduce
vulnerability to supply disruptions are needed to improve growth
prospects over the longer-term. So long as oil supplies are scarce and
uncertain, and energy markets lack the flexibility to absorb disruptions in the flow of oil, the risk of recurrent oil-price shocks cannot
be avoided.
While the market incentives provided by sharply higher energy
prices will furnish the major impetus for many of the needed adjustments, government actions will also be needed in some cases. The
development of some new sources of energy, for instance, may require government participation because of the long lead-times, very
large scale, and technological risks associated with them. Furthermore, the building up and management of petroleum stockpiles requires a government role since private stocking provides insufficient
protection against oil-supply disruptions for the reasons discussed in
Chapter 2.
There is also a strong rationale for a broader international coordination of energy policies. The potential gains from a more rapid expansion of U.S. coal production, for instance, are increased if other
countries, anticipating the increased availability of coal, at the same
time increase the capacity of their electric-power systems to use coal
instead of other fuels. More broadly, part of the social benefits that
arise when one country increases its energy production or reduces its
energy demand accrue abroad, since energy consumers in all countries will benefit from the resulting reduced pressure on world
energy prices. Joint projects and other forms of international cooperation may therefore be particularly appropriate in the field of energy.
The rationale for international coordination of government policies
is especially strong with regard to oil stocks. If countries attempt to
increase their own security by bidding for stocks and thereby create
conditions of excess demand, all countries will suffer the consequences of sharply higher oil prices. Conversely, the willingness of
one country to use existing stocks in times when markets are tight
may depend on the extent to which other countries do the same. A
197
coordinated use of stocks may forestall a surge in oil prices, but few
countries would act individually to draw down their stocks if they
thought that others would then exploit the opportunity to protect or
increase their own.
Incomes Policies
The adoption of policies to influence directly the process of wage
and price setting is another approach to improving economic performance. Elsewhere in this Report the possibilities as well as the
problems of implementing tax-based policies to encourage wage and
price restraint in the United States are discussed. The major foreign
countries do not now have formal incomes policies—though interest
in using them has at various times been evident in several of them. It
does appear to be the case, however, that those countries with the
greatest downward flexibility in wage and price behavior, and hence
also the lowest inflation rates, have a stronger social consensus than
those countries with higher inflation. Ironically, it may be that explicit incomes policies would be easiest to implement in those countries
where the implicit social consensus makes them least needed.
MONETARY POLICY AND EXCHANGE RATES
In addition to the fundamental economic and social issues involved
in designing and carrying out sustained policies of demand restraint
and supply enhancement, there are problems of a more technical
nature that must be dealt with. One of these, which has received a
good bit of attention recently, arises from the interaction between
domestic monetary policy and the foreign-exchange markets.
If it is perceived that different countries, through their monetary
and fiscal policies, have significantly different objectives, especially
with respect to inflation, then exchange rates are likely to move. For
instance, if some countries use monetary policies aggressively to
achieve a rapid decline in inflation while others pursue more expansionary policies that are judged likely to increase inflation, the currencies of the former countries will tend to appreciate against those
of the latter. Such exchange-rate adjustments are both unavoidable
over the longer run and necessary to prevent the building up of distortions in relative price levels across countries, so long as different
policy objectives persist.
Exchange-rate adjustments do not always proceed smoothly, however. Exchange markets may at times become disorderly, and exchange rates may move more* sharply than necessary to accommodate
differences in policies or in other fundamental economic variables.
Such risks probably increase when the divergence in policy objectives
becomes more marked and expectations about future economic performance correspondingly more diverse. Particularly when inflation
198
rates are high, differences in policy objectives may have a magnified
effect on exchange rates if the countries that attempt to ease policy
are viewed as giving up on the fight against inflation. For these reasons, some combination of broad consistency in economic policy objectives and cooperation in exchange-market policies is probably necessary to ensure the smooth functioning of the international monetary system.
As discussed earlier in this chapter, most countries are now pursuing broadly similar policies of demand restraint aimed at reducing inflation, and exchange markets have not been subject to major disruptions over the past 2 years. Monetary policies in many countries have
focused on keeping the rates of money growth—differently defined in
different countries—on target or within target ranges. These targets
are themselves set with an eye toward steady reduction in the rate of
monetary expansion so as to be consistent with the hoped-for reduction in inflation. Even though monetary policies have shared the
same general objectives and approach, they have had different consequences in different countries with respect to both the level and the
variability of interest rates. For various reasons these differences have
been particularly wide in the recent past and have raised several
questions about the relationship between domestic monetary policies
and the variability of exchange rates.
To the extent that actual and expected rates of inflation differ
across countries, nominal rates of interest tend to be different even
when monetary authorities pursue policies that restrict nominal
demand growth to a comparable extent. If different interest rates
simply reflect differences in underlying inflation expectations, international financial markets should not, in theory, be disrupted. Market
participants would recognize that higher nominal yields on assets denominated in some currencies do not necessarily translate into higher
rates of return if exchange rates move over time to reflect differences
in inflation. For a variety of reasons, however, this mechanism may
not always function smoothly. Purchasing power parities do not hold
with any great precision in the short or even the more medium term.
Therefore, market participants need not assume that depreciation
will offset higher nominal yields over the period during which the
asset is held. Furthermore, if asset holders perceive that monetary
authorities are likely to resist incipient currency depreciations
through intervention, they may be tempted to seek out high nominal
returns on the expectation that they will be able to unwind their positions before the depreciation occurs. In such circumstances downward pressure on the exchange rates of countries with lower inflation
and nominal interest rates might arise.
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The large differences in monetary structures and instruments of
monetary control across countries may also produce substantial differences in real interest rates for comparable degrees of monetary restraint. In particular, monetary systems which rely more heavily on
nonprice rationing effects to achieve restraint may tend to have lower
real rates of interest than those which have fewer such rigidities
(though such rigidities may also cause greater dispersion of interest
rates across different financial markets). Where such real interest rate
differences arise, exchange-rate pressures may emerge even when
nominal interest rates are properly discounted for inflation.
A second problem on which attention has focused has been the
greater volatility of interest rates. As discussed in other chapters of
this Report, both the change in the operating procedures of the Federal Reserve and major changes in the structure of U.S. financial
markets have led to increased variability in U.S. interest rates. If foreign exchange markets are highly sensitive to interest rate movements, then variations in U.S. interest rates may lead either to greater variability in the exchange rates of other countries vis-a-vis the
dollar or else to greater fluctuations in their interest rates. Of course,
a reduction in the volatility of interest rates in the United States
would be desirable on domestic grounds as well, if it could be accomplished without compromising the ability of the Federal Reserve
to achieve its monetary growth objectives.
Although it is clear that considerations of exchange-rate volatility
may sometimes reduce the freedom of monetary authorities to conduct monetary policies solely on the basis of domestic objectives, the
problem may have been overstated in recent public discussions. Moderate movements in exchange rates, even if not strictly necessary
from the perspective of fundamental economic conditions, need not
impose significant costs on economic performance. Furthermore, if
longer-run expectations concerning inflation and current-account balances are such as to provide stability to exchange rates, interest rate
differences are not likely to be a major and continuing source of
trouble.
The strength of the dollar in the latter part of 1980, for instance,
reflected not only high interest rates but also the strong current-account position of the United States. At the same time, the weakness
of the German mark, not only vis-a-vis the dollar but also against the
other currencies of the European Monetary System, was also due to
the large and unaccustomed German current-account deficit in 1980.
The yen, to take another example, strengthened during the second
half of last year and yet further in early 1981 despite a lowering of
Japanese interest rates and a large, although declining, current-account deficit. This strength probably reflects the relatively buoyant
200
Japanese trade performance in volume terms, and also perhaps the
ability of the Japanese authorities to attract OPEC funds. Again, the
continued strength of sterling during 1980 was only in part the result
of high nominal interest rates. Oil independence, the strengthening
current-account position, and the general credibility of the British
government's commitment to policies of restraint were also important.
To sum up, it appears that even with broad consistency in monetary policy objectives, problems can sometimes arise from the potential flow of funds across borders in response to differences in nominal interest rates. While the threat of such flows can complicate the
conduct of monetary policy, this threat need not be so severe as to
deprive carefully managed monetary policies of the flexibility they
need to meet domestic objectives. Flexibility in monetary policy may,
of course, occasionally require somewhat greater fluctuations in exchange rates than would otherwise be the case, but if fundamental
economic conditions are such as to promote stability, such movements should not pose major problems.
CHALLENGES TO THE INTERNATIONAL FINANCIAL SYSTEM
The international community possesses a marvelously articulated
set of private and public financial institutions through which funds
are channeled from short-term lenders to long-term borrowers, from
surplus to deficit countries, from one currency to another, and from
capital-rich countries to capital-poor developing ones. The smooth
functioning of this financial system has helped to make possible a
rapid expansion of international trade and a relatively sizable transfer
of resources to developing countries, both of which have contributed
importantly to postwar economic growth and development. While the
system has periodically required attention to keep it up to date with
changing financial conditions, it has adapted and performed its critical functions well over the last three-and-a-half decades.
The huge increase in the volume of international financial flows
occasioned by the recent oil-price rise, following upon a similar increase only 5 years earlier, has placed a major strain upon international financial institutions. Making sure that these institutions can
continue to conduct vitally needed financial transfers soundly and efficiently is a second major challenge to economic policymaking in the
years immediately ahead. If the needed transfers of resources from
surplus to deficit countries are not made, or if they occur in ways
that permit countries to avoid the painful adjustment to higher oil
prices, the prospects for sustainable world economic growth and development will be seriously harmed.
201
The volume of international financing is reflected in Table 32,
which describes current-account positions, net of official transfers,
for broad country groupings, as compiled and projected by the
OECD. The table provides an indication of the orders of magnitude
involved, but specific numbers should not be overemphasized since
even the historical numbers are subject to substantial margins of
error. The projections for 1981 are particularly uncertain because the
assumption of a constant real oil price that underlies these projections is at risk on account of the Iran-Iraq struggle.
Very large financing needs will persist over the next several years.
While the OPEC surplus is expected to decline if oil prices do not
rise sharply again, the decline will be more than matched by a projected improvement in the current-account positions of the larger
OECD countries. The deficits of the smaller OECD countries will
remain roughly unchanged at levels that—while broadly financeable—are nevertheless viewed as a problem by the countries themselves. The already substantial deficits of a number of the non-oil developing countries are projected to rise further, but whether financing on the scale implied by such deficits will be forthcoming must
remain a question of serious concern.
TABLE 32.—Global current-account balances, exclusive of official transfers, 1978-81
[Billions of U.S. dollars; OECD basis]
Country
1978
OECD
Bis Seven »
Other
.. ..
1980'
-13
-47
-12
35
2
-14
-33
-33%
5
Non-oil developing countries..
-30%
Other «
-9%
. . .
19812
28
-15
OPEC
Residual«
1979
7
70
-47
-3
21%
120
86
-62
-69
-6
-9
-5
4
1
Preliminary.
*:i OECD projection.
United
States, Japan, Germany, France, United Kingdom, Italy, and Canada.
4
Centrally planned economies, Gibraltar, Malta, South Africa and Yugoslavia.
A
Reflects statistical errors and asymmetries. Given the very large gross flows of world balance of payments transactions,
statistical errors and asymmetries easily give rise to world totals (balances) that are significantly different from zero.
Source: Organization for Economic Cooperation and Development (OECD).
At an aggregate level, of course, the borrowing needed to finance
deficits must be matched by the lending that surplus countries undertake. The relative ease, compared to expectations, with which the
"recycling" of funds was carried out after the first oil-price shock no
doubt owes a great deal to this "adding-up" property. The sharp increases in liquidity arising from massive inflows of OPEC funds into
the major national and Eurocurrency banks provided the funding for
the large increase in lending by these banks to the deficit countries.
202
No "Say's Law" operates in international financial markets, however, to assure that desired lending matches intended borrowing on a
country-by-country basis. Much of the money available for lending
comes from countries, especially OPEC countries, who wish to place
their funds in short-term liquid deposits. But much of the borrowing,
especially on the part of newly industrialized countries with relatively
fragile debt-servicing capacity, is for long-term needs. Between these
two different sets of preferences stand the intermediaries—some official international institutions and some international capital markets,
but principally the large private banks of the industrial countries
which accept liquid short-term deposits, make illiquid long-term
loans, and in return for the profits they earn bear most of the risks
involved. Channels of intermediation, however, can become clogged
or overburdened. Perceptions of risk may limit the willingness of intermediaries to expand their lending to certain countries, or high
borrowing costs may simply preclude countries with low incomes
from borrowing, since they lack the resources needed to service this
debt.
FINANCING THE DEFICITS OF THE NON-OIL DEVELOPING COUNTRIES
The broad financing pattern for the non-oil developing countries
over the period from 1973 to 1979 is shown in Table 33, taken from
IMF compilations. The character of the flows that finance these countries' deficits has changed markedly since 1973 when a large share of
the financing was with funds, such as government transfers, that did
not create debt. Since 1975, however, deficit financing has come to
depend increasingly on sources that do create debt, especially on
long-term borrowing on market terms from private sources. Beginning in 1979—and partial evidence suggests the trend continued into
1980—the share of private long-term financing declined. Offsetting
that decline were a small rise in official financing, a stronger increase
in short-term borrowing, and a slowing of reserve accumulation.
The aggregate data in Table 33 mask considerable diversity among
countries, but two main groups can be identified. One group consists
of the low-income developing countries which, largely unable to
afford market terms, rely heavily on official financing on concessional
terms. For them the continued availability of official finance on affordable terms is a major concern. In particular, the expansion of World
Bank resources through the Sixth Replenishment of its soft-loan affiliate, the International Development Association (IDA), is critical for
these countries. Yet without the approval of the U.S. Congress, IDA
resources cannot be replenished. Unfortunately, that approval did
not come out of the post-election Congressional session. If replenishment is not forthcoming, IDA will exhaust its commitment authority
in March, and it will have no resources with which to meet the rising
203
requirements of the low-income countries it serves. Speedy action by
the new Congress is therefore essential.
TABLE 33.—Non-oil developing countries: current-accountfinancing,1973-79
[In billions of U.S. dollars]
1973
Item
Current-account deficit'
1974
36.9
11.5
1975
45.9
Less: Financing through
transactions that do not affect net
debt positions2
9.8
M3.2
Plus: Accumulation of reserve assets (decumulation-)...
9.3
1.2
-2.0
24.9
32.2
Equals: Net external borrowing4
11.0
3
n.7
1976
1977
1978
1979
35.8
52.9
14.4
16.2
19.4
11.9
18.2
11.0
33.5
26.1
37.8
44.5
32.9
28.6
12.1
12.7
Long-term from official sources, net 6
5.5
3
9.6
11.4
10.2
12.4
13.3
15.9
Other long-term borrowing from nonresidents, net
6.6
10.2
14.7
17.6
15.8
25.1
23.4
From financial institutions6
4.0
8.6
9.2
10.9
15.6
19.3
17.3
Other.net 6
2.6
1.6
5.5
67
.2
5.8
6.1
i'>4
1.6
5.1
-1.6
2.4
6.5
-2.8
4.3
3.9
-2.5
J
1.1
-2.4
.2
5.0
Use of reserve-related credit facilities, net 7 ..
Other short-term borrowing, net
Residual errors and omissions8
-1.7
1
Net
2
Net
3
total of balances on goods, services, and private transfers (with sign reversed).
unrequited transfers, net direct investment, SDR allocations, gold monetization, and valuation adjustments.
Excludes the effect of a revision of the terms of the disposition of economic assistance loans made by the United States to
India and repayable in rupees, and of rupees already acquired by the U.S. Government in repayment of such loans. The revision
has the effect of increasing government transfers by about $2 billion, with an offset in net official loans.
•Includes any net use of nonreserve claims on nonresidents, errors and omissions in reported balance of payments
statements
for individual countries, and minor deficiencies in coverage.
6
Public and publicly guaranteed borrowing only.
6
Principally bond issues (public and publicly guaranteed borrowing only) and supplier credits, net of acquisitions of long-term
assets.
Comprises
use of Fund credit and short-term borrowing by monetary authorities from other monetary authorities.
8
Errors and omissions in reported balance of payments statements for individual countries, plus minor omissions in coverage.
9
Less than $50 million.
Source: International Monetary Fund.
A different set of concerns arises for other developing countries
such as the exporters of manufactured goods whose long-term deficit
financing has come to a large extent from the private capital markets.
For them it is obviously critical, first, whether the slowdown in longterm bank lending since 1978 is a "pause" that will shortly be reversed or a more permanent development; and, second, whether official resources—on which the poorer countries often have first
claim—will be adequate to fill any remaining gap.
Private Financing
It is probable that the slowing of long-term bank lending to developing countries reflects both a greater unwillingness on the part of
the banks to lend and an increased reluctance on the part of some
developing countries to borrow. The relative importance of these two
factors is hard to establish. There is considerable evidence that a
number of developing countries have deferred borrowing. Whether
they have done so because of high interest rates or, perhaps more
critically, because they are unwilling to accept higher spreads over
the London interbank rate (LIBOR) is unclear. Higher spreads raise
204
the cost of the loans, and they may also be interpreted in the financial markets as evidence that the borrowers are less creditworthy than
countries borrowing at lower spreads. There are also clear indications of reluctance on the part of the banks to continue to increase
their exposure in developing countries, either because of portfolio
management considerations or because of pressures from bank examiners to limit and diversify risks. Numerous factors affect the willingness of banks to extend loans to particular countries. Chief among
these are the external debt which a country has already incurred and
judgments by potential lenders about the risk that a country may
become unable to service its debt.
The problem of country risk arises most acutely if borrowing is
perceived to lead to debt-service payments which can be managed
only by still larger borrowing in the future. Several implications flow
from this perspective.
First, the willingness of banks to continue lending depends importantly on their perception of the longer-run economic prospects of
the borrowing country. A country that borrows to finance consumption—including the consumption of petroleum—is a riskier proposition than one borrowing to finance productive investment. The investment generates a return that can, in turn, be used to service the
debt.
Second, while the additional loan needs of many borrowers stem
from the need to pay for an increased oil bill, the ability to obtain
financing depends partly on how well the borrower is deemed to be
adjusting its economy to the reality of higher oil prices. To some
extent, the greater the signs of progress toward reducing oil imports
or expanding exports to pay for them, the easier it is to finance the
remaining deficit.
Third, banks* concerns about debt rescheduling may be an important influence on the pattern of lending, but the direction of influence is ambiguous. If countries which were unable to service all of
their external debts were to reschedule their official debts while continuing to meet payments to private lenders, the banks would have
little incentive to assess borrowers' long-term prospects, or to lend in
ways that foster appropriate adjustment by borrowers. Instead, banks
have a clear incentive for caution when they are required to participate in rescheduling and to bear some reasonable portion of the
burden. Banks are then more careful about making loans to countries
where the longer-term prospects are uncertain. For this reason, the
United States and other official creditors have insisted on requiring
countries experiencing debt crises to seek relief from private as well
as official creditors in order to assure a comparable sharing of burdens among all categories of creditors. When rescheduling is unat-
205
tractive to banks, however, a somewhat contradictory possibility
arises: banks can defer rescheduling by continuing to lend. Delay
may enable both borrower and lender to ride out a troubled period,
but it can also exacerbate the troubles to be faced later on. Of
course, banks' willingness to postpone rescheduling in this manner is
limited by the increased risks involved. Furthermore, bank examination procedures—particularly in the United States and increasingly in
other countries as well—are designed to signal the emergence of excessive exposure to risk.
Fourth, the future scope for bank lending will depend strongly on
the continued expansion of world trade and the ability of developing
countries to participate fully in that expansion. If export opportunities are blocked, then even borrowing for productive investment may
not be sustainable because such investment may not yield, either directly or indirectly, enough foreign exchange to service the debt.
Conversely, with ample trade opportunities, developing countries can
earn the foreign exchange that enables them not only to service existing debt but also to demonstrate their continuing dependability as
borrowers. This interaction provides one of the major avenues for
developing countries to accelerate adjustment without sacrificing
longer-run growth prospects.
Although it is possible to set forth in general terms the considerations that will determine the extent of private bank lending to the
developing countries, it is impossible to predict with any precision or
confidence the extent to which the recent pause in long-term lending
will be reversed. On balance, the likelihood of somewhat reduced
growth in private lending is high enough to place great importance
upon the role of official agencies like the International Monetary
Fund (IMF) and the World Bank.
Official Financing
Over the past year, the ability of the IMF and the World Bank to
take the lead in promoting financing and adjustment patterns that
are appropriate in current economic circumstances has been
strengthened. The resources available to these institutions have been
increased, and their operating procedures have been modified.
The role of the IMF has been substantially enhanced. A 50-percent
increase in quotas, negotiated in 1978, went into effect on January 1
of this year. It will raise substantially the liquid resources available to
the Fund over the coming years. Beyond this, the IMF is exploring
the possibility of further increasing its resources by borrowing—first
from member countries, particularly OPEC countries with large surpluses, but, if appropriate, from private sources as well. While such
borrowing could not, and should not, supplant quotas as the primary
source of Fund liquidity, it could play an important supporting role.
206
At the same time, access to the IMF by countries facing actual or
incipient balance of payments difficulties has also been substantially
increased. The quota increase itself has this effect, and it has been
complemented by adaptations in the structure of Fund lending programs. The adaptations effectively increase the cumulative amounts
that countries can borrow in relation to their quotas and lengthen
the adjustment period for IMF supported programs. Finally, increased emphasis is being placed on structural considerations in the
formulation of IMF stabilization and adjustment programs.
World Bank resources have also increased, albeit without full U.S.
participation. In the last days of its 1980 session, Congress did appropriate $328 million toward the Bank's 1977 Selective Capital Increase. But the Congress has yet to approve the U.S. share of the
1980 General Capital Increase. This increase went into effect in October 1980 with the formal agreement of 75 percent of the Bank's
voting power.
The World Bank, too, has modified its programs in the past year.
While continuing to expand its traditional project and sector lending,
the Bank has begun to develop a new type of lending program aimed
specifically at structural adjustment. This lending is intended to complement the shorter-term borrowing that countries engage in for balance of payments reasons with long-term funding to restructure
economies in ways that will strengthen their underlying external positions. Furthermore, ways are actively being sought—perhaps through
a new energy affiliate of the Bank—to increase sharply the resources
available for energy exploration and development in developing
countries. Over time, the resulting increase in domestic energy availability will tend to ease the financial burden of developing countries
by lowering their oil imports. Increased world supplies and more
suppliers may also make future energy price shocks less likely.
The extent to which the official institutions will be able to meet the
future financing needs of the non-oil developing countries will
depend in part upon the size of the gap which must be filled after
private financing and bilateral assistance—particularly OPEC assistance for oil-deficit countries—has been accounted for. The size of
this gap is very difficult to predict. But the recent expansion in the
resources of the official institutions and their demonstrated capacity
to adapt to changing needs suggest that they are capable of dealing
with a very wide range of possible problems.
CHALLENGES TO INTERNATIONAL TRADE RELATIONS
The progressive dismantling of trade restrictions during the postWorld War II period and the resulting rapid growth of world trade
207
were of central importance to the worldwide rise in prosperity during
the 1950s and 1960s. But the open trading system has come under
increasing pressure in the 1970s. Economic growth has slowed, unemployment rates have risen, and the balance of payments positions
of oil-importing countries have deteriorated. As a result, protectionist
sentiments have strengthened, and the promotion of exports has
become a more explicit aim in many countries. Furthermore, mounting structural difficulties in a number of key sectors have encouraged
the view that cartelization or market-sharing agreements among
countries can ease the burdens of adjustment. As a consequence, the
climate for trade has become more clouded despite the ratification in
1979 of the agreements reached in the Multilateral Trade Negotiations. These agreements strengthen the international trading system
by limiting the use of trade-restrictive practices and improving the
mechanisms for the settlement of disputes and thus represent an important step forward. They are unlikely to prevent an intensification
of trade frictions, however, if the underlying commitment of governments to open trade is eroded.
An important but perhaps inevitable cause of the emergence of a
more difficult environment for trade is the decline in the relative
dominance of the United States in the world economy. In the early
post-World War II period the United States was in a strong position
to promote a more liberal trading order without much regard to
strict reciprocity. Because imports constituted only a small share of
the U.S. market, the growth in imports that freer trade entailed was
not viewed as disruptive. At the same time, the demand for U.S. exports was strong because foreign production capacities had been
damaged by the war and because American goods embodied technologies not available elsewhere. Thus, open trade was not perceived as
a threat to the overall U.S. trade position. For other countries, on the
other hand, the promise of increased access to the vast U.S. market
made the opening of their own borders to imports seem a favorable
exchange.
While the conditions that made it so easy to support no longer
prevail, open trade nevertheless confers substantial benefits on the
world economy. Preservation of an open trading system must therefore become a truly multilateral effort and the shared responsibility
of the major trading nations. It is probable that few governments
today can effectively resist taking actions to redress what are viewed
domestically as the unfair trade practices of others. All countries
must therefore practice self-restraint, not only in the traditional sense
of minimizing protectionist measures against imports, but also in
avoiding measures that artificially promote exports at the expense of
other countries. It must be recognized that the only real alternative
208
to closer cooperation is to risk a cycle of trade retaliation that would
leave all countries substantially worse off.
Three specific challenges to open trade are taken up in the following pages: the heightened pressures to use trade barriers to save domestic jobs, the increased use of direct and indirect subsidies to promote exports, and the emerging reliance on market-sharing arrangements to ease adjustment.
PROTECTION AND EMPLOYMENT
The pressure to protect domestic sectors from import competition
is, to a large degree, a pressure to preserve jobs. Imports are seen as
substituting foreign for domestic employment and income abroad for
income at home. This pressure increases when economic growth
slows and unemployment levels rise, since alternative employment
possibilities are reduced.
Job losses of course occur continually within an economy as some
sectors contract. But meanwhile new jobs are being created in expanding sectors. International trade is but one of the pressures
behind such shifts. Indeed; the evidence suggests quite strongly that,
at least in the United States, changes in consumer demands and differential productivity gains from capital investment and technological
change have been far more important than increased imports in accounting for relative employment declines in lagging sectors.
But regardless of the source from which the pressures for adjustment come, intersectoral shifts in employment cannot be achieved
without transition costs. The skills no longer needed in declining sectors may not match the skills required in growing sectors. The regional distribution of employment opportunities may shift, but workers may not be in a position to move. And, even if workers who lose
jobs find new ones, their wages and job satisfaction may be lower if
specialized skills acquired over many years are made obsolete. The
more rapid the pace of adjustment, furthermore, the greater these
transition costs will be, since less of the adjustment can then be accomplished through natural employee attrition and ongoing demographic shifts. Because of transition costs, governments are often
tempted to intervene in an attempt to slow the pace of adjustment.
Such policies can perhaps be justified when the pressure for rapid
adjustment is very strong or when it is thought that the pressure will
subsequently be reversed. The risk is, however, that government efforts to ease adjustment may have the effect of deferring or preventing it. Experience suggests that this has often been the case. Such
outcomes are costly. Although transition costs are avoided for a time,
productivity is impaired, inefficiency is increased, inflationary pres-
209
sures are strengthened, and in the longer term employment too may
suffer.
In seeking a balance between justified intervention to reduce transition costs and undue protection of uneconomic sectors, careful assessment of the broad range of costs and benefits is needed. This is
particularly the case with regard to the use of trade-restrictive policies, for three reasons.
First, pressure to restrict imports can easily arise even when imports are not themselves the major threat to existing jobs because
the tools are more readily at hand to restrict imports than to deal
with other adjustment problems. In the United States the President
has considerable discretionary power to impose trade restrictions—
subject, however, to prior findings of injury by the International
Trade Commission. In other countries too, import restriction is generally easier to implement than adjustment policies requiring government budget resources.
Second, there is mounting evidence that trade protection is a very
expensive way to preserve jobs. In case after case that has been examined, the cost to consumers per job saved—that is, the extra costs
faced by consumers in the form of higher prices when imports are
restricted—has turned out to be at least several times higher than an
average worker's income. Although these consumer costs are large in
the aggregate, in no one instance do they seem large on a per capita
basis. As a consequence they are not highly visible and therefore easy
to overlook.
Finally, trade restriction, like other forms of domestic protection
but more clearly so, impairs employment prospects over the longer
run. Jobs saved in the protected sectors are saved in part at the expense of jobs elsewhere in the domestic economy. Higher prices for
protected goods reduce consumers' ability to purchase other goods,
and thereby limit employment growth. If imports are restrained,
export opportunities and employment in the export sector are also
reduced—directly if foreign countries retaliate, and indirectly even if
they do not, because the exchange rate tends to appreciate to restore
balance between exports and imports over the longer term. Moreover, trade restrictions increase prices directly and further exacerbate
inflation by limiting productivity growth. As a result, the ability of
governments to pursue expansive policies to support employment is
further reduced. Thus the jobs saved by trade restrictions are likely
to be matched by job losses elsewhere. As is so often the case, however, the jobs saved are immediate, specific, and highly visible; the
jobs lost are in the future, diffused throughout the economy, and
almost invisible.
210
While all countries, in attempting to balance long-term gains
against short-term pressures, may find the need for trade-restrictive
actions compelling from time to time, the risks are that such policies
will be resorted to excessively. These risks become considerably
larger to the extent that other countries aggressively use subsidies to
promote exports. The following section takes up this issue.
EXPORT SUBSIDIES
Countries subsidize exports directly or indirectly for a variety of
reasons. Faster export growth is seen as a way of overcoming the balance of payments deficits that higher oil bills have caused for many
countries. Subsidies may form part of an industrial strategy to promote the growth of key sectors and to exploit economies of scale
when they dictate a global marketing approach. Subsidies may also
be a counterpart to other policies, for instance, policies to limit
excess capacity and job losses in declining sectors by selling abroad.
Subsidies to exports can also arise indirectly—for instance, from domestic policies that keep the price of energy, and hence the cost of
production in energy-intensive sectors, artificially low. Or they can
arise when investment incentives to particular regions or industries
reduce the cost of capital to firms that produce certain goods.
The Subsidies Code that was negotiated in the Multilateral Trade
Negotiations places certain restrictions on the use of subsidies and
permits the adoption of countervailing duties in cases where subsidies can be shown to cause injury to trading partners. However,
given the various and often complex forms that subsidies can take,
and the fact that subsidies of exports may often arise as by-products
of policies directed at domestic goals, the Code by itself is unlikely
fully to resolve the problems that subsidies sometimes create. Selfrestraint among countries in the use of subsidies is therefore necessary. Two considerations are of critical importance in this regard.
First, subsidies often end up losing their effectiveness in promoting
exports. Initially, profits and employment in a subsidized activity will
increase and a competitive advantage will emerge. Gradually, however, the extra profits that are created by the subsidy may be diluted by
higher wages for the workers in that activity, or—if the activity is a
large user of scarce resources—in higher prices for those resources.
A familiar example is the bidding up of the price of farm land suitable for a particular crop when the price of that crop is supported by
the government at higher levels. The bidding up of costs of production in this way ultimately tends to eliminate the competitive advantage that the subsidy provides, thus increasing pressures for yet further subsidization to restore the advantage and making removal of
the subsidy increasingly difficult.
211
Second, the pressure for countries to match the subsidies provided
by other countries means that the opportunity to increase market
shares through subsidies is far less than it appears to each country in
isolation. This consideration is particularly important in the area of
export-credit subsidization, which has increased sharply in recent
years. Most of the major industrial countries have official exportcredit agencies that provide medium and long-term financing at fixed
rates of interest for "big ticket" exports, such as power plants, aircraft, and manufacturing plants. These interest rates have not risen
in step with rises in market rates, thus greatly increasing the subsidy
element of such trade financing. Yet, because export agencies in all
countries are under pressure to match or perhaps improve on the
terms provided by others so as to help secure the sale for a domestic
producer, the likely result is a costly standoff, with global overcapacity in subsidized sectors persisting. The heads of state of the major
countries made a specific commitment at the Venice Summit in June
of last year to bring export-credit rates more closely into line with
market rates. Efforts to renegotiate an export-credit agreement based on this commitment failed, but negotiations may resume
this year. In some countries—particularly some members of the European Community—it may not be clearly perceived how wasteful
and counterproductive export-credit subsidies are.
MARKET SHARING
Antitrust laws in the United States prohibit firms from attempting
to divide up markets by allocating market shares, formally or informally. The anticompetitive and price-raising consequences of such arrangements are well known. On an international level, however, there
are increasing temptations for governments themselves to develop or
to bless such market-sharing arrangements for sectors facing structural difficulties. The Multi-fiber Agreement, which sets a framework
within which individual countries have negotiated a complex system
of quotas on textile and apparel imports, is an example. Relatively
longstanding agreements exist with respect to shipbuilding. The
issue of automobile imports, so important in the United States, has
also been of great interest and concern internationally—and indeed
informal or formal industry agreements between European and Japanese auto producers are widespread.
The temptation to "organize** world markets when adjustment
pressures arise is understandable. If a number of countries need to
adjust, the pressures to assure that each country bears its fair share
of the adjustment burden are powerful. Negotiated arrangements
may appear both more effective and less confrontational than the use
of formal grievance procedures under the General Agreement on
Trade and Tariffs (GATT). As short-term responses to serious
212
threats of disruption, market-sharing arrangements may indeed be
preferred if the alternative is a resort to predatory behavior.
There are serious risks, however, in following this course. First, the
substitution of informal, ad hoc agreements for the more formal
mechanisms of the GATT reduces the transparency of the trading
system. The "rules of the game" become more complex and less visible to public scrutiny, and procedures for redress become uncertain.
Second, such agreements may perpetuate themselves. In seeking to
assure that adjustment is fairly distributed, they may in fact delay the
needed adjustments and perpetuate the excess capacities that gave
rise to the problem in the first place. Finally, such arrangements, by
requiring balance among countries in the degree of adjustment,
almost always guarantee that it is not the least efficient capacity
which is eliminated.
NEEDED RESPONSES
Pressures on all countries to use trade policies to promote shorterterm gains for particular sectors, to ease the process of adjustment,
or to protect jobs in sensitive areas will almost certainly remain
acute. It is also quite certain that in some cases such pressures will
not be resisted. Indeed a simon-pure attitude is unwarranted on the
part of any country, and unrealistic when other countries also yield to
such pressures. From a broader perspective, however, it is highly important to keep restrictive trade policies within circumscribed limits.
First, the achievement of both higher exports and lower imports is
not feasible—strictly so for the world as a whole, and to a very large
extent for individual countries. The only effective choice is one between slow trade growth or more rapid trade growth, and the historical record makes clear that the latter is to be preferred. Second, it is
imperative to aim for consistency in the formulation of policy. The
overriding need in all countries is to reduce the current inflation, and
also to reduce the inflation-proneness of economies that have
become more inflexible and less competitive. Trade policies that aim
for short-term protection intensify inflation directly by reducing competitive pressures, and they increase economic rigidities by sheltering
excessive wages, profits, and other incomes in particular sectors from
the discipline of the market. Better integration of trade policy into
overall economic policy formulation is needed in all countries to provide a clearer perspective on its real costs and benefits.
213
Appendix A
REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1980
215
LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D.C, December 31, 1980.
MR. PRESIDENT:
The Council of Economic Advisers submits this report on its activities during the calendar year 1980 in accordance with the requirements of the Congress, as set forth in section 10(d) of the Employment Act of 1946 as amended by the Full Employment and Balanced
Growth Act of 1978.
Cordially,
CHARLES L. SCHULTZE, Chairman
GEORGE C. EADS
STEPHEN M. GOLDFELD
217
Report to the President on the Activities of the
Council of Economic Advisers during 1980
The Council of Economic Advisers was established by the Employment Act of 1946 to provide economic analysis and advice to the
President and thus to assist in the development and implementation
of national economic policies. The Council also advises the President
with regard to decisions on other matters that affect the health and
operations of the Nation's economy.
The enactment of the Full Employment and Balanced Growth Act
of 1978—the Humphrey-Hawkins Act—substantially revised the chartering legislation of the Council of Economic Advisers for the first
time since 1946. This revision left unchanged the basic mission of
the Council of Economic Advisers but created a new framework for
the government's pursuit of its economic policies. This act and its requirements were discussed in detail in the 1979 Economic Report.
Charles L. Schultze, Chairman, and George C. Eads, Member, continued to serve in these positions throughout 1980. On May 27,
1980, Lyle E. Gramley resigned to become a Governor on the Board
of the Federal Reserve System. On August 20, 1980, Stephen M.
Goldfeld became a Member of the Council. Mr. Goldfeld was formerly Professor of Economics at Princeton University.
RESPONSIBILITIES
The responsibilities of the Council of Economic Advisers have
grown steadily as new economic problems have placed new demands
on the Council and its staff. Over the last decade especially, the
growing recognition that many "noneconomic" decisions have major
consequences for our economy has led to a broadening of the Council's activities. Today, the Council is responsible for advising the
President not only on Federal fiscal policies but also on policies affecting specific sectors of the economy, on regulation and regulatory
reform, on energy policies, and on international economic policies.
219
Past Council Members and their dates of service are listed below:
Name
Edwin G. Nourse
Leon H. Keyserling
John D. Clark
Roy Blough.
. ..
Robert C. Turner
Arthur F. Burns
Neil H. Jacoby
Walter W. Stewart
Raymond J. Saulmer
Joseph S. Davis
Paul W. McCracken
Karl Brandt
Henry C. Walllch
Walter W. Heller
James Tobin
Kermit Gordon
Gardner Ackley
John P. Lewts
Otto Eckstein
Arthur M. Okun
James S. Duesenberry
Merton J. Peck
Warren L. Smith
Paul W. McCracken
Hendrik S. Houthakker
Herbert Stein
Ezra Solomon
Marina v.N. Whitman
Gary L. Seevers
Wilfiam J. Fellner
Alan Greenspan
Paul W. MacAvoy
Burton G. Malktel
William D. Nordhaus
Lyle £. Gramtey
Oath of office date
Position
Chairman
Vice Chairman
Acting Chairman
Chairman .
Member
Vice Chairman
Member ...
Member
Chairman
Member
Member..
Member.
Chairman
Member
Member....
Member
Member
Chairman
Member
Member
Member
Chairman
Member
Member
Member
Chairman
Member
Member
Member
Chairman
Member
Member
Chairman
Member
Member
Member
Member
Chairman
Member .
Member
Member
Member
August 9,1946
August 9, 1946
November 2, 1949
May 10, 1950
August 9, 1946
May 10, 1950
June 29, 1950
September 8, 1952 . .
March 19, 1953
September 15, 1953
December 2, 1953
April 4. 1955
December 3, 1956
May 2. 195$
December 3, 1956
November 1,1958.
May 7, 1959
January 29, 1961 ..
January 29, 1961
January 29. 1961
August 3. 1962
November 16, 1964
May 17, 1963
September 2, 1964
November 16, 1964
February 15. 1968
February 2, 1966
February 15, 1968
July 1. 1968
February 4, 1969
February 4, 1969
February 4, 1969
January 1, 1972
September 9, 1971
March 13, 1972
July 23, 1973
October 31, 1973
September 4, 1974
June 13, 1975...
July 22, 1975
March 18, 1977
March 18, 1977
Separation date
November 1, 1949.
January 20, 1953.
February 11, 1953.
August 20, 1952.
January 20, 1953.
December 1, 1956.
February 9, 1955.
April 29, 1955.
January 20, 1961.
October 31, 1958.
January 31, 1959.
January 20, 1961.
January 20, 1961.
November 15, 1964.
July 31, 1962.
December 27, 1962.
February 15, 1968.
August 31, 1964.
February 1, 1966.
January 20, 1969.
June 30, 1968.
January 20, 1969.
January 20, 1969.
December 31, 1971.
July 15.1971.
August 31, 1974.
March 26.1973.
August 15, 1973.
April 15, 1975.
February 25, 1975.
January 20, 1977.
November 15, 1976.
January 20. 1977.
February 4, 1979.
May 27, 1980.
MACROECONOMIC POLICIES
From the outset, the Council's fundamental role has been to advise
the President on comprehensive economic policies designed to
achieve the government's objectives for price stability, employment,
and output. To fulfill this responsibility the Council develops economic forecasts several times each year with the assistance of an
Interagency Forecasting Committee. The members of this Committee
include, in addition to the Council, representatives from the Office of
Management and Budget and the Departments of the Treasury,
Commerce, and Labor. This group, which is chaired by a Member of
the Council, meets to analyze the outlook for individual sectors of
the economy and to develop detailed economic forecasts for the
period immediately ahead. The Chairman of the Council presents
these forecasts to the Economic Policy Group (EPG), which is made
up of the President's principal economic advisers and meets each
week to discuss and develop the Administration's proposals touching
on economic policy. The Chairman of the Council of Economic Advisers is a member of the EPG and of its steering group.
220
In the final months of each year, during the preparation of the
President's annual budget, the Council works with other members of
the EPG to develop and present to the President proposals for both
the stance and the design of Federal fiscal policies during the coming
fiscal year. The Council monitors the progress of the economy and
offers advice on when changes in fiscal policies are in order. Advising
the President on macroeconomic policy has remained one of the
Council's major responsibilities.
The Chairman of the Council took an active role in the March
budget revisions, in the decision to invoke the Credit Control Act,
and in the design of other steps taken at that time to halt inflationary
expectations.
In addition, the Council continued its involvement in the program
of voluntary pay and price standards, including monitoring the progress of the second program year. On November 12 the Chairman of
the Council of Economic Advisers resumed the position of Chairman
of the Council on Wage and Price Stability.
During the late spring and summer, the Council actively participated in the development and presentation of the Administration's Economic Revitalization Program.
The Chairman of the Council also chairs the Interagency Committee on Housing and Housing Finance. In 1980 the Council again coordinated special surveys of the conditions in housing markets.
The Council co-chaired with the Office of Management and
Budget a congressionally mandated study on the indexing of Federal
programs. The Council chaired the subgroup on issues involved in
the choice of an index. This report will be presented to the Congress
at the beginning of 1981.
MICROECONOMIC POLICIES
The Council of Economic Advisers has become increasingly involved in the analysis of microeconomic issues—the economic developments and the policy actions that affect individual industries, markets, or sectors of the economy. In 1980 the Council took part in formulating and articulating the Administration's policies on agriculture,
energy, hospital cost containment, industrial adjustment, regulation,
regulatory reform, and international trade.
Especially important in 1980 were the interagency studies of the
automobile and steel industries. The Council took an active role in
these studies and in the development of policy responses to problems in these two industries. In addition, the Council is a major participant in an ongoing study of the potential economic consequences
of, and policy responses to, a major oil-supply disruption.
In 1980 the Council continued to chair the Regulatory Analysis
Review Group (RARG). This interagency group was created late in
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Federal Reserve Bank of St. Louis
221
1977 to review selected analyses of the economic effects of major
regulatory proposals. The President has ordered that each major regulatory proposal issued by a nonindependent regulatory agency must
be accompanied by a regulatory analysis. The agency originating the
proposal develops the analysis and makes it available in draft form
for public comment before the final regulation is issued. During the
period for public comment the Regulatory Analysis Review Group
evaluates a select few of these regulatory analyses and files its appraisal in the agency's record of public comment.
In 1980 eight regulations were reviewed by RARG: the Environmental Protection Agency's air carcinogen policy, its guidelines for
water effluents in the leather tanning and finishing industry, its visibility regulations for Federal Class I areas, and its ambient air quality
standards for carbon monoxide; the Department of Energy's building
energy performance standards and its consumer appliance energy efficiency standards; the Department of Education's rules concerning
the education of students not proficient in English, and the Department of Housing and Urban Development's revisions of its minimum
property standards. At year's end the Environmental Protection
Agency's premanufacture notification requirements for new chemical
substances were being reviewed. Together with the staff of the Council on Wage and Price Stability, the Council's staff served as the analytic staff for the RARG. In addition, the Council and the staff continued their active involvement in proposed regulatory reform legislation and in the development of administrative means to lessen the
burden of regulation.
INTERNATIONAL ECONOMIC POLICIES
During 1980 the Council of Economic Advisers again took an
active part in international economic affairs. The Chairman of the
Council continued to serve as Chairman of the Economic Policy
Committee of the Organization for Economic Cooperation and Development (OECD). As such, he chaired two meetings of senior economic officials from OECD member governments to assess appropriate economic policies following the sharp rise in energy prices and to
achieve improved policy coordination among countries.
In consultation with senior officials from other countries, the
Chairman also prepared a position paper on economic policy issues
for the Venice Summit.
The Council is active in the OECD Economic Policy Committee's
working parties on short-term economic prospects, balance of payments adjustment, and macroeconomic structural and policy analysis.
Council Members or staff economists represent the U.S. government
at periodic meetings of these working parties during the year.
222
A Member of the Council represents the U.S. government at meetings of the OECD Special High-Level Group on Positive Adjustment
Policies, and in 1980 made an extended presentation on U.S. structural policies to this group. He also chairs a task force of the Special
Group that has been examining the alternatives used by governments
to identify and evaluate subsidies.
PUBLIC INFORMATION
The annual Economic Report is the principal medium through which
the Council informs the public of its work and its views. It is also an
important vehicle for presenting and explaining the Administration's
economic policies, both domestic and international. Distribution of
the Report in recent years has averaged about 50,000 copies. The
Council also assumes primary responsibility for the monthly Economic
Indicators, a publication prepared by the Council's Statistical Office,
under the supervision of Catherine H. Furlong. The Joint Economic
Committee issues the Indicators, which has a distribution of approximately 10,000 copies. Information is also provided to members of
the public through speeches and other public appearances by the
Chairman, Members, and staff economists of the Council. Finally, in
1980 the Chairman and Members made 13 appearances before Committees of the Congress to testify on the Administration's economic
policies.
ORGANIZATION AND STAFF OF THE COUNCIL
OFFICE OF THE CHAIRMAN
The Chairman is responsible for communicating the results of the
Council's work and for providing advice to the President. This duty
is performed through discussions with the President and in written
reports on economic developments. The Chairman also represents
the Council at Cabinet meetings and at many other formal and informal meetings of government officials. He exercises ultimate responsibility for directing the work of the professional staff. On November
12, 1980, the Chairman replaced Alfred E. Kahn, who had resigned,
as Chairman of the Council on Wage and Price Stability.
COUNCIL MEMBERS
The two Council Members directly supervise the work of the
Council's professional staff and are responsible for all subject matter
studied by the Council. They represent the Council at numerous
meetings of public and private groups, and they assume major responsibility for the Council's involvement in the activities of the government that affect the economy.
223
The Chairman and the Council Members work together on most
policy issues. Operationally, however, responsibility over major topics
of concern is divided between the two Members. Mr. Eads has supervised microeconomic analysis, including analysis of policies related to
such matters as energy, agriculture, social welfare, and international
trade. Mr. Eads also oversees regulatory reform activities. Mr. Goldfeld has the primary responsibility for macroeconomic analysis, including international monetary developments and the preparation of
economic forecasts, and for labor market policies.
PROFESSIONAL STAFF
At the end of 1980 the professional staff consisted of the Special
Assistant to the Chairman, the Senior Statistician, 12 senior and staff
economists, and 5 junior staff economists.
The professional staff and their special fields at the end of the year
were:
Susan J. Irving
Special Assistant to the Chairman
Senior and Staff Economists
William T. Boehm
Stephen H. Brooks
Geoffrey O. Carliner
Jose A. Gomez-Ibanez
Val L. Koromzay
Robert A. Leone
Michael J. McKee
David C. Munro
Susan C. Nelson
Perry D. Quick
Elinor Y. Sachse
Andrew J. Strenio
Agriculture and Food Policy
Macroeconomic Analysis and Forecasting,
and Fiscal Policy
Labor Market Policies and Pension Issues
Regulation, Natural Resources, and Transportation
International Financial and Economic Developments
Industrial Policy Issues and Energy
Macroeconomic Analysis and Forecasting,
Productivity, Prices, Anti-Inflation Policies,
and Energy
Macroeconomic Analysis and Forecasting
Public Finance, Taxes, Social Security, Health
and Welfare
Finance, Money, Housing, and Economic Development
International Financial Developments and
Trade
Regulation
Statistician
Catherine H. Furlong
Senior Statistician
Junior Economists
Martin A. Asher
Labor Market Policies
224
Elizabeth J. Jensen
Stephen A. O'Connell
Regulation
International Economic Developments and
Trade
David H. Romer
Macroeconomic Analysis and Forecasting
Robert W. Turner
Public Finance
Catherine H. Furlong, Senior Statistician, continued to be in
charge of the Council's Statistical Office. Mrs. Furlong has primary
responsibility for managing the Council's statistical information
system. She supervises the publication of Economic Indicators and the
preparation of all statistical matter in the Economic Report. She also
oversees the verification of statistics in memoranda, testimony, and
speeches. Natalie V. Rentfro, Earnestine Reid, and Barbara L. Sibel
assist Mrs. Furlong.
In preparing the Economic Report the Council relied upon the editorial assistance of John Phillip Sawicki. Also called on for special assistance in connection with the Report was Dorothy Bagovich.
SUPPORTING STAFF
The Administrative Office of the Council of Economic Advisers
provides general support for the Council's activities. Nancy F. Skidmore, Administrative Officer, prepares and analyzes the Council's
budget and provides general administrative services.
Elizabeth A. Kaminski, Staff Assistant to the Council, handles general personnel management, coordinates the schedule for the Economic Report, and provides general assistance to the Council and the Special Assistant in the management of the Council's activities.
Members of the secretarial staff for the Chairman and Council
Members during 1980 were Patricia A. Lee, Linda A. Reilly, Lisa A.
Stockdale, and Alice H. Williams. Secretaries for the professional
staff were Catherine Fibich, Bessie M. Lafakis, Joyce A. Pilkerton,
Margaret L. Snyder, and Lillie M. Sturniolo. Elizabeth A. Cralle provided secretarial assistance during the summer months and during
the preparation of the Report. Joseph Henley served as a clerk during
the preparation of the Report.
DEPARTURES
The Council's professional staff members are in most cases on
leave from universities, other government agencies, or research institutions. Their tenure with the Council is usually limited to 1 or 2
years. Senior staff economists who resigned during the year were
Paul N. Courant (University of Michigan), K. Burke Dillon (International Monetary Fund), David Harrison, Jr. (Harvard University),
David S. McClain (Boston University), V. Vance Roley (Federal Reserve Bank of Kansas City), Daniel H. Saks (National Commission for
Employment Policy), and Charles L. Trozzo (George Washington
225
University). Kate Stith Pressman, staff economist, resigned to accept
a position with the Department of Justice.
Junior economists who resigned in 1980 were David W. Berson
(University of Michigan), Lisa L. Blum (Department of Commerce),
Stephen G. Cecchetti (University of California, Berkeley), Judith R,
Gelman (Federal Trade Commission), and Matthew D. Shapiro (Massachusetts Institute of Technology).
226
Appendix B
STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION
227
CONTENTS
NATIONAL INCOME OR EXPENDITURE:
Page
B-l.
B-2.
B-3.
B-4.
B-5.
B-6.
B-7.
B-8.
B-9.
B-10.
B-ll.
B-12.
B-13.
B-14.
B-15.
B-16.
B-17.
B-18.
B-19.
B-20.
B-21.
B-22.
B-23.
B-24.
B-25.
Gross national product, 1929-80
Gross national product in 1972 dollars, 1929-80
Implicit price deflators for gross national product, 1929-80
Fixed-weighted price indexes for gross national product 1972
weights, 1959-80
Implicit price deflators and alternative price measures for gross national product and gross domestic product, 1929-80
Gross national product by major type of product, 1929-80
Gross national product by major type of product in 1972 dollars,
1929-80
:
Gross national product: Receipts and expenditures by major economic groups, 1929-80
Gross national product by sector, 1929-80
Gross national product by sector in 1972 dollars, 1929-80
Gross domestic product of nonfinancial corporate business, 192980
;
Output, costs, and profits of nonfinancial corporate business,
1948-80
Personal consumption expenditures, 1929-80
Gross private domestic investment, 1929-80
Inventories and final sales of business, 1946-80
Inventories and final sales of business in 1972 dollars, 1947-80
Relation of gross national product and national income, 1929-80 ...
Relation of national income and personal income, 1929-80
National income by type of income, 1929-80
Sources of personal income, 1929-80
Disposition of personal income, 1929-80
Total and per capital disposable personal income and personal
consumption expenditures in current and 1972 dollars, 1929-80.
Gross saving and investment, 1929-80
Saving by individuals, 1946-80
Money income (in 1979 dollars) and poverty status of families and
unrelated individuals by race of householder, 1952-79
233
234
236
238
239
240
241
242
244
245
246
247
248
249
250
251
252
253
254
256
258
259
260
261
262
POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY:
B-26.
B-27.
B-28.
B-29.
B-30.
B-31,
B-32.
B-33.
Population by age groups, 1929-80
Noninstitutional population and the labor force, 1929-80
Civilian employment and unemployment by sex and age, 1947-80..
Selected employment and unemployment data, 1948-80
Civilian labor force participation rate by demographic characteristic, 1954-80
,
Unemployment rate by demographic characteristic, 1948-80
Unemployment by duration, 1947-80..
Unemployment by reason, 1967-80
229
263
264
266
267
268
269
270
271
POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY—Confd
Page
B-34.
B-35.
B-36.
B-37.
B-38.
B-39.
Unemployment insurance programs, selected data, 1946-80
Wage and salary workers in nonagricultural establishments, 192980
Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-80
Average weekly earnings in selected private nonagricultural industries, 1947-80
Productivity and related data, private business sector, 1947-80
Changes in productivity and related data, private business sector,
1948-80
272
273
274
275
276
277
PRODUCTION AND BUSINESS ACTIVITY:
B-40.
B-41.
B-42.
B-43.
B-44.
B-45.
B-46.
B-47.
B-48.
B-49.
Industrial production indexes, major industry divisions, 1929-80....
Industrial production indexes, market groupings, 1947-80
Industrial production indexes, selected manufactures, 1947-80
Capacity utilization rate in manufacturing, 1948-80
New construction activity, 1929-80
New housing units started and authorized, 1959-80
Nonfarm business expenditures for new plant and equipment,
1947-81
Sales and inventories in manufacturing and trade, 1947-80
Manufacturers' shipments and inventories, 1947-80
Manufacturers' new and unfilled orders, 1947-80
278
279
280
281
282
284
Consumer price indexes, major expenditure classes, 1929-80
Consumer price indexes, selected expenditure classes, 1939-80
Consumer price indexes by commodity and service groups, 193980
\
Changes in consumer price indexes, major groups, 1948-80
Changes in special consumer price indexes, 1958-80
Producer price indexes by stage of processing, 1947-80
Producer price indexes by stage of processing, special groups,
1974-80
Producer price indexes by major commodity groups, 1940-80
.'..
Changes in producer price indexes for finished goods, 1948-80
289
290
285
286
287
288
PRICES:
B-50.
B-51.
B-52.
B-53.
B-54.
B-55.
B-56.
B-57.
B-58.
292
293
294
295
297
298
300
MONEY STOCK, CREDIT, AND FINANCE:
B-59.
B-60.
B-61.
B-62.
Money stock measures and liquid assets, 1959-80.
Components of money stock measures and liquid assets, 1959-80...
Commercial bank loans and investments, 1939-80
Total funds raised in credit markets by nonfinancial sectors, 197280
304
B-63.
B-64.
B-65.
B-66.
B-67.
B-68.
Federal Reserve Bank credit and member bank reserves, 1929-80...
Aggregate reserves and member bank deposits, 1959-80
Bond yields and interest rates, 1929-80
Consumer credit outstanding and net change, 1950-80
Consumer installment credit extended and liquidated, 1950-80
Mortgage debt outstanding by type of property and of financing,
1939-80
B-69. Mortgage debt outstanding by holder, 1939-80
GOVERNMENT FINANCE:
B-70. Federal budget receipts, outlays, and debt, fiscal years 1971-82
B-71. Federal budget receipts and outlays, fiscal years 1929-82
301
302
303
230
306
307
308
310
3U
312
313
314
316
GOVERNMENT FINANCE'—Continued
B-72.
B-73.
B-74.
B-75.
B-76.
B-77.
B-78.
B-79.
Relation of Federal Government receipts and expenditures in the
national income and product accounts to the unified budget, Page
1980-82
317
Government receipts and expenditures, national income and product accounts, 1929-80
318
Federal Government receipts and expenditures, national income
and product accounts, 1958-82
319
State and local government receipts and expenditures, national
income and product accounts, 1946-80
320
State and local government revenues and expenditures, selected
fiscal years, 1927-79
,
321
Interest-bearing public debt securities by kind of obligation, 196780
322
Estimated ownership of public debt securities, 1967-80
323
Average length and maturity distribution of marketable interestbearing public debt securities held by private investors, 1967-80. 324
CORPORATE PROFITS AND FINANCE:
B-80.
B-81.
B-82.
B-83.
B-84,
B-85.
B-86.
B-87.
B-88.
B-89.
B-90.
B-91.
Corporate profits with inventory valuation and capital consumption
adjustments, 1946-80
Corporate profits by industry, 1929-80
Corporate profits of manufacturing industries, 1929-80
Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-80
Relation of profits after taxes to stockholders' equity and to sales,
all manufacturing corporations, 1947-80
Relation of profits after taxes to stockholders' equity and to sales,
all manufacturing corporations, by industry group, 1979-80
Determinants of business fixed investment, 1955-80
Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-80
;
Current assets and liabilities of U.S. corporations, 1939-80
State and municipal and corporate securities offered, 1934-80
Common stock prices and yields, 1949-80
Business formation and business failures, 1929-80
325
326
327
328
329
330
331
332
333
334
335
336
AGRICULTURE:
B-92.
B-93.
B-94.
B-95.
B-96.
B-97.
Farm income, 1929-80
Farm output and productivity indexes, 1929-80
Farm input use, selected inputs, 1929-80
Indexes of prices received and prices paid by farmers, 1940-80
U.S. exports and imports of agricultural commodities, 1940-80
Balance sheet of the farming sector, 1929-81
337
338
339
340
341
342
INTERNATIONAL STATISTICS:
B-98. Exchange rates, 1973-80
B-99. U.S. international transactions, 1946-80
B-100. U.S. merchandise exports and imports by principal end-use category, 1965-80
B-101. U.S. merchandise exports and imports by area, 1973-80
B-102. U.S. merchandise exports and imports by commodity groups,
1958-80
B-103. International investment position of the United States at year-end,
selected years, 1970-79
B-104. World trade: Exports and imports, 1965, 1970, 1975, and 1977-80
231
343
344
346
347
348
349
350
INTERNATIONAL STATISTICS—Continued
B-105. World trade balance and current account balances, 1965, 1970, Page
1975, and 1977-80
351
B-106. International reserves, selected years, 1952-80
352
B-107. Growth rates in real gross national product, 1960-80
353
B-108. Industrial production and unemployment rate, major industrial
countries, 1960-80
354
B-I09. Consumer prices and hourly compensation, major industrial countries, 1960-80
355
B-110. Summary of major U.S. Government net foreign assistance, July 1,
1945 to December 31, 1979
356
General Notes
Detail in these tables may not add to totals because of rounding.
Unless otherwise noted, all dollar figures are in current dollars.
Symbols used:
p
Preliminary.
--Not available (also, not applicable).
Note.—Data for the national income and product accounts series appearing in this appendix reflect benchmark revisions by the Department of
Commerce, Bureau of Economic Analysis. See Survey of Current Business for
details.
232
NATIONAL INCOME OR EXPENDITURE
TABLE B-l.—Gross national product, 1929-80
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Net exports of goods and
services
Gross
national
product
Year or
quarter
Net
exports
16.2
1.1
7.0
5.9
8.8
1.4
7.4
2.4
2.0
8.2
2.1
6.1
103,4
1929
Government purchases of goods and
services
Gross
Personal
private
con:
sumption domestic
investexpendiment
tures •
77.3
Federal
Exports
Imports
Total
Total
NonNational
defense defense
State
and
local
Percent
change
from
preceding
period,
gross
national
product1
1933
55,8
45.8
1.4
A
1939
90.9
67.0
9.3
1.2
4.6
3.4
13.5
5.2
1.2
3.9
8.3
7.0
1940 . . .
1941
1942
1943
1944
1945. . .
1946
1947
1948
1949
. .
100.0
125.0
158.5
192.1
210.6
212.4
209.8
233.1
259.5
258.3
71.0
80.8
88.6
99.4
108.2
119.5
143.8
161.7
174.7
178.1
13.1
17.9
9.9
5.8
7.2
10.6
30.7
34.0
45.9
35.3
1.8
1.5
.2
-1.9
-1.7
-.5
7.8
11.9
6.9
6.5
5.4
6.1
5.0
4.6
5.5
7.4
15.1
20.2
17.5
16.3
3.6
4.7
4.8
6.5
7.2
7.9
7.3
8.3
10.5
9.8
14.2
24.9
59.8
88.9
97.0
82.8
27.5
25.5
32.0
38.4
6.1
16.9
52.0
81.3
89.4
74.6
17.6
12.7
16.7
20.4
2.2
13.7
49.4
79.7
87.4
73.5
14.8
9.0
10.7
13.2
3.9
3.2
2.6
1.6
2.0
1.1
2.8
3.7
6.0
7.2
8.1
8.0
7.8
7.5
7.6
8.2
9.9
12.8
15.3
18.0
10.0
25.0
26.7
21.3
9.6
.9
-1.2
11.1
11.3
-.5
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
286.5
330.8
348.0
366.8
366.8
400.0
421.7
444.0
449.7
487.9
192.0
207.1
217.1
229.7
235.8
253.7
266.0
280.4
289.5
310.8
53.8
59.2
52.1
53.3
52.7
68.4
71.0
69.2
61.9
78.1
2.2
4.4
3.2
1.3
2.5
3.0
5.3
7.3
3.3
1.4
14.4
19.7
19.1
18.0
18.7
21.0
25.0
28.1
24.2
24.8
12.2
15.3
15.9
16.7
16.2
18.0
19.8
20.8
21.0
23.4
38.5
60.1
75.6
82.5
75.8
75.0
79.4
87.1
95.0
97.6
18.7
38.3
52.4
57.5
47.9
44.5
45.9
50.0
53.9
53.9
14.0
33.5
45.8
48.6
41.1
38.4
40.2
44.0
45.6
45.6
4.7
4.8
6.5
8.9
6.8
6.0
5.7
5.9
8.3
8.3
19.8
21.8
23.2
25.0
27.8
30.6
33.5
37.1
41.1
43.7
10.9
15.5
5.2
5.4
.0
9.0
5.4
5.3
1.3
8.5
506.5
524.6
565.0
596.7
637.7
691.1
756.0
799.6
873.4
944.0
324.9
335.0
355.2
374.6
400.5
430.4
465.1
490.3
536.9
581.8
75.9
74.8
85.4
90.9
97.4
113.5
125.7
122.8
133.3
149.3
5.5
6.6
6.4
7.6
10.1
8.8
6.5
6.3
4.3
4.2
28.9
29.9
31.8
34.2
38.8
41.1
44.6
47.3
52.4
57.5
23.4
23.3
25.4
26.6
28.8
32.3
38.1
41.0
48.1
53.3
100.3
108.2
118.0
123.7
129.8
138.4
158.7
180.2
199.0
208.8
53.7
57.4
63.7
64.6
65.2
67.3
78.8
90.9
98.0
97.6
44.5
47.0
51.1
50.3
49.0
49.4
60.3
71.5
76.9
76.3
9.3
10.4
12.7
14.3
16.2
17.8
18.5
19.5
21.2
21.2
46.5
50.8
54.3
59.0
64.6
71.1
79.8
89.3
101.0
111.2
3.8
3.6
7.7
5.6
6.9
8.4
9.4
5.8
9.2
8.1
992.7
1,077.6
1,185.9
1,326.4
1,434.2
1,549.2
1,718.0
1,918.0
2,156.1
2,4119
621.7
672.2
737.1
812.0
888.1
976.4
1,084.3
1,205.5
1,348.7
1,510.9
144.2
166.4
195.0
229.8
228.7
206.1
257.9
322.3
375.3
415.8
6.7
4.1
.7
14.2
13.4
26.8
13.8
-4.2
-.6
13.4
65.7
68.8
77.5
109.6
146.2
154.9
170.9
183.3
219.8
281.3
59.0
64.7
76.7
95.4
132.8
128.1
157.1
187.5
220.4
267.9
220.1
234.9
253.1
270.4
304.1
339.9
362.1
394.5
432.6
473.8
95.7
96.2
101.7
102.0
111.0
122.7
129.2
143.9
153.4
167.9
73.6
70.2
73.1
72.8
77.0
83.0
86.0
93.3
100.0
111.2
22.2
26.0
28.5
29.1
33.9
39.7
43.2
50.6
53.4
56.7
124.4
138.7
151.4
168.5
193.1
217.2
232.9
250.6
279.2
305.9
5.2
8.6
10.1
11.8
8.1
8.0
10.9
11.6
12.4
12.0
1980 p
2,627.4
1,670.1
395.1
27.5
341.2
313.6
534.8
198.9
132.0
66.9
335.9
8.8
1978:
I
II
III....
IV
2,032.4
2,129.6
2,190.5
2,271.9
1,278.3
1,330.1
1,369.9
1,416.6
350 7
377.7
380 4
392.6
-12.3
-3.3
1.9
11.4
195.9
214.8
225.3
243.5
208.2
218.1
223 3
232.0
415.7
425.1
438 3
451.3
149.5
149.1
154.1
160.7
96.5
98.4
100.9
104.0
53.1
50.7
53.2
56.7
266.2
276.0
284.2
290.6
9.1
20.5
11.9
15.7
1979:
1
II
III
IV
2 340 6
2 374 6
2,444.1
2,496.3
1,454.1
1478 0
1,529.1
1,582.3
408.3
423 2
421.7
410.0
19 9
82
17.9
7.6
259.1
266 8
293.1
306.3
239 2
258 6
2752
298.7
458.2
4651
475.4
496.4
164.8
163 6
165.1
178.1
106.0
1081
112.0
118.7
58.8
55 5
53.1
59.4
293.4
301.6"
310.4
318.3
12.7
59
12.2
8.8
2 5717
2,564.8
2,637.3
16310
1,626.8
1,682.2
415 6
390^9
377.1
82
17.1
44.5
337 3
333.3
342.4
329 1
316.2
297.9
516 8
530.0
533.5
190 0
198.7
194.9
125 0
128.7
131.4
64 9
70.0
63.5
326 8
331.3
338.6
12 6
-1.1
11.8
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
.
..
. .
.
1970
1971
1972
1973
1974
1975.
1976
1977
1978
1979
1980:
1
II
III....
.
.
...
.
..
. .
.. ..
-4.2
1
Changes are based on unrounded data and therefore may differ slightly from those obtained from data shown here.
Source: Department of Commerce, Bureau of Economic Analysis.
233
TABLE B-2.—Gross national product in 1972 dollars, 1929-80
[Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Gross private domestic investment
Personal consumption expenditures
Fixed investment
Gross
national
product
Year or quarter
Total
Durable
goods
Nondurable
goods
Npnresidential
Services
Total
Total
Total
Structures
Producers'
durable
equipment
16.4
315.7
215.1
20.9
98.1
96.1
55.8
51.2
37.5
21.1
222.1
170.5
10.7
82.9
76.9
8.4
13.2
10.4
5.0
5.5
319.8
219.8
18.6
115.1
86.1
33.6
32.0
20.9
8.7
12.1
344.1
400.4
461.7
531.6
569.1
560.4
478 3
470.3
489.8
492.2
229.9
243.6
241.1
248.2
255.2
270.9
301.0
305.8
312.2
319.3
21.2
24.2
15.7
14.0
13.0
14.4
25.4
30.1
32.5
35.5
119.9
127.6
129.9
134.0
139.4
150.3
158.9
154.8
155.0
157.4
88.8
91.8
95.5
100.2
102.8
106.3
116.7
120.9
124.7
126.5
44.5
55.8
29.5
18.1
19.7
27.7
70.9
70.0
82.1
65.4
38.3
43.8
24.3
18.0
22.0
31.4
58.7
70.2
76.6
69.8
25.8
30.4
17.6
14.0
18.7
27.6
42.1
48.9
51.1
46.0
10.0
12.0
6.8
4.2
5.5
8.3
18.9
17.4
18.4
17.9
15,8
18.5
10.9
9.8
13.2
19.2
23.2
31.5
32.6
28.1
534.8
579.4
600.8
623.6
616.1
657.5
671.6
683 8
680.9
721.7
337.3
341.6
350.1
363.4
370.0
394.1
405.4
413.8
418.0
440.4
42.6
39.1
38.0
42.1
42.5
51.1
48.8
48.6
45.3
50.7
161.8
165.3
171.2
175.7
177.0
185.4
191.6
194 9
196.8
205.0
132.9
137.2
140.9
145.6
150.5
157.6
165.0
170.3
175.9
184.8
93.5
93.9
83.0
85.3
83.1
103.8
102.6
97 0
87.5
108.0
83.0
80.2
78.7
83.8
85.3
96.1
96.8
95 5
89.3
100.9
50.0
52.9
52.1
56.3
55.4
61.3
65.4
66.2
59.3
63.6
19.2
20.7
20.6
22.6
23.6
25.4
28.3
284
26.8
27.4
30.8
32.2
31.5
33.7
31.8
35.9
37.0
37.8
32.5
36.2
1960. .
1961.. . .
1962
1963
1964....
1965 . . .
1966
1967
1968
1969
737.2
756.6
800.3
832.5
876.4
929.3
984.8
1,011.4
1,058.1
1,087.6
452.0
461.4
482.0
500.5
528.0
557.5
585.7
602.7
634.4
657.9
51.4
49.3
54.7
59.7
64.8
72.6
78.4
79.5
88.3
91.8
208.2
211.9
218.5
223.0
233.3
244.0
255.5
259.5
270.5
277.3
192.4
200.2
208.8
217.8
229.8
240.9
251.8
263.7
275.6
288.8
104.7
103.9
117.6
125.1
133.0
151.9
163.0
154.9
161.6
171.4
101.2
100.9
109.7
117.5
125.9
140.1
146.2
142.7
152.6
160.4
66.9
66.7
72.0
75.1
82.7
97.4
108.0
105.6
109.5
116.8
29.5
30.2
31.6
31.9
34.4
40.6
43.4
42.0
42.8
45.0
37.4
36.5
40.4
43.1
48.3
56.8
64.5
63.6
66.8
71.8
1970
1971
1972
1973
1974 . . . .
1975
1976
1977
1978
1979.. ..
1,085.6
1,122.4
1,185.9
1,255.0
1,248.0
1,233.9
1,300.4
1,371.7
1,436.9
1,483.0
672,1
696.8
737.1
768.5
763.6
780.2
823.7
863.9
904.8
930.9
89.1
98.2
111.1
121.3
112.3
112.7
126.6
138.4
146.3
146.6
283.7
288.7
300.6
308.0
303.3
308.2
322.5
334.0
345.7
354,6
299.3
309.9
325.3
339.2
348.0
359.3
374.7
391.5
412.8
429.6
158.5
173.9
195.0
217.5
195.5
154.8
184.5
213.5
229.7
232.6
154.8
165.8
184.8
200.4
183.9
161.5
176.7
201.2
215.8
222.5
113.8
112.2
121.0
138.1
135.7
119.3
125.6
140.6
153.4
1G3.3
43.9
42.8
44.1
47.4
43.6
38.3
39.5
40.5
44.6
48.5
69.9
69.3
76.9
90.7
92.1
81,1
86.1
100.0
108.8
114.8
1980 »
1480 7
933 0
134 8
357 5
440 7
204 0
205 2
157 7
48 0
109 7
IV
1,402.3
1,432.8
1,446.7
1,465.8
884.1
900.6
911.2
923.4
139.5
148.1
147.0
150.7
339.8
342.4
347.2
353.5
404.8
410.1
417.1
419.2
224.9
232.9
229.3
231.8
207.2
216.9
217.8
221.3
145.7
153.5
155.0
159.4
42.1
44.7
45.3
46.3
103.6
108.9
109.7
113.1
1979.
1
II
III
IV
1,479.9
1,473.4
1,488.2
1,490.6
925.5
922.8
933.4
941.6
149.6
144.2
146.7
146.0
351.1
350.6
355.4
361.3
424.8
428.0
431.3
434.3
237.7
238.7
232.6
221.5
222.3
220.4
225.0
222.2
161.4
161.3
166.4
164.1
45.8
48.0
49.4
50.7
115.6
113.2
117.0
113.5
1,501.9
1,463.3
1,471.9
943.4
919.3
930.8
145.4
126.2
132.6
361.5
356.6
354.9
436.5
436.5
443.3
218.3
200.5
195.3
219.2
199.2
200.2
165.0
156.1
155.5
50.5
48.7
46.8
114.5
107.4
108.8
1929
"
1933
1939
.
1940..
1941
...
1942. ..
1943
1944..
1945
1946
1947
1948
1949..
. .
1950
1951
1952
1953
1954
1955
1956 . . . .
1957
..
1958
1959
1978:
I
ii
II!
. . .
'.;...
....
1980
1
II . .
Ill
.
See next page for continuation of table.
234
TABLE B-2.—Gross national product in 1972 dollars, 1929-80—Continued
[Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Net exports of goods and
services
Gross private domestic investment—
continued
Government purchases of
goods and services
Fixed investment—continued
Residential
Year or
quarter
Total
1929
1933
13.7
2.B
Change
in
business
inventories
Net
exports
Exports
Imports
Total
Federal
State
and
local
Percent
change
from
preceding
period,
gross
national
product1
Nonfarm
structures
Farm
structures
Producers'
durable
equipment
. 13.0
0.6
0.1
4.6
3.7
16.7
12.9
41.0
7.0
33.9
2.5
.2
.1
-4.9
.4
9.1
8.6
42.9
10.9
32.0
3.4
14.3
10.9
63.0
22.8
40.3
7.8
4.4 ;
3.2
-.6
-5.9
-6.2
-3.7
13.2
18.9
10.8
10.7
I5t5
16.4
11.4
9.8
10.5
13.8
27.3
32.2
26.3
25.8
11.1
13.2
12.0
15.7
16.8
17.5
14.0
13.3
15.5
15.2
65.3
97.8
191.6
271.3
300.4
265.4
93.1
75.7
84.7
96.8
26.7
61.0
157.4
239.6
269.7
233.7
58.2
36.3
42.8
49.2
38.6
36.8
34.3
31.7
30.7
31.7
34.9
39.4
41.9
47.5
7.6
16.3
15.3
15.1
7.1
-1.5
-14.7
-1.7
4.1
.5
-2.2
1939
11.1
10.4
.6
.1
1.6
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
12.5
13.3
6.7
4.0
3.4
3.8
16.6
21.3
25.6
23.8
11.6
12.3
6.0
3.5
3.0
3.4
15.3
19.7
23.8
22.1
.8
.9
.6
.4
.4
.3
1.1
1.3
1.5
1.4
.1
.2
.1
.0
.0
.1
.2
.3
.3
.3
6.2
12.0
5.2
.1
-2.3
-3.6
12.2
-.2
5.5
-4.4
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
33.0
27.3
26.6
27.5
29.9
34.8
31.5
29.2
30.0
37.4
31.3
25.7
25.1
26.1
28.5
33.5
30.0
27.8
28.6
35.9
1.3
1.3
1.2
1.2
1.1
.9
1.0
1.0
.9
1.0
.3
.3
.3
.3
.3
.4
.4
.4
.5
:6
10.6
13.7
4.3
1.5
-2.2
7.7
5.8
1.5
-1.8
7.0
5.9
10.1
7.9
4.8
6.9
7.3
10.1
11.8
5.6
2.7
23.6
28.6
27.9
26.6
27.8
30.7
35.3
38.0
33.2
33.8
17.7
18.5
20.0
21.8
20.9
23.4
25.2
26.1
27.6
31.1
98.1
133.7
159.8
170.1
156.0
152.3
153.5
161.2
169.9
170.6
47.3
82.2
107.2
114.7
96.1
88.2
86.8
90.6
93.4
91.4
50.8
51.5
52.7
55.3
59.9
64.1
66.7
70.6
76.5
79.2
8.7
8.3
3.7
3.8
-1.2
6.7
2.1
1.8
-.4
6.0
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
34.2
34.3
37.7
42.5
43.1
42.7
38.2
37.1
43.1
43.6
32.9
32.8
36.3
40.9
41.5
41.2
36.6
35.4
41.3
41.7
.8
1.0
.9
.9
.9
.8
.9
.9
.8
.9
.5
.5
.6
.6
.7
.7
.8
.8
.9
1.1
3.5
3.0
7.8
7.5
7.1
11.8
16.8
12.2
9.0
11.1
7.7
8.5
7.5
9.4
12.8
10.1
6.5
5.4
1.9
.9
38.4
39.3
41.8
44.8
50.3
51.7
54.4
56.7
61.2
65.0
30.7
30.9
34.3
35.4
37.5
41.6
47.9
51.3
59.3
64.1
172.8
182.9
193.2
197.6
202.6
209.8
229.7
248.5
260.2
257.4
90.4
95.3
102.8
101.8
100.2
100.3
112.6
125.1
128.1
121.8
82.4
87.5
90.4
95.8
102.4
109.5
117.1
123.4
132.1
135.6
2.2
2.6
5.8
4.0
5.3
6.0
6.0
2.7
4.6
2.8
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
41.0
53.7
63.8
62.3
48.2
42.2
51.2
60.6
62.4
59.1
39.2
51.6
61.5
59.9
45.3
39.8
48.7
57.8
59.5
56.2
.6
.7
.7
.6
1.1
.8
.8
1.0
1.0
.9
1.1
1.3
1.5
1.7
1.7
1.6
1.7
1.8
1.9
2.0
3.8
8.1
10.2
17.2
11.6
-6.7
7.8
12.3
14.0
10.2
3.9
1.6
.7
15.5
27.8
32.2
25.4
21.9
24.6
37.7
70.5
71.0
77.5
97.3
108.5
103.6
110.1
113.2
127.5
146.9
66.6
69.3
76.7
81.8
80.7
.71.4
84.7
91.3
103.0
109.2
251.1
250.1
253.1
253.5
261.2
266.7
266.8
272.3
277.8
281.8
110.6
103.7
101.7
95.9
96.6
97.4
96.8
100.7
99.8
101.7
140.5
146.4
151.4
157.6
164.5
169.3
170.0
171.6
178.0
180.1
-.2
3.4
5.7
5.8
= .6
-1.1
5.4
5.5
4.8
3.2
1980 *.
47.5
44.6
.9
2.0
-1.2
53.8
161.9
108.2
289.9
108.3
181.7
= .2
61.5
63.3
62.8
61.9
58 5
60.6
59.8
58.8
1.1
.8
1.1
1.0
1.9
1.9
1.9
2.0
17.7
16.0
11.5
10.6
18.7
23.0
26.1
30.5
118.3
125.4
129.8
136.6
99.5
102.4
103.7
106.2
274.6
276.3
280.0
280.1
99.4
98.0
100.8
101.0
175.3
178.3
179.2
179.2
3.2
9.0
3.9
5,4
60.8
59.1
58.6
58.1
58.1
56.3
55.5
54.9
.8
.8
.9
1.1
2.0
2.0
2.1
2.1
15.4
18.4
7.6
-.7
36.0
31.6
41.1
42.2
141.1
140.5
151.3
154.8
105.1
108.8
110.2
112.6
280.6
280.3
281.1
285.3
102.9
100.8
99.9
103.1
177.7
179.4
181.2
182.2
3.9
-1.7
4.1
.6
54.2
43.1
44.7
51.2
40.3
41.9
1.0
.8
.7
2.1
2.0
2.0
-.9
1.3
-5.0
50.1
51.7
57.6
165.9
160.5
160.5
115.8
108.9
102.8
290.1
291.9
288.2
107.6
110.7
106.9
182.5
181.2
181.3
3.1
-9.9
2.4
1978:
II
Ill
IV
1979:
1. . .
II
Ill
IV. ...
1980:
11".."."."""..'
Ill
1
Changes are based on unrounded data and therefore may differ slightly from those obtained from data shown here.
Source: Department of Commerce, Bureau of Economic Analysis.
235
TABLE B-3.—Implicit price deflators for gross national product, 1929-80
[Index numbers, 1972-100, except as noted; quarterly data seasonally adjusted]
Personal consumption expenditures
Gross
national
product1
Year or quarter
1929
1933
1939
1940....
1941. .
1942. ..
1943
1944 ..
1945
1946
1947
1948
1949
1950
1951
1952
1953. . ..
1954
1955
1956
1957
1958
1959
1960. .
1961
1962
1963
1964
1965. ...
1966...
1967
1968
1969...
1970
1971
1972
1973
1974
1975 ."." *.'"..'".....'
1976
1977... . '.'
1978
1979
'""'.
1980 ".
Gross private domestic investment *
Fixed investment
Total
Durable Nondurable Services
goods
goods
Presidential
Total
Total
Structures
Producers'
durable
equipment
33.4
35.9
44.2
38.4
31.6
28.3
28.3
24.3
26.9
32.5
26.8
26.1
22.4
22.9
19.2
26.2
30.5
35.9
30.5
29.2
27.7
28.2
23.0
32.0
30.9
33.2
36.7
40.1
42.4
44.1
47.8
52.9
56.0
55.8
36.7
40.0
43.7
46.7
51.3
55.5
62.1
67.8
70.3
70.5
30.9
33.6
39.1
43.7
46.2
47.8
52.1
58.7
62.3
60.3
29.5
30.8
32.4
34.2
36.1
37.3
38.8
41.7
44.4
46.0
28.5
30.7
33.5
35.7
37.0
37.2
41.3
49.0
53.7
54.9
29.1
31.0
33.9
35.9
36.8
36.7
40.0
46.9
51.5
53.0
23.4
24.9
28.4
32.4
33.8
33.9
36.6
44.0
48.8
48.4
34.9
37.3
37.3
38.0
37.9
42.8
48.6
53.0
56.0
53.56
57.09
57.92
58.82
59.55
60.84
62.79
64.93
66.04
67.60
56.9
60.6
62.0
63.2
63.7
64.4
65.6
67.8
69.2
70.6
72.2
76.3
76.7
77.2
75.0
75.6
77.7
80.9
81.3
83.8
60.7
65.8
66.5
66.3
66.6
66.3
67.3
69.4
71.0
71.4
47.4
49.9
52.6
55.4
57.2
58.4
60.1
62.2
64.1
66.0
56.7
60.9
62.3
63.1
63.6
65.0
68.5
71.1
71.0
71.8
54.5
59.1
60.1
61.2
61.7
62.9
67.3
71.0
70.9
72.2
49.3
55.1
56.3
57.4
56.5
57.6
62.4
64.9
63.9
64.2
57.8
61.7
62.6
63.8
65.5
66.6
71.1
75.5
76.6
78.3
68.70
69.33
70.61
71.67
72.77
74.36
76.76
79.06
82.54
86.79
91.45
96.01
100.00
105.69
114.92
125.56
132.11
139.83
150.05
162.77
177.45
71.9
72.6
73.7
74.8
75.9
77.2
79.4
81.4
84.6
88.4
83.8
84.3
85.4
86.2
87.1
86.8
86.7
88.2
91.1
93.3
72.6
73.3
73.9
74.9
75.8
77.3
80.1
81.9
85.3
67.9
69.0
70.4
71.7
72.7
74.2
76.4
78.7
81.9
86.0
72.1
71.8
72.2
72.3
72.9
74.0
76.3
78.8
82.2
87.0
72.5
72.0
72.5
73.1
73.8
74.7
76.9
79.5
82.8
86.7
63.7
63.3
63.6
64.1
64.9
66.4
69.2
72.2
75.8
81.5
79.4
79.3
79.4
79.7
80.1
80.6
82.1
84.3
87.2
89.9
92.5
96.5
100.0
105.7
116.3
125.2
131.6
139.5
149.1
162.3
95.7
99.0
100.0
101.7
108.2
117.3
123.9
129.2
136.2
144.8
93.6
96.6
100.0
108.3
123.1
132.1
137.0
143.4
153.2
169.8
90.5
95.6
100.0
104.7
113.0
121.6
129.6
139.9
150.1
162.1
91.1
95.7
100.0
105.5
116.7
131.9
139.2
149.7
163.7
179.1
91.3
96.2
100.0
103.8
115.4
132.2
138.6
146.2
157.7
171.3
88.2
94.5
100.0
107.7
128.2
144.8
149.0
159.4
176.4
198.6
93.2
97,2
100.0
101.8
109.3
126.2
133.9
140.9
150.1
159.7
179.0
156.0
188.6
178.2
194.5
187.1
225.2
170.4
144.93
148.63
151.42
154.99
144.6
147.7
150.3
153.4
132.6
135.1
137.4
139.4
148.3
152.0
154.5
157.9
145.6
148.6
151.4
154.6
157.2
161.7
165.9
169.4
152.8
155.9
159.4
162.3
166.8
173.2
179.5
185.1
147.1
148.9
151.2
153.0
158.16
161.17
164.23
167.47
157.1
160.2
163.8
168.0
142.0
143.9
145.4
148.0
162.9
167.3
172.1
176.9
157.7
159.9
163.3
167.4
172.8
177.0
181.5
184.9
165.5
169.2
173.4
176.8
190.6
194.0
201.4
207.4
155.6
158.7
161.5
163.2
171.23
175.28
179.18
172.9
177.0
180.7
151.9
154.1
157.5
182.9
186.2
190.0
171.6
176.0
180.3
188.5
192.5
196.4
180.5
185.7
189.1
214.3
222.4
229.5
165.6
169.0
171.7
32,76
25.13
28.43
29.06
31.23
34.32
36.14
37.01
37.91
43.88
49.55
52.98
52.49
32.8
1978:
n"Z '.'.....
HI
IV
1979:
I
II
III
IV
1980:
I
j|
lit
See next page for continuation of table.
236
TABLE B-3.—Implicit price deflators for gross national product,
1929-80—Continued
[Index numbers, 1972=100, except as noted; quarterly data seasonally adjusted]
Gross private domestic
investmentl—continued
Fixed investment—continued
Exports and
imports of
goods and
services1
Residential
Yea* or quarter
Total
Nonfarm
structures
ProFarm ducers' Exports Imports
struc- durable
tures equipment
Percent change
from preceding
period 2
Government purchases
of goods and services
Total
Federal
State
and
local
Gross
domestic Gross
Gross
product national domestic
product product
implicit implicit
price
price
deflator deflator
1929
28.2
27.8
28.6
77.2
42.2
45.5
21.5
20.5
21.8
32.8
1933
20.7
19.8
19,5
58.8
26.5
23.6
19.2
19.4
19.1
25.1
1939
26.6
26.3
23.4
61.1
32.1
31.0
21.4
22.7
20.7
28.4
1940
1941
1942
1943
1944 .
1945
1946
1947
1948
1949
27.4
30.0
32.4
34.9
38.1
40.8
44.6
53.7
58.1
58.7
27.2
29.7
31.8
34.3
37.3
40.0
43.9
53.0
57.5
58.1
23.6
26.6
30.7
35.7
40.8
42.9
46.6
52.8
57.3
58.0
59.6
63.8
71.3
71.4
75.0
84.6
95.2
105.6
111.5
107.9
34.9
37.3
43.6
46.8
51.9
53.6
55.4
62.8
66.5
63.1
32.8
35.4
40.0
41.3
42.7
44.9
51.8
62.3
67.8
64.6
21,7
25.5
31.2
32.8
32.3
31.2
29.6
33.6
37.7
39.7
22.7
27.8
33.0
34.0
33.1
31.9
30.2
35.0
39.0
41.4
20.9
21.7
22.8
23.7
24.8
25.8
28.5
32.4
36.4
37.8
29.1
31.2
34.3
36.1
37.0
37.9
43.9
49.5
53.0
52.5
2.2
7.5
9.9
5.3
2.4
2.4
15.7
12.9
6.9
-.9
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
60.0
64.4
66.4
66.9
67.1
68.7
71.0
71.4
71.2
71.1
59.5
63.8
65.8
66.3
66.6
68.2
70.5
70.9
70.7
70.6
59.4
63.7
65.7
66.2
66.5
68.3
70.6
70.9
70.8
70.7
107.4
114.9
114.6
114.2
112.4
109.1
104.3
103.4
101.9
101.8
61.0
68.8
68.6
67.5
67.2
68.5
71.0
74.0
73.1
73.5
68.8
82.6
79.9
76.7
77.2
77.1
78.4
79.6
76.1
75.2
39.2
45.0
47.3
48.5
48.6
49.2
51.7
54.0
55.9
57.2
39.6
46.6
48.9
50.1
49.9
50.4
52.9
55.1
57.7
59.0
38.9
42.3
44.1
45.2
46.5.
47.6
50.2
52.6
53.8
55.1
53.6
57.1
57.9
58.8
59.5
60.8
62.8
64.9
66.0
67.6
2.1
6.6
1.4
1.6
1.2
2.2
3.2
3.4
1.7
2.4
1960
1961
1962
1963 .. .
1964
1965
1966
1967
1968
1969
71.4
71.3
71.5
70.9
71.2
72.3
74.6
77.0
80.7
87.7
70.9
70.9
71.1
70.5
70.8
72.0
74.3
76.7
80.5
87.5
71.1
70.7
71.2
70.6
70.9
72.2
74.2
76.7
80.6
87.5
100.8
99.0
96.8
95.3
94.3
92.1
90.8
91.0
93.5
95.7
75.2
76.1
76.0
76.3
77.2
79.4
81.9
83.5
85.5
88.5
76.1
75.5
74.2
75.2
76.8
77.7
79.4
79.9
81.1
83.2
58.0
59.1
61.1
62.6
64.1
. 66.0
69.1
72.5
76.5
81.1
59.4
60.2
62.0
63.5
65.1
67.1
70.0
72.7
76.5
80.1
56.5
58.0
60.1
61.6
63.1
64.9
68.2
72.4
76.4
82.0
68.7
69.3
70.6
71.7
72.8
74.4
76.8
79.1
82.5
86.8
1.6
.9
1.8
1.5
1.5
2.2
3.2
3.0
4.4
5.1
1970...
1971
1972....
1973. .
1974
1975 .
1976
1977 ...
1978,
1979
90.5
94.8
100.0
109.1
120.3
131.0
140.7
158.0
178.3
200.5
90.3
94.7
100.0
109.4
120.8
131.6
141.3
159.0
179.8
202.7
90.6
95.0
100.0
109.2
120.5
131.9
140.7
157.2
179.0
202.0
97.8
99.3
100.0
100.6
106.8
116.9
122.7
126.6
132.7
140.3
93.2
97.0
100.0
112.7
134.7
149.6
155.2
161.9
172.4
191.5
88.6
93.3
100.0
116.7
164.6
179.5
185.5
205.4
214.0
245.4
87.7
93.9
100.0
106.7
116.4
127.5
135.7
144.8
155.7
168.1
86.6
92.7
100.0
106.3
114.9
126.0
133.5
142.9
153.7
165.1
88.6
94.7
100.0
106.9
117.4
128.3
137.0
146.0
156.9
169.8
91.4
96.0
100.0
105.7
114.9
125.6
132.1
139.8
150.1
162.8
5.4
5.0
4.2
5.7
8.7
9.3
5.2
5.8
7.3
8.5
1980 *.
219.1
222.2
220.0
149.5
210.7
289.9
184.4
183.7
184.9
177.5
9.0
III .
IV
167.8
175.7
181.8
187.9
169.0
177.1
183.3
189.6
168.7
176.0
182.5
188.3
129.5
131.6
133.7
135.9
165.6
171.3
173.5
178.2
209.1
212.9
215.3
218.5
151.4
153.8
156.5
161.1
150.5
152.1
152.9
159.2
151.9
154.8
158.6
162.2
144.9
148.6
151.4
155.0
5.8
10.6
7.7
9.8
1979:
I..
II...
Ill
IV ..
191.9
198.4
204.6
207.7
193.7
200.4
207.0
210.1
192.1
199.7
205.5
207.7
138.4
139.7
140.5
142.4
183.7
189.9
193.7
197.9
227.7
237.6
249.8
265.2
163.3
166.0
169.2
174.0
160.1
162.2
165.2
172.8
165.1
168.1
171.3
174.7
158.2
161.2
164.3
167.5
8.4
7.8
7.8
8.1
212.6
217.4
221.9
215.2
220.7
225.2
213.6
219.4
223.1
145.5
148.5
151.0
203.4
207.6
213.4
284.2
290.4
289.7
178.1
181.6
185.1
176.5
179.5
182.4
179.1
182.8
186.7
171.3
175.3
179.2
9.3
9.8
9.2
1978:
I
It....
-2.1
1980:
I
It .
III...
1
Separate deflators are not available for gross private domestic investment, change in business inventories, and net exports of
goods
and services.
2
Changes are based on unrounded data and therefore may differ slightly from those obtained from data shown here. Quarterly data
are at annual rates.
Source: Department of Commerce, Bureau of Economic Analysis.
237
TABLE B-4.—Fixed-weighted price indexes for gross national product 1972 weights, 1959-80
[Index numbers, 1972=100; quarterly data seasonally adjusted]
Years or quarter
Gross
national
product
Personal
consumption
expenditures
Gross private domestic
investment1
Fixed investment
Total
Nonresidential
Residential
Exports and
imports of
goods and
services1
Exports
Imports
Government
Total
Feder-
State
and
local
Gross
domestic
product
1959
69.1
72.1
74.3
73.9
74.9
73.8
75.0
56.8
56,8
58.5
69.1
1960
1961... .
1962...
1963...
1964
70.2
71.0
72.0
72.8
73.7
73.3
74.0
74.8
75.7
76.6
74.5
74.4
74,2
74.0
74,3
74.4
74.3
74,3
74.7
75.2
74.9
74.7
73.9
72.6
72.6
75.4
76.4
76,3
76.6
77.4
76.1
75.4
73.8
74.7
76.4
58.2
59.4
61.2
62.7
64.3
59.6
60.5
61.7
63.3
65.3
57.2
58.7
60.8
62.3
63.7
70,3
71.1
72.0
72.8
73.7
1965... .
1966
1967....
1968...
1969
75.0
77.2
79.5
83.0
87.2
77.7
79.7
81.6
84.8
88.5
75.2
77.0
79.3
82.5
87.3
76.1
77.9
80.3
83.3
87,0
73.5
75.3
77.5
81.0
87.8
79.7
82.1
83.4
85.4
88.4
77.1
78.8
79.3
80.7
83.0
66.1
69.1
72.3
76.4
81.3
67.2
69.7
71.6
75.7
79.8
65:4
68.6
72.9
76.9
82.3
75.0
77.2
79.5
83.0
87.2
1970...
1971...
1972...
1973...
1974...
91.7
96.1
100.0
105.8
115.6
92.6
96.5
100.0
105.8
116.8
91.2
95.8
100.0
105.8
117.9
91.6
96.3
100.0
104.0
116.5
90.6
94.9
100.0
109.2
120.5
93.1
96.9
100.1
112.6
137.4
88.4
93.3
100.0
116.6
161.2
87.9
94.0
100.0
106.8
117.2
86.7
93.0
100.0
106.6
116.6
88.7
94.8
100.0
106.9
117.7
91.7
96.1
100.0
105.8
115.6
1975...
1976...
1977...
1978...
1979...
126.0
133.1
141.6
152.3
166,3
125.8
132.4
140.6
150.6
164.8
132.3
140.2
151.8
167.1
185.0
132.9
139.9
148.5
161.1
176.7
131.2
140.8
158.0
178.3
200.9
151.7
156.9
164.1
174.8
196.8
174.5
178.6
194.6
209.6
243.3
128.2
136.2
145.5
156.4
170.4
127.4
134,8
144.6
154,2
168.0
128.8
137.2
146.1
157.8
172.0
126.0
133.2
141.6
152.3
166.4
1980 »
182.0
182.8
204.0
195.6
220.0
216.8
300.0
188.2
188.9
187.8
182.1
III!
147.1
150.6
153.7
157.6
145.8
149.3
152.0
155.3
159.7
164.8
169.5
173.9
155.4
159.1
163.0
166.5
167.9
175.7
181.7
188.0
168.5
172.9
175.6
181.4
203.5
208.1
211.3
215.3
151.7
154.1
157.5
162.1
150.7
152.1
154.5
159,8
152.4
155.4
159.5
163.6
147.1
150.6
153.8
157.6
1979:
I
II
Ill
IV
161.1
164.4
167.9
171.9
159.1
162.5
166.6
171.1
177.8
182.8
187.9
191.7
170.3
174.4
178.8
183.0
192.1
198.6
205.1
208.1
188.1
195.5
199.5
203.4
224.7
234.8
249.5
265.3
165.1
167.7
171.7
177.5
162.0
164.1
169.0
178.1
167.1
170.2
173.5
177.0
161.1
164.5
168.0
171.9
175.9
179.8
183.8
176.4
180.5
184.7
196.7
202.4
207.1
188.0
193.9
198.6
213.2
218.4
223.1
210.0
213.1
218.9
287.9
296.9
305.8
182.1
185.9
189.7
182.8
186.0
189.4
181.7
185.8
189.9
176.0
179.9
183,9
1978:
III....
IV....
1980:
I
1
Separate deflators are not available for gross private domestic investment, change in business inventories, and net exports of goods
and services.
Note.—Data are preliminary and subject to further revision.
Source: Department of Commerce, Bureau of Economic Analysis.
238
TABLE B-5.—Implicit price deflators and alternative price measures for gross national product and gross
domestic product,
1929-80
[Quarterly data seasonally adjusted]
Percent change from preceding periodl
Index numbers, 1972=100
Year or quarter
Gross national
product
Implicit
price
deflator
Fixedweighted
price
index
(1972
weights)
Gross domestic
product
Implicit
price
deflator
Fixedweighted
price
index
(1972
weights)
Gross national product
Implicit
price
deflator
Fixedweighted
price
index
(1972
weights)
Gross domestic product
Chain
price
index
Implicit
price
deflator
FixedA
weighted
price
index
(1972
weights)
Chain
price
index
1929
32.76
32.8
1933
25.13
25.1
21
- 2.1
1939
28.43
28.4
- 8
- 8
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
29,06
31.23
34.32
36.14
37 01
37 91
43.88
49.55
52.98
52 49
29.1
31.2
34.3
36.1
37.0
37 9
43.9
49 5
53.0
52 5
2.2
7.5
9.9
5.3
2.4
24
15.7
12 9
6.9
g
2.2
7.5
9.9
53
2.4
24
15.7
12.9
6.9
g
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
53.56
57.09
57.92
58 82
59.55
60 84
62.79
64.93
66.04
67.60
69.1
53.6
57.1
57.9
58.8
59.5
60.8
62.8
64.9
66.0
67.6
69.1
2.1
6.6
14
16
1.2
22
3.2
3.4
1.7
2.4
2.1
6.6
1.4
16
1.2
2.2
32
3.4
1.7
2.4
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969 . ...
68.70
69.33
70.61
71.67
72.77
74.36
76.76
79.06
82.54
86.79
70.2
71.0
72.0
72.8
73.7
75.0
77.2
79.5
83.0
87.2
68.7
69,3
70.6
71.7
72.8
74.4
76.8
79.1
82.5
86.8
70.3
71.1
72.0
72.8
73.7
75.0
77.2
79.5
83.0
87.2
1.6
.9
1.8
1.5
1.5
2.2
3.2
3.0
4.4
5.1
1.6
1.1
1.3
1.2
1.2
1.8
3.0
3.0
4.2
5.1
1.6
1.0
1.3
1.3
1.5
1.8
3.1
2.8
4.3
5.1
1.6
.9
1.8
1.5
1.5
2.2
3.2
3.0
4.4
5.2
1.6
1.1
1.3
1.2
1.2
1.8
3.0
3.0
4.2
5.1
1.6
1.0
1.3
1.3
1.4
1.8
3.1
2.8
4.3
5.1
91.45
96.01
100.00
105.69
114.92
.. .. 125.56
132.11
139.83
150.05
162.77
91.7
96.1
100.0
105.8
115.6
126.0
133.1
141.6
152.3
166.3
91.4
96.0
100.0
105.7
114.9
125.6
132.1
139.8
150.1
162.8
91.7
96.1
100.0
105.8
115.6
126.0
133.2
141.6
152.3
166.4
5.4
5.0
4.2
5.7
8.7
9.3
5.2
5.8
7.3
8.5
5.2
4.8
4.0
5.8
9.3
9.0
5.7
6.3
7.6
9.2
5.4
4.9
4.1
5.8
9.0
9.1
5.7
6.1
7.5
8.6
5.4
5.0
4.2
5.7
8.7
9.3
5.2
5.8
7.3
8.5
5.2
4.8
4.0
5.8
9.3
9.0
5.7
6.3
7.6
9.2
5.4
4.9
4.1
5.8
9.0
9.1
5.7
6.2
7.5
8.7
177.45
182.0
177.5
182.1
9.0
9.5
8.6
9.0
9.5
8.6
144.93
148.63
151.42
154.99
147.1
150.6
153.7
157.6
144.9
148.6
151.4
155.0
147.1
150.6
153.8
157.6
5.8
10.6
7.7
9.8
5.9
9.8
8.7
10.4
6.1
9.6
8.4
10.0
5.8
10.6
7.7
9.8
5.9
9.8
8.7
10.4
6.2
9.6
8.4
10.0
U
Ill
IV
158.16
161.17
164.23
167.47
161.1
164.4
167.9
171.9
158.2
161.2
164.3
167.5
161.1
164.5
168.0
171.9
8.4
7.8
7.8
8.1
9.1
8.5
8.9
9.7
8.8
8.0
7.4
8.5
8.4
7.8
7.8
8.1
9.2
8.5
8.9
9.7
8.8
8.0
7.4
8.5
1980:
1
II
III
171.23
175.28
179.18
175.9
179.8
183.8
171.3
175.3
179.2
176.0
179.9
183.9
9.3
9.8
9.2
9.8
9.1
9.2
8.3
8.5
9.4
9.3
9.8
9.2
9.8
9.1
9.2
8.2
8.5
9.4
1970
1971
1972
1973
1974
1975 ...
1976
1977
1978
1979
..
.
1980"
1978:
|
III
IV
1979:
. ...
1
Changes are based on unrounded data and therefore may differ slightly from those obtained from published indexes shown here.
Quarterly percent change data are at annual rates.
Note.—Data for fixed-weighted and chain price indexes are preliminary and subject to revision in late January 1981.
Source: Department of Commerce, Bureau of Economic Analysis.
239
TABLE B-6.—Gross national product by major type of product, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Goods
Gross
national
product
Year or
quarter
Final
sales
Inventory
change
Durable goods
Total
Total
Inventory
change
Final
sales
Final
sales
Inventory
change
Nondurable goods
Final
sales
Services
Structures
Auto
output
Inventory
change
103.4
101.7
1.7
56.1
54.4
1.7
16.1
1.4
38.3
0.3
35.9
11.4
1933
55.8
57.4
-1.6
27.0
28.6
-1.6
5.4
-.5
23.2
= 1.1
25.9
2.9
1939
90.9
90.5
.4
49.0
48.6
.4
12.4
.3
36.2
.1
34.4
7.5
100.0
125.0
158.5
192.1
210.6
212.4
209.8
233.1
259.5
258.3
97.8
120.6
156.7
192.8
211.6
213.5
203.5
233.5
254.8
261.4
2.2
4.5
1.8
56.0
72.5
93.7
120.4
132.3
128.9
125.3
139.8
154.4
147.7
53.8
68.0
91.9
121.0
133.3
129.9
118.9
140.3
149.7
150.8
2.2
4.5
1.8
-.6
15.4
23.8
34.5
54.2
58.5
50.1
31.8
44.4
48.0
50.0
1.2
38.4
44.2
57.4
66.8
74.8
79.8
87.1
95.9
101.7
100.9
1.0
1.4
.7
-.6
-.3
.2
1.1
35.7
40.8
50.8
63.0
72.3
77.0
68.8
71.6
77.2
82.2
15.7
21.7
28.0
28.4
11.9
286.5
330.8
348.0
366.8
366.8
400.0
421.7
444.0
449.7
487.9
279.7
320.5
344.8
366 3
368.4
394.1
417.0
442.6
451.2
482.2
162.4
189.5
194.6
203.1
196.1
214.5
223.3
232.3
228.2
248.5
155.6
179.2
191.5
202.7
197.6
208.5
218.6
231.0
229.7
242.9
88.5
103.5
113.9
121.6
126.2
136.1
146.2
158.7
167.7
179.8
35.6
37.8
39.4
42.0
44.5
49.5
52.2
53.0
53.8
59.5
15.4
13.3
12.0
16.1
14.7
21.2
16.9
19.4
14.4
19.4
506.5
524.6
565.0
596.7
637.7
691.1
756.0
799.6
873.4
944.0
503.6
522.2
558.8
590.7
632.1
681.2
741.9
789.3
865.5
934.2
254.2
257.4
278.5
290.3
309.8
338.4
375.0
389.4
421.3
450.2
251.3
255.0
272.2
284.3
304.2
328.5
360.9
379.1
413.4
440.4
193.8
207.0
222.0
237.1
255.0
273.3
299.0
326.5
358.2
391.9
58.5
60.2
64.5
69.3
72,9
79.3
82.0
83.6
94.0
101.8
21.3
17.8
22.5
25.2
25.9
31.2
30.4
28.0
35.1
34.9
992.7
1,077.6
1,185.9
1,326.4
1,434.2
1,549.2
1,718,0
1,918.0
2,156.1
2,413.9
989.5
1,070.0
1,175.7
1,307.9
1,420.1
1,556.1
1,706.2
1,897.0
2,133.9
2,396.4
10.2
18.5
14.1
-6.9
11.8
21.0
22.2
17.5
459.9
485.3
529.6
604.1
646.7
694.0
771.1
852.6
946.6
1,055.9
456.6
477.7
519.4
585.6
632.5
700.9
759.3
831.6
924.4
1,038.5
10.2
18.5
14.1
-6.9
11.8
21.0
22.2
17.5
179.2
187.1
207.4
237.6
250.7
279.4
312.5
353.9
392.0
439.7
13.1
12.0
= 8.4
17.8
11.5
277.5
290.6
312.0
348.0
381.8
421.5
446.7
477.7
532.5
598.8
6.0
429.9
472.0
519.0
571.5
636.1
705.2
779.3
869.0
976.2
1,097.2
102.9
120.3
137.3
150.8
151.4
150.0
167.6
196.4
233.2
260.8
28.7
39.1
41.6
46.2
39.2
40.7
55.9
65.3
69.6
68.0
1980 *
2,627.4
2,631.3
-3.9
1,132.0
1,135.9
-3.9
463.8
-4.9
672.1
1.0
1,231.1
264.3
59.0
1978:
1
II
Ill
IV
2,032.4
2,129.6
2,190.5
2,271.9
2,007.5
2,102.6
2,171.4
2,254.2
24.9
27.0
19.1
17.7
885.7
938.9
959.5
1,002.2
860.9
911.9
940.5
984.5
24.9
27.0
19.1
17.7
359.0
390.7
399.4
418.9
21.8
16.9
15.1
17.3
501.9
521.2
541.1
565.6
3.1
10.0
3.9
.4
935.1
959.1
989.3
1,021.5
211.5
231.6
241.6
248.2
65.8
72.2
67.8
72.6
2 340 6
2,374.6
2,444.1
2,496.3
2 316 2
2.34L5
2,430.8
2,497.1
24 3
33*1
13.3
— .8
1038 6 1014 3
l]04L9 l!00&8
1,064.9 1,051.6
1,078.3 1,079.1
24 3
13.3
3
434 7
426.4
449.2
448.4
18 9
20.9
6.7
= .4
579 5
582.4
602.4
630.7
1 055 5
l|078!5
1,112.0
1142.8
246 5
254^2
267.3
275.1
2,571.7
2,564 8
2,637.3
2,569.1
2 557 4
2,653.3
2.5
74
-16.0
1,116.9 1,114.4
1 106 4 1099 0
2.5
74
468.2
441 3
= 11.8
33
=8.4
646.2
657 7
680^5
1,178.6
1 205 6
276.2
252 8
258^9
1929
...
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.
197?
1973
1974
1975
1976
1977
1978
1979
1979:
|
II
Ill
IV
1980:
1
||
III
,. .
= .6
-1.0
-1.0
6.4
-.5
4.7
-3.1
6.8
10.3
3.1
.4
= 1.5
6.0
4.7
1.3
-1.5
5.7
3.0
2.3
6.3
6.0
5.6
9.9
14.1
10.3
7.9
9.8
3.2
7.7
-1.0
-1.0
6.4
— 5
47
= 3.1
6.8
10.3
3.1
.4
-1.5
6.0
4.7
1.3
-1.5
5.7
3.0
2.3
6.3
6.0
5.6
9.9
14.1
10.3
7.9
9.8
3.2
7.7
311
93.3
92.7
102.9
109.4
118.9
131.6
147.0
153.5
167.9
178.5
\M%A l,U5A — 16!o 464^9
Source: Department of Commerce, Bureau of Economic Analysis.
56.2
66.4
72.5
77.8
73.9
81.4
85.9
91.3
84.4
90.8
240
3.1
1.0
.0
= .6
-1.3
5.3
1.4
1.0
-1.8
3.6
6.1
1.2
1.5
=2.5
3.4
2.1
.5
-2.8
3.1
1.6
= .1
3.4
2.7
4.0
6.7
10.2
5.5
4.7
6.4
-=.1
2.8
7.2
7.7
8.8
99.4
112.8
119.0
124.9
123.7
127.1
132.7
139.6
145.3
152.1
158.0
162.4
169.3
174.9
185.3
196.9
213.9
225.6
245.5
261.9
-1.9
3.7
-1.3
3.2
4.2
2.0
= 1.1
1.0
2.6
2.6
.8
1.3
2.5
1.3
2.4
2.8
3.3
1.6
3.2
3.9
4.9
3.1
3.4
3.3
4.8
3.0
5.3
2.2
1.5
4.2
12.2
4.4
55
\Z2
6.6
—.5
14.3
41
-77
U49i0
8.3
11.8
14.0
8.7
6.1
6.5
7.2
8,8
76 0
6*5
64.9
61.8
64.4
53 6
543
TABLE B-7.—Gross national product by major type of product in 1972 dollars, 1929-80
[Billions of 1972 dollars; quarterly data at seasonally adjusted annual'rates]
Goods
Gross
national
product
Year or
quarter
Final
sales
Inventory
change
Total
Total
Final
sales
)
Durable goods
Inventory
change
Final
sales
Inventory
change
Nondurable goods
Final
sales
Services Structures
Auto
output
43.9
II
Inventory
change
1929
315.7
311.0
4.6
144.3
139.7
4.6
40.4
3.5
99.3
1933
222.1
227.0
=4.9
97.5
102.3
-4.9
17.5
-2.1
84.9
-2.8
110.7
14.0
1939 .
319.8
318.2
1.6
154.3
152.7
1.6
35.5
.7
117.2
.9
135.2
30.3
344.1
400.4
461.7
531.6
569.1
560.4
478.3
470.3
489.8
492.2
337.9
388.4
456.5
531.5
571.4
564.0
466.1
470.6
484.3
496.6
6.2
6.2
21&2
263.3
289.6
282.2
226.2
237.9
239.4
244.7
43.1
57.8
75.7
118.8
135.9
121.2
60.3
75.5
77.3
78.3
3.4
8.2
3.5
.7
122.4
128.7
140.5
144.4
153.7
161.0
165.8
162.4
162.1
166.4
2.8
3.8
1.7
-4.4
171.7
198.6
221.4
263.3
287.3
278.5
238.3
237.7
244.8
240.3
139.9
158.5
193.9
242.0
263.7
263.0
200.8
188.1
192,5
198.3
32.5
43.3
46.3
26.2
18,1
18.8
39.1
44.6 ""12.3
52.4
13.9
53.6
18.0
534.8
579.4
600.8
623.6
616.1
657.5
671.6
683.8
680.9
721.7
524.2
565.6
596.5
622.1
618.2
649.8
665.8
682.2
682.8
714.7
10.6
13.7
2615
283.7
1.5
3.2
2.9
.6
1.6
3.1
207.4
231.3
243.2
247.5
249.1
260.1
270.2
282.4
287.6
299.4
65.9
64.3
65.5
69.3
74.3
80.7
80.5
79.7
81.7
89.8
23.0
19.3
17.1
22.6
21.6
29.8
23.0
24.5
18.6
23.2
737.2
756.6
800.3
832.5
876.4
929.3
984.8
1,011.4
1,058.1
1,087.6
733,7
753.7
792.4
825.0
869.3
917.5
968.0
999.2
1,049.1
1,076.6
216.6
220.3
227.8
232.2
243.7
253.6
265.6
272.9
286.7
291.9
1.6
3.0
3.7
4.2
1.9
3.6
4.5
5.6
3.6
3.9
312.5
326.9
341.5
356.2
374.0
390.7
412.6
434.1
453.0
469.2
89.0
91.7
97.4
104.1
108.6
116.0
115.9
113.9
122.0
122.5
25.3
21.2
26.0
28.7
29.4
35.7
34.8
31.8
38.5
37.4
1970 .
1971 ..
.
1972
1973
1974
1975 . ..
1976
. .
1977..,.
1978 .
1979 . . ..
1,085.6
1,122.4
1,185.9
1,255.0
1,248.0
1,233.9
1,300.4
1,371.7
1,436.9
1,483.0
1,081.8
1,114.3
1,175.7
1,237.8
1,236.4
1,240.6
1,292.7
1,359.3
1,423.0
1,472.9
3.7
5.1
4.5
2.2
-.3
2.4
6.5
3.0
3.5
482.4
497.8
519.0
542.9
563.0
576.4
595.6
618.2
649.0
678.0
116.3
127.3
137.3
139.1
121.0
108.3
116.0
124.6
132.1
130.6
29.8
38.9
41.6
46.4
37.1
35.7
45.3
50.7
50.2
46.8
1980 *..
1,480.7
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
.
1978.
1
II
Ill
IV
12.0
5.2
.1
-2.3
-3.6
12.2
-.2
5.5
IV.
.
.
12.0
311.6
332.5
250.9
270.0
287.8
305.3
294.9
309.0
315.1
320.2
313.4
325.5
335.8
338.0
361.3
372.2
393.8
422.6
456.4
463.4
483.1
496.0
332.3
335.0
353.5
364.7
386.7
410.8
439.6
451.2
474.1
484.9
12.3
14.0
10.2
486.9
497.2
529.6
573.0
564.0
549.2
588.9
628.8
655.9
674.5
483.2
489.1
519.4
555.8
552.4
555.9
581.1
616.5
641.9
664.3
1,481.8
-1.2
665.9
1,402.3
1,432.8
1,446.7
1,465.8
1,384.6
1,416.8
1,435.2
1,455.3
17.7
16.0
11.5
10.6
1,479.9
1,473.4
1,488.2
1,490.6
1,464.4
1,455.0
1,480.6
1,491.3
1,501.9
1,463.3
1,471.9
1,502.8
1,462.0
1,476.9
4.3 292.1
1.5 306.8
-2.2
292.7
7.7 316.7
5.8 320.9
1.5 321.7
-1.8
7.0
5.2
.1
-2.3
-3.6
12.2
-.2
5.5
-4.4
10.6
13.7
4.3
1.5
-2.2
7.7
5.8
1.5
-1.8
7.0
86.1
98.2
107.9
116.2
109.0
117.2
117.8
119.4
109.2
113.6
-1.8
-3.7
10.8
1.4
1.6
-2.9
5.5
9.0
1.7
2.3
-3.7
4.5
2.9
.9
-3.4
3.9
111
3.8
-1.5
5.1
4.7
2.6
= .8
.0
3.0
12.3
14.0
10.2
187.5
188.7
207.4
236.1
234.1
230.3
242.8
264.2
278.6
290.2
6.7
295.7
300.4
312.0
319.7
318.3
325.7
338.3
352.3
363.3
374.1
667.1
-1.2
281.4
-2.0
385,6
.8
696.1
118.7
37.9
635.4
655.1
659.5
673.5
617.7
639.0
648.0
662.9
17.7
16.0
11.5
10.6
261.6
280.5
282.4
290.1
13.8
10.1
356.1
358.5
365.6
372.8
3.9
5.9
2.3
= .1
639.9
644.2
652.8
658.9
127.0
133.6
134.4
133.4
48.5
52.4
48.4
51.4
15.4
18.4
7.6
-.7
681.8
669.1
673.6
673.3
666.4
650.8
666.0
674.0
15.4
18.4
7.b
-.7
295.0
283.8
292.1
289.9
11.4
11.9
371.3
367.0
373.8
384.1
4.0
6.4
3.8
-.4
669.1
674.8
683,0
684.9
129.0
129.5
131.6
132.4
53.2
48.4
44.0
41.4
-.9
1.3
-5.0
682.1
658.1
657.5
683.0
656.8
662.4
-.9
1.3
-5.0
295.2
270.1
278.4
-4.6
387.7
386.7
384.0
3.7
-1.1
690.7
690.6
699.9
129.1
114.6
114.5
42.5
34.6
34.6
11.8
16.8
12.2
9.0
11.1
3.8
8.1
10.2
17.2
11.6
-6.7
7.8
11.8
16.8
12.2
9.0
11.1
3.8
8.1
10.2
17.2
11.6
-6.7
7.8
Source: Department of Commerce, Bureau of Economic Analysis.
-1.6
2.0
-.1
4.2
3.4
5.1
8.2
3.5
3.0
7.8
7.5
7.1
12.3
6.6
5.4
7.2
7.2
12.7
9.4
-6.4
5.4
5.8
10.9
9.2
10.6
3.8
-.3
1980.
II
164.8
171.8
179.9
189.1
185.9
191.9
197.2
200.8
204.3
211.9
= .6
-.5
.1
1.3
127.4
115.6
114.7
125.7
132.5
143.0
157.2
174.0
178.3
187.4
193.0
3.5
3.0
7.8
7.5
7.1
1979:
II " .
Ill .
165.5
1.1
241
.7
-3.8
3.0
.6
TABLE B-8.—Gross national product: Receipts and expenditures by major economic groups, 1929-80
[Billions of dollars)
(lover n ment
Persons
Expenditures
Net receipts
Surplus
or
PerLess:
Less: Equals: deficit
Personal sonal
TransPurTransEquals:
saving Tax and fers,
confers, chases national
Total
Equals:
Total
or
nontax
mterof
interexcluding sumption
income
expendiNet
disreceipts
interest expendigoods
and
tures
saving
or
receipts
tures
paid and
and
and
and
product
accruals
transfers
serv- accounts
subsisubsi3
3
ices
dies
dies
Disposable personal income
Year or
quarter
Total1
Less:
Interest
paid
and
transfers 2
1929 .
82.4
1.9
80.5
77.3
1933
45.6
.7
44.9
45.8
3.3
-.9
11.3
1.5
9.8
10.3
1.5
8.8
1.0
9.3
2.5
6.9
10.7
2.5
8.2
-1.4
-2.2
1939.
...
70.0
.9
69.2
67.0
2.2
15.4
4.1
11.3
17.6
4.1
13.5
1940..
1941
194?
1943.
1944
1945..
1946
1947
1948
1949
..
75.3
92.2
116.6
133.0
145.6
149.1
1589
168.7
188.0
187.9
1.0
1.1
.8
.7
.8
.9
1.4
1.7
2.1
2.3
74.4
91.1
115.8
132.3
144.8
148.2
157,5
167.0
185.9
185.6
71.0
80.8
88.6
99.4
108.2
119.5
143.8
161.7
174.7
178.1
3.4
4.3
3.8
4.2
4.4
6.0
9.9
18.0
17.1
18.5
20.9
13.5
21.2
28.4
44.7
45.2
43.3
33.0
39.9
40.4
35.0
18.4
28.8
64.0
93.3
103.0
92.7
45.6
42.5
50.5
59.3
4.3
3.8
4.2
4.4
6.0
9.9
7.5
17.7
25.0
32.6
49.2
51.2
53.2
51.0
56.9
58.9
55.9
18.0
17.1
18.5
20.9
14.2
24.9
59.8
88.9
97.0
82.8
27.5
25.5
32.0
38.4
206.6
226.0
237.7
252.2
257.1
275.0
292.9
308.6
319.0
338.4
2.7
2.9
3.3
4.0
4.3
4.8
5.6
5.9
6.0
6.5
203.9
223.1
234.5
248.2
252.8
270.1
287.3
302.7
313.0
331.9
192.0
207.1
217.1
229.7
235.8
253.7
266.0
280.4
289.5
310.8
11.9
16.1
17.4
18.5
17.0
16.4
21.3
22.3
23.6
21.1
69.0
85.2
90.1
94.6
89.9
101.1
109.7
116.2
115.0
129,4
22.5
19.1
18.3
19.0
21.3
23.0
25.1
28.2
32.6
33.4
46.5
66.2
71.8
75.6
68.6
78.1
84.6
88.0
82.4
96.0
61.0
79.2
93.9
101.6
97.0
98.0
104.5
115.3
127.6
131.0
22.5
19.1
18.3
19.0
21.3
23.0
25.1
28.2
32.6
33.4
38.5
60.1
75.6
82.5
75.8
75.0
79.4
87.1
95.0
97.6
352.0
365.8
386.8
405.9
440.6
475.8
513.7
547.9
593.4
638.9
7.4
7.7
8.3
9.4
10.5
11.7
12.6
13.3
14.6
16.6
344.6
358.0
378.5
396.5
430.1
464.0
501.1
534.5
578.8
622.4
324.9
335.0
355.2
374.6
400.5
430.4
465.1
490.3
536.9
581.8
19.7
23.0
23.3
21.9
29.6
33.7
36.0
44.3
41.9
40.6
139.5
144.8
156.7
168.5
174.0
188.3
212.3
228.2
263.1
296.7
36.1
40.9
42.4
44.1
46.5
49.5
54.9
62.2
70.1
78.0
103.4
103.9
114.3
124.4
127.5
138.9
157.4
166.0
193.0
218.7
136.4
149.1
160.5
167.8
176.3
187.8
213.6
242.4
269.1
286.8
36.1
40.9
42.4
44.1
46.5
49.5
54.9
62.2
70.1
78.0
100.3
108.2
118.0
123.7
129.8
138.4
158.7
180.2
199.0
208.8
1970
1971
1972
1973
1974
1975 ..
1976
1977
1978
1979
695.3
751.8
810.3
914.5
998 3
1,096.1
1,194.4
1,311.5
1,462.9
1,641.7
17.8
18.9
20.7
23.6
25 1
25.3
27.6
32.0
37.9
44.6
677.5
732.9
789.7
890.9
973 2
l,070J
1,166.8
1,279.6
1,425.1
1,597.1
621.7
672.2
737.1
812.0
888 1
97M
55.8
60.7
52.6
79.0
85 1
943
1,084.3
1,205.5
1,348.7
1,510.9
82.5
74.1
76.3
86.2
302.8
322.6
368.3
413.1
455 2
470:5
538.4
605.7
681.6
765.2
93.3
107.1
118.5
134.8
155 9
194^
212.8
229.5
249.3
279.5
209.6
215.4
249.8
278.3
299 3
2761
325.6
376.1
432.4
485.7
313.4
342.0
371.6
405.3
460 0
5343
574.9
624.0
681.9
753.2
93.3
107.1
118.5
134.8
155 9
19^4
212.8
229.5
249.3
279.5
220.1
234.9
253.1
270.4
304 1
339^
362.1
394.5
432.6
473.8
1980 "
1,821.8
47.5
1,774.3
1,670.1
104.2
834.2
334.2
500.0
869.0
334.2
534.8
1950..
1951
1952..
1953.
1954,
1955
1956
1957
1958
1959
..
..
...
..
....
1960
1961
1962....
1963.. . .
1964
1965... .
1966
1967
1968
...
1969
10.3
27.2
32.9
36.6
28.7
13.7
5.2
11.1
See next page for continuation of table.
242
-.7
-3.8
=31.4
-44.1
= 51.8
-39.5
5.4
14.4
8.4
-3.4
8.0
6.1
-3.8
-6.9
-7.1
3.1
5.2
.9
-12.6
-1.6
3.1
-4.3
-3.8
.7
-2.3
.5
-1.3
-14.2
-6.0
9.9
-10.6
-19.4
-3.3
7.8
47
-618
-36.5
= 18.3
-.2
11.9
-34.8
TABLE B-8.—Gross national product: Receipts and expenditures by major economic groups, 1929-
80—Continued
[Billions of dollars]
International
Business
Year or
quarter
Gross
retained
earnings4
uross
private
domestic
investment5
Excess of
Net
transearnings
fers and
or of
interest
investpaid to
foreignment
ers®
(-)
Net exports of goods and
services
Excess
Total
of net
income
transfers
or
and
Equals: interest receipts
or of
Net
Less:
Exports Imports
exnet
ports
exports
(-)7 .
Statistical
discrepancy
Gross
national
product
or
expenditure
103.4
11.6
16.2
-4.6
0.4
7.0
5.9
1.1
-0.8
102.3
1.1
3.1
1.4
1.7
.2
2.4
2.0
.4
-.2
55.1
.7
55.8
8.8
9.3
-.4
.2
4.6
3.4
1.2
-1.0
89.5
1.4
90.9
10.8
12.1
14.8
16.7
17.6
16.b
15.9
22.1
30.2
31.5
13.1
17.9
-2.3
-5.8
5.4
3.6
4.9
10.9
10.5
1.8
1.5
.2
-1.5
-1.3"
9.9
5.8
7.2
-147
-11.9
-15.6
-3.8
98.9
124.5
159.3
193.9
207.9
208.3
209.3
231.5
261.1
257.8
1.1
.6
-.8
10.6
30.7
34.0
45.9
35.3
.2
.2
.2
.2
.3
.8
2.9
2.6
4.5
5.6
100.0
125.0
158.5
192.1
210.6
212.4
209.8
233.1
259.5
258.3
30.7
34.8
37.4
38.2
41.1
47.9
49.4
52.0
51.7
58.7
53.8
59.2
52.1
53.3
52.7
68.4
71.0
69.2
61.9
78.1
-23.1
-24.4
-14.7
-15.1
-11.6
-20.5
-21.6
-17.2
-10.2
-19.4
4.0
3.5
2.6
2.5
2.3
2.5
2.5
2.5
58.3
60.0
67.2
71.0
76.7
86.0
92.7
95.6
100.0
103.0
75.9
74.8
85.4
90.9
97.4
113.5
125.7
122.8
133.3
149.3
-17.6
-14.8
-18.3
-19.9
-20.6
-27.5
-33.0
-27.2
-33.3
-46.2
2.6
2.8
3.0
3.2
3.2
3.3
3.5
3.7
1970 _
1971.
. .
1972
1973
1974.
1975
1976.
1977
1978 .
1979
102.8
119.7
136.6
148.7
149.4
188.4
211.9
248.3
279.1
312.7
144.2
166.4
195.0
229.8
228.7
206.1
257.9
322.3
375.3
415.8
-41.4
-46.7
-58.4
-81.1
-79.2
-17.7
-46.0
-74.0
-96.3
-103.1
4.3
5.5
6.5
7.7
8.5
8.5
1980" . . . .
333.4
395.1
-61.6
1929
1933....
1939
....
1940...
1941
1942
1943 ..
1944
1945
1946
1947
1948
1949.
.
..
...
.. .
.
1950
1951 . . ..
1952 .
.
1953 . .
1954
1955
1956
1957
1958 ' ...."
1959.
1960
1961.
1962
1963
1964
1965
1966
1967
1968
1969
.
.
.. .
.
.
.
..
5.4
6.1
5.0
4.6
5.5
7.4
15.1
20.2
17.5
16.3
4.7
4.8
6.5
7.2
7.9
7.3
8.3
-1.9
-1.7
-.5
7.8
11.9
.1
2.1
2.0
1.3
-4.9
-9.3
-2.4
9.8
6.9
6.5
14.4
19.7
19.1
18.0
18.7
21.0
25.0
28.1
24.2
24.8
12.2
15.3
15.9
16.7
16.2
18.0
19.8
20.8
21.0
23.4
2.2
4.4
3.2
1.3
2.5
3.0
5.3
7.3
3.3
1.4
28.9
29.9
31.8
34.2
38.8
41.1
44.6
47.3
52.4
57.5
23.4
23.3
25.4
26.6
28.8
32.3
38.1
41.0
48.1
53.3
5.5
6.6
6.4
7.6
13.2
16.2
65.7
68.8
77.5
109.6
146.2
154.9
170.9
183.3
219.8
281.3
59.0
64.7
76.7
95.4
132.8
128.1
157.1
187.5
220.4
267.9
14.2
13.4
26.8
13.8
-4.2
-.6
13.4
-6.5
-4.9
-18.3
-5.1
13.9
13.8
18.0
341.2
313.6
27.5
2.4
2.6
3.7
3.8
8.7
9.6
1
2
3
10.5
-.9
1.8
-.9
-.6
1.3
-.2
-.4
-1.8
2.7
4.1
.5
1.5
-1.6
.6
1.3
3.2
1.7
2.3
2.0
1.3
-.9
1.2
285.2
327.6
346.2
364.5
364.8
398.7
423.8
445.2
449.5
489.2
4.3
4.2
-2.8
-3.8
-3.4
-4.4
-6.8
-5.4
-3.0
-2.6
—6
-•4
508.9
524.7
562.9
595.0
637.6
692.3
754.6
799.8
875.5
947.9
6.7
4.1
-2.3
1.4
5.8
2.8
994.2
1,073.5
1,182.6
1,325.6
1,430.5
1,543.7
1,712.9
1,913.6
2,149.7
2,411.7
-1.5
.7
6.4
2.2
992.7
1,077.6
1,185.9
1.326.4
1,434.2
1,549.2
1,718.0
1,918.0
2,156.1
2,413.9
-9.5
2,625.7
1.7
2,627.4
10.1
8.8
6.5
6.3
-2.8
-4.8
-2.1
-1.2
.2
-1.3
-2.4
__ j
2il
1.7
.1
-1.2
1.4
-.3
-2.1
-3.9
4.1
3.3
.8
3.7
5.5
5.1
4.4
286.5
330.8
348.0
366.8
366.8
400.0
421.7
444.0
449.7
487.9
506.5
524.6
565.0
596.7
637.7
691.1
756.0
799.6
873.4
944.0
Personal income less personal tax and nontax payments (fines, penalties, etc.).
Interest paid by consumers to business and net personal transfer payments to foreigners.
Government transfer payments to persons and foreigners, net interest paid by government less dividends received by State
and4 local government, subsidies less current surplus of government enterprises, and disbursements less wage accruals.
Undistributed corporate profits with inventory valuation and capital consumption adjustments, corporate and noncorporate
capital
consumption allowances with capital consumption adjustment, and private wage accruals less disbursements.
5
See
Table B-14.
8
Net transfers to foreigners by persons and government and interest paid by government to foreigners.
7
Capital grants received by the United States (net) less net foreign investment.
Source: Department of Commerce, Bureau of Economic Analysis.
243
TABLE B-9.—Gross national product by sector, 1929-80
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Gross domestic product
Government2
Business
Year or quarter
Gross
national
product
Total
Total
nofi-
Farm
farm1
Households
static
tiral
and
iicai
discrepancy
institutions
Total
Federal
State
and
local
Percent
change
from
Pact
KcSI
precedof the
ing
world
period,
gross
domestic
product3
103.4
102.6
95.4
84.7
9.7
1.1
2.9
4.3
0.9
3.5
0.8
55.8
55.5
49.1
43.8
4.6
.7
1.7
4.7
1.2
3.5
.3
1939
90.9
90.5
80.6
72.9
6.3
1.4
2.3
7.6
3.4
4.2
.5
7.0
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
100.0
125.0
158.5
192.1
210.6
212.4
209.8
233.1
259.5
258.3
99.6
124.5
157.9
191.6
210.1
212.0
209.0
231.8
257.9
256.9
89.4
112.6
139.9
162.8
174.2
172.8
183.8
210.0
234.9
231.5
81.8
103.1
127.7
149.3
156.2
152.7
164.4
188.2
213.1
212.2
6.4
8.9
13.0
15.3
15.3
16.0
18.8
20.2
23.3
18.8
1.1
.6
= .8
-1.8
2.7
4.1
.5
1.5
-1.6
.6
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
27.2
29.8
14.6
9.4
8.9
10.0
4.3
4.4
4.5
4.7
4.9
5.4
6.2
7.3
8.5
9.4
.4
.5
,5
.5
.5
.4
.8
1.2
1.6
1.4
10.1
25.0
26.8
21.4
9.6
.9
-1.4
10.9
11.3
= .4
286.5
330.8
348.0
366.8
366.8
400.0
421.7
444.0
449.7
487.9
284.8
328.7
345.7
364.6
364.5
397.3
418.5
440.5
446.6
484.6
257.5
294.4
307.3
324.9
323.9
354.0
372.1
390.8
393.1
428.3
236.3
268.3
283.4
302.3
302.3
333.9
355.7
373.7
372.2
410.6
20.0
22.9
22.2
20.3
19.7
18.8
18.6
18.4
20.7
19.0
1.3
3.2
1.7
2.3
2.0
1.3
-2.1
-1.2
.2
-1.3
6.4
6.9
7.2
7.8
8.1
9.1
9.8
10.5
11.4
12.3
20.9
27.4
31.2
31.9
32.5
34.2
36.6
39.1
42.1
44.0
10,7
16.2
18.9
18.6
17.8
18.4
19.0
19.6
20.5
20.9
10.1
11.2
12.3
13.3
14.7
15.8
17.6
19.6
21.6
23.1
1.6
2.1
2.3
2.2
2.3
2.8
3.2
3.5
3.0
3.3
10.9
15.4
5.2
5.5
-.0
9.0
5.3
5.2
1.4
8.5
506.5
524.6
565.0
596.7
637.7
691.1
756.0
799.6
873.4
944.0
502.9
520.7
560.5
591.8
632.3
685.2
750.3
793.7
866.7
937.1
442.0
455.7
490.6
517.2
551.6
598.4
652.6
685.1
745.4
803.2
424.2
435.7
468.1
495.0
532.2
577.7
628.4
663.3
725.0
782.1
20.2
20.2
20.4
20.5
19.3
21.9
22.8
22.1
22.6
25.1
^2.4
= .1
2.1
1.7
.1
-1.2
1.4
-.3
-=2.1
-3.9
13.8
14.4
15.5
16.6
17.8
19.2
21.1
23.4
26.1
29.4
47.1
50.5
54.3
58.0
62.9
67.6
76.5
85.1
95.2
104.5
21.7
22.6
24.1
25.2
27.0
28.3
32.4
35.6
39.3
41.9
25.5
27.9
30.2
32.9
35.9
39.3
44.1
49.5
55.9
62.6
3.6
3.9
4.6
4.9
5.5
5.9
5.6
5.9
6.7
6.9
3.8
3.5
7.7
5.6
6.8
8.4
9.5
5.8
9.2
8.1
992.7
1,077.6
1,185.9
1,326.4
1,434.2
1,549.2
1,718.0
1,918.0
2,156.1
2,413.9
985.4
1,068.5
1,175.0
1,310.4
1,414.4
1,531.9
1,697.5
1,894.5
2,126.2
2,370.1
837.3
907.1
998.6
1,118.7
1,206.4
1,301.7
1,447.3
1,623.1
1,829.4
2,046.3
813.1
875.4
963.4
1,068.0
1,155.0
1,247.3
1,396.3
1,571.1
1,765.1
1,974.1
25.8
27.6
31.9
49.9
47.7
48.9
45.9
47.6
57.9
70.0
-1.5
4.1
3.3
.8
3.7
5.5
5.1
4.4
6.4
2.2
32.3
35.4
38.6
42.1
45.8
50,6
55.6
61.0
67.5
75.7
115.8
126.0
137.8
149.6
162.2
179.6
194.6
210.4
229.2
248.1
44.8
46.8
50.1
51.9
54.9
59.0
62.4
66.3
71.7
75.8
71.1
79.3
87.7
97.7
107.3
120.6
132.3
144.0
157.5
172.3
7.3
9.2
10.9
16.0
19.8
17.3
20.5
23.5
29.9
43.8
5.2
8.4
10.0
11.5
7.9
8.3
10.8
11.6
12.2
11.5
2,627.4
2,577.3
2,222.2
2,152.4
68.0
1.7
85.9
269.3
81.9
187.4
50.1
8.7
2 032 4
2,129.6
2,190.5
2,271.9
2 004 2
2,103.2
2,161.0
2,236.2
1 715 9
1,810.4
1,862.2
1,929.2
1663 6
1J4&6
1,793.0
1,857.2
52 9
564
59.1
63.3
10.0
8.7
65 4
66*6
68.1
70.0
222 9
226^3
230.6
237.1
70 2
70^9
71.5
74.4
152 7
155^5
159.1
162.7
28 2
2&3
29.5
35.7
8 1
2U
11.4
14.7
2,340.6
2,374.6
2,444.1
2,496.3
2,301.0
2,333.7
2,396.0
2,449.7
1,987.3
2,014.2
2,069.8
2,113.9
1,913.5
1,942.9
1,996.5
2,043.6
68.0
70.6
70.4
71.0
5.8
.7
2.8
-.7
72.3
74.2
76.9
79.4
241.4
245.4
249.4
256.4
74.6
74.6
74.9
79.0
166.8
170.8
174.5
177.3
39.6
40.9
48.1
46.6.
12.1
5.8
11.1
9.3
2,571.7
2,564.8
2,637.3
2,520.2
2,516.7
2,586.9
2,176,9
2,166.4
2,230.0
2,106.4
2,100.8
2,159.1
67.7
67.5
67.9
2.8
-1.9
3.0
82.1
84.4
86.9
261.2
265.9
269.9
79.6
80.5
80.7
181.6
185.4
189.3
51.5
48.1
50.5
12.0
= .6
11.6
1929
1933
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
. . .
.
.. .
..
.
...
.
.
.. . .
....
1960
1961
. .
1962
1963
1964
1965
1966 ..
1967 ..
. .
1968. .
1969 .. .
1970 .
1971
1972....
1973
1974
.
. .
1975 . .
1976
....
1977
. . . .
1978
1979
1980
p
1978:
|
II
III
IV
1979:
1
II
Ill
IV
1980.
I
II
Ill
.
.
1
-4.1
Includes compensation of employees in government enterprises.
Compensation of government employees.
Changes are based on unrounded data and therefore may differ slightly from those obtained from data shown here. See Table B - l
for percent changes in gross national product.
2
3
Source: Department of Commerce, Bureau of Economic Analysis.
244
TABLE B-10.—Gross national product by sector in 1972 dollars, 1929-80
[Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Gross domestic product
Percent
Government2
Business
Year or quarter
Gross
national
product
Total
Total
Nonfarm 1
farm
Statistical
discrepancy
Households
and
institutions
Total
Federal
State
and
local
Rest,
of the
world
from
preceding
period,
gross
domestic
product3
1929
315.7
313.2
271.5
244.7
23.6
3.1
15.6
26.2
5.2
21.0
2.4
1933
222.1
220.9
180.0
152.5
24.9
2.6
12.2
28.8
6.6
22.1
1.3
-2.1
1939
319.8
318.2
261.0
231.3
25.2
4.6
15.1
42.1
16.9
25.2
1.6
7.8
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
344.1
400.4
461.7
531.6
569.1
560.4
478.3
470.3
489 8
492.2
342.8
398.7
460.1
530.3
567.7
559.3
476.4
467.8
486.8
489.4
282.7
327.6
361.8
385.6
403.6
397.9
385.5
393.8
412.0
409.8
254.6
299.8
335.3
362.1
370.1
362.8
358.6
367.0
389.0
383.4
24.5
26.2
28.6
27.7
27.1
25.6
25.8
24.0
25.8
25.6
3.6
1.6
-2.1
-4.2
6.4
9.4
1.1
2.9
-2.8
.8
16.1
15.9
16.4
15.2
15.1
15.0
15.1
16.0
16.7
17.3
44.0
55.2
81.9
129.4
149.1
146.4
75.9
58.0
58.1
62.3
18.6
29.6
56.7
105.0
125.2
121.8
49.7
29.8
29.2
31.3
25.4
25.6
25.2
24.5
23.9
24.6
26.2
28.2
29.0
31.0
1.4
1.7
1.5
1.3
1.4
1.1
1.8
2.5
3.0
2.7
7.7
16.3
15.4
15.2
7.1
-1.5
-14.8
-1.8
4.1
.5
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
534.8
579.4
600.8
623.6
616.1
657.5
671.6
683.8
680.9
721.7
531.8
575.6
596.9
619.8
612.1
653.0
666.5
678.3
676.3
716.8
448.7
478.0
492.8
515.6
508.5
547.0
557.4
566.1
561.7
600.0
419.4
447.2
463.7
484.3
477.0
516.0
531.5
539.5
532.0
574.0
27.0
25.8
26.4
27.7
28.4
29.3
28.9
28.2
29.3
27.8
2.4
5.0
2.6
3.6
3.1
1.8
-3.0
-1.7
18.3
18.7
18.6
19.3
19.4
21.4
22.5
23.1
24.2
24.7
64.7
79.0
85.5
85.0
84.1
84.6
86.7
89.1
90.4
92.2
32.7
46.2
51.6
49.6
47.2
45.9
45.6
45.8
44.5
44.5
32.0
32.8
33.9
35.4
36.9
38.6
41.0
43.3
45.9
47.7
3.0
3.7
3.9
3.7
4.0
4.5
5.1
5.5
4.6
4.9
8.7
8.3
3.7
3.8
-1.2
6.7
2.1
1.8
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
737 2
756.6
800.3
832.5
876.4
929.3
984.8
1011.4
1,058.1
1,087.6
732 0
751.0
793.8
825.6
868.9
921.4
977.5
1,003.9
1,050.0
1,079.7
610.1
625.1
663.2
691.6
730.3
777.7
824.0
842.0
882.1
907.1
584.2
596.3
631.5
659.7
701.3
749.6
794.1
812.8
855.6
881.9
29.2
28.9
28.8
29.6
28.8
29.8
28.2
29.5
29.0
29.5
-3.3
-.2
2.9
2.3
26.6
27.0
28.1
28.9
29.8
30.9
32.6
34.3
35.4
37.0
95.3
98.9
102.5
105.2
108.8
112.7
120.8
127.7
132.4
135.7
45.2
46.2
48.3
48.2
48.5
48.7
53.0
57.2
58.0
58.2
50.1
52.7
54.3
57.0
60.4
64.0
67.9
70.5
74.4
77.4
5.2
5.7
6.5
6.9
7.5
7.9
7.4
7.5
8.2
7.9
2.1
2.6
5.7
4.0
5.2
6.0
6.1
2.7
4.6
2.8
1,085.6
1,122.4
1,185.9
1 255.0
1,248.0
1,233.9
1,300.4
13717
1436 9
1,483.0
1,077.6
1,112.9
1,175.0
1,239.9
1,230.7
1,220.0
1,284.8
1354 7
1416 8
1,455.9
904.8
938.6
998.6
1,061.4
1,049.1
1,034.7
1,097.6
1,165.1
1222 6
1,'258.3
875.4
901.7
963.4
1,029.1
1,014.1
996.7
1,061.6
1,1289
1185 5
1,222.1
31.1
32.6
31.9
31.6
31.8
33.6
32.1
33.0
32 9
34.9
-1.7
4.2
3.3
3.2
4.4
3.9
3.2
42
1.4
36.7
37.6
38.6
39.4
39.3
40.5
40.9
41.3
42 3
43.7
136.1
136.7
137.8
139.1
142.3
144.9
146.3
148.4
1519
153.9
55.2
52.5
50.1
48.2
48.5
48.4
48.5
48.6
49.3
49.0
80.9
84.2
87.7
90.8
93.8
96.5
97.8
99 7
102 6
104.9
8.0
9.5
10.9
15.1
17.3
13.9
15.6
16.9
20 1
27.2
-.2
3.3
5.6
5.5
-.7
— 9
5!3
5.4
4.6
2.8
1,480.7
1,452.1
1,251.6
1,215.4
35.2
1.0
45.3
155.2
49.2
106.0
28.6
-.3
1,402.3
1432 8
1,446.7
1,465.8
1,382.7
1414 9
1,427.0
1,442.6
1,189.4
1,221.0
1,232.4
1,247.6
1,156.3
1,184 5
1,192.7
1,208.7
33.5
315
33.0
33.4
-.4
4.9
6.6
5.6
42.2
42 2
42.3
42.6
151.0
151.8
152.3
152.3
49.0
49.3
49.5
49.2
102.0
102.5
102.8
103.1
19.6
17.9
19.7
23.2
2.2
9.7
3.4
4.4
1479 9
1,473.4
1,488.2
1,490.6
1,454 6
1,447.8
1,458.6
1,462.4
1,258.8
1,250.8
1,260.0
1,263.6
1,221 8
1,215.0
1,223.2
1,228.2
33.3
35.3
35.1
35.8
3.7
1.7
42.9
43.3
44.2
44.4
152.9
153.7
154.4
154.5
49.1
49.0
49.0
48.9
103.8
104.7
105.3
105.6
25.3
25.6
29.6
28.1
3.4
-1.9
3.0
1.0
1,501.9
1463 3
1,471.9
1,471.5
1435 5
1,443.4
1,271.9
1235 2
U42.3
1,233.3
1,198 5
1,207.6
37.0
37 8
33.1
1.6
-1.1
1.7
44.8
44 9
45.6
154.8
1554
155.5
49.0
49 4
49.4
105.8
105 9
106.1
30.4
27 8
28.5
2.5
-9.4
2.2
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980".
. . .
... .
-L9
-l!6
1.7
-2.5
-4.4
1978:
||
III
IV
1979:
II
III
IV
1980:
II
III
1
Includes compensation of employees in government enterprises.
Compensation of government employees.
Changes are based on unrounded data and therefore may differ slightly from those obtained from data shown here. See Table B-2
for percent changes in gross national product in 1972 dollars.
Source: Department of Commerce, Bureau of Economic Analysis.
2
3
245
T A B L E B - l l . — G r o s s domestic product of nonfinanciaI
corporate business, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Net domestic product
Year or
quarter
Capital
Gross
domes- consumptic
tion
product
allowof
ances
with
nonfinancial capital
corpo- consumprate
tion
busiadjustness
ment
Domestic income
Total
Indirect
business
tax,
etc. 1
Corporate profits with inventory valuation and capital
consumption adjustments
Total
CompenProfits
sation
of
Profits after tax
Prof- Profemploy- Total its
its
ees
tax
beUndisfore lia- Total Divi- tributed
dends
tax bility
profits
Inventory
valuation
adjustment
Net
consumption
adjustment
interest
1929
50.1
5.5
44.5
3.4
41.2
32.3
7.5
8.4
1.2
7.3
5.1
2.2
0.5
-1.4
1.4
1933
24.4
4.3
20.2
3.8
16.3
16.7 =2.1
.6
.5
.1
2.0
-1.9
=2.1
-.6
1,7
1939
43.7
4.8
39.0
5.1
33.9
28.2
4.2
6.1
1.4
4.7
3.3
1.4
=.7
-1.1
1.5
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
50.4
65.6
82.9
98.7
102.1
95.3
99.3
120.0
137.3
133.5
4.9
5.4
6.1
6.2
6.3
6.5
7.6
9.3
5.5
6.4
6.8
7.3
8.1
8.9
31.2
7.4
39.8 12.7
51.0 17.7
62.2 21.8
65.1 21.6
61.9 17.1
67.2 13.8
79.1 19.7
87.8 25.6
85.3 22.9
2.7
7.5
6.1
9.0
8.9
9.8
9.6
7.6
3.5
3.9
3.7
3.9
4.1
4.1
4.8
5.5
6.0
6.0
2.6
5.0
5.2
5.8
5.6
3.5
8.6
-.2
-2.5
-1.2
-1.2
-1.3
-1.2
-.8
-.9
10.1
11.2
12.1
12.6
40.0
53.8
70.0
85.2
87.7
79.9
81.6
99.6
114.3
109.2
8.8
10.9
11.7
45.4
60.2
76.8
92.4
95.8
88.8
91.8
110.7
126.4
121.8
=3.5
-4.0
-3.9
1.4
1.3
1.3
1.1
1.0
1.0
.7
.8
.9
1.0
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
151.9
174.5
182.3
195.0
191.9
216.7
231.6
242.3
236.3
266.0
12.6
14.6
15.8
16.8
17.9
19.1
21.8
23.8
24.8
25.8
139.3
159.9
166.6
178.2
174.0
197.6
209.8
218.5
211.6
240.2
14.1
15.2
16.8
18.2
17.4
19.2
20.8
22.4
22.8
25.4
125.2
144.7
149.7
160.0
156.6
178.4
189.0
196.1
188.8
214.8
94.7
110.2
118.3
128.7
126.5
138.5
151.4
159.1
155.9
171.6
29.6
33.4
30.2
30.0
28.6
38.3
35.9
34.9
30.2
40.1
21.6
17.9
16.0
16.4
16.4
21.8
21.8
20.7
17.5
22.4
10.0
12.4
-3.9
-4.6
-4.5
= 3.9
= 3.2
= 2.0
= 3.2
=3.4
=3.2
=2.7
.9
1.1
1.2
1.3
1.5
1.6
1.7
2.2
2.7
3.1
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
277.0
285.0
311.3
331.8
358.4
393.6
431.5
454.1
500.2
544.1
26.8
27.5
28.4
29.4
30.8
32.7
35.6
38.9
42.6
47.1
250.2
257.5
283.0
302.3
327.6
360.9
395.9
415.2
457.6
497.0
28.3
30.1
33.0
35.6
38.4
41.1
42.9
45.8
51.5
58.0
221,9
227.3
249.9
266.8
289.3
319.8
353.0
369.5
406.1
439.1
181.1
185.1
199.8
210.7
226.3
246.1
273.5
291.9
322.8
358.5
37.4 39.7 19.2 20.5
38.3 39.5 19.5 20.1
45.6 44.2 20.6 23.5
51.2 48.9 22.8 26.2
57.7 55.4 24.0 31.4
67.7 65.2 27.2 38.0
72.2 70.3 29.5 40.8
68.8 66.3 27.7 38.6
73.3 72.9 33.4 39.5
67.5 69.4 33.1 36.2
10.6
10.6
11.4
12.6
13.7
15.6
16.8
17.5
19.1
19.1
12.2
13.5
17.7
22.4
24.0
21.2
20.4
17.1
-2.1
-1.6
-3.7
-5.9
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
563.7
609.9
678.0
759.4
818.9
890.0
1,001.3
1,129.5
1,270.7
1,417.0
52.2 511.4 63.4 448.1
57.3 552.6 70.5 482.1
62.6 615,5 76.7 538.7
67.9 691.6 83.7 607.9
79.5 739.4 89.7 649.7
94.9 795.1 97.1 697.9
104.8 896.5 105.3 791.2
116.6 1,012.8 115.1 897.8
129.7 1,141.0 125.2 1,015.8
147.5 1,269.5 133.6 1,135.9
378.4
402.0
447.0
506.2
556.5
581.1
654.4
738.2
841.4
954.0
29.8
35.6
43.0
56.0
63.3
66.1
82.3
94.1
107.0
123.7
18.5
18.5
20.1
21.1
21.4
25.7
30.1
31.9
36.0
37.3
11.3
17.1
22.9
35.0
41.9
40.4
52.2
62.2
70.9
86.3
-6.6
-4.6
-6.6
-20.0
=40.0
-11.6
-14.7
-15.8
-24.3
-42.6
-1.8
-9.7
= 13.0
= 11.4
-12.4
= 14.1
29.6
30.8
29.5
33.2
36.8
45.2
1,533.9
166.2 1,367.7 152.1 1,215.7
1,036.8 122.8 179.5 61.3 118.2
40.3
77.9
-42.0
= 14.7
56.1
1,196.3
1,260.1
1,289.9
1,336.5
124.0
127.3
131.6
135.7
1,072.3
1,132.9
1,158.3
1,200.7
121.3 951.0
125.5 1,007.3
125.5 1,032.9
128.6 1,072.1
797.2
830.2
853.4
884.7
118.5
141.1
142.3
148.6
150.6
175.5
178.6
192.6
56.9 93.7
68.1 107.4
69.0 109.6
75.3 117.2
34.8
33.2
37.5
38.6
58.9
74.1
72.1
78.6
-21.6
-23.2
= 22.6
-29.8
-10.5
-11.2
-13.6
= 14.2
35.3
36.0
37.1
38.9
1,378.7
1,399.5
1,432.1
1,457.7
140.5
146.0
150.7
152.9
1,238.2
1,253.5
1,281.5
1,304.8
130.9
131.5
134.8
137.3
919.9
939.8
965.2
991.1
146.0
138.6
134.8
127.3
195.7
191.4
195.5
191.1
71.2
68.9
70.5
68.4
124.5
122.5
125.0
122.7
38.2
37.9
34.9
38.2
86.3
84.5
90.1
84.5
-35.3
-37.9
-46.5
-50.8
= 14.4
-14.8
-14.2
= 13.0
41.4
43.5
46.7
49.1
1,502.1
1,496.3
1,537.7
158.2 1,343.9 141.7 1,202.3 1,017.3 132.6 207.2 74.3 132.9
163.6 1,332.7 147.7 1,185.0 1,018.0 112.5 158.6 52.0 106.6
168.6 1,369.1 155.4 1,213.6 1,034.8 121.2 177.9 60.3 117.6
36.9
41.1
40.8
96.0
65.5
76.8
-61.4
-31.1
-41.7
= 13.1
-14.9
= 15.0
52.3
54.4
57.6
1980
P.
52.7
62.1
72.7
78.6
63.6
86.1
107.3
126.3
137.6
136.7
16.4
20.1
23.6
22.2
17.8
22.0
29.1
31.8
24.9
38.5
39.1
33.8
34.9
32.1
42.0
41.8
39.8
33.7
43.1
56.8
65.4
76.6
96.0
105.3
107.3
135.0
153.5
174.3
193.4
11.2
13.8
12.6
10.2
8.6 13.4
10.8 18.3
11.8 20.0
9.3 15.6
16.9
21.2
17.8
18.5
15.6
20.2
20.1
19.1
16.2
20.7
27.0
29.8
33.6
40.0
42.0
41.2
52.6
59.4
67.3
69.7
7.5
7.1
7.1
7.3
7.4
8.5
9.0
9.3
9.3
12.8
14.0
— 3
—6
= 5^3
-5.9
= 2.2
9.6
1.9
14.1
10.8
= 5.0
-1.2
8.8
9.1
9.0
1.0
13.4
12.7
11.4
8.2
9.9
9.5
-1.0
-.3
-1.7
-=2.7
= 1.5
= .3
= .3
- 2
'.3
.0
.1
— 5
-\2
2
-3d
3.5
3.9
1.4 4.5
2.3 4.8
2.9 5.3
3.7 6.1
3.9 7.4
4.0 8.7
4.0 10.1
4.0 13.1
= 2.1
-1.5
2.4 17.0
1.3 18.0
2.7 19.1
2.6 23.0
1978:
I
II
Ill
IV
1979:
|
ii...;
in
tv
1980:
1
II
Ill
1,107.3
1,122.0
1,146.7
1,167.5
1
Indirect business tax and nontax liability plus business transfer payments less subsidies.
Source: Department of Commerce, Bureau of Economic Analysis.
246
TABLE B-12.—Output, costs, and profits of nonfinancial corporate business, 1948-80
[Quarterly data at seasonally adjusted annual rates]
Current-dollar cost and profit per unit of output (dollars)'
Gross domestic
nonfinancial
corporate
business (billions
of dollars)
Year or quarter
Tota!
cost
and
profit2
Current
dollars
1972
dollars
137.3
133.5
229.7
219.9
0.598
.607
151.9
174 5
182.3
195 0
191.9
247.5
270.2
275.2
292.0
283.4
.614
646
.663
668
.677
216.7
2316
242.3
236.3
266.0
315.1
324.1
328.3
313.4
347.4
1960
1961
1962
1963
1964
277.0
285.0
311.3
331.8
358.4
1965
1966
1967
1968
1969
Capital
consumption
allowances
with
capital
consumption
adjustment
Indirect
business
tax,
etc. 3
Compensation
Net
of
interest
employees
Corporate profits with
inventory valuation and
capital consumption
adjustments
Total
Profits
tax
liability
Profits
after
tax*
0.047 0.053
.053 .057
0.382
.388
0.004
.004
0.112
.104
0.051
.042
0.060
.062
.051
.054
.057
.058
.063
.057
056
.061
062
.061
.383
408
.430
.441
.446
.004
.004
.004
.004
.005
.120
124
.110
103
.101
.068
079
.065
.063
.055
.051
045
.045
040
.046
.688
715
.738
.754
.766
.061
.067
.073
.079
.074
.061
064
.068
.073
.073
.439
.467
.484
.497
.494
.005
.005
.007
.009
.009
.122
111
.106
.097
.116
.064
.062
.058
.052
.060
.057
049
.048
.045
.056
358.4
367.2
399.7
426.3
455.6
.773
.776
.779
.778
.787
.075
.075
.071
.069
.068
.079
.082
.083
.083
.084
.505
.504
.500
.494
.497
.010
.011
.011
.011
.012
.104
.104
.114
.120
.127
.054
.053
.052
.053
.053
.051
.051
.062
.067
.074
393 6
431.5
454.1
500 2
544.1
495.2
530.7
543.0
578.9
604.0
795
.813
.836
864
.901
.066
.067
.072
.074
.078
.083
.081
.084
.089
.096
.497
.515
.538
.558
.594
.012
.014
.016
.017
.022
.137
.136
.127
.127
.112
.055
.056
.051
.058
.055
082
.080
.076
.069
.057
1970
1971
1972
1973
1974
563 7
609.9
678.0
759.4
818.9
599.6
626.8
678.0
731.9
708.2
940
.973
1000
1.038
1.156
.087
.091
.092
.093
.112
.106
.113
.113
.114
.127
.631
.641
.659
.692
.786
.028
.029
.028
.031
.042
.088
.099
.107
.107
.090
.045
.047
.049
.055
.059
043
.052
.058
.053
.030
1975
1976
1977
1978
890.0
10013
1,129.5
1,270.7
1,417.0
694.2
745.5
799.0
845.1
873.3
1.282
1.343
1.414
1.504
1.623
.137
.141
.146
.153
.169
.140
141
.144
.148
.153
.837
.878
.924
.996
1.092
.044
.040
.042
.044
.052
.124
.144
.158
.163
.157
.059
.071
.074
.080
.080
.065
073
.084
.083
.077
1,533.9
866.2
1.771
.192
.176
1.197
.065
.142
.071
.071
1,196.3
1948
1949
1950
1951
1952.
1953
1954
„
1955
1956
1957
1958
1959
nil
;..'i
. . .
1979 '.ZZL1
1980
p
;.
1978:
til
IV
1,289.9
1,336.5
821.8
845.8
849.8
862.9
1.456
1.490
1.518
1.549
.151
.150
.155
.157
.148
.148
.148
.149
.970
.982
1.004
1.025
.043
.043
.044
.045
.144
.167
.168
.172
.069
.081
.081
.087
.075
.086
.086
.085
1979.
1
II
Ill
IV
1,378.7
1,399.5
1,432.1
1,457.7
874.7
870.8
874.3
873.4
1.576
1.607
1.638
1.669
.161
.168
.172
.175
.150
.151
.154
.157
1.052
1.079
1.104
1.135
.047
.050
.053
.056
.167
.159
.154
.146
.081
.079 •
.081
.078
.086
.080
.074
.067
1,502.1
1496 3
1,537.7
878.2
853.2
860.4
1.710
1754
1.787
.180
.192
.196
.161
173
.181
1.158
1.193
1.203
.060
.064
.067
.151
.132
.141
.085
.061
.070
.066
.071
.071
1,260.1
ii...'.". .'...". ZZZ~"ZZ ""."ZZ
1980:
ii
..'
.7.711"
Ill
1
Output is measured by gross domestic product of nonfinancial corporate business in 1972 dollars.
2
This is equal to the deflator for gross domestic product of nonfinancial corporate business with the decimal point shifted two
places to the left.
3
Indirect business tax and nontax liability plus business transfer payments less subsidies.
4
With inventory valuation and capital consumption adjustments.
Source!: Department of Commerce, Bureau of Economic Analysis.
247
TABLE B-13.—Personal consumption expenditures,
1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Year or
quarter
Services 1
Nondurable goods 1
Durable goods1
FurniPersonal
conture
Motor
sumption
vehicles and
expendi- Total
and household
tures
parts
equipment
Total
Food
Cloth- Gaso- Fuel
line
oil
and and and
coal
shoes oil
Household
operation'
Total
Hous-2
ing
Total
Elec- Transportricity tation
and
gas
1929
77.3
9.2
3.3
4.7
37.7
19.5
9.4
1.8
1.6
30.3
11.7
4.0
1.2
1933
45.8
3.5
1.1
1.9
22.3
11.5
4.6
1.5
1.2
20.1
8.1
2.8
1.1
1.5
1939
67.0
6.7
2.3
3.4
35.1
19.1
7.1
2.2
1.4
25.2
9.4
3.8
1.4
2.0
1940
1941
1942 .
1943
1944
1945 .
1946
1947...
1948
1949
71.0
80.8
88.6
99.4
108.2
119.5
143.8
161.7
174.7
178.1
7.8
9.7
6.9
6.5
6.7
8.0
15.8
20.4
22.9
25.0
2.8
3.5
.7
.8
.8
1.0
4.1
6.6
8.0
10.6
3.8
4.8
4.6
3.9
3.8
4.5
8.4
10.6
11.5
11.3
37.0
42.9
50.8
58.6
64.3
71.9
82.7
90.9
96.6
94.9
20.2
23.4
28.4
33.2
36.7
40.6
47.4
52.3
54.2
52.5
8.8
11.0
13.4
14.6
16.5
18.2
18.8
20.1
19.3
7l5
2.3
2.6
2.1
1.3
1.4
1.8
3.4
4.0
4.8
5.3
1.5
1.7
1.9
2.0
2.0
2.2
2.5
3.0
3.4
3.1
26.2
28.2
31.0
34.3
37.1
39.6
45.3
50.4
55.3
58.2
9.7
10.4
11.2
11.8
12.3
12.8
14.2
16.0
17.9
19.6
4.0
4.3
4.8
5.2
5.9
6.4
6.8
7.5
8.1
8.5
1.5
1.5
1.6
1.7
1.8
1.9
2.1
2.3
2.6
2.9
2.1
2.4
2.7
3.4
3.7
4.0
5.0
5.3
5.8
5.9
1950
1951.. . .
1952. . .
1953 . ..
1954
1955
1956
1957
1958
1959
.. ..
192.0
207.1
217.1
229.7
235.8
253,7
266.0
280.4
289.5
310.8
30.0
29.8
29.1
32.5
31.8
38.6
37.9
39.3
36.8
42.4
13.7
12.2
11.3
13.9
13.0
17.8
15.8
17.2
14.8
18.9
13.7
14.0
14.0
14.6
14.6
16.2
17.1
16.9
16.6
17.8
98.2
108.8
113.9
116.5
118.0
122.9
128.9
135.2
139.8
146.4
53.9
60.4
63.4
64.4
65.4
67.2
69.9
73.6
76.4
79.1
19.6
21.2
21.9
22.1
22.1
23.1
24.1
24.3
24.7
26.1
5.5
6.1
6.8
7.4
7.8
8.6
9.4
10.2
10.6
11.3
3.4
3.5
3.4
3.4
3.5
3.8
3.9
4.1
4.2
4.0
63.0
68.5
74.0
80.6
86.1
92.1
99.2
105.9
112.8
121.9
21.7
24.3
27.0
29.8
32.2
34.3
36.7
39.3
42.0
45.0
9.5
10.4
11.1
12.0
12.6
14.0
15.2
16.2
17.3
18.5
3.3
3.7
4.1
4.5
5.0
5.5
6.1
6.5
7.1
7.6
6.2
6.7
7.1
7.8
7.9
8.2
8.6
9.0
9.3
10.1
1960 ....
1961...
1962
1963
.. .
1964..
1965
. .
1966.
1967
1968
1969 . .
324.9
335.0
355.2
374.6
400.5
430 4
465.1
490.3
536.9
581.8
43.1
41.6
46.7
51.4
56.4
630
68.0
70.1
80.5
85.7
19.7
17.8
21.5
24.4
26.1
30 0
30.4
30.1
36.3
38.7
17.7
17.9
18.9
20.3
22.8
24 7
27.7
29.5
32.3
34.1
151.1
155.3
161.6
167.1
176.9
188 6
204.7
212.6
230.6
247.8
81.1
83.2
85.5
87.8
92.7
98 9
106.6
109.6
118.7
127.5
26.7
27.4
28.7
29.5
31.9
33 5
36.6
38.2
42.1
45.5
12.0
12.0
12.6
12.9
13.5
14 7
16.0
17.0
18.6
20.7
3.8
3.7
3.7
4.0
4.1
4.4
4.7
4.8
4.7
4.5
130.7
138.1
147.0
156.1
167.1
178 7
192.4
207,6
225.8
248.2
48.1
51.2
54.7
58.0
61.4
65.5
69.5
74.1
79.8
87.0
20.1
21.0
22.2
23.4
24.8
26 3
28.0
30.0
32.2
35.0
8.3
8.8
9.4
9.9
10.4
10.9
11.5
12.2
13.1
14.2
10.7
11.2
11.7
12.2
12.8
13.7
15.0
16.2
17.6
19.5
1970
1971. .
1972 ....
1973
1974 .
...
1975
1976. ...
1977
1978
1979
1980 p
621.7
672.2
737.1
812.0
888.1
976.4
1,084.3
1,205.5
1,348.7
1,510.9
1,670,1
85.2
97.2
111.1
123.3
121.5
132.2
156.8
178.8
199.3
212.3
210.2
36.2
45.4
52.4
57.1
50.4
55.8
72.6
85.0
94.3
95.5
89.0
35.2
37.2
41.7
47.1
50.6
53.5
59.1
65.8
72.9
81.1
84.1
265.7
278.8
300.6
333.4
373.4
407.3
441.7
479.0
529.8
602.2
674.4
138.9
144.2
154.9
172.1
193.7
213.6
230.6
250.3
276.4
312.1
46.8
50.6
55.4
61.4
64.8
69.6
75.3
82.1
91.9
98.9
22.4
23.9
25.4
28.6
36.6
40.4
44.0
48.2
52.7
68.4
270.8
296.2
325.3
355.2
393.2
437.0
485.7
547.7
619.6
696.3
345.0 104.7
89.0
4.4
4.5
5.0
6.2
7.7
8.2
9.8
10.6
11.7
16.0
20.0
785.5
93.9 37.7
102.7 41.0
112.5 45.2
123.8 49.6
137.4 55.2
149.8 63.3
166.5 71.6
186.8 80.8
213.1 89.5
241.9 98.7
272.4 111.7
15.4
17.0
18.8
20.5
24.0
29.2
32.9
38.2
42.4
47.3
55.8
22.0
25.1
27.5
28.8
30.9
33.2
38.6
45.3
51.0
57.2
64.1
1,278.3
1,330.1
1,369 9
1,416.6
185.0
200.1
202.0
210.2
86.8
96.4
95.5
98.5
68.2
72.2
73 9
77.3
504 0
520.4
536.3
558.3
2641
271.4
279.5
290.4
86 3
91.0
93.4
96.9
49 8
51.0
53.3
56.8
11.9
11.8
11.3
11.9
589 3
609.5
631.6
648.1
201.8
209.2
216.8
224.6
87 2
87.8
90.8
92.3
41.8
41.4
42.9
43.5
49.0
50.6
51.6
52.7
1,454.1
1,478.0
1,529.1
1,582.3
212.5
207.4
213.3
216.1
100.1
91.7
94.7
95.4
78.0
80.1
82.4
83.8
571.8
586.4
611.5
639.2
299.1 95.8
306.0 97.0
314.3 100.3
329.0 102.5
60.6
63.2
72.1
77.6
13.1
14.9
17.9
18.1
669.9
684.2
704.3
727.0
231.4 96.1
238.1 96.4
244.9 99.5
253.0 102.7
46.4
45.9
47.3
49.8
54.4
56.5
58.2
59.9
1,631.0 220.9
1,626.8 194.4
1,682.2 208.8
100.6
77.5
87.0
83.6
81.3
84.6
661.1
664.0
674.2
336.2 102.2
338.4 102.3
347.7 105.3
89.4
90.9
85.3
18.8
19.2
20.7
749.0
768.4
799.2
259.8 104.2
267.3 109.3
275.7 116.1
50.0
54.5
59.3
61.4
61.6
65.8
1978:
||
in"Z
ZZ.
IV
1979:
H. ' " . . . '
Ill
IV ...
1980:
uZZZZZZZ.
HI
1
Total includes "other" category, not shown separately.
Includes imputed rental value of owner-occupied housing.
Source: Department of Commerce, Bureau of Economic Analysis.
2
248
2.6
TABLE B-14.—Gross private domestic investment, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Fixed investment
Change in
htieinaec
Gross
private
domestic
investment
Year or quarter
Residential
Nonresidential
Total
Total
Structures
Producers'
durable
equipment
Total
Nonfarm
structures
inventories
ProFarm ducers'
struc- durable
tures equipment
Total
Nonfarm
1929
16.2
14.5
10.6
5.1
5.5
3.9
3.6
0.2
0.1
1.7
1.8
1933
1.4
3.0
2.4
1.0
1.4
.6
.5
.0
.0
-1.6
-1.4
1939
9.3
8.8
5.9
2.0
3.9
2.9
2.7
.1
.1
.4
.3
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
13.1
17.9
9.9
5.8
7.2
106
30.7
34.0
45.9
35.3
10.9
13.4
8.1
6.4
8.1
11.7
24.3
34.4
41.1
38.4
7.5
9.4
6.0
5.0
6.9
10.1
16.9
23.0
26.3
24.4
2.3
3.0
1.9
1.4
1.9
2.8
6.9
7.7
9.0
8.7
5.2
6.4
4.1
3.7
5.0
7.3
9.9
15.3
17.3
15.7
3.4
4.0
2.2
1.4
1.3
1.5
7.4
11.4
14.9
13.9
3.2
3.6
1.9
1.2
1.1
1.4
6.7
10.4
13.7
12.8
.2
.1
.1
2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
*4J
-3.1
1.9
4.0
.7
-.6
-.6
-6
6.4
1.3
3.0
22
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
53.8
59.2
52.1
53.3
52.7
68.4
710
69.2
619
78.1
47.0
48.9
49.0
52.9
54.3
62.4
66 3
67.9
63 4
72.5
27.3
31.3
31.3
34.5
34.2
38.5
440
47.0
42 0
45.9
9.5
11.4
11.6
12.9
13.4
14.6
17 7
18.4
17 2
17.6
17.8
19.9
19.7
21.5
20.8
23.9
26 3
28.6
24.9
28.3
19.8
17.6
17.7
18.4
20.1
23.9
22 3
20.9
214
26.6
18.6
16.4
16.5
17.3
19.0
22.8
212
19.7
20.3
25.3
6.8
10.3
3.1
.4
-1.5
6.0
47
1.3
-15
6.0
9.1
2.1
1.1
-2.1
5.5
51
.8
23
5.7
5.7
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
75.9
74.8
85.4
909
97.4
113 5
125.7
122.8
133.3
149.3
72.9
72.5
79.2
849
91.7
103.7
111.6
112.5
125.4
139.5
48.5
48.0
52.2
54.8
61.0
72.7
83.1
83.9
90.7
101.3
18.8
19.1
20.1
205
22.4
27 0
30.1
303
32.4
36.7
29.7
28.9
32.1
34.4
38.7
45.8
53.0
53.7
58.2
64.6
24.5
24.5
27.0
301
30.7
30 9
28.5
28 6
34.8
38.2
23.3
23.2
25.8
28.9
29.4
29 6
27.1
27 2
33.3
36.5
3.0
2.3
6.3
6.0
5.6
99
14.1
10 3
7.9
9.8
2.7
2.0
5.5
52
6.2
89
14.3
96
7.8
9.7
1970....
1971
1972
1973
1974
1975
1976 . . .
1977.
1978
1979
144.2
166.4
195.0
229.8
228.7
206.1
257 9
322.3
375.3
415.8
141.0
158.8
184.8
211.3
214.5
213.0
2460
301.3
353.2
398.3
103.9
107.9
121.0
143.3
156.6
157.7
174.1
205.5
242.0
279.7
38.7
40.5
44.1
51.0
55.9
55.4
58 8
64.6
78.7
96.3
65.2
67,4
76.9
92.3
100.7
102.3
115 3
140.9
163.3
183.4
37.1
50.9
63.8
68.0
57.9
55.3
72 0
95.8
111.2
118.6
35.4
48.9
61.5
65.6
54.8
52.4
68 8
91.9
106.9
113.9
1980 p
395.1
399.0
295.0
108.1
186.9
104.0
350.7
377 7
380 4
392.6
325.8
350.7
3613
374.9
222.6
239.4
2471
258.7
70.3
77 3
85.7
152.3
1621
165 8
173.0
HI
IV
408 3
423.2
421.7
410.0
384 0
390.1
408.3
410.8
267.3
272.9
288.5
290.2
87 3
93.2
99.6
105.1
1980:
|
||
Ill
415.6
390.9
377.1
413.1
383.5
393.2
297.8
289.8
294.0
108.2
108.4
107.3
....
.2
.1
.0
.0
.0
.5
3
.9
.8
.8
.8
.8
.8
'.S
.7
3
.4
.4
.4
.4
.4
.4
7
.7
'5
.6
.6
.5
.5
.6
j
.6
j
'7
.6
.7
.9
1.0
.6
1.3
1.0
1.1
1.5
1.8
1.8
1.1
1.3
1.5
1.7
1.8
1.9
21
2.3
2.6
2.9
3.1
3.2
6.4
7.7
9.6
10.2
15.2
18.5
16.0
14.1
-6.9 -10.5
13 9
118
20.2
21.0
21.8
22.2
13.4
17.5
99.1
1.9
3.0
-3.9
26
103.2
1113
114 2
116.2
98.9
107 4
109 6
111.6
2.0
1.8
1.4
2.4
25
24,9
27 0
1.9
2.7
17.7
24.6
26 7
18 6
17.2
179 9
179.7
189.0
185.1
116 7
117.2
119 8
120.6
112 5
112.9
114.9
115.4
16
1.6
2.0
2.3
27
2.8
2.9
3.0
24 3
33.1
13.3
-.8
20 8
29.2
7.8
-4.4
189.7
181.4
186.8
115.2
93.6
99.2
110.1
88.9
94.5
2.2
1.8
1.7
2.5
3.0
7.4
2.9
3.0 -16.0
1.5
6.1
12 3
.7
1978:
It
Ill
IV
1979:
1
II
813
Source: Department of Commerce, Bureau of Economic Analysis.
249
26
191
TABLE B-15.—Inventories and final sales of business, 1946-80
[Billions of dollars, except as noted; seasonally adjusted]
Inventories'
Inventory—final
sales ratio
Nonfarm
Year and quarter
Total
Fourth quarter:
1946
1947
1948
1949
Farm
Total
Manufacturing
Wholesale
trade
Final
sales 2
Retail
trade
Other
Total
Nonfarm3
72.0
82 6
87.2
78.7
22.7
251
22.9
19.8
49.3
57 5
64.3
59.0
267
29.3
32.5
28.9
10.1
10.5
11.7
11.8
11.4
131
15.1
14.0
3.5
4.6
5.0
4.3
16.0
18 3
19.6
19.5
4.500
4.514
4.438
4.028
3.081
3.143
3.274
3.016
1950
1951
1952
1953
1954
98.0
110.5
109.2
110.1
107.6
26.1
28.3
26.0
24.6
23.8
71.9
82.2
83.1
85.5
83.9
35.2
43.4
44.4
46.4
44.3
13.8
14.6
14.8
15.0
15.3
17.5
18.0
17.7
18.3
18.5
5.4
6.1
6.2
5.8
5.9
21.7
24.6
26.1
27.2
27.5 '
4.525
4.485
4.181
4.053
3.913
3.322
3.336
3.183
3.148
3.050
1955..
1956
1957
1958
1959
114 8
124.0
127.6
127.3
132.0
22 5
22.9
24.3
25.6
24.4
92 2
101.0
103.3
101.7
107.6
48.8
54.5
54.8
53.2
55.7
16.6
17.9
18.2
18.3
20.0
20 9
21.7
22.9
22.9
23.9
6.0
6.9
7.3
7.3
8.0
29 7
31.4
32.7
33.7
35.6
3.863
3.945
3.898
3.773
3.709
3105
3.216
3.155
3.013
3.025
1960
1961
1962
1963
1964
136.0
137.9
144.6
150.4
156.2
25.6
25.9
27.3
27.6
26.5
110.4
112.1
117.3
122.7
129.7
56.6
57.7
60.9
62.9
66.4
20.4
20.9
21.5
23.1
24.4
25.3
24.9
26.3
27.6
29.0
8.1
8.7
8.6
9.2
9.9
36.9
38.8
41.1
43.7
46.2
3.687
3.555
3.518
3.438
3.382
2.993
2.889
2.853
2.806
2.809
1965
1966
1967
1968
1969
170.5
187.4
199.4
213.5
234.6
29.9
29.6
29.5
30.6
33.3
140.6
157.8
169.9
182.9
201.3
71.5
81.7
88.7
95.2
104.8
26.3
29.9
32.4
34.3
37.7
31.9
34.6
35.3
39.0
42.8
10.9
11.6
13.5
14.4
16.0
51.0
54.1
57.6
63.3
67.4
3.342
3.465
3.463
3.371
3.480
2.756
2.918
2.950
2.888
2.986
244.0
260.8
288.7
357.7
434.4
32.3
36.7
45.6
66.6
62.4
211.6
224.1
243.1
291.2
372.0
108.4
109.9
116.8
141.1
189.6
41.7
44.9
49.4
60.2
76.9
44.3
50.5
55.7
64.8
74.1
17.3
18.8
21.2
25.0
31.3
70.8
77.2
85.8
94.5
102.0
3.446
3.376
3.366
3.787
4.257
2.990
2.901
2.834
3.082
3.646
439.4
473.6
520.9
600.5
7101
64.5
60.6
61.4
76.0
84 3
374.9
413.0
459.5
524.5
625 9
189.8
207.5
225.6
254.7
3112
77.3
86.9
98.5
114.2
134 6
74.6
82.9
93.7
108.4
122 6
33.3
35.7
41.6
47.2
57 5
113.6
124,1
1392
159.3
176 2
3.867
3.815
3.743
3.770
4 030
3.300
3.327
3.301
3.292
3 551
1978:
I
II
Ill
IV
539.9
560.2
578.3
600.5
65.6
69.2
72.0
76.0
474.2
491.0
506.2
524.5
232.1
239.1
246.4
254.7
103.3
106.3
109.2
114.2
97.3
101.2
104.8
108.4
41.6
44.4
45.8
47.2
140.9
148.6
153.6
159.3
3.831
3.770
3.765
3.770
3.365
3.304
3.296
3.292
1979:
|
tl
Ill
IV
626.2
654.5
681.9
7101
79.4
80.5
83.4
84 3
546.7
574.0
598.5
625 9
267.6
281.9
295.0
3112
118.8
123.9
129.4
134 6
111.3
116.3
119.7
122 6
49.0
51.9
54.5
57 5
163.6
165.1
171.4
176 2
3.828
3.964
3.979
4 030
3.342
3.477
3.492
3 551
724.5
740.4
765.8
77.8
81.8
92.6
646.6
658.5
673.2
325.0
331.2
335.3
138.5
142.0
146.3
122.8
124.0
127.3
60.3
61.3
64.3
181.2
179.9
187.2
3.998
4.115
4.092
3.568
3.660
3.597
1970... .
1971 ..
1972
1973
1974
1975
1976
1977
1978
1979
.. .
. .
1980:
II. " " "
Ill
V ..
1
2
3
End of quarter.
Monthly rates.
Ratio based on total final sales, which include a small amount of final sales by farms.
Note.—The industry classification of inventories is on an establishment basis and is based on the 1972 Standard Industrial
Classification (SIC) beginning in 1948 and on the 1942 SIC prior to 1948.
Source: Department of Commerce, Bureau of Economic Analysis.
250
TABLE B-16.—Inventories and final sales of business in 1972 dollars, 1947-80
[Billions of 1972 dollars, except as noted; seasonally adjusted]
Inventories1
Inventory—final
sales ratio
Nonfarm
Final
sales 2
Year and quarter
Total
Farm
Total
Fourth quarter:
1947
1948
1949
Manufacturing
Wholesale
trade
Retail
trade
Other
Total
Nonfarm^
1161
121.6
117.2
257
26 7
26.2
90 5
94.8
91.0
47.4
48.8
46.2
160
17.2
17.2
18.3
20.3
19.8
87
8.6
7.8
33.2
34.4
34.6
3.500
3.535
3.382
2.727
2.758
2.626
1950
1951
1952
1953
1954
127 7
141.4
145.7
147.2
145.0
27 5
29.1
30.4
30.2
31.1
100 2
112.3
115.4
117.1
114.0
49 3
60.0
62.7
64.5
60.9
19 2
19.7
20.1
20.3
20.6
23.0
23.0
23.0
23.6
23.7
87
9.5
9.6
8.7
8.8
36.9
39.8
41.6
43.0
43.1
3 462
3.553
3.505
3.423
3.364
2 716
2.821
2.775
2.722
2.643
1955
1956
1957
1958
1959
152.8
158.6
1601
158 3
165.3
31.5
30 7
314
32 4
32.4
121.2
127 8
128 7
1259
132.9
64.3
69.1
68 7
66.1
69.1
22.1
22.8
22 5
22.5
24.6
26.5
26.8
27.8
27.5
28.7
8.4
92
98
9.8
10.5
45.6
46.5
47.1
48.1
49.7
3.348
3.413
3 399
3.292
3.329
2.657
2.751
2.733
2.618
2.676
1960
1961
1962
1963
1964
168 8
171.8
179 7
187.2
194.3
32 8
33.2
34 5
35.7
35.1
1361
138.6
145 2
151.5
159.2
699
71.7
75 6
78.2
82.0
251
25.7
26 6
28.4
29.9
30.3
29.8
31.6
33.0
34.5
10 7
11.4
11.4
12.0
12.8
50.7
53.1
55.3
58.3
60.9
3 329
3.237
3.248
3.212
3.190
2 683
2.611
2.625
2.600
2.614
1965
1966
1967
1968
1969
2061
222.9
2351
244.1
255.1
36 2
36.0
36 8
37.0
37.3
169 9
186.8
198 3
207.0
217.8
87.0
97.2
104.1
108.4
112.8
316
35.3
37.8
38.9
41.2
37.4
40.0
40.0
43.0
45.9
13.8
14.3
16.3
16.8
17.9
66.1
67.5
70.1
73.8
74.7
3.120
3.301
3.356
3.307
3.415
2.571
2.767
2.830
2.805
2.915
1970
1971
1972
1973
1974
258 9
267.0
277.2
294.4
306.0
37 7
39.2
39.8
42.1
41.8
2212
227.8
237.4
252.3
264.2
112.9
111.8
114.4
121.8
130.9
44 0
45.9
47.9
50.4
54.1
46.1
51.2
54.6
58.8
58.3
18.2
19.0
20.5
21.4
20.9
75.2
78.9
84.7
87.3
85.1
3.442
3.384
3.274
3.373
3.593
2.940
2.887
2.804
2.891
3.103
1975
1976
1977
1978
1979
299.2
307.0
319.3
333.3
343.5
43.0
41.1
41.1
41.1
43.5
256.3
265.9
278.3
292.2
300.0
127.1
130.9
133.9
139.1
145.9
52.2
55.5
59.5
63.2
64.2
55.8
58.8
63.0
66.8
66.8
21.1
20.8
21.9
23.0
23.1
88.3
92.4
97.9
103.1
105.4
3.388
3.321
3.261
3.233
3.260
2.901
2.877
2.841
2.834
2.847
323 8
327.8
330 7
333.3
411
41.1
411
41.1
282 7
286 7
289 6
292.2
135 5
136.9
138 2
139.1
612
61.8
62.1
63.2
64 2
65.2
66.3
66.8
217
22.7
23.0
23.0
97.6
100.4
101.7
103.1
3 316
3.265
3.250
3.233
2.895
2.855
2.846
2.834
337.2
341.7
343.7
343.5
41.6
42.2
43.0
43.5
295.5
299.5
300.7
300.0
141.8
143.9
145.0
145.9
63.9
64.1
64.5
64.2
66.8
68.4
68.1
66.8
23.0
23.2
23.1
23.1
103.6
102.7
104.4
105.4
3.254
3.328
3.293
3.260
2.852
2.917
2.881
2.847
343 3
343.6
342.3
43 6
43.8
43.4
299 6
299.8
299.0
147 3
147.2
145.9
64.1
64.5
64.7
64.9
64.7
65.1
234
23.4
23.4
106.1
102,8
103.9
3.236
3.341
3.294
2.825
2.915
2.877
1978:
1
||
III
IV
1979:
I
II
Ill
tv
S
. ..
1980:
II
III
1
2
3
End of quarter.
Monthly rates.
Ratio based on total final sales, which include a smalt amount of final sates by farms.
Note.—The industry classification of inventories is on an establishment basis and is based on the 1972 Standard Industrial
Classification (SIC) beginning in 1948 and on the 1942 SIC prior to 1948.
Source: Department of Commerce, Bureau of Economic Analysis.
251
TABLE B-17.—Relation of gross national product and national income, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Year or quarter
Gross
national
product
Less:
Capital
consumption
allowances
with
capital
consumption
adjustment
Equals:
Net
national
product
PIUS:
Subsidies
less
current
surplus
of
government
enterprises
Less:
Indirect
business
tax and
nontax
liability
Business
transfer
payments
Statistical
discrepancy
Equals:
National
income
103.4
9.7
93.7
-0.2
7.1
0.6
1.1
84.8
1933
55.8
7.4
48.4
-.0
7.1
.7
.7
39.9
1939
90.9
8.7
82.2
.4
9.4
.5
1.4
71.4
100 0
125.0
158.5
192.1
210.6
212.4
209 8
233.1
259 5
258.3
9.1
10.0
11.2
11.5
11.7
12.2
14.0
17.3
20.2
21.8
91.0
115.0
147.3
180.7
198.9
200.2
195.8
215.7
239.3
236.5
4
.1
1
.1
6
.7
.9
-.2
- 1
-.3
10.1
11.3
11.8
12.8
14.2
15.5
17.1
18.4
20.1
21.3
4
.5
5
.5
5
.5
5
.6
7
.8
11
.6
- 8
-1.8
27
4.1
5
1.5
-16
.6
79 7
102.7
135.9
169.3
1821
180.7
178.6
194.9
2199
213.6
1950
1951...
1952
1953
1954
1955
1956
1957 ..
1958
1959
286.5
330.8
348 0
366.8
366 8
400 0
421.7
444.0
449.7
487.9
23.5
27.2
29 3
31.0
32.7
34 8
38.7
41.7
43.5
44.9
263.0
303.6
318.7
335.8
334.1
365.3
383.0
402.3
406.2
443.0
.1
_.l
_ 3
J
1.1
.1
23.4
25.3
27.7
29.7
29.6
32 2
35.1
37.5
38.7
41.8
.8
9
10
1.2
11
12
1.4
1.5
1.6
1.8
1.3
3.2
17
2.3
20
13
-2.1
-1.2
.2
-1.3
237.6
274.1
287 9
302.1
301.1
330 5
349.4
365.2
366.9
400.8
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
506 5
524.6
565.0
596.7
637.7
691.1
756.0
799 6
873.4
944.0
46 3
47.5
49.0
50.6
52.9
56.0
60.7
65 9
72.1
80.0
460.2
477.0
516.1
546.1
584.8
635.0
695.3
733 7
801.3
864.0
4
1.7
1.8
1.1
1.7
1.6
2.5
16
1.4
1.9
45.4
48.0
51.6
54.6
58.8
62,6
65.3
70 2
78.9
86.6
20
2.0
2.1
2.4
2.7
2.8
3.0
31
3.4
3.9
-2 4
-.1
2.1
1.7
.1
-1.2
1.4
- 3
-2.1
-3.9
415 7
428.8
462.0
488.5
524.9
572.4
628.1
662 2
722.5
779.3
992 7
1,077.6
1,185.9
1,326 4
1,434.2
1,549.2
1,718.0
1,918.0
2,156.1
2,413.9
88.1
96.5
106.4
116.5
136.0
159.3
175.0
196.0
221.2
253.6
904.7
981.1
1,079.5
1 209.9
1,298.2
1,389.9
1,543.0
1,722.0
1,934.9
2,160.3
29
2.6
3.8
34
1.1
2.4
1.0
3.1
3.6
3.1
94.3
103.7
111.5
120.9
129.1
140.1
151.7
166.0
178.1
188.4
41
4.4
4.9
55
5.8
7.4
7.9
8.2
8.7
9.4
-15
4.1
3.3
8
3.7
5.5
5.1
4.4
6.4
2.2
810.7
871.5
963.6
1 086.2
1,160.7
1,239.4
1,379.2
1,546.5
1,745.4
1,963.3
2,627.4
287.8
2,339.6
4.7
211.7
10.5
1.7
2,120.5
II
III
IV
22il29.6
032 4
2,190.5
2,271.9
210
217.10
224.9
232.7
1822
4
1,912.5
1,965.6
2,039.2
43.7
5
1.8
4.4
174.3
179.6
177.0
181.4
85
8.6
8.7
8.9
- 7.3
.5
10.0
8.7
11,720.7
644.6
1,771.7
1,844.6
1979:
1
II
III
IV...,
2,340.6
2,374.6
2,444.1
2,496.3
240.1
249.8
259.6
265.1
2,100.5
2,124.8
2,184.6
2,231.2
2.4
3.0
4.0
2.7
184.5
185.8
190.0
193.5
9.1
9.3
9.6
9.8
5.8
.7
2.8
-.7
1,903.6
1,932.0
1,986.2
2,031.3
1980:
1
li
Ill
2,571.7
2,564.8
2,637.3
274.6
283.7
291.8
2,297.1
2,281.1
2,345.5
3.1
3.7
6.3
198.9
206.3
215.8
10.1
10.3
10.6
2.8
1.9
3.0
2,088.5
2,070.0
2,122.4
1929
1940
1941
1942
1943
1944
1945
1946..
1947
1948
1949
1970
1971
1972
1973., .
1974
1975
1976
1977
1978
1979 .
. . .
..
.
1980 "
-3
- 0
1978:
Source: Department of Commerce, Bureau of Economic Analysis.
252
TABLE B-18.—Relation of national income and personal income, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Plus:
Less:
National
income
Year or quarter
Corporate
profits
with
inventory
valuation
and
capital
consumption
adjust-
Wage
Equals:
Govern-
ment
Contribuaccruals
transfer Personal Personal Business Personal
tions for
Net
less
payments interest dividend transfer
interest social disburseincome
income payments income
to
insurance
ments
persons
ments
1929
1933
.....
84.8
9.0
4.7
0.2
0.0
0.9
6.9
5.8
0.6
85.0
39.9
-1.7
4.1
.3
.0
1.5
5.5
2.0
.7
47.0
1939
71.4
5.3
3.6
2.1
.0
2.5
5.4
3.8
.5
72.4
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
79.7
102.7
135.9
169.3
182.1
180.7
178.6
194.9
219.9
213.6
8.6
14.1
19.3
23.5
23.6
19.0
16.6
22.3
29.4
27.1
3.3
3.3
3.1
2.7
2.4
2.2
1.8
2.3
2.4
2.7
2.3
2.8
3.5
4.5
5.2
6.1
6.1
5.8
5.4
5.9
.0
.0
.0
.2
-.2
.0
.0
.0
.0
.0
2.7
2.6
2.7
2.5
3.1
5.6
10.8
11.2
10.6
11.7
5.3
5.3
5.2
5.1
5.2
5.9
6.6
7.6
8.1
8.7
4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2
.4
.5
.5
.5
.5
.5
.5
.6
.7
.8
77.9
95.4
122.6
150.8
164.5
170.0
177.6
190.1
209.0
206.4
1950
1951
1952
1953
1954
1955
1956
1957..
1958. . .
1959
237.6
274.1
287.9
302.1
301.1
330.5
349.4
365.2
366.9
400.8
33.9
38.7
36.1
36.3
35.2
45.5
43.7
43.3
38.5
49.6
3.0
3.5
4.0
4.4
5.3
5.9
6.6
7.9
9.6
7.1
8.5
9.0
9.1
10.5
11.2
12.5
13.7
14.9
16.7
18.8
20.3
22.5
8.8
8.5
8.5
8.8
9.1
10.3
14.4
11.6
12.1
12.9
15.1
16.2
17.3
20.1
24.3
25.2
9.7
10.1
11.5
12.9
14.9
15.2
18.0
.0
.1
.0
-.1
.0
.0
.0
.0
.0
.0
10.3
11.1
11.5
11.3
12.2
.8
.9
1.0
1.2
1.1
1.2
1.4
1.5
1.6
1.8
227.2
254.9
271.8
287.7
289.6
310.3
332.6
351.0
361.1
384.4
415.7
428.8
462.0
488.5
524.9
572.4
628.1
662.2
722.5
779.3
47.6
48.6
56.6
62.1
69.2
80.0
85.1
82.4
89.1
85.1
11.4
13.0
14.7
16.4
18.3
21.0
24.4
27.6
30.0
34.8
21.1
21.9
24.3
27.3
28.7
30.0
38.8
43.4
47.9
55.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
27.0
30.8
31.6
33.4
34.8
37.6
41,6
49.5
56.4
62.8
25.0
26.4
29.0
32.2
35.6
39.7
44.4
48.3
53.4
61.1
12.9
13.3
14.4
15.5
17.3
19.1
19.4
20.2
21.9
22.4
2.0
2.0
2.1
2.4
2.7
2.8
3.0
3.1
3.4
3.9
402.3
417.8
443.6
466.2
499.2
540.7
588.2
630.0
690.6
754.7
810.7
871.5
963.6
1,086.2
1,160.7
1,239.4
1,379.2
1,546.5
1,745.4
1,963.3
71.4
83.2
96.6
108.3
94.9
110.5
138.1
-164.7
185.5
196.8
41.4
46.5
51.2
60.2
76.1
84.5
87.2
100.9
115.8
143.4
58 6
64.6
74.2
92.4
104.3
110.9
126.0
140.6
161.8
187.1
.0
-.2
76.1
90.0
99.8
114.0
135.4
170.9
186.4
199.3
214.6
239.9
69.4
74.8
80.9
93.9
112.4
123.2
132.5
151.6
173.2
209.6
22.2
22.6
24.1
26.5
29.1
29.9
36.5
38.7
43.1
48.6
4.1
4.4
4.9
5.5
5.8
7.4
7.9
8.2
8.7
9.4
811.1
868.4
951.4
1,065.2
1,168.6
1,265.0
1,391.2
1,538.0
1,721.8
1,943.8
2,120.5
181.7
179.8
203.7
.0
284.0
256.3
54.4
10.5
2,160.5
1,644.6
1,720.7
1,771.7
1,844.6
163.6
185.2
190.5
202.7
107.3
112.3
117.8
125.7
155.3
159.9
163.4
168.5
.0
.0
.5
.4
208.5
209.7
218.7
221.6
161.7
168.5
176.9
185.6.
40.8
42.0
43.9
45.8
8.5
8.6
8.7
8.9
1,637.9
1,692.1
1,747.7
1,809.3
1,903.6
1,932.0
1,986.2
2,031.3
201.9
196.6
199.5
189.4
133.4
136.9
146.8
156.5
182.3
185.3
188.5
192.2
.1
-.9
-.1
.2
226.3
232.0
248.3
253.3
195.8
202.6
214.3
225.7
47.5
48.3
48.6
50.1
9.1
9.3
9.6
9.8
1,864.6
1,906.3
1,972.3
2,032.0
2,088.5
2,070.0
2,122.4
200.2
169.3
177.9
165.4
175.3
185.3
198.8
199.5
204.1
-.2
.0
.5
261.6
270.3
300.1
239.9
253.6
261.8
52.4
54.2
55.1
10.1
10.3
10.6
2,088.2
2,114.5
2,182.1
1960
1961.
1962....
1963
1964
1965
1966
1967
1968
1969 .
1970
1971
1972
1973
1974
1975
1976
1977 .
1978.
1979
.
.
.
..
...
.
. ..
1980 ".
. .
1978
ii V " .. .
Ill
IV . . . .
1979:
1
II
IJI
IV
1980:
1
II
IF)
Source: Department of Commerce, Bureau of Economic Analysis.
333-5HO
0 - 8 1 - 1 7
:
QL
3
253
.0
-.1
-.5
.0
.0
.0
.2
TABLE B-19.—National income by type of income, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual ratesj
Proprietors' itcome with inventory valuation and capital consumption
adjustments
Compensation
of employees
National
incomel
Year or
quarter
Total
Wages
and
salaries
Supplements
to
wages
and
salaries2
Nonfarm
Farm
Total
Total
Proprietors'
in
in-
come 3
Capital
consumption
adjustment
1 riven-
Total
Proprietors'
in
income4
Capital
tory"
valua- consumption
finn
iion
adjustadjustment
ment
84.8
51.1
50.5
0.6
15.0
6.1
6.3
-0.2
8.9
8.8
0.1
-0.1
39.9
29.5
29.0
.5
5.9
2.5
2.6
.0
3.3
3.9
-.5
.0
71.4
48.1
46.0
2.1
11.8
4.4
4.5
-.1
7.4
7.6
-.2
.0
1940
1941
...
1942
1943 .
. .
1944
1945
. .. .
1946
1947
1948 .
1949
79.7
102.7
135.9
169.3
182.1
180.7
178.6
194.9
219.9
213.6
52.1
64.8
85.3
109.5
121.2
123.1
U8.1
129.2
141.4
141.3
49.9
62.1
82.1
105.8
116.7
117.5
112.0
123.1
135.5
134.7
2.3
2.7
3.2
3.8
4.5
5.6
6.0
6.1
5.9
6.6
13.0
17.5
24.2
29.1
30.4
31.8
36.7
35.9
40.9
36.4
4.4
6.4
10.1
12.0
12.0
12.4
14.9
15.1
17.6
12.8
4.5
6.5
10.3
12.2
12.2
12.7
15.2
15.7
18.2
13.5
8.6
-.1
- . 2 * 11.1
14.1
-.2
17.1
-.2
18.4
-.3
19.4
-.3
21.8
-.3
20.8
-.5
23.3
-.6
23,6
-.7
8.6
117
14.4
17,1
18.3
19.3
23.3
21.8
23.1
.0
-.6
-.4
-.2
-.1
-.1
.0
.0
.1
.2
.2
.2
.2
.5
.6
.9
1950 .. . .
1951
1952... .
1953....
1954
1955
1956
1957
1958 .. . .
1959
237.6
274.1
287.9
302.1
301.1
330.5
349.4
365.2
366.9
400.8
154.8
181.0
195.7
209.6
208.4
224.9
243.5
256.5
258.2
279.6
147.0
171.3
185.3
198.5
196.8
211,7
228.3
239.3
240.5
258.9
7.8
9.7
38.7
43.2
43.4
41.8
41.2
42.9
43.9
45.3
47.7
47.6
137
16.1
15.1
13.1
12.5
11.5
11.2
11.1
13.2
10.9
14.4
16.9
16.0
13.9
13.3
12.2
12.1
12.1
14,1
11.9
-.7
-.8
-.8
-.8
-.8
-.8
-.9
-.9
-.9
25.1
26.4
26.9
27.6
27.6
30.5
31.8
33.1
33.2
35.3
-1.1
10.4
11.0
11.6
13.2
15.2
17.2
17.7
20.6
1960
1961.. .
1962. .
..
1963 . . . .
1964 .. .
1965 .
. ..
1966 . ..
1967
1968
. ..
1969 ..
415.7
428.8
462.0
488.5
524.9
572.4
6281
662.2
722.5
779.3
294.9
303.6
325.1
342.9
368.0
396.5
439 3
471.4
519.9
572.9
271,9
279.5
298.0
313.4
336,1
362.0
398 4
427.0
469.6
515.7
23.0
24.1
27.1
29.5
31.8
34.5
40 9
44.4
50.3
57.2
47.2
48.6
49.9
50.5
52.5
56.9
60 5
61.2
64.0
67.0
11.7
12.1
12.3
12.0
10.8
13.1
14 1
34.2
35.3
36.4
37.2
40.2
.0
.0
.0
.0
-.1
-.2
1970
1971
1972 ... .
1973 . . ..
1974
1975 ..
1976 .
1977 ...
1978
1979
810.7
871.5
963.6
1,086.2
1,160.7
1,239.4
1,379.2
1,546.5
1,745.4
1,963.3
612,0
652.2
718.0
801.3
877.5
931.4
1,036.3
1,152.3
1,299.7
1,460.9
548.7
581.5
635.2
702.6
765.2
806.4
889.9
983.8
1,105.4
1,235.9
63.2
70.7
82.8
98.7
112.3
125.0
146.4
168.5
194.3
225.0
1980 P.
2,120.5
1,596.5
1,343.6
1,644.6
1,720.7
1,771.7
1,844.6
1,238.1
1,282.3
1,316.5
1,361.7
1,903.6
1,932.0
1 986.2
2,031.3
2,088.5
1929
.
.
1933....
1939
. .
1978:
I
II .
Ill
IV
1979:
I
jj
lit
IV
'„
25.0
27.2
28.2
28.6
28.7
31.4
32.7
34.2
34.5
-1.0
367
-.9
-.8
-.8
35.5
36.5
37.6
38.5
41.7
43.8
111
-1.7
-1.5
-.4
.5
-.3
.2
-.2
.0
-.2
-.5
-.3
-.1
.0
1.0
1.0
1.1
1.2
1.2
1.2
1.4
1.4
1.4
1.4
-.9
464
48*
45 3
12.7
14.6
12.6
12.9
13.0
12.8
11.5
13.8
14 9
13.5
13.7
15.7
-1.0
-1.2
51.3
52.5
50.6
51.9
1.4
-.5
66.2
69.4
76.9
93.8
88.7
90.0
94.1
103.5
117.1
131.6
14.3
15.0
18.7
32.8
26.5
24.6
19.1
18.4
26.1
30.8
15.6
16.4
20.4
34.6
29.0
28.0
22.8
22.6
31.0
36.6
-1.3
-1.4
-1.6
-1.8
-2.5
-3.4
-3.7
-4.3
-4.9
-5.8
51.9
54.4
58.1
61.0
62.2
65.4
75.0
85.1
91.0
100.7
517
54.5
58.1
62.3
65.8
67.4
77.1
87.1
93.8
105.2
-.5
-.6
-7
=2.0
=-3.7
-1.2
-1.2
-1.3
-2.2
-3.4
-1.0
252.9
130.6
23.4
30.3
-6,9
107.2
112.6
-3.4
-1.9
1,052.8
1,091.0
1,119.8
1,157.9
185.4
191.3
196.8
203.8
110.3
115.5
118.2
124.6
22.9
24,9
26.1
30.6
27.5
29.7
31.1
35.8
-4.6
-4.8
-5.0
-5.2
87.4
90.5
92.1
94.0
89.7
93.1
94.9
97.4
-1.7
=2.1
-2.2
1,409.9
1,439.0
1,476.7
1,518.1
1,194.9
1,217.8
1,248.5
1,282.4
215.0
221.2
228.2
235.7
127.8
129,4
132 9
X3S*3
30.9
32.6
30.2
29*5
36.3
38.3
36.2
35.7
-5.4
—5.9
62
96.8
96.8
102.7
106.8
100.5
100.6
107.3
112 2
-3.0
-3.1
—3.5
1,558.0
1,569.0
1,597.4
1,314.5
1,320.4
1,342.3
243.5
248.6
255.0
133.7
124.9
129.7
25.7
23.3
22.1
32.3
30.2
29,0
-6.5
-6.9
-6.9
107.9
101.6
107.6
114.8
105.5
113.1
-5.3
-2.0
-3.5
its
—7
-7
-.7
—8
-57
427
— .2
415
-27
=40
1.3
1.2
1.2
1.4
1.5
1.3
13
U
1.1
1.1
.8
'.8
.6
.1
-.8
=.9
-7
-.6
_=. 7
~'.8
-.7
=.8
17
•*- l.t
1 *\
—1.3
1980:
nZZZZZZ'. 2,070.0
III
2,122.4
See next page for continuation of table.
254
-1.6
-1.9
-2.0
TABLE B-19-—National income by type of income, 1929-80—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Rental income of persons
with capital consumption
Corporate profits with inventory valuation and capital consumption
adjustments
Profits with inventory valuation adjustment and
without capital consumption adjustment
Year or quarter
Rental Capital
conTotal
Total income
of sumption
persons adjustment
Net
Capital
Invencon- interest
sumption
tory
Profits after tax
valua- adjustTotal Profits Profits
ment
tion
before tax
Undis- adjustDivitaxes liability Total dends tributed ment
profits
Profits
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959..
1960
. ...
1961
1962.
1963
1964 . ..
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
4.9
2.2
2.6
2.7
3.1
4.0
4.4
4.5
4.6
55
5.3
5.7
6.1
7.1
7.7
8.8
10.0
11.0
11.3
11.6
12.2
12.9
13.6
14.5
15.0
15.8
16.5
17.1
18.0
18.7
19.7
19 5
19.6
19 7
20.2
21.0
22.6
23 5
23^0
23.5
25.1
27.4
30.5
5.7
2.3
3.1
3.3
3.9
5.0
5.6
5.9
6.2
7.3
7.7
8.5
8.9
10.0
11.0
12.2
13.4
14.4
14:8
15.2
15.9
16.7
17.4
18.0
18.4
19.1
19.7
20.2
21.2
22.3
23.6
24.0
25.2
258
27.1
29.0
32.1
35 3
36*8
39.2
44.2
50.8
58.9
08
9.0
-.1 -1.7
5.3
-.6
-.6
8.6
- . 8 14.1
19.3
-12
23.5
- 1 . 4 23.6
- 1 . 6 19.0
- 1 . 8 166
- 2 . 5 22.3
- 2 . 8 29.4
- 2 . 8 27.1
- 2 . 9 33.9
- 3 . 3 38.7
- 3 . 4 36.1
- 3 . 4 36.3
- 3 . 3 35.2
- 3 . 5 45.5
- 3 . 6 43.7
- 3 . 6 43.3
- 3 . 8 38.5
- 3 . 8 49.6
- 3 . 5 47.6
- 3 . 4 48.6
- 3 . 4 56.6
- 3 . 2 62.1
- 3 . 2 69.2
- 3 . 3 80.0
- 3 . 6 85.1
- 3 . 9 82.4
- 4 5 891
- 5 . 6 85.1
- 6 1 714
- 6 . 9 83.2
- 8 . 0 96.6
- 9 . 5 108.3
— 118 94 9
— 1318 nois
- 1 5 . 6 138.1
- 1 9 . 1 164.7
- 2 3 . 4 185.5
- 2 8 . 3 196.8
1980"
31.9
65.1
-33.3
181.7 199.2 241.2
25.3
25.4
28.7
30.0
46.7
48.3
52.7
55.3
-21.5
-22.9
-24.0
-25.3
163.6
185.2
190.5
202.7
174.9
197.4
205.4
218.3
196.5
220.6
227.9
248.1
30.7
30.1
30.3
31.0
56.7
57.6
59.7
61.4
-26.0
-27.5
-29.4
-30.4
201.9
196.6
199.5
189.4
217.8
213.0
215.6
204.5
253.1
250.9
262.0
255.4
312
31.5
32.0
62.9
64.5
65.9
- 3 1 . 6 200.2 215.6 277.1
- 3 3 . 0 169.3 186.9 217.9
- 3 3 . 9 177.9 195.9 237.6
1929
1978:
ii;.'."."."...." *"
HI
IV
1979:
1
II
Ill
[V
1980:
II
Ill
10.5
-1.2
6.5
9.8
15.4
20.5
24.5
24.0
19.3
19.6
25.9
33.4
31.1
37.9
43.3
40.6
40.2
38.4
47.5
46.9
46.6
41.6
52.3
49.7
50.0
55.1
59.7
66.0
76.0
80.9
78.1
84.9
80.8
68.9
94^0
105.6
96 7
120.6
151.6
176.7
199.0
212.7
10.0
1.0
7.2
10.0
17.9
21.7
25.3
24.2
19.8
24.8
31.8
35.6
29.2
42.9
44.5
39.6
41.2
38.7
49.2
49.6
48.1
41.9
52.6
49.8
49.7
55.0
59.6
66.5
77.2
83.0
79.7
88 5
86.7
754
86.6
100.6
125.6
136 7
132.1
166.3
192.6
223.3
255.4
1.4
.5
1.4
2.8
7.6
11.4
14.1
12.9
10.7
9.1
11.3
12.4
10.2
17.9
22.6
19.4
20.3
17.6
22.0
22.0
21.4
19.0
23.6
22.7
22.8
24.0
26.2
28.0
30.9
33.7
32.5
39.2
39.5
34 2
37.5
41.6
49.0
51.6
50.6
63.8
72.6
83.0
87.6
8.6
.4
5.7
7.2
10.3
10.3
11.2
11.3
9.1
15.7
20.5
23.2
19.0
25.0
21.9
20.2
20.9
21.1
27.2
27.6
26.7
22.9
28.9
27.1
26.9
31.1
33.4
38.5
46.3
49.4
47.2
49 4
47.2
413
49.0
58.9
76.6
85.1
81.5
102.5
120.0
140.3
167.8
5.8
2.0
3.8
4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2
8.8
8.5
8.5
8.8
9.1
10.3
11.1
11.5
11.3
12.2
12.9
13.3
14.4
15.5
17.3
19.1
19.4
20.2
22 0
22.5
22 5
22.9
24.4
27.0
29.9
30.8
37.4
39.9
44.6
50.2
2.8
-1.6
2.0
3.2
5.8
6.0
6.7
6.7
4.5
10 2
14.2
16.2
11.8
16.2
13.4
11.8
12.1
11.9
16.9
16.6
15.2
11.6
16.7
14.3
13.6
16.6
17.9
21.2
27.2
29.9
27.0
27 3
24.7
18 8
26.1
34.5
49.6
55.2
50.7
65.1
80.1
95.7
117.6
80.1 161.1
71.2
83.3
85.0
92.3
125.4
137.2
142.9
155.8
88.5
86.4
88.4
87.2
0.5
.1
-.5
-1.2
-2.1
-1.6
-3 7
-5.9
-66
-4.6
-6.6
-20.0
-40.0
-11.6
-14.7
-15.8
-24.3
-42.6
-1.4
-.6
-1.1
-1.2
-1.3
-1.2
-1.0
-.3
—2
-30
-3.6
-4.0
-3.9
-4.0
-4.6
-4.5
-3.9
-3.2
-2.0
-3.2
-3.4
-3.2
-2.7
-2.0
-1.4
1.5
2.5
3.1
4.0
4.2
4.3
43
4.3
25
1.3
2.7
2.7
-1.8
-10.1
-13.5
-12.0
-13.5
-15.9
4.7
4.1
3.6
3.3
3.3
3.1
2.7
2.4
2.2
18
2.3
2.4
2.7
3.0
3.5
4.0
4.4
5.3
5.9
6.6
7.9
9.6
10.3
11.4
130
14.7
16.4
18.3
21.0
24.4
27.6
30 0
34.8
41.4
46.5
51.2
60.2
76.1
84.5
87.2
100.9
115.8
143.4
56.0
105.1 - 4 2 . 0
-17.5
179.8
42.3
43.5
45.4
47.3
83.1
93.8
97.4
108.4
-21.6
-23.2
-22.6
-29.8
-11.3
-12.2
-14.9
-15.6
107.3
112.3
117.8
125.7
164.6 49.0
164.6 49.8
173.6 50.2
168.2 51.6
115.5
114.8
123.5
116.6
-35.3
-37.9
-46.5
-50.8
-15.9
-16.4
-16.1
-15.1
133.4
136.9
146.8
156.5
128.9 - 6 1 . 4
90.7 - 3 1 . 1
102.4 - 4 1 . 7
-15.4
-17.6
-17.9
165.4
175.3
185.3
94.2 182.9 53.9
71.5 146.5 55.7
78.5 159.1 56.7
-2.1
-.7
-.2
-2.5
-1.2
-.8
-.3
-.6
-5.3
-5.9
-2.2
1.9
-5.0
-1.2
1.0
-1.0
-.3
-1.7
-2.7
-1.5
-.3
-.3
—.2
Q
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 B-17.
2
Employer contributions for social insurance and to private pension, health, and welfare funds; workmen's compensation,directors'
fees; and a few other minor items.
3
With inventory valuation adjustment and without capital consumption adjustment.
4
Without inventory valuation and capital consumption adjustments.
Source: Department of Commerce, Bureau of Economic Analysis.
255
TABLE B-20.—Sources of personal income, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Wage and salary disbursements l
Personal
income
Year or quarter
Commodityproducing
industries
Total
Total
Manufacturing
Distributive
industries
Service
industries
Government
and
government
enterprises
Other
labor
income 1
Proprietors'
income with
inventory
valuation and
capital
consumption
adjustments
Farm
Nonfarm
1929
85.0
50.5
21.5
16.1
15.6
8.4
5.0
8.9
47.0
29.0
9.8
7.8
8.8
5.2
5.2
0.5
.4
6.1
1933
2.5
3.3
1939
72.4
46.0
17.4
13.6
13.3
7.1
8.2
.6
4.4
7.4
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
77,9
95.4
122.6
150.8
164.5
170.0
177.6
190.1
2090
206.4
49.9
62.1
82.1
105.6
116 9
117!5
112.0
123.1
135 5
134.8
19.7
27.5
39.1
49.0
504
45.9
46.0
54.2
611
57.8
15.6
21.7
30.9
40.9
429
38.2
36.5
42.5
471
44.6
14.2
16.3
18.0
20.1
22.7
24.8
31.0
35.2
37 5
37.7
7.5
8.1
9.0
9.9
10.9
11.9
14.3
16.1
179
18.5
8.5
10.2
16.0
26.6
33.0
34.9
20.7
17.5
19 0
20!8
.6
7
.9
1.1
1.5
1.8
2.0
2.4
27
2.9
4.4
6.4
10.1
12.0
12.0
12.4
14.9
15.1
17 6
12.8
8.6
11.1
14.1
17.1
18.4
19,4
21.8
20.8
23 3
23.6
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
227.2
254.9
271.8
287.7
289.6
310.3
332.6
351.0
361.1
384.4
147.0
171.3
185.4
198.6
196.8
211.7
228.3
239.3
240.5
258.9
64.8
76.3
82.0
89.6
85.7
93.1
100.6
104.2
100.0
109.6
50.3
593
64.1
71.2
67.5
73.8
79,4
82.4
78.6
86.8
39.8
44,3
46.9
497
50.1
53.4
577
60.5
60.8
64.8
19.8
215
23.1
24.9
26.1
28.6
31.3
33.6
35.6
38.5
22.6
292
33.3
34.4
34.9
36.6
38.8
41.0
44.1
46.0
37
46
5.2
5.9
6.1
7.0
8.0
9.0
9.4
10.6
13.7
161
15.1
13.1
12.5
11.5
11.2
11.1
13.2
10.9
25.0
27 2
28!2
28.6
28.7
31.4
32.7
34.2
34.5
36.7
1960
1961
1962
1963
1964 .
1965
1966
1967
1968
1969
4023
417,8
443.6
466.2
499.2
540.7
588.2
630.0
690.6
754.7
2719
279!5
298.0
313.4
336.1
362.0
398.4
427.0
469.6
515.7
1131
1137
121.8
126.9
135.4
146.0
161.0
168.3
183.4
199.6
89 7
89.8
967
100.6
107.1
115.5
128.0
134.1
145.8
157.5
68 2
69.3
72.8
76.3
81.4
87.2
94.4
100.9
110,0
120.8
414
44! 1
47.2
50.2
54.4
58.9
647
71.3
79.6
897
49 2
52!4
56.3
60.0
64.9
69.9
78.3
86.4
96.6
105.5
112
ILB
13.0
14.0
15.7
17.8
19.9
217
25.2
28.5
117
12!l
12.3
12.0
10.8
13.1
14.1
12.6
127
14.6
35 5
36!5
37.6
38.5
41.7
43.8
46.4
48.6
51.3
52.5
811.1
868.4
951.4
1065 2
U68.6
1,265.0
1 391.2
1,538.0
1,721.8
1,943.8
548.7
580.9
635.2
702 7
7657
806.4
889.9
983.8
1,105.2
1,236.1
203.0
208.3
227.3
2543
2747
275.0
307.3
343.5
389.1
437.9
158.2
160.3
175.4
196 2
21l!4
211.0
237.4
266.0
299.2
333.4
130.3
139.4
152.1
168 3
184!6
195.6
216.6
239.4
270.5
303.0
98.3
106.7
118.2
1313
i4s!e
159.7
177.4
198.6
226.1
259.2
117.1
126.5
137.5
148 7
16(19
176.1
188 7
2023
219.4
236.1
32.5
367
43.0
48 8
55!S
64.5
75 9
89.0
102.2
118.6
14.3
15.0
18.7
32 8
26!5
24.6
191
18.4
26.1
30.8
51.9
54.4
58.1
610
62!2
65.4
750
85!l
91.0
100.7
2,160.5
1,343.6
464.9
350.2
329.1
295.9
253.6
136.9
23.4
107.2
1,637.9
1,692.1
1,747.7
1,809.3
1,052.8
1,091.0
1,119.3
1,157.6
365.6
384.8
395.9
410.3
285.8
294.5
302.5
314.0
2587
266.9
273.4
283.0
214.8
222.3
229.4
2377
2137
216.9
220.5
226.5
97.2
100.4
1037
107.4
22.9
24.9
26.1
30.6
87.4
90.5
92.1
94.0
1,864.6
1,906.3
1,972.3
2,032.0
1,194.8
1,218.6
1,248.6
1,282.2
425.1
434.3
441.6
450.4
326.1
3317
335.5
340.4
292.8
297.5
306.5
315.0
247.0
252.6
263.4
273.7
229.8
234.2
237.1
243.1
111.6
115.9
120.9
126.0
30.9
32.6
30.2
29.5
96.8
96.8
102.7
106.8
2,088.2
2,114.5
2,182.1
1,314.7
1,320.4
1,341.8
461.7
456.0
460.1
347.9
343.2
346.7
322.6
323.2
329.2
283.6
290.8
298.7
246.8
250.5
253.9
130.9
135.1
139.1
257
23.3
22.1
107.9
101.6
107.6
. .
1970
.
1971 . . .
1972
1973
1974
1975
1976
1977
1978 .
.
1979.
. .
...
.
.
..
.
1980 P
1978.
if!
III
IV
.
.
. *
1979:
if.
Ill
IV .
1980.
if
III
See next page for continuation of table.
256
TABLE B-20.—Sources of personal income, 1929-80—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Rental
income
of
persons Personal Personal
with
dividend interest
capital incomes income
consumption
adjustment
Year or
quarter
Transfer payments
Total
Old-age,
Govern- Aid to
survivors, Government
ment families
disabilwith
unem- Veterans employity, and ployment
dependee
health
benefits
ent
insurretireinsurance
ment children
ance
benefits
benefits (AFOC)
benefits
0.8
1.4
.1.7
0.1
2
1.7
1.8
1.8
1.8
2.0
2.0
2.1
.3
.4
.5
2.5
2.9
3.3
.7
.8
1.2
1.8
2.2
23
2.0
2.1
2.2
2.2
159.9
171.9
188.2
190.4
1.0
1.1
1.2
1.4
1.5
1.7
1.9
2.2
2.5
2.8
.6
.6
.5
.5
.6
.6
.6
.7
.8
.9
3.5
3.6
3.8
4.1
4.1
4.3
4.5
4.9
5.3
5.8
2.9
3.4
3.8
4.0
46
5.2
5.8
6.7
6.9
7.9
210.2
235.4
253.1
271.3
273.9
295.5
318.0
336.6
344.4
369.8
4.6
5.0
4.7
4.8
4.7
4.9
4.9
5.6
5.9
6.7
7.7
8.8
9.7
10.4
11.8
14.5
14.4
13.8
13.9
14.4
15.0
3.1
3.4
3.7
A.2
4.7
5.2
6.1
6.9
7.6
8.7
10.2
11.8
13.8
16.0
19.0
22.7
26.1
29.0
32.7
37.0
42.8
1.0
1.1
1.3
1.4
1.5
1.7
1.9
2.3
2.8
3.5
4.8
6.2
6.9
7.2
7.9
9.2
10.1
10.6
10.7
11.0
12.4
6.2
6.4
6.7
7.3
7.8
8.3
9.2
10.2
11.1
12.5
15.0
17.4
19.0
21.1
25.6
32.8
35.1
36.5
40.1
45.4
54.4
9.3
9.7
10.3
11.8
12.6
13.3
17.§
20.6
22.9
26.2
27.9
30.7
34.5
42.6
47.9
50.4
55.5
61.1
69.6
80.6
87.9
386.7
401.6
427.1
449.7
483.7
522.6
568.9
611.9
672.1
733.9
790.0
846.5
925.3
1,023.7
1,131.8
1,229.1
1,359.3
1,505.0
1,679.2
1,892.9
2,112.8
10.9
9.7
9.5
8.8
14.0
13.7
13.7
14.1
31.2
32.2
32.9
34.3
10.7
10.7
10.7
10.7
38.7
39.6
40.9
41.1
67.1
69.0
70.4
72.1
1,599.6
1,651.1
1,705.0
1,761.1
1216
126.5
137.8
139.3
9.2
9.4
9.8
10.6
14.4
14.2
14.4
14.6
35.0
36.4
37.3
39.2
10.7
10.8
11.1
11.5
42.5
44.1
47.3
47.8
79.0
80.0
81.2
82.4
1,814.8
1,853.9
1,921.5
1,981.2
142.0
144.7
163.2
11.4
16.0
19.0
14.8
14.6
14.9
40.2
42.3
43.1
11.7
12.0
12.8
51.6
51.0
57.7
86.2
85.9
88.1
2,039.6
2,067.3
2,135.3
1929
1933
1939
.4.9
2.2
2.6
5.8
2.0
3.8
6.9
5.5
5.4
1.5
2.1
3.0
0.0
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
2.7
3.1
4.0
4.4
4.5
46
5.5
5.3
5.7
6.1
4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2
5.3
5.3
5.2
5.1
5.2
5.9
6.6
7.6
8.1
8.7
3.1
3.1
3.1
3.0
3.6
6.2
11.3
11.7
11.3
12.5
.0
.1
.1
.2
.2
.3
.4
.5
.6
.7
7.1
7.7
8.8
10.0
11.6
12.2
12.9
13.6
8.8
8.5
8.5
8.8
9.1
10.3
11.1
11.5
11.3
12.2
9.7
10.5
11.2
12.5
13.7
14.9
16.7
18.8
20.3
22.5
15.2
12.6
13.1
14.1
16.2
17.5
18.7
21.6
25.9
27.0
....
14.5
15.0
15.8
16.5
17.1
18.0
18.7
19.7
19.5
19.6
19.7
20.2
21.0
22.6
23.5
23.0
23.5
25.1
27.4
30.5
31.9
12.9
13.3
14.4
15.5
17.3
19.1
19.4
20.2
21.9
22.4
22.2
22.6
24.1
26.5
29.1
29.9
36.5
38.7
43.1
48.6
54.4
25.0
26.4
29.0
32.2
35.6
39.7
44.4
48.3
53.4
61.1
69.4
74.8
80.9
93.9
112.4
123.2
132.5
151.6
173.2
209.6
256.3
II.!"".". .
Ill
IV. ..
25.3
25.4
28.7
30.0
40.8
42.0
43.9
45.8
1979:
1
II
Ill
IV
30.7
30.1
30.3
31.0
1980:
1
II
Ill
31.2
31.5
32.0
1950
1951
1952
1953
1954
1955
1956
1957. ..
1958
1959
1960.
1961..
1962
1963 .
1964
1965..
1966.
1967
1968.
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980 o
no
11.3
, ..
..
..
.
. .
..
1978:
Other
Less:
Persona* Nonfarm
contribu- personal
tions for income2
social
insurance
0.1
2
0.4
0.6
.6
.5
.5
.4
.4
.1
.1
.4
1.1
.8
.9
1.9
.5
.5
.5
.5
1.0
3.0
7.0
7.0
5.9
5.3
.3
.3
.3
.4
.4
.5
7
.7
.9
1.0
1.9
2.2
3.0
3.6
4.9
5.7
7.3
8.5
10.2
1.5
.9
1.1
1.0
2.2
1.5
1.5
1.9
4.1
2.8
7.7
4.6
4.3
4.1
4.2
4.4
4.4
4.5
4.7
4.6
28.9
32.8
33.8
35.8
37.4
40.4
44.7
52.6
59.8
66.7
80.1
94.4
104.7
119.5
141.2
178.3
194.3
207.5
223.3
249.4
294.5
11.1
12.6
14.3
15.2
16.0
18.1
20.8
25.5
30.2
32.9
38.5
44.5
49.6
60.4
70.1
81.4
92.9
104.9
116.2
131.8
153.9
3.0
4.3
3.1
3.0
2.7
2.3
1.9
2.2
2.1
2.2
4.0
5.8
5.7
4.4
6.8
17.6
15.8
12.7
9.7
9.8
16.0
161.7
168.5
176.9
185.6
216.9
218.2
227.4
230.5
111.4
112.3
119.7
121.5
47.5
48.3
48.6
50.1
195.8
202.6
214.3
225.7
235.4
241.3
257.8
263.1
52.4
54.2
55.1
239.9
253.6
261.8
271.7
280.7
310.7
.3
.6
1
The total of wage and salary disbursements and other labor income differs from compensation of employees in Table B-19 in that
excludes
employer contributions for social insurance and the excess of wage accruals over wage disbursements.
2
Personal income exclusive of farm proprietors'-income, farm wages, farm other labor income, and agricultural net interest.
Note.—The industry classification of wage and salary disbursements and proprietors' income is on an establishment basis and is
ised on the 1972 Standard Industrial Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948.
Source: Department of Commerce, Bureau of Economic Analysis.
257
TABLE B-21.—Disposition of personal income, 1929-80
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Percent of disposable
personal income
Less: Personal outlays
Personal
income
Year or
quarter
Equals:
Less:
Personal Ol s
tax and
nontax
Income
payments personal
a ar
Total
Personal
consumption
expenditures
Interest
paid by
consumers to
business
Personal
transfer
payments
to
foreigners
(net)
Personal outlays
Equals:
Personal
saving
Total
Consump- Personal
tion
saving
expenditures
1929
85.0
2.6
82.4
79.1
77.3
1.5
0,3
3.3
1933
47.0
1.4
45.6
46.5
45.8
.5
.2
-0.9
•
96.0
93.8
4,0
102.0
100.5
-2.0
72.4
2.4
70.0
67.8
67.0
.7
.2
2.2
96.9
95.6
3.1
77.9
95.4
122.6
150.8
164,5
170.0
177.6
190.1
209.0
206.4
2.6
3.3
5.9
72.0
81.8
89.4
100.1
109.0
120.4
145.2
163.5
176.9
180.4
71.0
80.8
88.6
99.4
108.2
119.5
143.8
161.7
174.7
178.1
.8
.9
.7
.5
.5
.5
.7
1.0
1.4
1.7
.2
.2
.1
.2
.4
.5
.7
.7
.7
.5
3.4
7.5
95.5
88.8
76.7
75.3
74.8
80.8
91.4
96.9
94.1
96.0
94.2
87.6
76.0
74.7
74.3
80.1
90.5
95.9
93.0
94.8
4.5
17.8
18.9
20.8
18.7
21.4
21.0
18.5
75.3
92.2
116.6
133.0
145.6
149.1
158.9
168.7
188.0
187.9
1950
1951 .
1952
.
1953
1954
1955
1956
..
1957
1958
1959
227.2
254.9
271.8
287.7
289.6
310.3
332.6
351.0
361.1
384.4
20.6
28.9
34.0
35.5
32.5
35.4
39.7
42.4
42.1
46.0
206.6
226.0
237.7
252.2
257.1
275.0
292.9
308.6
319.0
338.4
194.7
210,0
220.4
233.7
240.1
258.5
271.6
286.4
295.4
317.3
192.0
207.1
217.1
229.7
235.8
253.7
266.0
280.4
289.5
310.8
2.3
2.5
2.9
3.6
3.8
4.4
5.1
5.5
5.6
6,1
.4
.4
.4
.5
.5
.4
.5
.5
.4
.4
11.9
16.1
17.4
18.5
17.0
16.4
21.3
22.3
23.6
21.1
94.2
92.9
92.7
92.7
93.4
94.0
92.7
92.8
92.6
93.8
92.9
91.6
91.3
91.1
91.7
92.3
90.8
90.9
90.7
91.8
5.8
7.1
7.3
7.3
6.6
6.0
7.3
7.2
7.4
6.2
1960
1961 .
1962 .
1963 .
1964
1965.. ..
1966
1967
1968
1969.
402.3
417.8
443.6
466.2
499.2
540.7
588.2
630.0
690.6
754.7
50.4
.52.1
56.8
60.3
58.6
64.9
74.5
82.1
97.2
115.7
352.0
365.8
386.8
405.9
440.6
475.8
513.7
547.9
593.4
638.9
332.3
342.7
363.5
384.0
411.0
442.1
477.7
503.6
551.5
598.3
324.9
335.0
355.2
374.6
400.5
430.4
465.1
490,3
536.9
581,8
7.0
7.3
7.8
8.8
9.9
11.1
12.0
12.5
13.8
15.6
.4
.4
.5
.6
.6
.7
.7
.9
.8
.9
19.7
23.0
23.3
21.9
29.6
33.7
36,0
44.3
41.9
40.6
94.4
93.7
94.0
94.6
93,3
92.9
93.0
91.9
92.9
93.6
92.3
91.6
91.8
92.3
90.9
90.5
90.5
89.5
90.5
91.1
5.6
6.3
6.0
5.4
6.7
7,1
7.0
8.1
7.1
6.4
1970.
1971 .
1972
1973 . . . .
1974 .
1975...
1976 .
1977
1978.
811.1
868.4
951.4
1,065.2
1,168.6
1,265.0
1,391.2
1,538.0
1,721.8
1,943.8
115.8
116.7
141.0
150.7
170.2
168.9
196.8
226.5
258.8
302.0
695.3
751.8
810.3
914.5
998.3
1,096.1
1,194.4
1,311.5
1,462.9
1,641.7
639.5
691.1
757.7
835.5
913.2
1,001.8
1,111.9
1,237.5
1,386.6
1,555.5
621.7
672.2
737.1
812.0
888.1
976.4
1,084.3
1,205.5
1,348.7
1,510.9
16.7
17.7
19.5
22.3
24.1
24.4
26.7
31.1
37.1
43.7
1.1
1,1
1.1
1.3
1.0
.9
.9
.9
.8
1.0
55.8
60.7
52.6
79.0
85.1
94.3
82.5
74.1
76.3
86.2
92.0
91.9
93.5
91.4
91.5
91.4
93.1
94.4
94.8
94.8
89.4
89.4
91.0
88.8
89.0
89.1
90.8
91.9
92.2
92.0
8.0
8.1
6.5
8.6
8.5
8.6
6.9
5.6
5.2
5.3
.
2,160.5
338.7
1,821.7
1,717.6
1,670.1
46.4
1.1
104.2
94.3
91.7
5.7
239.9
251.4
265.7
278.3
1,398.0
1,440.7
1,482.1
1,531.0
1,313.4
1,367.1
1,408.7
1,457.1
1,278.3
1,330.1
1,369.9
1,416.6
34.4
36.2
38.0
39.7
.7
.8
.7
.9
84.6
73.6
73.4
73.8
94.0
94.9
95.0
95.2
91.4
92.3
92.4
92.5
6.1
...
1,637.9
1,692.1
1,747.7
1,809.3
5.1
5.0
4.8
.
1,864.6
1,906.3
1,972.3
2,032.0
284.4
293.5
308.4
321.8
1,580.2
1,612.8
1,663.8
1,710.1
1,496.3
1,521.9
1,574.5
1,629.4
1,454.1
1,478,0
1,529.1
1,582.3
41.4
43.1
44,5
45.8
.8
.8
.9
1.3
83.8
90.9
89.3
80.7
94.7
94.4
94.6
95.3
92.0
91.6
91.9
92.5
5.3
5.6
5.4
4.7
2,088.2
2,114.5
2,182.1
323.1
330.3
341,5
1,765.1
1,784.1
1,840.6
1,678.7
1,674.1
1,729.2
1,631.0
1,626.8
1,682.2
46.7
46.3
46.0
1.0
..
1.0
1.0
86.4
110.0
111.4
95.1
93.8
93.9
92.4
91.2
91,4
4.9
6.2
61
1939
1940
1941.
1942
1943
1944.
1945.
1946
1947
1948
1949
..
..
1979
1980"
1978:
1....
II...
III.
IV.
10.3
27.2
32.9
36.6
28.7
13.7
5.2
11.1
11.2
23.3
24.7
25.2
19.2
8.6
3.1
5.9
4.0
1979:
IL..
III.
IV...
1980:
IL
III..
Source: Department of Commerce, Bureau of Economic Analysis.
258
TABLE B-22.—Total and per capita disposable personal income and personal consumption expenditures in
current and 1972 dollars, 1929-80
[Quarterly data at seasonally adjusted annual rates, except as noted]
Personal consumption expenditures
Disposable persona! income
Year or quarter
Per capita
(dollars)
Total (billions of
dollars)
Total (billions of
dollars)
Per capita
(dollars)
Population
/thnn
^inousands) »
Current
dollars
1972
dollars
Current
dollars
1972
dollars
Current
dollars
1972
dollars
Current
dollars
1972
dollars
1929
82.4
229.5
676
1,883
77.3
215.1
634
1,765
1933
45.6
169.6
363
1,349
45.8
170.5
364
1,356
125,690
70.0
229.8
534
1,754
67.0
219.8
511
1,678
131,028
75.3
92.2
116.6
133.0
145.6
149.1
158.9
168.7
188.0
187.9
244.0
277.9
317.5
332.1
343.6
338.1
332.7
319.0
336.0
336.9
570
691
865
973
1,052
1,066
1,124
1,170
1,282
1,259
1,847
2,083
2,354
2,429
2,483
2,416
2,353
2,214
2,291
2,258
71.0
80.8
88.6
99.4
108.2
119.5
143.8
161.7
174.7
178.1
229.9
243.6
241.1
248.2
255.2
270.9
301.0
305.8
312.2
319.3
537
605
657
111
781
854
1,017
1,122
1,192
1,194
1,740
1,826
1,788
1,815
1,844
1,936
2,129
2,122
2,129
2,140
132,122
133,402
134,860
136,739
138,397
139,928
141,389
144,126
146,631
149,188
206.6
226.0
237.7
252.2
257.1
275.0
292.9
308.6
319.0
338.4
362.9
3727
383.2
399.1
403.3
426.9
446.3
455.6
460.7
479.7
1,362
1,465
1,515
1,581
1,583
1,664
1,741
1,802
1,832
1,903
2,393
2,415
2,441
2,501
2,484
2,583
2,653
2,660
2,645
2,697
192.0
207.1
217.1
229.7
235.8
253.7
266.0
280.4
289.5
310.8
337.3
341.6
350.1
363.4
370.0
394.1
405.4
413.8
418.0
440.4
1,266
1,342
1,383
1,439
1,452
1,535
1,581
1,637
1,662
1,747
2,224
2,214
2,230
2,277
2,278
2,384
2,410
2,416
2,400
2,476
151,684
154,287
156,954
159,565
162,391
165,275
168,221
171,274
174,141
177,888
352.0
365.8
386.8
405.9
440.6
475.8
513.7
547.9
593.4
638.9
489.7
•503.8
524.9
542.3
580.8
616.3
646.8
673.5
701.3
722.5
1,947
1,991
2,073
2,144
2,296
2,448
2,613
2,757
2,956
3,152
2,709
2,742
2,813
2,865
.3,026
3,171
3,290
3,389
3,493
3,564
324.9
335.0
355.2
374.6
400.5
430.4
465.1
490.3
536.9
581.8
452.0
461.4
482.0
500.5
528.0
557.5
585.7
602.7
634.4
657.9
1,797
1,823
1,904
1,979
2,087
2,214
2,366
2,467
2,674
2,870
2,501
2,511
2,583
2,644
2,751
2,868
2,979
3,032
3,160
3,245
180,760
183,742
186,590
189,300
191,927
194,347
196,599
198,752
200,745
202,736
751.6
695.3
779.2
751.8
810.3
810.3
865.3
914.5
858.4
998.3
875.8
1,096.1
907.4
1 194 4
939.8
1,311.5
981.5
1,462.9
1,641.7 1,011.5
3,393
3,630
3,880
4,346
4,710
5,132
5,550
6,046
6,688
7,441
3,668
3,763
3,880
4,112
4,050
4,101
4,216
4,332
4,487
4,584
621.7
672.2
737.1
812.0
888.1
976.4
1,084.3
1,205.5
1,348.7
1,510.9
672.1
696.8
737.1
768.5
763.6
780.2
823.7
863.9
904.8
930.9
3,034
3,246
3,529
3,858
4,190
4,572
5,038
5,557
6,166
6,848
3,280
3,365
3,529
3,652
3,603
3,653
3,828
3,982
4,136
4,219
204,918
207,084
208,873
210,440
211,945
213,566
215,203
216,928
218,749
220,643
1,821.8
1,017.7
8,176
4,567
1,670.1
933.0
7,496
4,188
222,804
1,398.0
1,440.7
1,482.1
1,531.0
966.8
975.5
985.9
998.0
6,411
6,594
6,768
6,975
4,434
4,465
4,502
4,547
1,278.3
1,330.1
1,369.9
1,416.6
884.1
900.6
911.2
923.4
5,862
6,088
6,256
6,454
4,054
4,122
4,161
4,207
218,052
218,483
218,983
219,478
1,580.2 1,005.7
1,612.8 1,006.9
1,663.8 1,015.7
1,710.1 1,017.7
7,186
7,320
7,533
7,722
4,574
4,570
4,598
4,596
1,454.1
1,478.0
1,529.1
1,582.3
925.5
922.8
933.4
941.6
6,613
6,708
6,923
7,145
4,209
4,188
4,226
4,252
219,896
220,335
220,884
221,455
1,765 1 1,021.0
17841 1,008.2
1,840.6 1,018.5
7,953
8 020
8,249
4,600
4,532
4t565
1,631.0
1,626.8
1,682.2
943.4
919.3
930.8
7,349
7313
7,539
4,251
4[l33
4,172
221,938
222,447
223,126
1939
.
1940
1941
1942
1943
1944
1945
1946 ..
1947
1948
1949 .
.
.
.
.
. . .
1950
.
1951 .
1952
1953
1954
1955
1956
.
1957
1958
1959
.
.
.
.
.
..
.
.
.
.
. . . .
.
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972 ..
1973
1974
1975 .
1976
1977
1978 .
1979
. . .
..
.
.
.
_
.
.
. .
. .
. . .
. .
.
.
..
.
1980"
1978:
I
II
HI
IV
.
...
.
.
. . . .
1979:
i
II ..
.
. . . .
Ill
IV
1980:
II
111
121,875
1
Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1959. Annual data are (or
July 1 through 1958 and are averages of quarterly data beginning 1959. Quarterly data are average for the period. Data from 1980
census not yet available.
Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).
259
TABLE B-23.—Gross saving and investment, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Gross investment
Gross saving
Government surplus or
deficit ( - ) , national
income and product
accounts
Gross private saving
Year or
quarter
Total
Total
1929
15.9
Gross
Personal
business
saving
saving'
3.3
14 9
-.9
Total
11.6
1.0
Federal
State
and
local
12
-0 2
Capital
grants
received
by the
United
States
{net) ^
Total
17 0
Gross
private
domestic
investment
16.2
Net
foreign
investment3
0.8
Statistical
discrepancy
11
1933
.9
2.2
3.1
-1.4
-1.3
1.6
1.4
.2
.7
1939
8.8
n.o
2.2
8.8
-2.2
-2.2
0
10.3
9.3
1.0
1.4
13.5
18.6
10.7
5.4
2.4
5.2
35.1
41.7
49.8
35.6
3.4
10.3
27.2
32.9
36.6
28.7
13.7
5.2
11.1
75
10.8
12.1
14.8
16.7
17.6
16.0
15.9
22.1
30.2
31.5
-.7
-3.8
-31.4
-44.1
-51.8
-39.5
5.4
14.4
8.4
-3.4
-1.3
-5.1
-33.1
-46.6
-54.5
-42.1
3.5
13.4
8.3
-2.6
.6
13
18
2.5
27
2.6
].9
14.7
19.2
9.8
3.7
5.2
9.3
35.6
43.2
48.3
36.2
13.1
17.9
9.9
5.8
7.2
10.6
30.7
34.0
45.9
35.3
1.5
1.3
-.1
-2.1
-2.0
-1.3
4.9
9.3
2.4
.9
1.1
.6
-.8
-1.8
2.7
4.1
50.7
56.9
51.0
49.8
50.9
67.5
75.9
75.2
62.6
78.3
14.2
22.4
42.0
49.6
54.3
44.7
29.6
27.3
41.4
39 0
i
42.7
50.8
54.8
56.7
58.1
64.4
70.7
74.3
75.3
79.9
11.9
16.1
17.4
18.5
17.0
16.4
21.3
22.3
23.6
21.1
30.7
34.8
37.4
38.2
41.1
47.9
49.4
52.0
51.7
58.7
8.0
6.1
-3.8
-6.9
-7.1
3.1
5.2
.9
-12.6
-1.6
9.2
6.5
-3.7
-7.1
-6.0
4.4
6.1
2.3
-10.3
-1.1
52.0
60.1
52.7
52.1
52.9
68.8
73.8
74.0
62.8
77.0
53.8
59.2
52.1
53.3
52.7
68.4
71.0
69.2
61.9
78.1
-1.8
.9
.6
-1.3
.2
.4
2.8
4.8
.9
-1.2
1.3
3.2
1.7
2.3
2.0
1.3
-2.1
-1.2
1960....
1961 .
1962
1963
1964
1965
1966
1967
1968
1969
81.1
78.7
86.7
93.6
104.0
120.2
127.3
125.7
136.0
153.6
78.0
83.0
90.5
92.9
106.3
119.7
128.6
139.9
142.0
143.6
19.7
23.0
23.3
21.9
29.6
33.7
36.0
44.3
41.9
40.6
58.3
60.0
67.2
71.0
76.7
86.0
92.7
95.6
100.0
103.0
3.1
-4.3
-3.8
.7
-2.3
3.0
-3.9
-4.2
.3
-3.3
.1
-.4
.5
.5
10
-.0
9.9
-L8
-13.2
-6.0
8.4
-1.1
.1
1.5
75.9
74.8
85.4
90.9
97.4
113.5
125.7
122.8
133.3
149.3
2.8
3.8
3.4
4.4
6.8
5.4
3.0
2.6
.6
.4
-2.4
-.1
2.1
1.7
-1.3
-14.2
60
78.7
78.6
88.8
95,3
104.2
119.0
128.7
125.4
133.9
149.7
1970
1971
1972
1973
1974
1975.
1976
1977
1978
19.79
148.9
161.6
186.6
235.5
227.8
218.9
257.9
304.0
355.2
411.9
158.6
180.3
189.2
227.7
234.5
282.7
294.4
322.4
355.4
398.9
55.8
60.7
52.6
79.0
85.1
94.3
82.5
74.1
76.3
86.2
102.8
119.7
136.6
1487
149.4
188.4
211.9
248.3
279.1
312.7
-10.6
-19.4
-3.3
7.8
-4.7
-63.8
36 5
-18.3
-.2
11.9
-12.4
-22.0
-16.8
-5.6
-11.5
-69.3
-53.1
-46.4
-29.2
-14.8
1.9
2.6
13.5
13.4
6.8
5.5
16.6
28.1
29.0
26.7
7
,0
-2.0
.0
.0
.0
.0
1.1
147.4
165.7
189.9
236.3
231.5
224.4
263.0
308.4
361.6
414.1
144.2
166.4
195.0
229.8
228.7
206.1
257.9
322.3
375.3
415.8
6.5
2.9
18.3
5.1
-13.9
-13.8
-1.7
-1.5
4.1
3.3
.8
3.7
5.5
5.1
4,4
6.4
2.2
1980 "
403.9
437.6
104.2
333.4
-34.8
-62.3
27.6
1.1
405.7
395.1
10.6
1.7
1978:
|
II
III....
IV
326.9
354.0
359.4
380 4
344.7
349.1
358.3
3696
84.6
73.6
73.4
73 8
260.1
275.5
284.9
295 8
17 7
4.9
1.1
108
-48.8
-27.4
-22.8
17 9
31.1
32.3
23.9
28 7
.0
.0
.0
326.4
361.3
369.4
350.7
377.7
380.4
-3OQ 1
-.5
7.3
10.0
o 7
1979:
I
||
III
IV
o
-24.2
-16.4
-10.9
o c
407.4
416.2
422.3
402.0
388.2
401.2
409.8
396.4
83.8
90.9
89.3
80.7
304.4
310.3
320.5
315.7
18.1
13.9
M.3
4.4
-11.5
-8.1
-15.2
-24.5
29.5
21.9
26.5
28.9
1.1
1.1
1.1
1.1
413.2
416.9
425.1
401.3
408.3
423.2
421.7
410.0
4.9
-6.3
3.4
= 8.7
5.8
.7
2.8
404.5
394.5
402.0
413.0
435.9
446.5
86.4
110.0
111.4
326.7
325.8
335.1
-9.6
-42.5
-45.6
-36.3
-66.5
-74.2
26.6
23.9
28.6
1.1
1.1
1.1
407.3
392.5
405.0
415.6
390.9
377.1
-8.3
1.7
27.8
2.8
-1.9
3.0
1940
1941
1942
1943
1944
1945
1946
1947..
1948
1949.
. .
. .
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
.".
1
-,
-.1
•"••••
]0
.1
_ 7
-1.2
—4
~'o
.1
-1.1
-1.3
-.9
-1.4
-2.4
- 4
•
0.9
3.2
~l!l
L5
-1.6
6
-13
-U
1.4
-.3
-2.1
-3.9
1980:
ii
HI
1
Undistributed corporate profits with inventory valuation and capital consumption adjustments, corporate and noncorporate capital
consumption
allowances with capital consumption adjustment, and private wage accruals less disbursements.
2
Allocations of special drawing rights (SDRs), except as noted in footnote 4.
3
Net exports of goods and services less net transfers to foreigners and interest paid by government to foreigners plus capital grants
received
by the United States, net.
4
In February 1974, the U.S. Government paid to India $2,010 million in rupees under provisions of the Agricultural Trade
Development and Assistance Act. This transaction is being treated as capital grants paid to foreigners, i.e., a =$2.0 billion entry in
capital grants received by the United States, net.
Source: Department of Commerce, Bureau of Economic Analysis.
260
TABLE B-24.—Saving by individuals, 1946-801
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Net investment in
Increase in financial assets
Year or
quarter
Total
NonSecuritie s
CurInsurMoney
Con- corMiscelrency Savance
porate
Nonmarsumer
laneous
ings
Govern- Corpoand
busifarm
Other and
Total
ket
rate
ment
demand acpension financial homes dura- ness
fund securi- equi- securibles
assets 6
depos- counts
re4
asshares ties 2 ties 3 ties
5
its
serves
sets 7
1946.
1947
1948
1949
24.4
20.2
24.5
21.3
18.8
13.2
5.6
9.1
9.9
-2.9
-2.0
6.3
3.4
2,2
2.6
1950
1951
1952
1953
1954
30.9
34.7
30.7
31.6
27.7
13.7
19.1
23.2
22.8
22.2
2.6
4.6
1.6
1.0
2.2
2.4
4.7
7.8
8.1
9.1
-.1
-.6
2.5
2.5
1.0
33.4
36.7
35.8
33.4
35.6
28.0
30.2
28.6
31.6
37.4
1.2
1.8
-.4
3.8
.8
11.9
13.9
11.1
8.6
9.4
5.8
3.9
2.3
35.6
34.1
40.3
45.2
55.7
32.5
35.9
40.6
47.3
56.1
63.8
72.1
77.6
82.2
73.7
59.0
58.4
70.4
76.2
64.5
1970
1971
1972
1973
1974
86.1
98.7
116.3
138.4
128.9
78.8
103.0
128.8
148.5
142.4
1975
1976
1977
1978
1979
150.0
164.6
172.8
198.2
198.8
167.2
208.1
241.7
275.3
291.6
14.9
22.7
18.3
14.2
176.6
." 196.7
205.4
214.2
243.4
286.4
288.6
282.9
26.7 91.2
17.2 113.7
14.7 117.1
14.7 98.8
6.9
5.4
5.8
184.4
213.3
204.2
193.2
273.6
305.3
313.3
271.1
- 8 . 3 85.9
23.7 67.8
31.3 103.5
9.8 66.7
28.8
31.6
33.1
44.1
221.6 311.9
220.1 232.8
215.1 314.8
- 4 . 5 82.7
- 3 . 9 106.1
27.7 122.8
61.3
62.5
1955 ..
1956
1957
1958
1959.
.
1960
1961
1962
.
1963....
1964
1965. .
1966
1967
1968
1969
. .
1.0
-.9
-1.2
4.2
5.2
7.5
2.4
9.9
11.1
-2.5
8.9
12.2
13.9
14.1
7.1
4.0
3.6
4.7
4.6
4.4
3.1
3.7
3.2
3.2
-0.5
11.8
11.7
11.3
12.3
12.7
14.9
11.3
7.0
4.4
2.0
.8
1.5
6.7
6.6
6.2
7.6
8.7
4.8
1.6
5.3
4.2
1.5
5.0
3.6
2,8
1.9
5.5
16.7
15.6
13.2
12.1
15.9
11.9
10.4
11.9
2.1
2.5
2.8
3.5
3.3
2.4 12.2
.5 11.2
2.1 8.9
2.3 9.5
3.4 12.8
7.2
3.9
2.9
.5
8.0
6.4
3.2
3.8
6.0
7.2
2.4
.1
.1
1.4
.4
11.5
12.1
12.7
13.9
16.1
3.6
4.3
3.2
2.9
3.2
14.3
12.0
12.8
13.4
13.9
6.7
4.1
8.2
11.7
12.2
14.1
16.2
17.5
4.4
2.5
6.3
8.9
9.8
4.8
6.5
7.2
11.8
15.1
3.1
3.3
6.3
8.5
7.7
1.3
2.4
4.8
6.8
16.9
19.2
18.6
19.8
21.5
3.7
4.4
6.7
8.1
4.0
13.4
12.6
10.9
14.3
14.2
20.2
22.8
20.9
26.3
26.2
11.2
17.0
13.8
12.5
17.1
18.5
10.6
23.9
27.4
29.4
33.0
36.2
5.4 11.7 20.2
5.8 18.8 26.2
11.4
3.9
2.7
6.3
2.8
2.8
2.4
2.2
1.6
.7
1.8
1.6
1.0
.8
-.7
.3
.0
.3
-.9
6.9
6.3
7.7
7.9
7.8
1.9
1.9
2.0
2.1
2.1
1.0
2.0
1,5
1.5
.6
.8
1.2
1.0
1.1
-.4
8.5
9.5
9.5
12.1
18.3
26.1
26.3
26.1
2.4 - . 5
.3
1.8
1.8 - 2 . 0
1.2 - 2 . 6
5.1 -.1
27.8
19,0
35.3
31.1
3.9 - 2 . 1
11.7 - . 6
-.7 - 4 . 2
5.7 - 6 . 4
-2.5
• 10.1
9.1
25.3 - 3 . 6
10.7
43.6
67.8
74.5
63.8
55.9
-7.2 -1.5
-10.1 -5.1
1.9 - 5 . 6
24.1 - 6 . 7
27.7 - 2 . 2
5.7
5.0
3.3
84.0
109.3
109.2
105.2
81.0
1978:
IL'.".".
Ill
IV
2.1
2.0
7.1
2.0
5.3
5.4
5.3
5.6
1.6
1.3
1.8
2.4
1.3
-.0
.2
6.9
34.4
9.6
IV
1980:
|
||. '
Ill
5.1
8.4
9.4
6.9
8.7
7.6
3.4
6.9
9.4
8.5
9.4
11.4
9.8 14.1
6.5
5.7
11.5
10.8
5.4
2.2
2.8
2.2
10.6
9.8
12.6
10.8
15.0
15.3
13.3
14.8
21.7
29.9
26.5
22.7
9.1
8.5
26.0
28.2
23.1
35.1
41.1
28.6
26.4
41.5
47.1
35.4
14.7
19.8
26.0
43.5
52.6
65.3
77.9
74.7
11.0
19.7
25.8
29.7
32.9
20.8
33.1
48.1
59.2
55.6
26.6 - . 2 38.1
40.6 - 1 . 0 61.3
50.9
5.9 93.2
57.5
6.9 103.8
52.6 10.5 110.2
9.7
71.0
73.2
90.7
76.4
25.4
31.3
32.4
29.8
56.6
58.3
59.8
62.0
48.1
59.5
58.8
63.4
10.4 113.2
53.3
38.1
53.0
55.7
38.0
4.7
63.1
81.1
76.7
77.8
29.1
34.3
34.4
31.6
59.3
56.9
54.3
52.0
60.1
50.8
50.8
48.5
8.5 112.3
9.7 110.8
10.3 108.5
13.7 109.3
51.4
45.2
46.9
31.1
53.3
53.4
69.0
51.8
84.3 - 1 7 . 4 - 6 . 1
-39.6
7.8 - 1 7 . 5
38.1 - 9 . 2
6.0
76.8
91.7
89.9
34.7
25.8
34.5
45.7
35.2
22.9
7.5 104.4 25.9
47.8
18.6 - 5 . 3 56.5 - 4 4 . 2
27.3 - 2 . 6 77.2
6.1
61.0
48.9
64.1
23.0
12.1
18.3
30.3
50.3
-3.5
-3.2
-6.1
-6.2
-11.9
35.3 - 8 . 8
32.5
26.5 -~5.'l
27.1 - 1 0 . 2
11.2
6.8
13.2
16.0
13.8
6.6
36.8
1979:
iiIII .' .71
Mortgage
debt Conon sumer Other
non- credit debt *«
farm
homes
3.6 6.1
6.7 8.8
9.1 9.8
8.4 10.9
1.1 - 0 . 9
1.1 -.8
.0
1.0
.7 - . 4
-1.5
Less: Net increase in
debt
66.5
60.7
22.5
51.3
-7.5
-10.6
-14.3
-15.0
1
2
16.0
16.7
26.0
13.5
17.7
20.3
2.8
9.9
25.6
40.6
50.6
44.2
5.3 95.3 43.4
5.2 102.8 56.9
6.7 104.1 48.8
16.7
29.2
40.0
46.2
57.2
Saving by households, personal trust funds, nonprofit institutions, farms, and other noncorporate business.
Consists of U.S. savings bonds, other U.S. Treasury securities, U.S. Government agency securities and sponsored agency securities,
and3 State and local obligations.
Includes investment company shares.
4
Corporate and foreign bonds and open market paper.
6
Private life insurance reserves, private insured and noninsured pension reserves, and government insurance and pension reserves.
6
Noncorporate business proprietors' equity, etc.
7
Includes data for corporate farms.
8
Other debt consists of security credit, policy loans, noncorporate business mortgage debt, and other debt.
Source: Board of Governors of the Federal Reserve System.
261
TABLE B-25.—Money income (in 1979 dollars) and poverty status of families and unrelated individuals by
race of householder, 1952-79
Total
Year
number
(millions)
FAMILIES1
1952
1953
1954 ..'. . . ' . . .
1955
1956. " .
1957
1958
1959
1960
1961
....
1962 ..
1963
. . .
1964
1965
1966
1967
1968
1969
1970 .
1971.
1972 . .
1973
1974
1974* . . .
1975
1976
.. .
1977
1978
1979«>
40.8
41.2
42.0
42 9
43.5
43.7
44.2
45.1
3
45.5
3
46.4
3 47.1
3
47.5
3
48.0
3
48.5
3
49.2
3
50.1
3
50.8
351.6
3
52 2
53.3
54.4
55.1
55.7
55.7
56.2
56.7
57.2
57.8
58.4
$10,638
11513
11,254
11976
12,766
12,807
12,770
13,490
13,774
13.915
14,292
14,815
15,372
16,005
16,846
17.246
18,010
18,677
18,444
18,433
19,287
19,684
18,893
18,990
18,502
19,073
19,176
19,626
19,684
.
..
.
.
9.7
9.5
9.7
9.9
9.8
10.4
10.9
10.9
3
11.1
3
11.2
3
11.0
3
3
3
. . .
1966
1967
1968
. .
1969
1970
1971
1972
1973
1974
1974*
1975
1976
1977 . . .
1978
.
1979
T&5
18.1
18.1
17.2
15.9
15.0
13.9
11.8
11.4
10.0
• 9.7
10.1
10.0
9.3
8.8
9.2
8.8
9.7
9.4
9.3
9.1
9.1
5.5
71
7.3
80
9.7
9.3
10.1
12.2
13.4
14.5
15.5
17.0
18.6
20.1
22.6
24.4
27.4
29.3
28 7
283
32.5
33.6
29.4
32.3
30.4
31.9
33.1
34.0
34.7
38.2
39 0
39.5
39.7
40.2
40.9
41.1
41,9
42.4
42.7
43.1
43.5
44.1
44.8
45.4
46.0
46.5
47.6
48.5
48.9
49.5
49.4
49.9
50.1
50.5
50.9
51.4
Percent with
incomes—
Total
number
Median
(milincome Betow $25,000
lions)
poverty
and
over
level
$11,250
11,937
11,715
12 505
13,359
13,328
13,305
14,053
14,301
14,512
14,966
15,524
16,049
16,681
17,502
17,901
18,646
19,392
19134
19,127
20,038
20,572
19,659
19,735
19,242
19,811
20,051
20,436
20,524
Below $15,000
poverty
and
over
level
UNRELATED
INDIVIDUALS*
1952...
1953
1954
1955
1956
1957
1958
1959
1960
1961...
1962
1963
1964
1965
Percent with
incomes—
Total
number
(milincome Below $25,000
lions)
poverty
and
over
level
Martian
wieuian
.
..
3
.
.
11.2
12.1
12.2
12.5
3
13.2
3
13.9
3
14.6
3
15 5
16.3
16.8
18.3
18.9
18.9
20.2
21.5
23.1
24.6
25.6
$3,853
3,789
3,300
3.570
3,809
3,850
3,730
3,877
4,216
4,256
4,206
4,267
4,641
4,953
5,122
5,172
5,813
5,803
5 864
5^943
6,109
6,752
6.534
6,775
6,584
6,854
7,075
7,460
7,578
Black
White
Total
46.1
45.2
45.9
45.4
44.2
42.7
39.8
38.3
38.1
34.0
34.0
32 9
3li6
29.0
25,6
25.5
24.1
25.1
24.9
22.6
22.1
21.8
3.6
3.8
3.7
4,3
4.5
5.8
6.6
6.7
7.2
8.7
9.7
10.4
11.2
12.2
12.1
13.4
15.9
15.3
16 2
16ll
17.1
18.6
17.1
17.8
16.9
17.8
18.9
20.2
20.5
15 2
14.9
14.8
13.9
12.8
12.2
11.1
9.3
9.0
8.0
7.7
80
7.9
7.1
6.6
7.0
6.8
7.7
7.1
7.0
6.9
6.8
6.2
7.5
7.9
8.8
10.5
10.0
10.9
13.1
14.3
15.7
16.8
18.4
19.8
21.6
24.2
25.9
29.0
31.0
30.4
30.5
34.4
35.7
31.2
34.1
32.2
34.0
35.1
36.0
36.7
MoHian
median
income
2
i'3.8
2
39
2
4.0
2
4.0
2
4.0
M.2
M.3
M.5
M.6
2
4.8
2
4.8
2
4.8
2
5.0
4.6
4.6
4.8
49
5.2
5.3
5.4
5.5
5.5
5.6
5.8
5.8
5.9
6.0
"BJ
8.5
8.5
8.9
9.2
9.3
9.6
9.6
9.5
9.7
10.4
10.5
10.7
11.3
12.0
12.5
13 4
R2
14.5
15.8
16.3
16.3
17.5
18.6
19.9
21.3
22.1
"44"l
43.0
43.2
42.7
42.0
40.7
38.1
36.1
36.5
32.2
32.1
30 8
29^6
27.1
23.7
23.2
21.8
22.7
22.7
20.4
19.8
19.6
3.8
4.5
4.2
4.9
5.0
6.8
7.3
7.5
7.8
9.5
10.7
11.6
12.2
13.4
13.3
14.5
17.0
16.7
17 4
V.3
17.9
19.6
18.1
18.9
18.0
19.0
19.9
21.0
21.4
Below
poverty
level
7,986
2
8,215
2
8,982
2
9,186
2
10,492
10,598
11,183
11,878
11737
11,542
11,909
11,873
11,493
11,784
11,840
11,784
11,455
12,104
11,648
$25,000
and
over
2
6,394
2
6 693
2
6,525
2
6 896
2
7,029
2
7,126
2
6,816
2
7.259
2
7,917
2
7,742
2
Below $15,000
poverty
and
over
level
4,154
3,998
3,551
3,795
3,910
4,121
3,997
4,144
4,559
4,574
4,502
4,474
4,886
5,165
5,386
5,370
6,159
6,094
6 137
6>10
6,380
6,974
6,824
7,020
6,877
7,148
7,344
7,822
7,855
Percent with
incomes—
2
2
0.9
11
1.2
2
.9
2
1.5
1.5
2
2.4
2
2.4
2
...
„„...
2
49.0
2
49.0
2
48.0
2
43.7
2
40.0
2
39.7
35.5
33.9
29.4
27.9
29 5
28.8
29.0
28.1
27.8
26.9
27.1
27.9
28.2
27.5
27.6
24.4
25.O
4.3
24.8
2
6.4
2
6.7
2
82
9.2
11.3
12.1
131
12.7
157
14.6
12.5
14.8
13.7
14.9
15.2
17.2
17.0
2
Below $15,000
poverty
and
level
over
2
nJ
1.4
2
2
1.3
1.5
2
1.6
2
1.6
2
1.5
2
1.6
2 1.5
2
1.5
2
1.6
2
1.7
2
21.6
1.6
1.7
1.8
1 7
1./
1.9
2.0
2.2
2.3
2.4
2.4
2.6
2.9
2.9
3.1
2
2 874
2
3,143
2
2,358
2
2,535
2
2 903
2
2,618
2
2,711
2
2,677
2
2,618
2
2,807
8 3,004
2
3,070
2
3,349
23J66
2
3,386
3,826
4,098
4,170
O QC7
j,yo/
4,033
4,457
5,153
4,503
4,735
4,433
4,806
5,313
4,908
5,444
2
57!6"
22 59.3
62.7
2
62.1
2
58.3
2
55.0
2
50.7
54.4
49.3
46.3
46.7
to.o
46.0
42.9
37.9
41.0
39.3
42.1
39.8
37.0
38.6
36.9
10
*.3
2.5
M
11
2.9
8
1.5
2
2.4
2
2.4
2
3.0
2
3.4
*3.3
2
5.1
2
5.2
2
4.6
5.6
7.3
6.2
7 9
/,&
7.5
101
12^4
10.0
11.1
10.2
10.8
12.5
13.4
14.6
'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
Data for "black" include "other" races.
3
Revised using population controls based on the 1970 census. Such controls are not available by race.
4
Based on revised methodology; comparable with succeeding years.
9
Based on householder concept. Restricted to primary families.
•The term "unrelated individuals" refers to persons 15 years old and over as of March 1980 and 14 years old and over for previous
years (other than inmates of institutions) who are not living with any relatives.
.. Note.—The poverty level is based on the poverty index adopted by a Federal interagency committee in 1969. That index reflects
different consumption requirements for families based on size and composition, sex and age of family householder, and farm-nonfarm
^ Source:
^ ZDepartment
& W of ^Commerce,
^ T Bureau
^ Tof the^ Census.
J S
K t changes in the co sumer price indexFor lurther det8ls see
"
262
-
TABLE B-26.—Population by age groups, 1929-80
[Thousands of persons]
Age (years)
July 1
1929
1933.
1939
1940 .
194]..
1942
1943...
1944..
1945
1946
1947
1948
1949
1950. .
1951
195?.
1953 .
1954 .
1955...
1956...
1957..
1953
1959
1960 .
1961...
1962.
1963
1964
1965
1966
1967
1968
1969
1970.
1971
1972..
1973..
1974
1975 .
1976..
1977
1978,.
1979
1980
Total
Under 5
121,767
125,579
130,830
132,122
133,402
134,860
136,739
138,397
11,734
10,612
10,418
10,579
10,850
11,301
12,016
12,524
139,928
141,389
144,126
146,631
149,188
12,979
13,244
14,406
14,919
15,60.7
152,271
154,878
157,553
160,184
163,026
165,931
168,903
171,984
174,882
177,830
180,671
183,691
186,538
189,242
191,889
194,303
196,560
198,712
200,706
202,677
16,410
17,333
17,312
17,638
18,057
18,566
19,003
19,494
19,887
20,175
20,341
20,522
20,469
20,342
20,165
19,824
19,208
18,563
17,913
17,376
204,878
207,053
208,846
210,410
211,901
213,559
215,152
216,880
218,717
220,584
222,807
5-15
16-19
26,800
26,897
25,179
9,127
9,302
9,822
24,811
24,516
24,231
24,093
23,949
23,907
24,103
24,468
25,209
25,852
26,721
27,279
28,894
30,227
31,480
8,542
8,446
8,414
8,460
8,637
32,682
8,744
33,994
35,272
36,445
37,368
8,916
9,195
9,543
10,215
38,494
39,765
41,205
41,626
42,297
10,683
11,025
11,180
12,007
12,736
42,938
43,702
44,244
44,622
44,840
13,516
14,311
14,200
14,452
14,800
17,148
17,177
16,990
16,694
16,288
44,774
44,441
43,948
43,227
42,538
15,275
15,635
15,946
16,310
16,590
15,879
15,345
15,248
15,378
15,649
41,956
41,459
40,575
39,623
38,643
16,793
16,928
16,966
16,935
16,838
1
9,895
9,840
9,730
9,607
9,561
9,361
9,119
9,097
8 952
8,788
t1)
t)
1
20-24
25-44
45-64
10,694
11,152
11,519
11,690
11,807
11,955
12,064
12,062
12,036
12,004
11,814
11,794
11,700
11,680
11,552
11,350
11,062
10,832
35,862
37,319
39,354
21,076
22,933
25,823
26,249
26,718
27,196
27,671
28,138
28,630
29,064
29,498
29,931
30,405
10,714
10,616
10,603
10,756
10,969
11,134
11,483
11,959
12,714
13,269
13,746
14,050
15,248
15,78616,480
17,184
18,032
18,345
18,741
19,229
19,630
20,077
20,461
20,726
(M
39,868
40,383
40,861
41,420
42,016
42,521
43,027
43,657
44,288
44,916
45,672
46,103
46,495
46,786
47,001
47,194
47,379
47,440
47,337
47,192
47,140
47,084
47,013
46,994
46,958
46,912
47,001
47,194
47,721
48,064
48,435
48,811
50,254
51,411
52,593
53,735
55,129
56,706
58,380
60,161
1
65 and
over
6,474
7,363
8,764
9,031
9,288
9,584
9,867
10,147
10,494
10,828
11,185
11,538
11,921
12,397
12,803
13,203
13,617
14,076
30,849
31,362
31,884
32,394
32,942
33,506
34,057
34,591
35,109
35,663
36,203
36,722
37,255
37,782
38,338
38,916
39,534
40,193
40,846
41,437
18,451
18,755
19,071
19,365
19,680
41,975
42,413
42,785
43,077
43,319
43,546
43,707
43,795
43,876
43,910
20,087
20,488
20,892
21,346
21,833
22,420
22,954
23,513
24,064
24,658
14,525
14,938
15,388
15,806
16,248
16,675
17,089
17,457
17,778
18,127
t)
Not available.
Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950. Data from 1980 census
not yet available.
Source: Department of Commerce, Bureau of the Census.
263
TABLE B-27.—Noninstitutional population and the labor force, 1929-80
[Monthly data seasonally adjusted, except as noted]
Civilian labor force
Year or month
Noninstitutional Armed1
populaForces
tion 1
Employment
Total
Total
Agriculiural
Nonagricultural
Civilian labor force
participation rate 8
Unemployment rate
(percent
of civilian
labor
UnemTotal Males Females
force)
ployment
Thousands of persons 14 years of age and over
1929
1933
1939
....
.
1940
.
1941
1942
1943 .
1944
1945....
1946.
1947 ..
.
260
250
370
100,380
540
101,520
1,620
102,610
3,970
103,660
9,020
104,630 11,410
105,530 11,440
106,520 3,450
107,608 1,590
47,630 10,450
38,760 10,090
45,750 9,610
47,520 9,540
50,350 9,100
53,750 9,250
54,470 9,080
53,960 8,950
53,860 52,820 8,580
57,520 55,250 8,320
60,168 57,812 8,256
49,180
51,590
55,230
55,640
55,910
56,410
55,540
54,630
37,180
28,670
36,140
37,980
41,250
44,500
45,390
45,010
44,240
46,930
49,557
Percent
1,550
3.2
12,830
24.9
9,480
17.2
8,120
5,560
2,660
1,070
670
14.6
9.9
4.7
1.9
1.2
55.7
56.0
57.2
58.7
58.6
837
84.3
85.6
86.4
87.0
28,2
28.7
31.3
36.0
36.5
1,040
2,270
2,356
1.9
3.9
3.9
57.2
55.8
56.8
84.8
82.6
84.0
31.0
3,637
3.9
3.8
5,9
58.3
58.8
58.9
86.4
86.6
86.4
31.8
32.7
33.1
59,2
59.3
59.0
58.9
58.8
86.4
86.5
86.3
86.0
85.5
33.9
34.6
34.7
34.4
34.6
35.9
31.2
Thousands of persons 16 years of age and over
1947.
1948
1949
1950 ..
1951
19523
1953
1954.
1955 ..
1956..
1957 ..
1958
1959...
1960 *
1961 .
1962^
1963 .
1964
1965
1966 .
1967
1968...
1969 .
1970
1971..
197233.
1973 ..
1974 ...
1975..
1976 .
1977. .
1978».
1979.
1980
7,160
6,726
6,500
6,260
6,205
49,148
50,714
49,993
51,758
53,235
53,749
54,919
53,904
1,834
' 3,532
5.3
3.3
3.0
2.9
5.5
62,170
63,799
64,071
63,036
64,630
6,450
6,283
5,947
5,586
5,565
55,722
57,514
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
59.3
60.0
59.6
59.5
59.3
85.3
85.5
84.8
84.2
83.7
35.7
36,9
36.9
37.1
37.1
69,628 65,778
70,459 65,746
70,614 66,702
71,833 67,762
73,091 69,305
74,455 71,088
2,723
75,770 72,895
3,123
77,347 74,372
3,446
78,737 75,920
3,535
80,734 77,902
3,506
3,188
82,715 78,627
2,816
84,113 79,120
2,449
86,542 81,702
2,326
88,714 84,409
2,229
91,011 85,935
92,613 84,783
2,180
2,144
94,773 87,485
2133
97,401 90,546
2,117 100,420 94,373
2,088 102,908 96,945
2,102 104,719 97,270
5,458
5,200
4,944
4,687
4,523
60,318
60,546
61,759
63,076
64,782
66,726
68,915
70,527
72,103
74,296
3,852
4,714
3,911
4,070
3,786
5.5
6.7
5.5
5.7
5.2
59.4
59.3
58.8
58.7
58.7
83.3
82.9
82.0
81.4
81.0
37.7
38.1
37.9
38.3
38.7
3,366
2,875
2,975
2,817
2,832
4.5
3.8
3.8
3,6
3.5
58.9
59.2
59.6
59,6
60.1
80.7
80.4
80.4
80.1
79.8
39.3
40.3
41.1
41.6
42.7
103,418
104,527
105,611
1,591
1,459
1,617
59,350
60,621
61,286
106,645
107,721
108,823
110,601
111,671
112,732
113,811
115,065
116,363
117,881
119,759
121,343
122,981
125,154
127,224
129,236
131,180
133,319
135,562
137,841
140,182
142,596
145,775
148,263
150,827
1,650
3,100
3,592
3,545
3,350
3,049
2,857
2,800
2,636
2,552
153,449
156,048
158,559
161,058
163,620
166,246
62,208
62,017
62,138
63,015
63,643
57,038
58,343
57,651
58,918
59,961
60,250
61,179
60,109
65,023
66,552
66,929
67,639
68,369
2,514
2,572
2,828
2>38
2,739
See next page for continuation of table.
264
7,890
7,629
7,658
4,361
3,979
3,844
3,817
3,606
3,288
2,055
1,883
4,993
4,840
4,304
5,076
4.9
5.9
5.6
4.9
5.6
60.4
60.2
60.4
60.8
61.2
79.7
79.1
79.0
78.8
78.7
43.3
43.3
43.9
44.7
45.6
3,380
3,297
3,244
3,342
3,297
75,165
75,732
78,230
80,957
82,443
81,403
84,188
87,302
91,031
93,648
7,830
7,288
6,855
6,047
5,963
8.5
7.7
7.0
6.0
5.8
61.2
61.6
62.3
63.2
63.7
77.9
77.5
77.7
77.9
77.9
46.3
47.3
48.4
50.0
51.0
3,310
93,960
7,448
7.1
63.8
77.4
51.6
3,462
3,387
3,472
3,452
3,492
TABLE B-27.—Noninstitutional population and the labor force, 1929-80—Continued
[Monthly data seasonally adjusted, except as noted]
Civilian labor force
participation rate 2
Civilian labor force
Year or month
Noninstitutional
population 1
Armed
Forcesl
Employment
Unemployment
Total
Total
ctilfuriral
Unemployment rate
(percent
of civilian
labor
force)
Total
Males
Females
Nonagricultural
Thousands of persons 16 years of age and over
Percent
1978: 3
159,937
160,128
160,313
160,504
160,713
160,928
2,121
2,124
2,122
2,118
2,113
2,098
99,101
99,031
99,336
99,823
100,201
100,507
92,752
92,863
93,133
93,780
94,177
94,680
3,400
3,276
3,305
3,305
3,282
3,436
89,352
89,587
89,828
90,475
90,895
91,244
6,349
6,168
6,203
6,043
6,024
5,827
6.4
6.2
6.2
6.1
6.0
5.8
62.8
62.7
62.8
63.0
63.2
63.3
77.9
77.7
77.8
77.8
77.9
77.9
49.2
49.2
49.4
49.7
49.9
50.1
161,148
161,348
161,570
161,829
162,033
162,250
2,116
2,122
2,123
2,122
2,117
2,108
100,603
100,719
100,937
101,171
101,576
101,831
94,494
94,837
94,991
95,374
95,653
95,715
3,392
3,360
3,356
3,365
3,236
3,346
91,102
91,477
91,635
92,009
92,417
92,369
6,109
5,882
5,946
5,797
5,923
6,116
6.1
5.8
5.9
5.7
5.8
6.0
63.3
63.3
63.3
63.3
63.5
63.6
77.8
77.8
77.7
77.8
78.0
78.1
50.2
50.2
50.4
50.4
50.5
50.6
162,448
162,633
162,909
163,008
163,260
163,469
2,094
2,094
2,090
2,082
2,078
2,076
102,014
102,393
102,578
102,213
102,366
102,556
96,056
96,400
96,622
96,295
96,590
96,838
3,275
3,312
3,304
3,234
3,226
3,276
92,781
93,088
93,318
93,061
93,364
93,562
5,958
5,993
5,956
5,918
5,776
5,718
5.8
5.9
5.8
5.8
5.6
5.6
63.6
63.8
63.8
63.5
63.5
63.5
78.2
78.2
78.0
77.9
77.8
77.7
50.5
50.8
51.0
50.6
50.7
50.8
163,685
163,891
164,106
164,468
164,682
164,898
2,082
2,090
2,092
2,093
2,092
2,089
103,015
103,105
103,492
103,566
103,605
104,053
97,277
97,048
97,521
97,434
97,501
97,781
3,282
3,342
3,332
3,281
3,378
3,323
93,995
93,706
94,189
94,153
94,123
94,458
5,738
6,057
5,971
6,132
6,104
6,272
5.6
5.9
5.8
5.9
5.9
6.0
63.7
63.7
63.9
63.8
63.7
63.9
77.9
77.7
78.0
77.7
77.5
77.7
51.0
51.2
51.2
51.3
51.3
51.5
fr.
165,101
165,298
165,506
165,693
165,886
166,105
2,081
2,086
2,090
2,092
2,088
2,092
104,208
104,271
104,171
104,427
105,060
104,591
97,708
97,817
97,628
97,225
97,116
96,780
3,287
3,329
3,337
3,262
3,352
3,232
94,421
94,488
94,291
93,963
93,764
93,548
6,500
6,454
6,543
7,202
7,944
7,811
6.2
6.2
6.3
6.9
7.6
7.5
63.9
63.9
63.7
63.8
64.1
63.8
77.6
77.7
77.5
77.5
78.0
77.4
51.6
51.5
51.3
51.5
51.7
51.5
June..
July .
Aug..
Sept...
Oct
Nov....
Dec...
166,391
166,578
166,789
167,005
167,201
167,396
2,099
2,114
2,121
2,121
2,119
2,124
105,020
104,945
104,980
105,167
105,285
105,067
96,999
97,003
97,180
97,206
97,339
97,282
3,267
3,210
3,399
3,319
3,340
3,394
93,732
93,793
93,781
93,887
93,999
93,888
8,021
7,942
7,800
7,961
7,946
7,785
7.6
7.6
7.4
7.6
7.5
7.4
63.9
63.8
63.8
63.8
63.8
63.6
77.5
77.3
77.4
77.4
77.3
77.0
51.7
51.7
51.5
51.6
51.6
51.5
Jan
Feb
Mar
fc .:.June
July
Aug
Sept
Oct
Nov
Dec
1979.
Jan..
Feb....
Mar..
Apr...
fay
June.
July...
Aug..
Sept.
Oct
Nov
Dec
1980:
Jan.. .
Feb .
Mar
1
Not seasonally adjusted.
Civilian labor force as percent of civilian noninstitutionaf population.
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
1960, 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. Beginning 1978, changes in sampling and estimation procedures introduced into the
household survey added about 250,000 to labor force and to employment. Unemployment levels and rates were not significantly
affected.
2
3
Note.—Labor force data in Tables B-27 through B-33 are based on household interviews and relate to the calendar week including
the 12th of the month. For definitions of terms, area samples used, historic comparability of the data, comparability with other series,
etc., see "Employment and Earnings."
Source: Department of Labor, Bureau of Labor Statistics.
265
TABLE B-28.—Civilian employment and unemployment by sex and age, 1947-80
[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]
Unemployment
[mployment
Year or
month
Total
Total
16-19
years
20
years
and
over
Total
16-19
years
Females
Males
Females
Males
20
years
and
over
Total
Total
16-19
years
20
years
and
over
Total
20
16-19 years
years and
over
475
564
841
854
689
1947
1948
1949
57,038 40,995
58,343 41,725
57,651 40,925
2,218 38,776 16,045
2,345 39,382 16,617
2,124 38,803 16,723
1,691 14,354
1,683 14,937
1,588 15,137
2,311
2,276
3,637
1,692
1,559
2,572
270
255
352
1,422
1,305
2,219
619
717
1,065
223
1950
1951
1952
1953»
1954
58,918
59,961
60,250
61,179
60,109
41,578
41,780
41,682
42,430
41,619
2,186 39,394 17,340
2,156 39,626 18,181
2,106 39,578 18,568
2,135 40,296 18,749
1,985 39,634 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
1,922
1,029
980
1,019
2,035
1,049
834
698
632
1,188
195
145
140
123
191
1955
1956
1957
1958
1959
62,170
63,799
64,071
63,036
64,630
42,621
43,379
43,357
42,423
43,466
2,095
2,164
2,U7
2,012
2,198
40,526
41,216
41,239
40,411
41,267
19,551
20,419
20,714
20,613
21,164
1,548
1,654
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
998
1,039
1,018
1,504
1,320
176
209
197
262
256
823
832
821
1,242
1,063
I960 1
1961
1962 *
1963
1984
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
2,518
2,016
1,971
1,718
1,366
1,717
1,488
1,598
1,581
286
349
313
383
386
1,080
1,368
1,175
1,216
1,195
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
432
448
427
441
1,435
1,120
1,060
993
963
1,452
1,324
1,468
1,397
1,429
395
404
391
412
412
1,056
1,078
985
1,016
1970
1971
1972 *
1973*
1974
78,627
79,120
81,702
84,409
85,935
48,960
49,245
50,630
51,963
52,518
3,407
3,470
3,750
4,017
4,074
45,553
45,775
46,880
47,946
48,445
29,667
29,875
31,072
32,446
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
f918
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
1975
1976
1977
1978>
1979
84,783
87,485
90,546
94,373
96,945
51,230
52,391
53,861
55,491
56,499
3,803
3,904
4,124
4,279
4,236
47,427
48,486
49,737
51,212
52,264
33,553
35,095
36,685
38,882
40,446
3,243
3,365
3,486
3,702
3,748
30,310
31,730
33,199
35,180
36,698
7f830
7,288
6,855
6,047
5,963
4,385
3,968
3,588
3,051
3,018
957
3,428
3,041
2>27
2,252
2,223
3,445
3,320
3,267
2,996
2,945
795
928
861
799
795
773
781
760
733
2,649
2,546
2,486
2,236
2,213
1980
97,270 55,988
4,016
51,972 41,283
3,587 37,696
7,448
4,157
896
3,261
3,291
744
2,547
96,056
96,400
96,622
96,295
96,590
96,838
56,293
56,396
56,379
56,322
56,426
56,586
4,292
4,264
4,267
4,237
4,224
4,299
52,001
52,132
52,112
52,085
52,202
52,287
39,763
40,004
40,243
39,973
40,164
40,252
3,794
3,831
3,841
3,762
3,727
3,731
35,969
36,173
36,402
36,211
36,437
36,521
5,958
5,993
5,956
5,918
5,776
5,718
3,036
3,024
3,009
2,980
2,888
2,801
835
836
2,201
2,188
2,188
2,165
2,083
2,097
2,922
2,969
2,947
2,938
2,888
2,917
717 2,205
718 2,251
701 2,246
760 2,178
741 2,147
740 2,177
97,277
97,048
97,521
97,434
97,501
97,781
56,667
56,473
56,780
56,594
56,505
56,617
4,260
4,123
4,260
4,179
4,205
4,253
52,407
52,350
52,520
52,415
52,300
52,364
40,610
40,575
40,741
40,840
40,996
41,164
3,742
3,621
3,693
3,715
3,762
3,743
36,868
36,954
37,048
37,125
37,234
37,421
5,738
6,057
5,971
6,132
6,104
6,272
2,932
3,023
3,056
3,101
3,169
3,241
788
824
768
784
806
2,177
2,235
2^32
2,333
2,385
2,435
2,806
3,034
2,915
3,031
2,935
3,031
684 2,122
731 2,303
97,708
97,817
97,628
97,225
97,116
96,780
96,999
97,003
97,180
97,206
97,339
97,282
56,458
56,631
56,489
56,054
55,914
55,597
4,195
4,195
4,259
4,119
4,043
3,973
52,263
52,436
52,230
51,935
51,871
51,624
41,250
41,186
41,139
41,171
41,202
41,183
3,712
3,626
3,589
3,574
3,602
3,570
37,538
37,560
37,550
37,597
37,600
37,613
6,500
6,454
6,543
7,202
7,944
7,811
3,448
3,378
3,500
3,994
4,543
4,496
819
797
764
802
974
938
2,629
2,581
2,736
3,192
3,569
3,558
3,052
3,076
3,043
3,208
3,401
3,315
738
765
748
707
808
746
2.314
2,311
2,295
2,501
2,593
2,569
55,678
55,589
55,754
55,881
55,897
55,920
3,964
3,798
3,931
3,918
3,890
3,875
51,714
51,791
51,823
51,963
52,007
52,045
41,321
41,414
41,426
41,325
41,442
41,362
3,593
3,524
3,622
3,571
3,533
3,542
37,728
37,890
37,804
37,754
37,909
37,820
8,021 4,593
7,942 4,558
7,800 4,566
7,961 4,498
7,946 4,491
7,785 4,334
963
946
914
966
959
909
3,630
3,612
3,652
3532
3,532
3,425
3,428
3,384
3,234
3,463
3,455
3,451
773
751
721
731
735
701
2,655
2,633
2,513
2J32
2,720
2,750
1979:
Jan
Feb
Mar
Apr
May.
July
Aug
Sept
Oct
Nov
Dec
1980:
Jan
Feb
Mar
June
July
Aug
Sept
Oct
Nov
Dec
1
See footnote 3, Table B-27.
Note.-See Note, Table B-27.
Source: Department of Labor, Bureau of Labor Statistics.
266
821
815
805
704
755
144
152
559
510
997
921
735 2,180
791 2,240
721 2,214
755 2,276
TABLE B-29.—Selected employment and unemployment data, 1948-80
[Percent;1 monthly data seasonally adjusted]
Unemployment rate1
By sex and age
Employment as
percent of
population5
By selected groups
ExperiWomen
Both
All
Females enced Married who
BlueBlack
Full-time
workers sexes 20Males
wage
and
3
20
years
collar 4 Total White and
years
16-19
men
workers 3< workers
salary
tain
other
years and over and over workers
families
Year or month
3.8
5.9
9.2
13.4
3.2
5.4
3.6
5.3
4.3
6.8
3.5
57
5.3
3.3
3.0
29
5.5
44
4.1
43
6.8
55
12.2
8.2
8.5
76
12.6
110.
11.1
116
15.9
14.6
4.7
2.5
2.4
2.5
4.9
3.8
3.4
3.6
6.2
4.7
5.1
4.0
3.2
2.9
5.5
4.4
4.2
4.1
6.1
5.2
6.0
3.7
3.3
3.2
6.2
4.8
4.4
4.6
7.2
5.7
4.6
1.5
1.4
1.7
4.0
2.8
2.6
2.8
5.1
3.6
5.0
2.6
2.5
5.5
6.7
55
5.7
52
4.5
3.8
3.8
3.6
3.5
14.7
16.8
14 7
17.2
162
14 8
12.8
12.9
12.7
12.2
4.7
5.7
4.6
4.5
39
3.2
2.5
2.3
2.2
2.1
5.1
6.3
54
5.4
5.2
4.5
3.8
4.2
3.8
3.7
5.7
6.8
56
5.5
5.0
4.3
3.5
3.6
3.4
3.3
3.7
4.6
36
3.4
2.8
2.4
1.9
1.8
1.6
1.5
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
4.9
5.9
5.6
49
5.6
8.5
77
7.0
6.0
5.8
15.2
16.9
16.2
14 5
16.0
19.9
19 0
17.7
16.3
16.1
3.5
4.4
4.0
32
3.8
6.7
5.9
5.2
4.2
4.1
4.8
5.7
5.4
48
5.5
8.0
7.4
7.0
6.0
5.7
4.8
5.7
5.3
45
5.3
8.2
7.3
6.6
5.6
5.4
1980
7.1
17.7
5.9
6.3
5.8
5.9
5.8
5.8
5.6
56
16.1
16.1
15.8
16.5
163
15 2
4.1
4.0
4.0
4.0
3.8
39
5.6
59
5.8
5.9
5.9
6.0
15.2
16.4
16.4
16.5
15.9
16.3
4.0
4.1
4.1
4.3
4.4
4.4
6.2
62
6.3
6.9
76
7.5
16.5
16 6
16.2
16.4
18 9
18.3
7.6
7.6
7.4
7.6
7.5
7.4
18.7
18.8
17.8
18.5
18 6
17.8
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
.
.;..'...
....'..'. .
.;
'.
.. "
1979:
Jan
Feb
Mar
May..
June
July
Aug
Sept . . .
Oct
Nov
Dec
1980:
Jan
Feb
Mar
Apr
May
inrte
til
Oct
Nov
Dec
.'.
4.2
8.0
55.8
54.6
12
3.9
3.6
34
.7.2
58
5.1
62
10.2
7.6
55.2
55.7
55.4
55.3
53.8
55.1
56.1
55.7
54.2
54.8
54.9
54.2
54.2
54.1
54.5
55.0
55.6
55.8
56.0
56.5
54.0
54.3
54.8
55.4
55.7
55.9
56.5
55.2
561
-4-g4.4
4.4
5.5
4.9
4.2
3.5
3.4
3.1
3.1
7.8
9.2
74
7.3
6.3
5.3
4.2
4.4
4.1
3.9
2.6
3.2
2.8
23
2.7
5.1
4.2
3.6
2.8
2.7
5.4
7.3
7.2
70
7.0
10.0
10 0
9.3
8.5
8.3
4.5
5.5
5.1
43
5.1
8.1
73
6.5
5.5
5.3
6.2
7.4
6.5
53
6.7
11.7
9.4
8.1
6.9
6.9
56.1
55.5
56.0
56 9
57.0
55.3
56.1
57.1
58.6
59.3
56.2
55.7
56.4
57 3
57.5
55.9
56.8
57.9
59.3
60.0
55.5
53.7
53.0
53 9
53.0
50.0
50 6
51.1
53,3
53.6
6.8
4.2
9.1
6.8
10.0
58.5
59.5
51.9
5.8
5.9
5.8
5.7
5.6
56
5.4
5.4
5.4
5.3
5.3
52
3.7
3.7
3.6
3.6
3.4
35
7.9
8.3
8.2
8.0
85
9.0
5.3
5.4
5.3
5.3
5.1
5.0
6.6
6.7
6.7
6.9
6.6
6.4
59.1
59.3
59.3
59.1
59.?
59.9
60.1
60.0
59.9
59,9
60.0
53.4
53.4
53.9
53.5
53.4
53.fi
5.4
5.9
5.6
5.7
5.6
5.7
5.3
5.6
5.5
5.6
5.6
5.6
3.5
3.7
3.6
3.7
3.7
3.8
8.1
8.0
8.0
8.4
8.5
8.5
5.1
5.3
5.3
5.4
5.4
5.5
6.7
7.1
7.0
7.2
7.6
7.5
59.4
59.2
59.4
59,?
59.2
59.3
60.2
60.0
60.2
60,1
60.0
60.2
54,0
53.6
54.0
53 7
53 4
53.3
4.8
4.7
5.0
5.8
6.4
6.4
5.8
5.8
5.8
6.2
6.5
6.4
5.9
5.9
6.0
6.6
7.4
7.3
4.1
4.1
4.2
4.7
5.2
5.1
9.0
8.5
8.6
9.0
8.3
8.5
5.8
5.8
5.9
6.5
7.3
7.2
8.1
7.9
8.2
9.6
10.9
11.1
59.2
59.2
59.0
58.7
58.5
58.3
60.1
60.1
59.9
59,6
59.5
59.2
53,1
5? 8
52.3
6.6
6.5
6.6
6.4
6.4
6.2
6.6
6.5
6.2
6.7
6.7
6.8
7.4
7.4
7.2
7.3
7.2
7.1
5.3
5.3
5.1
5.1
5.0
4.9
8.8
9.0
9.0
10.2
9.9
10.4
7.4
7.3
7.3
7.3
7.4
7.3
11.3
11.1
10.8
10.8
10.7
10.5
58.3
58.2
58.3
58.2
58?
58.1
59.2
59.1
59.2
59.2
59.2
59.1
51.9
51.8
51,6
51.4
515
51.3
v
1
2
3
4
5.2
3.8
3.7
40
7.2
6.7
•59.?
57.2
56.6
56.7
ftffl
51.7
Unemployment as percent of civilian labor force in group specified.
Married men living with their wives. Data for 1949 and 1951-54 are for April; 1950, for March.
Data for 1949-61 are for May.
Includes craft and kindred workers, operatives, and nonfarm laborers. Data for 1948-57 are based on data for January, April, July,
and8 October.
Civilian employment as percent of total noninstitutional population.
Note.—See footnote 3 and Note, Table B-27.
Source.- Department of Labor, Bureau of Labor Statistics.
267
TABLE B-30..—Civilian labor force participation rate by demographic characteristic, 1954-80
[Percent1, monthly data seasonally adjusted]
Black and other
White
All
workers Total
Year or month
Females
Males
Females
Males
20
20
16-19 years Total
years
Total 16-19
years and Total years and
over
over
20
16-19 years
Total
years and
over
Total
20
16-19 years
years
and
over
1954
58.8
58.2
85.6
57,6
87.8
33,3
40.6
327
64.3
85.2
61.2
87.1
46.1
31.0
47,7
1955
1956...
1957
1958
1959
59.3
60.0
59.6
59.5
59.3
58.7
59.4
59.1
58.9
58.7
85.4
85.6
84.8
84.3
83.8
58.6
60.4
59.2
56.5
55.9
87.5
87.6
86.9
86.6
86.3
34.5
35.7
35.7
35.8
36.0
40.7
43.1
42.2
40.1
39.6
34.0
35.1
35.2
35.5
35.6
64.2
64.9
64.4
64.8
64.3
85.0
85.1
84.3
84.0
83.4
60.8
61.5
58.8
57.3
55.5
87.8
87.8
87.0
87.1
86.7
46.1
47.3
47.2
48.0
47.7
32.7
36.3
33.2
31.9
28.2
47.5
48.4
48.6
49.8
49.8
I960;
1961
1962
1963
1964
59.4
59.3
58.8
58.7
58.7
58.8
58.8
58.3
58.2
58.2
83.4
83.0
82.1
81.5
81.1
55.9
54.5
53.8
53.1
52.7
86.0
85.7
84.9
84.4
84.2
36.5
36.9
36.7
37.2
37.5
40.3
40.6
39.8
38.7
37.8
36.2
36.6
36.5
37.0
37.5
64.5
64.1
63.2
63.0
63.1
83.0
82.2
80.8
80.2
80.0
57.6
55.8
53.5
51.5
49,9
86.2
85.5
84.2
83.9
84.1
48.2
48.3
48.0
48.1
48.5
32.9
32.8
33.1
32,6
31.7
49.9
50.1
49.6
49.9
50.7
1965
1966
1967
1968
1969
58.9
59.2
59.6
59.6
60.1
58.4
58.7
59.2
59.3
59.9
80.8
80.6
80.7
80.4
80.2
54.1
55.9
56.3
55.9
56.8
83.9
83.6
83.5
83,2
83.0
38.1
39.2
40.1
40.7
41.8
39.2
42.6
42.5
43.0
44.6
38.0
38.8
39.8
40.4
41.5
62.9
63.0
62.8
62,2
62.1
79.6
79.0
78.5
77.6
76.9
51.3
51.4
51.1
49.7
49.6
83.7
83.3
82.9
82.2
81.4
48.6
49.3
49.5
49.3
49.8
29.5
33.5
35.2
34.8
34.6
51.1
51.6
51.6
51.4
52.0
1970
1971
1972
1973
1974
60.4
60.2
60.4
60.8
61.2
60.2
60.1
60.4
60.9
61.4
80.0
79.6
79.6
79.5
79.4
57.5
57.9
60.1
62.0
63.0
82.8
82.3
82.0
81.6
81.4
42.6
42.6
43.2
44.1
45.2
45.6
45.5
48.2
50.1
51.8
42.2
42.3
42.7
43.5
44.4
61.8
60.9
60.0
60.3
60.0
76.5
74.9
73.7
73.8
73.3
47.3
44.7
46.0
46.3
47.2
81.4
79.9
78.5
78,4
77.7
49.5
49.2
48.7
49.1
49.1
34.0
31.3
32.2
34.4
34.1
51.7
51.8
51.1
51.3
51.3
1975
1976....
1977
1978
1979
61.2
61.6
62.3
63.2
63.7
61.5
61.9
62.6
63.4
64.0
78.7
78.4
78.5
78.6
78.6
61.9
62.4
64.1
65.1
64.8
80.7
80.3
80.3
80.2
80.2
45.9
46.9
48.1
49.5
50.6
51.6
52.9
54.7
56.9
57.6
45.3
46.2
47.4
48.7
49.9
59.3
59.4
60.0
61.8
61.8
71.5
70.7
71.0
72.1
71.9
42.7
42.1
43.4
45.4
43.9
76.4
75.6
75.6
76.5
76.4
49.2
50.2
50.9
53.3
53.5
35.6
33.5
33.6
38.1
38.0
51.2
52.6
53.4
55.5
55.6
1980
63.8
64.2
78.3
63.8
79.9
51.3
56.4
50.8
61.2
70.8
43.3
75.1
53.4
35.9
55.8
63.6
63.8
63.8
63.5
63.5
63.5
63.9
64.0
64.0
63.8
63.8
63.8
79.0
79.0
78.8
78.6
78.5
78.6
66.1
65.2
65.3
64.8
64.4
64.3
80.5
80.5
80.3
80.2
80.1
80.2
50.2
50.4
50.5
50.2
50.4
50.4
57.8
58.3
58.5
57.8
57.3
57.4
49.4
49.6
49.7
49.4
49.6
49.7
61.5
61.9
62.2
61.9
61.5
61.8
71.9
72.3
72.5
71.9
71.9
72.1
44.9
46.5
46.8
45.1
45.0
43.5
76.2
76.4
76.6
76.2
76.2
76.6
53.0
53.4
53.8
53.7
53.0
53.5
38.5
39.6
37.2
41.4
37.1
36.9
55.0
55.3
56.0
55.4
55.2
55.7
63.7
63.7
63.9
63.8
63.7
63.9
64.0
64.0
64.2
64.1
64.0
64.3
78.7
78.5
78,7
78.4
78.4
78.5
64.3
63.4
65.5
63.9
64.9
66.1
80.3
80.2
80.2
80.1
80.0
80.0
50.6
50.8
50.9
51.0
50.9
51.2
57.2
56.3
57.3
57.8
57.9
57.9
50.0
50.2
50.2
50.3
50.2
50.5
61.8
61.7
61.9
62.0
61.4
61.6
72.0
72.2
72.5
71.9
70.9
71.1
41.8
45.2
43.1
42.5
41.3
41.0
76.9
76.5
77.2
76.6
75.6
75.8
53.4
53.1
53.1
54.0
53.7
53.9
37.1
34.6
36.5
38.7
38.1
39.7
55.6
55.6
55.4
56.1
55.7
55.8
63.9
63.9
63.7
63.8
64.1
63.8
64.3
64.3
64.1
64.3
64.5
64.2
78.5
78.6
78.5
78.5
78.9
78.3
65.1
65.0
65.6
64.1
64.8
63.5
80.0
80.1
79.9
80.1
80.5
80.0
51.3
51.2
51.1
51.3
51.4
51.3
57.5
56.6
56.1
55.9
57.1
56.1
50.7
50.7
50.6
50.8
50.8
50.8
61.6
61.2
60.7
61.0
61.5
61.1
71.2
70.8
70.3
70.6
70.8
70.8
43.2
42.0
41.7
41.7
44.0
43.5
75.6
75.3
74.8
75.0
75.0
75.0
53.8
53.3
52.8
53.1
53.9
53.2
38.0
39.1
36.9
34.8
37.1
35.4
55.9
55.2
55.0
55.5
56.2
55.5
63.9
63.8
63.8
63.8
63.8
63.6
64.2
64.1
64.1
64.2
64.1
63.9
78.3
78.2
78.2
78.2
78.1
77.9
63.6
62.7
62.5
63.6
63.1
62.4
80.0
79.9
79.9
79.8
79.8
79.6
51.4
51.3
51.3
51.3
51.4
51.2
56.9
55.6
56.8
56.5
56.3
56.0
50.8
50.9
50.7
50.8
50.9
50.7
61.7
61.4
61.5
61.4
61.3
61.0
71.4
70.8
71.6
70.9
70.9
70.3
44.6
39.7
45.7
44.8
45.3
44.0
75.6
75.7
75.6
75.0
74.9
74.4
53.8
53.8
53.2
53.6
53.5
54.8
36.3
34.9
36.2
34.2
34.1
34.3
56.1
56.2
55.5
56.1
56.0
55.9
1979:
Jan....
Feb..
Mar.. ..
ft: •. •.
June
July..
Aug...
Sept.
Oct
Nov..,
Dec...
1980:
Jan...,
Feb...
Mar..,
May ..
June.
July...
AUg...
Sept....
Oct....
Nov... .
Dec...
.
.
.
.
1
Civilian labor force as percent of civilian noninstitutional population in group specified.
Note.—See footnote 3 and Note, Table B-27.
Source: Department of Labor, Bureau of Labor Statistics.
268
TABLE B-31.—Unemployment rate by demographic characteristic, 1948-80
[Percent; l monthly data seasonally adjusted]
White
Females
Males
All
Year or month
Black and other
Males
Females
work-
ers
20
Total
Total
16-19
years
years
and
over
20
Total
1948
1949
3.8
5.9
3.5
5.6
3.4
5.6
3.8
5.7
1950
1951
1952
1953
1954
5.3 .4.9
3.3 3.1
3.0 28
2.9 2.7
5.5 5.0
4.7
2.6
2.5
2.5
4.8
114
4*4
5.3
4.2
33
3.1
5.5
1955
1956
1957
1958
1959
4.4
4.1
4.3
6.8
5.5
3.9
3.6
3.8
6.1
4.8
3.7
3.4
3.6
6.1
4.6
11.3
10.5
11.5
15.7
14.0
3.3
3.0
3.2
5.5
4.1
4.3
4.2
4.3
6.2
5.3
1960
1961
1962
1963
1964
5.5
6.7
5.5
5.7
5.2
4.9
60
4.9
5.0
4.6
4.8
5.7
4.6
4.7
4.1
14.0
15.7
13.7
15.9
14.7
4.2
5.1
4.0
3.9
3.4
1965
1966
1967
1968
1969
4.5
3.8
3.8
3.6
3.5
4.1
3.3
3.4
32
3.1
3.6
2.8
2.7
2.6
2.5
12.9
10.5
10.7
10.1
10.0
1970
1971
1972
1973
1974
4.9
5.9
5.6
4.9
5.6
4.5
5.4
5.0
4.3
5.0
4.0
4.9
4.5
3.7
4.3
1975
1976
1977
1978
1979
8.5
7.7
7.0
6.0
5.8
7.8
7.0
6.2
5.2
5.1
1980
7.1
5.8
16-19
years
.... ....
20
Total
years
and
over
Total
16-19
years
years
and
over
20
16-19
years
years
and
over
20,6
8.4
19.2
22.8
20.2
28.4
27.7
7.7
7.8
6.4
9.5
8.3
24.8
29.2
30.2
34.7
31.6
8.3
106
9.6
9.4
9.0
31.7
29.6
28.7
27.6
7.5
6.6
7.1
6.3
5.8
10.5
10.7
34.4
35.4
38.5
34.5
34.6
6.9
8.7
8.8
8.2
8.4
38.5
39.0
39.9
38.4
35.7
U.5
U.3
Total
5.9
8.9
5.8
9.6
6.1
7.9
9.0
5.3
5.4
4.5
9.9
9.4
4.9
5.2
4.8
10.3
14 4
9.9
8.4
6.1
57
4.1
9.2
8.7
8.3
7.9
8.8
7.9
8.3
8.4
7.4
7.6
8.5
8.9
7.3
12.6
10.7
12.7
10.5
10.8
U.5
13.4
15.0
18.4
26.8
25.2
9.6
117
9.4
10.0
9.2
7.7
11.9
11.0
11.2
10.7
9.2
8.7
9.1
8.3
7.8
10.4
5.1
9.1
9J
9.5
12.7
12.0
3.9
3.7
3.8
5.6
4.7
5.3
6.5
5.5
5.8
5.5
12.7
14.8
12.8
15.1
14.9
4.6
5.7
4.7
4.8
4.6
10.2
12.4
10.9
10.8
10.7
12.8
10.9
10.5
9.6
8.9
24.0
26.8
22.0
27.3
24.3
2.9
2.2
2.1
2.0
1.9
5.0
4.3
4.6
43
4.2
14.0
12.1
11.5
12.1
11.5
4.0
3.3
3.8
3.4
3.4
8.1
7.3
7.4
6.7
6.4
7.4
6.3
6.1
5.6
5.3
23.3
21.3
23.9
22.1
21.4
6.0
4.9
4.3
3.9
3.7
13.7
15.1
14.2
12.3
13.5
3.2
4.0
3.6
2.9
3.5
5.4
6.3
5.9
5.3
6.1
13.4
15.1
14.2
13.0
14.5
4.4
5.3
4.9
4.3
5.0
10.0
8.2
9.9
8.9
9.9
7.3
9.1
8.9
7.6
9.1
25.0
28.9
29.7
26.9
31.6
5.6
7.2
6.8
5.7
6.8
7.2
6.4
5.5
4.5
4.4
18.3
17.3
15.0
13.5
13.9
6.2
5.4
4.6
3.7
3.6
8.6
7.9
7.3
6.2
5.9
17.4
16.4
15.9
14.4
13.9
7.5
6.8
6.2
5.2
5.0
13.9
13.1
13.1
11.9
11.3
13.7
12.7
12.4
10.9
10.3
35.4
35.4
37.0
34.4
31.5
11.7
10.6
10.0
8.6
8.4
14.0
13.6
14.0
13.1
12.3
6.3
6.1
16.2
5.2
6.5
14.8
5.6
13.2
13.3
34.9
11.4
13.1
36.9
11.1
51
5.0
4.5
ivfay ",'„'. ' ". ".
4.3
4.2
3.6
3.5
3.5
3.4
3.3
3.4
6.0
6.0
6.0
5.9
5.9
5.8
13.8
13.4
13.4
14.0
13.7
13.9
5.0
5.1
5.1
4.9
4.9
4.9
11.9
11.3
11.7
11.3
10.2
11.0
10.9
10.6
10.1
U.I
9.9
33.6
33.3
31.9
32.7
31.0
32.0
8.9
8.9
8.5
8.2
7.9
12.5
12.9
11.8
13.0
12.5
12.5
32.0
34.9
31.8
38.7
42.4
35.7
10.6
10.7
10.0
10.3
June
5.1
5.0
4.9
4.8
14.2
14.3
14.2
14.1
14.2
12.0
8.0
5.8
5.8
5.6
5.6
4.4
U.3
5.9
July
Aug
Sept
Oct
Nov
Dec
4.9
5.2
5.1
4.3
4.5
4.6
4.7
4.8
3.5
3.6
3.6
3.7
3.8
3.9
5.7
6.1
5.8
6.0
5.9
6.0
13.7
14.4
14.2
14.6
13.7
14.3
5.2
4.9
5.0
5.0
5.1
10.7
11.1
10.7
11.4
11.0
11.5
30.5
28.7
28.9
31.4
31.5
31.9
8.1
8.0
7.8
8.7
8.6
9.0
U.5
5.3
13.3
14.4
14.6
13.6
13.9
14.1
9.9
9.7
9.5
.
. .
5.6
5.9
5.8
5.9
5.9
6.0
30.2
38.3
35.1
38.5
34.8
35.6
5.5
5.4
5.5
6.1
6.8
6.7
5.1
4.9
5.2
6.0
6.8
6.7
14.4
13.8
13.5
15.0
17.8
17.4
4.2
4.1
4.5
5.2
5.8
5.7
6.1
6.2
6.0
6.4
6.7
6.6
14.0
14.6
14.7
14.5
16.3
14.7
5.1
5.2
5.0
5.5
5.7
5.7
11.9
11.7
11.9
12.6
13.6
13.5
U.5
U.5
11.2
12.3
13.5
14.0
32.4
34.2
31.1
29.1
32.9
33.5
9.7
9.5
Apr. ...
May
June ...
6.2
6.2
6.3
6.9
7.6
7.5
9.5
10.8
11.7
12.2
12.6
12.9
13.7
12.9
36.5
39.6
36.4
34.8
37.9
36.3
7.6
7.6
7.4
7.6
7.5
6.8
6.7
6.5
6.6
6.6
6.5
6.8
6.7
6.6
6.6
6.6
6.4
17.5
17.5
16.2
17.3
17.7
16.4
5.8
5.8
5.8
5.7
5.7
5.5
6.8
6.8
6.4
6.7
6.7
6.7
15.4
15.5
13.8
14.5
14.9
14.2
5.8
5.8
5.5
5.8
5.8
5.9
13.9
13.7
14.1
14.2
14.0
14.0
14.4
14.6
15.3
14.3
14.1
13.9
35.0
39.4
37.7
38.2
35.9
38.8
12.5
12.5
13.2
12.1
12.0
11.6
13.3
12.7
12.8
14.1
14.0
14.1
37.0
35.7
37.9
36.4
37.4
36.1
1979:
Jan
Feb
....
Mar ..
1980Jan
Feb
Mar
July
Aug
Sept
Oct
Nov
Dec
...
7.4
4.4
4.1
4.5
5.1
5.2
1
Unemployment as percent of civilian labor force in group specified.
Note.—See footnote 3 and Note, Table B-27.
Source: Department of Labor, Bureau of Labor Statistics.
333-Si+O O -
81 -
18
: QL 3
269
4.7
13.7
10.5
10.4
10.8
9.4
9.3
10.8
U.3
12.6
12.0
12.4
11.7
12.2
12.3
U.9
3L3
11.7
10.6
10.1
9.8
10.4
9.8
10.4
10.0
10.0
9.6
10.0
10.1
9.3
10.5
11.1
11.6
10.9
U.3
10.9
10.6
12.3
12.2
12.3
TABLE B-32.—Unemployment by duration, 1947-80
[Monthly data seasonally adjusted1]
Year or month
Total
unemployment
Duration of unemployment
Less than
5 weeks
5-14
weeks
15-26
weeks
27 weeks
and over
(mean)
duration
in weeks
Thousands of persons 16 years of age and over
704
669
234
193
428
164
116
256
1,055
425
166
148
357
137
84
1947,.
1948.
1949..
2,311
2,276
3,637
1,210
1,300
1,756
1950
1951.
1952
1953
1954
3,288
2,055
1,883
1,834
3,532
1,450
1,177
1,135
1,142
1,605
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
1,396
1,114
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
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
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
1975. .
1976..,
1977
1978
1979
7,830
7,288
6,855
6,047
5,963
1980
1,194
8.6
10.0
317
12.1
9.7
8.4
8.0
11.8
336
232
239
667
571
13.0
11.3
10.5
13.9
14.4
454
804
585
553
482
12.8
15.6
14.7
14.0
13.3
256
242
351
239
177
156
133
11.8
10.4
8.8
8.5
7.9
1,289
1,578
1,459
1,296
1,572
427
665
597
475
563
235
517
562
337
373
11.4
12.1
10.0
9.7
2,894
2,790
2,856
2,793
2,869
2,452
2,159
2,089
1,875
1,892
1,290
1,003
896
746
684
1,193
1,336
1,015
633
518
14.1
15.8
14.3
11.9
10.8
7,448
3,208
2,411
1,028
802
11.9
5,958
5,993
5,956
5,918
5,776
5,718
2,737
2,822
2,774
2,842
2,725
2,848
1,947
1,915
1,885
1,875
1,861
1,753
693
704
745
675
686
653
524
547
569
530
505
504
11.2
11.3
11.7
11.0
10.9
10.5
Nov
5,738
6,057
5,971
6,132
6,104
6,272
2,775
3,156
2,851
2,972
2,976
2,984
1,868
1,735
2,009
1,962
1,880
2,000
629
657
635
681
680
717
445
517
507
510
531
530
10.3
10.6
10.6
10.5
10.6
10.6
Jan.
Feb.
Mar
Apr
May
June
6,500
6,454
6,543
7,202
7,944
7,811
3,163
3,049
3,005
3,258
3,714
3,281
1,994
2,134
2,207
2,373
2,589
2,812
776
794
796
931
980
1,024
543
505
595
668
706
753
10.6
10.7
11.0
11.2
10.6
11.7
July
Aug
Sept
8,021
7,942
7,800
7,961
7,946
7,785
3,317
3,255
3,042
3,186
3,108
3,115
2,649
2,533
2,586
2,500
2,524
2,217
1,093
1,239
1,366
1,256
1,213
1,231
842
11.8
12.5
13.0
13.3
13.6
13.5
1979:
Jan
Feb..
Mar
t
June.
July
Aug.
Sept
Oct .
Dec...
1980:
Oct
Nov .
Dec
574
516
482
132
495
366
301
321
785
469
503
728
534
535
491
404
287
271
1,116
815
805
891
1
Because of independent seasonal adjustment of the various series, detail will not add to totals.
Note.—See footnote 3 and Note, Table B-27.
Source: Department of Labor, Bureau of Labor Statistics.
270
78
911
929
1,036
1,116
1,147
TABLE B-33.—Unemployment by reason, 1967-80
[Monthly data seasonally adjusted 1 ]
Year or month
Total
unemployment
Job losers
Job leavers
Reentrants
Thousands of persons 16 years of age and over
1967
1968
1969
2,975
2,817
2,832
1,229
1,070
1,017
1970
1971 . ..
1972
.. .
1973
1974
4,088
4,993
4,840
4,304
5,076
1975
1976
1977
1978 .
1979
1980
945
909
965
1,809
2,313
2,089
1,666
2,205
438
431
436
549
587
635
674
756
1,227
1,466
1,444
1,323
1,441
7,830
7,288
6,855
6,047
5,963
4,341
3,625
3,103
2,514
2,555
812
886
889
851
854
1,865
1,895
1,926
1,814
1,758
7,448
3,860
863
1,875
6,500
7,202
7,944
7,811
3,038
2,979
3,102
3,581
4,164
4,468
807
831
804
905
930
887
1,797
1,812
1,909
1,975
1,834
8,021
7,942
7,800
7,961
7,946
7,785
4,364
4,319
4,387
4,240
4,229
4,226
866
890
855
870
897
813
1,868
1,883
1,844
2,013
1,896
1,869
1967..
1968..
1969.
3.8
3.6
3.5
1.6
1.3
1.2
0.6
1970. ...
1971
1972
1973.. ..
1974 ..
4.9
5.9
5.6
4.9
5.6
2.2
2.8
2.4
1.9
2.4
.7
.7
.7
1975..
1976.
1977
1978 .
1979
8.5
7.7
7.0
6.0
5.8
4.7
3.8
3.2
2.5
2.5
2.0
2.0
2.0
1.8
1.7
1980..,
7.1
3.7
1.8
6.2
6.2
6.3
6.9
7.6
7.5
2.9
2.9
3.0
3.4
4.0
4.3
1.7
1.7
1.7
1.8
1.9
1.8
7.6
7.6
7.4
7.6
7.5
7.4
4.2
4.1
4.2
4.0
4.0
4.0
1980:
Jan.. .
Feb
Mar ..
Apr . ...
f^
June
July .
Aug
Sept ...
Oct
Nov
Dec. . .
Percent of civilian labor force
1980:
Jan
Feb.
Mar.
May'
June
July..
Aug..
Sept
Ocf
Nov.
Dec
1
Because of independent seasonal adjustment of the various series, detail will not add to totals.
Note.-See footnote 3 and Note, Table B-27.
Source: Department of Labor, Bureau of Labor Statistics.
271
is
.9
.9
.8
.8
.8
.8
.8
.9
1.2
1.2
1.2
1.5
1.7
1.7
1.5
1.6
1.8
1.8
1.8
1.9
1.8
1.8
TABLE B-34.—Unemployment insurance programs, selected data, 1946-80
All programs
Year or month
State programs
Total
Insured
benefits , Insured
Covered unemployment
paid
employunem(weekly
(millions ployment
ment 1
averof 2
age)"
dollars) *
31,856
33,876
34,646
33,098
34,308
36,334
37,006
38,072
36,622
40,018
42,751
43,436
44,411
45,728
46,334
46,266
47,776
48,434
49,637
51,580
54,739
56,342
57,977
59,999
59,526
59,375
66,458
69,897
72,451
71,037
73,459
76,419
88,804
'92,062
Exhaustions 5
Weekly average; thousands
Thousands
1946
1947
1948.
1949
1950
1951
1952
1953.
1954
1955
1956
1957
1958
1959.
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971 ..
1972...
1973 ,.
1974
1975
1976.
1977,,
1978
1979
Initial
claims
Insured
unemployment as
percent
Total
Average
(millions
of
weekly
covered
of
check
employ- dollars) * (dollars) 9
ment
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
1,605
1,000
1,069
1,067
2,051
1,399
1,323
1,571
2,773
1,860
1,467.6
862.9
1,043.5
1,050.6
2,291.6
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
2,510
1,684
2,071
2,994
1,946
7
1,973
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
7
1,806
1,605
1,328
1,061
1,205
1,111
1,101
2,070
2,608
2,192
1,793
2,558
4,937
3,846
3,308
2,645
2,592
4,209.3
6,154.0
5,491.1
4,517.3
6,933.9
16,802.4
12,344.8
10,998.9
9,006.9
9,401.3
1,805
2,150
1,848
1,632
2,262
3,986
2,991
2,655
2,359
2,434
3,198
3,209
2,921
2,610
2,230
2,119
1,036.6
972.1
1,043.0
844.2
793.2
662.9
2,345
2,329
2,336
2,381
2,307
2,320
2,429
2,377
2,164
2,236
2,559
3,047
715.1
820.2
656.1
741.2
795.9
909.0
2,409
2,492
2,488
2,540
2,643
2,631
3,740
3,730
3,652
3,629
3,680
3,790
1,368.2
1,307.0
1,323.8
1,378.3
1,338.3
1,333.8
2,729
2,685
2,857
3,204
3,717
4,009
4,140
3,911
3,961
3,661
3,726
1,579.5
1,441.8
1,503.0
3,880
3,778
3,802
3,589
3,332
189
187
200
340
236
208
215
218
304
226
227
270
369
277
331
350
302
7
298
268
232
203
226
201
200
296
295
261
247
363
478
386
375
346
388
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
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
4.8
5.6
4.4
4.3
3.8
3.0
2.3
2.5
2.2
2.1
2,726.7
3,4227
2,675.4
2,774.7
2,522.1
2,166.0
1,771.3
2,092.3
2,031.6
2,127.9
32.87
33.80
34.56
35.27
35.92
37.19
39.75
41.25
43.43
46.17
3.4
4.1
3.5
2.7
3.5
6.0
4.6
3.9
3.3
2.9
3,848.5
4,957.0
4,471.0
4,007.6
5,974.9
11,754.7
8,974.5
8,357.2
7,717.2
8,612.9
50.34
54.02
56.76
59.00
64.25
70.23
75.16
78.79
83.67
89.67
3.0
3.0
3.0
3.0
2.9
2.9
972.8
915.1
975.6
777.7
725.2
610.3
88.28
90.31
90.28
89.28
88,37
87.25
2.9
3.0
3.0
3.0
3.1
3.1
665.7
765.0
606.3
674.0
728.4
843.9
86.40
88.56
89.10
90.59
92.23
94.54
3.2
3.1
3.3
3.7
4.3
4.7
1,283.9
1,229.9
1,218.2
1,232.2
1,196.8
1,213.6
96.41
98.39
99.19
99.52
99.55
99.88
4.5
4.4
4.4
4.1
3.8
1,397.5
1,249.8
1,144.9
98.75
99.68
99.86
1979:
Jan
Feb
Mar
June
July
Aug
Sept.
Oct
Nov
Dec
1980:
Jan
Feb
Mar. . .
May!'.' .
June
July
Aug..
Sept
Oct....
Nov....
352
346
359
433
355
380
390
394
394
402
405
416
414
389
455
574
642
617
530
506
494
446
403
**Monthly data are seasonally adjusted.
•Includes persons under the State, UCFE (Federal employee, effective January 1955), and RRB (Railroad Retirement Board)
programs. Beginning October 1958, also includes the UCX program {unemployment compensation for ex-servicemen).
includes State, UCFE, RR, UCX, UCV (unemployment compensation for veterans, October 1952-January 1960), and SRA
(Servicemen's Readjustment Act, September 1944-September 1951) programs. Also includes Federal and State extended benefit
programs.
Does not include FSB (Federal supplemental benefits) and SUA (special unemployment assistance) programs.
3
Covered workers who have completed at least 1 week of unemployment.
4
Annual data are net amounts and monthly data are gross amounts. •
8
Individuals receiving final payments in benefit year.
6
For total unemployment only.
7
Programs
include Puerto Rican sugarcane workers for initial claims and insured unemployment beginning July 1963.
8
Latest data available for all programs combined. Workers covered by State programs account for about 97 percent of wage and
salary earners.
Source: Department of Labor, Employment and Training Administration.
272
TABLE B-35.—Wage and salary workers in nonagricultural establishments, 1929-80
[Thousands of persons; monthly data seasonally adjusted]
Year or
month
Total
wage
and
salary
workers
Manufacturing
Total
Non- Mining Construction
Durable durable
goods goods
Government
Transpor- Whole- Finance,
insurtation
sale
ance, Services
and
State
and
and
Federal
public
and
retail
real
utilities trade estate
local
1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951 ... .
1952.. .
1953
1954
1955
1956
1957
1958. . ..
1959.
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970 . .
1971
1972
1973
1974
1975....
1976
1977
1978
1979
1980".
.
31324 10,702
7 397
23 699
30,603 1O',278
32,361 10,985
36,539 13,192
40,106 15,280
42,434 17,602
41,864 17,328
40,374 15,524
41,652 14,703
43 857 15,545
44,866 15,582
43,754 14,441
45,197 15,241
47,819 16,393
48,793 16,632
50,202 17,549
48,990 16,314
50,641 16,882
52,369 17,243
52,853 17,174
51,324 15,945
53,268 16,675
54,189 16,796
53,999 16,326
55,549 16,853
56,653 16,995
58 283 17,274
60 765 18,062
63,901 19,214
65,803 19,447
67,897 19,781
70,384 20,167
70,880 19,367
71,214 18,623
73,675 19,151
76,790 20,154
78,265 20,077
76,945 18,323
79,382 18,997
82,471 19,682
86,697 20,505
89,886 21,062
90,652 20,365
4,715
5,363
6,968
8,823
11,084
10,856
9,074
7,742
8,385
8,326
7,489
8,094
9,089
9,349
10,110
9,129
9,541
9,833
9,855
8,829
9,373
9,459
9,070
9r480
9,616
9,816
10,405
11,282
11,439
11,626
11,895
11,208
10,636
11,049
11,891
11,925
10,688
11,077
11,597
12,274
12,772
12,218
5,564
5,622
6,225
6,458
6,518
6,472
6,450
6,962
7,159
7,256
6,953
7,147
7,304
7,284
7,438
7,185
7,341
7,411
7,321
7,116
7,303
7,337
7,256
7,373
7,380
7,458
7,656
7,930
8,007
8,155
8,272
8,158
7,987
8,102
8,262
8,152
7,635
7,920
8,086
8,231
8,290
8,147
1,087
744
854
925
957
992
925
892
836
862
955
994
930
901
929
898
866
791
792
822
828
751
732
712
672
650
635
634
632
627
613
606
619
623
609
628
642
697
752
779
813
851
960
1,025
1,512
824
1,165
1,311
1,814
2,198
1,587
1,108
1,147
1,683
2,009
2,198
2,194
2,364
2,637
2,668
2,659
2,646
2,839
3,039
2,962
2,817
3,004
2,926
2,859
2,948
3,010
3,097
3,232
3,317
3,248
3,350
3,575
3,588
3,704
3,889
4,097
4,020
3,525
3,576
3,851
4,229
4,483
4,468
3,916
2,672
2,936
3,038
3,274
3,460
3,647
3,829
3,906
4,061
4,166
4,189
4,001
4,034
4,226
4,248
4,290
4,084
4,141
4,244
4,241
3,976
4,011
4,004
3,903
3,906
3,903
3,951
4,036
4,158
4,268
4,318
4,442
4,515
4,476
4,541
4,656
4,725
4,542
4,582
4,713
4,923
5,141
5,155
6,123
4,755
6,426
6,750
7,210
7,118
6,982
7,058
7,314
8,376
8,955
9,272
9,264
9,386
9,742
10,004
10,247
10,235
10,535
10,858
10,886
10,750
11,127
11,391
11,337
11,566
11,778
12,160
12,716
13,245
13,606
14,099
14,705
15,040
15,352
15,949
16,607
16,987
17,060
17,755
18,516
19,542
20,269
20,571
1,494
1,280
1,447
1,485
1,525
1,509
1,481
1,461
1,481
1,675
1,728
1,800
1,828
1,888
1,956
2,035
2,111
2,200
2,298
2,389
2,438
2,481
2,549
2,629
2,688
2,754
2,830
2,911
2,977
3,058
3,185
3,337
3,512
3,645
3,772
3,908
4,046
4,148
4,165
4,271
4,467
4,724
4,974
5,162
3,425
2,861
3,502
3,665
3,905
4,066
4,130
4,145
4,222
4,697
5,025
5,181
5,240
5,357
5,547
5,699
5,835
5,969
6,240
6,497
6,708
6,765
7,087
7,378
7,620
7,982
8,277
8,660
9,036
9,498
10,045
10,567
11,169
11,548
11,797
12,276
12,857
13,441
13,892
14,551
15,303
16,252
17,078
17,736
533
565
905
996
1,340
2,213
2,905
2,928
2,808
2,254
1,892
1,863
1,908
1,928
2,302
2,420
2,305
2,188
2,187
2,209
2,217
2,191
2,233
2,270
2,279
2,340
2,358
2,348
2,378
2,564
2,719
2,737
2,758
2,731
2,696
2,684
2,663
2,724
2,748
2,733
2,727
2,753
2,773
2,867
2,532
2,601
3,090
3,206
3,320
3,270
3,175
3,116
3,137
3,341
3,582
3,787
3,948
4,098
4,087
4,188
4,340
4,563
4,727
5,069
5,399
5,648
5,850
6,083
6,315
6,550
6,868
7,248
7,696
8,220
8,672
9,102
9,437
9,823
10,185
10,649
11,068
11,446
11,937
12,138
12,399
12,919
13,147
13,304
1979:
Jan
Feb
Mar
88,858
89,109
89,455
89,386
89,708
89,909
90,054
90,222
90,283
90,441
90,552
90,678
21,040
21,094
21,130
21,113
21,113
21,132
21,128
21,055
21,071
21,043
20,966
20,983
12,717
12,781
12,814
12,811
12,810
12,837
12,841
12,782
12,822
12,764
12,693
12,706
8,323
8,313
8,316
8,302
8,303
8,295
8,287
8,273
8,249
8,279
8,273
8,277
927
936
940
941
946
953
963
974
976
982
985
992
4,396
4,347
4,467
4,419
4,463
4,472
4,491
4,499
4,507
4,529
4,553
4,615
5,061
5,082
5,103
5,008
5,110
5,168
5,156
5,182
5,185
5,203
5,216
5,212
20,058
20,126
20,159
20,176
20,209
20,217
20,254
20,301
20,352
20,414
20,479
20,448
4,872
4,889
4,905
4,924
4,951
4,970
4,989
5,019
5,017
5,033
5,049
5,064
16,728
16,831
16,928
16.944
17,029
17,074
17,114
17,152
17,192
17,264
17,308
17,362
2,757
2,759
2,758
2,760
2,770
2,783
2,784
2,811
2,762
2,769
2,773
2,773
13,019
13,045
13,065
13,101
13,117
13,140
13,175
13,229
13,221
13,204
13,223
13,229
20,971
20,957
20,938
20,642
20,286
20,014
19,828
19,940
20,044
20,157
20,282
20,349
12,681
12,715
12,707
12,442
12,140
11,947
11,819
11,860
11,955
12,043
12,147
12,185
8,290
8,242
8,231
8,200
8,146
8,067
8,009
8,080
8,089
8,114
8,135
8,164
999
1,007
1,009
1,012
1,023
1,029
1,013
1,013
1,028
1,037
1,054
1,070
4,745
4359
4,529
4,467
4,436
4,379
4,322
4,359
4,404
4,442
4,468
4,497
5,202
5,198
5,202
5,178
5,167
5,134
5,114
5,129
5,124
5,147
5,133
5,135
20,529
20,637
20,610
20,531
20,487
20,459
20,506
20,589
20,620
20,641
20,647
20,626
5,091
5,101
5,115
5,119
5,137
5,150
5,167
5,180
5,194
5,214
5,227
5,240
17,462
17,540
17,580
17,618
17,659
17,652
17,760
17,788
17,861
17,913
17,951
18,025
2,791
2,826
2,886
3,115
2,960
2,951
2,893
2,828
2,765
2,788
2,793
2,808
13,241
13,261
13,275
13,269
13,313
13,279
13,264
13,316
13,344
13,371
13,362
13,372
day!!!!!!!!!!!
June
July
Aug
Sept
Oct
Nov
Dec
1980:
91,031
Jan
Feb
91,186
Mar!!!!!.!!..!. 91,144
90,951
90,468
June
90,047
89,867
July
Aug
90,142
Sept
90,384
Oct
90,710
Nov"
90,917
Dec"
91,122
X':::::::
Note.—Data in Tables B-35 through 8-37 are based on reports from employing establishments and relate to full- and parttime wage and salary workers in nonagricultural establishments who worked during or received pay for any part of the pay
period which includes the 12th of the month. Not comparable with labor force data (Tables B-27 through B-33), which include
proprietors, self-employed persons, domestic servants, and unpaid family workers,* which count persons as employed when they
are not at work because of industrial disputes, bad weather, etc., even if they are not paid for the time off; and which are
based on a sample of the working-age population. For description and details of the various establishment data, see
"Employment and Earnings."
Source: Department of Labor, Bureau of Labor Statistics.
273
TABLE B-36.—Average weekly hours and hourly earnings in selected private nonagricultural
industries, 1947-80
[For production or nonsupervisory workers; monthly data seasonally adjusted]
Average gross hourly earnings,
current dollars
Average weekly hours
Year or
month
Adjusted hourly earnings, total
private nonagricultural3
Percent change
WholeIndex,
Whole- Total
Total
from a year
private
sale
sale
private Manufac1967-100
ConConManufacearlier 4
nonand
and
nonstruction
turing
turing
struction
agriculretail agriculretail Current 1967
1967
l
Current
1
tural
trade tural
trade
dollars dollars3 dollars dollars
$1,540 $0,940
1.712
1.010
1.792
1.060
42.6
46.0
48.2
63.7
63.8
67.5
So
4.8
0.2
1.100
1.18
1.23
1.30
1.35
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
2.45
2.57
2.71
2.82
2.93
1.40
1.47
1.54
1.60
1.66
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
2.26
2.32
2.39
2.45
2.53
3.07
3.20
3.31
3.41
3.55
1.71
1.76
1.83
1.89
1.97
78.4
80.8
83.5
85.9
88.2
88.4
90.2
92.2
93.7
95.0
2.46
2.56
2.68
2.85
3.04
2.61
2.71
2.82
3.01
3.19
3.70
3.89
4.11
4.41
4.79
2.04
2.14
2.25
2.41
2.56
91.2
95.3
100.0
106.2
113.2
96.6
98.0
100.0
101.9
103.1
3.4
3.1
3.3
2.9
2.7
3.4
4,5
4.9
6.2
6.6
1.8
2.0
2.2
1.6
1.4
1.7
1.4
2.0
1.9
1.2
35.3
35.1
34.9
34.6
34.2
3.23
3.45
3.70
3.94
4.24
3.35
3.57
3.82
4.09
4.42
5.24
5.69
6.06
6.41
6.81
2.72
2.88
3.05
3.23
3.48
120.7
129.2
137.5
146.0
157.5
103.8
106.5
109.7
109.7
106.7
6.6
7.0
6.4
6.2
7.9
.7
2.6
3.0
.0
36.4
36.8
36.5
36.8
37.0
33.9
33.7
33.3
32.9
32.6
4.53
4.86
5.25
5.69
6.16
4.83
5.22
5.68
6.17
6.69
7.31
7.71
8.10
8.66
9.27
3.73
3.97
4.28
4.67
5.06
170.6
183.0
196.8
212.9
229.8
105.9
107.3
108.4
109.0
105.6
8.3
7.3
7.5
8.2
7.9
39.7
37.0
32.1
6.66
7.27
9.93
5.48
250.6
fczz
June
35.7
35.7
35.9
35.3
35.6
35.6
40.6
40.6
40.6
39.3
40.2
40.1
36.7
36.9
37.5
35.6
37.1
37.2
32.5
32.6
32.7
32.8
32.6
32.6
5.96
5.99
6.03
6.03
6.08
6.13
6.47
6.52
6.56
6.57
6.65
6.69
8.96
9.06
9.05
9.13
9.20
9.21
4.91
4.93
4.97
4.99
5.01
5.05
222.6
224.0
225.2
226.7
227.6
229.2
108.4
107.8
107.3
106.9
106.3
105.9
8.2
8.4
8.2
8.0
7.8
7.9
-1.1
-1.4
-1.9
-2.4
-2.8
-2.9
July
Aug
Sept
Oct
Nov
Dec
35.6
35.7
35.6
35.6
35.6
35.7
40.1
40,1
40.1
40.1
40.1
40.2
36.9
37.3
37.5
36.8
37.0
37.2
32.6
32.6
32.6
32.6
32.6
32.6
6.17
6.22
6.26
6.28
6.34
6.39
6.73
6.75
6.79
6.82
6.87
6.91
9.29
9.33
9.39
9.40
9.48
9.55
5.07
5.11
5.13
5.15
5.20
5.23
230.8
232.3
234.3
235.0
237.3
239.4
105.5
105.2
104.9
104.2
104.1
103.8
7.8
8.0
8.2
7.7
8.2
8.3
-3.3
-3.5
-3.7
-4.2
-4.1
-4.5
May
June
35.6
35.5
35.4
35.3
35.1
35.0
40.3
40.1
39.8
39.8
39.3
39.1
37.3
37.1
36.6
36.7
36.8
37.1
32.6
32.4
32.3
32.0
32.1
31.9
6.41
6.45
6.51
6.54
6.57
6.62
6.93
6.99
7.06
7.11
7.15
7.22
9.46
9.64
9.75
9.79
9.83
9.89
5.28
5.31
5.37
5.38
5.42
5.45
240.3
242.4
245.2
246.2
248.3
250.9
102.7
102.2
102.0
101.4
101.4
101.5
7.9
8.2
8.9
8.6
9.1
9.4
-5.3
-5.2
-5.0
-5.2
-4.6
-4.2
July
Aug
Sept
Oct
Nov
Dec"
34.9
35.1
35.2
35.3
35.4
35.4
39.0
39.4
39.6
39.7
39.9
40.2
36.8
36.5
37.4
37.0
37.1
37.0
31.8
32.0
32.1
32.2
32.2
32.2
6.67
6.71
6.77
6.83
6.91
6.95
7.30
7.36
7.42
7.49
7.58,
7.64
9.94
10.04
10.05
10.14
10.20
10.29
5.50
5.53
5.56
5.59
5.65
5.68
252.1
254.0
255.4
257.9
260.7
261.6
102.0
102.0
101.5
101.5
101.6
9.2
9.3
9.0
9.7
9.8
9.3
-3.4
-3.0
-3.2
-2.5
-2.5
1947
1948
1949
40.3
40.0
39.4
40.4
40.0
39.1
38.2
38.1
37.7
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
40.5
40.5
38.1
40.0
38.9
37.9 : 39.5
37.2 < 39.5
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
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
1965
1966
1967
1968
1969
38.8
38.6
38.0
37.8
37.7
1970
1971
1972
1973
1974
37.1
36.9
37.0
36.9
36.5
1975
1976
1977
1978
1979
1980"
1979:
Jan
Feb
Mar
1980:
Jan
Feb
Mar
Apr
$1,131
1.225
1.275
$1,216
1.327
1.376
1.335
1.45
1.52
1.61
1.65
1.439
1.56
1.64
1.74
1.78
1.863
2.02
2.13
2.28
2.38
39.4
39.1
38.7
38.6
38.8
1.71
1.80
1.89
1.95
2.02
1.85
1.95
2.04
2.10
2.19
36.7
36.9
37.0
37.3
37.2
38.6
38.3
38.2
38.1
37.9
2.09
2.14
2.22
2.28
2.36
41.2
41.4
40.6
40.7
40.6
37.4
37.6
37.7
37.3
37.9
37.7
37.1
36.6
36.1
35.7
39.8
39.9
405
40.7
40.0
37.3
37.2
36.5
36.8
36.6
36.1
36.1
36.0
35.8
35.6
39.5
40.1
40.3
40.4
40.2
35.3
40.5
40.4
40.5
5.8
-2.7
-.7
1.3
1.0
.6
-3.1
9.1
1
Also includes other private industry groups shown in Table 8-35.
"Adjusted
for overtime (in manufacturing only) and for interindustry employment shifts.
3
Current dollar earnings index divided by the consumer price index (revised index for urban wage earners and clerical
workers used beginning 1978).
4
Monthly data are computed from indexes to two decimal places.
Note.-See Note, Table B-35.
Source: Department of Labor, Bureau of Labor Statistics.
274
TABLE B-37.—Average weekly earnings in selected private nonagricultural industries,
1947-80
[For production or nonsupervisory workers; monthly data seasonally adjusted]
Percent change from
Average gross weekly earnings
Total private
nonagricultural1
Construction
(current
dollars)
Wholesale
and retail
(current
dollars)
Current
dollars
1967
dollars
private
nonagricultural3
Current
dollars
1967
dollars2
Manufacturing
(current
dollars)
$45.58
49.00
50.24
$68.13
67.96
70.36
$49.13
53.08
53.80
$58.83
65.23
67.56
$38.07
40.80
42.93
7.5
2.5
-0.2
3.5
1950
1951
1952
1953
1954
5313
57.86
60.65
63.76
64.52
73 69
74.37
76.29
79.60
80.15
58.28
63.34
66.75
70.47
70.49
69 68
76.96
82.86
86.41
88.54
44.55
47.79
49.20
51.35
53.33
5.8
8.9
4.8
5.1
1.2
47
.9
2.6
4.3
1955
1956
1957
1958 ...
1959 .
67.72
70 74
73.33
75.08
78.78
84.44
8690
86.99
86.70
90.24
75.30
78.78
81.19
82.32
88.26
90.90
9638
100.27
103.78
108.41
5.0
4.5
3.7
2.4
4.9
90.95
92.19
94.82
96.47
98.31
10101
101.67
101.84
103.39
104.38
89.72
92.34
96.56
99.23
102.97
2.4
2.4
4.0
3.0
3.2
107 53
112.19
114.49
122.51
129.51
112.67
118.08
122.47
127.19
132.06
13838
146.26
154.95
164.49
181.54
5.4
29
.1
-.3
4.1
.8
1.4
2.9
1.7
1.9
1965
1966
1967
1968
1969
80.67
82.60
85.91
88.46
91.33
9545
98.82
101.84
107.73
114.61
55.16
57.48
59.60
61.76
64.41
66.01
67.41
69.91
72.01
74.66
76.91
79.39
82.35
87.00
91.39
4.5
3.5
3.1
5.8
6.4
27
.7
.2
1.5
1.0
1970
1971
1972
1973
1974
11983
127.31
136.90
145.39
154.76
103 04
104.95
109.26
109.23
104.78
133 33
142.44
154.71
166.46
176.80
19545
211.67
221.19
235.89
249.25
96 02
101,09
106.45
111.76
119.02
4.6
6.2
7.5
6.2
6.4
-13
1.9
4.1
-.0
-4.1
163.53
175.45
189.00
203.70
219.30
101.45
102 90
104.13
104.30
100.73
190.79
209.32
228.90
249.27
268.94
266.08
283.73
295.65
318.69
342.99
126.45
133.79
142.52
153.64
164.96
5.7
7.3
7.7
7.8
7.7
-3.2
1.4
1.2
2
-3.4
288.62
367.41
175.91
7.2
159.58
160.72
162.52
163.67
163.33
164.63
165.28
166.59
167.24
167.89
169.52
170.50
9.6
9.4
8.6
5.4
7.6
7.1
7.2
7.6
7.9
6.9
7.2
7.4
.1
-.5
-1.6
-4.8
-3.0
-3.6
-3.9
-3.9
-3.9
-4.9
-4.9
-5.3
Year or month
1947
1948
1949
I960
1961
1962
1963
1964
;
.
1975
1976
1977
1978
1979
.
.. .
1980 p
23510
1979:
Jan
Feb
Mar
Anr
£••:
8.
Sept
:.•
Oct
Nov . . . .
Dec
1980:
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov"p
Dec
trorfa
212.77
213.84
216.48
212.86
216.45
218.23
103.59
102.96
103.13
100.41
101.10
100.85
262.68
264.71
266.34
258.20
267.33
268.27
219.65
222.05
222.86
223.57
225.70
228.12
100.43
100.52
99.76
99.10
99.03
98.88
269.87
270.68
272.28
273.48
275,49
277.78
328.83
334.31
339.38
325.03
341.32
342.61
342.80
348.01
352.13
345.92
350.76
355.26
228 20
228.98
230.45
230.86
230.61
231.70
97 52
96.53
95.82
95 08
94.16
93.77
279 28
280.30
280.99
282.98
281.00
282.30
352 86
357.64
356.85
359 29
361.74
366.92
172.13
172.04
173.45
172.16
173.98
173.86
6.9
6.8
6.6
8.2
6.5
6.4
-6 2
-6.5
-7.0
-5.6
-6.9
-6.9
232.78
235.52
238.30
241.10
244.61
246.03
94.17
94.62
94.75
94.92
95.33
284.70
289.98
293.83
297.35
302.44
307.13
365.79
366.46
375.87
375.18
378.42
380.73
174.90
176.96
178.48
180.00
181.93
182.90
5.7
6.6
6.4
7.5
8.2
8.2
-6.5
-5.4
-5.5
-4.6
-3.9
jroups shown in Table B-35.
2
the consumer price index (revised index for urban wage earners and clerical workers used
Earnings in current dollars dividi
beginning 1978).
3
Based on unadjusted data.
Note.—See Note, Table 8-35.
Source: Department of Labor, Bureau of Labor Statistics.
275
TABLE B-38.—Productivity and related data, private business sector, 1947-79
[1967 = 100]
Output
Year
Hours of 2all
persons
per
Output per hour2 of Compensation
all persons
hour3
Unit labor cost
Implicit price
deflator4
Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm
business business business business business business business business business business business business
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
1947
1948
1949!;.!:!!.:;:
47.9
50.8
49.9
46.7
49.5
48.6
90.5
91.1
88.1
78.7
80.0
77.0
53.0
55.8
56.6
59.3
61.9
63.2
36.1
39.1
39.8
38.5
41.8
43.1
68.1
70.2
70.3
64.9
67.6
68.2
§5.8
70.4
69.6
63.0
67.3
67.9
1950
1951
1952
1953
1954
54.4
57.6
59.5
62.1
60.9
53.2
56.6
58.5
61.0
59.7
89.1
91.7
91.8
92.8
89.7
79.4
83.1
83.9
86.0
83.1
61.1
62.8
64.8
66.9
67.9
67.0
68.1
69.7
70.9
71.9
42.6
46.8
49.7
52.9
54.6
45.6
49.6
52.3
55.2
56.9
69.7
74.5
76.8
79.1
80.4
68.0
72.7
75.0
77.9
79.2
70.7
75.9
76.8
77.5
78.2
69.1
73.6
74.9
76.4
77.4
1955
1956
1957
1958
1959
65.8
67.5
68.1
67.1
70.8
64.6
66.4
67.2
66.0
70.0
93.1
94.5
93.1
88.9
92.4
86.5
88.7
88.3
84.6
88.4
70.6
71.4
73.2
75.4
76.6
74.7
74.9
76.2
78.0
79.3
56.0
59.7
63.6
66.4
69.2
59.0
62.5
66.1
68.6
71.3
79.3
83.6
86.9
88.0
90.3
79.0
83.5
86.8
87.9
90.0
79.4
82.1
84.9
86.0
89.1
79.1
81.8
84.8
85.6
89.0
1960
1961
1962
1963
1964
73.1
74.4
78.5
81.9
86.8
72.3
73.6
77.9
81.3
86.4
92.6
91.2
92.7
93.2
94.8
88.9
88.0
89.9
90.9
93.0
79.0
81.6
84.7
87.9
91.6
81.2
83.6
86.6
89.4
92.9
72.1
74.8
78.2
81.1
85.3
74.4
76.8
79.9
82.6
86.4
91.3
91.7
92.3
92.3
93.1
91.6
91.8
92.2
92.4
93.0
89.0
89.5
90.8
91.8
92.7
88.8
89.3
90.7
91.8
92.8
1965
1966
1967
1968
1969
92.7
97.8
100.0
105.1
108.1
92.4
97.9
100.0
105.3
108.4
97.8
100.0
100.0
101.7
104.4
96.5
99.7
100.0
102.0
105.2
94.9
97.8
100.0
103.3
103.6
95.8
98.2
100.0
103.3
103.0
88.6
94.8
100.0
107.7
115.2
89.3
94.7
100.0
107.4
114.4
93.4
96.9
100.0
104.2
111.2
93.2
96.5
100.0
103.9
111.1
94.5
97.3
100.0
104.0
109.0
94.3
96.9
100.0
104.0
108.9
1970
1971
1972
1973
1974
107.2
110.4
117.7
125.6
123.2
107.3
110.4
118.1
126.2
123.7
102.6
102.0
105.1
109.2
109.6
103.8
103.4
106.6
111.1
111.6
104.5
108.2
112.1
115.0
112.4
103.3
106.8
110.8
113.6
110.9
123.7
131.8
140.4
151.7
165.9
122.4
130.4
139.1
149.6
163.7
118.4
121.8
125.3
131.8
147.5
118.4
122.1
125.6
131.7
147.6
114.0
119.0
123.1
129.8
142.0
114.1
119.3
122.8
127.3
140.2
1975
1976
1977"""!"/.
1978
1979
120.9
128.5
136.6
143.0
147.1
121.0
129.1
137.4
144.0
148.0
105.1
108.2
112.6
118.1
122.0
106.9
110.5
115.3
121.2
125.4
115.0
118.8
121.3
121.1
120.6
113.2
116.9
119.1
118.9
117.9
181.8
197.4
212.6
230.5
253.4
179.4
194.0
208.7
226.4
248.0
158.1
166.2
175.3
190.4
210.1
158.5
166.0
175.2
190.4
210.2
155.8
163.2
172.3
185.1
201.4
154.6
162.4
171.9
183.9
199.7
1
2
Output refers to gross domestic product originating in the sector in 1972 dollars.
Hours of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily on
establishment
data.
3
Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an
estimate
of wages, salaries, and supplemental payments for the self-employed.
4
Current dollar gross domestic product divided by constant dollar gross domestic product.
Note.—Preliminary estimate based on benchmark revisions of national income and product accounts; revised data to be published by
Bureau of Labor Statistics the end of January 1981.
Source: Department of Labor, Bureau of Labor Statistics.
276
TABLE B-39.—Changes in productivity and related data, private business sector, 1948-79
[Percent change from preceding period]
Outputl
Year
Hours of all
persons2
Output per hour of Compensation per
all persons
hour3
Unit labor cost
Implicit price
deflator4
Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm
business business business business business business business business business business business business
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
1948
1949
6.1
-1.9
6.0
-1.9
0.7
-3.3
1.6
-3.8
5.3
1.5
4.3
2.0
8.5
1.6
8.6
2.9
3.0
.1
4.1
.9
7.0
-1.0
6.8
.9
1950
1951
1952
1953
1954
9.1
5.8
3.3
4.3
-1.8
9.4
6.5
3.4
4.2
-2.0
1.1
2.9
.1
1.0
-3.3
3.1
4.6
1.0
2.5
-3.4
7.9
2.8
3.2
3.2
1.6
6.0
1.7
2.3
1.7
1.4
7.1
9.8
6.4
6.4
3.2
5.8
8.8
5.5
5.6
3.2
-.8
6.9
3.0
3.1
1.6
—2
6^9
3.1
3.9
1.7
1.6
7.4
1.1
.9
1.0
1.7
6.6
1.8
2.0
1.4
1955
1956
1957
1958
1959
7.9
2.6
1.0
-1.6
5.6
8.2
2.8
1.2
-1.9
6.1
3.8
1.5
-1.5
-4.5
3.9
4.1
2.5
-.5
-4.2
4.4
4.0
1.0
2.5
3.1
1.6
3.9
.3
1.7
2.4
1.6
2.5
6.5
6.5
4.4
4.3
3.6
6.0
5.7
3.8
4.0
-1.4
5.5
3.9
1.3
2.7
-.3
5.7
3.9
1.4
2.3
1.6
3.3
3.5
1.3
3.6
2.2
3.5
3.6
.9
4.0
1960
1961
1962
1963
1964
3.3
1.7
5.5
4.3
6.0
3.2
1.8
5.8
4.4
6.4
.2
-1.5
1.6
.6
1.6
.6
-1.1
2.2
1.1
2.4
3.1
3.3
3.8
3.7
4.3
2.5
2.9
3.6
3.2
3.9
4.2
3.8
4.6
3.7
5.2
4.3
3.2
4.0
3.5
4.5
1.1
.5
.7
.0
.8
1.8
.3
.4
.2
.6
-.2
.6
1.5
4.1.
1.0
-.2
".6
1.5
1.2
1.2
1965
1966
1967
1968
1969
6.8
5.5
2.2
5.1
2.9
6.9
5.9
2.1
5.3
2.9
3.2
2.3
.0
1.7
2.6
3.7
3.4
.3
2.0
3.2
3.5
3.1
2.2
3.3
.2
3.1
2.5
1.9
3.3
-.3
3.9
7.0
5.5
7.7
7.0
3.4
6.0
5.6
7.4
6.5
.3
3.8
3.2
4.2
6.7
.3
3.5
3.7
3.9
6.8
1.9
3.0
2.7
4.0
4.9
1.6
2.8
3.2
4.0
4.7
1970
1971
1972
1973
1974
-.8
3.0
6.6
6.6
-1.9
-1.0
2.9
6.9
6.9
-1.9
-1.7
-.5
3.0
3.9
.4
-1.4
-.4
3.1
4.2
.4
.9
3.6
3.5
2.7
-2.3
.3
3.3
3.7
2.5
-2.4
7.4
6.6
6.5
8.0
9.4
7.0
6.6
6.7
7.6
9.4
6.4
2.9
2.9
5.2
11.9
6.6
3.1
2.8
4.9
12.1
4.5
4.4
3.4
5.4
9.4
4.8
4.5
3.0
3.7
10.1
1975
1976
1977
1978
1979
-1.9
6.3
6.3
4.7
2.8
-2.2
6.7
6.4
4.9
2.7
-4.1
2.9
4.0
4.9
3.3
-4.2
3.4
4.3
5.1
3.5
2.3
3.3
2.1
-.2
-.4
2.1
3.2
2.0
-.2
-.8
9.6
8.6
7.7
8.4
9.9
9.6
8.1
7.6
8.4
9.6
7.2
5.1
5.5
8.6
10.4
7.4
4.7
5.5
8.7
10.4
9.7
4.7
5.6
7.4
8.8
lCf.3
5.1
5.8
7.0
8.6
1
2
Output refers to gross domestic product originating in the sector in 1972 dollars.
Hours of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily on
establishment
data.
3
Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an
estimate
of
wages,
salaries, and supplemental payments for the self-employed.
4
Current dollar gross domestic product divided by constant dollar gross domestic product.
Note.—Percent changes are based on original data and therefore may differ slightly from percent changes based on indexes in Table
Preliminary estimates based on benchmark revisions of national income and product accounts; revised data to be published by Bureau
of Labor Statistics the end of January 1981.
Source: Department of Labor, Bureau of Labor Statistics.
277
PRODUCTION AND BUSINESS ACTIVITY
TABLE B-40.^Industrial production indexes, major industry divisions, 1929-80
[1967=100; monthly data seasonally adjusted]
Manufacturing
Total
industrial
production
Total
Durable
1967 proportion
100.00
87.95
51.98
35.97
6.36
5.69
1929
1933
1939
1940
1941
1942 ..
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954 .
1955
1956
1957
1958
.
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1979:
Jan
Feb
Mar .
Apr
21.6
13.7
21.7
25.0
316
36.3
44.0
47.4
40.7
35.0
39.4
41.1
38.8
44.9
48.7
50.6
54.8
51.9
58.5
61.1
61.9
57.9
64.8
66.2
66.7
72.2
76.5
81.7
89.8
97.8
100.0
106.3
111.1
107.8
109.6
119.7
129.8
129.3
117.8
130.5
138.2
146.1
152.5
22 8
14.0
21.5
25.4
32 4
37.8
47.0
50.9
42.6
35.3
39.4
409
38.7
45 0
48.6
50 6
55.2
515
58.2
60 5
61.2
57 0
64.2
65 4
65.6
715
75.8
810
89.7
97.9
100.0
106 4
111.0
106 4
108.2
118 9
129.8
129 4
116.3
130.3
138.4
146.8
153.6
22 5
9.1
17.7
23.5
314
39.9
54.2
59.9
45.2
31.6
37.7
39.3
35.7
43 5
48.9
519
58.7
518
59.2
61.1
61.6
53.9
61.9
62 9
61.8
68 6
73.1
78 3
89.0
98.9
100.0
106 5
110.6
102 3
102.4
113 7
127.1
125 7
109.3
122.3
130.0
139.7
146.4
23.2
19.9
26.1
27.5
33.3
34.6
37.1
38.6
38.5
39.7
41.3
42.7
42.0
46 7
48.3
49.2
51.2
51.6
57.2
60.1
61.1
61.6
67.7
69 3
71.5
75 8
80.0
85.2
90.9
96.7
100.0
106.2
111.5
112 3
116.6
126 5
133.8
134 6
126.4
141.8
150.5
156.9
164.0
43.1
30.6
42.1
46.8
49.7
51.3
52.5
56.2
55.1
54.2
61.3
64.4
57.1
63.8
70.0
69.4
71.2
69.9
77:9
82.0
82.1
75.3
78.7
80.3
80.8
83,1
86.4
89.9
93.2
98.2
100.0
104 2
108.3
112 2
109.8
1131
114.7
115 3
112.8
114.2
118.2
124.0
125.5
7.4
6.7
10.7
11.8
13.3
14.9
16.5
17.5
17.8
18.6
20.1
22.4
23.9
27.2
31.0
33.7
36.5
39.3
43.9
48.2
51.5
53.9
59.3
63.4
67.0
72 0
77.0
83.6
88.7
95.5
100.0
108.4
117.3
124 5
130.5
139 4
145.4
143 7
146.0
151.7
156.5
161.4
166.0
152.0
152.5
153.5
151.1
152.7
153.0
153.0
152.1
152.7
152.7
152.3
152.5
153.0
153.6
154.9
151.9
154.1
154.2
154.4
152.9
153.9
153.7
153.3
153.2
147.0
147.2
148.6
144.5
147.6
147.6
147.2
144.4
145.9
146.0
145.2
144.8
161.6
162.9
164.0
162.6
163.6
163.7
164.8
165.2
165.4
164.8
165.0
165.3
124.7
122.6
123.0
123.4
123.3
123.6
124.1
126.8
126.0
127.8
129.9
131.4
166.5
168.1
167.6
167.2
165.7
164.1
164.2
164.6
165.4
165.7
167.2
166.9
152.7
152.6
152.1
148.3
144.0
141.5
153.4
153 0
152.1
147.9
143.4
140.3
144.7
1441
143.4
138.4
133.3
129.9
166.0
165 9
164.7
161.6
158.0
155.3
133.5
132 9
133.0
133.1
133.4
132.9
164.8
1671
172.0
169.1
167.7
169.3
140.4
141.8
143.9
146.5
148.5
139.1
140.6
143.2
146 0
148.0
128.3
129.4
131.7
135 3
137.8
154.7
156.9
159.8
1614
162.7
130.6
129.6
130.5
1318
134.2
171.8
173.8
171.6
170 8
171.4
Year or month
.
.
May : : .::
June
July
Aug
Sept
:/.:
Set
::::;:..i.:::::
Nov
:'.::.: v : " "
:.: : v
:;
:::::::::
;..
Dec
1980:
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept..
Octp.
Nov"
..
Source: Board of Governors of the Federal Reserve System.
278
Nondurable
Mining
Utilities
TABLE B-41.—Industrial production indexes, market groupings, 1947-80
[1967=100; monthly data seasonally adjusted]
Final products
Total
industrial
production
Year or month
Total
Automotive
products
Total
1967 proportion
Materials *
Equipment2
Consumer goods l
Home
goods
Total
Business
Intermediate
products
Total
NonDuradurable
ble
goods goods
100.00
47.82
27.68
2.83
5.06
20.14
12.63
12.89
39.4
411
38.8
38.6
400
38.8
42.4
43 7
43.4
45.3
47 4
47:0
37.5
39.1
36.2
30.6
32 2
287
38.0
39 5
34.5
41.9
44 3
42.0
39.5
412
37.6
38.3
39 4
35.3
44.9
48 7
50.6
54.8
51.9
43.7
47 2
50.7
54.1
51.3
49.6
491
50.2
53.2
52.9
59.1
52 3
47.1
59.5
55.4
49.9
43.0
43.0
48.6
44.9
31.1
43 3
51.9
56.3
49.3
37.0
45 2
51.2
53.3
46.8
48.8
513
50.9
54.5
54.3
45.0
49 8
50.5
56.1
51.8
44.4
50 5
51.6
60.3
52.0
45 9
1955
1956
1957
1958
1959
58.5
61.1
619
57.9
64.8
55.4
58.6
60 3
57.6
63.2
59.0
61.2
626
62.1
68.1
73.6
60.6
63.5
50.5
63.3
53.0
55.7
54.5
51.4
59.0
50.4
55.3
57 5
51.5
56.5
50.8
58.8
611
51.5
57.9
617
64.4
64 4
63.0
69.5
61.3
62.8
62 8
56.5
65.2
637
63.9
638
537
64.0
52.5
54.9
54 7
54.4
62.1
I960
1961
1962
1963
1964
66 2
66.7
72.2
76.5
81.7
65.3
65.8
71.4
75.5
797
70.7
72.2
77.1
81.3
85.9
72.5
66.1
80.1
877
91.9
59.4
61.3
66.5
71.8
78.4
581
57.3
63.7
67.5
71.4
59 4
577
627
65.8
73.7
700
71.4
757
79.9
85.2
661
66.2
72.1
76.7
82.9
64.8
63.3
70.4
75.1
81.9
63 2
65.8
71.3
75.6
82.2
1965
1966
1967
1968
1969
89.8
97 8
100.0
106.3
111.1
87.6
95 9
100.0
106.2
109.6
92.6
97 3
100.0
105.9
109.8
113.3
112.8
100.0
119.4
118.1
88.9
97.9
100.0
106.4
113.2
80.7 84.4
94 0 97 7
100.0 100.0
106.5 105.5
109.3 112.5
90.6
96,2
100.0
106.3
112.9
92.4
100 7
100.0
106.5
112.5
93.8
103 3
100.0
106.2
112.1
90.3
97 5
100.0
108.8
115.7
1970
1971
1972
1973
1974
107.8
1096
119.7
129 8
129.3
105.3
106.3
115.7
124.4
125.1
109.0
114.7
124.4
131.5
128.9
98.8
124.4
141.4
153.0
132.8
U0.2
115.6
129.5
142.5
136.8
100.1 107.0
94.7 104.1
103.8 118.0
114.5 134.2
120.0 142.4
112.9
116.7
126.5
137.2
135.3
109.2
111.3
122.3
133.9
132.4
103.8
104.9
117.7
134.6
1327
115.4
120.2
132.9
142.2
142.6
1975
1976
1977
1978
1979
117 8
130.5
138 2
146.1
152.5
118 2
127.6
135 9
142.2
147.2
124 0
137.1
145.3
149.1
150.8
125 8
1557
175.6
179.9
1677
118.8
134.1
141.9
1477
149.2
110 2
114.6
123 0
132.8
142.2
128 2
135.4
147 8
160.3
171.3
1231
137.2
145.1
154.1
160.5
115 5
131.7
138 6
148.3
156.4
1091
128.0
136.1
149.0
157.8
126 6
147.8
155.6
165.6
175.9
152 0
152.5
153.5
1511
152.7
153 0
146 5
147.1
148.6
145 4
147.8
147 7
1513
151.8
153.4
149 3
152.2
152.1
1827
179.6
186.8
163 0
1827
176.2
149.2
150.6
150.8
145 6
148.3
149.4
139 9
140.6
141.9
1401
141.8
141.7
168 2
169.3
171.0
168 7
171.2
171.2
161.0
161.3
161.4
1601
160.1
160.7
155.7
156.1
156.9
154 9
156.1
156.8
158.4
158.1
159.4
155 6
158.1
159.6
172.1
173.6
174.2
174.1
174.7
174.4
153.0
152.1
152 7
152 7
152.3
152 5
147.4
145.8
147 3
147 3
147.1
147 2
151.2
1487
150 0
150 0
149.1
148.6
168.5
147.0
157.6
159 2
150.6
141.8
150.2
148.6
149.5
149 7
149.0
149.4
142.1
141.9
143 7
143 6
144.2
145 2
171.3
171.6
173.4
172 3
172.6
174.1
160.3
161.3
160.6
160 6
160.2
159.6
157.4
156.6
156.6
156.6
156.2
156.6
160.3
157.7
157.7
157.2
155.8
155.8
175.5
177.1
177.8
178.8
178.5
180.2
152.7
152.6
1521
148.3
144.0
141.5
147.0
1477
147 7
145.4
143.1
142.3
147.9
148.4
148 6
145.3
142.4
142.1
131.3
142.1
1410
126.3
118.5
121.6
148.5
145.8
145.8
142.0
134.6
132.0
145.8
146.6
146 6
145.6
144.0
142.6
174.9
176.0
1761
174.2
171.9
169.8
160.8
159.2
158.3
150.8
146.2
143.5
157.0
156.5
155.3
151.0
144.3
140.0
156.0
154.8
154.2
148.2
139.8
133.8
181.0
179.9
177.0
173.2
165.2
159.6
140.4
141.8
143.9
146.5
148.5
142.4
142.8
143.8
145.6
146.8
142.0
142.7
144.1
146.4
147.6
129.2
121.5
130.6
141.9
145.6
1277
132.6
134.2
138.2'
139.3
142.9 170.1
142.9 170.3
143.3 1707
144.5 171.9
145.8 173.4
144.5
147.6
150.1
151.3
152.8
136.5
138.6
142.1
146.1
149.0
129.0
131.3
133.7
139.5
144.2
156.2
159.8
169.6
173.6
175.0
1947
1948
1949
1950
1951
1952
1953
1954
.
.
.
1979:
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1980:
Jan
Feb
Mar
Apr
NTay
June
July
Aug
Sept
ock..;
Nov"
1
Also includes clothing and consumer staples, not shown separately.
Also includes defense and space equipment, not shown separately.
Also includes energy materials, not shown separately.
Source: Board of Governors of the Federal Reserve System.
2
3
279
39.29 20.35
10.47
TABLE B-42.—Industrial production indexes, selected manufactures, 1947-80
[1967=100; monthly data seasonally adjusted]
Nondurable manufactures
Ourable manufactures
Primary
metals
Year or month
Total
Iron
and
steel
Fabricated
metal
products
NonElectrieleccal
trical machinmachinery
ery
Transportation
equipment
Total
Motor
vehicles
and
parts
4.50
Printing ChemLumber
irak
Apparel
ltd 15
and
and
prodpublish- and
products
ing
products
ucts
Foods
1967 proportion
6.57
5.93
9.15
8.05
9.27
1.64
3.31
4.72
7.74
8.75
1947
1948...
1949
63.3
65.8
55.4
49.9
50.8
45.8
39.0
39.2
33.4
22.2
23.0
21.6
31.8
34.8
34.9
58.9
61.3
54.1
57.8
60.3
59.7
43.3
45.4
46.6
19.7
21.3
21.0
55.8
55.2
55.9
1950
1951
1952
1953
1954
69.7
75.8
69.2
78.5
63.5
70.1
56.1
59.9
58.5
66.0
59.4
37.5
47.7
51.9
54.0
46.1
29.6
29.8
34.0
39.0
34.7
41.8
46.6
54.2
68.0
59.2
60.5
65.7
65.5
64.7
68.4
68.0
64.3
63.1
66.3
67.2
66.4
48.9
49.7
49.7
52.0
54.1
26.2
29.7
31.1
33.6
34.1
57.9
59.0
60.2
61.4
62.7
1955
1956
1957
1958
1959
82.5
82.0
78.5
62.3
72.7
93.2
91.5
88.2
66.5
76.5
67.8
68.8
70.6
63.3
71.0
50.6
58.0
57.9
48.6
56.7
39.9
43.1
42.8
39.2
47.6
68.0
66.0
70.7
55.8
63.2
81.2
65.8
69.0
51.0
66.2
75.9
75.0
68.8
69.9
79.3
73.3
75.0
74.9
72.8
80.1
59.5
63.2
65.4
63.9
68.2
39.8
42.7
45.2
46.6
54.3
66.3
70.1
71.1
72.9
76.5
72.4
71.1
76.3
82.3
92.8
77.7
74.2
77.3
84.3
95.9
71.1
69.4
75.4
77.8
82.6
56.9
55.4
62.1
66.3
75.6
51.6
54.8
62.9
64.7
68.4
65.4
61.5
71.1
78.0
80.0
74.7 '
65.5
79.8
88.3
90.7
74.7
78.2
82.5
86.3
92.7
81.7
82.2
85.5
89.1
92.2
71.0
71,3
73.9
77.8
82.6
56.4
59.2
65.7
71.8
78.8
78.6
80.9
83.4
86.4
90.4
102.1
108.4
100.0
104.3
113.8
105.2
108.4
100.0
103.2
112.6
90.8
97.2
100.0
105.6
107.9
85.0
98.8
100.0
101.8
109.3
81.7
97.9
100.0
105.5
111.9
95.1
102.0
100.0
111.1
108.4
115.9
113.9
100.0
120.3
116.5
96.3
100.0
100.0
105.5
107.9
97.4
99.9
100.0
102.9
106.7
87.9
94.6
100.0
103.2
107.4
87.8
95.7
100.0
109.5
118.4
92.4
96.0
100.0
102.6
106.1
106.6
100.2
112.1
126.7
123.1
104.7
96.1
107.1
122.3
119.8
102.4
103.5
112.1
124.7
124.2
104.4
100.2
116.0
133.7
140.1
108.1
107.7
122.2
143.1
143.8
89.5
97.9
108.2
118.3
108.7
92.3
118.6
135.8
148.8
128.2
105.6
113.8
120.8
126.0
116.2
101.4
104.7
109.4
117.3
114.3
107.0
107.1
112.7
118.2
118.2
120.4
125.9
143.6
154.5
159.4
108.9
112.8
116.8
120.9
124.0
96.4
109.7
111.1
119.9
121.3
95.8
104.8
103.8
113.2
113.2
109.9
123.9
131.0
141.6
148.5
125.1
134.5
143.6
153.6
163.7
116.5
134.8
145.4
159.4
174.0
97.4
111.1
122.2
132.5
135.4
111.1
142.0
161.1
169.9
159.9
107.6
123.2
131.2
136.3
136.9
107.6
125.7
134.2
134.2
134.4
113.3
122.5
127.6
131.5
136.9
147.2
170.9
185.7
197.4
211.8
123.4
133.0
138.8
142.7
147.5
123.3
120.4
123.8
122.0
121.2
124.2
113.3
110.8
116.2
115.8
114.3
118.1
149.1
150.8
150.2
148.8
150.3
149.3
161.2
162.9
164.1
161.4
164.4
164.6
171.2
173.1
174.3
170.6
174.6
175.1
141.5
140.0
143.4
131.6
141.8
139.3
178.7
173.3
179.7
156.0
175.8
169.0
137.3
137.2
137.7
137.2
135.8
136.8
136.0
138.0
138.5
134.0
133.1
136.4
135.6
138.2
137.3
135.7
136.8
136.9
207.5
209.7
210.4
209.3
211.2
209.6
143.9
145.3
147.4
146.8
148.3
149.0
126.7
121.1
122.1
118.4
117.1
115.3
119.0
112.0
115.0
108.8
108.1
106.6
149.3
147.6
146.5
147.5
146.9
146.2
165.5
166.3
165.2
162.9
162.9
163.0
174.7
172.1
176.7
177.3
179.5
181.6
135.2
125.2
131.8
133.3
128.3
127.3
159.2
138.5
150.3
150.1
139.3
137.1
135.2
138.5
138.6
138.7
135.9
132.4
132.7
132.5
135.7
131.5
133.5
131.1
135.6
137.7
137.2
137.2
136.2
137.8
211.8
214.8
212.8
212.9
215.3
216.8
148.9
147.5
148.1
147.7
147.9
148.4
Jan
Feb
Mar.
Apr
May.
June
116.4
111.9
113.7
106.4
96.1
90.4
107.2
103.4
105.9
97.4
84.4
75.4
145.0
145.7
145.5
141.4
133.2
126.1
167.1
167.0
166.5
163.2
162.1
158.3
181.7
179.2
179.2
177.0
171.4
166.6
122.1
125.7
123.8
115.1
109.8
110.0
126.2
133.9
130.1
114.7
105.9
106.7
131.6
130.2
125.3
105.2
104.5
109.7
131.5
133.8
136.1
131.3
128.6
127.2
138.9
139.9
139.2
136.5
135.5
135.4
218.0
217.4
213.6
209.1
199.2
191.1
148.5
149.0
149.3
147.8
149.5
149.0
July.
Aug
.
Sept.
Oct"
Nov.
81.7
86.0
89.9
100.0
107.7
68.1
75.3
79.8
93.8
123.8
125.8
129.0
132.4
134.6
158.5
158.8
1591
160 5
161.5
165,0
166.7
167 8
169 9
171.9
110.7
108.3
112 9
118 9
120.9
107.9
104.4
113.4
124 7
128.3
112.8
121.7
122.7
121.4
121.5
123.8
138.6
140.3
1401
141 5
14214
190.3
197.8
206 0
210.4
148.9
148.3
148.7
149.2
I960
1961
1962
1963 .
1964. .
.. .
.
1965
1966
1967
1968
1969...
. .
1970
1971
1972..
1973..
1974
1975
1976
1977
1978
1979
.
.
....
1979:
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
.
4
,
4.21
1980
Source: Board of Governors of the Federal Reserve System.
280
TABLE B-43.—Capacity utilization rate in manufacturing, 1948-80
[Percent; quarterly data seasonally adjusted]
FRB series
Wharton series 3
Commerce series2
J
AdTotal
NonPrimary- AdvancedPrimary
NonTotal
Total
manufac- process- vanced manufac- Durable durable processed processed manufac- Durable
goods durab
goods goods
processturing
turing
goods
goods
ing
good;
turing
ing
Year or quarter
1948
1949
82.5
74.2
87.2
76.2
80.0
73.3
1950
1951
1952
1953
1954
82.8
85.8
85.4
89.2
80.3
88.5
90.2
84.9
89.4
80.6
79.8
83.4
85.9
89.3
80.1
•"'88.1
85.3
92.
1955
1956
1957
1958
1959
87 1
83 7
75.2
81.9
921
89 7
84.7
75.4
83.4
84 3
84 5
83.1
75.1
81.1
90 5
87 9
84.0
74.2
78.9
88 3
85.3
81.6
68.0
73.7
91
87.
1960
1961
1962
1963
1964
80.2
77.4
816
83.5
85.6
79.8
77.9
81.6
83.8
87.8
80.4
77.2
81.7
83.4
84.6
76.9
73.7
765
77.7
79.5
71.9
67.7
71.8
73.4
75.6
1965
1966
1967
1968
1969
89 6
91.1
86.9
87.1
86.2
91.1
91.4
85.7
87.7
88.5
88.9
91.2
87.6
86.8
85.0
84.2
88.2
86.9
89.2
90.1
82.3
88.0
86.2
88.8
89.4
87.
89.
91.
1970
1971
1972
1973
1974
79 3
78.4
83.5
87.6
83.8
82.9
82.3
88.2
92.5
87.8
77.4
76.3
81.0
85.0
81.5
1975
1976
1977
1978
1979
72.9
79 5
81.9
84.4
85.7
73.7
81.9
84.0
86.9
88.1
1975:
1
||
Ill
IV
70.3
70.7
74.6
76.1
78.4
79 5
80.0
80.0
80.7
82.1
82.4
82.6
864
86
86
84
85
85
88
85
89
85
87
83
84
84
86
85
86
86
88
87
86
87
85
83
84
84
93
83.
86.
84.
82
83.
83.
85
86.
88.
80
78
83
82
80
83
86
83
82
85
82
85
86
84
85
89
85
82
84
82
84.0
82.6
87.7
92.9
90.2
80.6
78.1
84.2
91.5
88.7
92.
94.
92.
72.5
78.2
80.8
83.0
84.3
77
81
83
84
83
76
81
84
84
83
79
82
82
83
82
76
82
83
84
84
77
81
83
84
82
79.4
85.5
88.1
90.9
92.6
75.9
81.8
84.8
89.2
91.7
84.
90.
92.
93.
94
69.9
70.4
76.2
78.4
70.4
71.0
73.8
74.9
75
75
79
79
74
73
78
77
76
78
80
81
75
73
78
78
75
76
79
79
77.0
77.3
81.0
82.2
74.8
74.1
77.1
77.5
80.
81.0
77.0
82
81
82
781
82
83
79
81
81
80
81
82
82
83
83
82
80
81
82
79
82
84.7
85.5
85.8
86.0
80.4
82.0
82.7
82.4
90.
819
82.2
84.4
84.5
84.7
79.8
80.8
81.3
81.3
83
84
84
86
82
82
83
84
82
82
82
83
86.8
88.2
88.5
88.7
82.9
84.9
85.4
86.0
92.
93.
82
82
82
82
84
84
82
82
82.0
83.9
85.2
86.4
84.0
86.3
87.9
89.5
80.9
82.7
83.7
84.6
84
84
83
84
84
85
83
85
83
82
82
83
83
84
84
85
84
84
82
84
88.4
90.4
91.6
93.1
85.8
88.5
90.2
92.4
92.
93.
93.
94.
1979:
|
II
Ill
IV
86.9
85.9
85.3
84.4
89.0
88.2
88.3
86.9
85.7
84.7
83.7
83.0
84
83
82
81
85
84
82
80
83
82
82
82
85
84
83
83
84
83
81
80
93.7
92.7
92.3
91.8
93.1
91.9
91.0
90.7
94.
93.
94.
93.
1980:
1
||
III
83.4
77 9
75.7
85.1
76.3
72.9
82.5
78 7
77.3
80
76
80
74
81
78
78
81
75
80
76
75
91.3
85.7
83.5
89.8
83.4
80.2
93.
88.
1976:
1
II.
Ill
IV
1977:
I
II
Ill
IV
82.6
82.1
78.5
78.8
81
78
83
1978:
ii •
Ill
IV
;.;...
76
1
2
83
74
79
77
88.
89.
81.
86.
89.
90.
90.
90.
92.
92.
88.
For description of the series, see "Federal Reserve Measures of Capacity and Capacity Utilization," February 1978.
Quarterly data are for last month in quarter. Annual data are averages of the (our indexes, except for 1965 (December index) and
1966-67
{averages of June and December indexes). For description of the series, see "Survey of Current Business," July 1974.
3
Annual data are averages of quarterly indexes. For description of the series, see F. Gerard Adams and Robert Summers, "The
Wharton Index of Capacity Utilization: A Ten Year Perspective, 1973 Proceedings of the Business and Economic Statistics Section,
American Statisticaf Association.
Sources: Board of Governors of the Federal Reserve System, Department of Commerce (Bureau of Economic Analysis), and Wharton
School of Finance.
281
TABLE B-44;—New construction activity, 1929-80
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Public construction
Private construction
Year or month
Total
new
construction
Presidential buildings and other
construction l
Residential
buildings1
Total
Total
New
Total 2
housing
units
Total
4.7
Commercial
Industrial
Federal
State and
local*
0.2
2.3
Other*
1929
10.8
8.3
3.6
3.0
2.6
2.5
1933
2.9
1.2
.5
.3
.5
1.6
1.1
1939... .
8.2
4.4
2.7
2.3
1.2
3.8
3.1
1940 ..
1941 . ..,
1942. . . .
1943
1944
8.7
12.0
14.1
8.3
5.3
5.1
6.2
3.4
2.0
2.2
3.0
3.5
1.7
.9
.8
2.6
3.0
1.4
.7
.6
1.3
1.5
1.2
.9
1.1
3.6
5.8
10.7
6.3
3.1
1.2
3.8
9.3
5.6
2.5
2.4
2.0
1.3
1945
1946
5.8
14.3
3.4
12.1
1.3
6.2
.7
4.8
1.3
3.0
2.4
2.2
1.7
.9
.7
1.4
1947
1948 ...
1949
20.0
26.1
267
16.7
21.4
20.5
9.9
13.1
12.4
7,8
10.5
10.0
6.9
8.2
8.0
1.7
1.4
1.0
4.2
5.5
5.9
3.3
4.7
6.3
1.2
1.5
2.5
3.5
4.8
1950
1951
1952
1953
1954
33.6
35.4
36.8
39.1
41.4
26.7
26.2
26.0
27.9
29.7
18.1
15.9
15.8
16.6
18.2
15,6
13.2
12.9
13.4
14.9
8.6
10.3
10.2
11.3
11.5
1.4
1.5
1.1
1.8
2.2
1.1
2.1
2.3
2.2
2.0
6.1
6.7
6.8
7.3
7.2
6.9
9.3
10.8
11.2
11.7
1.6
3.0
4.2
4.1
.
46.5
47.6
49.1
50.0
55.4
34.8
34.9
35.1
34.6
39.3
21.9
20.2
19.0
19.8
24.3
18.2
16.1
14.7
15.4
19.2
12.9
14.7
16.1
14.8
15.1
3.2
3.6
3.6
3.6
3.9
2.4
3.1
3.6
2.4
2.1
7.3
8.0
9.0
8.8
9.0
11.7
12.7
14.1
15.5
16.1
2.8
2.7
3.0
3.4
3.7
8.9
10.0
11.1
12.1
12.3
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
2.8
2.8
2.9
3.6
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
1965
1966
1967
1968
1969
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
7.8
9.4
6.0
6.8
15.1
16.6
22.1
24.0
25.5
27.6
28.0
4.0
4.0
3.5
3.4
3.3
18.0
20.0
22.1
24.2
24,7
..
94.9
110.0
124.1
137.9
138.5
66.8
80.1
93.9
105.4
100.2
31.9
43.3
54.3
59.7
50.4
24.3
35.1
44.9
50.1
40.6
34.9
36.8
39.6
45.7
49.8
9.8
11.6
13.5
15.5
15.9
6.5
5.4
4.7
6.2
7.9
18.6
19.8
21.5
24.0
25.9
28.1
29.9
30.2
32.5
38.3
3.3
4.0
4.4
4.9
5.3
24.8
25.9
25.8
27.7
33.0
1975. ..
1976
1977. . ..
1978
134.5
151.1
174.0
205.5
93.7
111.9
135.8
159.6
46.5
60.5
81.0
93.4
34.4
47.3
65.7
75.8
47.2
51.4
54.8
66.1
12.8
12.8
14.8
18.6
8.0
7.2
7J
11.0
26.4
31.5
32.4
36.6
40.9
39.1
38.2
45.9
6.3
7.0
7.3
34.6
32.1
30.9
37.5
1979..
229.0
179.9
99.0
78.6
80.9
24.9
15.0
41.0
49.0
.
'.S
New series
1955
1956.
1957,
1958
1959,
1970.
1971..
1972.
1973
1974
....
See next page for continuation of table.
282
3
5.2
6.3
6.6
7.1
8.3
40.2
TABLE B-44.—New construction activity, 1929-80—Continued
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Private construction
Public construction
Tntal
new
construction
Year or month
Residential
buildingsl
Total
Total2
Industrial
Other4
and
Federal State
local»
77.9
76.3
76 8
76.8
78.4
71.6
72.1
76.4
75.9
79.0
81.3
20.1
19.8
21.7
22.5
24.1
25.5
13.3
14.3
15.3
14.6
14.7
14.8
38.2
38.0
39.3
38 8
40.2
41.0
46.7
42.4
45.7
456
47.7
46.7
231.0
231.6
235 3
239.9
2394
244.0
181.3
182.0
184.3
187.3
187 4
191.2
98.5
98.9
100.4
101.5
101.8
102.1
79.0
79.3
804
79.9
79 0
78.5
82.8
83.1
83.9
85.8
85.6
89.1
25.5
26.1
26.4
27.3
27.7
29.4
15.9
14.2
14.7
15.6
15.8
15.9
41.4
42.8
429
42.9
42 0
43.8
49.7
49.6
50.9
52.6
52 0
52.9
2596
248.8
237.1
225.8
218.9
215.0
1981
191.7
180.6
171.5
164.8
161.3
105 8
101.5
94.0
83.5
77.0
73.4
80 7
75.1
68.4
60.7
55.2
51.9
923
31.6
30.7
29.9
30.9
30.1
29.6
15 8
15.7
13.9
13.6
14.2
15.0
44 9
43.8
42.8
43.5
43.5
43.4
615
98
516
90.2
86.6
88.0
87.8
88.0
57.0
56.5
54.3
54.1
53.7
9.2
10.8
10.1
9.9
8.9
47.8
45.8
44.3
44.2
44.7
Mill
8.6
7.9
9.6
101.4
98.6
97.1
96.6
96.2
97.7
214.3
215.1
223.7
226.2
231.8
158.6
162.1
167.9
171.1
178.0
74.3
78.6
84.4
87.4
93.5
52.2
56.1
60.8
63.6
69.0
84.3
83.4
83.5
83.7
84.4
28.1
28.0
27.4
28.4
28.8
13.3
13.0
13.1
13.0
13.3
43.0
42.4
43.0
42.3
42.4
55.7
53.1
55!8
55.1
53.8
11.1
9.8
10.3
9.4
10.3
44.6
43.2
45.5
45.7
43.5
. ...
oNovc f : . ;
Commercial 3
173.0
170.7
173.4
172.4
175.3
179.0
Mar
July
Aug
Sept
Total
Total
219.7
2131
219.2
2180
223.0
225.7
Apr
May
June
81.5
constructionl
M i l l
1979:
Jan
Feb
New
housing
units
Nonresidential buildings and other
::.:::„::. -:
Dec
1980:
Ian
8.1
9.0
8.2
9.0
9.2
9.5
8.4
8.9
9.1
38.1
34.5
36.2
37.4
38.7
38.5
40.7
40.3
415
44.2
431
43.8
MMI
: : : : :'
II 111
II 111
Mill
: :' :' ; :'
M i l l
M i l l
1 1 - 1 1 1 Mill
1
Beginning 1960, farm residential buildings included in residential buildings; prior to I960, included in nonresidential buildings and
other
construction.
2
Total
includes additions and alterations and nonhousekeeping units, not shown separately.
3
Office
buildings, warehouses, stores, restaurants, garages, etc.
4
Religious, educational, hospital and institutional, miscellaneous nonresidential, farm (see also footnote 1), public utilities, and all
other private.
5
Includes Federal grants-in-aid for State and local projects.
Source: Department of Commerce, Bureau of the Census.
283
TABLE B-45.—New housing units started and authorized, 1959-80
[Thousands of units]
New private housing
units
authorized2
New housing units started
Private and public1
Private (farm and nonfarm)'
Total
(farm and Nonfarm
nonfarm)
Type of structure
Year or month
Total
Type of structure
Total
1 unit
2 to 4 5 units
units or more
1 unit
2 to 4
units
5 units
1959..
1,553.7
1,531.3
1,517.0
1,234.0
283.0
1,208.3
938.3
77.1
192.9
1960
1961.
1962.
1963.
1964.
1,296.1
1,365.0
1,492.5
1,634.9
1,561.0
1,274.0
1,336.8
1,468.7
1,614.8
1,534.0
1,252.2
1,313.0
1,462.9
1,603.2
1,528.8
994.7
974.3
991.4
1,012.4
970.5
257.4
338.7
471.5
590.8
108.4
450.0
998.0
1,064.2
1,186.6
1,334,7
1,285.8
746.1
722.8
716.2
750.2
720.1
64.6
67.6
87.1
118.9
100.8
187.4
273.8
383.3
465.6
464.9
1965.
1966
1967.
1968
1969 .
1,509.7
1,195.8
1,321.9
1,545.4
1,499.5
1,487.5
1,172.8
1,298.8
1,521.4
1,482.3
1,472.8
1,164.9
1,291.6
1,507.6
1,466.8
963.7
778.6
843.9
899.4
810.6
86.6
61.1
71.6
80.9
85.0
422.5
325.1
376.1
527.3
571.2
1,239.8
971.9
1,141.0
1,353.4
1,323.7
709.9
563.2
650.6
694.7
625.9
,84.8
61.0
73.0
84.3
85.2
445.1
347.7
417.5
574.4
612.7
1970.
1971
1972.
1973
1974.,
1,469.0
2,084.5
2,378.5
2,057.5
1,352.5
1,433.6
2,052.2
2,356.6
2,045.3
1,337.7
812.9
1,151.0
1,309.2
1,132.0
888.1
120.3
141.3
118.3
68.1
535.9
780.9
906.2
795.0
381.6
1,351.5
1,924.6
2,218.9
1,819.5
1,074.4
646.8
906.1
1,033.1
882.1
643.8
616.7
88.1
885.7
132.9
148.6 1,037.2
820.5
117.0
366.2
64.3
1975
1976
1977
1978..
1979..
1,171.4
1,547.6
1,989.8
2,023.3
1,749.2
1,160.4
1,537.5
1,987.1
2,020.3
1,745.1
892.2
1,162.4
1,450.9
1,433.3
1,194.1
64.0
85.9
121.7
125.0
122.0
204.3
289.2
414.4
462.0
429.0
939.2
1,296.2
1,690.0
1,800.5
1,551.8
675.5
893.6
1,126.1
1,182.6
981.5
63.9
93.1
121.3
130.6
125.4
199.8
309.5
442.7
487.3
444.8
Seasonally adjusted annual rates
1979:
Jan
Feb..
Mar
Apr .
May .
June.,
88.4
84.7
153.3
161.3
189.1
192.0
1,727
1,469
1,800
1,750
1,801
1,910
1,175
•997
1,275
1,273
1,229
1,276
121
93
119
113
120
123
431
379
406
364
452
511
1,475
1,491
1,692
1,548
1,648
1,639
958
922
1,115
1,044
1,052
1,028
126
103
130
122
123
132
391
466
447
382
473
479
July . .
Aug. .
Sept.
Oct. .
Nov....
Dec
165.0
171.4
163.8
169.0
119.2
91.9
1,764
1,788
1.874
1,710
1,522
1,548
1,222
1,237
1.237
1,139
980
1,055
130
152
123
129
114
110
412
399
514
442
428
383
1,563
1,622
1,695
1,478
1,287
1,247
1,015
1,011
996
905
773
776
136
143
138
129
99
116
412
468
561
444
415
355
Jan .
Feb .
Mar.. .
Apr
May....
June
73.4
80.6
86.1
96.6
92.0
116.8
1,419
1,330
1,041
1,030
906
1,223
1,002
786
617
628
628
757
127
101
91
100
290
443
333
302
198
391
1,271
1,168
968
789
825
1,078
780
708
556
473
495
628
119
111
94
63
81
93
372
349
318
253
249
357
July .
Aug...
Sept .
Oct. .
Nov....
120.8
130.2
139.3
153.7
112.6
1,265
1,429
1,541
1,561
1,555
1,003
1,059
1,037
987
80
136
142
120
160
316
290
340
404
408
1,236
1,361
1,564
1,333
1,371
781
857
914
819
794
119
131
146
134
144
336
373
504
380
433
1980:
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 Mousing Act, are included in publicly owned starts and excluded from
2
Authorized by issuance of local building permit: in 16,000 permit-issuing places beginning 1978; in 14,000 places for 1972-77; in
13,000 places for 1967-71; in 12,000 places for 1963-66; and in 10,000 places prior to 1963.
3
Not available separately beginning January 1970.
Note.—-Only the series on private and public nonfarm housing units started is available prior to 1959. See 1976 "Economic Report"
for this earlier series.
Source: Department of Commerce, Bureau of the Census.
284
TABLE B-46.—Nonfarm business expenditures for new plant and equipment, 1947-81
[Billions of dollars,- quarterly data at seasonally adjusted annual rates]
Plant and equipment
Nonmanufacturir g
Manufacturing
Year or quarter
Total
Plant
Ennin
tquipment
Total
Dura- Nonble durable
goods goods
Total
Pub- Trade
Comand munication
Min- Transpor- lic
tation
ing
utili- serv-1
and
ties ices
other2
1947
1948
1949
21.80
25.46
23.54
8.45
10 35
10.20
13.35
15.11
13.34
8.73
9.25
7.32
3.39
3.54
2.67
5.34
5.71
4.64
13.07
16.21
16.22
0.69
.93
.88
2.21
2.66
2.30
1.64
2.67
3.28
6.13
6.92
7.13
2.40
3^4
2.63
1950
1951
1952
1953
1954
25.32
30.83
31.59
33.58
33.13
10.94
13.08
13.14
13 82
14.09
14.37
17.74
18.45
19.76
19.03
7.73
11.07
12.12
12.43
12.00
3.22
5.12
5.75
5.71
5.49
4.51
5.95
6.37
6.72
6.51
17.59
19.76
19.47
21.16
21.13
.84
1.11
1.21
1.25
1.29
2.38
3.05
2.99
2.97
2.42
3.42
3.75
3.96
4.61
4.23
8.37
8.83
8.05
8.94
9.59
2.58
3.03
3.25
3 38
3.60
1955
1956
1957
1958
1959
36.58
44.76
48.12
4217
44.78
15.97
19 34
20.94
19 41
19.89
20.60
25.42
27.19
22.76
24.89
12.50
16.33
17.50
12.98
13.76
5.87
8.19
8.59
6.21
6.72
6.62
8.15
8.91
6.77
7.04
24.08
28.43
30.62
29.19
31.02
1.31
1.64
1.69
1.43
1.35
2.60
3.07
3.35
2.34
3.17
4.26
4.78
5.95
5.74
5.46
11.49
13.64
13.68
14.11
15.40
4.42
5 30
5.96
5 58
5.63
I960
1961
1962
1963
1964
48.63
47 82
51.28
53 25
61.66
20.94
2112
22.12
22 23
24.96
27.70
2670
29.16
3103
36.70
16.36 8.28
15 53 7.43
16.03 7.81
17 27 8.64
21.23 10.98
8.08
8.10
8.22
8.63
10.25
32.28
32 29
35.25
35.99
40.43
1.29
126
1.41
126
1.33
3.19
2.82
3.26
3.36
4.46
5.40
5.20
5.12
5.33
5.80
16.15
16 53
18.27
18 57
20.38
6.25
6 48
7.19
7 47
8.46
1965
1966
1967
1968
19*69
70.43
82 22
83.42
88.45
99.52
27 24
32 21
32.22
35.51
40.54
43.19
50.01
51.20
52.94
58.99
25.41
3137
32.25
32.34
36.27
13.49
17.23
17.83
17.93
19.97
11.92
14 15
14.42
14.40
16.31
45.02
50.84
51.18
56.11
63.25
1.36
142
1.38
1.44
1.77
5.46 6.49 22.13
6.43 7.82 24.69
6.34 9.33 23.02
6.79 10.52 25.31
7.04 11.70 28.31
9.58
1049
11.11
12.06
14.43
1970
1971
1972
1973
1974
105.61
108.53
120.25
137.70
156.98
44.24
46 60
49.35
56.66
64.29
61.36
61.93
70.89
81.04
92.69
36.99
33.60
35.42
42.37
53.21
19.80
16.78
18.22
22.75
27.44
17.19 68.62
16.82 74.93
17.20 84.82
19.62 95.33
25.76 103.78
2.02
2.67
2.88
3.31
4.62
6.95
5.93
6.72
7.41
8.23
13.03
14.70
16.26
17.97
19.83
29.77
34.20
40.00
45.53
47.79
16.85
17.43
18.96
21.12
23.30
1975
1976
1977
1978
1979
157 71 65 21
171.45 7120
198 08 80 31
231.24 92.70
270.46 105.73
294.30
32613
92 50
100.25
117 77
138.54
164.73
54 92
59.95
69 22
79.72
98.68
26.33
28.47
34.04
40.43
51.07
28.59
31.47
3518
39.29
47.61
102 79 610
111.50 7.44
128 87 9 24
151.52 10.21
171.77 11.38
8.68
8.89
9.40
10.68
12.35
19 98
22.37
26 79
29.95
33.96
46 23
49.30
56 54
68.66
79.26
2180
23.51
26 90
32.02
34.83
11.98 34.62 82.28
12.96 37.64. 87.83
37.02
40.54
102.58
104.19
106.58
108.60
152.97
161.04
166.56
175.70
198033
1981
114.90 58.25
131.12 66.00
56.65 179.40 13.50
65.12 195.00 16.04
90.75 46.38
94.71 49.25
52.13
55.03
106.57
44.37
45.47
47.97
51.55
164.80
170.52
173.04
177.73
11.23
11.01
11.40
11.86
11.43
12.02
12.67
13.20
32.40
34.02
35.05
34.08
76.03
79.03
78.86
82.69
33.71
34.44
35.05
35.90
1980:
1
||
Ill
IV3
291.89 115.96 175.93 111.77 58.28
294.36 116.50 177.86 115.69 59.38
296.23 117 59 178.64 116.40 58.19
115.37 57.42
294.95
53.49
56.32
58.21
57.96
180.13
178.66
179.83
179.58
11.89
12.81
13.86
15.25
12.47
12.09
12.23
11.25
36.26
35.03
35.58
31.95
82.17
81.07
81.19
84.87
37.34
37.66
36.97
36.26
1981:
I3
310.59 _
1979;
ti
Ill
IV.
255 55
265.24
273.15
284.30
aoo.n
39.48
11.50 36.78 84.09
122.69 60.23 62.46 187.90 16.07
40.01
11.60 36.21 87.43
130.57 65.36 65.21 193.27 18.02
:=:
1
Wholesale and retail trade; finance, insurance, and real estate; and personal, business, and professional services.
2
"Other" consists of construction; social services and membership organizations; and forestry, fisheries, and agricultural services.
3
Planned capital expenditures reported by business in late October-December 1980, corrected for biases.
Note,—Revised series; for details, see Sumy of Current Business, October 1980.
Source: Department of Commerce, Bureau of Economic Analysis.
II*'ZZZZZZZ!!'..'ZZZZ 323.84
285
TABLE B-47.—Sales and inventories in manufacturing and trade, 1947-80
[Amounts in millions of dollars; monthly data seasonally adjusted]
Total manufacturing and
trade
Year or month
Sales'
Inventories 2
Ratio 3
Merchant wholesalers
Manufacturing
Sales 1
Inventories 2
Ratio3
Sales'
Retail trade
Inventories 2
Ratio*
Sales'
Inven3
tories2 Ratio
35,260
33,788
52,507
49,497
1.42
1.53
15,513
17,316
16,126
25,897
28,543
26,321
1.58
1.57
1.75
6,808
6,514
7,957
7,706
1.13
1.19
10,200
11,135
11,149
14,241
16,007
15,470
1.26
1.39
1.41
38,596
43,356
44,840
47,987
46,443
59,822
70,242
72,377
76,122
73,175
1.36
1.55
1.58
1.58
1.60
18,634
21,714
22,529
24,843
23,355
31,078
39,306
41,136
43,948
41,612
1.48
1.66
1.78
1.76
1.81
7,695
8,597
8,782
9,052
8,993
9,284
9,886
10,210
10,686
10,637
1.07
1.16
1.12
1.17
1.18
12,268
13,046
13,529
14,091
14,095
19,460
21,050
21,031
21,488
20,926
1.38
1.64
1.52
1.53
1.51
51,694
54,063
55,879
54,201
59,729
79,516
87,304
89,052
87,093
92,129
1.47
1.55
1.59
1.60
1.50
26,480
27,740
28,736
27,247
30,286
45,069
50,642
51,871
50,241
52,945
1.62
1.73
1.80
1.84
1.70
9,893
10,513
10,475
10,257
11,491
11,678
13,260
12,730
12,739
13,879
1.13
1.19
1.23
1.24
1.15
15,321
15,811
16,667
16,696
17,951
22,769
23,402
24,451
24,113
25,305
1.43
1.47
1.44
1.43
1.40
60,827
61,159
65,662
68,995
73,682
94,713
95,594
101,063
105,480
111,503
1.56
1.54
1.50
1.49
1.47
30,879
30,923
33,357
35,058
37,331
53,780
54,885
58,186
60,046
63,409
1.75
1.74
1.70
1.69
1.64
11,656
11,988
12,674
13,382
14,529
14,120
14,488
14,936
16,048
17,000
1.22 18,294
1.20 18,249
1.16 19,630
1.15 20,556
1.14 21,823
26,813
26,221
27,941
29,386
31,094
1.45
1.43
1.38
1.39
1.40
80,283
87,187
90,348
98,143
105,042
120,907
136,790
145,335
156,166
169,841
1.45
1.47
1.56
1.54
1.55
40,995
44,870
46,487
50,268
53,540
68,185
77,952
84,659
90,617
98,210
1.60
1.62
1.76
1.74
1.77
15,611
16,987
19,448
20,846
22,609
18,317
20,765
25,377
26,604
29,114
1.15
1.15
1.25
1.25
1.23
23,677
25,330
24,413
27,030
28,893
34,405
38,073
35,299
38,945
42,517
1.39
1.44
1.43
1.38
1.41
107,475 178,337
116,035 188,563
130,049 203,161
152,237 234,163
175,741 285,519
1.62
1.58
1.50
1.43
1.47
52,832
55,925
63,042
72,954
84,821
101,667
102,677
108,296
124,672
157,915
1.90
1.83
1.67
1.58
1.65
23,943
26,257
29,584
36,822
45,836
32,803
35,823
39,786
46,254
56,537
1.29 30,700
1.30 33,853
1.27 37,422
1.17 42,461
1.12 45,083
43,867
50,063
55,079
63,237
71,067
1.41
1.41
1.40
1.40
1.48
180,263 285,035
202,001 310,736
224,786 337,432
254,297 380,643
288,388 426,796
1.58 86,617 158,178
1.48 98,810 170,156
1.44 110,842 180,224
1.41 124,714 198,334
1.41 141,000 228,258
1.83
1.66
1.59
1.52
1.52
44,633
53,509
62,842
73,551
55,113
61,307
67,998
80,771
89,676
1.24 49,013 71,744
1.21 54,784 79,273
1.21 60,435 89,210
1.19 66,741 101,538
1.17 73,837 108,862
1.44
1.38
1.39
1.43
1.45
274,091
274,844
283,741
276,406
286,413
283,772
385,379
389,312
392,630
398,307
401,945
406,720
1.41
1.42
1.38
1.44
1.40
1.43
135,213
135,718
141,039
134,398
141,783
139,050
201,143
203,819
205,752
209,175
210,881
213,942
1.49
1.50
1.46
1.56
1.49
1.54
67,585
67,860
70,657
70,402
72,338
72,629
81,498
82,700
83,558
84,632
84,904
85,406
1.21
1.22
1.18
1.20
1.17
1.18
71,293
71,266
72,045
71,606
72,292
72,093
102,738
102,793
103,320
104,500
106,160
107,372
1.44
1.44
1.43
1.46
1.47
1.49
289,994
293,167
296,760
298,452
298,949
302,117
413,581
417,130
418,461
422,710
425,952
426,796
1.43 142,094
1.42 142,708
1.41 143,614
1.42 145,547
1.43 144,326
1.41 146,289
216,120
218,669
221,341
223,476
226,483
228,258
1.52
1.53
1.54
1.54
1.57
1.56
74,778
75,588
76,480
77,322
78,203
78,678
87,662
88,280
88,372
88,819
89,676
1.17 73,121
1.17 74,871
1.16 76,666
1.15 75,583
1.14 76,421
1.14 77,150
109,799
110,181
108,748
110,415
110,383
108,862
1.50
1.47
1.42
1.46
1.44
1.41
312,458
310,181
305,165
294,998
292,478
294,203
431,420
435,155
439,114
445,170
445,801
447,031
1.38 152,088
1.40 152,889
1.44 150,081
1.51 143,596
1.52 141,515
1.52 141,573
232,294
235,096
238,522
242,540
243,402
243,630
1.53
1.54
1.59
1.69
1.72
1.72
80,906
79,299
78,550
76,391
76,376
76,629
90,690
91,342
91,497
92,378
92,562
93,633
1.12 79,464 108,436
1.15 77,993 108,717
1.17 76,534 109,095
1.21 75,011 110,252
1.21 74,587 109,837
1.22 76,001 109,768
1.36
1.39
1.43
1.47
1.47
1.44
304,154
308,019
318,321
325,838
329,140
449,510
451,951
454,566
456,532
458,235
1.48
1.47
1.43
1.40
1.39
145,678
146,643
152,764
156,697
158,386
244,105
243,517
243,615
242,876
244,186
1.68
1.66
1.59
1.55
1.54
80,189
82,606
85,470
88,532
88,821
94,619
97,111
98,111
99,275
99,879
1.18 78,287 110,786
1.18 78,770 111,323
1.15 80,087 112,840
1.12 80,609 114,381
1.12 81,933 114,170
80,830
1.42
1.41
1.41
1.42
1.39
1
Monthly average for year and total for month.
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 of month to sales for month.
Note.—Earlier data are not strictly comparable with data beginning 1958 for manufacturing and beginning 1967 for wholesale and
2
3
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 Dusiness, 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).
286
TABLE B-48.—Manufacturers' shipments and inventories, 1947-80
[Millions of dollars; monthly data seasonally adjusted]
Shipments1
Year or month
Total
Inventories2
Nondurable
goods
indus- industries
tries
1947 ..
1948..
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
1955.
1956..
1957..
1958..
1959
Nondurable goods industries
Durable goods industries
Durable
Total
Total
8,819 25,897
9,738 28,543
8,935 26,321
Materials
and
supplies
Work
m
proc-
Finished
goods
Total
Materials
and
supplies
Work
in
proc-
Finished
goods
13,061
14,662
13,060
12,836
13,881
13,261
8,845
10,493
11,313
13,349
11,828
9,789 31,078 15,539
11,221 39,306 20,991
11,216 41,136 23,731
11,494 43,948 25,878
11,527 41,612 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
26,480
27,740
28,736
27,247
30,286
14,071
14,715
15,237
13,563
15,609
12,409
13,025
13,499
13,684
14,677
45,069
50,642
51,871
50,241
52,945
26,405
30,447
31,728
30,258
32,077
19,194
10,417
10,608
10,032
10,776
10,756
12,317
12,837
12,387
13,063
6,348
7,565
8,125
7,839
8,239
18,664
20,195
20,143
19,983
20,868
8,556
8,971
8,775
8,662
9,080
2,571
2,721
2,864
2,828
2,944
7,666
8,622
8,624
8,491
8,845
I960
1961.
1962 .
1963
1964 .
30,879
30,923
33,357
35,058
37,331
15,883
15,616
17,262
18,280
19,637
14,996
15,307
16,095
16,778
17,694
53,780
54,885
58,186
60,046
63,409
32,371
32,544
34,632
35,866
38,506
10,353
10,279
10,810
11,068
11,970
12,772
13,203
14,159
14,871
16,191
9,245
9,063
9,662
9,925
10,344
21,409
22,341
23,554
24,180
24,903
9,082
9,493
9,813
9,978
10,131
2,946
3,110
3,296
3,406
3,511
9,380
9,738
10,444
10,796
11,261
1965
1966
1967
1968.
1969.
40,995
44,870
46,487
50,268
53,540
22,221
24,649
25,267
27,698
29,477
18,774 68,185 42,257
20,220 77,952 49,920
21,220 84,659 54,996
22,570 90,617 58,871
24,064 98,210 64,739
13,325
15,489
16,454
17,389
18,710
18,075
21,939
25,001
27,314
30,377
10,854
12,491
13,542
14,167
15,651
25,928
28,032
29,662
31,746
33,471
10,448
11,155
11,715
12,289
12,726
3,806
4,204
4,423
4,849
5,124
11,674
12,673
13,524
14,608
15,621
..
..
..
...
.. .
52,832
55,925
63,042
72,954
84,821
28,215
29,973
34,043
39,703
44,253
24,617
25,952
28,999
33,251
40,568
101,667 66,790
102,677 66,313
108,296 70,308
124,672 81,426
157,915 101,866
19,198
19,778
20,893
26,062
35,228
29,836
28,654
30,819
35,546
42,683
17,756
17,882
18,597
19,818
23,956
34,877
36,364
37,987
43,245
56,048
13,154
13,680
14,676
18,134
23,689
5,275
5,669
5,983
6,713
8,179
16,448
17,015
17,328
18,398
24,180
1975
1976
1977
1978 .
1979
86,617
98,810
110,842
124,714
141,000
43,678
50,697
58,010
66,505
73,981
42,939
48,113
52,832
58,210
67,019
158,178
170,156
180,224
198,334
228,258
101,766
109,095
115,751
129,456
151,689
33,629
36,562
38,785
41,480
48,857
42,923
44,843
47,030
55,523
66,837
25,214
27,690
29,937
32,454
35,994
56,412
61,061
64,472
68,878
76,569
23,199 8,692
25,056 9,576
25,316 10,152
26,719 10,729
30,257 11,774
24,521
26,429
29,005
31,430
34,538
Jan..
Feb.
Mar...
Apr....
May.
June.
135,213
135,718
141,039
134,398
141,783
139,050
72,779
73,335
75,763
71,199
75,515
72,797
62,434
62,383
65,276
63,199
66,268
66,253
201,143
203,819
205,752
209,175
210,881
213,942
131,892
134,021
135,266
137,851
139,325
141,480
42,178
42,751
43,493
43,904
44,430
44,803
56,326
57,226
57,720
59,009
59,950
61,411
33,388
34,045
34,054
34,938
34,944
35,267
69,251
69,798
70,485
71,323
71,556
72,462
27,084
27,353
27,669
28,040
28,058
28,269
10,859
10,978
10,994
11,142
11,222
11,380
31,309
31,467
31,822
32,141
32,276
32,813
July .
Aug...
Sept..
Oct..
Nov
Dec .
142,094
142,708
143,614
145,547
144,326
146,289
73,875
74,363
74,201
75,544
73,751
74,191
68,220
68,345
69,414
70,003
70,574
72,098
216,120
218,669
221,341
223,476
226,483
228,258
143,141
144,658
146,048
148,136
150,476
151,689
45,524
46,378
46,417
47,362
48,416
48,857
61,927
62,607
63,810
64,859
66,145
66,837
35,691
35,671
35,821
35,914
35,916
35,994
72,979 -28,527 11,522
74,011 29,109 11,621
75,293 29,353 11,888
75,340 29,644 11,860
76,007 30,084 11,894
76,569 30,257 11,774
32,930
33,281
34,052
33,836
34,027
34,538
152,088
152,889
150,081
143,596
141,515
141,573
77,948
79,159
75,925
72,207
69,443
69,056
74,140
73,730
74,156
71,389
72,07.2
72,517
232,294
235,096
238,522
242,540
243,402
243,630
154,043
155,314
157,127
159,877
160,607
160,404
49,627
50,248
50,347
51,086
50,665
50,177
67,951
68,397
69,585
70,594
71,411
71,891
36,465
36,669
37,195
38,197
38,531
38,336
78,251
79,782
81,395
82,663
82,795
83,226
30,873
31,418
31,967
32,322
32,406
32,338
12,065
12,269
12,687
12,774
12,708
12,611
35,313
36,095
36,741
37,567
37,681
38,277
June..
145,678 72,544 73,134 244,105 160,875 50,032
July .
146,643 72,057 74,586 243,517 161,081 49,136
Aug .
152,764 76,571 76,193 243,615 160,691 49,007
Sept
156,697 79,497 77,200 242,876 160,137 48,722
Oct..
158,386 80,268 78,118 244,186 160,865 48,796
Nov.
1
Monthly average for year and total for month.
2
Book value, seasonally adjusted, end of period.
Note.—Data beginning 1958 are not strictly comparable with earlier data.
Source: Department of Commerce, Bureau of the Census.
72,126
73,113
73,209
73,037
73,693
38,717
38,832
38,475
38,378
38,376
83,230
82,436
82,924
82,739
83,321
32,314
31,461
31,918
32,139
32,278
12,634
12,620
12,725
12,551
12,790
38,282
38,355
38,281
38,049
38,253
1970
1971.
1972
1973
1974
8,966 10,720
7,894 9,721
1979:
1980:
Jan
Feb..
Mar.
fc:
287
TABLE B-49.—Manufacturers' new and unfilled orders, 1947-80
[Amounts in millions of dollars; monthly data seasonally adjusted]
Unfilled orders—shipments
ratio 3
Unfilled orders2
New orders*
industries
Year or month
Total
Total
NonCapital durable
goods
;oods
good
indus* industi
tries,
nondefense
Total
Durable
goods
industries
Nondurable
Total
industries
NonDurable durable
goods
goods
Industries industries
1947...
1948...
1949.
15,256
17,693
15,614
6,388
8,126
6,633
9,566
8,981
34,473
30,736
24,045
28,579
26,619
19,622
5,894
4,117
4,423
1950
1951..
1952
1953
1954 .
20,110
23,907
23,204
23,586
22,335
10,165
12,841
12,061
12,147
10,768
9,945
11,066
11,143
11,439
11,566
41,456
67,266
75,857
61,178
48,266
35,435
63,394
72,680
58,637
45,250
6,021
3,872
3,177
2,541
3,016
3.42
4.12
0.96
1955.
1956..
1957..
1958.
1959.
27,465
28,368
27,559
27,002
30,724
14,996
15,365
14,111
13,290
16,003
12,469
13,003
13,448
13,712
14,720
60,004
67,375
53,183
47,370
52,732
56,241
63,880
50,352
44,559
49,373
3,763
3,495
2,831
2,811
3,359
3.63
3.87
3.35
3.09
3.01
4.27
4.55
4.00
3.69
3.54
1.12
1.04
.85
.86
,94
1960.
1961
1962
1963..
1964..
30,235
31,104
33,436
35,524
38,357
15,303
15,759
17,374
18,709
20,652
14,932
15,345
16,061
16,815
17,705
45,080
47,407
48,577
54,327
66,882
42,514
44,375
45,965
51,270
63,691
2,566
3,032
2,612
3,057
3,191
2.78
2.63
2.69
2.80
3.10
3.37
3.13
3.24
3.37
3.72
.72
,79
.68
.73
.72
1965
1966.
1967 .
1968
1969
42,100
46,402
47,062
50,684
53,967
23,278
26,177
25,831
28,113
29,887
7,070
7,746
18,823
20,225
21,231
22,571
24,079
80,071
98,401
105,030
109,912
115,142
76,298
94,575
101,058
105,935
110,969
3,773
3,826
3,972
3,977
4,173
3.33
3.81
3.71
3.84
3.74
3.95
4.55
4.42
4.64
4.48
.80
.76
.73
.69
.69
1970
1971
1972,.
1973
1974
52,068
55,990
64,162
76,183
87,157
27,418
30,004
35,059
42,853
46,740
6,800
7,517
8,803
11,089
12,737
24,650
25,986
29,104
33,330
40,417
105,916
106,772
120,395
159,468
187,574
101,323
101,744
114,059
152,089
182,037
4,593
5,028
6,336
7,379
5,537
3.64
3.37
3.29
3.87
4.12
4,38
4.04
3.89
4.58
4.94
.77
.77
.88
.93
.64
1975..
1976...
1977.
1978
1979
85,082
99,184
112,451
128,488
144,335
41,957
51,047
59,562
70,145
77,215
10,772
12,501
15,084
18,308
21,643
43,125 169,126
48,137 173,646
52,889 193,561
58,344 239,321
67,120 279,710
161,286
165,509
184,708
228,819
267,879
7,840
8,137
8,852
10,502
11,831
3.69
3.20
3.16
3.35
3.67
4.42
3.83
3.77
3.92
4.35
.83
.74
.73
.80
.81
140,822
143,138
146,836
139,232
143,302
142,386
78,684
80,430
81,649
75,927
77,037
76,028
21,226
22,483
23,604
20,600
21,129
21,704
62,138
62,708
65,187
63,305
66,264
66,359
244,930
252,350
258,148
262,981
264,500
267,837
234,725
241,820
247,706
252,433
253,956
257,187
10,205
10,531
10,442
10,548
10,544
10,650
3.43
3.51
3.44
3.69
3.52
3.64
4.05
4.13
4.04
4.39
4.18
4.32
.76
.79
.75
.77
.74
.75
142,620
143,615
147,378
146,610
146,996
149,232
74,585
74,762
77,647
76,521
75,903
77,199
21,227
21,077
21,578
21,073
21,754
22,285
68,035 268,362
68,854 269,269
69,731 273,033
70,089 274,097
71,092 276,767
72,033 279,710
257,897
258,295
261,742
262,719
264,871
267,879
10,465
10,974
11,291
11,378
11,896
11,831
3.57
3.58
3.63
3.57
3.66
3.67
4.26
4.24
4.31
4.23
4.35
4.35
.71
.76
.78
.78
.81
.81
1980:
Jan
Feb.. .
Mar.
May"
June.
155,588
154,603
152,065
143,313
138,920
138,582
81,467
81,021
77,546
72,416
67,328
66,454
23,859
21,480
22,590
22,162
19,589
19,954
74,121
73,582
74,519
70,897
71,592
72,128
283,211
284,924
286,907
286,629
284,033
281,044
271,399
273,263
274,884
275,098
272,981
270,383
11,812
11,661
12,023
11,531
11,052
10,661
3.53
3.53
3.62
3.75
3.83
3.82
4.20
4.17
4.30
4.50
4.61
4.60
.75
.77
.79
.76
.74
.71
July..
Aug..
Sept
Ocl
Nov *.,
147,104
147,180
155,262
158,054
159,629
74,228
72,229
78,960
80,693
81,756
21,608
19,371
20,860
20,618
21,980
72,876
74,951
76,302
77,361
77,873
282,463
282,997
285,497
286,849
288,094
272,062
272,231
274,622
275,813
277,300
10,401
10,766
10,875
11,036
10,794
3.71
3.76
3.56
3.51
3.49
4.48
4.52
4.26
4.18
4.15
.68
.72
.69
.71
.69
1979:
Jan
Feb...
Mar...
fc..
June.
July..,
Aug .
Sept
Oct.
Nov..
Dec
1
2
3
Monthly average for year and total for month.
Seasonally adjusted, end of period.
Ratio of unfilled orders at end of period to shipments for period; excludes industries with no unfilled orders. Annual figures relate
to seasonally adjusted data for December.
Note.—Data beginning 1958 are not strictly comparable with earlier data.
Source: Department of Commerce, Bureau of the Census.
288
PRICES
TABLE B-50.—Consumer price indexes, major expenditure classes, 1929-80
[1967 = 100]
Year or month
All
items
Total >
1929 ..
1933
1939. . .
Housing
Food and
beverages
Food
Total2
Rent,
Home Fuel and
other
resi- ownerdential ship utilities3
Other
Apparel TransEntergoods
Medical
and
tainment
and
portation
care
upkeep
services
Energy1*
51.3
38.8
41.6
48.3
30 6
34.6
52Y
76.0
541
560
48.5
369
42.4
43.0
36.7
1940 . .
1941 .. ..
1942
1943.
1944
1945
1946.
1947
1948
1949.
.
42.0
44.1
48.8
51.8
52.7
539
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
591
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
4^.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
411
421
44.4
481
51.1
52.7
1950
1951
1952.. ..
1953
1954.
. ..
1955
1956
. .. .
1957
1958
1959
72.1
77.8
79.5
80.1
80.5
80.2
81.4
84 3
86.6
87.3
74.5
82.8
84.3
83.0
82.8
81.6
82.2
84.9
88.5
87.1
72.8
77.2
78.7
80.8
81.7
82.3
83.6
86.2
87.7
88.6
70.4
73.2
76.2
80.3
83.2
84.3
85.9
87.5
89.1
90.4
75.0
76.3
77.0
78.3
817
83.5
84.4
83.0
83.5
85.1
87.3
89.9
91.7
93.8
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
90.1
90.3
91.8
90.2
90.9
91.7
92.7
93.8
94 9
97.2
100.0
104 0
110.4
91.7
92.9
94.0
95.0
95.9
96 9
98.2
100.0
102.4
105.7
86.3
86.9
87.9
89.0
90.8
92 7
96.3
100.0
105.7
116.0
95.9
97.1
97.3
98.2
98.4
983
98.8
100.0
101.3
103.6
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
1960
196]
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971 . .
1972 .
1973... „
1974 .
1975
1976
1977
1978
1979.
1979:
Jan.
Feb
Mar. ..
Apr
May .
June
July
Aug.
Sept
Oct.. ..
Nov
Dec
1980.
Jan. .
Feb
Mar . .
Xv
June
July .
Aug
Sept
Oct
Nov
.
..."""'.
1
88.7
89.6
90.6
91.7
92.9
94 5
97.2
100.0
104 2
109.8
103 6
108.8
88.0
89.1
89.9
91.2
92.4
94 4
99.1
100.0
103.6
108.9
111.0
110.4
94.2
94.4
94.7
95 0
94.6
963
978
100.0
101.5
104.2
116.3
121.3
125.3
133.1
147.7
161.2
170.5
1815
195.4
217.4
114.7
118.3
123.2
139.5
158.7
172.1
177.4
188.0
206.3
228.5
114.9
118.4
123.5
141.4
161.7
175.4
180.8
192.2
211.4
234.5
118.2
123.4
128.1
133.7
148.8
164.5
174.6
186 5
202.8
227.6
110.1
115.2
119.2
124.3
130.6
137.3
144.7
153.5
164.0
176.0
128.5
133.7
140.1
146.7
163.2
181.7
191.7
204 9
227.2
262.4
107.6
115.0
120.1
126.9
150.2
167.8
182.7
202 2
216.0
239.3
116.1
119.8
122.3
126.8
136.2
142.3
147.6
154.2
159.6
166.6
112.7
118.6
119.9
123.8
137.7
150.6
165.5
177 2
185.5
212.0
120.6
128.4
132.5
137.7
150.5
168.6
184.7
202 4
219.4
239.7
116.7
122.9
126.5
130.0
139.8
152.2
159.8
167.7
176.6
188.5
116.8
122.4
127.5
132.5
142.0
153.9
162.7
172.2
183.3
196.7
107.0
111.2
114.3
123.5
159.7
176.6
189.3
207.3
220.4
275.9
204.7
207.1
209.1
211.5
214.1
216.6
218.9
221.1
223.4
225.4
227 5
229.9
218.3
222.4
224.4
226.3
228.2
229.3
230.7
230.2
231.0
232.1
2331
235.5
223.9
228.2
230.4
232.3
234.3
235.4
236.9
236.3
237.1
238.2
239.1
241.7
213.1
215.6
217.6
219.8
222.4
225.5
228.4
231.5
234.6
237.7
240 8
243.6
170.3
171.0
171.3
172.0
173.8
174.7
175.9
177.5
179.0
181.4
1821
182.9
241.6
245.6
248.2
251.7
254.9
258.8
263.0
267.6
271.9
276.7
282 4
286.9
221.5
223.3
225.9
227.5
232.2
239.0
243.5
247.2
251.2
252.9
252 0
255.1
160.7
161.4
164.3
165.4
166.1
165.7
164.3
166.3
169.8
171.0
171.7
172.2
193.9
195.6
198.1
202.9
207.7
212.6
216.6
219.6
221.4
222.7
224 9
227.7
230.7
232.6
233.9
235.1
236.3
237.7
239.9
241.8
243.7
245.9
248.0
250.7
182.3
183.2
184.8
186.5
187.8
188.2
189.1
190.2
191.1
192.0
192.8
193.4
190.5
191.9
192.8
193.2
193.9
194.5
195.2
197.0
201.7
202.3
202.9
204.0
231.5
235.0
241.2
250.2
260.8
275.4
287.1
296.3
304.3
307.5
307.8
313.7
233.2
236.4
. 239.8
242.5
244.9
247.6
...
247.8
249.4
251.7
253.9
256.2
237.5
238.6
241.0
242.8
244.1
245.7
248.3
252.0
254.2
255.5
257.4
243.8
244.9
247.3
249.1
250.4
252.0
254.8
258.7
261.1
262.4
264.5
247.3
250.5
254.5
257.9
261.7
266.7
265.1
265.8
267.7
271.1
273.8
184.1
185.6
186.6
187.0
188.9
191.1
192.1
193.2
195.1
197.1
198.3
292.5
296.3
302.0
307.7
312.9
320.4
315.4
315.4
317.6
323.8
329.4
258.6
263.8
268.0
270.5
275.9
282.2
285.5
286.8
288.2
287.6
285.7
171.0
171.9
176.0
177.3
177.5
177.2
176.2
178.6
182.2
183.9
184.8
233.5
239.6
243.7
246.8
249.0
249.7
251.0
252.7
254.7
256.1
259.0
253.9
257.9
260.2
262.0
263.4
264.7
266.6
268.4
270.6
272.8
274.5
195.3
197.8
200.6
202.5
204.0
205.3
206.6
208.0
209.8
210.9
211.2
206.3
208.1
208.9
209.8
211.2
212.5
213.5
214.5
220.6
221.5
222.8
327.9
344.6
355.0
358.8
363.2
367.8
370.4
370.7
370.1
368.0
366.1
. .
1
ib'6"6"
ioo.o
105.7
105.2
Includes alcoholic beverages, not shown separately.
Includes other items, not shown separately. Series beginning 1967 not comparable with series for earlier years.
Fuel oil, coal, and bottled gas; gas (piped) and electricity; and other utilities and public services.
4
Fuel oil, coal, and bottled gas; gas (piped) and electricity; and gasoline, motor oil, coolant, etc.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
Source: Department of Labor, Bureau of Labor Statistics.
2
3
289
TABLE B-51.—Consumer price indexes, selected expenditure classes, 1939-80
[1967-100]
Homeownership
Food and beverage
Fuel and other utilities
Household fuels
Food
Year or
month
UAMA
Total
Total
At
home
Away
from
nome
Total
hnmo
nome
purchase
Financing,
taxes,
and
insurance
Maintenance
and
repair
Total
Total
Fuel
oil
coal,
and
bottled
gas
Gas
and
electricity
1939
34 6
37.1
82.9
1940 .
1941...
1942
1943'"
1944
1945..!
1946
1947
1948
1949
35.2
38.4
45.1
49 6
50.7
58.1
70.6
76 6
73.5
38.2
40.5
43.1
45.2
47.1
48.0
51.3
58.4
68,6
70.3
82.1
81.4
81.0
80.6
80.3
79.6
77.4
77.1
79.1
81.0
1950
195ll*
1952
1953!!!!',
1954
1955
1956
1957
1958
1959
74 5
82.8
84 3
83.0
82.8
81.6
82.2
84,9
88,5
87.1
77 6
86.3
87 8
86.2
85.8
84.1
84.4
87.2
91.0
88.8
72 7
76.5
68.9
70.1
70.8
72.2
74.9
77.2
79.3
81.2
81.5
82.6
84.2
85.3
87.5
88.4
89.3
92.4
89.6
90.4
91.0
92.2
93.2
95.5
100.3
100.0
103.2
108.2
81.4
83.2
85.4
87.3
88.9
90.9
95.1
100.0
105.2
111.6
86.3
86.9
87.9
89.0
90.8
92.7
96.3
100.0
105.7
116.0
92 3
93.2
94 2
95,7
97.0
98.6
100.0
102.8
109.5
503
.
*ni
79.8
76.7
780
75.0 ''' 86.5
87.1
76.3
87 3
77.0
87.6
78.3
90.0
817
91.3
83.5
84.4
913
71.2
72.4
74.1
77.2
80.5
81.8
83.2
83.0
83.5
85.1
87.3
89.9
8l!5
81.2
82.3
85.9
90.3
917
887
89.8
947
918
95.9
97.1
97.3
98.2
98.4
98.3
98.8
100.0
101.3
103.6
89.2
91.0
91.5
93.2
100.0
108.3
1237
84.6
85.9
86.5
87.7
89.5
91.3
95.2
100.0
106.1
115.0
101.4
103.4
94.6
97.0
100.0
103.1
105.6
98.6
99.4
99.4
99.4
99.4
99.4
99.6
100.0
100.9
102.8
93.8
Other
utilities
and
public
services
1960
1961
1962
1963
1964....
1965....
1966...
1967
1968!!!!!!
1969
100.0
103.6
108,8
88.0
89.1
89.9
91.2
92.4
94.4
99.1
100.0
103.6
108.9
1970
1971
1972
1973
1974
1975
1976!!!!!!
1977
1978
1979
114.7
118.3
123.2
139,5
1587
172.1
177.4
188.0
206.3
228.5
114.9
118.4
123.5
141.4
161.7
175.4
180.8
192.2
211.4
234.5
1137
116.4
121.6
141,4
162.4
175.8
179.5
190.2
210.2
232.9
119.9
126.1
131.1
141.4
159.4
174.3
186.1
200.3
218.4
242.9
128.5
133.7
140.1
146.7
163.2
181.7
191.7
204.9
227.2
262.4
118.3
124.8
130.0
1327
1427
160.3
168.4
179.5
196.7
223.1
142.3
143.5
150.8
160.6
181.1
201.9
212.8
227.2
257.8
308.9
124.0
1337
1407
151.0
171.6
187.6
199.6
214.7
233.0
256.4
107.6
115.0
120.1
126.9
150.2
167.8
182.7
202.2
216.0
239.3
107.9
115.3
120.1
128.4
1607
183.8
202.3
228.6
247.4
286.4
110.1
117.5
118.5
136.0
214.6
235.3
250.8
283.4
298.3
403.1
107.3
1147
120.5
126.4
145.8
169.6
189.0
213.4
232.6
257.8
107.4
1147
120.6
124.1
130.3
137.1
145.4
152,0
158.3
159.5
1979:
Jan
Feb
Mar
Apr
May
June
218.3
222.4
224.4
226.3
228.2
229.3
223.9
228.2
230.4
232.3
234.3
235.4
223.1
228.0
229.9
231,7
233.4
234.2
230.2
233.4
236.0
238.4
241.1
2427
241.6
245.6
248.2
2517
254.9
258.8
208.1
210.9
212.7
215.4
217.6
220.9
276.6
283.5
2877
292.1
297.2
302.2
245.2
245.9
247.5
250.6
252.4
255.5
221.5
223.3
225.9
227.5
232.2
239.0
256.3
259.3
264.0
266.8
274.6
286.2
316.4
326.1
339.5
349.8
364.3
391.2
239.5
241.2
244.0
245.3
251.6
259.9
159.0
159.0
158.8
158.8
159.0
159.2
230.7
230.2
231.0
232.1
233.1
235.5
236.9
236.3
237.1
238.2
239.1
2417
235.5
233.9
234.7
235.4
236.0
2387
244.9
246.5
247.6
249 6
251.3
253.4
263.0
267.6
271.9
276 7
282.4
286.9
224.0
226.9
229.8
233 4
237.3
239.9
308.6
316.4
323.0
330 5
340.1
348.3
257.9
259.7
262.5
264 7
266.4
268.3
243.5
247.2
251.2
252 9
252.0
255.1
293.8
2997
306.6
310 3
307.0
311.8
412.9
438.6
461.6
470 8
477.4
488.0
264.5
266.5
270.1
272 5
267.3
270.8
159.4
159.8
159.8
158 8
161.0
161.9
237.5
238.6
241.0
242.8
244.1
245.7
243.8
244.9
247.3
249.1
250.4
252.0
240.6
241.3
243.6
245.3
246.5
248.0
256.1
258.3
260.9
263.0
264.6
266.6
292.5
296.3
302.0
307.7
312.9
320.4
242.1
243.0
244.0
246.5
2497
252.6
359.8
3677
379.9
390.6
399.7
416.1
270.6
2737
278.8
282.9
284.9
285.9
258.6
263.8
268.0
270.5
275.9
282.2
318.0
327.1
333.9
337.8
346.4
355.8
514.0
539.1
553.4
556.4
556.0
5587
273.0
278.8
284.0
288.0
298.2
308.8
161.5
161.3
161.9
162.3
163.1
164.9
248.3
252.0
254.2
255.5
257.4
254.8
258.7
261.1
262.4
264.5
251.5
256.3
258.9
260.0
262.1
267.8
269.5
271.4
273.1
275.3
315.4
315.4
317.6
323.8
329.4
253.9
258.1
261.5
265.5
267.3
399.6
393.6
393.5
404.7
416.9
287.6
288.5
291.6
292.8
294.2
285.5
286.8
288.2
287.6
285.7
360.8
362.5
364.5
362.8
358.7
560.4
561.5
561.5
558.7
567.0
314,3
316.1
318.4
317.1
310.5
165.9
166.5
167.1
167.8
169.0
r
July
Aug
Sept
Oct
Nov
Dec
1980:
Jan
Feb
Mar
i/ay!!!!!!!!!!
June
July
Aug
Sept'!!
Oct
Nov
See next page for continuation of table.
290
927
iod,'o
101.2
104.0
TABLE B-51.—Consumer price indexes, selected expenditure classes, 1939-80—Continued
[1967=100]
Transportatior
Medical care
Private
Year or month
Total
Total
New
cars
Used
cars
1939
43.0
44.2
43.2
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
42.7
44.2
48.1
47.9
47.9
47.8
50.3
55.5
61.8
66.4
43 6
45.9
52 3
51.4
51.4
51.3
54.3
61.5
68.2
72.3
43,3
46.6
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
68.2
72.5
77.3
79.5
78.3
77.4
78.8
83.3
86.0
89.6
72.5
75 8
80.8
82.4
80.3
78 9
80.1
84 7
87.4
91.1
83.4
87 4
94 9
95.8
94.3
90.9
93.5
98.4
101.5
105,9
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
89.6
90.6
92.5
93.0
94.3
95.9
97.2
100.0
103.2
107.2
90.6
91.3
93.0
93.4
94.7
96.3
97.5
1000
103.0
106.5
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
1000
112.7
118.6
119.9
123.8
137.7
150 6
165.5
177.2
185.5
212.0
111.1
116.6
117.5
121.5
136.6
149 8
164.6
176.6
185.0
212.3
193.9
195.6
1981
202 9
207.7
212.6
216 6
219.6
. : : : v 221.4
222 7
224 9
227.7
233.5
239 6
243.7
246.8
249 0
249.7
251.0
252.7
254 7
2561
259.0
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1979:
Jan
Feb
Mar
Apr
....
...
May::..:...:.::..:...:::::"..:.
June
July
Aue
sept:::::::::.: „•
Nov
Dec
1980:
Jan . . . .
Feb
Mar
Apr
May
June
Julv
Aug
Sept
Oct
Nov
.
Gasoline
AutoMedical
Public
mobile
care
Total
mainte- Other transporcomtation
nance
modities
and
repair
Medical
care
services
49.0
43.1
33.1
36.7
71.1
32.5
481
50.5
53 4
54.0
54.2
53.8
54.9
62.2
692
70.4
75.6
82.8 . ::: 72.3
43.0
44.9
48.8
49.4
50.0
50.4
52.0
56.4
59.6
61.1
331
33.1
33 3
33.4
33.5
33.5
34.4
36.0
40.7
45.2
36.8
37.0
38.0
39.9
41.1
42.1
44.4
48.1
51.1
52.7
70 8
71.4
73 0
73.5
74.3
74.8
76.2
81.8
86.1
87.4
32 5
32.7
33 7
35.4
36.9
37.9
40.1
43.5
46.4
48.1
71.8
73 9
75.8
80.3
82.5
83 6
86.5
90 0
88.8
89.9
62.3
67.0
68.6
72.3
74.8
76.5
79.5
82.4
83.7
85.5
48.9
54 0
57.5
61.3
65.5
67 4
70.0
72 7
76.1
78.3
53.7
56 3
59.3
61.4
63.4
64.8
67.2
69.9
73.2
76.4
88.5
910
91.8
92.6
93.7
94 7
96.7
99 3
102.8
104.4
49.2
51 7
55.0
57,0
58.7
60 4
62.8
65 5
68.7
72.0
103.1
92.5
91.4
91.9
91.8
91.4
94.9
97.0
100 0
101.4
104.7
87.2
89.3
90.4
91.6
92.8
94.5
96.2
100.0
105.5
112.2
103.4
109.7
81.0
84.6
87.4
88.5
90.1
91.9
95.2
100 0
104.6
112.7
79.1
81.4
83.5
85.6
87.3
89.5
93.4
100.0
106.1
113.4
104.5
103.3
101.7
100.8
100.5
100.2
100.5
100 0
100.2
101.3
74.9
77.7
80.2
82.6
84.6
87.3
92.0
100 0
107.3
116.0
107.6
112.0
111.0
111.1
117.5
127 6
135.7
142.9
153.8
166.0
104.3
110.2
110.5
117.6
122.6
146 4
167.9
182.8
186.5
201.0
105 6
106.3
107.6
118.1
159.9
170 8
177.9
188.2
196.3
265.6
120.6
129.2
135.1
142.2
156.8
176.6
189.7
203.7
220.6
242.6
119.2
128.4
129.1
127.8
132.4
141.2
163.1
177.3
184.6
198.6
128.5
137.7
143.4
144.8
148.0
158.6
174.2
182.4
187.8
200.3
120.6
128.4
132.5
137.7
150.5
168.6
184.7
202.4
219.4
239.7
103.6
105.4
105.6
105.9
109.6
118 8
126.0
134.1
143.5
153.8
124 2
133.3
138.2
144.3
159.1
1791
197.1
216.7
235.4
258.3
193.8
195 5
1981
203 2
208.1
213.3
217 4
220.4
222.0
2231
225 0
227.5
161.2
162.3
162 7
164 3
165.8
166.3
166 7
166.6
166.1
167.5
170 6
171.7
193.6
193 4
195 4
200 0
205.4
208.9
209 2
207.0
202.9
199 9
198 4
198.2
209.1
213 0
220 6
234 7
247.7
265.0
280 0
292.0
3010
303 8
306 9
313.9
231.3
233.9
236.3
238 2
240.1
242.0
244.0
245.7
247.1
249.1
250.8
252.6
191.4
192.5
193.4
194 8
196.4
297.3
198 5
200.5
201.7
203.7
205 5
207.5
190.0 230.7
190.7 232.6
1915 233.9
192 6 235.1
193.3 236.3
194.0 237.7
197 1 239.9
200.8 241.8
205.2 243.7
209.1 245.9
216.5 248.0
223.0 250.7
233 5
239 8
244.0
247 0
249 2
249.7
250.5
251.6
253 2
254 5
257.4
173 9
175 3
175.0
177.0
178 9
178.5
179.2
181.1
181.7
1819
184.3
197 2
195 3
195.2
196.7
199 3
200.7
203.4
206.4
214 6
222 7
230.8
334 6
357 6
370.9
374 7
375 4
376.2
376.7
375.9
373 0
370 5
370.5
255.1 209.8
258.2 212.6
260.9 . 216.5
264.3 223.3
266.1 224.5
267.3 225.0
269.0 224.5
271.1 224.7
273.8 226.0
276.0 226.5
278.4 228.8
89.2"
75.9
718
69.1
77 4
80.2
89.5
0)
iod.6
226.8
229 5
232.1
235.9
239.5
242.2
250.5
261.5
271.0
273.6
277.0
253.9
257.9
260.2
262.0
263.4
264.7
266.6
268.4
270.6
272.8
274.5
148.8 248.3
150.1 250.4
150.7 251.8
151.6 253 1
152.4 254.4
153.3 255.9
154.1 258.5
155.0 260.6
155.8 262.8
156.6 265.3
157.8 267.6
159.2 270.7
160.5
162.1
163.5
164.9
166.4
167.9
169.1
170.2
171.3
172.5
173.8
274.4
279 0
281.5
283.4
284.7
285.9
288.0
289.8
292.3
294.8
296.6
1
Not available.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
Source: Department of Labor, Bureau of'Labor Statistics.
291
TABLE B-52.—Consumer price indexes by commodity and service groups, 1939-80
[1967=100]
Services
Commodities
Special indexes
Commodities less food
Year or month
All
items
All
commodities
Food
All
Alt
Non- services
Durable durable
Rent
Services
less
rent
All
items
less
food
All
itofnc
uerns
All
items less Enerless food gy 1
energy and
energy
1939
41.6
40.2
34.6
47.7
48.5
44.3
43.5
56.0
38.1
47.2
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
42.0
44.1
48.8
518
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
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
721
77.8
79 5
80.1
80.5
80.2
81.4
84.3
86.6
87.3
788
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
704
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
"8X3"
85.7
86.3 85.2
87.3
87.0 87.0
88.7
89.6
90.6
917
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
912
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
88.3 88.3 94.2
89.3 89.3 94.4
90.4 90.5 94.7
91.6 916 95.0
92.9 93.0 94.6
94.3 94.3 96.3
97.3 96.6 97.8
100.0 1000 100.0
104.4 104.6 101.5
110.3 110.7 104.2
116.3
121.3
125.3
133.1
147.7
161.2
170.5
181.5
195 4
217.4
113.5
117.4
120.9
129.9
145.5
158.4
165.2
174.7
1871
208.4
114.9
118.4
123.5
141.4
161.7
175.4
180.8
192.2
2114
234.5
112.5
116.8
119.4
123.5
136.6
149.1
156.6
165.1
174 7
195.1
111.8
116.5
118.9
121.9
130.6
145.5
154.3
163.2
173 9
191.1
113.1
117.0
119.8
124.8
140.9
151.7
158.3
166.5
174 3
198.7
121:6
128.4
133.3
139.1
152.1
166.6
180.4
194.3
210 9
234^2
110.1
115.2
119.2
124.3
130.6
137.3
144.7
153.5
164 0
176.0
123.7
130.8
135.9
141.8
156.0
171.9
186.8
201.6
219 4
244.9
116.7
122.1
125.8
130.7
143.7
157.1
167.5
178.4
1912
2133
117.0
122.0
126.1
133.8
146.9
160.2
169.2
179.8
193 8
213]l
117.6
123.1
126.9
131.3
1412
155.3
165.5
175.8
188 7
2073
107.0
111.2
114.3
123.5
159.7
176.6
189.3
207.3
220.4
2753
iS&'
"*::::::
June
204 7
207.1
209.1
211.5
214.1
216.6
195.8
198.3
200.5
203.3
205.8
208.4
223.9
228.2
230.4
232.3
234.3
235.4
181.9
183.7
185.9
188.9
191.6
194.7
182.0
183.6
184.9
187.2
189.2
191.1
1803
182.2
185.7
189.6
193.2
197.6
221.1
223.3
225.1
227.0
229.5
232.1
170.3
171.0
171.3
172.0
173.8
174.7
230 4
232.9
235.0
237.1
239.8
242.6
199.8201.8
203.8
206.3
208.9
211.8
202.9
205.2
206.9
208.8
210.7
212.2
197.0
198.8
200.4
202.3
204.1
205.8
231.5
235.0
241.2
250.2
260.8
275.4
July
Aug
Sept. ..
Oct
Nov
Dec .
218.9
2211
223.4
225 4
227.5
229.9
210.5
212 2
214.1
215 6
217.4
219.4
236.9
236 3
237.1
238 2
239.1
241.7
197.0
199 5
201.8
203 4
2054
207.2
192.6
193 6
194.5
196 0
198.4
199.8
201.1
205 4
209.6
2113
2123
215.2
234.7
237 6
240J
243 6
246.2
249.3
175.9
177 5
179.0
181 4
182.1
182.9
245.6
248 8
252il
255 1
258.2
261.6
213.8
215 4
2173
219 2
224*. 1 221.4
266.4 223.6
207.3
209 4
211.5
213 6
216.1
218.1
287.1
296 3
3043
307 5
307*
313.7
233.2
236.4
239.8
242.5
244.9
247.6
222.4
225.2
228.0
229.9
231.4
232.8
243.8
244.9
247.3
249.1
250.4
252.0
210.4
213.8
216.7
218.6
220.2
221.4
201.3
202.1
203.0
204.9
207.1
208.6
220.5
227.3
232.6
234.6
235.5
236.3
253.1
256.8
261.3
265.3
269.2
274.2
184.1
185.6
186.6
187.0
188.9
191.1
266.1
270.2
275.4
280.0
284.4
290.0
229.9
233.5
237.1
239.9
242.6
245.5
225.9
228.0
230.8
233.4
235.7
238.3
220.6
222.8
225.7
228.5
231.0
233.7
327.9
344.6
355.0
358.8
363.2
367.8
247.8
249.4
251.7
253.9
256.2
234.1
236.7
239.0
240.7
242.5
254.8
258.7
261.1
262.4
264.5
222.2
224.2
226.6
228.3
230.0
209.8
212.4
215.3
218.1
220.6
236.6
237.8
239.3
239.6
240.5
272.4
272.5
274.8
277.9
280.9
192.1
193.2
195.1
197.1
198.3
287.6
287.4
289.8
293.2
296.4
245.1
246.3
248.6
250.9
253.2
238.3
240.0
242.5
245.1
247.7
233.1
234.3
236.9
239.7
242.4
370.4
370.7
370.1
368.0
366.1
1960
1961
1962....
1963
1964....
1965
1966
1967
1968
1969
. .
1970
1971
1972
1973
1974
1975....
1976....
1977
1978
1979
1979:
Jan
Feb
Mar.
1980.
Jan
Feb
Mar
Apr .
May
June
July
Aug
Sept
Oct
Nov
....
##
214.2
216 9
2193
2218
"g'ti.'i
90.3
91.8
1
Fuel oil, coal, and bottled gas; gas (piped) and electricity; and gasoline, motor oil, coolant, etc.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
Source: Department of Labor, Bureau of Labor Statistics.
292
TABLE B-53.—Changes in consumer price indexes major groups, 1948-80
[Percent change]
Year or month
Services
Commodities
All items
Dec.
to
Dec.2
Year
to
year
2.7
-1.8
Total
Commodities
less food
Food
Dec.
to
Dec.2
Energy »
Year
to
year
Dec.
to
Dec. 2
Year
to
year
Dec.
to
Dec.2
Year
to
year
Dec.
to
Dec.2
Year
to
year
Dec.
to
Dec.2
Year
to
year
7.8
-1.0
1.7
-4.1
7.2
-2.6
-0.8
-3.7
8.5
-4.0
5.3
-4.8
77
-1.5
6.1
3.6
6.3
4.8 ....
5.8
5.9
.9
.6
-.5
1.0
7.9
2.2
.8
.5
7.7
5.9
—7
-.S
-I A
.6
9.0
1.3
-.3
-.9
9.6
7.4
-1.1
-1.3
-1.6
1.4
11.1
1.8
-1.5
-.2
5.7
4.6
-.5
2
-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
-.4
2.6
2.6
1.3
.6
-.9
.9
3.1
2.3
.1
— 9 -1.4
11
.7
2.8
3.3.
2.2
4.2
-.8 - 1 . 6
0
2.5
2.2
.8
1.5
-7
1.0
3.1
1.1
1.3
2.3
3.1
4.5
27
3.7
2.0
2.5
4.0
3.8 " - 0 7
2.9
4.3
1960
1961
1962
1963
1964
1.5
.7
1.2
1.6
1.2
1.6
1.0
1.1
1.2
1.3
1.1
0
1.0
1.4
.8
.9
.5
.9
.9
1.1
3.1
-.9
1.5
1.9
1.4
1.0
1.3
.9
1.4
1.3
-.3
.6
.7
1.2
.4
.4
.3
.7
7
.8
2.7
1.9
1.7
2.3
1.8
3.3
2.0
1.9
2.0
1.9
1.5
-1.1
2.1
-.8
-.2
-.4!a
1.9
3.4
3.0
4.7
6.1
1.7
2.9
2.9
4.2
5.4
1.6
2.5
2.5
3.8
5.5
1.2
2.6
1.8
3.7
4.5
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
37
4.2
2.6
4.9
4.0
6.1
7.4
2.2
3.9
4.4
5.2
6.9
2.0
1.8
1.4
17
3.1
1.8
1.6
2.2
1.5
27
5.5
3.4
3.4
8.8
12.2
5.9
4.3
3.3
6.2
11.0
4.0
2.9
3.4
10.4
12.7
4.7
34
3.0
7.4
12.0
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
4.5
3.1
2.8
16.8
21.6
27
3.9
2.8
8.0
29.3
7.0
4.8
6.8
9.0
13.3
91
5.8
6.5
7.7
11.3
6.3
3.3
6.1
8.9
13.0
8.9
4.3
5.8
7.1
11.4
6.5
.6
8.0
11.8
10.2
8.5
3.1
6.3
10.0
10.9
6.2
5.1
4.9
7.7
14.3
9.2
5.0
5.4
5.8
117
8.1
7.3
7.9
9.3
13.7
9.5
8.3
77
8.5
11.0
11.6
6.9
7.2
8.0
37.4
10.6
7.2
9.5
6.3
25.2
1948
1949.. . .
1950
1951
1952
1953
1954
.. .
.
...
1965
1966
1967 .. . .
1968
1969 ... .
1970...
1971 ....
1972
1973
1974
..
.
1975
1976
1977
1978
1979
02
17
2.6
.2
Change from preceding month
SeaSeaSeaSeaSeaSeaUnad- sonally Unad- sonally Unad- sonally Unad- sonally Unad- sonally Unad- sonally
justed ad* justed ad- justed adjusted adjusted ad- justed adjusted
justed
justed
justed
justed
justed
1979:
Jan
Feb
Mar
f/ay.
June
Julv
Aug
Sept'
Oct
Nov
Dec
' . .
1980:
Jan
Feb
Mar
Aor
May
June
Aug.
Sept
..
ocf...:.....
Nov
0.8
1.1
.8
.9
1.2
1.0
1.4
1.5
2.6
37
4.2
5.6
1.6
1.5
27
3.5
37
4.6
1.3
13
L3
.8
1.1
1.1
0.9
1.0
.8
.8
1.1
1.1
11
12
1.3
1.2
1.1
1.3
1.1
11
1.2
1.2
1.1
1.4
4.2
3.2
2.7
1.1
.1
1.9,
3.8
33
1.5
1.6
1.4
9
7
.5
2.0
17
1.3
.5
.4
.3
1.5
1.5
1.8
1.5
15
1.9
1.4
1.5
1.9
1.5
1.6
1.8
4.5
5.1
3.0
1.1
1.2
1.3
4.6
5.1
3.0
.9
.8
.3
.4
.9
11
.8
•7
.5
.9
11
,S
.9
_7
.0
8
1.1
1.1
-.8
-.1
7
1.2
1.0
7
.1
-2
2
-!s
.3
0.9
1.2
1.0
1.1
1.2
1.2
0.9
1.1
1.0
1.0
1.0
1.0
0.8
1.3
1.1
1.4
1.2
1.3
1.0
1.2
1.1
1.0
.9
1.0
2.1
1.9
1.0
.8
.9
.5
1.4
1.4
1.0
.6
.6
.3
0.3
1.0
1.2
1.6
1.4
1.6
0.8
1.0
1.1
1.2
1.1
1.4
11
10
1.0
.9
.9
1.1
1.1
10
1.2
10
1.0
1.2
10
3
.9
.7
.8
.9
1.1
9
1.2
.8
1.0
1.1
.6
3
.4
1.1
.5
1
1.0
.8
L4
1.2
13
1.2
.8
1.0
.9
1.4
1.4
1.4
1.1
1.0
1.1
1.4
1.4
1.4
9
9
1.0
1.4
1.3
1.2
.8
7
.6
1.4
1.2
1.2
.5
.3
.9
.5
1.0
7
.5
0
-.0
1.0
.5
.3
.5
0
.6
1.1
1.0
.6
1.2
1.2
.8
1.0
1.1
1.5
.9
1.0
1.8
16
.8
1.1
.1
.6
9
.9
.9
10
1.0
1.0
7
1
c
i\
1.3
.9
2.3
.3
Fuel oil, coal, and bottled gas; gas (piped) and electricity; and gasoline, motor oil, coolant, etc.
2
Changes from December to December are based on unadjusted indexes.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
Source: Department of Labor, Bureau of Labor Statistics.
293
TABLE B-54.—Changes in special consumer price indexes, 1958-80
[Percent change]
Att items less
food
All items
Year or month
Dec.
to
Dec. 2
Year
to
Year
Dec.
to
Dec. 2
Year
to
Year
All items less
energy
Dec.
to
Dec*
Year
to
Year
At) items less
food and energy
Dec.
to
Dec. 2
Year
to
Year
All items less
home purchase
and finance1
Dec.
to
Dec*
Year
to
Year
1958
1959
1.8
1.5
2.7
.8
1.6
2.3
2.3
1.9
1.9
1.4
2.9
.8
1.8
2.2
2.3
2.1
1960
1961
1962
1963
1964
1.5
1*2
1.6
12
1.6
1.0
1.1
1.2
1.3
1.0
Ll
1.2
1.6
1.0
1.7
1.0
1.2
1.3
1.3
1.4
.8
1.2
1.8
1.3
1.5
Ll
1.2
1.3
1.4
.8
1.5
1.1
1.8
1.2
1.5
1.1
13
1.2
1.5
1965
1966 .
1967
..
1968. .
1969 .
1.9
3.4
30
47
6.1
1.7
2.9
2.9
4.2
5.4
1.6
3.3
3.5
4.9
5.7
1.4
2.3
3.4
4.4
5.5
1.9
3.5
3.1
4.9
6.4
1.5
3.2
2.8
4.4
5.7
1.5
3.3
3.9
5.1
6.1
1.4
2.4
3.5
4.6
5.8
5^5
4.1
47
5.5
34
3.4
8.8
12.2
5.9
4.3
3.3
6.2
11.0
6.5
3.1
3.0
5.6
12.2
6.0
4.6
3.0
3.9
9.9
5.6
3.3
3.5
8.3
11.5
6.1
4.3
3.4
6.1
9.8
6.6
3.1
3.0
4.7
11.3
6.2
4.7
3.1
3.5
8.3
4.7
3.7
3.3
9.0
12.2
5.1
4.5
3.1
6.6
1L1
70
4.8
6.8
9.0
13.3
9.1
5.8
6.5
7.7
11.3
7.1
6.2
6.3
8.5
14.0
9.3
6.6
6.5
7.2
11.4
6.7
4.6
6.8
9.2
11.1
9.1
5.6
6.3
7.8
10.0
6.7
6.1
6.4
8.5
11.3
9.2
6.6
6.2
7.3
9.7
6.7
5.1
6.3
8.1
11.3
8.8
5.8
6.5
6.9
10.0
1970 .
1971 .
1972
1973
1974
. . . .
1975
1976
1977
1978
1979
Change from preceding month
Unadjusted
Seasonally
adjusted
0.9
12
10
1.1
1.2
1.2
1979:
Jan
Feb
Mar
ft.
:.•••• • •
June
July
Aug..
Sept..
Oct
Nov
Dec
1980:
Jan
Feb
Mar
Apr.
fay
June
July
Aug
Sept
Oct . .
Nov
Unadjusted
Seasonally
adjusted
Unadjusted
Seasonally
adjusted
Unadjusted
Seasonally
adjusted
Unadjusted
Seasonally
adjusted
0.9
1.1
1.0
1.0
1.0
1.0
0.6
1.0
1.0
1.2
1.3
1.4
0.8
1.1
1.0
1.1
Ll
1.2
0.8
Ll
.8
.9
.9
0.9
.9
.8
.7
.8
.6
0.5
.9
.8
.9
.9
.8
0.7
1.0
.8
.8
.8
.8
0.9
1.0
.9
1.1
1.2
1.1
1.0
8
.9
.9
1.0
.9
11
10
1.0
.9
.9
1.1
1.1
1.0
1.2
1.0
1.0
1.2
1.1
1.3
1.2
1.0
1.0
1.0
1.2
1.2
1.2
1.1
Ll
1.2
.8
.7
'.9
1.0
1.0
.8
.8
.9
.9
1.0
1.2
.7
1.0
1.0
1.0
1.2
.9
.8
1.0
.9
1.0
Ll
1.2
.9
.8
.8
.6
.6
.9
.9
.9
.9
.8
.8
1.0
1.4
14
14
11
1.0
1.1
1.4
1.4
1.4
.9
.9
1.0
1.5
1.6
1.5
1.2
1.1
1.2
1.8
1.6
1.5
Ll
1.0
Ll
1.0
.9
1.2
Ll
1.0
Ll
1.1
.7
1.2
1.0
.9
1.0
Ll
1.0
1.3
1.2
Ll
1.2
1.3
Ll
1.2
Ll
1.0
Ll
1.2
1.4
1.3
.9
1.3
1.2
1.3
-.2
.5
.9
.9
.9
-.2
A
.9
1.0
.9
0
0
.7
1.0
1.1
Ll
.8
1.0
1.2
Ll
-.3
.5
Ll
1.2
1.1
'.$
1.2
1.1
.1
.6
9
9
.9
0
LO
1.0
'.5
.6
.7
.8
1.0
.5
.6
1.0
1.1
.6
.9
'All items less home purchase and financing, taxes, and insurance.
Changes from December to December are Based on unadjusted indexes.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
Source: Department of Labor, Bureau of Labor Statistics.
2
294
TABLE B-55.—Producer price indexes by stage of processing, 1947-80
[1967=100]
Finished goods
Consumer foods
Year or month
Total
finished
goods
Finished goods excluding consumer foods
Total
Crude
Total
Total
1947 .
1948 .
1949.
1950 .
1951 .
1952.
1953..
1954.
1955..
1956...
1957
1958
1959
1960.
1961
1962
1963
1964
1965
1966 . .
1967 ..
1968.
1969.
1970 .
1971 ...
1972 ..
1973...
1974
1975.
1976
1977 .
1978
1979
1980 »..
1979:
Jan.
Feb...
Mar.
Capital
equipment
Total
finished
consumer
goods
Consumer goods
Proc-
Durable
74.0
79.9
77.6
82.8
90.4
83.1
99.4
107.1
101.3
80.2
87.6
801
79.0
84.0
82.2
74.6
79.7
81.8
80.7
85.8
82.3
55.4
60.4
63.4
80.5
86.5
82.5
79.0
86.5
86.0
85.1
85.3
84.7
95.2
94.3
89.4
88.7
92.2
105.9
112.8
105.2
94.7
83.4
93.2
91.3
86.7
87.6
83.5
89.5
88.3
89.1
89.4
82.7
88.2
88.9
89.6
90.3
83.6
90.0
87.8
88.6
88.9
64.9
71.2
72.4
73.6
74.5
83.9
91.8
90.7
89.2
89.1
85.5
87.9
91.1
93.2
93.0
86.5
86.3
89.3
94.5
90.1
98.8
98.7
97.4
103.5
94.3
84.4
84.3
87.9
93.1
89.5
90.1
92.3
94.6
94.7
95.9
91.2
94.3
97.1
98.4
99.6
89.4
91.1
93.2
92.6
94.0
76.7
82.4
87.5
89.8
91.5
88.5
89.8
92.4
94.4
93.6
93.7
93.7
94.0
93.7
94.1
92.1
91.7
92.5
91.4
91.9
100.6
96.1
97.0
95.5
98.2
90.7
,90.9
91.7
90.7
90.8
96.3
96.2
96.0
96.0
95.9
99.2
98.8
98.3
97.8
98.2
94.7
94.7
94.8
95.1
94.8
91.7
91.8
92.2
92.4
93.3
94.5
94.3
94.6
94.1
94.3
95J
98.8
100-0
102.8
106.6
95.4
101.6
100.0
103.6
110.0
98.6
104.8
100.0
107.5
116.0
94.9
101.0
100.0
103.0
108.9
100.0
102.6
105.4
96.6
98.1
100.0
102.1
104.6
97.9
98.5
100.0
102.2
104.0
95.9
97.8
100.0
102.2
105.0
94.4
96.8
100.0
103.5
106.9
96.1
99.4
100.0
102.7
106.6
110.3
113.7
117.2
127.9
147.5
113.5
115.3
121.7
146.4
166.9
116.3
115.8
121.2
160.7
180.8
113.1
115.1
121.7
143.9
164.6
109.1
113.1
115.4
120.1
139.3
107.7
111.4
113.5
118.6
138.6
106.9
110.8
113.3
115.4
125.9
108.3
111.7
113.6
120.5
146.8
112.0
116.6
119.5
123.5
141.0
109.9
112.9
116.6
129.2
149.3
163.4
170.3
180.6
194.6
216.1
181.0
180.2
189.2
206.7
226.3
181.2
194.8
201.8
215.5
231.4
181.3
177.4
186.4
204.1
223.8
156.2
165.5
176.2
188.9
210.8
153.1
161.8
172.1
183.7
208.2
138.2
144.4
152.2
165.8
181.9
163.0
173.3
185.4
195.4
225.9
162.5
173.2
184.5
199.1
216.7
163.6
169.0
178.9
192.6
215.7
244.7
238.0
234.1
236.1
244.4
248.5
204.9
278.2
239.5
246.7
205.4
207.7
209.1
211.4
212.7
213.7
220.2
225.1
226.3
227.8
226.6
223.6
236.7
257.2
244.6
241.8
226.7
227.1
216.9
220.5
222.8
224.6
224.4
221.3
198.8
200.2
201.7
204.2
206.3
208.5
193.4
194.9
196.7
199.3
202.1
205.2
175.2
176.2
176.8
178.4
179.5
180.4
205.4
207.2
209.8
213.1
217.1
221.7
209.3
210.8
211.7
214.0
215.1
215.8
203.7
206.3
207.9
210.2
211.6
212.7
216.2
217.3
220.7
224.2
226.3
228.1
224.9
223.5
228.1
226.7
230.5
232.1
224.9
231.7
214.0
215.5
228.1
227.9
222.8
220.7
227.0
225.5
228.6
230.3
211.4
213.2
216.2
221.3
222.8
224.6
208.9
212.3
216.3
221.4
223.1
225.3
181.6
181.1
182.9
189.0
190.0
191.8
227.1
233.4
239.0
243.3
245.5
247.9
217.2
216.5
217.8
222.8
223.9
225.3
215.6
217.5
221.7
224.7
227.1
229.1
June..
232.4
235.7
238.5
240.5
241.6
243.0
231.4
231.6
233.1
228.9
230.0
231.0
226.0
220.1
230.9
222.3
226.1
223.6
229.7
230.4
231.1
227.2
228.1
229.4
230.5
234.6
237.8
241.7
242.8
244.3
232.3
238.3
242.3
246.2
247.6
249.5
199.1
202.1
200.3
201.2
201.0
203.5
254.7
262.7
270.9
276.9
279.6
281.0
229.3
230.5
232.2
236.2
236.6
237.7
233.5
237.6
240.8
242.1
243.4
245.0
July
Aug
Sept
Oct
Nov . .
Dec...
247.1
249.1
248.9
252.2
253.2
254.7
239.7
244.9
245.8
245.9
246.9
247.2
233.8
240.8
253.2
231.3
248.2
252.6
238.0
243.0
242.9
244.8
244.5
244.5
246.9
248.0
247.4
251.7
252.7
254.5
251.9
252.8
252.3
255.0
255.9
257.6
206.6
207.0
204.9
211.0
210.6
211.7
283.0
284.2
284.7
284.9
287.0
289.1
240.5
241.8
241.3
248.2
249.1
251.1
249.6
251.9
251.8
253.6
254.7
255.9
fe.
JuneJuly....
Aug...
Sept..
Oct...
Nov..
Dec...
1980: »
Jan....
Feb....
Mar..
See next page for continuation of table.
295
TABLE B-55.—Producer price indexes by stage ofprocessing, 1947-80—Continued
[1967=100]
Crude materials for further processing
Intermediate materials, supplies, and components
Year or month
Total
Foods
and
feeds9
Processed
Materials and
components
Other
fitflle
For
manufacturing
For
construction
and
lubricants
tainers Supplies
Total
Foodstuffs
and
feedstuffs
Other
Total
Fuel
Other
72.4
78.3
75.2
70.0
76.1
74.2
72.1
77.8
74.5
66.0
73.1
73.2
85.5
96.9
88.2
66.8
69.8
70.1
77.5
81.0
76.3
101.2
110.9
96.0
111.7
120.8
100.3
66.6
787
78.3
90.6
100.7
91.6
786
88.1
85 5
86.0
86.5
77.7
87.0
84 3
85.3
857
78.1
88.5
84.8
86.2
86.3
77.0
84.3
83.7
85.1
85.5
89.9
93.9
92.8
93.4
93.3
72.0
84.5
79.9
80.0
81.5
78.9
88.8
88.8
84.3
86.3
104.6
120.1
110.3
101.9
101.0
107.6
124.5
117.2
104.9
104.9
77.9
79.4
79.9
82.7
79.0
1047
1207
104.6
1O0.1
98.2
881
92.0
94.1
943
95.6
88.3
92.6
95.0
94.8
96.4
88.4
92.6
94.8
95.2
96.5
88.9
93.5
94.0
94.0
96.6
93.3
96.2
101.9
96.0
95.6
82.6
88.6
92.5
94.7
94.2
84.8
87.1
88.0
90.0
91.2
97.1
97.6
99.8
102.0
99.4
95.1
93.1
97.2
103.0
96.2
78.8
84.4
89.2
90.3
91.9
103.8
107.6
106.2
102.2
105.8
95.6
95.0
94 9
95.2
95.5
96.8
95.5
95.3
95.0
95.6
96.5
95.3
94.7
94.9
95,9
95.9
94.6
94.2
94.5
95.4
98.2
99.4
99.0
98.1
96.0
95.5
94.7
95.9
94.7
94.0
90.7
91.8
93.8
95.2
94.3
97.0
96.5
97.5
95.4
94.5
95.1
93.8
95.7
92.9
90.8
92.8
92.6
92.1
93.2
92.8
101.4
102.5
102.0
1007
102,4
96.8
99.2
100.0
102 3
105.8
97.4
99.3
100.0
1022
105.8
96.2
98.8
100.0
105 0
110.8
97.4
99.2
100.0
97 6
98.5
95.8
98.4
100.0
1024
106.3
95.2
99.4
100.0
1010
102.8
99.3
105.7
100.0
1016
108.4
97.1
105.9
100.0
1013
109.3
""ioo.6"
102.7
96.9
98.9
100.0
102 5
106.1
102 2
106.8
93.5
96.3
100.0
1023
106.6
104.5
106.7
100.0
1021
106.9
109.9
114.1
118.7
131.6
162.9
109.1
111.7
118.5
168.4
200.2
109.9
114.3
118.9
128.1
159.5
110.0
112.8
117.0
127.7
162.2
112.6
119.7
126.2
136.7
161.6
105.0
115.2
118.9
131.5
199.1
111.4
116.6
121.9
129.2
152.2
108.0
111.0
115.6
140.6
154.5
112.3
115.1
127.6
174.0
196.1
112.0
114.2
127.5
180.0
189.4
112.7
117.0
128.0
162.5
208.9
122.6
139.0
1487
164.5
219.4
109.8
1107
121.9
161.5
205.4
180.0
189.3
201.7
215.5
242.8
195.3
186.6
191.0
201.0
223.2
178.6
189.5
202.4
216.4
244.0
178.7
185.6
195.5
208.3
234.1
176.4
188.0
202.9
224.4
246.9
233.0
250.9
283.8
296.4
360.9
171.4
181.4
193.1
212.5
235.3
168.1
179.2
188.0
196.9
217.6
196.9
205.1
214.3
240.1
282.2
191.8
190.1
190.9
215.3
247.2
206.9
233.6
258.4
2867
348.3
271.5
314.7
400.5
4637
568.2
188.3
210.2
217.3
235:4
284.5
279.6
252.3
281.3
265.4
268.2
4941
2634
2461
3161
258 9
424 5
710.2
3416
225.7
. 228.5
231.5
235.8
" " 238.2
240.3
214.3
218.2
218.9
220.7
219.3
223.0
226.5
229.1
232.3
236.7
239.3
241.3
218.6
221.6
224.5
229.0
230.9
232.1
236.1
239.0
241.3
244.5
245.2
245.6
302.0
304.8
312.9
323.9
336.8
349.5
223.9
224.3
229.3
231.8
234.5
234.9
207.4
209.6
211.1
212.8
213J
216.1
260.2
270.4
276.6
279.9
282.3
283.0
233.0
243.7
247.4
251.5
251.9
248.2
311.5
320.7
331.6
333.3
339.6
348.7
504,3
513.9
525.2
529.2
556.8
563.1
255.6
2647
275.5
276.5
276.6
286.6
July.. .
. 244.6
Aug
247.5
Sept....
251.0
Oct
255.0
Nov
. . . 256.3
Dec. ..
258.7
231.0
223.1
226.6
226.0
226.9
229.8
245.4
249.0
252.5
256.8
258.1
260.5
236.0
238.0
240.7
244.3
245.5
247.8
247.4
249.2
252.5
254.7
254.0
253.7
364.8
384.6
399.4
410.6
416.5
424.6
235.4
237.6
237.9
242.6
243,8
247.1
219.6
219.6
221.2
224.9
226.4
229.2
287.1
281.7
288.3
289.5
290.8
296.2
254.1
2437
248.7
247.5
246.4
249.7
349.3
353.6
363.1
368.9
374.9
384.2
5707
586.2
604.0
612,9
617.4
634.5
285.2
286.1
293.3
298.1
304.6
311.6
265.9
271.6
273.7
275.1
276.4
278.2
224.8
237.5
232.4
227.3
239.7
242.1
268.4
273.7
276.2
278.0
278.6
280.5
255.5
259.8
259.5
260.3
262.2
264.1
257.7
262.1
265.5
265.6
265.7
267.1
444.0
464.0
481.0
486.9
488.8
493.0
250.9
251.6
253.8
262.6
263.8
265.5
232.5
239.0
240.8
241.7
241.8
243.2
296.8
308.4
303.5
297.0
300.7
299.6
243.0
252.6
245.9
235.5
242.9
242.5
398.9
414.3
412.7
413.9
410.5
407.9
636.3
664.8
664.1
678.9
690.3
695.6
330.1
341.7
339.8
337.0
329.3
324.4
281.0
283.8
284.1
286.3
288.0
291.2
251.0
264.4
267.1
282.2
288.7
269.9
282.9
285.0
285.2
286.6
288.0
292.6
265.4
268.6
268.4
271.8
273.1
275.5,
269.8
271.7
271.5
272.1
273.9
276.2
505.2
508.2
510.2
507.1
510.8
529.7
266.6
266.8
266.8
270.0
269.8
272.0
247.2
249.6
251.7
253.7
256.3
256.0
316.6
329.1
331.8
336,0
337.6
335.6
263.5
2767
276.7
279.1
277.3
271.3
417.1
424.4
436.3
444.1
452.0
457.8
710.5
725.4
740.5
756.1
776.1
783.3
331.9
342.2
348.1
353.5
357.9
363.3
1947.. .
1948
1949
1950 .
1951 .
1952
1953
1954
...
.
1955
1956
1957,.
1958
1959
1960
1961,. .
1962,. .
1963
1964
1965
1966
1967
1968
1969...
.
;
;*.
1970
1971.
1972
1973,. .
1974.. .
1975.
1976
1977.
1978
1979..
. .
1980 1
1979:
Jan
.
Feb . .
Mar
May.
June
1980:l
Jan
Feb
Mai .
.
. ...
JR. •: .
June
July . .
Aug .
Sept
Oct
. .
Nov .
Dec ..
994
1
Data have been revised through August 1980 to reflect the availability of late reports and corrections by respondents. All data are
subject
to revision 4 months after original publication.
2
Intermediate materials for food manufacturing and feeds.
Source: Department of Labor, Bureau of Labor Statistics.
296
TABLE B-56—Producer price indexes by stage of processing, special groups, 1974-80
[1967=100]
Intermediate materials,
supplies, and components
Finished goods
Crude materials for further
processing
Excluding food and
energy
Consumer
Year or month
Total
Food
Energy
Capi-
Total
tal
equip-
ment
goods
FoodStuffs
Foods
Total
and
Energy
Other
Total
feeds1
exclud-
and
Energy Other
feedstuffs
ing
food
and
dHU
energy
1974
147.5
166.9
215.2
133.3
141.0
129.1
162.9
200.2
188.7
156.7
196.1
1975
1976...
1977
1978
1979
163.4
170.3
180.6
194.6
216.1
181.0
180.2
189.2
206.7
226.3
252.4
274.5
305.0
318.1
438.1
148.5
156.7
166.1
178.6
194.4
162.5
173.2
184.5
199.1
216.7
141.0
148.0
156.1
167.4
182.4
180.0
189.3
201.7
215.5
242.8
195.3
186.6
191.0
201.0
223.2
220.8
237.3
268.3
281.2
344.6
174.7
184.9
196.0
210.1
234.1
196.9 191.8
205.1 190.1
214.3 190.9
240.1 215.3
282.2 247.2
266.9
291.0
344.9
390.7
479.4
19802
244.7
238.0
666.9
216.1
239.5
203.6
279.6
252.3
475.7
262.0
316.1
258.9
631.5 270.2
205.4
207.7
209.1
211.4
212.7
213.7
220.2
225.1
226.3
227.8
226.6
223.6
340.8
346.1
356.7
372.1
392.4
415.7
187.5
188.8
189.7
191.4
192.4
193.3
209.3
210.8
211.7
214.0
215.1
215.8
175.8
176.9
177.8
179.1
180.2
181.2
225.7
228.5
231.5
235.8
238.2
240.3
214.3
218.2
218.9
220.7
219.3
223.0
287.6
290.2
297.7
308.3
320.7
333.7
220.5
223.2
225.9
229.7
231.4
232.3
260.2
270.4
276.6
279.9
282.3
283.0
233.0
243.7
247.4
251.5
251.9
248.2
419.4
427.0
433.7
436.7
455.3
467.8
234.6
245.5
260.2
260.9
257.3
264.0
216.2
217.3
220.7
224.2
226.3
228.1
224.9
223.5
228.1
226.7
230.5
232.1
445.8
474.1
504.9
525.8
536.0
546.8
194.5
194.8
196.1
200.2
201.1
202.5
217.2
216.5
217.8
222.8
223.9
225.3
182.3
183.2
184.6
188.1
188.9
190.2
244.6
247.5
251.0
255.0
256.3
258.7
231.0
223.1
226.6
226.0
226.9
229.8
348.1
366.9
382.2
392.6
399.7
407.6
235.3
237.4
239.7
243.4
244.1
246.0
287.1
281.7
288.3
289.5
290.8
296.2
254.1
243.7
248.7
247.5
246.4
249.7
478.1
492.9
518.3
529.5
538.0
556.1
256.6
252.3
249.2
250.6
254.9
257.3
232.4
235.7
238.5
240.5
241.6
243.0
231.4
231.6
233.1
228.9
230.0
231.0
568.3
607.3
649.8
674.8
684.1
685.0
207.3
209.4
210.2
212.8
213.4
215.0
229.3
230.5
232.2
236.2
236.6
237.7
195.7
198.3
198.6
200.4
201.0
203.0
265.9
271.6
273.7
275.1
276.4
278.2
224.8
237.5
232.4
227.3
239.7
242.1
425.9
445.9
462.0
468.8
471.1
476.0
252.8
256.7
257.8
259.1
259.5
261.1
296.8
308.4
303.5
297.0
300.7
299.6
243.0
252.6
245.9
235.5
242.9
242.5
576.3
591.5
594.7
607.4
616.1
622.8
268.0
284.2
278.5
270.3
256.8
246.4
247.1
249.1
248.9
252.2
253.2
254.7
239.7
244.9
245.8
245.9
246.9
274.2
688.5
690.4
688.6
683.4
686.4
695.7
217.4
218.4
218.0
222.7
223.5
224.8
240.5
241.8
241.3
248.2
249.1
251.1
205.2
205.9
205.6
209.0
209.7
210.6
281.0
283.8
284.1
286.3
288.0
291.2
251.0
264.4
267.1
282.2
288.7
269.9
487.1
489.9
491.5
488.6
492.0
509.0
262.6
264.6
264.7
266.5
267.8
271.1
316.6 263.5
329.1 276.7
331.8 276.7
336.0 279.1
337.6 277.3
335.6 271.3
631.6
646.1
655.8
667.7
678.6
689.1
256.4
265.5
272.3
276.8
282.6
284.7
1979:
Jan.
Feb
.
..
Mar
•ft'".!."' .
June
July
Aug
Sept
Oct
Nov..
Dec.
1980. 2
Jan
Feb
Mar
Apr
May.
June
.
July
Aug
Sept
Oct
Nov .
Dec
....
1
2
189.4
223.0 198.3
165.0
195.2
197.0
212.0
253.6
Intermediate materials for food manufacturing and feeds.
Data have been revised through August 1980 to reflect the availability of late reports and corrections by respondents. All data are
subject to revision 4 months after original publication.
Source: Department of Labor, Bureau of Labor Statistics.
297
TABLE B-57.—Producer price indexes for major commodity groups, 1940-80
[1967=100]
Farm products and processed
foods and feeds
Year or month
Total
1940 .
1941 .
1942
1943. .
1944
1945
1946.
1947
1948
1949
1950
1951
. .
1952
1953 .
1954
.
1955
1956
,
1957 ..
1958
1959 . .
I960..
1961. .
1962
1963
1964
1965 .
1966
1967
1968
. ,
1969 .
1970
1971
...
1972
1973 .
1974
1975
1976 . ..
1977..
1978
1979
1980a
1979:
Jan
Feb
Mar...
Apr
May"!"" .'...
June....
.
July...
Aug
Sept
Oct
Nov
Dec
1980: a
Jan
Feb
Mar
Processed
foods and
feeds
Total
Textile
products
and
apparel
Hides,
skins,
leather,
and
related
products
Fuels and
related
products,
and
powerl
Chemicals
and allied
productsl
51.4
54.6
56.2
57.8
59.5
60.1
64.4
76.9
90.5
86.2
87.1
90.3
90.1
92.6
91.3
91.2
94.0
99.1
95.3
95.3
96.1
97.2
96.7
96.3
93.7
95.5
97.8
100.0
98.9
100.9
1062
115.2
118 6
134.3
208.3
245.1
265.6
302.2
322.5
408.1
573.4
52.4
57.0
63.3
64.1
64.8
65.2
70.5
93.7
95.9
87.6
88.9
101.7
96.5
97.7
98.9
98.5
99.1
101.2
102.0
101.6
101.8
100.7
99.1
97.9
98.3
99 0
99.4
100.0
99.8
99,9
102 2
104.1
104 2
110.0
146.8
181.3
187.2
192.8
198.8
222.3
260.2
82.9
88.7
80.6
83.4
92.7
91.6
87.4
88.9
85.0
84.9
87.4
91.8
89.4
89.5
91.0
91.9
92.5
92.3
95.5
101.2
100.0
102.2
107.3
1121
114.5
120.8
148.1
170.9
182.6
178.0
186.1
202.6
222.5
241.0
44.0
47 3
50.7
51.5
52.3
53.0
58.0
70.8
76.9
75.3
78.0
86.1
84.1
84.8
85.0
86.9
90.8
93.3
93.6
95.3
95.3
94.8
94.8
94.7
95.2
96.4
98.5
100.0
102.5
106.0
110 0
114.1
117.9
125.9
153.8
171.5
182.4
195.1
209.4
236.5
274.5
103.6
108.1
98.9
102.7
114.6
103.4
100.8
98.6
98.7
98.7
98.8
97.0
98.4
99.5
97.7
98.6
98.5
99.2
99.8
100.1
100.0
103.7
106.0
1071
109.0
113.6
123.8
139.1
137.9
148.2
154.0
159.8
168.7
183.4
45.2
48.4
52.8
52.7
52.2
52.9
61.1
83.3
84.2
79.9
86.3
99.1
80.1
81.3
77.6
77.3
81.9
82.0
82.9
94.2
90.8
91.7
92.7
90.0
90.3
94.3
103.4
100.0
103.2
108.9
1103
114.1
1313
143.1
145.1
148.5
167.8
179.3
200.0
252.4
348.6
93.5
93.7
93 7
94.7
93.8
93.2
97.1
103 5
....
100.0
1024
108.0
..
1117
...
113.9
1224
... . 1591
177.4
184 2
183.1
188.8
. . .
2066
229 8
244 6
41.4
50.3
64.8
75.0
75.5
78.5
90.9
109.4
117.5
101.6
106.7
124.2
117.2
106.2
104.7
98.2
96.9
99.5
103.9
97.5
97.2
96.3
98.0
96.0
94.6
98.7
105.9
100.0
102.5
109.1
1110
112.9
125.0
176.3
187.7
186.7
191.0
192.5
212.5
241.4
249.3
2211
227 2
229.0
231.2
230.8
229.0
232.2
227.5
231.8
230 6
232.3
234.6
230.4
2409
242.8
246.0
245.4
242.8
246.8
238.5
241.0
239 6
240.2
242.5
215.2
218 9
220.5
222.3
222.0
220.6
223.3
220.5
225.8
224 8
227*1
229.3
220.0
222 5
225.4
229.0
231.6
234.0
237.5
240.6
244.2
249 0
250^6
253.1
164.1
164 2
165.2
166.4
167.2
168.4
169.3
170.5
171.3
172 0
172i8
173.1
223.4
232 2
253.3
258.9
269.6
268.0
261.9
257.9
251.1
253 9
248^9
249.2
338.1
342 5
350.9
361.5
377.6
393.7
411.8
432.8
454.8
468 5
4763
487.9
205.0
207 3
209.9
215.1
218.0
219.2
225.0
228.5
230.8
234 2
236^0
238.2
231.9
237.0
234.9
229.3
233.8
234.3
246.6
255.1
256.3
258.8
260.1
256.5
236.4
242.3
239.3
228.9
233.5
233.4
254.3
263.8
266.6
263.4
264.9
265.3
228.5
233.1
231.6
228.6
233.1
233.9
241.5
249.4
249.8
2554
256.5
250.8
260.6
265.9
268.6
271.3
271.9
273.5
276.2
278.2
278.2
2812
282.7
286.1
175.2
176.5
179.3
181.2
182.0
183.0
184.7
185.6
186.2
187 8
189.3
190.2
255.7
250.9
246.8
243.5
240.7
240.9
245.1
251.3
247.8
3
508.0
532.7
553.5
566.6
572.1
576.5
585.5
590.6
593.0
592 5
597.6
611.7
246.0
248.7
252.8
259.8
262.5
262.8
263.3
264.4
263.2
264 6
266!9
267.9
. .
. .. .
....
94.3
101.5
89.6
93 9
106,9
102 7
96 0
95 7
...
.
912
90.6
93.7
.
981
," * * ."
....
. . .
tz . .
June...
July
Aug... .
Sept,.
Oct
Nov
Dec
Farm
products
Industrial commodities
..
...
See next page for continuation of table.
298
.
()
255.5
256.6
TABLE B-57.—Producer price indexes for major commodity groups,
1940*80—Continued
[1967=100]
Industrial commodities—Continued
Pulp,
paper,
and
allied
products
Metals
and
metal
products
Machinery
and
BQiiiprcicrii
Furniture
and
household
durables
Nonmetallic
mineral
products
Transportation
equipment:
Motor
vehicles
and
equipment 4
41.4
42.1
42.8
42.4
42.1
42.2
46.4
53.7
58.2
61.0
53.8
57.2
61.8
61.4
63.1
63.2
67.1
77.0
81.6
82.9
49.1
50.2
52.3
52.4
53.5
55.7
59.3
66.3
71.6
73.5
40.4
43.2
47.2
47.2
47.5
48.3
56.0
64.1
70.8
75.7
73 5
76.5
78.0
Rubber
and
plastic
products
Lumber
and
wood
products
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
57.1
61.5
71.6
736
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
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
971
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
981
100.3
79.2
83 9
83.4
85.6
86.4
86 5
87.6
90 2
92 0
92.2
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
916
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
1011
104.0
92.4
91.9
91.2
91.3
93.8
96.4
98.8
100.0
102.6
108.5
92.0
91.9
92.0
92.2
92.8
93.9
96.8
100.0
103.2
106.5
99.0
98.4
97.7
97.0
97.4
96.9
98.0
100.0
102.8
104.9
97.2
97.6
97.6
97.1
97.3
97.5
98.4
100.0
103.7
107.7
98.8
98.6
98.6
97.8
98.3
98.5
98.6
100.0
102.8
104.8
93.0
93.3
93 7
94.5
95.2
95.9
97 7
100.0
102 2
105.2
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
108.3
109.1
109.3
112 4
136 2
150.2
159.2
167 6
174.8
194.3
113.6
127.3
144.3
177.2
183 6
176.9
205.6
236.3
276.0
300.4
108.2
110.1
113.4
122.1
1517
170.4
179.4
186.4
195.6
219.0
116.6
118.7
123.5
132.8
171.9
185.6
195.9
209.0
227.1
259.3
111.4
115.5
117.9
121.7
139.4
161.4
171.0
181.7
196.1
213.9
107.5
110.0
111.4
115.2
127.9
139.7
145.6
151.5
160.4
171.3
112.9
122.4
126.1
130.2
153.2
174.0
186.3
200.5
222.8
248.6
108.7
114.9
118.0
119.2
129.2
144.6
153.8
163.7
176.0
190.5
109.9
112.9
114.6
119.7
1331
147.7
153.7
164.3
184.3
208.7
1980 2
217.3
288.8
249.3
286.2
239.6
187.3
282.8
208.7
258.7
1979:
Jan
Feb
Mar
Apr
May
June
180 8
183.2
185.9
188.8
190 8
193.1
290 2
293.9
300.5
304.9
302 8
299.8
207 0
208.8
212.3
215.0
216 2
216.6
2419
247.3
251.7
256.0
256 2
258.2
2051
206.5
207.9
209.8
2114
212.4
166 6
167.9
168.3
168.7
169.6
170.2
238.3
240.5
240.8
243.4
245.6
246.9
185 0
185.9
186.1
189.4
189.8
190.1
197 7
199.8
200.6
201.4
203.3
205.2
195.5
198 8
200.7
203.0
204.9
205.9
300.1
304 7
309.7
308.8
298.9
290.1
218.3
222 2
223.0
227.5
229.5
231.7
260.8
2618
263.7
269.6
271.1
273.6
214.8
216.0
217.7
220.0
221.3
223.4
170.7
171.5
172.7
175.1
176.4
177.9
249.5
249.9
254.6
256.2
257.4
259.6
190.8
187.8
188.6
197.1
197.4
198.2
207.0
208.9
213.1
218.9
221.4
227.4
207.8
210.7
212 7
214.1
215.0
217.3
290.0
294.7
294 9
275.6
272.1
279.8
237.4
239.2
242 6
247.8
249.2
251.1
284.6
288.9
286 8
284.4
281.8
281.9
227.6
230.2
232.5
236.4
237.6
239.2
183.4
185.6
185.7
184.4
185.4
186.5
268.4
274.0
276.5
283.7
284.0
283.4
200.7
200.1
200.7
205.4
204.5
205.2
242.9
262.9
2561
252.8
251.7
258.0
2188
220.5
2212
222 7
223 0
223.5
2892
296.1
2918
288 7
293 4
299.4
251 7
252.4
252 7
254 4
255 5
257.4
282 5
285.1
286.2
290 4
290 7
290.7
241.5
242.6
244.3
246.4
247.7
249.5
188.0
188.9
187.8
189.1
190.4
192.3
284.8
286.0
286.0
287.8
288.4
290.7
208.6
211.7
205.3
217.8
218.0
225.9
2617
260.1
264.4
265 0
263 8
265.4
Year or month
. ..
.. .
July
Aug '
Sept
Oct
Nov
Dec
1980:2
Jan
Feb
Mar
Apr
NfayZ:
June
Julv
Aug
Sept
Oct
Nov
Dec
... .
;.;:;;;:;;.;:;.;....T:.
1
Miscellaneous
products
Prices for some items in this grouping are lagged and refer to 1 month earlier than the index month.
Data have been revised through August 1980 to reflect the availability of late reports and corrections by respondents. All data are
subject to revision 4 months after original publication.
3
Not available
4
Index for total transportation equipment is not shown but is available beginning December 1968.
2
Department of Labor, Bureau of Labor Statistics.
Digitized forSource:
FRASER
299
TABLE B-58.—Changes in producer price indexes for finished goods, 1948-80
[Percent change]
Finished
consumer
foods
Total
finished
goods
Year or month
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
I960
1961
1962
1963
1964
1965
1966
1967.
1968 .. .
1969
1970
1971.
1972 ...
1973
1974
1975
.
1976. ..
1977
1978
1979
1980 a
Year
to
year
Dec.
to
Dec.1
Year
to
year
3.0
-4.6
10.4
2.9
-2.2
5
-.1
8.0
-2.9
1.8
9.5
-.6
-1.0
-2.4
-7.4
13.3
5.3
-5.9
-2.2
-1.9
-2.9
3.6
5.3
9.2 ..........
-8.1
1.9
12.4
-.9
-5.2
-.8
-2 5
-2
3.5
5.8
-4.7
2.2
-4
.9
-1.2
.5
3.8
6.5
-1.6
3.6
2.4
3.4
6.2
4.3
3.2
2.1
1.6
2.1
5.6
6.6
20.3
21.2
14.0
8.4
7.2
5.5
l;o 6.6
9.2
8.3
9.5
14.4
13.3
5.2
3.3
2.2
16
3.1
4.8
2.2
3.2
3.8
11.8
18.3
6.6
3.3
6.6
9.2
12.6
11.7
2^
3.6
2.3
.8
0
-37
5.2
-1.8
-.;3
- U
1.7
3.2
1.2
2.8
3.7
3.5
3.1
3.1
9.1
15.3
10.8
4.2
6.0
7.8
11.0
9.1
1.4
-.4
4.8
8.2
-2.5
5.9
8.0
22.5
13.0
5.5
-2.5
6.6
11.9
7.6
13.2
6.5
Consumer
goods
Total
Dec.
to
Dec.1
1.2
4.2
3.2
.5
-.4
1.8
-.5
-'.2
5
Finished
energy
goods
Finished goods excluding consumer foods
Dec.
to
Dec.*
Year
to
year
Dec.
to
Dec >
Year
to
year
4.0
-4.5
8.2
.9
-1.1
1.6
.3
1.7
2.5
17
6.3
-2.1
1.6
7.2
-1.3
.9
.3
.8
2.4
2.5
,1
1.3
.4
-.1
-.2
0
-.1
.8
.4
-.3
~;i
,1
12,1
6.0
6.5
7.2
11.6
.9
17
2.1
2.0
2.9
3.9
2.0
2.0
7.4
20.5
67
4.9
6.1
8.4
18.0
15.9
14.3
2.6
27
3.5
37
2.0
4.1
16.0
7
1.6
1.9
2.1
2.4
3.0
3.4
1.9
4.5
16.9
10.5
57
6.4
6.7
13.3
19.4
Capital
equipment
Year
Dec.
to
to
Dec.1 year
Dec.
to
Dec. *
Year
to
year
Finished goods
excluding food
and energy
Dec.
to
Dec. >
Year
to
year
9.0
5.0
2.4
97
17
17
1.2
3.0
7.4 :...*.;.
6.2
2.6
1.9
.2
10.4
-.6
10.3
3.4
.8
2.3
1.1
5.6
8.3
4.3
1.3
1,0
.1
;3
to
;9
1,5
3.9
3.1
3,0
4.6
4.9
2.4
2.0
5.3
22.6
8.2
6.4
7.2
8.0
8.8
11.5
1.2
2.5
3.3
3.5
3.3
4.8
4.1
2.5
3.3
14.2
15.2
6.6
6.5
7.9
8.8
10.5
; ..."
16.4
5.4
9.1
8.0
627
27.2
17.3
8.8
11.1
4.3
377
52.2
.*;..;*
6.1
5.4
6.3
8.2
9.3
11.0
11.4
5.5
6.0
7.5
8.8
11.2
Percent change from preceding month
Unadjusted
Season-
17
Unadjusted
1.4
1.1
7
1.1
.6
.5
1.2
1.6
1.6
.9
.8
1980:2
Jan
Feb
Mar
May"I '
June
July
Aug
Sept
Oct
Nov
Dec
'.
1.9
1.4
1.2
.8
'.6
1.7
.8
-.1
1.3
.4
.6
1.2
1.1
1.0
.8
.5
.6
1.2
1.1
1.5
1.1
1.2
.8
1.6
1.4
1.4
.6
.3
1.7
1.4
~;8
.6
.6
a
Unadjusted
justed
justed
1979:
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oc!
Nov....
Dec
Season-
Season-
S
Unadjusted
Season-
17
justed
justed
1.5
1.4
1.3
-.4
-1.0
-1.0
.7
1.5
1.4
-.1
1.9
1.2
7
7
1.2
1.0
1.1
1.4
.9
1.4
2.4
.7
.8
1.1
1.0
.9
1.2
1.0
1.1
1.3
1.0
1.5
1.5
1.0
1.1
1.3
.8
.9
1.3
1.4
1.5
1.8
1.6
1.9
2.4
.8
1.0
1.1
1.0
1.1
1.2
1.4
1.4
17
1.7
1.9
1.8
1.1
1.2
-.3
.1
.6
-1.8
.5
.4
3.8
2.2
-.9
-.4
1.0
-2.8
.0
2.6
1.8
1.4
1.6
2.4
2.0
1.5
1.6
.4
7
1.1
3.1
2.6
1.7
1.6
.6
.8
2.9
2.8
1.8
1.5
;o
";§
2.0
2.2
7
-~U
.6
.6
2.1
-.6
1.7
.7
.4
.1
3.9
4.3
~;4
;6
1.1
-1
17
.4
-1
Unadjusted
.9
1.0
.4
-.2
1.1
;9
7
Season$
justed
1.1
7
.4
1.1
1.0
.9
.6
1.1
;3
.6
-.3
.6
2.3
.5
.6
7
.8
-.1
7
.9
1.8
1.6
7
17
.2
;9
1.8
;9
;6
.8
.4
-.2
.6
-.2
2.9
T4
;g
'.8
.6
1.0
1.2
7
1.4
.7
Unadjusted
Season-
3
Unadjusted
2.0
1.8
3.5
4.3
4.9
5.2
7.2
6.3
6.5
4.1
1.9
2.0
6.0
6.2
6.5
4.5
2.7
2.3
3.9
6.9
7.0
3.8
1.4
4.5
7.1
7.5
3.8
.8
-.6
-.7
.1
-.3
-.3
-.4
-.8
.4
1.3
1.4 . 1.6
.5
17
justed
justed
1.4
1.6
3.1
4.3
5.5
5.9
Season-
1.2
7
.5
.9
;5
.6
.2
.7
2.1
.4
7
2.4
1.0
.4
1.2
7
1.1
.5
-.2
2.2
.4
.6
1.0
.9
.6
.8
.6
.6
.8
.3
.8
1.1
.7
.9
2.0
1.2
L2
.3
.9
1.3
.6
-.1
1.1
.6
.8
1
Changes from December to December are based on unadjusted indexes.
2
Dataliave been revised through August 1980 to reflect the availability of late reports and corrections by respondents. All data are
subject to revision 4 months after original publication.
Source: Department of Labor, Bureau of Labor Statistics.
300
MONEY STOCK, CREDIT, AND FINANCE
TABLE B-59.—Money stock measures and liquid assets, 1959-80
[Averages of daily figures; billions of dollars, seasonally adjusted]
Ml-A
Ml-B
M2
M3
Ml-B plus
overnight
Currency
Period
plus demand
deposits'
December:
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980 *.
1979:
Jan. .
Feb ....
Mar
t!
June. .
July ...
Aug
Sept..
Oct
Nov...
Dec.
1980
Jan...
Feb
Mar. ..
June..
July..
Aug. .
Sept..
Oct.. ..
Nov.
Dec. P.
Ml-A plus
other
checkable
deposits at
banks and
thrift
institutions
RPs and
M2 plus
Eurodollars,
large time
MMMF
deposits
and
shares, and
RPs at
savings and term
commercial
smalltime
banks and
deposits at
thrift
commercial
institutions
banks and
thrift
institutions2
M3 plus
other liquid
assets
140.7
296.7
297.9
387.5
t41.6
146.1
148.8
154.2
161.3
311.2
333.9
361.1
391.4
422.8
313.3
337.9
368.2
402.3
438.0
402.5
429.1
464.5
501.8
538.3
168.8
172.9
184.2
198.5
204.7
457.2
478.5
523.6
566.2
587.6
478.5
502.2
555.7
605.3
610.4
582.3
613.9
667.2
730.9
761.2
215.3
229.2
250.5
264.1
275.3
215.4
229.4
250.6
264.4
275.7
625.2
709.6
801.6
858.1
906.2
671.7
769.7
877.8
976.1
1,058.6
812.5
898.7
1,017.7
1,137.2
1,242.8
287.9
305.0
328.4
351.6
369.7
289.0
307.7
332.5
359.9
386.4
1,022.4
1,166.7
1,294.1
1,401.5
1,525.5
1,161.0
1,299.7
1,460.3
1,623.6
1,775.5
1,369.6
1,523.5
1,715.5
1,927.7
2,141.1
385.4
411.0
1,669.7
1,954.0
350.1
350.0
351.9
356.1
355.5
359.4
360.0
360.7
363.9
369.6
369.2
373.9
1,407.5
1,413.8
1,426.6
1,441.2
1,449.5
1,465.9
1,631.9
1,642.3
1,654.8
1,669.1
1,679.2
1,695.2
1,939.4
1,954.8
1,978.3
2,000.7
2,021.1
2,048.7
362.0
364.0
365.9
366.6
368.0
369.7
377.4
379.9
382.2
382.9
384.2
386.4
1,478.3
1,491.8
1,502.9
1,510.1
1,516.4
1,525.5
1,709.2
1,725.8
1,745.5
1,757.8
1,765.4
1,775.5
2,063.8
2,081.3
2,110.0
2,120.4
2,126.4
2,141.1
370.8
373.7
373.1
367.6
367.8
371.3
388.1
391.3
391.2
386.6
386.2
390.9
1,534.5
1,546.7
1,553.1
1,549.9
1,562.1
1,585.7
1,786.9
1,804.5
1,811.1
1,811.1
1,824.2
1,844.5
2,155.2
2,175.9
2,190.1
2,200.7
2,216.6
2,229.1
373.7
379.7
383.7
386.7
388.9
385.4
394.5
401.6
406.9
410.8
414.0
411.0
1,609.7
1,629.2
1,640.9
1,652.9
1,667.2
1,669.7
1,865.2
1,886.3
1,900.7
1,917.1
1,940.8
1,954.0
2,243.4
2,268.2
2,295.1
2,310.1
140.7
141.6
146.1
148.8
154.2
161.2
168.7
172.8
184.2
198.4
204.6
1
Demand deposits at all commercial banks other than those due to domestic banks, the U.S. Government, and foreign banks and
official institutions less cash items in the process of collection and Federal Reserve float.
2
Total M2 excludes demand deposits held by thrift institutions at commercial banks, not shown separately in components.
Note.—See Table B-60 for components.
Source: Board of Governors of the Federal Reserve System.
33-540 0 - 8 1 - 2 0
:
301
QL 3
TABLE B-60.—Components of money stock measures and liquid assets, 1959-80
[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]
OverMoney
night
Other
repur- Over- market
De- checknight mutual
chase
Cur- mand able
fund
agree- Eurorency depos- dedollars (MMMF)
its' posits ments
shares
(RPs)
}(net)
notl
NSA
NSA
NSA NSA
Period
Large
SavSmall
ings denomina- denominade- tion time tion time
posits deposits2 deposits2
Term
repurchase
agreements
{RPs)
NSA
NSA
December:
1959
28.9
111.8
0.0
0.0
0.0
11.5
1.2
0.0
1960
1961
1962
1963
1964
29.0
29.6
30.6
32,5
34.2
112.7
116.6
118.2
121.7
127.0
.0
.0
.0
.0
.1
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
157.8
173.9
193.1
212.6
233.3
12.6
14.8
20.2
25.7
29.3
2.0
4.0
10.9
15.3
.0
.0
.0
.0
.0
1965
1966
1967
1968
1969
36.3
38.3
40.4
43.5
46.1
132.4
134.5
143.7
154.9
158.6
.1
.0
.5
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
255.0
251.1
261.4
266.3
261.0
34,5
55.1
78.1
101.1
120.7
21.3
23.2
31.1
37.6
20.4
1970
1971
1972
1973
1974
49.1
52.6
56.9
61.6
67.8
166.2
176.7
193.6
202.5
207.4
6.8
7.2
.0
.0
.0
.0
.0
.0 256.7
.0 287.5
.0 317.0
153.0
191.8
232.6
266.4
288.9
45.1
57.6
73.0
110.9
144.0
1975
1976
1977
1978
1979
73.8
80.7
88.7
97.6
106.3
214.1
224.4
239.7
253.9
263.4
1.1
7.5
.0
2.7
.0
1.0
8.3
16.7
13.6
17.6
21.9
21.7
2.0
3.6
10.3 476.1
43.6 416.7
340.4
396.6
454.9
533.8
656.5
129.6
118.0
145.2
194.7
219.4
15.0
21.0
27.3
30.5
1980"..... 116.5
268.9
25.6
25.5
4.6
75.8 395.5
760.5
250.6
33.7
June
98.2
98.9
99.6
100.2
100.9
101.8
251.9
251.1
252.3
255.9
254.7
257.6
9.9
10.8
12.0
13.6
13.6
14.6
21.2
21.9
23.1
23.9
25.9
26.3
2.3
2.6
2.8
2.8
2.8
2.9
12.1
14,5
16.8
19.2
21.8
24.6
468.1
460.7
457.0
452.3
448.6
449.8
546.3
555.9
565.6
576.1
583.9
591.0
197.4
200.9
200.0
198.6
198.2
196.8
July
Aug
Sept
Oct
Nov
Dec
102.6
103.7
104.7
105.5
105.9
106.3
259.4
260.3
261.2
261.1
262.1
263.4
15.4
15.9
16.3
16.3
16.2
16.7
25.5
25.3
26.2
25.3
22.5
21.7
3.0
3.3
3.6
3.5
3.2
28.0
31.2
33.7
36.9
40.4
43.6
450.9
450.4
445.4
436.0
421.3
416.7
596.2
604.4
614.6
628.4
647.8
656.5
1980:
Jan
Feb
Mar
Apr
May
June
107.3
^ 108.1
108.9
109.0
110.1
111.0
263.5
265.6
264.2
258.6
257.7
260.3
17.3
17.6
18.0
19.0
18.4
19.6
22.6
23.0
21.0
17.6
18.5
19.6
4.1
2.7
2.8
2.9
49.1
56.7
60.9
60.4
66.8
74,2
411.8
403.1
391.9
377.3
372.7
381.4
July
Aug
Sept
Oct
Nov
Dec"
112.0
113.4
113.9
115.1
15.9
116.5
261.6
266.3
269.8
271.6
273.1
268.9
20.8
21.9
23.2
24.1
25.1
25.6
23.0
25.2
26.4
25.5
25.6
25.5
3.6
3.7
3.7
4.4
4.7
4.6
80.6
80.7
78.2
77.4
77.0
75.8
393.8
403.9
407.9
410.1
405.2
395.5
1979:
Jan
Feb
Mar
Apr
May
'.1
1.1
1.6
.1
2.5
.1
.1
.1
2.5
3.1
.3
.4
4.1
1.4
3.6
4.1
3.6
0.0 145.2
.1 322.2
2.3 333.9
3.6 383.9
3.4 447.7
3.8 486.5
7.1
ShortTerm
term
Bankers' ComEuro- SavTreasaccep- mercial
dollars ings
ury
tances paper
(net) bonds
securities
.0
.5
1.0
1.5
0.7 46.1 38.7
0.5
3.6
36.8
37.1
39.9
40.7
38.5
.8
1.0
1.0
1.1
1.2
5.1
5.2
6.8
7.7
9.1
1.7 49.7 40.7
2.1 50.2 43.2
1.5
10.2
14.4
17.8
22.5
34.0
,8 45.7
1.4 46.5
1.6 46.9
1.9 48.1
2.4 49.0
1.6
1.7
38.7
46.1
59.5
49.2
36.2
40.9
49.8
53.4
10.7
7.9
10.3
13.7
22.8
31.9
67.3 76.8
71.8 80.7
76.6 89.5
80.7 98.7
80.0 127.5
27.1
27.5
28.4
29.3
31.5
32.4
24.5
27,1
28.4
29.1
29.6
29.9
80.6
80.6
80.5
80.6
80.6
80.4
198.9
201.8
208.9
214.8
218.5
219.4
32.0
32.2
33.7
33.0
30.5
30.5
31.4
33.9
33.4
33.2
34.0
31.9
661.8
671.4
687.6
708.3
718.0
719,6
222.5
228.6
230.7
234.2
235.0
230.7
29.9
29.2
27.2
27.1
27.1
28.1
717.2
717.1
720.9
727.9
743.9
760.5
226.2
225.3
229.0
231.8
240.9
250.6
29.3
31.7
30.9
32.3
32.6
33.7
2.4
2.3
51.2
51.8
51.7
1.4
2.5
1.8
2.3
2.8
4.4
6.7
52.0
54.3
57.5
60.4
63.2
3.3
7.1
8.4
9.0
2.1
2.9
2.2
3.2
3.3
3.5
3.3
4.7
34.5
32.7
35.2
41.9
50.1
12.3
22.6
28.9
8.5
9.0
48.1
51.8
63.1
79.4
97.3
98.8
100.4
108.2
114.2
122.5
131.4
22.4
21.4
21.3
21.1
21.0
21.5
81.2
83.1
85.0
86.6
88.2
90.4
80.0
80.0
80.6
82.2
80.3
80.0
128.8
123.0
128.1
123.7
122.1
127.5
22.6
25.0
26.6
27.1
28.6
28.9
91.8
93.6
95.7
96.4
96.0
97.3
34.1
37.5
37.4
37.9
37.8
36.0
79.2
78.1
76.8
75.2
74.0
73.3
127.6
128.8
136.3
146.3
151.8
148.6
28.4
27.6
28.8
29.5
29.4
30.2
99.0
99.3
99.8
100.6
99.5
96.5
35.4
36.0
34.1
33.0
72.8
72.6
73.2
74.6
144.2
147.2
157.3
155.0
30.1
29.6
31.3
32.2
95.8
96.6
98.5
98.3
'Demand deposits at ail commercial banks other than those due to domestic banks, the U.S. Government, and foreign banks and
official institutions less cash items in the process of collection and Federal Reserve float.
"Small denomination and large denomination deposits are those issued in amounts of less than $100,000 and more than $100,000,
respectively.
Note.—NSA indicates data are not seasonally adjusted.
See also Table B-59.
Source: Board of Governors of the Federal Reserve System.
302
TABLE B-61.—Commercial bank loans and investments, 1939-80
[Billions of dollars]
Loans
Total loans
and
investments
Year and month
End of month *
1939- Dec
Total
Investments
Commercial and
industrial
US.
Treasury
securities
Other
securities
7.1
Loans plus
loans sold
to bank
affiliates
40 7
17.2
16.3
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
261
31.1
38.1
42.4
17.8
218
41.4
59.8
77.6
90 6
74.8
69.2
62.6
1948- Dec
1949: Dec
113 0
118.7
* 41,5
42.0
62 3
66.4
92
10.3
1950- Dec
1951- Dec
1952- Dec
1953- Dec
1954* Dec
1955- Dec
1956- Dec
1957- Dec
1958- Dec
1959: Dec
124.7
130 2
139.1
1431
1531
157.6
1616
166.4
1812
188.7
51.1
56 5
62.8
66.2
691
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
651
57.7
12.4
13 4
14.2
14.7
16 4
16.8
16.3
17.9
20.5
20.5
110.5
I960:
196119621963196419651966:
196719681969-
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
197.4
212 8
231.2
250 2
272.3
3001
316.1
352.0
390.2
401.7
116.7
123.6
137.3
153 7
172.9
198.2
213.9
231.3
258.2
279.4
42.1
43 9
47.6
521
58.4
69.5
78.6
86.2
95.9
105.7
59.9
65 3
64.7
615
60.7
57.1
53.5
59.4
60.7
51.2
20.8
23.9
29.2
35.0
38.7
44.8
48.7
61.3
71.3
71.1
116.7
1236
137.3
153.7
172.9
198.2
213.9
231.3
258.2
283.3
1970- Dec
1971: Dec
1972- Dec
435 5
485.7
558.0
292 0
320.9
378.9
110 0
116.2
130.4
57 8
60.6
62.6
85.7
104.2
116.5
294 7
323.7
381.5
5661
647.8
713.6
744 6
804 3
8911
1,014.3
1,132.5
386 2
460.3
519.9
516.9
554 8
6321
747.8
847.2
136 3
165.6
197.3
189.8
1912
2112
246.5
290.5
641
58.7
53.7
82.1
100 6
99 5
93.4
93.8
115 8
128.8
140.0
145.7
149.0
159 6
173.1
191.5
388 8
464.6
524.7
521.3
558.5
636.9
751.6
850.0
Way';:.:;..;:v":
:.;;:..::. :::::..
June
1,144.8
1,162 7
1165 2
11610
1,154.9
1,152.0
858.5
872 7
874 7
8716
860.6
853.5
295.6
301.1
302 8
3012
297.7
295.4
93.2
94 8
94 5
93 2
94.6
97.0
193.1
195.2
196.0
196.2
199.7
201.5
861.1
875.3
877.3
874.2
863.2
856.3
Julv
Aug
Sept
Oct
Nov
1160 0
1,177.2
1,191.0
1,204 5
1,221.2
855 0
865.8
876.4
886 2
899.4
296 2
301.4
306.0
312 0
318.4
100 9
104.4
106.6
107 9
109.3
204.2
207.0
208.0
210.3
212.5
857 8
868.7
879.3
889.0
902.1
1940194119421943:
19441945194619471948-
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
....
..
7.4
72
6.r
6.1
6.3
73
8.1
9.0
9.2
Seasonally adjusted
Average for month2
1972- Dec
1973- Dec
1974- Dec
1975- Dec
1976- Dec
1977- Dec
1978: Dec
1979- Dec
1980:
Jan
Feb
Mai
ADr
•..:....:...."""".:.:.".:
:;:;:;.:
z
1
Data are for December 31 call dates.
Data are prorated averages of Wednesday figures for domestically chartered banks and averages of current and previous month-end
data for foreign-related institutions. Lease financing receivables are included in total loans and investments and in total loans.
Source: Board of Governors of the Federal Reserve System.
8
303
TABLE B-62.— Total funds raised in credit markets by nonftnancial sectors, 1972-80
[Billions of dollars] *
Item
Total funds raised by nonfinancial sectors....
U.S. Government
1972
1973
1974
1975
1976
1977
1978
1979
176.8
203.1
191.6
210.8
271.9
338.5
400.3
394.9
15.1
8.3
11.8
85.4
69.0
56.8
53.7
37.4
4.0
6.1
15.4
13.3
20.8
13.9
32.3
21.2
Foreign
Private domestic nonfinancial sectors...
157.7
Corporate equities...
Debt instruments....
Debt capital instruments....
State and local government obligations
Corporate bonds
Mortgages
Home.
Multi-family residential
Commercial
Farm
164.4
112.1
182.0
267.9
314.4
336.4
10.9
146.8
7.9
180.9
4.1
160.3
9.9
102.1
10,5
171.5
2.7
265.1
2.6
311.8
3.5
333.0
102.1
105.1
98.0
98.4
123.5
175.6
196.6
199.9
14.7
12.2
75.2
14.7
9.2
81.2
16.5
19.7
61.9
16.1
27.2
55.0
15.7
22.8
85.0
23.7
21.0
131.0
28.3
20.1
148.2
18.9
21.2
159.9
42.5
12.7
16.4
3.6
46.4
10.4
18.9
5.5
34.8
6.9
15.1
5.0
39.5
= .0
11.0
4.6
63.7
1.8
13.4
6.1
96.4
7.4
18.4
8.8
104.5
10.2
23.3
10.2
109.1
8.9
25.7
16.2
Other debt instruments..
44.7
75.8
62.3
3.8
48.0
89.5
115.2
133.0
Consumer credit
Bank loans n.e.c...
Open-market paper.
19.8
17.1
.8
6.9
26.0
37.1
2.5
10.3
9.7
9.9
32.0 - 1 2 . 3
6.6
-2.6
13.7
9.0
25.6
4.0
4.0
14.4
40.6
27.0
2.9
19.0
50.6
37.3
5.2
22.2
44.2
50.6
10.9
27.3
By borrowing sector: Total
164.4
112.1
182.0
267.9
314.4
336.4
14.5
65.1
78.1
13.2
80.1
95.5
15.5
51.3
97.6
13.7
49.7
48.6
15.2
90.5
76.3
20.4
139.9
'.07.6
23.6
162.6
128.2
15.5
165.0
155.9
Farm
Nonfarm noncorporate.
Corporate
5.8
14.1
58.2
9.6
12.9
73.0
8.0
7.4
82.1
8.8
2.0
37.9
10.9
4.7
60.7
14.7
12.9
79.9
18.1
15.4
94.7
25.8
15.8
114.3
Debt instruments.
Equities
47.2
10.9
65.2
7.9
78.0
4.1
28.0
9.9
50.2
10.5
77.2
2.7
92.2
2.6
110.8
3.5
176.8
203.1
191.6
210.8
271.9
338.5
400.3
394.9
157.7
State and local governments.
Households
Nonfinancial business
Total funds supplied to nonfinancial sectors
,
Financed directly or indirectly by:
Private domestic nonfinancial sectors..,
Deposits
Demand deposits and currency
Time and savings deposits
Money market funds and repurchase agreements
Credit market instruments...
Corporate equities
122.7
140.3
118.9
140.4
168.5
189.7
217.0
238.2
106.7
101.2
73.8
98.1
131.9
149.5
151.8
144.7
21.5
83.6
14.5
75.7
8.2
12.6
84.0
16.1
113.5
26.1
121.0
22.2
18.9
84.7
65.4
1.6
11.0
21.6
45.7
-5.6
-6.7
1.6
2.3
2.4
45.8
39.8
46.4
-3.5
-3.2
=6.1
6.4
At banks
Credit and equity instruments..
U.S. Government-related loans, net
U.S. Government cash balances
Private insurance and pension reserves..
Other sources
.
3.8
10.8
3.0
3.4
2.6
— 4
26.3
11.0
11.2
-1.5
30.7
16.1
See next page for continuation of table.
304
105.4
71.4
47.3
-11.9
-6.2
-2.2
14.6
41.0
14.4
.2
Foreign funds
115.2
2.1
13.4
43.2
22.1
10.3
11.7
-8.7
10.8
-4.6
17.9
1.2
42.0
46.5
6.3
40.1
26.3
-6.1
19.5
-4.6
33.4
2.4
24.9
2.8
39.7
.9
20.5
3.0
47.9
18.6
19.5
.9
58.7
26,5
30.5
3.7
70.6
32.0
664
34.3
20.3
35.4
TABLE B-62.—Total funds raised in credit markets by nonfinancial sectors, 1972-80—Continued
[Billions of dollars]
1980 unadjusted quarterly
flows
Item
1
Total funds raised by nonfinancial sectors
U S Government
Foreign
Private domestic nonfinancial sectors
Corporate equities
Debt instruments
Debt capital instruments
State and local government obligations
Corporate bonds
Mortgages
.
Home mortgages
Multi-family residential
Commercial
...
....
...
Farm
Other debt instruments
Consumer credit
Bank loans n.e.c... .
Open-market paper
Other
By borrowing sector: Total
State and local governments.
Households.
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
....
....
.
...
Debt instruments..
Equities
.. . .
Total funds supplied to nonfinancial sectors
II
1980 seasonally adjusted
annual rates
III
1
ii
III
379 4
816
62 5
102 4
414 2
236 0
191
54
271
614
64 2
964
42
77
83
24 3
319
24 9
58.4
49 4
67 0
328 5
139 8
2581
2.0
56.4
1.2
48.2
1.2
65.3
8.0
320.5
4.7
135.2
4.9
253.2
38.5
41.9
50.4
198.0
138.2
177.7
1.6
5.0
6.6
11.4
239
20.8
23 2
154 0
14.8
43 3
319
8.4
84
33 6
801
23.4
33 6
1207
19.7
2.1
5.4
14.4
1.6
3.6
4.7
4.4
22.2
2.6
58
3.0
99.8
8.0
280
18.2
44.8
6.5
13.7
15.1
78.0
10.5
20 3
11.8
17 9
63
15 4
122 5
-31
75 5
-3.5
6.8
8.4
6.3
-8.1
2.2
6.0
6.2
39
13.0
-2.8
1.3
25 9
37.5
37.2
22.0
-44 2
-1.8
22.2
20.7
58.7
-10.2
20.9
58.4
49.4
67.0
328.5
139.8
258.1
1.4
23.1
33.9
5.8
13.3
7.8
27.1
303
20.2
1421
166 2
11.7
40.8
87 3
20.8
97.8
1394
23 9
18.4
123 8
23.2
-.1
643
18 6
18.8
102 0
59.6
47
971
49
236 0
379 4
321
5.4
7.9
48
2.2
26.3
.8
21.6
5.1
22 3
24.3
20.4
20
12
210
12
115 8
816
62 5
102 4
414 2
80
61
Financed directly or indirectly by:
Private domestic nonfinancial sectors
Deposits
Demand deposits and currency
Time and savings deposits.....
Money market funds and repurchase agreements
Credit market instruments
Corporate equities
Foreign funds
At banks
Credit and equity instruments
U S Government-related loans net
U S Government cash balances
Private insurance and pension reserves
Other sources
....
Source: Board of Governors of the Federal Reserve System.
305
44 0
29 4
58 7
252 8
117 3
2571
19.3
40.1
43 4
151.5
165.9
174.6
-23.7
26.9
16.0
5.9
16.6
17.6
5.7
34.3
3.5
2.7
84.8
64.1
-2.9
98.4
70.4
40.8
119.9
14.0
27 6
114
17 8
118 7
-56 3
917
-2.9
.8
-2.5
-17.4
7.8
-9.2
73
-117
_7
27 8
-22 0
-33 7
7.2
.0
-16.2
4.5
-6.9
6.3
36.7
-9.0
-69.6
47.6
-51.6
17.9
6.2
-8.0
18.8
13.4
15.5
5.7
20.0
3.4
4.9
8.5
18.4
12.6
46.3
-6.8
73.0
42.9
-12.1
83.4
26.5
7.2
15.1
72.6
61.0
2
y
TABLE B-63.—Federal Reserve Bank credit and member bank reserves, 1929-80
[Averages of daily figures; millions of dollars]
Member bank reserves2
Reserve Bank credit outstanding
Year and month
Total
U.S.
Government
and Federal
agency
securities
Member bank
borrowings
Total
Otherl
Total
Required
Excess
Seasonal
1929: Dec...
1933: Dec...
1939: Dec .
1,643
2,669
2,612
446
2,432
2,510
801
95
3
396
142
99
2,395
2,588
11,473
2,347
M,822
6,462
48
3 766
5,011
1940: Dec.
1941: Dec .
1942: Dec
1943: Dec .
1944-. Dec..
1945: Dec .
1946: Dec .
1947: Dec
1948: Dec.
1949: Dec .
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
1950:
1951:
1952:
1953:
1954:
1955:
1956:
1957:
1958:
1959:
Dec.
Dec.
Dec.
Dec .
Dec
Dec
Dec
Dec.
Dec.
Dec
21,606
25,446
27,299
27,107
26,317
26,853
27,156
26,186
28,412
29,435
20,345
23,409
24,400
25,639
24,917
24,602
24,765
23,982
26,312
27,036
142
657
1,593
441
246
839
688
710
557
906
1,119
1,380
1,306
1,027
1,154
1,412
1,703
1,494
1,543
1,493
17,391
20,310
21,180
19,920
19,279
19,240
19,535
19,420
18,899
18,932
16,364
19,484
20,457
19,227
18,576
18,646
18,883
18,843
18,383
18,450
1,027
826
723
693
703
594
652
577
516
482
1960: Dec .
1961: Dec.
1962: Dec..
1963: Dec
1964: Dec...
1965: Dec...
1966: Dec...
1967: Dec...
1968: Dec...
1969: 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
18,514
19,550
19,468
20,210
21,198
22,267
23,438
24,915
26,766
27,774
769
568
572
536.
411
452
392
345
455
257
1970: Dec...
1971: Dec..,
1972: Dec...
1973: Dec...,
1974: Dec..,
1975: Dec....
1976: Dec.
1977: Dec..,
1978: Dec..,
1979: Dec...
66,708
74,255
76,851
85,642
93,967
99,651
107,632
116,382
129,330
139,896
61,688
69,158
71,094
79,701
86,679
92,108
100,328
107,948
117,344
126,276
321
107
1,049
1,298
703
127
62
558
874
1,473
41
32
13
12
54
134
82
4,699
4,990
4,708
4,643
6,585
7,416
7,242
7,876
11,112
12,147
29,265
31,329
31,353
35,068
36,941
34,989
35,136
36,471
41,572
43,972
28,993
31,164
31,134
34,806
36,602
34,727
34,964
36,297
41,447
43,578
272
165
219
262
339
262
172
174
125
394
1980: Dec. r.
143,250
127,895
1,617
116
13,738
* 40,097
40,067
May*.' .,
June
138,843
135,485
136,260
139,212
139,590
141,182
126,238
123,327
124,243
127,546
129,663
131,356
1,241
1,655
2,824
2,455
1,018
380
75
96
150
155
63
12
11,364
10,503
9,193
9,211
8,90<
9,446
45,170
43,156
43,097
44,877
43,968
43,479
44,928
42,966
42,911
44,683
43,785
43,268
242
190
186
194
183
211
July
Aug....
Sept
Oct. ...
Nov
Dec."
141,744
139,235
139,993
141,695
142,984
143,250
130,997
128,070
128,684
130,661
129,743
127,895
395
659
1,311
1,335
2,156
1,617
7
10
26
67
99
116
10,352
10,506
9,998
9,699
11,085
13,738
42,859
40,373
41,164
41,815
* 41,678
4
40,097
42,575
40,071
40,908
41,498
40,723
40,067
284
302
256
317
5
955
•30
1980:
Jan
Feb
Mar
1
2
Mainly float.
Beginning December 1959, part of currency and cash held by member banks allowed as reserves; beginning November 1960 all
such currency and cash allowed.
Beginning November 1972, includes reserve deficiencies on which Federal Reserve Banks were allowed to waive penalties for a
transition period in connection with bank adaptation to Regulation J as amended effective November 9, 1972. Transition period ended
after second quarter 1974.
Effective November 1975, includes reserve deficiencies on which penalties are waived over a 24-month period when a nonmember
bank
merges into an existing member bank, or when a nonmember bank joins the Federal Reserve System.
3
Data are for licensed banks only.
* Includes all reserve balances of depository institutions plus vault cash at institutions with required reserve balances plus vault cash
equal
to required reserves at other institutions.
8
Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve requirements less required reserves. (This
measure of excess reserves is comparable to the old excess reserve concept published historically.)
Source: Board of Governors of the Federal Reserve System.
306
TABLE B-64.—Aggregate reserves and member bank deposits, 1959-80
[Averages of daily figures; billions of dollars, seasonally adjusted]
Reserves of depository
institutions1
Year and month
Total
2
Nonborrowed
Required
Member bank deposits subject to
reserve requirements
Monetary
base 3
Total
Time
and
savings
Private
U.S.
Government
Adjusted for changes in reserve
requirements4
institutions
Total
Nonborrowed
sitory
Required
Monetary
base
1959:
Dec
18.61
17.67
18.10
48.3
157.8
54.4
98.6
4.8
16.12
15.18
15.61
45.8
I960:
1961:
1962:
1963:
1964:
Dec
Dec
Dec
Dec.
Dec
18.91
19.76
19.72
20.39
21.27
18.84
19.63
19.46
20.06
21.01
18.17
19.18
19.14
19.90
20.87
48.7
50.2
51.2
53.8
56.5
162.2
175.4
189.1
203.7
219.1
58.9
67.8
80.1
92.4
104.1
98.8
102.7
103.3
105.9
109.1
4.6
4.9
5.7
5.4
5.9
16.35
16.91
17.36
17.85
18.50
16.27
16.77
17.10
17.52
18.24
15.60
16.32
16.79
17.36
18.10
46.1
47.3
48.8
51.3
53.8
1965:
1966:
1967:
1968:
1969:
Dec
Dec
Dec
Dec
Dec
22.34
23.39
24.91
27.18
28.07
21.90
22.86
24.69
26.43
26.95
21.92
23.05
24.54
26.75
27.78
59.8
62.9
66.5
72.0
75.6
238.9
246.8
276.3
300.4
288.0
121.1
129.0
149.3
164.9
150.7
113.0
114.1
121.5
130.6
132.1
4.8
3.7
5.4
4.9
5.2
19.30
19.41
21.20
22.53
22.43
18.86
18.88
20.97
21.78
21.31
18.88
19.07
20.82
22.10
22.14
56.7
58.9
62.8
67.3
69.9
1970:
1971:
1972:
1973:
1974-
Dec
Dec
Dec
Dec
Dec
29.22
31.28
31.40
34.98
36.66
28.89
31.15
30.35
33.68
35.94
28.97
31.09
31.11
34.68
36.41
79.8
85.5
90.2
98.6
106.8
321.7
361.1
402.8
443.4
487.2
179.4
211.4
242.4
280.4
323.3
136.1
143.8
154.4
158.2
160.6
6.2
5.8
6.1
4.8
3.3
23.98
25.63
28.53
30.25
32.15
23.65
25.50
27.48
28.95
31.42
23.73
25.44
28.25
29.94
3189
74,6
79.9
87.3
93.9
1021
1975:
1976:
1977:
1978:
1979:
Dec.
Dec
Dec
Dec .
Dec
34.67
34.90
36.00
41.16
43.57
34.54
34.85
35.43
40.29
42.10
34.40
34.63
35.81
40.93
43.13
111.0
118.4
127.6
142.2
153.8
504.9
528.3
567.6
616.1
644.4
337.5
353.6
385.6
428.7
451.1
164.6
171.7
178.5
185.1
191.5
2.8
3.0
3.5
2.2
1.8
32.17
32.67
34.10
36.03
37.51
32.04
32.62
33.53
35.16
36.03
31.90
32.39
33.91
35.80
37.06
107.6
115.2
124.8
136.1
146.8
40.13
38.44
39.58
159.8
701.8
503.9
195.9
1.9
40.11
38.42
39.56
159.7
June
40 36
39,90
39 76
39.78
38.90
39.11
4115
40.66
40 59
40.52
40.53
40.31
143 2
143.4
143 9
144.6
145.1
145.9
619 0
617.5
615 4
618.7
616.0
614.7
431.2
432.9
432.3
431.8
429.8
427.6
185 8
182.7
1812
185.0
184.2
185.0
20
p..-:::
4136
40.87
4075
40.70
40.67
40.53
1.9
18
1.9
1.9
2.1
3619
35.71
35 60
35.57
35.59
35.56
3519
34.74
34 61
34.65
33.83
34.14
35 98
35.51
3544
35.40
35.45
35.34
137 1
137.3
137 9
138.5
139.2
140.1
July
Aue
Sept
Oct
Nov
Dec
40:78
41.11
41.43
42.20
43.06
43.57
39.61
40.03
40.09
40.18
41.15
42.10
40.57
40.89
41.24
41.93
42.81
43.13
147.1
148.6
150.0
151.5
152.8
153.8
619.3
625.4
631.5
638.2
641.9
644.4
430.6
436.3
441.7
446.6
450.1
451.1
186.9
187.0
188.1
189.8
190.0
191.5
1.8
2.1
1.7
1.7
1.9
1.8
35.80
36.05
36.29
36.82
36.94
37.51
34.63
34.96
34.95
34.80
35.03
36.03
35.59
35.83
36.10
36.55
36.69
37.06
141.2
142.6
144.0
145.2
145.8
146.8
1980:
Jan
Feb...
Mar
Apr
May
June
43.44
43.35
43.67
44.85
44.45
43.96
42.20
41.70
40.85
42.39
43.43
43.58
43.19
43.14
43.48
44.65
44.27
43.76
154.7
155.6
156.6
157.9
158.5
158.9
643.7
647.2
649.1
655.4
656.8
658.0
451.9
454.4
457.9
464.2
467.7
467.9
189.5
190.9
189.4
188.7
187.3
188.4
2.3
1.9
1.8
2.4
1.8
1.7
37.48
37.40
37.48
37.52
37.49
37.46
36.23
35.75
34.65
35.06
36.47
37.08
37.22
37.19
37.29
37.32
37.31
37.26
147.8
148.7
149.5
149.7
150.7
151.5
42.78
40.75
41.52
41.73
41.23
40.13
42.39
40.09
40.21
40.42
39.17
38.44
42.50
40.45
41.26
41.52
40.73
39.58
158.8
158.2
159.5
160.9
160.6
159.8
658.5
667.8
678.2
684.7
694.5
701.8
467.0
474.2
482.0
486.7
494.2
503.9
189.1
191.5
194.5
195.6
198.2
195.9
2.5
2.1
1.8
2.4
2.2
1.9
37.57
38.05
38.73
38.89
M0.06
40.11
37.18
37.39
37.41
37.58
5
38.00
38.42
37.29
37.75
38.47
38.69
5
39.56
39.56
152.6
154.6
155.8
157.1
5
159.1
159.7
.
1980: Dec. P
1979:
Jan
Feb
Mar
Jutv
Aug
Sept
Oct
Nov
Dec "
1
Reserves of depository institutions series reflect actual reserve requirement percentages with no adjustment to eliminate the effect
of changes in Regulations D and M. Prior to November 13, 1980, the date of implementation of the Monetary Control Act, only the
reserves of commercial banks that were members of the Federal Reserve System were included in the series. Since that date the series
include the reserves of all depository institutions. In conjunction with the implementation of the act, required reserves of member
banks were reduced about $4.3 billion and required reserves of other depository institutions were increased about $1.4 billion. Effective
October 11, 1979, an 8 percentage point marginal reserve requirement was imposed on "managed liabilities". This action raised
required reserves about $320 million. Effective March 12, 1980, the 8 percentage point marginal reserve requirement was raised to 10
percentage points. In addition the base upon which the marginal reserve requirement was calculated was reduced. This action increased
required reserves about $1.7 billion in the week ending April 2, 1980. Effective May 29, 1980, the marginal reserve requirement was
reduced from 10 to 5 percentage points and the base upon which the marginal reserve requirement was calculated was raised. This
action reduced required reserves about $980 million in the week ending June 18, 1980. Effective July 24, 1980, the 5 percent marginal
reserve requirement on managed liabilities and the 2 percent supplementary reserve requirement against large time deposits were
removed.
These actions reduced required reserves about $3.2 billion.
2
Reserve balances with Federal Reserve Banks plus vault cash at institutions with required reserve balances plus vault cash equal to
required
reserves
at other institutions.
3
Includes reserve balances at Federal Reserve Banks in the current week plus vault cash held two weeks earlier used to satisfy
reserve requirements at all depository institutions plus currency outside the U.S. Treasury, Federal Reserve Banks, the vaults of
depository
institutions, and surplus vault cash at depository institutions.
4
Reserve aggregates series have been adjusted to remove discontinuities associated with the implementation of the Monetary Control
Act,5 marginal reserve requirements, the inclusions of Edge Act Corporation reserves, and other changes in Regulations D, K, and M.
Reserve measures beginning November reflect increases in required reserves associated with the reduction of weekend avoidance
activities of a few large banks. The reduction in these activities leads to essentially a one-time increase in the average level of required
reserves that need to be held for a given level of deposits entering the money supply. In November, this increase in required reserves is
estimated at $550 to $600 million.
Source: Board of Governors of the Federal Reserve System.
307
TABLE B-65.—Bond yields and interest rates, 1929-80
[Percent per annum]
Corporate
bonds
(Moody's)
U.I>. Treasury securities
Bills
(new
issues)»
Year or month
36month month
Constant
maturities2
3
years
Aaa
Baa
10
years
Highgrade
Prime
Newhome
mercial
pal
mortgage
bonds
yields 3 paper,
(Stand- (FHLBB)
months
ard &
Poor's)
Prime rate
charged by
banks*
Discount
rate,
Federal
Reserve
Bank of
Federal
funds
rate*
York4
4 73
5 90
4 27
5.85
5'/fe-6
5.16
1933 .
0 515
4.49
7.76
4.71
1.73
iy 2 -4
2.56
1939...
023
3.01
4.96
2.76
.59
1.50
1.00
1940
1941
1942
1943
1944
.014
.103
326
.373
375
2.84
2.77
2 83
2.73
2.72
4.75
4.33
4 28
3,91
3.61
2 50
210
2 36
2 06
186
.56
.53
66
.69
.73
1.50
1.50
1.50
1.50
1.50
6
1.00
8
1945
1946
1947
1948
1949
.375
.375
.594
1.040
1.102
2.62
2.53
2.61
2.82
2.66
3.29
3.05
3.24
3.47
3.42
167
164
2 01
2 40
2.21
.75
.81
1.03
1.44
1.49
1.50
1.50
lVfe-1%
l%-2
2.00
1950
1951
1952
1953
1954
1.218
1.552
1766
1931
.953
2.47" * 2 85
2.40
1.63
2.62
2.86
2.96
3.20
2.90
3.24
3.41
3.52
3.74
3.51
1.98
2.00
2.19
2.72
2 37
1.45
2.16
2.33
2.52
1.58
2.07
2.56
3.00
3.17
3.05
1.59
1.75
1.75
1.99
1.60
1.753
2.658
3.267
1.839
3.405
3.832
2.47
3.19
3.98
2.84
4.46
2.82
3.18
3.65
3.32
4.33
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
2.18
3.31
3.81
2.46
3.97
3.16
3.77
4.20
3.83
4.48
1.89
2.77
3.12
2.15
3.36
1.78
2.73
3.11
1.57
3.30
2 928
2 378
2.778
3.157
3 549
3.247
2.605
2.908
3.253
3.686
3.98
3.54
3.47
3.67
4.03
4.12
3.88
3.95
4.00
4.19
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
5.89"
5.82
3.85
2.97
3.26
3.55
3.97
4.82
4.50
4.50
4.50
4.50
3.53
3.00
3.00
3.23
3.55
3.22
1.96
2.68
3.18
3.50
1965
1966
1967
1968
1969
3 954
4.881
4.321
5 339
6 677
4.055
5.082
4.630
5.470
6.853
4.22
5.23
5.03
5.68
7.02
4.28
4.92
5.07
5.65
6.67
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
5.81
6.25
6.46
6.97
7.80
4.38
5.55
5.10
5.90
7.83
4.54
5.63
5.61
6.30
7.96
4.04
4.50
4.19
5.16
5.87
4.07
5.11
4.22
5.66
8.20
1970
1971
1972...
1973
1974
6.458
4 348
4.071
7 041
7.886
6.562
4.511
4.466
7.178
7.926
7.29
5.65
5.72
6.95
7.82
7.35
6.16
6.21
6.84
7.56
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
8.45
7.74
7.60
7.95
8.92
7,72
5.11
4.69
8.15
9.87
7.91
5.72
5.25
8.03
10.81
5.95
4.88
4.50
6.44
7.83
7.18
4.66
4.43
8.73
10.50
1975
1976
1977, . .!
1978
1979
5.838 6.122
4.989 5.266
5 265 5.510
7,221 7.572
10.041 10.017
7.49
6.77
6.69
8.29
9.71
7.99
7.61
7.42
8.41
9.44
8.83
8.43
8.02
8.73
9,63
10.61
9.75
8.97
9.49
10.69
6.89
6.49
5.56
5.90
6.39
9.01
8.99
9.01
9.54
10.77
6.33
5.35
5.60
7.99
7
10.91
7.86
6.84
6.83
9.06
12.67
6.25
5.50
5.46
7.46
10.28
5.82
5.05
5.54
7.93
11.19
1980
11.506 11.374
11.55
11.46
11.94
13.67
8.51
12.65
12.29
15.27
11.77
13.35
1929
.
1955
1956
1957
1958
1959...
. ..
1960.
.
1961 ...
1962...
1963
1964 . . . .
.
See next page for continuation of table.
308
1.00
1.00
1.00
M.00
6
1.00
•1.00
1.00
1.34
1.50
TABLE B-65.—Bond yields and interest rates, 1929-80—Continued
[Percent per annum]
Corporate
bonds
(Moody's)
U.S. Treasury securities
Year or month
(new
issues)'
Constant
maturities 2
Aaa
Highgrade
municipal
bonds
(Standard &
Poor's)
Prime
commercial
paper.
Prime rate
charged by
banks*
months
month month
3
years
10
years
6.448
6.457
6.319
6.306
6.430
6.707
6.685
6.740
6.644
6.700
7.019
7.200
7.61
7.67
7.70
7.85
8.07
8.30
7.96
8.03
8.04
8.15
8.35
8.46
8.41
8.47
8.47
8.56
8.69
8.76
9.17
9.20
9.22
9.32
9.49
9.60
5.60
5.51
5.49
5.71
5.97
6.13
9.15
9.18
9.26
9.30
9.37
9.46
6.79
6.80
6.80
6.86
7.11
7.63
7% -8
8 -8
8 -8
8 -8
8 -8*4
8*4 -9
7.074
7.036
7.836
8.132
8.787
9.122
7.471
7.363
7.948
8.493
9.204
9.397
8.54
8.33
8.41
8.62
9.04
9.33
8.64
8.41
8.42
8.64
8.81
9.01
8.69
8.69
8.89
9.03
9.16
9.60
9.48
9.42
9.59
9.83
9.94
6.18
5.98
5.93
5.95
6.03
6.33
9.57
9.70
9.73
9.83
9.87
10.02
7.91
7.90
8.44
9.03
10.23
10.43
9 -9
9 -9%
9y 4 - 9 %
9%-ioy*
10*4-11*4
11*4-11%
9.351
9.265
9.457
9.493
9.579
9.045
9.501
9.349
9.458
9.498
9.531
9.062
9.50
9.29
9.38
9.43
9.42
8.95
9.10
9.10
9.12
9.18
9.25
8.91
9.25
9.26
9.37
9.38
9.50
9.29
10.13
10.08
10.26
10.33
10.47
10.38
6.25
6.19
6.16
6.14
6.10
5.99
10.18
10.20
10.30
10.36
10.47
10.66
10.32
10.01
9.96
9.87
9.98
9.71
9.262
9.450
10.182
11.472
11.868
12.071
9.190
9.450
10.125
11.339
11.856
11.847
8.94
9.14
9.69
10.95
11.18
10.71
8.95
9.03
9.33
10.30
10.65
10.39
9.20
9.23
9.44
10.13
10.76
10.74
10.29
10.35
10.54
11.40
11.99
12.06
6.05
6.10
6.40
6.98
7.19
7.09
10.78
11.01
11.02
11.21
11.37
11.64
9.82
10.39
11.60
13.23
7
13.26
12.80
Jan
Feb..
Mar..
Apr.
May ..
June..
12.036
12.814
15.526
14.003
9.150
6.995
11.851
12.721
15.100
13.618
9.149
7.218
10.88
12.84
14.05
12.02
9.44
8.91
10.80
12.41
12.75
11.47
10.18
9.78
11.09
12.38
12.96
12.04
10.99
10.58
12.42
13.57
14.45
14.19
13.17
12.71
7.21
8.04
9.09
8.40
7.37
7.60
11.87
11.93
12.62
13.03
13.68
12.66
12.66
13.60
16.50
14.93
9.29
8.03
July
Aug
8.126
9.259
10.321
11.580
13.888
15.661
8.101
9.443
10.546
11.566
13.612
14.770
9.27
10.63
11.57
12.01
13.31
13.65
10.25
11.10
11.51
11.75
12.68
12.84
11.07
11.64
12.02
12.31
12.97
13.21
12.65
13.15
13.70
14.23
14.64
15.14
8.62
8.95
9.11
9.55
10.09
12.48
12.25
12.35
12.61
13.04
13.27
8.29
9.61
11.04
12.32
14.73
16.49
1978:
Jan..
Feb..
Mar...
t:
June .
July...
Aug...
Sept
Oct..
Nov.
Dec .
1979*
Jan..
Feb.
Mar..
t.
June..
July...
Aug..
Sept.
Oct..
Nov...
Dec...
n%-u%
im-n%
n%-n%
3
H /4-ll%
11%-11%
11%-llH
11*4-11%
13*4-15
155
Discount
rate,
Federal
Reserve
Bank of
New York 4
6 -6*4
SY2 -BV2
6%
6y 2
6y 2
7
-6*4
-6*4
-7
-7
7 -7y 4
1% - 7 %
7% -8
8 -8%
9
9
Federal
funds
rate*
6.70
6.78
6.79
6.89
7.36
7.60
7.81
8.04
8.45
8.96
9.76
10.03
-9*4
-9*4
-9*4
-9*4
9 Ms -9Y2
10.07
10.06
10.09
10.01
10.24
10.29
9*4-10
10 -10*4
10*4-11
U -12
12 -12
12 -12
10.47
10.94
11.43
13.77
13.18
13.78
12
12
13
13
13
12
-12
-13
-13
-13
-12
-11
13.82
14.13
17.19
17.61
10.98
9.47
11
10
10
11
11
12
-10
-10
-11
-11
-12
-13
9.03
9.61
10.87
12.81
15.85
18.90
9*4
9*4
9*4
9y*
1980:
Oci
SP-:Nov
Dec
1
2
3
15%16%
16%-19*4
19*4-19*4
18*6-14
14 -12
12 -11
11 -11*4
U%-13
14*4-17%
17%-21*4
Rate on new issues within period; bank-discount basis.
Yields on the more actively traded issues adjusted to constant maturities by the Treasury Department.
Effective rate (in the primary market) on conventional mortgages, reflecting fees and charges as weft as contract rate and
assuming
on the average, repayment at end of 10 years. Rates beginning January 1973 not strictly comparable with prior rates.
4
Average effective rate for the year, except for prime rate for 1929-33 and 1947-48, which are ranges of the rate in effect during
the5 period; opening and closing rate for the month.
Since July 19, 1975, the daily effective rate is an average of the rates on a given day weighted by the volume of transactions at
these rates. Prior to that date, the daily effective rate was the rate considered most representative of the day's transactions, usually
the6 one at which most transactions occurred.
From October 30, 1942, to April 24, 1946, a preferential rate of 0.50 percent was in effect for advances secured by Government
securities
maturing in 1 year or less.
7
Beginning November 1979, data are for 6-months paper.
8
On May I , range of 18*4-19 was in effect.
Sources: Department of the Treasury, Board of Governors of the Federal Reserve System, Federal Home Loan Bank Board (FHLBB),
Moody's Investors Service, and Standard & Poor's Corporation.
309
TABLE B-66—Consumer credit outstanding and net change, 1950-80
[Millions of dollars]
Amount outstanding (end of month)
Year and month
1950: Dec.
1951: Dec.
1952: Dec
1953: Dec.
1954: Dec
1955: Dec.
1956: Dec
1957: Dec..
1958: Dec.
1959: Dec .
I960: Dec
1961: Dec
1962: Dec
1963: Dec
1964: Dec
1965: Dec.
1966: Dec
1967: Dec .
1968: Dec
1969: Dec
1970:
1971:
1972:
1973:
1974:
1975:
1976:
1977:
1978:
1979:
Dec
Dec
Dec .
Dec.
Dec ,
Dec.
Dec.
Dec...
Dec...
Dec.
Installment credit >
Total
25,641
27,268
32,551
36,736
38,192
45,348
49,268
52,191
52,702
60,741
65,104
67,635
73,917
82,805
92,591
103,207
109,749
115,430
126,949
137,742
143,113
157,795
177,639
203,077
213,427
223,140
248,916
289,133
337,713
380,528
Total
Automobile
Revolving 2
6,015
15,503
5,958
16,220
7,635
20,470
9,685
24,254
9,747
24,891
30,269 13,471
14,484
33,171
35,443 15,472
14,258
35,339
16,632
41,123
18,083
45,051
46,027 17,599
50,994 19,924
57,829 22,842
65,572 25,817
73,881 29,355
79,339 30,992
83,148 31,131
91,681 34,348 2,105
101,161 36,946 3,720
105,528 36,325 5,128
8,528
118,255 40,519
133,173 47.862 9,700
155,108 53,772 11,709
164,594 54,266 13,681
171,996 57,242 15,019
193,525 67,707 17,189
230,564 82,911 39,274
273,645 101,647 48,309
312,024 116,362 56,937
Mobile
home 3
Other
2,461
7,226
9,526
13,580
14,642
14,434
14,573
14,945
15,235
16,838
9,488
10,262
12,835
14,569
15,144
16,798
18,687
19,971
21,081
24,491
26,968
28,428
31,070
34,987
39,755
44,526
48,347
52,017
55,228
60,495
61,614
61,982
66,085
76,047
82,005
85,301
94,056
93,434
108,454
121,887
Net change from preceding period
Noninstallment
credit *
10,138
11,048
12,081
12,482
13,301
15,079
16,097
16,748
17,363
19,618
20,053
21,608
22,923
24,976
27,019
29,326
30,410
32,282
35,268
36,581
37,585
39,540
44,466
47,969
48,833
51,144
55,391
58,569
64,068
68,504
Installment
credit l
Total
Total
Automobile
Noninstallment
credit *
3,271
717
4,250
1,677
3,784
2,050
637
62
5,378
3,724
2,902
1,013
2,272
988
- 1 0 4 -1,214
5,784
2,374
1,518
910
1,033
401
819
1,778
1,018
651
615
2,255
4,363
2,531
6,282
8,888
9,786
10,616
6,542
5,681
11,519
10,793
3,928
976
4,967
6,835
7,743
8,309
5,458
3,809
8,533
9,480
1,451
-484
2,325
2,918
2,975
3^38
1,637
139
3,217
2,598
435
1,555
1,315
2,053
2,043
2,307
1,084
1,872
2,986
1,313
5,371
14,682
19,844
25,438
10,350
9,713
25,776
40,217
48,580
42,815
4,367
12,727
14,918
21,935
9,486
7,402
21,529
37,039
43,081
38,379
-621
4,194
7,343
5,910
494
2,976
10,465
15,204
18,736
14,715
1,004
1,955
4,926
3,503
864
2,311
4,247
3,178
5,499
4,436
4,789
1,627
5,283
4,185
1,456
7,156
3,920
2,923
511
8,039
Seasonally adjusted 6
1979:
Jan.
Feb..
Mar...
May.
June.
July..
Aug.
Sept.
Oct
Nov
Dec.
1980:
Jan
Feb
Mar...
ft
June.
July.
Aug
a..
Nov..
337,603
338,995
342,678
346,864
352,096
356,241
359,020
364,224
368,545
371,644
375,268
380,528
273,863
274,770
277,321
281,191
285,717
289,928
293,151
298,006
301,978
304,370
307,336
312,024
102,419 47,800
103,511 47,068
105,456 46,770
107,188 47,245
109,279 47,855
111,121 48,545
112,187 48,918
113.685 50,304
115,190 51,230
115,668 51,928
116,102 53,270
116,362 56,937
15,401
15,601
15,855
15,925
16,107
16,236
16,318
16,487
16,584
16,718
16,793
16,838
108,243
108,594
109,240
110,833
112,476
114,026
115,728
117,530
118,974
120,056
121,171
121,887
63,740
64,221
65,357
65,673
66,379
66,313
65,869
66,218
66,567
67,274
67,932
68,504
5,602
5,897
5,383
5,288
3,748
2,322
4,214
4,220
3,350
3,809
3,166
2,611
2,031
1,681
1,579
1,388
1,140
3,118
3,524
5,234
4,705
3,410
2,608
2,816
2,731
4,008
3,033
2,694
2,033
816
871
1,713
954
794
1,014
1,226
1,672
716
575
378,277
377,046
376,334
374,491
371,732
370,018
371,917
374,172
375,526
376,151
311,012
310,149
309,127
307,831
305,788
304,399
303,853
305,763
306,926
307,222
308,051
116,719
117,202
117,642
117,502
117,058
116,456
116,125
116,868
116,781
116,657
116,517
16,832
16,875
16,944
16,974
16,912
16,988
17,004
17,068
17,113
17,276
17,293
121,205
120,803
120,272
119,665
118,593
117,913
117,688
118,056
118,626
118,691
118,937
67,265
66,897
67,207
66,660
65,944
65,619
1,959
2,517
1,277
-3,827
-4,102
-1,961
2,727
1,538
2,403
982
654
513
= 1,671 -^643
= 2,677 -1,041
-2,045 = 1,026
-=768
114
623
-2,156
-1,425
84
68,064
68,409
68,600
68,929
-544
835
1,009
524
-717
355
84
201
245
655
346
=46
= 178
56,256
55,269
54,269
53,690
53,225
53,042
53,036
53,771
54,406
54,598
55,304
1
-1,199
489
1,055
702
839
1,388
1,677
2,033
1,479
582
289
302
793
Installment credit covers most short- and intermediate-term credit extended to individuals through regular business channels,
usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be
repaid
(or with the option of repayment) in two or more installments.
2
Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Prior to
1968, included in "other," except gasoline companies, included in noninstallment credit prior to 1971. Beginning 1977, includes openend credit at retailers, previously included in ''other. Also beginning 1977, some retail credit was reclassified from commercial into
consumer
credit. Credit secured by real estate is generally excluded.
3
Not reported separately prior to July 1970.
4
Because of inconsistencies in the data and infrequent benchmarking, series on noninstallment credit is no longer published by the
Federal
Reserve Board on a regular basis. Data are shown here as a general indication of trends.
6
For installment credit, computed as the difference between extensions and liquidations (both seasonally adjusted); see also Table
B 67, For noninstallment credit, computed as the change from one month to another in the seasonally adjusted amount outstanding.
Source: Board of Governors of the Federal Reserve System.
310
TABLE B-67—Consumer installment credit extended and liquidated, 1930-80
[Millions of dollars; monthly data seasonally adjusted]
Total
Year or month
Liquidated
Automobile
Extended
Liquidated
22,130 18,861
24,583 23,867
30,616 26,355
32,579 28,794
32,265 31,625
40,263 34,882
40,886 37,899
43,101 40,759
41,138 41,290
49,134 43,395
8,445
8,951
11,610
12,740
11,741
16,732
15,572
16,554
14,287
18,008
1960
1961
1962
1963 ..
1964
1965
1966
1967
1968. ..
1969
50,827 47,022
50,598 49,735
57,562 52,601
64,660 57,822
72,445 64,616
79,918 71,616
83,821 78,365
89,058 85,194
101,426 92,075
109,422 99,945
18,112
16,477
20,164
22,617
24,792
27,913
27,844
27,623
32,228
33,686
1970 .
1971 .
1972
1973
1974
1975
1976
1977
1978
1979
115,132
138,046
151,749
173,035
172.765
180,083
210,740
257,600
297,668
324777
1950
1951
1952
1953
1954
1955.
1956
1957
1958
1959
1979:
Jan
Feb...
Mar ..
June.
July .
Aug...
Sept...
Oct ..
Dec . .
1980:
Jan
Feb
Mar
iday"
June. ...
July
Aug
Sept
Oct
Extended
Revolving»
Extended
Mobile home 2
Extended
Liquidated
Other
Extended
Liquidated
6,906
9,008
9,932
10,689
11,679
13,008
14,559
15,567
15,501
15,638
13,685
15,632
19,006
19,839
20,524
23,531
25,314
26,547
26,026
31,126
11,955
14,859
16,423
18,105
19,946
21,874
23,340
25,192
25,789
27,757
16,661
16,960
17,840
19,699
21,815
24,386
26,206
27,482
29,013
31,090
32,715
34,121
37,398
42,043
47,653
52,005
55,977
61,435
65,717
69,554
30,361
32,775
34,761
38,123
42,801
47,230
52,159
57,712
60,386
64,288
478 74,980
1,754 76,957
2,975 78,267
4,184 87,666
4,720 87,250
4,536 86,381
4,720 98,204
5,341 88,651
5,126 99,150
4,868 104,231
71,188
72,705
72,246
78,238
81,294
83,079
89,417
75,012
84,128
90,796
3,481
6,182
Liqui-
2,726
4,567
110,352 30,857 31,414 8,689 7,278
127,789 36,706 32,512 21,862 20,818
136,787 43,702 38,081 24,659 23,485
152,817 49,606 43,696 28,702 26,699
163,276 46,514 46,019 33,213 31,243
172,675 52,420 49,444 36,956 35,616
189,179 63,743 53,278 43,934 41,764
222,138 75,641 60,437 87,596 81,348
254,589 87,981 69,245 105,125 96,090
286,396 ,93,901 79,186 ll20,174 1111546
612
2,521
5,121
7,061
5,788
4,326
4,859
5,712
5,412
6,471
22,368
23,003
22,823
23,121
24,429
23,620
7,924
7,90S
7,789
7,955
8,100
7,427
5,893
6,224
6,210
6,567
6,960
6,439
9,553
9,871
9,533
9,724
9,941
9,919
8,716
8,989
8,877
8,891
9,164
9,326
613
675
615
496
609
498
323
399
414
431
424
430
8,492
8,772
8,236
8,755
8,945
8,387
7,436
7,391
7,322
7,232
7,881
7,425
27,108 24,292
27r593 24,862
28,109 24,101
27,712 24,679
26,895 24,201
26,638 24,605
7,586
7,802
8,380
7,814
7,470
7.735
6,770 9,949
6,931 10,303
6,667 10,356
6,860 10,439
6,676 10,500
6.721 10,146
9,442
9,494
9,610
9,579
9,781
9.745
492
527
507
531
488
453
430
413
411
405
398
368
9,081
8,961
8,866
8,928
8,437
8.304
7,650
8,024
7,413
7,835
7,346
7771
27,923
27,581
25,881
23,220
22,093
22,349
25,196
25,178
25,227
24,891
24,770
24,394
8,441
7,973
7,372
5,922
5,533
5,550
6,903
6,991
6,859
6,565
6,574
6,576
10,500
10,756
10,634
10,347
10,302
10,341
9,971
10,034
10,373
10,677
10,589
10,436
522
452
435
397
299
424
418
397
380
383
349
366
8,460
8,400
7,440
6,554
5,959
6,034
7,904
7,756
7,615
7,266
7,258
7,016
23,997
26,176
27,064
27,365
25,991
25,196
25,687
26,009
26,663
25,152
6,068
7,400
7,518
7,544
7,117
6,785
7,045
7,434
7,343
6,872
10,679
10,700
11,143
11,124
10,953
10,641
10,419
10,665
10,851
10,688
377
415
442
513
424
363
382
399
372
400
6,873
7,661
7,961
8,184
7,497
7,407
7,841
7511
8,097
7,192
26,582
27,223
26,173
26,930
27,595
26,231
1
Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Prior to
1968, included in "other," except gasoline companies included in noninstallment credit prior to 1971. Beginning 1977, includes openend credit at retailers, previously included in other. Also beginning 1977, some retail credit was reclassified from commercial into
consumer
credit. Credit secured by real estate is generally excluded.
2
Not reported separately prior to July 1970.
Note.—Installment credit covers most short- and intermediate-term credit extended to individuals through regular business channels,
usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be
repaid (or with the option of repayment) in two or more installments.
Liquidated credit includes repayments, chargeoffs, and other credit.
See also Table B-66.
Source: Board of Governors of the Federal Reserve System.
311
TABLE B-68.—Mortgage debt outstanding by type of property and of financing, 1939-80
[Billions of dollars]
Nonfarm properties by type of mortgage
Nonfarm properties
End of year
or quarter
All
properties
Conventional3
Government underwritten
properties
Total
Multi- Com1- to 4- family
family prop- mercial
proper- Total2
houses erties
ties'
1- to 4-family houses
Total
VA
FKA
guarinsured anteed
Total
1-to 4family
houses
1939
35.5
6.6
28.9
16.3
5.6
7.0
1.8
1.8
1.8
27.1
14.5
1940
1941
1942
1943
1944
36.5
37.6
36.7
35 3
34.7
6.5
6.4
6.0
54
4.9
30.0
31.2
30.8
299
29.7
17.4
18.4
18.2
17 8
17.9
5.7
5.9
5.8
58
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
41
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
49
5.1
5.3
5.6
30.8
36.9
43.9
50.9
57.1
18.6
230
28.2
33.3
37.6
5.7
61
6.6
7.5
8.6
4.3
6.3
9.8
13.6
17.1
4.3
6.1
9.3
12.5
15.0
4.1
3.7
3.8
5.3
6.9
0.2
2.4
5.5
7.2
8.1
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
1.3.5
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
26.5
30.6
34.1
37.3
40.0
44.6
49.0
54.9
61.5
69.2
14.3
16.9
18.9
20.8
22.6
1950
1951
1952
1953
1954
6.4
7.7
9.1
10.2
10.8
11.5
12.5
13.4
14.5
16.3
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
120.9
134.6
1461
160.7
1787
88.2
99.0
107 6
117.7
1309
14.3
14.9
153
16.8
18 7
18.3
20.7
23.2
26.1
29.2
42.9
47,8
516
55.1
593
38.9
43.9
47 2
50.1
538
14.3
15.5
165
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
604
67.6
77 0
1960
1961
1962
1963
1964
207.5
228.0
251.4
278.5
305.9
9.0
9.8
10.4
11.1
121
12.8
13.9
15.2
16.8
18.9
194.7
214.1
236.2
261.7
287.0
141.9
154.7
169.3
186.4
203.4
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
132.3
148.5
166.9
188.2
209.8
85.5
95.6
107,1
120.5
134.1
1965
1966
1967.. ..
1968..
1969
333.3
356.5
381.2
410.9
441.4
21.2
23.1
25.1
27.4
29.2
312.1
333.4
356.1
383.5
412.2
220.5
232.9
247.3
264.8
282.8
37.2
40.3
43.9
47.3
52.3
54.5
60.1
64.8
71.4
77.1
81.2
84.1
88.2
93.4
100.2
73.1
76.1
79.9
84.4
90.2
42.0
44.8
47.4
50.6
54.5
31.1
31.3
32.5
33.8
35.7
231.0
249.3
267.9
290.1
312.0
147.4
156.9
167.4
180.4
192.7
1970
1971..
1972..
1973
1974
474.2
526.5
603.4
682.3
742.5
30.3
32.2
35.8
41.3
46.3
443.8
494.3
567.7
641.1
696.2
298.1
328.3
372.2
416.2
449.4
60.1
70.1
82.8
93.1
100.0
85.6
95.9
112.7
131.7
146.9
109.2
120.7
131.1
135.0
140.2
97.3
105.2
113.0
116.2
121.3
59.9
65.7
68.2
66.2
65.1
37.3
39.5
44.7
50.0
56.2
334.6
373.5
436.5
506.0
556.0
200.8
223.1
259.2
300.0
328.1
801.5
889.2
1,023.5
1,172.8
1,333,6
50.9
57.0
65.8
76.2
92.4
750.7
832.2
957.7
1,096.6
1.241.2
490.8
556.5
656.6
761.8
872.1
100.6
104.5
111.8
122.0
130.7
159.3
171.2
189.3
212.7
238.4
147.0
154.1
161.7
176.4
199.0
127.7
133.5
141.6
153.4
172.9
66.1
66.5
68.0
71.4
81.0
603.7
61.6
678.0
67.0
795.9
73.6
920.2
82.0
92.0 1,042.2
363.0
422.9
515.0
608.5
699.1
1,051.7
1,092.2
1,133.5
1,172.8
68.1
70.9
73.8
76.2
983.7
1,021.4
1,059.7
1,096.6
676.4
706.3
734.8
761.8
113.7
116.4
119.4
122.0
193.6
198.7
205.6
212.7
165.3
167.4
174.7
176.4
144.7
146.7
150.7
153.4
68.6
69.2
69.9
71.4
76.1
77.6
80.8
82.0
818.4
853.9
885.1
920.2
531.7
559.6
584.0
608.5
III
III...
IV
1,206.2
1,252.4
1,295.9
1,333.6
80.2
85.1
89.2
92.4
1,126.0
1,167.4
1,206.8
1,241.2
784.5
817.0
846.3
872.1
124.0
125.9
128.3
130.7
217.5
224.5
232.2
238.4
183.0
187.1
194.3
199.0
158.4
162.2
168.2
172.9
73.9
76.4
79.1
81.0
84.5
943.1
85.8
980.3
89.2 1,012.5
92.0 1,042.2
626.2
654.7
678.1
699.1
1980:
1
II....
III...
1,363.8
1,386.3
1,149.2
97.0
101.4
104.3
1,266.8
1,285.0
1,314.9
891.2
904.2
926.2
132.1
133.6
136.0
243.5
247.1
252.7
207.5
210.8
180.8
184.1
86.0
87.4
99.4
94.8 1,059.2
96.7 1,074.1
710.3
720.1
1975
1976..
1977..
1978..
1979..
. .
1978:
III™
IV...
1979:
"' .
1
2
3
Includes negligible amount of farm loans held by savings and loan associations.
Includes FHA insured multifamily properties, not shown separately.
Derived figures. Total includes multifamily and commercial properties, not shown separately.
Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations.
312
TABLE B-69-—Mortgage debt outstanding by bolder, 1939-80
[Billions of dollars]
Major financial institutions
End of year or quarter
Total
Total
Savings
and
loan
associations
Mutual
savings
banks
Other holders
Commercial
banks1
Life
insurance
companies
Federal
and
related
agen-2
cies
Individuals
and
others
1939
35.5
18.6
3.8
4.8
4.3
5.7
5.0
11.9
1940
1941
1942
1943
1944
36.5
37.6
36.7
353
347
19.5
20.7
20.7
20 2
20.2
4.1
4.6
4.6
46
4.8
4.9
4.8
4.6
4.4
4.3
4.6
4.9
4.7
4.5
4.4
6.0
6.4
6.7
67
6.7
4.9
4.7
4.3
3.6
3.0
12.0
12.2
117
115
11.5
1945
1946
1947
1948.
1949
35.5
41.8
48.9
56.2
62.7
21.0
26.0
31.8
37.8
42.9
5.4
7.1
8.9
10.3
11.6
4.2
4.4
4.9
5.8
6.7
4.8
7.2
9.4
10.9
11.6
6.6
7.2
87
10.8
12.9
2.4
2.0
1.8
1.8
2.3
12.1
13.8
15.3
16.6
17.5
1950
1951
1952
1953
1954
72.8
82 3
91.4
101.3
113.7
51.7
59 5
66.9
75.1
85.7
13.7
156
18.4
22.0
26.1
8.3
9.9
11.4
12.9
15.0
13.7
14 7
15.9
16.9
18.6
16.1
19.3
21.3
23.3
26.0
2.8
3.5
4.1
4.6
4.8
18.4
19 3
20.4
217
23.2
1955
1956 .... .
1957
1958.
1959 .
129.9
144.5
156.5
171.8
190.8
99.3
111.2
119.7
131.5
145.5
31.4
35.7
40.0
45.6
53.1
17.5
19.7
21.2
23.3
25.0
21.0
22.7
23.3
25.5
28.1
29.4
33.0
35.2
37.1
39.2
5.3
6.2
77
8.0
10.2
25.3
27.1
29.1
32.3
35.1
1960
1961
1962
1963
1964
207.5
228.0
251.4
278.5
305.9
157.6
172.6
192.5
217.1
241.0
60.1
68.8
78.8
90.9
101.3
26.9
29.1
32.3
36.2
40.6
28.8
30.4
34.5
39.4
44.0
41.8
44.2
46.9
50.5
55.2
11.5
12.2
12.6
11.8
12.2
38.4
43.1
46.3
49.5
527
1965 . . .
1966
1967
1968
1969 . .
333.3
356.5
381.2
410.9
441.4
264.6
280.8
298.8
319.9
339.1
110.3
114.4
121.8
130.8
140.2
44.6
47.3
50.5
53.5
56.1
49.7
54.4
59.0
65.7
70.7
60.0
64.6
67.5
70.0
72.0
13.5
17.5
20.9
25.1
31.1
55.2
58.2
61.4
65.9
71.2
1970
1971
1972
1973
1974
474.2
526.5
603.4
682.3
742.5
355.9
394.2
450.0
505.4
542.6
150.3
174.3
206.2
231.7
249.3
57.9
62.0
67.6
73.2
74.9
73.3
82.5
99.3
119.1
132.1
74.4
75.5
76.9
81.4
86.2
38.3
46.4
54.6
64.8
82.1
79.9
85.9
98.9
112.2
117.8
801.5
889 2
1,023.5
1,172.8
1,333.6
581.2
647 5
745.0
848.1
939.5
278.6
323 0
381.2
432.8
475.8
77.2
816
881
95.2
98.9
136.2
1513
179.0
214.0
246.0
89.2
916
96.8
106.2
118.8
101.0
116 6
140.3
170.5
216.6
119.3
1251
138.2
154.2
177.5
I!
Ill
IV.
1,051.7
1,092.2
1,133.5
1,172.8
764.6
793.8
822.0
848.1
392.4
407.9
420.9
432.8
89.8
91.5
93.4
95.2
184.4
194.5
205.4
214.0
97.9
99.9
102.2
106.2
146.0
152.6
161.4
170.5
141.2
145.8
150.2
154.2
1979:
|
II . .
Ill
IV
1,206.2
1,252.4
1,295.9
1,333.6
866.0
894.4
920.2
939.5
441.4
456.5
468.3
475.8
96.1
97.2
97.9
98.9
220.1
229.6
239.6
246.0
108.4
111.1
114.4
118.8
181.2
192.4
203.8
216.6
159.0
1657
171.9
177.5
1,363.8
1,386.3
1,419.2
951.9
958.9
977.5
479.1
481.2
492.1
99.2
99.2
99.3
251.2
253.1
258.0
122.5
125.5
128.1
228.8
238.4
246.1
183.2
189.1
1957
1975
1976
1977
1978 ..
1979
1978.
19801 .
1!
Ill
...
1
Includes loans held by nondeposit trust companies, but not by bank trust departments.
"Includes
Includes former Federal National Mortgage
M o g a g e Association
Assciation (FNMA)
( N M A ) and new Govement
Government National Mortgage Association
Associaton (GNMA), as well
F d l Housing
H i A
dmiitti
V
t a Administration,
Adiitati
Pbli H
i A
d m i i t t i o Farmers
F
H
d m i i t t i o n and
d iin earlier
li
Administration,
Veterans
Public
Housing
Administration,
Home A
Administration,
as Federal
yyea
r s Reconstruction Finance Corporation, Homeowners Loan Corporation, and Federal Farm Mortgage Corporation. Also includes GNMA
Pools and U.S.-sponsored agencies such as new FNMA, Federal Land Banks, 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.
313
GOVERNMENT FINANCE
TABLE B-70.—Federal budget receipts, outlays, and debt,fiscalyears 1971-82
[Millions of dollars; fiscal years]
Actual
Description
1971
Transition
quarter
1972
1973
1974
1975
208,649
232,225
264,932
280,997
300,005
81,773
. 148,846 161,357
92,193
72,959
-13,156 -21,325
181,219
104,846
-21,133
187,505
118,590
-25,098
201,099
133,695
-34,789
54,085
32,071
=4,383
1976
BUDGET RECEIPTS AND OUTLAYS:
Total receipts
Federal funds
Trust funds
Interfund transactions...
Total outlays
Federal funds
Trust funds
Total Interfund
surplus ortransactions...
deficit ( - )
Federal funds
Trust funds
188,392
133,785
66,193
-11,586
211,425
232,021
247,074
269,620
326,151
366,418
94,728
163,651
59,360
-11,586
178,110
67,067
-13,156
186,951
81,448
-21,325
199,918
90,835
-21,133
240,081
111,168
-25,098
269,921
131,286
-34,789
65,088
34,023
-4,383
-23,033
-23,373
-14,849
-4,688
-45,154
-66,413
»12,956
-29,866
6,833
-29,264
5,892
-25,594
10,745
-18,699
14,011
-52,576
7^22
-68,822
2,409
-11,004
= 1,952
OUTSTANDING DEBT, END OF PERIOD:
Gross Federal debt
409,467
437,329
468,426
486,247
544,131
631,866
646,379
Held by Government agencies
Held by the public
105,140
304,328
113,559
323,770
140,194
346,053
147,225
396,906
151,566
480,300
148,052
498,327
Federal Reserve System
65,518
238,810
71,426
252,344
125,381
343,045
75,181
267,863
80,648
265,405
84,993
311,913
94,714
385,586
96,702
401,625
188,392
208,649
232,225
264,932
280,997
300,005
81,773
86,230
26,785
48,578
16,614
3,735
2,591
94,737
32,166
53,914
15,477
5,436
3,287
103,246
36,153
64,542
16,260
4,917
3,188
118,952
38,620
76,780
16,844
5,035
3,334
122,386
40,621
86,441
16,551
4,611
3,676
131,603
41,409
92,714
16,963
5,216
4,074
38,801
8,460
25,760
4,473
1,455
1,212
3,533
325
3,252
381
3,495
426
4,845
524
5,777
934
5,451
2,575
1,500
112
211,425
232,021
247,074
269,620
326,151
366,418
94,728
75,808
4,097
4,180
1,031
3,909
4,288
2,358
8,050
2,916
76,550
4,693
4,173
1,270
4,235
5,280
2,216
8,388
3,422
74,541
4,066
4,030
1,179
4,763
4,852
924
9,065
4,595
77,781
5,681
3,977
837
5,670
2,227
3,925
9,172
4,134
85,552
6,922
3,989
2,169
7,336
1,659
5,607
10,388
3,738
89,430
5,552
4,370
3,127
8,124
2,504
3,792
13,435
4,767
22,307
2,193
1,161
794
2,532
581
1,392
3,304
1,340
9,839
14,716
55,426
9,776
1,299
2,020
535
19,602
12,519
17,467
63,913
10,730
1,650
2,415
673
20,563
12,735
18,832
72,965
12,013
2,131
2,568
7,351
22,782
12,344
22,073
84,437
13,386
2 462
3,243
6,890
28,032
15,870
27,648
108,576
16,597
2,942
3,133
7,187
30,911
18,737
33,448
127,390
18,432
3,320
2,948
7,235
34,511
5,162
8,721
32,797
3,962
859
883
2,092
7,216
-8,427
-8,137
-12,318
-16,651
-14,075
-14,704
-2,567
-2,611
- 4,765
-2,768
-5,089
-279
-2,927
-5,436
-3,956
-3,319
-6,583
-6,748
-3,980
-7,667
-4,242
-7,800
-985
-270
-2,428
-2,662
-1,311
Other
BUDGET RECEIPTS
Individual income taxes,
Corporation income taxes
Social insurance taxes and contributions
Excise taxes
Estate and gift taxes
Customs duties..
Miscellaneous receipts:
Deposits of earnings by Federal Reserve
System
....
Allother
BUDGET OUTLAYS
National defense
International affairs
General science, space, and technology
Energy..
Natural resources and environment.
Agriculture
Commerce and housing credit...
Transportation
Community and regional development.
Education, training, employment, and social services
Health
Income security
Veterans benefits and services
Administration of justice. . .
General government.
...
General purpose fiscal assistance.
Interest
Allowances
Undistributed offsetting receipts
Composition of undistributed offsetting receipts:
Employer share, employee retirement,
Interest received by trust funds.
...
Rents and royalties on the Outer Continental Shelf
1,051
See next page for continuation of table.
314
TABLE B-70.—Federal budget receipts, outlays, and debt,fiscalyears 1971-82—Continued
[Millions of dollars; fiscal years]
Actual
Description
Estimate
1978
1979
357,762
401,997
465,940
520,050
607,525
711,780
241,312
152,763
-36,313
270,484
168,012
-36,498
316,351
189,641
-40,052
350,849
213,875
-44,674
415,239
242,545
-50,259
484,105
286,113
-58,437
402,710
450,804
493,635
579,613
662,740
739,296
295,756
143,267
-36,313
331,985
155,318
-36,498
362,381
171,305
-40,052
419,214
205,074
-44,674
474,932
238,068
-50,259
530,817
266,916
-58,437
-44,948
-48,807
-27,694
-59,563
-55,215
-27,516
-54,444
9,496
-61,804
12,694
-46,030
18,335
-68,364
8,801
-59,693
4,477
-46,712
19,196
709,138
780,425
833,751
914,317
992,398 1,057,664
157,295
551,843
169,477
610,948
115,480
495,468
199,212
715,105
120,846
594,259
205,293
787,105
105,004
446,839
189,162
644,589
115,594
528,996
357,762
401,997
465,940
520,050
607,525
711,780
157,626
54,892
108,688
17,548
7,327
5,150
180,988
59,952
123,410
18,376
5,285
6,573
217,841
65,677
141,591
18,745
5,411
7,439
244,069
64,600
160,747
24,329
6,389
7474
284,013
66,009
184,824
44,393
6,909
331,677
64,648
214,664
69,633
7,668
7,800
5,908
622
6,641
772
8,327
910
11,767
975
13,069
899
14,710
402,710
450,804
493,635
579,613
662,740
739,296
97,501
4,813
4,677
4,172
10,000
5,532
98
14,636
6,348
20,985
38,785
137,900
18,038
3,600
3,169
9,499
38,009
105,186
5,922
4,742
5,861
10,925
7,731
3,324
15,445
11,070
26,463
43,676
146,181
18,974
3,802
3,706
9,601
43,966
117,681
6,091
5,041
6,856
12,091
6,238
2,565
17,459
9,542
29,685
49,614
160,159
19,928
4,153
4,093
8,372
52,556
135,856
10,733
5,722
6,313
13,812
4,762
7,782
21,120
10,068
30,767
58,165
193,100
21,183
4,570
4,505
8,584
64,504
161,088
11,314
6,258
8,739
14,110
1,112
3,456
24,054
11,144
31,773
66,032
231,650
22,591
4,786
5,170
6,854
80,405
-15,053
-15,772
-18,488
-21,933
-27,796
184,399
12,152
7,590
11,973
14,039
4,803
8,058
21,551
9,084
34,511
74,636
255,006
24,462
4,882
5,246
6,902
89,946
1,920
-31,863
-4,548
-8,131
-2,374
-4,983
-8,530
-2,259
-5,271
-9,950
-3,267
-5,787
-12,045
-4,101
-6,561
-13,435
-7,800
-6,798
-15,165
-9,900
1977
1980
1981
1982
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 PERIOD:
Gross Federal debt
Held by Government agencies
Held by the public
Federal Reserve System.,
Other
'
BUDGET RECEIPTS....
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts:
Deposits of earnings by Federal Reserve System..
Another
..
BUDGET OUTLAYS...
National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and social services..
Health
Income security
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Interest
Allowances
\
Undistributed offsetting receipts
Composition of undistributed offsetting receipts:
Employer share, employee retirement
Interest received by trust funds
Rents and royalties on the Outer Continental Shelf..
.J.439
225,559
832,105
Note.—Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning with fiscal
year 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis. Beginning October 1976 (fiscal year 1977), the fiscal
year is on an October 1-September 30 basis. The period July 1,1976 through September 30,1976 is a separate fiscal period known as the
transition quarter.
Refunds of receipts are excluded from receipts and outlays.
See "Budget of the United States Government, Fiscal Year 1982" for additional information.
Sources: Department of the Treasury and Office of Management and Budget.
315
TABLE B-l\.—Federal
budget receipts and outlays, fiscal years 1929-82
[Millions of dollars]
Fiscal year
Receipts
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
1950. ..
1951.
1952.
1953
1954 . ..
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
39,485
51,646
66,204
69,574
69,719
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.
65,469
74,547
79,990
79,636
79,249
68,509
70,460
76,741
82,575
92,104
-3,041
4,087
3,249
-2,939
-12,855
1960
1961 .
1962
1963 .
1964 .
92,492
94,389
99,676
106,560
112,662
92,223
97,795
106,813
111,311
118,584
269
-3,406
-7,137
-4,751
-5,922
1965
1966
1967. ..
1968
1969...
116,833
130,856
149,552
153,671
187,784
118,430
134,652
158,254
178,833
184,548
-1,596
-3,796
-8,702
-25,161
3,236
1970
1971. ..
1972
1973
1974
193,743
188,392
208,649
232,225
264,932
196,588
211,425
232,021
247,074
269,620
-2,845
-23,033
-23,373
=-14,849
-4,688
1975
1976
Transition quarter.
1977 ..
1978
1979
280,997
300,005
81,773
357,762
401,997
465,940
326,151
366,418
94,728
402,710
450,804
493,635
-45,154
-66,413
-12,956
-44,948
1980.
1981'
1982»
520,050
607,525
711,780
579,613
662,740
739,296
. .
- 48,807
- 27,694
-59,563
-55,215
-27,516
1
Estimates.
Note.—Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning with
fiscal year 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977),
the fiscal year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 is a
Oata for 1929-39 are according to the administrative budget and those beginning 1940 according to the unified budget.
Refunds of receipts are excluded from receipts and outlays.
See "Budget of the United States Government, Fiscal Year 1982" for additional information.
Sources: Department of the Treasury and Office of Management and Budget.
316
TABLE B-72.—Relation of Federal Government receipts and expenditures in the national income and
product accounts to the unified budget,fiscalyears 1980-82
[Billions of dollars; fiscal years]
Estimate
Receipts and expenditures
1980
1981
1982
520.0
607.5
711.8
8.6
4.0
-4.4
-1.2
9.7
6.4
10.3
-8.0
-1.5
.3
.2
527.3
614.4
728.2
RECEIPTS
Total budget receipts....
Government contribution for employee retirement (grossing)
Other netting and grossing
Adjustment to accruals
Geographic exclusions
Other
Federal sector, national income and product accounts, receipts
6.3
1.1
-1.5
EXPENDITURES
Total budget outlays
579.6
662.7
739.3
Lending and financial transactions
Government contribution for employee retirement (grossing). ...
Other netting and grossing
Defense timing adjustment
Bonuses on Outer Continental Shelf land leases
Geographic exclusions
Other.....
-10.3
8.6
4.0
-6.1
-6.8
10.3
Federal sector, national income and product accounts, expenditures..
-2.3
-4.5
-.8
9.7
6.4
-.9
5.2
-4.9
-1.1
-5.3
-1.3
578.2
671.0
746.3
22
6.3
6.1
Note.—See Note, Table B-71.
See Special Analysis B, "Special Analyses, Budget of the United States Government, Fiscal Year 1982" for description of these
categories.
Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and
Budget:
317
TABLE B-73.—Government receipts and expenditures, national income and product accounts,
1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Calendar year or quarter
Receipts
Expenditures
State and local
government
Federal Government
Total government
Surplus or
deficit
(-).
national
income
and
product
accounts
Receipts
Expenditures
Surplus or
deficit
<-),
national
Receipts
income
and
product
accounts
Surplus or
deficit
Expenditures
national
income
and
product
accounts
1929
11.3
10.3
1.0
3.8
2.6
1.2
7.6
7.8
=0.2
1933
9.3
10.7
-1.4
2.7
4.0
-1.3
7.2
7.2
=.1
1939
15.4
17.6
-2.2
6.7
8.9
-2.2
9.6
9.6
.0
1940
1941
1942
1943
1944
1945
1946 .. .
1947
1948
1949
17.7
25.0
32 6
49.2
51.2
53.2
510
56.9
58.9
55.9
18.4
28.8
64.0
93.3
103.0
92.7
45.6
42.5
50.5
59.3
-.7
= 3.8
=31.4
=44.1
-51.8
=39.5
5.4
14.4
8.4
=3.4
8.6
15.4
22 9
39.3
410
42.5
391
43.2
43.2
38.7
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
8.3
=2.6
10.0
10.4
10.6
10.9
11.1
11.6
13.0
15.4
17.7
19.5
9.3
9.1
88
8.4
8.5
9.0
11.1
14.4
17.6
20.2
.6
1.3
1.8
2.5
2.7
2.6
1.9
1.0
.1
= .7
1950
1951
1952
1953 . . . .
1954
1955 ,
1956
1957
1958 ...
1959
69.0
85 2
90.1
94.6
89.9
101.1
109 7
116.2
115.0
129.4
61.0
79.2
93.9
101.6
97.0
98.0
104 5
115.3
127.6
131.0
8.0
61
=3.8
=6.9
-7.1
3.1
52
.9
= 12 6
= 1.6
50.0
64 3
67.3
70 0
63.7
72.6
78 0
81.9
78 7
89.8
40.8
57.8
71.1
77.1
69.8
68.1
71.9
79.6
88.9
91.0
9.2
6.5
-3.7
-7.1
-6.0
4.4
61
2.3
= 10 3
= 1.1
21.3
23.4
25.4
27.4
29.0
31.7
35.0
38.5
42.0
46.4
22.5
23 9
25.5
27.3
30.2
32.9
35 9
, 39.8
44 3
46.9
= 1.2
= .4
-.0
,1
= 1.1
-1.3
g
-1.4
-2.4
-.4
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
139.5
144.8
156.7
168.5
174.0
188.3
212.3
228.2
263.1
296.7
136.4
149.1
160.5
167.8
176.3
187.8
213.6
242.4
269.1
286.8
3.1
-4.3
-3.8
.7
-2.3
.5
= 13
-14.2
-6.0
9.9
96.1
98.1
106.2
114.4
114.9
124.3
1418
150.5
174.4
196.9
93.1
101.9
110.4
114.2
118.2
123.8
143.6
163.7
180.5
188.4
3.0
= 3.9
=4.2
-13
.5
-18
= 13.2
=6.0
8.4
49.9
54.0
58.5
63.2
69.5
75.1
84.8
93.6
107.3
120.2
49.8
54.4
58.0
62.8
68.5
75.1
84 3
94.7
107.2
118.7
.1
-.4
.5
.5
1.0
--.0
.5
-1.1
.1
1.5
1970
1971
1972
1973
1974
1975
1976
1977
1978 ..
1979
302.8
322.6
368.3
413.1
455.2
470.5
538.4
605 7
6816
765.2
313.4
342.0
371.6
405.3
460.0
534.3
574.9
624.0
681.9
753.2
-10.6
= 19.4
= 33
7.8
-4.7
-63.8
-36.5
= 18 3
- 2
11.9
191.9
198.6
227 5
258.6
287.8
287.3
331.8
3751
4315
494.4
204.3
220.6
244 3
264.2
299.3
356.6
384.8
421.5
460 7
509.2
-12.4
-22.0
-16 8
= 5.6
-11.5
= 69.3
= 53.1
=46.4
—29 2
= 14.8
135.4
153.0
178 3
195.0
211.4
237.7
267.8
298.0
327 4
351.2
133.5
150.4
164 8
181.6
204.6
232.2
251.2
270.0
298 4
324.4
1.9
2.6
13.5
13.4
6.8
5.5
16.6
28.1
29 0
26.7
1980"
834.2
869.0
= 34.8
538.9
601.2
= 62.3
382.6
355.0
27.6
1978:
I
H
Ill
IV
640.7
674.2
691.2
720.5
658.4
669.3
690.0
709.7
-17.7
49
1.1
10.8
398.6
423 6
440.9
462.7
447.4
451 1
463.7
480.6
=48.8
-27 4
=22.8
-17.9
316.9
328 0
327.2
337.7
285.8
295 7
303.3
309.0
31.1
32 3
23.9
28.7
1979:
I
II
lit
IV
739.7
750.9
775.3
794.7
721.7
737.0
764.0
790.3
18.1
13.9
11.3
4.4
477.0
485.9
500.6
514.0
488.4
494.0
515.8
538.6
-11.5
=8.1
-=15.2
-24.5
340.9
342.7
355.4
365.6
311.4
320.8
328.9
336.7
29.5
21.9
26.5
28.9
1980:
I
||
Ill
815.0
807.6
839.9
824.6
850.2
885.6
=9 6
-42.5
=45.6
528 4
520.9
540.8
564 7
587.3
615.0
36 3
66.5
-74.2
3721
373.9
386.8
345 4
350.0
358.2
26 6
23.9
28.5
...
..
.
Note.—Federal grants-in-aid to State and local governments are reflected in Federal expenditures and State and local receipts. Total
government receipts and expenditures have been adjusted to eliminate this duplication.
Source: Department of Commerce, Bureau of Economic Analysis.
318
TABLE B-74.—Federal Government receipts and expenditures, national income and product accounts,
1958-82
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Expenditures
Receipts
Transfer
payments
Year or quarter
Fiscal year: 2
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967 . .
1968 . .
1969 . .
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980 3
1981 . .
1982 V
Calendar year:
1958
1959.
I960..
1961
1962
1963
1964
J965
1966 ..„
1967
1968
1969
1970
1971 .. .
1972
1973
1974
1975 .. ..
1976
1977
1978. .
1979....
1980*
1979:
I
II
Ill
IV
1980:
I
II*"""
Tota!
Indirect
Personal Corporate business
tax and profits
tax and
nontax
nontax
tax
receipts accruals
accruals
SubsiGrantsdies
PurContriin-aid
less
chases
butions
to
Net
current
of
for
State
1
intersurplus
To
and
est
of
social Total goods
and
To
local paid governinsurserv- persons foreigners
government
ance
ices
ments
enterprises
52.6
58.9
71.5
84.2
91.9
101.0
116.2
133.4
152.7
171.3
194.8
226.3
82.8
91.2
91.3
98.1
106.2
111.7
117.2
118.5
132.7
154.9
172.2
184.6
195.5
212.9
232.7
255.7
278.2
328.8
370.7
411.7
450.5
494.7
578.2
671.0
746.3
51.1
54.8
52.9
55.8
61.0
63.7
65.9
64.6
72.4
86.0
95.0
98.0
97.1
94.9
100.6
101.1
104.5
117.9
125.1
140.3
1507
163.4
190.2
218.5
248.7
40.4
12.4
14.9
17.6
18.3
20.5
23.1
24.0
25.0
33.1
36.7
40.7
46.7
49.3
54.4
62.7
79.5
89.8
94.1
106.5
118.5
137.2
159.0
172.2
88.9
91.0
93.1.
101.9*
110.4
114.2
118.2
123.8
143.6
163.7
180.5
188.4
204.3
220.6
244.3
264.2
299.3
356.6
384.8
421.5
460.7
509.2
601.2
53.9
53.9
53.7
57.4
63.7
64.6
65.2
67.3
78.8
90.9
98.0
97.6
957
96.2
101.7
102.0
111.0
122.7
129.2
143.9
153.4
167.9
198.9
75.3
73.5
75.3
74.3
29.4
29.4
29.3
29.6
155.5
157.4
159.9
163.0
494.0
515.8
538.6
164.8
163.6
165.1
178.1
80.5
60.9
66.7
31.9
38.7
42.9
169.2
169.3
171.8
564.7
587.3
615.0
190.0
1987
194.9
78.1
85.4
94.8
95.0
104.0
110.0
115.6
120.0
132.7
146.0
159.9
189.8
194.8
192.4
213.4
240.7
271.6
283.4
314.9
365.9
414.2
480.7
527.3
614.4
728.2
36.3
38.2
42.5
43.6
47.3
49.6
50.7
51.4
57.5
64.4
71.4
90.2
94.0
87.9
100.5
107.4
122.7
127.5
137.2
166.4
186.4
223.1
249.7
290.5
339.3
17.9
21.4
22.3
20.0
22.7
23.3
25.7
27.1
30.8
30.3
33.1
36,8
32.9
31.9
34.2
41.2
43.4
41.8
52.5
58,8
67.2
75.8
70.6
67.9
78.8
11.6
12.0
13.2
13.3
14.2
15.0
15.6
16.9
15.5
15.8
17.1
18.6
19.2
20.0
19.9
20.7
21.4
22.2
24.4
24.5
27.2
29.1
35.7
61.2
83.8
78.7
89.8
96.1
98.1
106.2
114.4
114.9
124.3
141.8
150.5
174.4
196.9
191.9
198.6
227.5
258.6
287.8
287.3
331.8
375.1
431.5
494.4
538.9
36.8
39.9
43.6
44.7
48.6
51.5
48.6
53.9
61.7
67.5
79.7
95.1
92.6
90.3
108.2
1147
131.3
125.8
147.3
170.1
194.9
231.4
11.5
12.5
13.4
13.6
14.6
15.3
16.2
16.5
15.6
16.3
18.0
19.0
19.3
20.4
20.0
21.2
21.7
23.9
23.4
25.0
28.1
29.4
258.0
18.0
22.5
21.4
21.5
22.5
24.6
26.1
28.9
31.4
30.0
36.1
36.1
30.6
33.5
36.6
43.3
45.1
43.6
54.6
61.6
71.2
74.6
68.3
477.0
485.9
500.6
514.0
216.7
225.7
236.2
247.1
528.4
520.9
540.8
246.9
252.0
259.4
12.3
13.9
16.7
18.1
19.9
22.1
23.6
24.5
28.9
35.5
38.3
44.2
48.8
1
2
4.7
6.2
6.9
6.9
7.6
8.3
9.8
10.9
12.7
14.8
17.8
19.2
22.6
26.8
32.6
40.4
41.6
101.8
131.4
153.8
166.6
178.7
197.8
2347
276.8
308.7
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
27
3.0
3.1
3.0
3.2
3.5
4.0
4.6
4.7
5.2
66.3
74.7
79.1
867
90.3
94.6
19.6
20.1
21.6
25.0
25.6
27.0
27.9
30.3
33.5
40.1
46.0
50.6
61.3
727
80.5
93.3
114.5
146.3
158.8
169.6
181.8
204.9
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
3.2
3.1
3.2
3.2
3.8
4.2
5.6
6.8
6.5
7.2
8.0
9.1
10.4
11.1
14.4
15.9
18.6
20.3
24.4
29.0
37.5
40.6
43.9
54.6
61.1
67.5
77.3
80.4
245.2
4.5
17.8
19.9
20.6
23.6
25.1
26.5
27.4
28.4
31.8
37.2
42.7
487
55.0
67.7
76.1
87.2
48.4
57.5
5.4
5.6
6.8
6.4
6.4
7.1
77
8.2
87
9.6
10.4
11.9
13.5
14.0
14.0
157
19.6
217
25.2
28.4
33.5
40.6
51.2
67.3
75.1
2.4
2.5
2.4
3.3
4.1
4.0
4.1
4.3
4.8
5.2
4.1
4.7
5.5
7.0
6.5
9.2
7.6
6.0
6.2
7.0
9.6
9.8
10.8
13.4
14.0
87.3
29.1
35.2
42.3
53.4
2.8
2.1
2.6
4.0
4.2
3.9
4.5
4.6
5.5
47
4.5
5.2
6.5
6.3
7.9
7.8
5.5
6.9
5.8
8.2
9.3
9.4
12.1
192.5
197.5
212.8
216.8
78.2
77.8
80.8
84.9
40.0
42.0
42.9
44.4
8.5
9.2
10.5
9.5
224.4
232.2
260.4
85.5
87.2
87.7
50.3
54.4
53.5
10.1
11.0
137
5.2
6.2
6.8
6.2
6.8
7.3
8.0
8.4
9.2
9.8
11.3
12.7
14.1
13.8
14.4
18.0
20.7
23.1
26.8
Includes an item for the difference between wage accruals and disbursements, not shown separately.
Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning with fiscal:
year 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 [fiscal year 1977), the
fiscal year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 is a separate
fiscal
period known as the transition quarter.
3
Estimates.
Sources: Department of Commerce (Bureau of Economic Analysis) and Office of Management and Budget.
319
TABLE B-75.—State and local government receipts and expenditures, national income and product accounts,
1946-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Expenditures
Receipts
Calendar year
or quarter
Total
Personal
tax and
nontax
receipts
Corpo- Indirect Contribubusiness
rate
tions for
tax and
profits
social
nontax
tax
insurance
accruals accruals
Federal
grantsin-aid
Totall
Surplus
or
Subsideficit
dies
TransNet
Purless
national
fer
interest
chases
current income
paypaid
of
surplus
and
ments
less
goods
of
product
to
diviand
govern- accounts
perdends
services
sons received ment
enterprises
1946
1947
1948
1949...
13 0
15.4
177
19.5
1.5
17
2.1
2.4
0.5
.6
7
.6
9.3
107
12.2
13.3
0.6
!8
.9
1.1
17
2.0
2.2
11.1
14.4
17.6
20.2
9.9
12.8
15.3
18.0
1.7
2.3
3.0
3.0
0.2
.1
.1
.1
-0.7
-.8
-.8
=.9
1.9
1.0
.1
-7
1950
1951
1952
1953...
1954
21.3
23.4
25.4
27.4
29.0
2.5
2.8
3.0
3.2
3.5
.8
.9
.8
.8
.8
14.6
15.9
17.4
18.8
19.9
1.1
1.4
1.6
1.7
2.0
2.3
2.5
2.6
2.8
2.9
22.5
23.9
25.5
27.3
30.2
19.8
21.8
23.2
25.0
27.8
3.6
3.1
3.3
3.5
3.6
.1
.0
.0
.0
.1
-.9
-1.0
-1.1
-1.2
-1.3
-1.2
-.4
~!l
-1.1
1955
1956
1957
1958
1959....
31.7
35.0
38.5
42.0
46.4
3.9
4.5
5.0
5.4
6.1
1.0
1.0
1.0
1.0
1.2
21.6
23.8
25.7
27.2
29.3
2.1
2.3
2.6
2.8
3.1
3.1
3.3
4.2
5.6
6.8
32.9
35.9
39.8
44.3
46.9
30.6
33.5
37.1
41.1
43.7
3.8
3.9
4.3
4.8
5.1
.1
.1
.1
.1
.1
= 1.5
-1.6
-1.7
-17
-2.0
-1.3
=.9
-1.4
= 2.4
= .4
1960
1961
1962
1963.
1964
49.9
54.0
58.5
63 2
69.5
6.7
7.4
8.2
88
10.0
1.2
1.3
1.5
17
U
32.0
34.4
37.0
39 4
42.6
3.4
3.7
3.9
4.2
4.7
6.5
7.2
8.0
91
10.4
49.8
54.4
58.0
62 8
68.5
46.5
50.8
54.3
59 0
64.6
5.4
5.8
6.0
6.4
6.9
.1
.1
.1
.1
-2.2
-2.3
-2.5
-2 8
-2.8
.1
„_ 4
1965
1966
1967
1968
1969
75.1
84 8
93.6
107.3
120.2
10.9
12 8
U.S
17.5
20.6
2.0
22
2.5
3.1
3.4
46.1
49 7
54.0
60.9
67.6
5.0
57
6.7
7.2
8.3
11.1
14 4
15.9
18.6
20.3
75.1
84 3
94.7
107.2
118.7
71.1
79 8
89.3
101.0
111.2
7.3
81
9.4
10.5
12.2
-.3
_7
-.9
-1.1
-1.4
=3.0
=3 0
-3.1
-3.2
=•3.3
-.0
5
-1.1
.1
1.5
1970
1971
1972
1973
1974
135.4
153.0
178,3
195.0
211.4
23.2
26.4
32.8
36.0
39.0
3.5
4.1
5.0
5.8
6.5
75.0
83.3
91.5
99.7
107.4
9.2
10.2
11.5
13.0
14.6
24.4
29.0
37.5
40.6
43.9
133.5
150.4
164.8
181.6
204.6
124.4
138.7
151.4
168.5
193.1
147
17.3
19.3
207
20.9
-2.0
-1.7
-1.9
-3.3
-5.0
-3.6
-3.7
-4.2
-4.3
—4.4
1.9
2.6
13.5
13.4
6.8
1975
1976
1977
1978
1979
237 7
267.8
298.0
327.4
351.2
431
49.6
56.4
63.9
70.6
71
9.3
11.0
117
13.0
116 2
128.3
141.0
149.9
159.0
16 8
19.5
22.1
24.6
28.1
54 6
61.1
67.5
77.3
80.4
232 2
251.2
270.0
298.4
324.4
217 2
232.9
250.6
279.2
305.9
24 6
27.6
29.7
32.8
35.0
= 51
=4.5
-5.2
-7.7
-10.3
—45
-4.8
-5.1
-5.7
-6.3
55
16.6
28.1
29.0
26.7
1980 *
382.6
807
11.9
171.2
31.5
87.3
355.0
335.9
38.9
-12.4
-7.4
27.6
1978:
1
II
Ill
IV
316.9
328.0
327.2
337.7
60.6
63.0
64.9
67.1
10.2
118
12.0
13.0
147.7
1516
148.5
152.0
23.5
24 1
24^9
25.8
74.8
77 5
76.9
79.9
285.8
295 7
303.3
309.0
266.2
276 0
284.2
290.6
317
32 7
33.3
33.5
-6.6
=7 3
-8.0
-8.7
-5.5
57
-5.8
-5.9
31.1
32 3
23^9
28.7
Ill
IV
340.9
342.7
355.4
365.6
67.7
67.8
72.3
747
13.2
12.9
13.1
12.9
155.1
156.4
160.6
163.9
26.8
27.9
28.6
29.2
78.2
77.8
80.8
84.9
311.4
320.8
328.9
336.7
293.4
301.6
310.4
318.3
33.8
34.5
35.4
36.4
-9.4
=9.9
-10.6
-11.2
=6.0
-6.2
-6.5
-67
29.5
21.9
26.5
28.9
1980:
|
II
Ill
372.1
373 9
386.8
76.2
78.3
82.1
137
106
117
167.0
167 7
173.0
29.6
302
32.3
85.5
87 2
87.7
345.4
350 0
358.2
326.8
3313
338.6
37.2
381
39.7
-11.8
— 12 2
-127
=7.0
-72
-7.5
26.6
23 9
28.6
is
.5
1.0
1979:
nil. ..
1
Includes an item for the difference between wage accruals and disbursements, not shown separately.
Source: Department of Commerce, Bureau of Economic Analysis.
320
TABLE B-76.—State and local government revenues and expenditures, selected fiscal years, 1927-79
[Millions of dollars]
General expenditures by function 2
Genera) revenues by source2
Fiscal year 1
Total
Property
taxes
Sales
and Individgross
ual
reincome
ceipts taxes
taxes
Corpo- Revenue
ration
from
All
net
Federal
income Govern- others
taxes
ment
Total
Education
Highways
Public
welfare
All
other 4
1927
7,271
4,730
470
70
92
116
1,793
7,210
2,235
1,809
151
3,015
1932
1934
1936
1938
7,267
7,678
8,395
9,228
4,487
4,076
4,093
4,440
752
1,008
1,484
1,794
74
80
153
218
79
49
113
165
232
1,016
948
800
1,643
1,449
1,604
1,811
7,765
7,181
7,644
8,757
2,311
1,831
2,177
2,491
1,741
1,509
1,425
1,650
444
889
827
1,069
3,269
2,952
3,215
3,547
1940
1942
1944
1946
1948
9,609
10,418
10,908
12,356
17,250
4,430
4,537
4,604
4,986
6,126
1,982
2,351
2,289
2,986
4,442
224
276
342
422
543
156
272
451
447
592
945
858
954
855
1,861
1,872
2,123
2,269
2,661
3,685
9,229
9,190
8,863
11,028
17,684
2,638
2,586
2,793
3,356
5,379
1,573
1,490
1,200
1,672
3,036
1,156
1F225
1,133
1,409
2,099
3,862
3,889
3,737
4,591
7,170
1950
1952
1953
1954
20,911
25,181
27,307
29,012
7,349
8,652
9,375
9,967
5,154
6,357
6,927
7,276
788
998
1,065
1,127
593
846
817
778
2,486
2,566
2,870
2,966
4,541
5,763
6,252
6,897
22,787
26,098
27,910
30,701
7,177
8,318
9,390
10,557
3,803
4,650
4,987
5,527
2,940
2,788
2,914
3,060
8,867
10,342
10,619
11,557
1955
1956
1957
1958
1959
31,073
34,667
38,164
41,219
45,306
10,735
11,749
12,864
14,047
14,983
7,643
8,691
9,467
9,829
10,437
1,237
1,538
1,754
1,759
1,994
744
890
984
1,018
1,001
3,131 7,584
3,335 8,465
3,843 9,250
4,865 9,699
6,377 10,516
33,724
36,711
40,375
44,851
48,887
11,907
13,220
14,134
15,919
17,283
6,452
6,953
7,816
8t567
9,592
3,168
3,139
3,485
3,818
4,136
12,197
13,399
14,940
16,547
17,876
1960
1961
1962
1963
50,505
54,037
58,252
62,890
16,405
18,002
19,054
20,089
11,849
12,463
13,494
14,456
2,463
2,613
3,037
3,269
1,180
1,266
1,308
1,505
6,974
7,131
7,871
8,722
11,634
12,563
13,489
14,850
51,876
56,201
60,206
64,816
18,719
20,574
22,216
23,776
9,428
9,844
10,357
11,136
4,404
4,720
5,084
5,481
19,325
21,063
22,549
24,423
1962-63 5
1963-64«
1964-65 6
62,269
68,443
74,000
19,833
21,241
22,583
14,446
15,762
17,118
3,267
3,791
4,090
1,505
1,695
1,929
8,663 14,556
10,002 15,951
11,029 17,250
63,977
69,302
74,546
23,729
26,286
28,563
11,150
11,664
12,221
5,420
5,766
6,315
23,678
25,586
27,447
1965-66*
1966-67 5
1967-68 5
1968-69 5
1969-708
83,036
91,197
101,264
114,550
130,756
24,670
26,047
27,747
30,673
34,054
19,085
20,530
22,911
26,519
30,322
4,760
5,826
7,308
8,908
10,812
2,038
2,227
2,518
3,180
3,738
13,214
15,370
17,181
19,153
21,857
19,269
21,197
23,598
26,118
29,971
82,843
93,350
102,411
116,728
131,332
33,287
37,919
41,158
47,238
52,718
12,770 6,757
13,932 8,218
14,481 9,857
15,417 12,110
16,427 14,679
30,029
33,281
36,915
41,963
47,508
1970-718
1971-72*
1972-73=
1973-74«
1974-75°
144,927
166,352
190,214
207,670
228,171
37,852
42,133
45,283
47,705
51,491
33,233 11,900
37/488 15,237
42,047 17,994
46,098 19,491
49,815 21,454
3,424
4,416
5,425
6,015
6,642
26,146
31,253
39,256
41,820
47;034
32,374
35,826
40,210
46,541
51,735
150,674
166,873
181,227
198,959
230,721
59,413
64,886
69,714
75,833
87,858
18,095
19,010
18,615
19,946
22,528
18,226
21,070
23,582
25,085
28,155
54,940
61,907
69,316
78,096
92,180
1975-76^
1976-77*
1977-78 5
1978-79*
256,176
285,796
315,960
343,278
57,001
62,535
66,422
64,944
54,547
60,595
67,596
74,247
24,575
29,245
33,176
36,932
7,273
9,174
10,738
12,128
55,589
62,575
69,592
75,164
57,191
61,673
68,436
79,864
256,731 97,216
274,388 102,805
296,983 110,758
327,517 119,448
23,907
23,105
24,609
28,440
32,604
35,941
39,140
41,898
103,004
112,537
122,476
137,731
1
2
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
Includes1 licenses and other taxes and charges and miscellaneous revenues.
4
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.
Note.—Data are not available for intervening years.
Source: Department of Commerce, Bureau of the Census.
321
TABLE B-77,—Interest-bearing public debt securities by kind of obligation, 1967-80
[Millions of dollars]
End of year or month
public
debt
securities
Fiscal year:
1967..
1968
.
1969
322,286
344,401
351,729
1970
1971.
1972..
1973..
1974.
369,026
396,289
425,360
456,353
473,238
1975..
1976..
1977..
1978
1979.
532,122
619,254
697,629
766,971
819,007
1980...
906,402
1979:
June
789,502
791,249
792,344
795,434
803,816
799,863
July
Aug
Sept.
Oct.
Nov...
Dec ...
806,508
812,095
819,007
825,736
832,730
843,960
Jan
Feb
Mar
1980:
Jan. .
Feb,
Mar
Apr. .
May
June..
July
Aug
Sept.
Oct....
Nov..
846,517
853,366
862,211
868,866
873,529
876,275
880,395
888,733
906,402
906,948
909,371
Nonmarketable
Marketable
Total
interestTotal
Bills
* 210,672
226,592
226,107
58,535
64,440
68,356
76,154
86,677
94,648
100,061
105,019
128,569
161,198
156,091
160,936
161,378
49,108
71,073
78,946
93,489
104,807
113,419
117,840
128,419
150,257
191,758
241,692
267,865
274,242
232,599
245,473
257,202
262,971
266,575
315,606
392,581
443,508
485,155
506,693
594,506 199,832 310,903
496,529
497,976
500,400
504,585
506,867
499,343
506,994
509,187
506,693
515,033
519,573
530,731
159,938
160,489
161,378
161,692
165,100
172,644
535,658
540,636
557,493
564,869
567,560
566,735
175,522
177,422
190,780
195,296
195,387
184,684
576,145
583,419
594,506
599,406
605,381
191,491
199,306
199,832
202,309
208,721
162,286
162,416
165,459
163,730
163,076
159,890
Total
Foreign
GovernU.S. government
savings ment
and
account
bonds public
series
series 2
36,779
39,626
45,724
56,355
71,073
83,772
111,614
117,808
125,623
136,426
150,816
168,158
193,382
206,663
216,516
226,673
254,121
281,816
312,314
311,896
51,213 1,514 56,155
51,712 3,741 59,526
51,711 4,070 66,790
51,281 4,755 76,323
53,003 9,270 82,784
55,921 18,985 89,598
59,418 28,524 101,738
61,921 25,011 115,442
65,482 23,216 124,173
69,733 21,500 130,557
75,411 21,799 140,113
79,798 21,680 153,271
80,440 28,115 176,360
72,727 25,158 189,848
24,164
Treasury TreasuryI
bonds
notes
97,418
91,079
78,805
62,956
53,989
49,135
45,071
33,137
Other*
2,731
2,828
3,051
4,068
5,759
3,654
3,701
4,289
3,644
4,883
16,797
27,067
27,400
272,807
271,372
270,803
275,311
276,123
272,066
278,257
277,582
274,242
280,832
279,723
283,379
61,436
64,189
64,139
65,544
67,668
67,387
292,973
293,273
291,944
290,849
296,949
300,520
80,414
80,459
80,417
80,426
80,430
80,460
30,257
28,150
28,161
25,416
25,158
26,807
155,237
157,637
153,765
158,178
164,552
166,274
27,065
27,027
29,601
26,829
26,809
26,981
68,799
71,116
71,073
72,510
74,751
74,708
299,514
302,909
312,314
310,703
313,157
313,229
80,524
80,503
80,440
80,178
79,669
79,517
28,015
27,688
28,115
28,010
29,164
28,820
163,882
167,301
176,360
175,267
176,992
177,460
27,094
27,418
27,400
27,247
27,331
27,434
283,990
286,814
290,390
291,831
291,532
301,455
302,626
300,251
310,903
311,927
311,119
76,147
76,400
76,323
77,741
80,641
80,596
82,027
83,861
83,772
85,170
85,541
310,859
312,730
304,718
303,997
305,968
309,539
304,250
305,314
311,896
307,542
303,989
78,247
77,338
75,643
73,889
73,247
73,072
72,968
72,853
72,727
72,669
72,524
30,045
29,643
26,901
26,250
25,925
25,460
174,904
178,415
175,451
179,652
182,642
186,842
181,479
182,447
189,848
185,665
182,447
27,664
27,336
26,722
24,207
24,156
24,165
25,779
25,845
25,158
24,805
24,501
24,022
24,170
24,164
24,404
24,518
1
2
Includes Treasury bonds and minor amounts of Panama. Canal and postal savings bonds.
Nonmarketable certificates of indebtedness, notes, bonds, and bills in the Treasury foreign series of dollar-denominated and foreigncurrency
denominated issues.
3
Includes depository bonds, retirement plan bonds, Rural Electrification Administration bonds, State and local bonds, and special
issues
held
only by U.S. Government agencies and trust funds and the Federal home loan banks.
4
Includes $5,610 million in certificates not shown separately.
Note.—Through fiscal year 1976, the fiscal year was on a July 1 June 30 basis; beginning October 1976 (fiscal year 1977) the fiscal
year is on an October 1-September 30 basis.
Source: Department of the Treasury.
322
TABLE B-78.—Estimated ownership ofpublic debt securities, 1967-80
[Par values;' billions of dollars]
Total public debt securities
Held by private investors
End of year or month
Total^
Fiscal year:
1967
1968
1969
Held by Held by
Govern- Federal
Reserve Total 3
ment
accounts Banks
Mutual
savings
State and
banks
ComCorporalocal
and
mercial
6
govern-6
insurtions
4
banks
ments
ance
companies
MiscelIndilaneous
viduals7 investors 3 - 8
322.9
345.4
352.9
71.8
76.1
84.8
46.7
52.2
54.1
204.4
217.0
214.0
55.5
59.7
55.3
13.2
12.5
11.6
11.0
12.0
11.1
23.6
25.1
26.4
70.4
74.2
77.3
30.7
33.4
32.3
1970
1971
1972
1973
1974
370.1
397.3
426.4
457.3
474.2
95.2
102.9
111.5
123.4
138.2
57.7
65.5
71.4
75.0
80.5
217.2
228.9
243.6
258.9
255.6
52.6
61.0
60.9
58.8
53.2
10.4
10.3
10.2
9.6
8.5
8.5
7.4
9.3
9.8
10.8
29.0
25.9
26.9
28.8
28.3
81.8
754
73.2
75.9
807
35.0
491
63.2
76.0
74.2
1975
1976 . . .
1977 .
1978.. .
1979
1980
533.2
620.4
698.8
771.5
826.5
907.7
145.3
149.6
155.5
167.9
1877
197.7
84.7
94.4
104.7
115.3
115 5
1207
303.2
376.4
438.6
488.3
523.4
589.2
69.0
92.5
99.8
94.4
90.1
100.9
10.6
16.0
20.5
20.3
194
197
13.8
24.7
23.4
19.4
24.0
25.5
317
39.3
48.2
63.8
67.1
73.4
86.8
96.2
106.5.
113.9
115 5
123.0
91.3
1077
140.2
176.5
207 3
2467
790.5
792.2
796.8
796.4
804.8
804.9
167 7
170.1
166.3
170.7
177.0
178.5
1013
103.5
110.9
108.6
106.2
109.7
521.4
518.6
519.6
517.1
521.5
516.6
89.9
91.1
92.5
92.0
94.2
93.5
19.9
20.0
20.0
19.7
19.6
19.3
22.0
22.7
23.5
24.4
25.2
26.1
64.0
63.9
65.5
65.9
66.2
66.6
115 2
116.2
116.1
116.0
117.0
113.0
2104
204.7
202 0
199.1
199.3
198.1
807.5
813.1
826.5
826.8
833.8
845.1
176 2
178.6
187.7
185.7
187.1
187.1
1114
113.0
115.5
114.6
118.1
117.5
519.8
521.5
523.4
526.5
528.6
540.5
89 8
89.0
90.1
90.4
91.5
91.5
19 5
19.6
197
19.7
19.5
19.4
25.4
24.7
24.0
24.3
24.6
24.9
66.5
66.6
66.5
67.1
67.2
67.4
1141
114.6
115.5
116.0
115.4
116.1
204 5
207.0
207.5
209.0
210.4
221.2
847.7
854.6
863.5
870.0
877.9
877.6
184.5
187.8
186 3
188.2
190.7
194.9
116.3
115.2
1167
118.8
124.3
124.5
546.9
551.6
560.5
563.0
562.9
558.2
92.1
92.9
92.4
90.3
92.0
93.6
19.0
19.2
19 9
19.8
18.3
18.3
26.5
28.1
21.8
257
25.0
22.8
67.8
72.9
68.1
67.3
67.6
67.4
117.0
113.8
124 8
125.3
124.3
120.1
224.4
224.7
233 5
234.6
235.7
236.0
881.7
893.4
907.7
908.2
189.2
189.8
197.7
193.4
119.6
119.8
120.7
121.5
572.9
583.8
589.2
593.3
94.4
98.1
100.9
103.4
19.1
19.1
19.7
20.8
25.3
24.6
25.5
25.3
68.9
707
73.4
73.1
121.2
124.1
123.0
122.9
244.0
247.2
246.7
247.8
1979
Jan
Feb
Mar
Apr
May
June
....
...
...
..
July
Aug.
....
. ..
SP - •
.
Nov
Dec
1980:
Jan
Feb
Mar
£_:::•: :....:. .:;.
June
July
Aug
Sept
Oct
1
U.S savings bonds, series A-F and J, and U.S. savings notes are included at current redemption value.
2
As of July 31, 1974, public debt outstanding has been adjusted to exclude the notes of the International Monetary Fund to conform
with
the Budget presentation. This adjustment applies to the 1967-79 data in this table.
3
For comparability with 1975-79 published data, published data for 1967-74 have been adjusted to exclude notes of the
International Monetary fund, these adjustments amounted to $3.3 billion in 1967, $2.2 billion in 1968, and $0.8 billion in each year
1969 through 1974. These adjustments were necessary in order to add to the total public debt figures as published by the Department
of 4the Treasury.
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.
* Exclusive of banks and insurance companies.
6
Includes trust, sinking, and investment funds of State and local governments and their agencies, and of Territories and
7
8
Includes partnerships and personal trust accounts.
Includes savings and loan associations, nonprofit institutions, corporate pension trust funds, dealers and brokers, certain
government deposit accounts and government-sponsored agencies, and investments of foreign balances and international accounts in
the United States.
Note.—Through fiscal year 1976, the fiscal year was on a July 1—June 30 basis; beginning October 1976 (fiscal year 1977), the
fiscal year is on an October 1—September 30 basis.
Source: Department of the Treasury.
323
TABLE B-79-—Maturity distribution and average length of marketable interest-bearing public debt securities
held by private investors, 1967-80
End of year or month
Amount
outstanding,
privately
held
Maturity class
Average length
Within
lyear
Ito5
years
5 to 10
years
10 to 20
years
20 years
and over
Millions of dollars
Fiscal year:
1967
1968 .
1969. ..
150,321
159,671
156,008
1970
1971
1972
1973
1974
157,910
161,863
165,978
167,869
164,862
1975
1976..
1977..
1978
1979...
210,382
279,782
326,674
356,501
380,530
1980,...
463,717
1979:
Jan
Feb.. .
Mar.,
Apr ....
May.
June.
382,556
381,797
380,060
383,315
388,001
377,649
July ...
Aug.
Sept..
Oct....
Nov...
Dec,..
1980
Jan,. ..
Feb....
Mar..
383,102
384,771
380,530
389,074
390,439
402,226
June..
July.......
Aug...
Sept...
Oct.
Nov
408,300
414,647
430,036
435,283
433,175
431,893
446,255
454,063
463,717
467,845
475,365
Years
56,561
66,746
69,311
76,443
74,803
79,509
84,041
87,150
115,677
151,723
161,329
163,819
181,883
220,084
53,584
52,295
50,182
57,035
58,557
57,157
54,139
50,103
65,852
89,151
113,319
132,993
127,574
156,244
21,057
21,850
18,078
8,286
14,503
16,033
16,385
14,197
15,385
24,169
33,067
33,500
32,279
38,809
6,153
6,110
6,097
7,876
6,357
6,358
8,741
9,930
8,857
8,087
8,428
11,383
18,489
25,901
184,277
185,602
186,967
185,725
188,018
184,113
183,277
182,891
181,883
182,297
180,676
190,403
192,829
195,694
208,542
207,942
209,899
198,365
210,106
218,977
220,084
222,346
230,987
133,992
132,434
129,454
132,538
130,576
124,443
129,462
130,607
127,574
134,205
133,276
133,173
135,132
137,442
137,514
142,011
140,835
147,756
149,215
150,764
156,244
156,712
154,434
33,690
31,299
31,245
31,235
33,572
33,359
33,555
32,392
32,279
32,325
34,319
36,592
36,793
37,593
40,151
40,111
36,317
39,715
39,426
35,652
38,809
38,747
38,021
15,282
15,195
15,141
16,578
17,326
17,271
18,617
18,548
18,489
19,938
19,866
19,796
21,247
21,794
21,725
23,140
22,270
22,229
23,682
25,948
25,901
27,338
27,266
Months
12,968
12,670
12,337
8,272
7,645
6,922
4,564
3,481
6
3
11
4,611
6,652
10,531
14,805
20,304
7
11
7
22,679
15,315
17,267
17,254
17,239
18,508
18,462
18,390
20,334
20,304
20,309
22,302
22,262
22,299
22,124
22,104
22,079
23,854
23,828
23,826
22,722
22,679
22,702
24,657
10
9
9
10
8
10
10
9
10
9
9
10
Note,- All issues classified to final maturity.
Through fiscal year 1976, the fiscal year was on a July 1—June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal year
is on an October 1—September 30 basis.
Source: Department of the Treasury:
324
CORPORATE PROFITS AND FINANCE
4. ABLE B-80.—Corporate profits with inventory valuation and capital consumption adjustments, 1946-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Profits after tax with inventory valuation and
capital consumption adjustments
Corporate
profits with
inventory
valuation
and capital
consumption
adjustments
Corporate
profits tax
liability
1946 .
1947
1948
1949
16.6
22.3
29.4
27.1
9.1
113
12.4
10.2
1950
1951
1952
1953
1954
33.9
38.7
36.1
36.3
35.2
1955
1956
1957
1958
1959
Dividends
Undistributed
profits with
inventory
valuation
and capital
consumption
adjustments
7.5
11.0
17.0
16.9
5.6
63
7.0
7.2
1.9
47
10.0
9.7
17.9
22.6
19.4
20.3
17.6
16.0
16.1
16.7
16.0
17.5
8.8
8.5
8.5
8.8
9.1
7.2
7.6
8.2
7.2
8.4
45.5
43.7
43.3
38.5
49.6
22.0
22.0
21.4
19.0
23.6
23.4
21.8
21.8
19.5
26.0
10.3
11.1
11.5
11.3
12.2
13.1
10.7
10.3
8.2
13.8
47.6
48.6
56.6
62.1
69.2
22.7
22.8
24.0
26.2
28.0
24.9
25.8
32.6
35.9
41.2
12.9
13.3
14.4
15.5
17.3
12.1
12.5
18.2
20.4
23.9
80.0
85.1
82.4
89.1
85.1
30.9
33.7
32.5
39.2
39.5
49.1
51.4
49.9
50.0
45.6
19.1
19.4
20.2
22.0
22.5
30.0
32.0
29.7
27.9
23,1
71.4
83.2
96.6
108.3
94.9
34.2
37.5
41.6
49.0
51.6
37.2
45.7
55.0
59.3
43.3
22 5
22.9
24.4
27.0
29.9
14.8
22.8
30.5
32.3
13.4
110.5
138.1
164.7
185.5
196.8
50.6
63 8
72.6
83.0
87.6
59.9
74 3
92.2
102.5
109.2
30.8
37 4
39.9
44.6
50.2
29.1
36 9
52.3
57.9
59.1
181.7
80.1
101.6
56.0
45.6
|
11
Ill
IV
163.6
185.2
190.5
202.7
71.2
83 3
85.0
92.3
92.4
1019
105.4
110.4
42.3
43 5
45.4
47.3
50.1
58 4
60.0
63.1
||
III
IV
201.9
196.6
199.5
189.4
88.5
86.4
88.4
87.2
113.3
110.2
111.1
102.2
49.0
49.8
50.2
51.6
64.3
60.5
60.9
50.6
I
II
III
200.2
169.3
177.9
94 2
715
78.5
106.0
97 8
99.5
53 9
55 7
56.7
52 1
421
42.8
Year or quarter
1960
1961
1962
1963
1964
.
.
..
1965
1966
1967 .
1968
1969
.
. . .
.. ..
.
.
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
....
1980 *
1978:
Total
1979:
1980:
Source: Department of Commerce, Bureau of Economic Analysis.
325
T A B L E B-81.—Corporate profits by industry, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Corporate profits with inventory valuation adjustment and without capital consumption adjustment
Domestic industries
Financial1
rear or quarter
Total
Nonfinancial
Total
Federal
Reserve
banks
Other
Total
Total
Manufacturing2
Daet
KcSl
Wholesale
and
retail
trade
Utilities 3
1.0
1.8
of the
world
Other
1929
10.5
10.2
1.3
0.0
1.3
8.9
1933
= 1.2
-1.2
.3
.0
.3
-1.5
1939
6.5
6.1
.8
.0
.8
5.3
3.3
.7
1.0
.3
.3
1940
1941
1942
.
1943...
1944 ...
1945 .
1946
1947
1948
1949 .
9.8
9.6
1.0
15.0
20.1
24.1
23.5
18.9
18.9
24.9
32.2
29.9
11
1.2
1.3
1.6
1.7
2.1
1.7
2.6
3.1
.9
1.0
1.2
1.3
1.6
1.6
2.0
1.6
2.3
2.9
8.6
15.4
20.5
24.5
24.0
19.3
19.6
25.9
33.4
31.1
.0
.0
.0
.0
.1
.1
.1
.1
.2
.2
14.0
18.9
22.8
21.9
17.3
16.8
23.2
29.6
26.8
5.5
9.5
13.6
17.6
16.2
1>2
1.4
2.2
3.0
3.2
3.3
3.8
4.6
5.5
4.5
1.3
2.0
3.4
4.4
3.9
2.7
1.8
2.2
3.0
3.0
.6
1.1
1.5
1.6
1.6
1.5
2.1
2.9
3.6
3.1
.3
,4
.4
.4
.4
.3
.7
1.0
1.3
1.1
3.1
36
4.0
4.5
4.6
4.8
5.0
5.2
5.7
6.8
.2
3
.4
.4
.3
.3
.5
.6
.6
.7
3.0
3.3
3.7
4.1
4.3
4.5
4.5
4.6
5.1
6.0
33.5
37 9
34.7
33.9
31.8
40.3
39.1
38.3
33.5
42.9
20.9
24 6
21.7
22.0
19.9
26.0
24.7
24.0
19.4
26.4
5.0
50
4.8
3.8
3.8
5.0
4.5
4.0
46
4.9
5.0
4.7
5.6
5.9
5.8
5.9
7.0
3.6
37
3.3
3.1
3.4
3.6
4.1
4.0
3.6
3.6
1.3
17
1.9
1.8
2.0
2.4
2.8
3,1
2.5
2.7
7.2
7.0
7.3
6.8
6.9
7.5
8.5
9.0
1.0
.8
.9
1.0
1.1
1.4
1.7
2.0
2.5
3.1
6.2
6.3
6.4
5.8
5.8
6.2
6.8
7.0
7.9
8.0
39.5
39.8
44.2
49.0
54.9
64.0
68.2
64.8
69.3
63.5
23.6
23.3
26.0
29.3
32.3
39.3
41.9
38.5
41.2
36.6
7.4
7.8
8.4
9.3
10.4
10.5
10.0
11.0
11.8
10.7
10.8
10.3
3.6
3.7
3.9
4.4
5.1
5.6
6.3
6.5
6.9
6.1
3.0
3.2
3.6
3.9
4.2
4.5
4.2
4.4
5.2
6.1
8.6
26.6
34.1
40.7
45.5
39.0
52.6
69.2
76.2
85.3
88.9
11.7
13.4
13.9
12.5
21.3
22.4
27.0
24.5
23.0
8.2
8.5
9.0
8.7
6.1
10.0
14.5
17.8
20.7
18.0
5.9
6.5
6.9
8.0
7.9
6.5
7.1
8.6
9.3
6.2
50.2
60.8
70.0
76.0
65.4
95.8
120.3
137.7
150.0
150.8
11.9
14.2
16.7
19.5
20.8
13.7
16.3
13.0
14.3
15.5
19.7
30.3
.
1950
1951
1952 ..
1953
1954 .
1955
1956
1957
1958
1959
36.7
5.2
-.4
-.5
11.8
13.8
13.2
9.7
9.0
.0
0.9
-.7
0.2
.0
37.9
43 3
40.6
40.2
38.4
47.5
46.9
46.6
41.6
52.3
38.7
38.4
36.4
45.1
44.1
43.5
39.1
49.6
49.7
50.0
55.1
59.7
66.0
76.0
80.9
78.1
84.9
80.8
46.7
46.8
51.5
55.8
61.8
71.5
76.7
73.7
79.7
74.6
10.4
11.1
1979
68.9
82.0
94.0
105.6
96.7
120.6
151.6
176.7
199.0
212.7
62.4
74.9
85.3
92.0
80.4
107.6
137.4
161.2
179.3
182.4
12.1
14.1
15.3
15.9
15.0
11.8
17.1
23.5
29.3
31.6
9.6
11.1
17.3
21.6
22.0
1980"
199.2
167.5
30.0
11.7
18.3
137.5
73.6
20.5
19.6
23.7
31.7
174.9
197.4
205.4
218.3
155.9
181.0
186.1
194.3
27.0
28.6
30.1
31.6
7.0
7.4
8.0
8.6
20.0
21.2
22.1
23.0
128.9
152.4
156.0
162.8
73.0
86.4
88.3
93.6
22.0
25.3
25.6
25.2
17.0
21.0
22.1
22,6
17.0
19.7
20.0
21.4
19.0
16.5
19.3
24.0
217.8
213.0
215.6
204.5
191.7
184.4
180.5
172.9
31.3
31.0
31.5
32.6
8.8
9.2
9.7
10.5
22.5
21.8
21.7
22.1
160.4
153.4
149.0
140.3
99.4
91.5
84.4
80.2
21.0
22.9
25.6
22.6
20.8
19.2
17.1
14.9
19.1
19.7
22.0
22.6
26.0
28.5
35.1
31.7
215.6
186.9
195.9
179.0
157.5
165.0
33.3
30.1
28.7
11.9
12.7
11.3
21.4
17.4
17.4
145.7
127.5
136.2
92.1
61.3
68.5
14.8
25.9
20.4
16.1
16.6
22.5
23.7
24.8
111
36.6
29.3
30.9
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969.
.
.
..
..
1970
1971
.
1972..
1973
....
1974
1975
1976. .
1977 .
1978
.
. .
...
.
415
3.6
3.3
3.4
4.5
5.7
5.7
6.0
6.2
7.7
10.7
11.9
11.4
•
4.4
4.6
5.9
4.9
5.0
5.8
5.9
7.5
8.1
8.2
9.1
9.5
1978.
IL
.
'.'"..
Ill
IV
1979:
j
IL .
Ill
. . .
IV
. . .
19801
II..
Ill
.
.
1
Consists of the following industries: Banking; credit agencies other than banks; security and commodity brokers, dealers, and
services;
insurance carriers; regulated investment companies; small business investment companies; and real estate investment trusts.
2
See
Table B-82 for industry detail.
3
Consists of transportation, communication, and electric, gas, and sanitary services.
Note.—The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning
1948, and on the 1942 SIC prior to 1948.
Source: Department of Commerce, Bureau of Economic Analysis.
326
TABLE B-82.—Corporate profits of manufacturing industries, 1929-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates}
Corporate profits with inventory valuation adjustment and without capital consumption adjustment
Durable goods
Nondurable goods
Year or quarter
1929
1933.. . .
Total
manufacturing
Total
5.2
2.6
Food
and
kindred
products
Chemicals
and
allied
products
Petroleum
and
coal
products
Other
Total
Primary
metal
industries
Fabricated
metal
products
Machinery,
except
electrical
Electric
and
electronic
equipment
0.3
.4
0.5
1.1
1.2
1.3
0.6
.7
1.1
1.4
2.1
1.6
2.3
2.3
1.9
1.7
1.7
2.1
2.0
1.4
2.1
1.2
1.3
1.5
1.4
1.2
1.1
1.2
1.5
1.3
1.7
3.1
2.4
2.4
2.6
2.1
4.1
2.2
2.6
.9
3.0
Motor
vehicles
and
equipment
2.6
_ 4
-.4
1939. .
3.3
1.7
1.7
1940...
1941.
1942. .
1943 . .
1944...
1945...
1946....
1947...
1948 .
1949. .
5.5
9.5
11.8
13.8
13.2
9.7
9.0
13.6
17.6
16.2
2.4
3.1
4.6
5.7
5.9
5.2
6.6
7.8
10.0
8.0
1.4
1.3
1.9
1.6
1.2
1.4
1.7
1.8
.9
1.5
2.8
1.9
3.1
3.6
3.7
2.8
3.1
6.4
7.2
8.1
7.4
4.5
2.4
5.8
7.5
8.1
0.8
1.5
1.6
1.5
1950.
1951...
1952.
1953...
1954...
1955..
1956..
1957...
1958...
1959....
20.9
24.6
21.7
22.0
19.9
26.0
24.7
24.0
19.4
26.4
8.9
11.4
9.9
10.1
9.4
11.8
11.9
10.7
10.0
12.7
1.6
1.4
1.7
1.8
1.6
2.2
1.8
1.8
2.1
2.4
2.3
2.8
2.3
2.2
2.2
3.0
2.8
2.8
2.5
3.5
2.3
2.7
2.3
2.B
2.7
3.0
3.3
2.6
2.1
2.5
2.7
4.4
3.6
3.3
2.9
3.6
4.1
3.6
3.3
4.3
12.0
13.2
11.7
11.9
10.5
14.3
12.8
13.3
9.3
13.7
2.3
3.1
1.9
2.5
1.7
2.9
3.0
3.0
1.9
2.3
I960..
1961..
1962..
1963...
1964....
1965
1966
1967. .
1968...
1969...
23.6
23.3
26.0
29.3
32.3
39.3
41.9
38.5
41.2
36.6
12.0
11.9
12.0
13.1
14.4
16.3
18.1
17.6
19.1
17.7
2.2
2.3
2.3
2.7
2.7
2.8
3.2
3.2
3.2
3.0
3.1
3.2
3.2
3.6
4.0
4.6
4.9
4.3
5.2
4.5
2.5
2.2
2.2
2.1
2.4
2.9
3.2
3.9
3.7
3.2
4.2
4.1
4.3
4.6
5.3
6.0
6.8
6.3
7.0
6.9
11.6
11.4
14.0
16.3
17.9
23.0
23.8
20.9
22.2
18.9
2.0
1.6
1.6
2.0
2.5
3.1
3.6
2.7
1.9
1.4
1.0
1.1
1.3
1.4
2.0
2.4
2.4
2.3
2.0
1.8
1.9
2.3
2.5
3.3
3.9
4.5
4.1
4.1
3.7
1.3
1.3
1.5
1.6
1.7
2.7
3.0
2.9
2.8
2.3
3.0
2.5
4.0
4.9
4.7
6.2
5.1
3.9
5.5
4.7
1970
1971.
1972.
1973
1974
1975....
1976...
1977
1978.
1979..
26.6
34.1
40.7
45.5
39.0
52.6
69.2
76.2
85.3
16.5
17.8
18.3
21.2
25.8
33.6
38.8
40.2
42.3
49.4
3.2
3.5
2.9
2.4
2.8
8.6
6.9
6.7
5.9
6.9
3.9
4.4
5.2
6.0
5.6
6.5
8.3
8.0
8.3
8.2
3.5
3.5
3.0
5.0
10.5
9.6
12.6
11.8
12.6
18.3
5.9
6.4
7.2
7.8
6.8
8.9
11.0
13.7
15.4
16.0
10.2
16.3
22.4
24.3
13.2
18.9
30.4
36.0
43.0
39.5
.7
1.6
2.2
5.4
2.9
2.1
1.3
3.2
4.2
1.1
1.5
2.1
2.5
1.6
3.0
3.8
4.5
4.8
5.0
2.9
2.9
4.3
4.6
2.9
4.7
6.3
7.6
8.9
8.8
1.2
1.9
2.8
3.0
.4
2.1
3.4
5.4
6.3
6.3
1.2
5.0
5.9
5.7
l'.9
7.2
9.2
8.9
4.3
1980*...
73.6
53.7
6.6
7.3
25.4
14.5
19.9
2.6
3.7
6.4
5.4
-5.1
1978:
I. .
II..
til. .
IV....
73.0
86.4
88.3
93.6
38.2
42.4
42.6
45.9
5.8
5.6
5.6
6.7
7.7
8.1
8.2
9.4
9.9
12.8
13.7
13.9
14.9
15.9
15.0
15.9
34.7
44.0
45.7
47.7
1.2
3.7
3.6
4.2
4.1
4.8
5.0
5.4
7.0
10.3
7.8
10.3
5.9
5.9
7.3
6.0
7.6
8.9
10.0
9.1
1979:
I ...
II ... .
III.. .
IV. .
99.4
91.5
84.4
80.2
48.5
48.5
49.6
50.9
6.6
7.5
6.7
6.7
9.4
15.0
16.9
17.7
23.7
17.4
15.4
17.4
13.8
50.9
43.0
34.8
29.3
4.8
4.7
4.5
2.8
5.5
5.3
4,6
4.8
9.3
8.8
9.2
8.0
92.1
61.3
68.5
64.0
51.2
49.1
8.2
6.7
5.7
31.0
25.3
22.2
16.0
13.2
14.2
28.1
10.1
19.4
5.9
2.0
1980:
I ..
II . .
Other
7.8
6.6
11.8
6.6
-.3
6.6
3.8
5.5
-2.9
-8.8
-4.8
Mote.—The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning
1948, and on the 1942 SIC prior to 1948.
Source.- Department of Commerce, Bureau of Economic Analysis.
327
TABLE B-83.—Sales, profits, and stockholders1 equity, all manufacturing corporations, 1950-80
[Billions of dollars]
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
Sales
(nat\
(net)
. . ..
. . .
1960
1961
1962
1963
1964
.
.
. .
1965
1966. . . .
1967. .
.
1968.
1969
1970
1971
1972
1973 .
.
1973: IV
...
Profits
Profits
Profits
Year or quarter
Stock-
Nondurable goods industries
Durable goods industries
All manufacturing corporations
Before After holders'
income1 income equity2
taxes
taxes
Sales
/nof \
(net;
C+nnL
MOCK-
Before After holders'2
income income equity
taxes' taxes
1819
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
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
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
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
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
275.1
21.4
13.0
386.4
6.7
6.1
5.5
5.8
5.6
8.1
8.3
7.9
5.8
8.1
7.0
6.9
8.6
9.5
Sales
(nat\
(nei;
Qtnr\t
MOCK-
Before After
income income
taxes l taxes
hotders'2
equity
6.1
5.7
5.2
5.5
5.6
7.0
7.8
7.5
6.9
8.3
8.2
8.5
9.2
43.5
51.1
53.9
55.7
58.2
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
58.8
65.2
70.5
72.8
77.9
136.3
147.8
154.1
156.7
168.5
12.1
13.2
11.6
82.3
84.9
89.1
93.3
98.5
171.8
181.2
1944
203.6
216.8
13.5
13.9
15.1
16.4
18.3
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
2624
274.8
296.4
328.1
20.3
22.6
22.0
24.8
26.6
15.5
16.4
144
106.3
115.1
122.6
130.3
142.3
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
1714
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
140.1
10.8
6.3
194.7
135.0
10.6
6.7
191.7
104
9.6
124
11.3
13.9
10.0
11.6
13.0
14.6
61.3
664
70.6
74.6
79.2
83.1
87.7
92.3
96.3
101.3
New series:
236.6
20.6
13.2
368.0
122.7
10.1
6.2
185.8
113.9
10.5
7.0
182.1
1974
1,060.6
92.1
58.7
395.0
529.0
41.1
24.7
196.0
531.6
51.0
34.1
199.0
1975
1976
1977
1978
1979
1977
1,065.2
1,203.2
1,328.1
1,496.4
1,741.8
79.9
104.9
115.1
132.5
154.2
49.1
64.5
70.4
81.1
98.7
423.4
462.7
496.7
539.4
600.5
521.1
589.6
657.3
760.7
865.7
35.3
50.7
57.9
69.6
72.4
21.4
30.8
34.8
41.8
45.2
208.1
224.3
239.9
261.5
292.5
544.1
613.7
67Q.8
735.7
876.1
44.6
54.3
57.2
62.9
81.8
27.7
33.7
35.5
39.3
53.5
215.3
238.4
256.8
277.9
308.0
311.5
338.6
331 7
346^2
25.6
32.4
27 3
29^9
15.6
19.7
16 7
479.8
492.9
5024
5117
151.2
169.5
163 8
172J
12.5
16.9
13 0
15^5
7.5
10.2
78
160.3
169.1
167 9
1715
13.0
15.5
8.1
9.5
94
230.8
2384
243 1
24L5
249.1
254.5
ocq
0
CD 3,3
340.3
377 5
376^9
401.8
26.9
36 0
33.4
36.3
16.0
170.1
195 0
189.7
205.9
13.6
19 8
17.0
19.1
7.9
250.3
170.3
20'.4
22.6
518.7
531 8
5463
560.8
406.6
436.4
437.5
461.2
36.5
42.6
38.2
36.8
22.7
26.8
24.7
24.5
576.2
592.5
609.2
624.0
207.5
222.6
213.6
221.9
18.8
21.6
16.4
15.7
465 0
465.7
463.7
39 4
35.9
33.1
24 7
22.4
21.0
640 0
654.2
666.6
219 9
21B.B
212.8
15 8
13!5
11.9
1973: IV
ii'...'. . ... . .
Ill
IV
1978
1
II
III. . .
IV
1979-
1
ii"... ! ""
in
IV . . .
19801
II
Ill
184
221
•\OO A
14 1
m.o
14.3
13.3
89
9^0
2684
10.1
11.0
281.1
287.8
11.2
13.5
144
294.3
303.2
312.6
321.9
15 0
332 5
342^0
349.9
I.C.M
fcJ/.O
lot.**
ifi 7
1D.&
10.3
11.6
265.2
272.9
187,2
195.9
164
17.1
114
281.9
289.3
296.5
302.1
199.1
213.8
223.9
239.3
17.7
21.1
21.9
21.2
14.4
97
307 5
31Z1
316.8
245 1
ZA6.9
250.9
23 6
22^3
21.2
13.7
13.3
10.3
10.1
8^2
7.3
264.2
8.1
in 1
Rl
£./**,£,
1
In the old series, "income taxes" refers to Federal income taxes only, as State and local income taxes had already been deducted.
In 2the new series, no income taxes have been deducted.
Annual data are average equity for the year (using four end-of-quarter figures).
Note.—Data are not necessarily comparable from one period to another due to changes in accounting procedures, industry
classifications, sampling procedures, etc. For explanato™ notes concerning compilation of the series, see "Quarterly Financial Report for
Manufacturing, Mining, and Trade Corporations, Federal Trade Commission.
Source: Federal Trade Commission.
328
TABLE B-84.—Relation of profits after taxes to stockholders' equity and to sales, all manufacturing
corporations, 1947-80
Ratio of profits after income taxes (annual
rate) to stockholders' equity—percent1
Year or quarter
Profits after income taxes per dollar of
sales—cents
All
manufacturing
corporations
Durable
goods
industries
Nondurable
goods
industries
All
manufacturing
corporations
Durable
goods
industries
Nondurable
goods
industries
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
54
1950
1951
1952
1953
1954
15.4
121
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
4.8
4.3
4.3
4.5
7.7
5.3
4.5
4.2
4.6
6.5
45
4.1
43
4.4
1955
1956
1957
1958
1959
12 6
12 3
10.9
86
10.4
13 8
12.8
11.3
8.0
10.4
114
11.8
10.6
9.2
10.4
5.4
5.3
4.8
4.2
4.8
57
5.2
4.8
3.9
4.8
51
5.3
4.9
4.4
4.9
1960
1961
1962
1963
1964
92
8.9
9.8
103
11.6
85
8.1
9.6
10.1
11.7
98
9.6
9.9
10.4
11.5
4.4
4.3
4.5
4.7
5,2
40
3.9
4.4
4.5
5.1
48
4.7
4.7
49
5.4
1965
1966
1967
1968
1969
13.0
13 4
11.7
121
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
56
4.8
4.9
4.6
5.5
5.6
5.3
5.2
5.0
1970
1971
1972
1973
9.3
97
10.6
12.8
8.3
90
10.8
13.1
10.3
10.3
10.5
12.6
4.0
4.1
4.3
4.7
3.5
38
4.2
4.7
4.5
45
4.4
4.8
1973- IV
13.4
12.9
14.0
4.7
4.5
5.0
., ..
New series:
1973-IV
14.3
13.3
15.3
5.6
5.0
6.1
1974
14.9
12.6
17.1
5.5
4.7
6.4
1975
1976
1977
1978
1979
11.6
13.9
14.2
15.0
16.4
10.3
13 7
14.5
16.0
15.4
12.9
14.2
13.8
14.2
17.4
4.6
5.4
5.3
5.4
5.7
4.1
52
5.3
5.5
5.2
5.1
55
5.3
5.3
6.1
1977:
I
II
III
IV
13.0
16.0
13.3
14.4
13.0
17.1
12.9
15.1
13.0
15.0
13.7
13.7
5.0
5.8
5.0
5.3
5.0
6.0
4.8
5.4
5.0
5.6
5.3
5.2
1978:
1
II
HI
IV
12.4
16 7
14.9
16.1
12.7
18 7
15.5
17.0
12.1
14 8
14.4
15.3
4.7
5.9
5.4
5.6
4.7
62
5.4
5.6
4.8
56
5.4
5.6
1979:
I
II
Ill
IV
15.7
18.1
16.3
15.7
16.2
18.4
14.0
13.4
15.3
17.8
18.4
17.9
5.6
6.1
5.7
5.3
5.5
6.0
4.8
4.6
5.6
6.3
6.4
6.0
1980:
I
||
111
15.4
13.7
12.6
12.6
10.6
9.2
18.1
16.5
15.7
5.3
4.8
4.5
4.4
3.8
3.4
6.1
5.7
5.5
.'.'.
* *..]
1
Annual ratios based on average equity for the year (using four end-of-quarter figures). Quarterly ratios based on equity at end of
quarter only.
Note.—Based on data in millions of dollars.
See Note, Table 8-83.
Source: Federal Trade Commission.
329
TABLE B-85.—Relation of profits after taxes to stockholders' equity and to sales, all manufacturing
corporations, by industry group, 1979-80
Profits after income taxes per
dollar of sales—cents
Ratio of profits after income taxes (annual
rate) to stockholders' equity—percentl
Industry
1980
1979
III
1979
IV
1
II
III
III
1980
IV
1
II
III
16.3
15.7
15.4
13.7
12.6
5.7
5.3
5.3
4.8
4.5
14 0
13 4
12 6
10 6
92
48
4.6
44
3.8
34
19.4
13.3
13.9
5.7
5.9
16.8
11.5
11.8
14.4
5,6
5.2
1.9
2.5
5.4
4.6
4.2
5.4
2.1
11.7
15.8
-2.3
18.2
12.8
22.9
3.4
8.7
-.7
67
3.9
7.9
2.7
6.7
1.2
3.6
Fabricated metal products ..
Machinery, except electrical. .,
Electrical and electronic equipment
Transportation equipment2
15.8
16.0
16.4
5.2
15.4
17.2
16.6
14.1
8.2
17.1
13.3
15.6
6.8
4.4
3.7
6.0
12.3
13.9
4.5
6.8
4.4
7.2
5.0
6.0
4.0
6.6
3.8
6.3
17.6
7.9
16.0
3.8
14.8
-3.6
14.2
-6.2
5.3
1.7
5.5
2.5
5.1
1.2
4.8
-1,2
4.8
-2.1
Motor vehicles and equipment
Aircraft, guided missiles,
and parts...,
-.5
3.5
-2.2
-14.1
^18.1
-.2
1.2
-.8
-5.2
-6.9
17.9
18.3
16.5
16.5
15.4
5.1
5.0
4.5
4.3
43
Alt manufacturing corporations
Durable goods industries
Stone, clay, and glass products..
Primary metals industries
Iron and steel
Nonferrous metals
Instruments and related products
Other durable manufacturing
products
.....
16.2
17.0
16.2
17.3
17.6
8.4
8.7
8.5
8.9
9.1
19.7
15.7
12.5
9.0
12.2
5.2
4.1
3.6
2.7
3.6
18.4
17.9
18.1
16.5
15.7
6.4
6.0
6.1
5.7
5.5
Food and kindred products
Tobacco manufactures
Textile mill products
Paper and allied products
Printing and publishing
Chemicals and allied products2..
17.2
21.6
13.4
20.5
20.1
15.9
13.8
184
12.5
13.4
16.8
15.3
12.8
212
10.9
13.3
15.0
18.0
13.4
20 2
7.9
13.1
16.5
15.3
15.1
22 3
6.7
10.8
17.3
15.0
3.9
131
3.7
8.2
6.8
7.2
3.1
10.8
3.2
5.4
5.5
7.0
3.0
131
2.8
5.4
5.2
8.0
3.1
121
2.0
5.5
5.6
7.1
3.4
13 0
1.8
4.6
5.8
7.1
Industrial chemicals and
synthetics
Drugs
13.3
18.4
13.6
17.9
16.1
21.6
12.3
18.3
9.6
22.6
5.9
12.4
6.1
11.9
6.8
14.0
4.7
15.1
21.1
24.6
24.3
21.5
18.2
9.0
9.5
9.0
5.7
12.4
8.4
8.8
5.6
7.7
5.6
6.2
2.7
1.7
2.4
1.8
2.0
19.0
14.3
10.5
10.3
16.0
3.7
2.8
2.2
2,2
3.1
Nondurable goods industries
Petroleum and coal products
Rubber and miscellaneous plastics products
Other nondurable manufacturing products
1
Ratios based on equity at end of quarter.
2
Includes other industries not shown separately.
Source: Federal Trade Commission.
330
7.2
TABLE B-86.—Determinants of business fixed investment, 1955-80
[Percent, except as noted]
Nonfinancial corporations
Real
investment as
percent
of real
GNP
Capacity
utilization
rate in
manufacturing J
Cash
flow
as
percent
of
GNP a
Rate
of
return
on
depreciable
assets 3
Rate of
return
on
stockholders'4
equity
Ratio of
market
value to
replacement
cost of
net
assets B
9.3
9.7
9.7
8.7
8.8
87.1
86.4
83.7
75.2
81.9
9.3
8.9
8.9
8.6
9.3
14.3
12.2
11.1
9.5
12.2
6.2
5.5
5.0
3.9
4.9
0.855
.837
.775
.810
.977
9.1
8.8
9.0
9.0
9.4
80.2
77.4
81.6
83.5
85.6
8.9
8.8
9.5
9.7
10.1
11.1
11.2
12.9
13.8
14.7
5.0
4.4
5.9
6.4
7.6
.954
1.055
.998
1.096
1.174
1965
1966
1967
1968
1969
10.5
11.0
10.4
10.3
10.7
89.6
91.1
86.9
87.1
86.2
10.6
10.4
10.0
9.4
8.6
16.1
15.8
14.0
13.8
12.1
9.3
9.1
8.0
7.8
7.2
1.247
1.126
1.138
1.174
1.053
1970
1971
1972
1973
1974..
10.5
10.0
10.2
11.0
10.9
79.3
78.4
83.5
87.6
83.8
7.8
8.3
8.6
8.0
7.0
9.5
10.1
10.7
10.6
8.1
4.6
5.4
6.7
9.3
8.7
.861
.939
1.011
.932
.666
9.7
9.7
10.3
10.7
11.0
72.9
79.5
81.9
84.4
85.7
9.0
9.3
9.6
9.3
8.9
8.8
9.6
10.1
9.9
9.0
5.4
4.9
6.3
7.1
7.8
.658
.743
.656
.606
.561
10.7
(6)
8.7
(6)
(6)
(6)
Year
1955
1956..
1957
1958
1959
1960
1961
1962 .
1963
1964
.
1975
1976
1977
1978
1979
1980
p
1
2
3
Federal Reserve Board index.
Cash flow calculated as after-tax profits plus capital consumption allowance plus inventory valuation adjustment.
Profits before taxes plus capital consumption adjustment and inventory valuation adjustment plus net interest paid divided by the
stock of depreciable assets valued at current replacement cost. Data for the inventory component of depreciable assets do not reflect
national
income and product accounts benchmark revisions.
4
After-tax profits corrected for inflation effects divided by net worth {physical capital component valued at current replacement
cost).
Data
do not reflect national income and product accounts benchmark revisions.
5
Equity plus interest-bearing debt divided by current replacement cost of net assets. Data for the inventory component of
depreciable assets do not reflect national income and product accounts benchmark revisions.
* Not available.
Sources: Department of Commerce (Bureau of Economic Analysis), Board of Governors of the Federal Reserve System, and Council of
Economic Advisers.
331
TABLE B-87.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-80
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Sources
Uses
External
Year or quarter
Credit market funds
Total
Internal
!
Total
Total
Securities
and
mortgages
Loans
and
shortterm
paper
3.3
3.0
Others
Total
Discrepancy
Purchase Increase
(sources
of
in
physical3 financial less uses)
assets
assets
3.7
5.8
3.3
-2.7
17.1
25.3
24.9
17.9
18.5
17.0
19.9
14.4
-1.4
8.4
5.0
3.5
1.3
1.4
3.6
1.9
3.9
4.1
1.5
15.9
5.7
-1.5
.5
39.9
37.2
29.1
27.7
27.7
23.6
29.8
24.5
25.4
22.8
16.4
7.4
4.6
2.3
4.9
1.9
-1.3
.1
!'4
6.4
7.5
10.4
10.5
8.1
3.7
5.3
1.9
-.0
4.1
13.1
2.5
-.4
1.2
7.9
49.2
41.1
39.4
38J
51.7
32.7
37.1
35.2
27.9
37.5
16.5
4.0
4.2
10.8
14.2
2.8
2.9
2.9
2.5
3.5
11.9
12.5
12.8
12.2
14.8
7.5
10.8
9.4
8.4
4.5
1.8
3.5
3.8
5.9
1.0
6.7
4.3
9.3
7.7
40.6
50.4
54.9
59.1
64.1
38.0
37.2
43.8
44.9
50.7
2.7
13.2
11.1
14.2
13.4
7.0
4.1
3.9
6.9
8.5
35.1
36.3
32.7
52.2
57.0
20.6
25.4
29.8
31.8
38.6
9.3
15.9
21.6
18.8
20.7
11.4
9.5
8.2
13.0
17.9
14.4
10.9
2.9
20.4
18.4
82.2
90.5
87.5
105.3
113.1
62.0
75.7
73.0
77.2
84.3
20.2
14.8
14.5
28.2
28.8
9.0
6.3
6.4
9.2
5.6
58.9
68.6
80.8
83.8
75.7
45.5
59.3
80.8
116.2
115.6
40.7
45.2
58.2
73.0
82.1
32.1
41.1
40.6
37.0
39.1
8.5
4.1
17.6
36.1
43.0
4.9
14.1
22.6
43.1
33.4
95.9
119.6
145.8
185.6
179.0
80.3
86.0
100.3
123.3
134.7
15.6
33.5
45.6
62.3
44.4
8.5
8.2
15.8
14.4
12.2
150.0
209.7
242.3
295.7
341.3
106.8
125.3
139.9
148.8
158.3
43.2
84.4
102.3
146.9
183.0
37.9
60.7
79.9
94.7
114.3
49.3
48.8
46.1
49.2
52.4
-11.4
11.9
33.8
45.6
61.9
5.3
23.8
22.4
52.2
68.7
133.0
183.3
216.8
274.3
319.4
99.9
139.0
169.9
195.9
221.3
33.2
44.3
46.9
78.3
98.2
16.9
26.4
25.5
21.4
21.9
259.6
297.7
303.5
322.1
135.0
150.5
153.8
155.9
124.5
147.2
149.7
166.2
94.7
92.7
90.4
101.1
31.9
54.8
55.1
55.0
62.8
38.0
35.3
46.2
29.8
54.5
59.3
65.1
232.5
281.3
284.4
298.9
177.0
203.2
199.9
203.6
55.5
78.1
84.4
95.2
27.0
16.4
19.1
23.2
350.2
323.3
377.3
314.9
154.4
159.0
161.6
158.2
195.8
164.3
215.7
156.7
113.4
123.9
126.7
93.0
48.9
55.2
56.2
49.2
64.5
68.7
70.5
43.8
82.4
40.4
89.0
63.7
324.8
294.6
360.5
298.3
213.0
228.6
226.6
216.9
111.8
66.1
133.9
81.4
25.5
28.7
16.8
16.6
315.4
204.9
258.7
153.7
160.1
165.7
161.7
44.9
93.1
123.8
64.3
102.0
56.2
59.1
61.8
67.7
5.2
40.3
37.9
-19.4
-9.0
294.9
190.0
240.7
226.0
220.0
209.1
68.9
-=30.0
31.6
20.6
14.9
18.0
1946....
1947....
1948...
1949....
18.4
26.7
28.5
19.7
7.8
12.6
18.8
19.3
10.6
14.1
9.8
6.9
8.3
6.5
3.1
3.6
5.4
6.7
4.9
1950.,.
1951...
1952...
1953..
1954....
41.8
35.9
29.2
27.3
29.1
17.8
19.7
21,2
21.1
23.5
24.0
16.2
8.0
6.1
5.6
8.1
10.5
9.5
5.6
6.5
4.2
6.4
8.0
6.0
6.7
1955..
1956...
1957...
1958 .
1959
52.0
44.0
42.2
41.3
55.2
28.8
28.7
30.4
29.6
35.0
23.2
15.3
11.8
11.7
20.1
10.2
12.8
12.2
10.5
12.2
1960
1961
1962
1963
1964
47.6
54.5
58.8
66.0
72.6
34.7
35.3
41.6
44.5
50.1
12.9
19.2
17.2
21.5
22.5
1965
1966.
1967...
1968 ..
1969
91.1
96.8
93.9
114.6
118.6
56.1
60.5
61.3
62.3
61.7
1970.,
1971 .
1972 ..
1973 .
1974
104.4
127.8
161.6
200.0
191.3
1975..
1976
1977
1978
1979
-"u
1978:
II . '
III
IV
1979-
II
1980.
I.. ..
II.
1
Undistributed profits (after inventory valuation and capital consumption adjustments), capital consumption allowances, and foreign
branch
profits.
2
Consists of tax liabilities, trade debt, and miscellaneous liabilities.
a
Plant and equipment, residential structures, inventory investment, and mineral rights from U.S. Government.
Source: Board of Governors of the Federal Reserve System.
332
TABLE B-88.—Current assets and liabilities of U.S. corporations, 1939-80
[Billions of dollars]
Current assets
End of year
or quarter
Total
Cash 1
U.S.
Government 2
securities
Current liabilities
Notes
Other
and
accounts Invencurrent
receiv- tories assets
able
Total
Net
Notes
Other
Current
and
current working
ratio 3
capital
accounts liabilities
payable
All corporations
SEC series:5
1939
54.5
10.8
2.2
22.1
18.0
1.4
30.0
21.9
8.1
24.5
1.817
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
19.8
25.6
27.3
27.6
26.8
26.3
37.6
44.6
48.9
45.3
1.5
32.8
40.7
47.3
51.6
51.7
45.8
51.9
61.5
64.4
60.7
23.2
26.4
26.0
26.3
26.8
25.7
31.6
37.6
39.3
37.5
9.6
10.1
16.4
20.9
21.1
15.3
14.1
14.8
16.8
24.0
28.0
27.3
26.9
26.5
25.9
30.7
38.3
42.4
43.0
14.3
21.3
25.3
24.9
20.1
20.3
23.9
25.0
23.3
27.5
32.3
36.3
42.1
45.6
51.6
56.2
62.1
68.6
72.4
1.838
1.791
1.767
1.818
1.880
2.127
2.083
2.010
2.065
2.193
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
56.8
61.5
67.4
68.5
73.6
88.9
97.7
102.2
109.7
120.6
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
48.3
54.9
59.3
59.5
6L7
9.1
79.8
92.6
96.1
98.9
99.7
121.0
130.5
133.1
136.6
153.1
76.1
83.9
86.6
90.4
101.0
31.6
37.8
36.8
39.4
38.0
45.0
46.6
46.5
46.2
52.0
81.6
86.5
90.1
91.8
94.9
103.0
107.4
111.6
118.7
124.2
2.024
1.934
1,938
1.927
1.952
1.851
1.823
1.838
1.869
1.811
I960.. .
1961
289.0
306.8
37.2
41.1
20.1
20.0
129.2
139.2
91.8
95.2
10.6
11.4
160.4
171.2
106.8
U4.6
53.6
56.6
128.6
135.6
1.802
1.792
1.4
1.3
1.3
1.4
2.4
1.7
1.6
1.6
1.4
6.7
7.5
Nonfinancial corporations6
5
SEC series:
1961
1962
1963 .
1964 .
1965 . .
1966 .. .
1967 . .
1968 ..
1969
1970
1971
1972 .
1973..
1974
95.0
100.5
106.8
14.4
13.0
10.3
11.5
10.6
97.9
103.2
110.5
119.9
134.1
146.6
155.3
173.9
197.0
50.2
53.3
59.0
66.3
71.1
7.7
U.O
10.6
12.8
12.3
735.4
759.0
826.8
902.1
1,030.0
1,200.9
73,2
82,1
88,2
95.8
104.5
116.1
1,081.0
1,108.2
1,169.5
1,200.9
102J
1,235.2
1,233.8
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
123.7
132.4
145.5
156.6
178.8
199.4
211.3
244.1
287.8
84.4
88.7
97.0
104.9
121.5
137.5
147.1
168.8
199.2
39.3
43.7
48.5
51.7
57.3
61.9
64.2
75.3
88.6
131.0
137.3
142.7
149.0
157.2
164.6
174.9
182.4
185.7
2.059
2.037
1.981
1.951
1.879
1.825
1.828
1.747
1.646
206.1
221.1
248.2
288.5
322.1
193.3
200.4
225.7
263.9
313.6
35.0
43.8
55.8
66.4
71.7
304.9
326.0
375.6
450.9
530.4
211.3
220.5
282.9
340.3
402.3
93.6
105.5
92.7
110.7
128.1
187.4
203.6
223.7
246.9
260.3
1.615
1.625
1.595
1.548
1.491
11.1
19.0
23.4
17.6
16.3
15.6
265.8
272.1
292.8
324.7
383.8
456.8
319.5
315.9
342.4
374.8
426.9
501.7
65.9
69.9
80.1
89.2
98.5
110.8
453.4
451.6
494.7
549.4
665.5
809.1
269.8
264.2
281.9
313.2
373.7
456.3
183.6
187.4
212.8
236.2
291.7
352.8
282.0
307.4
332.2
352.7
364.6
391.8
1.622
1.681
1.672
1.642
1.548
1,484
100.1
103.7
116.1
17.4
18.6
15.8
15.6
408.1
421.1
453.0
456.8
451.4
465.2
489.4
501.7
101.4
103.2
107.7
110.8
705.4
724.7
777.8
809.1
391.3
406.4
438.8
456.3
314.1
318.3
339.0
352.8
375.6
383.5
391.7
391.8
1.532
1.529
1.504
1.484
110.2
111.4
15.1
13.9
471.2
464.2
519.5
525.7
119.3
318.7
838.3
828.1
467.9
463.1
370.4
364.9
397.0
405,7
1.474
1.490
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
492.3
529.6
599.3
697.8
790.7
16.5
16.8
16.7
15.8
U3.1
FTC-FRB series:1
1974
1975.
1976.. .
1977. ...
1978....
1979.. .
1979:
I.
II.
II!
IV.
1980:
I.
1
2
3
4
5
6
Includes time certificates of deposit.
Includes Federal agency issues.
Total current assets divided by total current liabilities.
Excludes banks, savings and loan associations, and insurance companies.
Based on data from "Statistics of Income," Department of the Treasury.
Excludes banks, savings and loan associations, insurance companies, investment companies, finance companies (personal and
commercial),
real estate companies, and security and commodity brokers, dealers, and exchanges.
7
Based on data from "Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations," Federal Trade Commission. See
"Federal Reserve Bulletin," July 1978, for details regarding the series.
Note.-SEC series not available after 1974.
Sources: Board of Governors of the Federal Reserve System, Federal Trade Commission, and Securities and Exchange Commission.
333
TABLE B-89-—State and municipal and corporate securities offered, 1934-80
[Millions of dollars]
Year or quarter
Corporate securities offered for cash
State
and
municipal
Type of corporate security
Industry of corporate issuer
securities
offered
Total
for cash corporate Common Preferred Bonds Manufac- Electric, Transpor- Communigas, and
(princi- offerings
and
tation a
cation
stock
stock
turing l
water 2
pal
notes
amounts)
Other
939
397
372
67
133
176
1939...
1,128
2,164
87
98
1,979
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
2,389
917
990
2,670
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
782
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
6,362
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 8,081
450 9,420
422 8,969
343 10,856
412 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
14,782
17,385
24,014
21,261
25,997
1,473
1,901
1,927
3,885
7,640
724
580
881
636
691
12,585
14,904
21,206
16,740
17,666
5,414
7,056
11,069
6,958
6,346
2,934
3,666
4,935
5,293
6,715
702
1,494
1,639
1,564
1,779
945
2,003
1,975
1,775
2,172
4,787
3,167
4,396
5,671
8,985
1970
1971
1972
1973
1974
17,762
24,370
22,941
22,953
22,824
37,451
43,229
39,705
31,680
37,820
7,037
9,485
10,707
7,642
4,050
1,390
3,683
3.371
3,341
2,273
29,023
30,061
25,628
20,700
31,497
10,647
11,651
6,398
4,832
10,511
11,009
11,721
11,314
10,269
12,836
1,253
1,148
860
811
1,005
5,291 9,252
5,840 12,867
4,836 16,298
4,872 10,897
3,932 9,632
1975
1976
1977
1978
1979
29,326
33,845
45,060
46,215
42,261
53,632
53,314
54,229
48,212
53,015
7,414
8,305
8,047
7,937
8,709
3,459
2,803
3,916
2,832
3,525
42,759
42,206
42,266
37,443
40,781
18,652
15,496
13,757
11,062
11,552
15,893
14,418
13,704
12,253
13,687
3,637
4,649
3,218
2,696
3,294
4,466
3,562
4,443
3,640
4,694
1980: First 3 quarters
36,089
61,602
12,670
2,614 46,318
19,709
12,860
2,884
5,431 20,719
1979:
I
||
IN
IV
9,722
10,526
9,872
12,142
12,038
15,104
13,662
12,211
1,910
1,447
2,250
3,102
556 9,572
611 13,046
1,438 9,974
920 8,189
2,096
3,300
3,659
2,497
3,287
3,346
3,057
3,997
720
895
899
780
7,836
15,361
12,892
17,721
25,097
18,784
5,354
3,462
3,854
910 11,457
807 20,828
897 14,033
6,548
7,110
6,051
4,716
4,176
3,968
890
840
1,154
1934
1980:
1
2
3
1,569
779
1,103
1,243
10,983
15,194
19,113
18,565
19,797
4,365
6,788
4,946
3,697
1,278 4,289
2,142 10,830
2,011 5,600
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.
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, and issues to be sold over an extended period, such as employee-purchase plans. Closed-end investment
company issues are included beginning 1973.
Sources: Securities and Exchange Commission, "The Commercial and Financial Chronicle" and "The Bond Buyer."
334
TABLE B-90.—Common stock prices and yields, 1949-80
Common stock prices *
New York Stock Exchange indexes (Dec. 31,
1965=50) 2
Year or month
Composite
Industrial
Transportation
Utility
Finance
Common stock yields
(percent) s
DowJones
industrial
average3
Standard
& Poor's
composite
index
(194143=10)4
Dividendprice
ratio 6
Earningsprice
ratio 7
1949
9.02
179.48
15.23
6.59
15.48
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
10.87
13 08
13.81
13.67
1619
21.54
24.40
23.67
24.56
30.73
216.31
257.64
270.76
275.97
333.94
442.72
493.01
475.71
491.66
632.12
18.40
22.34
24.50
24.73
29.69
40.49
46.62
44.38
46.24
57.38
6.57
6.13
5.80
5.80
4 95
4.08
4.09
4.35
3.97
3.23
13.99
11.82
9.47
10.26
8.57
7.95
7.55
7.89
6.23
5.78
30.01
35.37
33.49
37.51
43.76
47.39
46.15
50.77
55.37
54.67
46.18
51.97
58.00
57.44
' 50.26
53.51
50.58
46.96
' 45.41
45.43
44.19
42.80
44.45 '
49.82
65.85
70.49
618.04
691.55
639.76
714.81
834.05
910.88
873.60
879.12
906.00
876.72
55.85
66.27
62.38
69.87
81.37
88.17
85.26
91.93
98.70
97.84
3.47
2.98
3.37
3.17
3.01
3.00
3.40
3.20
3.07
3.24
5.90
4.62
5.82
5.50
5.32
5.59
6.63
5.73
5.67
6.08
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
45.72
54.22
60 29
57.42
43.84
45.73
54.46
53.69
53.70
58.32
48.03
57.92
65 73
63.08
48.08
50.52
60.44
57.86
58.23
64.76
32.14
44.35
50.17
37.74
31.89
31.10
39.57
41.09
43.50
47.34
37.24
39.53
38.48
37.69
29.79
31.50
36.97
40.92
39.22
38.21
60.00
70.38
78.35
70.12
49.67
47.14
52.94
55.25
56.65
61.42
753.19
884.76
950.71
923.88
759.37
802.49
974.92
894.63
820.23
844.40
83.22
98.29
109 20
107.43
82.85
86.16
102.01
98.20
96.02
103.01
3.83
3.14
2 84
3.06
4.47
4.31
3.77
4.62
5,28
5.47
6.45
5.41
5 50
7.12
11.59
9.15
8.90
10.79
12.03
13.46
1980
68.10
78.70
60.61
37.35
64.25
891.41
118.78
5.26
55.77
55.08
56.19
57.50
56.21
57.61
61.31
60.37
61.89
63.63
62.21
63.57
43.69
42.27
43.22
45.92
45.60
47.54
38.83
39.21
38.94
38.63
37.48
38.44
57.59
56.09
57.65
59.50
58.80
61.87
837.39
825.18
847.84
864.96
837.41
838.65
99.71
98.23
100.11
102.07
99.73
101.73
5.33
5.48
5,41
5.35
5.58
5.53
Nov
Dec
58.38
61.19
61.89
59.27
59.02
61.75
64.24
67.71
69.17
66.68
66.45
69.82
48.85
52.48
52.21
48.09
47.61
50.59
38.88
39.26
38.39
36.58
36.55
37.29
64.43
68.40
67.21
61.64
60.64
63.21
836.95
873.55
878.50
840.39
815.78
836.14
102.71
107.36
108.60
104.47
103.66
107.78
5.50
5.30
5.31
5.56
5.71
5.53
1980:
Jan
Feb
Mar
Apr
May
June
63 74
66.06
59.52
58 47
61.38
65.43
72 67
76.42
68.71
66 31
69.39
74.47
52 61
57.92
51.77
48.62
51.07
54.04
37 08
36.22
33.38
35.29
37.31
38.53
64 22
61.84
54.71
57.32
61.47
65.16
860 74
878.22
803.56
786.33
828.19
869.86
110 87
115.34
104.69
102.97
107.69
114.55
5 41
5.24
5.87
6.05
5.77
5.39
68.56
70.87
73.12
75.17
78.15
76.69
78.67
82.15
84.92
88.00
92.32
90.37
59.14
62.48
65.89
70.76
77.23
75.74
38.77
38.18
38.77
38.44
38.35
37.84
66.76
67.22
69.33
68.29
67.21
67.46
909.79
947.33
946.67
949.17
971.08
945.96
119.83
123.50
126.51
130.22
135.65
133.48
5.20
5.06
4.90
4.80
4.63
4.74
. . . .
1960
1961
1962
1963
1964. .
1965
1966
1967..
1968
1969
. . .
.
.
..
1979:
Jan
Feb
Mar
May'
June
."..'
July... .
Aug
S1-
...
. .
• •.-.:•:
..
J""y
Aug
Sept
Oct
.
Nov .
Dec
.
...
1
13.09
13.58
13.38
13.77
14.98
13.08
Averages of daily closing prices, except New York Stock Exchange data through May 1964 are averages of weekly closing prices.
Includes alt the stocks (more than 1,500) listed on the New York Stock Exchange.
Includes 30 stocks.
* Includes 500 stocks.
5
Standard & Poor's series, based on 500 stocks in the composite index.
6
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.
7
Ratio of quarterly earnings after taxes (seasonally adjusted annual rate) to price index for last day of quarter. Annual ratios are
averages of quarterly ratios.
2
3
Note.—All data relate to stocks listed on the New York Stock Exchange.
Sources: New York Stock Exchange, Dow-Jones & Co., Inc., and Standard & Poor's Corporation.
335
TABLE B-91.—Business formation and business failures,
1929-80
Business failures1
Year or month
Index
fit
nat
or net
business
formation
(1967=
100)
Amount of current liabilities
(millions of dollars)
Number of failures
New
business
incorporations
(number)
Business
failure
rate2
103.9
100 3
69.6
63.0
54.4
44.6
16.4
6.5
4.2
52
14.3
20.4
34.4
Liability size class
Total
Under
$100,000
$100,000
and over
22,909
19,859
14,768
13,619
11,848
9,405
3,221
1,222
809
1,129
3,474
5,250
9,246
22,165
18,880
14,541
13,400
11,685
9,282
3,155
1,176
759
1,003
3,103
4,853
8,708
744
979
111
219
163
123
66
46
50
126
371
397
538
Liability size class
Total
Under
$100,000
$100,000
and over
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
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
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
1929
1933 n
1939 3
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949,
104.8 "
86.4
132 916
112,897
96,346
85,640
1950..
1951
1952
1953
1954
1955
1956
1957
1958
1959
90.8
90.1
94.5
92.4
90.8
98.2
95.4
91.4
91.1
98.1
93.092
83,778
92,946
102,706
117,411
139,915
141,163
137,112
150 781
193,067
34.3
30.7
28.7
33,2
42.0
41.6
48.0
51.7
55 9
51.8
9,162
8,058
7,611
8,862
11,086
10,969
12,686
13,739
14,964
14,053
8,746
7,626
7,081
8,075
10,226
10,113
11,615
12,547
13,499
12,707
416
432
530
787
860
856
1,071
1,192
1,465
1.346
248.3
259.5
283.3
394.2
462.6
449.4
562.7
615.3
728.3
692.8
151.2
131.6
131.9
167.5
211.4
206.4
239.8
267.1
297.6
278.9
97.1
128.0
151.4
226.6
251.2
243.0
322.9
348.2
430.7
413.9
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
94.5
91.1
92.8
94.7
98.0
99.5
98.9
100.0
107.6
113.5
182,713
181,535
182,057
186,404
197,724
203,897
200,010
206,569
233,635
274,267
57.0
64.4
60.8
56.3
53.2
53.3
51.6
49.0
38.6
37.3
15,445
17,075
15,782
14,374
13,501
13,514
13,061
12,364
9,636
9,154
13,650
15,006
13,772
12,192
11,346
11,340
10,833
10,144
7,829
7,192
1,795
2,069
2,010
2,182
2,155
2,174
2,228
2,220
1,807
1,962
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
327.2
370.1
346.5
321.0
313.6
321.7
321.5
297.9
241.1
231.3
611.4
720.0
867.1
1,031.6
1,015.6
1,000.0
1,064.1
967.3
699.9
910.8
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
107.1
109.5
115.5
115.5
111.2
108.8
117.2
126.5
132.9
131.7
264,209
287,577
316,601
329,358
319,149
326,345
375,766
432,172
478,019
524,565
43.8
41.7
38.3
36.4
38.4
42.6
34.8
28.4
23.9
27.8
10,748
10,326
9,566
9,345
9,915
11,432
9,628
7,919
6,619
7,564
8,019
7,611
7,040
6,627
6,733
7,504
6,176
4,861
3,712
3,930
2,729
2,715
2,526
2,718
3,182
3,928
3,452
3,058
2,907
3,634
1,887.8
1,916.9
2,000.2
2,298.6
3,053.1
4,380.2
3,011.3
3,095.3
2,656.0
2,667.4
269.3
271.3
258.8
235.6
256.9
298.6
257.8
208.3
164.7
179.9
1,618.4
1,645.6
1,741.5
2,063.0
2,796.3
4,081.6
2,753.4
2,887.0
2,491.3
2,487.5
5easonally adjusted
1979:
Jan
Feb."..
Apr
May
June
131.3
132.1
132.5
130.9
130.5
130.9
42,410
42,302
42,761
43 034
43 895
43,044
27.4
24.4
27.9
30 8
291
26.2
642
545
732
734
708
602
355
291
379
397
380
307
287
254
353
337
328
295
182.2
177.1
187.8
242.8
200 4
273.2
15.1
12.8
18.0
16,8
16.8
13.8
167.1
164.3
169.8
226.0
183.7
259.4
Julv
Aug
Sept
Oct
Nov
Dec
1318
130.3
132.5
131.9
131.4
133.9
44 655
42,911
44,687
46,478
44,811
43,579
27 5
32.9
26.1
33.6
23.1
24,9
565
736
505
767
519
509
285
412
248
374
260
242
280
324
257
393
259
267
212 2
287.4
186.2
395.8
184.3
138.0
139
18.0
11.4
17.5
13.7
12.2
198 3
269.4
174.8
378.3
170.6
125.8
June
ft ...v .
131.0
129.8
125.8
120.5
117.8
114.8
44,447
44,583
42,615
42,461
41,974
39,746
30.9
27.5
36.2
42.2
39.3
48.7
729
677
925
1,068
975
1,094
363
330
452
525
452
522
366
347
473
543
523
572
243.1
190.8
274.2
428.2
381.1
436.7
17.0
15.5
21.7
24.4
22.0
25.2
226.2
175.3
252.5
403.8
359.2
411.5
July
Aug
Sept
Oct
115.3
117.7
120.6
117.6
44,058
43,266
46,488
47,225
52.0
45.4
45.0
1,141
1,009
926
1,340
531
486
465
610
523
461
445.7
345.4
1,002.9
26.3
23.2
22.2
419.4
322.2
980.7
Mar
..
1980:
Jan,
Feb.. .
Mar .
.
1
Commercial and industrial failures only. Excludes failures of banks and railroads and, beginning 1933, of real estate, insurance,
holding, and financial companies, steamship lines, travel agencies, etc.
2
Failure rate per 10,000 listed enterprises.
" Series revised; not strictly comparable with earlier data.
Sources: Department of Commerce (Bureau of Economic Analysis) and Dun & Bradstreet, Inc.
336
AGRICULTURE
TABLE B-92.—Farm income 1929-80
[Billions of dollars; Quarterly data at seasonally adjusted annual rates]
Income of farm operators from farming
Net farm income
Gross farm income
Produc-
Cash marketing receipts
Year or quarter
Total1
Total
Livestock
and
products
Crops
Value of
inventory
changes 2
expenses
Current
dollars
1967
dollars3
7.7
44
6.3
6.2
26
4.4
66
106
10.7
5.3
7.9
6.2
28
4.5
5.1
25
3.3
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
11.3
14.3
19.9
23.3
24.0
25.4
29.6
32.4
36.5
30.8
8.4
4.9
3.5
.3
6.9
4.5
11.1
15.6
19.6
20.5
21.7
24.8
29.6
'30.2
27.8
6.5
9.0
11.5
11.4
12.0
13.8
16.5
17.1
15.4
4.6
6.5
8,1
9.2
9.7
11.0
13.1
13.1
12.4
.4
1.1
-.1
-.4
-.4
.0
-1.8
1.7
-.9
7.8
10.0
11.6
12.3
13.1
14.5
17.0
18.8
18.0
6.5
9.9
11.7
11.7
12.3
15.1
15.4
177
12.8
10.7
14.7
20 2
22.7
22 2
22.8
25.8
23.0
24.5
17.9
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
331
38 3
37.8
34 4
34.2
33 5
34.0
34 8
39.0
37.9
28.5
32.9
32.5
31.0
29.8
29.5
30.4
29.7
33.5
33.6
16.1
19 6
18.2
16.9
16.3
160
16.4
17 4
19.2
18.9
12.4
13.2
14.3
14.1
13.6
13 5
14.0
12 3
14.2
14.7
.8
-.5
6
.8
.0
19.5
22.3
22.8
21.5
21.8
22.2
22.7
23.7
25.8
27.2
13.6
15 9
15.0
13 0
12.4
113
11.3
111
13.2
10.7
18.9
20 5
18.8
16 2
15.4
141
13.8
131
15.2
12.3
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
389
40.5
42 3
43.4
42 3
46.5
50 5
50.5
518
56.4
34.2
35.2
36.5
37.5
37.3
39.4
43.4
42.8
44.2
48.2
19.0
19.5
20.2
20.0
19.9
21.9
25.0
24.4
25.5
28.6
15.3
15.7
16.3
17.4
17 2
17.5
18.4
18.4
18.7
19.6
.4
.3
.6
.6
_ 8
1.0
_ 1
.7
.1
.1
27.4
28.6
30.3
31.6
31.8
33.7
36.5
38.2
39.5
42.1
11.5
12.0
12.1
11.8
10.5
12.9
14.0
12.3
12.3
14.3
13 0
12.3
13 3
12.8
113
13.7
14.4
12.3
118
13.0
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
58 6
62 0
71.0
98.9
98.3
100 3
1018
108.1
126.9
149.6
50.5
52 9
61.2
87.1
92.4
88.2
94 8
95.8
112.5
131.5
29 6
30 6
35.7
45.9
41.4
43 0
0
47.4
59.0
68.6
210
22 3
25.5
41.1
51.1
451
48 7
48.3
53.5
62.8
.9
3.4
-1.6
34
-2 4
.6
.4
4.1
44.4
47 4
52.3
65.6
72.2
75.9
83.1
90.3
100.8
118.6
14.2
14 6
18.7
33.3
26.1
24.5
18 7
17.8
26.1
31.0
III
IV
119.7
123.5
126.3
138.0
105.5
109.8
112.7
122.2
53.0
58.0
60.6
64.6
52.5
51.8
52.1
57.6
.5
.3
.4
.4
97.4
98.8
100.1
106.9
22.3
24.7
26.2
31.1
11.8
12.8
13.2
15.4
1979:
I
||
Ill
IV
145.5
149.1
149.9
154.1
128.9
130.9
130.6
135.4
69.7
68.2
66.9
69.7
59.2
62.7
63.7
65.7
3.2
3.9
5.4
3.9
114.2
116.3
119.6
124.2
31.3
32.8
30.3
29.9
15.1
15.3
13.7
13.1
1521
1518
158.6
137.2
136.4
142.8
67.9
69.2
70 8
1.0
70.5
72.3
-3.9
127.2
129.9
132.9
25.9
23.4
21.8
10.9
656
1929
1933
1939
13.8
....
. .
. .
69
11.3
461
-0.1
2
.1
12
.9
- 6
2
14
12.0
12 2
121
14.9
25.1
17.7
15 2
110
9.8
13.3
14.2
1978:
j
||
1980:
I
||
, ...
Ill
15
96
8.8
'Cash marketing receipts and inventory changes plus Government payments, other farm cash income, and nonmoney income
furnished
by farms.
2
Physical changes in end-of-period inventory of crop and livestock commodities valued at average prices during the period.
3
Income in current dollars divided by the consumer price index (Department of Labor).
Source: Department of Agriculture, except as noted.
337
TABLE B-93.—Farm output ami productivity indexes, 1929-80
11967
«100]
Farm output
Productivity indicators
Crops2
Year
Total'
1929. ..
Total:!
Feed
grains
Food
grains
Oil
crops
Livestock
and
products11
Farm
output Crop
per
prounit duction
per
of
acre 4
total
input
Farm output per hour
of farm work
Total
53
53
1933 ,
Crops
Livestock
and
products
16
26
15
25
1939 ... .
25
20
27
1940
1941
1942
1943
1944...
29
29
40
41
36
20
21
24
24
24
21
23
25
24
25
27
28
30
31
30
1945
1946
1947
1948
1949
36
34
39
47
45
26
27
28
31
32
27
29
29
33
33
31
32
33
34
35
1950
1951
1952....
1953.
1954
46
47
46
47
49
34
35
38
39
42
36
35
39
40
42
37
39
40
41
43
1955... .
1956
1957
1958...
1959...
53
60
58
69
64
44
47
51
57
59
45
48
53
61
61
46
48
50
54
58
1960
1961
1962....
1963
1964
87
87
68
77
78
81
81
87
91
92
95
97
90
91
92
96
95
92
95
97
95
65
67
71
77
81
66
68
72
77
79
62
66
71
77
82
88
100
106
98
95
97
100
114
116
95
97
100
100
101
100
97
100
102
103
100
97
100
105
106
89
92
100
106
110
90
94
100
106
108
86
93
100
105
112
89
116
112
115
93
91
107
102
114
120
117
121
131
155
127
105
106
107
105
106
102
110
110
111
105
104
112
115
116
104
115
128
136
130
136
111
126
135
138
128
121
128
137
144
156
121
121
129
131
144
114
120
126
135
145
142
141
132
125
143
153
132
175
182
219
101
105
106
106
110
115
115
114
116
119
112
111
117
121
130
152
162
173
183
184
142
146
158
166
171
160
178
189
204
195
129
119
157
168
112
115
113
189
166
224
91
91
92
96
95
93
91
92
96
94
1965.. ..
1966
1967 .,
1968. .
1969....
98
95
100
102
102
99
95
100
103
104
89
100
95
99
1970
1971 ..
1972
1973 . .
1974....
101
110
110
112
106
100
112
113
119
110
1975
1976
1977
1978
1979
114
117
119
122
129
1980"
123
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.
a
Gross production.
:|
Includes
items
not included in groups shown.
4
Computed from variable weights for individual crops produced each year.
Source: Department of Agriculture.
338
TABLE B-94.—Farm input use, selected inputs, 1929-80
Farm population
(April I ) 1
Year
Number
(thousands)
As
percent
of total
population 2
Farm employment
(thousands) 3
Total
Selected indexes of input use (1967 = 100)
Fam- Hired
ily
work- work-
Crops
harvested
(millions of
acres) 4
Total
Farm
labor
Farm
real
tate
Mechanical
power
and
machinery
Agricultural
chemicals 5
Feed,
seed,
and
livestock
purchases6
10
31
1929
30,580
25.1 12,763 9,360 3,403
365
102
329
103
1933
32,393
25.8 12,739 9,874 2,865
340
96
321
97
28
1939 .
30,840
23.5 11,338 8,611 2,727
331
294
102
41
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
341
344
348
357
362
100
100
103
104
105
293
288
296
292
289
103
102
100
98
98
13
14
15
17
20
42
45
48
52
52
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
354
352
355
356
360
103
101
101
103
105
271
260
246
240
231
98
102
103
103
104
20
21
23
25
27
54
53
55
56
61
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
345
344
349
348
346
104
107
107
106
105
217
218
208
200
192
105
105
105
105
105
84
90
94
96
96
29
32
35
36
37
63
67
69
69
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 2,036
5,900 1,952
5,660 1,940
5,521 1,982
5,390 1,952
340
324
324
324
324
105
103
101
100
102
185
174
162
156
151
105
102
102
100
101
97
98
97
97
98
39
41
41
43
49
72
75
74
79
84
1960
1961
1962
1963.
1964
15,635
14,803
14,313
13,367
12,954
8.7
8.1
7.7
7.1
6.8
7,057
6,919
6,700
6,518
6,110
5,172
5,029
4,873
4,738
4,506
1,885
1,890
1,827
1,780
1,604
324
302
295
298
298
101
100
100
100
100
145
139
133
129
122
100
100
100
100
100
97
94
94
93
93
49
53
58
65
71
84
88
90
90
92
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 1,482
3,854 1,360
3,650 1,253
3,535 1,213
3,419 1,176
298
294
306
300
290
98
98
100
100
99
110
103
100
97
93
99
99
100
99
98
94
96
100
101
101
75
85
100
105
111
93
97
100
97
101
9,712
9,425
9,610
9,472
9,264
4.7
4.6
4.6
4.5
4.4
4,523
4,436
4,373
4,337
4,389
3,348 1,175
3,275 1,161
3,228 1,146
3,169 1,168
3,075 1,314
293
305
294
321
328
100
100
100
101
100
101
99
98
97
95
100
102
101
105
109
115
124
131
136
140
104
111
113
116
107
8,864
8,253
6,194
6,501
6,241
4.2
3.8
'2.9
7
3.0
7
2.8
4,342
4,374
4,155
3,957
3,774
3,026
2,997
2,859
2,689
2,501
1,317
1,377
1,296
1,267
1,273
336
337
344
337
348
100
103
105
105
108
96
97
99
97
96
113
116
120
125
129
127
145
154
160
182
101
110
112
115
120
6,100
7
3,790 2,485 1,305
97
125
183
121
1970
1971
1972 .
1973
1974.
1975
1976
1977
1978 .
1979
1980 "
7
7
7
7
2.7
107
65
'Farm population as defined by Department of Agriculture and Department of Commerce, i.e., civilian population living on farms,
regardless
of occupation. See also footnote 7.
2
Total population of United States as of July 1, including Armed Forces overseas. Data from 1980 census not yet available.
3
Includes persons doing farmwork on atf farms. These data, published by the Department of Agriculture, differ from those on
agricultural employment by the Department of Labor (see Table 8-29) because of differences in the method of approach in concepts of
employment,
and in time of month for which the data are collected. See quarterly report on "Farm Labor,"
4
Acreage harvested plus acreages in fruits, tree nuts, and farm gardens,
s
Fertilizer,
lime, and pesticides.
e
Nonfarm constant dollar value of feed, seed, and livestock purchases.
7
Based on new definition of a farm. Under old definition of a farm, farm population (in thousands and as percent of total
population) for 1977, 1978, and 1979 is 7,806 and 3.6; 8,005 and 3.7; and 7,553 and 3.4, respectively.
Sources: Department of Agriculture and Department of Commerce (Bureau of the Census).
339
TABLE B-95.—Indexes ofprices received and prices paid by farmers, 1940-80
[1967^=1003
Prices paid by farmers
Prices received by
farmers
All
farm
products
. .
June
July
Aug
Sept
Oct
Nov
Dec
Livestock
and
products
Production items
Total2
Tractors
and
selfpropelled
machinery
Fertilizer
Fuels
and
energy
Wage
rates3
103
107
106
103
106
100
100
97
100
108
114
175
224
201
197
192
203
223
239
40
50
62
72
71
77
88
105
115
99
102
122
111
97
90
85
82
89
99
93
92
91
93
89
86
94
106
100
104
117
118
118
136
183
165
172
177
175
217
257
251
36
39
44
50
53
56
61
70
76
73
75
82
84
81
81
81
81
84
86
87
88
88
90
91
92
94
99
100
103
108
112
118
125
144
164
180
192
202
219
250
280
43
45
52
57
60
61
67
78
87
83
86
95
95
89
89
87
87
90
92
93
92
93
94
95
94
96
100
100
100
104
108
113
121
146
166
182
193
200
217
248
275
92
96
100
104
111
116
122
128
137
161
195
217
238
259
289
323
103
102
100
94
87
88
91
94
102
167
217
185
181
180
196
243
98
98
100
101
102
104
107
108
116
159
177
187
202
212
276
380
15
18
23
31
38
42
46
49
52
51
50
55
59
61
60
61
63
66
68
72
74
76
78
80
82
86
93
100
108
119
128
134
142
155
178
192
210
226
242
265
286
233
242
246
245
246
244
244
238
240
236
238
239
209
216
214
213
220
234
238
236
226
224
226
222
253
265
274
274
270
255
249
242
254
247
251
255
235
239
244
247
249
249
252
251
255
257
258
260
231
236
244
247
248
248
251
249
254
256
256
258
272
111
280
280
280
293
293
293
302
302
302
302
179
179
187
187
194
194
194
194
194
211
211
222
226
229
235
246
256
270
285
298
308
314
318
324
257
257
257
269
269
269
266
266
266
269
269
269
236
238
234
224
227
232
247
256
261
260
264
261
220
220
220
217
223
226
242
250
259
259
270
266
252
255
247
232
232
237
252
262
263
263
260
258
269
271
274
274
275
278
280
283
286
288
290
291
263
266
270
268
268
270
273
278
282
284
287
287
302
302
317
317
317
325
325
325
337
337
337
337
222
222
244
244
248
248
248
248
248
246
246
247
345
365
378
384
385
387
388
385
385
383
386
390
284
284
284
284
284
284
288
288
289
288
288
288
40
48
64
83
88
90
102
117
113
100
103
118
119
107
108
103
104
100
99
to
40
49
64
77
79
83
94
110
115
100
103
121
115
102
98
93
92
94
100
96
95
96
98
97
95
98
106
100
102
107
110
113
125
179
192
185
186
183
210
241
245
— CO OO
1940
1941
1942
1943
1944
1945.. .
1946
1947
1948
1949
1950
1951... .
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971..
1972
1973
1974
1975
1976
1977
1978
1979
1980
1979:
Jan
Feb
Mar
Apr .
May
June
....
July,
Aug
Sept
Oct
Nov
Dec
1980:
Jan
Feb
Mar
Crops
5to
Year or month
All
commodities,
services,
interest,
taxes,
and
wage
rates •
1
Addendum:
Average
farm
real
estate
value
per
acre4
19
19
21
23
26
29
32
36
39
41
40
46
51
52
51
53
55
58
61
66
68
69
73
77
82
86
93
100
107
113
117
122
132
150
187
213
242
283
308
351
404
'351
379
404
—-•
Includes items used for family living, not shown separately.
Includes other items not shown separately.
Seasonal^ adjusted; annual data are averages of seasonally adjusted data.
Average for 48 States. Annual data are for March 1 of each year through 1975 and for February 1 beginning 1976. Monthly data
are for first of month.
Source: Department of Agriculture.
2
:>
4
340
TABLE B-96.—U.S. exports and imports of agricultural commodities, 2940-80
[Billions of dollars]
Imports
Exports
Year
Total
1
Food
Feed
grains grains 2
Oilseeds
and
products
1940
1941
1942
1943
1944
o.r
1945
1946
1947
1948
1949
2.3
3.1
4.0
3.5
3.6
SI
.4
.1
.3
.4
.7
1.4
1.5
1.1
1950
1951
1952
1953
1954
2.9
4.0
3.4
28
3.1
.2
.3
.3
3
.2
.6
1.1
1.1
7
.5
.2
.3
1955
1956
1957
1958
1959
3.2
4.2
4.5
3.9
4.0
.3
.4
.3
.5
.6
.6
1.0
1.0
.8
.9
4.8
5.0
5.0
5.6
6.3
.5
.5
.8
.8
.9
1965
1966
1967
1968
1969
6.2
6.9
6.4
6.3
6.0
1970
1971
1972
1973
1974
'4
4
4
4
4
Cotton
Tobacco
0.2
.1
.1
.2
.1
El
Animals
and
products
Total
1
.1
0.1
.3
.8
1,2
1.3
1.3
1.7
1.3
1.5
1.8
.3
.5
.4
.5
.9
.2
A
.3
.2
.3
.9
.9
.7
.5
.4
1.7
2.3
2,8
3.1
2.9
1.0
1.1
.9
5
.8
.3
.3
.3
.5
.3
.4
.5
4.0
5.2
4.5
4.2
4.0
A
.5
.5
.4
.6
.5
.7
1.0
.7
.4
.4
.3
.4
.4
.3
.6
.7
.7
.5
.6
1.2
1.4
1.3
1.5
1.7
.6
.6
.7
.8
1.0
1.0
.9
.5
.6
.7
.4
.4
.4
A
A
1.1
1.3
1.1
.9
.9
1.4
1.8
1.5
1.4
1.2
1.2
1.2
1.3
1.3
1.3
.5
.4
.5
A
.5
'.3
!e
7.3
7.7
9.4
17.7
22.0
1.1
1.0
15
3.5
4.6
1.4
1.3
1.8
4.7
5.4
1.9
2.2
2.4
4.3
5.7
A
.6
.5
.9
1.3
.5
.5
1975
1976
1977
1978
1979
21.9
23.0
23.6
29.4
34.7
5.2
6.0
4.9
5.9
7.7
6.2
4.7
3.6
5.5
6.3
4.5
5.1
6.6
8.2
8.9
Jan-Oci:
1979
1980
27.3
33.2
6.1
7.7
5.1
6,3
6.8
7.5
1960
1961
1962
1963
1964
.7
1.2
2.1
2.1
.. .
$
.'3
.2
Crops,
fruits,
and
vegetabfes"
Animals
and
products
El
0.2
.3
'1
A
.3
Coffee
AgriCocoa cultural
beans trade
and
prod- balance
ucts
0.1
.2
.2
.3
.3
-0.8
-1.0
.3
.4
.4
.4
.6
.3
.5
.6
.7
.8
El
.2
.2
.2
.7
1.1
.2
.2
.2
.5
1.1
1.4
1.4
15
1.5
4.0
4.0
4.0
3.9
4.1
.2
.5
.4
.5
.2
.2
.2
.2
'.B
1.4
1.4
1.4
1.2
1.1
-.8
2
.2
_ i
.6
.6
.6
.7
.8
3.8
3.7
3.9
4.0
4.1
.2
.2
.2
.3
.3
.6
1.0
1.0
1.0
1.0
1.2
.2
.9
.9
.8
1.0
1.3
1.2
1.6
2.3
.8
.7
.7
.7
.8
4.1
4.5
4.5
5.0
5.0
.3
.4
.4
.5
.9
1.2
1.1
1.3
1.4
1.1
1.1
1.0
1.2
.9
5.8
5.8
6.5
8.4
10.2
.5
.6
.8
.8
1.6
1.5
1.8
2.6
2.2
1.2
1.2
1.3
1.7
1.6
.2
.3
.9
.9
1.0
1.1
1.6
1.8
1.5
1.9
2.9
9.3
11.8
1.0
1.0
1.5
1.7
2.2
.9
.9
1.1
1.4
1.2
1.7
2.4
2.7
3.0
3.8
9.3
11.0
13.4
14.8
16.7
.8
.9
1.2
1.5
1.7
1.8
2.3
2.3
19
1.7
2.9
4.2
4.0
4.2
.5
.6
1.0
1.4
1.2
12.6
12.0
10.2
14.6
18.0
1.7
2.5
.8
1.0
3.1
3.1
13.6
14.3
1.4
1.4
3.1
3.0
3.2
3.6
1.0
.8
13.7
18.8
1
Total
2
Rice,
3
.2
.1
ll
.2
.2
.2
.1
',2
2
'.2
.1
2
.2
.3
.5
8
1.2
.3
.7
-1.1
-1.1
-1.1
-13
-.9
i
2.1
2.4
1.9
1.3
1.1
includes items not shown separately.
wheat, and wheat flour.
includes nuts, fruits, and vegetable preparations.
Hess than $50 million.
Note.—Data derived from official estimates released by the Bureau of the Census, Department of Commerce. Agricultural
commodities are defined as (1) nonmarine food products and (2) .other products o1 agriculture which have not passed through complex
processes of manufacture. Export value, at U.S. port of exportation, is based on the selling price and includes inland freight,
insurance, and other charges to the port. Import value, defined generally as the market value in the foreign country, excludes import
duties, ocean freight, and marine insurance.
Source: Department of Agriculture.
341
TABLE B-97.—Balance sheet of the farming sector, 1929-81
[Billions of dollars]
Assets
Claims
Other physical assets
Beginning of
year
Total
Real
estate
live- Machinstock 1 ery and Crops2
motor
vehicles
Household
equipment
and
furnishings
Financial assets
Deposits
U.S.
and
savings
curbonds
rency
Investments in
cooperatives
Total x
Real
estate
debt
Other
debt
Proprietors'
equities
48.0
6.6
3.2
30.8
3.0
2.5
8.5
34,1
5.1
3.2
6.8
53.0
54.8
62.9
73.6
84.0
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
3.9
5.1
6.1
4.2
4.1
4.8
4.8
4.7
3.2
3.5
4.2
5.5
6.6
0.3
.3
.5
1.1
2.2
0.8
.9
.9
1.0
1.1
53.0
54.8
62.9
73.6
84.0
6.6
6.5
6.4
5.9
5.4
3.4
3.9
4.1
4.0
3.5
43.0
44.4
52.4
63.7
75.1
1945
1946
1947.
1948
. ...
1949.. . .
93.8
102 9
115.9
127.4
134.6
53.9
610
68.5
73.7
76.6
9.0
97
11.9
13.2
14.4
6.5
54
5.3
7.4
10.1
6.7
63
7.1
9.0
8.5
5.2
55
7.2
8.1
8.9
7.9
94
10.2
9.9
9.6
3.4
42
4.2
4.4
4.6
1.2
14
1.5
1.7
1.9
93.8
102 9
115.9
127.4
134.6
4.9
47
4.9
5,1
5.3
3.4
32
3.6
4.2
6.1
85.5
95 0
107.4
118.1
123.2
1950
1951 . .
1952
1953
1954
134.5
154.3
170.1
167.6
164.6
77.6
89.5
98.4
100.1
98.7
12.9
17.1
19.5
14.8
11.8
12.2
14.1
16.7
17,4
18.4
7.6
7.9
8.8
9.0
9.2
8.4
9.6
10.1
9.6
9.5
9.1
9.1
9.4
9.4
9.4
4.7
4.7
4.7
4.6
4.7
2.0
2.3
2.5
2.7
2.9
134.5
154.3
170.1
167.6
164.6
5.6
6.1
6.7
7.2
7.7
6.8
6.9
8.0
8.9
9.2
122.1
141.3
155.4
151.5
147,7
168.8
173.6
182.8
191.3
208.4
102.2
107.5
115.7
121.8
131.1
11.2
10.6
11.0
13.9
17.7
18.6
19.3
20.2
20.1
21.8
9.6
8.3
8.3
7.6
9.3
9.7
10.0
9.6
9.6
9.4
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
168.8
173.6
182.8
191.3
208.4
8.2
9.0
9.8
10.4
U.l
9.4
9.8
9.5
10.0
12.5
151.2
154.8
163.5
170.9
184.8
1960 . . . .
1961
1962
1963
1964
210.2
210.8
219.3
227.7
235.8
137.2
138.5
144.5
150.2
158.6
15.3
15.6
16.4
17.3
15.9
22.7
22.2
22.5
23.5
23.9
7.7
8.0
8.8
9.3
9.8
9.2
8.7
8.9
8.8
8.8
9.2
8.7
8.8
9.2
9.2
4.7
4.6
4.5
4.4
4.2
4.2
4.5
4.9
5.0
5.4
210.2
210.8
219.3
227.7
235.8
12.0
12.8
13.8
15.1
16.8
12.8
13.4
14.7
16.3
17.6
185.4
184.6
190.8
196.3
201.4
1965.
1966..
1967
1968
1969
243.8
260,8
274 2
288.0
302.8
167.5
179.2
1891
199.7
209.2
14.5
17.6
19 0
18.9
20.2
24.8
26.0
27 4
29.8
31.3
9.2
9.7
10 0
9.6
10.6
8.4
8.4
83
8.8
9.4
9.6
10.0
10 3
10.9
11.5
4.2
4.0
39
3.8
3.8
5.6
5.9
62
6^5
6.8
243.8
260.8
274 2
288*0
302.8
18.9
21.2
23 l
25.1
27.4
17.9
19.5
210
22^3
23.1
207.0
220.1
230 1
240^6
252.3
1970
1971
1972
1973
1974
314.9
326.0
351.8
394.8
478.5
215.8
223.2
239.6
267.3
327.7
23.5
23.7
27.3
34.1
42.4
32.3
34.4
36.6
39.3
44.2
10.9
10.7
11.8
14.5
22.1
9.6
10.0
10.8
11.9
12.3
11.9
12.4
13.2
14.0
14.9
3.7
3.6
3.7
4.0
4.1
7.2
8.0
8.8
9.7
10.8
314.9
326.0
351.8
394.8
478.5
29.2
30.3
32.2
35.7
41.3
23.8
24.2
269
29.6
32.8
261.9
271.5
292.7
329.5
404.4
1975
1976
517.6
580.2
368.5
416.9
24.6
29.5
55.7
65.0
23.3
21.3
14.0
14.2
15.1
15.6
4.3
4.4
13.3
517.6
580.2
46.3
51.1
35.5
39.7
435.8
489.4
1977 3. .
1978..
1979.
. ..
641.4
697.4
804.4
472.9
513.7
586.1
29.0
31.9
51.2
71.0
77.0
85.1
22.0
24.9
27.4
13.7
15.5
18.0
14.8
15.2
15.5
3.8
3.9
4.2
14.1
15.3
16.8
641.4
697.4
804.4
56.6
63.6
70.8
46.1
55.6
65.2
538.7
578.1
668.3
1980 . .
1981
918.9
999.3
671.2
730,3
61.2
69.9
94.3
98.0
33.1
38.3
20.5
22.5
15.9
16.2
4.0
3.6
18.6
20.5
918.9
999.3
82.1
96.1
75.2
84.4
761.6
818.8
1929.
1933.
.
1939..
1940...
1941.
.
1942
1943 .. . .
1944 . . . .
1955
1956 .
1957
1958
1959
. .
9.8
1
Beginning with 1961, horses and mules are excluded.
Includes all crops hetd on farms and crops held off farms by farmers as security for Commodity Credit Corporation loans. The latter
on January 1, 1981 totaled approximately $1.0 billion.
3
Beginning 1977, data are for farms included in the new farm definition, that is, places with sales of $1,000 or more annually.
Note.—Beginning 1960, data include Alaska and Hawaii.
Source: Department of Agriculture.
2
342
INTERNATIONAL STATISTICS
T A B L E B-98—Exchange rates, 2973-80
[Cents per unit of foreign currency, except as noted]
Belgian franc
Year and month
Canadian
dollar
French franc
German mark
Italian lira
Japanese yen
2.5377
100.333
22.191
35.548
0.17600
0.38190
2.5040
2.6366
2.5364
2.7158
102.877
103.481
101.384
101.192
20.742
20.408
20.831
22.109
38.211
39.603
37.580
40.816
.15687
.15379
.15103
.15179
.35454
.35340
.33439
.33288
2.9083
2.8603
2.5485
2.5311
99.954
97.426
97.437
98.627
23.804
24,971
22.367
22.428
43.120
42.726
38.191
38.144
.15842
.15982
.14740
.14645
.34731
.34077
.33345
.32715
2.5480
2.5220
2.6046
2.7483
101.431
102.712
102.557
98.204
21.657
21.109
20.334
20.055
39.064
38.797
40.169
41.965
.12113
.11780
.11837
.11521
.33276
.33424
.34800
.33933
2.7258
2.7713
2.7910
2.9608
95.125
94.549
93.168
91.132
20.075
20.240
20.314
20.844
41.812
42.453
43.034
46.499
.11276
.11295
.11318
,11416
.35687
.36652
.37486
.41491
3.1589
3.0590
3.2207
3.3637
88.823
89.143
85.739
84.763
21.256
21.841
22.909
23.178
49.181
47.984
50.778
53.217
.11692
.11634
.12050
.11863
.43148
.46744
.52656
.51038
Mar
June
Sept
3.3971
3.3048
3.4684
3.5423
85.187
85.296
85.814
85.471
23.328
22.914
23.826
24.614
53.754
53.084
55.758
57.671
.11888
.11828
.12326
.12329
.48470
.45750
.44963
.41613
1980:
Mar
June
Sept
Dec
3.3395
3.5335
3.4844
3.1543
85.255
86.836
85.861
83.560
23.188
24.310
24.056
21.925
54.039
56.584
55.883
50.769
.11635
.11973
.11742
.10704
.40246
.45894
,46644
.47747
March 1973
1974:
Mar
June
Sept
Dec
1975Mar
June
Sept
Dec
1976.
Mar
June
Seot
Dec
1977:
Mar
June
Sept
Dec
1978:
Mar
June
Sept
Dec •":::.
1979:
. . : : ; 7.'.:..
De?
Netherlands
guilder
March 1973
1974:
Mar
June
Sept
Dec
1975Mar
June
Sept
Dec
1976.
Mar
June.
Sept
Dec
1977.
Mar
June
Sept
Dec
1978:
Mar
June
Sept
Dec
1979:
Mar
June
Sept
Dec
1980Mar
June
Sept
.
.
...
. . .
. . .
. . .
. . .
.
.
.
Dec
Swedish Krona
United States dollar
{March 1973=100)
Multilateral
trade-weighted
average
Bilateral tradeweighted
average
34.834
22.582
31.084
247.24
100.0
100.0
36.354
37.757
36.870
39.331
21.915
22.885
22.333
23,897
32.490
33.449
33.371
38.442
234.06
239.02
231.65
232.94
101.6
100.0
102.9
98.6
100.9
99.9
103.0
101.0
42.124
41.502
37.229
37.234
25.481
25.532
22.501
22.685
40.273
40.086
36.905
37.970
241.80
228.03
208.35
202.21
93.9
94.8
103.0
103.5
98.5
100.0
104.9
105.0
37.149
36.524
38.390
40.240
22.702
22.475
22.998
24.051
38.980
40.484
40.431
40.823
194.28
176.40
172.72
167.84
105.1
107.1
105.7
105.3
104.6
105.2
104.0
105.8
40.079
40.326
40.604
42.955
23.726
22.625
20.602
21.044
39.209
40.170
42.115
48.168
171.74
171.91
174.31
185.46
105.2
104.4
103.8
98.4
106.2
105.6
105.4
101.9
45.994
44.716
46.733
49.120
21.693
21.690
22.592
22.808
52.693
53.046
63.765
59.703
190.55
183.72
195.95
198.61
94.8
94.7
89.5
88.5
100.3
99.2
96.0
96.3
49.801
48.374
50.635
52.092
22.901
23.028
23.860
23.935
59.473
58.884
62.087
62.542
203.78
211.19
219.66
220.07
88.4
89.6
86.7
86.3
96.7
98.0
96.5
97.5
49.270
51.578
51.398
46.730
23.008
23.995
24.072
22.722
56.710
61.207
61.012
56.022
220.45
233.59
240.12
234.60
90.3
85.3
85.5
91.0
100.1
94.9
95.1
98.7
Source: Board of Governors of the Federal Reserve System.
Swiss franc
United
Kingdom
pound
343
TABLE B-99— U.S. international transactions, 1946-80
[Millions of dollars; quarterly data seasonally adjusted]
Merchandise12
Investment income3
Year or
q
@FedFRASER