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Transmitted to the (|o|grpss
Februajry jjl^86






Economic Report
of the President

Transmitted to the Congress
February 1986
TOGETHER WITH

THE ANNUAL REPORT
OF THE

COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 1986

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







C O N T E N T S
Page

ECONOMIC REPORT OF THE PRESIDENT

1

ANNUAL REPORT OF THE COUNCIL OF ECONOMIC
ADVISERS*

13

CHAPTER 1. INFLATION, DISINFLATION, AND THE STATE OF THE
MACROECONOMY

23

CHAPTER 2. THE UNITED STATES AND ECONOMIC DEVELOPMENT..

71

CHAPTER 3. PROTECTIONISM AND THE UNITED STATES IN THE
WORLD TRADING SYSTEM

105

CHAPTER 4. INCOME TRANSFERS TO AGRICULTURE

129

CHAPTER 5. REFORMING REGULATION: STRENGTHENING MARKET
INCENTIVES

159

CHAPTER 6. THE FEDERAL ROLE IN CREDIT MARKETS

189

CHAPTER 7. THE ECONOMIC EFFECTS OF IMMIGRATION

213

APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF
THE COUNCIL OF ECONOMIC ADVISERS DURING 1985

235

APPENDIX B. STATISTICAL TABLES
EMPLOYMENT, AND PRODUCTION

245

RELATING TO INCOME,

* For a detailed table of contents of the Council's Report, see page 17.




(Ill)







ECONOMIC REPORT
OF THE PRESIDENT




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

The major economic objectives of my Administration from its beginning have been strong, sustainable, noninflationary economic
growth and expanding economic opportunities for all Americans. To
achieve these goals, we have pursued policies that are in the longterm best interest of the Nation.
The benefits of this approach are now clear. The economy has entered the fourth year of a robust expansion that has dramatically increased opportunities for all Americans. Millions of new jobs have
been created. Investment opportunities have increased. Standards of
living have risen. Moreover, this success has been accomplished without rekindling inflation.
We are committed to continuing and extending policies that encourage the private investment and innovation that are the foundation of this expansion. We continue to resist unnecessary increases in
government spending and unwarranted interference in private markets. Sustained, strong economic growth depends critically on allowing the market system to function as freely as possible. Free markets
provide proper incentives to work, save, and invest, and they ensure
that the interests of consumers are served.
These basic principles were embodied in our 1981 Program for
Economic Recovery and reaffirmed in the second-term Program for
Growth and Opportunity. These programs do not offer "quick fixes"
but rely on the inherent ability of the free market system to allocate
resources efficiently and to generate economic prosperity. The fundamental responsibility of the Federal Government should be to provide a stable environment within which people can make economic
decisions, not to make those decisions for them. To this end, our initial program involved four essential elements:
• Restrain the growth of Federal spending,
• Reduce personal and business taxes,
• Reduce regulatory excesses, and
• Encourage stable and moderate monetary growth.
THE CURRENT EXPANSION

The success of our policies is now apparent. Even though economic growth slowed a bit in 1985 compared with its strong performance
in 1983 and 1984, the expansion has nonetheless proceeded at an




encouraging pace. It is already 4 months longer in duration than the
average peacetime expansion since World War II. If the expansion
continues as expected throughout 1986, it will be the third longest in
the postwar period.
This expansion has been characterized by unusually strong real
business investment in plant and equipment due to our successful
attack on inflation and to our tax policy, which stimulated investment. Real business investment has contributed nearly twice as much
to real gross national product (GNP) growth in this expansion as it
typically has in previous postwar expansions; as a share of real GNP,
it is higher than at any other time in the postwar period. Stronger
U.S. investment means not only a stronger economy today, but also
higher productivity and the potential for faster growth in the future.
Strong employment growth is another outstanding feature of this
recovery. Since the end of the last recession in November 1982, the
U.S. economy has employed more than 9 million new workers. Furthermore, the unemployment rate fell from 10.6 percent in November 1982 to 6.9 percent in December 1985. Despite this dramatic improvement, however, we will not be satisfied until all American workers can find jobs at wages commensurate with their skills.
When we initiated our Program for Economic Recovery, we were
confident that a resourceful, flexible economy, unencumbered by excessive governmental intervention, would create jobs. At the same
time, we believed that restrained monetary growth would reduce inflation. Our optimism was justified. The rate of inflation is now less
than one-third of the rate in 1980. During this expansion, inflation
has maintained its lowest level in more than a decade despite the tremendous employment growth that the economy has generated. Reflecting in part the reduction in inflation, interest rates—especially
long-term rates—have declined throughout 1985 and by the end of
the year were at their lowest levels in 6 years.
Our success in reducing inflation came as a surprise to some. As
inflation rose in the 1970s, some businesses and individuals incurred
debt in order to purchase assets, expecting the income generated by
these assets to rise with inflation while the real burden of servicing
the debt decreased. With the decline in inflation, the real burden of
debt servicing rose and the income generated by many assets fell.
This combination of events has strained some U.S. financial institutions. Falling farm incomes have hampered the ability of some farmers to pay interest on their debt. Similarly, many less developed
countries have had difficulty repaying loans from U.S. financial institutions. The stress that the undesirable rise in inflation and its desirable but unexpectedly rapid decline have imposed on the U.S. finan-




cial system emphasizes the importance of achieving and maintaining
long-term price stability.
America's optimism concerning continued growth in economic opportunities is shared by businesses and individuals throughout the
world. The United States has been and remains one of the few major
immigrant-receiving countries, reflecting in part the economy's ability
to generate economic opportunities. During the current expansion,
profitable investment opportunities in the United States have also attracted foreign capital, helping to finance the rapid growth in investment. The inflow of foreign capital indicates a strong economy. As
other nations continue to move toward market-oriented policies and
reduce excessive government spending, taxation, and structural rigidities, they too will generate increased investment opportunities, resulting in increased growth and stronger currencies as more capital
flows into their economies.
THE ECONOMIC OUTLOOK

Many factors point to continuation of the current expansion. Economic conditions at the end of 1985 were more favorable than they
were at the beginning of the year and are expected to improve further. Monetary growth during the past year has been sufficient to accommodate growth in the economy. The leading economic indicators
have risen in 11 of the past 12 months. Inventories are relatively low,
and as sales continue to expand, production should increase to replenish depleted inventories. Interest rates have continued their decline, promising to spur additional capital spending. Furthermore,
the warning signals that typically precede the end of expansions have
not been observed. Thus, we feel confident that the current expansion will continue through 1986.
We expect increased growth in real GNP of 4 percent in 1986,
continuing throughout 1987 and 1988 and declining gradually in
1989-91 as the economy approaches its long-run real growth trend.
Given the monetary and exchange rate developments during the past
year, we anticipate a slight rise in inflation in 1986-87. However, if
the Federal Reserve reaffirms its resolve to achieve price stability, a
goal that I support without reservation, the downturn in inflation
should resume in later years.
Changing events, including erratic monetary and fiscal policies, can
bring any expansion to an abrupt and unexpected halt. Our projections for the longer term are premised on the assumption that stable
economic policies will foster continued economic growth and will
also provide the needed flexibility for the economy to respond to external disturbances. Our policy goals reflect this commitment to economic stability as the key contribution to sustained growth, stable




prices, declining interest rates, and falling unemployment. The
American people have a right to expect such results and, with the cooperation of the Congress and the Federal Reserve, we expect to
continue to deliver them.
THE ECONOMIC ROLE OF GOVERNMENT

In formulating our program for healthy and continued economic
expansion, we recognized the limited role that government properly
plays. The Federal Government cannot provide prosperity or generate economic growth; it can only encourage private initiative, innovation, and entrepreneurial activity that produce economic opportunities. An overly active government actually hinders economic
progress. Federal spending absorbs resources, many of which could
be better used by the private sector. Excessive taxation distorts relative prices and relative rates of return. By arbitrarily reallocating resources, it inhibits the economy's ability to grow. Thus, the best way
for government to promote economic growth is to provide a foundation of stable, predictable economic policies, and then to stand back
and let the creative potential of the American people flourish.
The Federal Government has several definite responsibilities that
my Administration continues to uphold. The first is to provide an
adequate national defense. World peace and security require the
United States, as the leader of the free world, to demonstrate its willingness and ability to defend its own national security and to contribute to the defense of its allies.
Furthermore, we will not ignore the less fortunate in this society.
My Administration continues to provide an appropriate safety net to
aid those individuals who need help. At the same time, we have
worked to develop a strong, vibrant, opportunity-generating economy that can offer meaningful jobs to all who are able to work. The
economic expansion has done much more to reduce poverty than any
government transfer program. The significant decline in the percentage of the population in poverty in 1984 reflects both the success of
our programs and the strength of the economy. Moreover, tax
reform will benefit the working poor. My proposed tax reforms eliminate the Federal income tax burden of most working poor.
Finally, even though we believe that markets generally allocate resources most efficiently, there are a few special cases, such as air and
water pollution, in which the market mechanism alone may be inadequate. In these instances, government intervention is necessary, but
even here, it should be based on market principles. For example, the
Environmental Protection Agency has approved arrangements that
enable firms to earn credits for reducing emissions below the required limit, which they can sell to other firms facing higher costs of




emission control. In this way, environmental quality is maintained
and improved while the costs of compliance decline.
Control Federal Spending

Fulfillment of these limited responsibilities, however, does not require the level or the rate of growth of Federal spending that the
Nation has been experiencing. In spite of our efforts, spending remains excessive and has been the primary cause of the large budget
deficit. Tax rate cuts did not generate this deficit; in fact, current tax
receipts are as large a share of GNP as they were in the late 1970s,
even after the reduction in tax rates that we initiated in 1981. The
key to resolving the Federal budget deficit is to restrain unneeded
spending. Spending, not the deficit, is the true indicator of the cost
of government, because it measures the total economic resources diverted from the private sector. Excessive spending affects the economy in deleterious ways regardless of whether it is financed through
taxation, borrowing, or even inflation. Private capital formation is reduced, resources are inefficiently allocated, and economic growth is
slowed.
I applaud and support the newly enacted Balanced Budget and
Emergency Deficit Control Act of 1985, known commonly as GrammRudman-Hollings, as a way to work with the Congress to reduce Federal spending and the deficit. I intend to submit budgets in each of
the coming years that satisfy the act's deficit targets, not by sacrificing the programs essential to the Nation, but by reforming or eliminating those programs that are ineffective or nonessential. I reject
the notion of increased taxes. Higher taxes would only encourage
more Federal spending and limit the economy's ability to grow.
Gramm-Rudman-Hollings accomplishes only part of our long-term
objective of Federal fiscal responsibility. Properly applied, it will
produce a balanced budget by 1991, but it does not guarantee a continued balanced budget thereafter. We must now direct our attention
to a constitutional amendment providing for a permanently balanced
budget. Together, these two measures will provide an orderly transition to a balanced budget, restrain future spending, and ensure that
future fiscal decisions are prudent and responsive to the national interests. Accordingly, I continue to support strongly and to urge the
adoption of a balanced-budget constitutional amendment. I also seek
legislation that would authorize the President to veto individual line
items in appropriations measures. Such authority is essential to
ensure that only effective and essential government programs are
funded.




Reform Taxes

Over the years, successive modifications of the Federal tax code
have resulted in a complex tax system that contains many loopholes
and artificially encourages some types of activities at the expense of
others. Furthermore, the inflation of the 1970s distorted the overall
pattern of capital taxation and pushed personal incomes into everhigher tax brackets, discouraging saving and investment. Our actions
to reduce tax rates have corrected many of these distortions and inequities. Individual income tax rates have been reduced and indexed
to the inflation rate; effective tax rates on new investment have been
lowered substantially. Still, more must be done.
In May 1985, I submitted to the Congress a comprehensive reform
of the tax code to make it simpler, fairer, and more conducive to economic growth. I proposed reducing marginal tax rates for individuals
and businesses, broadening the tax base by eliminating the majority
of existing loopholes, taxing different activities consistently so that
resources are allocated on the basis of economic merit and not tax
considerations, and compensating for or eliminating much of the remaining influence of inflation on effective tax rates on capital. Just
before it recessed, the House of Representatives passed a tax reform
bill that incorporated some of these principles. Despite substantive
differences between my proposal and the House bill, I urged its passage to move the legislative process forward. We will now work with
the Senate to generate a fair and simple tax code that is truly profamily, pro-jobs, and pro-growth.
Eliminate Counterproductive Regulation

Tax reform is only one part of our goal to enable markets to function more efficiently in allocating resources. We have also worked
hard to identify and remove government regulations that impede the
operation of markets, inhibit competition, or impose unnecessary
costs on firms and unnecessarily high prices on consumers. The regulation of domestic oil prices provides a good example of the deleterious economic effects that regulation can have as it distorts relative
prices and prevents necessary adjustments. The results of my accelerating the deregulation of oil prices in January 1981 are now apparent. Oil imports have declined, and the Organization of Petroleum
Exporting Countries has found it impossible to sustain its previous
levels of high prices. In contrast, the natural gas market is still
plagued by distortions induced by price controls. In 1983, we unsuccessfully urged the Congress to deregulate natural gas prices. We will
again pursue legislation that would completely deregulate natural gas
prices. In addition, we are proposing further deregulation of the
trucking industry.




We will continue efforts to reduce government involvement in two
particular sectors of the economy. First, the banking and credit
system remains rife with regulations and loan guarantees that arbitrarily allocate credit and hamper the system's ability to adapt to
changing economic conditions. While we must continue to protect
the public against severe economic disturbances, we should allow financial institutions greater freedom in determining the composition
of their assets and liabilities so that they can respond more flexibly to
the changes they encounter.
Second, heavy government involvement also persists in many agricultural markets. Government policies, intended as solutions, have so
distorted incentives that they have actually caused some of agriculture's current problems. The legislation that I proposed in 1985 was
designed to return American agriculture gradually to a free market.
The bill passed by the Congress in late 1985 contained some of my
proposed reforms, but preserved some of the policies that now
hamper agriculture. In particular, it maintained counterproductive
government intervention in the dairy industry, mandated export subsidies, and continued costly distortions of the sugar market. We will
continue to pursue further agricultural reform that lessens government involvement in these areas and increases opportunities for
farmers to compete successfully in world markets.
Transfer Some Services to the Private Sector

The Federal Government has increasingly sought to provide services that can be more efficiently provided by the private sector. To
address this problem, I have established a working group to investigate which government functions could be effectively returned to the
private sector. I have also included several initiatives in this area in
the recently released budget. This strategy does not necessarily require eliminating services now provided by the government. Rather,
it would make private alternatives available. Such a strategy ensures
production of services that are demanded by consumers, not those
chosen by government bureaucrats. It also leads to more efficient
and lower cost production of those services, and often removes government-imposed restraints on competition.
Maintain Free and Fair Trade

Our pursuit of unencumbered markets is not confined to the domestic economy. Our international trade policy rests firmly on the
foundation of free and open markets. The benefits of free trade are
well known: it generates more jobs, a more productive use of a nation's resources, more rapid innovation, and higher standards of
living both for this Nation and its trading partners. While a unilateral




commitment to free trade benefits the Nation, Americans gain even
more when U.S. trading partners also open their markets. My Administration will actively pursue this goal. An important part of our trade
program is to begin a new round of multilateral trade negotiations.
Under the auspices of the General Agreement on Tariffs and Trade,
we are seeking to engage U.S. trading partners in comprehensive negotiations that will generate freer trade, increased access for U.S. exports, and a stronger international trading system. To complement
this initiative, we are continuing to explore the possibility of establishing bilateral free trade zones with some U.S. trading partners.
We do not blindly pursue free trade. We also strive to ensure that
trade is fair by vigilantly enforcing current trade laws. Unfair trade
practices abroad harm U.S. exporters as well as reduce standards of
living worldwide; this is unacceptable. In an unprecedented move, I
have asked the U.S. Trade Representative to initiate unfair trade
practice investigations under Section 301 of the Trade Act of 1974.
Such investigations are not intended to produce retaliatory action by
the United States, but rather to achieve more open markets internationally. In this way, we hope to convey the message that a commitment to free and fair trade is a reciprocal obligation in this increasingly interrelated world trading community.
The large trade deficit that has evolved during the current expansion has subjected our free and fair trade policy to much criticism,
especially from the Congress. During the past year, more than 300
pieces of protectionist legislation have been considered or proposed.
While the conditions that have led to the trade deficit have adversely
affected some U.S. industries, increased protectionism is not the solution. Protectionist measures will have little effect on the trade balance and will only decrease standards of living and inefficiently redistribute resources within the economy.
Our agreement with four other major industrialized nations in September 1985 was an important recognition that economic policy
changes across countries (not only in the United States) are essential
to correct trade imbalances worldwide and to realign currency values.
To this end, we reaffirmed our commitment to continue efforts to
reduce the Federal Government deficit by lowering spending as a
share of GNP. We urged the Congress to enact Gramm-RudmanHollings to achieve that goal. America's trading partners, in turn,
committed themselves to policies designed to foster increased internally generated economic growth and, hence, increased demand for
U.S. exports. These policy objectives are important for less developed countries as well. Indeed, a central facet of the Secretary of the
Treasury's recent initiatives to assist in resolving the debt-servicing




10

problems of these countries is that they pursue policies to promote
growth, reduce inflation, and secure balance of payments adjustment.
CONCLUSION

My Administration recognizes the responsibility of the Federal
Government to promote economic growth and individual opportunity
through policies that lead to maximum employment, production, and
purchasing power. We intend to maintain this course with policies
that continue to promote strong, sustainable, noninflationary growth
and provide expanding economic opportunities for all. We shall continue to resist additional government involvement as a solution to
short-term problems. Such involvement has been unsuccessful in the
past and ultimately becomes part of the problem rather than part of
the solution. With the cooperation and support of the Congress and
the independent agencies, we will pursue the appropriate policies
necessary to sustain the current expansion and to stabilize prices.

(j \ cHAJULfix)^ \ ^JL-IMj^O^v

February 6, 1986




11







THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS




LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D.C., January 31, 1986.
MR. PRESIDENT:
The Council of Economic Advisers herewith submits its 1986
Annual Report in accordance with the provisions of the Employment
Act of 1946 as amended by the Full Employment and Balanced
Growth Act of 1978.
Sincerely,




Beryl W. Sprinkel
Chairman

Thomas Gale Moore
Member

15




C O N T E N T S
Page

CHAPTER 1. INFLATION, DISINFLATION, AND THE STATE OF THE
MACROECONOMY
The Rise of Inflation and the Transition to Price Stability..
The Legacy of the 1970s
The Role of Money Growth
The Role of Relative Price Changes
The Disinflation of the 1980s
Disinflation and the Value of the Dollar
The Costs of Inflation
The "Optimal" Disinflation Path
The Expansion to Date
Characteristics of the Expansion
Employment Growth in this Expansion
The "Two-Tiered" Economy
The Saving Rate and Consumer Debt
Real Investment and Growth in this Expansion
U.S. Domestic Investment and Foreign Capital Inflows
Recent Behavior of Velocity
Economic Outlook and Policy
Policy Principles and Assumptions
The Outlook for 1986
Fiscal Policy
Monetary Policy
Long-Term Outlook
Lesson for the Future
CHAPTER 2. THE UNITED STATES AND ECONOMIC DEVELOPMENT..
Economic Performance and Problems of Developing
Countries
Trade Between Developing Countries and the United
States
Credit Flows to Developing Countries
Economic Problems of Developing Countries
Effects of External Shocks
The Role of International Credit
The International Debt Situation




17

23
26
26
27
27
30
30
32
35
37
38
41
43
46
48
50
54
58
58
58
60
65
67
70
71

72
73
74
75
77
79
80

Page

The Role of the International Monetary Fund
Policies for Economic Growth and Development
Establishing Appropriate Incentives Through Relative
Prices
Maintaining Reasonable Fiscal Discipline
Restraining General Price Inflation
Maintaining an Open Policy Toward International
Trade
Maintaining an Appropriately Valued Exchange Rate ..
Limiting Distortions of Domestic Product and Factor
Markets
Maintaining Political Stability
Policies for the Industrial Countries and the International
Economic System
Policies of the Administration
Policies to Reduce Structural Rigidities
Policies for the Multilateral Development Banks
Policies to Deal with the International Debt Situation..
Policies to Strengthen the Open System of Trade
CHAPTER 3. PROTECTIONISM AND THE UNITED STATES IN THE
WORLD TRADING SYSTEM
Claims for Protectionism
Protectionism and the Trade Deficit
Protectionism and Jobs
Protectionism and Deindustrialization
Recent and Prospective Trade Policy Actions
Nonrubber Footwear
Steel
Textiles and Apparel
Semiconductors
Agricultural Exports
Policy Initiatives for the 1980s—Free and Fair Trade
Broadening the Scope of Free Trade
Ensuring the Practice of Fair Trade
Promoting Adjustment to Changing Trade Patterns ....
The Thrust of U.S. Trade Policy
CHAPTER 4. INCOME TRANSFERS TO AGRICULTURE
Food Security Act of 1985
The Structure of American Agriculture
Philosophy and Mechanics of Income Support
Price-Support Programs
Deficiency Payments
Production Diversion Programs
Production and Marketing Quotas




18

83
85
85
86
88
89
91
92
95
96
97
97
98
100
102
105
106
106
107
108
Ill
112
114
116
119
120
122
122
123
126
128
129
130
131
133
135
140
144
146

Marketing Orders
Federal Milk Marketing Orders
Alternative Methods of Income Support
CHAPTER 5. REFORMING REGULATION: STRENGTHENING MARKET
INCENTIVES
Transportation: Deregulation Success
Airlines
Trucking
Safety
Railroads
Further Transportation Deregulation
The Effects of Continuing Regulation
The Natural Gas Market
End-Use Standards: A Vestige of Oil Price Controls....
CAFE Standards
Regulatory Use of Market Incentives
Airport Slots
Environmental Regulation
Extending Market Incentives
Experience in the United States and Abroad
Steps for Further Privatization
Conclusion
CHAPTER 6. THE FEDERAL ROLE IN CREDIT MARKETS
The Size of the Federal Role in Credit Markets
Federal Loan and Loan-Guarantee Programs
Direct Federal Loans and Guarantees
Government-Sponsored Financial Intermediaries
Housing Finance Intermediaries
The Federal Home Loan Banks
The Farm Credit System
SallieMae
Federal Deposit Insurance
Adverse Incentives of Deposit Insurance
Controlling Adverse Incentives: Capital Requirements
Portfolio Regulation
Risk-Adjusted Deposit Insurance
Risk-Adjusted Capital Requirements
The Thrifts
Insured Pension Benefits
Deregulation and the Financial System
CHAPTER 7. THE ECONOMIC EFFECTS OF IMMIGRATION
Migration to the United States
Aliens Entering the United States
Characteristics of the Foreign-Born




19

148
153
155
159
159
160
161
161
163
165
166
166
172
173
178
178
179
184
185
186
187
189
190
191
192
193
194
195
195
197
198
199
200
201
201
202
203
206
209
213
214
216
219

Page

Effects of Immigration on Output and Income
Evidence on Labor Market Effects
Immigration and Trade
Fiscal Effects of Immigration
Public Services Used
Taxes Paid
Net Fiscal Effects
Conclusion
APPENDIXES
A. Report to the President on the Activities of the Council
of Economic Advisers During 1985
B. Statistical Tables Relating to Income, Employment,
and Production

221
222
227
228
229
232
233
234
235
245

List of Tables and Charts
Tables

1-1. Macroeconomic Indicators, 1954-82
1-2. Growth Rates of Real GNP Components, Current Expansion, and Average of Previous Expansions
1-3. Output and Employment Growth, Current and Previous
Expansions
1-4. Saving, Investment, Government Deficit, and Current
Account Balance as Percent of GNP, 1972-85
1-5. Economic Outlook for 1986
1-6. Accounting for Growth in Real GNP, 1948-91
1-7. Administration Economic Assumptions, 1986-91
2-1. Real Net Flow of Funds to Developing Countries, Selected Years, 1970-84
2-2. Indicators of Economic Growth, 1955-84
2-3. External Shocks and Real GDP Growth in Selected Developing Countries, 1979-83
2-4. Debt Indicators for Developing Countries, 1967-84
2-5. Price Distortions and Economic Growth in the 1970s
3-1. Manufacturing Sector Indicators, 1973-84
3-2. Manufacturing Sector Indicators: Nonrubber Footwear,
1973-84
3-3. Manufacturing Sector Indicators: Steel, 1965-84
3-4. Manufacturing Sector Indicators: Textiles and Apparel,
1973-84
4-1. The Structure of American Agriculture, 1984
4-2. Government Payments to Producers of Selected Grains
and Cotton, 1985
4-3. Milk Diversion Payments: Top Five States
4-4. Losses and Gains from Income-Support Programs




20

26
39
44
51
60
68
69
75
76
78
82
95
Ill
113
115
117
132
141
145
156

List of Tables and Charts—Continued
Tables

Page

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

Airline Accidents per 100,000 Departures, 1972-85
Trucking Accidents, 1976-84
Mileage per Gallon for Domestic Cars, 1978-85
Effects of Corporate Average Fuel Economy (CAFE)
Standards on Incremental Profitability of Automobiles
of Different Fuel Economy Levels
6-1. Market Shares of Agricultural Lending, 1970-84
7-1. Alien Entrants to the United States, Fiscal 1984

162
163
174
176
197
217

Charts

1-1.
1-2.
1-3.
1-4.
1-5.
1-6.
3-1.
4-1.
4-2.
4-3.
5-1.
6-1.
7-1.

Ml Growth and Inflation
Employment-Population Ratio
Cumulative Change in Employment since 1959
Employment Shares—Goods-Producing and ServiceProducing Industries....
Saving Measures as Percent of GNP
Federal Outlays and Receipts as a Share of GNP
Manufacturing Production and Real GNP
Distribution of Financially Distressed Farms by Sales
Class, January 1985
Target Price, Loan Rate, and Exports of Corn
U.S. Share of World Exports of Flue-Cured Tobacco
Real Price of Gasoline and Small-Car Sales
Debt of All Nonfinancial Sectors as Percent of GNP
Legal Immigration as Percent of Population, 1820-1984




21

28
41
42
45
46
62
110
134
143
148
175
190
216




CHAPTER 1

Inflation, Disinflation, and the State of
the Macroeconomy
THE AMERICAN ECONOMY is now in the fourth year of a robust
expansion that has increased employment by more than 9 million,
sustained the greatest advance in business fixed investment of any
comparable period in the postwar era, while inflation has remained at
less than a third of the rate prevailing when the Administration took
office. Interest rates are at the lowest levels of this decade. Longterm interest rates, in particular, have declined 5 percentage points
from their peaks in 1981, and home mortgage rates are down by 7
percentage points. Worldwide confidence in the vitality of the U.S.
economy has been restored, as is reflected in the unprecedented
inflow of foreign investment and the substantial appreciation of the
dollar since 1980. The outlook is favorable for continuation of a
healthy expansion. After slowing in the second half of 1984, economic activity is again accelerating. The recent moderate decline in the
dollar bodes well for an eventual improvement in the trade balance.
A modest and temporary acceleration of inflation is possible in 1986.
But with appropriate economic policies, lower inflation, and ultimately price stability are achievable goals for an economy that continues
to grow and to generate opportunities for all Americans.
Despite the impressive progress of the U.S. economy, important
problems remain. Although the 3.8 percentage point decline in the
unemployment rate since November 1982 far exceeds the average decline for a comparable period in earlier postwar expansions, the total
unemployment rate remains high by postwar standards. Federal
spending consumes an unprecedentedly large share of gross national
product (GNP) for a peacetime period, diverting resources that could
be more productively employed in the private sector. Determined efforts and politically difficult decisions will be required to bring Federal spending into line with revenues and thereby reduce the fiscal
deficit. Inflation, now in abeyance, could be reignited by excessive
monetary growth. Alternatively, a sudden move to sharply lower
money growth could push the economy once again into recession.
American agriculture faces severe financial problems. The strong
dollar—itself a manifestation of vigorous growth and bright prospects




23

for the U.S. economy compared with sluggish performance or deep
difficulties of many other countries—has contributed to the problems
of U.S. agriculture and to the deterioration of the U.S. trade balance.
Even after 3 years of solid real growth and substantial gains in employment, workers and firms in a number of industries exposed to
international competition have had trouble adjusting to an altered
competitive environment. Individuals, businesses, and countries that
borrowed extensively during the period of rising inflation have had
problems meeting their debt service obligations, and these problems
have affected the financial institutions that hold their loans.
This Report examines these problems and discusses the appropriate
economic policies to deal with them. Chapter 1 sets the stage for
subsequent chapters. It reviews the critical features of the process of
inflation and disinflation over the past 15 years that lie at the root of
many of the economic problems that still confront the United States
and many other countries. This chapter also discusses key characteristics of the current expansion and policies needed to extend and
prolong its desirable features. Chapter 2 considers the relationship
between the United States and the economic performance and
growth of developing countries, in the context of the open system of
international trade and investment. The focus is on the economic
problems that have recently afflicted many developing countries, on
the policies that offer the best hope of generating rapid and sustainable growth in these countries, and on the roles of the industrial
countries and of the international economic system in maintaining an
environment conducive to worldwide prosperity.
Chapter 3 examines issues of international trade policy for the
United States, in particular the fallacious arguments used to support
protectionist measures, the record of recent trade policy actions, and
the Administration's policy initiatives for free and fair trade. Chapter
4 investigates government programs to provide assistance to American agriculture. It finds that governmental efforts to transfer income
to agriculture primarily by raising prices received by farmers create
important economic distortions and inefficiencies. More efficient, less
costly mechanisms are available to achieve this income transfer.
Chapter 5 discusses the successful efforts to reduce government
regulation. It explores the potential for further actions that will allow private businesses to produce more efficiently and to provide
to consumers the goods and services they desire, while preserving
standards of health, safety, and environmental quality. Chapter 6
considers problems affecting credit markets and institutions and policies needed to deal with these problems: the problems of the thrifts,
of the Farm Credit System, and of the Pension Benefit Guaranty Corporation; and policies relating to government lending and loan guar-




24

antees, to government-sponsored financial intermediaries, and to deposit insurance. Finally, Chapter 7 examines a matter that is today
important for economic and social policy and that has been of great
concern to America throughout its history—the economic effects of
immigration.
Two central themes dominate this Report and, not coincidentally,
the Administration's approach to economic policy. First, the private
enterprise, free market system is generally the best mechanism to organize efficient and full employment of the economy's resources and
to generate genuine opportunity and rising living standards for all.
To assist the private sector, the government should limit itself to
providing essential public services and should avoid blunting or distorting economic incentives by high or uneven tax rates and by unnecessary or inappropriate regulation.
Second, economic performance is seriously injured by the macroeconomic instability inevitably associated with cycles of inflation and
disinflation. Such injury was reflected in the relatively sluggish economic growth of the 1970s. It was most acute and most apparent
when rising inflation confronted efforts to reduce inflation by lowering monetary growth: in 1969-70, in 1974-75, briefly in late 1979
and early 1980, and finally on a more persistent basis in 1981-82. In
each confrontation, the outcome was a recession; in two cases, a
severe and prolonged recession;
Even now, the consequences of earlier inflation and disinflation are
still felt in the problems afflicting the American economy. The
present level of unemployment is partly the heritage of past inflation and
necessary actions to control it. Problems in agriculture, in industry, and
in international trade are related to fluctuations in commodity prices,
asset values, and the value of the dollar that, in turn, are linked to the
process of inflation and disinflation and to the economic policies that
underlie that process. Problems of the credit system—of borrowers,
lenders, and government insurance agencies—derive partly from
sharp, unexpected movements in interest rates, asset values, and
income levels that accompany the inflation-disinflation process.
The healthy overall performance of the U.S. economy may be small
comfort to those affected by its remaining problems. But with time
and with appropriate policies, these remaining problems can be corrected. The cure, however, does not lie in policies that would reignite inflation and once again inflict its debilitating effects on the
American economy. Rather, the cure lies with policies that will enhance private incentives for growth, while maintaining a stable macroeconomic environment.




25

THE RISE OF INFLATION AND THE TRANSITION TO PRICE
STABILITY
THE LEGACY OF THE 1970s

The prevalent view of macroeconomic policymaking during much
of the post-World War II period presumed a stable, long-term tradeoff between inflation and unemployment. Policymakers believed that
by accepting the increase in inflation associated with more expansionary monetary and fiscal policy, they could achieve an increase in
the rate of real growth and a permanent reduction in the unemployment rate. As both inflation and unemployment generally rose during
the 1970s, this view of the economy was repeatedly contradicted by
events.
Table 1-1 compares the behavior of key macroeconomic indicators
and policy variables during the relatively low-inflation period from
the second quarter of 1954 through 1970 with the relatively high-inflation period from the fourth quarter of 1970 through 1982. The
end points of these periods were chosen because they correspond to
business cycle troughs. Between the two periods, the inflation rate, as
measured by the GNP implicit price deflator, more than doubled. A
higher rate of monetary expansion, a larger share of government
spending in GNP, and a larger total government deficit as a share of
GNP were all associated with this rise in inflation. The higher rate of
inflation and the more expansionary monetary and fiscal policies, however, were not associated with either a lower unemployment rate or a
higher rate of real GNP growth. Thus, the secular rise in inflation did
not buy either more real growth or less unemployment.
TABLE 1-1.—Macroeconomic indicators, 1954-82
[Percent]
Average annual rate of change 1
Period
(trough to trough)

GNP implicit
price deflator

Real GNP

Average level
Unemployment rate2

Ml

Corporate
Aaa bond
yields
(Moody's)

Government
deficit as
percent of
GNP3

Government
expenditures
as percent of
GNP3

1954 11-1970 IV

3.0

3.4

3.1

4.8

4.70

0.3

27.7

1970 IV-1982 IV

7.5

2.3

6.8

6.7

9.48

1.2

32.1

1

Change from 1954 II to 1970 IV and from 1970 IV to 1982 IV.
Unemployed as percent of labor force including resident Armed Forces.
Government deficit and expenditures relate to Federal and State and local government sectors, national income and product
accounts.
Note.—Based on seasonally adjusted data, except for bond yields.
Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), Board of
Governors of the Federal Reserve System, and Moody's Investors Service.
2

3

The rise in inflation is also reflected in the secular rise in interest
rates, represented in Table 1-1 by the corporate Aaa bond rate.
Since the recession trough in 1954, each successive interest rate cycle




26

has generated both higher peaks and higher troughs in interest rates;
each cyclical rise in interest rates has taken rates to new highs and
each successive downturn has failed to bring rates back to their previous lows. The unemployment rate shows a similar upward trend over
the same period.
THE ROLE OF MONEY GROWTH

There is a well-established causal link between money growth and
inflation over the long run that has been supported by empirical evidence for the United States as well as many other countries. The
exact nature of this relationship varies with time and institutions, but
the long-run relationship between appropriately defined money
growth and inflation is difficult to refute. The relationship between
the trend rate of money growth and inflation is illustrated for the
United States since 1959 in Chart 1-1. The secular rise in inflation
from the mid-1960s through 1980 was associated with an upward drift in
the trend rate of money growth. With a lag of 1 to 2 years, most significant slowdowns in money growth are also reflected in subsequent
movements in the inflation rate. There are, however, several periods,
notably the period since 1982, when the inflation rate has diverged
from the trend rate of money growth. The period since 1982 is analyzed later in this chapter.
There are several reasons why the inflation rate may not track
money growth closely in the short run. The short-run impact of a
change in money growth may differ, depending on the state of inflation expectations. If, for example, an increase in money growth
occurs when current inflation rates are already high, or when monetary or fiscal actions are already perceived as inflationary, the rise in
money growth is likely to show up in the inflation rate more quickly.
The immediate effect of a given change in money growth also depends on whether it is perceived as permanent or just a temporary
deviation from a long-term policy path. An acceleration of money
growth that is perceived to be a permanent move toward a more inflationary policy is likely to translate more immediately into a higher
inflation rate.
THE ROLE OF RELATIVE PRICE CHANGES

In some periods, short-term deviations of the observed inflation
rate around that implied by long-term money growth can be understood by recognizing the difference between relative price changes
and inflation. A relative price change is a change in the price of one
particular good or service relative to others. Movements in the prices
of individual goods and services arise naturally from the interplay of
market forces and reflect changes in costs of production or consum-




27

Chart 1-1

M1 Growth and Inflation

M1 Growth Lagged Eight Quarters
Percent change (annual rate)
10
Change from Same Quarter
Eight Quarters Earlier
9 -

Inflation

8 -

1963

1965

1967

1969

1971 1973

1975

1977

1979

1981

1983

1985

Note.—Inflation measured by change in GNP implicit price deflator.
Based on seasonally adjusted data.
Sources: Department of Commerce and Board of Governors of the Federal Reserve System.

ers' preferences. Changes in relative prices, however, should not be
confused with inflation or deflation. Inflation is an ongoing increase
and deflation is an ongoing decrease in the general price level. Relative price changes do not cause an ongoing change in the average
price level unless they are accommodated and generalized by a
change in money growth.
Changes in relative prices, however, may contribute to short-run
movements in the price level. As Chart 1-1 illustrates, the observed
inflation rate rose above that implied by the long-run trend of money
growth during the 1970s. This partially reflects the short-term effects
of the oil price shocks of 1974 and 1979. In addition, a poor harvest
in 1974 helped push up agricultural prices. Another important contributing factor in the 1979-80 period was the depreciation of the
U.S. dollar that began in 1977 and lasted until mid-1980. The decline in the real exchange rate (the observed exchange rate adjusted
for price level differences between countries) was another example of




28

a relative price change that raised the prices of imported goods and
added short-term upward pressure to the measured inflation rate.
As the trend rate of money growth rose during the 1970s, many
significant relative price adjustments—in energy, food, and the
dollar—all worked in the direction of raising the observed rate of inflation above the underlying rate determined by monetary growth.
But these relative price changes tended to be self-limiting and selfreversing, while inflation was cumulative and ongoing. The annual
average rate of Ml growth more than doubled from 3.5 percent during
the 5-year period 1961-65 to 8.6 percent in the 5 years ending in 1980.
Thus, the money was supplied to fuel an upward trend in the rate of
inflation.
Although the decline of the dollar in the late 1970s contributed to
a short-term rise in the measured inflation rate, in a more basic sense
the rise in money growth and inflation also contributed importantly
to dollar depreciation. Specifically, the rise in 1977 and 1978 of the
inflation rate in the United States relative to that in its major trading
partners, and the concern this generated about the future course of
U.S. monetary policy, contributed to a depreciation of the dollar in
the late 1970s. Similarly, the oil price increase in 1979 was probably
not independent of either the U.S. inflation rate or the depreciation
of the dollar. The reduction in the real price of oil received by oil
exporters caused by the rise of U.S. inflation and the depreciation of
the dollar likely helped induce additional increases in the price of oil.
Therefore, in a short-term context the relative changes in both the
value of the dollar and the price of oil helped increase the observed
inflation rate. But those relative price shifts were related to a rising
inflation rate and to the monetary policy that accommodated that
rise.
The oil price increases induced a wealth transfer from oil-importing countries to oil-exporting countries. In an attempt to offset partially the wealth transfer and the associated reduction in real output,
many industrialized countries increased the rate of money growth.
The rise in money growth validated the upward pressure on the price
level caused by the oil price increases and increased the rate of inflation. Despite the rise of inflation, real energy prices rose. Over time
the resource allocation function of higher oil prices encouraged conservation and the development of more oil and alternative energy
sources. But the wealth transfer to oil exporters was unavoidable.
The rise in inflation merely redistributed wealth among U.S. citizens.
As inflation rose over the 1970s, the tendency to confuse relative
price changes with inflation led to a series of short-term explanations
or rationalizations of the rising inflation rate. Inflation was blamed
on oil price increases, poor agricultural harvests, wage pressures, or




29

whatever relative price adjustment was topical. Relative price changes
do not explain ongoing inflation of the magnitude experienced over
the decade. But such anecdotes implied that the general rise in inflation somehow had little to do with monetary policy and was beyond
the control of policymakers.
THE DISINFLATION OF THE 1980s

Many analysts date the new resolve to reduce inflation in the
United States to October 1979, when the Federal Reserve announced
a change in its operating procedures to more direct control of the
money supply. Ml growth fluctuated widely in 1980 and showed no
sustained deceleration until 1981. Despite this short-term variability,
the trend rate of money growth (measured as the annual rate of
change over eight quarters) fell from 8.4 percent in the third quarter
of 1979 to 6.3 percent 3 years later. This monetary deceleration provided the initial disinflationary impetus. Inflation in 1982, as measured by the consumer price index (CPI), was less than half the 1980
rate and by 1983 had been reduced to less than one-fourth the 1980
rate. Thus, the decline in inflation was greater than would have been
implied by the decline in the trend of money growth.
The important relative price shifts of the 1970s that had pushed
the observed rate of inflation above its underlying rate ended or
were reversed during the 1980s. The shift to a disinflationary monetary policy probably contributed to an appreciation of the dollar that
began in mid-1980, that in the short term, has helped to hold down
prices of imported goods and has generated added price competition
for many domestically produced goods. Following decontrol, domestic crude oil prices (measured by the producer price index) dropped
more than 21 percent from the end of 1981 to the end of 1985 and
the energy products component of the CPI has registered very
modest increases in each of the past 4 years. In addition, deregulation in some industries, such as transportation and telecommunications, has likely caused relative price declines that are important
enough to affect the composite price indexes. All these relative price
adjustments probably had some favorable effect on the observed inflation rate, holding it temporarily below the rate implied by longterm money growth.
In some cases, individual prices have actually declined in recent
years. The index of raw commodities spot prices has, for example,
declined 26 percent since early 1980; prices of some commodities are
down as much as 40 to 50 percent. In each case, however, these relative price declines do not constitute deflation, anymore than the
nearly 34 percent increase in the price of medical care services since
1982 constitutes rapid inflation. While relative price changes have




30

helped reduce the observed inflation rate in recent years, as long as
the general price level continues to rise—albeit at a much slower
pace—generalized inflation persists.
DISINFLATION AND THE VALUE OF THE DOLLAR

The dramatic move from inflation to disinflation had a marked
impact on the U.S. dollar exchange rate. When analyzing exchange
rate movements and their effects, it is important to distinguish between the nominal and the real exchange rate. The nominal exchange rate is observed in exchange markets; the real exchange rate
is the nominal rate adjusted for price level differences across countries. If changes in the nominal rate reflected only relative price level
changes across countries, the real rate would remain constant. By
definition, real exchange rate changes reflect changing relative prices
and, thus, both affect and are affected by real economic variables.
Nominal exchange rates are asset prices whose values depend not
only on current market conditions and policies, but also on expected
future market conditions and policies. Nominal exchange rates tend
to be more forward looking than domestic price levels; that is, exchange rates adjust more rapidly to actual or expected events than
do domestic price levels. As a result, nominal and real exchange rate
movements tend to move together. For example, when market participants perceive that one country's policies have become relatively
inflationary, the nominal exchange rate depreciates almost immediately. Because domestic prices do not rise immediately, a real depreciation also occurs. When domestic prices begin to rise, the real exchange rate also rises without a concomitant change in the nominal
rate because it has already moved in anticipation of a rise in domestic
prices.
An unprecedented appreciation in both the nominal and real exchange rate has accompanied the turnaround in the U.S. inflation
rate. From July 1980 to February 1985 the multilateral trade-weighted value of the dollar rose 87 percent in nominal terms and 78 percent in real terms. No single factor explains the appreciation of the
dollar. It appears, however, that the tightening of Federal Reserve
policy and the market perception that future monetary policy would
be markedly less inflationary, stimulated a substantial reversal of inflation expectations and contributed to a rise in the dollar. As would be
expected, the U.S. domestic price level adjusted less rapidly to this
change and, hence, the real exchange rate rose as well. The subsequent fall in the domestic inflation rate reinforced market expectations and may have contributed to further strengthening of both
nominal and real dollar exchange rates in 1982. The continued rise
of the dollar from 1982 to early 1985 apparently reflects factors




31

other than, or in addition to, changes in monetary policy. The
strength of the U.S. recovery and the rise in the real after-tax rate of
return on U.S. investment have probably played an important role in
the rise of the dollar since 1982. Nonetheless, it is likely that at least
the first stage of the dollar's rise was in large part due to the Federal
Reserve's shift to a disinflationary policy and the subsequent success
in bringing down U.S. inflation relative to the rest of the world.
THE COSTS OF INFLATION

The inflation of the 1970s, particularly the latter part of the
decade, had widespread effects on economic behavior. Market interest rates in the United States rose to levels unprecedented in modern
times. Many households shifted to real estate investment as a hedge
against inflation. Workers demanded ever-rising wage rates as inflation eroded the real value of income and bracket creep imposed
higher tax rates even on incomes that were not rising in real terms.
Inflation-induced distortions in the tax code altered relative after-tax
rates of return, thereby encouraging otherwise noneconomic investments purely on tax considerations. Profitability declined as many
producers faced rising costs, declining productivity, and higher effective tax rates.
A rising inflation rate imposes significant costs on an economy. In
theory, an economy can adjust to anticipated inflation if no institutional or legal constraints prevent adjustment. In practice, however,
the evidence indicates that the variability of inflation rises with the
inflation rate, so that it is likely to be more difficult to anticipate and
adjust for higher inflation. In addition, in most economies—and the
United States is no exception—many regulations, institutions, and
laws are defined in nominal terms so that even if inflation is adequately anticipated, adjustment cannot be complete. To the extent
that inflation is imperfectly foreseen or adjustment constrained, it is
likely to distort price signals and economic incentives.
It is well recognized that unanticipated inflation causes an arbitrary
redistribution of wealth and income. The redistribution of wealth
from lenders to borrowers, for example, is well established, as is the
adverse effect of inflation on those living on a fixed income. But
these distributive effects are not a comprehensive measure of the
economic costs of inflation. In addition, high and variable inflation
harms allocative efficiency and thereby aggregate economic performance. This cost of inflation is especially important because everyone
loses to the extent that the inefficiencies and distortions associated
with inflation impair economic performance.
The most basic way in which inflation can impede economic efficiency is by interfering with the appropriate adjustment of relative




32

prices. In an inflationary environment, it is difficult to disentangle inflation-induced price increases from price changes caused by changes
in underlying market conditions. With price signals more difficult to
interpret, the ability of the market mechanism to allocate economic
resources to their most efficient uses can be impaired. Moreover, a
high and variable inflation rate encourages people to devote economic resources to adapt to higher prices, to protect against future inflation, and to attempt to gain from inflation. Activities undertaken to
adjust to inflation and activities designed to beat inflation or offset its
effects are a waste of economic resources; in an environment of
stable prices, these resources would be put to more productive use.
These adverse effects of inflation can be exacerbated by laws and
government regulations that are defined in nominal terms. Government regulations or tax policies frequently interact with rising inflation to encourage noneconomic activity designed to circumvent regulation or avoid taxes. Many of the distortions and disincentives that
arose during the inflation of the 1970s resulted from the interaction
of the inflation rate with government tax and regulatory policies that
were defined in nominal terms.
Because a higher inflation rate is also likely to be more variable,
rising inflation generates greater uncertainty about the outlook for
inflation. Uncertainty about future inflation in general makes financial planning more complex and in particular makes investors less
willing to hold long-term, fixed-rate financial assets. As both inflation
and interest rates in the 1970s rose above what had been generally
expected by financial market participants, holders of fixed-rate financial assets repeatedly incurred significant capital losses. Investors
were encouraged to shift funds out of financial assets into certain
real assets, such as real estate and gold, the prices of which rose
more rapidly than did the general price level. The reluctance of investors to hold financial assets, particularly long-term financial assets,
implies a less-than-optimal allocation of capital, as well as an economic loss to the extent that the resources used to adjust portfolios
could be put to more productive uses.
Disinflationary policies were adopted on three separate occasions
before 1981. As can be seen in Chart 1-1, in 1969-70 and in 197475 money growth was reduced substantially and, with a lag of l x /2 to
2 years, inflation also declined. In addition, Ml growth fell in late
1979 and early 1980, but reaccelerated during the second half of the
year. In all three episodes, a recession was associated with the advent
of disinflationary monetary policy. In theory it may be possible to
devise a monetary policy strategy that would reduce inflation without
necessarily also causing an economic downturn. In practice, however,
disinflationary monetary policy in the United States, as well as in




other countries, has frequently been associated with a slowdown in
real economic activity in the short run. This is often the major cost
of a rise in inflation: the disinflationary monetary policy that becomes
necessary is, in practice, likely to result in lost output and employment.
Moreover, these are likely to be only the immediate costs of a disinflationary policy. To the extent that expectations of inflation are
built into financial contracts, the effects of a disinflationary policy will
linger after the actual inflation rate has fallen. Many of the credit
market and other sectoral problems in the economy today are fundamentally related to the inflation-disinflation process. The rise in the
inflation rate in the 1970s provided a powerful incentive to assume
debt; the tax deductibility of interest expense strengthened this incentive. Assumption of debt is a reasonable strategy in a high-inflation environment, but it leaves both lenders and borrowers vulnerable to an unanticipated change in inflation. In the agriculture, real
estate, and energy sectors, for example, debt was incurred in the late
1970s on the presumption that real asset values and some commodity
prices would continue to rise at rapid rates. Much of the credit extended to less developed countries (LDCs) when inflation was high
was made on the assumption that energy and raw materials prices
would continue to rise rapidly enough to generate the foreign exchange earnings needed to service the debt. The subsequent sectoral
debt problems arose when the actual inflation rate diverged from
these expectations.
In the late 1970s and in 1980 those who borrowed money at fixed
interest rates gained as inflation rates rose faster than expectations. A
substantial part of their gain came at the expense of lenders and
holders of fixed-rate financial assets. Later, when inflation declined
more rapidly than anticipated, borrowers' real debt-service burdens
rose. Thus the debt problems in various sectors, as well as the associated stress in some financial institutions, are related to the market revaluation of real assets and outstanding debt in a disinflationary environment. In addition, debt continued to be assumed and credit extended on the assumption of high inflation even as inflation fell. The
failure of inflation expectations to decline with the inflation rate after
1981 has therefore prolonged the period of adjustment and exacerbated the debt problems in some sectors. The economic situation in
LDCs is discussed in Chapter 2, the agriculture sector is analyzed in
greater detail in Chapter 4, and the problems of financial institutions
are examined in Chapter 6.




34

THE "OPTIMAL" DISINFLATION PATH

Although economists generally agree that reducing inflation requires a decline in the trend of money growth, they agree far less on
what the appropriate disinflationary path is. Some adverse real and
financial effects are almost inevitable, but it is not clear what policy
path or pace of disinflation is most likely to minimize economic
disruption. It is possible, however, to identify some aspects of a
disinflationary policy that would be expected to facilitate the adjustment process and minimize the resultant economic dislocation.
Once the expectation of continued high inflation is built into economic institutions and behavior, the transition to disinflation requires
that expectations and behavior, predicated on years of experience
with a rising inflation rate, be realigned. The economic costs—
lost jobs and output—associated with reducing inflation occurs when
private behavior that is adapted to an inflationary environment confronts a disinflationary monetary policy. Even though money growth
is ample to support real economic activity, it will be insufficient to
support as well a level of nominal economic activity that presumes a
continued high rate of inflation.
The extent of the economic disturbance associated with reducing
inflation depends on the responsiveness of inflation expectations.
The longer it takes for expectations to adjust, and therefore the
longer inflation-based behavior persists, the longer is the likely
period during which real growth is restricted by disinflationary monetary policy. Conversely, the more quickly the public comes to believe
in lower inflation, and adjusts nominal behavior accordingly, the
more quickly decreased money growth becomes sufficient to support
adequate real economic growth. A disinflationary policy that assures
the public of the government's commitment to controlling inflation
and thereby fosters the adjustment of inflation expectations is therefore also likely to minimize the associated economic dislocation.
Inflation was temporarily reduced in two separate periods during
the 1970s, then allowed to reaccelerate each time to a rate higher
than the previous peak. This probably contributed to public skepticism about the government's ability or willingness to control inflation
over the long run. In addition, policies adopted and events in 1980
probably added to this skepticism. Money growth declined in late
1979 and early 1980 and the money supply declined absolutely after
credit controls were imposed in March 1980. Interest rates fell sharply, as did the short-term inflation rate. All these developments were
abruptly reversed after mid-1980, however, as money growth, interest
rates, and inflation all soared to double-digits. The extreme volatility
of macroeconomic policy and the associated volatility in interest rates




35

and the inflation rate likely increased the uncertainty about future
inflation and interest rates, as well as about policy itself.
Credible, pre-announced policies that are consistent with the stated
goal of lower inflation can facilitate the downward adjustment of inflation expectations. This is true for fiscal as well as monetary policy.
In contrast, when policy goals are unclear, and actions are unpredictable or inconsistent with long-term goals, adjustment of expectations
is likely to be impeded and the economic cost of reducing inflation is
likely to be raised.
The Administration recommended in 1981 that money growth be
decelerated in a gradual and predictable pattern. To minimize the
disruption to real economic activity and hasten the adjustment of inflation expectations, both the gradual and the predictable elements of
that prescription were believed to be important. A gradual move to
disinflationary monetary policy allows time for the public to recognize and believe in the new policy and to adjust inflation expectations
and behavior accordingly. This gradualism should not only extend
the period of adjustment to disinflation, but should also reduce the
associated disruption to output and employment growth. A reasonably predictable deceleration of money growth can also provide the
public with the assurance of lower inflation needed to reduce inflation expectations. A highly variable path of money growth is more
unpredictable and therefore is likely to help maintain and reinforce
the uncertainty about future inflation and to retard the adjustment of
expectations.
It is difficult to characterize the deceleration of money growth in
1981-82 as either gradual or predictable. The Administration's recommendation assumed a gradual reduction in money growth to 3
percent in 1986. In fact, more than half of the deceleration in money
growth that the Administration had envisioned occurring over 6 years
occurred during 1981. Moreover, there were two 6-month periods
during 1981 and early 1982 when Ml growth was negligible. As a
result of the substantial slowdown in monetary growth, inflation
probably fell more rapidly than it otherwise would have. However,
the abrupt reduction in Ml growth, as well as the protracted periods
of very slow money growth, probably contributed to the duration and
depth of the 1981-82 recession.
In addition, the variability of Ml growth increased substantially
after 1979; the standard deviation of quarterly Ml growth increased
from 2.2 percent in the 6-year period preceding October 1979 to 4.8
percent in the 6-year period thereafter. During the seven-quarter
period of decelerated money growth that began in 1981, for example, quarterly growth rates of Ml ranged from 3 to 9.2 percent. This




36

is considerably more variability in Ml growth than can be attributed
to technical limitations of monetary control.
In the context of relatively stable prices, such monetary volatility
might not be particularly important. But in the early 1980s a major
challenge facing policymakers was to restore policy credibility. In that
environment, each reacceleration of money growth helped raise anew
the fear that disinflationary policy was not permanent and thereby
helped maintain and reinforce inflationary expectations even as the
actual inflation rate fell dramatically.
Uncertainty about future inflation may also have been exacerbated
by the emergence of large budget deficits. Large current and prospective budget deficits may raise the perceived probability that the
Federal Reserve will eventually increase money growth and thereby
generate higher inflation that would ease the burden of accumulated
debt. Concerns about the budget deficit therefore may have interacted with the uncertainty caused by volatile money growth and may
have impeded the downward adjustment of inflation expectations.
Thus a number of factors may have effectively raised the cost of
reducing inflation during the early 1980s. First, the abrupt and unanticipated deceleration of money growth in 1980-82 probably contributed to a more severe and prolonged recession in 1981-82 than
would likely have occurred if a more gradual and predictable deceleration had occurred. Second, the sluggish adjustment of inflation
expectations kept nominal interest rates high relative to the actual inflation rate. Moreover, the public's reluctance to revise its expectations of inflation is probably related to the volatile and unpredictable
nature of monetary policy, to large budget deficits and the fear that
they will be monetized, and to the memory of failed attempts to
reduce inflation during the 1970s.
THE EXPANSION TO DATE
The current expansion that began in November 1982 marks an important departure from the pattern of persistently rising inflation
rates, interest rates, and unemployment rates that characterized earlier expansions since the rise of general inflation began in the late
1960s. This expansion has been accompanied by a significant decline
in inflation relative to historical experience. What is particularly unusual compared with the average postwar expansion is that the inflation rate has continued to decelerate during the third year of this expansion. The four-quarter change in the implicit GNP price deflator
was lower in the fourth quarter of 1985 than at any other time in this
expansion. For every other postwar expansion the GNP deflator
began to accelerate by this stage of the expansion; on average a sub-




stantial reacceleration of inflation had been evident by the third year
of the expansion.1 There is some evidence that the secular rise of interest rates described above may have been broken in this expansion.
During 1985 the monthly levels of most short- and long-term interest
rates fell below their cyclical lows reached in mid-1980. After rising
in 1983 and early 1984, rates declined and at year-end 1985 were
below the levels that existed when the expansion began. Interest
rates are 5 to 10 percentage points below their peaks in late 1981; in
comparison with other postwar expansions, this is by far the largest
decline in interest rates that has occurred 3 years into an expansion.
In addition, total employment has increased by 9.1 million over the
past 3 years. The decline in the unemployment rate in this expansion
is the largest decline in any 3-year period since the expansion that
began in 1949.
There are other ways in which this expansion has been unusual.
The growth of capital investment has been the strongest in the postwar period. The substantial appreciation of the U.S. dollar and the
strong growth in the United States relative to the rest of the world
have contributed to an unprecedented trade deficit and capital
inflow. Contrary to most historical experience around the world,
large and persistent trade deficits have coexisted with a strong and,
until 1985, appreciating exchange rate. The trade deficit, capital
inflow, and relatively strong dollar all appear to be symptomatic of
renewed worldwide confidence in the U.S. economy and reflect the
availability of relatively attractive investment opportunities in the
United States. Some have argued that the trade deficit is evidence of
a "two-tiered" economy, with the United States concentrating on
production of services and importing goods. Another unusual aspect
of this expansion is the large deviation from trend of the growth of
velocity, the relationship between the money supply and nominal GNP.
With nearly flat velocity over the past 3 years, Ml growth has been
very rapid during this expansion, but inflation has remained relatively
subdued. Moreover, based on historical relations, the money growth
that occurred in late 1984 and 1985 would have been expected to
induce a more significant rebound in real growth than has yet occurred. These developments are discussed in greater detail below.
CHARACTERISTICS OF THE EXPANSION

In aggregate terms the current expansion resembles other postwar
expansions, but its sectoral and temporal patterns differ from previ1
Throughout this discussion the "average" expansion is defined as the average of post-World War
II expansions excluding those beginning in the fourth quarter of 1945, the fourth quarter of 1949,
the second quarter of 1958, and rhe tnird quarter of 1980. The 1945 and 1949 recoveries are
excluded because of distortions relating to the transition from World War II and to the Korean war,
respectively; the 1958 and 1980 expansions lasted 2 years or less.




38

ous experience. Table 1-2 shows growth rates for GNP and various
components for the entire expansion, as well as its first and latest six
quarters. It also reports growth rates for other selected macroeconomic variables.
TABLE 1-2.—Growth rates of real GNP components, current expansion and average of previous
expansions
[Average annual percent change, except as noted]

Item

First 3 years of
expansion
Current1

REAL GNP3

Average2

First six quarters of
expansion

Second six quarters
of expansion

Current1

Current1

Average2

Average2

4.5
4

4.5

6.9

5.2

2.1

3.8

3.8

3.9

4.3

4.1

3.4

3.7

Personal consumption expenditures

3.9

4.3

5.2

5.1

2.5

3.4

Gross private domestic investment

17.4

10.6

38.0

15.7

-.1

6.0

11.3

6.4

13.6

6.0

9.0

6.9

6.8
14.0

3.0
8.8

4.9
19.1

2.6
8.9

8.7
9.1

3.5
9.1

15.1

9.3

29.2

15.0

2.6

4.2

4.6
10.4

11
4.5

13.2
7.0

Final sales

Nonresidential fixed investment
Structures
Producers' durable equipment
Residential fixed investment
Exports of goods and services
Imports of goods and services

2.4
14.6

8.8
8.6

6.0
25.7

4.0

1.1

1.7

.5

6.3

1.8

5.9
2.4

-1.1
3.7

1.2
2.1

-1.2
3.1

10.8
2.7

.9
4.2

59.4

36.6

125.3

30.7

-65.9

5.9

Government purchases of goods and services
Federal
State and local
Change in inventory accumulation (billions of 1982 dollars) ..
ADDENDA:
GNP implicit price deflator
Employment including resident Armed Forces5
Industrial production
Corporate Aaa bond yields (Moody's)6

3.6
8.8
7.6
-1.30

4.5
7.6
7.3
.12

3.8
5.9
13.4
1.34

4.2
3.8
9.3
-.14

3.4
2.8
2.0
264

4.7
3.6
5.3
.26

1
Calculated
2

from 1982 IV, the most recent recession trough.
Average of expansions that began in 1954 II, 1961 I, 1970 IV, and 1975 I.
Real GNP and its components are in 1982 dollars.
GNP less change in business inventories.
Absolute percent change.
Absolute change.
Note.—For current expansion, change for first 3 years and second six quarters based on preliminary data for 1985 IV.
Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), Board of
Governors of the Federal Reserve System, and Moody's Investors Service.
3
4
5
6

Over the 3 years of this expansion, aggregate measures of economic activity such as real GNP, real final sales, and industrial production
all increased at rates similar to those registered in the typical postwar
expansion. The temporal pattern of this expansion, however, differs
from the average expansion. Growth rates of both real GNP and industrial production were significantly stronger in the first six quarters
and subsequently have moderated. This is explained partly by the behavior of inventory accumulation that helped boost real growth early
in the expansion, but reduced growth as inventories were depleted in
the more moderate second phase of the expansion. While inventory
drawdown has reduced GNP growth in recent quarters, current low




39

inventory-sales ratios suggest that no important inventory imbalances
exist at this stage of the expansion.
The growth of personal consumption expenditures was below that
of the average postwar expansion, particularly in the second six quarters of the expansion. Growth of government spending was somewhat higher than in previous expansions, but this growth has been
concentrated in the latter six quarters of the current expansion when
the overall growth rate was moderating. Thus, it does not appear
that this expansion has been driven by especially strong growth of
either consumer or government spending.
The sector that has uniformly outperformed average historical experience is gross private domestic investment. Despite high real interest rates and concern about crowding out of domestic investment
by the Federal deficit, above-average growth was recorded for all major
categories of private domestic fixed investment and was particularly
prominent for real nonresidential fixed investment. From the recession
trough through the fourth quarter of 1985, real nonresidential fixed
investment increased 11.3 percent per year, compared with 6.4 percent
in the average postwar expansion. The growth of real nonresidential
fixed investment in this expansion has been more than twice that of
consumption or real GNP. Both producers' durable equipment and
structures have advanced at rates above normal for comparable expansions. As a consequence, the ratio of real nonresidential fixed investment to GNP has risen to a postwar high of 13.5 percent as of the
fourth quarter of 1985. Nonresidential fixed investment has contributed nearly twice as much to real GNP growth in this expansion as in the
average postwar expansion. While fixed investment has continued to
grow rapidly during the second six quarters of this expansion, there
has been a sharp reduction in total investment growth. This is attributable to the decline in inventory accumulation discussed above.
The expansion also compares favorably to recent experience in
other industrialized countries. Since 1982, real growth in the United
States has been substantially stronger than in every other industrial
country except Canada and Japan, where growth rates have been
similar to the United States. With relatively strong income growth in
the United States, the demand for imports has risen more rapidly
than the foreign demand for U.S. exports. This has been reinforced
by the appreciation of the dollar and has helped generate a decline in
the net export balance. Strong U.S. growth and weak growth in foreign countries have contributed to the increase in the U.S. trade deficit. This is a more appropriate interpretation of cause and effect than
the suggestion that the growth of the trade deficit has caused slower
real growth in the United States. Thus, an increase in foreign economic growth would reduce the trade deficit and increase U.S. GNP
growth. As discussed in Chapter 3, protectionist measures designed




40

to reduce U.S. imports would likely also reduce U.S. GNP growth
and might not lead to an improved trade balance.
EMPLOYMENT GROWTH IN THIS EXPANSION

Strong employment growth is an outstanding feature of the current
economic expansion. The 9.1 million increase in employment represents an 8.8 percent increase since the trough of the recession, compared with a 7.6 percent increase in the average postwar expansion.
As illustrated in Chart 1-2, a higher fraction of the U.S. population is
now at work than at any time in the postwar period. The employment-to-population ratio increased by 3 percentage points during the
current expansion, and is now at an all-time high of 60.8 percent.
Chart 1-2

Employment-Population Ratio
An International Comparison
(Annual Data)

nil

. i
1960

i i
1965

1970

1975

1980

1985

-J/Excludes Northern Ireland.
Note.—For United States, employment as percent of noninstitutional population (both include
resident Armed Forces); data relate to persons 16 years of age and over. For other countries,
data approximate U.S. concepts.
Source: Department of Labor.

This employment performance compares favorably with those of
other major industrialized countries. As shown in Chart 1-2, the
major European industrial countries as well as Japan employ a smaller percentage of their population today than they did 20 years ago.




41

Cumulative gains in employment in the United States compared with
those for other major countries are presented in Chart 1-3. Over the
past 25 years employment has remained stable in West Germany and
the United Kingdom, while it has grown moderately in Japan. By
contrast, U.S. employment growth has been vigorous, adding more
than 40 million workers since 1959. For the 1980-84 period, employment has grown 5.7 percent in the United States, compared with a
weighted-average decline of 0.6 percent in other major industrialized
countries.
Chart 1-3

Cumulative Change in Employment Since 1959
An International Comparison
(Annual Data)

Percent change
70

1960

1965

1970

1975

1980

1985

-J/Excludes Northern Ireland.
Note.—For United States, employment includes resident Armed Forces; data relate to persons
16 years of age and over. For other countries, data approximate U.S. concepts.
Source: Department of Labor.

The total unemployment rate has fallen 3.8 percentage points from
10.6 percent at the trough of the recession, to 6.8 percent in December 1985. This decline in the unemployment rate is nearly double the
decline recorded in an average postwar expansion. At the outset of
this expansion, however, the unemployment rate was at a postwar
high. This reflects the secular rise in the unemployment rate noted
earlier as well as the length and severity of the 1981-82 recession. As
a result, the unemployment rate remains relatively high by historical
standards despite the employment gains recorded in this expansion.




42

The long-term tendency of the unemployment rate to remain high
is partly attributable to increases in the working-age population and
in the labor force participation rate. The working-age population has
increased substantially as the postwar baby boom generation entered
the labor force. Increases in the labor force participation rate are also
due to the increased participation of women. The total labor force
grew from 71.5 million in 1960 to 117.2 million in 1985. Despite the
strength of employment growth, it has not matched labor force
growth and the unemployment rate has tended to rise secularly since
1957. In recent months the labor force participation rate has risen to
an all-time high of 65.3 percent and the labor force has increased by
5.2 million people during this expansion.
Nominal and real wage rates as well as unit labor costs have all increased at rates below those in the average postwar expansion. Despite the limited growth in wage rates, employment gains have led to
sizable gains in total wages; record increases in hours worked per
employee have increased real wages per employee.
Labor productivity growth plays an important role in determining
real wage rates. So far in this expansion, productivity in the nonfarm
business sector has increased at an average annual rate of 1.4 percent
and manufacturing productivity has increased at an average annual
rate of 4.3 percent. This is considerably below productivity performance in the average postwar expansion. Even with slow productivity
growth in this expansion, growth in unit labor costs has been well
below average. This reflects the sharp slowdown in wage growth. It
appears that the slowdown in output growth during the second half
of this expansion has contributed to the slowdown in measured productivity growth. Over the longer run the rapid growth in investment
and favorable shifts in the composition of the labor force are expected to lead to higher productivity growth.
THE "TWO-TIERED" ECONOMY

In any expansion, some industries and firms grow more rapidly
than others. In this expansion, performance of some particularly visible industries such as steel and leather footwear has been especially
weak. Because these industries produce goods, their relatively weak
performance has led to concern that the United States is becoming a
"two-tiered" economy in which the services sector expands at the
expense of the goods-producing sector. Growth of the trade deficit has
reinforced this view and raised concern that the U.S. economy will
become predominantly a service producer. The performance of specific industries and the trade deficit are discussed in Chapter 3.




43

Long-term trends show no indication that overall production of
goods is becoming less important in the U.S. economy.2 For the past
25 years, goods production as a share of real GNP has been remarkably stable, fluctuating in a relatively narrow range of 41 to 45 percent of GNP. The share of goods production in GNP in 1985 is above
the middle of this range and is higher than it has been in more than a
decade. Furthermore, there is no indication that this secular pattern of
goods production has been altered during this expansion.
Table 1-3 compares growth in goods- and service-producing sectors for the first 3 years of postwar expansions. Relative to real GNP
growth, goods production has expanded more rapidly and service
production has grown more slowly during the current expansion than
in any other postwar expansion. These data demonstrate that the
growth of U.S. demand has been sufficient during the current expansion to generate a substantial increase in the production of both
goods and services.
TABLE 1-3.—Output and employment growth, current and previous expansions
[Absolute percent change 3 years from trough]

First 3 years of expansions beginning

Real GNP by type of product
Goods

Services

Total
GNP1

Nonagricultural payroll
employment by type of industry
Goodsproducing

Serviceproducing

1954 II

11.6

11.2

10.8

7.0

9.4

1961 1

17.4

15.5

16.6

5.8

8.7

1970 IV

17.6

12.0

14.5

1975 1

15.9

11.0

14.3

9.0

15.6

12.4

14.0

8.0

14.1

9.2

AVERAGE OF ABOVE
1982 IV2

19.0

6.4

10.3

Total
8.4
7.6

10.5

10.4

11.2

10.5

9.9

12.1

9.2

11.3

1
2

Total GNP includes structures, not shown separately.
Based on preliminary data for 1985 IV.
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).

Further, if the United States were becoming a two-tiered economy,
a change in the historical relationship between real GNP (which
measures production of goods and services) and industrial production (which is composed of goods) would be apparent. This relationship, however, does not reveal any weakening of industrial production growth relative to real GNP growth during this expansion.
Inferences about the relative decline in the goods sector are often
based on the fact that employment in goods-producing industries as
a share of total employment is falling. However, this is not a phe2
The qualitative conclusions drawn from this analysis are the same whether the analysis is based
on goods production or industrial production.




44

nomenon peculiar to this expansion. As shown in Chart 1-4, the
share of employment devoted to goods production has trended
downward for the past 30 years, while the service-producing employment share has steadily increased. Neither of these trends appears to
have changed during this expansion or the preceding recession.
The coexistence of a declining share of goods-producing employment and a relatively constant share of goods production in GNP is
evidence of relatively rapid productivity growth in the goods-producing sector, not a decline in output growth.
Chart 1-4

Employment Shares—Goods-Producing
and Service-Producing Industries
Percent of nonfarm employment
801

70

60

Service-Producing
Industries

50 -

40

30

«"~

Goods-Producing
Industries

**.*-»••*.

20
n liiiliiiliiiliiilii:liiiliiili|iliiilMiliiiliiilinliiiliiiliiiliiiliiiliiiliiiliiiliiiliii|iiiliiiliiiliiiliiiliiili|i||i|l

1955

1 6
9 0

1965

1970

1975

1980

1985

Note. —Data relate to all employees on nonfarm payrolls (establishment data), seasonally adjusted.
Source: Department of Labor.

The comparison of employment growth contained in Table 1-3
shows that employment in goods-producing industries has grown
more during the current expansion than in all but one of the other
postwar expansions examined, and is above the average performance
of these four previous cycles. Aggregate employment growth in this
expansion has been sufficient to yield substantial employment gains
in both the goods-producing and services sectors.




45

THE SAVING RATE AND CONSUMER DEBT

Saving and Investment

Aggregate saving provides the financing for business investment,
housing, government deficits, and other lending. A lower saving rate,
other things being equal, implies that fewer funds are available for
capital formation. Chart 1-5 shows various components of saving
represented relative to nominal GNP. Personal saving as a share of
GNP has drifted downward since the mid-1970s and remains low relative to its historical norm. However, business saving as a share of
GNP has increased since 1974, and this has offset the relative decline
in personal saving. As a consequence, gross private saving (personal
saving plus business saving) as a share of GNP is approximately at
the 1970s level and is above the level achieved during most of the
1950s and 1960s.
Chart 1-5

Saving Measures as Percent of GNP
Percent of GNP
20
Gross Private Saving

/\

16

12
Gross Business Saving

Personal Saving

1

1950

1955

I

I

I

1

1960

i

1

I

I

I

1965

I

I

I I

1970

I

1975

I

I

1980

I

I

I I

1985

J/Gross total saving is gross private saving plus government surplus or deficit.
Source: Department of Commerce.

What is relevant for inferences about the impact of saving on investment is the total amount of saving. In terms of funds available
for borrowing, it makes no difference whether the funds originate
from the household, business, or government sector. In addition, the




46

U.S. financial markets are part of an increasingly well-integrated
world capital market. To the extent that investment opportunities are
more profitable here than in the rest of the world, saving will be attracted to the United States to finance investment.
Gross total saving is private saving plus government saving (government saving is negative when governments run a deficit). As is
illustrated in Chart 1-5, gross total saving relative to GNP has drifted
downward since 1979. In recent years this is attributable in an arithmetic sense to the size of total government budget deficits. Despite large
government deficits, it is important to note that the level of gross total
domestic saving relative to GNP in recent years is not an unprecedented low for the postwar period. Nonetheless, it is a legitimate
matter of concern that total domestic saving is relatively low. The absorption of saving by persistent budget deficits is detrimental to
long-term capital formation.
In addition, the relative price of investment goods (as measured by
the ratio of the price deflator for nonresidential fixed investment to
the GNP deflator) has declined 11 percent since the fourth quarter of
1982. This means that a given nominal amount of saving translates
into higher real investment because real saving—in terms of the investment that can be financed—is higher than is indicated by nominal
saving as a share of GNP. In fact, private saving was 102 percent of
total U.S. investment as of third quarter 1985.
Personal Saving and Consumer Debt

Low personal saving may also be of concern in conjunction with
record levels of consumer indebtedness. Outstanding household debt
as a share of disposable personal income reached a record high of 82
percent in the third quarter of 1985. With high household indebtedness and a low saving rate, some analysts have suggested that consumers might curtail consumption in order to reduce indebtedness.
This raises concern that an economic slowdown could result from reduced consumer spending. However, other factors are relevant to the
recent trends in saving and indebtedness.
First, while the ratio of debt to income has risen, the ratio of assets
to income has risen faster. The ratio of household debt to liquid
assets has fallen from a postwar peak of 69 percent in 1979 to 65
percent in the third quarter of 1985. As long as the asset position of
households is strong, the servicing of debt should not be a problem.
Second, real household net worth, the difference between household assets and household debt, has increased 6.2 percent during
this expansion. Increased household wealth, along with high real interest rates, may be related to the low personal saving rate. If households save to accumulate funds to finance a given amount of future
consumption, then an increase in the market value of current asset




47

holdings reduces required saving relative to current income. Recent
declines in private sector employer contributions to defined-benefit
pension plans may reflect this effect. Increases in the market value of
pension fund assets reduce required employer contributions. Because these contributions are included in personal income, the result
is an observed decline in the personal saving rate even though
savers' claims to future pension benefits are unchanged.
Demographic shifts may have also played a role in the decline in
the personal saving rate. The proportion of the population between
the ages of 25 and 44 has grown continuously since 1970. Because
this age group typically saves relatively less and borrows relatively
more, its higher representation in the population may contribute to a
lower overall saving rate and higher consumer indebtedness. In addition, the over-65 age bracket has also grown since 1970. Because retired people tend to save less, this development also would be expected to reduce the personal saving rate.
REAL INVESTMENT AND GROWTH IN THIS EXPANSION

Real gross business fixed investment has grown much more rapidly
during this expansion than it has in the average postwar expansion.
Although it slowed in 1985 from its 1984 pace, real gross business
fixed investment grew faster than real GNP in 1985 and for the
second consecutive year reached a postwar high as a share of real
GNP. However, real net business fixed investment as a share of real
net national product has not reached a postwar high. The slower
growth in net investment relative to gross investment is partly due to
the direction of investment toward relatively shorter lived assets. The
shortening of new investment lives is not necessarily undesirable, at
least to the extent that it implies a more flexible capital stock that is
more adaptable to technological change and to relative price
changes.
A number of factors have contributed to the boom in gross investment. The robust expansion initially stimulated increased investment
demand. The ratio of real investment to real GNP has a predominant
cyclical component and moves closely with capacity utilization. When
capacity utilization rises because of increased aggregate demand, real
business investment generally rises relative to real GNP. The real
economy and capacity utilization rose rapidly until mid-1984 and real
business investment as a share of real GNP rose as well. Since the
third quarter of 1984, real GNP growth has decelerated substantially
and capacity utilization has actually fallen while real investment has
continued to increase. Thus, the performance of real business investment thus far has exceeded that implied by typical cyclical behavior.




48

Because cyclical events cannot explain the continued strength of
real investment, other influences must be at work. One important
factor has been the dramatic decline in the relative price of investment goods. After rising somewhat faster than the general price level
since the mid-1970s, investment goods prices have exhibited essentially no growth since the end of 1982 while the general price level
has increased more than 11 percent.
More importantly, the tax changes in 1981 significantly improved
the tax environment for business investment. During the 1970s the
rise in inflation and existing depreciation schedules made depreciation allowances increasingly inadequate to cover the cost of replacement investment goods. That is, with the existing tax code, accelerating inflation raised the effective tax rate on income from investment
in business plant and equipment. The net effect of tax law changes
since 1981 has been shorter tax lives of many assets, more accelerated depreciation, and an expanded investment tax credit. These tax
changes interacted with disinflation in the 1980s to reduce the effective tax rate on investment income. As a result, after-tax rates of
return on new business investment rose and incentives to invest were
enhanced.
The combination of high real interest rates and robust investment
growth over the past 3 years may appear paradoxical. They are not.
The initial rise in real interest rates was associated with the shift to
disinflationary monetary policy. In addition, many have attributed the
sustained high levels of real interest rates -to the emergence of large
Federal budget deficits. As the expansion progressed, however, neither explanation for high real rates was consistent with the strong investment growth that occurred. Either explanation would have involved a crowding out of real investment by high real rates, not the
observed investment boom.
An explanation consistent with actual events is that real interest
rates both determine and are determined by investment demand. It
appears that the tax law changes in 1981 interacted with the decline
in inflation to raise the internal rate of return on capital investment.
As a result, more investment projects became profitable. To finance
these projects, firms willingly bid up the real rate of interest in financial markets. Thus, a portion of the observed, historically high real
interest rates reflects an increase in the underlying after-tax real
return on plant and equipment.
As much as 20 to 25 percent of the rise in real business fixed investment during the period 1982-84 has been attributed to tax law
changes. Thus, while other influences are clearly at work, tax changes
have also played a critical role in the investment boom of this expansion. Furthermore, to the extent that tax changes have stimulated in-




49

vestment demand, they may also have had an effect on the level of
real interest rates.
U.S. DOMESTIC INVESTMENT AND FOREIGN CAPITAL INFLOWS

Unprecedented net flows of foreign capital into the United States
have accompanied the investment boom in this expansion. The counterpart of a net capital inflow is a current account deficit. The U.S.
current account deficit has risen from $8 billion in 1982 to an annual
rate of $110 billion during the first three quarters of 1985. This increase in net capital inflows has played an important role in financing
the rapid investment growth in the presence of a large government
deficit.
The capital account measures increases in foreigners' claims on
U.S. residents (capital inflows) versus increases in U.S. claims on foreigners (capital outflows). Thus, a capital account surplus means that
foreigners' claims on U.S. residents have risen relative to U.S. claims
on foreigners. Traditionally, capital account surpluses or deficits have
been viewed as passively adjusting to finance current account deficits
or surpluses. Consequently, the relative demands for and supplies of
goods and services across countries have been considered the major
determinants of current account balances. Capital flows, however,
should not be thought of as passively financing an independently determined current account balance. Rather, the desired capital account
balance, determined by investors' efforts to earn the highest available
risk-adjusted return, exerts an independent force on the payments
balance. The current account adjusts to reflect the consequent net
capital flows. This adjustment of the current account occurs primarily
through changes in exchange rates, relative prices, and income levels
at home and abroad.
Domestic investment is financed by private domestic saving and
total government saving as well as net capital inflow from abroad.
The links between these variables are summarized by the accounting
identity:
Private Saving + Government Saving = Domestic
Investment + Net Foreign Investment,
where net foreign investment is the net accumulation of foreign
assets by domestic residents. It corresponds to both a current account surplus and a net outflow of capital. Government saving is
negative when the government runs a deficit, and net foreign investment is negative when the current account is in deficit. A necessary
implication of this accounting identity is that when total domestic investment exceeds total domestic saving, the current account is in deficit and foreign capital flows into the United States and conversely.
Furthermore, an increase in the government budget deficit, with con-




50

stant private saving and constant domestic investment, necessarily
implies a worsening of the current account balance. A government
budget deficit, however, is neither necessary nor sufficient for a current account deficit. A current account deficit could coexist with a
budget surplus if domestic investment exceeded the sum of private
saving and the budget surplus and conversely. Hence, to understand
the relationship between budget deficits and the current account balance, it is necessary to take account of how economic forces affect
private saving and domestic investment. Table 1-4 provides the data
relevant to understanding these relationships.
When domestic investment was at a cyclical low in 1975, total domestic saving exceeded domestic investment and the current account
was in surplus. This occurred despite a total government deficit in
1975 that, as a share of GNP, was larger than that in 1982 or 1985.
As the economy expanded after 1975, domestic investment rose and
the total government deficit fell as a share of GNP. By 1978 the total
government budget was essentially balanced, but the current account
balance, as a share of GNP, had deteriorated by about 2 percentage
points. Foreign capital flowed into the United States as domestic investment expanded and outpaced domestic savings.
TABLE 1-4.—Saving, investment, government deficit, and current account balance as percent of
GNP, 1972-85
[Percent of GNP]
Government saving
Year

Federal
and State
and local

Federal

Gross
private
saving

Gross
private
domestic
investment

Current
account
balance

-0.3
.6
-.3

-1.4
-.4
-.8

16.8
18.0
17.3

16.7
17.6
16.3

-0.5
.5
.1

-4.1
-2.2
-1.0
-.0
.5

-4.3
-3.0
-2.3
-1.3
-.6

19.0
18.0
17.8
18.2
17.8

13.7
15.6
17.3
18.5
18.1

1.1
.2
-.7
-.7
-.0

1980
1981
1982
1983
1984

-1.3
-1.0
-3.5
-3.8
-2.9

-2.2
-2.1
-4.6
-5.3
-4.6

17.5
18.0
17.6
17.7
18.4

16.0
16.9
14.1
14.8
17.9

.1
.2
-.3
-1.4
-2.8

1985 J

-3.3

-4.8

17.5

16.8

-2.8

1972
1973
1974
1975
1976
1977
1978
1979

.

.

.

.

.

..

.

1

Average for first three quarters.
Source: Department of Commerce, Bureau of Economic Analysis.

The situation in 1982 was similar to that in 1975. Both the Federal
and the total government deficits were approximately the same share
of GNP. Because domestic investment was at a cyclical low in 1982
and the excess of private domestic saving over domestic investment
was nearly sufficient to finance the government budget deficit, the
current account deficit was negligible.




51

Although more pronounced, the cyclical rebound of domestic investment from 1982 to 1985 was similar to that from 1975 to 1978.
Contrary to the 1975-78 experience, however, the government deficit
hardly receded at all. With the rise in domestic investment accompanied by a relatively constant government deficit as a share of GNP,
private saving was insufficient to satisfy all domestic demand for
credit. Consequently, foreign capital flowed in to finance the excess
of the government deficit plus domestic investment over private
saving. A current account deficit was the counterpart of this capital
inflow.
The Role of the Dollar

The real appreciation of the U.S. dollar in foreign exchange markets since 1980 is widely believed to have played a key role in generating the current account deficit necessarily implied by the combination of the budget deficit and the levels of private saving and domestic investment. Increases in the real value of the dollar were initially
associated with the actual and perceived shift to a tighter monetary
policy in the United States and the attendant effects of this policy
shift on nominal and real interest rates. As the recovery began in late
1982, however, the persistence of high U.S. real interest rates and a
strong dollar were most likely due primarily to rapid real growth in
the United States relative to that in the rest of the world. The robust
expansion, low inflation, and business tax cuts all improved the aftertax real return to new business investment and raised the return on
dollar-denominated assets in general, making the United States more
attractive to investors worldwide. The increased demand for dollardenominated assets bid up the real foreign exchange value of the
dollar. As a result, the current account balance has deteriorated sufficiently to enable a net capital inflow to finance the excess of U.S. domestic investment over domestic saving.
Events other than the rise in the dollar have also contributed to
the increased current account deficit. Because the U.S. expansion has
been strong relative to those of other industrialized countries, U.S.
demand for imports has grown more rapidly than foreign demand for
U.S. exports. This real growth differential alone would have worsened the U.S. current account balance. In addition, efforts of developing countries to reduce imports in order to limit their external
borrowing requirements has reduced demand for U.S. exports.
Resolving External Imbalances

Because an excess of investment over saving in the United States
necessarily implies an excess of saving over investment in the rest of
the world, the U.S. current account deficit is a product of macroeconomic policies and conditions abroad as well as in the United States.




52

The Group of Five Agreement in September 1985 was an important
recognition that policy changes across countries, not just in the
United States, are essential to correct external imbalances. Specifically, the Ministers of Finance and Central Bank Governors of France,
West Germany, Japan, the United Kingdom, and the United States
agreed that policies designed to achieve increased convergence of
economic performance, especially sustained, noninflationary growth,
were the responsibility of all of the participants. Hence, the United
States reaffirmed its commitment to decrease the Federal Government's claim on domestic saving by reducing government spending
as a share of GNP. The remaining four countries committed themselves to policies that promote internally generated economic growth,
thereby providing increased demand for their own output as well as
for U.S. and LDC exports. While the Ministers and Governors noted
and agreed that a realignment of exchange rates should play a role in
redressing external imbalances, such a realignment cannot be sustained unless policies are pursued to generate more balanced economic growth.
It is important to note that intervention in foreign exchange markets to force down the value of the dollar is not an appropriate longterm strategy to resolve external imbalances. Intervention that does
not affect domestic money supplies has little if any long-run effect on
nominal or real exchange rates. Intervention that does affect domestic money supplies is tantamount to conducting domestic monetary
policy in foreign exchange markets. Such intervention can affect the
long-run behavior of nominal exchange rates, and perhaps also the
shorter run behavior of real exchange rates. However, commitment
of monetary policy to the control of exchange rate movements interferes with its use for other important policy objectives—most importantly maintenance of price stability and avoidance of money-induced
fluctuations in economic activity. The Group of Five's policy initiatives recognize these limitations of foreign exchange market intervention, and place appropriate emphasis on correcting investment and
saving imbalances and divergent real growth rates as the means for
resolving external payments imbalances.
Can the Current Situation Persist?

Whether, and for how long, the U.S. current account deficit can
persist depends on foreign and domestic saving and investment decisions and on the macroeconomic policies that affect those decisions.
Labor forces have been growing relatively more slowly in Japan and
Western Europe than in the United States. Consequently, these countries require less investment than the United States to equip new
members of the labor force with physical capital. Higher tax rates on
capital and structural rigidities make investment in both Japan and




53

most of Western Europe less attractive. Furthermore, the average age
of the populations of Western Europe and Japan is rising more rapidly than in the United States. Consequently, these countries require
higher saving rates to finance future retirement benefits. These conditions suggest that investment may continue to exceed saving in the
United States while saving may continue to outpace investment in
Japan and Western Europe. Consequently, a continued net inflow of
foreign capital into the United States can be expected.
As a result of persistent current account deficits for the past 4
years, the stock of U.S. assets held by foreigners now exceeds the
stock of foreign assets held by U.S. residents. With this net debtor
position currently expanding by more than $100 billion per year, the
U.S. situation has been termed a pending debt crisis similar to those
experienced by some LDC debtors. However, there is little similarity
between the positions of LDC debtors and that of the United States.
The foreign debt of LDCs is primarily government debt denominated in foreign currencies, while U.S. foreign debt is denominated
mostly in dollars and is broadly diversified across public and private
assets. Moreover, the United States has become a net debtor primarily because funds, especially those of U.S. banks, that used to flow
abroad are now being invested in the United States. Finally, the
extent to which the servicing of this debt becomes a future burden
depends on whether the capital inflows are used productively to generate the future income needed to service the debt. With U.S. fixed
real investment as a share of GNP at an all-time high, it does not
appear that the capital inflow into the United States is being squandered.
RECENT BEHAVIOR OF VELOCITY

One of the unusual aspects of this recovery has been the behavior
of velocity and the uncertainty it has generated about the meaning of
money growth. The trend growth of velocity from 1959 to the last
business cycle peak in 1981 has been 3.3 percent per year. In contrast, velocity has declined slightly during this expansion. Velocity
has typically exhibited sizable fluctuations in the short run, but recent
deviations of velocity growth from trend have been large and persistent by comparison with postwar experience.
Growth of Ml has been very strong in this expansion, yet the rise
of inflation that would be inferred from the historical relationship between Ml growth and inflation has not occurred. Over the 12 quarters of this expansion, Ml growth has been about 9 percent and has
exceeded the rates associated with the rise in inflation in the 1970s.
In addition, Ml growth was more than 11 percent in 1985, but the
rebound in the real economy recorded through the fourth quarter




54

has not been as strong as would be expected from the historical relationship between short-term changes in money growth and economic
activity.
There are several competing explanations for this below-trend
growth of velocity. Because a change in money growth affects economic activity with a lag and velocity is the ratio of nominal GNP to
Ml, part of the unusual fluctuations in velocity in recent years is related to increased volatility of money growth. While this may contribute to abnormal velocity behavior in the short run, monetary volatility does not explain the longer lived declines in velocity growth observed since 1982.
Some analysts relate the behavior of velocity in this expansion to
inventory swings and to the increase in the trade deficit. A larger
trade deficit may depress velocity because a larger share of the domestic spending facilitated by money growth is satisfied by imports
and does not show up in GNP. By the same reasoning, relatively
large swings in inventories might account for more volatile velocity
behavior as domestic spending translates into changes in inventory
accumulation rather than into production. There is, however, little
difference over the past 5 years between the behavior of the conventional measure of velocity and a measure that accounts for changes in
inventories and in the trade deficit. Hence, neither appears to be a
major factor contributing to the prolonged period of abnormal velocity behavior.
The deregulation of deposits at financial institutions can have both
transitory and permanent effects on velocity growth. The introduction of new types of deposit accounts can induce shifts of funds
among various monetary aggregates that can affect observed money
and velocity growth. But once completed these deposit shifts have no
lasting effect on money or velocity growth. A permanent change in
velocity growth may have been caused by the inclusion in Ml of interest-bearing checking accounts, which function partially as savings
balances. As a result, the public's desire to hold Ml balances as
either income or interest rates change may have been altered. The
saving element in Ml may induce the public to build up Ml balances
more rapidly as income rises; this would reduce the trend growth of
velocity.
In addition, it is possible that the inclusion of interest-bearing deposits in Ml has altered the interest-elasticity of the demand for Ml
balances. Because some Ml assets now pay interest, Ml balances may
grow more rapidly and velocity more slowly if market interest rates
fall relative to those paid on Ml deposits. The declines in velocity in
early 1985 may be attributable to the decline in interest rates over




55

the same period. However, velocity continued to fall and Ml growth
continued in double digits after interest rates stopped falling in June.
Disinflation has likely also contributed to abnormally low velocity
growth. The secular rise in inflation and interest rates over the past
few decades has probably contributed to the positive trend growth of
velocity over that period. The decline in inflation after 1981 and the
downward adjustment of both interest rates and inflation expectations may have been substantial enough to induce a realignment of
velocity behavior. Some empirical evidence suggests that in the
United States the decline in velocity in 1982-83 was related to falling
inflation and interest rates, rather than to financial deregulation.
Moreover, since 1981 most industrialized countries have experienced
slower than normal velocity behavior, even though the substantial financial deregulation that occurred in the United States did not generally occur elsewhere. A common factor in all these countries is the
decline in inflation and interest rates.
There is not now sufficient information to determine the nature
and precise extent of any permanent change in velocity behavior.
Nevertheless, it is difficult to see any evidence that would justify over
the long run the money growth that occurred in 1985. Even if velocity remained constant rather than resuming its positive trend growth,
12 percent money growth combined with 4 percent annual real
growth would imply 8 percent inflation over the long run. If velocity
were to return to a positive trend, such money growth would imply
an even higher long-term inflation rate.
Federal Reserve Policies Since 1982

The record of monetary policy actions and statements by Federal
Reserve officials indicate that, in the absence of evidence of any significant reacceleration of inflation, the Federal Reserve has reacted to
the uncertainty about velocity behavior by focusing attention on real
economic activity. Based either on the path of interest rates or Ml
growth, it is possible to discern three periods of different monetary
policy since the period of restrained money growth in 1981-82.
The first began in the fall of 1982 when monetary policy turned
more expansionary. At the time, inflation was falling rapidly, while the
economy remained in a deep recession and some LDCs were experiencing difficulties servicing their external debt. In this environment,
the Federal Reserve moved to a substantially more expansionary
monetary policy. Simultaneously, the Federal Reserve effectively reversed the change in operating procedures adopted in October 1979
and deemphasized the role of Ml as a primary target variable. The
introduction of new types of deposits caused considerable uncertainty
about the meaning of the monetary aggregates in late 1982 and early
1983. In the face of this uncertainty, the Federal Reserve allowed Ml




56

to grow at double-digit rates in the fourth quarter of 1982 and over the
first half of 1983. The strength of the economic recovery in 1983 and
early 1984 suggests that the Federal Reserve provided considerable
monetary stimulus to the economy.
A period of substantially slower money growth began in mid-1983
as strong economic growth continued and the Federal Reserve apparently became more concerned about rapid money growth. Interest
rates were allowed to rise in the late spring and Ml growth slowed
substantially during the second half of 1983. As both nominal and
real GNP expanded at a rapid rate in the first half of 1984, Federal
Reserve officials became concerned that the expansion was overheating and would generate inflationary pressures. Interest rates rose
again in the spring and Ml growth slowed further in the second half
of 1984. Ml was consistently within its target range during 1984, but
the substantial deceleration of money growth from 1983 to 1984 contributed to the slowdown in real economic activity after mid-1984.
The third period began late in 1984 as interest rates fell and
money growth was accelerated and remained high throughout 1985.
By June 1985 Ml was growing at a compound annual rate of nearly
12 percent and had risen well above its 4 to 7 percent target range.
In July the Federal Reserve defined a new target range, 3 to 8 percent, and rebased the new target range to the second-quarter level of
Ml, incorporating nearly $14 billion into the targeted level of Ml.
During the second half of the year, Ml growth averaged more than
11 percent and was consistently above the new target range. This
more expansionary monetary policy coincided with a period of slower
real economic growth and still moderate inflation. The short-term
result of this combination of expansionary monetary policy with relatively slower growth of nominal GNP was an actual decline in velocity
during 1985.
Thus, over the past 3 years, each of the major shifts in monetary
policy appears to be a reaction to contemporaneous economic activity. In 1982-83 and 1985 monetary policy turned expansionary following periods of falling real growth. In both instances that concern
was reinforced by international concerns. In both mid-1983 and 1984
the slowdown in money growth followed periods of strong real
growth. These policy moves are consistent with the view that with a
continued moderate inflation rate, real growth has been the primary
target of monetary policy.




57

ECONOMIC OUTLOOK AND POLICY
POLICY PRINCIPLES AND ASSUMPTIONS

The President initiated an economic program in 1981 based on the
belief that government policies can best foster economic prosperity
and progress by allowing the private market system to function as
freely as possible. Economic efficiency is maximized if inputs into the
production process are put to their most productive uses. This is
most likely to occur if market forces are left free to direct resources
and the government does not interfere with the process. Moreover,
the maintenance of a flexible relative price system promotes an
adaptable macroeconomy that can adjust to unforeseen events in a
timely and orderly way. Within this market-oriented framework, the
task for macroeconomic policy is to provide a stable environment in
which the market system can function freely.
One element of that environment is price stability. By controlling
the rate of money growth, the Federal Reserve can control the price
level over the long run. In the context of a long-run goal of restoring
and maintaining price stability, the Administration has consistently
recommended that the Federal Reserve provide a reasonably stable
and predictable path of money growth in order to avoid the fluctuations in real economic activity that are typically associated with sharp
swings in money growth. The Administration's outlook for 1986 and
its long-term economic assumptions and goals that are presented
below are conditional on a monetary policy that achieves a gradual
reduction of monetary growth and ultimately restores price stability.
Little evidence supports the efficacy of either monetary or fiscal
policy for short-term fine-tuning of the macroeconomy. In principle,
discretionary, short-term adjustments to emerging economic conditions appear to be a reasonable approach to policymaking. In practice, however, the lags in economic policy, as well as lack of reliable
information about the dynamic path of the economy, imply that
policy actions designed in response to evolving economic conditions
can be destabilizing. In some instances, actions undertaken to finetune the economy may turn out to be appropriate; but such policies
rely on a high degree of luck to succeed and typically do not minimize the risk to economic performance.
THE OUTLOOK FOR 1986

By the end of 1986, the current expansion will have exceeded the 45month average length of all previous postwar expansions. Based on the
premise that expansions have a natural lifespan, it has been suggested
that an economic downturn is increasingly likely. However, historical
evidence indicates that the probability of a recession occurring does




58

not rise as an expansion proceeds. Economic conditions or imbalances
can emerge that frequently are precursors of a slowdown or downturn
in the economy, but none of these is now apparent. A substantial
slowdown in inventory accumulation during 1985 left inventory levels
very low, so that continued growth in final sales would be expected to
trigger production increases. Most interest rates are at their lowest
levels in over 6 years and inflation remains low. Money growth has
been ample to support continued real growth. Despite substantial
gains in employment during this expansion, considerable slack persists
in labor markets and excess capacity remains in most industries. The
rapid growth of capital investment in this expansion bodes well for
future output and productivity growth. Thus, the real output constraints or financial imbalances that frequently precede a recession are
not present, and in their absence there is no reason to expect that age
itself will bring the expansion to an end.
The Full Employment and Balanced Growth Act of 1978 requires
that the Economic Report of the President, together with the Annual Report
of the Council of Economic Advisers, include an investment policy report
and a review of progress in achieving the national economic goals
specified in the act. Strong business investment, as discussed earlier,
has been an important contributor to this expansion. Motivated in
part by the Administration's tax changes, real nonresidential investment has contributed nearly twice as much to real GNP growth in
this expansion as in previous postwar expansions. Furthermore, increased attractiveness of U.S. investment opportunities has generated
a net .inflow of foreign capital. Both of these issues are discussed in
the preceding part of this chapter. In addition, Federal Government
involvement in credit markets and the implications for investment are
discussed in Chapter 6.
The Administration's projections for 1986, shown in Table 1-5,
anticipate that real business investment will continue to lead the expansion. Real investment is expected to grow more rapidly than real
GNP and to reach another postwar high as a share of real GNP in
1986. Residential investment should improve.
The remaining projections contained in the table depict continuing
progress toward achieving the goals specified in the act—increased
employment, higher real income and productivity growth, and low
inflation. From the fourth quarter of 1985 to the fourth quarter of 1986
the Administration expects a 4 percent rise in real GNP. This growth is
higher than the 2.5 percent growth of real GNP in 1985 because it
reflects continued strong fixed investment plus a rebuilding of real
inventories in 1986. Employment in 1986 is expected to increase by
1.7 million, leading to a further decline in the unemployment rate.
Following the depreciation of the foreign exchange value of the




59

dollar during most of 1985, real net exports of goods and services
are expected to increase; however, the nominal trade deficit will
probably show little improvement. With the implementation of the
Balanced Budget and Emergency Deficit Control Act of 1985, commonly referred to as the Gramm-Rudman-Hollings Act, Federal Government purchases will decline in 1986. This decline reflects a sharp
reduction in projected Federal purchases of agricultural commodities
by the fourth quarter of 1986 from the very high level in the fourth
quarter of 1985. At the State and local government levels, growth in
purchases, financed by continued growth in receipts, is expected to be
maintained.
TABLE 1-5.—Economic outlook for 1986
19851

Item

1986
forecast

Percent change, fourth quarter to fourth quarter
Real gross national product

2.5

4.0

2.9
6.0
6.4
11.8
2.9

2.6
5.0
8.0
-4.0
3.5

GNP implicit price deflator

3.2

3.8

Compensation per hour2

3.7

5.5

-.1

1.8

Personal consumption expenditures
Nonresidential fixed investment
Residential investment
Federal purchases of goods and services
State and local purchases of goods and services

Output per hour2

Fourth quarter level
Unemployment rate (percent)

3

6.9

6.7

1.7

Housing starts (millions of units, annual rate)

1.9

1

Preliminary.
2
Nonfarm business, all persons.
3
Unemployed as percent of labor force including resident Armed Forces.
Note.—Based on seasonally adjusted data.
Sources.- Department of Commerce (Bureau of Economic Analysis and Bureau of the Census), Department of Labor (Bureau of
Labor Statistics), and Council of Economic Advisers.

After being lower than expected in 1985, the inflation rate, as
measured by the GNP deflator, is expected to rise somewhat in 1986.
Rapid monetary growth throughout 1985 as well as the depreciation
of the dollar are expected to place upward pressure on prices. The
projected rise in near-term inflation, however, is expected to be temporary, provided that a policy of gradual money-growth reduction is
pursued. Due to anticipated productivity growth, hourly compensation is expected to rise faster than the rate of inflation. With average
hours worked expected to remain steady, real incomes should continue to rise. The expected growth in hourly compensation and in productivity indicates that unit labor costs should rise less than the inflation rate. Consequently, business profits should improve in 1986.
FISCAL POLICY

Fiscal policy is concerned with the level and character of both government spending and taxation. The Administration's goals for fiscal



60

policy are to promote long-term economic growth by limiting the
growth of government spending, keeping overall tax rates as low as
possible, and enacting appropriate tax reform. These goals are consistent with the evidence that short-term, discretionary changes in
fiscal policy are not effective for purposes of short-term macroeconomic stabilization, with the evidence that resources are generally
used more efficiently in the private sector, and with the evidence that
high and uneven marginal tax rates distort economic incentives and
inhibit economic growth.
The Federal fiscal deficit is the excess of Federal spending over
Federal revenues, and is estimated to be about $200 billion on a current services basis for the 1986 fiscal year. Large and persistent Federal deficits are commonly believed to cause many of the economy's
current problems, in particular high interest rates, the strong dollar,
and the trade deficit. Evidence linking the fiscal deficit to interest
rates, the value of the dollar, or even the trade balance is tenuous.
While the level of government spending rather than the deficit
should be the primary focus of policy, large persistent deficits are
nonetheless a cause of concern for several reasons. First, deficits may
absorb saving that could otherwise be used to finance more productive private economic activity, thereby adversely affecting capital formation and the long-run growth of the economy. While little hard
evidence supports the claim that deficits increase interest rates, deficits may have some effect on rates. Existing evidence, however, suggests that this relationship is weak and sensitive to the time period
examined as well as to alternative measures of debt, deficits, and interest rates. Second, absent changes in government spending, deficits
may shift tax burdens into the future. To the extent that citizens do
not fully recognize this postponement of taxes, deficits may conceal
the true cost (or reduce the perceived cost) of Federal expenditures.
In response to this lower perceived price for government goods, citizen-taxpayers may increase their demand for publicly provided goods
and services, thereby promoting more government spending than
would otherwise be the case. Third, continuing deficits add to cumulative interest costs, thereby increasing the interest cost burden, or
the portion of government spending that must be set aside for interest payments on debt. Fourth, persistent deficits contribute to the
fear that the Federal Reserve will monetize the debt, thereby generating higher inflation and interest rates.
It is evident that increased government spending rather than lower
revenue is the principal reason why deficits have increased so rapidly.
Chart 1-6 illustrates that while government spending as a share of
GNP increased to an unprecedented level, the share of tax revenue
has generally remained around 19 to 20 percent of GNP. Tax reve-




61

nues as a share of GNP rose rapidly during the late 1970s, so that
the overall effect of the 1981 tax cut has been to return revenue as a
share of GNP to approximately its historical norm. Moreover, marginal tax rates were reduced only to levels prevailing in the late
1970s because the income tax cuts were in part offset by bracket
creep and scheduled increases in the social security tax. Although no
major new domestic spending initiatives have been undertaken, aggregate government spending still has increased in real terms for
both defense and nondefense spending categories. This suggests that
recent Federal budget deficits are symptomatic not of declining revenues, but of an inability to control the growth of government spending.
Chart 1-6

Federal Outlays and Receipts As a Share of GNP
Percent of GNP
25

1960

1965

1970
1975
Fiscal Years

1980

1985

Note.—Outlays and receipts include on-budget and off-budget items.
Trends estimated over the 1960-85 period.
Sources: Department of Commerce, Office of Management and Budget, and Council of
Economic Advisers.

Several factors contribute to government spending growth. One
basic force explaining such growth is that the benefits of individual
government spending programs are typically concentrated among a
relatively small number of beneficiaries whereas the costs of individual programs are widely dispersed among millions of taxpayers. The
beneficiaries of government spending programs, including private




62

suppliers of inputs to such spending and government employees who
administer such programs, have incentives to support and muster
forces for lobbying efforts that may influence the final outcome of
spending legislation. Moreover, because benefits are concentrated
among a few, beneficiaries can easily join forces with one another to
form coalitions endorsing spending programs. On the other hand,
voters have little incentive to become informed about particular
spending issues or to oppose specific spending projects that individually have little effect on their taxes. Hence, legislators may have
little incentive to oppose individual spending projects because their
constituents are largely unaware of the importance of doing so. At
the same time, they will be under pressure from coalitions of beneficiaries to support increased government spending. Consequently, the
incentives in the political process foster increases in government
spending. Government spending continues to grow, therefore, not
because the private sector fails to provide desired goods and services,
but because of weaknesses in the political decisionmaking process.
The recognition that recent increases in the deficit are attributable
to rapid increases in government spending, not declines in revenues,
has strengthened the Administration's resolve to control government
spending. Controlling government spending is a principle aim of
fiscal policy, not primarily because of the size of the deficit, but because the real cost of government is the level of government spending. Spending diverts resources from the private sector to the public
sector, regardless of whether it is financed by borrowing, taxation, or
inflation.
Moreover, as discussed in Chapter 2, some evidence suggests that
a high level of government spending tends to retard economic
growth. European economies that have larger shares of government
and heavier average tax burdens than the United States, Canada, and
Japan have also had slower rates of economic growth. The disincentive effects of high tax rates on working, saving, and investing may
well have contributed to this result. Also, while the evidence relating
to deficits and interest rates is ambiguous, empirical studies have
shown a positive and significant relationship between government
spending and interest rates. This evidence suggests that it is government spending, regardless of how it is financed, that crowds out private economic activity.
The Gramm-Rudman-Hollings Act provides a mechanism for reducing spending and the deficit and is designed to produce a balanced budget by 1991, but does not guarantee a continued balanced
budget thereafter. To institutionalize fiscal restraint, the Administration strongly supports a balanced-budget constitutional amendment
with tax limitation. Another important improvement that would con-




63

tribute to spending control in the budgetary process is the line-item
veto. This permits the President to veto individual items in congressional appropriations. In addition, tax reform is essential to reduce
the tax code's distortion of relative prices and relative rates of return
that have constrained the economy's ability to grow.
Gramm-Rudman-Hollings Act

The Gramm-Rudman-Hollings Act prescribes that Federal budget
deficits cannot exceed targets that are gradually reduced until the
budget is balanced in 1991. The President may not propose and the
Congress may not consider budget resolutions that do not conform
to these targets. If the Congress and the President fail to agree on a
budget consistent with the deficit targets, a Presidential sequestering
order will mandate across-the-board spending reductions in accordance with procedures specified by the act. Under sequestering, deficit
targets are attained by reducing the growth of defense and nonexempt, nondefense government spending by an equal amount. Several
programs or types of domestic spending are exempt, or partially
exempt, from such reductions, including social security and medicaid.
The Administration does not intend to resort to tax increases to
balance the budget. Higher tax rates adversely affect incentives to
work, save, and invest and therefore are detrimental to both long-run
economic growth and the tax base. As a result, tax rate increases may
yield less than proportional increases in tax revenues. Moreover, tax
increases may lead to further increases in government spending. Tax
increases not only may weaken economic activity and thereby trigger
automatic increases in government spending, but they also diminish
the apparent need to slow the growth of government spending.
In addition, it has been argued that the Gramm-Rudman-Hollings
Act may cause a contraction of aggregate demand that induces a
slowdown in economic activity. Assuming discretionary tax increases
are not used to meet the act's deficit targets, the largest reductions in
real Federal spending will occur in fiscal 1987 and 1988. They will
amount to only about 0.5 percent and 0.1 percent of GNP respectively. Historically, reductions this small have not been followed by recessions. Given anticipated economic growth, the scheduled reductions would reduce the share of Federal spending in GNP to about
19 percent by 1991. As long as the monetary authority maintains
steady, predictable monetary growth, no serious or protracted economic disturbances are expected from reducing the deficit. Moreover, the legislation allows for delays in implementing the deficit reduction should real economic growth fall below 1 percent for two
consecutive quarters, or a recession be forecast by the Congressional
Budget Office or the Office of Management and Budget.




64

The longer term macroeconomic effects of the Gramm-RudmanHollings Act depend on the extent to which deficits are reduced by
spending cuts or tax increases. As suggested above, government
spending decreases would contribute to long-term economic growth
and would therefore be beneficial. Tax increases, on the other hand,
would be detrimental to long-term economic growth.
Tax Reform

The Administration has proposed significant improvements to the
current tax code in accord with the following principles. First, marginal tax rates should be reduced for both individuals and corporations as a means of improving productive incentives. The supply of
labor, capital, innovation, entrepreneurial skill, as well as market activity, should increase in response to lower marginal tax rates.
Second, deductions and loopholes should be curtailed to broaden the
tax base. These actions would reduce the incentive to avoid taxes and
consequently encourage greater voluntary compliance with the tax
laws. They would also make economic productivity, rather than tax
consequences, the primary factor in individual and business decisions. Moreover, they would enable tax rates to be lowered without a loss
of tax revenue. Third, the tax code should be simplified. Resources
would be saved if taxpayers could comply with, and tax collectors
could administer, the tax code more easily. Fourth, tax reform should
promote a tax code that is equitable. The President's proposals address the concerns of families as well as the working poor by increasing the personal exemption and the zero bracket amount. This could
virtually eliminate taxation of families with incomes below the poverty level. Tax reform should also provide for similar treatment of taxpayers with the same incomes (horizontal equity), rather than imposing differential tax rates on individuals with similar incomes, as is
currently the case.
MONETARY POLICY

Uncertainty about Ml velocity behavior in recent years has made
the formulation of monetary policy more difficult. Many observers
have asserted that abnormal velocity behavior means that Ml is no
longer a useful target for monetary policy. There is, however, no
reason to believe that velocity behavior will not return to a reliable
pattern. While the trend growth of velocity and its interest elasticity
may have been permanently altered, neither change would render Ml
permanently unreliable as a policy target. Moreover, the variables
commonly suggested as alternatives to Ml—such as nominal and real
interest rates, commodity prices, or the broader monetary aggregates—have well-known drawbacks as targets for policy. The drawbacks of these alternatives derive either because the Federal Reserve




65

has imperfect control over them or because their relationship to economic activity is relatively unreliable.
Monetary policy actions in 1985 were generally accommodative
over the year as interest rates fell, the dollar depreciated, and money
growth was rapid. The Federal Reserve's accommodative actions
were apparently motivated by a perceived need to foster stronger
real growth. However, efforts to tailor monetary policy to contemporaneous economic conditions run the risk of being destabilizing. Because of the lags and inaccuracies in reported contemporaneous economic data, and the length and variability of the lags in the effect of
monetary policy, policy actions aimed at a currently perceived problem will not affect the economy until well after the problem has appeared and perhaps disappeared. A policy of targeting real economic
activity increases the probability that policy itself becomes destabilizing as economic developments emerge that are unanticipated or inaccurately forecasted.
Stable and moderate money growth will neither remove all of the
uncertainty that surrounds policymaking nor prevent unforeseen
shocks from affecting the economy. However, stable, predictable
monetary policy can eliminate monetary policy itself as a source of
uncertainty and as a potentially destabilizing force. In addition, an
announced and well-articulated monetary policy can help reduce uncertainty about the economic outlook and foster a stable and predictable economic environment.
The setting and achieving of money-growth targets is a critical element of just such a credible monetary policy. In addition to providing monetary discipline, appropriate, pre-announced monetary targets that are achieved through consistent policy actions transmit important information to the public about prospective inflation. The
principles of monetary targeting discussed at length in this Report last
year are equally appropriate now. These include a targeting procedure that would eliminate year-to-year "base drift" in the target
range and institute a target range constructed of parallel bands that
would provide greater latitude for the targeted level of Ml early in
the year.
Even recognizing the uncertainty about the current behavior of velocity, it is difficult to dismiss the inflationary threat that would be
implied by persistence of the monetary growth rate experienced in
1985. Any plausible explanation of long-term velocity behavior indicates the need to decelerate money growth in order to limit the
threat of higher inflation. The Administration strongly recommends
that that deceleration be achieved gradually and predictably, in order
to avoid the restriction of real economic activity that is associated




66

with abrupt declines in money growth and long periods of very slow
money growth.
LONG-TERM OUTLOOK

The Administration's longer term projections are contingent on
the following macroeconomic policies. First, the longer term inflation
and real growth projections will require a gradual deceleration of
money growth that is consistent with restoring price stability and that
also avoids any policy-related disruption to the real economy.
Second, the projections assume that the deficit reduction goals defined in the Gramm-Rudman-Hollings Act are achieved by a reduction in the growth of government spending. Third, it is assumed that
a tax reform bill is enacted that is similar to the President's Tax Proposals for Fairness, Growth, and Simplicity. With a commitment to
these policies, sustained growth and stable prices are not only possible,
but probable.
Determinants of Real Growth

The growth of real GNP in the long run depends largely on the
growth in productive resources and technological change. This concept provides the basis for the Administration's long-term projection
of real GNP growth. In particular, the projected growth rate of real
GNP for the period 1986-91 is based on assumptions of employment
and productivity growth, the latter reflecting additions to the capital
stock, additions to labor skills, and technological change.
Table 1-6 contains a convenient accounting progression from population growth to real GNP growth. This involves partitioning real
GNP growth into the part associated with growth in total labor hours
worked and the part associated with growth in output per hour
worked (productivity growth). The first column reports average
annual growth from the expansion peak in 1948 to that in 1981. The
second column reports average growth from the peak in 1973 to the
peak in 1981. The third column shows average growth from the 1981
peak through the fourth quarter of 1985, and the final column shows
the Administration's projections for 1985-91.
The progression through the table is straightforward. The foundation for real GNP growth is population growth. The first five rows of
Table 1-6 translate population growth into civilian employment
growth. The process begins with Bureau of the Census estimates of
population growth for past time periods and its projection for 198591 (row 1). Using historical growth rates and the Administration's
projection for labor force participation growth (row 2) and growth in
the civilian employment rate (row 4), past and projected growth rates
for total civilian employment are calculated (row 5). The projected
growth in civilian employment of 1.8 percent per year is only slightly




67

TABLE I-6.—Accounting for growth in real GXP, 19-48-91
[Average annual percent change]
1948 IV
to
1981 III

Item

1973 IV
to
1981 III

1981 III
to
1985 IV1

1985 IV
to
1991 IV1

18

12
.5

09
.6

GROWTH IN:

15
.2

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

2.4

_ 1

_ 4

1.6
1

1.5
3

17

20

17

18

.1

.1

.2

.2

1.7
_ 4

2.1
-6

2.0

2.0
_2

(9) EQUALS- Hours of all persons (nonfarm business)
(10) PLUS: Output per hour (productivity) (nonfarm business)

14

15

20

18

1.9

.6

.9

2.1

(11) EQUALS: Nonfarm business output
(12) LESS- Nonfarm business output as a share of real GNP

3.3
0

2.0
_.l

2.9
6

4.0
2

(13) EQUALS- Real GNP

33

2.2

24

3.8

1.8

(3) EQUALS: Civilian labor force
(4) PLUS- Civilian employment rate
(5) EQUALS- Civilian employment
(6) PLUS: Nonfarm business employment as a share of civilian employment
(7) EQUALS: Nonfarm business employment
(8) PLUS- Average weekly hours (nonfarm business)

1

1

Data for 1985 IV are preliminary.
Note.—Based on seasonally adjusted data.
Detail may not add to totals due to rounding.
Sources: Department of Cpmmerce (Bureau of the Census and Bureau of Economic Analysis), Department of Labor (Bureau of
Labor Statistics), and Council of Economic Advisers.

above the 1948-81 average and lower than the performance of the
1970s.
Conversion of employment growth into output growth requires
measures of growth in productivity and hours worked, but these variables are not available for the entire economy. Consequently, total
employment is transformed into total hours worked in the nonfarm
business sector by the calculations performed in rows 6 to 9. The resulting expected growth in total nonfarm business hours worked for
1985-91 (row 9) is 1.8 percent per year. A crucial step in the projection of output growth involves the projection of nonfarm business
productivity growth (row 10). The Administration expects a rebound
in growth to the 1948-81 trend and has projected nonfarm business
productivity growth of 2.1 percent per year from 1985 to 1991. The
projection recognizes that current and proposed policies should generate strong, sustained productivity growth.
Many factors influence productivity growth. Capital formation is an
important source of productivity growth. From 1948 to 1981 the net
capital stock averaged growth of about 4 percent per year and, with
hours worked growing at 1.4 percent, growth in capital per hour
averaged 2.5 percent. This accounts for about 0.7 percent, or onethird, of productivity growth. The extent to which capital formation
improves productivity depends critically on the accumulation of capital that can be used efficiently. Government policies that distort investment decisions either through subsidies, regulatory constraints,




68

or special tax provisions can erode the contribution of capital to
growth. The President's tax reform proposals specifically address
this through more equal effective tax rates across investment activities.
Combining the projected productivity growth with employment
growth and adjusting for expected growth of the nonfarm business
sector relative to the rest of the economy, yields the Administration's
real GNP growth projection of 3.8 percent per year from 1985 to
1991 (row 13). As the progression through the growth accounting
framework indicates, this projection does not require any unprecedented employment or productivity growth.
The Outlook for 1986-91
Table 1-7 summarizes the Administration's forecast for 1986 and
its long-term economic projections for 1987-91. The longer term
projections should not be interpreted as year-to-year forecasts, but
rather as expected trends. To place these projections in a proper
perspective, it is important to realize that in general they imply a
return to the economy's postwar trend. They do not indicate unprecedented performance by the economy over the next 6 years.
TABLE 1-7.—Administration economic assumptions, 1986-91
[Calendar years]
Item

1987

1986

1988

1989

1990

1991

Percent change, year to year
3.4

4.0

4.0

3.9

3.6

3.5

Real compensation per hour1

.9

2.3

2.5

2.4

2.3

2.2

Output per hour1

.9

2.0

2.1

2.1

2.2

2.3

3.5

4.1

3.7

3.3

2.8

2.1

116.7

118.9

120.9

5.8

5.6

Real GNP

Consumer price index 2

Annual level
Employment (millions)

3

Unemployment rate (percent) 4
1
2
3
4

110.7

112.7

114.7

6.7

6.5

6.3

6.1

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

Source: Council of Economic Advisers.

These projections are based on the premise that stable, predictable
policies will provide the economic environment that is conducive to
growth. The policies of this Administration have generated an environment within which strong economic growth has already occurred.
A continued commitment to this course is the key to sustained
growth and the realization of these projections.




69

LESSON FOR THE FUTURE

The unsatisfactory economic performance associated with the rise
of inflation and the adjustment problems that arise during disinflation provide a clear lesson: reacceleration of inflation must be prevented. The surest way to avoid the costs of both inflation and disinflation is to avoid the policies that lead to an acceleration of inflation.
Moreover, the experience of the past 3 years has indicated that substantial economic growth can occur without rekindling inflation. The
disinflation process has clearly caused financial stress in many sectors
that incurred debt during the period of high inflation. But a reacceleration of inflation is not a proper policy response to this stress.
The capital gains and losses associated with the market revaluation of
debt have already largely occurred. A resurgence of inflation would
set in motion another round of arbitrary capital gains and losses like
those experienced in the 1970s.
Memories of rising inflation in the 1970s are still fresh in the public's mind. If inflation were allowed to resurge to the rates recorded
in the late 1970s, inflation expectations would likely rise rapidly, and
quickly and firmly become imbedded in economic behavior. Skepticism about the government's ability and willingness to provide longrun price stability could be validated and strengthened. There is
every reason to believe that future attempts to reduce a rekindled
rate of inflation would be very costly.
The government, particularly the Federal Reserve, has a responsibility to provide price stability. For reasons reflected throughout this
Report, the Administration believes that price stability is a basic prerequisite for healthy economic growth. Given the economic dislocation and discomfort associated with reducing the inflation rate since
1981, the risk of allowing inflation to resurge carries with it the risk
that those costs—and possibly even higher costs—will have to be
borne again. The President remains committed to his original objectives of restoring price stability and sustaining economic growth and,
with the cooperation of the Federal Reserve and the Congress, can
meet these goals.




70

CHAPTER 2

The United States and Economic
Development
AFTER WORLD WAR II, the United States in cooperation with
other countries established the basic policies and institutions of the
open system of world trade and investment that has since guided
economic relations among nations. On the whole, the world has enjoyed an extraordinary record of economic progress under this
system. Between 1950 and 1984, U.S. real per capita gross national
product (GNP) rose at a 1.8 percent average annual rate, allowing
nearly a doubling of average real living standards in 34 years. In the
other nine largest Western industrial countries, real per capita
income rose at a spectacular 3.7 percent average annual rate, implying that real living standards in these countries (as measured by real
per capita GNP) rose by more than twice as much as they had in all
of previous history. Despite disappointing economic performance of
some developing countries, the average annual rate of growth of real
per capita income for all developing countries was 2.8 percent between 1955 and 1984, implying more than a doubling of average real
living standards in these countries in just 29 years.
The progress of developing countries over the past three decades
is manifested in other important indicators of human welfare. Between 1955 and 1984, their population nearly doubled. Despite the
problems of some developing countries, this increase in population
was not accompanied by increasing human misery, as some feared,
but rather by generally rising real living standards that were reflected
in longer life expectancies, lower infant and child mortality rates,
better nutrition and health care, and higher educational attainment.
For example, between 1965 and 1983, average life expectancy rose by
9 years in lower income developing countries and by 8 years in
middle-income developing countries.
This overall record of economic and social progress provides the
context for this chapter's discussion of important economic problems
that have recently afflicted a number of developing countries and of
the policies that are needed to deal with these problems. The record
of long-term economic success of many countries suggests that these
problems can be successfully resolved. It also suggests that retention




71

and refinement of the policies and institutions that helped to generate this success, together with reform of practices that have contributed to recent difficulties, is the appropriate prescription for restoring prosperity and reviving growth in countries that have suffered
economic slowdown or stagnation.
To develop this main theme, it is appropriate first to discuss the
substantial and growing importance of developing countries in the
world economy. This is followed by a description of the general economic performance and recent economic problems of developing
countries, including the problems associated with the international
debt crisis. The chapter next examines economic policies that experience suggests are conducive to rapid and sustainable economic
growth. The chapter concludes with a discussion of contributions
that the developed countries can make to the economic performance
of the developing countries and of improvements of the international
economic system that can benefit all nations.
Before embarking on this discussion, it is important to stress the
interest of the United States in seeking more vigorous economic
growth in both developed and developing countries. Beyond wishing
its friends well, the United States has a strong national interest in the
economic prosperity of its allies, and has an important national interest in economic prosperity of developing countries, including especially countries striving to strengthen their democratic institutions.
The United States also has an economic interest in the prosperity of
other countries. Economic growth appears to be a mutually reinforcing process. For example, the rapid recovery in the United States
during the first six quarters of the current expansion contributed significantly to recovery and expansion in other countries and particularly to easing of some of the economic problems of developing
countries. Conversely, as discussed in Chapter 1, relatively sluggish
recovery of other industrial countries and recent economic problems
in many developing countries are seen as factors contributing to the
deterioration of the U.S. trade balance during the current recovery
and perhaps also to the slowdown of that recovery since mid-1984.
Thus, for economic as well as broader national purposes, the United
States has an important interest in rapid and sustainable growth in
other countries.
ECONOMIC PERFORMANCE AND PROBLEMS OF DEVELOPING
COUNTRIES
Developing countries are the home of three-quarters of the world's
population. Their aggregate national products in 1983 were more
than half of that of the United States and nearly double that of Japan.




72

Merchandise trade (exports plus imports) of the developing countries
(including high-income oil exporters) in 1983 accounted for more
than a quarter of total world merchandise trade and was more than
twice the size of that of the United States, the world's largest trading
country. The substantial and growing economic importance of developing countries is reflected specifically in the extent of trade between
these countries and the United States and, especially during the past
decade, in the flow of credit from the United States and other industrial countries to the developing countries.
TRADE BETWEEN DEVELOPING COUNTRIES AND THE UNITED STATES

The importance of trade with developing countries has been growing along with the general importance of international trade for the
U.S. economy in the postwar period, especially during the past 20
years. In 1965 exports to and imports from developing countries
were, respectively, 1.2 and 1.0 percent of U.S. GNP. They rose to 3.0
and 4.4 percent of U.S. GNP, respectively, in 1980. By 1984 the
share of exports to developing countries in GNP fell to 2.0 percent,
and the share of imports from such countries fell to 3.3 percent. The
relatively small shares of exports and imports in U.S. GNP are somewhat deceiving because industries that account for about 70
percent of U.S. GNP produce either services that do not enter into
international merchandise trade, or produce products that are largely
nontradable. For the industries that account for the remaining 30
percent of U.S. GNP, international merchandise trade is of considerable importance. On average for these industries in 1984, exports to
developing countries accounted for about 7 percent of annual product, and imports from developing countries accounted for about 11
percent of annual product.
Increased imports of some categories of manufactured goods from
developing countries have been a particular cause of concern for and
complaint by U.S. competitors. Without attempting to judge the
merits of individual complaints, it should be noted that the United
States has until recently had a trade surplus in manufactured goods
with developing countries and still exports large amounts of such
goods to these countries. In 1980 the United States exported $60 billion of manufactured goods to and imported $32 billion of such
goods from developing countries, for a net export surplus of $28 billion. Although the magnitude of this surplus may have reflected temporary factors such as the weak dollar and the large borrowing of developing countries in 1980, the existence of such a surplus is consistent with past trends. By 1984 exports of manufactures to developing
countries fell to $52 billion, while imports of manufactures from
these countries rose to $64 billion, yielding a net export deficit of




73

$12 billion. The deterioration in the net trade position in manufactured products with developing countries, however, is proportionately smaller than the deterioration of the overall U.S. net trade position
between 1980 and 1984.
The explanation of the behavior of the overall U.S. trade balance
or current account balance, of course, cannot be found in analyses of
changes in the bilateral trade imbalances between the United States
and individual countries or groups of countries. As emphasized in
Chapter 1, the overall trade balance or current account balance is a
macroeconomic phenomenon whose behavior is primarily to be explained by the behavior of other macroeconomic variables, in particular economic growth of the United States in comparison with other
countries, levels of saving and investment in the United States and in
other countries, expenditure and tax policies of the U.S. Government
and the governments of other countries, anticipated real rates of
return on investments in different countries, and the real foreign exchange value of the U.S. dollar.
CREDIT FLOWS TO DEVELOPING COUNTRIES

The growing importance of financial relationships between developed and developing countries is apparent in the rapid growth of the
real flow of financial resources to developing countries, as reported
in Table 2-1. The net flow of funds to developing countries (in 1983
dollars), as estimated by the Organization for Economic Cooperation
and Development (OECD), nearly doubled in real terms between
1970 and 1980, from $53.1 billion to $93.9 billion. After peaking in
1983 at $118.3 billion, this flow declined to $92.3 billion in 1984.
The sources of these funds have shifted substantially over the past 15
years. In 1970 official development assistance accounted for 42 percent of the net flow of funds to developing countries, while lending
by commercial banks accounted for only 15 percent of the total. By
1983 the share of official development assistance declined to 29 percent, while the share of bank lending (including rescheduling) rose to
46 percent. This trend was reversed in 1984, when the share of official development assistance rose to 39 percent of net lending and the
share of commercial banks fell to 26 percent. More recent information indicates a further substantial decline in commercial bank net
lending to developing countries in 1985.
By 1983 total external liabilities of developing countries reached
an estimated $843 billion, equal to about one-third of the annual
GNP of these countries and about 10 percent of the annual GNP of
the developed countries. More than half of these liabilities were loans
from commercial banks, and nearly a third of these bank loans were
owed to U.S. financial institutions. The problems recently experi-




74

TABLE 2-1.—Real net flow of funds to developing countries, selected years, 1970-84
[Billions of 1983 dollars]

Type of receipt

Official development assistance
Grants by private voluntary agencies
Nonconcessional flows

1975

1970

1980

22.2

316

36.1

2.3

20

2.2

28.7

510

557

1981

36.2

1982

1984

1983

33.7

33.8

35.8

2.3

2.3

68.6

60.1

82.1

54.0

2.0

2.5

Official or officially supported flows

10.4

15.7

22.9

21.6

21.9

19.8

20.0

Private flows

183

354

328

470

382

62.3

34.0

Direct investment

97

169

99

168

118

78

95

Bank lending1

7.9

17.8

29.2

25.9

54.0

24.0

Bond lending
TOTAL

21.6

.8

.6

1.3

1.1

531

846

939

106.8

.5
96.1

.5
118.3

.5
92.3

1
Includes for 1983 and 1984 significant amounts of rescheduled short-term debt.
Note.—Detail may not add to totals due to rounding.
Source: Organization for Economic Cooperation and Development.

enced by several of the high-debt countries in meeting their debtservice obligations, and the consequences of these problems for the
financial institutions that hold their obligations, have dramatized the
deepening financial relationships between developing countries and
the United States and other developed countries.
ECONOMIC PROBLEMS OF DEVELOPING COUNTRIES

Economic growth in developing countries has been rapid over the
past 30 years, on average, as indicated in Table 2-2. Some countries,
however, have not shared in this progress over the long run, and, in
the past few years, a number of countries with relatively good longrun performance have experienced economic difficulties. The chronic
economic problems of many quite poor countries in Sub-Saharan
Africa, South Asia, and Latin America deserve treatment separate
from the acute difficulties recently experienced by middle-income
countries with large debt burdens.
The low-income developing countries (those with per capita incomes of less than $400 in 198S) had an average annual growth rate
of real per capita GNP of 2.3 percent between 1955 and 1984. This
result is dominated by the performance of China and India, which together account for three-quarters of the population of low-income
developing countries and which had a combined average annual
growth rate of real per capita GNP of 2.4 percent over this period.
Interestingly, the combined growth performance of these two large
countries has been improving recently as they have adopted more
market-oriented, pro-growth economic policies. Some other lowincome developing countries have also enjoyed vigorous growth, in-




75

eluding some spectacularly successful countries that earlier adopted
market-oriented, pro-growth economic policies and have now graduated to the class of middle-income developing countries. In many
other low-income countries growth performance has not been very
strong. Between 1965 and 1984, real per capita income in the lowincome countries of Sub-Saharan Africa rose at only a 0.5 percent average annual rate.
TABLE 2-2.—Indicators of economic growth, 1955-84
[Annual growth rate; percent]
Population

Period

Real GNP per
capita

Real GNP

DEVELOPING COUNTRIES:1

2.2
2.2
2.0

5.4
5.3
3.1

3.1
3.1
1.1

21
21
1.8

3.7
4.5
6.7

1.6
2.4
4.9

2.4
2.4
2.4

6.0
5.6
1.8

3.5
3.1
-.6

11

1955-70
1970-80
1980-84

47
32
1.8

36
24
1.3

Low-income countries-.
1955-70
1970-80
1980-84
Middle-income countries:
1955-70
1970-80
1980-84
INDUSTRIAL MARKET COUNTRIES:
1955-70
1970-80
1980-84

8
5

1
Excludes the high-income oil exporters.
Source: International Bank for Reconstruction and Development.

The road to economic prosperity for many of the poorest countries
will be a long and difficult one. In some extreme situations, such as
the recent and continuing famine in Ethiopia, extraordinary external
assistance has been essential to provide the bare requirements of
human survival. The success of some formerly quite poor countries,
however, gives hope that some of today's poorer countries will be
able to graduate to the ranks of the middle-income developing countries by early in the next century.
The middle-income developing countries (those with per capita incomes between $400 and $7,000 in 1983) had good growth performance on average between 1955 and 1984. As a group, they recorded
an average annual growth rate of real per capita income of 2.8 percent per year, enabling the real income of the average resident of
these countries to rise by 123 percent in just 29 years. Some countries, of course, performed less well than the average, and a few even
registered substantial declines in real per capita incomes over periods
of two decades or longer. On the other hand, nine countries had
growth rates of real per capita income of 5 percent per year or better




76

between 1965 and 1983, implying an increase in real per capita
income of more than 140 percent in just 18 years.
The early 1980s have been a period of sharp contrasts in the economic performances of developing countries. For all developing
countries, excluding the high-income oil exporters, the average
growth rate of real per capita income was only 1.1 percent per year
between 1980 and 1984. Thanks primarily to the good performance
and large weight of China and India, low-income developing countries
registered a 4.9 percent average annual growth rate of real per
capita income over these 4 years. Other low-income countries in Asia
did about as well as China and India, on average, but low-income
countries in Africa suffered a cumulative 8.7 percent decline in average real per capita income over these 4 years. For the middle-income
developing countries, average real per capita incomes declined at a
0.6 percent annual rate between 1980 and 1984. Despite the recession in the industrial countries, some of these countries, especially in
Asia, continued to enjoy strong real growth. Other middle-income developing countries, especially in Latin America, had enjoyed generally good growth during the 1960s and 1970s, but experienced economic stagnation or decline in the early 1980s.
EFFECTS OF EXTERNAL SHOCKS

For developing countries that experienced poor economic performance in the early 1980s, adverse external economic developments explain part, but only part, of this poor performance. Some countries
whose national incomes depend heavily on revenues from oil exports
saw their real national incomes decline because of the fall in world
oil prices and in the volume of oil exports. However, some oil-exporting countries that saved some of their oil-export revenues in the
1970s have been able to draw on those savings to support domestic
consumption and investment during a period of lower oil prices and
export volumes. Other oil exporters that spent all of their export revenues and even borrowed from world capital markets to spend on
consumption and domestic investment have faced a more difficult
task in adjusting to lower oil exports and oil prices. The same is true
for developing countries that experienced export booms for other
commodities during the 1970s and failed to foresee that these booms
might not last forever.
Moreover, evidence suggests that adverse external events are not
primarily responsible for the recent poor economic performance of
some developing countries. As previously mentioned, other developing countries that faced similar external circumstances continued to
perform well in the early 1980s. Table 2-3 summarizes results from a
World Bank study that compared the magnitude of external shocks to




77

developing countries that needed to reschedule their external debts
by the end of 1984 with countries that did not need to reschedule.
The index of external shocks was calculated as the combined effects
on a country's balance of payments of deteriorations in its terms of
trade (the ratio of export prices to import prices), declines in world
demand for its exports, and increases in interest rates on its outstanding external debt. In 1979-80 and 1981-82, the average adverse
external shock was about the same for reschedulers and nonreschedulers. The average of annual growth rates of real gross domestic
product (GDP) in 1979-83 for reschedulers, however, was only 0.9
percent, versus 4.3 percent for nonreschedulers.
TABLE 2-3.—External shocks and real GDP growth in selected developing countries, 1979-83
Net external shocks as
percent of GNP1

Country Category

Growth of real GDP (percent)2

1979-80

1981-82

1979-83

Reschedulers3

-2.6

-9.3

0.9

Nonreschedulers

-2.6

-8.4

4.3

1

External shocks are defined as the impact on the balance of payments as a percentage of GNP of: (a) changes in the terms
of trade; (b) a decline in the growth rate of world demand for a country's exports; and (c) increases in interest rates, averaged
across countries.
2
Averaged across countries and years.
3
Countries that had rescheduled debt as of the end of 1984.
Sources: International Bank for Reconstruction and Development, World Dnvlopment Report, 1985, and International Monetary
Fund, International Financial Statistics Yearbook, 1985.

External shocks did, of course, affect developing countries in the
early 1980s. The disinflation of the early 1980s was associated with
an unwinding of the effects of the inflation of the 1970s on relative
commodity prices, including prices of some products exported by developing countries. The recession in the industrial countries in the
early 1980s reduced demand for the exports of developing countries.
The real burden of the external, dollar-denominated debt of many
developing countries rose as the dollar appreciated in foreign exchange markets. Increased nominal and real interest rates, especially
in 1981, increased the debt-service requirements of heavily indebted
countries with large amounts of floating-rate loans. Countering these
adverse developments have been the recovery in the industrial countries, especially the United States, and the decline in interest rates
since 1982, plus the recent moderate decline of the dollar.
The effects of movements in interest rates and in the foreign exchange value of the dollar on debt-service burdens were important
for developing countries that chose, as a consequence of the policies
they pursued, to borrow large sums from international capital markets. The problems of these countries are best understood in the
context of a general discussion of the role of international credit
flows and the current international debt situation.




78

THE ROLE OF INTERNATIONAL CREDIT

The international flow of capital performs at least two important
economic functions. It allows countries with more attractive investment opportunities than can be financed out of domestic saving to
obtain resources from countries with excess savings. It also allows
countries suffering temporary economic difficulties to borrow
from world capital markets rather than institute sharp temporary
reductions in consumption or costly cutbacks in investment.
International capital flows have performed these functions for
many countries over a long span of time. In the 50 years prior to
World War I, the United States, Canada, Australia, Argentina, and
the Scandinavian countries financed domestic investments with substantial loans from Great Britain and other European countries. The
evidence indicates that despite occasional defaults and other difficulties, the providers of this credit earned higher returns than those
typically available on investments in their own countries. In most of
the period since World War II, the United States has been a net supplier of capital to the rest of the world, especially through the mechanism of direct investment by U.S. firms in foreign countries. The
generally higher real growth rates of other industrial countries up to
1975 and of developing countries up to 1980 suggest that this flow
of capital out of the United States was generally in the direction of
higher returns. During the current expansion, the United States has
become a net borrower in world credit markets. This is consistent
with the high rate of return on and rapid growth of investment in the
United States, in comparison with other countries, and with the need
to finance the Federal deficit. The suppliers of credit to the United
States are primarily other industrial countries where desired saving
rates exceed desired rates of domestic investment.
With the exception of some oil-exporting countries, developing
countries have generally been recipients of net capital inflows in the
postwar period. Evidence indicates that from the mid-1960s to the
late 1970s, there was a generally positive relationship between the
growth of external indebtedness of particular developing countries
and the growth of investment in these countries. Evidence suggests a
similarly positive relationship between the growth of external indebtedness and the growth rate of real gross domestic product. This is
consistent with the notion that international capital flows were, on
the whole, performing the desirable function of financing investment
in countries with good growth opportunities. From 1979 to 1983,
however, there is no significant relationship between growth of external indebtedness and growth of investment for developing countries,
and there is a negative relationship between growth of external debt
and growth of real domestic product.




79

In the 1960s and 1970s, a few developing countries experienced
difficulties in meeting their debt-service obligations and had to reschedule their external debts. At least up to 1979, however, these
problems affected no more than two or three countries in any year,
and the total amount of debt rescheduled in any year did not exceed
$2 billion. In 1979, 7 countries rescheduled $6.2 billion of external
debts; in 1980, 6 countries rescheduled $3.7 billion; and in 1981, 13
countries rescheduled $5.8 billion. In 1982 reschedulings fell when 9
countries rescheduled $2.4 billion; but in 1983, 21 countries rescheduled $51 billion; and in 1984, 24 countries (many of them the same
as in the preceding year) rescheduled $116 billion. Because rescheduling agreements are typically reached some time after a country
begins to experience debt-servicing difficulties, it is reasonable to
conclude that by 1982 many of the developing countries with large
external debts were already in trouble.
THE INTERNATIONAL DEBT SITUATION

A stylized description of events leading up to the recent international debt crisis is the following. Starting in 1973, growth of balance
of payments surpluses of some high-income oil-exporting countries
stimulated expansion of the international banking system that recycled these surpluses. Increased availability of credit on attractive
terms through the international banking system increased opportunities for many developing countries to become borrowers from that
system in the mid-1970s. Initially, debt-service requirements did not
rise relative to the export earnings of many of these countries because they enjoyed rapid economic growth and because the inflationary expansion of the 1970s contributed to a boom in demand for
their exports. Moreover, nominal interest rates on dollar-denominated loans declined from 1974 to 1976 and rose modestly between
1976 and 1978. Real interest rates became increasingly negative
during the late 1970s as inflation accelerated. In addition, depreciation of the dollar relative to the currencies of other industrial countries after 1976 reduced the value of the dollar-denominated debt of
many countries, thereby making further borrowing seem even more
attractive.
In 1981-83 difficulties arose for many developing countries that
had borrowed extensively from the international banking system in
the late 1970s and 1980. The recession in the industrial countries,
the high level of nominal and real interest rates (especially from late
1980 through mid-1982), the strengthening of the U.S. dollar, and
the declines in the dollar prices of many commodities exported by
heavily indebted developing countries (associated with the undoing
of the inflationary excesses of the 1970s) contributed to an increase




80

in the debt-service requirements of these countries relative to their
export earnings, especially for countries with large volumes of dollardenominated, floating-rate loans. To meet rising debt-service requirements, many debtor nations increased external borrowing.
These high levels of borrowing, together with deteriorating export
earnings and slackening economic growth, caused concern among
lenders about the longer run capacity of these countries to meet their
external debt-service obligations.
Table 2-4 presents data for two groups of debtor countries that
are useful in understanding the debt crisis. Group A consists
of indebted developing countries that incurred external payments arrears between 1981 and 1983 or rescheduled their external debts between 1981 and mid-1984. The 57 countries in group A accounted
for 42.8 percent of GDP and 59.5 percent of the external debt of all
developing countries in 1980. Group B consists of those indebted developing countries that did not experience recent debt-servicing difficulties. The 66 countries in group B accounted for 43.2 percent of
GDP and 40.5 percent of the external debt of all developing countries in 1980. These two groups had the same average annual growth
rate of real GDP, 5.5 percent per year, from 1967 to 1976. Both
groups enjoyed substantial growth between 1976 and 1980, although
even by this stage, countries in group B (with generally lower external debt burdens) were growing somewhat more rapidly. The growth
rate of real GDP for group A fell to 1.1 percent in 1981, to —0.1
percent in 1982, and to —1.9 percent in 1983, and was estimated to
be only 2.0 percent in 1984. In contrast, group B continued to enjoy
impressive growth rates of real GDP, with annual growth rates of 5.1
percent in 1981, 4.0 percent in 1982, 5.4 percent in 1983, and an
estimated 5.7 percent in 1984.
Another important difference between these two groups is the behavior of their respective current account balances. On average, from
1967 to 1976, group A had a slightly larger current account deficit as
a percentage of exports of goods and services than group B. By 1977
the current account deficit as a percentage of exports had risen to
25.5 percent for group A, while it was only 6.1 percent of exports for
group B. In the late 1970s and early 1980s the current account deficit of group B remained modest, peaking at 14 percent of exports in
1981. For group A the current account deficit remained much larger,
peaking in absolute size in 1981, and relative to exports at 33.3 percent in 1982. An important factor contributing to the larger current
account deficit of group A was the interest they had to pay on their
larger external debt.
A current account deficit implies an excess of national spending
over national income that must somehow be financed. The primary




81

TABLK 2-4.—Debt indicators for developing countries, 1967-84
Indicator by country group1

1967-76
average

1977

1978

1979

1980

1981

1982

1983

19842

Percent
Growth of real GDP
Group A
Group B....

5.5
5.5

5.4
6.3

3.7
8.2

5.3
4.7

1.1
5.1

-0.1
4.0

-1.9
5.4

2.0
5.7

207.4
328.2

185.4
319.1

178.2
322.5

192.1
354.9

3.9
4.9

Billions of U.S. dollars
Exports of goods and services
Group A
Group B

107.8
154.5

117.3
183.5

154.5
240.1

201.3
310.5

Percent of exports of goods and services
Current account balance
Group A
Group B

-25.5
-6.1

-31.9
-10.6

-25.3
-9.4

-23.7
-9.4

-32.2
-14.0

29.5
8.9

36.1
10.9

28.8
10.5

32.3
10.6

37.5
12.9

Net asset transactions plus
errors and omissions
Group A
Group B

-7.4
-3.1

-5.9
-1.6

-3.4
-2.5

-10.0
-2.2

External debt
Group A
Group B

171.7
95.3

195.8
91.9

178.1
81.6

167.1
73.6

194.5
78.3

22.3
10.0

29.6
11.8

30.2
11.7

26.9
11.0

33.8
12.7

Net external borrowing
Group A
Group B

Debt-service payments
Group A
Group B

-18.5
-13.3

-14.5
-2.1

-33.3
-12.9
32.2
11.9

-14.4
-10.5

-7.6
-6.5

18.3
10.2

11.0
7.2

-6.2
-2.7

-2".2

246.0
91.1

268.1
97.0

256.8
94.2

41.6
14.6

36.2
14.4

36.6
14.9

-16.7
-2.2

1

Group A: countries with recent debt-servicing problems.
Group B: countries without debt-servicing problems.
Estimates.
Source: International Monetary Fund, \\'orld Eron
2

means of finance for developing countries is usually external net borrowing. This is shown in Table 2-4 in the close relationship between
net external borrowing as a percentage of exports and the current
account balance as a percentage of exports for both groups of countries. Not surprisingly, debt-servicing difficulties are associated with
countries that run large and persistent current account deficits that
need to be financed by large and persistent net external borrowing.
Loss of confidence in a country's creditworthiness might be expected to affect internal as well as external creditors, leading to a flight
of domestic capital. This is reflected in Table 2-4 in the behavior of
net asset transactions plus errors and omissions in the balance of
payments. As a percentage of exports, these items remain quite small
for group B, which did not experience debt-servicing problems. For
group A, however, these items grow quite large in 1980-82.
Adverse external developments can contribute to a loss of confidence in creditworthiness. A decline in export earnings due to a decline in world market demand for a country's exports may cause
creditors to worry about the security for their loans. For a country




82

with a large amount of floating-rate debt, an increase in interest rates
increases debt-service requirements. This tends to worsen the current
account balance, thereby contributing to creditor worries.' Such
events did adversely affect many heavily indebted developing countries in the early 1980s. However, the extent of these effects depended on the size of a country's external debt. In Table 2-4, group A
has a higher ratio of debt service to exports in both 1977 and 1982
and a larger increase in this ratio between 1977 and 1982 than
group B. This is not because group A faced higher interest rates or a
larger increase in interest rates. It is because they had a higher ratio of
external debt to exports in 1977 and a larger increase in this debt ratio
between 1977 and 1982. Especially in developing countries where
most external debt is government debt, the effects of changing interest rates on debt-service problems are a mixture of the effects of
external events and of past government policies.
When a country experiences debt-servicing difficulties, its creditors
tend to want to reduce their exposure by collecting all interest and
principal payments as they come due, while extending no new credit.
This may be neither desirable nor feasible. For the countries that experienced debt-servicing difficulties to pay all of the interest and
principal on their external debts in 1982, without any new gross external borrowing, they would have had to move from net external
borrowing equal to 37.5 percent of exports in 1981 to net external
lending equal to principal payments on outstanding external loans
(probably about 20 percent of exports). This would have required
these countries to improve their trade balances in 1982 by more than
$100 billion, relative to actual performance. Engineering such a massive change in the trade position of these countries was probably not
feasible in so short a time, and it certainly would have been very
costly. Moreover, it is questionable whether the major creditor countries, including the United States, would have wished to see a deterioration of more than $100 billion in their own trade balances,
which would have been the necessary counterpart of an improvement
of similar magnitude in the trade balances of debtor countries. To
deal with this problem, debtor countries and their creditors normally
attempt to negotiate rescheduling arrangements under which the
creditors agree to extend the time period for repayment of the principal and sometimes part of the interest on existing loans.
THE ROLE OF THE INTERNATIONAL MONETARY FUND

In most cases, debt rescheduling involves formal standby lending
arrangements with the International Monetary Fund (IMF). The IMF
establishes such arrangements as part of its general function to pro-




83

vide financial support to countries experiencing balance of payments
difficulties, provided that they adopt policies holding promise of correcting these difficulties. Typically, under these agreements, the IMF
provides only part of the new credit extended to a debtor country,
but the agreement is frequently an effective precondition for a rescheduling arrangement with other creditors. As a condition for IMF
support, countries agree to pursue policies directed at improving
their capacity to meet their external obligations. Usually, the agreed
policies seek reductions or limitations of government spending,
government borrowing, and credit and money creation. The policies
are intended to reduce domestic spending relative to domestic
income and thereby improve the current account balance. In many
cases, a devaluation of the exchange rate is also adopted as a means
of improving the current account balance by increasing the price of
internationally traded goods relative to home goods. Such a relative
price change tends to reduce imports, increase exports, and shift resources toward the tradable goods sector of the economy.
The IMF has been criticized, in some quarters, especially in developing countries, on the grounds that it recommends policies that
focus too strongly on achieving short-term improvements in the balance of payments, rather than promoting longer term growth, and
that contribute downward pressure on economic activity in countries
already subject to strong recessionary forces. It is certainly true that
several countries that adopted economic policies recommended by
the IMF suffered severe recessions in the early 1980s. It is far less
clear that these policies were primarily responsible for the severity of
these recessions or that, under the circumstances, there was any real
alternative to adopting some of these policies. These circumstances
included the cumulative effects of past government policies and of
adverse external events that contributed to the loss of confidence in
the creditworthiness of a number of heavily indebted developing
countries. A country that cannot borrow because of lost confidence
in its creditworthiness must adopt policies that keep the excess of
spending over income within the range of permitted borrowing. Because its own resources are limited, the IMF's capacity to expand the
supply of credit (including borrowing to make debt-service payments)
depends partly on its capacity to persuade other creditors that poi:
cies undertaken by debtor countries offer reasonable hope of restoring creditworthiness. Moreover, some of the countries that have established standby agreements with the IMF have improved their current
account balances. This task might well have proved, more difficult
and more painful without the assistance of the IMF.
The critical issue for the future is how to resolve the economic
problems of debtor countries in the manner most advantageous to




84

them, to their creditors, and to the world as a whole. The mutually
advantageous resolution is clearly one that restores these countries to
paths of rapid, sustainable, noninflationary economic growth, thereby
assuring creditors of repayment and benefiting the world economy
through a general expansion of trade and economic activity. This
most desirable outcome requires that developing countries pursue
policies that support their own economic growth and structural adjustment, that the United States and other industrial countries maintain high and stable rates of economic growth, and that the nations
of the world cooperate in sustaining an open system of international
trade and investment that enables each of them to realize its full economic potential.
POLICIES FOR ECONOMIC GROWTH AND DEVELOPMENT
Achievement of a rapid rate of economic growth has been a key
objective of economic policy in many older and newly emergent developing countries for the past three decades. Different countries at
different times have pursued a wide array of different policies in their
efforts to stimulate and sustain rapid rates of growth, and have enjoyed varying degrees of success in these efforts. From this wealth of
experience, it is possible to learn a good deal about economic policies likely to support successful development and about policies likely
to inhibit economic growth.
ESTABLISHING APPROPRIATE INCENTIVES THROUGH RELATIVE PRICES

One basic lesson is that the rules governing economic behavior in
developing countries do not fundamentally differ from the rules governing such behavior in more economically advanced countries. Allowed the opportunity to pursue their own interests, individuals respond to the incentives implicit in the relative prices of products they
consume and produce and of factor services they sell or employ.
Hence, it is crucial that economic policies operate to confront individuals with relative prices of products and factors that accurately reflect their true values and allow them to respond appropriately to
the incentives embodied in these prices.
The importance of this point has not always been recognized in
either developing or developed countries. For example, policies that
depress prices of agricultural commodities in many developing countries are often seen as benefiting low-income consumers, without
much reducing agricultural production. Experience demonstrates the
error of this supposition. When prices of cash crops are depressed by
export taxes, overvalued exchange rates, or price controls, production declines as farmers shift to crops with higher market prices or




85

shift back to subsistence agriculture, sometimes with disastrous consequences for the national food supply. The opposite side of this
coin has been observed in many developed countries where programs to support prices of agricultural products have generated
mountains of surplus grain, oceans of surplus dairy products, and
enough sugar production to please even Mary Poppins.
Another recent example of this fallacy is the supposed lack of
responsiveness of producers and consumers to changes in the price
of energy. After 1973 the U.S. Government imposed controls on the
prices paid to domestic producers of oil and natural gas and on
standards for energy consumption, including fuel economy standards
for automobiles. Part of the rationale for these controls was the supposition that allowing domestic energy prices to rise would redistribute income from energy consumers to domestic energy producers,
but would have little effect on the quantities of energy produced and
consumed. However, as discussed in Chapter 5, energy production in
the United States responded strongly to the incentives provided by
higher prices. Similarly, when consumers faced higher energy prices,
they demanded higher gas mileage vehicles, better insulated homes
and factories, and more energy-efficient equipment and applicances.
The relevance of this point is not limited to the United States. In
some oil-exporting countries, domestic fuel prices were kept well
below world market levels throughout the 1970s. When the economic
situation of many of these countries deteriorated in the early 1980s,
there was resistance to raising domestic fuel prices as a means of
conserving a vamable resource because it was believed that price increases would reduce real incomes of fuel consumers without stimulating much conservation. Countries that raised domestic fuel prices,
however, found that fuel consumption responded to the incentives
created by higher prices.
MAINTAINING REASONABLE FISCAL DISCIPLINE

A second basic lesson from experiences with economic growth is
the virtue of maintaining reasonable fiscal discipline. This requires
that governments not run large and persistent fiscal deficits, especially deficits financed by inflationary money creation or by heavy foreign borrowing, and that the size of the public sector be limited.
The "reasonable" size of the fiscal deficit depends on the situation
and circumstances of particular countries. A country that enjoys rapid
economic growth can usually expand its money supply more rapidly
without generating inflation than a country that suffers slower economic growth. A country with good credit standing can finance a
temporary fiscal deficit by foreign borrowing, while a country with a




86

poorer credit rating may not have this option. A country that devotes
a large fraction of its income to productive and profitable investments can sustain a higher rate of foreign borrowing than a country
that does not invest as much in its future growth. However, the experience of many developing countries in the international debt crisis
of the early 1980s demonstrates the dangers and disadvantages of
policies that lead to persistent, large-scale foreign borrowing.
More generally, experience indicates that countries whose governments run large and persistent fiscal deficits (sometimes exceeding 8
or 10 percent of national income) may enjoy rapid economic growth
for a while, but sooner or later they suffer severe economic difficulties. These difficulties may become acute during periods when deficits are being curtailed, thereby complicating observed relationships
between fiscal deficits and economic performance. The painful effects
of reducing government deficits, however, should be attributed to
their basic cause. We suffer hangovers not because we stop drinking,
but because we drank too much in the first place.
The appropriate size of the public sector is a critical issue to be
resolved by any society. Experience does not provide unambiguous
evidence that the size of the public sector, within a certain range, is
strongly and negatively correlated with the rate of economic growth,
but it does suggest that large public sectors are not associated with
superior growth performance. For the industrial countries, the share
of government spending in GNP has generally risen over the postwar
period, and the rate of economic growth has generally declined.
Japan has enjoyed the highest rate of economic growth among the
major industrial countries and has also had the lowest share of government spending in GNP. In the 1950s and 1960s, Western European countries generally had higher rates of economic growth than the
United States, even though they generally had somewhat larger
public sectors. More recently, however, as many Western European
countries have increased their share of public spending, their growth
performance has fallen off, both absolutely and relative to the United
States. Among developing countries, the evidence is mixed concerning the cross-sectional relationship between the size of the public
sector and the rate of economic growth. There are, however, a
number of examples where rapid growth of the public sector has
been associated with a deterioration of growth performance. Moreover, large public sectors generally need to be supported (sooner or
later) by high taxes. High tax rates create disincentives for working,
saving, and investing, and, as some evidence shows, tend to be associated with lower rates of economic growth.
For a country with a large public sector, it is especially important
that the public sector be run efficiently. Public sector enterprises that




87

provide services similar to those that might be provided by private
firms (such as electricity or transportation) should meet the standards
of efficiency and profitability normally expected of private sector enterprises. Some public sector enterprises may meet this performance
criterion; many do not. Often, employment in public sector enterprises is artificially high and wage and benefit levels for workers and
managers of such enterprises exceed levels generally prevailing in the
private sector. As discussed in Chapter 5, public sector enterprises in
the United States are less efficient than their private sector counterparts. Evidence suggests that public sector enterprises in developing
countries also suffer from serious inefficiencies, implying that substantial gains can be made by making public sector enterprises
behave more like private firms or, better still, by shifting their activities to private firms.
Restoring fiscal discipline is a politically painful exercise. The
short-run effect of either a reduction in government spending or an
increase in taxes may be a decline in economic activity. The longer
run effect of higher taxes, which distort economic incentives, is
likely to be a lower level of real income. Moreover, the beneficiaries
of deficit spending see themselves harmed by spending cuts, by taxrate increases, or by efforts to expand the tax base. There is an important asymmetry here. Recipients of subsidized public services,
transfer payments, or special tax breaks frequently blame governments for reducing these benefits. They do not protest with similar
intensity the failure to provide such benefits in the first place. Hence,
to maintain reasonable fiscal discipline, it is important not to initiate
programs that may become expensive and are likely to generate interest groups supporting their continuation.
RESTRAINING GENERAL PRICE INFLATION

A third basic lesson is that a rapid rate of price inflation is generally associated with relatively poor growth performance. For the industrial countries, the higher inflation period of the 1970s and early
1980s generally brought poorer economic performance than the
lower inflation period of the 1950s and 1960s. Some developing
countries with inflation rates in the range of 20 to 40 percent per
year have enjoyed reasonably good real growth. When inflation rates
have accelerated to 50 percent per year or higher, however, growth
performance has generally been poor relative to lower inflation periods. Inflation rates of 100 percent per year or higher have frequently
been associated with economic stagnation or decline. Successful efforts to reduce high inflation rates have usually been associated with
higher real economic growth. Countries enjoying the highest real
growth rates have generally had low or moderate inflation rates.




88

The causal linkage between high inflation and poor growth is complex. Because governments often resort to inflationary policies when
their economies are not performing well, inflation can be a symptom
as well as a cause of poor economic performance. In theory, a country could have a high and predictable rate of inflation, and could
adjust its economic institutions (including its tax system) to such inflation. In practice, high inflation rates are usually variable and unpredictable. High and variable inflation rates tend to induce wide variations in relative prices that interfere with the signals concerning the
appropriate allocation of resources. With high and variable inflation
rates, economic agents divert time, effort, and resources from productive activities into socially unproductive efforts to profit or to
avoid losses from inflation and its attendant effects. Inflation frequently interacts with other distortions of the economic system to
impair economic performance. For example, taxation of interest and
other returns from capital on a nominal rate of return basis produces
high real effective rates of taxation in the presence of high inflation.
Schemes for indexing wage rates and other economic variables to
deal with the problems of inflation can reduce the flexibility of the
economy to deal with other types of disturbances. Under general
price inflation, controlled nominal prices of basic commodities and
public services frequently result in low relative prices of these goods
and services. Governments are often reluctant to raise these controlled prices for fear that it will contribute to inflation or stimulate
political protests. Enlarged fiscal deficits necessary to finance high
real subsidies on basic commodities and to pay for the deficits of
public sector enterprises, however, can stimulate increased money
creation that in turn accelerates inflation.
MAINTAINING AN OPEN POLICY TOWARD INTERNATIONAL TRADE

A fourth basic lesson is that an outward looking, open policy
toward international trade tends to be conducive to rapid economic
growth. The essence of such a policy is that internal relative prices of
internationally traded goods are not forced to diverge too far from
world market prices because of import tariffs or quotas, exports taxes
or subsidies, multiple or misvalued exchange rates, or other government policies. An open policy toward international trade allows for
relatively unrestricted importation of products cheaply available in
world markets and for exportation of products in which a country has
or can develop a comparative advantage.
This contrasts with the inward looking, import-substitution policies
adopted by many developing countries early in the postwar period.
The objective of these import-substitution policies was to stimulate
economic growth by encouraging development of domestic industries




89

to produce products (especially manufactured products) previously
imported. The tools were high-import tariffs, restrictive import
quotas, foreign exchange licensing schemes, and other protective devices. In a few extreme cases, domestic producers could even obtain
absolute prohibitions of imports on the promise that they would
supply, domestic substitutes.
Many studies have shown that relatively open policies toward international trade provide a better environment for economic growth in
developing countries than policies of import-substitution. The most
rapidly growing countries generally have relatively open trade policies. Countries that have shifted from import substitution to more
open policies have generally improved economic performance. In
contrast, import-substitution policies have produced large distortions
between the domestic relative prices of tradable goods and the
true costs of these goods, as reflected in world market relative
prices. As a result, resources were diverted from potential export activities into production of high-cost domestic substitutes for products
that could be purchased more cheaply in world markets. In addition,
smaller countries that adopted import-substitution policies lost
economies of scale by attempting to produce a diversified range of
products for a small domestic market, rather than concentrating on a
more limited range of products to be produced for export as well as
domestic consumption. In some cases, loss of productive efficiency
was exacerbated by a decline in market discipline on domestic firms
and their workers because these firms faced little internal competition and were shielded from foreign competition.
Some countries with relatively open policies toward international
trade have provided temporary protection for some import-competing industries or have given direct or indirect export subsidies to
some industries (including preferential tax treatment and favorable
tariff rates on imported inputs used in these industries). In some
cases, special privileges accorded to particular industries may
merely offset other distortions that impair the exploitation of natural
comparative advantage. Although there are a few examples of
successful industrial targeting, there are also many examples of industries that have become successful exporters without benefit of
specific targeting by government authorities. There are also examples
of industries targeted for development that never proved especially
successful. Worst of all are the examples of targeted industries that
continue to require subsidies or protection long after they were initially selected for special assistance. The general lesson appears to be
that industrial targeting may occasionally succeed when a government has the luck to select the right industries for development. But
there is a danger that special government privileges will be supplied




90

for long periods to industries with little development potential.
Moreover, if private sector investors err in selecting an industry for
development, they bear an important part of the cost of that mistake,
rather than passing it on to the rest of society. For this reason, there
is less danger that the private sector will prolong activities that prove
unsuccessful.
Given that most countries will not pursue policies of complete free
trade, it is important to recognize that some impediments to trade
are worse than others. A uniform ad valorem import tariff applied to
all imports is generally less distortionary than a tariff structure with
the same average tariff rate but with wide variations in the tariffs applied to individual commodities. This is especially so when imported
goods are used as inputs in producing other goods. In this situation,
relatively small variations in nominal tariff rates can generate large
differences in effective rates of protection for value added in different domestic production activities. Large differences in effective protection rates, in turn, imply large distortions of the incentives to
devote domestic resources to different production activities.
In general, import tariffs are less harmful than import quotas that
provide the same initial level of protection. Tariffs raise revenue for
the government. The implicit revenue associated with an import
quota is usually distributed to the private parties who receive quota
allocations and who hence have an interest in preserving and enhancing the scarcity value of the right they have received. A tariff generally allows less latitude for the exercise of market power by domestic
producers of import substitutes (or by suppliers of factors to such
producers) than does an import quota. With an import tariff, the
degree of protection for domestic producers relative to foreign competitors is fixed; domestic producers are therefore under pressure to
match the efficiency gains of their foreign competitors. With an
import quota, the discipline on domestic producers to remain efficient is often diminished because the level of protection rises to
offset any deterioration in the efficiency of domestic producers relative to their foreign competitors. Systems of foreign exchange licenses, with different exchange rates for different classes of imports
and exports and with complicated mechanisms for the allocation of
licenses, share the disadvantages of import and export quotas and
frequently offer even greater latitude for harmful manipulation.
MAINTAINING AN APPROPRIATELY VALUED EXCHANGE RATE

A fifth
countries
exchange
terms of

basic lesson from the growth experiences of developing
is the importance of maintaining an appropriately valued
rate. The exchange rate is the price of domestic money in
foreign monies. The economically appropriate exchange




91

rate establishes the correct relationship between internal nominal
prices of goods and services in terms of domestic money and the
nominal prices of goods and services in terms of foreign monies. For
most developing countries that maintain some form of pegged exchange rate, the economically appropriate exchange rate is difficult
to identify with great precision. However, there is little doubt that
some developing countries have injured their export industries and
their overall growth performances by maintaining substantially overvalued exchange rates. Frequently, this has happened because rapid
domestic inflation has transformed an initially appropriate nominal
exchange rate into a substantially overvalued exchange rate.
The initial effect of an overvalued exchange rate is often to enlarge
a country's trade deficit beyond the level that can be financed by the
normal equilibrium level of capital inflow. In the short run, to sustain
the foreign exchange value of its currency, the government may intervene in the foreign exchange market by using its official reserves
or reserves borrowed on the world capital market. Alternatively, a
large-scale capital inflow resulting from either official foreign borrowing or from private capital inflows can contribute to overvaluation
of the exchange rate by financing an excess of domestic spending
over domestic income. To sustain an overvalued exchange rate and
stem reserve losses, governments frequently resort to trade restrictions and foreign exchange controls. Although the reason for imposing these restrictions may not be a desire to engage in import substitution, the effect is the same—a distortion of the economically appropriate relationship between internal and external prices and a corresponding distortion of incentives for the efficient allocation of resources.
LIMITING DISTORTIONS OF DOMESTIC PRODUCT AND FACTOR MARKETS

A sixth basic lesson from the experiences of developed and developing countries is the importance of limiting distortions of domestic
product and factor markets. Such distortions can arise from the activities of private economic agents, in particular through the exercise
of market power. The appropriate role of government policy in this
regard is not to facilitate the exercise of market power by supporting
cartels or other anticompetitive practices but to promote competition. Even more important, the government should not allow its own
policies to distort excessively the markets for domestic products and
factors.
Some distortion of domestic product and factor markets is the inevitable consequence of taxes used to raise revenue to finance essential government operations. The harmful distortionary effects of taxation generally rise more than proportionately with the rate of tax-




92

ation. They become especially acute when rates of taxation are highly
variable across similar products or across different uses of the same
factor of production. Hence, it is important to keep overall tax rates
as low as possible and to keep tax rates relatively even across similar
products and different uses of the same factor of production. Increasingly, experience suggests that low and even tax rates contribute to
economic growth, presumably by maintaining incentives to work,
save, and invest.
To keep overall tax rates low, it is vital to limit public spending
financed by tax revenues. The appropriate rule with respect to public
spending is that the marginal social value of such spending should
exceed its direct cost by enough to compensate for the distortionary and
collection costs of the taxes necessary to finance it. For the United
States, the true social cost of Federal Government spending has been
estimated at one and one-half times the direct budget cost. For many
developing countries that may have higher tax collection costs and
more distortionary tax systems than the United States, the marginal
social cost of additional government spending is even higher relative
to direct budget cost.
Further, public sector enterprises that supply goods and services in
competition with private sector enterprises or that might plausibly
function as private sector enterprises (such as electric utilities and
suppliers of transport services) should charge prices that reflect the
true costs of the goods and services they supply (adjusted for externalities associated with consumption or production of these goods
and services). Such user charges do not have the distortionary effects
of taxation because they make the users recognize the cost of the
particular good or service they are using. Normally, public sector enterprises should generate profits that reflect a fair rate of return on
the capital that the public has invested in these enterprises. The profits should be returned to the public treasury, not squandered on employment of unnecessary personnel, on excessively high wage rates
for workers, or on benefits and perquisites for their managers.
Special tax exemptions, rebates, and privileges frequently cause
economic distortions. They increase, sometimes to a great extent, the
disparity between tax rates on activities benefiting from them and on
similar activities. There also is the need to replace by raising other
taxes the revenue lost because of exemptions, rebates, and privileges.
Moreover, once granted, special benefits often prove to be politically
difficult to remove and may stimulate others to seek similar benefits.
In addition to taxes, many other government policies can harm
economic performance by distorting economic incentives. Such policies include regulations of prices, wages, and interest rates. Policies




that have maintained low prices of agricultural commodities in a
number of developing countries have often discouraged agricultural
production, thereby exacerbating problems of hunger and starvation
while reducing the real income of rural families who are usually the
poorest families in developing countries. Rent controls in both developing and developed countries generate housing shortages. Regulations that hold real wage rates above economic equilibrium levels
contribute to unemployment among affected groups of workers. Restrictions on plant closings and work force reductions, such as have
been used recently in some Western European countries, protect
specific jobs for specific workers in the short run. However, they discourage workers who have protected jobs from seeking new jobs in
which their social product (if not immediately their own income)
would be higher. They also discourage creation of new jobs by
making prospective employers fear that workers hired to expand
output today will be a liability if demand contracts tomorrow.
Distortions also arise from controls on interest rates and credit allocations, especially in inflationary economies. Several developing
countries have controlled nominal interest rates on deposits at financial institutions in the face of inflation rates that made real returns of
such deposits substantially negative. This discouraged saving and investment and impaired the functioning of financial institutions as intermediaries of credit transactions. When real rates of return on savings were well below those on investment, financial institutions typically employed nonprice mechanisms for allocating the scarce supply
of credit. Many factors other than the likely economic productivity of
alternative investments can influence the allocation of credit in such
an environment.
In its continuing studies of the effects of economic policies on economic growth, the World Bank has estimated for a number of developing countries the extent of economic distortions resulting from inappropriate exchange rates, protection of domestic manufacturing industries from import competition, protection or taxation of domestic
agriculture, distortions of domestic capital markets, distortions of domestic labor markets, and distortions generated by inflation. The
measures of these classes of distortions have been combined in a
general distortion index, which has been related to measures of economic performance of developing countries in the 1970s. The results
are summarized in Table 2-5. Countries with a low distortion index
show a higher growth rate of real gross domestic product, a higher
domestic savings ratio, a higher growth rate of industrial output, a
higher growth rate of agricultural output, and a higher growth rate of
exports than countries with a medium distortion index. Medium-dis-




94

tortion countries, in turn, show better economic performance in all
of these categories than countries with a high distortion index.
TABLE 2-5.—Price distortions and economic growth in the 1970s
[Percent 1 ]
Annual
growth rate
of GDP

Domestic
saving/GDP
ratio

Low-distortion countries

6.8

21.4

Medium-distortion countries

5.7

17.8

High-distortion countries

31

138

Country category

1

Annual
growth rate
of
agriculture

Annual
growth rate
of industry

27.6

4.4

9.1

6.7

26.9

29

6.8

3.9

168

18

3.2

.7

Return on
investment

Annual
growth rate
of export
volume

Averaged across countries.

Source: International Bank for Reconstruction and Development, HorM Development Report, 1983.

MAINTAINING POLITICAL STABILITY

A final general lesson from the growth experiences of many countries over a long span of time is the importance of maintaining reasonable political and economic stability. Economic growth requires
current sacrifice to obtain future reward. A political and economic
system that does not provide reasonable assurance that those who
make the sacrifices will enjoy a fair share of the reward will almost
inevitably fail to generate much growth. This is apparent in countries
where the insecurity created by war or political turmoil has caused
economic stagnation or decline.
Even in less extreme circumstances, it is important that the political and economic system provide reasonable assurance that those
who make the greatest contributions to economic progress enjoy a
fair share of the fruits of that progress. This means that there is unlikely to be an absolutely even distribution of the benefits of economic growth. Those who work the hardest, save the most, exhibit the
greatest skill and inventiveness, and provide the critical entrepreneurial efforts should be able to expect a greater share in the benefits of growth than those who make smaller contributions. On the
other hand, economic "progress" that benefits only a very few, perhaps at the expense of a great many, is likely to prove unstable and
ephemeral. Sustained economic growth requires the contributions of
all elements of society and should be expected to benefit all elements
of society.
The broad experience with economic growth and development
over the past three decades demonstrates that rapid economic
growth does benefit all of society, even if all do not benefit in the
same proportion. A developing country that has enjoyed the average
growth of real per capita income over the past three decades has more
than doubled its real living standard. In some countries with average or




95

better than average growth rates, real per capita incomes of the
poorest 20 percent of the population may have risen relatively less than
real per capita incomes of the richest 20 percent of the population. But
even the poorest 20 percent have benefited substantially from general
economic growth. Along the coastline of economic progress the tide
may rise more rapidly in some places than in others, but, as President
Kennedy observed, "A rising tide lifts all boats."
There is, of course, no absolute guarantee that countries will
always achieve rapid rates of economic growth even if their governments recognize the importance of economic incentives, maintain
reasonable fiscal discipline, sustain moderate inflation rates, pursue
open policies with respect to international trade, keep exchange rates
near economically appropriate levels, avoid excessive distortions of
their domestic economies, and provide reasonable assurance that
those who make the sacrifices necessary for economic progress enjoy
a fair share of the benefits of such progress. At times adverse external economic conditions will make growth difficult even for countries
with growth-oriented economic policies. Moreover, in the final analysis, successful growth and development do not depend only or primarily on government policies. They depend on the effort, investment, ingenuity, and enterpreneurship of the citizens of a country.
The fundamental task for economic policy is to provide the essential
environment of economic stability and the right framework of economic incentives so that these basic forces can have their full effect
in generating economic progress. The experience of many developed
and developing countries indicates that in the longer run societies
where economic policies perform these essential tasks do enjoy the
fruits of economic progress and the improvements in human welfare
that flow from such progress.
POLICIES FOR THE INDUSTRIAL COUNTRIES AND THE
INTERNATIONAL ECONOMIC SYSTEM
Developing countries operate in an economic environment influenced by the economic performance and policies of the industrial
countries and by the international system that guides economic relationships among nations. The industrial countries contribute to
successful economic performance of developing countries by maintaining rapid and sustainable rates of economic growth and reasonable price stability, and by supporting an open system of international
trade and investment that serves the interests of all nations.




96

POLICIES OF THE ADMINISTRATION

The Administration has directed its economic policies toward these
fundamental goals. The Administration has sought a monetary policy
that reduces the inflation rate gradually from the high rate it inherited in 1981 to the moderate rates experienced over the past 3 years
and ultimately to the zero rate consistent with price stability. The Administration has pursued a tax policy that reduces marginal tax rates
in order to strengthen incentives for productivity and growth. The
Administration is actively seeking additional tax reform that will further reduce marginal tax rates and equalize tax treatment of different
forms of investment, again with the objective of supporting more
rapid economic growth. To increase the efficiency of resource use,
the Administration has reduced the burden of government regulation
and is pursuing further deregulation. The Administration has opposed protectionist measures that conflict with the basic principles of
an open system of international trade and has sought to persuade
other nations to adopt more open trade policies. In cooperation with
other nations, the Administration has pursued efforts to strengthen
the international financial system and has recently proposed new initiatives in this important area.
As discussed in detail in Chapter 1, under Administration policies,
the United States has enjoyed a sharp decline in inflation and a
robust recovery from the world recession of 1980-82. In the other
industrial countries, inflation rates also generally are down substantially from the high levels prevailing in 1979-81, but recovery from
the world recession has been sluggish. In many industrial countries,
unemployment rates have risen to levels not experienced since the
1930s. Fortunately, recent evidence suggests that unemployment
rates in many of these countries have peaked and that future growth
will at least keep them from rising.
POLICIES TO REDUCE STRUCTURAL RIGIDITIES

One favorable sign of the prospects for more rapid and sustainable
growth in the industrial countries is the increasing consensus that to
deal with chronic problems of slow growth and high unemployment,
structural rigidities (especially in labor markets) must be reduced. In
part, this is a task for government. Explicit or implicit subsidies to
provide public services at artificially low prices or to maintain highwage jobs in unprofitable industries must ultimately be financed by
taxes that tend to reduce employment, investment, and growth in
other industries. The same is true of overly generous benefits to unemployed workers, which may also reduce incentives for finding new
employment. Restrictions on plant closing or work force reductions
may, in the short run, diminish chances of unemployment for work-




97

ers with jobs, but they probably also discourage new and existing
firms from hiring more workers. The net result in the longer term is
likely to be a less efficient distribution of the labor force and a lower
level of total employment. Low-rent public housing and other heavily
subsidized public services linked to residency in a particular area discourage labor mobility. Reform of these and other government policies that contribute to rigidities and inefficiencies of the economic
system can contribute importantly to renewed growth.
From a broader perspective, the problem of structural rigidities
must be addressed by all who participate in the economy and in the
political system. The process of economic growth is not one in which
each forward step benefits everyone or, at a minimum, harms no one.
In a prosperous and growing economy, some industries expand while
others contract. Some firms grow and earn above-average profits
while others decline and confront bankruptcy. Some workers enjoy
rapid increases in real wage rates and work overtime hours while
others face real wage declines or unemployment. In the end, rigid insistence that such disparities should not exist is tantamount to insistence that rapid economic growth should not occur. The whole, vastly
favorable experience with rapid economic growth in the postwar
period demonstrates the error of such a posture. There is much to
gain from reaching the social, political, and economic consensus necessary to move away from such a posture and toward more growthoriented economic and social policies.
POLICIES FOR THE MULTILATERAL DEVELOPMENT BANKS

The recent and continuing problems of a number of heavily indebted developing countries suggest the desirability of further efforts
to improve the international financial system. In considering these
improvements, it is important to distinguish between the system of
official lending and assistance, bilateral and multilateral, that serves
the financial needs of both low- and middle-income developing countries, and the system of private lending and direct investment that
supplies external capital primarily to middle-income developing
countries. Given the problems that private creditors have recently experienced with loans to middle-income developing countries, it
seems unlikely that private capital flows will anytime soon become
the dominant source of external credit to low-income countries.
The Multilateral Development Banks (MDBs) are an important
source of external credit and technical assistance to developing
countries. The MDBs include the World Bank and its affiliates, the
Inter-American Development Bank, the Asian Development Bank,
and the African Development Bank. Aggregate new MDB loan commitments to both low- and middle-income developing countries cur-




98

rently run about $20 billion per year. MDBs loan to low-income
countries on a concessionary basis, while they loan to middle-income
countries at or near market interest rates.
MDB loans are concentrated in areas for which it would be difficult
to attract private external credit, including agricultural development
projects, education, health, transportation, and water and sanitation
systems. MDBs also frequently provide technical assistance on project
design and operation to countries with shortages of skilled personnel, and they help to catalyze resource flows to developing countries
from private sources. To continue these generally worthwhile activities, it is necessary for the industrial countries to provide continued
support to the MDBs, especially for their concessional lending activities. To serve these same ends, the United States has suggested that
reflows to the IMF Trust Fund (estimated to be $2.7 billion over the
next few years) be used to provide additional assistance to lowincome countries pursuing policies to restructure their economies
and improve prospects for growth.
MDB lending for industrial development projects and other
projects that could be run as business enterprises (including some
projects in the agricultural sector) raises issues that need to be carefully analyzed. A loan to finance a business investment is justified if
that business can reasonably be expected to generate profits sufficient to repay the loan at an interest rate that appropriately reflects
the scarcity value of capital. The scarcity value of capital in lowincome developing countries is not the interest rate that MDBs
charge on concessional loans, but rather is an interest rate that probably exceeds the rates charged on nonconcessional loans from these
institutions. Moreover, in assessing the potential profitability of a
prospective business investment, it is important to use appropriate
"shadow pricing" techniques so that profitability is not artificially inflated by government policies that provide special privileges to a particular enterprise. For example, a textile mill or a fertilizer plant that
is profitable only because a tariff protects it against competing imported products is not a worthwhile investment project based on an
appropriate cost-benefit calculation.
MDBs also engage in "structural adjustment lending" to facilitate
adoption of economic policies that provide a better environment for
economic growth in the longer term but have significant costs in the
short term. With respect to such lending, it is critical that the policies
really do provide a better environment for economic growth and that
these policies be implemented and maintained. Even for the poorest
countries, additional resources made available through external loans
do little long-run good if economic policies do not create an environment conducive to economic growth.




99

POLICIES TO DEAL WITH THE INTERNATIONAL DEBT SITUATION

For most of the middle-income developing countries that have
been the focus of the international debt crisis, lending from MDBs
and other official sources has provided a relatively small part of external credit. Much of the external credit to countries involved in the
debt crisis has come from private sources, especially from commercial banks in the developed countries. A key element in the problems
of these countries has been the decline in confidence of their creditors concerning their ability to meet their debt-service obligations.
These doubts affected not only foreign creditors who became reluctant to extend new loans or extend the terms of existing loans, but
also domestic investors who sought safer foreign havens for their
capital.
The key requirement for resolving the problems of these debtor
nations is their adoption of economic policies that support sustainable growth and structural adjustment and afford to their creditors
(foreign and domestic) confidence of receiving a fair rate of return
on their capital. Absent such a return of confidence, based upon a
genuine improvement in prospects for future economic growth, further extensions of credit from external sources, official or private, are
at best a short-run palliative. If domestic residents cannot be persuaded to keep their capital at home and return some that they have
moved abroad, there is little hope that foreign investors can be induced to fill the gap for very long.
The industrial countries, including the United States, can make a
substantial contribution to resolving the problems of the debtor
countries by supporting an environment conducive to the economic
growth of developing countries. This means maintaining rapid and
sustainable rates of economic growth and reasonable price stability in
the industrial countries, and supporting an open international economic system that allows developing countries to grow and to meet
their external obligations.
In addition, the industrial countries recognize that debtor countries
pursuing appropriate policies supportive of economic growth and
balance of payments adjustment require access to external credit adequate to finance implementation of these policies. Specifically, at the
Williamsburg Summit in 1983 and the London Summit in 1984, the
six major industrial countries agreed that the problems of debtor
countries need to be addressed on a case-by-case basis in accord with
the following principles: (1) Debtor countries need to adopt policies
that will adjust their economies to the realities of their external payments situations. (2) Sustained growth and maintenance of open markets in the industrial countries are important for the successful resolution of the problems of many debtor countries. (3) The IMF should




100

have adequate resources to play its important role in providing credit
and arranging programs for stabilization and adjustment in debtor
countries. (4) Continued commercial bank lending is necessary and
appropriate for countries making determined adjustment efforts. (5)
Bridge financing from central banks should be provided when necessary to facilitate agreement on suitable adjustment programs.
More recently, at the IMF/World Bank Annual Meeting in Seoul in
October 1985, the U.S. Secretary of the Treasury, proposed a Program for Sustained Growth that builds upon the principles established at the economic summits to foster growth and adjustment of
developing countries. The program embodies three main elements:
adoption by debtor countries of macroeconomic and microeconomic
policies to promote growth, reduce inflation, and secure balance of
payments adjustment; continued central involvement of the IMF in
the arrangement of stabilization and adjustment programs, supplemented by structural and sectoral assistance lending by the multilateral development banks; and increased lending by commercial banks.
The program calls for a 50 percent increase in loan disbursements by
the MDBs and for $20 billion of new loan commitments by commercial banks to a core group of 15 debtor nations over the next several
years. These disbursements and loans will be tied to comprehensive
economic reforms by the borrowers and to continued commercial
bank lending to other developing countries that pursue appropriate
policies.
Additional commercial bank lending will be required over the next
few years to meet the financing needs of debtor countries pursuing
appropriate policies. In the longer term, however, it would be desirable to reduce problems arising from the mismatch between the
nature of the investment undertaken by developing countries and the
nature of the external obligations issued to finance part of this investment. Developing countries have financed long-term equity investments in their own economies with short-term, foreign-currencydenominated, government-guaranteed, floating-interest-rate loans
from large international commercial banks. If these bank loans had
instead taken the form of equity investments, like common stocks,
the effect of the adverse developments of the early 1980s would have
been partly absorbed by foreign holders of these equities. If bank
loans to developing countries had instead taken the form of longterm bonds, then at least the effect of the increase in market interest
rates would have been absorbed by the bondholders in the form of a
decline in the market value of their bonds. In addition, if the bonds
were not government guaranteed, then the bondholders would have
absorbed the increase in default risk associated with a deterioration
in economic conditions.




101

Of course, potential foreign investors would require higher expected rates of return to compensate for the increased risks associated
with equity investments or long-term, nonguaranteed bonds. A developing country that seeks to finance part of the expenses of its growth
with foreign capital simply must decide whether it wishes to pay a
higher expected return to foreign investors to induce them to bear
part of the risk inevitably associated with any economic endeavor, or
whether it wishes to absorb all the risk itself and pay a lower, but
fully assured, return to foreign investors. It is relevant to note that
most of the capital inflow into the United States in the 19th century
took the form of foreign investments in securities issued by private
sector enterprises, especially railroad bonds. Holders of these securities were exposed to some risk from interest rate fluctuations and
from the possibility of default, but presumably were offered returns
that compensated for these risks.
To encourage an appropriate share of equity investment in total
credit flows to developing countries, it is important that creditor
countries avoid policies that distort the nature of these credit flows.
These distortionary policies include restrictions on foreign investment adopted in misguided efforts to protect domestic jobs. It is also
especially important that developing countries desiring increased
equity investment create an environment favorable to such investment. National treatment of foreign firms and investors (that is, treatment on the same basis as domestic firms and investors) generally
contributes to such an environment. In contrast, differential taxation
of domestic and foreign investors or enterprises, special limitations
on the activities of foreign-owned firms, restrictions on repatriation
of earnings, export performance requirements, insistence on domestic participation in or control over subsidiaries of foreign enterprises,
and inadequate protection of patents, licenses, and intellectual property rights generally do not support such an environment.
POLICIES TO STRENGTHEN THE OPEN SYSTEM OF TRADE

In the area of international trade policy, there is the need to forestall new efforts at protectionism and to roll back protectionist measures in both developed and developing countries. The next chapter
discusses the fallacies in arguments used to support protectionism.
Here, it is important to stress the essential link between an open
world trading system and the ability of many developing countries to
meet their external payment obligations. Payment of just the interest
on the external debts of indebted developing countries, without any
new net borrowing, currently requires that these countries generate
payments surpluses (primarily from net exports) of about $80 billion
per year. Even with a substantial flow of new net lending, payment of




102

a significant fraction of the interest on already outstanding loans requires that indebted developing countries generate substantial net
export surpluses. Generation of such surpluses depends on the ability of debtor countries to sell their products in the markets of creditor
countries.
Opposition to protectionism and support of the open system of
world trade is in the community interest of all nations. In most countries, from time to time, strong political pressures arise to adopt protectionist measures that serve the interests of special groups, even
though they do not serve the general interest. The ability to resist
such pressures is strengthened when the international ethic supporting an open trading system is strong, and is weakened when other
governments yield to special interests or adopt protectionist measures for other misguided reasons.
In this regard, the role of developing countries should not be ignored. Most rapidly growing developing countries have benefited
substantially from the open system of international trade and investment. They have not, however, always been assiduous in abiding by
the rules and adopting the ethic of that system. This is true not only
for trade policies, where some developing countries have ignored or
claimed exemption from the rules of the General Agreement on Tariffs and Trade, but also for important issues like the rules governing
foreign investment and protection of patents and intellectual property rights. Such lapses once received little attention. As the economic
importance of these countries grows, these lapses pose an increasing
threat to the open system of international economic relations.
The extraordinary postwar record of economic progress under this
open system of international trade and investment demonstrates the
substantial benefits that this system provides to all nations. The
United States, as the principal sponsor and supporter of this system,
has a special interest in, and responsibility for, its preservation and
improvement. Other nations, including many developing nations that
have progressed rapidly under this open international economic
system, share this interest and responsibility.




103




CHAPTER 3

Protectionism and the United States in
the World Trading System
TRADE AMONG NATIONS benefits buyers and sellers alike.
Adam Smith made this point more than 200 years ago when he attacked the mercantilist view that only the exporting nation gains from
trade. Although the world trading system has never been entirely
free, most observers agree that freer trade promotes more rapid
growth, improves the use of a nation's resources, encourages innovation, and ensures a higher standard of living for all trading partners.
A bipartisan consensus over the past 50 years has enabled the United
States to lead the world toward a more open trading system.
On September 23, 1985, the President, in reconfirming the U.S.
commitment to free trade, stated that, "if trade is not fair for all,
then trade is Tree' in name only." This Nation benefits from free
trade, but it particularly gains when trading partners also open their
markets. Consequently, the Administration has rejected new calls for
protectionism and has placed primary emphasis on reducing foreign
barriers that restrict U.S. exports.
Nevertheless, protectionist bills have been introduced in the Congress in large numbers during the past year. Many of their supporters have focused on the current large trade deficit or on the decline
of manufacturing employment compared to 1979. The remedy often
proposed to deal with these situations is greater restriction of trade.
Consequently, one purpose of this chapter is to analyze popular arguments for increased protectionism. The case for protectionism is
found to be a misleading basis for policy.
A second purpose is to review recent trade policy developments affecting the following areas: footwear, steel, textiles, semiconductors,
and agricultural exports. These examples do not exhaust the number
of industries facing intense international competition, but raise representative policy issues addressed recently. The discussion of these examples suggests when trade intervention is not likely to be successful
in promoting U.S. production in the intended industry and what
costs are likely to be imposed on U.S. consumers, taxpayers, and
other industries.




105

A third purpose is to explain the rationale behind the Administration's Trade Policy Action Plan. The policy requires interrelated actions by the United States and by its trading partners to ensure free
and fair trade. Several aspects of the plan are discussed here. Major
goals include promoting multilateral efforts to reduce current trade
barriers, extending international trade rules to situations currently
not covered, ensuring fair trade through rigorous enforcement of
current trade laws and agreements, and assisting workers to adjust to
changing patterns of world trade. An additional aspect of the plan,
the pursuit of policies to promote more balanced world growth and
thereby to reduce the current trade deficit, is discussed in Chapter 1.
CLAIMS FOR PROTECTIONISM
In spite of the generally recognized benefits of an open trading
system, some argue for a broad reversal of this policy and for increased government control over international trade. For example,
legislation has been introduced to impose both general and countryspecific import surcharges to reduce the trade deficit. Some commentators blame increases in this deficit for massive job losses and a
reduction in the U.S. growth rate. Others argue that the deficit is deindustrializing the economy and eliminating manufacturing jobs. These
arguments are based on an inadequate understanding of the benefits
of trade and of changes occurring in the U.S. economy. The remedies suggested are likely to be costly and inappropriate.
PROTECTIONISM AND THE TRADE DEFICIT

In the first 9 months of 1985 the U.S. merchandise trade deficit,
the excess of imports over exports of goods, was about $114 billion
at an annual rate. The current account deficit, which also includes
transfer payments and trade in services, was about $110 billion.
Some suggest that if this deficit were curtailed and spending were
shifted to domestic goods through the imposition of a general import
surcharge, the United States would benefit from expanding national
output. Others elaborate on this argument by claiming that a surcharge would lower the value of the dollar, a step that would make
domestic tradable goods more attractive.
Such a policy would be misguided for several reasons. In particular, it ignores the macroeconomic factors that determine the current
account balance. Because the current account deficit represents an
inflow of funds into the United States when domestic investment exceeds domestic saving, any successful policy to reduce this deficit
must alter the underlying saving and investment incentives in the
United States and abroad. Reliance on protectionism to reduce the




106

trade deficit by increasing the relative price of imports is unlikely to
succeed. An import surcharge will reduce spending on imports, but
in a world with flexible exchange rates and unchanged saving and
investment incentives, the U.S. dollar will appreciate. As a result,
exports will decline and imports will fail to decline as much as if exchange rates remained unchanged. The surcharge primarily introduces an inefficiency into the economy, which in turn reduces national income.
The most significant impacts of a surcharge are likely to be distributional. Returns to resources used primarily in the production of
import-competing goods tend to rise, while returns to resources used
primarily in export industries tend to fall. There will be an incentive
to shift resources out of export industries into import-competing industries. Reduced imports in industries such as apparel, steel, and
autos are likely to be offset by reduced exports from industries such
as aircraft, chemicals, and machinery. A significant reduction of the
trade deficit is unlikely.
An import surcharge is a particularly undesirable way of attempting
to reduce the trade deficit because of likely foreign retaliation. The
United States is not a small country whose actions will be ignored by
others. When foreigners retaliate, they can be expected to choose
U.S. export sectors that are particularly vulnerable and subject to intense foreign competition, such as agriculture.
While a general surcharge will not be particularly effective in reducing the trade deficit, a surcharge directed against a few countries
promises even less chance of success. Countries exempted from the
surcharge would tend to increase sales to the United States. Countries subject to the surcharge would divert their exports to markets
previously served by the exempt suppliers. Such a policy might disrupt trade initially, but eventually it would have a minimal impact on
the overall U.S. trade balance unless the targeted countries happened
to produce goods with few substitutes and few alternative sources of
supply.
A surcharge is unlikely to have even a short-run economic payoff,
but it has considerable potential to alienate major trading partners
and to set in motion market-closing measures on a worldwide scale.
Because the current account balance is determined primarily by macroeconomic relationships, a commercial policy such as a surcharge is
particularly unsuited to eliminating the present U.S. trade deficit.
PROTECTIONISM AND JOBS

Many argue that an import surcharge will save jobs. For example,
some observers claim that each additional billion dollars worth of imports costs 25,000 to 30,000 jobs. Behind this assertion is the impli-




107

cation that reductions in imports must lead to greater spending on
domestic goods. Protection may save jobs in import-competing industries, but this is likely to be matched by the less visible loss of
jobs elsewhere in the economy. For example, a decline in U.S. exports can be expected when the dollar appreciates, but also when
foreign countries earn less from their sales to the United States. The
loss of exports will be particularly severe if foreign countries close
their markets in retaliation against the U.S. surcharge.
One measure of whether current economic policy is costing jobs is
the change in total employment in the economy. By that standard
U.S. performance has been exceptional in recent years. The expansion of imports has not come at the expense of aggregate employment in the United States. Civilian employment has grown substantially and 8 million more people were employed at the end of 1985
than when the President took office. Such a record stands in contrast
to those of other developed countries, many of which are running
trade surpluses but which have failed to add significantly to their employment.
Inadequate employment growth can foster bad economic policy as
countries adopt costly measures in an attempt to preserve existing
jobs. All too often these efforts introduce rigidities and inefficiencies
into the economy. Trade barriers, subsidies, and plant closing regulations are adopted in spite of market signals indicating that patterns
of demand have shifted or that an industry's international competitiveness is declining. Other potentially competitive industries become
so burdened with higher taxes and inflated input costs that they no
longer offer the prospect of long-run growth. Ironically, the very
goal of job preservation becomes less attainable when governments
resort to greater protectionism and subsidization of politically powerful industries.
PROTECTIONISM AND DEINDUSTRIALIZATION

As shown in Chapter 1, goods production has accounted for a remarkably constant share of U.S. output. Nevertheless, in some major
export- and import-competing industries, output has declined or has
expanded less rapidly than in the rest of the economy. Total employment within manufacturing has not regained the level reached in
1979. Some commentators view these circumstances as symptoms of
the deindustrialization of America. By failing to consider the rise in
manufacturing productivity and output, this reasoning mistakenly attributes to the trade deficit changes in the observed pattern of input
usage that have been caused by other factors.




108

Manufacturing Output Performance

Strong U.S. economic growth has allowed both imports and domestic output of manufactured goods to rise. Additionally, strong domestic demand can divert U.S. production from export markets. Increases in the trade deficit and the import share of the domestic
market (the import-penetration ratio) do not indicate a weakened domestic industrial capability; in fact, U.S. manufacturing output has expanded. In particular, over the 1982-84 period, the import-penetration ratio for all manufactured goods rose from less than 9 percent
to nearly 11 percent, and manufactured exports as a share of shipments declined from 8.8 percent to 7.6 percent. Nevertheless, U.S.
industrial production in manufacturing rose 7.8 percent in 1983 and
12.4 percent in 1984. The 1984 performance allowed total manufacturing output to surpass the past peak established in 1979, and in
1985 manufacturing output continued to expand, although at a
slower rate.
The index of industrial production in manufacturing is shown in
Chart 3-1, together with the gross national product (GNP). Manufacturing production is more variable than total production over the
business cycle, generally falling more in recessions and rising more
in expansions. The economic decline in 1982, followed by an exceptionally strong recovery in 1983-84, is quite consistent with this pattern. The fact that manufacturing output has grown steadily with the
economy is reflected by the very narrow band in which manufacturing's share of GNP has fluctuated over the past two decades, from 20
to 22 percent. There has been no radical shift in demand away from
U.S. manufactured goods, nor has growing international competitive
pressure substantially altered this relationship. Sales lost in import
and export markets have been offset by the expansion of manufacturing output necessary to satisfy greater domestic consumption, investment, or government purchases.
Manufacturing Input Usage

Strong growth in manufacturing output during the current expansion has not required proportionate increases in capital and labor
inputs. Such reductions in input requirements per unit of output are
what allow increases in U.S. wage rates and the standard of living. In
the case of labor, annual growth of output per hour worked (labor
productivity) in manufacturing was 2.6 percent from 1948 to 1984.
This exceeds the corresponding economy-wide rate of 1.6 percent,
and helps explain why manufacturing's share of total employment has
fallen steadily over the past three decades. Furthermore, the relatively more rapid growth of labor productivity in manufacturing has been
accompanied by a more rapid rise in manufacturing wages than those




109

Chart 3-1

Manufacturing Production and Real GNP
Index, 1977=100
130

(Seasonally Adjusted)

120

110

100

90

80

\

70
^

60

i

Manufacturing
Production

50

40

niimliiiliiiliiilniiiiiiiiiiiiiliiilinliiiliiiliiihiiliiiiiiilinhiilinlniliiiiiiiliniiiiini
1960

1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984

Note.—Index for real GNP based on data in 1982 dollars.
Sources: Department of Commerce and Board of Governors of the Federal Reserve System.

in the rest of the economy. For example, average hourly earnings in
manufacturing were 5 percent greater than in the economy as a
whole in 1969, but this differential rose to 9 percent in 1979 and 11
percent in 1985.
One reason labor productivity has increased is the substitution of
capital for labor. The capital-labor ratio in manufacturing was two
and one-half times as great in 1984 as it was in 1948. However, as
shown in Table 3-1, during the most recent expansion both capital
and labor requirements per unit of output have fallen. A possible explanation of this result is technological improvement, generated by
the electronics revolution in particular, which has allowed major
input savings. Also, the composition of output within manufacturing
has changed, shifting toward industries that appear best able to take
advantage of newer, more efficient technologies.
Manufacturing employment may well continue to decline as productivity grows, especially if the wage gap in favor of manufacturing




110

TABLE 3-1.—Manufacturing sector indicators, 1973-84
Year

Import
penetration
(percent) 1

Industrial
production
(1977=100)

Employment
(thousands) 2

Productivity
(1977 = 100)3

Average hourly
earnings
(dollars) 4

Real net capital
stock (billions of
1982 dollars) 5

1973
1974.

6.2
72

94.0
926

20,154
20077

93.4
906

4.09
442

554.2
581 1

1975
1976
1977
1978
1979

6.5
67
6.9
78
7.9

83.4
91.9
100.0
107 1
111.5

18,323
18,997
19,682
20505
21,040

92.9
97.1
100.0
101 5
101.4

4.83
5.22
5.68
6 17
6.70

597.2
612.5
630.5
655 1
681.4

1980
1981
1982
1983
1984

8.2
8.5
8.9
9.3
109

108.2
110.5
102.2
110.2
1239

20,285
20,170
18,781
18,434
19412

101.4
103.6
105.9
112.9
1185

7.27
7.99
8.49
8.83
918

707.2
729.7
741.3
741.1
7529

1

Imports as percent of manufacturers' shipments plus imports minus exports; based on value data.
All employees; establishment data.
Output per hour of all persons.
4
For production workers.
5
End of year. Based on data to be published in Smvey of Current Business.
Sources: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census), Department of Labor (Bureau of
Labor Statistics), and Board of Governors of the Federal Reserve System.
2

3

widens. This outcome cannot be blamed on the trade deficit. Rather,
this process of change is similar in many respects to the profound
restructuring of the U.S. agricultural sector that has occurred over
the past century. Compared with the situation 60 years ago, real agricultural output is now two and one-half times as great, but rising
productivity has resulted in farm employment falling to less than
one-third of its level in the 1920s.
A decline in sectoral employment need not signal a lack of efficiency or the inability of U.S. producers to compete internationally. Instead, it can be part of the process whereby U.S. producers become
more efficient and competitive. Furthermore, in a competitive market
productivity will grow as firms introduce new technologies when they
become economically profitable, regardless of whether those technologies give a competitive advantage over other U.S. producers or over
foreign producers.
RECENT AND PROSPECTIVE TRADE POLICY ACTIONS
The Administration has taken several trade policy actions in the
past year that affect particular industries. A review of these actions
demonstrates the variety of international competitive pressures confronted by U.S. producers and the extent to which government intervention may be ineffective in alleviating these pressures, especially in
the long run. The effects of these actions on domestic consumers,
taxpayers, and producers in other industries are also discussed, as
are relevant U.S. international economic interests.




Ill

NONRUBBER FOOTWEAR

In 1985 the President rejected the domestic industry's petition for
import relief brought under Section 201 of the Trade Act of 1974.
The President concluded that import barriers would impose substantial costs on U.S. consumers and reduce U.S. exports, while likely
saving jobs in the domestic industry only on a temporary basis. The
Congress subsequently passed legislation to reduce footwear imports
as part of a textile trade bill, but the President vetoed it. To evaluate
this series of actions, it is necessary first to understand the background of Section 201 in general and then of the circumstances in
the footwear industry.
Section 201 contains procedures for providing temporary protection to import-sensitive industries for the purpose of promoting adjustment to a loss of competitiveness internationally. This statute,
and its counterpart in the General Agreement on Tariffs and Trade
(GATT), are referred to as the "escape clause," because no demonstration of unfair trade practices is necessary to justify temporary
protection. Rather, Section 201 specifies conditions under which temporary relief can be granted to an industry that has been seriously
injured (or threatened with serious injury) by imports. In such cases,
the International Trade Commission (ITC) determines whether the
industry has been seriously injured and whether imports have been a
substantial cause of this injury. If so, the ITC recommends to the
President the appropriate remedy to promote adjustment by the domestic industry.
The President considers a broader set of criteria in determining
what method and amount of relief, if any, is in the national interest.
These factors include effects on consumers, international economic
interests of the United States, the probable effectiveness of relief in
promoting adjustment, the consequences on other industries if compensation is granted to foreign countries, and the economic costs incurred by workers and communities if import relief is or is not provided. If the President decides that some form of import relief is in
the national interest, he is statutorily limited to granting a maximum
of 8 years of protection. The domestic industry that emerges from
this adjustment period is expected to be fully competitive with foreign producers.
Since 1975 the ITC has ruled on 55 escape clause relief petitions.
The Commission recommended trade relief in 32 cases, and the
President granted some form of trade relief in 13. Because the ITC
and the President are charged with different responsibilities in Section 201 cases, this record of divergent views over the appropriateness of relief should not be surprising. Nevertheless, the Congress is
considering legislation to ensure that a finding of injury to an indus-




112

try results in relief being granted. Other proposals would further
amend conditions for relief and require only that imports be a cause,
although not a substantial cause, of injury to the industry. Steps in
this direction would result in an unbalanced assessment of trade
policy, because they ignore the many other effects the President is
charged to consider.
In the case of the nonrubber footwear industry, the prospects for
industry revitalization could be inferred in part from the escape
clause relief provided from 1977 to 1981. Orderly marketing agreements limited shipments from the two major suppliers, Taiwan and
Korea. Growth in the quantity of imports slackened, although the
effect on the import-penetration ratio measured in value terms was
less pronounced. No increase in real investment to retool the industry occurred, while labor productivity actually fell. As shown in Table
3-2, employment declined less rapidly. But this industry is one of the
most labor intensive in the manufacturing sector, and the opportunity
to reduce labor costs substantially through greater capital investment is limited to only a few products. It is not surprising that protection did not enable most segments of the industry to become competitive with foreign producers who can pay much lower wages.
Moreover, U.S. quotas gave foreign producers an incentive to reduce
shipments of low-cost merchandise and to expand exports of higher
quality footwear that competes more directly with U.S. production.
Such incentives tend to undermine the efforts of U.S. firms to remain
competitive when protection is removed.
TABLE 3-2.—Manufacturing sector indicators: Nonrubber footwear, 1973-84
Import
penetration
(percent) l

Year

Employment
(thousands)2

Productivity
(1977 = 100)3

Average
weekly
earnings
(dollars) 4

178

490.0
4530

183
172

985
968

.
.

.

..

.

1980
1981
1982
1983
1984

.

20.7
22.8
23.4
32.5
34.4

413.1
422.5
418.1
418.9
398.9

158
164
157
158
149

1013
102 1
100.0
102.5
1002

11334
12197
127.37
13838
14806

30.9
31.3

386.3
372.0
3591
344.3
298.5

144
146
135
126
116

99.1
95.6

161.33
174.97
17971
190.77
19602

Profitabilit
(percent)5

103.09
10643

18.0

1973
1974
1975
1976
1977
1978
1979

Output
(millions of
pairs)

372
41.6

498

973
102.0
(6)

(
2!
3

2'

2(
11

1

Imports as percent of manufacturers' shipments plus imports minus exports; based on value data; 1984 estimated.
All employees; establishment data.
Output per hour of all employees.
4
For production workers.
5
Net income before taxes as percent of net worth.
6
Not available.
Sources: Department of Commerce (Bureau of the Census), Department of Labor (Bureau of Labor Statistics), and
International Trade Commission.
2

3

With respect to the most recent footwear cases brought in 1984
and 1985, domestic output again has fallen. The reduction in domes-




113

tic capacity has been quite responsive to market signals; the return
on operations for those still in the industry more than matched the
return on equity in all manufacturing. Protectionism may raise the
return to these successful producers, but it seldom results in the reopening of outmoded plants that already have closed.
Trade intervention has become an increasingly expensive way of
attempting to save jobs in the footwear industry. As imports account
for a larger share of the market, quotas that drive up import prices
are more likely to result in large increases in profits for foreign producers than for domestic producers.
In summary, the President's decision to deny relief to the footwear
industry recognized that its contraction represents an adjustment to
world market forces that are not a temporary but a permanent source
of competitive pressure. Any efforts to reverse this process would be
exceedingly expensive for American consumers and at the same time
would deny market access to many debt-ridden developing countries.
The Administration is committed to effective use of Section 201 provisions, but only where that use can be expected to promote successful adjustment and further the national interest.
STEEL

Several bilateral export restraint agreements were negotiated with
foreign steel producing countries in 1985 as part of the President's
steel plan. An earlier agreement with the European Community (EC)
covering finished steel was renegotiated, but the United States unilaterally imposed import quotas on semifinished steel from the EC.
These steps were the latest in a series of trade actions involving the
steel industry.
Over the 1970s, steel production facilities in the United States and
Europe became increasingly outmoded relative to those in Japan and
other recent entrants in the market. Many European governments intervened with large infusions of funds to restructure their domestic
industries. The U.S. industry was partially insulated from the effects
of growing world capacity as the result of a boom in steel demand in
1974, the depreciation of the U.S. dollar, and various protective
schemes: voluntary restraint agreements to limit the quantity of imports and a trigger price mechanism to prevent foreign dumping of
steel in the U.S. market at prices below costs of production.
As shown in Table 3-3, import penetration in the 1970s remained
significantly below subsequent values in the 1980s. Since the mid1970s, real gross investment declined, as investors apparently anticipated greater profits elsewhere in the economy. At the same time,
wages rose very rapidly, at an average annual rate of 10 percent over
the decade, and in relative terms increased from 45 percent above all




114

U.S. production workers' average weekly earnings in 1969 to 95 percent in 1979. Growth in labor productivity was less than the manufacturing average, and from 1973 to 1979 productivity rose at less than
one-tenth of 1 percent a year. The sharp rise in unit labor costs suggests why the industry's competitive position did not improve over
the decade, in spite of dollar depreciation and measures to restrict
imports.
TABLE 3-3.—Manufacturing sector indicators: Steel, 1965-84
Average wee <ly earnings 5

Year

Import
penetration

(percent) 1

Output

(millions of
short
tons)

Apparent

consumption
(millions
of short
tons) 2

Employment
(thousands) 3

Productivity

(1977 = 100)4

Dollars

Ratio to
total private
nonagricultural

Real
gross
investment

(millions of

1982
dol-

Rate of
return

on
equity

(percent) 7

lars) 6

(8)

(8)

100.5
99.0
93.7
107.6
102.7

657
652
635
636
644

87.5
89.2
86.4
89.5
90.0

140.90
144.73
143.51
154.16
166.03

148
146
141
143
145

5,210

(«)

5,540
5,630
4,860

(8)
(8)

('")

92.7
90.0
83.9
91.9
93.9

1970
1971
1972
1973
1974

7.8
9.8
9.6
8.1
10.6

90.8
87.0
91.8
111.4
109.5

97.1
102.5
106.6
122.5
119.6

627
574
568
605
610

87.6
91.9
97.3
106.6
106.5

166.40
177.80
206.25
229.77
258.95

139
140
151
158
167

4,150
3,040
2,470
2,820
4,000

(8)

1975
1976
1977
1978
1979

10.6
9.0
10.8
11.4
104

80.0
89.4
91.1
97.9
100.3

89.0
101.1
108.5
116.6
115.0

548
549
554
561
571

93.3
99.0
100.0
108.3
106.9

274.13
305.88
338.58
389.69
428.89

168
174
179
191
195

5,390
5,090
4,380
3,670

1980
1981
1982
1983
1984

109

83.9
88.5
61.6
67.6
73.7

95.2
105.4
764
83.5
98.9

512

1029
112.0
909
116.8
132.0

448.77
509.04
505.97
509.16
527.39

191

4,050
3,700
3,780
3,200
3,440

1965
1966
1967
1968
1969

(8)
(8)
8

13.8
168
12.3
16.7

506
396

341
334

199
189

181
179

4,980

4,140

(8)

(8)
(8)

1^
10.9
9.0
3.6
8.9
8.8

90
11.5
-145
-17.4

.6

1

Imports as percent of manufacturers' shipments plus imports minus exports; based on value data.
Manufacturers' shipments plus imports minus exports.
All employees; establishment data.
4
Output per hour of all employees.
5
For production or nonsupervisory workers.
6
Expenditures for new plant and equipment.
7
Profits after taxes as percent of average stockholders' equity for the year.
8
Not available on same basis as for later years.
Sources: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census), Department of Labor (Bureau of
Labor Statistics), and International Trade Commission.
2

3

A countervailing duty case brought against several European steel
producers in 1982 was an important application of the GATT subsidies code to address the competitive effects of European government
assistance programs. A Department of Commerce investigation disclosed large subsidy margins for several nationalized producers.
However, the United States did not impose countervailing duties and
agreed to the European request for a negotiated settlement. The EC
was thereby able to allocate U.S. market shares to member countries
consistent with its own restructuring plan. The subsequent limitations on Europe's market share were intended to reduce the ability of
subsidized imported steel to drive down prices in the U.S. market.
To the extent that U.S. prices rose, they benefited not only U.S. pro-




115

ducers, but also foreigners able to sell in the U.S. market. Although
the volume of European sales declined, each ton would be sold at
U.S. market prices and not at lower world prices. However, increased
sales by uncontrolled suppliers would limit the extent of this U.S.
price increase.
Total U.S. demand for steel has fallen considerably since 1979, as
more products are designed to require less steel, and patterns of
demand have shifted away from traditional products requiring relatively more steel toward electronically based capital goods and consumer products requiring less steel. Controlling European sales
alone has not been sufficient to avoid substantial declines in domestic
output and employment. The President rejected the relief proposed
by the ITC in a Section 201 case in 1984. Instead, the Administration
negotiated voluntary export restraints with 16 countries based on the
stated goal of limiting imports of unfairly traded steel and preventing
diversion of steel to the United States from other markets. Several
countries have requested such agreements to ensure themselves a
share of the U.S. market and to obtain immunity from unfair trade
actions. These agreements will expire in 1989.
The U.S. steel industry continues to contract. Some diversification
into other areas, such as oil and gas, has occurred. Traditional integrated producers have been challenged not only by imports but also
by domestic minimills. The emergence of minimill producers, who
generally roll particular finished steel products from semifinished
steel, indicates that U.S. producers may be more competitive in some
stages of steel production than in others. The below-average returns
reported by large integrated producers suggest that their retrenchment and diversification are appropriate. The extent of industry contraction will be influenced not only by the reduction in steel usage,
but also by the behavior of U.S. costs of production. Labor productivity has risen sharply since 1982. Recent moderation in wage demands and flexibility over work rules will contribute toward a less
severe contraction of the domestic industry. Progress in these areas
will be critical if the domestic industry is to adjust successfully by the
termination of the President's steel plan.
TEXTILES AND APPAREL

One of the most visible trade policy confrontations in 1985 was the
passage and subsequent veto of the Textile and Apparel Trade Enforcement Act. In 1986 the renegotiation with foreign countries of
current export restraint agreements will be especially significant.
U.S. trade in textiles and apparel has been governed for many
years by an extensive set of bilateral quota agreements. These two
industries receive protection under the MultiFiber Arrangement




116

(MFA), a multilateral agreement that can be traced back to the 1950s
and is scheduled to be renegotiated in 1986. Production in both industries has risen above its past cyclical peak, as shown in Table 3-4.
In 1983 and 1984, profitability in the textile industry rose substantially to a level comparable to that of all manufacturing. Both industries have received considerable public attention due to declining
employment, which is attributable primarily to sharply rising labor productivity rather than to a decline in output. Over the period 1974 to
1982, output per hour worked rose 4.4 percent annually in textiles,
2.9 percent in apparel, and 2.0 percent in all manufacturing. The
growth in labor productivity has coincided with higher total multifactor productivity, a measure of output per unit of combined capital
and labor inputs. The capital stock has declined from its 1978 peak.
Investment in new equipment appears to embody more productive
technologies that have allowed output to grow even as labor and capital input requirements fall. Any policy to slow down this rate of technological change would tend to result in a less competitive domestic
industry.
TABLE 3-4.—Manufacturing sector indicators: Textiles and apparel, 1973-84
Import penetration
(percent)1
Year
Textiles

Apparel

Productivity
( 1977 = 100)4

Real
output
(billions
of 1982
dollars)2

Employment
(thousands)3

Textiles

Apparel

Real net
capital
stock
(billions
of 1982
dollars)5

Textiles:
Rate of
return
on
equity
(percent)6

1973
1974

4.5
4.3

7.1
7.6

30.5
28.2

2,448
2,328

80.2
80.7

89.1
88.5

26.0
26.8

(7)
8.0

1975
1976
1977
1978
1979

3.6
3.8
3.7
4.3
4.1

8.3
10.3
10.0
12.1
12.4

27.3
31.0
34.4
35.1
35.7

2,111
2,237
2,227
2,231
2,189

89.6
91.8
100.0
102.3
104.8

94.5
94.5
100.0
104.2
98.1

26.6
26.5
26.7
26.9
26.8

4.3
8.0
8.6
11.5
12.0

1980
1981
1982
1983
1984

4.3
4.9
4.6
4.7
6.1

12.9
13.8
13.9
15.4
20.2

36.2
36.1
33.7
37.3
38.5

2,111
2,067
1,911
1,905
1,943

104.7
106.6
113.7

97.3
103.6
111.0

R

R

26.7
26.3
25.6
24.6
24.3

8.5
9.5
6.9
12.0
11.2

1

Imports as percent of manufacturers' shipments plus imports minus exports; based on value data; 1984 estimated.
2
Real gross domestic product.
3
All employees; establishment data.
4
5 Output per hour of all employees; based on unpublished data from Bureau of Labor Statistics.
6

End of year. Based on data to be published in Survey of Current Business.

Profits after taxes as percent of average stockholders' equity for the year.
Not available on same basis as for later years.
Sources: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census) and Department of Labor (Bureau
of Labor Statistics).
7

Industries seeking import relief generally prefer quotas, such as the
MFA provides, rather than tariffs. The protective effect of a quota is
less likely to be offset by dollar appreciation or declining domestic
cost competitiveness. Nevertheless, imports still can surge rapidly
over a short time period, as textiles and apparel imports did in 1983
and 1984, for several reasons. Quotas may not be binding initially,
not all product categories from a controlled country may be covered,




117

not all countries may be controlled, or not all substitute fibers may
be controlled. In the case of the MFA, a source of uncertainty has
been the rapid growth of sales by the EC and Canada, which are not
controlled. The United States does not face quotas in their markets
either and as recently as 1980 was a net exporter of textiles.
In spite of the apparent ease of expanding imports in recent years,
even from countries controlled by the MFA, foreign traders have
been willing to pay increasingly more for the right to export to the
U.S. market. In Hong Kong, where quota rights are sold openly, the
average cost of acquiring an expanded quota for apparel products
was estimated in early 1984 to be equivalent to a 47 percent tariff,
whereas a comparable figure in 1982 was 10 percent. The gap between U.S. and world prices is even larger than this, because foreign
exporters also face an average U.S. statutory tariff on apparel of 21
percent. Nevertheless, in 1985 legislation to tighten further import
restrictions on textiles and apparel became a focal point for protectionist action in the Congress. The bill sent to the President would
have rolled back imports by roughly 5 percent and stringently controlled future import growth.
The President vetoed this bill because of the high additional costs
it would have imposed on consumers, and because of the offsetting
negative effect on U.S. exports, a particular concern if retaliatory foreign trade barriers are imposed. The rollback probably would have
resulted in consumers paying an extra $4 billion to $8 billion in 1986
for apparel and textile products. By breaking bilaterally negotiated
agreements reached under the MFA, the rollback would have subjected the United States to demands for compensation or retaliation. For
example, when the United States tightened its rules for determining
the country of origin of imports in 1984, the Chinese stated that they
were reducing purchases of U.S. agricultural exports in retaliation.
A tightening of trade restrictions would have raised international
political pressures on the United States. In a situation where market
shares are allocated on political grounds rather than on the basis of
economic efficiency, countries with high-cost producers tend to lobby
for control over sales that they otherwise could not make in an open
market. Countries with low-cost producers tend to complain that
their competitive strength is being arbitrarily eliminated by administrative fiat. Countries that already have a large established share of
the market benefit from a system that allows them high returns from
selling at prices in the United States that are above world market
levels. Yet, in a competitive market they might be displaced by the
expansion of more efficient countries and emerging new competitors.
Any U.S. action leaves current or prospective quota holders displeased without benefiting U.S. consumers.




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SEMICONDUCTORS

Several trade actions affecting the semiconductor industry were initiated in 1985. U.S. producers filed two antidumping cases against
Japanese firms, and the Federal Government initiated another case.
These cases address unfair pricing practices in the U.S. import
market. Broader policy concerns regarding U.S. access to the Japanese market have been considered in one of the four bilateral U.S.Japan market-oriented sector-selective talks initiated in early 1985
and in an unfair trade case brought by the domestic industry under
Section 301 of the Trade Act of 1974. Market access in Japan is important because the competitive position of U.S. semiconductor producers depends upon their total volume of sales, over which large research and development expenditures are spread and which allow
greater efficiencies in production. These various trade actions raise
important issues relevant to carrying out government policy in this
and other high-technology industries.
An antidumping case can be based on two alternative conditions:
either foreigners are selling at a lower price in the U.S. market than
in their own domestic market, or foreigners are selling at a price less
than cost, specifically less than average total cost. Japanese practices
do not seem to fall in the first category, as semiconductor prices reported in Japan are lower than in the United States. Rather, Japanese
practices appear to reflect very rapid price cutting to promote greater
sales volume, even if it may mean selling at a loss. Such a strategy
potentially could be economically advantageous to Japanese firms if
they could drive U.S. competitors from the market permanently and
then raise prices collusively. It would also be advantageous to vertically integrated firms if success in semiconductor production allowed
more timely development and introduction of other products.
The antidumping cases will address several challenging conceptual
issues. Large research and development expenditures account for a
significant share of product value and must be allocated over expected production. This cost calculation requires an estimate of the
length of the relevant product cycle and prospective volume of production. The role of likely reductions in variable costs, as firms gain
more production experience, must also be recognized.
If the Department of Commerce finds that positive dumping margins exist, and if the ITC rules that the domestic industry has been
injured, antidumping duties will be levied. Higher Japanese prices in
the U.S. market would tend to reduce their exports to the United
States. Depending on demand and cost conditions, the profitability of
Japanese producers could decline, too.
The ability to prevent pricing below cost in the U.S. market may
not eliminate the competitive effects of alleged Japanese dumping. If




119

Japanese producers maintain lower prices in markets outside of the
United States, a price differential between U.S. and world markets
may cause U.S. users of semiconductors to locate operations offshore
to take advantage of cheaper inputs. U.S. users of semiconductors are
concentrated in the following sectors: data processing and office
equipment (62 percent); consumer electronics (23 percent); communications equipment (8 percent); and testing and analytical instruments (5 percent). These users appear more likely to be hurt by
higher input costs and more likely to shift production offshore than
would minor users such as automobile producers. The effect of U.S.
antidumping actions on the profitability of Japanese firms will
depend not only on the availability of substitute products within the
U.S. market but also on the likelihood that U.S. users maintain production in the United States. When alternative supplies are available
domestically and U.S. users find offshore production economically
unattractive, Japanese semiconductor profitability is more likely to
fall and the capacity of Japanese firms to contract.
Other policy initiatives center on greater U.S. access to the Japanese market. The Section 301 case brought by the U.S. industry alleges that access has been denied as the result of horizontal collusion
and buying practices among Japanese companies that have participated in government-coordinated research programs. The United States
traditionally has sought greater access to sell in foreign markets, but
not a mandated share of the market. Measuring progress toward
more open markets, however, must be tied to some change in the
current level of sales. If a satisfactory negotiated settlement of the
Section 301 case is not reached, some observers have advocated
prompt U.S. retaliation. Such actions are likely to result in higher
semiconductor prices in the United States, thereby reducing the
competitiveness of U.S. user industries. Therefore, if retaliation were
considered appropriate, an important aspect of designing a response
would be to determine in which products Japanese producers were
most dependent upon sales to the U.S. market, but any resulting price
disadvantage facing U.S. users would be small.
AGRICULTURAL EXPORTS

A particularly relevant agricultural trade policy issue is the establishment in 1985 of the export-enhancement program to promote
U.S. commodity sales abroad. The possible consequences of this
policy are also relevant in evaluating other efforts to subsidize U.S.
exports on a permanent basis. Most significantly, subsidies generally
can be expected to result in a loss in U.S. income, because foreign
consumers benefit from the willingness of taxpayers to underwrite
foreign sales on more favorable terms.




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The responsiveness of foreign output to rising world market prices
of agricultural commodities in the 1970s and the appreciation of the
U.S. dollar in the 1980s mean that U.S. agricultural exports now face
considerably more competition. EC export subsidies have helped European producers claim a larger share of world wheat markets. Domestic political support for higher U.S. target prices and loan rates
has resulted in increased government acquisitions of commodities.
Some of these commodity stocks have been released through the
export-enhancement program established in 1985. This approach was
extended further by the recently signed Food Security Act of 1985,
which requires that, through September 1988, the Secretary of Agriculture use $2 billion of agricultural commodities and products to
provide export assistance.
Under the export-enhancement program, the government has
made stocks available to U.S. exporters to increase the competitiveness of U.S. commodities. If such a policy could impose sales losses
on exporting countries that subsidize their sales to gain a larger
share of world markets, then it might force these countries to reduce
their export subsidies. A targeted subsidy program, however, is particularly difficult to contain when the product being subsidized is homogeneous and sold in world rather than national markets. Sales in
one market may be gained at the expense of a particular country;
however, that foreign output may be diverted to other markets, once
again displacing U.S. sales. If the export-enhancement program results in a larger total supply of wheat, for example, being offered on
world markets, the price would fall for all exporters, not just the offending subsidizer. Net importing countries, such as the U.S.S.R.,
clearly would benefit from falling world prices. From the U.S. standpoint, greater sales under the enhancement program are likely to displace commercial agricultural sales to some extent.
Achieving some change in foreign subsidization practices is critical
to the success of the program. Even committing all U.S. assistance to
trade in a single commodity, wheat, would augment world trade by
only 5 percent. The resulting pressure on the EC might be insufficient to cause a reduction in their subsidies. In that case, the United
States benefits only if there are few alternative uses for the resources
being given to foreigners on preferential terms. Given the uncertain
success of this approach, the President has indicated his desire to
work with the Congress to amend this legislation and to continue Administration efforts multilaterally to obtain a negotiated solution to
limit agricultural subsidies.




121

POLICY INITIATIVES FOR THE 1980s—FREE AND FAIR TRADE

The President's Trade Policy Action Plan is based on the concept
of free and fair trade. The guiding principle behind this policy is that
opening foreign markets to enable greater U.S. sales is preferable to
closing U.S. markets to foreigners.
BROADENING THE SCOPE OF FREE TRADE

An important goal of the President's Trade Policy Action Plan is to
begin a new round of Multilateral Trade Negotiations under the
auspices of GATT. The United States requested a meeting of the
contracting parties of GATT, which took place in September, to begin
the preparatory process. In November the parties established a preparatory committee to develop a timetable and an agenda for a new round
of trade negotiations. The preparatory committee's work is expected to
be discussed at a September 1986 GATT Ministerial Meeting.
U.S. objectives in the new round center on extending GATT discipline to areas where international rules are limited or nonexistent.
Additionally, the United States seeks changes in the current
operation of the GATT system in dispute settlement and conditions
governing safeguard actions. Areas of particular interest are agriculture, services, intellectual property rights, and direct foreign investment.
Agricultural trade is of special interest to the United States because
of this country's traditionally strong export position in a sector that
largely falls outside of GATT control. In particular, agriculture is not
included in the subsidies code on the same basis as manufactured
goods. Rather, export subsidies are a cause for complaint only if they
allow the subsidizing country to gain more than an equitable share of
the world market or if subsidized products are priced significantly
below those of other suppliers. Such vague standards often preclude
any action under GATT.
Trade in services is growing rapidly. Many activities fall in this category—tourism, transportation, insurance, banking, advertising, engineering design, data processing, and the transmission of information.
The United States has a comparative advantage in providing many
services due to the availability of a skilled work force and a high rate
of innovation to serve the large domestic market. A U.S. goal is to
establish the right of entry in foreign markets and also to establish
the principle of national treatment or nondiscrimination against foreign providers of services. Trade in many services is subject to government regulatory control. Agreement is needed regarding the
transparency and reasonableness of regulations, as well as the appropriate role for government monopolies. Under conditions of limited




122

market access and inconsistent national standards and regulations,
the world economy loses from small-scale, inefficient operations designed to serve single-country markets.
The protection of intellectual property is of growing importance to
the United States. U.S. research creativity has resulted in the successful introduction of many new products and processes. When foreign
producers can copy these innovations with impunity, the rewards to
innovation decline and the pace of technical change slackens. A priority for the U.S. Government is to establish wider international
agreements protecting intellectual property. Some U.S. concerns deal
with the lack of patent, copyright, trademark, and trade secret protection or compulsory licensing provisions. Others center on the right
to charge royalties payable in convertible currencies. Basic ground
rules tend to be lacking in these areas, especially in countries that
feel little need to protect domestic innovation.
U.S. goals regarding direct foreign investment center on reducing
the distortions to world trade and production arising from conditions
frequently placed on such investment by foreign countries. Foreign
requirements that a certain percentage of output use locally produced inputs or that a certain share of output be exported distort
patterns of international trade, just as other trade barriers do. Performance requirements can impede the flow of investment to foreign
countries, a result also observed when national treatment is not
granted foreign firms. As discussed in Chapter 2, developing the private sectors of these countries is an important step to improving
their prospects for renewed growth.
If more traditional multilateral steps are unsuccessful, the United
States also will explore other ways of opening markets. In 1985 the
United States concluded negotiations with Israel to establish a bilateral free trade area. The United States now faces a historic opportunity in the possibility of establishing a free trade agreement with
Canada. In September 1985 the Canadian Government proposed that
both countries consider bilateral negotiations on the broadest possible package of mutually beneficial reductions in trade barriers. In
1935 Canada and the United States took bilateral steps to reverse the
protectionism of that era, steps that became a catalyst for broader
international cooperation then. The new Canadian-U.S. initiative
offers similar prospects now.
ENSURING THE PRACTICE OF FAIR TRADE

Another important objective of Administration trade policy is to
ensure that markets remain open and that competition takes place
under internationally agreed trading rules. Countries should be expected to live up to their international commitments regarding




123

market access. The Administration has increasingly emphasized the
standard of fair trade, because reduced market access generally reduces the profitability for U.S. exporters, worsens the U.S. terms of
trade, and results in a lower U.S. standard of living.
Presidential Involvement in Section 301 Cases

One example of the Administration commitment to fair trade is the
self-initiation since September 1985 of four cases against unfair foreign trade practices under Section 301 of the Trade Act. Deadlines
for action were set in two other cases. Although the affected industry
traditionally petitions to initiate action, a demonstration of official
U.S. concern is necessary in particular instances.
The two cases in which the President set a deadline involved EC
subsidization of canned fruit and Japanese quotas on leather and
leather footwear. GATT panels had already supported the U.S. position. The EC blocked adoption of the panel report and Japan failed
to bring its practices into conformity with GATT practice. Presidential involvement indicates the need to move beyond the current dispute-settlement procedures that allow such inaction and delay.
In the case of canned fruit, the EC agreed to a substantial reduction in its domestic subsidy program, a solution that completely
avoided the need for compensation or retaliation. In the case of
leather and leather footwear restrictions, Japan agreed to compensatory tariff reductions over a broad range of products. The Japanese
made concessions in two sensitive areas, paper and aluminum, where
the United States particularly had sought broader market access. The
Administration will monitor trade in these areas to verify that these
concessions will not be impaired by other government actions. Also,
the United States retaliated against Japanese leather and leather footwear sales to the United States by imposing an additional 40 percent
tariff on them.
Broader retaliatory measures had been considered for implementation if meaningful market access were not obtained. In such cases,
U.S. objectives are best met by choosing retaliation targets where
many competitive sources of supply exist and where the offending
country is especially dependent upon sales to the U.S. market. If such
retaliatory actions are likely to become permanent, then the appropriate tariff is one that will not eliminate the offending country from
the market entirely. Rather, the tariff will drive down the price received by the foreign country on sales in the United States and raise
U.S. Government tariff collections.
The government-initiated Section 301 cases include Brazilian
measures to prevent foreign competition in its information industries, Korean restrictions on the operation of foreign insurance companies, Japanese controls over investment in and distribution of to-




124

bacco products, and Korea's lack of patent and copyright protection.
An additional possible case, directed at Taiwanese restrictions on
wine, beer, and tobacco sales, was resolved through negotiation. The
United States initiated a GATT case to consider European wheat
export subsidies rather than start a Section 301 investigation.
Unfair practices often extend beyond issues directly covered by
GATT. However, U.S. actions embody the principle that nations benefiting from the current trading system have an obligation to apply to
other areas of international commerce the spirit of open trading relationships established for merchandise trade. Negotiated settlements
appear possible in some areas as like-minded nations recognize their
own self-interest in moving toward a more open world economy with
predictable, transparent rules of conduct.
Export Credit Competition

An Administration goal is to reduce export credit competition, a
costly policy that distorts commercial trade patterns. Significant
progress has been achieved in recent years. Through an agreement
reached in November 1983 among countries of the Organization for
Economic Cooperation and Development (OECD), minimum allowable interest rates have been established with respect to official
export financing. The rates vary, based on the country destination of
an export sale. This progress has reduced the need for a greater permanent commitment of funds to finance U.S. exports through the
Export-Import Bank.
Foreign practices still distort export markets through export tiedaid credits, a situation where an exporting country grants foreign aid
to make a commercial sale. In the past 2 years, agreements have been
reached to ban tied-aid sales in the case of nuclear power plants and
large-bodied aircraft. The Administration seeks further progress to
cover all sales. Subsidization of these sales largely benefits the purchasing countries and involves negligible expansion of the market. In
particular, a significant share of these tied-aid credits is received by
middle-income developing countries that can usually finance these
purchases on commercial terms. The Administration objective is to
obtain international agreement that such tied-aid sales be limited to
truly needy countries. The President has proposed an export credit
fund to be used strategically against countries that thus far have been
unwilling to negotiate limits on the use of such subsidies. The fund is
intended to support an aggressive U.S. stance to deny export sales,
or significantly raise the cost of making them, for noncooperative nations and thereby encourage these nations to agree to effective limitations on the use of tied-aid credits.




125

PROMOTING ADJUSTMENT TO CHANGING TRADE PATTERNS

Another important aspect of Administration trade policy involves
the adjustment and reemployment of workers in trade-impacted industries. Strong U.S. performance in generating more jobs has been
discussed above. A clear goal of Administration adjustment policies is
to increase the likelihood that workers displaced in declining industries will share in the general expansion of the economy. This focus
contrasts with the consequences of protection, which reduces overall
job opportunities and thus worsens the prospects of workers actually
displaced by rising imports.
Sound macroeconomic policy to ensure noninflationary growth is
the first prerequisite of a successful adjustment policy. Other measures are likely to be unsuccessful if applied under recessionary conditions. Similarly, as discussed in Chapters 1 and 2, policies that promote labor market flexibility give employers a greater incentive to
hire new workers.
An Administration goal is to create conditions for sustained growth
that will attract workers out of declining industries. Other job opportunities are most attractive when relocation is not necessary, a condition more likely to be fulfilled in States with low unemployment
rates. Many trade-impacted industries are located in such States. For
example, Maine, Massachusetts, and Missouri are important shoeproducing States, yet each has a below-average unemployment rate
and exhibits strong growth in aggregate employment. A similar situation exists in South Carolina and North Carolina, dominant textileproducing States.
The prospects for successful adjustment are greater in strong labor
markets. Still, adjustment for many workers may be difficult. Displaced workers who are immobile may face high personal costs of adjustment if local labor markets are depressed. Under those circumstances, a worker's past job skills may be of little value. Prospects for
adjustment are sometimes misinterpreted. The initial costs associated
with retraining, relocating, or accepting a lower wage job are immediate, while the likelihood of increased earnings in future years may
seem uncertain. Research indicates that even in severe cases of dislocation, earnings tend to recover in 3 to 5 years to the level they
would have reached in the worker's previous job. These figures do
not apply to workers who leave the labor force, nor do they control
for changes in fringe benefits. Nevertheless, many dislocated workers
make successful labor market adjustments.
Trade Adjustment Assistance (TAA), originally established under
the Trade Expansion Act of 1962 and later modified in 1974 and
1981, is intended to promote adjustment of workers in import-impacted industries. The TAA system of readjustment allowances,




126

which expired on December 19, 1985, was based on an extension of
unemployment insurance benefits. One rationale for such payments
was that they provided partial income maintenance to those workers
having the greatest difficulty finding alternative jobs. Yet, these payments also may have retarded adjustment. Benefit payments based on
continued unemployment provide an incentive to delay seeking a new
job and to wait for recall to the previous job. These expectations may
be inappropriate, given changing patterns of production and competitiveness internationally.
The Administration has advocated continued funding of dislocated
worker programs under Title III of the Job Training Partnership Act
(JTPA) as a replacement for TAA. JTPA does not provide incomesupport payments to individual workers, but relies on local private
industry councils, composed of business, labor, and local government
representatives, to determine the most effective adjustment measures
for dislocated workers. Also, rather than distinguish which workers
are displaced by greater imports and which are displaced for other
reasons, a procedure required under TAA, JTPA is intended to encourage adjustment by all dislocated workers. In his 1987 Budget,
the President has requested that the Secretary of Labor be provided
an additional $74 million of discretionary JTPA funds in 1986 to address particular priority adjustment problems. For 1987, $100 million
is requested for that purpose. In recent trade cases involving steel,
copper, and nonrubber footwear, the President has also charged the
Secretary of Labor to use JTPA resources to promote the retraining,
relocation, and reemployment of displaced workers.
Early experience under Title III of JTPA appears promising. Shortterrn job search assistance can be implemented quickly. Program participants have been committed to making job changes. JTPA does not
focus exclusively on training, because that approach is not needed by
many experienced workers and is not the most cost effective for
them. Experience has demonstrated the difficulty of ensuring that
government-provided training results in a long-term increase in
worker earnings. A recent review of the record for steelworkers assisted under TAA reports that only a fourth of the workers who
chose to retrain found jobs related to their training. This result indicates the difficulty of designing effective training programs and also
the potential problems of making income-support payments contingent upon participation in training programs.
An inference that can be drawn from past experience is that no
single program or approach can be counted on to succeed uniformly
in promoting adjustment in all industries and locations. Experience
under a variety of Federal policies has been mixed, often because
these programs have other objectives in addition to effective adjust-




127

ment. From the standpoint of promoting successful economic adjustment, strong economic growth should be the principal goal of Federal policy.
THE THRUST OF U.S. TRADE POLICY

Government management of trade through protectionism will not
solve problems that result from international macroeconomic imbalances. It will not recapture jobs lost to rising productivity. At the
factory level, its dominant effect will be to shift burdens from one
industry to another. Protectionism is likely to penalize U.S. export industries in particular, for they are the most vulnerable to foreign retaliation.
The United States has a strong self-interest in advocating and practicing free and fair trade. This is the course that the President has set
for the Nation.
The United States seeks a major transformation of the world trading system, strengthening GATT discipline and extending it to many
areas not presently addressed. If multilateral steps are taken to
reduce existing trade and investment barriers, all countries will have
to agree to politically sensitive changes in some of their current practices. Initial progress toward the opening of a new round of multilateral trade negotiations is encouraging. However, significant advances
will occur only if world leaders place a high priority on trade liberalization and pursue economic policies that generate support for it.
Another important dimension of the Administration's trade policy
is vigorous enforcement of trade laws and agreements. Unfair foreign
practices are especially detrimental to U.S. export prospects. The Administration has aggressively used Section 301 of the Trade Act of
1974 against unfair foreign practices. Although these actions should
result in greater U.S. exports of specific commodities and services,
they will not, of course, eliminate the current trade deficit. That will
depend on appropriate macroeconomic policies being followed.
Rather, the purpose of recent U.S. trade actions is to hold all parties
to their commitments to free and fair trade principles.
The world today is not static or unchanging. The world daily produces situations that Adam Smith never envisioned. But the accuracy
of his policy prescriptions endures. A return to the mercantilist
dogma that imports weaken an economy is likely to result in policies
that yield slower growth, a lower standard of living, and lost opportunities for current and future generations of workers. The Administration program of free and fair trade provides a strong basis for
continued economic expansion in the United States and the world.




128

CHAPTER 4

Income Transfers to Agriculture
AMERICAN AGRICULTURE IS EXPERIENCING severe financial
problems. Agricultural export earnings have plummeted and land
values have dropped sharply. Farmers are $210 billion in debt,
making U.S. agriculture a bigger debtor than Mexico and Brazil combined. When the debt-service burden of farmers is combined with the
erosion in farm asset values, the magnitude of the adjustments that
agriculture faces becomes apparent: farms lost $111 billion after capital gains in 1984.
Industries closely tied to agriculture are also experiencing hardship. Demand has dropped for farm equipment and related products.
Since 1979, for example, U.S. farm tractor sales have fallen more
than 50 percent. Agricultural banks, once a bulwark of domestic finance, are failing at higher rates than similar-sized nonagricultural
banks.
In the 1970s, many saw an "ever-expanding" export market curing
the traditional "farm problems" of low relative earning power and
excess capacity. American agriculture transformed from a sector
using export subsidies and concessional sales to a large competitive
exporter. This transformation was accompanied by an expansion in
productive capacity financed largely by increased borrowing. Because
real agricultural land values rose by as much as two-thirds in the
1970s the expanded borrowing seemed financially prudent to many.
Land values, however, were predicated upon strong demand for U.S.
exports and expectations of continued inflation. By 1983, however,
agricultural export value had fallen from its 1981 peak of $43 billion
to $36 billion, and is estimated for 1985 at about $29 billion.
No definitive study of the export decline exists. But conventional
wisdom runs something like: In the early 1980s both interest rates
and the U.S. exchange rate rose. Besides making farm financing
more difficult, rising interest rates hurt indebted third world countries that had been among our fastest growing export markets. These
countries reduced their food imports. The appreciating U.S. dollar
encouraged U.S. customers to switch to alternative suppliers only
shortly after U.S. reliability had been damaged by the grain embargo.




129

Almost simultaneously the United States met stiff and, at times,
subsidized competition in export markets. A commonly cited example
is the European Community's use of export refunds (subsidies). In
1983 and 1984, these subsidies represented roughly 30 to 35 percent
(in European currency units) of the common agricultural policy's authorized budget. Finally, as discussed below, U.S. agricultural programs often encouraged farmers to turn their commodities over to
the government rather than to export them.
With agricultural export performance faltering and inflation under
control, farm debt incurred in the late 1970s became increasingly difficult to manage and service. What had looked like sound business
moves in a rapidly growing sector of a generally inflationary economy
of the late 1970s had frequently become unsustainable.
These problems persist despite the existence of Federal Government price- and income-support programs that have cost—and continue to cost—taxpayers billions of dollars a year. Recently, direct
Federal payments to farmers have been at record levels and now
equal roughly 20 percent of farmers' net cash income. The Federal
Government spent more than $60 billion on farm programs in the
past 4 years. Yet some of these programs may not help farmers. On
the contrary, they can hurt farmers by distorting economic incentives.
And some hurt consumers.by driving up food prices. Moreover, they
use billions of taxpayer dollars in a time of growing fiscal austerity.
A keystone of this Administration's farm policy is that farm programs can distort economic incentives enough to cause some of agriculture's problems. The President recommended in early 1985 that
American agriculture be returned gradually to a free-market footing.
The Food Security Act of 1985, which the President signed into law
in mid-December 1985, implemented some of his suggested reforms.
But it maintained the traditional structure of American farm programs. Thus, U.S. agriculture has turned toward the free market, but
it still remains heavily dependent upon Federal Government programs. This chapter is devoted to an analysis of the economic implications of those programs that directly and indirectly support farm
income.
FOOD SECURITY ACT OF 1985
The Food Security Act of 1985 is the latest omnibus farm bill that
provides the basic authority for U.S. farm programs. This act has
turned U.S. farm programs toward the free market. Most significantly, it lowered price support levels for several important commodities.
Lowering price supports means lower prices for U.S. consumers and
makes the United States more competitive internationally. The act




130

also gradually lowers direct income support for some commodities. A
less distortionary method of direct income support has been instituted.
By and large, however, the Food Security Act of 1985 retains the
traditional structure of most farm programs. Even though improvements have been made, farm programs still distort economic incentives and cause a misallocation of economic resources. Farm program
costs under the act are currently expected to exceed $52 billion for
fiscal 1986-88. Moreover, in some instances, particularly export subsidies, sugar, and dairy, the act appears to have increased the distortions of American farm programs. In signing the act the President
specifically noted that these programs require improvement and he
promised to work with the Congress to achieve these goals. The
dairy and sugar programs are addressed below; Chapter 3 considers
the export subsidy program.
THE STRUCTURE OF AMERICAN AGRICULTURE
Revenue-generating ability in American agriculture is concentrated
in relatively few farms (Table 4-1). The three highest sales classes,
those with sales exceeding $100,000, generate almost 70 percent of
gross farm income but account for only about 14 percent of farms.
Farm income is also highly skewed toward the largest sales classes.
Large-scale farms earn most of their income from farming while
smaller scale farms earn a significant, and in many instances, a predominant share of their income off-farm. The average American farm
family earns roughly 40 percent of its income from farming and the
other 60 percent off-farm.
The emerging structure could be characterized as dominated by a
relatively few large-scale farmers with most farmers running smallscale, part-time operations. This view is partially misleading. Roughly
30 percent of all farms can be classified as commercial, i.e., annual
sales exceed $40,000. And although farms in the $40,000-$ 100,000
sales category earn more income off-farm than on-farm, net equity
per farm averages almost $400,000 in this sales class. Even these relatively small-sized farms have significant equity invested in farming.
Farms with sales exceeding $100,000 receive approximately 66 percent of direct government payments, and commercial farms receive
88 percent of direct government payments. Not all farms receive
direct government payments, which are concentrated in the grains
and cotton. In fact, the payment concentration is tighter than Table
4-1 suggests; only about 30 percent of farms participate in direct
payment programs.




131

TABLE 4-1.— The structure of American agriculture, 1984
Farm size, by annual sales (thousands of dollars)
Item

500
and
over

250 to
500

100
to
250

40 to
100

20 to
40

10 to
20

5 to
10

Less
than
5

All
farms

Thousands

31

77

229

353

1.3
29.1
12.4

Number of farms

3.3
16.8
18.7

9.9
23.5
35.4

15.2
16.1
22.2

247

269

314

807

2,328

11.6
3.3
2.8

13.5
2.4
1.3

34.7
3.5
.7

100.0
100.0
100.0

5.5

4.0
.1
3.6
6.1
35.9

5.8
.1
6.5
10.1
59.7

166.2
8.4
102.9
198.9
657.2

0.3
19.5
114.3

0.1
12.5
74.0

3.6
85.4
282.3

-1.5
17.7
16.3

-1.5
20.2
18.6

-1.8
20.4
18.6

11.4
17.2
28.6

4.3

2.7

1.1

5.1

16.2

14.6

14.4

23.2

Percent of total
Number of farms
Gross farm income
Direct government payments

10.6
5.3
6.4

Billions of dollars
Gross farm income
Direct government payments
Real estate debt1
Total liabilities1
Net equity1

48.3
1.0
18.9
43.1
73.8

28.0
1.6
16.5
33.0
91.1

39.2
3.0
25.8
48.1
156.3

Direct government payments
Total liabilities1
Net equity1

33.4
1,379.1
2,361.6

20.6
428.6
1,183.6

13.0
209.5
681.2

423.1
14.4
437.5

81.9
11.5
93.3

31.9
10.7
42.6

26.7
1.9
20.1
37.6
136.6

8.8
.5
6.9
12.6
60.4

4'8
8.4
43.5

Thousand dollars per farm
5.3
106.4
386.9

2.2
51.0
244.3

0.9
31.2
161.4

Thousand dollars per operator
Farm income
Off-farm income
Total income

6.1
9.7
15.8

0.4
21.1
21.5

Percent
Direct government payments as percent of gross
farm income

2.2

5.7

7.6

7.0

36.9

26.6

23.5

21.6

6.2
Ratio

Debt to assets1

17.3

1

December 31, 1984; excludes operator households.
Source: Department of Agriculture.

Because many larger scale operations produce commodities (livestock, poultry, nurseries, and fruit and vegetables) not covered by
direct payment programs, and because producers cannot usually receive payments exceeding $50,000, the largest farms are not always
the largest beneficiaries of these payments. Consequently, farms with
sales exceeding $500,000 account for 29 percent of gross farm
income while receiving 12 percent of direct government payments.
Among commercial farms, no other sales class contributes more relatively to total gross farm income than it receives in government payments. However, large direct payments to wealthy farmers do exist.
Average net equity for farms with sales exceeding $500,000 is more
than $2 million; on average these farms receive about $33,000 annually in direct government payments.
A succinct indicator of U.S. agriculture's financial problem is the
historical trend of its aggregate debt/asset ratio. Almost unpreceden-




132

tedly, this ratio fell 2 years in a row in the early 1970s, but in 1974
the debt/asset ratio again started to rise. In the 1980s, however, this
ratio jumped to levels unseen since the Great Depression. A major
reason was a rapid erosion of agricultural land and machinery values.
Although total agricultural debt has declined slightly since 1982, land
values nationwide fell an average of 19 percent between 1981 and
1985.
Not surprisingly, financial problems are concentrated in the regions with the largest land-value declines, i.e., the Corn Belt, the
Lake States, and the Northern Plains. Roughly 60 percent of farms
classified as financially distressed by the U.S. Department of Agriculture (USDA) were in these regions; a farm is considered financially
distressed if its debt/asset ratio exceeds 40 percent and it cannot
generate enough cash income to pay its bills. About 12V2 percent of
all farms were in this category on January 1, 1985.
Chart 4-1 decomposes financial stress by farm size. Sales classes
encompassing $40,000 to $250,000 account for 25 percent of U.S.
farms and 40 percent of gross farm income and include more than
half of all financially stressed farmers. These sales classes contain the
predominantly family-size, commercial farms on which the debt crisis
centers. Compared with other sales classes, this category also contains a disproportionate number of commercial grain, dairy, and livestock operators in the Midwest.
PHILOSOPHY AND MECHANICS OF INCOME SUPPORT
The United States has developed an extensive array of programs
designed to enhance the economic position of farmers. Since the
1930s, many farm groups have been convinced that the best way to
address low farm incomes is to curtail production. Voluntary curtailment programs by producer groups were tried and failed, but the
belief in production curtailment remained so strong that some form
of it was embedded in virtually every piece of omnibus farm legislation.
The ability of production curtailment to support income hinges
upon the responsiveness of demand to price changes. If consumers,
when faced with a given percentage supply curtailment, are willing to
increase the price paid for the product by more in percentage terms
than the supply curtailment, farmers can raise revenue by selling less.
The price increase associated with restricting supply more than offsets the diminished sales volume. Economists refer to this condition
as inelastic demand.
Demand for most agricultural products within any given country is
usually believed to be inelastic. And as long as U.S. agriculture was




133

Chart 4-1

Distribution of Financially Distressed Farms by Sales Class,
January 1985
(Sales classes in thousands of dollars)

$250 to $ 0 ( %
5 0 7)

Over $ 0 ( %
5 0 3)

Under $10 (15%)

$10 to $20 (9%)
Note.—Financially distressed farms are defined as those with debt/asset ratio over 40 percent and
negative cash flow.
Source: Department of Agriculture.

insulated from world markets, this probably described the situation
facing domestic producers. But now that American agriculture operates in a worldwide setting, the efficacy of production or supply curtailment is being questioned. Demand for farm commodities in international markets appears more sensitive to changes in price than internally. If total demand is very responsive to price changes, production and marketing control programs will fail in the long run unless
some mechanism insulates the domestic from the world market.
Farm programs can contribute to ends besides supporting income.
Other goals which farm policy can ideally pursue include: the assurance of a steady and reasonably priced supply of food and fiber to
U.S. consumers; farm income stabilization and more efficient production practices by reducing price risk; and the promotion of socially
beneficial research and development programs. Besides benefiting
farmers, therefore, farm programs may benefit consumers. What follows focuses on the gains to producers and losses to consumers and
taxpayers associated with the major income-support programs. Pro-




134

grams analyzed include: price-support programs (loan programs and
direct acquisitions), deficiency payments, production diversion programs, production and marketing quotas, and marketing orders.
PRICE-SUPPORT PROGRAMS

The Agricultural Adjustment Act of 1933 created the Commodity
Credit Corporation (CCC) and authorized it to borrow from the Federal Treasury to execute its price-support programs. The CCC supports prices using nonrecourse loans and direct purchases.
Loan Programs

Under nonrecourse loan programs, farmers take out loans and
pledge their crop as collateral. The size of the loan is the product of
the loan rate times the amount put under loan. Loan maturity varies
by commodity but typically is no longer than a year. At maturity, or
anytime prior, the farmer can repay the loan plus any accrued interest to the CCC. The farmer can also freely default (hence the name
nonrecourse) by delivering the commodity to the CCC in lieu of repaying the loan and any accumulated interest.
The CCC may resell commodities if market prices rise to prespecified levels above loan rates. The CCC's general pricing policy is to
stabilize prices and protect the CCC's investment while not interfering with commercial marketing channels. An ideal loan program can
operate as a buffer stock, but commodity groups often lobby effectively for release practices that do not depress domestic prices. Commodities having loan programs include wheat, corn, barley, oats, rice,
cotton, honey, peanuts, sorghum, soybeans, rye, tobacco, and sugar
(sugar loans are made to processors).
Loan programs provide short-term subsidized credit to farmers,
and they also provide farmers with price insurance. Farmers receive
subsidized credit because the interest rate CCC charges is below
commercial rates. These credit subsidies offer farmers a low-cost way
to market their commodities. If providing low-cost credit lets the
farmer realize a higher average price for the crop, then low-cost
loans enhance income. An alternative way to view the loan program
is as a subsidy to the marketing and storage functions.
Loan rates also act as price insurance. If the market price stays
below the loan rate and accumulated interest, forfeiting the crop
under loan (in which case interest costs are forgiven) is more profitable than selling in the market and repaying the loan. The loan rate
establishes a guaranteed minimum price for participating farmers. In
the absence of direct income-support programs, loan rates can support farm income.
Over time, guaranteeing farmers a minimum price, by lessening
price risk, may promote production of a higher amount of the com-




135

modity than otherwise. This could benefit consumers by assuring
them an increased supply of the commodity at reasonable price
levels. A great deal depends, however, upon where loan rates are set.
Suppose, for example, that demand and supply conditions are such
that without the program market-clearing prices would be chronically
below loan levels. Producers will not sell at these lower prices, preferring instead to forfeit their crop to the CCC. Because, by law, the
CCC cannot resell at prices below or only slightly above the loan
rate, the forfeited commodities are effectively sheltered from the
market. The CCC crowds consumers out of the market at prices
lower than the loan rate. While producer revenues are protected,
consumers are not. When compared with the situation that would
have existed without loan programs, consumers lose to the extent
that they buy a smaller quantity at a higher price. The producer gain,
however, generally exceeds the consumer loss because the producer
sells more to the government and consumers combined at a higher
price. But taxpayer costs exist in addition to these consumer losses.
Once a loan is forfeited, the CCC effectively buys the commodity at a
price equal to the loan rate plus any accrued interest. Thus the CCC
acquires commodity stocks that must generally be given away or disposed of at a much lower price than acquired. Moreover, the taxpayer also bears the storage costs until the commodity is disposed of.
Adding these costs to the consumer loss, a clear social loss can
emerge, i.e., the producer gain can be smaller than the sum of the
consumer loss and taxpayer expense.
In recent years, loan rates were high enough relative to world
prices to encourage farmers to forfeit to CCC rather than to sell. Because the United States exports many of these commodities, high
loan rates effectively taxed agricultural exports. By slowing the flow
of American commodities to international markets, world prices were
held up. The loan rate became a minimum price under which competitors could undersell American farmers. The United States experienced a loss of market share in world markets. By holding up world
prices, U.S. loan rates also supported foreign producer income at
U.S. taxpayer expense and encouraged expanded production abroad.
A major accomplishment of the Food Security Act of 1985 was to
lower loan rates for important export commodities. This change was
meant to improve U.S. export performance by making sales into
international markets more attractive than forfeiture to the CCC.
Lowering loan rates should lower world prices and make it more difficult for others to compete in world export markets. The extent to
which U.S. loan rates support foreign-producer prices and incomes
will be diminished.




136

The recent history of the U.S. sugar program illustrates the losses
caused by establishing loan rates above market-clearing levels. The
raw cane sugar loan rate is 18 cents per pound. In 1985, the world
price for raw sugar ranged from about 3 cents to 6 cents per pound.
When the Agriculture and Food Act of 1981 established the sugar
loan program that prevailed through 1985, it was realized that mandated loan levels were high relative to the world price. The Senate
report accompanying this act urged the President to use available authorities to prevent adverse budgetary outlays. The danger was clear:
A loan rate set above the world price meant that any sugar put under
loan would be forfeited to the government if world prices prevailed.
To keep domestic prices above forfeiture levels, a country-by-country quota and a duty and fee system for sugar imports were established. The quota size has been continually reduced and in one instance the quota year was lengthened. Domestic raw sugar prices
were at times seven times higher than world prices. Although the
program avoided significant CCC budget outlays, this distortion of
economic incentives had predictable effects. High domestic sugar
prices made switching to alternative sweetener sources more profitable for sugar users. In 1980, before the quota system was implemented, production of high-fructose corn syrup (HFCS) was 2.0 million
tons (roughly 15 percent of the total U.S. caloric sweetener market).
By 1985, after the quota had been in place 3 years, HFCS production
had more than doubled to about 5.0 million tons (about 33 percent
of the total U.S. caloric sweetener market). Major soft-drink manufacturers have switched from sugar to HFCS. Furthermore, domestic
manufacturers of high-content sugar products, such as chocolate and
candy, are finding it difficult to compete with imports produced
using low-cost, world sugar.
The vast internal-external price difference also made circumventing the quota lucrative. Entrepreneurs were importing high-sugar
content products, such as iced-tea mix, and then sifting their sugar
content from them and selling the sugar at the high domestic price.
An emergency import quota was placed on several sugar-containing
product categories in January 1985. This emergency quota had the
unintended effect of excluding commodities (e.g., kosher pizza shells)
from the domestic market for which quota circumvention was not an
issue. Consequently, the scope of the emergency quota was narrowed
in May 1985.
Assessing the exact gains and losses from the U.S. sugar program
is difficult. The United States is not alone in protecting its domestic
sugar industry, the European Community (EC) also has a sugar
policy that engenders excess production. Exactly how much of the
current low world price is due to U.S. or to EC policy is not clear.




137

Moreover, the sugar program has so distorted economic incentives
that tracing the associated multimarket effects with any exact precision is difficult.
However, some estimates can be attached to the sugar program.
Recent estimates indicate that the sugar program costs domestic consumers about $2.5 billion to $2.9 billion annually. Domestic producers gain about $1.6 billion to $1.8 billion. Domestically, therefore,
producers gain about $1 billion less than consumers lose. About a
third to half of this $1 billion is transferred to countries holding
import quotas. Because these countries export sugar to the United
States at higher than world prices, they can gain from the quota. At
least in price ranges observed in recent empirical studies, these exporting countries compensate quantity declines by price increases.
However, countries not having access to the American market lose
because the quota lowers world prices. On balance, therefore, the
U.S. sugar program transfers roughly $1.9 billion to $2.2 billion from
domestic consumers to domestic and international producers.
Because there are roughly 12,000 to 13,000 sugar cane and sugar
beet farmers in the United States, the average annual transfer from
consumers is approximately $120,000 to $145,000 in profit per farm.
In addition, domestic consumers pay about another $80,000 per
sugar farmer to make the transfer because of inefficiencies associated
with the quota system.
On September 18, 1985, a sugar import quota of 1.85 million tons
was announced for the December 1, 1985, to September 30, 1986,
period. Some experts believed a quota of approximately 1.2 million
tons was necessary to avoid significant sugar-loan forfeitures. This
Administration's decision to set a quota at the higher level was made
to avoid the adverse effects of a lower quota on domestic sugar consumers and a number of smaller countries that depend heavily on
sugar exports to the United States for foreign exchange earnings. A
deeper quota cut would have had significant economic consequences
for the President's Caribbean Basin Initiative.
The Food Security Act of 1985 mandates beginning next quota
year that the Secretary of Agriculture avoid loan forfeitures in operating the sugar program. The current quota year, ending on September 30, 1986, is either to be extended until December 31, 1986, or
the Secretary is to administer the program so that forfeitures would
be the same as achieved by extending the quota year. The President
has asked the Congress to reconsider its sugar policy.
Extending the quota year means that a quota designed for a 10month period would cover 13 months; the effective quota cut is
about 25 percent. This quota cut could increase domestic U.S. prices
by as much as $40 per ton. U.S. consumers could lose more than




138

$300 million. Because the sugar that would otherwise have been sold
in the United States now must be sold or stored elsewhere, world
sugar prices will probably decline.
In the past the objective of no loan forfeitures has been pursued
by quota cuts. But maintaining high domestic sugar prices encourages expanded domestic sugar production. In recent years, domestic
sugar production has grown. Continued growth could require a prohibitive quota on sugar imports. At some point, domestic production
controls may be necessary to avoid loan forfeiture.
Like all programs transferring wealth to agricultural producers by
maintaining artificially high prices, the sugar program most affects
those consumers who spend the largest proportion of their income
on foods and staple products. Poorer consumers tend to spend a
higher percentage of their income on food products than richer consumers. This means that the relative burden of such programs falls
heaviest on the poorest segments of society and is, therefore, a form
of regressive taxation—a transfer of wealth from poorer to richer
segments of society.
Direct Acquisition Programs

The CCC also supports some commodity prices by purchasing any
of the commodity offered at a stated price—the support price. This
technique is used indirectly to support milk prices. Fluid-milk perishability makes acquiring and storing large enough quantities of fluid
milk to support prices effectively infeasible. Thus, CCC supports milk
prices by purchasing butter, cheese, and nonfat dry milk. Because
U.S. support prices for these products are generally higher than
world prices, the United States also limits total imports of dairy products to less than 2 percent of domestic production. Without import
controls, U.S. price-support operations would support world dairy
prices.
The economic effects of direct acquisitions resemble those of commodity loans except that no loan subsidy is associated with direct acquisitions. Excess production can occur if the support price is chronically set at higher than market-clearing levels. Resources normally
devoted to other uses may be diverted toward production of the supported commodity. This could be reflected in the milk market by
herd overexpansion as well as overexpansion of processing capacity.
The potential economic losses associated with direct acquisition
are illustrated by milk. In 1980-84, program costs to taxpayers exceeded $9 billion. For the marketing year ending September 30,
1985, they exceeded $2 billion. In 1985 the CCC purchased roughly
64 percent of all American nonfat dry milk production, 24 percent of
butter production, and 20 percent of cheese production through
price-support operations. Partly because of these large budgetary




139

outlays, the support price has been lowered in recent years from
$13.10 to $11.60 per hundredweight. Even with these cuts, the CCC
continues to accumulate processed milk products. The USDA estimates that at current support levels the CCC will acquire roughly
16.5 billion out of an estimated 145 billion pounds of milk products
in the 1985-86 marketing year. Estimates indicate that eliminating
price supports and allowing all production to come onto the open
market would make prices fall about $2.70 per hundredweight in the
short run and $1.25 in the long run. Consumer losses from pricesupport operations are, therefore, estimated at approximately $1.7
billion to $3.7 billion per year. All the consumer loss, plus a portion
of the taxpayer expenditure (about $1.9 billion), is transferred to
milk producers who will gain somewhere in the neighborhood of
$1.8 billion to $3.9 billion. The economic inefficiency of the program
costs consumers and taxpayers an extra $0.40 to $1 for every $1
transferred to producers.
DEFICIENCY PAYMENTS

The Agriculture and Consumer Protection Act of 1973 tried to
separate price support from income support by introducing target
prices and deficiency payments. Target prices are set above the loan
rate and entitle participating farmers to receive per-unit deficiency
payments equaling the difference between the average market price
and the target price (not to exceed the difference between the target
price and the loan rate) for program commodities. As long as the
market price exceeds the loan rate by enough to cover accrued interest payments, farmers will find it profitable to sell the crop in the
market and collect the deficiency payment. The government can then
support agricultural incomes without acquiring agricultural commodities. However, target prices create an uncertain and potentially very
large budget exposure. Receipt of deficiency payments frequently is
contingent upon farmers retiring acreage from production.
As defined by the Agriculture and Food Act of 1981, target prices
and deficiency payments tied income support to production levels.
(As explained later, deficiency payments need not be tied to production levels.) When market prices are above target prices, such policies can have relatively little effect. With acreage retirement provisions in effect, target prices can even exceed market prices without
encouraging significant producer participation. This is because the
income forgone on acreage retired from production to qualify for deficiency payments may exceed the extra income generated through
deficiency payments. Farmers will then prefer to rely only on the
market for their income rather than on taxpayer subsidies.




140

Target prices above market-clearing levels can be distortionary.
When income support is tied to production, participating farmers
have incentives to overproduce. If acreage retirement provisions are
not sufficient to counteract these incentives, excess production
occurs and market prices are depressed. Because the United States
exports most crops with target prices, this price-depressing effect can
be transmitted to international markets. Consequently, the domestic
producer price (the target price) may be higher than the price to foreign and domestic consumers (corrected for transportation differentials, marketing margins, and other factors).
A higher-than-market target price can distort markets closely linked
to the supported commodity. For example, the 1985 corn target
price was $3.03 per bushel, while market prices were running significantly lower. Because corn is grown competitively with soybeans
(which have no target price), these higher than market returns for
corn could divert resources from soybean toward corn production.
Even if competitive crops have deficiency payments, changing relative
producer prices can distort market relationships.
Data on direct government payments suggest that government programs do not distribute benefits equally across crops (Table 4-2).
Cotton and rice producers, in particular, receive more from government on a per-acre basis than either wheat or corn farmers.
TABLE 4-2.—Government payments to producers of selected grains and cotton, 1985
Commodity

Per producer

Per acre

$36

Wheat

$4000

Corn

45

2,700

Cotton

84

3,800

138

9500

Rice
Source: Preliminary estimates of Council of Economic Advisers.

Besides distorting markets for competitive crops, deficiency payments can distort input markets by bidding up input prices. This is
particularly true of inputs, such as farmland, that are in relatively
fixed supply. The amount a farmer pays for an acre of farmland,
other things equal, varies directly with the cash returns that the farmland yields. If deficiency payments increase cash returns, they increase farmland value. Deficiency payments also enhance land rental
rates because a renter who can use the land to grow crops yielding
higher-than-market returns will pay a higher rental rate than otherwise.
Programs that increase land values and rental rates benefit most
landowners holding the land at the beginning of the program. Farm-




141

ers acquiring land after program institution may pay up to the entire
capitalized program benefit to acquire the right to receive the payments. Thus, by enhancing land values, deficiency payments also
augment landowner wealth relative to nonlandowners. Moreover, the
higher the returns deficiency payments generate, the more land
values are bid up. With an 8 percent interest rate the capitalized
values of the estimated per-acre direct payments for 1985 are: wheat
$450, corn $562, cotton $1,050, and rice $1,725. The average value
of an acre of farmland in the United States is $679.
Acreage retirement programs frequently do not reduce production
very much. In 1985 producers owning more than 50 percent of all
corn acreage participated in the corn program and were required to
retire 10 percent of their acreage base (the average of acreage planted and acreage considered planted to corn in 1983 and 1984). And
yet the 1985 corn crop was nearly a record. Such events occur for
several reasons. First, even significant acreage retirement can be
offset by good growing conditions. Second, a farmer usually retires
the poorest and least productive land first. Third, by planting fewer
acres, the farmer frees resources to be used in more intensive farming of the remaining acres. And fourth, nonparticipating producers
can expand their acreage. Hence, a given percentage acreage reduction to accommodate program provisions does not necessarily translate into an equal percentage production reduction. So even with relatively large acreage reduction programs, the price incentives of high
target prices can encourage excess production. In some instances,
this excess supply can depress market prices enough that forfeiture
of commodities under loan to the CCC becomes attractive. When
market prices are at such depressed levels, the loan-rate mechanism
counters the export-enhancement characteristics of the target price.
Now, instead of stimulating exports, the programs inhibit exports because a higher return can always be had by forfeiting commodities to
the CCC. The CCC is then in the worst possible position from a
budgetary perspective: it is at or near maximum deficiency payments
and faces large loan forfeitures. Without significant downward adjustment in target prices or other program adjustments, farmers have no
incentive to make the production reductions necessary to ameliorate
the situation.
Most commodities with target prices and loan rates have suffered
experiences similar to those described above. Payments to farmers
have been large and large quantities of CCC stocks have accumulated. And while target prices and loan rates have risen, exports have
fallen as illustrated for corn by Chart 4-2.
While these programs are burdensome from a budget perspective—in fiscal 1980 deficiency payments were $80 million, by fiscal




142

Chart 4-2

Target Price, Loan Rate, and Exports of Corn
Millions of metric tons
90

Dollars per bushel

Target Price
(Right scale)

3.00

80
2.50

Loan Rate
(Right scale)

70

2.00

60

1.50

50
Exports
(Left scale)

40

J_
1980

1.00

J_
1981

1982

1983

1984

1985

Source: Department of Agriculture.

1985 they had risen to about $6 billion—they can also hurt farmers
who rely on the free market rather than on taxpayer subsidies. These
farmers must sell their commodities at depressed prices. Just as consumers are effectively taxed by direct acquisition schemes, nonparticipating producers can be indirectly taxed by selling at lower than free
market prices. At the same time, because commodity programs can
bid up input prices, nonparticipating producers also can face an implicit input tax by paying higher than free market input prices.
Therefore, not only do nonparticipating producers not reap direct
benefits from the programs, but they may end being taxed for relying
on the market and not the taxpayer. This creates strong incentives
for nonparticipants to participate in government programs. As target
prices remain well above market-clearing levels, participation might
be expected to rise. In the early 1980s less than 30 percent of corn
acreage participated in government programs; in 1986 more than 70
percent of corn acreage is expected to participate.




143

The Food Security Act of 1985 initially freezes target prices at current levels. However, in an attempt gradually to return U.S. agriculture to a free-market, competitive footing while protecting farm
income in the interim, this act lowers target prices slowly after 1988.
This change should eventually reduce incentives to overproduce.
Quantitative estimates of the losses occurring in markets with
target-price deficiency payment programs vary. Taxpayer costs for
the wheat program are estimated at approximately $3.2 billion while
producer gains are around $2.1 billion. Taxpayer cost in the corn,
cotton, and rice programs are, respectively, estimated at $3.0 billion
to $4.1 billion, $1.5 billion, and $0.71 billion. In all these markets
producer gains are less than the taxpayer outlay being, respectively,
$2.1 billion to $2.5 billion, $1.1 billion, and $0.58 billion annually.
Some of the taxpayer costs are transferred to foreign consumers of
the supported commodities.
PRODUCTION DIVERSION PROGRAMS

Programs exist which pay farmers not to produce. For example, in
1985 the wheat, cotton, and rice programs required unpaid retirement and the paid diversion of some of the farmer's base acreage.
To be eligible for wheat deficiency payments and loans, wheat farmers had to idle 20 percent of their base acreage without payment and
10 percent of their acreage with a $2.70 payment for each bushel that
would normally have been produced on the diverted land.
Producers participate in such programs if the income received from
the target price and the land diversion payment exceeds what the
market would yield without program participation. Society loses from
virtually all such programs when the taxpayer cost of the diversion
and deficiency payments, added to the wastage of economic resources caused by diversion, exceed any producer or consumer gains.
Between January 1984 and April 1985 the United States had a paid
milk diversion program. Producers were paid $10 per hundredweight
diverted. Forty-two thousand producers were paid roughly $955 million, the average per-producer payment exceeded $22,000. Program
benefits were not evenly distributed throughout all sales classes or
throughout all regions. Roughly 75 percent of participants received
less than $25,000 in payments, but they received only 38 percent of
total payments. The remaining 25 percent, with payments exceeding
$25,000, received roughly 62 percent of the payments. Table 4-3 decomposes the payments to the top five recipient States by total State
payments and average payment per participating producer in the
State. These five States received 38 percent of all milk diversion payments. Average payments in Florida and California were both particularly large, exceeding $100,000 per producer.




144

TABLE 4-3.—Milk diversion payments: top five States
Payments to $25,000+ payees
Total
payments
(millions of
dollars)

State

Average
payment
(dollars)

As percent
of total
payees

As percent
of total
dollar
amount

Wisconsin

112.5

39,600

14.9

38.3

California

87.9

142,200

86.6

98.5

Minnesota

81.3

37,700

11.1

30.5

Texas

46.6

63,900

70.7

90.8

Florida..

40.3

226,700

95.2

99.6

955.3

57,100

24.9

62.3

U.S. TOTAL
Source: Department of Agriculture.

One reason for large per-producer payments in California and
Florida, as well as some other States, is that the milk diversion program was not designed to limit income transfers as some other programs are. For example, total deficiency payments per producer
cannot exceed $50,000. Milk diversion payments were only limited by
the requirement that payments could only be made on 30 percent of
the production base. Thus, very large-scale producers were potentially eligible for large diversion payments, and States with many largescale producers received larger payments than States with smaller
scale producers.
The Food Security Act of 1985 establishes a milk production termination program. Each dairy producer is to be taxed 40 cents per hundredweight of milk marketed between April 1, 1986, and January 1,
1987, and 25 cents per hundredweight of milk marketed between
January 1, 1987, and October 1, 1987. The milk support price is left
at its current level through 1986 and is then cut to $11.35. This tax
revenue is to finance partially whole-herd dairy buyouts. The goal of
the program is to reduce U.S. milk production by 12 billion pounds.
Producers wishing to participate must submit bids to the Secretary of
Agriculture. If a contract is executed, these producers must sell for
slaughter or export all their dairy cattle and refrain from milk production for a period of 5 years.
The exact effects of the dairy buyout program are difficult to predict. But several things are clear. First, the producer's bid to the Secretary will be large enough to cover the expected difference between
what the producer would earn from the herd over time by selling
milk and what the producer earns by selling the herd for slaughter or
for export. Each producer bid estimates the economic cost of diverting productive resources, e.g., dairy cattle, to a less productive use,
i.e., slaughter. The program, if effective, will reduce milk production.




145

But it will only raise a market's dairy prices if that market's production reduction is large enough to end CCC takeovers in that market.
For the coming marketing year, with no production reduction programs, projected takeovers are more than 16 billion pounds. The
CCC expenditures on milk support will fall to the extent that the
production reduction program curbs takeovers.
The program-induced slaughtering of dairy cows will put downward
pressure on meat prices. To minimize this effect, the Food Security Act
of 1985 instructs the Secretary of Agriculture to purchase an extra
400 million pounds of meat. Two hundred million pounds are to be
used domestically; the remainder goes to export programs and military commissaries. Much of these meat purchases, therefore, could be
sold or given to foreign consumers at lower prices than U.S. consumers face.
If takeovers continue and market prices remain around support
levels, consumers may not be seriously affected. But the program's
goal is production reduction—consumers cannot gain. While CCC
expenditures for milk support may go down, any savings here will
tend to be offset by the increased expenditures for meat products
and by the economic cost of diverting cattle to slaughter or export.
Compared with the situation that would prevail under the policy advocated by the Administration, i.e., a lowering of support rates to
market-clearing levels, clear social losses emerge.
Because the milk production reduction program does not immediately lower support prices, it does not address a fundamental cause
of the current excess capacity. If support rates remain above marketclearing levels in the future, the production termination program will
have only relatively short-run effects. With above market-clearing
prices new producers will find dairy production attractive and may
replace those who exit the industry under the program. An ultimate
solution to excessive dairy production, excessive dairy processing capacity, and large CCC takeovers is gradually to lower support rates
to at least market-clearing levels and not to further distort dairy production by taxing dairy producers to finance the slaughtering of cows.
PRODUCTION AND MARKETING QUOTAS

Some programs enhance farm income by limiting what farmers can
produce or market in domestic markets. When mandatory production
controls are effective, consumers lose because they buy less at a
higher price. Production controls can increase producer revenues if
demand is inelastic. Therefore, production controls effectively tax
consumers to transfer income to producers. Effective production
quotas also imply that resources whose best use without the program
is producing the restricted commodity are devoted to less econorni-




146

cally remunerative uses. These costs have to be added to consumer
costs to determine whether the domestic costs associated with the
program exceed producer benefits.
The economics underlying marketing quotas are similar. Marketing
quotas limit the amount that can be sold in certain markets. For example, the U.S. peanut program sets no limits on domestic production and no limit on the amount sold internationally. However, it
does limit the amount that can be sold domestically. Limiting the
amount sold domestically results in losses to consumers because they
purchase less at higher prices. Producers gain because on domestic
sales they receive a higher price than otherwise.
Farm marketing quotas exist for tobacco. Tobacco prices are also
supported by a loan program. By legislative mandate, these support
operations are run at no net cost to the Federal Government. Hence,
tobacco farmers are assessed on the basis of tobacco marketed to
fund the no-net-cost-tobacco fund.
Marketing quotas for tobacco have decreased as the demand for
U.S. tobacco exports has diminished. Loan rates for tobacco are also
at levels that may make it difficult for U.S. tobacco to compete in
world markets. As a consequence, the U.S. share of the world tobacco market has diminished (Chart 4-3).
If quota limitations raise producer incomes, producers will pay a
positive price for access to the quota. In burley and flue-cured markets, quota rights can be either sold or rented. Thus, establishing effective quotas creates income and, hence, wealth for quota owners. If
quotas were abolished, quota owners would suffer a real wealth loss.
An estimate suggests that quota abolition would entail losses of
roughly $700 million to $800 million to current quota holders. Although these losses are large and real, their value equals only the
value of income extracted from consumers and transferred to quota
owners through the program.
Tobacco legislation was not included in the Food Security Act of
1985, but a new tobacco price-support program is to be considered
by the Congress later this year. The present program was designed
to be funded through producer assessments. Because of a drought in
1983, however, the burley tobacco crop was of extremely poor quality and almost one half remains unsold. An important provision of
the proposed new legislation requires the government to help burley
tobacco farmers cover some of the losses associated with this crop.
This provision of the bill could cost more than $0.5 billion.
The U.S. peanut program places a quota on domestic peanut marketings but no limitation on the amount of American peanuts sold in
international markets. Peanut prices are also supported by nonrecourse storage loans. Support, however, is two-tiered: Peanuts eligi-




147

Chart 4-3

U.S. Share of World Exports of Flue-Cured Tobacco
Billions of pounds

Percent
100

90
1.5

80
70
60

1.0

Effective U.S. Marketing Quota \
N
(Right scale)

50
40
30

U.S. Share of Exports
(Left scale)

20
10
I
1966

1968

I
1970

I

I
1972

I

I
1974

I

I
1976

I
1978

I

I
1980

I
1982

1984

Source: Department of Agriculture.

ble for domestic sale are supported at a higher rate than peanuts not
eligible for domestic sale (nonquota or additional peanuts).
A rough estimate of the consumer losses and producer gains associated with the peanut program can be made by comparing the
export and domestic prices. For 1982-84, the average price difference was about 9 cents per pound or $180 per ton. Given domestic
consumption at roughly 1 million tons, total producer gains were
about $180 million per year. Consumer losses were slightly larger at
about $184 million.
MARKETING ORDERS

The Congress has established special marketing arrangements,
known as marketing orders, that operate separately from the CCC. In
1985, marketing orders covered 47 fruit, vegetable, and specialty
crops in the United States and approximately 80 percent of fluid
grade milk sales.




148

Marketing orders play roles that range from controlling quantity to
generic advertising. The basic legislative authority for existing marketing orders is the Agricultural Marketing Agreement Act of 1937.
The primary focus of marketing orders has been the achievement and
maintenance of what have been called orderly marketing conditions.
Once established, orders apply to a specific commodity, to a specific geographic market, and to all commodity handlers in the market.
Participation in established marketing orders is involuntary. Thus,
marketing orders are sometimes controversial, because by law they
can limit the freedom of independent producers to choose how,
when, and where to market their crop.
Arguments made for marketing orders often revolve around quality
control, stabilization, research and information, offsetting potential
monopoly power, and income redistribution. Because many marketing-order commodities are highly perishable and/or seasonal, stabilization is often considered a main producer benefit. Furthermore,
some orders cover tree crops requiring large capital investments well
in advance of production. Because of these long lags some argue that
producers need a stable price upon which to base their decisions to
avoid under- or overinvestment.
Some marketing orders assess members to fund research programs
that benefit all producers but which no single producer has the incentive to undertake. Problems appear in the dissemination of information about a commodity for which it is not easy to develop brand
loyalties. For example, if an orange producer advertises and convinces consumers to buy more oranges, all orange producers likely
benefit from the increased orange purchases. But only one producer
bears the costs. As a result, no producer has the incentive to advertise at a socially optimal level. The formation of marketing orders
that assess producers to pay for generic advertising can mitigate such
problems.
Marketing orders use quality control, quantity controls, and
market-support activities. The main economic issues are whether
these tools serve their stated purpose and the magnitude of the economic costs and benefits associated with their use. Quantity controls
are controversial because they can be used to enhance producer
income by monopolistic-like pricing.
Volume Controls

The Agricultural Marketing Agreement Act of 1937 provides for
three methods of volume control: producer allotments, market allocation, and reserve pools. With producer allotments each producer has
a base allotment derived from historic marketings. Every marketing
season producers are then told how much of the base they can sell.
Producer allotments are similar to marketing quotas in their econom-




149

ic effects. When the controls restrict supply, consumers lose by
paying more for less of the commodity than otherwise. Producers
may gain if the price increase associated with restricting supply offsets the decrease in quantity marketed.
Research has shown, however, that orders with allotment schemes
may not practice pure monopolistic pricing because the allotment decision is typically made by the order's administrative committee on
the basis of a majority vote. The administrative committee generally
has representatives from diverse industry interests; some orders even
have a consumer representative. Under majority voting, one expects
the outcome to reflect the allotment that maximizes the well-being of
the majority. This outcome is not necessarily the monopolistic solution.
If producer allotments give order members a higher income than
the free market, then producers will pay a positive price for an allotment. Although only three producer allotment schemes have been in
effect recently (Florida celery, hops, and spearmint oil), in two of
those orders (hops and spearmint oil) the right to purchase allotments has had large positive prices. (The hops order terminated on
December 31, 1985.) This suggests that these orders may have enhanced producer incomes at consumer expense.
Market allocation schemes take advantage of demand differences
across alternative markets for a commodity, for example, the markets
for fresh and processed fruit. If commodities sold in one market
cannot be easily resold in the other, and if one market's demand is
more inelastic than the other's, producers may gain by price discriminating, i.e., charging different prices in the two markets. Consumers
lose by such pricing arrangements. If one market's demand is more
inelastic than another's, a price discriminator diverts some of what
would have normally been sold in this market to the other market.
Without retrading between markets, price rises in the first market
and falls in the second. Consumers in the first market buy less at a
higher price and, therefore, lose. Consumers in the second market
gain by buying more at a lower price. The amount gained in the
second market is less than the amount lost in the first; consumers in
the aggregate lose.
Marketing orders using market allocation establish a "free" percentage that can be marketed without restriction. The remainder is
marketed in a noncompetitive outlet. Like the peanut program,
market-allocation orders do not control the quantity produced and
further, they do not restrict entry of new producers. In the short run,
the market allocation can enhance producer income from a given
crop. Effectively, producers see a weighted-average price from the
two markets that is higher than the market-clearing price for the




150

available supply. Without production control or barriers to entry,
producers have incentives to expand production in response to this
higher perceived price. As time wears on, entry and overproduction
tend to erode the original profits that were enjoyed. An increasing
amount of the order crop is diverted to the secondary market, effectively lowering the weighted-average price that producers receive.
Orders with market allocation schemes include walnuts, filberts, California dates, and raisins.
Reserve pools temporarily remove some of the crop from the
market. If used appropriately, a reserve pool can benefit both consumers and producers by operating as a buffer stock. However, reserve pools can artificially restrict supply to increase producer
income. For example, produce could be diverted to the reserve pool
without bringing it back onto the market for later resale or for resale
in a secondary market. If producer revenues are thus enhanced, these
practices are tantamount to the price discrimination practiced under
market allocation orders. The economic effects would be the same.
Orders with reserve pools include tart cherries, California walnuts,
spearmint oil, prunes, and California raisins.
Market Flow Regulations

Two main types of market flow regulations exist: shipping holidays
and handler prorates. Shipping holidays restrict the flow of the commodity to the market for certain days of the year—frequently right
after a peak demand period. Handler prorates, which specify amounts
of the commodity that can be marketed during certain time periods,
tend to be more controversial. For some marketing orders, prorates
apply for only part of the year. But in three western citrus crop
orders (navel oranges, Valencia oranges, and lemons) season-long
prorates are permitted. These season-long prorates could be used to
price discriminate by segmenting the fresh-fruit market from the
processed market. Fruit marketed in excess of the prorate must be
marketed in a secondary market, which usually means the processed
market or wastage markets such as livestock feed. Season-long prorates used to limit total deliveries to primary markets should generate
basically the same economic effects as direct market allocation—consumer losses, overproduction, and larger sales in secondary markets.
For the three western citrus orders with season-long prorates, chronic overproduction has occurred. And in the navel orange order, revenue from sales to the processing market by growers has at times not
been enough to cover grower costs. This evidence suggests that
these orders may have used the prorate to price discriminate.
In 1985 the Secretary of Agriculture responded to shortages
caused by severe freeze damage to the Texas and Florida citrus crops
by suspending the prorate provisions for California-Arizona navel or-




151

angcs. The prorate suspension occurred after approximately 52 percent of the navel crop had been shipped. An analysis concluded that
the suspension had no significant effects on either the average price
level or price variability. The suspension also had minimal effects on
producer incomes. Income under the suspension was higher than it
would have been under the utilization schedule proposed by the
Navel Orange Administration Committee. Order suspension apparently did not result in less orderly marketing. These results should
be interpreted with caution, however, because they are based on an
unusual supply situation. A recent study has found that consumer
losses from the California-Arizona Navel Orange marketing order for
the 1985-86 marketing year will be about $47 million while producers will gain about $26 million. In the longer run consumers would
gain about $59 million from ending the prorate while producers
would lose about $43 million annually.
Even if prorates are not used to price discriminate through market
allocation, both they and shipping holidays can be used to price discriminate over time. Just as one can price discriminate across markets, one can market the same commodity at different times at different prices. To discriminate effectively requires that the commodity
once sold should be highly perishable and that the character of
demand change over time. For example, some citrus products can be
stored on the tree for several months without undue product deterioration but deteriorate fairly quickly once harvested. Also the demand
for some order crops bears a distinctly seasonal character (higher, for
example, around Christmas time). Intertemporal price discrimination
involves charging a higher price during periods when demand is
more inelastic and a lower price in periods when demand is more
elastic.
Quality Control

Marketing orders can control quality through the setting and enforcing of minimum grade, size, and maturity standards. An argument made for quality control is that removing below-standard
produce improves the average quality of produce marketed. But removing fruit or vegetables from the market lowers the quantity marketed; quality controls can be effective quantity controls.
In assessing the effects of quality controls, a primary question is
whether consumers can distinguish quality at purchase time. If consumers can distinguish product quality, quality controls can engender
consumer losses by limiting the range of alternative purchases. For
example, some consumers may prefer to consume fruit that others
would find overripe. If ripeness can be determined by examination,
eliminating this overripe fruit deprives these consumers of their preferred fruit quality.




152

Some also argue that quality controls, by improving perceived average quality, enhance demand and therefore result in higher producer prices. This argument relies on the commodity not being
priced according to quality. For example, a bad orange might fetch
the same price as a good orange. If, however, commodities are priced
according to quality differences, the argument may be invalid. Presumably, providing higher quality produce incurs higher costs than
providing low-quality produce. Producers will then weigh the cost
and price differences and choose the quality of produce that maximizes profit. Product quality would then be determined by the free
interaction of consumers and producers and not by the marketing
order.
To the extent, however, that quality is not easily perceptible at
purchase time, some form of mandatory grading and grade labeling
might be desirable to inform buyers about quality. Unless health risks
are involved, however, this does not justify the use of minimum quality standards to eliminate lower grades of produce that some consumers might otherwise choose to buy.
An alternative approach is the use of a grading and inspection
system similar to that existing in the U.S. beef market. Consumers
could be informed about product quality based on publicly available,
objective standards applied industry-wide. Then the consumer and
not the marketing order would choose what quality of produce to
buy.
FEDERAL MILK MARKETING ORDERS

The basic laws underlying Federal milk marketing orders are the
Agricultural Marketing Agreement Act of 1937 and the Agricultural
Adjustment Acts of 1933 and 1935. Federal milk orders cover only
Grade A milk, i.e., milk potentially marketable in fluid form.
The main tools of Federal milk orders are classified pricing and
revenue pooling to arrive at a blend price. Although Federal milk
orders have no explicit quantity controls, the setting of minimum
prices, under classified pricing, may constrain the amount that consumers purchase and thus have the same welfare implications as
quantity controls.
Classified pricing separates milk consumption into at least two
classes: milk for fluid use (Class I) and milk not for fluid use (for example, ice cream). Minimum prices are then set for each class with
Class I milk the higher priced. Minimum prices for lower class milk
are related by transportation differentials to the price of manufacturing-grade milk in Minnesota and Wisconsin. Each order then has its
own fixed differentials between minimum prices for these classes and
Class I.




153

With uniform blend pricing, market-wide revenues from Grade A
sales are distributed to producers by paying each producer a weighted-average price of milk sold in all classes (the blend price) for each
unit of Grade A marketed.
Studies have found that the minimum Class I prices are above the
prices that would clear the market in the absence of classified pricing.
Consumers, therefore, buy less Class I products than otherwise, and
fluid grade milk is diverted to manufacturing uses. This diversion depresses prices in the manufacturing market. However, studies indicate that the demand for processed milk products is more elastic than
the demand for Class I milk, implying that the resulting blend price
is higher than the market-clearing price in the absence of the order.
Producers seeing this higher price overexpand production. This extra
production further depresses manufacturing grade prices and lowers
the blend price. As with market allocation schemes, Federal milk
marketing orders can result in oversupply for lower class usages. Estimates of the price-depressing effect on manufacturing grade milk
range as high as 9 percent, while the price-enhancing effect for Class
I milk has been placed as high as 8 percent. Blend pricing has been
estimated to raise average producer prices by as much as 9 percent.
Isolating the total effects of the Federal milk orders is difficult because they co-exist with the price-support program. But by not allowing certain classes of milk to sell for less than the minimum price,
orders can constrain consumer purchases. In such instances, consumers lose from classified pricing. Producers of manufacturing grade
milk can be hurt if classified and blend pricing depress manufacturing-grade prices. Finally, by placing downward pressure on lower
grade milk prices, classified milk pricing can increase the cost of CCC
price-support operations.
Because classified pricing can raise producer prices, processors in
order areas might want to buy milk at lower prices from non-order
producers. To prevent such practices from disrupting classified pricing, a system for out-of-order purchases guarantees that ail milk sold
in an order area effectively receives the same price. Compensatory
charges may be levied if a handler purchases milk from a non-federally regulated handler or uses milk concentrates to produce reconstituted milk. In the case of reconstituted milk, the compensatory
charge is the difference between the lowest class price and the Class
I price. Reconstituted milk, which is actually competitive with Class I
milk, is, therefore, effectively priced as manufacturing grade milk to
the handler. The main incentive for reconstitution is removed. Studies show that the efficiency losses from stifling the transportation of
milk concentrates for reconstitution from surplus areas to high-cost
areas may be substantial.




154

ALTERNATIVE METHODS OF INCOME SUPPORT
Income-support programs redistribute income away from consumers and taxpayers toward farmers. As such, consumers and taxpayers
generally lose from such programs while participating farmers generally gain. But income-support programs by inhibiting the efficient operation of agricultural markets can impose extra costs on consumers
and taxpayers that exceed the amount of income transferred to farmers. When such losses occur, the programs are doing more than redistributing income, they are wasting valuable economic resources
that could be used to make every one better off. Table 4-4 summarizes estimates of the costs to consumers and taxpayers as well as the
producer gains of the major commodity programs discussed above.
In all instances, economic resources appear to be wasted because
producer gains are always less than consumer and taxpayer losses.
However, this table may underestimate the total losses from U.S.
farm programs because it does not cover all commodities affected by
farm programs. A recent USDA study, covering all program commodities, found that extending the Agriculture and Food Act of 1981
through 1990 would raise annual net cash income to farmers an average of $4 billion above what it would be with no programs. Consumer expenditures for food, however, would increase an average of
$5 billion while taxpayer cost would average $16 billion. For every
dollar of net cash income transferred from consumers and taxpayers
to farmers, an extra $4.25 would be incurred because of program
provisions that inhibit the efficient operation of farm markets. Much
of the $21 billion consumer and taxpayer expenditure would go not
to farmers but would be dissipated throughout the agricultural industry in the form of higher input prices (including land) and increased
profits to suppliers of materials and services to farmers.
Farm income can be supported with less waste. The most efficient
way to transfer, say, $4 billion a year in net cash income to farmers is
simply to pay them this amount directly, independent of what they
produce and sell in the marketplace. This would minimize the wastage of economic resources. Consumers and taxpayers would still lose
the $4 billion but no more. As a practical matter, however, to avoid
encouraging people to enter farming only to receive the government
payments, such payments can be made only to farmers in farming at
the beginning of the program. New farmers would then decide to
enter farming on the basis of whether they could be competitive in a
freely functioning market. Finally, these government payments to
farmers can be gradually phased down.
The targeting of government payments would be the major issue
unresolved by this approach. This is important, because some argue




155

TABLE 4-4.—Losses and gains from income-support programs (annual costs)1
[Billions of dollars]

Cotton

1.7 to 1.8

32

21

12

3 0 to 4 1

2 1 to 2 5

1.5 to 2 1

13)

Corn

0.9 to 1.1

1.8 to 3.9

5 to 6

Wheat

1.6 to 1.8

1.9

1

. . . .

Milk

Producer gain

1.7 to 3.7

Sugar

Taxpayer cost2

15

11

4

Consumer loss

Commodity

2 5 to 2 9

71

58

Total loss

22

Rice

09

Peanuts

184

180

004

047 to 059

026 to 043

016 to 021

Oranges4
TOTAL

5.12 to 7.63

10.31 to 11.41

9.49 to 12.20

5.94 to 6.85

1

Estimates are not adjusted for program changes contained in the Food Security Act of 1985.
2
Includes CCC expenses after cost recovery.
3
Less than $50 million.
4
California-Arizona navel oranges.
Source: Compiled by the Council of Economic Advisers from various sources.

that changing income-support methods would endanger those farmers who are currently the most stressed. This argument lacks empirical support. The largest deficiency payments go to those program
participants who produce the most. Typically, these farmers are not
the most troubled. The USDA characterizes as most stressed those
farmers with a debt/asset ratio exceeding 70 percent and a negative
cash flow. These farms receive only 11 percent of all direct government payments. The next most severely stressed are those with debt/
asset ratios in the 40 to 70 percent range and negative cash flow;
these farmers receive only about 13 percent of all direct government
payments.
Where do these payments go if not to the most economically
stressed farmers? The answer is—to the unstressed farmers who constitute the majority of all U.S. farmers. The deficiency payment
method used in the Agriculture and Food Act of 1981 made it likely
that larger farmers would benefit more from government programs
than smaller farmers.
Thus, one is hard-pressed to argue that deficiency payments have
provided a safety net for troubled farmers. In fact, they may benefit
unstressed farmers more. If society's goal is to provide a safety net
for troubled farmers, then replacing deficiency payments with income
supplements for the most stressed would seem cheaper and more
economically efficient.
However, if the present distributional aspects of current programs are
desired, income can still be transferred in roughly the same amounts
to the same producers with less distortion of production incentives.




156

One method is to make per-acre payments that approximate current
benefits. Farmers would be allowed to plant as much of any crop as
they wish. In terms of Table 4-2, this might mean, for example,
paying wheat producers $36 per acre, corn producers $45 per acre,
cotton producers $84 per acre, and rice producers $138 per acre. If
these payments were tied to ownership of specific parcels of land
and producers could do anything with the land they wished—including
not producing—then program benefits would be capitalized into land
prices. But production incentives would not be distorted and land
would rent at rates equaling the cash returns it would fetch in the
marketplace. When dramatic land price declines are the norm in the
Midwest and other areas, a program of such payments that is gradually
phased out could ease long-run adjustments in land values that are
dictated by market realities.
A second approach is to retain deficiency payments pro forma
while changing how payments are calculated. Under the Agriculture
and Food Act of 1981, the total deficiency payment a farmer received
was the difference between the target and season average price times
the farmer's eligible program acreage and the program yield. Both
the program acreage and the program yield varied from year to year.
Clearly, the higher is the eligible program acreage, the larger is the
total deficiency payment. With target prices above market prices,
farmers have incentives to expand acreage. Excess production results.
A change that fractures the link between income support and production would be to freeze permanently both the program acreage and the
program yield. Farmers would receive payments on the basis of these
frozen program acreages and yields regardless of how much of any
crop they produced. With each individual's payment depending only
upon historical production, individuals would have the incentive to
produce only what could be sold profitably in the market. A major
program change contained in the Food Security Act of 1985 was to
freeze program yields at the 1981-85 average (exduding high and
low years) and to calculate base acreage as the most recent 5-year average of acreage planted or considered to be planted. Furthermore,
to be eligible for payments, farmers need plant only 50 percent of a
commodity's program acreage to that commodity. Thus, the Food
Security Act of 1985 reduces incentives to overproduction and permits participating farmers more flexibility in choosing the mix of
crops planted. However, eligible program acreages are not yet completely frozen, and farmers are still not allowed to plant as much of
any crop as they want and still receive deficiency payments. Farmers
of program commodities will continue to produce in response to government programs.




157

Farm incomes are also supported indirectly through price-support
programs and market intervention programs (such as quotas and
import controls). Although quotas and import controls clearly support income, some would argue that price-support programs are not
designed primarily as income supports and thus serve a useful purpose distinct from income support.
To the extent that price supports operate as buffer stocks, they
may benefit society at large. For this argument to be valid, however,
support prices must bear some relation to market reality. For example, setting loan rates far in excess of free-market prices (as in the
sugar program) is hard to construe as anything but income enhancement. Establishing loan rates and support prices well above marketclearing levels prevents rather than smooths price adjustments. Milk
price supports fall in this category. They have engendered a chronic
surplus that the CCC must remove from the market at taxpayer expense. Milk consumers are taxed twice, once in the marketplace by
higher prices and second by the government to fund CCC dairy
product takeovers. For such markets, economic efficiency suggests
lowering price supports at least to free market-clearing levels.
For many commodities, however, price supports probably have had
a stabilizing influence. But recent developments in agricultural commodity markets have lessened the need for government intervention.
Recently, the long-term ban on trading agricultural option contracts
was lifted. Option markets allow producers to take advantage of favorable price movements while avoiding much of the risk associated
with harmful price movements. A put option gives a commodity
seller the right, but not the obligation, to sell a futures contract at a
given value (the strike price) on or before a specified date. The buyer
of the put option (the seller of the commodity) pays a premium to
the party writing the contract for this right. A producer, therefore,
can guarantee a price for the crop at harvest time or, thereafter, by
purchasing a put option. In effect, the producer buys price insurance.
If, later, a higher price can be realized by selling the commodity than
by executing the futures contract, the producer is free to do so.
Thus, the farmer avoids downside price risk without being locked
into a contract that inhibits his or her ability to take advantage of favorable price movements. Unlike the loan contract, however, the producer and not the taxpayer pays for the price insurance. The CCC
makes loans on and options markets exist for corn, wheat, soybeans,
cotton, and sugar.
Basically, as the President recommended in 1985, agricultural policy
should be shaped to return farming to a freer market. This means
separating income supports from production and lowering loan rates
or eliminating them. Future agricultural programs should be flexible
and should minimize market distortions in achieving their goals.




158

CHAPTER 5

Reforming Regulation: Strengthening
Market Incentives
MARKETS GENERATE AND USE enormous quantities of specialized information that is extremely difficult and costly for government
officials to obtain. When government substitutes for markets, either
through regulation or government ownership, this information is
usually lost and economic performance is sacrificed. Regulation often
reduces the ability of firms to innovate and it frequently restrains
competition, leading to higher costs and prices. Where the government itself produces a good, incentives for efficient operation can be
stifled. Even where regulation is necessary to deal with incomplete
markets, as in the environmental area, greater reliance on market incentives can improve performance.
This chapter points to benefits of using market incentives. It also
discusses extending market incentives to other sectors of the economy. In particular, this chapter discusses the effects of deregulation,
where deregulation might be extended, where necessary government
regulation could benefit from market incentives, and the potential for
privatizing certain government activity.
TRANSPORTATION: DEREGULATION SUCCESS
A great deal of economic research has shown that transport regulation served the interest of regulated companies and their unionized
workers at the expense of the consuming public. Restrictions on the
entry of trucking firms and airlines limited competition and kept
prices high. Railroad regulation produced prices that were largely
unrelated to demand and cost conditions and that were too rigid to
allow railroads to compete with other transportation modes.
By the late 1970s a major deregulation effort was underway. Under
deregulation, firms have been able to set prices based on market
demand, but constrained by competition. As a result, average passenger fares and many shipping rates have declined and the service variety has increased. Firms have responded to the pressure of competition by seeking wage concessions and improved productivity.




159

AIRLINES

During the regulatory period from 1938 to 1978, not a single new
interstate trunk airline received permission to provide service. Since
Congress passed the Airline Deregulation Act in 1978, 26 new scheduled interstate carriers have entered the industry and 19 have exited.
Existing airlines also expanded into new markets. The number of
city-pairs served by more than one airline increased by 55 percent
from 1979 to 1984.
Increased entry has led to lower average fares. The Civil Aeronautics Board (CAB) price formula, adjusted for input price changes,
shows that except for the smallest markets, average actual fares in
1983 were below those that would have been permitted by regulation. While all fares were not set exactly equal to formula prior to
deregulation, the fact that in almost all market types average fares
are below formula suggests that deregulation has led to lower average fares.
Since deregulation, a host of new types of fares have been introduced, increasing consumer choice. Peak and off-peak fares are increasingly common, with special fares for very slack periods. New airlines have sprung up serving different segments of the market, with
some airlines specializing in low-cost and no-frills flights, while
others are offering premium service at higher rates.
By limiting fare competition, regulation greatly restricted consumers' choices. The tradeoff between price and quality is manifested in
the airlines' load factor, a measure of the percentage of seats that are
filled. The fewer the empty seats flown, the lower the unit costs of
operation, but the smaller the probability of a passenger getting a
seat on the most convenient flight.
Since 1977, when the CAB began to grant greater fare-setting
flexibility, average, load factors have increased. In the years 1973-77
average load factors ranged between 51.7 and 56 percent. Since
1977, load factors have ranged between 57.5 and 62.8 percent. Airlines now compete on fares as well as on the frequency of flights.
However, those willing to pay for higher quality service can purchase
it. First-class seats or nondiscount fares are available on shorter
notice, but at higher cost.
Under regulation, the CAB set route structures administratively.
Under deregulation, a hub and spoke system has emerged as regional
airlines and trunks entered new markets. The carriers found that by
concentrating departures in hubs they could serve more markets at
lower cost. For many passengers, more extensive hubbing means
more convenient service since on a given trip they will change airlines less often. The percentage of passengers completing trips without changing airlines increased from 89.1 to 96.7 percent between




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1978 and 1983. Moreover, while some passengers no longer have
direct flights, the percentage of passengers changing planes actually
decreased slightly from 27 percent to 25.3 percent between 1978 and
1984.
With greater competition, airlines have been forced to improve
their cost performance. For example, ton-miles per employee for the
"systems majors" increased by 19.5 percent between 1978 and 1985.
In sum, the deregulated industry is able to provide greater variety in
service at lower unit cost than the industry did during 40 years of
regulation.
Accompanying the airline deregulation debate was concern about
what would happen to service for small communities. While no one
knows what would have happened had regulation continued, service
in terms of flights to non-hubs and to small hubs has actually increased by 20 and 31.6 percent, respectively, since 1977. However,
airlines have switched to smaller planes to serve non-hubs, and available seats departing from non-hubs have declined by 7.2 percent.
TRUCKING

Similar positive results characterize trucking deregulation. With
passage of the Motor Carrier Act of 1980, entry of new carriers into
the trucking industry expanded dramatically. The Interstate Commerce Commission (ICC) reported that processed applications for
operating authorities rose from 5,910 in fiscal 1976 to 27,706 in
fiscal 1981 before declining to 13,544 in 1985. The percentage of
those cases where authority was granted rose from 70 percent in
1976 to 99.9 percent in 1985. Overall, the number of ICG-authorized
carriers increased from approximately 18,000 in 1980 to 33,548 in
1984. Restrictions on many existing operating licenses were also removed as requests for broader territorial authority or broader commodity descriptions were readily granted.
There is not a great deal of information on shipping costs since
deregulation, but one recent survey found that average real truckload
rates for large shippers declined by 25 percent between 1977 and
1982, while less-than-truckload rates declined by 15 percent over the
same period. Several surveys also have found that service, as described by shippers, improved. Even smaller communities report no
deterioration in service since deregulation.
SAFETY

Some argue that too much competition forces cost-cutting and
leads to skimping on safety. But competition will not normally induce
firms to lower safety expenditures. An airline or trucking firm that
has high accident rates will lose business and face higher insurance




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rates. Although firms close to bankruptcy might arguably find they
have less to lose by reducing safety expenditures than a solvent firm,
the firms are still subject to inspections and regulation by the Federal
Aviation Administration and the Federal Highway Administration.
The available data on airline safety show no increase in accident
rates since deregulation. A good way to measure safety is to look at
accident rates per 100,000 departures. This controls for the increased number of flights over time and abstracts from the effect of
changes in load factors. Table 5-1 shows accident rates over the past
14 years for scheduled airlines. Total accidents per 100,000 departures have been low over the entire period, but reached their lowest
levels in 1980 and 1984. Fatal accidents also reached their lowest
levels in 1980 and 1984. In 1985 much attention has been focused
on safety. Worldwide, 1985 was the worst year in terms of total fatalities. Nevertheless, looking at U.S. accident rates, 1985 was not an unusual year. As Table 5-1 shows, accident rates, both fatal and nonfatal, were exceeded in several years under regulation and deregulation
as well. In 1985 commuter airlines, the fastest growing segment of
the airline industry, experienced the lowest number and rate of accidents in the history of commuter aviation.
TABLE 5-1.—Airline accidents per 100,000 departures, 1972-85
[Airlines using large aircraft in revenue operations]
Year

Fatal Accidents

Total

1972
1973
1974

0.926
.701
889

0.141
.156
127

1975
1976
1977
1978
1979

.616
.435
385
399
.426

.043
.041
061
100
.074

1980
1981
1982
1983
1984

280
.480
282
457
259

1985

319

0
077
060
079
019
071

Source: National Transportation Safety Board.

The number of trucking accidents, as shown in Table 5-2, generally has increased over the past 8 years with a large increase in 1984.
The difficulty for analysis is that reliable data on miles driven are not
available, thus making it impossible to calculate reliable accident
rates. The pattern of accidents, however, suggests no relationship between the increase in total accidents and deregulation. In 4 of the
years for which data are available since deregulation, the total
number of accidents was lower than in the pre-deregulation years of
1978 and 1979. Furthermore, the percentage of total accidents ac-




162

counted for by ICG-authorized carriage has remained close to 79
percent throughout the period. One would expect that if deregulation were causing the increase in accidents, ICG-licensed carriers, a
category that has probably increased its market share under deregulation, would show a larger percentage increase in accidents than private carriers. This appears not to be the case.
TABLE 5-2.— Trucking accidents, 1976-84
[Number, except as noted]
Type of carrier
Year

Total

Mail and
other

Private

Authorized1

Authorized
as percent
of total

1976
1977
1978
1979

25,666
29,936
33,998
35,541

109
44
53
59

5,017
5,781
6,493
6,872

20,073
23,726
26,955
28,206

78.2
79.3
79.3
79.4

1980
1981
1982
1983
1984

31,389
32,306
31,759
31628
37323

41
35
104
147
225

6,323
6,330
6,341
5781
6255

24,724
25,588
24,493
24849
29893

78.8
79.2
77.1

1

786
801

Carriers authorized by Interstate Commerce Commission.

Source: Department of Transportation, Bureau of Motor Carrier Safety, and Interstate Commerce Commission.

RAILROADS

In the railroad industry, regulation produced price structures
largely unrelated to underlying cost and demand conditions. Absent
regulation, the market conveys signals as to what rates can be
charged on what freight in order to compete with other modes. Furthermore, changing patterns of demand and supply call for adjusting
rates. Regulators found the task of efficiently controlling these rates
to be impossible. The problems worsened in the 1970s when regulatory lag in adjusting rates during inflation resulted in rates moving
up more slowly than the cost of doing business. Because of the varying degree of competition across the different commodities shipped
and the changing demand and cost conditions for different types of
traffic, adjusting all rates by the same percentage increase was not efficient.
The most dramatic effect of regulation was the bankruptcies of several railroads in the 1970s, including the Penn Central and the Rock
Island. In order to improve the performance of the railroads by restoring profitability, Congress granted a greater degree of ratemaking freedom to the railroads in the Staggers Rail Act of 1980.
The act freed railroads to set rates as long as the rate is less than 180
percent of variable cost as measured by ICC procedures. For rates
above this threshold, if the shipper has no competitive alternative,
the ICC can review the "reasonableness" of the rate. Deregulation




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was a response to a bureaucratic regulatory system that was cumbersome and largely unnecessary because railroads faced competition on
much of the freight they shipped.
Overall, the Staggers Act has performed well. While railroads have
been able to increase profits, rates have declined modestly in real
terms, and productivity has substantially increased. Since passage of
the Staggers Act, not a single Class I railroad has gone bankrupt.
Moreover, average real freight rates for all commodity groups as
measured by the Bureau of Labor Statistics have decreased by 1.6
percent between the third quarter of 1980 and the third quarter of
1985. Even these numbers may overstate rates because they exclude
contract rates, which tend to be lower. Productivity as measured by
ton-miles per employee hour was up by 44 percent in the first 4
years after passage of the Staggers Act. The ratio of empty car-miles
to full car-miles declined from 0.828 in 1980 to 0.756 in 1984, an
increase of 10 percent in capacity utilization in the rolling stock. Rate
flexibility contributed to these productivity gains. Now a railroad is
able to offer a low rate on back-hauls so that rather than shipping
empty cars, it can lower rates and capture freight from competing
transport modes.
Service quality also has improved as railroads have been able to
invest and upgrade the quality of the track and equipment. Route
miles over which train speeds were reduced because of the poor
quality of the roadbed have gone down from 30,000 miles in 1978 to
fewer than 12,000 in 1984. While some of this improvement reflects
abandonment of low density track, the improvement is significant.
Railroad Rates for Hauling Coal

Electric utilities and coal companies have asserted that the Staggers
Act has allowed railroads to exploit market power in shipping coal.
Coal rates, however, as measured by the Bureau of Labor Statistics,
have decreased by about 0.7 percent in real terms since passage of
the Staggers Act. Many contract rates have also declined. This is not
surprising because railroads face competition on much of their coal
traffic from other railroads or barges. For plants not yet sited, interregional and interrailroad competition can be intense.
One study estimated that 40 percent of coal shipments are captive
to a single railroad. Another study, using a different methodology
and definition of captive, estimated that 13 percent were captive. Furthermore, even though some shippers may be constrained now, as
old contracts expire or as old plants become obsolete, more choices
will be available to utilities. Nevertheless, there undoubtedly are circumstances in which individual shippers find themselves with no alternative to a single railroad.




164

The Congress intended that there be limits on the ability of railroads to raise rates to captive shippers. The ICC has established two
criteria to determine whether rates are reasonable. First, the railroad
must be "revenue adequate"—total revenue must generate a return
equal to the cost of capital. Second, rates cannot exceed "stand-alone
cost," that is, the cost a shipper or group of shippers would incur to
build and operate the most efficient transport system. This can be a
rail or a slurry pipeline system. These limits have theoretical appeal,
but their practical implementation presents problems. To determine
revenue adequacy, one must not only estimate the cost of capital, but
also measure the capital stock. The Railroad Accounting Principles
Board, established by the Congress in the Staggers Act, is confronting these issues.
Many shippers acknowledge the theoretical validity but question
the practicality of the stand-alone cost concept, which is intended to
estimate long-run marginal cost. Shippers argue that it is costly to
prepare and present such a case before the ICC. It is also difficult to
determine what other freight would be attracted to the hypothetical
system. Small shippers, in particular, might find that the costs of litigating are not justified given relatively small coal movements. Experience with the stand-alone cost guideline is as yet too limited to know
whether these potential problems will be significant.
FURTHER TRANSPORTATION DEREGULATION

Great progress has been made in deregulating transport industries.
In addition to the sectors discussed above, in 1982 intercity buses
were substantially deregulated. Yet, there are still other areas where
progress can be made. The Administration in 1985 sent to the Congress a bill to remove the last vestiges of regulation, which would
free motor carriers from having to secure operating rights from the
government or from filing tariffs. Only safety regulation would
remain.
More than 1 million tariffs are filed each year. Rate-filing involves
staff and expenditures that serve no useful purpose. Paperwork requirements may also serve as a barrier to the entry of small trucking
firms. Even now the ICC sometimes turns down a tariff filing. The
Administration bill would make it impossible, without new legislation,
for a future ICC to interfere with market-determined rates. The Administration proposal also would eliminate any statutory authority for
reviewing applications for operating rights. The ICC now approves
more than 99 percent of applications. Total deregulation of trucking
would prevent a future ICC from reimposing entry restrictions.
Finally, the bill would eliminate the remaining antitrust immunity
enjoyed by rate bureaus. While anticompetitive behavior is unlikely in




165

an industry with such easy entry, removal of antitrust immunity
would subject behavior in trucking to the same legal constraints
faced by other industries.
An Administration bill deregulating freight forwarders has also
been submitted to the Congress. Freight forwarders provide transportation services by consolidating small shipments and arranging
with motor carriers for truckload shipping. Entry is easy and competition would be vigorous absent regulation. Rates on domestic water
traffic are largely deregulated, and an Administration proposal would
remove controls on the remaining water traffic still subject to regulation by the ICC.
To recapitulate, the experience in transportation demonstrates that
prices usually decline when government-imposed limitations on competition are removed. It turns out that the market is a much more
efficient processor of information than the regulatory system. Deregulation provides a much greater variety of services compared with
the uniformity of service under regulation. The various wants of consumers are satisfied better when consumers are free to compare the
costs and benefits of various product offerings and firms are free to
respond to their demands.
THE EFFECTS OF CONTINUING REGULATION
Sectors of the economy remain where the benefits of market incentives are not being fully exploited. The rest of this chapter examines
some areas where increased reliance on market forces would greatly
enhance economic performance. It begins with the energy sector,
where vestiges of the controls of the past still linger.
THE NATURAL GAS MARKET

Natural gas markets are subject to complex controls producing distortions and inefficiencies that contrast with developments in the oil
market since oil price deregulation. It is instructive to review briefly
experience in the United States oil market since 1981.
In January 1981, the President accelerated the decontrol process
by removing oil price controls 8 months before they had been set to
expire. Many observers warned of a rapid increase in prices. Experience has been the opposite. Beginning in 1981 the downward trend
in U.S. oil production outside Alaska began to moderate and by 1982
production was increasing. Lower 48 States' production climbed to a
level of 7.2 million barrels per day in 1984, a level last reached in
1979.
Under price controls, imports of oil were artificially increased because domestic production was held down and consumer prices were




166

held below the true cost of imported oil. The price paid for crude oil
by all refiners was equal to a weighted average of high-cost imports
and low-cost controlled oil. A complicated system of entitlements
equalized the average cost of crude among refiners. In effect, pricecontrolled domestic crude was averaged with imported crude, keeping the cost to consumers below world levels.
With decontrol, imported and domestic oil sold at the same price.
Consumers no longer paid an artificially low price. Partly as a result,
oil consumption declined by 8 percent, from 17.1 million barrels a
day in 1980 to 15.7 million in 1984. The reduction in demand plus
increased domestic production led to a fall in net U.S. imports from
6.4 million barrels a day in 1980 to 4.1 million in the first 8 months
of 1985, a decrease of 36 percent. These developments, together
with growth in production outside of the Organization of Petroleum
Exporting Countries (OPEC) helped reduce the market power of
OPEC and ultimately led to declines in oil prices.
The experience with oil price controls provides important lessons.
Natural gas controls produce effects similar to those that occurred in
oil markets. Production and consumption of high-cost gas are artificially encouraged at the expense of production and consumption of
low-cost gas. Efforts to shield consumers from higher prices have delayed inevitable adjustment and now may be hurting the very consumers they sought to protect.
Natural Gas Price Controls and Their Effects

The Supreme Court decided in 1954 (Phillips Petroleum Co. v. Wisconsin) that the Natural Gas Act of 1938 required the Federal Power
Commission (FPC) to set the wellhead price of natural gas sold into
interstate markets. Over time, as demand grew and costs increased,
price ceilings set by the FPC proved too low to generate sufficient
incentives for firms to explore for new reserves. By the late 1960s
and early 1970s shortages of gas developed in midwestern and northeastern markets. After the oil price shock in 1973-74, the situation
became worse as gas prices were further out of line with the cost of
energy production elsewhere in the economy. Proved reserves of gas
declined from 290.7 trillion cubic feet in 1970 to 200.3 trillion cubic
feet in 1978.
While gas was becoming scarcer, those who were lucky enough to
have contracted for the low-cost controlled gas had little incentive to
conserve. As shortages became worse, many States instituted moratoria on new gas hookups and the FPC developed "curtailment" policies to determine who had priority in receiving the limited supplies
of gas. Gas that did not cross State lines was not subject to the same
controls. In markets such as Texas and Louisiana, gas was bought
and sold at higher uncontrolled prices. But gas was available.




167

The Natural Gas Policy Act of 1978 was an attempt to deal with
the shortages in the interstate market. The act extended price controls to the intrastate market. Old gas, gas discovered before 1977,
was subject to price ceilings that would escalate with the general rate
of price increase in the economy. New gas was subject to higher ceilings and price controls on this new gas were to be eliminated on January 1, 1985. Lastly, gas from deep wells exceeding 15,000 feet was
deregulated as of November 1979.
The apparent logic behind this act was that higher prices were
needed to encourage exploration and production of new high-cost
sources of gas. Supporters apparently felt such incentives were not
necessary for more readily available low-cost gas, and that as a matter
of equity, those who had discovered gas before 1977 should not benefit at all from decontrol of gas prices.
A pipeline buying both controlled low-price gas and high-price decontrolled gas sells at a single average price to industrial users and to
local gas distribution companies. The greater the amount of low-cost
gas for which a pipeline had previously contracted, the more it could
bid for high-priced gas. The pipeline's customers would see only an
average price cushioned by the amount of controlled gas available to
the pipeline.
Soon after passage of the act, oil prices rose from $15 per barrel
to more than $30. In a decontrolled market, this would have led to
higher gas prices as consumers shifted from oil to gas. Under the
Natural Gas Policy Act, however, controlled prices could not rise and
the price distortions became greater. As a consequence, pipelines bid
up the price of decontrolled gas because this was the only market
where additional supplies could be coaxed through higher prices. In
addition, pipelines reacted to the increased energy prices and fears of
shortages in 1979 and 1980 by signing long-term contracts for large
quantities of this high-cost gas. Because price controls were binding
on new gas, pipelines were forced to compete for the available controlled gas on other contract terms. Pipelines promised to pay for a
certain amount of gas whether they took it or not. A study by the
Department of Energy details how "take" percentages went from
about 60 percent on older contracts into the 80 to 85 percent range
on newer contracts. By stemming price competition, regulation channeled buyer competition into other forms just as airline price-fixing
by the CAB had caused producers to compete by offering more frequent flights.
Gas consumers paid an average price made up of all the different
supplies to the pipeline. This average price was below the actual cost
of incremental supplies, so consumers continued to consume too




168

much high-cost gas. The effect was similar to what averaging oil
prices did to oil imports during the period of oil price controls.
The other side of the regulatory coin was the inefficient incentives
provided for producers. Price controls substantially reduced the incentive to invest in and maintain the production of old gas. The
flawed logic of the 1978 act was that, because producers had been
willing to find and produce the old gas at past prices that were much
lower, they did not need higher prices for this gas. This overlooked
the possibility that producers could have stemmed the natural decline
of old gas fields by investing to maintain or even to increase production from old gas reservoirs.
From Shortage to Surplus: The 1980s

Due to these rigidities, the system was ill-equipped to deal with
energy markets of the 1980s. Declining oil prices starting in 1981
meant that oil in some uses became less expensive than the gas available from many pipelines. Refiner sales prices for No. 2 fuel oil, a
substitute for natural gas in many uses, declined from $1.02 per
gallon in March 1981, to $0.76 per gallon in March 1985. Those
energy consumers who were able to switched back to oil, lowering
the demand for gas. The recession of 1981-82 augmented this effect.
Gas deliveries for many pipelines declined. Between 1981 and 1983,
total sales declined by 14 percent, although deliveries rose slightly in
the following year. In a free market, this lower demand then would
have been translated into lower prices, but in fact, gas prices to pipelines continued to rise through 1983. Prices paid by residential consumers rose through 1984 and data for 1985 indicate that, through
September, residential gas prices continued to rise. Prices to industrial users and electric utilities began to decline only in 1984.
These consumer price increases are in part attributable to the decline in throughput that resulted in higher transportation and distribution charges. Under regulation, pipelines are entitled to recover
their cost plus a "just and reasonable" rate of return. As throughput
declines, the fixed capital charges are spread over a smaller volume
of gas, raising the average transport cost. The charge by major pipelines, as measured by the difference between wellhead price and the
price paid in sales for resale, increased by 31 percent between 1980
and 1983 before declining by 8 percent in 1984, for a net increase of
21 percent. The margin charged by distribution companies increased
by 84 percent between 1980 and 1984. Another factor contributing
to the rising prices was the high level of take-or-pays on newer, relatively high-priced gas. As demand slackened, because a pipeline had
to pay for the higher cost gas whether it took that gas or not, cutbacks came disproportionately from the older lower cost gas with




169

lower take-or-pay levels. This, too, raised the average cost of gas in
spite of a declining demand and declining spot price.
With the approval of the Federal Energy Regulatory Commission
(FERC), pipelines began to offer special marketing programs to their
most price-sensitive customers. To gain incremental volume, producers were willing to take a price lower than the current contract prices
being paid by the pipeline. Pipelines increased their throughput, lowered average transportation costs, and gained incremental sales credited against their take liability in the take-or-pay contracts.
Special marketing programs were challenged and were found in
1985 by the U.S. Court of Appeals for the D.C. Circuit to be price
discrimination contrary to the Natural Gas Act of 1938. A few
months after this ruling, FERC promulgated new rules requiring
pipelines offering transportation service to any customer to offer the
same service to all. In return for this nondiscriminatory pricing,
FERC would grant to the pipeline simplified and accelerated certification for any pipeline services. Pipeline response to these regulations has, so far, been less than enthusiastic. Pipelines fear that if all
customers can avail themselves of lower cost gas at the wellhead, the
pipelines will be unable to sell the gas that they are committed to
take on long-term, high-price contracts. Furthermore, the FERC
ruling would allow local distribution companies to reduce their contract commitments. As a result, many pipelines are refusing to offer
nondiscriminatory transportation services to all consumers.
FERC is considering another regulatory change that would segregate gas sales into two blocks—old gas and all other. Customers
would receive a fixed allocation of old gas at the old gas price. The
rest would be sold at the average price of new gas supplies. Because
the old gas allocation is fixed, the price of incremental consumption
would be the higher new gas price. Consumers therefore would base
their consumption decisions on a price much closer to market price.
Such a mechanism, by removing the cushioning effect of old gas
on average prices, eliminates the bias toward consumption of highcost gas. Not surprisingly, many gas producers and pipelines with
long-term purchase agreements for high-cost gas oppose block-billing. Others correctly point out that block-billing simply transfers the
old gas cushion to pipelines' customers—the local distribution companies. State public utility commissions can continue to allow the
local distribution companies to average price, blunting the benefits of
more efficient pricing by the pipelines. Furthermore, old gas prices
still would be controlled and no gains would be obtained from inducing more efficient producer behavior. FERC's proposals, at best, are
very partial measures aimed at correcting the distortions in consumer
incentives, but with very uncertain prospects for success.




170

The Administration Deregulation Initiative

In January 1985 new gas prices were decontrolled under the 1978
act. Rather than rising as had been predicted, new gas prices declined from an average of $3.78 per million cubic feet in January to
$3.58 in August. In view of this experience, the Administration has
decided again to seek complete deregulation of natural gas prices.
Only deregulation provides the proper incentives to both consumers
and producers. In one attempt to improve natural gas markets, the
Department of Energy suggested in recent filings that FERC, using
current authority, end the vintaging of gas prices, that is, allowing
different prices for gas depending upon when the gas was found.
The Department also argues that FERC then can set all prices closer
to market-clearing levels.
Recently, the Administration decided to propose legislation that
would completely remove all remaining controls on natural gas
prices. The Department of Energy estimates that the present value of
benefits to the economy are in the neighborhood of $15 billion to
$27 billion (1982 constant dollars). These benefits come from the increased supply of relatively low-cost gas and the decrease in the use
of high-cost gas. In addition, the Department of Energy estimates
that the marginal wellhead price of gas will decline by 2 to 15 percent in the 1985-95 period under deregulation. It calculates that additional supplies of old gas from currently shut-in wells, infill drilling,
production enhancement, and delayed abandonment would be
enough to lower not only the average but also the marginal price.
The Administration approach couples deregulation of wellhead price
with mandatory contract carriage. The latter feature means that consumers will have the choice of buying transportation services when
pipeline capacity permits or buying gas directly from the pipeline, allowing the market to choose who will bear the risks of demand fluctuations.
Lessons of Natural Gas Regulation

Natural gas regulation demonstrates the difficulties with price controls. Gas competes with oil and oil prices are not controlled. As
prices of oil change, so does the demand for gas. What might have
been a rational price for gas at oil prices of $15 per barrel was no
longer meaningful at oil prices of $30 per barrel and higher. When
oil prices declined, the excess supply of gas should have diminished
as lower gas prices induced greater consumption.
To be sure, even in an uncontrolled market, the volatility of the
energy market would have led to adjustment difficulties. Pipelines
that had signed long-term contracts still would have been saddled
with these high-priced commitments when prices began to fall. Regu-




171

lation, however, exacerbated the difficulties. Price controls meant
that firms agreed to higher take-or-pay commitments than they would
have, had prices been free to adjust. Also, price controls on old gas
limited the availability of this gas and caused greater reliance on
high-cost substitutes and oil imports. Partial deregulation created
problems not anticipated at the time of passage of the Natural Gas
Policy Act, problems that FERC has been trying to solve with yet a
new set of regulations. In turn, FERC's proposals will transfer these
problems to the next level of regulation—the local public utility commissions. Deregulating all natural gas prices, as the Administration
has proposed, will avoid these difficulties.
END-USE STANDARDS: A VESTIGE OF OIL PRICE CONTROLS

In 1975 the Congress was concerned that incentives for energy
conservation were inadequate. It enacted several laws that dealt with
the energy efficiency of major consumer durables. The major legislative effort was the Energy Policy and Conservation Act (EPCA).
EPCA established procedures for setting energy efficiency standards
on consumer appliances and established corporate average fuel economy (CAFE) standards for new automobiles. These standards required that the sales-weighted average fuel efficiency of the passenger car fleet of each automobile manufacturer reach 18 miles per
gallon by 1978 and increase each year until 1985, when the standard
was to be 27.5 miles per gallon from then on. The Congress was
aware of the great uncertainty surrounding the future energy situation and technological feasibility of the standards. Consequently, the
Congress authorized the Secretary of Transportation to amend the
standards to the "maximum feasible" level.
At the time of passage of this act, the United States controlled oil
and gas prices. Gasoline and other energy prices were artificially low.
These low prices affected consumer decisions for a host of consumer
durables. A consumer buying a refrigerator, for example, has the
choice of paying more for a unit that, due to greater insulation, will
use less electricity. The value of lower energy costs over time trades
off against the higher initial price and convenience of other energyusing features. Similarly, an auto purchaser is faced with numerous
options in performance, size, and gasoline consumption. If energy
prices are held below their true cost, consumers will choose larger
cars and less efficient refrigerators than they would if faced with the
true higher prices.
Because the Congress was unwilling to allow U.S. prices to rise to
world market levels, and was also unwilling to accept the consumption and production decisions that resulted from regulated prices, it
passed laws that regulated end-use consumption. The practical prob-




172

lems with this approach are many. First, the Congress only selected
specific end uses as the objects of controls. Letting prices find their
market-clearing level would have induced the proper amount of conservation across all types of energy consumption. Second, the Congress could only guess at the cost-effective level of conservation. Finally, the conservation levels set in 1975 have little relevance in a
world that has changed in ways unforeseen 10 years ago. The flexibility of a market cannot be duplicated by rigid legislatively mandated
end-use standards.
While one might have argued in 1975 that end-use regulation,
clumsy as it is, was necessary, the situation today is dramatically different. Oil prices have been decontrolled. Consumers can make their
own tradeoff between gasoline consumption and automobile performance or between low-efficiency and high-efficiency appliances.
The United States is also less vulnerable to potential disruptions in
the oil market with an oil stockpile equal to more than 100 days of
imports. End-use standards are a costly and unnecessary way to provide protection against oil supply disruptions.
CAFE STANDARDS

The most visible remaining end-use standards are the CAFE requirements. CAFE averages for each manufacturer are calculated separately for automobiles produced in the United States and Canada
and for automobiles that the manufacturer imports. If the average
level of fuel economy realized by a manufacturer falls below the
standard, the manufacturer is subject to a fine of $5 per vehicle sold
per one-tenth of a mile per gallon of difference between the standard
and the actually realized level of gasoline efficiency. For a firm producing several million automobiles per year, the fine for noncompliance could be in the hundreds of millions of dollars. A firm can use
accumulated credits earned from exceeding the standards in the previous 3 years to offset fines in a given year. Furthermore, if the firm
can demonstrate that it will exceed standards in the next 3 years, it
can borrow against those future credits to offset fines.
Table 5-3 presents the passenger car standards and the levels
achieved by the big three automobile manufacturers in the United
States. Chrysler met or exceeded the standards in all years. General
Motors and Ford met the standards in each year until 1983. Ford
avoided fines in 1983 and 1984 by using previously accumulated
credits. General Motors used previously earned credits in 1983 and
in 1984 used previously earned credits and borrowed expected future
credits to avoid fines. For 1985 both firms are expected to propose
borrowing against future credits.




173

TABLE 5-3.—Mileage per gallon for domestic cars, 1978-85
Year

CAFE
standard

1978
1979

180

1980
1981

20.0

1982
1983

240

1984
1985

Chrysler

General
Motors

Ford

184

18.4
20.5

19.2

19.0
19.1

22.3
26.8

22.9
24.1

22.6
23.8

26.0

27.6
26.9

25.0
24.3

24.6
24.0

27.0
275

27.8
*279

25.8
!263

19.0

220

J

24.9
255

1
Projections.
Note.—The 1986 corporate average fuel economy (CAFE) standard is 26 miles per gallon.
Source: Department of Transportation.

An automobile manufacturer can take several actions to meet the
CAFE standards. It can use lighter materials and design more efficient engines. It can lower the weight and size of its cars to increase
fuel efficiency. By changing relative prices on its small and large cars,
it can affect the mix of cars purchased by consumers. A substantial
part of the realized average level of fuel efficiency, however, is
beyond the control of the firm. One of the most important of these
factors is the price of gasoline. When gasoline prices rise and are expected to stay high, more consumers turn to fuel-efficient cars. Conversely, when gasoline prices fall and are expected to stay down, consumers return to less fuel-efficient cars because the operating cost associated with their greater comfort and other amenities declines.
While many factors affect car purchase decisions, the general correlation between gasoline prices and small-car sales is shown in Chart
5-1. As the real price of gasoline fell between 1975 and 1978, small
car (compact, subcompact, and imports) sales, as a percentage of the
market, fell from 54 to 49 percent in 1977 and to 50 percent in 1978.
The oil price increases in 1979 and 1980 raised this to 65 percent by
1981. As oil prices began to fall in 1982, smaller car sales fell again,
reaching 58 percent in 1984. The data on imports include a relatively
small amount of larger cars, yet the response in the domestic market
alone shows a similar pattern. Between 1981 and 1984 sales of smaller cars, as a percentage of the domestic market, decreased from 50 to
46 percent.
When the standards call for greater fuel economy than would
obtain in an unregulated market, their effect is to further encourage
the production of smaller, more energy-efficient cars at the expense
of larger cars by changing the relative profitability of each type of
car. One estimate of the impacts of CAFE standards on large and
small cars is presented in Table 5-4. The table indicates the effects
of CAFE on the profitability of large and small cars based on a calcu-




174

Chart 5-1

Real Price of Gasoline and Small-Car Sales
Percent
100

Index, 1975 = 100
160
Real Price of Gasoline
(Left scale)

140
120

90
80

Domestic Small-Car and
Import Sales as Percent of
Total Market
(Right scale)

100

70
60

80

50
Domestic Small-Car
Sales as Percent of
Domestic Market
(Right scale)

I
1975

i
1976 1977

1978

1979 1980

1981 1982

1983 1984

1985

Note.—Real price of gasoline is consumer price index for gasoline deflated by consumer
price index for all items.
Car sales are measured in units.
Sources: Department of Labor and Board of Governors of the Federal Reserve System.

lation of the increase or decrease in fines a firm would have to pay if
it sold an additional car with the fuel-efficiency level shown, assuming the CAFE standard to be 27.5 miles per gallon and the average
efficiency of the firm's fleet to be 25.5 miles per gallon. These
changes in profitability are passed on by automobile companies,
much as a per car tax or subsidy would be, raising the price of less
fuel-efficient cars and lowering the price of more fuel-efficient ones.
The major automobile firms have stated that they will not engage in
"unlawful conduct," which is the statutory concept of failing to meet
the standards after offsetting credits. These firms said, in effect, that
in order not to pay fines they are willing to take drastic actions and
make large expenditures to reduce the average gasoline consumption
of their fleet. For them the net incentives and disincentives are larger
than shown in Table 5-4. Given the large declines in oil prices in
early 1986, one can expect large-car purchases as a percentage of the
total market to increase. This too, will exacerbate the difficulty in




175

meeting the standard and increases the relative disincentive effect on
larger cars.
TABLE 5-4.—Effects of corporate average fuel economy (CAFE) standards on incremental
profitability of automobiles of different fuel economy levels
Increase or decrease ( - ) in
profitability per automobile

Miles per gallon

15
2 0

-$980
-449

. . .

25

-125

30

92

35

248

40

366

,

Note.—Assumes that a firm currently realizes 25.5 miles per gallon, on average, on its fleet and that the standard is set at
27.5 miles per gallon, and it produces 4.7 million cars per year, and has no offsetting credits.
Source: Council of Economic Advisers.

Costs to Consumers

While there is some question whether CAFE standards had any
independent effect when consumers were responding to rising gasoline prices, they now constrain the behavior of the two largest U.S.
automobile companies. In filings with the National Highway Traffic
Safety Administration (NHTSA) both General Motors and Ford described the difficulties they would have had in meeting the 27.5 miles
per gallon standard for the 1986 model year. As a consequence of the
economic dislocation a 27.5 miles per gallon standard would have
caused and because the Administrator of NHTSA found that the
companies made reasonable efforts to meet the standards, the standards for model year 1986 were lowered to 26 miles per gallon. Both
Ford and General Motors argue that similar relief is necessary for 1987
and beyond.
As discussed above, the CAFE regulations can affect the price of
large and small cars in amounts reaching hundreds of dollars per car.
The result is distortions in producer and consumer behavior. A consumer chooses a car such that the sacrifice made in comfort and performance by buying a smaller car is equal, at the margin, to the value
of the fuel saved. CAFE standards artificially raise the cost of comfort
and performance. Because the true cost of larger cars is less than implied by CAFE standards, consumers are induced to accept less of
the attributes they value than is justified by the true cost of production. Similarly, CAFE standards induce automobile manufacturers to
excessive expenditures on fuel efficiency that are a net loss to the
entire economy.
Fuel Savings

The purpose of CAFE was to save gasoline. Has it done so? As
Table 5-3 shows, the energy efficiency of the U.S. automobile stock




176

has increased substantially. Yet factors other than CAFE have contributed to this development. The response of consumers to the dramatic increases in the 1970s in oil prices gave a powerful signal to
the manufacturers that the market demanded small cars. Absent
CAFE, U.S. automobile firms would have taken many of the actions
they did take to increase fuel efficiency.
Given the lag, at least 4 years, in design and introduction of new
models, major improvement in fuel efficiency before 1979 probably
should not be attributed to CAFE. Yet, between 1973 and 1979 average fuel economy in the U.S. market increased by 43 percent, from
14.2 to 20.3 miles per gallon. Between 1973 and 1975, the year the
Energy Policy and Conservation Act was passed, average fuel efficiency of the fleet improved 12 percent. The market response to higher
gasoline prices contributed to significant increases in fuel economy.
One recent study suggests that, given actual gasoline price increases,
the automobile firms responded precisely as they would have without
CAFE.
Other considerations make it difficult to estimate CAFE's effect on
fuel consumption. The law establishes average standards, yet the
concern of the Congress was total gasoline consumption. One effect
of CAFE is to raise the cost of larger, less fuel-efficient automobiles.
This means that people who want to drive large cars are more likely
to hold on longer to their older, less fuel-efficient large automobiles.
In addition, because the price of smaller cars declines due to the implicit subsidy, more small cars are sold. If total automobile ownership
increases, fuel consumption also may increase despite greater average
efficiency of the automobile fleet. In addition, a more efficient fleet
will probably be driven more, tending to increase total gasoline consumption.
CAFE Effects on Imports

Fleet averages are calculated separately for a manufacturer's imports and for cars it manufactures in the United States and Canada.
Because the bulk of North American small-car production takes place
in the United States, the effect of separate calculations is to encourage domestic automobile companies to manufacture small cars in the
United States rather than import them. To sell a large car manufactured here, some small-car production must take place in the United
States. The tighter the CAFE standard, the more small cars will be
produced domestically. Some see this as a way to protect domestic
car production and employment.
However, while domestic small-car production is increased by
CAFE, domestic large-car production is disadvantaged by these efficiency standards. The limitations CAFE places on large cars are
much more restricting on domestic manufacturers than on Japanese




177

producers. The latter have concentrated on small-car production and
have built up tremendous CAFE credits. Japanese producers can now
enter the large-car or high-performance market without having to
worry about CAFE standards, as do Ford and General Motors. Because these firms need not pay fines if they increase large-car or
high-performance car sales, foreign manufacturers gain an incremental cost advantage amounting to hundreds of dollars per car from
CAFE in this end of the market. If gasoline prices fall even further,
and CAFE compliance becomes more difficult for U.S. manufacturers, this advantage for Japanese producers will increase further. In
the long run, CAFE will induce greater penetration of imports in the
larger size and high-performance end of the market.
Recent developments suggest that automobile companies may have
already responded to this incentive. Honda announced in October
1985 that it would be exporting a luxury sedan to this country to
compete in the higher priced market. Ford has threatened that CAFE
standards will cause it to take some large-car production abroad. The
statute defines a car as "nondomestic" if more than 25 percent of its
value was manufactured outside of the United States or Canada. Ford
claims it will import more than 25 percent of the value for some of
its larger models. This action would allow it to average some largecar production with small-car imports and thereby satisfy CAFE. This
possibility suggests that any cost advantage of the United States over
foreign production of large cars is, in fact, diminished by CAFE. In
the long run, this could counter any job gains in the United States
that may come from the implicit subsidy of small-car production.
REGULATORY USE OF MARKET INCENTIVES
The Federal Government controls access to many resources such
as mineral lands and offshore oil resources. The government must
determine who gets the right to use these resources. Offshore oil resources and some mineral lands have long been allocated to the
highest bidder. The government accepts a market allocation. Normally this leads to an efficient allocation of the resources. Firms that
value the resource most highly and can use it at lowest cost will bid
the highest price.
AIRPORT SLOTS

Recently the Administration decided to apply this concept to the
allocation of airport landing and takeoff slots at the four capacityconstrained airports—Washington's National, New York's LaGuardia
and Kennedy, and Chicago's O'Hare. These airports cannot accommodate additional flights during peak periods. Until now the avail-




178

able slots were allocated by unanimous agreement of scheduling
committees made up of airlines either serving or desiring to serve an
airport. These committees often could not agree on allocations,
though the Federal Aviation Administration (FAA) could try to cajole
agreement. When agreements were reached, they represented compromises and not the most efficient allocation of slots.
The new rules create a market in takeoff and landing slots. Subject
to limitations that ensure usage and service to small communities,
firms holding slots will be able to sell or lease slots to any airline.
Those airlines valuing additional slots the most will pay the highest
price. An airline that wants a slot to rationalize its route structure
and lower its costs, or an airline that wants to provide service to a
market where demand for the service is great, can bid a high price
and acquire a slot. An allocation of slots will result that accommodates new entrants and is more efficient than an administratively determined allocation.
ENVIRONMENTAL REGULATION

Trading as a method of efficient allocation has also been applied in
pollution control. Under certain circumstances, firms can trade credit
for surplus emission reductions among themselves. One firm reduces
its emissions not only to meet its own requirements, but also to meet
requirements of other firms facing higher costs. The firm that generates surplus emissions reduction credits can sell the credits to others.
Firms can also trade reductions at one emission source in a plant for
increases at another location within the same plant or at other nearby
plants owned by the same firm. The Environmental Protection
Agency (EPA) has approved arrangements of this type, and more
trading offers a way of substantially improving the efficiency of pollution regulations. The following sections describe the significant benefits and potential problems that come from these emissions trading
approaches.
Overview of Air Pollution Laws

The Clean Air Act established National Ambient Air Quality Standards that must be met by each air quality control region. To meet
these standards, States must put into place State implementation
plans that describe steps that will be taken to attain the ambient
standards. In addition, the act and its amendments establish requirements for emissions from all major new plants or significant modifications of existing plants.
The traditional approach to pollution regulation, often called command and control, specifies uniform standards that apply to all plants
of a particular category. Thus, for example, all new coal burning
electric plants commencing operation after 1972 were required to




179

emit no more than 1.2 pounds of sulfur dioxide per million Btu.
Coal-fired powerplants commencing operation after 1979 must meet
a tighter "percent reduction" standard that effectively mandates
stack-gas scrubbing devices regardless of the sulfur content of the
coal. Existing sources must also use specific technology in many
cases. Such uniformity of requirements minimizes the discretion firms
have in meeting the overall goal of emissions reduction.
The Concept of Emissions Trading

Emissions trading is a market-based method of pollution control.
The costs of reducing pollution vary substantially among plants and
even within plants. At some plants or individual stacks, it is relatively
inexpensive to meet a given emission standard. At others, because of
the particular production process or because of the age of the plant,
it is much more expensive. The traditional approach has been to require both to meet the same standard. A more efficient method is to
ask plants where pollution reduction can be accomplished at low cost
to reduce emissions to a greater extent than where pollution reduction is more expensive. In this way, total emissions can be the same
as under uniform standards, but the cost is lower.
The difficulty with different standards for different plants or stacks
is that regulators do not know which firms fall into which cost category. There are huge numbers of plants in an area, each with a different technology and different cost structure. This information
problem usually causes regulators to choose uniform standards.
However, an emissions trading approach uses a market to ferret out
this information. The total areawide allowable emissions are fixed by
regulators. Then trading takes place among firms. A firm with high
costs of pollution reduction, instead of actually lowering emissions,
pays for emissions reduction credits that it uses to satisfy regulations.
The low-cost firms sell the surplus credits they have earned by lowering their own emissions below the level required under the uniform
standards, the so-called "baseline."
With trading, regulators need not determine the least-cost level of
pollution from each plant. Consequently, they do not need the detailed cost information required for an efficient command and control system. Each firm knows better than regulators how to reduce
pollution, whether by new capital equipment, enhanced use of existing equipment, varying production processes, or purchase of an
emissions reduction credit. Using market incentives minimizes the
costs of meeting any overall target of pollution reduction, whereas a
uniform standard would not take advantage of some firms' lower cost
of pollution reduction, nor provide incentives for that firm to use its
own expertise to improve pollution control.




180

Use and Assessment of Emissions Trading

Approved emissions trading has actually been conducted in several
ways. The specific mechanism depends on whether trading takes
place in attainment areas, that is, areas in compliance with the ambient air standards, in nonattainment areas that have EPA-approved
plans for attaining the standards, or in nonattainment areas lacking
such plans. Furthermore, the allowable mechanism depends upon
whether the plant represents a new source of pollution. In all trading
situations, however, the basic idea is the same. Several sources of
pollution are combined for the purposes of establishing acceptable
total aggregate emissions as if a bubble enclosed the various smokestacks or emission sources.
Regardless of the ambient air quality status of an area, emissions
reduction trading offers a way to reduce substantially the costs of
meeting emissions requirements. One study of the costs of reducing
emissions of volatile organic compounds found that costs per ton of
emission reduction varied from $60 to $12,000, depending on the
emission source. The wide variance in these costs indicates the kinds
of savings that can result. By reducing emissions where reduction
costs are $60 per ton, for the same total cost, more than two hundred times as much reduction can be obtained than at the source
with incremental reduction costs of $12,000 per ton. These potential
cost savings as well as potential additional reductions in emissions
are an important justification for emissions trading.
Specific examples demonstrate the type of savings achievable with
emissions trading. In one recent application, EPA proposed to approve an electric utility plan that would allow the firm to treat two
units at a plant site as a bubble. Normally each unit must meet the
new source performance standard for sulfur dioxide of 1.2 pounds
emitted per million Btu. In the bubble treatment, the two sources together must average no more than the 1.2 pounds standard. Under
this bubble the first unit will reduce emissions to approximately 0.6
pounds, the second unit will be controlled so that the average for
both sources will be 1.1 pounds, below what would have been
achieved had each individual source met the new source performance
standards. EPA estimates that emissions will be 3,000 tons less per
year than with the traditional approach. The firm estimates that it
will save $20 million per year and $500 million over the plant's life.
In another example, a manufacturing firm leased several hundred
tons of emissions reduction from a firm that had ''deposited" these
credits in an "emissions bank." In this manner, the firm renting these
credits did not have to choose between expensive new capital equipment for an aging production facility or the premature shutdown of
the plant.




181

Some critics of trading reject the notion of surplus emissions no
matter where trading takes place. They are reluctant to give up the
perceived opportunity to force greater reductions, even in areas that
have attained the ambient air quality standards regardless of the cost
savings that can be generated. However, the use of bubbles in nonattainment areas that lack approved attainment plans receives the most
criticism. It is argued that in those areas the cost savings of trading
are irrelevant. Emission reductions are required by law. If an area has
not reached or determined the level of reductions required for attainment, then allowing one emitter to sell a so-called surplus simply will
reduce pressure on someone else to make needed reductions.
In many cases, it is argued, the so-called surplus results from actions that would have taken place without the added incentives of
emissions trading. For example, a firm closes a unit or changes the
manufacturing process and thereby gains an emissions reduction surplus that it may sell. It might have closed the plant or changed the
technology even if it were not able to sell the emissions reduction.
Or the surplus might result from an emission reduction technology
exceeding original performance expectations. Granting emissions
credits for these reductions, it is argued, means giving up a chance to
reduce emissions in the nonattainment area.
In nonattainment areas, the debate is actually about how trading
affects the ability to improve air quality. In order to assess these arguments, one must ask whether emissions trading in fact does make
attainment more or less difficult. The answer depends on what would
occur without the trades. Is compliance less likely if trading is made
more difficult? Behind the opposing views on emissions trading lie
two different views of the regulatory process.
The argument that there is no surplus is really an argument that
through traditional command and control methods regulators will
achieve reductions at each emissions source that surpass the reductions achievable with trades. It assumes that regulators, at a reasonable cost, will achieve these surplus reductions anyway and will gain
additional reductions from other sources. But this is a highly idealized view of environmental regulation.
In fact, noncompliance is common. Regulators typically lack information about emissions from specific sources. Firms have incentives
not to report the amount of reduction that is feasible because they
fear, with good reason, that the information will stimulate even more
stringent regulatory standards. Regulators must frequently negotiate
reductions with firms and often settle for less than the maximum
amount implicit in the arguments of critics of emissions trading. The
less cost-effective the regulations, the greater the firm's resistance to
reductions and the more negotiation and delay in achieving reduc-




182

tions. In essence, the opportunity forgone is not the low level of
emissions envisioned in the critique of trades, but something often
far short of that.
Market incentives can improve this imperfect system by encouraging compliance and hastening attainment of ambient air standards.
Firms that know they can do better than the standards require will
find it in their interest to come forward voluntarily because the surplus reduction now has value. It is in their interest to do better and
to demonstrate the feasibility of greater reductions if they can sell
these credits immediately or bank them for future sale. Lowering the
costs of emissions reductions can also make firms less resistant to
taking the necessary actions to lower emissions further.
Firms increasingly will regard pollution reduction as an element in
the production process. A firm that can realize a monetary reward
from efficient emissions reduction will choose technology that takes
this into account. Rather than having regulators choose technology,
as is often done now under command and control regulation, trading
schemes encourage firms to choose technology to surpass minimum
requirements or to select production processes that are less polluting
and that cannot be mandated.
As a practical matter, it is difficult to second guess firms' actions. If
the regulators could determine what the firm would have done, they
probably could have required efficient action in the first place. In
fact, the information problems that plague command and control systems make a policy of ex post analysis difficult.
Inevitably some firms will benefit under a trading policy from
doing what they would have done anyway. In these cases, opportunities for additional emissions reductions will be lost. This is only a
problem in nonattainment areas without approved plans, where there
is still a requirement to reduce emissions further but no plan on how
to do so. But, the obvious cases can be readily dealt with. EPA, for
example, could decide not to grant credits for actions taken before
application for a bubble. Safety margins could also be built into a
bubble by requiring a bubble to lower emissions below current required levels in nonattainment areas. Of course, constraining bubbles
too much will prevent the cost and emission reduction benefits from
being widely realized.
In summary, as in all economic policy decisions, the question
comes down to one of the appropriate opportunity cost. Emissions
trading makes sense if the alternative is a highly imperfect and costly
command and control regime. If, on the other hand, regulators can
set standards and mandate technology that, at relatively low cost, will
reduce emissions and achieve ambient standards, a trading mechanism is not necessary. However, major emission reduction cost differ-




183

ences, and the fact that many air quality control regions still have not
attained the ambient air quality standards, suggest that command and
control regulation is not efficient.
Experience with other regulatory solutions also suggests that
market incentives are likely to be considerably more efficient. Benefits similar to those realized in other sectors can be obtained by
employing market incentives more in environmental regulation. Many
issues are the same. Plant managers who know the costs of production and of emission reduction are given an incentive to act upon
that information. The alternative is to have regulators determine,
from a much more limited information base, how firms should act.
Just as the CAB could not determine what service configuration satisfied consumers at lowest cost, regulators are unable to determine
how to produce emissions reductions most efficiently. Realizing this
fact, it is the policy of this Administration to encourage the use of
market-based incentives.
EXTENDING MARKET INCENTIVES
Another area where market incentives can improve economic efficiency is in the provision of goods and services by the government
itself. The major ways to infuse market-based incentives in these activities are contracting out to the private sector through competitive
bidding and the outright sale of government assets.
There are three primary sources of efficiency gains. First, managers
not responsible to shareholders have greater latitude to pursue managerial objectives other than value maximization. Consequently, government-owned firms might be expected to operate less efficiently
than privately owned businesses. Second, the monopoly constraints
that often accompany government production are reduced. Third,
the price of products produced by the government often reflects
hidden subsidies that distort market outcomes.
The range of government-provided services and products is wide
and offers many opportunities for what has come to be called privatization. The Federal Government provides many products and services similar to products and services provided in the private sector. A
partial list includes mail delivery, electricity generation, land management, and the financing and management of housing developments.
Currently, there is great interest in privatization as a way to reduce
government deficits. Indeed, the Administration in its budget for
fiscal 1987, has proposed several privatization initiatives. While privatization can be a strategy of budget reduction, the long-run gains
of privatization to the economy are increases in economic efficiency.




184

EXPERIENCE IN THE UNITED STATES AND ABROAD

Over the past few years Great Britain has sold a large number of
government-owned corporations. Other countries, including Brazil,
Japan, and India, are also divesting themselves of government assets
and returning them to the private sector. In the United States there
have been several efforts aimed at contracting with private firms to do
what have traditionally been governmental functions. The Government
Printing Office, for example, contracts out for $548 million of printing
services. The Office of Management and Budget (OMB) estimates that
$6.0 billion of government-provided services such as data processing,
accounts management, and facilities maintenance should be considered as candidates for contracting out to private firms. OMB estimates that more than $1 billion could be saved annually from contracting out these services.
Substantial empirical evidence suggests that private firms are more
efficient than government suppliers of similar products or services. A
recent study compared the costs of municipal services such as laying
asphalt, tree maintenance, and refuse collection in cities contracting
out for service with costs in cities performing the functions themselves. The municipalities were all in the same geographical area.
After controlling for scale of operation and quality of service, contracting out lowered costs for most services by amounts ranging from
37 to 95 percent. Only payroll preparation showed no significant cost
savings through contracting out to private firms. While it is difficult
to control for all possible differences in quality of services and to
measure costs precisely, these large percentage differences suggest
that contracting out has been an important cost-saving measure. Additional evidence comes from a study of water utilities. After controlling for scale and adjusting for differences in input prices, the study
found that average production costs were lower for privately owned
than for publicly owned firms.
A study of Australia's two interstate airlines, one governmentowned and the other private but heavily regulated, found that the
private airline was more efficient as measured by tons of freight and
mail carried per employee. A study of mutual savings banks in the
United States also points to the importance of shareholder control.
Depositors technically own mutual banks but in practice they exercise
no control over management. Furthermore, regulation limits the ability of management to capture profits in higher salaries. The result:
Mutuals appear to be less efficient, incurring larger expenses than for
similar operations in stockholder controlled firms.
At the Federal level, cost savings can be realized by transferring
production of goods and services to the private sector. The General
Accounting Office found that in hydroelectric power generation, after




185

adjusting for scale and degree of automation, government operating
costs were 20 percent higher than those for private firms. In addition, public hydroelectric plants were slower to innovate. Similar
findings by the President's Private Sector Survey on Cost Control
point to other potential reductions in cost where private firms replace government production.
STEPS FOR FURTHER PRIVATIZATION

The United States has begun to take steps to sell assets that would
be managed more efficiently in the private sector. This Administration has proposed selling Conrail, the federally owned freight railroad. It also has suggested ending subsidies to Amtrak, leaving it to
the private sector to determine whether and to what extent rail passenger service was worth maintaining. Recently, a proposal to sell the
power marketing authorities has been put forward.
The power marketing authorities are government agencies that sell
the power produced by government-owned hydroelectric dams. Sales
of these authorities, such as Bonneville Power, to the private sector
would increase efficiency in several ways other than improving managerial incentives. The Federal Government currently subsidizes borrowing rates through the Federal Financing Bank. This subsidization
misinforms management about the true cost of maintaining or expanding the system. Also, the President's Private Sector Survey on
Cost Control calculated that power marketing authorities' subsidized
borrowing rates and current pricing methods significantly underprice
the cost of electricity that they sell. If regulations allow, a transfer of
the assets to the private sector at prices that reflect the true value of
the assets would lead to more efficient pricing.
An additional opportunity is the introduction of more marketbased incentives in the U.S. Postal System (USPS). The USPS is, in
effect, a transport monopoly maintained by law. The private express
statutes reserve "letters" for the USPS. A letter, for the purposes of
the private express statutes, is defined by USPS itself. The effects of
this monopoly are similar to the effects of other transport regulation:
Average rates are higher than they need be and service is poorer.
The costs of the USPS are elevated, much as the costs of trucking
were elevated under regulation. Wages of postal workers are higher
than wages of comparable employees in the private sector. A recent
study found that after adjusting for education and skill level, a postal
worker earned in excess of 20 percent more than comparable private
sector workers. Lacking competition, these higher wages lead to
higher rates as the costs are passed on to consumers. Rates are distorted in another way. Although costs vary with distance and destination, all first-class mail is priced at the same rate based on average




186

cost. This is, in effect, a subsidy for rural and long-distance delivery
that is paid for largely by shippers of first-class mail within urban
areas.
There have been different proposals for bringing market incentives
into the USPS. One is the greater use of private contractors. At
present, many private firms pre-sort bulk mailings in order to realize
the pre-sort discount offered by the USPS. Operations such as intercity transport of mail are contracted out to private firms. Extending
contracting to rural delivery routes as they become vacant and contracting out the sorting of letter mail through competitive bidding
have been suggested as ways to bring some of the benefits of competition to the system. Other proposals would chip away at the USPS
monopoly by allowing private firms to deliver some selected types of
letters.
The most direct approach would simply eliminate the private express statutes. Without a government monopoly, private firms would
be free to enter and compete for business. Proponents of this approach point out that there is no convincing evidence of economies
of scale in the Postal System that justify a monopoly and, even if
there were, competition would ensure that the most efficient firm
would survive. Furthermore, the incentives of profit-oriented firms
would lead to costs lower than those of the USPS.
A concern with a purely private system is that while prices for most
consumers would decline, prices to rural areas would increase or
service would be poorer. Similar arguments were made in the debate
about airline and trucking deregulation. Undoubtedly, under deregulation the cost of mailing will depend on the cost of providing the
service and it will probably cost more to mail a letter a longer distance or to a remote location. However, because postal system costs
will tend to go down, it is not clear, on balance, whether rural rates
will increase.
In sum, privatization should be seen as a method to improve economic performance in many areas of the economy. The evidence suggests that in many cases private firms can provide services more efficiently than can government enterprises. Contracting out or selling
assets to private firms are two methods to carry out such a policy. Of
course, not all governmental activities can be privatized, yet those
discussed above and others as well offer possibilities for enhancing
economic efficiency.
CONCLUSION
Economic performance can be improved through greater reliance
on market incentives. In some cases regulation itself causes ineffi-




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ciency, and deregulation is an appropriate policy. In other areas, as
in the environmental area, government regulation is necessary to correct an underlying market failure. Yet, even here greater reliance on
market incentives can produce desired social outcomes at lower cost.
Finally, where government produces a good or service such as producing electric power or delivering mail, a better incentive structure
can be brought to bear through privatization. This Administration is
committed to increasing efficiency throughout the economy, using
these different approaches, where appropriate.




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CHAPTER 6

The Federal Role in Credit Markets
THE INSTABILITY OF INTEREST RATES and inflation through
the 1970s and early 1980s resulted in substantial difficulties for many
institutions in U.S. credit markets. Home mortgage lenders experienced an enormous capital loss from which they are not yet fully recovered. Lenders to real estate, including agricultural real estate, suffered losses when real property values, once buoyed by inflation, fell
with the return of lower inflation. Similarly, institutions that lent dollars abroad when inflation was high and the dollar was low face borrowers struggling to repay in now stronger dollars.
In this episode of instability, well-meaning government policies
aimed at protecting savers and accommodating borrowers interfered
with risk bearing and risk management. Encouraged by regulation
and tax policy, the thrifts and a government-sponsored financial intermediary lent to homeowners on a long-term, fixed-rate basis.
These loans were financed by shorter term deposits and bonds guaranteed by the government. The increased volatility of interest rates
made this a very risky strategy. Fluctuations in real property values
revealed the deficiencies of limited-purpose lenders such as the Farm
Credit System. Barriers to interstate banking inhibited diversification
of lending risks, many of which have large regional components, and
increased the likelihood of the insolvency of many financial institutions. Concern for the security of pension beneficiaries created a
pension insurance system that generates a large subsidy, encourages
abuse, and in only 10 years of operation, has created a large liability
that the taxpayers may have to assume.
This chapter analyzes government policy as it shapes the institutions that must cope with both the risks of lending and the risks of
macroeconomic policy as well. It examines Federal loan programs
and five government-sponsored financial intermediaries which execute much of government credit policy. It also analyzes the incentives
and outcomes of insuring deposits at commercial banks and thrift institutions and insuring the income from certain pension plans. This
chapter concludes with a discussion of the relationship between the
deregulation of financial institutions and some of the problems these
institutions have recently experienced.




189

THE SIZE OF THE FEDERAL ROLE IN CREDIT MARKETS
At the end of fiscal 1985 nonfinancial debt outstanding (the sum of
the debt of households, nonfinancial businesses, and Federal, State,
and local governments) totaled $6.5 trillion. Chart 6-1 shows the development of Federal involvement in the credit markets between
1959 and 1985, by type of debt outstanding, as a percent of gross
national product (GNP).
Chart 6-1

Debt of All Nonfinancial Sectors
As Percent of GNP
Percent of GNRJ/

180 I
160
140

120

Private Debt

100

80

1960

1965

1970

1975

1980

1985

Fiscal Years
-J/Debt at end of fiscal year as percent of GNP for fiscal year.
Source: Council of Economic Advisers, based on data from various government agencies.

The bottom layer of the chart represents the outstanding debt of
State and local governments, which has remained stable in relation to
GNP. The next layer up is Federal debt outstanding less direct Federal loans (made to households and businesses). Direct Federal loans
are subtracted because they represent government borrowing for the
purpose of relending, and hence constitute a portion of the Federal
debt that is financial. Direct Federal loans are included in the next
layer of debt.




190

The third layer of debt consists of loans made or guaranteed directly by the government, plus loans made or guaranteed indirectly
by the government through government-sponsored financial intermediaries. The total outstanding debt from these Federal credit activities was $1,038 billion at the close of fiscal 1985, which is approximately the same as the total assets of thrift institutions and just
under half of the total assets of the commercial banks. These activities account for 22 percent of private (nongovernment) nonfinancial
debt.
The Federal Government insured over $2 trillion of deposits at
commercial banks, thrift institutions, and credit unions at the close of
fiscal 1985. Many institutions use money raised through insured deposits to acquire instruments that already carry Federal guarantees or
are obligations of the Federal Government. These instruments are
federally guaranteed loans, Treasury debt, the debt of the government-sponsored intermediaries, cash, and reserves held at the Federal Reserve Bank. Subtracting the sum of these instruments from insured deposits yields the fourth layer—the net additional involvement
of the Federal Government arising from deposit insurance.
Completely privately intermediated debt is represented in the top
layer of the chart. Bank loans financed by bank capital coming from
sources other than insured deposits are represented here. The debt
of private corporations that issue bonds not guaranteed by the government is also represented here.
The level of government involvement as both borrower and lender
has remained fairly stable between 1959 and 1985 at a surprisingly
high 63 to 69 percent of total nonfinancial debt (including State and
local debt). But the composition of borrowing versus lending has
changed. The relative amount of Federal debt outstanding fell from
the end of World War II until very recently, but was offset by a rise
in the government's role as a lender and insurer of credit, from 23
percent of total nonfinancial debt in 1959 to 38 percent in 1985.
FEDERAL LOAN AND LOAN-GUARANTEE PROGRAMS
Federal credit programs have two primary effects on credit markets. First, they all provide subsidies transferring wealth to government-favored borrowers from the rest of the public. These subsidies
create distortions in the economy by reallocating resources from
higher to lower valued uses.
Second, these credit programs disperse lending risk nationally, bypassing barriers to interstate banking. Two benefits flow from national dispersion of risk. First, a more broadly based loan portfolio effectively diversifies away a significant portion of lending risk. In addi-




191

tion, the remaining nondiversifiable lending risk can be more easily
borne if widely dispersed rather than concentrated in one region or
one institution. Ultimately, diversification lowers interest rates for
borrowers and reduces potential instability for the financial system as
a whole.
DIRECT FEDERAL LOANS AND GUARANTEES

The government makes direct loans to finance agriculture, housing, education, medical facilities, purchases of arms by foreign governments, rural development, railroads, and other activities. These
loans must be financed with either taxes or Federal borrowing. The
Federal Government also redirects credit by guaranteeing the loans
of certain borrowers, notably homebuyers, students, and small business owners.
Because the public bears the lending risk for direct Federal loans
and loan guarantees, that risk is more widely dispersed than if the
risk-bearer were a small commercial bank. In case of a default, the
public absorbs the loss either in the form of higher taxes or higher
government debt.
The costs of the direct loan and loan-guarantee programs are not
measured in the cash-based Federal budget. The budget generally
records outlays when cash is disbursed and records receipts when
funds are received. The budget shows the cost of a new direct Federal loan to be the amount lent, and the net cost of direct lending programs to be new lending less payments of interest and principal on
existing loans. For loan guarantees, a budgetary cost appears only if
a guaranteed borrower defaults and the government has to make
good on its guarantee.
To understand the cost to the public of Federal credit activity, consider the budgetary impact resulting from having the government
contract with private lenders and loan insurers to loan to or insure
parties for whom the legislature desired to subsidize borrowing. Private lenders and loan insurers would base their fees on the degree of
risk assumed and the degree of subsidy provided, and would charge
the government more for guaranteeing risky loans than sure ones. If
the government paid up front for direct loan subsidies and guarantees, the cost would be accurately reflected even in the cash-based
budget.
The Federal direct loan and loan-guarantee programs are not
small. At the close of fiscal 1985, the Federal direct loan portfolio
totaled $257 billion. This loan portfolio is larger than the combined
loan portfolios of the two largest U.S. commercial banks, and represents 17 percent of the outstanding national debt held by the public.
Federally guaranteed loans totaled another $410 billion.




192

The Office of Management and Budget estimates the subsidies
provided through Federal credit programs. The Administration's
1987 (cash) budget proposes to reduce the subsidies by charging
Federal credit programs for the use of the government's good name
in the credit market. This would entail raising the fees on insurance
programs such as the Government National Mortgage Association
(Ginnie Mae), the Veterans Administration, and the Federal Housing
Administration and imposing fees on the five sponsored intermediaries. While fees would not result in putting the cost of Federal lending
and guarantees into the budget, it would put revenues into the
budget to offset some of the costs borne by the taxpaying public
from guaranteeing government loans and would reduce credit market
distortions caused by these programs.
GOVERNMENT-SPONSORED FINANCIAL INTERMEDIARIES

The government moved in the direction of using the private sector
in serving its credit goals by establishing five government-sponsored
financial intermediaries. Three of these, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage
Corporation (Freddie Mac), and the Federal Home Loan Banks, serve
the housing finance market. The Farm Credit System finances agriculture, and the fifth, the Student Loan Marketing Association (Sallie
Mae), makes a secondary market in federally guaranteed student
loans. Each issues securities (bonds, notes, and/or mortgage passthroughs) and uses the proceeds to fund its lending activities. All of
the five sponsored enterprises are now privately owned but maintain
a special relationship with the Federal Government. Among the privileges enjoyed in this special relationship are exemption of their earnings from State and local income taxes, exemption of their securities
from registration with the Securities and Exchange Commission, and
eligibility of their debt securities for unlimited investment by most
depository institutions.
Ideally, these institutions would pool and diversify risks and distribute any remaining risk to the parties most willing to bear it via
national distribution of their debt and equity securities. Three of the
sponsored intermediaries, Fannie Mae, Freddie Mac, and Sallie Mae,
come close to this result. To what degree the government also shares
the risk by guaranteeing their bonds remains an open question. In
principle, the Farm Credit System distributes risk nationally through
its bonds; but again, it is not clear how much risk is borne by the
government rather than the bondholders. The Farm Credit System
fails to disperse its equity risk nationally because the equity holders
of the system are its borrowers.




193

HOUSING FINANCE INTERMEDIARIES

Fannie Mae and Freddie Mac assist in providing lower cost credit
to private financial institutions that in turn provide lower cost credit
to homebuyers. There are two fundamental sources of this cost advantage: the implicit subsidy from association with the Federal Government, and the opportunities to diversify regional components of
real estate lending risk.
The usefulness of the secondary market created by Fannie Mae and
Freddie Mac resulted from restrictions on interstate banking. Large
interstate banks could diversify mortgage-lending risks by holding
portfolios of mortgages on properties across the country and by nationally distributing their equity shares. Without a secondary market
for mortgages, equity holders of smaller banks and thrifts would be
forced to bear all of the risk associated with changes in the value of
property within a confined geographic area. They would naturally require compensation for bearing this risk. By creating a national
market for mortgages, Fannie Mae and Freddie Mac provided a
mechanism for diversifying away much of the geographically specific
risk in mortgage lending, thereby lowering the rate of return required by the lenders and ultimately lowering the cost of borrowing.
Fannie Mae and Freddie Mac both make secondary markets in
mortgages, but differ in the potential liabilities that they create for
the public. Freddie Mac is owned by the thrifts and by the Federal
Home Loan Banks, and acts primarily as an agent that buys, repackages, and sells mortgages. At the end of fiscal 1985 Freddie Mac held
a portfolio of mortgages of only $13 billion and had an outstanding
portfolio of mortgage-backed securities of $92 billion. Hence, Freddie Mac is exposed to relatively little risk from changes in interest
rates.
Fannie Mae's equity is held by the public and its equity shares are
traded on the New York Stock Exchange. In its mortgage passthrough operations, totaling $49 billion, Fannie Mae assumes no interest rate risk. But in its direct funding operations, another $97 billion, Fannie Mae takes considerable risk from possible fluctuations in
interest rates because the average maturity of Fannie Mae's assets is
longer than the average maturity of its liabilities. As a result, any rise
in interest rates causes greater declines in the value of Fannie Mae's
assets than in the value of its debt. As late as April 1984, when interest rates had already declined substantially from the peaks in 1981,
Fannie Mae still had negative net equity on a market-value basis. Yet
Fannie Mae's bonds continued to be priced as if they were nearTreasury securities, (rather than claims on Fannie Mae's portfolio)
presumably because bondholders imputed a value to Fannie Mae's
special relationship with the Federal Government.




194

The special relationship of Fannie Mae to the Federal Government
benefits the equity holders of Fannie Mae as well. If Fannie Mae
speculates on interest rates successfully, the profits belong to the
equity holders. If the speculation is unsuccessful, the government is
expected to absorb the loss. The continued success of the home
mortgage market does not depend on government sponsorship of
term intermediation. This is demonstrated by the success of the passthrough operations of both Fannie Mae and Freddie Mac, by the existence of markets in which institutions can hedge interest rate risk,
and by the growing role of adjustable-rate mortgages.
Moreover, although substantial barriers to interstate and intrastate
branch banking remain, the emergence of private firms in the secondary market for mortgages shows that government subsidies and
government sponsorship are not necessary to support secondary
mortgage markets. Fannie Mae and Freddie Mac do still enjoy subsidies and have a comparative advantage over private firms in their
niche of the market. Private firms have concentrated on mortgages
exceeding the size limits imposed on Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac are no longer unique in providing diversification services, but they are unique in operating under the
aegis of the Federal Government.
THE FEDERAL HOME LOAN BANKS

The Federal Home Loan Banks (FHLBs) lend to the thrifts on substantial collateral and hence face very little risk through this lending.
FHLB funding of the thrifts resembles the funding that the Federal
Reserve provides to commercial banks through its discount window,
except in term and size. The FHLB loans are both short- and longterm ($15 billion out of $80 billion is of more than 5-year term),
while discount funding is typically overnight. As of August 1985 discount window borrowing totaled slightly more than $1 billion, financing less than 0.05 percent of commercial bank assets, while FHLB
borrowing totaled $80 billion, financing 8 percent of thrift assets.
The role of the FHLBs in diversifying thrift lending risk is minimal.
THE FARM CREDIT SYSTEM

The Farm Credit System (FCS) operates a network of primary and
secondary lenders. The 12 Federal Land Banks (FLBs) make mortgage loans on farms and real estate, through 306 (as of the end of
1985) local Federal Land Bank Associations (FLBAs), to farmers and
ranchers, rural homeowners, and farm-related businesses on terms of
up to 40 years. Twelve Federal Intermediate Credit Banks provide
loan funds to 216 Production Credit Associations (PCAs) and can
discount agricultural loans from other financial institutions as well.




195

The PC As make primarily 1-year operating loans to agricultural borrowers. In addition, the Central Bank for Cooperatives makes loans
to the 12 district Banks for Cooperatives, which make short- and
long-term loans for cooperative agricultural facilities.
The smallest entities of the PCS, the PCAs and FLBAs, are owned
by their borrowers, who must buy stock in them in proportion to
their loans. The PCAs in turn own the Federal Intermediate Credit
Banks and the FLBAs own the Federal Land Banks. These, together
with the Banks For Cooperatives and the Central Bank for Cooperatives, make up the Farm Credit System. The borrowers of these organizations reap the benefits of any profits made by the FCS in the
form of lower interest rates on subsequent loans or in patronage refunds.
Much publicity was given to the losses of the FCS in 1985, a difficult year for agriculture. While the FCS as a whole did report a loss
of $426 million for the first 9 months of 1985, it also reported remaining total capital of $8.5 billion on total assets of $80.5 billion.
While the FCS will probably experience further losses through 1987,
these income and equity figures show that the FCS as a whole is solvent.
The troubles of the FCS in 1985 varied greatly by region, supporting the contention that there is a strong regional element in agricultural lending risk. For the quarter ending September 1985 the FLBs
in Omaha and Wichita reported losses exceeding 2 percent of total
assets, while the FLBs in Texas and Sacramento reported positive
income. Legislation passed in December 1985 established a regulator
for the FCS and empowered the regulator to impose assessments on
the district banks to pool their resources. The Administration believes that with this pooling of capital, the FCS will be able to cover
anticipated losses.
The Farm Credit System has not inspired competitors, as have
Fannie Mae and Freddie Mac. On the contrary, both the FCS and
direct Federal lending to agriculture have gained ground compared
with private alternatives. Market shares of agricultural lending for
1970, 1975, 1980, and 1984 are shown in Table 6-1.
Why has government and government-sponsored lending to the
farm sector steadily displaced private lending? Private financial institutions have been at a disadvantage to the FCS and Federal direct
loans on at least two grounds. First, the FCS's special agency status
has lowered its borrowing costs, and of course, the funding for direct
loans comes from the U.S. Treasury. Second, important actual and
potential competitors, specifically commercial banks, have only limited ability to pool agricultural risk because of restrictions on interstate
and intrastate branch banking. Insurance companies competing with




196

TABLE 6-1.—Market shares of agricultural lending, 1970-84
[Percent of total]
Source of lending

1970

Government direct and sponsored programs

1975

1980

1984

32.6

48.1

319

5.6
.4

31 1
10.7
2.7

67.4

64.4

555

51.9

273

28.9

?8?
73

221
?fH
71

235

29.8

Commercial banks
Individuals and others
Life insurance companies

44.5

296

6.0
3.4

Private sources....

35.6

232

Farm Credit System
Farmers Home Administration
Commodity Credit Corporation

103

12.1
4.1

??•)

59

Note.—Data for end of year.
Source: Department of Agriculture.

the FCS, however, do have access to national capital markets. Over
these potential competitors, the FCS had no advantage except its
subsidy. These comparisons suggest that the subsidy, not the access
to national markets, was the primary force behind the increased share
of government-affiliated lending to the farm sector.
The FCS has a method of allocating equity risk that exacerbates
the difficulties of agricultural borrowers in hard times. Each owner/
equity holder's share of the capital in the local borrower-owned unit
is a proportion of his or her borrowing from the institution. When
capital contributors believe their capital is at risk, they can withdraw
it by going to another institution and borrowing a sufficient amount
to pay off their FCS loans. The remaining borrowers are those who
cannot go to alternative institutions for loans except at much higher
interest rates, if at all. This system has two unfortunate consequences. First, "equity runs" can leave the FCS with only the lower
quality loans when times are difficult. Second, when farmers have a
difficult year due to poor crops or low prices, their equity investment in
their local FCS institution does very poorly.
Strictly speaking, agricultural credit has been subsidized through
the special relationship of the FCS and the Federal Government. But
all things considered, it seems that agricultural borrowers are not
well served by their credit markets. Commercial banks cannot serve
the agricultural borrowers as well as they might because of the barriers to interstate and intrastate branch banking. The FCS makes only
agricultural loans, and hence can diversify only across agriculture. By
forcing farmers who borrow from it to be its equity holders, the FCS
prevents them from transferring equity lending risk to other parties.
SALLIE MAE

The youngest and smallest of the government-sponsored intermediaries, Sallie Mae, makes a secondary market in federally guaranteed
student loans. It also buys these loans for its own portfolio, financing




197

the purchases by selling bonds. Organized as a private corporation
with shares traded on the New York Stock Exchange, Sallie Mae has
earned on average slightly more than 30 percent of net worth annually over the past 5 years. Little implicit government subsidy is currently provided directly to Sallie Mae (as distinct from the large subsidy that is provided on the federally guaranteed student loans). If
the role of this enterprise was to demonstrate, with a temporary subsidy, that a secondary market could be profitably made in guaranteed
student loans, its mission is accomplished. It is therefore appropriate
to consider making Sallie Mae a fully private organization. The Administration will investigate this possibility in 1986.
FEDERAL DEPOSIT INSURANCE
Insured deposits in commercial banks, thrift institutions, and credit
unions now stand at more than $2 trillion, making deposit insurance
by far the largest of the Federal guarantees in the credit markets. Deposit insurance is intended to prevent runs on these depository institutions (here called "banks" when discussed as a group) that can degenerate into general banking panics. Runs occur when depositors
become concerned that an institution's assets may not be able to
cover all of its deposits. Depositors "run" to be first in line to withdraw their deposits. Because the typical bank's assets are for the most
part illiquid, even a bank whose assets are larger than deposits plus
other liabilities can have considerable difficulties in accommodating
large, sudden withdrawals of deposits.
From the point of view of averting runs, it does not matter whether
a deposit insurance corporation stands ready to make deposits good
or a lender of last resort is ready to lend to institutions plagued by
runs, so long as depositors believe that the backer will in fact support
the deposits. Assuring this support is a particularly difficult problem
for deposit insurance. Conventional insurance, for example life insurance, operates on the principle of insuring many uncorrelated risks.
But bank runs tend to be contagious. The only insurer that unambiguously has the capacity to meet any run, no matter how large, is one
with the power to print money. This gives the government a comparative advantage in providing deposit insurance.
The role of deposit insurance is not so much to pool, diversify, and
eliminate risks, as conventional insurance does, but to change the way
in which certain risks are borne. While there is a large diversifiable
component to lending risk, there remains a large nondiversifiable
component that must simply be borne. Without deposit insurance, the
risk is borne by both equity holders and depositors, leaving the




198

banking system vulnerable to occasional collapses through runs. With
deposit insurance, the risk is borne by bank equity holders and by the
public.
Deposit insurance imposes risk on the public because it prevents loss
to depositors not only from runs on solvent institutions but also from
defaults on loans and, if the maturity of the bank's assets and liabilities
are not matched, from changes in interest rates. Without the inherent
uncertainty regarding the value of bank assets there would be no
reason for runs. Thus, maintaining deposit insurance requires insuring
against these events, as well as against mere illiquidity.
When a bank is insolvent due either to defaults on loans or fluctuations in interest rates, the loss may be treated several different ways.
First, it could be met by an insurance fund capitalized with accumulated insurance premiums. Should the loss exhaust the fund, the
additional loss could be borne either by collecting taxes to pay off
depositors or printing money to pay off depositors. If printed money is
the solution, the cost is borne in the form of a general rise in the price
level. The government could, of course, issue bonds to cover the loss,
but these bonds would ultimately be repaid either by collecting taxes
or by printing money.
On the other hand, when no real insolvency is present, the central
bank can be called upon to serve simply as a temporary provider of
liquidity. The central bank extends a loan to the temporarily illiquid
bank and receives repayment; this imposes on the public only the
cost of administering the transaction less interest collected on the
loan.
ADVERSE INCENTIVES OF DEPOSIT INSURANCE

Insuring deposits encourages bank owners to take on more risk
than they otherwise would. As long as the bank pays interest competitive with rates available on similarly safe investments, insured depositors have no reason to withdraw their deposits, even from a bank
engaging in risky lending.
Equity holders of banks are usually not protected when a bank
fails, but even when they lose their entire investment they still are
not responsible for all of the losses of unsuccessful lending. Part of
the loss falls on the deposit insurer. Because the deposit insurance
fee is not adjusted to reflect the increase in risk borne by the deposit
insurer, the bank owners have incentives to take account of only that
part of increased risk that is borne by equity holders—and not the
increased risk absorbed by the deposit insurer.
For depository institutions with substantial amounts of equity capital relative to their assets and other liabilities, the incentive to




199

engage in excessively risky activities is limited. After all, equity holders have a lot to lose before the deposit insurer steps in. For depository institutions with low equity capital, and especially for institutions
with negative equity capital on a market-value basis, the incentive for
excessive risk-taking can be quite strong.
To reduce excessive risk-taking encouraged by deposit insurance,
regulators impose two kinds of restrictions on depository institutions.
First, they subject institutions to "capital adequacy" requirements.
Second, they impose portfolio regulations that restrict institutions as
to the kinds and amounts of different activities. Two other approaches
have been suggested: risk-adjusted deposit insurance and risk-adjusted
capital requirements.
CONTROLLING ADVERSE INCENTIVES: CAPITAL REQUIREMENTS

In principle, the goal of capital requirements is to ensure that bank
owners have much to lose if they do not invest the bank's funds prudently. Of course, the deposit insurer must be willing to carry
through with its threat to close institutions not meeting the requirements. If capital requirements worked perfectly, regulators would
close a bank with insufficient capital before the capital was zero or
negative, and the public would bear no loss through deposit insurance. In practice, capital requirements have some serious flaws.
The most serious flaw is that the regulators' measure of capital is a
poor gauge of the true market value of the owner's stake. Regulatory
measures of capital generally reflect changes in the value of bank
assets and liabilities on the bank's financial statements only when
assets and liabilities are bought or sold. However, market values of
many assets and liabilities change, sometimes quite substantially,
without any transactions being made. In particular, the market value
of long-term, fixed-rate loans and mortgages fluctuates with changes
in interest rates, just as does the market value of long-term bonds.
Regulatory methods of accounting, however, value long-term, fixedrate loans and mortgages at the interest rates that prevailed when the
loans and mortgages were made, that is, at book value rather than at
market value.
Fluctuations in interest rates are not the only force that changes
the market value of bank assets. Loans to foreign countries, for example, or on real estate or agricultural properties, may change in
value because of changes in expectations about when and if the borrower will repay. For these kinds of loans, there is a limit to the use
that can be made of observable, competitive market prices to adjust
asset values. Banks do, after all, find their comparative advantage in
gathering and assessing information about borrowers, and it is unlikely that other parties could provide better information on asset




200

quality than do the banks themselves. Nonetheless all loans change in
value with changes in interest rates, and more accurate accounting
can be achieved even for these loans by making adjustments for interest fluctuations.
Flaws in the measures of net worth used to set capital standards
lead to two problems. First, capital requirements often do not control
the adverse incentives for risk-taking that they were designed to
combat. Because capital requirements are based on book rather than
market measures of capital, a fall in the value of a bank's assets often
does not affect its capital adequacy until the cash-flow consequences
begin to impinge on its ability to pay its bills. This event could be
many years hence. But the fall in value immediately affects the incentives of the owners of the institution. As pointed out above, insured
institutions with very low or negative net worth have especially
strong incentives to engage in excessive risk-taking.
The second problem is that transactions that impair book capital,
but otherwise are desirable for both the institution and the economy,
are discouraged, and transactions that enhance book capital, but are
otherwise undesirable, are encouraged. For example, a bank that
forecloses on property due to a loan default typically takes that property onto its books at assessed value. Banks have for the most part
not found their comparative advantage in managing real property,
and would probably want to sell the property, even if it fell further in
value. But if the market value is less than the book value, sale will
lower the bank's regulatory capital; hence the property may not be
sold. On the other hand, a bank with a big capital gain on its own
building may sell that building simply to get the capital gain onto its
books and thus raise its regulatory capital.
PORTFOLIO REGULATION

Besides imposing capital requirements, regulators of financial institutions attempt to control risk exposure by directly imposing limits
on investment activities. These controls impose a considerable
burden on the regulator in terms of risk assessment and prediction.
In addition, they reduce market flexibility in allocating credit. They
do not merely introduce incentives, but legally limit many kinds of
activities and preclude others.
RISK-ADJUSTED DEPOSIT INSURANCE

A suggestion for reducing risk-taking incentives is to risk-adjust deposit insurance premiums. The Vice President's Task Group on the
Regulation of Financial Services recommended that deposit insurers be permitted to do this. Risk-adjusting deposit insurance premiums would have two beneficial consequences. First, institutions in-




201

volved in more risky activities would be charged for increasing the
public's risk exposure. Second, basing the premiums on risk would
reduce incentives for risk-taking and thus promote overall financial
stability.
The principle of risk-adjusted deposit insurance is appealing. In
practice, however, it presents unresolved practical problems. First,
how do regulators assess the riskiness of different lines of bank activity? Second, would such assessments be useful in predicting the
future riskiness of the same lines of activity? For example, it is unlikely that the deposit insurer could have foreseen either the change
in the riskiness of lending to oil and gas concerns or the significant
change in the volatility of interest rates that occurred in the 1970s.
Third, can the deposit insurer appropriately capture the portfolio effects of bank activity? A bank that has equal proportions of its assets
in real estate loans, farm loans, oil and gas loans, consumer loans,
and so on, may have a loan portfolio consisting entirely of activities
judged risky by the deposit insurer. But with the wide assortment of
lending activity, the exposure to the deposit insurer could be small
as a result of portfolio effects. Fourth, how much will the institutions that present the biggest problems in terms of risk control—
those that are nearly insolvent anyway—be influenced by deposit insurance rates? If the equity in an institution is inconsequential, equity
holders will not hesitate much to spend someone else's money (the
deposit insurer's) in order to take on more risk.
RISK-ADJUSTED CAPITAL REQUIREMENTS

In January 1986, the Board of Governors of the Federal Reserve
announced that it will formally consider the imposition of capital requirements based on assessments of the risk of bank assets. In terms
of implementation, risk-adjusted capital requirements are subject to
the same practical problems of risk assessment as risk-adjusted deposit insurance premiums.
Risk-adjusting capital requirements versus deposit insurance is
analogous to varying insurance deductibles versus insurance rates.
The risk faced by an automobile insurer for a given policy, for example, is a function of the age and record of the driver, and also of the
amount deductible before the insurance coverage begins. Generally
speaking, the larger the deductible, the cheaper the insurance. Riskadjusted capital requirements force a bank to have a higher deductible
if it engages in more risky activities. Risk-adjusted deposit insurance
with the standard capital requirement allows all the banks the same
deductible but charges them different rates depending on their activities.




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In principle, there seems no reason not to use both devices to control risk exposure. The risk-adjusted capital requirements give the
regulators one more lever against the exaggerated risk-taking incentives of nearly insolvent institutions. If a nearly insolvent institution
increases the risk of its portfolio without increasing the owner's
stake, it can be closed. But of course this could be done simply with
more strict enforcement of existing capital requirements.
None of the devices for controlling adverse incentives introduced by deposit insurance is perfect. Risk-based deposit insurance
premiums and capital requirements introduce desirable incentives,
but may be weak and difficult to administer effectively. Portfolio regulation helps to control the public's risk exposure, but it also requires the regulator to make difficult judgments regarding lending
risk and reduces the role for markets in allocating credit. The last,
capital requirements, corrects for the adverse incentives of deposit
insurance and helps control the risk exposure of the public, but it is
effective only if the requirements are based on definitions of capital
that are economically meaningful and are executed by a regulator
willing to close institutions with insufficient capital.
THE THRIFTS

The most serious challenge to the system of deposit insurance
since it began in 1933 was the insolvency of the thrift institutions in
the early 1980s. This industry is composed of more than 3,000 lending institutions (savings and loan associations and some mutual savings banks) with total assets (at book value) of about $1 trillion in
1985. Congress intended the thrifts to serve the home mortgage
market and offered them tax incentives to hold a large fraction of
their portfolios in home mortgages. Deposits with interest ceilings
and loans from the Federal Home Loan Banks financed the thrifts at
lower-than-market interest rates. Responding to these incentives,
thrifts typically held 60 percent or more of their assets in long-term
mortgages, virtually all of which were fixed-rate prior to 1981.
Until the 1970s thrift institutions lived comfortably with their mismatched portfolios because interest rates remained relatively low and
stable. With the rise in interest rates from the early 1970s to 1981,
however, the cost of funds to thrift institutions rose above the interest earned on their portfolios of long-term, fixed-rate mortgages. By
generally accepted accounting principles (GAAP), many thrifts began
to show negative net incomes in the early 1980s as their long-term
assets fell in value much more than did their liabilities. As of 1981
the thrift industry as a whole had an estimated negative net worth of
$110 billion on a market-value basis. Interest rates have moved in
favor of the thrifts since 1981, and the June 1985 estimate of their




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value corrected for changes in interest rates (but not asset quality) is
above zero for the first time in many years.
To deal with the insolvency of the early 1980s, thrift regulators
lowered capital requirements and redefined capital. For regulatory
purposes, thrift regulatory capital is no longer defined by GAAP (the
standards applied to commercial banks) but by regulatory accounting
principles (RAP). RAP allows thrifts to reassess certain fixed assets. If
the appraised equity value exceeds the price originally paid, which is
the book value, the appraised equity value may be entered on the
balance sheet. An institution whose property has gone down in value,
however, need not declare the lower value on its balance sheet. In
addition, thrifts can amortize losses on assets they sell. For example,
if a thrift sold a home mortgage that was 10 years from maturity for
$50,000 less than its book value, the institution could declare its loss
at $5,000 per year for 10 years. The loss would have only a gradual
impact on the regulatory capital.
In addition, two programs were created in order to give certain
thrifts the appearance of having more equity. These were the net
worth certificate program and the income capital certificate program.
Both involve a mere bookkeeping entry in which the Federal Savings
and Loan Insurance Corporation (FSLIC) becomes an equity holder
in a thrift, with a few strings attached in terms of the investments
thrifts can undertake. FSLIC counts its paper "investment" in the
thrift as an asset, and the thrift counts FSLIC's "contribution" of
capital as equity for purposes of meeting capital requirements.
These programs to boost the regulatory net worth of thrifts kept
many of them officially solvent when on the basis of GAAP—let alone
market-value—they were insolvent. The programs did not affect
the market value of these institutions, but merely bought time during
which regulators hoped, not in vain, for lower interest rates. In
effect, the thrift regulators made a judgment (like the judgments frequently made by creditors of insolvent enterprises) that the deposit
insurance funds and ultimately the Treasury and the country had
more to gain from keeping insolvent thrifts operating than from closing them down.
Although the thrifts, as a group, no longer have negative equity by
market value, the full returns of this experiment in term intermediation are not yet complete. Four serious problems still remain. First,
many thrifts with negative net worth continue to operate, and many
of these continue to lose money. Second, the resources FSLIC has
available to close failed institutions are very strained. Third, the industry as a whole is poorly capitalized, even by its own standards,
and the capital standards of the thrifts are well below those of the




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commercial banks. And fourth, the thrifts are still exposed to considerable interest rate risk.
As of June 1985 there were 88 thrifts with total assets of $16.8 billion with negative net worth by RAP measures. By GAAP measures,
461 institutions with total assets of $111.4 billion had negative net
worth. Allowing insolvent institutions to operate greatly increases the
burdens of the Federal Home Loan Bank Board (FHLBB) and the
FSLIC in controlling the continuing losses and risk-taking of insured
institutions. It is not yet clear how successful thrift regulators have
been in controlling the incentives for excessive risk-taking by insolvent insured institutions.
Many of the currently insolvent institutions will likely remain insolvent. What to do about these institutions will involve difficult
choices. During fiscal 1984, FSLIC found the cost of closing insolvent institutions to be 14.7 percent of the book value of their assets,
and found that many institutions had serious asset quality problems.
If asset quality problems worsen, the costs could rise. But interest
rates have fallen, so the costs may fall.
Many insolvent institutions could be taken over by solvent institutions, and with infusions of capital from them (and perhaps other
sources) once again have sufficient equity to inhibit excessive risktaking. Hence, a judgment must be made regarding which financial
institutions will be allowed to buy failed thrifts. For the most part,
the FHLBB has attempted to resolve problem cases by merging
failing institutions within the traditional boundaries of the thrift industry. Regulators have sought acquirers for insolvent institutions
first among nearby thrifts, then in the same State, then in adjacent
States, and only after these avenues proved unfruitful have they
opened the market nationally. The cost to the public of closing these
institutions may well be lower if the market is widened to commercial
banks and other financial institutions as well.
As FSLIC has closed and liquidated insolvent institutions for which
it could not find a merger partner, it has acquired a portfolio of
assets from institutions whose depositors it paid off. FSLIC itself
needs to liquidate these assets in order to have cash with which to
close additional insolvent thrifts. But FSLIC has found some of these
assets, such as unfinished real estate development projects, to be difficult to dispose of. To be able to liquidate troublesome properties
more quickly and at better prices, the FHLBB has set up a new quasigovernment organization, the Federal Asset Disposition Association
(FADA), which will be exempt from many of the salary and staffing
restrictions FSLIC faces as a government entity.
The FHLBB has announced that it intends to restrict FADA to operating only as a sales management organization and only for FSLIC.




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Should these restrictions be relaxed, potential problems with FADA
include the possibility of it growing into another liability for taxpayers.
Resolution of the problems in the thrift industry should involve
first, closing or recapitalizing insolvent institutions. Recapitalizing
is not a simple task, as it entails either finding new investors (possibly
institutions) that will invest their own funds, or reorganizing debt
holders of the failed thrift into equity holders. Second, the thrifts
should use capital requirements and definitions of capital that are
economically realistic and consistent with the standards of commercial banks. Third, it may be appropriate to reconsider the wisdom of
designating limited-purpose lenders, including mortgage lenders. The
commercial banks have been very active in mortgage lending, and their
activity plus the success of firms in the secondary market for mortgages
makes clear that mortgage lending does not require a separate,
subsidized financial sector. Fourth, term intermediation is risky not
only for individual institutions, but also for the economy as a whole.
The effort succeeds only so long as interest rates and inflation rates are
stable. Consequently, existing regulatory incentives for exposure to
interest rate risk should be eliminated, and policies that result in stable
interest rates and price levels should be promoted.
INSURED PENSION BENEFITS
The Employee Retirement Income Security Act (ERISA) of 1974
requires almost all companies having ''defined benefit" pension plans
to purchase insurance from the Pension Benefit Guaranty Corporation (PBGC), a government entity established by the ERISA. Insured
firms may terminate their pension plans at any time by filing with the
PBGC. When a firm terminates its plan, the PBGC assumes both the
liabilities (the promises made by the employer to the employees in
terms of retirement benefits) and the assets of the pension plan. The
PBGC also has the right to as much as 30 percent of the company's
equity. Currently, the PBGC insures the pension benefits of 38 million people. By October 1985, the PBGC had taken over more than
1,200 pension plans covering 190,000 persons, and had accumulated
a deficit of about $1.3 billion, more than two-thirds of it in 1985. Because the PBGC operates under public auspices, the public may ultimately have to assume the difference between the premiums it collects and the pensions it pays. Legislation to raise the premiums
charged by the PBGC is pending.




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"Defined contribution" pension plans resemble ordinary savings
accounts, except that contributions (deposits) are tax-deductible and
interest accumulates tax-free. In a defined contribution plan, employee and employer contribute to an account; after a vesting period
(typically 3 to 5 years), the account essentially belongs to the employee, although use of it is generally restricted. Defined benefit pension
plans typically promise an employee income in retirement based on
("defined by") the number of years of employment and the wages
earned in the last years of employment. Strictly speaking, the promise is independent of how much the employer actually sets aside to
pay these promised benefits, although ERISA imposes minimum
funding standards. Assets set aside to fund these promises are held
in trust. A pension plan is "fully funded" if the assets are at least
adequate to cover the present value of the employer's promises, and
"underfunded" if the assets are inadequate.
Insurance premiums collected by the PBGC are set by statute and
are currently far too low to cover its anticipated liabilities. Because
the government assumes responsibility for the soundness of the pensions and collects far less from the insured parties than its guarantees
are worth, its insurance performs as a subsidy. Prior to the passage of
ERISA, the degree to which ailing companies with underfunded pension plans could substitute pension promises for wages was limited
by employees' assessments of the company's ability to make good on
such promises. With the establishment of the PBGC, a company can
make generous retirement benefit promises to employees, and pay
employees lower wages than it otherwise would, because both parties
know that if the company fails, the PBGC will honor the pension obligations (up to ERISA-limited amounts).
The companies most likely to abuse PBGC pension insurance are
those doing poorly. Companies losing money enjoy no tax benefits
from fully funding a pension plan and are also less likely to be able
to deliver on pension promises with company assets. Yet premiums
depend neither on the riskiness of the assets with which the portfolio
is funded nor on the level of funding (above ERISA's minimum).
This implies that even if premiums were set so that on average they
covered the expected liabilities of the PBGC, ERISA would redistribute wealth from the employees and employers of healthy, low-risk
companies with funded plans to the employees and employers of
ailing or high-risk companies with underfunded plans.
In analyzing the economic effects of ERISA, it is instructive to consider how private companies would price pension insurance and how
pension sponsors would respond. For the sake of the argument, suppose the government simply required all firms to insure their pension plans, much as State governments require individuals who own




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and operate automobiles to carry liability insurance, and left it up to
private firms to provide that insurance. Insurance premiums would
then reflect the riskiness of the assets securing the pension benefits.
Premiums for an underfunded plan would primarily reflect the riskiness of the assets of the sponsoring company. Premiums for a funded
plan would reflect the riskiness of the portfolio of securities with which
it was funded. Incentives to underfund the pension plan or to fund it
with more risky securities would be reduced. The ERISA-caused
redistribution of wealth from employees and employers of fully funded
plans in healthy companies to employees and employers of underfunded plans in ailing companies would disappear.
A full analysis of the pension insurance issue must consider the
question of why some pension plans were underfunded in the first
place. Did these underfunded plans simply occur because employers
were irresponsible and employees were ignorant of the situation?
Several studies by economists conclude that underfunded pension
plans are a device that gives unions and firms a common interest and
helps to resolve disputes over how to divide the firm's revenues. By
underfunding the pension plan, a firm effectively makes employees
who are covered by the plan long-term bondholders in the firm.
This need for a common interest is acute in industries where firms
have large "sunk" costs, such as those involved in heavy manufacturing. Firms invest in capital only when they believe that long-run
income will cover the costs of the capital. The costs are paid up front.
Because its capital costs are sunk, the firm will continue to operate as
long as it can cover variable costs, even if its income falls considerably
below what was expected. Thus, unions could raise wages and lower
the firm's income, without endangering jobs, once the capital investment has been made.
Anticipating that the union will raise wages once an investment is
complete, the firm will be less likely to make the capital investment in
the first place. Both parties, as well as consumers, are potential losers.
The firm loses income from a profitable investment. Workers lose jobs.
Consumers lose the value of the firm's products. This conflict of
interest can be resolved to the benefit of both the firm and the union
by creating a common interest—making the employees security holders in the firm via underfunding of the pension plan.
The evidence in favor of this view is first, the association of defined-benefit pension plans with unions. One study shows that while
25 percent of non-union participants are covered primarily or solely
by a defined-contribution plan, virtually no unionized participants
have such coverage. Second, virtually all systematic underfunding is
associated with unions. Pre-ERISA, plans for union members had




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funding ratios (funded assets as a proportion of total liabilities) that
were on average 30 percent lower than the funding ratios for plans
covering non-union employees.
If the underfunded plan was a device for aligning the interests of
firms and unions, the passage of ERISA should give cause for companies to seek other devices, and they have. Employee stock option and
profit-sharing plans are other ways to give employees an interest in
the value of the firm as a whole and not just in the wages they will
collect from it. One study shows that companies with unions were 1.3
times more likely to introduce employee stock option or profit-sharing plans, post-ERISA, than were companies without unions. The
same study found that over the pre-ERISA period 1968-73 unionized
companies were only 0.6 times as likely to introduce such plans.
The passage of ERISA reflects the judgment that although underfunded pensions may have had an economic rationale, the security of
retirement income is too important to be left hostage to union/firm
disputes. The administration supports this judgment. But the agency
that currently provides pension insurance, the PBGC, faces a serious
and deteriorating situation. There are several options for dealing
with PBGC's burgeoning deficit, including raising the premiums arid
also risk-adjusting the premiums. Policy in this area should seek to
ensure that the Federal Government is not left holding the promises
of employers who walk out on their pension responsibilities. It
should also ensure that employees who have worked for their pensions—-in some cases an entire lifetime—are provided with income in
their old age. The cost of making good on underfunded pension
promises should not be pushed onto the employers and employees of
more responsible firms.
DEREGULATION AND THE FINANCIAL SYSTEM
The recent period of difficulty for many financial institutions coincided with a limited deregulation of financial institutions. Deregulation progressively eliminated ceilings on interest rates paid to depositors and gradually reduced restrictions on types of assets that could
be held by thrift institutions. Legislative, legal, and regulatory actions
substantially broadened the eligible range of securities market activities of depository institutions, and opened, although only partially,
opportunities for interstate operation of depository institutions. The
coincidence of deregulation with the problems of some financial institutions has led to the suggestion that deregulation is somehow responsible for these problems.




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A more persuasive case can be made for the opposite conclusion—
that inappropriate and excessive regulation, combined with inflation
and then disinflation, contributed to an environment in which many
depository institutions could not have continued to operate without
deregulation.
The problems of the thrift industry derive fundamentally from
funding long-term, fixed-rate mortgages with short-term deposits. The
rise in interest rates made the thrifts temporarily insolvent. True, if the
thrifts could have maintained pre-1979 interest rates on deposits,
they would not have suffered so severely in 1981 and later, but these
institutions could not have retained deposits at low, controlled interest rates. Much more attractive opportunities, notably money market
mutual funds, had become available to their depositors elsewhere.
And a massive outflow of deposits would have meant the collapse of
many thrifts in 1981 or 1982, as they liquidated their mortgage portfolios—at well below book value—to pay off depositors. Therefore,
deregulation of interest rates on deposits cannot be the reason for
the problems of thrifts. Moreover, even if it had been possible to
suppress the new alternatives to deposits, that would only have shifted the problems of the thrifts onto their depositors.
Relaxation of restrictions on assets held by thrift institutions can
allow thrifts some benefits from diversification, but may also provide
greater latitude for exploiting the deposit insurance system by undertaking highly risky loans and investments. Indeed, some of the current problems involve thrifts that have been established or have expanded rapidly since 1982. But the expansion of activities has two
faces. Institutions may expose themselves to more risk, but they may
also ultimately bear less risk as a result of more broadly based activities. Risk-adjusted deposit insurance premiums and more economically meaningful capital requirements can reduce the necessity for
portfolio regulation.
The recent difficulties of the Farm Credit System and of many
smaller commercial banks that lend heavily to agriculture are similar
in important respects to those of thrift institutions. Due to either
Federal designation or Federal barriers to interstate banking, these
institutions have concentrated their lending in such a way that the
value of their loan portfolios has been strongly and adversely affected by events associated with the inflationary and disinflationary process. The inflation that fed the boom in agricultural land values in the
1970s also fed the appetite for borrowing to finance farmland and
equipment and made lending appear attractive. The decline in farmland values in the disinflation of the early 1980s undermined the security for these loans. In the case of the Farm Credit System, these
problems were exacerbated by structural defects of that system. De-




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regulation of financial markets and institutions played no role. Further deregulation, however, might reduce such problems by allowing
broader diversification of agricultural lending risk through lowering
of barriers to interstate banking.
Similarly, the recent problems of some larger commercial banks
derive primarily from their choices of loans and investments, and are
not the consequence of deregulation. Some large banks that have
lent to developing countries have suffered declines in the market
value of their equity as the dollar rose and the market reassessed the
value of those loans. Some banks that aggressively expanded their
loan portfolios by making loans that other institutions were reluctant
to fund have suffered losses. Other banks that concentrated lending in
industries such as oil and gas drilling have suffered from the declines
in these industries.
The episode of increased volatility of interest rates and inflation
has resulted in some changes that have made U.S. financial institutions better able to cope with risk of all kinds. Some changes, notably
deregulating interest rates, lessening of the barriers to interstate
banking, and loosening of portfolio restrictions, were made by regulators. Other changes, such as the introduction of new financial instruments for hedging risks, were the innovations of private markets.
The deregulatory effort should not be regarded as complete. The
most promising changes would eliminate aspects of government
policy that inhibit diversification. First, it is time to move toward true
interstate banking. It is no accident that 97 percent of the outstanding financing provided by the five government-sponsored intermediaries goes to housing and agriculture. Regional components are
large in both housing and agricultural credit risk, and if the financial
institutions are able to diversify this risk, credit for these borrowers
will be less expensive and the markets will allocate credit more efficiently than if it cannot be diversified.
Banks keep, rather than sell, many mortgage, farm, and other loans
for which there are currently secondary markets. This suggests that
there are costs to gathering and disseminating information about
borrowers that make it efficient for loan originators to keep many
loans. Given that this is so, there are probably many loans—those
with large regional risk components but also complex information
about borrowers—for which the most efficient and lowest cost holder
is neither a small local bank nor a secondary market customer, but
rather a large interstate bank. Large States, such as California and
New York, have greater opportunities for intrastate diversification
than do smaller States with less variety in their economies. The experience of the large States shows that big banks, little banks, and sec-




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ondary markets all have a natural place in the financial sector of the
economy.
A similar argument for diversification calls for rethinking the designation of limited-purpose lenders, such as the thrift industry and
the Farm Credit System. Eliminating the barriers to diversifying
across activities would decrease the probability of failure of these institutions. It would also decrease the likelihood that these institutions
might ever pose a macroeconomic threat to the financial system.
Second, the risk that cannot be eliminated through diversification
needs to be controlled more effectively by the system of deposit insurance. Deposit insurance can be reformed so that it no longer provides incentives for depository institutions to undertake excessive
risk, including the risk inevitably associated with funding long-term,
fixed-rate mortgages via short-term, interest-sensitive deposits. Deposit insurance reform should include revisions of regulatory accounting. Shareholders and managers of financial institutions should
be made to bear—promptly and effectively—the good and bad consequences of the operations of the institutions they own and control.
Finally, it is essential to avoid the strains on the economy and the
financial system that result from macroeconomic policies that induce
volatile inflation and interest rates. In the recent episode of volatility,
the financial services industry continued to operate smoothly in spite
of the failure of many individual institutions. Many reforms have already made the remaining institutions more resilient to such risks,
and further reforms can do still more. But even more robust institutions are not invulnerable. Life is risky enough without macroeconomic policy introducing additional uncertainty.




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CHAPTER 7

The Economic Effects of Immigration
THE MOVEMENT OF PEOPLE BETWEEN COUNTRIES links
national economies. Like international trade in goods, services, and
financial claims, international migration connects domestic and international markets. The free flow of resources in response to market
signals promotes efficiency and produces economic gains for both
producers and consumers. The migration of labor, both domestically
and internationally, represents such a flow of productive resources.
Most countries restrict the flow of international migrants. Emigration from a country is a basic human right established by the United
Nations Universal Declaration of Human Rights, which states: "Everyone has the right to leave any country, including his own, and to
return to his country." The right of immigration into a country, however, is not recognized in international law. Every country has sovereign power over the admission of foreign nationals, either as temporary visitors or as permanent residents. Many countries, most notably
the U.S.S.R., restrict emigration as well as immigration.
The United States has a long tradition of assimilating diverse
groups into the economic and political life of the Nation. Citizenship
has been a traditional consequence of immigration to the United
States, and persons born here are automatically citizens regardless of
parentage. In many other countries, citizenship is based on lineage,
not on birth in the country.
This Nation was largely populated and built by immigrants and
their descendents. It remains one of the few major immigrant-receiving countries of the world, symbolizing personal freedom and economic opportunity. For more than 200 years, the U.S. economy has
been strong, creating many millions of jobs at growing real income
levels. For more than a century, per capita income has been many
times higher than the level for most of the world's population. This
strength and stability have attracted inflows of foreign capital and immigration.
Economic instability and poor prospects for advancement in many
countries have encouraged emigration, while wars and political oppression have induced mass migration of persons in search of safety
and political freedom. International migration has also been made




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easier by falling transportation costs and better information. Air
transportation has significantly reduced travel times, and today's migrants can more easily maintain ties with friends and relatives in their
home countries through modern communications.
An individual's decision to migrate, either within a country or
across international borders, depends on whether the expected gains
outweigh the expected costs. As with most investments, migration
has initial costs while its gains are realized over time. An individual's
moving costs are personal as well as financial, especially for an international move. Many migrants leave behind a known way of life,
friends, and relatives, and they face a period of adjustment in their
new country. The gains from migration are also personal as well as
economic. In the case of a move to the United States, for example,
gains may include greater freedom as well as the expectation of
higher income. The economic success achieved by migrants depends
on their ambition and entrepreneurial ability, on the skills and capital
they bring with them, and on the skills they develop in the United
States. Migrants are self-selected based on their ability and motivation to succeed in their new country.
National concern has arisen about the effects of international migration, especially illegal migration, on the United States. Immigration policy and the ability to control the country's borders have serious implications for the definition of national sovereignty. Although
many illegal aliens are productive members of society who have established strong community ties, their presence violates U.S. law.
Concerns exist as well regarding the social, political, and environmental consequences of immigration.
Immigration policy is not shaped by economic considerations
alone, but immigration has important economic effects. Immigrants
work, save, pay taxes, and consume public services. At the same time,
there is concern that an influx of migrants might reduce job opportunities for some groups of native-born workers and reduce wages.
Many are concerned that immigrants may increase the use of public
services, including services they are not legally entitled to receive.
Examination of these economic issues is a necessary part of the
broader analysis of immigration policy. Although economic analysis
helps illuminate some of the consequences of immigration, it does
not address the fundamental importance of enforcing the law, nor
does it suggest that illegal immigration is condoned.
MIGRATION TO THE UNITED STATES
From colonial times until the last quarter of the 19th century, the
United States was open to immigrants from all over the world. The




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first restrictions on immigration were qualitative, barring convicts
and prostitutes. Restrictions on immigration by nationality began in
1882 with the exclusion of the Chinese. Numerical restrictions were
first instituted in 1921. These applied to immigration from the Eastern Hemisphere and were based on the composition by national
origin of the U.S. population. Numerical restrictions on immigration
from countries in the Western Hemisphere were first enacted in
1965.
The 1965 amendments to the Immigration and Nationality Act of
1952, which remain substantially unchanged, abolished the national
origin system and set an annual ceiling on immigration to the United
States. The worldwide annual ceiling for numerically restricted immigrants is now 270,000, with uniform per-country ceilings of 20,000.
The amendments also established a preference system that emphasizes family reunification and, secondarily, employment considerations. The immediate relatives of U.S. citizens are, however, exempt
from these provisions and ceilings, as are refugees and persons seeking political asylum.
The 1965 amendments permitted a shift of immigration from
Europe to Asia. Prior to the 1960s, the majority of immigrants were
European. European immigration first fell below 50 percent of the
total in the 1960s, and it has continued to fall to just over 10 percent
in the early 1980s. Asians represent an increasing share of total immigration, rising from 13 percent in the 1960s to about 50 percent in
the 1980s. Asian immigration also increased because of the admission of Indo-Chinese refugees, beginning in the 1970s. The proportion of legal immigrants from Mexico has been stable at 10 to 15
percent for the past 35 years.
In recent years, legal immigration flows have been about 550,000
per year. These levels are significantly lower than they were early in
the 20th century. Chart 7-1 shows immigration to the United States
as a percent of the total U.S. population. Legal flows in recent years
have been less than one-quarter of 1 percent of the population annually, about half the historical average. Including the estimated flow of
illegal settlers does not raise this percentage to the historical average.
Flows of immigrants to the United States are also low relative to
domestic migration. Between 1975 and 1980, approximately 20 million people migrated to a new State of residence in the United
States. This compares with an overall inflow of 2.5 million immigrants over the same period.
The total foreign-born population in the United States in 1980 was
14.1 million. This represents 6.2 percent of the total U.S. population,
which is also low by historical standards. This percentage fell steadily
after 1910, but increased in the 1970s. Between 1970 and 1980, the




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Chart 7-1

Legal Immigration as Percent of Population,
1820-1984

1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940' 1950 1960 1970 1980
if Legal immigration for fiscal year as percent of July 1 resident population (including Alaska
and Hawaii beginning 1940).
Sources: Department of Commerce and Department of Justice.

foreign-born proportion of the population grew from 4.8 to 6.2 percent. Much of this increase can be attributed to low U.S. birth rates
and to an increasing flow of immigrants over the period. Even with
this recent increase, however, the foreign-born proportion of the
population in 1980 was less than half of what it was in 1910.
ALIENS ENTERING THE UNITED STATES

Aliens legally admitted to the United States can be classified into
two broad categories—immigrants and nonimmigrants. Immigrants
are admitted to the United States for permanent residence and are
eligible to become U.S. citizens. Nonimmigrants are admitted for a
temporary stay and for a specific purpose.
Immigrant admissions fall into three classes—numerically restricted, numerically unrestricted (mainly immediate relatives of U.S. citizens), and refugees and asylees. Nonimmigrants are composed for
the most part of visitors who come to the United States for pleasure




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or business. They include temporary workers and students. Although
nonimmigrants are admitted for a temporary stay, many of them,
such as investors and students, remain here for a number of years. In
addition, many aliens are in the United States illegally. Aliens may
shift from one category to another during their time in this country.
For example, visitors may apply to remain here permanently and undocumented settlers may attain legal resident status.
Table 7-1 shows the number of alien entrants to the United States
in fiscal 1984. The figures vary in precision. Inflows of immigrants
and nonimmigrants are based on administrative records and are reasonably accurate. Figures for deportable aliens and return migrants
are far less reliable.
TABLE 7-1.—Alien entrants to the United States, fiscal 1984
Category

Number of persons

IMMIGRANTS
Numerically restricted
Numerically unrestricted
Refugees and asylees adjusting to immigrant status

262,000
190,000
92,000

Total

544,000
Estimated return migration

Estimated net inflow

133,000

. .

411,000

NONIMMIGRANTS
Visitors for pleasure
Visitors for business
Temporary workers
Other1

6,595,000
1,623,000
69,000
1,140,000

Total

9:427,000

ESTIMATED DEPORTABLE ALIENS
100,000
to 300,000

Settlers (net inflow)..

Less than
1,000,000

Temporary migrants (average stock)

'These include but are not limited to foreign government officials, students, treaty traders and investors, and employees of
multinational corporations.
Note.— Data are from U.S. Government administrative records, except for return migrants and deportable aliens.
Sources: Department of Commerce (Bureau of the Census) and Department of Justice (Immigration and Naturalization
Service).

Immigrants and Refugees

A preference system controls the admission of numerically restricted immigrants. Preferential status is based on either a family relationship or a prospective job. A prospective immigrant must also prove
that he is not likely to become a public charge. About 80 percent of
numerically restricted immigrants are admitted under family preferences; the rest receive preference on the basis of occupation. In
1984, 262,000 immigrants entered the United States under this preference system.




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Numerically unrestricted immigrants include alien spouses, minor
children, and parents of adult citizens. In 1984 these immediate
family members and a small number of numerically unlimited "special immigrants" totaled 190,000.
A separate system determines the admission of refugees. Under the
Refugee Act of 1980, the President, in consultation with the Congress, annually determines the number and regional allocation of refugee admissions. Political asylum may also be granted to individuals
who are in the United States and are able to prove to the Immigration and Naturalization Service (INS) and the Department of State
that they are in danger of persecution on return to their home country. Refugees and asylees may adjust to permanent resident alien
status after a year. In fiscal 1984, 79,000 refugees and asylees were
admitted and 92,000 adjusted to immigrant status. By comparison,
there are an estimated 10 million refugees worldwide.
Return migration is estimated by the Bureau of the Census to be
about 133,000 per year, yielding a net inflow of legal immigrants and
refugees in 1984 of about 411,000.
Nonimmigrants

Of the nearly 10 million nonimmigrants admitted to the United
States in 1984, most were visitors for pleasure (6.6 million) or business (1.6 million). The 69,000 admitted for employment included
temporary seasonal workers, trainees, or temporary workers of distinguished merit and ability such as scholars and musicians. More than a
million others were in diverse categories such as foreign government
officials and students.
Deportable Aliens

Millions of aliens cross the U.S. border every year; a small fraction
stay legally, and fewer still stay illegally. The flow of undocumented
migrants has been difficult to measure. Undocumented aliens, almost
by definition, are not identified by any administrative system. The
Bureau of the Census estimates that in recent years the net annual
increase of undocumented settlers has ranged from 100,000 to
300,000. Thus, as many as 40 percent of all aliens who annually
settle in the United States may be here illegally.
Many people believe that illegal crossing of the U.S.-Mexican
border is the most common method of entry for deportable aliens.
Ninety-four percent of apprehensions of illegal aliens are made at the
border. Available information, however, shows that only about half of
resident deportable aliens entered the country illegally. The other
half of those illegally present in the United States are violating the
terms of their nonimmigrant visas by overstaying or working. Because the annual flow of legal nonimmigrants is so large—almost 10




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million—even a small proportion of overstayers can amount to a
large absolute number who remain in the country illegally.
The Bureau of the Census estimates that the total number of illegal aliens in the United States in 1985 was 4 million to 6 million. Estimates are made separately for settlers and temporary migrants. The
Bureau of the Census estimate for settlers is based primarily on its
finding that it counted approximately 2.1 million undocumented
aliens in the 1980 census. This estimate is derived by subtracting the
estimated legal foreign-born population from the 1980 census count
of the total foreign-born population. Other demographic evidence is
used to take into account those undocumented aliens not counted in
the census, yielding a range of 2.5 million to 3.5 million undocumented settlers in 1980. Comparing data from a 1983 Current Population Survey with the Decennial Census shows a net increase of
100,000 to 300,000 per year in the number of undocumented settlers. Assuming the same annual growth between 1980 and 1985
yields an increase in the undocumented alien population of 500,000
to 1,500,000 for the 5-year period. This increase, added to the estimate for 1980, results in an estimated range of 3 million to 5 million
undocumented settlers in 1985.
The number of illegal temporary migrants is unknown, but demographers at both the Bureau of the Census and the INS believe that
their average population is probably less than 1 million. Temporary
migrants may work in the United States for years, months, or every
day on a commuter basis.
Unsubstantiated estimates of the illegal alien population have
ranged from 2 million to 15 million people. Some of these estimates
reflect the number of illegal aliens apprehended by the INS, which
increased sharply over the 1970s and reached 1.3 million in fiscal
1985. Apprehensions, however, are not an accurate basis for estimating the size or the growth of the illegal population. Apprehensions
count incidents and not individuals. According to INS statistics,
about 30 percent of those apprehended admit to at least one previous apprehension. Because the INS focuses its enforcement operations at the border, these counts underrepresent illegal aliens who
have violated nonimmigrant visas. In addition, apprehensions reflect
the effectiveness of enforcement as wrell as the volume of attempted
illegal entries.
CHARACTERISTICS OF THE FOREIGN-BORN

The foreign-born population enumerated in the Decennial Census
includes naturalized U.S. citizens as well as aliens, some of whom live
here illegally.




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Census data show that newly arrived foreign-born residents are
younger on average than native-born Americans. The median age of
those who entered the country between 1970 and 1980 was 26.8 in
1980, compared with 30.0 for the population as a whole. The newly
arrived foreign-born are predominantly of working age. Seventyseven percent of those arriving in the United States between 1970
and 1980 were 15 to 64 years of age in 1980, compared with 66 percent of the entire population. The Bureau of the Census estimates
that illegal aliens are younger, on average, than legal immigrants.
The 1980 census shows that about half of the foreign-born who
entered the United States between 1970 and 1980 were female. The
proportion of females among illegal aliens, however, is estimated to
be lower.
The recently arrived foreign-born have larger families than the
native-born. On the average, there were 3.8 persons in families of
those who came in the 1970s compared with 3.3 persons in nativeborn families. In addition, the proportion of the foreign-born more
than 15 years of age who are married is higher than that of the
native-born, and the proportion who are divorced is lower.
The distribution of educational achievement is much broader for
the recently arrived foreign-born than for the native-born. A significant fraction has little education. Among those 25 years of age and
older who entered the United States between 1970 and 1980, 13 percent completed fewer than 5 years of school as compared with 3 percent of the native-born. In contrast, 22 percent of the recent arrivals
completed 4 or more years of college compared with 16 percent of
the native-born.
Although U.S. immigration policy is based primarily on the humanitarian principles of family reunification and refugee resettlement,
most of the foreign-born, including illegal aliens, enter the labor
force. The employment-to-population ratio of recent arrivals is
higher than that of the native-born. A higher proportion of the foreign-born work in blue-collar and service jobs: 39 percent of recent
arrivals had blue-collar jobs compared with 32 percent for all U.S.
employed persons; 18 percent held service jobs compared with 13
percent of the U.S. total. The incomes of those who entered the
United States between 1970 and 1980 are lower on average than incomes of the native-born, but incomes of those who arrived before
1970 are similar.
The recently arrived foreign-born are concentrated in a few States.
More than half live in California, New York, and Texas. Ten States
accounted for 80 percent of total immigrants, and no other States
had more than 2 percent of the total. The vast majority of the foreign-born live in metropolitan areas; one in five of the recently ar-




220

rived foreign-born live in the Los Angeles area. Illegal alien residents
tend to settle in the same areas as legal aliens, but they are even
more geographically concentrated. According to estimates based on
the 1980 census and INS data, 70 percent of illegal aliens were living
in California, New York, and Texas, compared with 53 percent of
legal alien residents.
EFFECTS OF IMMIGRATION ON OUTPUT AND INCOME
Market principles suggest that immigration in a competitive economy increases output and improves productivity. An increase in the
supply of immigrant workers increases the output and earnings of
other factors of production in the receiving country. Immigration
provides increased returns to a wide range of inputs—capital, land,
and workers with skills different from those of the immigrants. Inputs
to production can become more effective as they acquire greater
quantities of labor with which to work. This concept may be illustrated by several examples. A bulldozer on a road construction project is
more productive if there are workers to keep it running for multiple
shifts, repair it, and redirect traffic away from the construction site. A
scientist is more productive if there are assistants to wash the test
tubes and type manuscripts. A worker with family responsibilities is
more productive if there are others in the household to help with
child care and home maintenance. Increased economic returns that
result from immigration may also lead to an increase in investment,
producing an additional source of growth in output.
Although immigrant workers increase output, their addition to the
supply of labor may change the distribution of income. Whenever the
supply of labor increases, either because of immigration or increased
labor force participation of native-born workers, wage rates in the
immediately affected market are bid down. Although total employment in that market will rise, some of those who were initially employed at the higher pre-immigration wage rate may not accept work
at the lower wage. Thus, native-born workers who compete with immigrants for jobs may experience reduced earnings or reduced employment.
Those who are concerned about job displacement caused by immigration often focus only on this initial effect. Job opportunities in
labor markets where immigrant labor is complementary with nativeborn labor, however, are likely to rise. This increase in labor demand
will raise wage rates and increase the employment of native-born
workers—including those who may have been displaced from employment elsewhere. Demand for labor will also increase because the
availability of immigrant workers encourages investment in industries




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that might not have been competitive otherwise. Moreover, the increased demand for goods and services that results from the consumer purchases of immigrants also tends to increase domestic employment. The aggregate effect of immigration depends on the responsiveness of workers and employers to changing labor market
conditions and on the presence of market rigidities, such as the minimum wage, that may impede normal adjustment. As a general rule,
increases in output, brought about by a greater abundance of labor
and increased returns to other factors of production, outweigh reductions that may occur in the wages of workers who compete with immigrants. Consequently, the net effect of an increase in labor supply
due to immigration is to increase the aggregate income of the nativeborn population.
The economic benefits of immigration are spread throughout the
economy. These include increased job opportunities and higher
wages for some workers as well as the widely diffused benefits of
lower product prices and higher profits. Many people share in the
higher returns on capital because capital ownership is widespread
through personal and pension holdings. One in four Americans holds
stock directly in U.S. firms. In addition, wage and salary workers own
a considerable portion of productive capital, mainly through assets in
pension funds. In contrast, job losses or wage reductions that may
occur as a result of immigration are likely to be more visible than the
economic gains. Such losses are likely to be concentrated among
groups who compete directly with immigrant labor.
Some have suggested that labor market displacement may be widespread: In 1980, 6.5 million foreign-born residents held jobs, while a
total of 7.6 million workers were unemployed. This view implicitly assumes that the number of jobs is fixed and that if immigrants find
employment, fewer jobs will be available for the native-born.
Arguments supporting the restriction of immigration to protect
American jobs are similar to those favoring protectionism in international trade, which is discussed in Chapter 3. Restrictions on immigration, however, like restrictions on trade, are costly. Limiting the
entry of immigrant labor may increase the demand for some groups
of native-born workers, but it will impose costs on consumers, investors, and other workers.
EVIDENCE ON LABOR MARKET EFFECTS

Studies have examined the effects of immigration on the employment levels and wage rates of the native-born. It is difficult, however,
to isolate the effects of immigration from other factors that simultaneously influence job opportunities. These factors include characteristics of the immigrants themselves as well as industrial and other un-




222

deriving characteristics of the labor market. A number of studies
have attempted to identify these factors.
Some observers have pointed to immigrants who are employed in
narrowly defined occupations and geographic areas as prima facie
evidence that immigrant jobholders displace native-born workers.
They cite the growth of ethnic enclaves in several industries, including agriculture, as evidence of possible displacement. It has been observed, for example, that the language of the workplace changes with
the concentration of immigrants and that English-speaking workers
may consequently be excluded from jobs.
Studies that focus on specific low-skilled occupations or on small
segments of the labor market, however, are likely to overstate displacement effects by ignoring job and occupational mobility. Nativeborn Americans who hold jobs in one sector may move into other
lines of work. This appears to be confirmed by more systematic studies of the labor market effects of immigration. Studies that take a
broad view of the labor market have found no significant evidence of
unemployment among native-born workers attributable to immigration. Any direct effects of immigration on domestic employment have
either been too small to measure or have been quickly dissipated
with job mobility. Although existing studies may not be conclusive,
the evidence currently available does not suggest that native-born
American workers experience significant labor market difficulties in
areas that have attracted immigrants. Several studies, moreover, have
shown that the presence of immigrants in labor markets is associated
with increased job opportunities overall, including job opportunities
for native-born minority groups.
Some studies of the effects of immigration on wage levels have revealed evidence of adverse wage effects. For example, one study concluded that real wages were 8 to 10 percent lower on average in
cities near the Mexican border. Several studies found a reduction in
the wages of unskilled workers in areas with high concentrations of
unskilled immigrant workers.
Other studies, however, have shown that greater concentrations of
aliens in labor markets are associated with higher earnings of nativeborn workers. Increased wages have been found both for broad
groups of workers and also for native-born minority groups with
whom immigrants might compete directly for jobs.
The experience of the Los Angeles labor market in adjusting to a
growing concentration of unskilled immigrant labor is instructive.
One study estimated that more than a million foreign-born persons
settled in Los Angeles County between 1970 and 1983. During the
early 1980s the foreign-born in Los Angeles County represented
close to a third of the total population. Job growth in the area was




223

strong, and the new immigrants were quickly absorbed into the labor
market. New immigrant workers accounted for some 70 percent of
the net growth in employment in the 1970s. Job gains by native-born
workers were predominantly in white-collar occupations, which expanded rapidly. Job growth among immigrants was concentrated
mainly in unskilled jobs. Wage growth was lower than the national
average for workers in manufacturing, particularly unskilled manufacturing jobs. In jobs outside manufacturing, however, including jobs
in services and retail trade, wage growth was higher than the national
average. This study also showed that the unemployment rate in Los
Angeles, which had exceeded the national average in 1970, fell below
the average by the early 1980s. These results were not, of course, the
consequence of international migration alone, but they suggest a
smooth labor market adjustment to the inflow of migrants.
Legal and Illegal Aliens

Although aliens who are eligible to hold jobs in the United States
are clearly distinct from those who are not, researchers have not
been able to isolate separate economic effects of illegal alien workers.
Demographic differences between legal and illegal aliens may affect
their patterns of labor market activity, but those differences appear to
be small. Illegal aliens have a higher proportion of males than legal
aliens, are younger, and are less likely to bring family members with
them. Illegal migrants are likely to remain in the United States for
shorter periods of time than legal migrants. Illegal migrants also tend
to have lower levels of education and to work in jobs requiring lower
skill levels. Illegal aliens may have less incentive to invest in schooling or other activities that are specifically useful in the U.S. labor
market.
Legal and illegal aliens tend to settle in the same geographic areas,
making it difficult to distinguish their separate labor market effects.
Also, deportation risk notwithstanding, many illegal aliens have been
living in the United States for a long time; it is estimated that a quarter have been U.S. residents for more than 10 years. The economic
distinction between legal and illegal aliens is further blurred by the
fact that many legal resident aliens were undocumented when they
initially entered the United States, but later acquired legal status.
Labor Market Absorption of the Foreign-Born

Migrants have initial disadvantages in the labor market because
many do not speak English, lack familiarity with national customs and
institutions, and are not educated and trained for jobs in the United
States. As they invest in education and develop skills, their labor
market experiences and earnings can be expected to resemble those
of the native-born.




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Although the labor market success of immigrant groups depends
on their skills and other characteristics, the evidence suggests that
immigrant workers have been readily absorbed into the labor market.
One dimension of the labor market adjustment of immigrants is their
employment over the year. It has been estimated that on average the
foreign-born catch up with the native-born in weeks worked in about
5 years; after 5 years there is no observed difference.
Census and other data show that, although the foreign-born initially earn less than the native-born, like the native-born their earnings
rise with increased schooling and with U.S. labor market experience.
Some results suggest that after 10 to 20 years, the earnings of foreign-born males equal and then exceed the earnings of native-born
males with similar characteristics. This implies that the disadvantages
of foreign origin diminish, while the favorable effects of self-selection
and motivation remain. Apparently migrants work hard to capture
the benefits of their investment in coming to the United States.
Many immigrants are entrepreneurs. One study found that foreignborn males are significantly more likely to be self-employed than
native-born males with similar skills. Self-employed workers, both
foreign- and native-born, had higher annual incomes than salaried
workers. Returns on capital owned by self-employed workers may
partially explain these differences in incomes. Self-employment also
provides greater potential for high work effort. The self-employed
work more hours per week than do wage-and-salary workers.
Refugees may not adjust to the U.S. labor market as rapidly as
other migrants. Because economic factors are not the primary determinants of their migration, refugees are likely to have fewer of the
characteristics associated with high labor market performance. Some
refugees, however, may bring substantial amounts of physical as well
as human capital. Also, because refugees may not be able to return
to their country of origin, they rnay have greater incentives than
other immigrants to adapt rapidly to the U.S. labor market. Limited
evidence, based on the experience of Cuban refugees in the early
1960s, suggests that the earnings of political refugees approach, but
do not overtake, those of comparable native-born workers.
The children of the foreign-born have better-than-average success
in the labor market. Earnings of children of the foreign-born are
about 5 percent higher than earnings of children of native-born parents with similar characteristics. Any disadvantages to the second
generation that may arise from being raised in a home less familiar
with the language and customs of the United States are apparently
outweighed by the advantages of having parents who are foreignborn. One study of the children of foreign-born parents found that
they have higher investments in schooling than do children of com-




225

parable native-born Americans, and also better reported health
status.
One study of illegal aliens found that their labor market adjustment patterns were similar to those for legal immigrants. Earnings
rose with years of schooling and labor market experience in the
country of origin, but especially with U.S. labor market experience.
A recent study of apprehended illegal aliens in Chicago showed
that they use market opportunities to improve their economic status.
The subjects of the study were able to benefit from a competitive
labor market, with opportunities for skill improvement and upward
job mobility. These illegal aliens were apparently able to work their
way up from entry-level jobs. Only 16 percent of those in the Chicago study had wage rates below the Federal minimum of $3.35 per
hour, and some of these were in sectors not covered by the minimum
wage. The average hourly wage of these illegal aliens at the time of
their apprehension, in 1983, was $4.50. The INS reports that in fiscal
1985, 14 percent of apprehended illegal aliens who had jobs received
wages below the Federal minimum.
One reason for the successful absorption of immigrants into the
U.S. labor market is that overall migrant inflows have been low relative to the size of the population, to labor force growth, and to domestic migration. International migrant flows, moreover, historically
respond to labor market demands. Before legal restrictions were imposed, immigration increased when the demand for labor was relatively high and decreased when labor demand was relatively low.
During the Great Depression, for instance, immigration to the United
States dropped sharply and return migration increased. In recent
years, numerical restrictions have resulted in queues of potential immigrants waiting for visas and, as a result, have limited the response
of legal migration inflows to U.S. labor market conditions. Illegal migrant flows may be more responsive to economic conditions, but are
not precisely measurable on an annual basis. Still, migrant flows
appear to respond to labor market demands.
Perhaps most important for the absorption of immigrant labor is
the strength and flexibility of the U.S. labor market. Workers and
employers are generally free to respond to market signals, and to negotiate wages and other terms of employment either directly or
through the collective bargaining process. The absence of significant
barriers to change and growth has enabled the U.S. labor market to
adjust easily to immigrant flows, as well as to other changes in the
labor force and the economy.
Over the past several decades, the United States has generated
tens of millions of new jobs as it accommodated a substantial influx
of new workers. The vast majority of that influx stemmed from the




226

baby-boom generation reaching working age, coupled with sharply
increased labor force participation by women. Roughly 33 million
more people were employed in 1980 than in 1960, an increase of
about 50 percent. Over the same period, 2 million more foreign-born
were employed, or 6 percent of the total increase in U.S. employment. Even allowing for an increased number of employed illegal
aliens over the period, however, these figures suggest that immigration has been a relatively small factor in long-term employment
growth and in the adjustment of the economy to changing conditions.
IMMIGRATION AND TRADE

The countries of the world are economically linked by the exchange of people, goods, and capital. Both parties gain from trade
and, in the absence of restrictions, exchange will continue until potential benefits are exhausted. The movement of labor across borders
can be a partial substitute for the movement of goods and capital.
When international trade in goods or capital flows is hindered, pressures are heightened for people to migrate instead.
Countries that are relatively well-endowed with natural resources
but thinly populated will tend to export products that have a relatively high natural resource content but relatively low labor content.
Such countries will tend to import products that require relatively
greater inputs of labor. Developing countries, similarly, would have a
comparative advantage in producing and exporting products that
embody relatively high proportions of low-skilled labor and less capital than would be the case for U.S. production and exports.
Restrictions on trade between developing countries and the United
States provide powerful incentives for the migration of low-skilled
workers into the United States. The presence of these additional
workers in the United States enables domestic business enterprises to
produce goods profitably that would not otherwise have been produced here. In the absence of trade restrictions, such goods might
have been imported. In the presence of both trade restrictions and
effective restrictions on immigration, however, such goods may be
available to American consumers only at higher prices.
The production of certain fresh fruits and vegetables in the United
States is a frequently cited example of an industry that draws heavily
on low-skilled alien labor. Many alien workers are seasonally employed to pick perishable crops. About 15,000 to 20,000 are legally
admitted each year, subject to Department of Labor certification.
This certification is contingent on a job offer and on a labor market
test. Certification is granted if it is determined that qualified workers
are not available in the United States and that the wages and working




227

conditions of the job will not adversely affect similarly employed U.S.
workers.
The largest alien work force in agriculture, however, appears to
consist of undocumented workers who come primarily from countries
in the Western Hemisphere. The inflow of low-skilled alien workers
to pick U.S. crops has a long history. The bracero program allowed
U.S. employers to recruit large numbers of temporary workers from
Mexico. The bracero program was begun during World War II to alleviate the labor shortage when rural workers left the farms for the
higher wages of urban factory jobs. In its peak years, during the late
1950s, more than 400,000 such short-term work permits were issued
annually. The program was terminated officially in 1964, but many
migrant workers from Mexico still come to the United States without
legal sanction.
Although many aliens work on farms illegally, the availability of
such workers may enable U.S. production of certain fruit and vegetable crops to remain competitive with that of other nations. The argument is sometimes made, however, that alien labor benefits agricultural producers only in the short run, and that it delays shifts toward
mechanization that are necessary to maintain long-run competitiveness with foreign producers. Although restricting the supply of alien
farm labor would encourage the substitution of machinery for human
labor, it would increase the costs of farm production. Capital-intensive production methods are not inherently more cost-effective than
labor-intensive methods. Steps that would induce scarcity by reducing the supply of labor to an industry raise costs and prices and
reduce output and growth. A policy of restricting international migration to improve the long-run competitiveness of the United States
would have the opposite effect.
FISCAL EFFECTS OF IMMIGRATION
A major concern regarding immigration is the use of public services such as education and low-income assistance by aliens. If international migrants use services that cost more than the taxes they pay,
they are a fiscal burden on native-born Americans. If their tax payments exceed the cost of services, however, immigrants are a net
fiscal gain for the country. Both the tax payments and the services
used are spread over the years after an immigrant first arrives in the
United States. Consequently, any assessment of the fiscal effects of
immigration must consider whether the present value of tax payments exceeds that of service costs, measured over the years the immigrant is in the United States.




228

As with native-born Americans, an immigrant's use of public services and the ability to pay for those services through taxation depend
on personal and family characteristics and, crucially, on success in
the labor market. People in their twenties and thirties and in good
health—both the native-born and immigrants—are more likely to be
working and paying taxes, and less likely to be dependent on government assistance, than are children, the elderly, or the disabled. Immigrants are typically adults arriving near the start of their working
lives. Thus, immigrants, on average, are better able to support themselves through work than is the native-born population, which has a
higher proportion of dependents.
A great deal of variation can be observed in the labor market success and consequently the fiscal burden of immigrant groups. As immigrants adjust to their new environment and as their families grow,
their demand for public education and other services—and their ability to pay for those services—increases. As with the native-born population, when immigrants age and their children mature, their reliance on government retirement benefits grows but is offset by the
entry of their children into the labor market.
PUBLIC SERVICES USED

International migrants, like the native-born, may use three major
types of public programs: low-income assistance, social insurance,
and education and health. These programs provide benefits directly
to recipients. Other public services, such as fire and police protection, that provide general benefit to the community may also have
greater demands placed on them by the presence of greater numbers
of people. In addition, the presence of immigrants in the United
States entails a more intensive use of the country's publicly financed
infrastructure—its transportation system, recreational areas, and
other facilities.
Eligibility for Services

Legal immigrants to the United States are eligible for most benefits
available to citizens. Aliens admitted temporarily and illegal aliens
are in many cases ineligible for such benefits.
The major low-income assistance programs funded by the Federal
Government, usually in conjunction with State funding, generally restrict eligibility to aliens who permanently and lawfully reside in the
United States. These include aid to families of dependent children,
food stamps, medicaid, supplemental security income, and housing
assistance. What constitutes sufficient legal standing for benefits
varies with each program; regulations list specific conditions under
which aliens may participate. Some recent court rulings require that
benefits under supplementary security income and other programs be




229

made available to certain aliens who may be in the United States illegally.
Eligibility for benefits under social security and medicare depends
on worker and employer contributions to the programs, and not on
immigration status. Social security recipients may reside outside the
United States, although nonresidents receive less than 1 percent of
total benefits. Unemployment compensation is generally restricted to
lawful permanent residents of the United States who qualify through
their previous work experience.
Local public health facilities normally serve patients without regard
to their immigration status; elective treatment in public health facilities is usually limited to persons who are able to pay for services.
Public education at the elementary and secondary levels is also available to all residents regardless of immigration status. Legal precedent was established in 1982 by the Supreme Court, which held that
Texas could not deny free public education to undocumented alien
children. Even prior to this decision, however, most States did not
check the legal status of school children or their parents. Moreover,
many children of illegal aliens are born in the United States and consequently are citizens eligible for education services without qualification.
Financial aid for higher education and training programs under the
Job Training Partnership Act are largely restricted to lawful permanent residents and refugees. The Federal Government funds bilingual education programs that are of use to immigrants, and it also
funds a refugee assistance program.
Benefits Received

Little is known about the use of government services by immigrants. Most available studies examine disparate immigrant groups in
various time periods, often focusing on immigrants living in particular locations in the country. The evidence that exists, however, suggests that immigrants are not heavy users of public services. Illegal
residents are less likely to avail themselves of government programs
than are legal immigrants, but the determining factor in service use is
not immigration status. The major reasons why illegal residents may
receive lower benefits than others is that they are younger and have
fewer dependents, which reduces their eligibility for programs.
A recent study shows that some groups of immigrants, such as
Asians and Hispanics, have higher participation rates in welfare programs than do their ethnic counterparts born in the United States.
Other groups of immigrants, however, use welfare less than the
native-born. For Asian immigrants, higher participation is due partly
to the relocation assistance offered to political refugees from South-




230

east Asia in the 1970s. Immigrant groups other than Asians rely on
public assistance less than do the native-born with similar incomes.
A study of Mexican migrants in Los Angeles focuses on State and
local public services. This study, which includes both legal and illegal
residents, finds that these families have more children and thus place
greater demands on public schools and health facilities than does the
average family. The Mexican immigrant households in this study do
not appear to make disproportionate use of other services.
Direct evidence on public service use by deportable aliens is
sketchy. Deportable aliens are generally ineligible for Federal and
many local benefit programs, but the extent to which they are actually screened out is unknown. The INS is developing a project called
SAVE (Systematic Alien Verification for Entitlements), which gives
State and local government agencies access to an automated data
system to verify the eligibility of alien applicants for selected programs. The INS also provides data on immigration status to many
programs and areas through other channels.
Systematic screening is most cost-effective in areas where the concentration of illegal aliens is high. California has one of the oldest
alien verification programs in the country, having routinely screened
alien applicants for social services for about 10 years. In 1984, almost
30,000 persons or 3 percent of all applicants were denied welfare
benefits in Los Angeles because of immigration status. The figure
understates the full impact of this program, however, because it excludes ineligible aliens who were deterred from applying by the
knowledge that their immigrant status would be checked.
Several studies suggest that illegal aliens use below-average
amounts of welfare and other social services. This may be due not
only to their demographic characteristics, but also to a fear of detection by authorities and to heightened efforts by some government
agencies to limit access to those eligible. In addition, extended family
networks may provide a partial means of support in emergencies. It
is likely that illegal aliens use public education and health facilities
more than welfare and other services because of easier access. This
imposes a direct fiscal burden on State and local governments, which
provide most of the funding for public schools; local governments
also provide funding for local hospitals.
A 1976 study of apprehended illegal workers found that their use
of government benefits was very low, reflecting the fact that they
were typically young, male, and single. Studies of illegal migrants
with longer stays in the country tend to show higher rates of participation in social programs. A recent study of illegal residents in Texas
found very little use of social and other welfare services, but substantial use of health and education services. Illegal aliens appear to use




231

health services more frequently than other services, but most appear
to pay for those services.
The stream of benefits received by immigrants over their lifetimes
has not been directly surveyed. One study suggests that the benefits
received by legal (and some illegal) migrants are initially well below
those of the average native-born family. During their first 5 years in
the United States, immigrants receive similar welfare and education
benefits but lower social security payments. As immigrants remain
longer in the country, they receive more education and social insurance benefits. The study estimates that overall use of benefits among
immigrants equals the average usage by native-born families only
after 15 years of residence.
TAXES PAID

All residents of the United States, regardless of legal status, are required to pay taxes. Employed migrants in most cases are subject to
Federal and State income tax withholding and social security taxes.
They also pay sales and property taxes.
The extent of tax payments by illegal aliens has been the subject of
much debate and analysis. Sales taxes and property taxes, important
sources of local revenue, are collected from illegal aliens without
substantial avoidance directly at the point of sale or implicitly as part
of a rent payment. Social security taxes are automatically deducted
from paychecks and may not be avoided easily by illegal aliens, although some employers may fail to make the required payment to
the Federal Government. The amount withheld for income taxes may
be substantially reduced, however, if an illegal alien claims a large
number of exemptions. False exemption claims are difficult to prevent and, according to some accounts, income tax avoidance may be
pervasive among illegal aliens. The extent of such tax evasion, however, is not clear.
A study of illegal migrants in Texas found that the vast majority
made substantial payments for Federal income and social security
taxes, as well as sales and excise taxes. The study did not estimate
property taxes, and Texas had no State income tax. A study of Mexican migrants, both legal and illegal, in Los Angeles found that migrants paid below-average State and local taxes (including property
taxes), reflecting their below-average levels of income.
These studies reflect tax payments in a single year and reveal little
about the lifetime flow of immigrants' tax payments. No survey directly measures the lifetime pattern of tax payments by immigrants.
One cross-sectional analysis roughly estimates that the total tax payments of immigrants are below those of the average native-born
family only during the first few years after entry. With rising family




232

incomes in subsequent years, immigrants' tax payments rise. Taxes
paid by immigrants are estimated to be higher after 10 years in this
country, on average, than taxes paid by the native-born. The estimated differential continues to grow as the immigrants' length of stay in
the United States increases.
NET FISCAL EFFECTS

Because of differences in their family characteristics and economic
circumstances, immigrant groups may generate greatly varying net
fiscal effects. Political refugees may have particular difficulties adjusting to life in a new land, and they benefit from special refugee assistance programs. Those who arrive without basic educational and job
skills may find initial problems in the labor market, but the evidence
shows that they are able eventually to increase their earnings and
reduce their program dependency. Illegal aliens may find it possible
to evade some taxes, but they use fewer public services (especially
social security benefits) than do other groups.
On the whole, however, international migrants appear to pay their
own way from a public finance standpoint. Most come to the United
States to work, and government benefits do not appear to be a major
attraction. Some immigrants arrive with fairly high educational levels,
and their training imposes no substantial costs on the public. Their
rising levels of income produce a rising stream of tax payments to all
levels of government. Their initial dependence on welfare benefits is
usually limited, and they finance their participation in social security
retirement benefits with years of contributions.
The distribution of these net fiscal benefits is not uniform. Many of
the fiscal costs of migration, such as those arising from pressures on
school systems and hospitals, are incurred in areas where there is a
high concentration of migrants. Tax collections from migrants in
these areas may not fully cover these additional costs. An increase in
population, however, generally imposes a fiscal burden on local
areas, which is offset by increased local fiscal capacity.
There may also be fiscal spillovers of immigration to other workers. For example, those who face stronger labor market competition
may experience a reduction in annual earnings and a corresponding
increased reliance on government benefit programs, such as unemployment compensation. Although some workers may be adversely
affected, the extent of displacement appears to be small. The net
spillover depends on the size of the offsetting reduction in benefit
payments to (and increase in tax payments from) persons whose incomes have improved because of the positive economic effects of immigrants. The net fiscal spillover seems likely to be positive, with




233

greater tax payments and lower benefit costs than would occur in the
absence of immigration.
CONCLUSION
For much of the Nation's history, U.S. immigration policy has been
based on the premise that immigrants have a favorable effect on the
overall standard of living and on economic development. Analysis of
the effects of recent migrant flows bears out this premise. Although
an increasing number of migrants, including many illegal aliens, have
entered the country in recent years, inflows are still low relative to
population and relative to U.S. labor force growth.
International migrants have been readily absorbed into the labor
market. Although some displacement may occur, it does not appear
that migrants have displaced the native-born from jobs or have reduced wage levels on a broad scale. There is evidence that immigration has increased job opportunities and wage levels for other workers. Aliens may also provide a net fiscal benefit to the Nation, often
paying more in taxes than they use in public services. Immigrants
come to this country seeking a better life, and their personal investments and hard work provide economic benefits to themselves and to
the country as a whole.
The economic gains provided by international migration, however,
do not justify the presence or employment of aliens in the United
States on an illegal basis. Illegal aliens knowingly defy American laws
while their presence establishes claims to economic opportunity and
Constitutional protections. As a sovereign Nation, the United States
must responsibly decide not only who may cross its borders, but also
who may stay.




234

Appendix A
REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1985







LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D.C., December 31, 1985.
MR. PRESIDENT:
The Council of Economic Advisers submits this report on its
activities during the calendar year 1985 in accordance with the
requirements of the Congress, as set forth in section 10(d) of the
Employment Act of 1946 as amended by the Full Employment and
Balanced Growth Act of 1978.
Sincerely,




BERYL W. SPRINKEL, Chairman
THOMAS GALE MOORE, Member

237

Council Members and their Dales of Sennce
Name

Position

Edwin G. Nourse
Leon H. Keyseriing

Chairman
Vice Chairman
Acting Chairman
Chairman
Member
Vice Chairman
Member
Member
Chairman
Member
Member
Member
Chairman
Member

John D Clark
Roy Blougn
Robert C. Turner
Arthur F. Burns ..
Neil H. Jacoby
Walter W. Stewart
Raymond J. Saulnier

. .

Joseph S Davis
Paul W. McCracken
Karl Brandt
Henry C. Wallich
Walter W Heller
James Tobin
Kermit Gordon
Gardner Ackley
John P. Lewis
Otto Eckstein
Arthur M Okun
James S Duesenberry
Merton J. Peck
Warren L Smith
Paul W McCracken
Hendrik S Houthakker . .
Herbert Stein
Ezra Solomon
Marina v.N. Whitman
Gary L. Seevers .
William J Fellner
Alan Greenspan
Paul W MacAvoy
Burton G. Malkiel
Charles L Schultze
William D, Nordhaus
Lyle E Gramley
George C. Eads
Stephen M. Goldfeld
Murray L Weidenbaum
Jerry L. Jordan
William A. Niskanen
Martin Feldstein
William Pooie.. . .
Beryl W Sprinkel
Thomas Gale Moore




Oath of office date

.

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
Chairman
Member
Member
Member
Member
Chairman
Member
Member
Chairman
Member
Chairman
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, !953
December 2, 1953
April 4, 1955
December 3, 1956
May 2 1955
Decembers, 1956
November 1 1958
May 7, 1959
January 29 1961
January 29, 1961
January 29 1961
August 3, 1962
November 16 J964
May 17, 1963
September 2, 1964
November 16 1964
February 15, 1968
February 2 1966
February 15, 1968
July 1 1968
February 4 1969
.. .. February 4, 1969
February 4 1969
January 1, 1972
September 9 1971
March 13, 1972
July 23 1973
October 31 1973
September 4, 1974
June 13 1975
July 22, 1975
January 22 1977
March 18, 1977
March 18 1977 . .
June 6, 1979
August 20 1980
February 27 1981
July 14, 1981
June 12, 1981
October 14, 1982
December 10 1982
April 18 1985
July 1, 1985

238

Separation date
November 1, 1949.
January 20, 1953.
February 11, 1953.
August 20 1952
January 20, 1953.
December 1, 1956.
February 9, 1955.
April 29, 1955.
January 20, 1961.
October 31 1958
January 31, 1959.
January 20 1961
January 20, 1961.
November 15 1964.
July 31, 1962.
December 27 1962.
February 15, 1968.
August 31, 1964.
February 1, 1966.
January 20, 1969.
June 30 1968.
January 20, 1969.
January 20, 1969.
December 31 1971
July 15, 1971.
August 31, 1974.
March 26 1973
August 15, 1973.
April 15, 1975.
February 25 1975
January 20, 1977.
November 15 1976.
January 20, 1977.
January 20, 1981
February 4, 1979.
May 27, 1980
January 20, 1981.
January 20, 1981
August 25 1982
July 31, 1982.
March 30, 1985.
July 10, 1984.
January 20 1985

Report to the President on the Activities of the
Council of Economic Advisers During 1985
The Council of Economic Advisers was established by the Employment Act of 1946 to provide economic analysis and advice to the
President and thus to assist in the development and implementation
of national economic policies. The Council also advises the President
on other matters affecting the health and operations of the Nation's
economy.
Beryl W. Sprinkel was appointed Chairman of the Council on April 18,
1985. Dr. Sprinkel was formerly Under Secretary of the Treasury
for Monetary Affairs. Thomas Gale Moore of the Hoover Institution
on War, Revolution, and Peace of Stanford University was appointed
a Member on July 1, 1985. William A. Niskanen resigned as a
Member on March 30, 1985, to become Chairman of The Cato Institute in Washington, B.C. William Poole resigned as a Member on
January 20, 1985, to return to Brown University where he is a Professor of Business Administration.
MACROECONOMIC POLICIES

As is its tradition, the Council devoted much of its time during
1985 to advising the President on the formulation of broad economic
policy objectives and the design of programs to carry them out.
The Council chaired an interagency forecasting group, also including the Secretary of the Treasury and the Director of the Office of
Management and Budget, which develops the economic projections
for the Federal budget that are presented to the President. The
Council also presented studies of macroeconomic policy issues before
the Cabinet-level Economic Policy Council, paying particular attention to monetary policy and financial market developments.
The Chairman of the Council was elected Chairman of the Economic Policy Committee of the Organization for Economic Cooperation and Development (OECD) and the Council participated actively
in other OECD fora, working on a variety of issues, including structural adjustment and barriers to economic development.
MICROECONOMIC POLICIES
A wide variety of microeconomic issues received Council attention
during the year. The Council participated in Cabinet-level groups
dealing with such issues as international trade policy and regulation,




239

agriculture and farm credit, privatization and alternatives to Federal
regulation, employee pensions, space shuttle pricing, immigration,
antitrust laws, the economic impact of the Gramm-Rudman-Hollings
budget proposals, and analysis of the effects of tax reform.
PUBLIC INFORMATION
The Council's Annual Report is the principal medium through which
the Council informs the public of its work and its views. It is also an
important vehicle for presenting the Administration's domestic and
international economic policies. Annual distribution of the Report in
recent years has averaged about 50,000 copies. The Council also assumes primary responsibility for the monthly Economic Indicators,
which is issued by the Joint Economic Committee of the Congress
and has a distribution of approximately 10,000. Information is also
provided to the public through speeches and other public appearances by the Council Chairman, Members, and senior staff.
ORGANIZATION AND STAFF OF THE COUNCIL
OFFICE OF THE CHAIRMAN
The Chairman is responsible for communicating the Council's
views to the President. This role is performed through personal
discussions with the President and written reports on economic developments. The Chairman also represents the Council at Cabinet meetings, meetings of the Cabinet-level Economic Policy Council and Domestic Policy Council, the daily White House senior staff meetings,
and at many other formal and informal meetings of senior government officials. The Chairman exercises ultimate responsibility for directing the work of the professional staff.
COUNCIL MEMBERS
Members of the Council are involved in the full range of issues
within the Council's purview, and are responsible for the supervision
of the work of the professional staff. Members represent the Council
at a wide variety of interagency and international meetings and
assume major responsibility for selecting issues for Council attention.
The small size of the Council permits the Council Chairman and
Members to work as a team on most policy issues. There was in
1985, however, an informal division of subject matter. In addition to
overseeing the entire work of the Council, Dr. Sprinkel has temporarily assumed primary responsibility for domestic and international
macroeconomic analysis, economic projections, and monetary and financial issues. Dr. Moore has been primarily responsible for microeconomic, trade, and sectoral analysis, as well as regulatory issues.




240

PROFESSIONAL STAFF
The professional staff of the Council consists of the Special Assistant, the senior statistician, 11 senior staff economists, 6 junior staff
economists, and 1 research assistant. The professional staff and their
respective areas of concentration at the end of 1985 were:
Special Assistant to the Chairman
Margot E. Machol
Senior Staff Economists
Lincoln F. Anderson
Joseph R. Antos
Dallas S. Batten
Robert G. Chambers
Arlene S. Holen
Robert E. Keleher
Carol A. Leisenring
John H. Mutti
Charles E. Stuart
Susan E. Woodward
Martin B. Zimmerman

Macroeconomics and Forecasting
Health, Education, and Welfare
International Finance and Macroeconomics
Agriculture
Labor and Immigration
Macroeconomics
Macroeconomics and Monetary Policy
International Trade
Public Finance and Taxation
Financial Markets and Regulation
Energy, Transportation, Environment, and
Regulation
Statistician

Catherine H. Furlong

Senior Statistician
Junior Staff Economists

David S. Bizer
Public Finance and Taxation
Catherine A. Bonser-Neal
International Trade and Finance
Phillip A. Braun
Macroeconomics and Finance
S. Dean Furbush
General Microeconomics and Labor
Ellen L. Hughes-Cromwick ... Macroeconomics and Money
James V. Stout
General Microeconomics
Research Assistant
Anne H. Caple
Michael L. Mussa, William H. Abbott Professor of International
Business at the University of Chicago, served as a consultant during
1985.
Natalie V. Rentfro, Linda A. Reilly, and Deborah D. Miller work in
the Statistical Office, which is run by Mrs. Furlong. This office manages the Council's statistical information system, overseeing the publication of the Economic Indicators and the statistical appendix to the




241

Economic Report, as well as the verification of statistics in memoranda,
testimony, and speeches.
Joseph Foote provided editorial assistance in the preparation of the
Economic Report.

SUPPORTING STAFF
The Administrative Office, which provides general support for the
Council's activities, consists of Elizabeth A. Kaminski, Staff Assistant
to the Council, and Catherine Fibich, Administrative Assistant.
The secretaries for the Council of Economic Advisers during 1985
were Bonnie D. Brown, Audrey L. Carlson, Nancy L. Fiester, Bessie
M. Lafakis, Lisa D. Robinson, Margaret L. Snyder, Suzanne M.
Tudor, and Alice H. Williams.
John E. Singer (Lawrence College) served as an intern during the
fall of 1985. Donald R. Brown, Tina L. Haftman, and Penelope M.
Lister provided assistance for the Council during the summer. Lorraine A. Ambrosio served as a Student Assistant during the year.
DEPARTURES
The Council's senior staff economists, in most cases, are on leave
of absence as professors from universities, or are from other government agencies or research institutions. Their tenure with the Council
is generally limited to 1 or 2 years. Most of the senior staff economists who resigned during the year returned to their previous affiliations. They are: J. Hay den Boyd (Department of Commerce), Roger
D. Feldman (University of Minnesota), Richard T. Freeman (Board of
Governors of the Federal Reserve System), Marvin S. Goodfriend
(Federal Reserve Bank of Richmond), Joel B. Slemrod (University of
Minnesota), and Joe A. Stone (University of Oregon). Some others
went on to new positions. They are: Joseph A. Grundfest (Commissioner, Securities and Exchange Commission), William S. Haraf (Visiting Scholar, American Enterprise Institute), Randall S. Jones (Vice
President, Japan Economic Institute of America), Robert L. Thompson (Assistant Secretary, Department of Agriculture), Kathleen P.
Utgoff (Executive Director, Pension Benefit Guaranty Corporation),
and Robert S. Villanueva (consultant).
Junior staff economists usually are graduate students who spend 1
year with the Council and then return to complete their dissertations.
Those who resigned in 1985 were: Alexander S. Berg (University of
Chicago), Ann Marie Hillberg (Purdue University), Andrew N. Kleit
(Yale University), Mark S. Lutz (University of Maryland), John F.
Navratil (Harvard University), and Thomas R. Rumbaugh (University
of Maryland).




242

Support staff who resigned in 1985 were Patricia A. Lee (Department of Commerce), Rosemary M. Rogers (Pension Benefit Guaranty
Corporation), and Barbara L. Severn (Department of the Navy).




243




Appendix B
STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION







CONTENTS
NATIONAL INCOME OR EXPENDITURE:
Page

B-l.
B-2.
B-3.
B-4.
B-5.

B-8.
B-9.
B-10.
B-ll.
B-12.
B-l3.
B-14.
B-15.
B-16.
B-17.
B-18.
B-l9.
B-20.
B-21.
B-22.
B-23.
B-24.
B-25.
B-26.
B-27.
B-28.
B-29.

Gross national product, 1929-85
Gross national product in 1982 dollars, 1929-85
Implicit price deflators for gross national product, 1929-85
Fixed-weighted price indexes for gross national product, 1982
weights, 1959-85
Changes in gross national product, personal consumption expenditures, and related price measures, 1933-85
Gross national product by major type of product, 1929-85
Gross national product by major type of product in 1982 dollars,
1929-85
Gross national product by sector, 1929-85
Gross national product by sector in 1982 dollars, 1929-85
Gross national product by industry, 1947-84
Gross national product by industry in 1982 dollars, 1947-84
Gross domestic product of nonfmancial corporate business, 192985
Output, costs, and profits of nonfmancial corporate business,
1948-85
Personal consumption expenditures, 1929-85
Gross and net private domestic investment, 1929-85
Gross and net private domestic investment in 1982 dollars, 192985
Inventories and final sales of business, 1946-85
Inventories and final sales of business in 1982 dollars, 1947-85
Foreign transactions in the national income and product accounts,
1929-85
Exports and imports of goods and services in 1982 dollars, 192985
Relation of gross national product, net national product, and national income, 1929-85
Relation of national income and personal income, 1929-85
National income by type of income, 1929-85
Sources of personal income, 1929-85
Disposition of personal income, 1929-85
Total and per capita disposable personal income and personal consumption expenditures in current and 1982 dollars, 1929-85
Gross saving and investment, 1929-85
Saving by individuals, 1946-85
Number and median income (in 1984 dollars) of families and persons, and poverty status, by race, selected years, 1960-84




247

252
254
256
258
259
260
261
262
263
264
265
266

267
268
270
271
272
273

274
275

276
277
278
280
282
283
284
285
286

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY
Page

B-30.
B-31.
B-32.
B-33.
B-34.
B-35.
B-36.
B-37.
B-38.
B-39.
B-40.
B-41.
B-42.
B-43.
B-44.

Population by age groups, 1929-85
Population and the labor force, 1929-85
Civilian employment arid unemployment by sex and age, 1947-85..
Unemployment by duration and reason, 1947-85
Civilian labor force participation rate and civilian employment/
population ratio, 1948-85
Unemployment rate, 1948-85
Civilian labor force participation rate by demographic characteristic, 1954-85
Civilian employment/population ratio, 1954-85
Civilian unemployment rate by demographic characteristic, 194885
Unemployment insurance programs, selected data, 1955-85
Employees on nonagricultural payrolls, by major industry, 193985
'.
Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-85
Average weekly earnings in selected private nonagricultural industries, 1947-85
Productivity and related data, business sector, 1947-85
Changes in productivity and related data, business sector, 1948-85.

PRODUCTION AND BUSINESS ACTIVITY:
B-45. Industrial production indexes, major industry divisions, 1939-85....
B-46. Industrial production indexes, market groupings, 1947-85
B-47. Industrial production indexes, selected manufactures, 1947-85
B-48. Capacity utilization rates, 1948-85
B-49. New construction activity, 1929-85
B-50.
New housing units started and authorized, 1959-85
B-51. Business expenditures for new plant and equipment, 1947-86».
B-52. Sales and inventories in manufacturing and trade, 1948-85
B-53.
Manufacturers' shipments and inventories, 1947-85
B-54. Manufacturers'new and unfilled orders, 1947-85
PRICES:
B-55.
B-56.
B-57.
B-58.
B-59.
B-60.
B-61.
B-62.
B-63.

Consumer price indexes, major expenditure classes, 1946-85..
Consumer price indexes, selected expenditure classes, 1946-85
Consumer price indexes, commodities, services, and special
groups, 1940-85
Changes in special consumer price indexes, 1958-85
Changes in consumer price indexes, commodities and services,
1929-85
Producer price indexes by stage of processing, 1947-85
Producer price indexes by stage of processing, special groups,
1974-85
Producer price indexes for major commodity groups, 1947-85........
Changes in producer price indexes for finished goods, 1955-85

MONEY STOCK, CREDIT, AND FINANCE:
B-64. Money stock, liquid assets, and debt measures, 1959-85
B-65. Components of money stock measures and liquid assets, 1959-85...




248

287
288
290
291
292
293
294
295
296
297
298

300
301
302
303
304
305
306
307
308
310
311
312
313
314
315
316
318
319
320
321
323
324
326
327
328

Page
B-66.
B-67.
B-68.
B-69.
B-70.
B-71.
B-72.

Aggregate reserves of depository institutions and monetary base,
1959-85
Commercial bank loans and investments, 1972-85
Bond yields and interest rates, 1929-85
Total funds raised in credit markets by nonfinancial sectors, 197685
Mortgage debt outstanding by type of property and of financing,
1939-85
Mortgage debt outstanding by holder, 1939-85
Consumer credit outstanding, 1950-85

330
331
332
334

336
337
338

GOVERNMENT FINANCE:
B-73.
B-74.
B-75.

B-76.
B-77.
B-78.
B-79.
B-80.
B-81.
B-82.
B-83.

Federal receipts, outlays, surplus or deficit, and debt, selected
fiscal years, 1929-87
Federal receipts, outlays, and debt, fiscal years 1978-87
Relation of Federal Government receipts and expenditures in the
national income and product accounts to the budget, fiscal years
1985-87
Federal and State and local government receipts and expenditures,
national income and product accounts, 1929-85
Federal and State and local government receipts and expenditures,
national income and product accounts, by major type, 1929-85...
Federal Government receipts and expenditures, national income
and product accounts, 1964-87
State and local government receipts and expenditures, national
income and product accounts, 1946-85
State and local government revenues and expenditures, selected
fiscal years, 1927-84
Interest-bearing public debt securities by kind of obligation, 196785
Maturity distribution and average length of marketable interestbearing public debt securities held by private investors, 1967-85.
Estimated ownership of public debt securities, 1976-85

339
340

342
343
344
345
346
347
348

349
350

CORPORATE PROFITS AND FINANCE:
B-84.
B-85.
B-86.
B-87.
B-88.
B-89.
B-90.
B-91.
B-92.

Corporate profits with inventory valuation and capital consumption
adjustments, 1929-85
Corporate profits by industry, 1929-85
Corporate profits of manufacturing industries, 1929-85
Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-85
Relation of profits after taxes to stockholders' equity and to sales,
all manufacturing corporations, 1947-85
Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-85
State and municipal and business securities offered, 1934-85
Common stock prices and yields, 1949-85
Business formation and business failures, 1940-85

351
352
353
354
355
356
357
358
359

AGRICULTURE:
B-93.
B-94.
B-95.
B-96.

Farm income, 1929-85
Farm output and productivity indexes, 1929-85
Farm input use, selected inputs, 1929-85
Indexes of prices received and prices paid by farmers, 1946-85




249

360
361
362
363

Page

B-97.
B-98.

U.S. exports and imports of agricultural commodities, 1940-85
Balance sheet of the farm sector, 1939-84

364
365

INTERNATIONAL STATISTICS:
B-99.
U.S. international transactions, 1946-85
B-100. U.S. merchandise exports and imports by principal end-use category, 1965-85
B-101. U.S. merchandise exports and imports by area, 1976-85
B-102. U.S. merchandise exports and imports by commodity groups,
1966-85
B-103. International investment position of the United States at year-end,
1977-84
B-104. International reserves, selected years, 1952-85
B-105. Exchange rates, 1967-85
B-106. World trade: Exports and imports, 1965, 1970, 1975, and 198185
B-107. World trade balance and current account balances 1965, 1970,
1975, and 1981-85
B-108. Industrial production and consumer prices, major industrial countries, 1960-85
B-109. Civilian unemployment rate, and hourly compensation, major industrial countries, 1960-85
B-110. Growth rates in real gross national product, 1961-85
„




250

366
368
369
370
371
372
373
374

375
376
377
378

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 the comprehensive revision by the Department of
Commerce, Bureau of Economic Analysis. See Survey of Current Business for
details.




251

NATIONAL INCOME OR EXPENDITURE
TABLE B-l.—Gross national product, 1929-85
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Gross private domestic investment

Personal consumption expenditures

Fixed investment
Year or quarter

Gross
national
product

Nonresidential
DuraNonble durable Services
goods goods

Total

Total
Total

Total

i

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976 ...
1977
1978
1979
1980
1981
1982
1983
1984

,

1985"
1982:1

II
III
IV
1983- 1
1!
Ill
IV
1984: I

II
Ill
IV
1985:!
||
III
IV"

103.9
56.0
91.3
100.4
125.5
159.0
192.7
211.4
213.4
212.4
235.2
261.6
260.4
288.3
333.4
351.6
371.6
372.5
405.9
428.2
451.0
456.8
495.8
515.3
533.8
574.6
606.9
649.8
705.1
772.0
816.4
892.7
963.9
1,015.5
1,102.7
1,212.8
1,359.3
1,472.8
1,598.4
1,782.8
1,990.5
2,249.7
2,508.2
2,732.0
3,052.6
3,166.0
3,401.6
3,774.7
3,992.5
3,112.6
3,159.5
3,179.4
3,212.5
3,268.7
3,365.1
3,437.5
3,535.0
3,676.5
3,757.5
3,812.2
3,852.5
3,917.5
3,960.6
4,016.9
4,075.1

77.3
45.8
67.0
71.0
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3
192,1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3
330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9
640.0
691.6
757.6
837.2
916.5
1,012.8
1,129.3
1,257.2
1,403.5
1,566.8
1,732.6
1,915.1
2,050.7
2,229.3
2,423.0
2,581.9
1,996.3
2,023.8
2,065.6
2,117.0
2,146.0
2,210.1
2,254.9
2,306.3
2,358.6
2,414.4
2,439.0
2,480.1
2,525.0
2,563.3
2,606.1
2,633.3

9.2
3.5
6.7
7.8
9.7
6.9
6.5
6.7
8.0
15.8
20.4
22.9
25.0
30.8
29.9
29.3
32.7
32.1
38.9
38.2
39.7
37.2
42.8
43.5
41.9
47.0
51.8
56.8
63.5
68.5
70.6
81.0
86.2
85.7
97.6
111.2
124.7
123.8
135.4
161.5
184.5
205.6
219.0
219.3
239.9
252.7
289.6
331.1
360.8
245.1
248.9
252.8
263.8
268.5
285.3
295.3
309.4
321.6
330.2
331.1
341.5
351.5
356.5
376.0
359.2

37.7
22.3
35.1
37.0
42.9
50.8
58.6
64.3
71.9
82.7
90.9
96.6
94.9
98.2
109.2
114.7
117.8
119.7
124.7
130.8
137.1
141.7
148.5
153.2
157.4
163.8
169.4
179.7
191.9
208.5
216.9
235.0
252.2
270.3
283.3
305.1
339.6
380.9
416.2
452.0
490.4
541.8
613.2
681.4
740.6
771.0
817.0
872.4
912.5
758.1
762.6
776.7
786.6
792.4
811.7
826.5
837.2
856.6
873.2
876.6
883.1
895.7
910.2
914.5
929.4

30.4
20.1
25.2
26.2
28.3
31.0
34.3
37.2
39.7
45.4
50.6
55.5
58.4
63.2
69.0
75.1
82.1
88.0
94.3
101.6
108.5
1157
125.0
134.0
141.8
151.1
160.6
172.8
185.4
200.3
216.0
236.4
259.4
284.0
310.7
341.3
373.0
411.9
461.2
515.9
582.3
656.1
734.6
831.9
934.7
1,027.0
1,122.7
1,219.6
1,308.6
993.1
1,012.2
1,036.1
1,066.5
1,085.2
1,113.0
1,133.1
1,159.6
1,180.4
1,211.1
1,231.3
1,255.4
1,277.8
1,296.6
1,315.6
1,344.6

See next page for continuation of table.




252

16.7
1.6
9.5
13.4
18.3
10.3
6.2
7.7
11.3
31.5
35.0
47.1
36.5
55.1
60.5
53.5
54.9
54.1
69.7
72.7
71.1
63.6
80.2
78.2
77.1
87.6
93.1
99.6
116.2
128.6
125.7
137.0
153.2
148.8
172.5
202.0
238.8
240.8
219.6
277.7
344.1
416.8
454.8
437.0
515.5
447.3
501.9
674.0
670.4
459.5
467.8
452.2
409.6
425.0
483.7
521.2
577.6
658.8
673.3
687.9
676.2
657.6
672.8
666.1
685.2

14.9
3.1
9.1
11.2
13.8
8.5
6.9
8.7
12.3
25.1
35.5
42.4
39.5
48.3
50.2
50.5
54.5
55.7
64.0
68.0
69.7
65.1
74.4
75.1
74.7
81.5
87.3
94.2
106.2
114.4
115.4
129.1
143.4
145.7
164.7
191.5
219.2
225.4
225.2
261.7
322.8
388.2
441.9
445.3
491.5
471.8
508.3
607.0
661.4
483.6
472.9
461.2
469.5
467.7
489.2
524.0
552.1
566.7
604.5
619.5
637.2
639.1
657.3
665.9
683.2

11.0
2.5
6.1
7.7
9.7
6.3
5.4
7.4
10.6
17.3
23.5
26.8
24.9
27.8
31.8
31.9
35.1
34.7
39.0
44.5
47.5
42.4
46.3
48.8
48.3
52.5
55.2
61.4
73.1
83.5
84.4
91.4
102.3
105.2
109.6
123.0
145.9
160.6
162.9
180.0
214.2
259.0
302.8
322.8
369.2
366.7
356.3
427.9
475.7
382.0
369.2
360.7
354.9
338.0
343.0
357.3
386.8
394.1
423.4
435.9
458.1
459.6
474.2
478.5
490.6

Change
in busiProness
ducers' ResiStrucdur- dential inventories
tures
able
equipment

5.5
1.1
2.2
2.6
3.3
2.2
1.8
2.4
3.3
7.4
8.1
9.5
9.2
10.0
11.9
12.2
13.6
13.9
15.2
18.2
18.9
17.5
18.0
19.2
19.4
20.5
20.8
22.7
27.4
30.5
30.7
32.9
37.1
39.2
40.9
44.5
51.4
57.0
56.3
60.1
66.7
81.0
99.5
113.9
138.5
143.3
126.1
147.6
170.0
150.3
145.1
140.2
137.6
127.6
121.5
124.7
130.5
135.0
147.0
151.3
157.2
166.1
169.7
170.4
173.7

5.5
1.4
3.9
5.2
6.4
4.1
3.7
5.0
7.3
9.9
15,3
17.3
15.7
17.8
19.9
19.7
21.5
20.8
23.9
26.3
28.6
24.9
28.3
29.7
28.9
32.1
34.4
38.7
45.8
53.0
53.7
58.5
65.2
66.1
68.7
78.5
94.5
103.6
106.6
119.9
147.4
178.0
203.3
208.9
230.7
223.4
230.2
280.2
305.8
231.7
224.1
220.5
217.3
210.4
221.5
232.6
256.3
259.1
276.5
284.5
300.9
293.5
304.5
308.1
316.9

4.0
.6
3.0
3.5
4.1
2.2
1.4
1.4
1.7
7.8
12.1
15.6
14.6
20.5
18.4
18.6
19.4
21.1
25.0
23.5
22.2
22.7
28.1
26.3
26.4
29.0
32.1
32.8
33.1
30.9
31.1
37.7
41.2
40.5
55.1
68.6
73.3
64.8
62.3
81.7
108.6
129.2
139.1
122.5
122.3
105.1
152.0
179.1
185.6
101.7
103.6
100.5
114.7
129.7
146.2
166.7
165.4
172.6
181.0
183.7
179.1
179.4
183.1
187.4
192.5

1.7
-1.6
.4
2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
_5
47
-3.1
6.8
10.2
3.1
.4
-1.6
5.7
4.6
1.4
-1.5
5.8
3.1
2.4
6.1
5.8
5.4
9.9
14.2
10.3
7.9
9.8
3.1
7.8
10.5
19.6
15.4
-5.6
16.0
21.3
28.6
13.0
-8.3
24.0
-24.5
-6.4
67.1
9.1
-24.1
-5.0
-9.0
-59.9
-42.7
-5.5
-2.8
25.5
92.1
68.9
68.3
39.0
18.5
15.5
.2
2.1

TABLE B-l.—Gross national product, 1929-85—Continued
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Percent change
from preceding
period

Government purchases of goods and
services

Net exports of goods and
services

Federal
Year or quarter
Net
Exports Imports
exports

Total
Total

National
defense

Nondefense

State
and
local

Final
sales

Gross
national
product

Final
sales

1.1
.4
1.2

7.1
2.4
4.6

5.9
2.1
3.4

8.9
8.3
13.6

1.5
2.2
5.2

il

19"

7.4
6.1
8.3

102.2
57.6
90.9

-4.2
7.0

-5.5
5.4

1.8
1.5
.2
-1.9
-1.7
-.5
7.8
11.9
7.0
6.5

5.4
6.1
5.0
4.6
5.5
7.4
15.2
20.3
17.5
16.4

3.7
4.7
4.8
6.5
7.2
7.9
7.3
8.3
10.6
9.8

14.2
25.0
59.9
88.9
97.1
83.0
29.1
26.4
32.6
39.0

6.1
17.0
52.0
81.4
89.4
74.8
19.2
13.6
17.3
21.1

2.3
13.8
49.4
79.8
87.5
73.7
16.4
10.0
11.3
13.9

3.9
3.2
2.6
1.6
2.0
1.1
2.8
3.6
6.0
7.2

8.1
8.0
7.8
7.5
7.6
8.2
9.9
12.8
15.3
18.0

98.3
121.0
157.2
193.4
212.3
214.4
206.0
235.7
256.9
263.4

10.0
25.0
26.6
21.2
9.7
.9
-.5
10.8
11.2
-.5

8.1
23.2
29.9
23.0
9.8
1.0
-3.9
14.4
9.0
2.5

2.2
4.5
3.2
1.3
2.6
3.0
5.3
7.3
3.3
1.5

14.5
19.8
19.2
18.1
18.8
21.1
25.2
28.2
24.4
25.0

12.3
15.3
16.0
16.8
16.3
18.1
19.9
20.9
21.1
23.5

38.8
60.4
75.8
82.8
76.0
75.3
79.7
87.3
95.4
97.9

19.1
38.6
52.7
57.9
48.4
44.9
46.4
50.5
54.5
54.6

14.3
33.8
46.2
49.0
41.6
39.0
40.7
44.6
46.3
46.4

4.7
4.8
6.5
8.9
6.8
6.0
5.7
5.9
8.3
8.2

19.8
21.8
23.1
24.8
27.7
30.3
33.3
36.9
40.8
43.3

281.4
323.2
348.6
371.1
374.1
400.2
423.6
449.6
458.3
490.0

10.7
15.7
5.5
5.7
.2
9.0
5.5
5.3
1.3
8.5

6.8
14.8
7.9
6.5
.8
7.0
5.8
6.1
1.9
6.9

1960
1961
1962
1963
1964
1965
1966
1967 .
1968
1969

5.9
7.2
6.9
8.2
10.9
9.7
7.5
7.4
5.5
5.6

29.9
31.1
33.1
35.7
40.5
42.9
46.6
49.5
54.8
60.4

24.0
23.9
26.2
27.5
29.6
33.2
39.1
42.1
49.3
54.7

100.6
108.4
118.2
123.8
130.0
138.6
158.6
179.7
197.7
207.3

54.4
58.2
64.6
65.7
66.4
68.7
80.4
92.7
100.1
100.0

45.3
47.9
52.1
51.5
50.4
51.0
62.0
73.4
79.1
78.9

9.2
10.2
12.6
14.2
16.0
17.7
18.3
19.3
21.0
21.1

46.1
50.2
53.5
58.1
63.5
69.9
78.2
87.0
97.6
107.2

512.3
531.4
568.5
601.1
644.4
695.2
757.8
806.1
884.8
954.1

3.9
3.6
7.6
5.6
7.1
8.5
9.5
5.8
9.3
8.0

4.6
3.7
7.0
5.7
7.2
7.9
9.0
6.4
9.8
7.8

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

8.5
6.3
3.2
16.8
16.3
31.1
18.8
1.9
4.1
18.8

68.9
72.4
81.4
114.1
151.5
161.3
177.7
191.6
227.5
291.2

60.5
66.1
78.2
97.3
135.2
130.3
158.9
189.7
223.4
272.5

218.2
232.4
250.0
266.5
299.1
335.0
356.9
387.3
425.2
467.8

98.8
99.8
105.8
106.4
116.2
129.2
136.3
151.1
161.8
178.0

76.8
74.1
77.4
77.5
82.6
89.6
93.4
100.9
108.9
121.9

22.0
25.8
28.4
28.9
33.6
39.6
42.9
50.3
52.9
56.1

119.4 1,012.3
132.5 1,094.9
1,202.3
144.2
160.1 1,339.7
182.9 1,457.4
205.9 1,604.1
220.6 1,766.8
236.2 1,969.2
263.4 2,221.0
289.9 2,495.2

5.4
8.6
10.0
12.1
8.3
8.5
11.5
11.7
13.0
11.5

6.1
8.2
9.8
11.4
8.8
10.1
10.1
11.5
12.8
12.3

32.1
33.9
26.3
-5.3
-59.2
-74.4

351.0
382.8
361.9
354.1
384.6
370.4

318.9
348.9
335.6
359.4
443.8
444.8

530.3
588.1
641.7
675.7
736.8
814.6

208.1
242.2
272.7
284.8
312.9
353.9

142.7
167.5
193.8
215.7
237.0
262.0

65.4
74.8
78.9
69.2
76.0
91.9

322.2
345.9
369.0
390.9
423.9
460.7

2,740.3
3,028.6
3,190.5
3,408.0
3,707.6
3,983.4

8.9
11.7
3.7
7.4
11.0
5.8

9.8
10.5
5.3
6.8
8.8
7.4

34.7
42.1
14.5
14.1

373.0
378.9
359.9
335.9

338.4
336.8
345.4
321.9

622.1
625.7
647.1
671.8

262.9
259.3
275.3
293.2

182.2
190.3
197.3
205.4

80.7
69.0
78.0
87.7

359.2
366.4
371.8
378.7

3,136.7
3,164.5
3,188.4
3,272.4

-.2
6.2
2.5
4.2

4.2
3.6
3.1
11.0

1983- 1
II
III.
IV

28.4
-2.6
-19.7
-27.4

344.6
345.0
358.0
368.8

316.2
347.5
377.6
396.2

669.3
673.8
681.1
678.6

287.1
287.0
286.0
279.2

209.4
214.5
215.8
222.9

77.8
72.5
70.2
56.2

382.2 3,311.4
386.9 3,370.6
395.1 3,440.3
399.4 3,509.5

7.2
12.3
8.9
11.8

4.9
7.3
8.5
8.3

1984:1
II
Ill
IV

-37.4
-65.3
-61.9
-72.2

375.4
382.3
391.4
389.5

412.8
447.6
453.3
461.7

696.5
735.1
747.3
768.4

285.6
314.8
318.5
332.9

228.3
235.8
236.2
247.5

57.3
79.0
82.2
85.4

410.9
420.3
428.8
435.5

3,584.4
3,688.7
3,743.9
3,813.5

17.0
9.1
6.0
4.3

8.8
12.2
6.1
7.6

1985:1

-42.3
-70.3
-87.8
-97.2

379.6
369.2
363.2
369.7

421.9
439.5
451.0
466.9

777.2
794.8
832.5
853.7

334.4
337.8
364.8
378.6

249.5
256.0
269.9
272.5

84.9
81.7
95.0
106.1

442.8
457.1
467.7
475.2

3,899.0
3,945.0
4,016.7
4,073.0

6.9
4.5
5.8
5.9

9.3
4.8
7.5
5.7

1929
1933
1939
1940. .
1941
1942
1943
1944
1945
1946
1947
1948
1949

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

1980
1981
1982
1983
1984
1985

.

p

1982- 1
II
Ill
IV

||
III

IV

Source.- Department of Commerce, Bureau of Economic Analysis.




253

TABLE B-2.—Gross national product in 1982 dollars. 1929-85
[Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Gross private domestic investment

Personal consumption
expenditures
Year or
quarter

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949 .
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981 .
1982
1983
1984
1985"
1982: 1
II
Ill
IV
1983- 1
II
Ill
IV
1984: I

II
Ill
IV
1985:1
II
Ill
IV

Gross
national
product

709.6
498.5
716.6
772.9
909.4
1,080.3
1,276.2
1,380.6
1,354.8
1,096.9
1,066.7
1,108.7
1,109.0
1,203.7
1,328.2
1,380.0
1,435.3
1,416.2
1,494.9
1,525.6
1,551.1
1,539.2
1,629.1
1,665.3
1,708.7
1,799.4
1,873.3
1,973.3
2,087.6
2,208.3
2,271.4
2,365.6
2,423.3
2,416.2
2,484.8
2,608.5
2,744.1
2,729.3
2,695.0
2,826.7
2,958.6
3,115.2
3,192.4
3,187.1
3,248.8
3,166.0
3,277.7
3,492.0
3,573.5
3,170.4
3,179.9
3,154.5
3,159.3
3,190.6
3,259.3
3,303.4
3,357.2
3,449.4
3,492.6
3,510.4
3,515.6
3,547.8
3,557.4
3,584.1
3,605.0

Fixed investment
Nonresidential

Total

471.4
378.7
480.5
502.6
531.1
527.6
539.9
557.1
592.7
655.0
666.6
681.8
695.4
733.2
748.7
771.4
802.5
822.7
873.8
899.8
919.7
932.9
979.4
1,005.1
1,025.2
1,069.0
1,108.4
1,170.6
1,236.4
1,298.9
1,337.7
1,405.9
1,456.7
1,492.0
1,538.8
1,621.9
1,689.6
1,674.0
1,711.9
1,803.9
1,883.8
1,961.0
2,004.4
2,000.4
2,024.2
2,050.7
2,145.9
2,239.9
2,312.6
2,031.2
2,041.0
2,051.8
2,078.7
2,096.4
2,137.2
2,161.8
2,188.1
2,210.9
2,243.0
2,243.4
2,262.0
2,288.6
2,303.5
2,329.6
2,328.7

Durable
goods

40.3
20.7
35.7
40.6
46.2
31.3
28.1
26.3
28.7
47.8
56.5
61.7
67.8
80.7
74.7
73.0
80.2
81.5
96.9
92.8
92.4
86.9
96.9
98.0
93.6
103.0
111.8
120.8
134.6
144.4
146.2
161.6
167.8
162.5
178.3
200.4
220.3
204.9
205.6
232.3
253.9
267.4
266.5
245.9
250.8
252.7
283.6
318.6
344.7
247.7
249.1
251.8
262.0
264.9
280.8
288.5
300.0
311.0
317.7
318.0
327.6
335.0
340.3
359.3
344.3

Nondurable Services
goods

211.4
181.8
248.0
259.4
275.6
279.1
284.7
297.9
323.5
344.2
337.4
338.7
342.3
352.8
362.9
376.6
388.2
393.8
413.2
426.9
434.7
439.9
455.8
463.3
470.1
484.2
494.3
517.5
543.2
569.3
579.2
602.4
617.2
632.5
640.3
665.5
683.2
666.1
676.5
708.8
731.4
753.7
766.6
762.6
764.4
771.0
800.7
828.0
847.4
764.2
768.3
772.8
778.6
787.0
796.8
806.8
812.0
819.4
832.8
831.2
828.6
839.9
846.7
849.8
853.0

219.7
176.2
196.7
202.7
209.3
217.2
227.2
232.9
240.5
262.9
272.6
281.4
285.3
299.8
311.1
321.9
334.1
347.4
363.6
380.1
392.6
406.1
426.7
443.9
461.4
481.8
502.3
532.3
558.5
585.3
612.3
641.8
671.7
697.0
720.2
756.0
786.1
803.1
829.8
862.8
898.5
939.8
971.2
991.9
1,009.0
1,027.0
1,061.7
1,093.3
1,120.5
1,019.2
1,023.5
1,027.2
1,038.1
1,044.5
1,059.7
1,066.5
1,076.1
1,080.5
1,092.6
1,094.3
1,105.8
1,113.7
1,116.5
1,120.4
1,131.3

Total
Total

139.2
22.7
86.0
111.8
138.8
76.7
50.4
56.4
76.5
178.1
177.9
208.2
168.8
234.9
235.2
211.8
216.6
212.6
259.8
257.8
243.4
221.4
270.3
260.5
259.1
288.6
307.1
325.9
367.0
390.5
374.4
391.8
410.3
381.5
419.3
465.4
520.8
481.3
383.3
453.5
521.3
576.9
575.2
509.3
545.5
447.3
503.4
661 3
650.6
464.2
467.5
448.6
408.8
422.5
489.0
526.3
575.9
649.0
662.9
673.3
659.9
639.6
655.6
645.0
662.2

See next page for continuation of table.




254

128.4
33.5
82.1
97.4
111.1
64.7
49.7
61.6
84.9
150.2
178.9
196.0
178.4
210.8
204.3
201.8
213.8
217.3
243.5
244.9
240.4
224.8
253.8
252.7
251.8
272.4
290.5
310.2
341.8
353.7
345.6
370.7
385.1
373.3
399.7
443.7
480.8
448.0
396.1
431.4
492.2
540.2
560.2
516.2
521.7
471.8
508.9
598.6
643.3
488.2
473.0
458.1
468.1
464.7
492.7
524.9
553.2
565.4
596.8
608.4
623.8
623.8
640.5
646.8
662.0

Total

Structures

54.7
93.0
14.3
25.8
25.2
53.2
65.0
28.5
33.4
76.6
47.4
20.9
39.4
15.6
20.4
52.6
74.2
27.0
105.5
50.9
121.7
47.5
127.4
50.5
49.3
114.8
124.0
52.8
131.7
56.5
130.6
57.3
140.1
62.3
64.9
137.5
69.4
151.0
160.4
75.5
75.2
161.1
70.6
143.9
71.9
153.6
159.4
76.1
77.7
158.2
170.2
81.3
81.6
176.6
87.9
194.9
227.6 101.8
250.4
108.0
105.4
245.0
108.0
254.5
269.7
112.9
111.1
264.0
258.4
107.3
109.5
277.0
317.3 117.7
317.8 115.2
102.8
281.2
104.4
290.6
108.3
324.0
362.1 119.3
130.6
389.4
136.2
379.2
148.8
395.2
143.3
366.7
360.1 129.7
148.7
430.3
471.8 165.7
151.0
387.0
144.7
369.5
139.3
358.0
352.3 - 138.3
337.5 129.3
125.4
346.9
128.6
363.4
135.4
392.9
138.8
398.8
148.5
426.8
151.6
437.6
156.0
457.8
163.2
457.2
165.3
470.9
473.7
165.8
168.4
485.4

Producers'
durable
equipment

38.4
11.5
28.0
36.5
43.2
26.5
23.8
32.1
47.2
54.7
74.2
76.9
65.5
71.2
75.2
73.3
77.7
72.7
81.7
84.9
85.9
73.3
81.7
83.3
80.5
88.9
95.1
107.0
125.8
142.4
139.6
146.5
156.8
152.9
151.0
167.5
199.6
202.7
178.4
186.2
215.7
242.8
258.8
243.0
246.4
223.4
230.5
281.6
306.1
235.9
224.9
218.7
214.1
208.2
221.4
234.7
257.5
260.0
278.3
286.0
301.9
293.9
305.6
307.9
317.0

Residential

35.4
7.7
28.9
32.5
34.4
17.3
10.4
9.0
10.7
44.7
57.2
68.6
63.6
86.7
72.6
71.2
73.8
79.8
92.4
84.4
79.3
81.0
100.2
93.3
93.6
102.2
113.9
115.3
114.2
103.2
100.6
116.2
115.4
109.3
141.3
166.6
163.4
130.2
114.9
140.8
168.1
178.0
170.8
137.0
126.5
105.1
148.7
168.3
171.5
101.2
103.4
100.1
115.8
127.2
145.8
161.6
160.4
166.6
170.0
170.8
166.0
166.7
169.6
173.1
176.7

Change in
business
inventories

10.8
-10.7
3.9
14.4
27.8
12.0
.7
-5.2
-8.4
27.9
-1.0
12.3
-9.7
24.2
30.8
10.0
2.8
-4.8
16.3
12.9
3.0
-3.4
16.5
7.7
7.3
16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1
8.2
19.6
21.8
40.0
33.3
-12.8
22.1
29.1
36.8
15.0
-6.9
23.9
-24.5
-5.5
62.7
7.3
-24.0
-5.4
-9.4
-59.3
-42.2
-3.7
1.4
22.6
83.6
66.0
64.9
36.1
15.8
15.1
-1.8
.1

TABLE B-2.—Gross national product in 1982 dollars, 1929-85—Continued
[Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Net exports of goods and
services
Year or quarter

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955 .
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971.
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984 . .
1985 '

,

1982:1

II
Ill
IV
1983: 1
II
I!)
IV
1984- 1
II
Ill
IV
1985:1
||

III
IV

Federal
Net
exports Exports Imports

4.7
-1.4
6.1
8.2
3.9
-7.7
-23.0
-23.8
-18.9
27.0
42.4
19.2
18.8
4.7
14.6
6.9
-2.7
2.5
.0
4.3
7.0
-10.3
-18.2
-4.0
-2.7
-75
-1.9
5.9
-27
-13.7
-16.9
-29.7
-34.9
-30.0
-39.8
-49.4
-31.5
.8
18.9
-11.0
-35.5
-26.8
3.6
57.0
49.4
26.3
-19.4
-85.0
-105.1
40.4
41.7
11.7
11.7
22.5
-15.0
-36.2
-48.9
-60.6
-90.4
-88.7
-100.2
-71.8
-101.1
-119.8
-127.6

42.1
22.7
36.2
40.0
42.0
29.1
25.1
27.3
35.2
69.0
82.3
66.2
65.0
59.2
72.0
70.1
66.9
70.0
76.9
87.9
94.9
82.4
83.7
98.4
100.7
1069
114.7
128.8
1320
138.4
143,6
155.7
165.0
178.3
179.2
195.2
242.3
269.1
259.7
274.4
281.6
312.6
356.8
388.9
392.7
361.9
349.4
370.9
360.2
374.1
378.5
359.5
336.0
342.8
342.4
353.1
359.1
362.7
366.6
376.9
377.3
368.7
358.2
353.5
360.4

Total

37.4
24.2
30.1
31.7
38.2
36.9
48.0
51.1
54.1
42.0
39.9
47.1
46.2
54.6
57.4
63.3
69.7
67.5
76.9
83.6
87.9
92.8
101.9
102.4
103.3
1144
116.6
122.8
1347
152.1
160.5
185.3
199.9
208.3
218.9
244.6
273.8
268.4
240.8
285.4
317.1
339.4
353.2
332.0
343.4
335.6
368.8
455.9
465.3
333.7
336.8
347.8
324.3
320.3
357.4
389.3
408.0
423.3
457.0
465.6
477.5
440.5
459.3
473.3
488.0

94.2
98.5
144.1
150.2
235.6
483.7
708.9
790.8
704.5
236.9
179.8
199.5
226.0
230.8
329.7
389.9
419.0
378.4
361.3
363.7
381.1
395.3
397.7
403.7
427.1
4494
459.8
470.8
4870
532.6
576.2
597.6
591.2
572.6
566.5
570.7
565.3
573.2
580.9
580.3
589.1
604.1
609.1
620.5
629.7
641.7
647.8
675.9
715.4
634.6
629.7
642.5
660.1
649.1
648.2
651.5
642.2
650.1
677.1
682.4
693.9
691.4
699.4
729.2
741.7

Source: Department of Commerce, Bureau of Economic Analysis.




Percent change
from preceding
period

Government purchases of goods and
services

255

Total

18.3
27.0
53.8
63.6
153.0
407.1
638.1
722.5
634.0
159.3
91.9
106.1
119.5
116.7
214.4
272.7
295.9
245.0
217.9
215.4
224.1
224.9
221.5
220.6
232.9
2493
247.8
244.2
2444
273.8
304.4
309.6
295.6
268.3
250.6
246.0
230.0
226.4
226.3
224.2
231.8
233.7
236.2
246.9
259.6
272.7
275.5
292.5
321.3
267.0
260.5
273.8
289.5
279.2
277.6
277.4
267.9
271.4
294.8
296.7
307.3
304.3
305.9
331.1
343.7

National
^defense

185.3
171.0
163.3
161.1
157.5
159.2
160.7
164.3
171.2
180.3
193.8
207.3
220.3
236.0
185.4
191.6
197.0
201.4
203.8
206.9
206.5
211.8
214.1
219.6
219.6
227.9
226.7
231.5
243.3
242.6

Nondefense

60.7
59.1
63.1
65.2
66.8
72.7
73.0
71.9
75.7
79.3
78.9
68.3
72.3
85.2
81.6
68.9
76.9
88.2
75.4
70.6
70.9
56.1
57.3
75.2
77.1
79.5
77.6
74.3
87.9
101.1

State
and
local

75.9
71.5
90.3
86.6
82.6
76.7
70.8
68.3
70.5
77.6
87.9
93.4
106.5
114.2
115.4
117.3
123.1
133.4
143.4
148.3
157.0
170.4
176.2
183.1
194.2
200.1
212.0
226.6
242.5
258.8
271.8
288.0
295.6
304.3
315.9
324.7
335.3
346.8
354.6
356.0
357.2
370.4
373.0
373.6
370.1
369.0
372.2
383.3
394.2
367.7
369.2
368.6
370.6
369.9
370.6
374.1
374.3
378.6
382.4
385.7
386.6
387.1
393.6
398.1
398.0

Final
sales

Gross
national
product

Final
sales

698.7
509.2 ""-'2l ""-Ti
712.7
7.9
6.3
6.4
7.8
758.5
16.2
17.7
881.6
21.2
1,068.3
18.8
19.4
18.1
1,275.5
1,385.7
8.2
8.6
1,363.3
-1.9 -1.6
1,069.0 -19.0 -21.6
1,067.7
-2.8
-.1
2.7
1,096.4
3.9
1,118.7
.0
2.0
5.4
8.5
1,179.5
10.0
1,297.4
10.3
5.6
3.9
1,370.0
4.6
4.0
1,432.5
-.8
-1.3
1,421.0
4.1
5.6
1,478.6
2.3
1,512.7
2.1
1.7
2.3
1,548.1
-.4
-.8
1,542.6
5.8
4.5
1,612.6
2.8
2.2
1,657.5
2.6
2.6
1,701.4
4.8
5.3
1,783.3
4.1
4.1
1,856.7
5.4
5.3
1,957.6
5.4
2,062.4
5.8
5.3
2,171.5
5.8
3.3
2.9
2,242.6
4.1
4.5
2,344.6
2.3
2.4
2,398.1
.4
2,407.9
-.3
2.4
2.8
2,465.2
4.9
5.0
2,586.8
4.5
2,704.1
5.2
-.3
2,696.0
-.5
.4
-1.3
2,707.8
4.9
3.6
2,804.6
4.7
4.5
2,929.5
3,078.4
5.3
5.1
3.2
3,177.4
2.5
-.2
.5
3,194.0
1.0
1.9
3,225.0
-2.5 -1.1
3,190.5
2.9
3.5
3,283.1
4.5
6.5
3,429.3
4.0
3,566.2
2.3
3,194.4
-5.9 -1.7
1.2 -1.1
3,185.3
-3.2 -2.6
3,164.0
7.1
.6
3,218.6
1.8
3,232.8
4.0
3.8
8.9
3,263.0
4.9
3,302.1
5.5
6.7
4.0
3,334.6
11.4
3.8
3,365.7
7.4
5.1
3,426.6
2.2
2.1
3,445.5
4.0
.6
3,479.5
3.7
6.2
3,532.0
1.2
1.1
3,542.3
5.0
3.0
3,585.8
2.1
2.4
3,604.8

TABLE B-3.—Implicit price deflators for gross national product, 1929-85
[Index numbers, 1982 = 100, except as noted; quarterly data seasonally adjusted]
Gross private domestic investment l

Personal consumption
expenditures
Gross
national
product

Year or quarter

1929
1933
1939 . . .
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952.. .
1953
1954
1955 .
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974 .
. .
1975
1976
1977
1978
1979
1980
1981
1982.. .
1983
1984
1985 »
1982:1

II
III
IV
1983- !
11
Ill
IV
1984: 1
II
Hi
IV
1985: I

II
Ill
IV

. .

14.6
11.2
12.7
13.0
13.8
14.7
15.1
15.3
15.7
19.4
22.1
23.6
23.5
23.9
25.1
25.5
25.9
26.3
27.2
28.1
29.1
29.7
30.4
30.9
31.2
31.9
32.4
32.9
33.8
35.0
35.9
37.7
39.8
42.0
44.4
46.5
49.5
54.0
59.3
63.1
67.3
72.2
78.6
85.7
94.0
100.0
103.8
108.1
111.7
98.2
99.4
100.8
101.7
102.4
103.2
104.1
105.3
106.6
107.6
108.6
109.6
110.4
111.3
112.1
113.0

Nonresidential
Total

16.4
12.1
13.9
14.1
15.2
16.8
18.4
19.4
20.2
22.0
24.3
25.7
25.6
26.2
27.8
28.4
29.0
29.1
29.5
30.1
31.0
31.6
32.3
32.9
33.3
33.9
34.4
35.0
35.6
36.7
37.6
39.3
41.0
42.9
44.9
46.7
49.6
54.8
59.2
62.6
66.7
71.6
78.2
86.6
94.6
100.0
103.9
108.2
111.6
98.3
99.2
100.7
101.8
102.4
103.4
104.3
105.4
106.7
107.6
108.7
109.6
110.3
111.3
111.9
113.1

Durable
goods

22.9
16.8
18.7
19.2
20.9
22.0
23.3
25.4
27.7
33.0
36.1
37.1
36.9
38.1
40.0
40.1
40.8
39.4
40.1
41.2
42.9
42.8
44.2
44.4
44.8
45.7
46.3
47.0
47.1
47.5
48.3
50.1
51.4
52.7
54.7
55.5
56.6
60.4
65.9
69.5
72.7
76.9
82.1
89.2
95.7
100.0
102.1
103.9
104.7
98.9
99.9
100.4
100.7
101.3
101.6
102.4
103.1
103.4
103.9
104.1
104.2
104.9
104.8
104.6
104.3

Nondurable Services
goods

17.8
12.2
14.2
14.3
15.5
18.2
20.6
21.6
22.2
24.0
26.9
28.5
27.7
27.8
30.1
30.5
30.4
30.4
30.2
30.6
31.5
32.2
32.6
33.1
33.5
33.8
34.3
34.7
35.3
36.6
37.5
39.0
40.9
42.7
44.2
45.8
49.7
57.2
61.5
63.8
67.1
71.9
80.0
89.4
96.9
100.0
102.0
105.4
107.7
99.2
99.3
100.5
101.0
100.7
101.9
102.4
103.1
104.5
104.8
105.5
106.6
106.7
107.5
107.6
109.0

See next page for continuation of table.




Fixed investment

256

13.8
11.4
12.8
12.9
13.5
14.3
15.1
16.0
16.5
17.3
18.6
19.7
20.5
21.1
22.2
23.3
24.6
25.3
25.9
26.7
27.6
28.5
29.3
30.2
30.7
31.4
32.0
32.5
33.2
34.2
35.3
36.8
38.6
40.7
43.1
45.1
47.4
51.3
55.6
59.8
64.8
69.8
75.6
83.9
92.6
100.0
105.7
111.5
116.8
97.4
98.9
100.9
102.7
103.9
105.0
106.2
107.8
109.2
110.8
112.5
113.5
114.7
116.1
117.4
118.9

Total

11.6
9.4
11.1
11.5
12.4
13.2
13.8
14.2
14.5
16.7
19.8
21.7
22.2
22.9
24.6
25.0
25.5
25.6
26.3
27.8
29.0
28.9
29.3
29.7
29.7
29.9
30.1
30.4
31.1
32.4
33.4
34.8
37.2
39.0
41.2
43.2
45.6
50.3
56.9
60.7
65.6
71.9
78.9
86.3
94.2
100.0
99.9
101.4
102.8
99.1
100.0
100.7
100.3
100.6
99.3
99.8
99.8
100.2
101.3
101.8
102.1
102.4
102.6
103.0
103.2

Total

11.8
9.8
11.5
11.9
12.7
13.3
13.8
14.0
14.3
16.4
19.3
21.0
21.7
22.4
24.2
24.4
25.1
25.2
25.8
27.7
29.5
29.5
30.2
30.6
30.5
30.9
31.3
31.5
32.1
33.3
34.4
35.9
37.9
39.9
42.4
44.4
46.0
50.5
57.9
61.9
66.1
71.5
77.8
85,1
93.4
100.0
98.9
99.4
100.8
98.7
99.9
100.8
100.7
100.1
98.9
98.3
98.4
98.8
99.2
99.6
100.1
100.5
100.7
101.0
101.1

Structures

10.0
7.6
8.8
9.0
9.7
10.7
11.4
11.6
12.3
14.5
17.1
18.9
18.6
18.8
21.1
21.3
21.8
21.4
21.8
24.1
25.2
24.8
25.0
25.2
25.0
25.2
25.5
25.9
26.9
28.2
29.1
30.4
32.9
35.2
38.1
40.6
43.7
49.5
54.7
57.6
61.6
67.9
76.2
83.6
93.1
100.0
97.2
99.3
102.6
99.5
100.3
100.7
99.5
98.7
96.9
96.9
96.4
97.2
98.9
99.8
100.8
101.8
102.7
102.8
103.1

Producers'
durable
equipment
14.3
12.5
13.9
14.2
14.9
15.3
15.4
15.6
15.4
18.2
20.7
22.5
24.0
25.0
26.4
26.9
27.7
28.6
29.3
31.0
33.3
34.0
34.7
35.6
35.9
36.1
36.2
36.2
36.4
37.2
38.4
39.9
41.5
43.2
45.5
46.8
47.3
51.1
59.7
64.4
68.3
73.3
78.6
86.0
93.7
100.0
99.9
99.5
99.9
98.2
99.7
100.8
101.5
101.1
100.0
99.1
99.5
99.6
99.3
99.5
99.7
99.8
99.6
100.1
100.0

Residential

11.2
8.1
10.5
10.9
11.9
12.8
13.8
14.9
15.8
17.5
21.1
22.8
23.0
23.7
25.4
26.1
26.3
26.4
27.0
27.9
28.0
28.0
28.0
28.2
28.2
28.3
28.2
28,5
29.0
29.9
30.9
32.5
35.6
37.0
39.0
41.2
44.8
49.8
54.2
58.0
64.6
72.6
81.4
89.4
96.6
100.0
102.2
106.4
108.2
100.5
100.2
100.4
99.1
102.0
100.3
103.2
103.1
103.6
106.5
107.6
107.9
107.7
107.9
108.2
109.0

TABLE B-3.—Implicit price deflators for gross national product, 1929-85—Continued
[Index numbers, 1982 = 100, except as noted; quarterly data seasonally adjusted]
Exports and
imports of goods
and services 1
Year or quarter
Exports

1929
1933
1939
1940 . . . .
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961 . . .
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971 . ..
1972
1973
1974
1975
1976
1977
1978
1979
1980 . . . .
1981
1982
1983
1984
1985"
1982- 1
II,
Ill
IV
1983:1
II
III
IV
1984- 1
II
Ill
IV
1985:1
||
III
IV"

Imports

16.8
10.7
12.7
13.6
14.6
17.2
18.5
20.2
21.1
22.0
24.6
26.5
25.2
24.4
27.4
27.4
27.0
26.9
27.5
28.6
29.7
29.6
29.9
30.4
30.9
31.0
31.1
31.4
32.5
33.7
34.5
35.2
36.6
38.7
40.4
41.7
47.1
56.3
62.1
64.8
68.0
72.8
81.6
90.2
97.5
100.0
101.4
103.7
102.8
99.7
100.1
100.1
100.0
100.5
100.8
101.5
102.7
103.5
104.3
103.8
103.2
102.9
103.1
102.7
102.6

15.9
8.6
11.3
11.6
12.3
13.1
13.6
14.1
14.6
17.4
20.9
22.4
21.2
22.5
26.7
25.3
24.1
24.1
23.5
23.8
23.8
22.7
23.1
23.4
23.1
22.9
23.6
24.1
24.7
25.7
26.2
26.6
27.4
29.0
30.2
32.0
35.5
50.4
54.1
55.7
59.8
65.8
77.1
96.0
101.6
100.0
97.5
97.4
95.6
101.4
100.0
99.3
99.3
98.7
97.2
97.0
97.1
97.5
98.0
97.3
96.7
95.8
95.7
95.3
95.7

Government purchases of goods and services

Percent change
from preceding
period 2

Federal
Total

9.4
8.4
9.4
9.5
10.6
12.4
12.5
12.3
11.8
12.3
14.7
16.3
17.3
16.8
18.3
19.4
19.8
20.1
20.8
21.9
22.9
24.1
24.6
24.9
25.4
26.3
26.9
27.6
28.5
29.8
31.2
33.1
35.1
38.1
41.0
43.8
47.1
52.2
57.7
61.5
65.8
70.4
76.8
85.5
93.4
100.0
104.3
109.0
1139
98.0
99.4
100.7
101.8
103.1
104.0
104.5
105.7
107.1
108.6
109.5
110.7
112.4
113.6
114.2
115.1

Total

8.1
8.0
9.7
9.7
11.1
12.8
12.8
12.4
11.8
12.0
14.8
16.3
17.6
16.3
18.0
19.3
19.6
19.7
20.6
21.5
22.5
24.2
24.6
24.7
25.0
25.9
26.5
27.2
28.1
29.4
30.5
32.3
33.8
36.8
39.8
43.0
46.2
51.3
57.1
60.8
65.2
69.2
75.4
84.3
93.3
100.0
103.4
107.0
110.2
98.5
99.6
100.5
101.3
102.8
103.4
103.1
104.2
105.2
106.8
107.3
108.3
109.9
110.4
110.2
110.1

National Nondefense defense

41.8
45.3
50.6
55.6
59.3
63.4
67.8
74.2
83.4
92.9
100.0
104.0
107.6
111.0
98.3
99.4
100.2
102.0
102.7
103.7
104.5
105.3
106.6
107.4
107.6
108.6
110.1
110.6
110.9
112.3

46.8
48.9
53.3
60.6
64.3
69.1
72.4
78.0
86.4
94.3
100.0
101.3
105.1
107.9
99.0
100.2
101.5
99.5
103.1
102.6
99.0
100.1
99.9
105.0
106.7
107.5
109.4
110.0
108.1
105.0

State
and
local

9.7
8.6
9.2
9.3
9.7
10.2
10.6
11.2
11.6
12.8
14.5
16.3
16.9
17.3
18.9
19.7
20.2
20.7
21.2
22.4
23.5
24.0
24.6
25.2
25.9
26.7
27.4
28.0
28.8
30.2
32.0
33.9
36.3
39.2
41.9
44.4
47.8
52.8
58.1
62.0
66.1
71.1
77.7
86.2
93.4
100.0
105.0
110.6
116.9
97.7
99.2
100.9
102.2
103.3
104.4
105.6
106.7
108.5
109.9
111.2
112.7
114.4
116.1
117.5
119.4

Final
sales

14.6
11.3
12.8
13.0
13.7
14.7
15.2
15.3
15.7
19.3
22.1
23.4
23.5
23.9
24.9
25.4
25.9
26.3
27.1
28.0
29.0
29.7
30.4
30.9
31.2
31.9
32.4
32.9
33.7
34.9
35.9
37.7
39.8
42.0
44.4
46.5
49.5
54.1
59.2
63.0
67.2
72.1
78.5
85.8
93.9
100.0
103.8
108.1
111.7
98.2
99.3
100.8
101.7
102.4
103.3
104.2
105.2
106.5
107.6
108.7
109.6
110.4
111.4
112.0
113.0

GNP
implicit
price
deflator

-2.2
-.8
2.0
6.2
6.6
2.6
1.4
2.9
22.9
13.9
7.0
-.5
2.0
4.8
1.5
1.6
1.6
3.2
3.4
3.6
2.1
2.4
1.6
1.0
2.2
1.6
1.5
2.7
3.6
2.6
5.0
5.6
5.5
5.7
4.7
6.5
9.1
9.8
6.4
6.7
7.3
8.9
9.0
9.7
6.4
3.8
4.1
3.3
6.4
5.0
5.8
3.6
2.8
3.2
3.5
4.7
5.0
3.8
3.8
3.7
3.0
3.3
2.9
3.3

Final
sales
implicit
price
deflator

-2.5
-.9
1.5
6.0
7.2
3.0
1.1
2.6
22.5
14.6
6.1
.5
1.3
4.4
2.1
1.8
1.6
2.8
3.4
3.7
2.3
2.4
1.6
1.0
2.2
1.6
1.5
2.4
3.6
2.9
5.0
5.6
5.5
5.7
4.7
6.5
9.3
9.4
6.4
6.7
7.3
8.9
9.3
9.4
6.5
4.0
4.2
3.3
5.9
4.6
6.2
3.6
2.8
3.6
3.5
3.9
5.0
4.2
4.2
3.4
3.0
3.7
2.2
'3.6

1
Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports of
goods and services.
2
Quarterly changes are at annual rates.
Source: Department of Commerce, Bureau of Economic Analysis.




257

TABLE B-4.—Fixed-weighted price indexes for gross national product, 1982 weights, 1959-85
[Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted]
Gross private domestic
investment1
Personal
Gross
connational sumption
product expenditures

Year or quarter

Fixed investment

Total

Exports and
imports of goods
and services1

Nonresi- Residen- Exports
tial
dential

Imports

Government purchases of
goods and services
Federal

Total

Total

National Nondefense defense

State
and
local

Percent
change
from
preceding,
period,
gross
national
product
fixedweighted price
index2

1959

37.6

35.2

58.0

65.9

30.2

32.8

27.0

25.8

26.9

249

1960
1961
1962
1963
1964

38.1
38.4
38.7
39.1
396

35.7
36.1
36.4
36.8
372

58.1
58.0
58.0
58.0
582

66.1
66.0
66.1
66.2
664

30.3
30.2
29.9
29.5
296

33.5
34.0
34.1
34.4
348

27.3
27.0
26.7
27.1
111

26.4
27.0
27.8
28.5
293

27.3
27.8
28.4
29.3
301

25.7
26.4
27.3
27.9
28.5

1.3
.7
.8
1.0
1.2

1965
1966
1967
1968
1969

40.1
41.1
42.1
43.7
45.6

37.7
38.5
39.5
41.0
42.8

58.5
59.3
60.2
61.4
63.2

66.7
67.4
68.4
69.5
71.0

30.0
30.8
31.6
33.1
36.0

35.9
37.1
38.2
39.3
40.9

28.1
29.1
29.5
30.1
31.2

30.0
31.3
32.7
34.5
36.6

30.8
32.0
32.8
34.5
36.4

29.3
30.6
32.5
34.4
36.7

1.4
2.5
2.6
3.7
4.4

1970
1971
1972
1973
1974

47.2
48.8
50.3
53.1
57.2

44.7
46.6
48.3
51.0
55.8

61.5
60.6
59.8
61.8
64.4

68.4
66.6
65.0
66.6
68.5

37.4
39.5
41.6
45.1
50.1

43.3
45.3
46.5
50.8
59.8

33.4
35.6
37.8
42.4
54.5

39.6
42.3
45.2
48.8
53.5

39.5
42.4
46.0
50.1
54.8

44.3
47.4
51.4

50.5
56.9
63.3

39.6
42.2
44.6
47.8
52.6

3.6
3.5
2.9
5.5
7.8

1975
1976
1977
1978
1979

61.8
65.1
68.4
72.7
78.8

60.1
63.5
67.5
72.2
78.6

69.0
71.4
72.6
74.5
80.3

73.1
75.2
74.9
75.0
80.1

54.6
58.4
64.8
72.5
81.2

65.4
67.4
70.3
74.5
82.9

59.7
61.3
66.1
71.3
80.9

58.6
62.2
66.0
70.9
77.3

59.4
62.4
65.8
70.6
76.8

56.5
59.7
63.5
68.6
75.1

66.6
69.0
71.5
75.5
81.0

57.9
62.0
66.2
71.2
77.7

8.0
5.3
5.1
6.2
8.5

1980
1981
1982
1983
1984

86.1
94.1
100.0
104.0
108.5

86.8
94.6
100.0
104.0
108.5

86.9
94.5
100.0
100.3
102.0

86.1
93.9
100.0
99.7
100.7

89.4
96.6
100.0
102.3
106.4

90.5
97.7
100.0
101.6
104.6

96.3
101.5
100.0
97.7
97.6

86.3
94.1
100.0
104.7
109.6

86.4
94.9
100.0
104.2
107.9

84.7
93.8
100.0
103.8
107.6

90.6
97.4
100.0
105.0
108.6

86.2
93.5
100.0
105.1
110.8

9.3
9.3
6.2
4.0
4.3

1985 P

112.4

112.2

103.9

102.7

108.2

104.4

95.8

114.5

110.9

111,3

109.9

117.3

3.6

1982: I

98.2
99.4
100.7
101.7

98.3
99.1
100.7
101.8

99.2
100.0
100.6
100.2

98.8
100.0
100.7
100.5

100.5
100.2
100.4
99.1

99.7
100.1
100.1
100.0

101.4
100.0
99.3
99.3

98.1
99.4
100.5
102.0

98.7
99.6
100.0
101.7

98.5
99.6
100.1
101.8

99,2
99.7
99.7
101.4

97.7
99.2
100.9
102.2

5.7
4.7
5.5
4.0

1983- 1
II
Ill
IV

102.5
103.5
104.5
105.6

102.4
103.5
104.5
105.6

100.6
99.7
100.4
100.4

100.2
99.5
99.6
99.5

102.0
100.4
103.2
103.3

100.6
101.0
101.8
103.2

98.7
97.4
97.5
97.5

103.1
104.2
105.2
106.3

102.7
103.8
104.5
105.6

102.4
103.7
104.1
105.1

103.3
104.1
105.7
106.9

103.3
104.4
105.7
106.8

3.2
3.8
4.0
4.3

1984: I

106.9
108.1
109.1
110.0

106.9
107.9
109.0
110.0

100.6
101.7
102.5
103.0

99.7
100.4
101.1
101.6

103.8
106.4
107.5
107.8

104.0
105.1
104.8
104.4

97.7
98.1
97.6
97.1

108.0
109.3
109.9
111.0

107.2
108.1
107.8
108.4

106.7
107.8
107.5
108.3

108.3
108.8
108.7
108.5

108.6
110.1
111.4
112.9

5.1
4.3
3.7
3.5

1985:1
||

110.9
111.9
112.7
113.9

110.7
111.8
112.5
113.8

103.3
103.6
104.1
104.6

102.0
102.4
102.9
103.3

107.7
107.9
108.2
108.9

104.4
104.6
104.2
104.3

95.9
95.9
95.5
95.9

112.7
113.8
114.8
116.6

109.9
110.1
110.6
112.3

110.2
110.5
111.1
113.1

109.1
109.2
109.1
110.2

114.7
116.5
117.9
119.9

3.5
-3.6
2.7
4.5

II
Ill . .
IV

||
Ill
IV
III
IV

.

1
Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports of
goods and services.
2
Quarterly changes are at annual rates.
Source-. Department of Commerce, Bureau of Economic Analysis.




258

TABLE B-5.—Changes in gross national product, personal consumption expenditures, and related price
measures, 1933-85
[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]
Personal consumption expenditures

Gross national product

Year or quarter

Current
dollars

Constant
(1982)
dollars

Implicit
price
deflator

Chain
price
index

Fixedweighted price
index
(1982
weights)

Current
dollars

Constant
(1982)
dollars

Implicit
price
deflator

Chain
price
index

Fixedweighted price
index
(1982
weights)

-42

21

-22

-57

-16

-42

7.0

7.9

-.8

4.6

5.1

-.5

10.0
25.0
26.6
21.2
9.7
.9
-.5
10.8
11.2
-.5

7.8
17.7
18.8
18.1
8.2
-1.9
-19.0
-2.8
3.9
.0

2.0
6.2
6.6
2.6
1.4
2.9
22.9
13.9
7.0
_ 5

6.0
13.8
9.7
12.2
8.8
10.5
20.4
12.5
8.0
1.9

4.6
5.7
7
2.3
3.2
6.4
10.5
1.8
2.3
2.0

1.3
7.7
10.4
9.6
5.4
3.9
8.9
10.6
5.6
-.1

1950 .
1951
1952
1953
1954
1955
1956
1957
1958
1959

10.7
15.7
5.5
5.7
.2
9.0
5.5
5.3
1.3
8.5

8.5
10.3
3.9
4.0
-1.3
5.6
2.1
1.7
8
5.8

2.0
4.8
1.5
1.6
1.6
3.2
3.4
3.6
2.1
2.4

7.7
8.3
5.3
6.2
3.1
7.5
4.9
5.4
3.3
7.4

5.4
2.1
3.0
4.0
2.5
6.2
3.0
2.2
1.4
5.0

2.2
6.1
2.2
2.1
.6
1.3
1.9
3.2
1.8
2.2

I960
1961
1962
1963.. .
1964
1965
1966
1967
1968
1969

3.9
3.6
7.6
5.6
7.1
8.5
9.5
5.8
9.3
8.0

2.2
2.6
5.3
4.1
5.3
5.8
5.8
2.9
4.1
2.4

1.6
1.0
2.2
1.6
1.5
2.7
3.6
2.6
5.0
5.6

1.5
2.8
1.3
1.4
1.5
1.8
3.1
2.9
4.3
5.1

1.3
.7
.8
1.0
1.2
1.4
2.5
2.6
3.7
4.4

4.6
3.1
6.1
5.5
7.2
7.7
8.3
5.5
9.7
8.2

2.6
2.0
4.3
3.7
5.6
5.6
5.1
3.0
5.1
3.6

1.9
1.2
1.8
1.5
1.7
1.7
3.1
2.5
4.5
4.3

1.6
1.1
1.1
1.4
1.2
1.5
2.7
2.5
4.0
4.4

1.5
.9
.9
1.1
1.2
1.2
2.2
2.5
3.8
4.3

5.4
8.6
10.0
12.1
8.3
8.5
11.5
11.7
13.0
11.5

-.3
2.8
5.0
5.2
-.5
-1.3
4.9
4.7
5.3
2.5

5.5
5.7
4.7
6.5
9.1
9.8
6.4
6.7
7.3
8.9

5.3
5.2
4.3
5.8
13.9
9.9
5.8
6.5
6.9
8.0

3.6
3.5
2.9
5.5
7.8
8.0
5.3
5.1
6.2
8.5

7.0
8.1
9.5
10.5
9.5
10.5
11.5
11.3
11.6
11.6

2.4
3.1
5.4
4.2
-.9
2.3
5.4
4.4
4.1
2.2

4.6
4.7
4.0
6.2
10.5
8.0
5.7
6.5
7.3
9.2

4.7
4.3
3.6
6.0
10.3
8.0
5.7
6.4
7.2
9.2

4.6
4.2
3.5
5.7
9.4
7.7
5.6
6.3
7.0
8.8

1980
1981
1982
1983
1984
1985 p

8.9
11.7
3.7
7.4
11.0
5.8

_ 2
L9
-2.5
3.5
6.5
2.3

9.0
9.7
6.4
3.8
4.1
3.3

9.1
9.5
6.4
4.0
4.2
3.5

9.3
9.3
6.2
4.0
4.3
3.6

10.6
10.5
7.1
8.7
8.7
6.6

-.2
1.2
1.3
4.6
4.4
3.2

10.7
9.2
5.7
3.9
4.1
3.1

10.9
9.2
5.7
4.0
4.2
3.4

10.5
9.0
5.6
4.0
4.3
3.4

1982- 1
II
Ill
IV

-.2
6.2
2.5
4.2

-5.9
1.2
-3.2
.6

6.4
5.0
5.8
3.6

5.4
6.4
5.7
3.8

5.7
4.7
5.5
4.0

7.6
5.6
8.5
10.3

2.2
1.9
2.1
5.3

5.5
3.7
6.2
4.4

5.2
3.6
6.3
4.8

5.2
3.5
6.3
4.8

1983- 1
II
Ill

IV

7.2
12.3
8.9
11.8

4.0
8.9
5.5
6.7

2.8
3.2
3.5
4.7

3.2
2.8
4.7
2.9

3.2
3.8
4.0
4.3

5.6
12.5
8.4
9.4

3.4
8.0
4.7
5.0

2.4
4.0
3.5
4.3

2.2
4.2
3.7
4.4

2.3
4.2
3.8
4.4

1984- 1
II
Ill
IV

17.0
9.1
6.0
4.3

11.4
5.1
2.1
.6

5.0
3.8
3.8
3.7

4.8
6.1
3.8
3.9

5.1
4.3
3.7
3.5

9.4
9.8
4.1
6.9

4.2
5.9
.1
3.4

5.0
3.4
4.2
3.4

5.1
3.7
4.1
3.6

5.2
3.8
4.2
3.6

6.9
4.5
5.8
5.9

3.7
1.1
3.0
2.4

3.0
3.3
2.9
3.3

3.5
3.6
2.5
3.9

3.5
3.6
2.7
4.5

7.4
6.2
6.8
4.2

4.8
2.6
4.6
-.2

2.6
3.7
2.2
4.4

2.7
3.7
2.4
4.7

2.7
3.8
2.6
4.7

1933
1939
1940
1941
1942
1943
1944
1945
1946 ..
1947
1948
1949

1970
1971
1972
1973
1974
1975
1976.
1977
1978
1979

.

. . .

.

.

. .

1985:1
||
III
IV P

.

Source-. Department of Commerce, Bureau of Economic Analysis.




259

TABLE B-6.—Gross national product by major type of product, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Goods
Year or
quarter

Gross
national
product

Final
sales

Inventory
change

Total
Total

Final
sales

Durable goods
Inven- Final Inventory
tory
change sales change

Nondurable goods
Final
sales

Inventory
change

Services Structures

Auto
output

1929
1933
1939

103.9
56.0
91.3

102.2
57.6
90.9

1.7
-1.6
.4

56.1
27.0
49.0

54.4
28.6
48.6

1.7
-1.6
.4

16.1
5.4
12.4

1.4
-.5
.3

38.3
23.2
36.2

0.3
-1.1
.1

35.9
25.9
34.5

11.9
3.1
7.8

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

100.4
125.5
159.0
192.7
211.4
213.4
212.4
235.2
261.6
260.4

98.3
121.0
157.2
193.4
212.3
214.4
206.0
235.7
256.9
263.4

2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
_5
4'. 7
-3.1

56.0
72.5
93.7
120.4
132.3
128.9
125.3
139.8
154.4
147.7

53.8
68.0
91.9
121.0
133.3
129.9
118.9
140.3
149.7
150.8

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

15.4
23.8
34.5
54.2
58.5
50.1
31.8
44.4
48.0
50.0

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

38.4
44.2
57.4
66.8
74.8
79.8
87.1
95.9
101.7
100.9

1.0
1.4
.7
-.6
_3
'.2
1.1
-1.9
3.7
-1.3

35.8
40.9
50.9
63.2
72.4
77.3
70.5
72.7
78.0
83.0

8.6
12.1
14.4
9.2
6.6
7.2
16.6
22.8
29.2
29.6

7.2
8.8
11.9

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

288.3
333.4
351.6
371.6
372.5
405.9
428.2
45-1.0
456.8
495.8

281.4
323.2
348.6
371.1
374.1
400.2
423.6
449.6
458.3
490.0

6.8
10.2
3.1
.4
-1.6
5.7
4.6
1.4
-1.5
5.8

162.4
189.9
195.5
204.6
198.0
216.3
225.4
234.7
230.5
250.8

155.6
179.6
192.4
204.2
199.6
210.6
220.7
233.3
232.0
245.1

6.8
10.2
3.1
.4
-1.6
5.7
4.6
1.4
-1.5
5.8

56.2
66.4
72.6
78.0
74.1
81.7
86.2
91.7
84.8
91.1

3.6
6.1
1.2
1.5
-2.5
3.4
2.1
.5
-2.8
3.1

99.4
113.2
119.8
126.2
125.5
128.9
134.5
141.6
147.2
154.0

3.2
4.2
1.9
-1.1
.9
2.3
2.5
.9
1.3
2.6

89.0
104.4
115.2
123.4
128.5
138.5
148.9
161.6
170.9
183.5

36.9
39.1
40.9
43.6
46.0
51.1
53.9
54.8
55.5
61.5

15.4
13.3
12.0
16.1
14.7
21.2
16.9
19.4
14.5
19.4

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

515.3
533.8
574.6
606.9
649.8
705.1
772.0
816.4
892.7
963.9

512.3
531.4
568.5
601.1
644.4
695.2
757.8
806.1
884.8
954.1

3.1
2.4
6.1
5.8
5.4
9.9
14.2
10.3
7.9
9.8

257.2
260.4
281.5
293.2
313.5
342.9
380.1
395.1
427.4
456.6

254.1
258.0
275.4
287.4
308.1
333.0
365.9
384.9
419.5
446.8

3.1
2.4
6.1
5.8
5.4
9.9
14.2
10.3
7.9
9.8

93.8
93.1
103.4
110.0
119.6
132.4
147.9
154.5
169.1
180.1

160.3
164.8
172.0
177.4
188.5
200.6
218.1
230.4
250.4
266.7

1.4
2.5
2.7
3.1
1.4
3.2
4.0
4.8
3.2
3.4

197.4
210.9
226.4
242.2
261.1
280.5
307.2
334.9
368.0
402.3

60.7
62.5
66.7
71.5
75.2
81.7
84.6
86.4
97.2
105.1

21.3
17.8
22.4
25.1
25.9
31.1
30.2
27.8
35.0
34.7

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

1,015.5
1,102.7
1,212.8
1,359.3
1,472.8
1,598.4
1,782.8
1,990.5
2,249.7
2,508.2

1,012.3
1,094.9
1,202.3
1,339.7
1,457.4
1,604.1
1,766.8
1,969.2
2,221.0
2,495.2

3.1
7.8
10.5
19.6
15.4
-5.6
16.0
21.3
28.6
13.0

467.8 464.7
493.0 485.2
537.4 526.9
616.4 596.8
647.7
663.1
714.7 720.3
798.9 782.9
882.0 860.7
991.4
962.8
1,099.1 1,086.1

3.1
7.8
10.5
19.6
15.4
-5.6
16.0
21.3
28.6
13.0

182.1
189.4
209.7
241.9
257.2
288.2
323.6
369.4
416.9
473.1

1.6
-.1
3.4
2.7
4.0
6.7
10.2
5.5
4.7
6.4
_}
2'.8
7.2
15.0
11.2
-7.0
10.3
9.7
20.1
10.3

3.2 441.1
4.9 484.9
3.3 533.2
4.6 586.6
4.3 650.6
1.3 725.2
5.7 803.5
895.9
11.6
8.6 1,003.0
2.7 1,121.9

106.5
124.8
142.1
156.3
159.1
158.5
180.4
212.6
255.3
287.1

28.5
38.9
41.4
46.0
38.8
40.3
55.2
64.3
68.3
66.9

1980
1981
1982
1983
1984
1985 "

2,732.0
3,052.6
3,166.0
3,401.6
3,774.7
3,992.5

2,740.3 -8.3
3,028.6 24.0
3,190.5 -24.5
3,408.0 -6.4
3,707.6 67.1
3,983.4
9.1

1,174.9
1,322.9
1,319.1
1,394.7
1,585.8
1,644.2

1,183.2 -8.3
1,298.9 24.0
1,343.7 -24.5
1,401.1 -6.4
1,518.8 67.1
1,635.2
9.1

499.4 -2.9
541.1
6.8
542.9 -16.8
573.2
-.9
642.5 37.0
7.9
704.6

683.8
757.8
800.8
827.9
876.2
930.6

-5.4
17.2
-7.7
-5.5
30.1
1.2

1,265.0
1,415.4
1,547.5
1,678.0
1,806.6
1,928.8

292.0
314.4
299.4
328.9
382.2
419.5

60.1
69.4
66.5
88.9
103.4
113.6

1982:1
II
Ill
IV

3,112.6
3,159.5
3,179.4
3,212.5

3,136.7 -24.1
3,164.5 -5.0
3,188.4 -9.0
3,272.4 -59.9

1,310.7
1,329.9
1,326.2
1,309.8

1,334.8 -24.1
1,335.0 -5.0
1,335.2 -9.0
1,369.7 -59.9

537.7 -14.6
539.5 -4.1
542.6 -5.7
551.8 -42.7

797.1
795.5
792.7
817.9

-9.5
-.9
-3.3
-17.2

1,499.1
1,530.3
1,561.6
1,598.9

302.8
299.3
291.6
303.9

58.7
68.4
74.4
64.5

1983:1
II
Ill
IV

3,268.7
3,365.1
3,437.5
3,535.0

3,311.4 -42.7
3,370.6 -5.5
3,440.3 -2.8
3,509.5 25.5

1,328.4
1,385.0
1,399.9
1,465.3

1,371.1 -42.7
1,390.5 -5.5
1,402.7 -2.8
1,439.8 25.5

542.4 -28.9
566.3
-.9
576.4
12.9
607.4
13.5

828.7
824.2
826.3
832.4

-13.9
-4.7
-15.7
12.1

1,632.2
1,662.5
1,693.3
1,724.1

308.0
317.6
344.3
345.6

79.4
79.6
96.0
100.5

1984:1
II
Ill
IV

3,676.5
3,757.5
3,812.2
3,852.5

3,584.4
3,688.7
3,743.9
3,813.5

92.1
68.9
68.3
39.0

1,558.1
1,585.4
1,595.8
1,604.0

1,466.0
1,516.5
1,527.5
1,565.0

92.1
68.9
68.3
39.0

618.5
637.6
641.4
672.6

43.2
36.1
39.4
29.3

847.4
878.9
886.1
892.5

48.9
32.8
28.9
9.7

1,757.9
1,789.2
1,823.8
1,855.6

360.5
383.0
392.6
392.9

111.8
95.0
100.5
106.3

1985:1

3,917.5
3,960.6
4,016.9
4,075.1

3,899.0
3,945.0
4,016.7
4,073.0

18.5
15.5
.2
2.1

1,628.4
1,636.0
1,650.8
1,661.8

1,609.8
1,620.5
1,650.6
1,659.7

18.5
15.5
.2
2.1

689.4
704.0
721.2
703.7

16.9
1.8
-6.4
19.1

920.5
916.5
929.4
956.0

1.6
13.7
6.6
-17.0

1,887.6
1,908.2
1,939.9
1,979.4

401.5
416.3
426.2
433.9

119.4
107.7
117.5
109.9

II
Ill
IV ".

Source: Department of Commerce, Bureau of Economic Analysis.




260

282.6
295.8
317.2
354.9
390.4
432.2
459.3
491.3
545.9
613.0

TABLE B-7.—Gross national product by major type of product in 1982 dollars, 1929-85
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]
Goods
Year or
quarter

Gross
national
product

Final
sales

Inventory
change

Total
Total

Final
sales

Durable goods
Inventory
change

Final
sales

Inventory
change

Nondurable goods
Final
sales

Inventory
change

Services Structures

Auto
output

698.7
10.8
509.2 -10.7
712.7
3.9

308.1
210.0
331.7

297.3
10.8
220.7 -10.7
327.8
3.9

85.8
34.9
74.8

3.5
-2.1
.7

211.5
185.7
253.1

1.6
-2.5
2.1

290.0
252.1
306.4

111.4
36.5
78.5

758.5
881.6
1,068.3
1,275.5
1,385.7
1,363.3
1,069.0
1,067.7
1,096.4
1,118.7

14.4
27.8
12.0
.7
-5.2
-8.4
27.9
-1.0
12.3
-9.7

370.3
431.9
504.1
608.6
664.6
639.1
521.0
517.1
531.7
517.9

355.9
404.2
492.1
607.9
669.8
647.5
493.1
518.1
519.4
527.6

14.4
27.8
12.0
.7
-5.2
-8.4
27.9
-1.0
12.3
-9.7

91.9
122.9
163.3
254.4
292.4
263.1
129.6
164.7
166.5
166.8

3.4
8.2
3.5
.7
-1.8
-3.7
10.8
1.4
1.6
-2.9

264.0
281.2
328.8
353.5
377.4
384.4
363.5
353.4
353.0
360.8

4.2
6.0
5.2
.7
-1.2
-1.5
.8
-3.6
8.3
-3.8

318.1
367.1
460.4
598.9
665.0
662.3
472.0
431.0
438.1
450.1

84.5
110.3
115.8
68.7
50.9
53.5
104.0
118.6
138.9
141.0

24"l
27.6
35.5

1,203.7
1,328.2
1,380.0
1,435.3
1,416.2
1,494.9
1,525.6
1,551.1
1,539.2
1,629.1

1,179.5
1,297.4
1,370.0
1,432.5
1,421.0
1,478.6
1,512.7
1,548.1
1,542.6
1,612.6

24.2
30.8
10.0
2.8
-4.8
16.3
12.9
3.0
-3.4
16.5

561.4
623.0
641.3
676.6
643.5
683.9
697.1
699.3
674.2
716.6

537.2
592.2
631.3
673.8
648.2
667.6
684.1
696.3
677.6
700.1

24.2
30.8
10.0
2.8
-4.8
16.3
12.9
3.0
-3.4
16.5

180.0
208.8
229.8
245.4
230.6
245.2
248.3
251.3
229.1
236.8

5.5
9.0
1.7
2.3
-3.7
4.5
2.9
.9
-3.4
8.2

357.1
383.4
401.5
428.4
417.7
422.3
435.8
445.0
448.6
463.4

11.4
11.9
5.3
-2.2
2.5
5.8
5.6
1.5
3.6
8.3

470.4
537.7
567.3
577.6
579.5
601.0
619.7
645.4
654.7
681.5

171.9
167.5
171.4
181.2
193.2
210.0
208.9
206.5
210.3
231.0

44.9
38.3
34.9
44.8
43.3
58.2
45.8
48.3
37.4
45.7

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

1,665.3
1,708.7
1,799.4
1,873.3
1,973.3
2,087.6
2,208.3
2,271.4
2,365.6
2,423.3

1,657.5
1,701.4
1,783.3
1,856.7
1,957.6
2,062.4
2,171.5
2,242.6
2,344.6
2,398.1

7.7
7.3
16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1

726.8 719.1
730.2 723.0
773.5 757.3
797.5 780.8
845.2 829.5
904.0 878.8
974.7 937.8
993.1 964.3
1,024.8 1,003.7
1,048.5 1,023.3

7.7
7.3
16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1

242.2
239.2
260.2
273.4
295.4
322.2
354.2
363.6
378.5
389.7

4.0
-.1
8.4
7.1
11.2
17.4
26.3
14.4
11.8
15.2

476.9
483.7
497.1
507.4
534.1
556.5
583.6
600.7
625.3
633.6

3.7 709.9
7.3 743.0
7.7 777.0
9.5 811.5
4.5 852.8
7.8 891.6
10.6 942.7
14.4
990.6
9.3 1,032.0
9.9 1,066.9

228.5
235.4
248.9
264.4
275.3
292.0
291.0
287.6
308.8
307.9

49.6
41.1
49.8
54.6
55.3
66.9
64.8
58.3
70.5
67.6

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

2,416.2
2,484.8
2,608.5
2,744.1
2,729.3
2,695.0
2,826.7
2,958.6
3,115.2
3,192.4

8.2
2,407.9
2,465.2
19.6
2,586.8
21.8
2,704.1
40.0
33.3
2,696.0
2,707.8 -12.8
2,804.6
22.1
2,929.5
29.1
3,078.4
36.8
3,177.4
15.0

1,030.0
1,037.6
1,093.8
1,175.0
1,159.2
1,125.0
1,194.7
1,256.2
1,329.1
1,354.6

1,021.7
8.2
19.6
1,017.9
21.8
1,072.1
1,135.0
40.0
33.3
1,125.9
1,137.8 -12.8
22.1
1,172.5
1,227.1
29.1
1,292.4
36.8
1,339.6
15.0

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

640.1
642.4
662.7
660.1
649.9
666.7
681.7
693.1
719.9
735.1

8.8
12.5
6.4
9.2
13.3
-1.4
6.3
14.9
9.3
1.7

1,092.4
1,126.1
1,169.4
1,218.7
1,256.4
1,286.4
1,324.4
1,368.7
1,426.9
1,478.6

293.8
321.2
345.4
350.4
313.7
283.6
307.6
333.7
359.1
359.2

53.1
69.8
73.9
82.0
65.4
61.8
80.1
88.7
87.3
80.2

1980
1981
1982
1983
1984
1985"

3,187.1
3,248.8
3,166.0
3,277.7
3,492.0
3,573.5

3,194.0 -6.9
3,225.0
23.9
3,190.5 -24.5
3,283.1 -5.5
62.7
3,429.3
3,566.2
7.3

1,344.2
1,386.0
1,319.1
1,364.4
1,506.4
1,537.0

1,351.1 -6.9
1,362.2
23.9
1,343.7 -24.5
1,369.9 -5.5
62.7
1,443.7
1,529.6
7.3

584.0 -3.2
578.5
6.9
542.9 -16.8
562.9 -1.1
619.9
35.5
672.0
7.2

767.1
783.7
800.8
807.1
823.9
857.6

-3.7
16.9
-7.7
-4.4
27.1
.2

1,511.1
1,533.4
1,547.5
1,584.4
1,615.4
1,642.1

331.8
329.4
299.4
328.8
370.2
394.4

67.1
73.3
66.5
86.0
97.3
104.0

1982:1

3,170.4
3,179.9
3,154.5
3,159.3

3,194.4 -24.0
3,185.3 -5.4
3,164.0 -9.4
3,218.6 -59.3

1,327.7
1,335.0
1,316.0
1,297.9

1,351.7 -24.0
1,340.5 -5.4
1,325.4 -9.4
1,357.1 -59.3

548.5 -14.8
541.6 -4.1
537.7 -5.9
543.8 -42.4

803.2
798.8
787.7
813.4

-9.2
-1.3
-3.6
-16.9

1,539.9
1,546.2
1,548.3
1,555.5

302.8
298.6
290.3
305.9

59.0
68.5
75.3
63.3

1983:1

3,190.6
3,259.3
3,303.4
3,357.2

3,232.8 -42.2
3,263.0 -3.7
1.4
3,302.1
3,334.6
22.6

1,314.6
1,358.8
1,370.1
1,414.3

1,356.8 -42.2
1,362.5 -3.7
1,368.7
1.4
1,391.6
22.6

533.5 -28.4
558.6 -1.0
567.2
12.1
592.2
13.0

823.3
803.9
801.5
799.4

-13.8
-2.7
-10.7
9.7

1,569.1
1,579.5
1,590.9
1,598.0

306.9
321.0
342.5
345.0

77.9
77.7
94.1
94.4

1984:1

3,449.4
3,492.6
3,510.4
3,515.6

3,365.7
3,426.6
3,445.5
3,479.5

83.6
66.0
64.9
36.1

1,489.0
1,511.6
1,514.4
1,510.5

1,405.4
1,445.5
1,449.5
1,474.4

83.6
66.0
64.9
36.1

600.5
616.6
617.6
644.8

41.4
35.0
37.9
27.9

804.9
829.0
832.0
829.6

42.2
31.0
27.0
8.2

1,603.2
1,609.6
1,618.7
1,630.1

357.1
371.5
377.2
375.0

105.3
90.3
94.5
99.1

1985:1

3,547.8
3,557.4
3,584.1
3,605.0

3,532.0
3,542.3
3,585.8
3,604.8

15.8
15.1
-1.8
.1

1,530.3
1,531.5
1,541.0
1,545.0

1,514.6
1,516.3
1,542.7
1,544.9

15.8
15.1
-1.8
.1

657.2
672.6
686.4
672.0

15.8
1.6
-6.1
17.4

857.3
843.8
856.3
872.9

-.1
13.5
4.4
-17.2

1,636.0
1,633.9
1,643.4
1,655.4

381.5
392.0
399.7
404.6

109.4
99.0
108.4
99.1

1929
1933
1939

709.6
498.5
716.6

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

772.9
909.4
1,080.3
1,276.2
1,380.6
1,354.8
1,096.9
1,066.7
1,108.7
1,109.0

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

II
Ill
IV
II
Ill
IV
II
Ill
IV
II
Ill
IV ".

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




261

TABLE B-8.—Gross national product by sector, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Gross domestic product
Year or quarter

Gross
national
product

Business 1
Total
Total *

Nonfarm

l

Farm

Statistical
discrepancy

Households
and
institutions

Government 2

Total

Federal

State
and
local

Rest
of the
world

1929
1933
1939

103.9
56.0
91.3

103.2
55.7
90.9

96.0
49.3
81.0

84.8
43.6
73.0

9.7
4.6
6.3

1.5
1.2
1.7

2.9
1.7
2.3

4.4
4.7
7.6

0.9
1.2
3.5

3.5
3.5
4.2

0.8
.3
.4

1940
1941
1942
1943
1944
1945
1946 .
1947
1948
1949

100.4
125.5
159.0
192.7
211.4
213.4
212.4
235.2
261.6
260.4

100.1
125.0
158.5
192.3
210.9
213.0
211.6
234.1
260.1
259.0

89.8
113.0
140.4
163.4
174.9
173.5
184.8
211.3
236.4
232.9

82.0
103.4
128.0
149.8
156.9
153.5
165.2
189.3
214.4
213.3

6.4
8.9
13.0
15.3
15.3
16.0
18.8
20.2
23.3
18.8

1.4
.7
-.7
-1.7
2.7
4.0
.7
1.8
-1.3
.8

2.4
2.5
2.9
3.2
3.7
4.1
4.5
5.1
5.6
5.9

7.8
9.5
15.2
25.6
32.3
35.3
22.4
17.6
18.1
20.1

3.5
5.1
10.7
21.0
27.3
30.0
16.2
10.3
9.6
10.7

4.3
4.4
4.5
4.7
4.9
5.4
6.2
7.3
8.5
9.4

.4
.5
.5
.4
.5
.4
.7
1.2
1.5
1.4

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

288.3
333.4
351.6
371.6
372.5
405.9
428.2
451.0
456.8
495.8

286.7
331.4
349.4
369.5
370.3
403.3
425.2
447.7
453.9
492.7

259.0
296.7
310.7
329.3
329.1
359.4
378.1
397.3
399.4
435.5

238.3
271.1
286.7
306.3
306.7
338.8
361.4
380.1
378.8
417.9

20.0
22.9
22.2
20.3
19.7
18.8
18.6
18.4
20.7
19.0

.8
2.7
1.8
2.6
2.7
1.8
-1.9
-1.2
-.1
-1.5

6.5
6.9
7.2
7.8
8.1
9.1
9.9
10.6
11.5
12.4

21.2
27.7
31.5
32.4
33.0
34.8
37.2
39.8
43.0
44.8

11.1
16.6
19.3
19.1
18.3
19.0
19.6
20.2
21.4
21.7

10.1
11.2
12.3
13.3
14.7
15.8
17.6
19.6
21.6
23.1

1.5
2.0
2.2
2.1
2.2
2.6
3.0
3.4
2.9
3.1

I960
1961
1962
1963
1964
1965
1966
1967
1968
1969

515.3
533.8
574.6
606.9
649.8
705.1
772.0
816.4
892.7
963.9

511.8
530.0
570.1
602.0
644.4
699.3
766.3
810.4
885.9
957.1

449.9
463.9
499.1
526.0
562.1
610.7
666.7
699.7
762.0
820.1

432.5
445.0
478.6
506.2
544.3
590.0
641.7
677.8
740.4
798.8

20.2
20.2
20.4
20.5
19.3
21.9
22.8
22.2
22.7
25.2

-2.8
-1.2
.0
-.6
-1.4
-1.2
2.1
-.4
-1.1
-3.9

13.9
14.5
15.6
16.7
17.9
19.3
21.3
23.4
26.1
29.5

48.1
51.6
55.4
59.3
64.4
69.3
78.4
87.4
97.8
107.5

22.6
23.6
25.2
26.5
28.5
30.0
34.3
37.8
41.9
44.9

25.5
27.9
30.2
32.9
35.9
39.3
44.1
49.5
55.9
62.6

3.5
3.8
4.5
4.9
5.4
5.8
5.6
6.0
6.8
6.8

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

1,015.5
1,102.7
1,212.8
1,359.3
1,472.8
1,598.4
1,782.8
1,990.5
2,249.7
2,508.2

1,008.2
1,093.4
1,201.6
1,343.1
1,453.3
1,580.9
1,761.7
1,965.1
2,219.1
2,464.4

856.3
927.4
1,020.0
1,145.0
1,237.5
1,341.2
1,500.7
1,682.1
1,908.4
2,125.3

831.2
897.5
988.8
1,098.3
1,190.0
1,288.4
1,448.7
1,631.7
1,850.0
2,054.5

26.3
28.1
32.8
51.0
49.2
50.3
48.5
50.4
60.3
71.8

-1.1
1.8
-1.6
-4.3
-1.7
2.5
3.6
.0
-1.9
-1.0

32.4
35.6
39.0
43.0
47.2
52.0
57.1
62.4
70.2
78.6

119.5
130.3
142.6
155.0
168.7
187.7
203.8
220.5
240.5
260.4

48.4
51.1
54.9
57.1
61.1
66.5
70.9
75.5
81.7
86.9

71.1
79.3
87.7
97.9
107.6
121.1
132.9
145.0
158.9
173.5

7.3
9.3
11.2
16.2
19.5
17.5
21.1
25.4
30.5
43.8

1980
1981
1982
1983. .
1984
1985"

2,732.0
3,052.6
3,166.0
3,401.6
3,774.7
3,992.5

2,684.4
3,000.5
3,114.8
3,350.9
3,726.7
3,951.8

2,306.8
2,582.8
2,658.2
2,862.1
3,203.1
3,392.0

2,236.4
2,498.9
2,581.3
2,802.0
3,124.4
3,322.0

65.5
79.8
• 77.0
60.8
80.2
69.2

4.9
4.1
-.1
-.6
-1.5
.7

89.3
101.0
112.7
122.4
131.9
140.8

288.3
316.7
343.9
366.4
391.7
419.0

96.1
107.4
117.0
124.6
132.1
139.8

192.2
209.3
226.9
241.8
259.6
279.2

47.6
52.1
51.2
50.7
48.0
40.7

1982:1
II
Ill
IV

3,112.6
3,159.5
3,179.4
3,212.5

3,062.3
3,105.9
3,127.4
3,163.8

2,618.9
2,653.2
2,667.1
2,693.6

2,548.8
2,575.9
2,592.7
2,607.7

74.9
76.2
77.7
79.0

-4.8
1.0
-3.2
6.8

108.5
111.2
114.5
116.9

334.9
341.5
345.8
353.4

114.4
116.0
116.9
120.7

220.5
225.5
228.9
232.6

50.3
53.6
52.0
48.7

1983:1

II
Ill
IV

3,268.7
3,365.1
3,437.5
3,535.0

3,219.3
3,316.1
3,384.7
3,483.5

2,740.7
2,830.9
2,892.5
2,984.2

2,670.6
2,767.2
2,842.5
2,927.6

71.5
59.4
54.3
57.8

-1.4
4.3
-4.3
-1.2

118.9
121.0
123.7
126.0

359.7
364.2
368.5
373.3

123.1
124.3
125.0
125.9

236.5
239.9
243.4
247.4

49.4
49.0
52.8
51.5

1984:1
II
III
IV

3,676.5
3,757.5
3,812.2
3,852.5

3,625.0
3,712.5
3,763.7
3,805.6

3,112.6
3,192.6
3,236.7
3,270.6

3,027.3
3,112.6
3,157.3
3,200.7

82.5
81.9
78.6
77.6

2.8
-1.9
.8
-7.6

128.9
131.1
132.8
134.9

383.6
388.9
394.3
400.0

130.8
131.6
132.5
133.5

252.8
257.3
261.8
266.5

51.5
45.0
48.5
46.9

1985- 1
II
Ill
IV"

3,917.5
3,960.6
4,016.9
4,075.1

3,874.7
3,920.4
3,977.2
4,034.9

3,327.8
3,365.5
3,414.2
3,460.4

3,251.3
3,301.5
3,346.9
3,388.3

74.0
68.7
64.7
69.5

2.5
-4.7
2.5
2.5

136.9
139.3
141.9
145.2

410.0
415.6
421.2
429.3

138.3
139.0
139.5
142.5

271.7
276.6
281.6
286.9

42.8
40.2
39.6
40.2

1
2

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




262

TABLE B-9.—Gross national product by sector in 1982 dollars, 1929-85
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]
Gross domestic product
Year or quarter

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966..
1967
1968
1969
1970
1971
1972
1973,
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985"
1982: I
II

HI
IV
1983:1
II
Ill
IV..
1984: I
|
|

III
IV
1985- 1
II
Ill
IV"

Gross
national
product

709.6
498.5
716.6

Business 1
Total
Total *

611.6
404.9
586.8

1,665.3
1,708.7
1,799.4
1,873.3
1,973.3
2,087.6
2,208.3
2,271.4
2,365.6
2,423.3
2,416.2
2,484.8
2,608.5
2,744.1
2,729.3
2,695.0
2,826.7
2,958.6
3,115.2
3,192.4
3,187.1
3,248.8
3,166.0
3,277.7
3,492.0
3,573.5
3,170.4
3,179.9
3,154.5
3,159.3

704.6
496.1
713.5
770.3
906.0
1,077.1
1,273.4
1,377.7
1,352.6
1,093.3
1,061.6
1,102.5
1,103.4
1,197.4
1,320.3
1,371.7
1,427.4
1,407.8
1,485.5
1,515.0
1,539.7
1,529.7
1,619.1
1,654.1
1,696.6
1,785.6
1,858.5
1,957.1
2,070.6
2,192.5
2,255.0
2,347.9
2,406.2
2,399.1
2,464.1
2,584.9
2,711.8
2,693.5
2,665.7
2,793.7
2,921.2
3,073.0
3,136.6
3,131.7
3,193.6
3,114.8
3,228.9
3,447.5
3,537.0
3,119.2
3,125.9
3,102.9
3,111.3

1,002.8
1,080.5
1,114.7
1,170.0
1,154.6
1,229.7
1,254.1
1,274.0
1,260.4
1,345.8
1,369.7
1,403.2
1,480.9
1,546.7
1,635.2
1,737.4
1,837.1
1,880.9
1,961.1
2,009.8
2,004.4
2,068.0
2,186.6
2,309.1
2,283.9
2,249.6
2,374.8
2,497.2
2,639.2
2,696.4
2,683.2
2,739.8
2,658.2
2,769.4
2,982.1
3,065.8
2,663.8
2,668.9
2,646.0
2,654.1

3,190.6
3,259.3
3,303.4
3,357.2
3,449.4
3,492.6
3,510.4
3,515.6
3,547.8
3,557.4
3,584.1
3,605.0

3,142.3
3,212.0
3,252.7
3,308.3
3,401.1
3,450.7
3,465.6
3,472.6
3,508.9
3,521.2
3,548.6
3,569.4

2,684.1
2,753.4
2,792.8
2,847.2
2,938.4
2,986.0
2,999.4
3,004.6
3,039.9
3,051.1
3,076.7
3,095.5

772.9
909.4
1,080.3
1,276.2
1,380.6
1,354.8
1,096.9
1,066.7
1,108.7
1,109.0
1,203.7
1,328.2
1,380.0
1,435.3
1,416.2
1,494.9
1,525.6
1,551.1
1,539.2
1,629.1

635.5
738.7
832.9
891.6
934.3
914.3
866.3
886.1
925.4
916.7

Nonf arm *

Government 2
Total

Federal

State
and
local

Rest
of the
world

547.8
338.7
518.3
571.2
675.8
774.4
841.6
862.5
839.3
809.0
828.6
875.1
858.5
941.4
1,014.9
1,050.9
1,101.3
1,084.2
1,161.5
1,199.6
1,219.0
1,199.7
1,291.6
1,317.2
1,346.7
1,421.1
1,488.7
1,581.6
1,681.8
1,776.5
1,824.2
1,908.3
1,962.1
1,946.4
2,001.4
2,128.0
2,256.6
2,226.5
2,180.6
2,306.6
2,434.9
2,581.0
2,633.2
2,613.1
2,659.6
2,581.3
2,707.4
2,912.3
2,991.9
2,591.8
2,593.2
2,573.2
2,567.1

54.1
56.6
56.4
54.6
58.1
62.4
59.2
57.2
53.7
54.0
49.9
55.2
55.0
58.3
56.0
57.2
59.3
60.9
62.0
60.7
58.8
61.2
58.8
61.1
60.2
59.8
59.8
57.7
59.0
54.7
57.7
55.7
57.2
60.7
62.3
62.0
61.1
60.7
64.8
62.5
62.2
61.0
64.6
64.2
75.7
77.0
62.6
71.2
73.3
76.9
74.7
76.0
80.3

9.7
9.6
12.1
9.7
4.8
-4.0
-9.2
14.6
21.3
3.3
7.6
-4.9
3.2
3.1
9.7
6.5
9.4
9.5
6.2
62
-3.8
-.5
46
87
-3.7
.1
-1.8
-4.1
-3.4
5.9
-1.0
28
-9.5
-2.7
4.2
-3.4
-8.6
-3.3
4.2
5.6
.1
2g
-1.4
5.9
4.4
_ i
-!6
-1.4
.6
-4.9
1.0
-3.2
6.7

34.4
27.1
33.3
35.8
35.8
36.9
34.3
34.3
34.4
35.4
37.9
41.2
42.4
45.0
46.1
46.2
47.7
48.4
53.2
56.1
57.7
60.7
62.7
67.4
68.0
70.7
72.5
74.6
77.4
80.4
83.1
85.6
88.2
87.0
88.8
91.2
93.4
93.9
96.4
97.0
98.0
101.0
103.7
107.3
109.9
112.7
114.5
116.9
120.2
111.4
112.4
113.4
113.8

58.6
64.0
93.4
99.0
131.5
207.4
347.6
409.1
403.8
191.6
137.7
135.8
144.2
149.6
193.7
210.7
209.7
204.8
202.6
204.8
208.0
208.6
210.6
217.1
225.4
233.9
239.2
247.3
255.8
275.0
291.0
301.2
308.2
307.7
307.4
307.1
309.3
315.7
319.6
321.9
326.0
332.8
336.5
341.2
343.9
343.9
345.0
348.5
351.0
344.0
344.6
343.6
343.5

13.2
16.2
38.9
44.1
76.2
152.9
294.6
357.5
350.7
135.0
76.7
73.2
77.1
80.3
122.8
137.5
133.2
125.0
119.2
116.1
114.5
109.5
107.5
108.9
111.5
116.7
116.1
116.8
117.3
128.1
138.5
140.7
141.0
133.2
125.5
118.3
113.6
113.5
112.8
112.7
112.7
113.9
113.0
114.4
115.8
117.0
118.7
120.3
121.6
116.4
116.8
117.3
117.6

45.3
47.9
54.6
55.0
55.3
54.4
52.9
51.7
53.2
56.6
61.0
62.6
67.1
69.3
71.0
73.3
76.5
79.8
83.4
88.7
93.5
99.2
103.1
108.2
113.9
117.3
123.1
130.5
138.5
146.9
152.4
160.5
167.2
174.5
181.9
188.8
195.7
202.1
206.8
209.2
213.3
219.0
223.5
226.8
228.1
226.9
226.3
228.2
229.5
227.6
227.7
226.3
225.9

4.9
2.4
3.1
2.6
3.4
3.1
2.7
2.9
2.3
3.6
5.1
6.2
5.6
6.2
7.9
8.3
7.9
8.4
9.4
10.7
11.5
9.5
10.0
11.1
12.1
13.9
14.9
16.1
17.0
15.9
16.3
17.7
17.0
17.1
20.7
23.7
32.2
35.9
29.3
33.0
37.4
42.1
55.7
55.5
55.2
51.2
48.8
44.5
36.5
51.2
54.0
51.6
48.0

2,612.0
2,683.6
2,743.2
2,790.7

73.5
65.6
53.8
57.7
68.3
71.4
72.8
72.5
73.0
73.5
73.7
73.0

-1.4
4.2
-4.1
-1.1
2.6
-1.8
.7
-7.0
2.3
-4.2
2.3
2.3

113.9
114.0
114.8
115.4
115.7
116.7
117.1
118.1
118.5
119.4
120.5
122.2

344.4
344.6
345.1
345.7

118.6
118.7
118.8
118.7
119.5
120.0
120.6
121.0
121.4
121.5
121.7
121.8

225.8
225.9
226.3
227.0
227.4
227.9
228.5
228.9

48.2
47.4
50.7
48.9
48.3
42.0
44.8
43.0
38.9
36.2
35.4
35.6

2,867.5
2,916.4
2,925.9
2,939.2
2.964.6
2,981.8
3,000.8
3,020.2

1
2

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




Farm

Statistical
discrepancy

Households
and
institutions

263

347.0
347.9
349.1
349.9
350.4
350.7
351.4
351.6

229.1
229.2
229.7
229.9

TABLE B-10.—Gross national product by industry, 1947-84
[Billions of dollars]
Gross domestic product
Year

Gross
GovernManufacturing
Fination* AgriculKcSl
Trans- lA/hnlo nance,
ment Statisti- Pact
wnoieal
ture,
portation sale insurof the
and
PA-,
pal
cai
uonprod- forestry, Mining struction
Dura- Nonand
and ance, Services govern- discrep- world
uct
and
ment
Total
ble durable public retail and
ancy
goods goods utilities trade
enterfisheries
real
prises
estate

1947
1948
1949

235.2
261.6
260.4

20.8
24.0
19.5

6.8
9.4
8.1

1950
1951
1952
1953
1954

288.3
333.4
351.6
371.6
372.5

20.8
23.9
23.2
21.4
20.8

1955
1956
1957
1958
1959

405.9
428.2
451.0
456.8
495.8

1960
1961
1962
1963
1964

66.2
74.7
72.2

33.5
38.2
37.1

32.7
36.6
35.0

21.0
23.7
23.9

44.2
48.5
48.0

23.8
26.9
29.2

20.2
21.9
22.6

20.2
20.8
23.2

1.8
-•1.3
.8

1.2
1.5
1.4

9.3
10.2
10.2
10.7
11.0

13.2 84.0
15.6 99.0
16.9 103.3
17.5 112.5
17.7 106.7

45.9
55.5
59.0
66.1
61.0

38.1
43.4
44.3
46.4
45.7

26.6
30.2
32.2
34.2
33.8

51.5
56.8
58.9
60.4
61.6

32.2
35.5
39.1
43.3
47.0

24.2
26.4
28.1
30.2
31.6

24.2
31.2
35.7
36.8
37.4

.8
2.7
1.8
2.6
2.7

1.5
2.0
2.2
2.1
2.2

20.0
19.8
19.6
22.1
20.4

12.5
13.6
13.7
12.6
12.5

19.1
21.3
22.2
21.8
23.7

121.3
127.2
131.8
124.3
141.8

70.8
73.9
78.0
70.0
81.6

50.4
53.3
53.8
54.3
60.3

36.8
39.6
41.7
41.9
45.1

67.1
71.3
75.0
76.4
83.3

50.7
54.3
58.5
63.1
68.2

35.1
38.7
41.7
44.0
48.3

39.0
41.2
44.5
47.8
50.8

1.8
-1.9
-1.2
-.1
-1.5

2.6
3.0
3.4
2.9
3.1

515.3
533.8
574.6
606.9
649.8

21.7
21.8
22.3
22.3
21.4

12.8
12.9
13.1
13.4
13.8

24.3
25.3
27.1
28.9
31.6

144.4
145.0
158.6
168.1
180.2

82.5
81.6
91.9
98.0
105.7

61.9
63.3
66.8
70.1
74.5

47.3
48.9
51.9
54.8
58.3

85.7
88.0
94.1
98.3
107.1

72.8
76.9
81.7
86.5
92.0

51.4
54.8
59.2
63.3
69.0

54.2
57.6
62.1
67.0
72.5

-2.8
-1.2
.0
-.6
-1.4

3.5
3.8
4.5
4.9
5.4

1965
1966
1967
1968
1969

705.1
772.0
816.4
892.7
963.9

24.2
25.3
24.9
25.7
28.6

14.0
14.6
15.2
16.2
17.1

34.7
37.9
39.7
43.5
48.7

198.4
217.4
222.9
243.6
257.1

118.4
130.8
133.7
146.1
154.2

80.0
86.6
89.2
97.5
102.9

62.6
67.4
70.7
76.4
82.6

114.9
124.1
133.0
146.8
159.2

98.9
1C6.9
115.6
125.1
136.3

74.6
82.5
90.6
99.1
110.4

78.2
88.1
98.4
110.5
121.0

-1.2
2.1
-.4
-1.1
-3.9

5.8
5.6
6.0
6.8
6.8

1970
1971
1972
1973
1974

1,015.5
1,102.7
1,212.8
1,359.3
1,472.8

29.9
32.2
37.4
56.2
55.0

18.7
18.8
20.2
23.4
36.9

51.4
56.5
63.0
70.4
74.5

252.3
265.7
292.5
326.4
338.5

145.9
153.8
172.6
195.4
201.7

106.3
111.9
119.9
131.0
136.7

88.4
97.1
108.0
118.7
129.1

168.7
183.8
202.5
225.6
246.0

145.8
161.4
174.8
190.5
206.7

120.2
130.2
144.6
163.2
179.4

134.0
145.9
160.1
173.1
189.0

-1.1
1.8
-1.6
-4.3
-1.7

7.3
9.3
11.2
16.2
19.5

1975
1976
1977
1978
1979

1,598.4
1,782.8
1,990.5
2,249.7
2,508.2

56.3
55.7
58.9
70.1
83.1

41.3
46.0
50.2
56.5
72.7

76.5
86.2
97.9
115.6
131.4

357.3
409.3
465.3
518.8
561.8

206.3
239.7
277.7
317.4
345.2

151.0
169.7
187.7
201.4
216.5

141.7
160.4
178.9
201.0
216.1

273.7
299.7
332.8
373.4
415.8

221.7
246.1
280.3
326.3
363.3

199.8
224.9
253.4
289.1
328.7

210.1
229.7
247.4
270.3
292.4

2.5
3.6
-.0
-1.9
-1.0

17.5
21.1
25.4
30.5
43.8

1980
1981
1982
1983
1984

2,732.0
3,052.6
3,166.0
3,401.6
3,774.7

77.2
92.0
89.6
75.8
95.2

107.3
143.7
132.1
115.5
121.2

137.7
138.4
140.9
150.0
167.7

581.0
643.1
634.6
692.5
779.8

351.8
385.8
362.5
390.7
454.1

229.2
257.3
272.1
301.8
325.7

240.8
269.6
288.4
312.8
345.3

438.9
483.1
506.5
548.4
620.2

400.6
449.3
475.1
531.2
579.9

374.0
422.6
463.6
514.7
575.5

322.1
354.7
383.9
410.7
443.4

4.9
4.1
-.1
-.6
-1.5

47.6
52.1
51.2
50.7
48.0

9.1
11.5
11.5

Note.—The industry classification is on an establishment basis and is based on the 1972 Standard Industrial Classification.
Source: Department of Commerce, Bureau of Economic Analysis.




264

TABLE B-ll.—Gross national product by industry in 1982 dollars, 1947-84
[Billions of 1982 dollars]
Gross domestic product
TransAgriGross
portation
national culture, Min- Conforestproduct ry, and ing strucDura- Non- and
tion Total ble durable public
fishergoods goods utilies
ities
Manufacturing

Year

Wholesale
and
retail
trade

Govern- StaFinance,
ment
Rest
tisinsur- Serv- and
of the
1
ance, ices govern- tical Resid- world
and
ment dis- u a l
real
enter- crepestate
prises ancy

1947
1948
1949

1,066.7
1,108.7
1,109.0

55.6
61.3
61.0

67.6
72.4
65.7

1950
1951
1952
1953
1954

1,203.7
1,328.2
1,380.0
1,435.3
1,416.2

64.3
62.6
64.2
66.3
68.2

72.8
80.8
81.5
84.3
83.3

100.0
110.9
115.9
119.9
124.8

257.7
288.4
298.2
319.9
296.6

156.7
181.4
190.6
208.4
185.8

101.0
107.0
107.6
111.5
110.8

95.3
104.9
104.5
106.7
104.1

182.1
183.8
189.5
195.6
197.1

119.7
126.4
134.7
142.2
149.5

1955
1956
1957
1958
1959

1,494.9
1,525.7
1,551.1
1,539.3
1,629.1

69.1
67.8
65.9
68.3
65.8

92.0
96.5
96.2
89.1
94.1

133.3
142.7
142.4
147.5
160.4

327.7
330.6
332.5
303.5
338.0

208.5
207.3
208.7
180.1
203.0

119.2
123.3
123.8
123.4
135.0

112.3
117.7
119.9
116.1
123.5

215.0
221.4
225.1
225.0
240.7

1960
1961
1962
1963
1964

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

68.3 94.2 163.1
67.5 95.6 165.1
67.1 98.1 172.5
67.2 102.2 177.5
65.2 105.7 185.9

338.7
339.4
368.3
397.4
425.4

202.4
199.9
220.5
238.9
259.3

136.3
139.5
147.8
158.5
166.2

127.8
130.0
136.3
143.8
150.4

1965
1966
1967
1968
1969

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

66.7
62.4
65.4
63.6
65.3

109.4
115.0
120.2
124.7
128.9

193.7
194.4
190.7
190.2
183.6

462.5
497.9
496.6
522.0
536.7

286.9
312.3
311.9
326.2
334.0

175.6
185.6
184.7
195.8
202.6

1970
1971
1972
1973
1974

2,416.2
2,484.8
2,608.5
2,744.0
2,729.4

68.8
70.6
70.9
70.3
69.7

134.5
132.4
134.4
133.4
130.3

168.0
162.7
166.7
170.4
162.3

506.8
515.5
561.2
621.3
591.6

304.8
305.5
336.5
377.0
363.5

2,695.0
2,826.7
2,958.6
3,115.2
3,192.3

73.1
71.5
71.6
71.8
76.1

125.6
124.4
126.2
128.8
130.0

149.4
158.1
165.1
176.7
173.5

547.5
600.6
645.0
683.4
697.1

3,187.2
3,248.8
3,166.0
3.277.7
3,492.0

76.2
88.0
89.6
75.8
85.0

135.6
139.8
132.1
125.4
133.0

161.6
147.4
140.9
147.8
156.7

665.4
676.1
634.6
680.9
760.7

1975
1976
1977
1978
1979
1980
1981
1982
1983
1984

..

76.7 226.1 138.1
90.0 238.5 145.0
89.4 226.3 133.2

88.0 100.0 157.8 103.0 124.7
93.5 98.7 161.9 107.7 128.9
93.1 90.7 166.1 112.2 128.9

156.2
7.6 -13.6
155.5 -4.9 -7.5
164.0
3.2 -4.2

5.1
6.2
5.6

133.8
136.9
139.4
142.7
145.9

169.2
214.0
231.9
230.9
225.4

-.6
2.0
5.3
9.4
3.5

6.2
7.9
8.3
7.9
8.4

160.2
168.8
178.3
184.5
195.9

153.0
161.1
168.6
174.3
183.5

223.4
6.2 -6.6
225.6 -6.2 -11.1
229.2 -3.8 -14,7
5 81
230.1
232.8 -4.6 -11.0

9.4
10.7
11.5
9.5
10.0

245.4
247.7
263.9
273.8
290.7

206.5
215.0
226.5
235.9
245.8

190.2
197.7
207.7
217.4
230.7

240.3 -8.7 -11.6
249.2 -3.7 -6.9
258.4
.1 133
264.5 -1.8 -19.7
274.0 4 1 12 6

11.1
12.1
13.9
14.9
16.1

161.5
174.2
178.1
189.5
200.3

309.8
326.5
335.3
354.8
361.7

259.8
271.1
282.4
296.0
314.0

240.4
253.9
265.2
274.7
287.8

284.3
305.5
322.3
332.6
340.2

-3.4 -14.0
5.9 145
-.2
-1.0
2.8
-2.8
-9,5 -2.7

17.0
15.9
16.3
17.7
17.0

202.0
210.0
224.8
244.3
228.1

203.9
209.8
223.8
243.0
248.8

367.6
385.7
414.8
437.0
426.2

320.7
335.9
350.9
367.7
381.6

295.7
302.4
320.0
340.2
347.5

27
39
339.6
340.0
4.2
4.8
5.1
340.5 -3.4
343.4 -8.6 -6.2
350.6 -3.3 -11.8

17.1
20.7
23.7
32.2
35.9

325.2
357.4
386.2
415.9
423.5

222.2
243.2
258.9
267.5
273.5

246.4
257.1
268.5
284.8
293.4

433.1
454.4
479.2
502.4
511.7

387.6
403.1
417.7
442.5
459.2

352.4
367.7
388.4
411.9
429.8

355.0
4.2 -8.7
357.7
66
5.6
.1 -3.4
362.9
371.5
2.1
28
376.2 -1.4 -9.0

29.3
33.0
37.4
42.1
55.7

401.5
404.9
362.5
394.5
462.0

263.9
271.2
272.1
286.3
298.6

293.4
296.2
288.4
294.2
312.8

500.4
507.3
506.5
536.0
584.7

464.3
474.2
475.1
488.6
512.6

442.6
462.5
463.6
485.1
509.5

382.7
5.9
385.3 4.4
383.9 -.1
386.1 -.6
390.7 -1.4

55.5
55.2
51.2
48.8
44.5

3.1
9.7
6.5
9.4
9.5

3.5
12.5
.0
9.6
3.2

1
Equals GNP in constant dollars measured as the sum of incomes less GNP in constant dollars measured as the sum of gross product
by industry.

Note.—The industry classification is on an establishment basis and is based on the 1972 Standard Industrial Classification.
Source: Department of Commerce, Bureau of Economic Analysis.




265

TABLE B-12.—Gross domestic product of nonfinancial corporate business, 1929-85
[Billions of dollais; quarterly data at seasonally adjusted annual rates]
Gross
domestic
product
of
noninancial
corporate
business

Year or
quarter

1929
1933
1939
1940
1941
1942.
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985 "
1982: I

1!
Ill
IV
1983: 1
II
Ill
IV
1984- 1
II
Ill
IV
1985: 1
II
Ill
IV

. .

,

Net domestic product
Capital
conDomestic income
sumption
Corporate profits with inventory valuation and capital
allowconsumption adjustments
Indiances
rect
with
ComProfits
busiInven- Capital Net
capital Total ness
pensatory con- intercontion of
Profits after tax
tax,1 Total employvalu- sump- est
sumpetc.
Total Profits
ation tion
tion
ees
before tax
Undis- adjust- adjustDiviadjusttax lability Total dends tributed ment ment
ment
profits

50.4
24.6
44.0
50.6
65.9
83.3
99.1
102.6
95.8
99.8
121.2
138.9
135.2
153.6
176.3
184.0
196.6
193.5
218.5
233.6
244.1
238.0
267.1
277.6
285.2
311.1
331.1
357.7
392.7
430.2
452.6
499.7
542.2
560.4
605.1
671.8
753.0
812.8
881.5
995.5
1,126.1
1,274.1
1,417.4
1,540.8
1,738.4
1,782.2
1,915.9
2,153.1
2,283.3
1,777.4
1,783.2
17890
1,779.4
1,820.0
1,884.9
1,946.5
2,012.2
2,088.0
2,147.0
2,172.5
2,205.2
2,237.0
2,265.8
2,301.6

5.3 45.1
4.2 20.4
4.8 39.1
5.0 45.6
5.4 60.5
6.0 77.3
6.1 93.0
6.2 96.4
6.3 89.5
7.4 92.4
9.0 112.2
10.5 128.4
11.2 123.9
12.1 141.5
13.9 162.4
14.9 169.1
15.9 180.7
16.8 176.7
17.9 200.7
20.1 213.5
22.1 221.9
23.2 214.8
24.3 242.8
25.3 252.4
26.0 259.1
27.0 284.2
28.2 303.0
29.6 328.0
31.6 361.1
34.5 395.7
37.8 414.8
41.7 458.0
45.7 496.6
50.2 510.2
55.1 550.0
60.5 611.3
65.6 687.4
76.8 736.0
92.5 789.0
103.0 892.5
115.1 1,010.9
130.8 1,143.3
150.7 1,266.7
172.5 1,368.2
200.2 1,538.1
223.0 1,559.3
232.1 1,683.8
242.5 1,910.6
253.7 2,029.7
216.1 1,561.3
220.9 1,562.3
225 1 1 5638
229.7 1,549.7
229.3 1,590.7
230.4 1,654.4
233.8 1,712.7
234.9 1,777.3
237.7 1,850.3
241.0 1,906.0
244.2 1,928.3
247.1 1,958.0
249.3 1,987.7
251.5 2,014.3
255.2 2,046.4
258.7

3.4 41.8
3.8 16.5
5.1 34.1
5.5 40.2
6.4 541
6.8 70.5
7.3 85.7
8.1 88.3
8.9 80.6
10.1 82.3
11.9 100.3
13.2 115.2
13.9 110.1
15.3 126.2
16.5 146.0
18.0 151.1
19.2 161.5
18.6 158.1
20.6 180.0
22.4 191.1
23.7 198.2
24.1 190.7
26.2 216.7
28.5 223.9
29.8 229.4
32.2 252.0
34.2 268.7
36.8 291.2
39.4 321.7
40.7 355.0
43.3 371.5
49.9 408.1
54.9 441.6
59.0 451.2
64.7 485.3
69.4 541.9
76.5 610.8
81.5 654.5
88.3 700.7
95.4 797.1
104.4 906.5
114.1 1,029.2
122.1 1,144.7
138.5 1,229.7
165.9 1,372.3
166.9 1,392.4
182.5 1,501.3
202.2 1,708.4
213.3 1,816.3
165.3 1,396.0
165.3 1,397.0
1672 13967
169.7 1,379.9
171.6 1,419.1
181.8 1,472.6
187.3 1,525.4
189.3 1,588.0
195.6 1,654.6
201.8 1,704.2
204.6 1,723.6
206.7 1,751.3
208.2 1,779.5
214.2 1,800.1
214.8 1,831.6
216.2

32.3
16.7
28.2
31.2
398
51.0
62.2
65.1
61.9
67.2
79.1
87.7
85.2
94.7
110.2
118.2
128.6
126.4
138.4
151.3
1590
155.8
171.5
181.2
185.3
200.1
211.1
226.7
246.5
274.0
292.3
323.2
358.8
378.7
402.0
447.1
505.9
556.8
580.4
656.3
741.0
847.4
962.0
1,051.1
1,160.5
1,203.9
1,267.3
1,401.6
1,488.4
1,198.0
1,203.3
1 2078
1,206.5
1,222.7
1,249.5
1,277.7
1,319.5
1,362.3
1,392.4
1,414.6
1,437.2
1,460.1
1,480.6
1,494.7
1,518.2

8.0
-1.9
4.4
7.6
130
18.2
22.4
22.2
17.7
14.4
20.4
26.6
23.9
30.6
34.7
31.7
31.5
30.1
40.0
38.1
37.0
32.2
42.1
39.2
40.1
47.3
52.8
59.3
69.1
73.7
70.5
74.8
69.6
55.4
65.2
75.7
82.4
69.4
91.6
113.3
134.9
146.0
139.1
123.1
144.2
111.9
160.6
221.1
242.3
118.6
113.6
115.2
100.1
124.8
151.9
173.1
192.5
213.2
227.2
220.0
224.1
229.8
232.2
253.1

8.4
.6
6.1
8.8
164
20.1
23.6
22.2
17.8
22.0
29.1
31.8
24.9
38.5
39.1
33.8
34.9
32.1
42.0
41.8
39.8
33.7
43.1
39.7
39.5
44.2
48.9
55.4
65.2
70.3
66.5
73.1
69.6
57.0
65.6
76.8
96.9
107.2
109.2
138.3
160.5
182.1
195.8
181.8
181.5
129.7
151.5
186.3
172.6
138.8
133.1
130.6
116.3
117.6
145.4
170.2
172.8
193.2
197.5
177.4
176.9
169.6
164.6
174.5

1.2
U
2.7
75
11.2
13.8
12.6
10.2
8.6
10.8
11.8
9.3
16.9
21.2
17.8
18.5
15.6
20.2
20.1
19.1
16.2
20.7
19.2
19.5
20.6
22.8
24.0
27.2
29.5
27.8
33.6
33.3
27.2
29.9
33.8
40.2
42.2
41.5
53.0
59.9
67.1
69.6
67.0
63.9
46.3
57.0
71.7
62.0
49.4
47.8
46.9
41.0
40.9
55.1
66.0
65.9
76.9
78.4
86.1
65.3
60.9
58.0
63.3

7.3
.1
4.7
6.1
90
8.9
9.8
9.6
7.6
13.4
18.3
20.0
15.6
21.6
17.9
16.0
16.4
16.4
21.8
21.8
20.7
17.5
22.4
20.5
20.1
23.5
26.2
31.4
38.0
40.8
38.6
39.5
36.2
29.8
35.6
43.0
56.7
65.0
67.7
85.4
100.6
115.0
126.2
114.8
117.6
83.4
94.5
114.6
110.6
89.4
85.3
83.7
75.4
76.7
90.3
104.1
106.9
116.3
119.1
111.3
111.6
108.6
106.6
111.2

1
Indirect business tax and nontax liability plus business transfer payments less subsidies.
Source-. Department of Commerce, Bureau of Economic Analysis.




266

5.1
2.0
3.3
3.5
39
3.7
3.9
4.1
4.1
4.8
5.5
6.0
6.0
7.5
7.1
7.1
7.3
7.4
8.5
9.0
9.3
9.3
10.0
10.6
10.6
11.4
12.6
13.7
15.6
16.8
17.5
19.1
19.1
18.5
18.5
20.1
21.1
21.7
24.8
27.8
32.0
37.2
39.3
45.5
53.4
59.7
66.5
72.1
76.6
57.8
57.9
60.9
62.2
68.5
68.0
69.5
59.9
69.6
72.5
72.7
73.6
71.7
83.1
75.0
76.8

2.2
-19
1.4
2.6
50
5.2
5.8
5.6
3.5
8.6
12.8
14.0
9.6
14.1
10.8
8.8
9.1
9.0
13.4
12.7
11.4
8.2
12.4
9.9
9.5
12.2
13.5
17.7
22.4
24.0
21.2
20.4
17.1
11.3
17.1
22.9
35.6
43.3
42.9
57.6
68.6
77.8
86.9
69.3
64.2
237
28.0
42.5
34.0
31.5
27.4
22.8
13,2
8.2
22.4
34.6
47.0
46.6
46.6
38.6
38.0
37.0
23.5
36.1

0.5
-2.1
-.7
-.2
25
-1.2
-.8
-.3
-.6
53
-5.9
-2.2
1.9
-5.0
-12
1.0
-1.0
3
-1.7
-2.7
-1.5
-!3
-.2
.3
.0
.1

-~L2
21
-1.6
-3.7
-5.9
66
-4.6
-6.6
-20.0
-39.5
-11.0
-14.9
-16.6
-25.3
-43.2
-43.1
-24.2
-10.4
-10.0
-5.4
-.4
-7.7
-10.3
-10.0
-13.4
-3.4
-9.3
-18.1
-8.9
-13.0
-5.6
-1.3
-1.6
.7
2.2
4.7
-9.0

-0.9
-.3
10
-1.0
10
-.7
-.4
.3
-2^3
-2.8
-3.0
-2.9
-2.9
-3.2
-3.0
-2.4
-1.6
-.3
-1.1
-1.2
-1.2
-.8
-.2
.3
3.1
3.9
4.4
5.2
5.5
5.5
5.3
5.9
5.0
4.2
5.5
5.6
1.7
-6.6
-10.2
-9.0
-10.9
135
-15.5
-13.1
-7.5
19.0
40.3
70.0
-12.4
-9.3
54
-2.8
10.6
15.9
21.0
28.7
33.0
35.3
43.9
48.8
59.6
65.4
73.9
81.1

1.4
1.7
1.5
1.4
13
1.3
1.1
1.0
1.0
.7
0.8
.9
1.0
.9
1.1
1.2
1.3
1.6
1.6
1.8
2.2
2.7
3.1
3.5
4.0
4.5
4.8
5.3
6.1
7.4
8.8
10.1
13.2
17.1
18.1
19.2
22.5
28.3
28.7
27.5
30.6
35.9
43.5
55.5
67.5
76.6
73.4
85.7
85.6
79.3
80.2
73.6
73.4
71.6
71.3
74.7
75.9
79.2
84.5
89.0
90.1
89.6
87.3
83.8
81.8

TABLE B-13.—Output, costs, and profits of nonfinancial corporate business, 1948-85
[Quarterly data at seasonally adjusted annual rates]

Year or
quarter

Gross domestic
product of
nonfinancial
corporate
business
(billions of
dollars)

Current-dollar cost and profit per unit of output (dollars) 1

Total
cost

and
profit 2

Capital
consumption
allowances
with
capital
consumption
adjustment

Indirect
business

tax,

Compen-

Net

of
employees

interest

0.022

0.027

.018

.028

.002

.166
.177
.185
.192
.194
.192
.203
.210
.215
.215

.054
.056
.050
.047
.046
.056
.051
.049
.044
.053

.030
.034
.028
.028
.024
.028
.027
.025
.022
.026

.024
.022
.022
.020
.022
.028
.024
.024
.022
.027

.002
.002
.002
.002
.002
.002
.002
.003
.004
.004

12.053
12.506

2.589
2.685

.035
.035
.036
.035
.036
.035
.034
.036
.039
.041

.221
.221
.221
.219
.220
.222
.230
.240
.251
.268

.048
.048
.052
.055
.058
.062
.062
.058
.058
.052

.023
.023
.023
.024
.023
.024
.025
.023
.026
.025

.024
.025
.029
.031
.034
.038
.037
.035
.032
.027

.004
.005
.005
.005
.005
.005
.006
.007
.008
.010

12.672
13.058
13.550
14.135
14.655
14.979
15.205
15.344
15.715
15.700

2.797
2.884
2.997
3.093
3.229

.038
.040
.041
.042
.050
.062
.065
.068
.073
.082

.045
.048
.048
.049
.053
.059
.060
.062
.064
.066

.286
.295
.306
.322
.363
.390
.414
.439
.473
.523

.042
.048
.052
.053
.045
.062
.072
.080
.082
.076

.021
.022
.023
.026
.028
.028
.033
.036
.037
.038

.021
.026
.029
.027
.018
.034
.038
.044
.044
.038

.013
.013
.013
.014
.018
.019
.017
.018
.020
.024

15.713
16.158
16.490
16.832
16.331
16.691
16.986
17.257
17.358
17.221

4.490
4.774
5.045
5.425
5.930

.852
.946
1.000
1.026
1.056
1.088

.095
.109
.125
.124
.119
.121

.077
.090
.094
.098
.099
.102

.581
.632
.676
.679
.687
.709

.068
.078
.063
.086
.108
.115

.037
.035
.026
.031
.035
.030

.031
.044
.037
.055
.073
.086

.031
.037
.043
.039
.042
.041

17.096
17.194
17.318
17.934
18.316

9.939
10.861
11.699
12.175
12.588

1,799.1
1,791.7
1,777.8
1,760.2

.988
.995
1.006
1.011

.120
.123
.127
.131

.092
.092
.094
.096

.666
.672
.679
.685

.066
.063
.065
.057

.027
.027
.026
.023

.038
.037
.038
.034

.044
.045
.041
.042

17.203
17.301
17.375
17.402

11.456
11.619
11.804
11.928

1,820.0
1,884.9
1,946.5
2,012.2

1,793.1
1,842.5
1,891.2
1,940.8

1.015
1.023
1.029
1.037

.128
.125
.124
.121

.096
.099
.099
.098

.682
.678
.676
.680

.070
.082
.092
.099

.023
.030
.035
.034

.047
.053
.057
.065

.040
.039
.039
.039

17.700
17.887
18.036
18.109

12.070
12.130
12.185
12.313

2,088.0
2,147.0
2,172.5
2,205.2

2,005.0
2,043.0
2,048.2
2,061.0

1.041
1.051
1.061
1.070

.119
.118
.119
.120

.098
.099
.100
.100

.679
.682
.691
.697

.106
.111
.107
.109

.038
.038
.032
.032

.068
073
.075
.077

.039
.041
.043
.044

18.319
18.405
18.298
18.255

12.447
12.544
12.638
12.730

2,237.0
2,265.8
2,301.6

2,077.3
2,087.2
2,106.9

1.077
1.086
1.092

.120
.121
.121

.100
.103
.102

.703
.709
.709

.111
.111
.120

.029
.028
.030

.081
.083
.090

.043
.042
.040

18.260
18.244
18.372

12.835
12.942
13.034

538.9
515.7

0.258

0.019
.022

0.025

.262

.027

0.163
.165

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

153.6
176.3
184.0
196.6
193.5
218.5
233.6
244.1
238.0
267.1

570.4
622.4
637.3
668.4
650.8

.269
.283
.289
.294
.297
.304
.313
.322
.328
.335

.021
.022
.023
.024
.026
.025
.027
.029
.032
.030

.027
.026
.028
.029
.029
.029
.030
.031
.033
.033

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

277.6
285.2

820.8

311.1
331.1
357.7
392.7
430.2
452.6
499.7
542.2

839.1
904.8
964.4
1,029.0
1,111.7
1,189.5
1,217.0
1,286.5
1,339.6

.338
.340
.344
.343
.348
.353
.362
.372
.388
.405

.031
.031
.030
.029
.029
.028
.029
.031
.032
.034

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

560.4
605.1
671.8
753.0
812.8
881.5
995.5
1,126.1
1,274.1
1,417.4

1,325.2
1,360.6
1,461.1
1,569.7
1,533.4
1,488.1
1,583.5
1,686.6
1,789.8
1,840.4

.423
.445
.460
.480
.530
.592
.629
.668
.712
.770

1980
1981
1982
1983
1984
1985"

1,540.8 1,807.9
1,738 4 1,837.2
1,782.2 1,782.2
1,915.9 1,866.9
2,153.1 2,039.3
2,283.3 2,098.4

1982- 1
II
Ill
IV

1,777.4
1,783.2
1,789.0
1,779.4

1983:1

1985:1

II
Ill"

ees

.046

138.9
135.2

II
Ill
IV

of all
employ-

0.049

1948
1949

1984:1

Compensation
per hour

Profits
after
tax 4

etc.3

719.3
747.0
758.1
725.2
798.5

1

Profits

of all
employees
(1982
dollars)

tax
liability

1982
dollars

III
IV

Output
per hour

sation

Current
dollars

||

Corporate profits with
inventory valuation and
capital consumption
adjustments

Total

(dollars)

0.002

3.321
3.502
3.685
3.948
4.206

6.510
7.040
7.581
8.219
9.002

Output is measured by gross domestic product of nonfinancial corporate business in 1982 dollars.
This is equal to the deflator for gross domestic product of nonfinancial corporate business with the decimal point shifted two
places to the left.
3
Indirect business tax and nontax liability plus business transfer payments less subsidies.
4
With inventory valuation and capital consumption adjustments.
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).
2




267

TABLE B-14.—Personal consumption expenditures, 1929-85
[Billions of dollars,- quarterly data at seasonally adjusted annual rates]

Year or quarter

Personal
consumption
expenditures

Nondurable goods

Durable goods
Durable
goods

Nondurable goods

Services

Furniture
Motor
and
vehicles household
and parts equipment

Other

Food

Clothing
and
shoes

1929
1933
1939... .

77.3
45.8
67.0

9.2
3.5
6.7

37.7
22.3
35.1

30.4
20.1
25.2

3.3
1.1
2.3

4.7
1.9
3.4

1.2
.5
1.0

19.5
11.5
19.1

9.4
4.6
7.1

1940
1941
1942
1943
1944
1945
1946
1947
1948. ..
1949

71.0
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3

7.8
9.7
6.9
6.5
6.7
8.0
15.8
20.4
22.9
25.0

37.0
42.9
508
58.6
64.3
71.9
82.7
90.9
96.6
94.9

26.2
28.3
31.0
34.3
37.2
39.7
45.4
50.6
55.5
58.4

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

1.1
1.3
1.6
1.9
2.1
2.5
3.2
3.3
3.4
3.2

20.2
23.4
28.4
33.2
36.7
40.6
47.4
52.3
54.2
52.5

7.5
8.8
11.0
13.4
14.6
16.5
18.2
18.8
20.1
19.3

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

192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3

30.8
29.9
29.3
32.7
32.1
38.9
38.2
39.7
37.2
42.8

98.2
109.2
114.7
117.8
119.7
124.7
130.8
137.1
141.7
148.5

63.2
69.0
75.1
82.1
88.0
94.3
101.6
108.5
115.7
125.0

13.7
12.2
11.3
13.9
13.0
17.8
15.8
17.3
14.8
18.9

13.7
14.1
14.0
14.7
14.8
16.4
17.3
17.2
16.9
18.1

3.3
3.6
3.9
4.1
4.3
4.6
5.0
5.2
5.4
5.8

53.9
60.7
64.1
65.4
66.8
68.6
71.4
75.1
77.9
80.7

19.6
21.3
22.0
22.2
22.3
23.3
24.4
24.5
24.9
26.4

I960.. ..
1961
1962
1963
1964
1965
1966
1967. ...
1968
1969

330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9

43.5
41.9
47.0
51.8
56.8
63.5
68.5
70.6
81.0
86.2

153.2
157.4
163.8
169.4
179.7
191.9
208.5
216.9
235.0
252.2

134.0
141.8
151.1
160.6
172.8
185.4
200.3
216.0
236.4
259.4

19.7
17.8
21.5
24.4
26.0
29.9
30.3
30.0
36.1
38.4

18.0
18.3
19.3
20.7
23.2
25.1
28.2
30.0
32.9
34.7

5.8
5.8
6.3
6.8
7.6
8.4
10.0
10.6
12.0
13.2

82.7
84.8
87.1
89.5
94.6
101.0
109.0
112.3
121.6
130.5

27.0
27.6
29.0
29.8
32.4
34.1
37.4
39.2
43.2
46.5

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

640.0
691.6
757.6
837.2
916.5
1,012.8
1,129.3
1,257.2
1,403.5
1,566.8

85.7
97.6
111.2
124.7
123.8
135.4
161.5
184.5
205.6
219.0

270.3
283.3
305.1
339.6
380.9
416.2
452.0
490.4
541.8
613.2

284.0
310.7
341.3
373.0
411.9
461.2
515.9
582.3
656.1
734.6

35.9
44.9
51.5
56.7
50.3
55.8
72.7
85.4
95.1
96.9

35.7
37.8
42.4
47.9
51.5
54.5
60.2
67.1
73.9
82.1

14.1
14.9
17.2
20.1
22.0
25.0
28.5
32.0
36.6
40.0

142.1
147.5
158.5
176.1
198.2
218.7
236.2
255.9
282.2
317.3

47.8
51.7
56.4
62.5
66.0
70.8
76.6
84.1
94.8
102.2

1980
1981
1982. .
1983
1984
1985 "

1,732.6
1,915.1
2,050.7
2,229.3
2,423.0
2,581.9

219.3
239.9
252.7
289.6
331.1
360.8

681.4
740.6
771.0
817.0
872.4
912.5

831.9
934.7
1,027.0
1,122.7
1,219.6
1,308.6

90.3
100.5
108.9
130.6
153.8
167.7

86.2
92.7
95.7
107.4
119.4
128.9

42.8
46.6
48.1
51.7
57.9
64.1

349.1
376.5
398.8
422.0
451.7
474.2

109.0
119.9
124.4
135.2
147.4
156.1

1982- 1 .
II
Ill
IV

1,996.3
2,023.8
2,065.6
2,117.0

245.1
248.9
252.8
263.8

758.1
762.6
776.7
786.6

993.1
1,012.2
1,036.1
1,066.5

105.7
105.7
108.3
115.7

92.3
95.1
96.4
99.1

47.1
48.1
48.1
49.0

388.9
396.7
402.7
407.0

123.4
122.8
125.0
126.5

1983:1
II
III.
IV

2,146.0
2,210.1
2,254.9
2,306.3

268.5
285.3
295.3
309.4

792.4
811.7
826.5
837.2

1,085.2
1,113.0
1,133.1
1,159.6

115.9
129.2
134.0
143.1

102.1
105.4
109.0
113.0

50.4
50.7
52.2
53.3

413.1
419.0
426.0
430.0

129.4
135.0
135.5
140.9

1984:1

2,358.6
2,414.4
2,439.0
2,480.1

321.6
330.2
331.1
341.5

856.6
873.2
876.6
883.1

1,180.4
1,211.1
1,231.3
1,255.4

150.1
154.1
153.6
157.4

116.1
118.8
119.3
123.5

55.4
57.3
58.2
60.6

440.0
449.9
457.1
459.6

144.4
149.1
146.4
149.7

1985- 1
II
III.

2,525.0
2,563.3
2,606.1
2,633.3

351.5
356.5
376.0
359.2

895.7
910.2
914.5
929.4

1,277.8
1,296.6
1,315.6
1,344.6

163.1
165.4
183.0
159.3

125.7
127.6
128.6
133.9

62.7
63.4
64.4
66.0

465.5
472.1
475.9
483.3

152.8
156.3
155.7
159.8

II
III
IV

IV

See next page for continuation of table.




268

TABLE B-14.—Personal consumption expenditures, 1929-85—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Nondurable goods— cont'd
Year or
quarter

Gasoline
and oil

Fuel oil
and coal

Services
Household operation

Other

Housing *

Total

Electricity
and gas

Other

Transportation

Medical
care

Other

1929
1933
1939

1.8
1.5
2.2

1.6
1.2
1.4

5.4
3.5
5.3

11.7
8.1
9.4

4.0
2.8
3.8

1.2
1.1
1.4

2.9
1.7
2.4

2.6
1.5
2.0

2.2
1.5
2.1

9.9
6.3
8.0

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

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

5.6
6.4
7.5
8.7
9.6
10.8
11.3
12.8
14.1
14.7

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

2.6
2.7
3.2
3.5
4.1
4.5
4.7
5.1
5.4
5.6

2.1
2.4
2.7
3.4
3.7
4.0
5.0
5.3
5.8
5.9

2.2
2.4
2.7
2.9
3.3
3.6
4.6
5.6
6.3
6.5

8.2
8.9
9.6
11.0
12.0
12.9
15.0
16,3
17.4
17.8

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

5.5
6.1
6.8
7.4
7.8
8.6
9.4
10.2
10.6
11.3

3.4
3.5
3.5
3.4
3.5
3.8
3.9
4.1
4.2
4.0

15.8
17.6
18.4
19.4
19.3
20.4
21.7
23.2
24.2
26.1

21.7
24.3
27.0
29.9
32.3
34.4
36.7
39.3
42.0
45.0

9.5
10.4
11.2
12.1
12.7
14.2
15.4
16.3
17.4
18.7

3.3
3.7
4.1
4.5
5.0
5.5
6.1
6.5
7.1
7.6

6.2
6.7
7.1
7.6
7.7
8.6
9.3
9.8
10.4
11.1

6.2
6.8
7.3
8.0
8.2
8.5
8.9
9.4
9.7
10.5

6.9
7.4
8.3
9.3
10.2
10.8
11.7
12.8
14.0
15.3

18.8
20.1
21.4
22.9
24.6
26.5
28.9
30.7
32.5
35.4

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

12.0
12.0
12.6
13.0
13.6
14.8
16.0
17.1
18.6
20.5

3.8
3.8
3.8
4.0
4.1
4.4
4.7
4.8
4.7
4.6

27.7
29.2
31.4
33.1
35.0
37.6
41.4
43.5
47.0
50.2

48.2
51.2
54.7
58.0
61.4
65.4
69.5
74.1
79.7
86.8

20.3
21.2
22.4
23.6
25.0
26.5
28.2
30.1
32.3
35.0

8.3
8.8
9.4
9.9
10.4
10.9
11.5
12.2
13.0
14.0

11.9
12.3
12.9
13.7
14.6
15.6
16.7
17.9
19.3
21.0

11.2
11.7
12.2
12.7
13.4
14.5
15.9
17.3
18.9
20.9

16.4
17.5
19.4
21.0
24.1
25.9
28.3
31.1
35.7
40.9

38.0
40.3
42.4
45.3
48.9
53.1
58.5
63.5
69.9
75.8

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

21.9
23.2
24.4
28.1
36.1
39.7
43.0
46.9
51.3
66.1

4.4
4.6
5.1
6.3
7.8
8.4
10.1
11.1
12.0
15.8

54.1
56.4
60.8
66.6
72.7
78.5
86.0
92.4
101.4
111.8

94.0
102.7
112.1
123.1
135.1
148.4
163.5
182.4
205.2
231.1

37.7
40.9
45.2
49.6
55.4
63.5
72.3
81.7
90.9
100.3

15.2
16.6
18.4
20.0
23.5
28.5
32.5
37.6
42.1
46.8

22.5
24.3
26.8
29.6
31.9
35.0
39.8
44.1
48.8
53.4

23.7
27.1
29.8
31.2
33.3
35.7
41.3
49.2
53.5
59.0

' 46.1
51.8
57.8
64.4
72.4
84.2
95.9
111.5
125.1
141.4

82.5
88.2
96.5
104.7
115.7
129.3
142.9
157.5
181.4
202.7

1980
1981
1982
1983
1984 p
1985

83.7
92.7
89.1
90.1
90.7
92.0

18.0
19.4
18.6
17.5
17.9
15.8

121.5
132.2
140.1
152.1
164.7
174.3

261.5
295.6
321.1
344.0
371.3
403.3

113.9
127.5
143.4
155.9
166.0
173.2

56.4
63.5
72.8
80.2
84.6
88.8

57.5
64.0
70.6
75.7
81.4
84.4

64.5
68.3
69.7
74.7
82.1
86.8

164.2
193.5
217.8
237.4
259.5
280.3

227.9
249.7
275.1
310.7
340.7
365.1

1982- 1
II
Ill
IV

91.5
86.4
88.6
89.8

19.0
18.4
18.9
18.2

135.2
138.3
141.5
145.2

313.3
316.9
323.7
330.3

139.9
142.0
143.7
148.0

72.3
72.0
71.9
74.8

67.6
70.0
71.7
73.2

68.1
69.1
70.4
71.1

208.1
214.8
221.3
226.9

263.7
269.5
277.1
290.2

1983- 1
II
Ill
IV

86.5
89.4
92.5
92.1

15.7
17.6
18.5
18.3

147.5
150.7
154.1
155.8

335.4
340.3
346.8
353.6

149.7
155.6
157.4
160.8

74.9
79.9
82.1
83.9

74.8
75.7
75.3
76.9

72.3
72.9
76.1
77.4

230.6
235.2
239.0
244.8

297.1
309.0
313.8
323.0

1984- 1
II
Ill

92.0
91.9
89.1
89.8

18.9
18.2
17.8
16.8

161.3
164.1
166.2
167.3

359.8
367.6
375.5
382.3

161.4
166.6
166.9
168.9

81.7
84.8
84.5
87.2

79.8
81.8
82.4
81.7

79.8
81.9
82.3
84.4

250.0
257.1
262.6
268.1

329.4
338.0
343.9
351.7

89.3
92.9
92.2
93.7

16.1
15.4
16.0
15.9

172.1
173.5
174.8
176.8

389.1
398.1
408.0
418.0

174.2
171.1
173.3
174.0

93.0
87.0
87.6
87.5

81.3
84.1
85.7
86.6

85.6
86.2
86.7
88.7

271.9
278.5
281.8
288.9

357.0
362.7
365.8
375.0

IV

1985:1

II
Ill
IV P

1
Includes imputed rental value of owner-occupied housing.
Source: Department of Commerce, Bureau of Economic Analysis.




269

TABLE B-15.—Gross and net private domestic investment, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Less:

Year or quarter

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956 . .
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984 p
1985
1982- 1
II
Ill
IV
1983:1
||
III
IV
1984- 1
II
Ill
IV
1985:1
II.
Ill ;
IV ' . .

Gross
private
domestic
investment

16.7
1.6
9.5
13.4
18.3
10.3
6.2
7.7
11.3
31.5
35.0
47.1
36.5
55.1
60.5
53.5
54.9
54.1
69.7
72.7
71.1
63.6
80.2
78.2
77.1
87.6
93.1
99.6
116.2
128.6
125.7
137.0
153.2
148.8
172.5
202.0
238.8
240.8
219.6
277.7
344.1
416.8
454.8
437.0
515.5
447.3
501.9
674.0
670.4
459.5
467.8
452.2
409.6
425.0
483.7
521.2
577.6
658.8
673.3
687.9
676.2
657.6
672.8
666.1
685.2

Equals: Net private domestic investment

consumption
allowances
with
capital
consumption
adjustment

Net fixed investment

9.9
7.6
9.0
9.4
10.3
11.3
11.6
12.0
12.4
14.2
17.6
20.4
22.0
23.6
27.2
29.2
30.9
32.5
34.4
38.1
41.1
42.8
44.6
46.4
47.8
49.4
51.4
53.9
57.4
62.1
67.4
73.9
81.4
88.8
97.5
107.9
118.1
137.5
161.8
179.2
201.5
229.9
265.8
303.8
347.8
383.2
399.6
418.9
438.2
373.3
379.8
386.3
393.2
394.5
396.1
403.3
404.4
409.1
416.4
422.5
427.7
430.5
433.8
441.4
447.3

Nonresidential
Total
Total
Total

6.7
-6.1
.5
4.1
8.0
-1.0
-5.3
-4.2
-1.1
17.3
17.5
26.7
14.5
31.5
33.3
24.4
24.0
21.6
35.3
34.6
29.9
20.8
35.5
31.8
29.4
38.2
41.8
45.7
58.8
66.5
58.3
63.1
71.8
60.0
74.9
94.1
120.7
103.4
57.8
98.4
142.5
186.9
189.1
133.1
167.7
64.1
102.3
255.1
232.2
86.2
88.0
65.9
16.4
30.4
87.6
117.9
173.2
249.6
256.9
265.4
248.5
227.0
239.0
224.7
238.0

5.0
-4.5
.1
1.9
3.5
-2.7
-4.7
-3.2
-.1
10.9
17.9
22.0
17.6
24.6
23.1
21.3
23.6
23.3
29.6
29.9
28.5
22.3
29.8
28.7
27.0
32.1
35.9
40.3
48.9
52.3
48.0
55.2
62.0
56.9
67.2
83.6
101.1
87.9
63.4
82.4
121.3
158.3
176.1
141.5
143.7
88.7
108.7
188.0
223.1
110.4
93.0
74.9
76.3
73.2
93.2
120.7
147.7
157.5
188.0
197.1
209.5
208.5
223.5
224.5
235.9

Source.- Department of Commerce, Bureau of Economic Analysis.




270

3.3
-3.5
_7
.7
2.0
21
-3.1
-1.3
1.7
6.9
10.7
11.8
8.7
10.3
11.6
10.1
11.9
10.2
13.2
15.6
15.9
9.6
12.1
13.4
11.9
14.9
16.0
20.3
29.3
35.8
32.3
34.2
39.8
36.8
34.5
40.5
56.2
55.8
37.5
40.9
58.6
82.2
98.9
88.9
98.6
65.5
42.1
99.3
133.3

Structures

1.8
-1.7
-1.1
-.8
_3

If

-2.4
-1.9
-1.0
2.4
1.9
2.5
2.2
2.8
3.9
3.8
4.8
5.0
5.9
7.9
7.9
6.3
6.4
7.3
7.3
8.0
7.9
9.4
13.2
15.2
14.4
15.1
17.4
17.4
16.8
17.4
21.7
22.0
15.6
16.0
17.6
25.0
34.5
39.4
51.7
45.9
25.3
42.5
61.2

Producers'
durable
equipment

1.4
-1.8
.4
1.5
2.3
5
_7

is

2.8
4.5
8.7
9.3
6.5
7.5
7.7
6.4
7.1
5.2
7.3
7.7
8.1
3.2
5.7
6.1
4.6
6.9
8.1
10.9
16.1
20.7
18.0
19.0
22.4
19.4
17.7
23.1
34.4
33.7
21.9
24.8
41.0
57.2
64.5
49.5
46.9
19.6
16.8
56.8
72.1

Residential

1.7
-1.0
.8
1.2
1.5
-.6
-1.6
-1.9
-1.8
4.0
7.3
10.2
8.9
14.4
11.5
11.2
11.7
13.0
16.4
14.4
12.6
12.7
17.7
15.4
15.1
17.2
19.9
20.0
19.6
16.5
15.7
21.0
22.2
20.1
32.7
43.1
45.0
32.2
25.9
41.6
62.6
76.1
77.2
52.6
45.0
23.2
66.6
88.8
89.8

Change in
business
inventories

1.7
-1.6
.4
2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
-.5
4.7
-3.1
6.8
10.2
3.1
.4
-1.6
5.7
4.6
1.4
-1.5
5.8
3.1
2.4
6.1
5.8
5.4
9.9
14.2
10.3
7.9
9.8
3.1
7.8
10.5
19.6
15.4
-5.6
16.0
21.3
28.6
13.0
-8.3
24.0
-24.5
-6.4
67.1
9.1
-24.1
-5.0
-9.0
-59.9
-42.7
-5.5
-2.8
25.5
92.1
68.9
68.3
39.0
18.5
15.5
.2
2.1

TABLE B-16.—Gross and net private domestic investment in 1982 dollars, 1929-85
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951 .
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985".
1982-1
||
III
IV
1983- 1
II
Ill
IV
1984- 1
II
III
IV
1985- 1
||
III
IV P

. . . .

Gross
private
domestic
investment

139.2
22.7
86.0
111.8
138.8
76.7
50.4
56.4
76.5
178.1
177.9
208.2
168.8
234.9
235.2
211.8
216.6
212.6
259.8
257.8
243.4
221.4
270.3
260.5
259.1
288.6
307.1
325.9
367.0
390.5
374.4
391.8
410.3
381.5
419.3
465.4
520.8
481.3
383.3
453.5
521.3
576.9
575.2
509.3
545.5
447.3
503.4
661.3
650.6
464.2
467.5
448.6
408.8
422.5
489.0
526.3
575.9
649.0
662.9
673.3
659.9
639.6
655.6
645.0
662.2

Less:
Capital
consumption
allowances
with
capital
consumption
adjustment

86.8
86.5
84.4
84.9
86.3
86.9
85.7
84.8
85.4
88.0
91.8
96.8
101.7
106.5
111.8
117.0
122.1
127.4
132.6
138.3
143.5
147.7
151.9
156.3
160.6
165.1
170.3
176.3
183.7
192.2
201.1
209.8
219.8
229.8
239.5
253.4
263.6
276.1
287.0
297.3
309.6
323.7
341.3
356.1
369.7
383.2
394.0
405.9
423.3
377.7
381.0
384.0
390.0
388.9
391.4
398.3
397.3
400.7
404.2
407.7
411.0
415.2
420.1
426.6
431.2

Equals: Net private domestic investment
Net fixed investment
Nonresidential
Total

Total

52.4
-63.8
1.6
26.9
52.5
-10.2
-35.3
284
-8.9
90.1
86.1
111.4
67.1
128.4
123.3
94.8
94.4
85.2
127.2
119.5
99.9
73.7
118.4
104.1
98.4
123.5
136.8
149.6
183.4
198.3
173.4
181.9
190.5
151.8
179.8
212.1
257.1
205.3
96.3
156.2
211.7
2533
234.0
153.2
175.8
64.1
109.4
255.4
227.3
86.5
86.5
64.6
18.8
33.6
97.6
128.0
178.6
248.3
258.7
265.6
248.9
224.4
235.5
218.4
231.0

41.6
-53.0
-2.3
12.5
24.7
-22.1
-36.0
-23.3
-.5
62.2
87.1
99.1
76.7
104.2
92.5
84.8
91.7
90.0
110.9
106.5
96.9
77.1
101.9
96.4
91.2
107.3
120.1
133.9
158.1
161.4
144.6
160.9
165.3
143.6
160.2
190.3
217.1
172.0
109.1
134.1
182.6
216.5
218.9
160.1
152.0
88.7
114.9
192.7
220.0
110.5
91.9
74.0
78.1
75.8
101.3
126.6
156.0
164.7
192.7
200.7
212.8
208.6
220.4
220.2
230.9

Source: Department of Commerce, Bureau of Economic Analysis.




271

Total

26.2
-40.2
-10.1
1.5
12.0
-17.5
-24.4
105
10.5
39.5
52.6
54.3
37.9
43.3
46.9
41.7
47,0
40.4
49.9
54.9
51.7
31.5
38.5
41.4
37.3
46.4
49.2
63.3
90.4
106.3
93.6
96.1
103.1
89.3
76.1
85.3
116.5
106.9
60.8
61.8
85.2
111.6
124.3
101.3
105.5
65.5
49.8
109.6
137.3

Structures

16.8
-24.3
120
-8.5
-3.5
-15.9
-20.7
-15.2
-8.3
15.4
11.7
14.3
12.7
15.7
18.8
18.8
22.9
24.4
27.7
32.5
30.7
24.8
25.0
27.9
28.1
30.3
29.1
34.0
46.2
50.4
45.9
46.7
49.7
46.1
40.4
39.8
46.8
42.5
27.9
27.3
28.7
37.2
44.8
47.2
56.0
45.9
28.8
45.2
58.3

Producers'
durable
equipment

9.4
-16.0
1.9
10.0
15.6
-1.6
-3.8
4.7
18.8
24.1
40.9
40.0
25.2
27.6
28.1
22.9
24.1
16.0
22.2
22.4
20.9
6.6
13.6
13.6
9.3
16.0
20.1
29.2
44.2
55.8
47.7
49.3
53.4
43.3
35.7
45.5
69.8
64.4
32.9
34.6
56.5
74.3
79.5
54.1
49.4
19.6
21.0
64.4
79.0

Residential

15.4
-12.8
7.8
11.1
12.7
46
-11.5
-12.8
-11.0
22.7
34.5
44.8
38.9
60.9
45.6
43.2
44.7
49.6
60.9
51.6
45.2
45.6
63.4
55.0
53.8
61.0
70.9
70.6
67.7
55.1
50.9
64.8
62.2
54.2
84.1
105.0
100.6
65.1
48.3
72.2
97.4
104.9
94.6
58.7
46.5
23.2
65.1
83.1
82.8

Change in
business
inventories

10.8
107
3.9
14.4
27.8
12.0
-5^2
-8.4
27.9
-1.0
12.3
97
24.2
30.8
10.0
2.8
-4.8
16.3
12.9
3.0
34
16.5
7.7
7.3
16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1
8.2
19.6
21.8
40.0
33.3
-12.8
22.1
29.1
36.8
15.0
-6.9
23.9
-24.5
-5.5
62.7
7.3
-24.0
-5.4
-9.4
-59.3
-42.2
-3.7
1.4
22.6
83.6
66.0
64.9
36.1
15.8
15.1
-1.8
.1

TABLE B-17.—Inventories and final sales of business, 1946-85
[Billions of dollars, except as noted; seasonally adjusted]
Inventory—final
sales ratio

Inventories '
Nonfarm

Quarter

Total

Fourth quarter:
1946
1947
1948
1949

Farm

Total

Manufacturing

Wholesale
trade

Retail
trade

Final
sales 2
Total

Other

Nonfarm 3

70.7
79.9
85.1
77.1

19.6
21.0
19.3
16.7

51.0
58.8
65.8
60.4

24.6
29.0
32.2
28.6

10.4
11.1
12.5
12.5

12.8
14.5
16.6
15.4

3.2
4.1
4.5
3.9

15.9
18.4
19.8
19.7

4.45
4.33
4.31
3.92

3.21
3.19
3.33
3.07

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

96.1
108.8
108.0
109.1
106.8
114.0
122.8
126.3
126.2
131.7

22.5
24.9
23.3
22.0
21.2
19.9
19.9
21.2
22.6
22.1

73.7
83.9
84.7
87.1
85.5
94.1
102.8
105.1
103.7
109.6

34.9
43.1
44.0
46.0
43.9
48.3
54.0
54.3
52.7
55.2

14.7
15.6
15.6
15.8
16.1
17.6
18.9
19.2
19.3
21.0

19.2
19.7
19.4
20.0
20.2
22.8
23.7
25.0
25.1
26.2

4.9
5.5
5.6
5.2
5.3
5.4
6.2
6.6
6.6
7.2

21.8
24.9
26.4
27.5
28.0
30.2
31.9
33.3
34.3
36.2

4.41
4.38
4.09
3.96
3.82
3.78
3.84
3.80
3.68
3.64

3.38
3.37
3.20
3.16
3.06
3.12
3.22
3.16
3.02
3.03

I960
1961
1962
1963
1964
1965
1966
1967
1968
1969

135.5
137.2
143.8
149.6
155.3
169.1
185.2
197.4
211.8
232.4

23.3
23.8
25.2
25.7
24.5
28.0
27.4
27.9
29.1
31.8

112.2
113.4
118.6
123.8
130.9
141.0
157.8
169.5
182.6
200.6

56.2
57.2
60.3
62.2
65.9
70.7
80.9
87.5
94.0
103.4

21.3
21.8
22.4
23,9
25.2
26.9
30.3
32.7
34.6
37.9

27.5
27.0
28.3
29.6
31.0
33.7
36.2
36.9
40.7
44.5

7.2
7.4
7.5
8.0
8.8
9.8
10.4
12.4
13.3
14.9

37.5
39.5
41.8
44.5
47.1
52.1
55.3
58.8
64.8
68.8

3.61
3.47
3.44
3.36
3.30
3.24
3.35
3.36
3.27
3.38

2.99
2.87
2.84
2.78
2.78
2.70
2.85
2.88
2.82
2.91

240.3
257.8
285.6
352.6
423.3
428.8
463.3
505.7
588.2
674.8

31.1
35.4
44.3
65.5
62.4
64.3
60.2
59.3
73.7
80.7

209.2
222.4
241.3
287.1
360.9
364.5
403.1
446.4
514.5
594.1

105.8
107.3
113.6
136.1
177.0
177.8
194.9
210.6
238.4
281.1

41,7
45.2
50.0
59.4
75.6
76.2
86.1
96.2
113.8
133.7

45.8
52.3
57.7
66.4
74.6
74.7
82.7
93.3
107.8
117.0

16.0
17.6
19.9
25.2
33.7
35.8
39.4
46.3
54.5
62.3

72.4
78.9
87.7
96.8
104.6
117.1
128.5
143.9
165.1
183.2

3.32
3.27
3.26
3.64
4.05
3.66
3.60
3.51
3.56
3.68

2.89
2.82
2.75
2.97
3.45
3.11
3.14
3.10
3.12
3.24

739.3
789.0
771.5
789.1
858.5
859.1

84.5
81.6
79.2
79.9
83.6
74.9

654.8
707.4
692.2
709.2
774.8
784.2

310.7
330.2
316.1
317.3
345.7
341.0

154.8
164.7
162.2
164.0
178.5
179.5

122.7
134.0
134.7
147.0
161.7
171.9

66.7
78.5
79.2
80.9
88.9
91.8

201.1
217.8
229.5
246.6
269.3
288.2

3.68
3.62
3.36
3.20
3.19
2.98

3.26
3.25
3.02
2.88
2.88
2.72

||
III
IV

784.0
786.6
784.7
771.5

82.9
84.2
82.1
79.2

701.1
702.4
702.6
692.2

327.6
323.4
321.0
316.1

161.8
164.7
164.2
162.2

132.3
133.6
136.8
134.7

79.5
80.7
80.7
79.2

220.3
221.5
223.0
229.5

3.56
3.55
3.52
3.36

3.18
3.17
3.15
3.02

1983: 1
II
Ill
IV

764.5
769.9
778.5
789.1

79.3
79.2
76.3
79.9

685.2
690.7
702.2
709.2

310.1
311.4
315.2
317.3

159.1
158.8
162.3
164.0

135.9
139.5
142.6
147.0

80.1
80.9
82.1
80.9

232.0
236.4
241.3
246.6

3.30
3.26
3.23
3.20

2.95
2.92
2.91
2.88

1984: I
II
Ill
IV

820.1
836.5
850.7
858.5

86.2
87.1
85.5
83.6

733.9
749.4
765.3
774.8

327.2
336.2
344.2
345.7

168.4
171.9
176.2
178.5

154.2
155.4
156.8
161.7

84.0
85.9
88.1
88.9

251.7
260.3
264.0
269.3

3.26
3,21
3.22
3.19

2.92
2.88
2.90
2.88

1985- 1
II
Ill
IV

859.9
858.5
856.1
859.1

82.9
79.9
77.8
74.9

777.0
778.6
778.4
784.2

344.6
343.6
342.7
341.0

179.0
180.4
180.0
179.5

165.0
164.8
165.2
171.9

88.5
89.7
90.5
91.8

275.8
279.2
284.5
288.2

3.12
3.08
3.01
2.98

2.82
2.79
2.74
2.72

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1982:

. . .

. .
p

I

.

1

End of quarter.
Quarterly totals at monthly rates. Business final sales equals final sales less gross product of households and institutions,
government, and rest of the world, and includes a small amount of final sales by farms.
3
Ratio based on total business final sales, which includes a small amount of final sales by farms.
Note.—The industry classification of inventories is on an establishment basis and is based on the 1972 Standard Industrial
Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948.
Source: Department of Commerce, Bureau of Economic Analysis.
2




272

TABLE B-1S.-—Inventories and final sales of business in 1982 dollars, 1947-85
[Billions of 1982 dollars, except as noted; seasonally adjusted]
Inventories *

Inventory— final
sales ratio

Nonfarm

Quarter

Total

Fourth quarter:
1947
1948 .
1949

Farm

Total

Manu- Wholesale
facturing trade

Retail
trade

Final
sales2
Other

Total

Nonfarm 3

251.3
263.5
253.9

43.3
45.4
44.4

208.0
218.1
209.5

105.1
108.6
102.9

39.9
42.7
42.8

39.6
43.7
42.8

23.5
23.1
21.1

74.8
77.1
77.3

3.36
3.42
3.28

2.78
2.83
2.71

278.1
308.9
318.9
321.6
316.9

47.7
51.5
54.6
54.3
55.9

230.4
257.4
264.3
267.4
260.9

109.8
133.2
139.0
142.7
135.0

47.6
49.0
50.0
50.4
51.1

49.5
49.6
49.6
50.8
51.2

23.4
25.6
25.8
23.5
23.6

82.6
90.4
93.9
98.0
97.7

3.37
3.42
3.40
3.28
3.24

2.79
2.85
2.81
2.73
2.67

333.2
346.1
349.1
345.7
362.2

56.0
53.7
54.9
57.3
58.1

277.1
292.4
294.2
288.4
304.2

142.5
153.2
152.1
146.8
153.5

54.8
56.6
56.0
56.0
60.7

57.1
57.8
59.8
59.4
61.9

22.7
24.8
26.3
26.3
28.1

102.5
104.7
105.9
107.7
111.4

3.25
3.31
3.30
3.21
3.25

2.7.0
2.79
2.78
2.68
2.73

1960
1961 .. ..
1962
1963
1964

370.0
377.2
393.4
410.1
425.8

59.4
60.8
63.5
65.8
64.0

310.5
316.5
329.9
344.2
361.8

154.7
158.8
167.2
172.6
180.9

61.8
63.1
65.0
68.9
72.6

65.2
64.2
67.5
70.3
73.4

28.8
30.3
30.1
32.4
34.9

114.1
118.7
123.4
130.4
136.3

3.24
3.18
3.19
3.14
3.12

2.72
2.67
2.67
2.64
2.65

1965
1966
1967
1968
1969

451.0
487.9
516.6
537.7
562.8

66.3
66.1
67.7
68.2
69.0

384.7
421.7
449.0
469.4
493.8

191.6
213.6
229.2
239.0
248.5

76.5
85.1
90.7
93.5
98.9

79.2
84.3
84.2
90.5
96.4

37.4
38.7
45.0
46.5
50.0

147.7
150.2
156.4
163.7
165.4

3.05
3.25
3.30
3.28
3.40

2.60
2.81
2.87
2.87
2.98

1970
1971
1972
1973
1974

571.1
590.7
612.4
652.5
685.7

69.8
73.4
75.9
81.4
81.3

501.2
517.3
536.6
571.0
604.5

248.3
246.1
251.7
267.9
288.5

105.8
110.7
114.0
118.4
128.4

96.6
107.2
114.0
122.1
121.1

50.5
53.2
56.9
62.6
66.4

166.8
172.6
185.4
188.9
184.3

3.42
3.42
3,30
3.45
3.72

3.00
3.00
2.89
3.02
3.28

1975...
1976
1977
1978
1979

673.0
695.1
724.2
761.0
776.0

82.6
79.1
77.2
77.8
82.4

590.3
616.1
647.0
683.2
693.6

281.9
294.0
301.9
314.1
324.7

124.0
131.2
140.5
151.6
156.1

115.9
122.3
130.9
139.1
136.7

68.6
68.5
73.7
78.4
76.1

191.5
199.3
209.0
221.5
225.6

3.51
3.49
3.47
3.44
3.44

3.08
3.09
3.10
3.08
3.08

1980
1981
1982
1983.
1984
1985 *

769.1
793.0
768.4
763.0
825.5
832.9

77.8
82.6
81.2
75.4
82.2
79.4

691.4
710.3
687.2
687.6
743.4
753.6

326.8
330.3
315.2
310.0
333.4
330.5

161.6
165.0
161.5
158.1
171.9
174.4

130.4
135.5
132.9
141.2
153.1
160.6

72.7
79.5
77.6
78.3
85.1
88.1

225.3
224.6
226.1
235.4
247.4
258.0

3.41
3.53
3.40
3.24
3.34
3.23

3.07
3.16
3.04
2.92
3.01
2.92

1982- 1
II
III
IV

787.0
785.6
783.3
768.4

81.6
82.6
83.4
81.2

705.4
703.0
699.8
687.2

328.4
323.9
320.7
315.2

162.8
164.5
163.9
161.5

133.5
133.5
135.8
132.9

80.7
81.2
79.5
77.6

224.0
222.9
221.3
226.1

3.51
3.53
3.54
3.40

3.15
3.15
3.16
3.04

1983: 1
II .
Ill
IV

757.9
756.9
757.3
763.0

79.1
77.7
74.4
75.4

678.8
679.2
682.9
687.6

309.1
308.5
308.7
310.0

157.7
155.8
156.7
158.1

133.5
136.0
137.8
141.2

78.5
78.9
79.7
78.3

227.2
229.8
231.8
235.4

3.34
3.29
3.27
3.24

2.99
2.96
2.95
2.92

1984: 1
II
Ill
IV.

783.9
800.4
816.6
825.6

79.1
80.7
81.8
82.2

704.8
719.7
734.8
743.4

316.3
324.7
332.3
333.4

160.7
164.6
169.1
171.9

146.7
147.9
149.0
153.1

81.1
82.5
84.3
85.1

237.9
243.3
244.5
247.4

3.29
3.29
3.34
3.34

2.96
2.96
3.00
3.01

1985: 1
II
III
IV P

829.6
833.4
832.9
832.9

83.2
84.3
83.4
79.4

746.4
749.1
749.5
753.6

333.7
333.6
332.6
330.5

171.9
174.1
174.1
174.4

155.4
155.2
155.7
160.6

85.4
86.2
87.0
88.1

252.0
253.0
256.5
258.0

3.29
3.29
3.25
3.23

2.96
2.96
2.92
2.92

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

,

1
2

End of quarter.
Quarterly totals at monthly rates. Business final sales equals final sales less gross product of households and institutions,
government, and rest of world, and includes a small amount of final sales by farms.
3
Ratio based on total business final sales, which includes a small amount of final sales by farms.
Note._The industry classification of inventories is on an establishment basis and is based on the 1972 Standard Industrial
Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948.
Source: Department of Commerce, Bureau of Economic Analysis.




273

TABLE B-19.—Foreign transactions in the national income and product accounts, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Receipts from foreigners
Exports of goods and
services

Year or quarter
Total

Total

Merchandise

Services

Payments to foreigners
Imports of good s and
services

Capital
grants
received
by the
United
States
(net)

Transfer payments (net)

Merchandise

From
persons
(net)

Total
Total

Services

Total

Interest
paid by
From
governgovern- ment to
ment foreigners
(net)

Net
foreign
investment

1929
1933
1939

7.1
2.4
4.6

7.1
2.4
4.6

5.3
1.7
3.3

1.7
.7
1.3

7.1
2.4
4.6

5.9
2.1
3.4

4.5
1.5
2.4

1.5
.6
1.0

0.4
.2
.2

0.3
.2
.2

0.0
.0
.0

0.0
.0
.0

0.8
.2
1.0

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

5.4
6.1
5.0
4.6
5.5
7.4
15.2
20.3
17.5
16.4

5.4
6.1
5.0
4.6
5.5
7.4
15.2
20.3
17.5
16.4

4.1
4.5
3.4
2.9
3.6
5.4
11.8
16.1
13.3
12.2

1.3
1.6
1.6
1.7
1.9
2.1
3.4
4.2
4.3
4.1

5.4
6.1
5.0
4.6
5.5
7.4
15.2
20.3
17.5
16.4

3.7
4.7
4.8
6.5
7.2
7.9
7.3
8.3
10.6
9.8

2.7
3.4
2.7
3.4
3.8
3.9
5.1
6.0
7.6
6.9

1.0
1.3
2.1
3.1
3.4
4.0
2.3
2.4
3.0
2.9

.2
.2
.2
.2
.3
.8
2.9
2.6
4.5
5.6

.2
.2
.1
.2
.4
.5
.7
.7
.7
.5

.0
.0
.1
-.1
-.1
.4
2.3
2.0
3.9
5.1

.0
.0
.0
.0
.0
.0
.0
.0
.0
.0

1.5
1.3
-.1
-2.1
-2.0
-1.3
4.9
9.3
2.4
.9

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

14.5
19.8
19.2
18.1
18.8
21.1
25.2
28.2
24.4
25.0

14.5
19.8
19.2
18.1
18.8
21.1
25.2
28.2
24.4
25.0

10.2
14.2
13.4
12.4
12.9
14.4
17.6
19.6
16.4
16.5

4.3
5.5
5.8
5.7
5.9
6.7
7.6
8.7
8.0
8.5

14.5
19.8
19.2
18.1
18.8
21.1
25.2
28.2
24.4
25.0

12.3
15.3
16.0
16.8
16.3
18.1
19.9
20.9
21.1
23.5

9.1
11.2
10.8
11.0
10.4
11.5
12.8
13.3
13.0
15.3

3.2
4.1
5.2
5.8
5.9
6.6
7.1
7.6
8.1
8.2

4.0
3.5
2.5
2.5
2.3
2.5
2.4
2.3
2.3
2.3

.4
.4
.4
.5
.5
.4
.5
.5
.4
.4

3.6
3.1
2.1
2.0
1.8
2.1
1.9
1.8
1.8
1.9

.0
.0
.1
.1
.1
.1
.2
.2
.1
.3

-1.8
.9
.6
-1.3
.2
.4
2.8
4.8
.9
-1.2

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

29.9
31.1
33.1
35.7
40.5
42.9
46.6
49.5
54.8
60.4

29.9
31.1
33.1
35.7
40.5
42.9
46.6
49.5
54.8
60.4

20.5
20.9
21.7
23.3
26.7
27.8
30.7
32.2
35.3
38.3

9.4
10.1
11.4
12.3
13.8
15.1
15.8
17.3
19.5
22.1

29.9
31.1
33.1
35.7
40.5
42.9
46.6
49.5
54.8
60.4

24.0
23.9
26.2
27.5
29.6
33.2
39.1
42.1
49.3
54.7

15.2
15.1
16.9
17.7
19.4
22.2
26.3
27.8
33.9
36.8

8.8
8.8
9.3
9.7
10.2
11.0
12.7
14.4
15.4
17.9

2.4
2.7
2.8
2.9
3.0
3.0
3.1
3.3
3.2
3.2

.4
.5
.5
.6
.7
.7
.7
.9
.9
1.0

1.9
2.2
2.3
2.3
2.3
2.3
2.4
2.4
2.3
2.2

.3
.3
.3
.4
.5
.5
.5
.6
.7
.8

3.2
4.2
3.8
4.9
7.5
6.2
3.8
3.5
1.6
1.7

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

69.8
73.1
82.1
114.1
149.5
161.3
177.7
191.6
227.5
292.4

68.9
72.4
81.4
114.1
151.5
161.3
177.7
191.6
227.5
291.2

24.4
44.5
45.6
26.8
51.7
29.6
73.9
40.2
101.0 50.5
51.7
109.6
117.5
60.2
123.1 68.6
144.7
82.8
183.3 107.9

0.9
.7
.7
.0
-2.0
.0
.0
.0
.0
1.1

69.8
73.1
82.1
114.1
149.5
161.3
177.7
191.6
227.5
292.4

60.5
66.1
78.2
97.3
135.2
130.3
158.9
189.7
223.4
272.5

40.9
46.6
56.9
71.8
104.5
99.0
124.3
151.9
176.5
211.9

19.6
19.5
21.3
25.5
30.7
31.3
34.6
37.9
46.9
60.5

3.5
3.9
4.1
4.1
4.6
4.9
5.4
5.1
5.6
6.2

1.2
1.2
1.1
1.3
1.0
1.0
1.0
.9
.9
1.0

2.3
2.7
2.9
2.9
3.6
4.0
4.4
4.2
4.7
5.2

1.0
1.8
2.7
3.8
4.3
4.5
4.5
5.5
8.7
11.1

4.8
1.3
-2.9
8.8
5.4
21.6
9.0
-8.7
-10.1
2.6

1980
1981
1982
1983
1984
1985 *.

352.1
383.9
361.9
354.1
384.6
370.4

351.0
382.8
361.9
354.1
384.6
370.4

225.1
238.3
214.0
206.0
224.1
219.2

125.9
144.5
148.0
148.1
160.5
151.2

1.2
1.1
.0
.0
.0
.0

352.1
383.9
361.9
354.1
384.6
370.4

318.9
348.9
335.6
359.4
443.8
444.8

247.5 71.4
266.5 82.4
249.5 86.1
271.4
88.0
336.0 107.9
337.0 107.8

7.7
7.5
9.0
9.5
12.0
15.3

1.1
1.0
1.3
1.0
1.3
2.1

6.5
6.5
7.8
8.5
10.7
13.3

1982:1
II

Ill
IV

373.0
378.9
359.9
335.9

373.0
378.9
359.9
335.9

225.1
224.0
210.5
196.3

147.9
155.0
149.4
139.6

.0
.0
.0
.0

373.0
378.9
359.9
335.9

338.4
336.8
345.4
321.9

252.6
246.2
259.2
239.9

85.7
90.6
86.2
82.0

9.4
8.1
8.0
10.6

1.3
1.4
1.2
1.1

8.0
6.8
6.8
9.5

18.0
17.5
18.8
18.9

7.3
16.5
-12.3
-15.4

1983:1
||
III
IV

344.6
345.0
358.0
368.8

344.6
345.0
358.0
368.8

200.8
200.4
205.0
217.7

143.8
144.6
153.0
151.1

.0
.0
.0
.0

344.6
345.0
358.0
368.8

316.2
347.5
377.6
396.2

236.1
261.6
285.4
302.5

80.1
85.9
92.2
93.7

7.1
8.2
9.5
13.3

.9
1.0
1.1
1.2

6.2
7.2
8.4
12.2

17.7
17.5
17.8
18.3

3.6
-28.2
-47.0
-59.0

1984:1
||
lil
IV

375.4
382.3
391.4
389.5

375.4
382.3
391.4
389.5

218.7
223.0
225.8
229.0

156.7
159.3
165.6
160.5

.0
.0
.0
.0

375.4
382.3
391.4
389.5

412.8
447.6
453.3
461.7

314.9
97.9
338.1 109.6
340.4 112.9
350.6 111.1

9.5
9.6
12.1
17.0

1.4
1.2
1.2
1.5

8.1
8.3
11.0
15.5

18.6 -65.5
19.1 -93.9
-94.3
20.2
21.2 -110.4

1985:1
II
Ill
IV "

379.6
369.2
363.2
369.7

379.6
369.2
363.2
369.7

225.8
219.7
213.6
217.9

153.8
149.5
149.6
151.8

.0
.0
.0
.0

379.6
369.2
363.2
369.7

421.9
439.5
451.0
466.9

316.1
331.9
343.5
356.5

13.3
14.3
16.9
16.7

2.1
1.8
2.2
2.1

11.2
12.5
14.7
14.7

21.2
21.1
21.5
21.5

Source: Department of Commerce, Bureau of Economic Analysis.




274

105.8
107.6
107.5
110.4

13.0
12.6
10.6
16.9
-1.0
18.3
-32.7
17.8
19.8 -91.0
21.3 -111.0

-76.8
-105.8
-126.2
-135.4

TABLE B-20.—Exports and imports of goods and services in 1982 dollars, 1929-85
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]
Imports of goods and services

Exports of goods and services
Merchandise
Year or quarter
Total

DuraTotal

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

. .

1956
1957
1958. . .
1959
1960 .
1961
1962
1963 . .
1964
1965.. . .

1966
1967
1968
1969
1970
1971
1972
1973
1974.. . .

1975
1976 . .
1977
1978
1979
1980
1981
1982
1983
1984.. . .

1985 p
1982- 1
II
Ill
IV
1983- 1
II
Ill
IV
1984:1
II

111
IV
1985- 1
II
Ill
IV p

42.1
22.7
36.2
40.0
42.0
29.1
25.1
27.3
35.2
69.0
82.3
66.2
65.0
59.2
72.0
70.1
66.9
70.0
76.9
87.9
94.9
82.4
83.7
98.4
100.7
106.9
114.7
128.8
132.0
138.4
143.6
155.7
165.0
178.3
179.2
195.2
242.3

269.1
259.7
274.4
281.6
312.6
356.8
388.9
392.7
361.9
349.4
370.9
360.2
374.1
378.5
359.5
336.0
342.8
342.4
353.1
359.1
362.7
366.6
376.9
377.3
368.7
358.2
353.5
360.4

ble

Nondur-

able
goods goods

29.7
12.3
15.9
4.5
26.5
13.3
30.5
18.9
31.7
20.2
13.4
19.5
15.2
10.5
16.4
11.0
24.0
12.6
54.1
23.1
65.5 34.4
49.1 24.5
48.4
24.1
42.2
21.0
51.1 23.8
49.0
25.3
46.4
25.8
48.8
26.9
53.2
30.3
34.4
61.8
66.6
37.2
56.6
31.0
56.1 30.5
68.8
37.9
69.1 38.0
72.2
39.8
77.6
42.1
87.7
48.2
88.2 50.0
94.0
53.6
96.5
58.8
104.9
64.8
110.0
69.5
120.6
74.3
119.3 72.9
131.3
80.0
160.6 99.3
175.8 113.9
171.5 112.1
177.5 112.9
178.1 111.2
196.2 121.9
218.2 136.6
241.8 150.0
238.5 143.8
214.0 121.9
207.2 119.3
222.5 130.7
224.8 136.9
222.9 127.6
222.5 126.8
211.4 122.5
199.1 110.8
203.0 114.8
202.9 116.8
206.8 119.4
216.2 126.2
216.1 126.7
218.7 128.5
224.6 132.6
230.7 135.1
229.3 137.1
223.9 137.4
220.0 135.8
225.9 1375

Merchandise

Services

17.5
11.4
13.1
11.6
11.6
6.1
4.8
5.4
11.3
31.0
31.1
24.6
24.2
21.3
27.3
23.7
20.6
21.9
22.9
27.4
29.4
25.6
25.6
30.9
31.1
32.4
35.5
39.5
38.2
40.4
37.7
40.1
40.5
46.3
46.4
51.3
61.3
62.0
59.5
64.7
66.9
74.3
81.6
91.9
94.6
92.1
87.9
91.8
87.9
95.2
95.7
89.0
88.3
88.2
86.1
87.4
90.0
89.4
90.2
92.0
95.7
92.2
86.5
84.2
88.5

Factor

in-

Total

Other

Total

12.3
6.8
9.8
9.4
10.3
9.6
9.8
10.9
11.2
14.9
16.9
17.1
16.7
17.0
20.9
21.2
20.5
21.2
23.7
26.1
28.3
25.8
27.6
29.6
31.6
34.7
37.1
41.1
43.8
44.4
47.1
50.8
55.0
57.6
59.9
64.0
81,7
93.3
88.2
96.8
103.6
116.4
138.6
147.1
154.3
148.0
142.1
148.3
135.4
151.2
155.9
148.0
136.9
139.8
139.4
146.3
142.9
146.6
147.8
152.3
146.5
139.4
134.3
133.5
134.5

7.6
3.7
5.2
4.6
5.2
4.8
4.6
4.9
4.8
5.6
7.2
8.5
8.2
9.1
10.9
11.3
11.0
11.6
13.0
14.1
14.8
13.2
14.0
15.7
16.9
18.5
20.0
21.8
23.2
22.8
23.8
26.3
29.0
29.6
30.5
33.9
46.2
53.5
45.6
49.7
53.5
63.2
86.6
91.4
96.3
91.6
86.2
93.4
80.6
92.6
98.6
92.4
83.0
81.7
83.6
90.5
89.1
91.8
93.5
96.8
91.5
82.4
80.7
79.1
80.4

275

ble

Nondur-

Services
Factor

4.8
3.1
4.5
4.8
5.1
4.9
5.2
6.0
6.5
9.4
9.7
8.6
8.5
7.9
10.0
9.9
9.5
9.6
10.7
12.0
13.5
12.6
13.5
13.9
14.7
16.2
17.2
19.3
20.6
21.6
23.3
24.5
26.0
28.0
29.4
30.1
35.4
39.8
42.6
47.1
50.1
53.2
52.0
55.7
57.9
56.3
55.9
54.9
54.8
58.6
57.3
55.6
53.8
58.1
55.9
55.8
53.8
54.8
54.3
55.5
55.1
57.0
53.6
54.4
54.1

37.4
24.2
30.1
31.7
38.2
36.9
48.0
51.1
54.1
42.0
39.9
47.1
46.2
54.6
57.4
63.3
69.7
67.5
76.9
83.6
87.9
92.8
101.9
102.4
103.3
114.4
116.6
122.8
134.7
152.1
160.5
185.3
199.9
208.3

218.9
244.6
273.8
268.4
240.8
285.4
317.1
339.4
353.2
332.0
343.4
335.6
368.8
455.9
465.3
333.7
336.8
347.8
324.3
320.3
357.4
389.3
408.0
423.3
457.0
465.6
477.5
440.5
459.3
473.3
488.0

29.3
19.2
24.0
25.6
29.4
21.0
25.0
26.5
26.0
30.0
29.3
33.9
33.3
40.9
40.4
41.9
44.6
42.1
48.3
53.6
56.1
58.1
68.0
67.5
69.0
78.9
81.2
86.3
97.0
109.1
113.0
135.7
144.6
150.9
166.2
190.7
218.2
211.8
187.9
229.3
259.4

274.1
277.9
253.6
258.7
249.5
282.3
352.1
362.9
247.6
246.1
261.5
242.7
241.2
272.7
298.8
316.6
328.5
351.4
357.4
371.0
338.9
356.9
371.5
384.3

able
goods

Total

goods

come !

1
Factor income exports less factor income imports equals rest-of-the-world product.
Source-. Department of Commerce, Bureau of Economic Analysis.




Dura-

Total

7.4
4.0
6.9
8.8
11.0
6.7
6.5
6.7
6.9
7.8
7.8
9.4
8.9
11.5
11.5
13.0
13.7
11.9
14.7
16.8
17.1
16.9
22.8
21.7
21.1
24.8
26.2
29.0
35.6
44.0
48.0
61.7
65.6
66.8
74.4
84.4
88.9
89.2
72.4
88.5
99.3
113.7
115.7
116.1
126.1
125.3
150.3
201.5
215.4
127.4
129.0
127.6
117.1
130.8
141.1
153.7
175.8
184.1
199.5
206.6
215.7
203.9
208.0
220.9
228.7

22.0
15.2
17.0
16.8
18.4
14.3
18.5
19.7
19.1
22.2
21.5
24.5
24.4
29.5
28.9
28.9
30.9
30.3
33.5
36.8
39.0
41.3
45.3
45.8
47.9
54.0
55.0
57.4
61.4
65.2
65.0
74.0
79.0
84.1
91.8
106.4
129.4
122.5
115.5
140.8
160.1
160.4
162.2
137.5
132.6
124.2
132.0
150.6
147.5
120.2
117.1
133.9
125.6
110.5
131.6
145.1
140.8
144.3
151.9
150.8
155.3
135.0
148.9
150.6
155.6

8.0
4.9
6.1
6.2
8.8
15.8
23.0
24.6
28.2
12.0
10.6
13.1
13.0
13.6
17.1
21.4
25.1
25.4
28.6
30.0
31.8
34.6
33.8
34.9
34.3
35.5
35.4
36.5
37.7
43.0
47.5
49.6
55.2
57.4
52.7
53.9
55.6
56.6
52.9
56.1
57.7
65.3
75.3
78.4
84.7
86.1
86.4
103.8
102.4
86.0
90.7
86.3
81.6
79.1
84.6
90.5
91.4
94.8
105.6
108.2
106.5
101.6
102.5
101.8
103.7

in-

Other

come *

2.6
1.3
2.2
2.0
1.9
1.7
1.9
2.1
2.5
1.9
2.1
2.3
2.6
2.8
3.1
2.9
3.1
3.3
3.6
3.4
3.4
3.7
4.0
4.6
4.8
4.6
5.1
5.6
6.2
7.0
7.5
8.6
12.0
12.5
9.8
10.2
13.9
17.7
16.3
16.7
16.1
21.1
30.8
35.9
41.1
40.5
37.4
48.9
44.1
41.4
44.7
40.8
35.1
33.5
36.2
39.8
40.1
43.6
51.6
52.0
48.5
43.5
44.6
43.7
44.9

5.4
3.6
4.0
4.1
6.9
14.2
21.2
22.5
25.7
10.1
8.5
10.8
10.4
10.8
14.0
18,4
21.9
22.1
25.0
26.6
28.4
30.9
29.8
30.3
29.6
30.9
30.3
30.9
31.6
36.0
40.0
41.0
43.2
45.0
42.9
43.7
41.7
38.9
36.6
39.3
41.6
44.2
44.5
42.4
43.6
45.7
49.0
54.9
58.3
44.6
46.0
45.5
46.5
45.6
48.5
50.7
51.2
51.3
54.0
56.2
58.0
58.1
57.9
58.1
58.9

TABLE B-21.—Relation of gross national product, net national product, and national income, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985"
1982:1
II
III
IV
1983:1
II
III
IV
1984:1
II
III
IV
1985:1
II
III
IV

Gross
national
product

103.9
5.
60
91.3
100.4
125.5
159.0
192.7
211.4
213.4
212.4
235.2
261.6
260.4
288.3
333.4
351.6
371.6
372.5
405.9
428.2
451.0
456.8
495.8
515.3
533.8
574.6
606.9
649.8
705.1
772.0
816.4
892.7
963.9
1,015.5
1,102.7
1,212.8
1,359.3
1,472.8
1,598.4
1,782.8
1,990.5
2,249.7
2,508.2
2,732.0
3,052.6
3,166.0
3,401.6
3,774.7
3,992.5
3,112.6
3,159.5
3,179.4
3,212.5
3,268.7
3,365.1
3,437.5
3,535.0
3,676.5
3,757.5
3,812.2
3,852.5
3,917.5
3,960.6
4,016.9
4,075.1

Less:

Less-.
Capital
consumption
allowances
with
capital
consumption
adjustment

Equals:

Indirect
business
tax and
nontax
liability

Business
transfer

94.0
48.4
82.3

7.1
7.1
9.4

91.1
115.3
147.7
181.1
199.4
201.0
198.2
217.6
241.2
238.4

10.1
11.3
11.8
12.8
14.2
15.5
17.1
18.4
20.1
21.3
23.4
25.3
27.7
29.7
29.6
32.2
35.0
37.4
38.6
41.7

0.6
.7
.5
.4
.5
.5

Net

national
product

9.9
7.6
9.0
9.4
10.3
11.3
11.6
12.0
12.4
14.2
17.6
20.4
22.0
23.6
27.2
29.2
30.9
32.5
34.4
38.1
41.1
42.8
44.6
46.4
47.8
49.4
51.4
53.9
57.4
62.1
67.4
73.9
81.4
88.8
97.5
107.9
118.1
137.5
161.8
179.2
201.5
229.9
265.8
303.8
347.8
383.2
399.6
418.9
438.2
373.3
379.8
386.3
393.2
394.5
396.1
403.3
404.4
409.1
416.4
422.5
427.7
430.5
433.8
441.4
447.3

264.6
306.2
322.5
340.7
340.0
371.5
390.1
409.9
414.0
451.2
468.9
486.1
525.2
555.5
595.9
647.7
709.9
749.0
818.7
882.5
926.6
1,005.1
1,104.8
1,241.2
1,335.4
1,436.6
1,603.6
1,789.0
2,019.8
2,242.4
2,428.1
2,704.8
2,782.8
3,002.0
3,355.8
3,554.3
2,739.3
2,779.6
2,793.1
2,819.3
2,874.1
2,969.0
3,034.2
3,130.6
3,267.4
3,341.1
3,389.7
3,424.8
3,487.0
3,526.8
3,575.5
3,627.8

Source: Department of Commerce, Bureau of Economic Analysis.




276

pay-

ments

Statistical
discrepancy

1.5
1.2
1.7

'.5
.6
.7

1.4
.7
-.7
-1.7
2.7
4.0
.7
1.8
-1.3

.9
1.0
1.2
1.1
1.2
1.4
1.5
1.6
1.8

2.7
1.8
2.6
2.7
1.8
-1.9
-1.2
-.1
-1.5

45.3
48.0
51.5
54.6
58.7
62.5
65.2
70.1
78.7
86.3
94.0
103.4
111.1
120.8
129.0
140.0
151.7
165.7
178.1
189.4
213.3
251.5
258.8
282.5
310.6
328.5

2.0
2.0
2.1
2.4
2.7
2.8
3.0
3.1
3.4
3.9
4.1
4.4
4.9
5.5
5.8
7.4
7.9
8.6
9.3
10.3
12.1
12.4
14.3
15.6
17.3
19.3

-2.8
-1.2
.0
-.6
-1.4
-1.2
2.1
-.4
-1.1
-3.9
-1.1
1.8
-1.6
-4.3
-1.7
2.5
3.6
.0
-1.9
-1.0
4.9
4.1

254.5
256.2
260.1
264.5
267.0
281.1
288.3
293.7
302.4
308.8
314.0
317.4

13.4
14.1
14.6
15.2
15.3
15.5
15.7
16.1
16.5
17.1
17.6
18.1
18.6
19.1
19.6
20.1

4.8
1.0
3.2
6.8
1.4
4.3
-4.3
-1.2

321.3
329.8
329.8
333.0

'.5

1.5
.7

2.8
-1.9
.8
-7.6
2.5
-4.7
2.5

Plus.Subsidies
less
current
surplus
of
government
enterprises
-0.2
.0
.4
.4
.1
.1

16
.7
.9
-.2
-.1
-.3
.1
-.1
-.3
-.5

Equals:
National
income

84.7
39.4
71.2
79.6
102.8
136.2
169.7
182.6
181.6
180.7
196.6
221.5
215.2

~'.0
.7
.1
1.1
.1

239.8
277.3
291.6
306.6
306.3
336.3
356.3
372.8
375.0
409.2

.4
1.7
1.8
1.1
1.7
1.6
2.5
1.6
1.4
1.9
2.9
2.6
3.7
3.5
1.2
2.4
1.0
3.0
3.9
3.5
5.7
6.7
8.7
13.9
10.1
9.9

424.9
439.0
473.3
500.3
537.6
585.2
642.0
677.7
739.1
798.1
832.6
898.1
994.1
1,122.7
1,203.5
1,289.1
1,441.4
1,617.8
1,838.2
2,047.3
2,203.5
2,443.5
2,518.4
2,718.3
3,039.3
3,215.6

6.9
5.6
6.7
15.4

2,483.1
2,514.0
2,528.4
2,548.2
2,603.6
2,678.9
2,747.4
2,843.5
2,967.7
3,021.1
3,064.2
3,104.4

10.3
10.8
13.0
21.5
22.0
4.0
6.9
7.4
10.7
9.5
4.4
14.9

3,155.3
3,192.2
3,228.0

TABLE B~22.—Relation of national income and personal income, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

1929
1933 . .
1939
1940
1941
1942
1943
1944
1945
1946
1947 .
1948
1949
1950
1951
1952
1953 . .
1954
1955
1956
1957
1958
1959
1960
1961
1962 . .
1963
1964
1965
1966
1967
1968
1969 .
1970
1971
1972
1973
1974
1975
1976
1977.....
1978
1979
1980
1981
1982
1983
1984
1985 "
1982:

I

1983:

I
II

1984:

1
II

||
HI
IV
III
IV. .
Ill
IV

1985: I

H
III
IV P

National
income

84.7
39.4
71.2
79.6
1028
136.2
169.7
1826
181.6
180.7
1966
221.5
2152
2398
277.3
2916
3066
306.3
3363
356.3
372.8
3750
409.2
424.9
4390
4733
5003
5376
5852
6420
6777
739.1
7981
8326
8981
9941
1,1227
12035
1,289.1
14414
1,617.8
1,838 2
20473
2,203.5
24435
25184
2,718.3
3,039 3
32156
2,483.1
25140
2,528.4
25482
2,603.6
26789
27474
2,843.5
2,967.7
3,021.1
3,064.2
3,104.4
3,155.3
3 1922
3,228.0

Net
interest

9.6
-1.5
5.5
8.8
143
197
24.0
242
197
17.2
229
30.3
280
349
399
375
377
36.6
471
457
45.3
403
51.4
495
503
583
636
707
813
866
841
90.7
874
747
87 1
1007
1133
101 7
1176
1452
174.8
1972
200 1
1772
1880
1500
213.8
2733
2990
149.9
1496
154.3
1461
173.4
2059
2284
2476
268.0
277.8
2712
276.2
281.7
288 1
309.1

4.7
41
3.6
3.3
33
31
2.7
23
2.2
1.8
23
2.4
26
30
35
39
44
5.2
58
65
7.8
95
10.2
113
129
146
163
182
209
243
274
298
346
412
463
510
596
75 5
83'8
888
1053
1263
1583
2009
2481
2723
273.6
3002
2877
273.0
2802
269.1
2669
268.5
2694
2764
280.3
286.9
297.6
309.5
307.0
302.9
2924
281.8
2737

Wage
Contribu- accruals
tions for
less
social
insurance disbursements

0.3
.3
2.2
2,4
28
35
4.6
52
6.3
7.7
67
6.0
66
74
88
93
96
10.6
120
135
15.5
159
18.8
21.9
229
254
28.5
301
316
406
455
50.4
579
622
689
790
976
110 5
1185
1345
149.8
1717
1978
2165
2512
2696
290.8
3252
3549
265.2
2687
271.3
2730
284.1
2883
2924
298.5
318.6
323.2
327.4
331.7
348.0
3529
356.4
362.3

Source: Department of Commerce, Bureau of Economic Analysis.




Equals:

PliJS:

Le SS:

Corporate
profits
with
inventory
valuation
and
capital
consumption
adjustments

277

0.0
.0
.0
.0
0
0
.2
_2
.0
.0
0
.0
0
0
.1
0
_1
.0
0
.0
.0
0
.0
.0
0
0
.0
0
0

o
o
0
o
o

6
0
_1
5
1
1
.1
3
2
0
1

o

_.4
2
2
-.1
0
.0
0
.0
13
_4
.0
.2
.2
.0
.6
.1
10
.0
.0

Government
transfer
payments
to
persons

0.9
1.5
2.5
2.7
26
2.7
2.5
31
5.6
10.8
112
10.6
117
144
116
122
131
153
164
175
20.3
247
257
27.5
315
326
345
360
391
436
523
60.6
675
818
970
1084
1241
147 4
1857
2028
217.5
2348
2628
3126
3557
3962
426.6
4374
4652
374.7
3864
403.7
4202
422.3
4296
4256
428.8
433.8
436.4
438.4
441.1
459.0
4619
468.6
471.3

Persona! Personal Business
interest dividend transfer
income income payments

6.9
5.5
5.3
5.3
53
5.2
5.1
5.2
5,8
6.6
7.5
8.0
87
96
10.4
112
12.4
13.7
149
166
18.7
203
22.3
24.9
263
28.9
32.2
355
39.6
442
482
53.2
609
69.3
747
808
93.3
1119
1225
1341
155.4
1825
2215
271.9
335.4
3697
385.7
4422
4565
367.5
3770
368.0
366.2
371.1
3772
392.1
402.6
417.2
433.6
456.8
461.3
462.8
4605
450.6
452.1

5.8
20
3.8
4.0
44
4.3
4.4
4.6
4.6
5.6
6.3
7.0
72
88
8.5
85
8.8
9.1
103
11.1
11.5
11.3
12,2
12.9
133
14.4
15.5
173
19.1
194
20.2
21.9
224
222
226
241
26.6
289
287
338
38.2
430
481
52.9
613
639
68.0
746
789
63.6
631
63.6
65.4
66.5
669
68.3
70.2
72.1
74.1
75.3
76.9
77.9
787
79.1
79.8

0.6
7
.5
.4
5
5
.5
5
.5
.5
6
.7
8
8
.9
10
12
1.1
12
1.4
1.5
1.6
1.8
2.0
20
2.1
2.4
27
2.8
30
3.1
3.4
3.9
4.1
44
4.9
5.5
58
7.4
79
8.6
9.3
103
12.1
12.4
143
15.6
173
193
13.4
141
14.6
15.2
15.3
155
15.7
16.1
16.5
17.1
17.6
18.1
18.6
191
19.6
20.1

Personal
income

84.3
46.3
72.1
77.6
95.2
122.4
150.7
164.5
170.0
177.6
190.2
209.2
2064
228.1
256.5
2738
290.5
293.0
3142
337.2
356.3
367.1
390.7
409.4
426.0
453.2
476.3
510.2
552.0
600.8
644.5
707.2
772.9
831.8
894.0
981.6
1,101.7
1 2101
1313.4
1 451.4
1,607.5
1,812.4
2 034.0
2,258.5
2,520.9
2 670.8
2,836.4
3,111.9
3 294.2
2,614.3
2,655.9
2,683.6
2,729.2
2,752.8
2,805.7
2,852.4
2,934.8
3,033.8
3,083.5
3,144.2
3,186.2
3,240.9
32801
3,298.5
3,357.4

TABLE B-23.—National income by type of income, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Proprietors' income with inventory valuation and capital consumption
adjustments

Compensation
of employees
Year or quarter

National
income 1

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
.. .
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985"
1982:1

II
Ill
IV
1983- 1
II
Ill
IV
1984:1

II
Ill
IV
1985- 1
II
Ill
IV "

84.7
39.4
71.2
79.6
102.8
136.2
169.7
182.6
181.6
180.7
196.6
221.5
215.2
239.8
277.3
291.6
306.6
306.3
336.3
356.3
372.8
375.0
409.2
424.9
439.0
473.3
500.3
537.6
585.2
642.0
677.7
739.1
798.1
832.6
898.1
994.1
1,122.7
1,203.5
1,289.1
1,441.4
1,617.8
1,838.2
2,047.3
22035
2,443.5
2,518.4
2,718.3
3,039.3
3,215.6
2,483.1
2,514.0
2,528.4
2,548.2
2,603.6
2,678.9
2,747.4
2,843.5
2,967.7
3,021.1
3,064.2
3,104.4
3,155.3
3,192.2
3,228.0

Total

51.1
29.6
48.2
52.2
64.8
85.3
109.6
121.3
123.3
119.6
130.1
142.1
142.0
155.4
181.6
196.3
210.4
209.4
225.9
244.7
257.8
259.8
281.2
296.7
305.6
327.4
345.5
371.0
399.8
443.0
475.5
524.7
578.4
618.3
659.4
726.2
812.8
891.3
948.7
1,057.9
1,176.6
1,329.2
1,491.4
1,638.2
1,807.4
1,907.0
2,025.9
2,221.3
2,372.7
1,879.2
1,899.3
1,918.4
1,931.1
1,962.4
2,001.5
2,041.8
2,097.6
2,160.9
2,204.8
2,241.2
2,278.5
2,320.4
2,356.9
2,385.2
2,428.1

Wages
and
salaries

50.5
29.0
46.0
49.9
62.1
82.1
105.8
116.7
117.5
112.0
123.1
135.5
134.7
147.2
171.6
185.6
199.0
197.2
212.1
229.0
239.9
241.3
259.8
272.8
280.5
299.3
314.8
337.7
363.7
400.3
428.9
471.9
518.3
551.5
584.5
638.7
708.6
772.2
814.7
899.6
994.0
1,119.6
1,251.9
1,372.0
1,510.4
1,586.1
1,675.4
1,835.2
1,960.5
1,566.1
1,580.1
1,594.6
1,603.7
1,623.7
1,654.4
1,687.6
1,735.8
1,782.4
1,821.0
1,852.8
1,884.4
1,917.7
1,947.6
1,970.1
2,006.5

Supplements
to
wages Total
and
salaries 2
0.7
.6
2.2
2.3
2.8
3.2
3.8
4.5
5.8
7.6
7.0
6.5
7.3
8.2
10.0
10.7
11.5
12.1
13.8
15.7
17.8
18.5
21.4
23.8
25.1
28.1
30.7
33.2
36.1
42.7
46.6
52.8
60.1
66.8
74.9
87.6
104.2
119.1
134.0
158.3
182.6
209.7
239.5
266.3
297.1
320.9
350.5
386.2
412.2
313.1
319.2
323.8
327.4
338.8
347.1
354.3
361.8
378.5
383.8
388.4
394.0
402.7
409.4
415.1
421.6

Nonfarm

Farm

Total

14.4
5.4
11.4
12.6
17.1
23.9
28.8
30.0
31.5
36.3
35.5
40.4
35.9
38.8
44.0
44.4
43.4
43.5
45.4
46.9
48.8
51.5
51.7
52.1
54.3
56.6
57.7
60.5
65.1
69.6
71.1
75.4
79.3
80.2
86.8
98.3
119.0
118.8
125.4
137.7
152.9
176.2
191.9
180.7
186.8
175.5
192.3
233.7
242.4
166.2
173.0
174.6
188.3
185.9
187.3
188.8
207.1
240.3
229.1
232.3
232.9
239.4
240.9
237.5
251.6

6.1
2.5
4.4
4.4
6.4
10.1
12.0
11.9
12.4
14.8
15.1
17.5
12.8
13.6
16.0
15.0
13.0
12.4
11.3
11.1
11.0
13.1
10.8
11.6
12.0
12.1
11.9
10.7
13.0
14.0
12.7
12.8
14.6
14.7
15.5
19.4
33.7
27.5
25.4
20.6
20.5
27.0
31.7
20.5
30.7
24.6
14.3
32.1
21.0
23.3
23.6
22.9
28.5
18.7
11.8
6.6
20.0
44.4
29.4
27.8
26.6
26.5
22.8
12.2
22.5

Proprietors'
income 3
6.3
2.5
4.5
4.5
6.5
10.3
12.2
12.2
12.6
15.2
15.6
18.2
13.5
14.3
16.8
15.9
13.9
13.2
12.1
12.0
11.9
14.0
11.7
12.4
12.8
12.9
12.6
11.4
13.7
14.8
13.6
13.7
15.8
16.0
16.8
21.1
35.6
30.1
29.0
24.6
25.1
32.4
38.0
28.1
39.4
33.9
23.7
41.3
29.7
32.6
32.9
32.2
38.0
28.2
21.3
16.0
29.3
53.6
38.7
37.2
35.8
35.4
31.6
20.9
30.9

Capital
consumption
adjustment

-0.2
.0
-.1
-.1
-.2
-.2
-.2
-.3
-.3
-.4
-.5
-.7
-.7
-.7
-.8
-.9
-.9
-.8
-.8
_g
-i9
-.9
-.9
-.8
-.8
-.8
_7
_7
->
-.8
-.8
-.9
-1.1
-1.3
-1.3
-1.7
-1.9
-2.6
-3.6
-4.0
-4.6
-5.3
-6.3
-7.6
-8.7
-9.3
-9.4
-9.3
-8.7
-9.3
-9.3
-9.3
-9.4
-9.4
-9.5
-9.5
-9.3
-9.2
-9.3
-9.3
-9.2
-8.9
-8.8
-8.7
-8.4

Total

8.3
2.9
7.1
8.2
10.8
13.8
16.8
18.1
19.1
21.5
20.4
22.9
23.1
25.2
28.0
29.4
30.4
31.1
34.0
35.8
37.8
38.5
40.9
40.5
42.3
44.4
45.7
49.8
52.1
55.5
58.4
62.6
64.7
65.4
71.4
79.0
85.3
91.3
100.0
117.1
132.4
149.2
160.1
160.1
156.1
150.9
178.0
201.6
221.3
143.0
149.4
151.7
159.8
167.2
175.5
182.3
187.1
195.9
199.7
204.5
206.3
212.9
218.1
225.3
229.1

Proprietors'
income4
8.8
3.9
7.6
8.6
11.7
14.4
17.1
18.3
19.3
23.3
21.8
23.1
22.2
25.7
27.7
28.5
29.8
30.4
33.5
35.4
37.2
37.7
40.1
39.7
41.7
43.8
45.1
49.1
51.8
55.5
58.4
63.1
65.1
66.0
72.3
79.6
87.2
95.3
102.2
119.6
135.1
152.8
164.0
164.3
155.2
148.5
167.7
183.6
193.5
140.2
147.4
149.5
156.9
160.8
165.7
170.9
173.3
180.9
182.5
185.6
185.4
188.3
190.3
195.3
199.9

Inventory
valuation
adjustment
0.1
_5
-2
.0
-.6
-.4
_2
-.1
-.1
-1.7
-1.5
_4
^5
-1.1
-.3
.2
— 2
.0
-.2
-.5
-.3
-.1
.0
.0
.0
.0
.0
-.1
-.2
-.2
-.2
-.4
-.5
-.5
-.6
-.7
-2.0
-3.8
-1.2
-1.3
-1.3
-2.3
-2.9
-2.9
-1.4
-.5
-.9
-.5
— .3
-.4
-.6
-.4
-.6
-.6
-.9
-1.3
-.8
-1.3
-.3
-.1
-.2
-.3
-.2
.4
-1.1

Capital
consumption
adjustment

-0.6
-.5
-.4
-.3
-.3
-.3
-.2
_\
-'.I
-.1
.1
.2
.5
.6
.6
.7
.7
.8
.7
.9
.9
.9
.9
.8
.6
.6
.7
.7
.4
'.2
-.1
.1
.0
-.3
!l
-.3
-1.0
-1.3
-1.4
-1.4
-1.0
-1.2
2.3
2.9
11.2
18.5
28.2
3.2
2.5
2.5
3.5
7.0
10.6
12.7
14.6
16.3
17.5
19.0
21.2
24.9
27.9
29.6
30.4

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-21.
2
Employer contributions for social insurance and to private pension, health, and welfare funds; workers' compensation; directors'
fees; and a few other minor items.
See next page for continuation of table.




278

TABLE B-23.—National income by type of income, 1929-85—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Rental income of persons
with capital consumption
adjustment
Year or quarter
Total

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955 .. . .
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985 "
1982- 1
II
Ill
IV
1983- 1
II
HI
IV.. ..
1984:1

||
III
IV
1985- 1
II
Ill
IV P

Rental Capital
conincome sumption
of
adjustpersons ment

4.9
2.0
2.6
2.7
3.2
4.1
4.6
4.8
5.0
5.8
5.8
6.4
6.7
7.7
8.3
9.4
10.7
11.6
12.0
12.4
13.1
13.9
14.6
15.3
15.8
16.5
17.1
17.3
18.1
18.6
19.6
18.4
18.4
18.2
18.6
17.9
18.0
16.1
13.5
11.9
8.2
9.3
5.6
6.6
13.3
13.6
12.8
10.8
14.0
14.8
11.9
12.0
15.8
13.3
14.8
11.9
11.0
11.6
11.9
10.0
9.7
11.0
13.8
14.5
16.5

5.6
2.1
3.2
3.3
4.0
5.1
5.7
6.1
6.5
7.5
8.2
9.1
9.4
10.5
11.5
12.7
13.9
14.9
15.3
15.9
16.5
17.3
18.0
18.7
19.1
19.8
20.3
20.5
21.3
22.2
23.5
22.9
24.2
24.6
25.9
26.5
28.1
28.9
28.6
28.9
28.8
34.2
35.7
41.4
52.2
54.4
54.4
54.0
57.4
55.8
52.7
52.8
56.5
55.1
55.9
54.1
52.7
53.3
55.1
53.7
53.8
54.3
56.6
58.1
60.4

07
-.1
-.5
6
-.8
-.9
-1.1
-1.3
-1.5
-1.7
-2.4
27
-2.7
-2.8
-3.2
-3.3
-3.3
32
-3^3
-3.5
-3.5
-3.4
34
34
-3.3
-3.3
-3.2
-3.2
33
-3.6
39
-4.5
58
64
-7.4
86
-10.1
-12.7
150
-17.0
-20.6
249
-30.1
348
-38.9
-40.8
417
-43.2
-43.4
41 1
-40.7
-40.7
407
-41.8
-41.1
-42.2
-41.7
-41.7
-43.2
-43.7
-44.1
-43.4
-42.8
-43.7
-43.9

Corporate profits with inventory valuation and capital consumption adjustments
Profits with inventory valuation adjustment and without
capital consumption adjustment
Capital
Net
conInventory sumption interest
Profits after tax
adjustvaluation
ment
UndisDivi- tributed adjustTotal dends
ment
profits

Profits
Total
Total

9.6
-1.5
5.5
8.8
14.3
19.7
24.0
24.2
19.7
17.2
22.9
30.3
28.0
34.9
39.9
37.5
37.7
36.6
47.1
45.7
45.3
40.3
51.4
49.5
50.3
58.3
63.6
70.7
81.3
86.6
84.1
90.7
87.4
74.7
87.1
100.7
113.3
101.7
117.6
145.2
174.8
197.2
200.1
177.2
188.0
150.0
213.8
273.3
299.0
149.9
149.6
154.3
146 1
173.4
205.9
228.4
247.6
268.0
277.8
271.2
276.2
281.7
288.1
309.1

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
49.8
50.1
55.2
59.8
66.2
76.2
81.2
78.6
85.4
81.4
69.5
82.7
94.9
107.1
99.4
123.9
155.3
183.8
208.2
214.1
194.0
202.3
159.2
195.0
232.3
227.2
164.0
160.7
161.6
1507
163.7
190.5
207.3
218.7
234.4
241.8
226.5
226.3
220.6
220.9
233.2

Profits Profits
before
tax
tax liability

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
49.9
49.8
55.1
59.8
66.7
77.4
83.3
80.1
89.1
87.2
76.0
87.3
101.5
127.2
138.9
134.8
170.3
200.4
233.5
257.2
237.1
226.5
169.6
205.0
237.6
227.6
171.7
171.0
171.6
164 1
167.1
199.8
225.4
227.6
247.4
247.4
227.7
228.0
220.0
218.7
228.6

3
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
32.7
39.4
39.7
34.4
37.7
41.9
49.3
51.8
50.9
64.2
73,0
83.5
88.0
84.8
81.1
63.1
75.2
93.6
85.7
64.2
64.0
64.3
598
58.9
73.8
84.1
84.0
99.1
100.6
87.4
87.4
83.4
82.3
87.4

8.6
.4
5.7
7.2
10.3
10.3
11.2
11.3
9.1
15.7
20.5
23.2
19.0
25.0
21.9
20.2
20.9
21.1
27.2
27.6
26.7
22.9
28.9
27.2
27.1
31.2
33.5
38.7
46.5
49.6
47.5
49.7
47.5
41.7
49.6
59.6
77.9
87.1
83.9
106.0
127.4
150.0
169.2
152.3
145.4
106.5
129.8
144.0
141.9
107.5
1070
107.3
1043
108.2
126.0
141.3
143.6
148.3
146.7
140.3
140.6
136.6
136.4
141.1

With inventory valuation adjustment and without capital consumption adjustment.
Without inventory valuation and capital consumption adjustments.
Source: Department of Commerce, Bureau of Economic Analysis.




279

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
29.7
29.6
34.6
39.5
44.7
50.1
54.7
63.6
66.9
70.8
78.1
83.5
66.4
660
66.6
685
69.3
69.6
71.1
73.1
75.3
77.5
78.9
80.7
82.0
83.1
83.9
850

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
13.7
16.8
18.0
21.4
27.4
30.2
27.3
27.7
25.0
19.2
26.6
35.2
50.8
57.3
54.3
71.4
87.9
105.2
119.1
97.6
81.8
39.6
59.0
65.9
58.3
41.1
409
40.7
358
38.9
56.4
70.3
70.6
73.1
69.2
61.3
60.0
54.6
53.3
57.3

0.5
-2.1
_7
-.2
25
-1.2
-.8
-.3
-.6
53
-5.9
-2.2
1.9
-5.0
-1.2
1.0
-1.0
3
-1.7
-2.7
-1.5
-.3
-.2
.3
.0
.1
12
-2.1
-1.6
-3.7
-5.9
66
-4.6
66
-20.0
-39.5
-11.0
-14.9
-16.6
-25.3
-43.2
43 i
-24.2
-10.4
-10.0
-5.4
-.4
-7.7
-103
100
134
34
-9.3
-18.1
-8.9
-13.0
56
-1.3
-1.6
.7
2.2
4.7
-9.0

09
-.3
-1.0
-1.1
-1.1
-.8
-.5
.2
.4
-2.4
-2.9
-3.2
-3.0
-3.0
-3.4
-3.2
-2.5
18
-.4
-1.2
-1.3
-1.3
-.8
3
.2
3.1
3.8
4.5
5.2
5.4
5.5
5.3
6.1
5.2
4.3
5.8
6.2
2.3
-6.2
-10.1
-9.0
109
-14.0
168
-14.4
-9.2
18.8
41.0
71.8
-14.1
-11.1
-7.3
45
9.7
15.5
21.0
28.9
33.5
36.0
44.8
49.8
61.1
67.2
75.9
83.2

4.7
4.1
3.6
3.3
3.3
3.1
2.7
2.3
2.2
1.8
2.3
2.4
2.6
3.0
3.5
3.9
4.4
5.2
5.8
6.5
7.8
9.5
10.2
11.3
12.9
14.6
16.3
18.2
20.9
24.3
27.4
29.8
34.6
41.2
46.3
51.0
59.6
75.5
83.8
88.8
105.3
126.3
158.3
200.9
248.1
272.3
273.6
300.2
287.7
273.0
280.2
269.1
2669
268.5
269.4
276.4
280.3
286.9
297.6
309.5
307.0
302.9
292.4
281.8
273.7

TABLE B-24.—Sources of personal income, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Wage and salary disbursements *

Year or quarter

Personal
income

Commodityproducing
industries
Total
Total

1929
1933.
1939
1940
1941.
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

..

IV
1984- 1

||
III
IV

1985: 1

II
III
IV"

Other
labor
income »

Farm

Nonfarm

8.4
5.2
7.1

5.0
5.2
8.2

0.5
.4
.6

6.1
2.5
4.4

8.3
2.9
7.1

15.6
21.7
30.9
40.9
42.9
38.2
36.5
42.5
47.1
44.6

14.2
16.3
18.0
20.1
22.7
24.8
31.0
35.2
37.5
37.7

7.5
8.1
9.0
9.9
10.9
11.9
14.3
16.1
17.9
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
2.7
2.9

4.4
6.4
10.1
12.0
11.9
12.4
14.8
15.1
17.5
12.8

8.2
10.8
13.8
16.8
18.1
19.1
21.5
20.4
22.9
23.1

39.9
44.4
47.0
49.9
50.3
53.6
58.0
60.7
61.1
65.1
68.6
69.6
73.3
76.8
82.0
87.9
95.1
101.6
110.8
121.7
131.2
140.4
153.3
170.3
186.8
198.1
219.5
242.7
274.6
307.8
335.5
366.8
384.2
404.2
441.6
468.8
378.5
382.5
386.4
389.3
391.4
400.3
405.6
419.5

19.9
21.6
23.2
25.0
26.2
28.7
31.5
33.8
35.9
38.8
41.7
44.4
47.6
50.7
54.9
59.4
65.3
72.0
80.4
90.6
99.4
107.9
119.7
133.9
148.6
163.4
181.6
202.8
232.9
266.8
305.6
346.9
384.4
424.4
469.4
513.9
369.8
378.5
390.7
398.5

25.2
28.0
29.4
30.4
31.1
34.0
35.8
37.8
38.5
40.9

11.2
11.8
13.0
14.0
15.7
17.8
19.9
21.7
25,2
28.5
32.5
36.7
43.0
49.2
56.5
65.9
79.3
94.1
107.7
122.7
138.4
150.3
163.6
179.5
193.4
206.4

427.8
436.3
442.6
449.0

3,240.9
3,280.1
3,298.5
3,357.4

1,917.6
1,948.6
1,970.1
2,006.5

600.1
604.7
607.6
616.3

453.5
454.9
457.2
464.4

428.2
439.1
446.1
453.0
459.8
467.4
471.2
476.8

22.6
29.2
33.3
34.4
34.9
36.6
38.8
41.0
44.1
46.0
49.2
52.4
56.3
60.0
64.9
69.9
78.3
86.4
96.6
105.5
117.1
126.5
137.4
148.7
160.9
176.0
188.6
202.3
219.4
236.1
260.2
284.4
305.9
324.2
346.1
370.8
298.7
303.2
307.7
314.0
318.1
322.7
326.5
329.6
337.8
343.2
349.2
354.1

13.6
16.0
15.0
13.0
12.4
11.3
11.1
11.0
13.1
10.8
11.6
12.0
12.1
11.9
10.7
13.0
14.0
12.7
12.8
14.6
14.7
15.5
19.4
33.7
27.5
25.4
20.6
20.5
27.0
31.7
20.5
30.7
24.6
14.3
32.1
21.0

2,614.3
2,655.9
2,683.6
2,729.2
2,752.8
2,805.7
2,852.4
2,934.8
3,033.8
3,083.5
3,144.2
3,186.2

50.3
59.4
64.2
71.3
67.6
73.9
79.5
82.5
78.7
86.9
89.8
89.9
96.8
100.7
107.3
115.7
128.2
134.3
146.0
157.7
158.4
160.5
175.6
196.6
211.8
211.6
238.0
266.7
300.1
334.8
355.6
386.7
384.0
397.4
438.9
457.5
389.2
386.5
383.0
377.4
381.7
390.9
401.8
415.1

3.7
4.6
5.2
5.9
6.1
7.0
8.0
9.0
9.4
10.6

551.5
583.9
638.7
708.7
772.6
814.6
899.5
993.9
1,119.3
1,252.1
1,372.0
1,510.3
1,586.1
1,675.8
1,834.9
1,960.7
1,566.3
1,580.0
1,594.6
1,603.6
1,623.7
1,655.7
1,688.0
1,735.8
1,782.2
1,820.8
1,852.9
1,883.9

64.8
76.4
82.1
89.8
85.8
93.3
100.8
104.4
100.3
109.9
113.4
114.0
122.2
127.4
136.0
146.6
161.6
169.0
184.1
200.4
203.7
209.1
228.2
255.9
276.5
277.1
309.7
346.1
392.3
441.4
470.7
512.2
511.7
523.0
577.9
607.2
519.3
515.8
509.8
501.8
505.4
513.8
528.0
544.9
562.9
574.3
583.2
591.2

158.6
162.3
165.6
168.0
171.8
177.5
182.3
186.3
189.7
192.2
194.4
197.2
200.9
204.8
208.4
211.5

23.3
23.6
22.9
28.5
18.7
11.8
6.6
20.0
44.4
29.4
27.8
26.6
26.5
22.8
12.2
22.5

831.8
894.0
981.6
1,101.7
1,210.1
1,313.4
1,451.4
1,607.5
1,812.4
2,034.0
2,258.5
2,520.9
2,670.8
2,836.4
3,111.9
3,294.2

IV

1983: 1
II.
Ill

Government
and
government
enterprises

15.6
8.8
13.3

228.1
256.5
273.8
290.5
293.0
314.2
337.2
356.3
367.1
390.7
409.4
426.0
453.2
476.3
510.2
552.0
600.8
644.5
707.2
772.9

Ill

Service
industries

16.1
7.8
13.6

84.3
46.3
72.1
77.6
95.2
122.4
150.7
164.5
170.0
177.6
190.2
209.2
206.4

1970
1971
1972
1973 .
1974
1975
1976
1977
1978
1979
1980
1981 . .
1982
1983
1984
1985"
1982- 1 .
II

Manufacturing

Distributive
industries

Proprietors' income
with inventory
valuation and
capital
consumption
adjustments

50.5
29.0
46.0
49.9
62.1
82.1
105.6
116.9
117.5
112.0
123.1
135.5
134.8
147.2
171.5
185.6
199.0
197.2
212.1
229.0
239.9
241.3
259.8
272.8
280.5
299.3
314.8
337.7
363.7
400.3
428.9
471.9
518.3

21.5
9.8
17.4
19.7
27.5
39.1
49.0
50.4
45.9
46.0
54.2
61.1
57.8

408.9
419.0
428.0
441.9
453.2
464.3
474.4
485.5
495.2
508.1
518.7
533.6

362.5
368.4
372.6
379.7

40.5
42.3
44.4
45.7
49.8
52.1
55.5
58.4
62.6
64.7
65.4
71.4
79.0
85.3
91.3
100.0
117.1
132.4
149.2
160.1
160.1
156.1
150.9
178.0
201.6
221.3
143.0
149.4
151.7
159.8
167.2
175.5
182.3
187.1
195.9
199.7
204.5
206.3
212.9
218.1
225.3
229.1

1
The total of wage and salary disbursements arid other labor income differs from compensation of employees in Table B-23 in that it
excludes employer contributions for social insurance and the excess of wage accruals over wage disbursements.
See next page for continuation of table.




280

TABLE B-24.—Sources of personal income, 1929-85—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Rental
income
of
persons Personal Personal
with
Year or quarter capital dividend interest
income income
consumption
adjustment

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953 .
1954
1955
1956
1957
1958
1959
1960 ~
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974 . .
1975
1976 . .
1977
1978
1979
1980
1981
1982
1983. . .
1984
1985"
1982- 1
II
Ill
IV
1983: I

II
Ill
IV
1984: 1

II
III
IV
1985- 1
II
Ill
IV "

,..

4.9
2.0
2.6
2.7
3.2
4.1
4.6
4.8
5.0
5.8
5.8
6.4
6.7
7.7
8.3
9.4
10.7
11.6
12.0
12.4
13.1
13.9
14.6
15.3
15.8
16.5
17.1
17.3
18.1
18.6
19.6
18.4
18.4
18.2
18.6
17.9
18.0
16.1
13.5
11.9
8.2
9.3
5.6
6.6
13.3
13.6
12.8
10.8
14.0
14.8
11.9
12.0
15.8
13.3
14.8
11.9
11.0
11.6
11.9
10.0
9.7
11.0
13.8
14.5
16.5

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
21.9
22.4
22.2
22.6
24.1
26.6
28.9
28.7
33.8
38.2
43.0
48.1
52.9
61.3
63.9
68.0
74.6
78.9
63.6
63.1
63.6
65.4
66.5
66.9
68.3
70.2
72.1
74.1
75.3
76.9
77.9
78.7
79.1
79.8

6.9
5.5
5.3
5.3
5.3
5.2
5.1
5.2
5.8
6.6
7.5
8.0
8.7
9.6
10.4
11.2
12.4
13.7
14.9
16.6
18.7
20.3
22.3
24.9
26.3
28.9
32.2
35.5
39.6
44.2
48.2
53.2
60.9
69.3
74.7
80.8
93.3
111.9
122.5
134.1
155.4
182.5
221.5
271.9
335.4
369.7
385.7
442.2
456.5
367.5
377.0
368.0
366.2
371.1
377.2
392.1
402.6
417.2
433.6
456.8
461.3
462.8
460.5
450.6
452.1

Transfer payments

Total

1.5
2.1
3.0
3.1
3.1
3.1
3.0
3.6
6.2
11.3
11.7
11.3
12.5
15.2
12.6
13.3
14.3
16.3
17.7
18.9
21.8
26.3
27.4
29.5
33.5
34.7
36.9
38.7
41.9
46.6
55.5
64.0
71.4
85.9
101.5
113.3
129.6
153.2
193.1
210.7
226.1
244.0
273.1
324.7
368.1
410.6
442.2
454.7
484.5
388.1
400.4
418.3
435.4
437.6
445.0
441.3
444.9
450.4
453.5
456.0
459.2
477.6
481.0
488.1
491.4

Old-age,
Governsurvivors, Government
ment
disability, unemand
Veterans employployment benefits
ees
health
insurretireinsurment
ance
ance
benefits
benefits benefits

0.0
.0
.1
.1
.2
.2
.3
.4

'.B
.1
1.0
1.9
2.2
3.0
3.6
4.9
5.7
7.3
8.5
10.2
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
154.2
182.0
204.5
221.7
235.7
253.4
195.2
197.3
209.0
216.6
217.4
220.2
222.0
227.0
231.3
233.7
236.0
241.8
249.2
250.7
256.5
257.3

0.4
.5
.4
.4
.1
.1
.4
1.1
.8
.9
1.9
1.5
.9
1.1
1.0
2.2
1.5
1.5
1.9
4.1
2.8
3.0
4.3
3.1
3.0
2.7
2.3
1.9
2.2
2.1
2.2
4.0
5.8
5.7
4.4
6.8
17.6
15.8
12.7
9.7
9.8
16.1
15.9
25.2
26.3
15.8
15.5
19.2
23.8
26.0
31.8
30.2
31.8
23.2
19.9
17.4
15.6
15.0
15.4
16.6
15.8
14.8
14.8

06
.6
.5
.5
.5
.5
1.0
3.0
7.0
7.0
5.9
5.3
7.7
4.6
4.3
4.1
4.2
4.4
4.4
4.5
4.7
4.6
4.6
5.0
4.7
4.8
4.7
4.9
4.9
5.6
5.9
6.7
7.7
8.8
9.7
10.4
11.8
14.5
14.4
13.8
13.9
14.4
15.0
16.1
16.4
16.6
16.4
16.8
16.3
16.2
16.3
16.6
16.8
16.6
16.6
16.5
16.4
165
16.5
16.3
16.9
17.0
16.7
16.6

01
.2
.3
.3
.3
.3
.4
.4
.5
.7
.7
.7
.9
1.0
1.1
1.2
1.4
1.5
1.7
1.9
2.2
2.5
2.8
3.1
3.4
3.7
4.2
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
36.9
43.0
49.4
54.6
58.7
60.8
66.6
51.7
54.8
55.6
56.1
56.7
58.4
59.5
60.2
61.1
61.8
62.5
57.7
65.3
66.2
67.0
68.0

Aid to
families
with
depend- Other
ent
children
(AFDC)

0.3
.4
.5
.6
.6
.5
.5
.6
.6
.6
.7
.8
.9
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
13.0
13.3
14.2
14.9
15.4
13.2
13.2
13.3
13.6
14.0
14.2
14.3
14.4
15.0
15.1
14.6
14.8
15.1
15.3
15.5
15.6

0.8
1.4
1.7
1.7
1.8
1.8
1.8
2.0
2.0
2.1
2.5
2.9
3.3
3.5
3.6
3.9
4.2
4.2
4.5
4.8
5.2
5.7
6.2
6.7
7.1
7.6
8.3
9.1
9.8
11.2
13.0
15.3
17.3
20.7
24.5
27.6
31.2
37.5
47.6
51.5
55.1
60.9
69.1
84.0
91.8
96.5
104.7
111.1
116.8
92.4
95.0
98.1
100.6
102.3
103.8
105.8
106.8
109.1
110.7
111.3
113.2
114.5
116.1
117.6
119.0

Less:
Personal
contribu- Nonfarm
personal
tions for income 2
social
insurance

0.1
2
.6
.7
.8
1.2
1.8
2.2
2.3
2.0
2.1
2.2
2.2
2.9
3.4
3.8
4.0
4.6
5.2
5.8
6.7
6.9
7.9
9.3
9.7
10.3
11.8
12.6
13.3
17.8
20.6
22.9
26.2
27.9
30.7
34.5
42.6
47.9
50.4
55.5
61.2
69.8
81.0
88.6
104.5
112.3
119.8
132.4
149.1
110.8
111.8
113.1
113.5
117.1
118.7
120.4
123.0
129.7
131.7
133.4
134.9
146.3
148.3
149.7
152.1

172.0
188.3
190.6
211.2
237.1
255.4
274.2
277.5
299.6
322.8
341.9
350.4
376.2
393.9
409.9
436.7
460.0
494.9
534.0
581.5
626.3
688.7
752.1
810.4
871.8
955.0
1,059.7
1,172.6
1,276.9
1,417.9
1,572.6
1,769.3
1,983.2
2,215.8
2,465.6
2,618.7
2,795.3
3,053.3
3,247.1
2,564.3
2,604.8
2,632.8
2,672.8
2,706.7
2,767.0
2,819.2
2,888.3
2,962.9
3,027.6
3,089.8
3,132.7
3,188.1
3,231.0
3,260.4
3,308.9

2
Personal income exclusive of farm proprietors' income, farm wages, farm other labor income, and farm net interest.
Note.—The industry classification of wage and salary disbursements and proprietors' income is on an establishment basis and is
based on the 1972 Standard Industrial Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948.
Source: Department of Commerce, Bureau of Economic Analysis.




281

TABLE B-25.—Disposition of personal income, 1929-85
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Less: Personal outlays

Year or quarter

1929
1933
1939.

Personal
income

Less:
Personal
tax and
nontax
payments

Equals-.
Disposable
personal
income

Total

Percent of disposable
personal income

Personal
Personal Interest transfer
paid by
conpaysumption consum- ments
expendi- ers to
to
busitures
forness
eigners
(net)

Personal outlays
Equals:
Personal
saving
Total

Personal
consump- Personal
saving
tion
expenditures

84.3
46.3
72.1

2.6
1.4
2.4

81.7
44.9
69.7

79.2
46.5
67.9

77.3
45.8
67.0

1.5
.5
.7

0.3
.2
.2

2.6
-1.6
1.8

96.8
103.6
97.4

94.5
102.1
96.2

3.2
-3.6
2.6

1940
1941
1942
1943.. .
1944
1945
1946
1947
1948.
1949

77.6
95.2
122.4
150.7
164.5
170.0
177.6
190.2
209.2
206.4

2.6
3.3
5.9
17.8
18.9
20.8
18.7
21.4
21.0
18.5

75.0
91.9
116.4
132.9
145.6
149.2
158.9
168.8
188.1
187.9

72.0
81.9
89.5
100.2
109.0
120.5
145.3
163.6
177.0
180.6

71.0
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3

.8
.9
.7
.5
.5
.5
.7
1.0
1.4
1.7

.2
.2
.1
.2
.4
.5
.7
.7
.7
.5

3.0
10.0
27.0
32.7
36.5
28.7
13.6
5.2
11.1
7.4

96.0
89.1
76.8
75.4
74.9
80.8
91.4
96.9
94.1
96.1

94.7
87.9
76.1
74.8
74.4
80.2
90.6
95.9
93.0
94.9

4.0
10.9
23.2
24.6
25.1
19.2
8.6
3.1
5.9
3.9

1950
1951
1952
1953
1954
1955
1956
1957.
1958
1959

228.1
256.5
273.8
290.5
293.0
314.2
337.2
356.3
367.1
390.7

20.6
28.9
34.0
35.5
32.5
35.4
39.7
42.4
42.2
46.1

207.5
227.6
239.8
255.1
260.5
278.8
297.5
313.9
324.9
344.6

194.8
211.0
222.4
236.7
244.1
262.8
276.2
291.2
300.6
322.8

192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3

2.3
2.5
2.9
3.6
3.8
4.4
5.1
5.5
5.6
6.1

.4
.4
.4
.5
.5
.4
.5
.5
.4
.4

12.6
16.6
17.4
18.4
16.4
16.0
21.3
22.7
24.3
21.8

93.9
92.7
92.7
92.8
93.7
94.2
92.8
92.8
92.5
93.7

92.6
91.4
91.4
91.2
92.0
92.5
90.9
90.9
90.7
91.8

6.1
7.3
7.3
7.2
6.3
5.8
7.2
7.2
7.5
6.3

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

409.4
426.0
453.2
476.3
510.2
552.0
600.8
644.5
707.2
772.9

50.5
52.2
57.0
60.5
58.8
65.2
74.9
82.4
97.7
116.3

358.9
373.8
396.2
415.8
451.4
486.8
525.9
562.1
609.6
656.7

338.1
348.9
370.2
391.2
419.9
452.5
489.9
516.9
567.1
614.5

330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9

7.0
7.3
7.8
8.8
9.9
11.1
12.0
12.5
13.8
15.6

.4
.5
.5
.6
.7
.7
.7
.9
.9
1.0

20.8
24.9
25.9
24.6
31.5
34.3
36.0
45.1
42.5
42.2

94.2
93.4
93.5
94.1
93.0
93.0
93.2
92.0
93.0
93.6

92.1
91.3
91.4
91.8
90.7
90.5
90.8
89.6
9U.6
9LO

5.8
6.6
6.5
5.9
7.0
7.0
6.8
8.0
7.0
6.4

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979.

831.8
894.0
981.6
1,101.7
1,210.1
1,313.4
1,451.4
1,607.5
1,812.4
2,034.0

116.2
117.3
142.0
152.0
171.8
170.6
198.7
228.1
261.1
304.7

715.6
776.8
839.6
949.8
1,038.4
1,142.8
1,252.6
1,379.3
1,551.2
1,729.3

657.9
710.5
778.2
860.8
941.7
1,038.2
1,156.9
1,288.6
1,441.1
1,611.3

640.0
691.6
757.6
837.2
916.5
1,012.8
1,129.3
1,257.2
1,403.5
1,566.8

16.7
17.7
19.5
22.3
24.1
24.4
26.6
30.5
36.7
43.5

1.2
1.2
1.1
1.3
1.0
1.0
1.0
.9
.9
1.0

57.7
66.3
61.4
89.0
96.7
104.6
95.8
90.7
110.2
118.1

91.9
91.5
92.7
90.6
90.7
90.8
92.4
93.4
92.9
93.2

89.4
89.0
90.2
88.2
88.3
88.6
90.2
91.1
90.5
90.6

8.1
8.5
7.3
9.4
9.3
9.2
7.6
6.6
7.1
6.8

1980
1981.. . .
1982
1983
1984
1985 "

2,258.5
2,520.9
2,670.8
2,836.4
3,111.9
3,294.2

340.5
393.3
409.3
411.1
441.8
493.1

1,918.0
2,127.6
2,261.4
2,425.4
2,670.2
2,801.1

1,781.1
1,968.1
2,107.5
2,292.2
2,497.7
2,671.4

1,732.6
1,915.1
2,050.7
2,229.3
2,423.0
2,581.9

47.4
52.0
55.5
61.8
73.3
87.4

1.1
1.0
1.3
1.0
1.3
2.1

136.9
159.4
153.9
133.2
172.5
129.7

92.9
92.5
93.2
94.5
93.5
95.4

90.3
90.0
90.7
91.9
90.7
92.2

7.1
7.5
6.8
5.5
6.5
4.6

1982: 1
II
Hi
IV

2,614.3
2,655.9
2,683.6
2,729.2

407.1
414.1
405.0
411.1

2,207.2
2,241.8
2,278.6
2,318.1

2,052.2
2,080.1
2,122.6
2,174.9

1,996.3
2,023.8
2,065.6
2,117.0

54.6
55.0
55.8
56.8

1.3
1.4
1.2
1.1

155.0
161.7
156.0
143.1

93.0
92.8
93.2
93.8

90.4
90.3
90.7
91.3

7.0
7.2
6.8
6.2

1983- 1
II
Ill
IV

2,752.8
2,805.7
2,852.4
2,934.8

407.4
418.0
404.4
414.4

2,345.5
2,387.7
2,447.9
2,520.4

2,205.2
2,271.3
2,319.0
2,373.3

2,146.0
2,210.1
2,254.9
2,306.3

58.3
60.2
63.0
65.9

.9
1.0
1.1
1.2

140.3
116.4
129.0
147.1

94.0
95.1
94.7
94.2

91.5
92.6
92.1
91.5

6.0
4.9
5.3
5.8

1984: 1
II
Ill
IV

3,033.8
3,083.5
3,144.2
3,186.2

423.6
433.6
447.5
462.4

2,610.2
2,649.9
2,696.7
2,723.8

2,428.7
2,487.4
2,515.2
2,559.4

2,358.6
2,414,4
2,439.0
2,480.1

68.6
71.7
75.1
77.8

1.4
1,2
1.2
1.5

181.6
162.6
181.5
164.5

93.0
93.9
93.3
94.0

90.4
91.1
90.4
91.1

7.0
6.1
6.7
6.0

1985: I

3,240.9
3,280.1
3,298.5
3,357.4

501.7
462.4
498.2
510.1

2,739.2
2,817.7
2,800.2
2,847.2

2,608.4
2,650.6
2,697.6
2,729.2

2,525.0
2,563.3
2,606.1
2,633.3

81.2
85.4
89.3
93.8

2.1
1.8
2.2
2.1

130.9
167.2
102.6
118.1

95.2
94.1
96.3
95.9

92.2
91.0
93.1
92.5

4.8
5.9
3.7
4.1

il
Ill
IV"

Source: Department of Commerce, Bureau of Economic Analysis.




282

TABLE B-26.—Total and per capita disposable personal income and personal consumption expenditures in
current and 1982 dollars, 1929-85
[Quarterly data at seasonally adjusted annual rates, except as noted]
Disposable personal income
Year or quarter

Total (billions of
dollars)
Current
dollars

1929
. .
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968 . .
1969.....
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983 .
1984
1985"
1982- 1
II
III
IV
1983: 1
||
.
Ill
IV
1984- 1
II
Ill
IV
1985: 1
II
III.
IV P

1982
dollars

81.7
44.9
69.7
75.0
91.9
116.4
132.9
145.6
149.2
158.9
168.8
188.1
187.9
207.5
227.6
239.8
255.1
260.5
278.8
297.5
313.9
324.9
344.6
358.9
373.8
396.2
415.8
451.4
486.8
525.9
562.1
609.6
656.7
715.6
776.8
839.6
949.8
1,038.4
1,142.8
1,252.6
1,379.3
1,551.2
1,729.3
1,918.0
2,127.6
2,261.4
2,425.4
2,670.2
2,801.1
2,207.2
2,241.8
2,278.6
2,318.1
2,345.5
2,387.7
2,447.9
2,520.4
2,610.2
2,649.9
2,696.7
2,723.8
2,739.2
2,817.7
2,800.2
2,847.2

498.6
370.8
499.5
530.7
604.1
693.0
721.4
749.3
739.5
723.3
694.8
733.1
733.2
791.8
819.0
844.3
880.0
894.0
944.5
989.4
1,012.1
1,028.8
1,067.2
1,091.1
1,123.2
1,170.2
1,207.3
1,291.0
1,365.7
1,431.3
1,493.2
1,551.3
1,599.8
1,668.1
1,728.4
1,797.4
1,916.3
1,896.6
1,931.7
2,001.0
2,066.6
2,167.4
2,212.6
2,214.3
2,248.6
2,261.5
2,334.6
2,468.4
2,509.0
2,245.7
2,260.9
2,263.4
2,276.1
2,291.3
2,309.0
2,346.9
2,391.3
2,446.8
2,461.8
2,480.5
2,484.4
2,482.7
2,532.2
2,503.1
2,517.9

Personal consumption expenditures

Per capita
(dollars)
Current
dollars

671
357
532
568
689
863
972
1,052
1,066
1,124
1,171
1,283
1,260
1,368
1,475
1,528
1,599
1,604
1,687
1,769
1,833
1,865
1,946
1,986
2,034
2,123
2,197
2,352
2,505
2,675
2,828
3,037
3,239
3,489
3,740
4,000
4,481
4,855
5,291
5,744
6,262
6,968
7,682
8,422
9,247
9,732
10,339
11,279
11,727
9,533
9,661
9,793
9,937
10,033
10,192
10,423
10,706
11,064
11,209
11,379
11,465
11,506
11,814
11,710
11,878

Total (billions of
dollars)

1982
dollars

Current
dollars

1982
dollars

4,091
2,950
3,812
4,017
4,528
5,138
5,276
5,414
5,285
5,115
4,820
5,000
4,915
5,220
5,308
5,379
5,515
5,505
5,714
5,881
5,909
5,908
6,027
6,036
6,113
6,271
6,378
6,727
7,027
7,280
7,513
7,728
7,891
8,134
8,322
8,562
9,042
8,867
8,944
9,175
9,381
9,735
9,829
9,723
9,773
9,732
9,952
10,427
10,504
9,700
9,743
9,728
9,758
9,802
9,856
9,993
10,157
10,371
10,413
10,466
10,457
10,429
10,617
10,468
10,504

77.3
45.8
67.0
71.0
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3
192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3
330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9
640.0
691.6
757.6
837.2
916.5
1,012.8
1,129.3
1,257.2
1,403.5
1,566.8
1,732.6
1,915.1
2,050.7
2,229.3
2,423.0
2,581.9
1,996.3
2,023.8
2,065.6
2,117.0
2,146.0
2,210.1
2,254.9
2,306.3
2,358.6
2,414.4
2,439.0
2,480.1
2,525.0
2,563.3
2,606.1
2,633.3

471.4
378.7
480.5
502.6
531.1
527.6
539.9
557.1
592.7
655.0
666.6
681.8
695.4
733.2
748.7
771.4
802.5
822.7
873.8
899.8
919.7
932.9
979.4
1,005.1
1,025.2
1,069.0
1,108.4
1,170.6
1,236.4
1,298.9
1,337.7
1,405.9
1,456.7
1,492.0
1,538.8
1,621.9
1,689.6
1,674.0
1,711.9
1,803.9
1,883.8
1,961.0
2,004.4
2,000.4
2,024.2
2,050.7
2,145.9
2,239.9
2,312.6
2,031.2
2,041.0
2,051.8
2,078.7
2,096.4
2,137.2
2,161.8
2,188.1
2,210.9
2,243.0
2,243.4
2,262.0
2,288.6
2,303.5
2,329.6
2,328.7

Per capita
(dollars)
Current
dollars

634
365
511
538
606
657
727
782
855
1,018
1,123
1,193
1,195
1,267
1,349
1,396
1,458
1,477
1,560
1,608
1,666
1,692
1,786
1,829
1,857
1,940
2,017
2,133
2,268
2,428
2,534
2,752
2,949
3,121
3,330
3,609
3,950
4,285
4,689
5,178
5,707
6,304
6,960
7,608
8,324
8,825
9,503
10,235
10,810
8,623
8,721
8,878
9,075
9,180
9,434
9,601
9,796
9,997
10,212
10,291
10,439
10,606
10,747
10,898
10,986

1982
dollars
3,868
3,013
3,667
3,804
3,981
3,912
3,949
4,026
4,236
4,632
4,625
4,650
4,661
4,834
4,853
4,915
5,029
5,066
5,287
5,349
5,370
5,357
5,531
5,561
5,579
5,729
5,855
6,099
6,362
6,607
6,730
7,003
7,185
7,275
7,409
7,726
7,972
7,826
7,926
8,272
8,551
8,808
8,904
8,784
8,798
8,825
9,148
9,462
9,682
8,773
8,795
8,819
8,911
8,968
9,123
9,205
9,294
9,371
9,488
9,466
9,521
9,613
9,658
9,742
9,715

Population
(thousands) '

121,878
125,690
131,028
132,122
133,402
134,860
136,739
138,397
139,928
141,389
144,126
146,631
149,188
151,684
154,287
156,954
159,565
162,391
165.275
168,221
171,274
174,141
177,073
180,760
183,742
186,590
189,300
191,927
194,347
196,599
198,752
200,745
202,736
205,089
207,692
209,924
211,939
213,898
215,981
218,086
220,289
222,629
225,106
227,732
230,087
232,376
234,579
236,731
238,849
231,520
232,050
232,667
233,268
233,772
234,268
234,850
235,425
235,924
236,419
236,998
237,584
238,065
238,503
239,126
239,703

1
Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1960. Annual data are for
July 1 through 1958 and are averages of quarterly data beginning 1959. Quarterly data are averages for the period.
Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).




283

TABLE B-27.—Gross saving and investment, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Gross investment

Gross saving
Gross private saving
Year or
quarter

Total
Total

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947 . .. .
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977 .
1978
1979
1980
1981
1982
1983
1984
1985 " .
1982: 1

||
III
IV
1983-. 1
II
Ill
IV
1984: 1

II
Ill
IV
1985: 1
II
Ill
IV

15.9
.9
8.8
13.5
18.6
10.6
5.8
3.0
5.9
35.7
42.5
50.8
365
52.5
58.7
52.3
51.0
51.6
68.4
77.3
77.1
64.5
80.5
84.2
82.6
91.4
98.7
108.5
123.5
130.3
129.5
139.7
158.8
154.7
171.9
200.7
251.9
247.9
238.7
283.0
335.4
408.6
458.4
445.0
522.0
446.4
469.8
584.5
558.7
471.6
483.4
443.1
387.4
430.0
451.2
478.5
519.8
590.5
581.3
592.8
573.5
578.3
571.7
537.3

Personal
saving

Gross
ness
saving 1

2.6
12.3
14.9
3.8
2.2 -1.6
9.2
11.0
1.8
14.2
3.0
11.2
12.4
22.4
10.0
27.0
15.0
42.0
32.7
50.0
17.3
18.4
36.5
54.9
45.4
28.7
16.8
16.7
30.3
13.6
28.1
5.2
23.0
42.4
11.1
31.3
325
74
399
12.6
31.8
44.5
52.6
16.6
36.0
17.4
38.7
56.1
18.4
58.0
39.6
16.4
58.8
42.3
65.2
16.0
49.2
72.1
21.3
50.8
76.1
22.7
53.5
77.1
24.3 52.9
82.1
21.8
60.3
81.1
20.8
60.3
86.8
24.9
62.0
95.2
25.9
69.3
97.9
24.6
73.3
110.8
31.5
79.3
88.7
123.0
34.3
131.6
36.0
95.6
143.8 45.1 98.6
145.7
42.5 103.3
148.9
42.2 106.7
57.7 106.7
164.5
190.6
66.3 124.3
203.4
61.4 142.0
244.0
89.0 155.0
96.7 157.6
254.3
303.6 104.6 198.9
321.4
95.8 225.6
90.7 263.8
354.5
409.0 110.2 298.9
445.8 118.1 327.7
478.4 136.9 341.5
550.5 159.4 391.1
557.1 153.9 403.2
600.6 133.2 467.4
693.0 172.5 520.5
697.7 129.7 568.0
547.6 155.0 392.6
561.1 161.7 399.4
565.7 156.0 409.7
554.2 143.1 411.1
580.0 140.3 439.7
575.0 116.4 458.6
605.5 129.0 476.5
642.0 147.1 495.0
684.3 181.6 502.7
678.6 162.6 516.0
708.8 181.5 527.3
700.3 164.5 535.8
677.7 130.9 546.8
723.6 167.2 556.4
681.8 102.6 579.2
118.1

Governmeri t surplus or deficit Capital
( — ), na :ional income and
grants
received
prod uct accounts
by the
State
United
Federal
States
Total
and
local
(net) 2

1.0
-1.4
-2.2
-.7
-3.8
-31.4
-44.2
-51.8
-39.5
5.4
14.4
8.4
-34
8.0
6.1
-3.8
-7.0
-7.1
3.1
5.2
.9
-12.6
-1.6
3.1
-4.3
-3.8
.7
-2.3
.5
-1.3
-14.2
-6.0
9.9
-10.6
-19.5
-3.4
7.9
-4.3
-64.9
-38.4
-19.1
-.4
11.5
-34.5
-29.7
-110.8
-130.8
-108.5
-139.0
-76.0
-77.7
-122.5
-166.8
-150.0
-123.8
-127.0
-122.2
-93.8
-97.3
-116.0
-126.8
-99.4
-151.9
-144.5

1.2
-1.3
-2.2
-1.3
-5.1
-33.1
-46.6
-54.5
-42.1
3.5
13.4
8.3
-26
9.2
6.5
-3.7
-7.1
-6.0
4.4
6.1
2.3
-10.3
-1.1
3.0
-3.9
-4.2
.3
-3.3
.5
-1.8
-13.2
-6.0
8.4
-12.4
-22.0
-16.8
-5.6
-11.6
-69.4
-53.5
-46.0
-29.3
-16.1
-61.3
-63.8
-145.9
-179.4
-172.9
-197.3
-109.2
-112.9
-158.8
-202.6
-187.9
-170.6
-179.7
-179.5
-157.8
-163.0
-178.1
-192.7
-162.6
-209.1
-201.3

-0.2
-.1
.0
.6
1.3
1.8
2.4
2.7
2.6
1.9
1.0
.1
_7
-1.2
-.4
.0
.1
-1.1
-1.3
-.9
-1.4
-2.4
-.4
.1
-.4
.5
.5
1.0
.0
.5
-1.1
.1
1.5
1.8
2.6
13.5
13.5
7.2
4.5
15.2
26.9
28.9
27.6
26.8
34.1
35.1
48.6
64.4
58.3
33.2
35.2
36.3
35.8
37.9
46.8
52.7
57.2
64.0
65.7
62.1
65.8
63.2
57.3
56.9

0.9
4

'.7
.0
-2.0
.0
.0
.0
.0
1.1
1.2
1.1
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0

Total

17.4
1.7
10.6
15.0
19.5
10.2
4.1
5.8
10.0
36.4
44.3
49.6
37.3
53.2
61.4
54.2
53.6
54.3
70.2
75.4
75.9
64.5
79.0
81.4
81.3
91.5
98.1
107.1
122.3
132.4
129.2
138.6
154.9
153.6
173.7
199.1
247.6
246.2
241.2
286.6
335.3
406.7
457.4
449.9
526.1
446.3
469.2
583.0
559.4
466.8
484.4
439.9
394.2
428.5
455.5
474.2
518.6
593.3
579.4
593.6
565.8
580.8
567.0
539.9
549.9

Gross
private
domestic
investment

16.7
1.6
9.5
13.4
18.3
10.3
6.2
7.7
11.3
31.5
35.0
47.1
36.5
55.1
60.5
53.5
54.9
54.1
69.7
72.7
71.1
63.6
80.2
78.2
77.1
87.6
93.1
99.6
116.2
128.6
125.7
137.0
153.2
148.8
172.5
202.0
238.8
240.8
219.6
277.7
344.1
416.8
454.8
437.0
515.5
447.3
501.9
674.0
670.4
459.5
467.8
452.2
409.6
425.0
483.7
521.2
577.6
658.8
673.3
687.9
676.2
657.6
672.8
666.1
685.2

Net
foreign
investment 3

0.8
.2
1.0
1.5
1.3
-.1
-2.1
-2.0
-1.3
4.9
9.3
2.4
.9
-1.8
.9
.6
-1.3
.2
.4
2.8
4.8
.9
-1.2
3.2
4.2
3.8
4.9
7.5
6.2
3.8
3.5
1.6
1.7
4.8
1.3
-2.9
8.8
5.4
21.6
9.0
-8.7
-10.1
2.6
13.0
10.6
-1.0
-32.7
-91.0
-111.0
7.3
16.5
-12.3
-15.4
3.6
-28.2
-47.0
-59.0
-65.5
-93.9
-94.3
-110.4
-76.8
-105.8
-126.2
-135.4

Statistical
discrepancy

1.5
1.2
1.7
1.4
.7
-.7
-1.7
2.7
4.0
.7
1.8
-1.3
.8
.8
2.7
1.8
2.6
2.7
1.8
-1.9
-1.2
-.1
-1.5
-2.8
-1.2
.0
-.6
-1.4
-1.2
2.1
-.4
-1.1
-3.9
-1.1
1.8
-1.6
-4.3
-1.7
2.5
3.6
.0
-1.9
-1.0
4.9
4.1
-.1
-.6
-1.5
.7
-4.8
1.0
-3.2
6.8
-1.4
4.3
-4.3
-1.2
2.8
-1.9
.8
-7.6
2.5
-4.7
2.5

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.




284

TABLE B-28.—Saving by individuals, 1946-85 l
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Increase in financial assets

Year or
quarter

Total

Checkable
deposTotal
its
and
currency

Securities
Insur- Other
lime
ance finanand Money
and
sav- market Govern- Corpo- Other
ment
rate securi- pension cial
ings fund
asrede- shares securi- equi2
3
ties4 serves5 sets6
ties
ties
posits

Net investment in 7 Less: Net increase in
debt
Mortgage
debt Con- Other
on sumer
non- credit debt* *
farm
homes

Consumer
durables

Noncorporate
business
assets8

36 61
6.7 9.0
9.1 9.8
8.4 10.6

23
1.8
6.9
1.8

36
4.7
4.6
4.4

31
3.7
3.2
3.2

-04
2.2
2.8
2.2

6.7
6.6
6.2
7.6
8.7
122
112
89
9.5
12.8

4.8
1.6
5.3
4.2
1.5
72
39
29
.5
8.0

5.0
3.7
2.7
1.9
5.5
64
3.2
38
6.0
7.2

11.7
4.4
12.2
2.5
14.1
6.3
16.2
8.9
17.5
9.8
17.0 10.6
6.5
13.8
125 57
169 11.5
18.6 10.8

4.9
6.5
7.2
10.7
10.8
14.3
12.2
176
192
19.4

Timo

Owneroccupied
homes

??

2.6

-15
1.6
1.3
1.8

11
1.1
1.0
.7

09
-.8
.0
-.4

53
5.4
5.3
5.6

28
2.4
2.2
1.6

2.6 2.4
4.6 4.7
1.6 7.8
1.0 8.1
2.2 9.1
1 2 86
1.8 94
4 119
3.8 13.9
1.0 11.0

-.1
-.6
2.5
2.5
1.0
58
3.9
23
-2.5
10.1

.7
1.8
1.6
1.0
.8
10
2.0
15
1.5
.5

-.7
.3
.0
.3
'8
1.2
10
1.1
-.3

6.9
6.3
7.7
7.9
7.8
85
9.5
95
10.4
11.9

1.9
1.9
2.0
2.1
2.1
21
2.5
28
3.5
3.3

11.8
11.7
11.3
12.3
12.7
167
156
132
12.3
16.3

14.8
11.3
8.6
10.1
7.1
122
85
77
3.6
7.3

6.8
4.5
2.3
1.0
1.9
29
12
27
2.6
5.0

32.1
1.0 120
35.4 — .9 18.3
40.1 -\2 26.1
4.2 26.2
46.6
55.7
5.3 26.1
7.6 27.8
58.8
2.4 19.0
57.5
697
99 353
750 11 1 31 1
65.0 -2.5
9.1

2.2
1.4
1.3
.6
4.8
3.7
11.3
12
52
25.9

-.6
.3
-2.1
-2.6
-.2
-2.1
-.7
-47
-75
-2.8

2.4
.1
.1
1.4
.4
1.3
2.4
52
79
10.0

11.5
12.1
12.7
13.9
16.1
16.9
19.2
186
19.8
21.5

3.6
4.3
3.2
2.9
3.2
3.7
4.0
66
76
3.9

14.8
12.7
13.5
14.3
15.0
14.5
13.5
117
157
16.3

7.0
4.3
8.5
11.8
15.0
20.2
23.1
21 1
270
26.3

3.6
4.7
7.5
9.8
9.2
13.3
10.8
102
100
12.7

8.9
12.3
13.7
14.1
7.3
6.9
15.7
19.9
22.5
21.5

43.6
67.7
74.2
62.6
51.1
84.2
106.2
108.2
102.1
74.4

2.4
1.3
.0
.2
6.9
34.4

-5.4
-12.2
.7
22.1
25.6
17.7
8.3
17.0
29.5
45.7

-1.7
-5.5
-5.4
-6.2
-.9
-4.7
-5.0
-4.0
-5.4
-18.8

6.9
6.5
2.4
8.6
3.6
.3
6.0
3.7
1.8
5.2

23.9
27.4
34.3
38.8
47.0
54.9
60.1
71.8
86.6
95.1

5.2
5.6
11.2
10.3
11.1
13.8
19.2
18.9
30.2
36.0

13.6
20.7
28.0
31.0
25.2
24.2
39.2
54.4
67.0
68.2

20.0
26.6
34.6
40.4
28.4
26.5
40.0
49.6
56.7
52.5

11.5
17.5
20.6
26.6
10.6
5.0
.2
13.1
22.0
26.0

14.1
26.2
41.4
46.5
38.0
40.6
61.4
90.8
112.9
123.0

5.4
14.7
19.8
24.3
9.9
9.6
25.4
40.2
48.8
45.4

20.7
30.3
44.2
44.2
36.3
28.3
39.9
55.3
67.7
74.6

319.7
356.2
365.2
437.2
521.1

10.2
31.8
16.9
43.3
29.3

126.5
66.7
119.2
198.8
216.8

29.2
107.5
24.7
-44.1
47.2

23.8
41.8
35.1
84.4
117.6

-8.3
-29.7
-5.7
6.0
-41.6

-11.8
-11.2
-4.6
-13.4
-10.4

116.0
118.2
147.2
144.2
135.0

34.1
31.2
32.4
17.9
27.2

56.2
47.6
24.1
54.9
74.7

32.8
39.1
35.5
61.5
85.2

-.3
24.1
11.9
.3
22.1

95.4
74.4
49.5
110.1
138.5

4.7
22.7
20.1
59.8
96.5

73.3
79.7
73.5
102.5
97.5

424.3
414.3
423.0
487.3

62.6
73.0
13.4
24.1

252.3 -105.2
158.7 -62.7
199.8
-6.5
184.6
-1.8

63.1
138.9
77.2
58.6

2.9
-1.9
-11.0
34.0

2.0
-62.8
-5.6
12.9

135.3
147.7
144.0
149.9

11.2
23.4
11.8
25.1

36.5
49.9
63.7
69.7

1.7 73.9
44.8
60.2 -1.9 100.9
65.1 -6.9 124.4
75.9
8.5 141.1

34.2
54.0
57.1
93.8

92.0
114.0
102.9
101.0

333.7 450.7
II.... 358.0 548.7
III... 396.4 527.9
IV... 394.0 556.9

37.7
35.9
4.8
38.8

200.4
233.3
225.1
208.5

44.9
15.4
20.5
107.9

73.6
166.4
157.0
73.6

-29.0
-55.4
-40.6
-41.2

-18.4
-10.0
1.2
-14.6

124.7
130.5
128.3
156.5

16.9
32.7
31.6
27.4

70.6
75.8
77.4
75.0

83.0
89.4
81.4
86.9

132.7 78.8
150.4 125.4
134.5 90.2
136.6 91.5

87.9
97.5
87.4
117.0

317.8 473.8 6.9 177.5
II.... 333.7 501.9 72.3 114.9
III... 319.3 491.3 119.6 94.3

-12.1
20.4
-21.2

66.8
120.2
93.2

-43.3
18.6
.3

124.6
-53.8
10.2

134.6
181.3
183.6

18.9
28.0
11.3

73.4 91.3
76.4 91.9
77.4 105.5

16.6 129.0 121.3
16.9 141.3 112.1
10.7 148.7 115.2

87.1
100.1
101.6

1946
1947
1948
1949

246
20.1
24.3
20.9

188 56
.1
13.2
9.1 -?9
9.9 -2.0

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

30.6
34.7
31.3
32.5
28.2
341
372
365
34.1
38.0

13.7
19.1
23.2
22.8
22.2
280
302
286
31.6
37.4

I960
1961
1962
1963
1964
1965
1966
1967
1968'
1969

36.7
35.9
42.0
46.7
56.8
65.0
72.4
769
800
71.4

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

86.2
95.4
108.8
133.4
127.2
151.7
163.0
166.5
190.5
197.2

81.3
101.9
131.1
150.3
147.2
174.4
210.3
235.7
274.2
293.2

1980
1981
1982
1983
1984

235.1
290.2
293.5
281.7
370.5

1983: 1
II....
III...
IV...

307.2
253.7
260.5
305.5

1984: 1

1985: 1

63
3.4

_ g

1
Saving
2

28.9
17.4
21.7
20.2

by households, personal trust funds, nonprofit institutions, farms, and other noncorporate business.
Consists of U.S. savings bonds, other U.S. Treasury securities, U.S. Government agency securities and sponsored agency securities,
mortgage pool securities, and State and local obligations.
3
Includes mutual fund shares.
4
Corporate and foreign bonds and open market paper.
5
Private life insurance reserves, private insured and noninsured pension reserves, and government insurance and pension reserves.
6
Consists of security credit, mortgages, accident and health insurance reserves, and nonlife insurance claims for households and of
consumer credit, equity in sponsored agencies, and nonlife insurance claims for noncorporate business.
7
Purchases of physical assets less depreciation.
8
Includes data for corporate farms.
9
Other debt consists of security credit, policy loans, and noncorporate business debt.
Source: Board of Governors of the Federal Reserve System.




285

TABLE B-29.—Number and median income (in 1984 dollars) of families and persons, and poverty status,
by race, selected years, 1960-84
Families '
Below poverty level
Number
(millions)

Year

ALL RACES
1960
1961
1962
1963
1964
1965
1966 3
1967
1968
1969
1970
1971
1972
1973 3
1974
1975
1976
1977
1978 4
1979
1980
1981
1982
1983
1984

Median
income

Female
householder

Total
Number
(millions)

Rate

Number
(millions)

Rate

Median income of persons 14 2
years old
Persons
below
and over with income
poverty level
Males
Females
Number
(millions)

Rate

All
persons

Yearround
full-time
workers

All
persons

Yearround
fulltime
workers

$14,311 $19,060 $4,424 $11,558
14,545 19,662 4,442 11,601
15,012 20,007 4,608 11,872
15,303 20,595 4,655 12,064
15,561 21,042 4,852 12,425
16,536 21,721 5,007 12,564
16,982 22,261 5,244 12,885
17,275 22,676 5,603 13,060
17,854 23,330
6,028 13,638
18,215 24,559 6,041 14,385
17,842 24,567 5,984 14,552
17,704
24,701 6,176 14,621
18,497
26,164 6,453 15,029
18,830 26,805 6,535 15,165
17,802 25,617 6,492 15,111
17,085 24,961 6,533 14,897
17,199 25,288 6,525 15,166
17,351 25,831
6,755 15,108
17,410
25,573 6,477 15,350
16,856 25,012
6,228 15,070
15,795 24,168 6,202 14,611
15,387 23,632 6,233 14,227
6,335 14,703
15,012 23,303
28,464 6,678 15,105
15,285
24,004
6,868 15,422
15,600

45.5
46.4
47.1
47.5
48.0
48.5
49.2
50.1
50.8
51.6
52.2
53.3
54.4
55.1
55.7
56.2
56.7
57.2
57.8
59,6
60.3
61.0
61.4
62.0
62.7

$19,711
19,912
20,452
21,200
21,998
22,903
24,107
24,680
25,772
26,727
26,394
26,378
27,599
28,167
27,175
26,476
27,293
27,440
28,085
28,029
26,500
25,569
25,216
25,724
26,433

8.2
8.4
8.1
7.6
7.2
6.7
5.8
5.7
5.0
5.0
5.3
5.3
5.1
4.8
4.9
5.5
5.3
5.3
5.3
5.5
6.2
6.9
7.5
7.6
7.3

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
8.8
9.7
9.4
9.3
9.1
9.2
10.3
11.2
12.2
12.3
11.6

2.0
2.0
2.0
2.0
1.8
1.9
1.7
1.8
1.8
1.8
2.0
2.1
2.2
2.2
2.3
2.4
2.5
2.6
2.7
2.6
3.0
3.3
3.4
3.6
3.5

42.4
42.1
42.9
40.4
36.4
38.4
33.1
33.3
32.3
32.7
32.5
33.9
32.7
32.2
32.1
32.5
33.0
31.7
31.4
30.4
32.7
34.6
36.3
36.0
34.5

39.9 22.2
39.6 21.9
38.6 21.0
36.4 19.5
36.1 19.0
33.2 17.3
28.5 14.7
27.8 14.2
25.4 12.8
24.1 12.1
25.4 12.6
25.6 12.5
24.5 11.9
23.0 11.1
23.4 11.2
25.9 12.3
25.0 11.8
24.7 11.6
24.5 11.4
26.1 11.7
29.3 13.0
31.8 14.0
34.4 15.0
35.3 15.2
33.7 14.4

WHITE
1970
1971
1972
1973 3
1974
1975
1976
1977
1978 4
1979
1980
1981
1982
1983
1984

46.5
47.6
48.5
48.9
49.4
49.9
50.1
50.5
50.9
52.2
52.7
53.3
53.4
53.9
54.4

27,381
27,371
28,674
29,439
28,241
27,536
28,349
28,693
29,244
29,248
27,611
26,858
26,475
26,937
27,686

3.7
3.8
3.4
3.2
3.4
3.8
3.6
3.5
3.5
3.6
4.2
4.7
5.1
5.2
4.9

8.0
7.9
7.1
6.6
6.8
7.7
7.1
7.0
6.9
6.9
8.0
8.8
9.6
9.7
9.1

1.1
1.2
1.1
1.2
1.3
1.4
1.4
1.4
1.4
1.4
1.6
1.8
1.8
1.9
1.9

25.0
26.5
24.3
24.5
24.8
25.9
25.2
24.0
23.5
22.3
25.7
27.4
27.9
28.3
27.1

17.5
17.8
16.2
15.1
15.7
17.8
16.7
16.4
16.3
17.2
19.7
21.6
23.5
24.0
23.0

9.9
9.9
9.0
8.4
8.6
9.7
9.1
8.9
8.7
9.0
10.2
11.1
12.0
12.1
11.5

18,754
18,561
19,401
19,758
18,649
17,948
18,131
18,174
18,235
17,608
16,800
16,327
15,870
16,080
16,467

25,271
25,396
27,108
27,581
26,116
25,538
26,041
26,359
26,047
25,735
24,858
24,187
23,924
24,090
24,826

6,062
6,278
6,495
6,598
6,565
6,600
6,580
6,858
6,555
6,286
6,236
6,303
6,421
6,794
6,949

14,809
14,791
15,324
15,422
15,239
14,932
15,283
15,204
15,494
15,202
14,752
14,464
14,901
15,307
15,575

BLACK
1970
1971
1972
1973 3
1974
1975
1976
1977
1978 4
1979
1980
1981
1982
1983
1984

4.9
5.2
5.3
5.4
5.5
5.6
5.8
5.8
5.9
6.2
6.3
6.4
6.5
6.7
6.8

16,796
16,517
17,042
16,990
16,863
16,943
16,863
16,391
17,321
16,562
15,976
15,151
14,633
15,181
15,432

1.5
1.5
1.5
1.5
1.5
1.5
1.6
1.6
1.6
1.7
1.8
2.0
2.2
2.2
2.1

29.5
28.8
29.0
28.1
26.9
27.1
27.9
28.2
27.5
27.8
28.9
30.8
33.0
32.3
30.9

.8
.9
1.0
1.0
1.0
1.0
1.1
1.2
1.2
1.2
1.3
1.4
1.5
1.5
1.5

54.3
53.5
53.3
52.7
52.2
50.1
52.2
51.0
50.6
49.4
49.4
52.9
56.2
53.7
51.7

7.5
7.4
7.7
7.4
7.2
7.5
7.6
7.7
7.6
8.1
8.6
9.2
9.7
9.9
9.5

33.5
32.5
33.3
31.4
30.3
31.3
31.1
31.3
30.6
31.0
32.5
34.2
35.6
35.7
33.8

11,120
11,069
11,751
11,951
11,555
10,730
10,917
10,785
10,924
10,900
10,096
9,709
9,511
9,404
9,448

17,213
17,366
18,306
18,589
18,710
19,006
18,651
18,172
19,949
18,547
17,490
17,113
16,992
17,176
16,943

5,518
5,501
6,068
5,956
5,927
5,996
6,200
5,922
5,902
5,721
5,773
5,600
5,664
5,806
6,164

12,134
13,060
13,109
13,077
14,064
14,266
14,289
14,209
14,361
13,929
13,759
13,063
13,318
13,588
14,036

....

'The term "family" refers to a group of two or more persons related by blood, marriage, or adoption and residing together; all such
persons are considered members of the same family. Beginning 1979, based on householder concept and restricted to primary families.
2
Beginning 1979, data are for persons 15 years and over.
3
Based on revised methodology; comparable with succeeding years.
4
Based on 1980 census population controls; comparable with succeeding years.
Note—The poverty level is based on the poverty index adopted by a Federal interagency committee in 1969. That index reflected
different consumption requirements for families based on size and composition, sex and age of family householder, and farm-nonfarm
residence. Minor revisions implemented in 1981 eliminated variations in the poverty thresholds based on two of these variables, farmnonfarm residence and sex of householder. The poverty thresholds are updated every year to reflect changes in the consumer price
index. For further details see "Current Population Reports," Series P-60, No. 147.
Source: Department of Commerce, Bureau of the Census.




286

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY
TABLE B-30.—Population by age groups, 1929-85
[Thousands of persons]
Age (years)
July 1

Total
Under 5

5-15

16-19

20-24

25-44

45-64

65 and
over

1929

121 767

11734

26800

9127

10694

35862

21076

6474

1933

125,579

10,612

26,897

9,302

11,152

37,319

22,933

7,363

1939

130,880

10418

25,179

9822

11519

39,354

25,823

8,764

1940
1941
1942
1943
1944

132 122
133,402
134,860
136 739
138,397

10579
10850
11,301
12016
12,524

24811
24,516
24,231
24093
23,949

9895
9,840
9,730
9607
9,561

11690
11,807
11,955
12064
12,062

39868
40,383
40,861
41420
42,016

26,249
26,718
27,196
27,671
28,138

9,031
9,288
9,584
9,867
10,147

1945
1946
1947 .
1948
1949

139,928
141,389
144 126
146,631
149 188

12,979
13,244
14406
14,919
15607

23,907
24,103
24,468
25,209
25852

9,361
9,119
9,097
8,952
8788

12,036
12,004
11,814
11,794
11700

42,521
43,027
43657
44,288
44916

28,630
29,064
29,498
29,931
30,405

10,494
10,828
11,185
11,538
11921

1950
1951 .
1952
1953
1954

152,271
154 878
157,553
160 184
163,026

16,410
17333
17,312
17638
18,057

26,721
27,279
28,894
30227
31,480

8,542
8446
8,414
8460
8637

11,680
11,552
11,350
11062
10,832

45,672
46,103
46,495
46786
47,001

30,849
31,362
31,884
32,394
32,942

12,397
12,803
13,203
13,617
14,076

1955 . .
1956
1957
1958
1959

165 931
168,903
171,984
174 882
177,830

18566
19003
19,494
19887
20,175

32,682
33,994
35,272
36,445
37,368

8744
8916
9,195
9543
10215

10714
10,616
10,603
10756
10,969

47194
47,379
47,440
47,337
47,192

33,506
34,057
34,591
35,109
35,663

14,525
14,938
15,388
15,806
16,248

1960
1961
1962. .
1963
1964

180,671
183691
186 538
189,242
191 889

20,341
20522
20469
20,342
20165

38,494
39765
41205
41626
42297

10,683
11 025
11 180
12007
12736

11,134
11483
11959
12,714
13269

47,140
47084
47013
46,994
46958

36,203
36722
37,255
37,782
38338

16,675
17089
17,457
17,778
18,127

1965
1966.
1967
1968
1969

194,303
196 560
198,712
200 706
202,677

19,824
19208
18563
17913
17,376

42,938
43702
44,244
44622
44,840

13516
14311
14200
14452
14,800

13,746
14050
15,248
15786
16,480

46,912
47001
47,194
47721
48,064

38,916
39534
40,193
40846
41,437

18,451
18,755
19,071
19,365
19,680

1970
1971
1972
1973
1974

205,052
207,661
209,896
211,909
213 854

17166
17,244
17 101
16851
16487

44816
44,591
44203
43'582
42989

15289
15,688
16039
16446
16769

17202
18159
18'l53
18521
18975

48,473
48,936
50482
51,749
53051

41,999
42,482
42,898
43,235
43,522

20,107
20,561
21,020
21,525
22,061

1975
1976
1977
1978
1979

215,973
218 035
220 239
222,585
225,055

16,121
15617
15564
15,735
16063

42508
42099
41298
40,428
39552

17017
17194
17276
17,288
17242

19,527
19986
20499
20,946
21297

54,302
55852
57561
59,400
61379

43,801
44,008
44150
44,286
44,390

22,696
23,278
23892
24,502
25,134

1980
1981 ... .
1982
1983
1984

227,738
230 043
232 345
234,538
236 681

16,454
16917
17279
17,616
17816

38,839
38170
37846
37,630
37602

17,160
16769
16247
15^689
15 121

21,579
21799
21 780
21,680
21525

63,488
65583
67'772
69,826
71825

44,510
44,546
44560
44,623
44,752

25,709
26,259
26861
27,474
28,040

1985 .

238816

Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950.
Based on revised methodology, total population for 1980 through 1985 is: 227,757; 230,138; 232,520; 234,799; 237,019; and
239,283, respectively. Detail by age not yet available.
Source: Department of Commerce, Bureau of the Census.




287

TABLE B-31.—Population and the labor force, 1929-85
[Monthly data seasonally adjusted, except as noted]

Period

Civilian
noninstitutional
population1

Labor
force
including
resident
Armed
Forces

Resident
Armed
Forces1

Unemployment
rate

Civilian labor force
ment
ncluding
resident
Armed
Forces

Employment
Total

Total

Nonagricultural

±

al

Unemployment

All
workers2

49,180
51,590
55,230
55,640
55,910
56,410
55,540
54,630
53,860
57,520
60,168

99840
99,900
98,640
94,640
93,220
94,090
103,070
106,018

Civilian
work- Total3
ers

Civilian4

Percent

Thousands of persons 14 years of age and over
1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947

Labor force
participation
rate

47,630 10,450 37,180 1,550
38,760 10,090 28,670 12,830
45,750 9,610 36,140 9,480
47,520 9,540 37,980 8,120
50,350 9,100 41,250 5,560
53,750 9,250 44,500 2,660
54,470 9,080 45,390 1,070
53,960 8,950 45,010
670
52,820 8,580 44,240 1,040
55,250 8,320 46,930 2,270
57,812 8,256 49,557 2,356

3.2
249
17.2
14.6
9.9
4.7
1.9
1.2
1.9
3.9
3.9

55.7
56.0
57.2
58.7
58.6
57.2
55.8
56.8

39
3.8
5.9
5.3
3.3
3.0
2.9
5.5
4.4
4.1
4.3
6.8
5.5
5.5
6.7
5.5
5.7
5.2
4.5
3.8
3.8
3.6
3.5
4.9
5.9
5.6
4.9
5.6
8.5
7.7
7.1
6.1
5.8
7.1
7.6
9.7
9.6
7.5
7.2
8.6
8.9
9.0
9.3
9.4
9.6
9.8
9.9
10.1
10.4
10.7
10.7

58.3
58.8
58.9
59.2
59.2
59.0
58.9
58.8
59.3
60.0
59.6
59.5
59.3
59.4
59.3
58.8
58.7
58.7
58.9
59.2
59.6
59.6
60.1
60.4
60.2
60.4
60.8
61.3
61.2
61.6
62.3
63.2
63.7
63.8
63.9
64.0
64.0
64.4
64.8
63.7
63.8
63.8
63.9
64.3
63.9
64.0
64.1
64.1
64.1
64.2
64.1

Thousands of persons 16 years of age and over
1947
1948
1949
1950
1951. .
19525
1953
1954
1955
1956
1957
1958
1959 . . .
I9605
1961
1962^
1963
1964
1965
1966
1967
1968
1969
1970
1971 5
.
19725
1973
1974
1975
1976 .
1977 5
1978
1979
1980
1981
1982
1983
1984
1985
1982: Jan ...
Feb....
Mar...

May'"
June..
July...
Aug...
Sept..
Oct....
Nov...
Dec...

101,827
103 068
103,994
104,995
104,621
105,231
107,056
108,321
109,683
110,954
112,265
113,727
115,329
117,245
118,771
120,153
122,416
124,485
126,513
128,058
129,874
132,028
134,335
137,085
140,216
144,126
147,096
150,120
153,153
156,150
159,033
161,910
164,863
167,745
170,130
172,271
174,215
176,383
178,206
171,335
171,489
171,667
171,844
172,026
172,190
172,384
172,511
172,690
172,881
173,058
173,199

1,169
2,143
2,386
2,231
2,142
2,064
1,965
1,948
1,847
1,788
1,861
1,900
2,061
2,006
2,018
1,946
2,122
2,218
2,253
2,238
2,118
1,973
1,813
1,774
1,721
1,678
1,668
1,656
1,631
1,597
1,604
1,645
1,668
1,676
1,697
1,706
1,656
1,664
1,671
1,668
1,665
1,664
1,674
1,689
1,670
1,668
1,660
1,665

63,377 60,087
64,160 62,104
64,524 62,636
65,246 63,410
65,785 62,251
67,087 64,234
68,517 65,764
68,877 66,019
69,486 64,883
70,157 66,418
71,489 67,639
72,359 67,646
72,675 68,763
73,839 69,768
75,109 71,323
76,401 73,034
77,892 75,017
79,565 76,590
80,990 78,173
82,972 80,140
84,889 80,796
86,355 81,340
88,847 83,966
91,203 86,838
93,670 88,515
95,453 87,524
97,826 90,420
100,665 93,673
103,882 97,679
106,559 100,421
108,544 100,907
110,315 102,042
111,872 101,194
113,226 102,510
115,241 106,702
117,167 108,856
110,721 101,346
111,141 101,431
111,255 101,347
111,475 101,220
112,206 101,770
111,757 101,200
112,007 101,167
112,237 101,344
112,393 101,166
112,424 100,887
112,720 100,792
112,627 100,720

59,350
60,621
61,286
62,208
62,017
62,138
63,015
63,643
65,023
66,552
66,929
67,639
68,369
69,628
70,459
70,614
71,833
73,091
74,455
75,770
77,347
78,737
80,734
82,771
84,382
87,034
89,429
91,949
93,775
96,158
99,009
102,251
104,962
106,940
108,670
110,204
111,550
113,544
115,461
109,065
109,477
109,584
109,807
110,541
110,093
110,333
110,548
110,723
110,756
111,060
110,962

57,038
58,343
57,651
58,918
59,961
60,250
61,179
60,109
62,170
63,799
64,071
63,036
64,630
65,778
65,746
66,702
67,762
69,305
71,088
72,895
74,372
75,920
77,902
78,678
79,367
82,153
85,064
86,794
85,846
88,752
92,017
96,048
98,824
99,303
100,397
99,526
100,834
105,005
107,150
99,690
99,767
99,676
99,552
100,105
99,536
99,493
99,655
99,496
99,219
99,132
99,055

See next page for continuation of table.




288

7,890
7,629
7,658
7,160
6,726
6,500
6,260
6,205
6,450
6,283
5,947
5,586
5,565
5,458
5,200
4,944
4,687
4,523
4,361
3,979
3,844
3,817
3,606
3,463
3,394
3,484
3,470
3,515
3,408
3,331
3,283
3,387
3,347
3,364
3,368
3,401
3,383
3,321
3,179
3,394
3,369
3,376
3,352
3,436
3,330
3,401
3,406
3,378
3,487
3,521
3,417

49,148
50,714
49,993
51,758
53,235
53,749
54,919
53,904
55,722
57,514
58,123
57,450
59,065
60,318
60,546
61,759
63,076
64,782
66,726
68,915
70,527
72,103
74,296
75,215
75,972
78,669
81,594
83,279
82,438
85,421
88,734
92,661
95,477
95,938
97,030
96,125
97,450
101,685
103,971
96,296
96,398
96,300
96,200
96,669
96,206
96,092
96,249
96,118
95,732
95,611
95,638

2,311
2,276
3,637
3,288
2,055
1,883
1,834
3,532
2,852
2,750
2,859
4,602
3,740
3,852
4,714
3,911
4,070
3,786
3,366
2,875
2,975
2,817
2,832
4,093
5,016
4,882
4,365
5,156
7,929
7,406
6,991
6,202
6,137
7,637
8,273
10,678
10,717
8,539
8,312
9,375
9,710
9,908
10,255
10,436
10,557
10,840
10,893
11,227
11,537
11,928
11,907

5.2
3.2
2.9
2.8
5.4
4.3
4.0
4.2
6.6
5.3
5.4
6.5
5.4
5.5
5.0
4.4
3.7
3.7
3.5
3.4
4.8
5.8
5.5
4.8
5.5
8.3
7.6
6.9
6.0
5.8
7.0
7.5
9.5
9.5
7.4
7.1
8.5
8.7
8.9
9.2
9.3
9.4
9.7
9.7
10.0
10.3
10.6
10.6

59.7
60.1
60.0
59.7
59.6
60.0
60.7
60.3
60.1
59.9
60.0
60.0
59.5
59.3
59.4
59.5
59.8
60.2
60.3
60.8
61.0
60.7
60.9
61.3
61.7
61.6
62.0
62.6
63.5
64.0
64.1
64.2
64.3
64.4
64.7
65.1
64.0
64.2
64.2
64.2
64.6
64.3
64.4
64.4
64.5
64.4
64.5
64.4

TABLE B-31.—Population and the labor force, 1929-85—Continued
[Monthly data seasonally adjusted, except as noted]

Period

Civilian
noninstitutional
population 1

Labor
Employforce
ment
Resi- includrlont
including
dent
ing
resident
Armed
resiForces * dent
Armed
Forces
Armed
Forces

Civilian labor force
Employment
Total

Total

Agricultural

Nonagricultural

Unemployment
rate
Unemployment

All
workers 2

Thousands of persons 16 years of age and over

Labor force
participation
rate

Civilian
work- Total 3
ers

Civilian 4

Percent

1983: Jan ....
Feb
Mar....
Apr
May....
June...

173,354
173,505
173,656
173,794
173,953
174,125

1,667
1,664
1,664
1,671
1,669
1,668

112,318
112,327
112,279
112,491
112,575
113,529

100,833
100,773
100,854
101,205
101,313
102,258

110,651
110,663
110,615
110,820
110,906
111,861

99,166
99,109
99,190
99,534
99,644
100,590

3,439
3,381
3,379
3,347
3,341
3,462

95,727
95,728
95,811
96,187
96,303
97,128

11,485
11,554
11,425
11,286
11,262
11,271

10.2
10.3
10.2
10.0
10.0
9.9

10.4
10.4
10.3
10.2
10.2
10.1

64.2
64.1
64.0
64.1
64.1
64.6

63.8
63.8
63.7
63.8
63.8
64.2

July....
Aug....
Sept...
Oct
Nov....
Dec....

174,306
174,440
174,602
174,779
174,951
175,121

1,864
1,682
1,695
1,695
1,685
1,688

113,400
113,927
113,984
113,634
113,903
113,956

102,889
103,317
103,692
103,749
104,416
104,704

111,736
112,245
112,289
111,939
112,218
112,268

101,225
101,635
101,997
102,054
102,731
103,016

3,479
3,490
3,331
3,299
3,290
3,335

97,746
98,145
98,666
98,755
99,441
99,681

10,511
10,610
10,292
9,885
9,487
9,252

9.3
9.3
9.0
8.7
8.3
8.1

9.4
9.5
9.2
8.8
8.5
8.2

64.4
64.7
64.7
64.4
64.5
64.5

64.1
64.3
64.3
64.0
64.1
64.1

1984: Jan ....
Feb
Mar....
Apr
May....
June-

175,533
175,679
175,824
175,969
176,123
176,284

1,686
1,684
1,686
1,693
1(690
1,690

113,877
114,367
114,420
114,776
115,412
115,508

104,895
105,530
105,645
106,011
106,865
107,270

112,191
112,683
112,734
113,083
113,722
113,818

103,209
103,846
103,959
104,318
105,175
105,580

3,291
3,355
3,270
3,326
3,349
3,374

99,918
100,491
100,689
100,992
101,826
102,206

8,982
8,837
8,775
8,765
8,547
8,238

7.9
7.7
7.7
7.6
7.4
7.1

8.0
7.8
7.8
7.8
7.5
7.2

64.3
64.5
64.5
64.6
64.9
64.9

63.9
64.1
64.1
64.3
64.6
64.6

July....
Aug....
Sept...
Oct
Nov....
Dec....

176,440
176,583
176,763
176,956
177,135
177,306

1,698
1,712
1,720
1,705
1,699
1,698

115,620
115,430
115,515
115,741
115,864
116,202

107,164
106,934
107,135
107,362
107,670
107,946

113,922
113,718
113,795
114,036
114,165
114,504

105,466
105,222
105,415
105,657
105,971
106,248

3,332
3,270
3,356
3,193
3,395
3,387

102,134
101,952
102,059
102,464
102,576
102,861

8,456
8,496
8,380
8,379
8,194
8,256

7.3
7.4
7.3
7.2
7.1
7.1

7.4
7.5
7.4
7.3
7.2
7.2

64.9
64.7
64.7
64.8
64.8
64.9

64.6
64.4
64.4
64.4
64.5
64.6

1985: Jan ....
Feb
Mar....
Apr
May....
June-

177,384
177,516
177,667
177,799
177,944
178,096

1,697
1,703
1,701
1,702
1,705
1,702

116,451
116,685
117,036
116,958
117,044
116,726

108,012
108,290
108,652
108,574
108,644
108,303

114,754
114,982
115,335
115,256
115,339
115,024

106,315
106,587
106,951
106,872
106,939
106,601

3,319
3,325
3,314
3,353
3,284
3,140

102,996
103,262
103,637
103,519
103,655
103,461

8,439
8,395
8,384
8,384
8,400
8,423

7.2
7.2
7.2
7.2
7.2
7.2

7.4
7.3
7.3
7.3
7.3
7.3

65.0
65.1
65.2
65.2
65.2
64.9

64.7
64.8
64.9
64.8
64.8
64.6

July....
Aug....
Sept...
Oct
Nov....
Dec....

178,263
178,405
178,572
178,770
178,940
179,112

1,704
1,726
1,732
1,700
1,702
1,698

116,976
117,069
117,522
117,814
117,832
117,927

108,575
108,936
109,251
109,513
109,671
109,904

115,272
115,343
115,790
116,114
116,130
116,229

106,871
107,210
107,519
107,813
107,969
108,206

3,120
3,095
3,017
3,058
3,070
3,151

103,751
104,115
104,502
104,755
104,899
105,055

8,401
8,133
8,271
8,301
8,161
8,023

7.2
6.9
7.0
7.0
6.9
6.8

7.3
7.1
7.1
7.1
7.0
6.9

65.0
65.0
65.2
65.3
65.2
65.2

64.7
64.7
64.8
65.0
64.9
64.9

1

Not seasonally adjusted.
Unemployed as percent of labor force including resident Armed Forces.
Labor force including resident Armed Forces as percent of noninstitutional population including resident Armed Forces.
4
Civilian labor force as percent of civilian noninstitutional population.
5
Not strictly comparable with earlier data due to population adjustments as follows: Beginning 1953, introduction of 1950 census
data added about 600,000 to population and 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-31 through B-38 are based on household interviews and relate to the calendar week including
the 12th of the month. For definitions of terms, area samples used, historical comparability of the data, comparability with other series,
etc., see "Employment and Earnings."
Source: Department of Labor, Bureau of Labor Statistics.




289

TABLE B-32.—Civilian employment and unemployment by sex and age, 1947-85
[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]
Civilian employment
Males
Year or month

1947
1948
1949
1950
1951
1952.1 .
1953
1954
1955
1956
1957
1958
1959
I9601
1961
1962 '
1963
1964
1965
1966
1967
1968
1969
1970
1971 1
1972
1973 !
1974
1975
1976
1977
1978 *
1979
1980
1981
1982
1983
1984
1985
1984: Jan
Feb
Mar
Apr
May
June
July
Aug

. ..

Oct
Nov
Dec
1985- Jan
Feb
Mar
Apr
May
June
July
AUR

sept:....:....:

Oct
Nov
Dec

Total

Females

20
20 Total
20
20
Total 16-19 years Total 16-19 years
Total 16-19 years Total 16-19 years
years and
years and
years and
years and
over
over
over
over

57,038 40,995
58,343 41,725
57,651 40,925
58,918 41,578
59,961 41,780
60,250 41,682
61,179 42,430
60,109 41,619
62,170 42,621
63,799 43,379
64,071 43,357
63,036 42,423
64,630 43,466
65,778 43,904
65,746 43,656
66,702 44,177
67,762 44,657
69,305 45,474
71,088 46,340
72,895 46,919
74,372 47,479
75,920 48,114
77,902 48,818
78,678 48,990
79,367 49,390
82,153 50,896
85,064 52,349
86,794 53,024
85,846 51,857
88,752 53,138
92,017 54,728
96,048 56,479
98,824 57,607
99,303 57,186
100,397 57,397
99,526 56,271
100,834 56,787
105,005 59,091
107,150 59,891
103,209 58,251
103,846 58,577
103,959 58,663
104,318 58,701
105,175 59,006
105,580 59,393
105,466 59,189
105,222 59,197
105,415 59,361
105,657 59,443
105,971 59,615
106,248 59,688
106,315 59,614
106,587 59,653
106,951 59,828
106,872 59,820
106,939 59,942
106,601 59,623
106,871 59,719
107,210 59,936
107,519 60,049
107,813 60,105
107,969 60,179
108,206 60,244

2,218 38,776 16,045
2,344 39,382 16,617
2,124 38,803 16,723
2,186 39,394 17,340
2,156 39,626 18,181
2,107 39,578 18,568
2,136 40,296 18,749
1,985 39,634 18,490
2,095 40,526 19,551
2,164 41,216 20,419
2,115 41,239 20,714
2,012 40,411 20,613
2,198 41,267 21,164
2,361 41,543 21,874
2,315 41,342 22,090
2,362 41,815 22,525
2,406 42,251 23,105
2,587 42,886 23,831
2,918 43,422 24,748
3,253 43,668 25,976
3,186 44,294 26,893
3,255 44,859 27,807
3,430 45,388 29,084
3,409 45,581 29,688
3,478 45,912 29,976
3,765 47,130 31,257
4,039 48,310 32,715
4,103 48,922 33,769
3,839 48,018 33,989
3,947 49,190 35,615
4,174 50,555 37,289
4,336 52,143 39,569
4,300 53,308 41,217
4,085 53,101 42,117
3,815 53,582 43,000
3,379 52,891 43,256
3,300 53,487 44,047
3,322 55,769 45,915
3,328 56,562 47,259
3,245 55,006 44,958
3,334 55,243 45,269
3,344 55,319 45,296
3,316 55,385 45,617
3,347 55,659 46,169
3,386 56,007 46,187
3,296 55,893 46,277
3,275 55,922 46,025
3,324 56,037 46,054
3,308 56,135 46,214
3,379 56,236 46,356
3,357 56,331 46,560
3,383 56,231 46,701
3,379 56,274 46,934
3,417 56,411 47,123
3,430 56,390 47,052
3,398 56,544 46,997
3,239 56,384 46,978
3,316 56,403 47,152
3,300 56,636 47,274
3,298 56,751 47,470
3,256 56,849 47,708
3,282 56,897 47,790
3,262 56,982 47,962

* See footnote 5, Table B-31.
Note.—See Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




Unemployment
Males

Females

290

1,691
1,682
1,588
1,517
1,611
1,612
1,584
1,490
1,547
1,654
1,663
1,570
1,640
1,768
1,793
1,833
1,849
1,929
2,118
2,468
2,496
2,526
2,687
2,735
2,730
2,980
3,231
3,345
3,263
3,389
3,514
3,734
3,783
3,625
3,411
3,170
3,043
3,122
3,105
3,145
3,120
3,041
3,132
3,123
3,201
3,239
3,074
3,103
3,125
3,081
3,085
3,108
3,221
3,196
3,127
3,114
2,945
3,082
3,077
3,107
3,099
3,134
3,080

14,354
14,936
15,137
15,824
16,570
16,958
17,164
17,000
18,002
18,767
19,052
19,043
19,524
20,105
20,296
20,693
21,257
21,903
22,630
23,510
24,397
25,281
26,397
26,952
27,246
28,276
29,484
30,424
30,726
32,226
33,775
35836
37>34
38,492
39,590
40,086
41,004
42,793
44,154
41,813
42,149
42,255
42,485
43,046
42,986
43,038
42,951
42,951
43,089
43,275
43,475
43,593
43,713
43,927
43,925
43,883
44,033
44,070
44,197
44,363
44,609
44,656
44,882

2,311 1,692
2,276 1,559
3,637 2,572
3,288 2,239
2,055 1,221
1,883 1,185
1,834 1,202
3,532 2,344
2,852 1,854
2,750 1,711
2,859 1,841
4,602 3,098
3,740 2,420
3,852 2,486
4,714 2,997
3,911 2,423
4,070 2,472
3,786 2,205
3,366 1,914
2,875 1,551
2,975 1,508
2,817 1,419
2,832 1,403
4,093 2,238
5,016 2,789
4,882 2,659
4,365 2,275
5,156 2,714
7,929 4,442
7,406 4,036
6,991 3,667
6,202 3,142
6,137 3,120
7,637 4,267
8,273 4,577
10,678 6,179
10,717 6,260
8,539 4,744
8,312 4,521
8,982 5,090
8,837 4,958
8,775 4,907
8,765 4,887
8,547 4,752
8,238 4,575
8,456 4,702
8,496 4,624
8,380 4,648
8,379 4,539
8,194 4,507
8,256 4,583
8,439 4,574
8,395 4,575
8,384 4,517
8,384 4,556
8,400 4,514
8,423 4,633
8,401 4,611
8,133 4,435
8,271 4,445
8,301 4,571
8,161 4,445
8,023 4,346

270 1,422
256 1,305
353 2,219
318 1,922
191 1,029
205 980
184 1,019
310 2,035
274 1,580
269 1,442
300 1,541
416 2,681
398 2,022
426 2,060
479 2,518
408 2,016
501 1,971
487 1,718
479 1,435
432 1,120
448 1,060
426 993
440 963
599 1,638
693 2,097
711 1,948
653 1,624
757 1,957
966 3,476
939 3,098
874 2,794
813 2,328
811 2,308
913 3,353
962 3,615
1,090 5,089
1,003 5,257
812 3,932
806 3,715
848 4.242
825 4,133
848 4,059
829 4,058
809 3,943
792 3,783
825 3,877
760 3,864
818 3,830
800 3,739
780 3,727
808 3,775
808 3,766
812 3,763
774 3,743
781 3,775
818 3,696
771 3,862
856 3,755
802 3,633
789 3,656
894 3,677
789 3,656
780 3,566

619
717
1,065
1,049
834
698
632
1,188
998
1,039
1,018
1,504
1,320
1,366
1,717
1,488
1,598
1,581
1,452
1,324
1,468
1,397
1,429
1,855
2,227
2,222
2,089
2,441
3,486
3,369
3,324
3,061
3,018
3,370
3,696
4,499
4,457
3,794
3,791
3,892
3,879
3,868
3,878
3,795
3,663
3,754
3,872
3,732
3,840
3,687
3,673
3,865
3,820
3,867
3,828
3,886
3,790
3,790
3,698
3,826
3,730
3,716
3,677

144
153
223
195
145
140
123
191
176
209
197
262
256
286
349
313
383
385
395
405
391
412
413
506
568
598
583
665
802
780
789
769
743
755
800
886
825
687
661
703
733
728
729
695
687
623
691
716
654
617
671
705
680
699
650
687
638
670
555
631
676
659
689

475
564
841
854
689
559
510
997
823
832
821
1,242
1,063
1,080
1,368
1,175
1,216
1,195
1,056
921
1,078
985
1,015
1,349
1,658
1,625
1,507
1,777
2,684
2,588
2,535
2,292
2,276
2,615
2,895
3,613
3,632
3,107
3,129
3,189
3,146
3,140
3,149
3,100
2,976
3,131
3,181
3,016
3,186
3,070
3,002
3,160
3,140
3,168
3,178
3,199
3,152
3,120
3,143
3,195
3,054
3,057
2,988

TABLE B-33.—Unemployment by duration and reason, 1947-85
[Monthly data seasonally adjusted 1 ]
Reason for unemployment

Duration of unemployment
Year or month

Unemployment

Less
than 5
weeks

5-14
weeks

15-26
weeks

27
weeks
and
over

AverMedian
age
(mean) duradura- tion in
tion in weeks
weeks

1950
1951
1952
1953
1954
1955
1956 . . .
1957
1958
1959
1960
1961
1962 ... .
1963
1964
1965
1966
1967
1968
1969
1970
1971...
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1984: Jan
Feb
Mar .
Apr
May
June
July
Aug
Sept .
Oct
Nov
Dec
1985: Jan
Feb
Mar
Apr.
May
June
July
Aug
Sept
Oct
Nov
Dec

2,311
2,276
3,637

1,210
1,300
1,756

704
669
1,194

234
193
428

164
116
256

Reentrants

New
entrants

8.6
10.0

3,288
2,055
1,883
1,834
3,532
2,852
2,750
2,859
4,602
3,740
3,852
4,714
3,911
4,070
3,786
3,366
2,875
2,975
2,817
2,832
4,093
5,016
4,882
4,365
5,156
7,929
7,406
6,991
6,202
6,137
7,637
8,273
10,678
10,717
8,539
8,312
8,982
8,837
8,775
8,765
8,547
8,238
8,456
8,496
8,380
8,379
8,194
8,256
8,439
8,395
8,384
8,384
8,400
8,423
8,401
8,133
8,271
8,301
8,161
8,023

1,450
1,177
1,135
1,142
1,605
1,335
1,412
1,408
1,753
1,585
1,719
1,806
1,663
1,751
1,697
1,628
1,5731,634
1,594
1,629
2,139
2,245
2,242
2,224
2,604
2,940
2,844
2,919
2,865
2,950
3,295
3,449
3,883
3,570
3,350
3,498
3,275
3,342
3,358
3,386
3,236
3,229
3,378
3,562
3,313
3,426
3,385
3,352
3,627
3,501
3,556
3,528
3,607
3,466
3,525
3,422
3,484
3,430
3,465
3,374

1,055
574
516
482
1,116
815
805
891
1,396
1,114
1,176
1,376
1,134
1,231
1,117
983
779
893
810
827
1,290
1,585
1,472
1,314
1,597
2,484
2,196
2,132
1,923
1,946
2,470
2,539
3,311
2,937
2,451
2,509
2,522
2,501
2,524
2,477
2,410
2,292
2,447
2,413
2,531
2,392
2,347
2,524
2,540
2,488
2,487
2,516
2,594
2,536
2,514
2,508
2,505
2,536
2,448
2,460

425
166
148
132
495
366
301
321
785
469
503
728
534
535
491
404
287
271
256
242
428
668
601
483
574
1,303
1,018
913
766
706
1,052
1,122
1,708
1,652
1,104
1,025
1,183
1,161
1,117
1,112
1,202
1,033
1,062
1,103
1,101
1,068
1,006
983
932
1,065
1,061
1,031
1,063
1,033
1,078
1,047
1,035
1,057
894
973

357
137
84
78
317
336
232
239
667
571
454
804
585
553
482
351
239
177
156
133
235
519
566
343
381
1,203
1,348
1,028
648
535
820
1,162
1,776
2,559
1,634
1,280
2,024
1,836
1,775
1,730
1,664
1,606
1,584
1,519
1,479
1,446
1,430
1,401
1,315
1,348
1,339
1,343
1,211
1,295
1,251
1,227
1,272
1,220
1,311
1,215

12.1
9.7
8.4
8.0
11.8
13.0
11.3
10.5
13.9
14.4
12.8
15.6
14.7
14.0
13.3
11.8
10.4
8.7
8.4
7.8
8.6
11.3
12.0
10.0
9.8
14.2
15.8
14.3
11.9
10.8
11.9
13.7
15.6
20.0
18.2
15.6
20.5
19.1
18.9
18.6
18.6
18.1
18.0
17.5
17.2
16.8
17.1
17.1
15.9
16.0
15.9
16.1
15.0
15.5
15.5
15.5
15.5
15.4
15.7
15.4

4.5
4.4
4.9
6.3
6.2
5.2
5.2
8.4
8.2
7.0
5.9
5.4
6.5
6.9
8.7
10.1
7.9
6.8
9.1
8.3
8.3
8.2
8.9
7.7
7.5
7.3
7.6
7.2
7.2
7.3
6.8
7.1
7.0
6.8
6.7
6.8
7.1
7.2
6.9
7.0
6.9
6.9

1
Because of independent seasonal adjustment of the various series, detail will not add to totals.
Note.—See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




Job
leavers

Thousands of persons 16
years of age and over

Thousands of persons 16
years of age and over
1947
1948
1949

Job
losers

291

1,229
1,070
1,017
1,811
2,323
2,108
1,694
2,242
4,386
3,679
3,166
2,585
2,635
3,947
4,267
6,268
6,258
4,421
4,139
4,789
4,733
4,641
4,534
4,417
4,300
4,370
4,238
4,198
4,292
4,138
4,196
4,271
4,236
4,177
4,229
3,994
4,167
4,206
4,144
4,142
4,040
4,081
3,933

438
431
436
550
590
641
683
768
827
903
909
874
880
891
923
840
830
823
877
804
786
787
802
814
799
838
838
849
816
875
856
877
868
861
852
870
983
894
875
852
911
808
876

945
909
965
1,228
1,472
1,456
1,340
1,463
1,892
1,928
1,963
1,857
1,806
1,927
2,102
2,384
2,412
2,184
2,256
2,195
2,173
2,181
2,279
2,150
1,995
2,138
2,320
2,233
2,157
2,183
2,240
2,240
2,238
2,301
2,283
2,378
2,233
2,184
2,191
2,335
2,237
2,226
2,225

396
407
413
504
630
677
649
681
823
895
953
885
817
872
981
1,185
1,216
1,110
1,039
1,182
1,121
1,189
1,180
1,155
1,135
1,093
1,106
1,063
1,067
1,019
1,015
1,045
1,056
1,074
1,051
1,142
1,018
1,098
941
918
1,045
1.055
1,033

TABLE B-34.—Civilian labor force participation rate and civilian employment/population ratio, 1948-85
[Percent; monthly data seasonally adjusted]
Civilian employment/population ratio 2

Civilian labor force participation rate '

Year or month
Total

1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985

58.8
58.9
59.2
59.2
59.0
58.9
58.8
59.3
60.0
59.6
59.5
59.3
59.4
59.3
58.8
58.7
58.7
58.9
59.2
59.6
59.6
60.1

.

Both
sexes

16-19
years

52.5
52.2
51.8
52.2
51.3
50.2
48.3
48.9
50.9
49.6
47.4
46.7

Males

20
years

and
over

88.6
88.5
88.4
88.4
88.3
88.0
87.8
87.6
87.6
86.9
86.6
86.3
86.0
85.7
84.8
84.4
84.2
83.9
83.6
83.4
83.1
82.8

Females

20
years
and
over

Black
White

and
other

Black

Total

Males

20

Females

20

Black
White

and

Black

16-19
years

years

and
over

years

47.7
45.2
45.5
47.9
46.9
46.4
42.3
43.5
45.3
43.9
39.9
39.9

85.8
83.7

30.7
30.6

84.2
86.1
86.2
85.9
83.5
84.3
84.6
83.8
81.2
82.3

31.6
32.6
33.0
32.9
32.3
33.8
34.9
35.0
34.6
35.1

55.2
56.5
57.3
56.8
55.3
55.9

58.0
58.7
59.5
59.3
56.7
57.5

40.5
39.1
39.4
37.4
37.3
38.9
42.1
42.2
42.2
43.4

81.9
80.8
80.9
80.6
80.9
81.2
81.5
81.5
81.3
81.1

35.7
35.6
35.8
36.3
36.9
37.6
38.6
39.3
40.0
41.1

55.9
55.3
55.4
55.3
55.5
56.0
56.8
57.2
57.4
58.0

42.3
41.3
43.5
45.9
46.0
43.3
44.2
46.1
48.3
48.5
46.6
44.6
41.5
41.5
43.7
44.4

79.7
78.5
78.4
78.6
77.9
74.8
75.1
75.6
76.4
76.5
74.6
74.0
71.8
71.4
73.2
73.3

41.2
40.9
41.3
42.2
42.8
42.3
43.5
44.8
46.6
47.7

61.0
60.8
61.0
61.5
62.2
62.9

56.1
55.4
55.5
55.4
55.7
56.2
56.9
57.3
57.5
58.0
57.4
56.6
57.0
57.8
57.8
56.1
56.8
57.9
59.3
59.9
59.2
59.0
57.8
57.9
59.5
60.1

48.1
48.6
48.4
48.8
50.1
51.0

57.5
56.8
57.4
58.2
58.3
56.7
57.5
58.6
60.0
60.6
60.0
60.0
58.8
58.9
60.5
61.0

57.9
56.2
56.3
56.2
57.0
57.8
58.4
58.2
58.0
58.1
56.8
54.9
54.1 '"53.7
54.5
55.0
53.5
54.3
51.4
50.1
52.0
50.8
51.4
52.5
54.7
53.6
53.8
55.2
53.6
52.3
51.3
52.6
49.4
50.9
49.5
51.0
52.3
53.6
53.4
54.7

31.8
32.3

56.6
55.4

33.3
34.0
34.1
33.9
34.2
35.4
36.4
36.5
36.9
37.0

56.1
57.3
57.3
57.1
55.5
56.7
57.5
57.1
55.4
56.0

58.2
58.7
59.4
59.1
58.9
58.7

Both
sexes

64.3
64.2
64.9
64.4
64.8
64.3
64.5
64.1
63.2
63.0
63.1
62.9
63.0
62.8
62.2
62.1

other

and
over

63.8
63.9
64.0
64.0
64.4
64.8

47.5
47.0
46.2
45.2
44.5
45.7
48.2
48.4
48.3
49.5
49.9
49.7
51.9
53.7
54.8
54.0
54.5
56.0
57.8
57.9
56.7
55.4
54.1
53.5
53.9
54.5

63.9
64.1
64.1
64.3
64.6
64.6

53.0
53.7
53.5
54.0
54.0
54.8

78.3
78.3
78.3
78.2
78.3
78.5

53.0
53.3
53.4
53.6
54.1
53.8

64.3
64.5
64.5
64.6
64.9
64.9

61.5
61.9
61.9
62.0
62.6
62.8

61.0
61.8
61.6
61.6
62.0
62.1

58.8
59.1
59.1
59.3
59.7
59.9

42.7
43.2
42.9
43.5
43.8
44.7

72.7
72.9
72.9
72.9
73.2
73.5

49.3
49.6
49.7
49.9
50.5
50.3

59.9
60.1
60.2
60.3
60.7
60.8

51.9
52.7
52.5
52.8
53.7
54.0

50.5
51.8
51.4
51.3
52.2
52.4

Aug
Sept
Oct
Nov
Dec

64.6
64.4
64.4
64.4
64.5
64.6

54.4
53.2
54.4
54.0
53.9
54.4

78.4
78.3
78.3
78.2
78.2
78.3

54.0
53.9
53.6
53.9
54.0
54.0

64.8
64.5
64.6
64.7
64.6
64.8

62.9
63.2
62.9
63.2
63.1
63.0

62.5
62.8
62.3
62.7
62.9
62.8

59.8
59.6
59.6
59.7
59.8
59.9

44.5
43.3
43.9
44.1
44.3
44.3

73.3
73.2
73.3
73.3
73.4
73.4

50.3
50.2
50.1
50.2
50.4
50.6

60.7
60.4
60.5
60.6
60.6
60.8

53.6
54.1
54.2
54.6
54.6
54.4

52.1
52.8
52.9
53.1
53.5
53.3

1985- Jan
Feb
Mar
Apr
May
June

64.7
64.8
64.9
64.8
64.8
64.6

54.8
55.4
55.5
54.9
55.3
52.4

78.2
78.1
78.2
78.1
78.2
78.1

54.4
54.4
54.6
54.6
54.5
54.6

64.9
65.0
65.1
65.0
65.0
64.8

63.5
63.1
63.7
63.7
63.6
63.3

63.0
62.9
62.8
63.1
63.1
62.7

59.9
60.0
60.2
60.1
60.1
59.9

44.4
45.2
45.4
45.1
44.9
42.7

73.3
73.2
73.4
73.2
73.4
73.1

50.7
50.8
51.0
50.9
50.8
50.9

60.8
61.0
61.1
60.9
61.0
60.6

54.9
54.1
54.8
54.9
54.7
54.9

53.5
52.9
53.3
53.5
53.3
53.6

64.7
64.7
64.8
65.0
64.9
64.9

54.9
53.5
54.1
54.8
54.3
54.0

77.9
78.0
78.1
78.1
78.1
78.0

54.5
54.6
54.8
54.9
54.9
55.0

64.9
64.9
65.1
65.2
65.2
65.1

63.2
62.7
63.2
63.2
63.3
63.5

62.8
62.4
62.7
62.8
62.9
63.2

60.0
60.1
60.2
60.3
60.3
60.4

44.3
44.1
44.3
43.9
44.3
43.8

73.0
73.3
73.3
73.4
73.4
73.4

50.9
51.0
51.2
51.4
51.4
51.6

60.7
60.9
61.1
61.2
61.3
61.3

54.7
54.7
54.5
54.6
54.4
54.9

53.4
53.6
53.2
53.5
53.1
53.8

..

..

..

1984: Jan
Feb
Mar
Apr
May .
June
July

July

Aug .
Sept
Oct
Nov
Dec
1
2

60.4
60.2
60.4
60.8
61.3
61.2
61.6
62.3
63.2
63.7

82.6
82.1
81.6
81.3
81.0
80.3
79.8
79.7
79.8
79.8
79.4
79.0
78.7
78.5
78.3
78.1

43.3
43.3
43.7
44.4
45.3
46.0
47.0
48.1
49.6
50.6
51.3
52.1
52.7
53.1
53.7
54.7

58.8
58.8
58.3
58.2
58.2
58.4
58.7
59.2
59.3
59.9
60.2
60.1
60.4
60.8
61.4
61.5
61.8
62.5
63.3
63.9
64.1
64.3
64.3
64.3
64.6
65.0

37.6
38.0
37.8
38.3
38.9
39.4
40.1
41.1
41.6
42.7

61.8
60.9
60.2
60.5
60.3
59.6
59.8
60.4
62.2
62.2
61.7
61.3
61.6
62.1
62.6
63.3

59.9
60.2
59.8
58.8
59.0
59.8
61.5
61.4

Civilian labor force as percent of civilian nomnstitutional population in group specified.
Civilian employment as percent of civilian noninstitutional population in group specified.

Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-31.
•Source-. Department of Labor, Bureau of Labor Statistics.




292

TABLE B-35.—Unemployment rate, 1948-85
[Percent; monthly data seasonally adjusted]

Year or
month

Unemployment
All
rate, civilian
all
work- work- Total
ers *
ers

Unemployment rate, civilian workers 2
Males

Females

20
20
16- years
16- years
19
19
and Total years and
years over
over

Both
sexes
1619
years

Black
White and Black
other

Experienced
wage
and
salary
workers

Mar- Women
ried
who
men,
mainspouse tain
presfamient 3
lies

3.8
5.9

1948
1949

3.6
5.9

9.8
14.3

3.2
5.4

4.1
6.0

8.3
12.3

3.6
5.3

9.2
13.4

3.5
5.6

5.9
8.9

43
6.8

3.5

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

5.2
3.2
2.9
2.8
5.4
4.3
4.0
4.2
6.6
5.3

5.3
3.3
3.0
2.9
5.5
4.4
4.1
4.3
6.8
5.5

5.1
2.8
2.8
2.8
5.3
4.2
3.8
4.1
6.8
5.2

12.7
8.1
8.9
7.9
13.5
11.6
11.1
12.4
17.1
15.3

4.7
2.5
2.4
2.5
4.9
3.8
3.4
3.6
6.2
4.7

5.7
4.4
3.6
3.3
6.0
4.9
4.8
4.7
6.8
5.9

11.4
8.3
8.0
7.2
11.4
10.2
11.2
10.6
14.3
13.5

5.1
4.0
3.2
2.9
5.5
4.4
4.2
4.1
6.1
5.2

12.2
8.2
8.5
7.6
12.6
11.0
11.1
11.6
15.9
14.6

4.9
3.1
2.8
2.7
5.0
3.9
3.6
3.8
6.1
4.8

9.0
5.3
5.4
4.5
9.9
8.7
8.3
7.9
12.6
10.7

6.0
3.7
3.4
3.2
6.2
4.8
4.4
4.6
7.3
5.7

4.6
1.5
1.4
1.7
4.0
2.6
2.3
2.8
5.1
3.6

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

5.4
6.5
5.4
5.5
5.0
4.4
3.7
3.7
3.5
3.4

5.5
6.7
5.5
5.7
5.2
4.5
3.8
3.8
3.6
3.5

5.4
6.4
5.2
5.2
4.6
4.0
3.2
3.1
2.9
2.8

15.3
17.1
14.7
17.2
15.8
14.1
11.7
12.3
11.6
11.4

4.7
5.7
4.6
4.5
3.9
3.2
2.5
2.3
2.2
2.1

5.9
7.2
6.2
6.5
6.2
5.5
4.8
5.2
4.8
4.7

13.9
16.3
14.6
17.2
16.6
15.7
14.1
13.5
14.0
13.3

5.1
6.3
5.4
5.4
5.2
4.5
3.8
4.2
3.8
3.7

14.7
16.8
14.7
17.2
16.2
14.8
12.8
12.9
12.7
12.2

5.0
6.0
4.9
5.0
4.6
4.1
3.4
3.4
3.2
3.1

10.2
12.4
10.9
10.8
9.6
8.1
7.3
7.4
6.7
6.4

5.7
6.8
5.6
5.6
5.0
4.3
3.5
3.6
3.4
3.3

3.7
4.6
3.6
3.4
2.8
2.4
1.9
1.8
1.6
1.5

4"9
4.4
4.4

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

4.8
5.8
5.5
4.8
5.5
8.3
7.6
6.9
6.0
5.8

4.9
5.9
5.6
4.9
5.6
8.5
7.7
7.1
6.1
5.8

4.4
5.3
5.0
4.2
4.9
7.9
7.1
6.3
5.3
5.1

15.0
16.6
15.9
13.9
15.6
20.1
19.2
17.3
15.8
15.9

3.5
4.4
4.0
3.3
3.8
6.8
5.9
5.2
4.3
4.2

5.9
6.9
6.6
6.0
6.7
9.3
8.6
8.2
7.2
6.8

15.6
17.2
16.7
15.3
16.6
19.7
18.7
18.3
17.1
16.4

4.8
5.7
5.4
4.9
5.5
8.0
7.4
7.0
6.0
5.7

15.3
16.9
16.2
14.5
16.0
19.9
19.0
17.8
16.4
16.1

4.5
5.4
5.1
4.3
5.0
7.8
7.0
6.2
5.2
5.1

8.2
9.9
10.0 "10.4"
9.4
9.0
9.9 10.5
14.8
13.8
13.1 14.0
14.0
13.1
11.9 12.8
11.3 12.3

4.8
5.7
5.3
4.5
5.3
8.2
7.3
6.6
5.6
5.5

2.6
3.2
2.8
2.3
2.7
5.1
4.2
3.6
2.8
2.8

5.4
7.3
7.2
7.1
7.0
10.0
10.1
9.4
8.5
8.3

1980
1981
1982
1983
1984

7.0
7.5
9.5
9.5
7.4

7.1
7.6
9.7
9.6
7.5

6.9
7.4
9.9
9.9
7.4

18.3
20.1
24.4
23.3
19.6

5.9
6.3
8.8
8.9
6.6

7.4
7.9
9.4
9.2
7.6

17.2
19.0
21.9
21.3
18.0

6.4
6.8
8.3
8.1
6.8

17.8
19.6
23.2
22.4
18.9

6.3
6.7
8.6
8.4
6.5

13.1
14.2
17.3
17.8
14.4

14.3
15.6
18.9
19.5
15.9

6.9
7.3
9.3
9.2
7.1

4.2
4.3
6.5
6.5
4.6

9.2
10.4
11.7
12.2
10.3

1985 . .

7.1

7.2

7.0

19.5

6.2

7.4

17.6

6.6

18.6

6.2

13.7

15.1

6.8

4.3

10.4

1984: Jan
Feb
Mar
Apr
May
June....

7.9
7.7
7.7
7.6
7.4
7.1

8.0
7.8
7.8
7.8
7.5
7.2

8.0
7.8
7.7
7.7
7.5
7.2

20.7
19.8
20.2
20.0
19.5
19.0

7.2
7.0
6.8
6.8
6.6
6.3

8.0
7.9
7.9
7.8
7.6
7.3

18.3
19.0
19.3
18.9
18.2
17.7

7.1
6.9
6.9
6.9
6.7
6.5

19.5
19.4
19.8
19.5
18.9
18.3

6.9
6.8
6.7
6.7
6.5
6.2

15.6
14.9
15.1
15.0
14.2
14.0

17.2
16.2
16.6
16.6
15.8
15.6

7.6
7.4
7.3
7.3
7.0
6.7

4.9
4.9
4.8
4.7
4.6
4.5

10.9
10.7
10.9
10.4
9.9
9.9

July
Aug
Sept....
Oct
Nov
Dec

7.3
7.4
7.3
7.2
7.1
7.1

7.4
7.5
7.4
7.3
7.2
7.2

7.4
7.2
7.3
7.1
7.0
7.1

20.0
18.8
19.7
19.5
18.8
19.4

6.5
6.5
6.4
6.2
6.2
6.3

7.5
7.8
7.5
7.7
7.4
7.3

16.1
18.4
18.7
17.3
16.7
17.9

6.8
6.9
6.6
6.9
6.6
6.5

18.1
18.6
19.3
18.4
17.8
18.7

6.3
6.4
6.4
6.3
6.2
6.2

14.9
14.4
13.7
13.7
13.6
13.7

16.6
15.9
15.0
15.3
14.9
15.1

7.0
7.0
6.9
6.9
6.8
6.9

4.5
4.5
4.5
4.6
4.4
4.4

9.9
10.2
9.9
10.3
10.8
9.9

1985: Jan
Feb
Mar
Apr
May
June....

7.2
7.2
7.2
7.2
7.2
7.2

7.4
7.3
7.3
7.3
7.3
7.3

7.1
7.1
7.0
7.1
7.0
7.2

19.3
19.4
18.5
18.5
19.4
19.2

6.3
6.3
6.2
6.3
6.1
6.4

7.6
7.5
7.6
7.5
7.6
7.5

18.5
17.4
17.9
17.2
18.1
17.8

6.8
6.7
6.7
6.7
6.8
6.7

18.9
18.4
18.2
17.9
18.8
18.6

6.4
6.2
6.3
6.3
6.2
6.4

13.7
14.4
13.8
13.8
13.9
13.2

15.1
16.0
15.2
15.2
15.4
14.4

6.9
6.9
6.8
6.8
6.8
6.9

4.5
4.4
4.3
4.3
4.0
4.6

10.2
10.9
10.3
10.7
10.8
9.9

July
Aug
Sept....
Oct
Nov
Dec

7.2
6.9
7.0
7.0
6.9
6.8

7.3
7.1
7.1
7.1
7.0
6.9

7.2
6.9
6.9
7.1
6.9
6.7

20.5
19.6
19.3
21.5
19.4
19.3

6.2
6.0
6.1
6.1
6.0
5.9

7.4
7.3
7.5
7.3
7.2
7.1

17.9
15.3
16.9
17.9
17.4
18.3

6.6
6.6
6.7
6.4
6.4
6.2

19.3
17.5
18.1
19.8
18.4
18.8

6.3
6.1
6.1
6.1
5.9
5.9

13.5
12.8
13.7
13.5
14.1
13.4

15.0
14.1
15.2
14.9
15.6
14.9

6.9
6.7
6.8
6.7
6.6
6.5

4.4
4.1
4.3
4.2
4.3
4.3

10.3
10.8
11.3
10.4
10.0
9.4

1
2
3

.

Unemployed as percent of labor force including resident Armed Forces.
Unemployed as percent of civilian labor force in group specified.
Data for 1949 and 1951-54 are for April; 1950, for March.

Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




293

TABLE B-36.—Civilian labor force participation rate by demographic characteristic, 1954-85
[Percent;1 monthly data seasonally adjusted]
White
Year or month

All
civilian
work- Total
Total
ers

Black

Males
16-19
years

Males

Females
20
years Total
and
over

16-19
years

20
years Total Total
and
over

16-19
years

Females
20
years Total
and
over

16-19
years

20
years
and
over

1954

588

582

856

576

878

333

406

327

1955.
1956
1957
1958
1959

593
600
596
595
593

587
594
59 1
589
58.7

854
856
848
843
83.8

586
604
592
565
559

875
876
869
866
86.3

345
357
357
358
36.0

407
431
422
401
39.6

340
351
352
355
35.6

1960
1961
1962
1963
1964

594
593
588
587
587

588
588
583
582
582

834
830
821
815
81 1

559
545
538
531
527

860
857
849
844
842

365
369
367
372
375

403
406
398
387
378

362
366
365
370
375

1965
1966
1967
1968
1969

58.9
592
596
59.6
601

584
587
592
59.3
599

80.8
806
807
80.4
802

541
559
563
55.9
568

83.9
836
835
83.2
830

38.1
392
401
40.7
418

392
426
425
43.0
446

380
388
398
40.4
415

1970
1971
1972
1973
1974

60.4
602
60.4
608
613

602
601
60.4
608
614

80.0
796
79.6
794
794

575
579
60.1
620
629

82.8
823
82.0
816
814

42.6
426
43.2
441
452

456
454
48.1
501
517

42.2
423
42.7
435
444

59.9
602
598

73.6
734
729

46.3
457
467

78.5
784
776

48.7
493
490

32.2
342
334

51.2
516
514

1975
1976
1977
1978
1979

612
61.6
623
63.2
637

615
61.8
625
63.3
639

787
78.4
785
78.6
786

619
62.3
640
65.0
648

807
80.3
802
80.1
801

459
46.9
480
49.4
505

515
52.8
545
56.7
574

453
46.2
473
48.7
498

588
59.0
598
61.5
614

709
70.0
706
71.5
713

426
41.3
432
44.9
436

760
75.4
756
76.2
763

488
49.8
508
53.1
531

342
32.9
329
37.3
368

51 1
52.5
536
55.5
55,4

1980
1981
1982
1983
1984

638
639
640
640
644

64 1
643
643
643
646

782
779
774
77' 1
771

637
624
600
594
590

798
795
792
789
787

51 2
519
524
527
533

562
554
550
545
554

506
515
522
525
531

610
608
610
61 5
622

703
700
70 1
705
708

432
416
398
399
417

75 1
745
747
752
748

53 1
535
537
542
552

349
340
335
330
350

556
560
562
568
576

1985

648

650

770

597

785

54 1

552

540

629

708

446

744

565

379

58.6

1984: Jan
Feb
Mar
Apr
May
June

63.9
641
641
64.3
64.6
64.6

64.3
645
645
64.6
64,9
64.9

77.0
770
770
77.0
77.1
77.3

58.3
589
596
58.8
59.3
59.4

78.7
787
787
78.7
78.7
78.9

52.7
530
530
53.3
53.7
53.5

55.3
558
556
56.2
55.8
56.3

52.5
528
528
53.0
53.5
53.3

61.0
61 8
616
61.6
62.0
62.1

70.2
712
708
70.1
71.0
70.6

38.0
399
406
41.8
41.6
42.1

74.8
757
750
74.1
75.1
74.6

53.5
542
542
54.7
54.8
55.2

32.5
337
310
34.5
30.3
37.3

56.0
56.6
569
57.0
57.7
57.2

July
64.6
Aug
64.4
Sept
64.4
Oct. . . 644
Nov
645
Dec
64.6

64.8
64.5
64.6
647
646
64.8

77.1
76.9
77.1
770
77 1
77.2

59.0
57.3
59.5
592
594
599

78.7
78.6
78.8
786
787
78.8

53.6
53.3
53.1
534
533
53.6

55.9
54.5
55.5
550
540
55.1

53.4
53.2
53.0
532
533
53.4

62.5
62.8
62.3
627
629
62.8

71.0
70.9
70.6
710
707
71.0

41.7
41.4
43.0
432
433
43.6

75.1
75.0
74.4
74.8
744
74.7

55.5
56.2
55.5
560
567
56.3

37.0
37.3
37.0
37.7
363
35.8

57.7
58.3
57.6
58.1
590
58.6

64.7
64.8
649
64.8
64.8
64.6

64.9
fttO
651
65.0
65.0
64.8

77.0
77.1
771
77.1
77.1
76.8

60.3
60.3
602
60.8
61.0
58.0'

78.5
78.6
786
78.6
78.6
78.5

53.8
54.0
542
54.0
53.9
53.8

55.4
57.0
570
54.8
55.2
52.6

53.7
53.8
540
53.9
53.8
53.9

63.0
62.9
628
63.1
63.1
62.7

70.8
71.1
705
70.7
71.0
70.4

44.5
43.2
438
45.0
44.2
42.4

74.4
74.9
74.2
74.2
74.6
74.2

56.8
%4
566
57.0
56.7
56.5

38.0
39.1
395
38.7
40.0
37.2

58.9
*tfn
58.6
59.0
58.6
58.7

64.7
64.7
64.8
650
64.9
64.9

64.9
64.9
65.1
652
65.2
65.1

76.8
76.8
76.9
771
76.9
76.8

60.3
59.2
59.2
603
58.8
58.5

78.2
78.4
78.5
786
78.5
78.4

54.0
54.0
54.3
544
54.4
54.5

54.7
53.5
55.2
556
56.0
55.7

53.9
54.0
54.2
543
54.3
54.4

62.8
62.4
62.7
628
62.9
63.2

70.9
70.6
71.0
709
70.4
708

46.1
44.5
44.9
462
43.2
45.6

74.2
74.2
74.6
743
74.1
74.2

56.3
55.7
56.1
563
56.9
57.0

38.3
34.3
35.7
383
38.3
37.4

58.3
58.1
58.3
583
59.0
59.2

1985: Jan
Feb
Mar.. ..
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec

1
Civilian labor force as percent of civilian noninstitutional population in group specified.
Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




294

TABLE B-37.—Civilian employment/population ratio, 1954-85
[Percent *; monthly data seasonally adjusted]
White
Year or month

All
civilian
work- Total
ers

Black
Females

Males
Total

16-19
years

20
years
and
over

Total

16-19
years

Males
20
years
and
over

Total

1954

555

552

81 5

499

840

314

364

56.7
575
57.1
554
560

56.5
573
56.8
553
559

82.2
827
81.8
792
799

52.0
541
52.4
476
481

84.7
850
84.1
818
828

33.0
342
34.2
33.6
340

37.0
389
38.2
35.0
348

561
554
55.5
554
557

559
553
55.4
553
555

794
782
78.4
777
778

481
459
46.4
447
450

824
814
81.5
81 1
813

346
345
34.7
350
355

351
346
34.8
329
322

562
569
57.3
575
58.0

560
568
57.2
574
58.0

779
783
78.4
783
78.2

47 1
501
50.2
503
51.1

815
817
81.7
816
81.4

362
375
38.3
389
40.1

337
375
37.7
378
39.5

574
56.6
57.0
57.8
57.8

575
56.8
57.4
58.2
58.3

768
75.7
76.0
76.5
75.9

496
49.2
51.5
54.3
54.4

801
79.0
79.0
79.2
78.6

403
39.9
40.7
41.8
42.4

395
38.6
41.3
43.6
44.3

404
40.1
40.6 "'537'
41.6
54.5
42.2
53.5

1975
1976
1977
1978
1979

56.1
56.8
57.9
59.3
59.9

56.7
57.5
58.6
60.0
60.6

73.0
73.4
741
75.0
75.1

50.6
51.5
544
56.3
55.7

75.7
76.0
76.5
77.2
77.3

42.0
43.2
44.5
46.3
47.5

42.5
44.2
45.9
48.5
49.4

41.9
43.1
444
46.1
47.3

1980
1981
1982
1983
1984

59.2
59.0
57.8
57.9
59.5

60.0
60.0
58.8
58.9
60.5

73.4
72.8
706
70.4
72.1

53.4
51.3
470
47.4
49.1

75.6
75.1
730
72.6
74.3

47.8
48.3
481
48.5
49.8

47.9
46.2
446
44.5
47.0

1985

60.1

61.0

72.3

49.9

74.3

50.7

47.1

20
years
and
over

365
375
38.3
391
40.1

1970
1971
1972
1973
1974

16-19
years

345
345
34.7
352
358

1965
1966
1967
1968. .
1969

Total

32.7
338
33.9
335
340

I960
1961 .
1962
1963
1964

16-19
years

31 1

1955
1956 ..
1957
1958
1959

Total

Females
20
years
and
over

"'eel'

igT '"ieis

67.5
65.8

3L6" '"73"o" ""43'b
73.7
32.8
43.8
31.4
71.9 ^43.5

22.0
20.9

47.2
46.9

50.1
50.8
514
53.6
53.8

60.6
60.6
61.4
63.3
63.4

26.3
25.8
26.4
28.5
28.7

66.5
66.8
67.5
69.1
69.1

41.6
42.8
43.3
45.8
46.0

20.2
19.2
18.5
22.1
22.4

44.9
46.4
47.0
49.3
49.3

47.8
48.5
484
48.9
50.0

52.3
51.3
494
49.5
52.3

60.4
59.1
560
56.3
59.2

27.0
24.6
20.3
20.4
23.9

65.8
64.5
61.4
61.6
64.1

45.7
45.1
44.2
44.1
46.7

21.0
19.7
17.7
17.0
20.1

49.1
48.5
47.5
47.4
49.8

51.0

53.4

60.0

26.3

64.6

48.1

23.1

50.9

63.5
64.7
63.6
62.7
64.5
63.5

44.4
45.6
45.6
46.1
46.4
47.1

16.7
20.5
15.9
18.7
16.0
23.1

47.7
48.6
49.0
49.3
49.9
49.9

58.8
59.1
59.1
59.3
59.7
59.9

59.9
60.1
60.2
60.3
60.7
60.8

71.6
71.8
71,9
71.9
72.1
72.6

47.8
49.1
49.2
48.7
49.3
49.6

73.8
73.9
74.0
74.1
74.2
74.7

49.2
49.4
49.5
49.7
50.2
50.1

47.3
46.5
46.5
47.3
47.3
47.7

49.4
49.6
49.7
49.9
50.4
50.3

50.5
51.8
51.4
51.3
52.2
52.4

58.1
59.4
58.5
57.9
59.5
58.9

20.7
21.5
22.5
23.5
24.2
25.9

July
Aug
Sept
Oct
Nov
Dec

598
59.6
59.6
59.7
59.8
59.9

607
60.4
60.5
60.6
60.6
60.8

723
72.1
72.3
72.3
72.3
72.5

490
48.0
49.2
49.6
49.7
50.2

744
74.3
74.4
74.3
74.4
74.5

502
49.7
49.7
49.9
50.0
50.2

488
46.0
46.7
46.7
46.5
46.7

503
50.0
49.9
50.1
50.2
50.4

52 1
52.8
52.9
53.1
53.5
53.3

586
59.5
59.7
60.0
60.3
59.9

240
24.4
25.5
24.2
25,5
24.6

633
64.3
64.4
64.9
65.1
64.7

468
47.4
47.4
47.6
48.1
48.0

214
21.3
20.8
23.8
21.4
21.9

497
50.3
50.5
50.3
51.1
51.0

1985: Jan
Feb
Mar
Apr
May
June

59.9
60.0
60.2
60.1
60.1
59.9

60.8
61.0
61.1
60.9
61.0
60.6

72.3
72.3
72.4
72.4
72.5
71.9

50.6
50.2
50.9
51.2
50.8
48.3

74.2
74.3
74.4
74.3
74.5
74.0

50.3
50.6
50.7
50.5
50.4
50.3

46.9
49.0
48.6
46.9
46.9
44.6

50.5
50.7
50.9
50.8
50.7
50.8

53.5
52.9
53.3
53.5
53.3
53.6

59.9
59.6
59.6
59.8
60.1
60.1

25.0
25.6
25.8
27.3
26.8
25.0

64.8
64.3
64.3
64.3
64.6
65.0

48.4
47.5
48.1
48.4
47.9
48.4

23.2
22.2
22.9
23.5
23.4
23.2

51.3
50.3
51.0
51.3
50.7
51.2

July
Aug
Sept
Oct
Nov
Dec

60,0
60.1
60.2
60.3
60.3
60.4

60.7
60.9
61.1
61.2
61.3
61.3

71.9
72.1
72.4
72.4
72.4
72.4

49.9
49.0
49.7
49.2
49.5
49.0

73.9
74.2
74.4
74.5
74.5
74.4

50.5
50.6
50.8
51.0
51.1
51.2

46.5
46.6
47.3
47.1
47.6
47.1

50.8
51.0
51.1
51.3
51.4
51.5

53.4
53.6
53.2
53.5
53.1
53.8

60.1
61.0
60.1
59.7
59.1
60.0

26.2
28.9
26.5
27.3
23.7
26.9

64.8
65.3
64.7
64.1
63.9
64.5

47.9
47.7
47.7
48.4
48.3
48.7

23.4
22.0
22.8
23.7
24.5
21.6

50.6
50.5
50.5
51.2
50.9
51.7

1984: Jan
Feb
Mar
Apr
May
June

1
Civilian employment as percent of civilian noninstitutional population in group specified.
Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-31.

Source: Department of Labor, Bureau of Labor Statistics.




295

TABLE B-38.—Civilian unemployment rate by demographic characteristic, 1948-85
[Percent;l monthly data seasonally adjusted]
White
All
Males
Females
civilian
20
20 Total
work- Total
ers
Total
Total 16-19 years Total 16-19 years
years and
years and
over
over

Year or month

1948
1949

38
5.9

35
5.6

34
56

5.3
3.3
30
2.9
55

49
3.1
28
27
50

47
2.6
25
25
48

134

44

53
4.2
33
3.1
55

104

4.4
41
4.3
68
55

3.9
36
3.8
61
48

3.7
34
36
61
46

11.3
105
115
157
140

3.3
30
3.2
55
41

4.3
42
4.3
62
53

9.1
97
95
127
120

55
67
5.5
57
5.2

50
60
4.9
50
4.6

48
57
4.6
47
4.1

140
157
13.7
159
147

42
5.1
4.0
39
3.4

53
65
5.5
58
5.5

127
148
12.8
151
149

46
57
47
48
46

1965
1966
1967
1968
1969

4.5
3.8
38
36
3.5

4.1
3.4
34
32
3.1

3.6
28
27
26
2.5

12.9
105
107
101
100

2.9
2.2
21
20
1.9

5.0
4.3
46
43
4.2

14.0
121
115
121
11.5

4.0
33
38
34
34

1970
1971
1972...
1973
1974..

4.9
5.9
56
4.9
56

4.5
5.4
51
4.3
50

40
4.9
45
3.8
44

137
15.1
142
123
135

32
4.0
36
3.0
35

54
6.3
59
5.3
61

134
15.1
142
130
145

44
5.3
49
43
51

1975
1976
1977
1978
1979

85
7.7
71
6.1
58

78
7.0
62
5.2
51

72
64
55
46
45

183
173
150
135
139

62
54
47
37
36

86
79
73
62
59

174
164
159
144
140

1980
1981
1982
1983
1984... .

7.1
76
97
9.6
75

6.3
67
86
8.4
65

61
65
88
8.8
64

162
179
21 7
202
168

5.3
56
78
79
57

65
69
83
79
65

148
166
190
183
152

1985

7.2

6.2

61

165

54

64

1984: Jan
Feb
Mar
Apr
May
June

8.0
7.8
78
7.8
7.5
7.2

6.9
68
67
6.7
65
6.2

7.0
68
67
66
64
6.1

18.0
167
175
171
168
16.6

63
61
59
59
57
54

6.7
68
67
6.7
65
64

July.
Aug
Sept
Oct
Nov
Dec

7.4
75
7.4
7.3
72
7.2

6.3
64
6.4
6.3
62
5.2

6.2
62
6.3
6.1
61
6.2

17.0
162
17.2
16.3
164
16.3

5.5
55
5.5
5.4
54
5.5

1985: Jan
Feb
Mar
Apr
May
June

7.4
73
7.3
73
7.3
73

6.4
6?
6.3
63
62
64

6.2
61
6.0
61
60
64

16.1
168
156
157
167
167

July
Aue
Sept
Oct
Nov
Dec

7.3
7.1
71
71
7.0
6.9

6.3
6.1
61
61
5.9
59

6.3
61
59
61
5.8
57

17.1
172
162
185
15.8
162

20
16-19 years
years and
over

3.9
37
38
56
47

1960
1961
1962
1963
1964

16-19
years

51

1955
1956
1957
1958
1959.. .

Females
20
years Total
and
over

38
5.7

1950
1951
1952
1953
1954

Black
Males

. .




'"465"
36.1
374

88
88

125
114
107
93
93

148
14.3
149
138
133

410
41.6
434
408
39.1

122
11.7
123
11.2
10.9

37.5
407
489
488
427

124
135
178
181
143

14.0
15.6
176
18.6
15.4

39.8
42.2
471
48.2
42.6

119
13.4
154
165
13.5

153

410

132

14.9

39.2

131

17.2
166
173
174
161
16.6

45.5
460
444
43.8
420
38.5

15.2
144
152
15.4
141
14.9

17.1
15.8
159
15.7
15.5
14.6

48.8
39.3
48.6
45.8
47.3
38.1

149
14?
13.8
13fi
135
1?8

17.5
161
15.5
15.5
147
15.6

42.4
41 1
40.8
43.9
412
43.5

15.6
142
13.5
13.3
12.6
13.4

15.7
157
14.5
15.0
15.2
14.6

42.2
42.8
43.8
36.8
41.1
38.9

13.7
13.7
12.4
134
134
130

15.1
160
152
152
154
144

15.3
162
154
153
153
145

43.9
409
41.1
394
39.3
410

12.9
142
13.3
133
13.4
125

14.8
15.8
15.0
150
15.5
144

38.9
43.3
41.9
39.3
41.5
37.8

130
137

15.0
141
152
149
15.6
149

15.1
137
154
158
16.0
153

43.1
349
41 1
410
45.2
410

12.8
119
133
137
13.7
131

14.9
14.5
149
13.9
15.2
14.5

39.0
35.9
36.1
38.2
36.0
42.3

13.1
131
13.5
1?1
136
1?6

8.0
98

""317
278
331

75
68
62
52
50

148
140
140
128
123

148
137
133
118
114

381
375
392
367
342

56
59
73
69
58

143
156
189
195
159

145
157
20 1
203
164

148

57

151

145
167
163
158
153
152

60
59
59
59
58
56

17.2
162
166
16.6
158
156

6.4
66
6.5
6.6
63
6.3

12.8
156
15.7
15.0
138
15.2

5.8
58
5.7
5.9
57
5.6

16.6
159
15.0
15.3
149
15.1

55
54
54
54
52
57

6.6
63
6.5
65
65
65

153
140
147
145
151
152

59
57
59
58
58
58

5.6
53
52
52
5.2
51

6.4
62
64
62
6.1
61

15.0
130
144
153
15.1
155

5.7
57
57
55
5.4
54

Unemployed as percent of civilian labor force in group specified.
Note.—See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.

296

.........

11.1
113

94
105

1

.....„.„.

"iis

"ibT ""93"

60
74

nn

13?
135
12.7

TABLE B-39.—Unemployment insurance programs, selected data, 7955-8.5
All programs

Year or month

Covered
employment 1

State programs

Insured
Total
unemploy- benefits
paid
ment
(weekly
(millions
of 2 4
average)" dollars)

Insured
unemployment

1,560.2
1,540.6
1,913.0
4,290.6
2,854.3
3,022.8
4,358.1
3,145.1
3,025.9
2,749.2
2,360.4
1,890.9
2,221.5
2,191.0
2,298.6
4,209.3
6,154.0
5,491.1
4,517.3
6,933.9
16,802.4
12,344.8
10,998.9
9,006.9
9,401.3
16,175.4
15,287.1
23,774.8
20,206.2
13,109.6

1984: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec

3,374
3,174
2,958
2,613
2,290
2,166
2,327
2,184
2,083
2,149
2,441
2,778

1,515.5
1,455.4
1,425.2
1,207.3
1,131.7
966.9
1,003.7
1,040.9
851.0
998.4
1,047.1
1,163.1

2,610
2,525
2,489
2,430
2,382
2,365
2,397
2,356
2,390
2,425
2,509
2,487

1985-. Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec .

3,361
3,339
3,113
2,766
2,455
2,337
2,523
2,361
2,212
2,227
2,468

1,556.1
1,495.6
1,483.7
1,379.5
1,258.4
1,035.9
1,197.3
1,123.2
1,000.9
1,105.5
1,052.6

2,607
2,681
2,639
2,587
2,575
2,548
2,597
2,533
2,529
2,519
2,548
2,574

,.

Exhaustions 6

Weekly average; thousands
226
1,265
227
1,215
1,446
270
2,510
369
1,684
211
1,908
331
2,290
350
1,783
302
7
7
1,806
298
1,605
268
232
1,328
1,061
203
1,205
226
1,111
201
1,101
200
1,805
296
2,150
295
1,848
261
247
1,632
2,262
363
3,986
478
2,991
386
2,655
375
346
2,359
2,434
388
3,350
488
3,047
460
4,061
583
3,396
438
2,474
378

Thousands
40,018
1,399
1,323
42,751
1,571
43,436
44,411
2,773
45,728
1,860
46,334
2,071
2,994
46,266
47,776
1,946
7
48,434
1,973
49,637
1,753
51,580
1,450
54,739
1,129
56,342
1,270
57,977
1,187
59,999
1,177
59,526
2,070
59,375
2,608
66,458
2,192
69,897
1,793
72,451
2,558
71,037
4,937
73,459
3,846
76,419
3,308
88,804
2,645
92,062
2,592
92,659
3,837
93,300
3,410
91,628
4,594
91,898
3,775
8
96,474
2,565

1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984

Initial
claims

insured
Benefits paid
unemployment as
Total
Average
percent
weekly
of
(millions
covered
of 4
check
employ- dollars) (dollars) 6
ment

25
20
23
50
33
31
46
32
30
26
21
15
17
16
16
25
39
35
29
37
81
63
55
39
39
59
57
80
80
50

3.5 1,350.3
3.2 1,380.7
3.6 1,733.9
6.4 3,512.7
4.4 2,279.0
4.8 2,726.7
5.6 3,422.7
4.4 2,675.4
4.3 2,774.7
3.8 2,522.1
3.0 2,166.0
2.3 1,771.3
2.5 2,092.3
2.2 2,031.6
2.1 2,127.9
3.4 3,848.5
4.1 4,957.0
3.5 4,471.0
2.7 4,007.6
3.5 5,974.9
6.0 11,754.7
4.6 8,974.5
3.9 8,357.2
3.3 7,717.2
2.9 8,612.9
3.9 13,761.1
3.5 13,262.1
4.6 20,650.0
3.9 17,762.8
2.8 12,594.7

25.04
27.02
28.17
30.58
30.41
32.87
33.80
34.56
35.27
35.92
37.19
39.75
41.25
43.43
46.17
50.34
54.02
56.76
59.00
64.25
70.23
75.16
78.79
83.67
89.67
98.95
106.70
119.37
123.59
123.47

373
354
352
362
353
362
378
366
372
393
395
386

61
58
57
58
54
48
49
45
43
42
42
44

3.0
2.9
2.9
2.8
2.8
2.7
2.8
2.7
2.8
2.8
2.9
2.8

1,457.9
1,400.4
1,368.0
1,160.9
1,100.8
935.2
972.8
1,013.7
826.9
967.9
1,009.9
1,114.8

123.60
124.29
124.64
125.20
123.85
122.19
120.13
120.54
122.04
123.56
124.39
125.36

394
406
392
390
386
396
390
382
381
375
384
390

50
52
55
58
52
49
51
46
43
63
43

2.9
3.0
3.0
2.9
2.8
2.8
2.8
2.8
2.8
2.7
2.8
2.8

1,505.3
1,450.2
1,439.2
1,333.7
1,221.9
1,008.5
1,167.3
1,091.4
970.5
1,073.4
1,017.6

126.68
127.28
128.98
127.55
126.34
125.73
125.04
126.13
127.19
128.20
126.64

**Monthly data are seasonally adjusted.
1
Includes persons under the State, UCFE (Federal employee, effective January 1955), and RRB (Railroad Retirement Board) programs.
Beginning October 1958, also includes the UCX program (unemployment compensation for ex-servicemen).
2
Includes State, UCFE, RR, UCX, UCV (unemployment compensation for veterans, October 1952-January 1960), and SRA
(Servicemen's Readjustment Act, September 1944-September 1951) programs. Also includes Federal and State extended benefit
programs. Does not include FSB (Federal supplemental benefits), SUA (special unomployment assistance), and Federal Supplemental
Compensation programs.
3
Covered workers who have completed at least 1 week of unemployment.
4
Annual data are net amounts and monthly data are gross amounts.
5
Individuals receiving final payments in benefit year.
6
For total unemployment only.
7
Programs include Puerto Rican sugarcane workers for initial claims and insured unemployment, beginning July 1963.
8
Latest data available for all programs combined. Workers covered by State programs account for about 97 percent of wage and
salary earners.
Source: Department of Labor, Employment and Training Administration.




297

TABLE B-40.—Employees on nonagricultural payrolls, by major industry, 1939-85
[Thousands of persons; monthly data seasonally adjusted]
Goods-producing industries
Year or month

Total

Manufacturing
Total

Mining

Construction

Total

Durable
goods

Nondurable
goods

1939

30,603

12,297

854

1,165

10,278

4,715

5,564

1940
1941.
1942
1943
1944
1945
1946
1947
1948
1949

32,361
36,539
40,106
42,434
41,864
40,374
41,652
43,857
44,866
43,754

13,221
15,963
18,470
20,114
19,328
17,507
17,248
18,509
18,774
17,565

925
957
992
925
892
836
862
955
994
930

1,311
1,814
2,198
1,587
1,108
1,147
1,683
2,009
2,198
2,194

10,985
13,192
15,280
17,602
17,328
15,524
14,703
15,545
15,582
14,441

5,363
6,968
8,823
11,084
10,856
9,074
7,742
8,385
8,326
7,489

5,622
6,225
6,458
6,518
6,472
6,450
6,962
7,159
7,256
6,953

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

45,197
47,819
48,793
50,202
48,990
50,641
52,369
52,853
51,324
53,268

18,506
19,959
20,198
21,074
19,751
20,513
21,104
20,964
19,513
20,411

901
929
898
866
791
792
822
828
751
732

2,364
2,637
2,668
2,659
2,646
2,839
3,039
2,962
2,817
3,004

15,241
16,393
16,632
17,549
16,314
16,882
17,243
17,174
15,945
16,675

8,094
9,089
9,349
10,110
9,129
9,541
9,833
9,855
8,829
9,373

7,147
7,304
7,284
7,438
7,185
7,341
7,411
7,321
7,116
7,303

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

54,189
53,999
55,549
56,653
58,283
60,765
63,901
65,803
67,897
70,384

20,434
19,857
20,451
20,640
21,005
21,926
23,158
23,308
23,737
24,361

712
672
650
635
634
632
627
613
606
619

2,926
2,859
2,948
3,010
3,097
3,232
3,317
3,248
3,350
3,575

16,796
16,326
16,853
16,995
17,274
18,062
19,214
19,447
19,781
20,167

9,459
9,070
9,480
9,616
9,816
10,405
11,282
11,439
11,626
11,895

7,337
7,256
7,373
7,380
7,458
7,656
7,930
8,007
8,155
8,272

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

70,880
71,214
73,675
76,790
78,265
76,945
79,382
82,471
86,697
89,823

23,578
22,935
23,668
24,893
24,794
22,600
23,352
24,346
25,585
26,461

623
609
628
642
697
752
779
813
851
958

3,588
3,704
3,889
4,097
4,020
3,525
3,576
3,851
4,229
4,463

19,367
18,623
19,151
20,154
20,077
18,323
18,997
19,682
20,505
21,040

11,208
10,636
11,049
11,891
11,925
10,688
11,077
11,597
12,274
12,760

8,158
7,987
8,102
8,262
8,152
7,635
7,920
8,086
8,231
8,280

1980
1981
1982
1983
1984
1985 ".

90,406
91,156
89,566
90,196
94,461
97,692

25,658
25,497
23,813
23,334
24,730
25,054

1,027
1,139
1,128
952
974
969

4,346
4,188
3,905
3,948
4,345
4,661

20,285
20,170
18,781
18,434
19,412
19,424

12,187
12,109
11,039
10,732
11,522
11,565

8,098
8,061
7,741
7,702
7,890
7,859

1984: Jan.
Feb.
Mar.
Apr
May
June.

92,603
93,115
93,387
93,725
93,998
94,317

24,234
24,464
24,507
24,603
24,670
24,767

963
965
966
967
973
978

4,192
4,308
4,265
4,289
4,307
4,344

19,079
19,191
19,276
19,347
19,390
19,445

11,232
11,322
11,390
11,438
11,485
11,538

7,847
7,869
7,886
7,909
7,905
7,907

July.
Aug.
Sept.
Oct
Nov.
Dec

94,615
94,893
95,238
95,573
95,882
, 96,092

24,842
24,889
24,851
24,918
24,955
25,045

979
984
985
979
978
973

4,354
4,366
4,386
4,403
4,424
4,469

19,509
19,539
19,480
19,536
19,553
19,603

11,589
11,638
11,611
11,652
11,666
11,701

7,920
7,901
7,869
7,884
7,887
7,902

96,419
96,591
96,910
97,120
97,421
97,473

25,112
25,062
25,056
25,090
25,066
25,010

974
976
977
982
982
974

4,534
4,525
4,553
4,641
4,658
4,638

19,604
19,561
19,526
19,467
19,426
19,398

11,702
11,675
11,651
11,608
11,586
11,560

7,902
7,886
7,875
7,859
7,840
7,838

97,707
97,977
98,217
98,559
98,739
99,059

24,980
25,015
24,962
25,051
25,076
25,136

969
965
962
960
953
952

4,660
4,688
4,721
4,753
4,748
4,764

19,351
19,362
19,279
19,338
19,375
19,420

11,509
11,519
11,449
11,493
11,507
11,525

7,842
7,843
7,830
7,845
7,868
7,895

1985: Jan .. .
Feb
Mar .
Apr
May .
June

July
Aug . .
Sept
Oct
Nov "
Dec".

.

.

See next page for continuation of table.




298

TABLE B-40.—Employees on nonagriculturalpayrolls, by major industry, 1939-85—Continued
[Thousands of persons; monthly data seasonally adjusted]
Service-producing industries
Year or month
Total

Transportation
and
public
utilities

Wholesale
trade

Retail
trade

Finance,
insurance,
and real
estate

Services

Government
Total

Federal

State
and
local

18,306
19,140
20,574
21,636
22,320
22,536
22,867
24,404
25,348
26,092
26,189

2,936
3,038
3,274
3,460
3,647
3,829
3,906
4,061
4,166
4,189
4,001

4,664
4,914
5,251
5,212
5,160
5,214
5,365
6,084
6,485
6,667
6,662

1,447
1,485
1,525
1,509
1,481
1,461
1,481
1,675
1,728
1,800
1,828

3,502
3,665
3,905
4,066
4,130
4,145
4,222
4,697
5,025
5,181
5,240

3,995
4,202
4,660
5,483
6,080
6,043
5,944
5,595
5,474
5,650
5,856

905
996
1,340
2,213
2,905
2,928
2,808
2,254
1,892
1,863
1,908

3,090

1,835
1,960
1,906
1,822
1,845
1,949
2,291
2,471
2,605
2,602

26,691
27,860
28,595
29,128
29,239
30,128
31,266
31,889
31,811
32,857

4,034
4,226
4,248
4,290
4,084
4,141
4,244
4,241
' 3,976
4,011

2,635
2,727
2,812
2,854
2,867
2,926
3,018
3,028
2,980
3,082

6,751
7,015
7,192
7,393
7,368
7,610
7,840
7,858
7,770
8,045

1,888
1,956
2,035
2,111
2,200
2,298
2,389
2,438
2,481
2,549

5,357
5,547
5,699
5,835
5,969
6,240
6,497
6,708
6,765
7,087

6,026
6,389
6,609
6,645
6,751
6,914
7,278
7,616
7,839
8,083

1,928
2,302
2,420
2,305
2,188
2,187
2,209
2,217
2,191
2,233

4,098
4,087
4,188
4,340
4,563
4,727
5,069
5,399
5,648
5,850

4,004
3,903
3,906
3,903
3,951
4,036
4,158
4,268
4,318
4,442

3,143
3,133
3,198
3,248
3,337
3,466
3,597
3,689
3,779
3,907

7,378
7,620
7,982
8,277
8,660
9,036
9,498
10,045
10,567
11,169

8,353
8,594
8,890
9,225
9,596
10,074
10,784
11,391
11,839
12,195

2,270
2,279
2,340
2,358
2,348
2,378
2,564
2,719
2,737
2,758

6,083
6,315
6,550
6,868
7,248
7,696
8,220
8,672
9,102
9,437

4,515
4,476
4,541
4,656
4,725
4,542
4,582
4,713
4,923
5,136

3,993
4,001
4,113
4,277
4,433
4,415
4,546
4,708
4,969
5,204

8,248
8,204
8,368
8,530
8,823
9,250
9,648
9,917
10,320
10,798
11,047
11,351
11,836
12,329
12,554
12,645
13,209
13,808
14,573
14,989

2,629
2,688
2,754
2,830
2,911
2,977
3,058
3,185
3,337
3,512

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

33,755
34,142
35,098
36,013
37,278
38,839
40,743
42,495
44,160
46,023
47,302
48,278
50,007
51,897
53,471
54,345
56,030
58,125
61,113
63,363

3,645
3,772
3,908
4;046
4,148
4,165
4,271
4,467
4,724
4,975

11,548
11,797
12,276
12,857
13,441
13,892
14,551
15,303
16,252
17,112

12,554
12,881
13,334
13,732
14,170
14,686
14,871
15,127
15,672
15,947

2,731
2,696
2,684
2,663
2,724
2,748
2,733
2,727
2,753
2,773

9,823
10,185
10,649
11,068
11,446
11,937
12,138
12,399
12,919
13,174

1980
1981
1982
1983
1984
1985

64,748
65,659
65,753
66,862
69,731
72,638

5,146
5,165
5,082
4,954
5,171
5,301

5,275
5,358
5,278
5,268
5,550
5,770

15,035
15,189
15,179
15,613
16,584
17,418

5,160
5,298
5,341
5,468
5,682
5,924

17,890
18,619
19,036
19,694
20,761
21,931

16,241
16,031
15,837
15,869
15,984
16,294

2,866
2,772
2,739
2,774
2,807
2,873

13,375
13,259
13,098
13,096
13,177
13,421

68,369
68,651
68,880
69,122
69,328
69,550
69,773
70,004
70,387
70,655
70,927
71,047
71,307
71,529
71,854
72,030
72,355
72,463

5,094
5,103
5,126
5,135
5,145
5,164
5,174
5,194
5,210
5,223
5,229
5,246
5,259
5,272
5,269
5,278
5,301
5,295

5,422
5,459
5,478
5,499
5,516
5,532
5,557
5,573
5,610
5,636
5,647
5,665
5,686
5,697
5,714
5,733
5,748
5,768

16,138
16,237
16,296
16,385
16,443
16,534
16,623
16,673
16,750
16,859
16,994
17,026
17,090
17,160
17,249
17,280
17,392
17,425

5,588
5,607
5,627
5,639
5,653
5,680
5,693
5,707
5,719
5,737
5,755
5,776
5,790
5,809
5,835
5,858
5,888
5,906

20,259
20,358
20,463
20,546
20,628
20,707
20,766
20,849
21,014
21,087
21,184
21,252
21,382
21,480
21,644
21,723
21,813
21,856

15,868
15,887
15,890
15,918
15,943
15,933
15,960
16,008
16,084
16,113
16,118
16,082
16,100
16,111
16,143
16,158
16,213
16,213

2,778
2,782
2,791
2,795
2,806
2,802
2,805
2,812
2,827
2,823
2,831
2,836
2,836
2,834
2,850
2,859
2,873
2,872

13,090
13,105
13,099
13,123
13,137
13,131
13,155
13,196
13,257
13,290
13,287
13,246
13,264
13,277
13,293
13,299
13,340
13,341

72,727
72,962
73,255
73,508
73,663
73,923

5,302
5,282
5,317
5,327
5,341
5,358

5,773
5,791
5,805
5,830
5,834
5,855

17,453
17,514
17,539
17,610
17,621
17,648

5,932
5,959
5,987
6,011
6,046
6,066

21,926
22,073
22,155
22,244
22,358
22,473

16,341
16,343
16,452
16,486
16,463
16,523

2,878
2,886
2,904
2,892
2,892
2,899

13,463
13,457
13,548
13,594
13,571
13,624

1939
1940
1941
1942
1943
1944
1945
1946...
1947
1948
1949

.

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

I960.. ..
1961
1962.
1963
1964
1965
1966 .
1967
1968
1969

v

p

1984- Jan

Feb
Mar

Apr
May
June
July
Aug
Sept

Oct

Nov
Dec

1985- Jan
Feb

Mar

Apr
May
June

July
Aug
Sept
Oct
Dec p

1,762

3,206
3,320
3,270
3,175
3,116
3,137
3,341
3,582
3,787
3,948

Note.— Data in Tables B-40 through B-42 are based on reports from employing establishments and relate to full- and part-time wage
and salary workers in nonagricultural establishments who worked during or received pay for any part of the pay period which includes
the 12th of the month.. Not comparable with labor force data (Tables B-31 through B-38),, which include proprietors,, self-employed
persons, domestic servants, and unpaid family workers; which count persons as emptoyed 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.




299

TABLE B-41.—Average weekly hours and hourly earnings in selected private nonagricultural industries,
1947-85
[For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted]
Average gross hourly earnings,
current dollars

Average weekly hours
Year or
month

1947
1948
1949
1950
1951
1952
1953.
1954
1955
1956.
1957
1958
1959. .
1960
1961
1962.
1963
1964.
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980.
1981
1982
1983
1984
1985 P.

Total
private
nonagricultural *

Manufacturing

Construction

Retail
trade

Total
private ManufacConnonagricul- turing struction
tural *

Adjusted hourly earnings, 2
total
private nonagricultural
Index,
1977 = 100

trade

Percent change
from a year
earlier 4

Current 1977 3 Current 1977
dollars dollars dollars dollars

40.3
40.0
39.4
39.8
39.9
39.9
39.6
39.1
39.6
39.3
38.8
38.5
39.0
38.6
38.6
38.7
38.8
38.7
38.8
38.6
38.0
37.8
37.7
37.1
36.9
37.0
36.9
36.5
36.1
36.1
36.0
35.8
35.7
35.3
35.2
34.8
35.0
35.3
35,1

40.4
40.0
39.1
40.5
40.6
40.7
40.5
39.6
40.7
40.4
39.8
39.2
40.3
39.7
39.8
40.4
40.5
40.7
41.2
41.4
40.6
40.7
40.6
39.8
39.9
40.5
40.7
40.0
39.5
40.1
40.3
40.4
40.2
39.7
39.8
38.9
40.1
40.7
40.5

38.2
38.1
37.7
37.4
38.1
38.9
37.9
37.2
37.1
37.5
37.0
36.8
37.0
36.7
36.9
37.0
37.3
37.2
37.4
37.6
37.7
37.3
37.9
37.3
37.2
36.5
36.8
36.6
36.4
36.8
36.5
36.8
37.0
37.0
36.9
36.7
37.1
37.7
37.7

40.3
40.2
40.4
40.4
40.4
39.8
39.1
39.2
39.0
38.6
38.1
38.1
38.2
38.0
37.6
37.4
37.3
37.0
36.6
35.9
35.3
34.7
34.2
33.8
33.7
33.4
33.1
32.7
32.4
32.1
31.6
31.0
30.6
30.2
30.1
29.9
29.8
30.0
29.7

$1.131
1.225
1.275
1.335
1.45
1.52
1.61
1.65
1.71
1.80
1.89
1.95
2.02
2.09
2.14
2.22
2.28
2.36
2.46
2.56
2.68
2.85
3.04
3.23
3.45
3.70
3,94
4.24
4.53
4.86
5.25
5.69
6.16
6.66
7.25
7.68
8.02
8.33
8.58

$1.216
1.327
1.376
1.439
1.56
1.64
1.74
1.78
1.85
1.95
2.04
2.10
2.19
2.26
2.32
2.39
2.45
2.53
2.61
2.71
2.82
3.01
3.19
3.35
3.57
3.82
4.09
4.42
4.83
5.22
5.68
6.17
6.70
7.27
7.99
8.49
8.83
9.18
9.52

$1.540
1.712
1.792
1.863
2.02
2.13
2.28
2.38
2.45
2.57
2.71
2.82
2.93
3.07
3.20
3.31
3.41
3.55
3.70
3.89
4.11
4.41
4.79
5.24
5.69
6.06
6.41
6.81
7.31
7.71
8.10
8.66
9.27
9.94
10.82
11.63
11.94
12.12
12.26

$0.838
.901
.951
.983
1.06
1.09
1.16
1.20
1.25
1.30
1.37
1.42
1.47
1.52
1.56
1.63
1.68
1.75
1.82
1.91
2.01
2.16
2.30
2.44
2.60
2.75
2.91
3.14
3.36
3.57
3.85
4.20
4.53
4.88
5.25
5.48
5.74
5.88
5.97

21.6
23.4
24.5
25.4
27.3
28.7
30.3
31.3
32.4
34.0
35.7
37.2
38.5
39.8
41.0
42.4
43.6
44.8
46.4
48.4
50.8
53.9
57.5
61.3
65.7
69.8
74.1
80.0
86.7
92.9
100.0
108.2
116.8
127.3
138.9
148.5
155.4
160,7
165.5

58.5
58.9
62.3
64.0
63.6
65.5
68.7
70.5
73.3
75.9
76.9
78.0
80.0
81.4
83.0
85.0
86.3
87.5
89.0
90.3
92.2
94.0
95.0
95.7
98.3
101.2
101.1
98.3
97.6
99.0
100.0
100.5
97.4
93.5
92.6
93.4
94.9
94.8
94.3

8.3
4.7
3.7
7.5
5.1
5.6
3.3
3.5
4.9
5.0
4.2
3.5
3.4
3.0
3.4
2.8
2.8
3.6
4.3
5.0
6.1
6.7
6.6
7.2
6.2
6.2
8.0
8.4
7.2
7.6
8.2
7.9
9.0
91
6.9
4.6
3.4
3.0

0.7
5.8
2.7
6
3.0
4.9
2.6
4.0
3.5
1.3
1.4
2.6
1.8
2.0
2.4
1.5
1.4
1.7
1.5
2.1
2.0
1.2
.7
2.7
3.0
-.1
-2.8
-.7
1.4
1,0
.5
-3.1
-4.0
-1.0
.9
1.6
-.1
-.5

1984: Jan ....
Feb....
Mar....
Apr....
May ...
June...
July....
Aug....
Sept...
Oct....
Nov....
Dec....

35.3
35.4
35.2
35.4
35.3
35.3
35.3
35.2
35.3
35.2
35.2
35.2

40.8
41.1
40.7
41.0
40.7
40.6
40.5
40.5
40.6
40.5
40.5
40.6

37.7
38.3
37.0
37.7
37.6
37.8
37.5
37.6
37.9
37.7
38.0
37.8

30.1
30.1
30.0
30.1
30.1
30.1
30.0
29.9
29.9
29.8
29.9
29.9

8.21
8.23
8.25
8.30
8.29
8.32
8.35
8.35
8.40
8.38
8.42
8.47

9.04
9.07
9.10
9.12
9.13
9.16
9.19
9.22
9.24
9.28
9.31
9.35

12.07
12.02
12.07
12.10
12.14
12.14
12.13
12.14
12.15
12.14
12.16
12.20

5.84
5.83
5.85
5.86
5.86
5.87
5.88
5.87
5.89
5.90
5.93
5.93

158.6
158.7
159.3
160.1
159.9
160.5
161.0
160.8
161.7
161.6
162.3
163.4

94.9
94.9
95.1
95.5
95.0
95.2
95.2
94.2
94.3
94.1
94.5
94.9

3.8
3.4
3.7
3.8
3.3
3.5
3.4
3.4
3.5
2.8
3.1
3.4

.1
-.4
.1
.7
.2
.4
.3
-.2
-.3
-.8
-.3
-.1

1985: Jan ....
Feb...
Mar...

35.1
35.1
35.2
35.0
35.1
35.1
35.0
35.1
35.1
35.1
35.0
35.1

40.6
40.1
40.4
40.2
40.4
40.4
40.3
40.6
40.7
40.7
40.7
41.0

37.7
37.8
38.1
38.0
37.6
37.2
37.6
37.5
37.9
37.9
37.5
37.2

29.8
29.8
29.8
29.7
29.9
29.9
29.7
29.6
29.6
29.5
29.5
29.3

8.44
8.49
8.52
8.54
8.55
8.59
8.57
8.60
8.65
8.64
8.67
8.75

9.38
9.41
9.43
9.48
9.49
9.51
9.53
9.56
9.56
9.58
9.61
9.65

12.20
12.27
12.22
12.26
12.25
12.23
12.23
12.26
12.30
12.26
12.26
12.33

5.92
5.94
5.95
5.94
5.96
5.94
5.95
5.96
6.00
5.99
6.00
6.03

163.0
164.0
164.4
164.8
164.9
165.7
165.4
165.7
166.7
166.4
167.1
168.4

94.5
94.7
94.5
94.4
94.3
94.5
94.3
94.3
94.7
94.3
94.1
94.6

2.7
3.3
3.2
2.9
3.1
3.2
2.7
3.0
3.0
3.0
3.0
3.1

-.5
-.2
-.7
-1.2
-.9
-.8
-1.0
.0
.4
.1
_5
-'.5

,

fc
June..
July...
Aug...
Sept..
Oct ...
Nov.
Decp.

1
Also includes other private industry groups shown in Table B-40.
2
Adjusted for overtime (in manufacturing only) and for interindustry
3

employment shifts.
Current-dollar earnings index divided by the consumer price index for urban wage earners and clerical workers on a 1977=100
base.
4
Monthly percent changes are computed from indexes to two decimal places and are based on data not seasonally adjusted.
Note.—See Note, Table B-40.
Source: Department of Labor, Bureau of Labor Statistics.




300

TABLE B-42.—Average weekly earnings in selected private nonagricultural industries, 1947-85
[For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted]
Average gross weekly earnings
Year or month

Total private
nonagricultural J
Current
dollars

1947
1948
1949
1950
1951....
1952
1953....
1954
1955
1956
1957
1958
1959
I960...
1961
1962....
1963
1964....
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977. .
1978
1979
1980
1981
1982
1983
1984
1985"
1984:Jan
Feb

Mar
Apr
May
June
July

Aug

Sept
Oct
Nov

Dec

1985-. Jan
Feb
Mar

Apr

May
June
July
Aug
Sept
Oct
Nov"
Dec p

1977
dollars 2

Manufacturing
(current
dollars)

Construction
(current
dollars)

$45.58
49.00
50.24
53.13
57.86
60.65
63.76
64.52
67.72
70.74
73.33
75.08
78.78
80.67
82.60
85.91
88.46
91.33
95.45
98.82
101.84
107.73
114.61
119.83
127.31
136.90
145.39
154.76
163.53
175.45
189.00
203.70
219.91
235.10
255.20
267.26
280.70
294.05

$123.52
123.43
127.84
133.83
134.87
138.47
144.58
145.32
153.21
157.90
158.04
157.40
163.78
164.97
167.21
172.16
175.17
178.38
183.21
184.37
184.83
187.68
189.44
186.94
190.58
198.41
198.35
190.12
184.16
186.85
189.00
189.31
183.41
172.74
170.13
168.09
171.26
173.48

$49.13
53.08
53.80
58.28
63.34
66.75
70.47
70.49
75.30
78.78
81.19
82.32
88.26
89.72
92.34
96.56
99.23
102.97
107.53
112.19
114.49
122.51
129.51
133.33
142.44
154.71
166.46
176.80
190.79
209.32
228.90
249.27
269.34
288.62
318.00
330.26
354.08
373.63

$58.83
65.23
67.56
69.68
76.96
82.86
86.41
88.54
90.90
96.38
100.27
103.78
108.41
112.67
118.08
122.47
127.19
132.06
138.38
146.26
154.95
164.49
181.54
195.45
211.67
221.19
235.89
249.25
266.08
283.73
295.65
318.69
342.99
367.78
399.26
426.82
442.97
456.92

$33.77
36.22
38.42
39.71
42.82
43.38
45.36
47.04
48.75
50.18
52.20
54.10
56.15
57.76
58.66
60.96
62.66
64.75
66.61
68.57
70.95
74.95
78.66
82.47
87.62
91.85
96.32
102.68
108.86
114.60
121.66
130.20
138.62
147.38
158.03
163.85
171.05
176.40

301.16
289.81
291.34
290.40
293.82
292.64
293.70
294.76
293.92
296.52
294.98
296.38
298.14
296.24
298.00
299.90
298.90
300.11
301.51
299.95
301.86
303.62
303.26
303.45
307.13

171.60
173.33
174.14
173.48
175.21
173.88
174.30
174.31
172.19
172.80
171.80
172.62
173.14
171.73
172.15
172.46
171.19
171.59
172.00
171.01
171.80
172.51
171.82
170.96
172.16

385.56
368.83
372.78
370.37
373.92
371.59
371.90
372.20
373.41
375.14
375.84
377.06
379.61
380.83
377.34
380.97
381.10
383.40
384.20
384.06
388.14
389.09
389.91
391.13
395.65

462.20
455.04
460.37
446.59
456.17
456.46
458.89
454.88
456.46
460.49
457.68
462.08
461.16
459.94
463.81
465.58
465.88
460.60
454.96
459.85
459.75
466.17
464.65
459.75
458.68

177.31
175.78
175.48
175.50
176.39
176.39
176.69
176.40
175.51
176.11
175.82
177.31
177.31
176.42
177.01
177.31
176.42
178.20
177.61
176.72
176.42
177.60
176.71
177.00
176.68

1

Also includes other private industry groups shown in Table B-40.
Earnings in current dollars divided by the consumer price index on a 1977 = 100 base.
Based on data not seasonally adjusted.
Note.—See Note, Table B-40.
Source: Department of Labor, Bureau of Labor Statistics.
2
3




Retail
trade
(current
dollars)

301

Percent change from
a year earlier, total
private
nonagricultural 3
Current
dollars

1977
dollars

4.6
6.2
7.5
6.2
6.4

-0.1
3.6
4.7
.8
2.7
4.4
.5
5.4
3.1
.1
-.4
4.1
.7
1.4
3.0
1.7
1.8
2.7
.6
.2
1.5
.9
-1.3
1.9
4.1
-.0
-4.1

5.7
7.3
7.7
7.8
8.0
6.9
8.5
4.7
5.0
4.8

-3.1
1.5
1.2
.2
-3.1
-5.8
-1.5
-1.2
1.9
1.3

2.4

.-1.1
1.8
2.6
1.9
2.6
1.5
1.8
1.6
1.2
.6
-.8
-.1
.4
-1.2
-1.3
-.6
-2.0
-1.5
-1.2
-1.9
-.4
-.3
.1
-1.0
-.7

7.5
2.5
5.8
8.9
4.8
5.1
1.2
5.0
4.5
3.7
2.4
4.9
2.4
2.4
4.0
3.0
3.2
4.5
3.5
3.1
5,8
6.4

5.5
6.5
5.5
5.8
4.7
4.9
4.8
4.9
4.4
2.8
3.3
4.0
2.0
2.1
3.3
2.1
2.4
2.8
1.8
2.6
2.4
3.0
2.4
2.9

TABLE B-43.—Productivity and related data, business sector, 1947-85
[1977 = 100; quarterly data seasonally adjusted]

Year or
quarter

Output per hour
of all persons

Compensation per
hour 3

Hours of 2all
persons

Output »

Real compensation
per hour 4

Unit labor costs

Implicit price
deflator 5

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

1947
1948
1949

45.1
47.0
47.8

51.6
53.1
54.3

36.4
38.2
37.5

35.4
37.1
36.4

80.6
81.2
78.5

68.6
69.8
67.1

16.6
18.0
18.4

18.0
19.6
20.2

45.1
45.5
46.7

48.9
49.3
51.3

36.9
38.4
38.4

34.9
36.8
37.1

35.3
38.1
37.7

33.8
36.5
36.8

1950
1951
1952
1953
1954

51.6
53.9
55.5
57.7
58.6

57.7
59.6
60.9
62.3
63.2

41.0
44.0
45.4
47.6
46.8

39.9
43.1
44.5
46.6
45.7

79.4
81.7
81.8
82.5
79.8

69.1
72.3
73.1
74.8
72.3

19.7
21.6
23.0
24.5
25.3

21.4
23.3
24.6
26.0
26.8

49.6
50.5
52.5
55.6
57.1

53.9
54.3
56.0
58.8
60.5

38.1
40.1
41.4
42.6
43.2

37.1
39.0
40.4
41.7
42.4

38.4
40.6
41.2
41.5
41.9

37.5
39.5
40.3
40.9
41.5

1955
1956
1957
1958
1959

603
60.7
62.3
64.3
66.4

650
64.9
66.2
67.9
70.1

499
50.9
51.5
50.7
54.4

488
50.0
50.7
49.8
53.6

827
84.0
82.7
78.8
81.9

752
77.0
76.6
73.3
76.5

260
27.7
29.5
30.9
32.2

278
29.5
31.2
32.4
33.8

587
61.7
63.6
64.7
67.0

628
65.7
67.2
68.0
70.3

431
45.7
47.4
48.0
48.5

428
45.4
47.1
47.8
48.2

431
44.7
46.3
46.9
47.8

429
44.6
46.2
46.6
47.8

1960
1961
1962
1963
1964

675
69.9
724
75.3
78.5

709
73.1
755
78.2
81.3

554
56.4
594
62.1
65.8

545
55.6
587
61.4
65.3

820
80.7
820
82.5
83.8

769
76.1
111
78.6
80.4

336
34.9
365
37.9
39.9

353
36.4
379
39.3
41.1

688
70.7
732
75.0
77.9

722
73.8
759
77.7
80.2

498
49.9
505
50.4
50.8

498
49.8
502
50.2
50.5

485
48.8
497
50.2
50.7

485
48.8
497
50.2
50.8

1965
1966
1967
1968
1969

809
83.1
85.3
87.6
87.7

833
85.1
87.0
89.3
88.9

700
73.6
75.6
78.9
81.1

695
73.4
75.3
78.8
80.9

865
88.6
88.6
90.1
92.4

834
86.3
86.5
88.2
91.0

41 4
44.3
46.7
50.3
53.8

424
45.0
47.4
51.0
54.3

795
82.6
84.7
87.6
89.0

815
83.9
86.1
88.8
89.8

512
53.3
54.7
57.4
61.4

510
52.8
54.5
57.1
61.2

518
53.6
54.9
57.4
60.4

519
53.5
55.0
57.5
60.4

1970
1971
1972
1973
1974

88.3
91.2
94.1
959
93.9

89.1
91.8
94.7
964
94.3

80.3
82.5
87.7
930
91.3

80.0
82.2
87.5
929
91.2

90.9
90.5
93.3
969
973

89.8
89.5
92.3
963
967

57.7
61.5
65.5
709
77.6

58.1
61.9
66.0
71 2
78^0

90.1
92.0
94.9
967
95'.4

90.7
92.6
95.7
97 1
95.9

65.4
67.4
69.6
739
82.7

65.2
67.4
69.7
739
82.7

63.2
66.4
69.0
734
80.5

63.4
66.6
69.0
723
79.7

1975
1976
1977
1978
1979

95.7
98.3
100.0
100.8
99.6

96.0
98.5
100.0
100.8
99.2

89.4
94.6
100.0
105.8
107.8

89.1
94.4
100.0
105.9
107.9

93.4
96.1
100.0
104.9
108.3

92.8
95.9
100.0
105.1
108.7

85.2
92.8
100.0
108.5
119.1

85.6
92.8
100.0
108.6
118.9

95.9
98.7
100.0
100.8
99.4

96.4
98.8
100.0
100.9
99.2

89.0
94.3
100.0
107.7
119.6

89.2
94.2
100.0
107.7
119.8

88.7
94.0
100.0
107.3
117.0

88.3
93.8
100.0
107.0
116.5

1980
1981
1982
1983
1984

99.2
100.7
100.3
102.9
105.0

98.8
99.8
99.2
102.6
104.3

106.6
108.9
105.5
110.0
119.0

106.7
108.5
104.9
110.2
118.9

107.5
108.2
105.2
106.9
113.4

108.0
108.7
105.8
107.4
114.1

131.5
143.7
154.9
161.5
167.8

131.3
143.6
154.8
162.1
168.1

96.7
95.7
97.3
98.2
97.9

96.6
95.7
97.2
98.6
98.1

132.6
142.7
154.5
157.0
159.8

132.9
144.0
156.0
158.0
161.2

127.6
139.8
148.1
153.0
158.7

127.8
140.3
149.2
154.2
159.6

1985 P

105.3

104.2

122.3

122.2

116.1

117.3

174.5

174.3

98.3

98.2

165.7

167.2

163.0

164.8

1982:1

99.8
100.2
100.3
101.1

98.8
99.1
99.1
99.8

106.0
105.9
105.1
105.0

105.4
105.5
104.5
104.2

106.2
105.8
104.8
103.9

106.7
106.4
105.4
104.5

151.2
153.8
156.6
158.3

151.2
153.5
156.3
158.2

96.8
97.2
97.2
97.9

96.8
97.0
97.0
97.9

151.6
153.5
156.1
156.6

153.1
154.8
157.6
158.5

145.7
147.3
149.3
150.2

146.8
148.2
150.3
151.4

1983:1

102.1
103.2
102.9
103.5

101.3
102.9
103.1
103.1

106.6
109.3
110.8
113.4

106.2
109.3
111.4
113.8

104.4
105.9
107.7
109.5

104.8
106.2
108.1
110.3

160.0
160.8
161.5
163.8

160.4
161.6
162.4
163.9

98.9
98.3
97.7
98.2

99.1
98.8
98.3
98.2

156.7
155.9
157.0
158.3

158.3
157.1
157.6
158.9

151.1
152.0
153.7
154.9

152.3
153.6
154.8
156.1

1984:1

104.7
105.2
105.1
104.9

103.9
104.6
104.3
104.0

117.1
119.2
119.6
120.1

117.1
119.2
119.5
120.0

111.8
113.3
113.8
114.5

112.7
113.9
114.5
115.4

165.9
166.8
168.5
170.0

165.9
167.4
168.8
170.1

98.1
97.7
97.8
97.9

98.1
98.1
98.0
97.9

158.5
158.5
160.3
162.1

159.7
160.0
161.8
163.6

156.6
158.0
159.4
160.8

157.1
158.8
160.5
161.9

105.0
II
105.2
Ill
105.7
IV... 105.3

104.1
104.3
104.4
103.9

121.2
121.9
122.6
123.4

121.1
121.8
122.6
123.3

115.5
115.9
116.0
117.2

116.3
116.7
117.4
118.7

171.9
173.5
175.4
177.2

172.1
173.7
174.9
176.5

98.2
98.1
98.6
98.6

98.3
98.2
98.3
98.2

163.8
164.9
166.0
168.2

165.3
166.5
167.6
169.8

161.6
162.7
163.5
164.6

163.0
164.5
165.5
166.4

II
Ill
IV
II
Ill
IV
II
Ill
IV

1985:1

i
1

Output refers to gross domestic product originating in the sector in 1982 dollars.
Hours of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily on
establishment data.
3
Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an
estimate of wages, salaries, and supplemental payments for the self-employed.
4
Hourly compensation divided by the consumer price index for all urban consumers.
5
Current dollar gross domestic product divided by constant dollar gross domestic product.
Note.—Data reflect the comprehensive revision in the national income and product accounts.
Source: Department of Labor, Bureau of Labor Statistics.
2




302

TABLE B-44.—Changes in productivity and related data, business sector, 1948-85
[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]
Output per hour
of ail persons
Year or quarter

Hours of all
persons 2

Output >

4.2
1.6

2.9
2.2

1950
1951
1952
1953
1954

8.1
4.4
3.0
3.8
1.7

6.2
3.4
2.1
2.3
1.5

1955
1956
1957
1958
1959

2.8
.7
2.7
3.2
3.3

2.7
-.1
2.0
2.6
3.2

1960
1961
1962
1963
1964

1.7
3.5
3.6
4.0
4.3

1965
1966
1967
1968
1969
1970
1971
1972
1973
1974

5.0
-1.8

9.3
7.5
3.1
4.8
-1.8

6.6
2.2
1.2
-1.6

4.7
-1.7

9.4
8.1
3.2
4.8
-1.9

6.9
2.4
14
-1.8

0.8
-3.4

1.1
2.9
.1
.9
-3.4

3.7
1.5
15
-4.7

7.3

7.7

3.9

1.1
3.2
3.3
3.6
3.9

1.8
1.9
5.2
4.6
6.0

1.7
2.0
5.5
4.7
6.3

2.5
2.1
2.3
2.6
-.5

6.3
5.2
2.7
4.4
2.7

6.4
5.6
2.6
4.7
2.7

.7
3.2
3.2
2.0

.3
3.0
3.2
1.8

-.9
2.7
6.3
6.0

-2.1

-2.2

1.8
2.6
1.5
.8

2.0
2.8
1.7
.8
-1.2

-1.6

-.3
1.5
-.4
2.6
2.1

1985"

-.4
1.0
-.6
3.4
1.6

.3

-.0'

1982- 1
(I
Ill
IV

-.3
1.5
.4
3.2

0
1.4
.1
2.6

1983:1

4.2
4.4

6.3
6.3
.6
.4

II
Ill
IV
1984:1

II
Ill
IV
1985:1

II
Ill
IV

1.7
-3.9

3.0
4.6
1.0
2.4
-3.4

4.1
2.5
-6
-4.3

.1

3.0
2.8
2.7
2.7
.1

1980
1981
1982
1983
1984

Real compensation
per hour4

Unit labor costs

Implicit price
deflator5

Nonfarm
Nonfarm
Nonfarm
Nonfarm
Nonfarm
Nonfarm
Nonfarm
Business
Business
Business
Business
Business
Business
business
business
business
business Business business
business
business
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector
sector

1948
1949

1975
1976
1977
1978
1979

Compensation per
hour3

-1.2

2.5
4.6
2.1
-.5
-.7

3.0
2.9
-1.2
-1.2

.1
.9
1.9
-1.3

.5
.7
.3
-1.8

-1.0

2.7
6.4
6.2

-1.8

-1.8

-2.1

-2.3

5.8
5.8
5.8
1.9
-1.1

2.1
-3.1

4.3
8.2
2.8
-5.5

-.2
-3.1

-.4
6.3
10.5

5.8
9.5

6.0
5.9
5.9
1.8
-1.1

1.7
-3.3

5.0
8.0
2.8
-5.3

.2
-3.4
-1.2

7.6
12.2

7.9
9.0

0.7
2.7

0.8
4.0

4.1
.1

5.5
.8

7.3
9.8
6.3
6.7
3.2

6.1
8.7
5.6
5.7
3.3

6.3
1.7
4.0
5.9
2.8

5.1
.7
3.3
4.9
2.8

-.7
5.2
3.1
2.8
1.6

-.1
5.2
3.4
3.3
1.7

1.7
5.9
1.4
.6
1.1

2.0
5.2
2.1
1.6
1.5

2.5
6.7
65
4.6
4.3

3.6
6.2
57
4.1
4.1

2.8
5.1
30
1.8
3.5

3.9
4.6
22
1.3
3.3

-.3
6.0
37
1.4
1.0

.9
6.2
37
1.4
.9

2.8
3.8
34
1.4
2.0

3.4
4.0
35
1.0
2.6

8.0
-1.1

8.1
.8

2.1
1.1
2.3

4.3
3.8
4.7
3.8
5.2

4.4
3.3
4.1
3.5
4.6

2.7
2.7
3.5
2.5
3.8

2.8
2.2
2.9
2.3
3.3

2.6
.3
1.1
-.2
.8

3.3
.1
.8
-.1
.7

1.4
.5
1.9
.9
1.0

1.4
.6
2.0
.9
i:2

3.2
2.4
0
1.7
2.6

3.8
3.4
.3
2.0
3.2

3.8
6.9
5.4
7.9
7.0

3.4
5.9
5.5
7.6
6.6

2.1
3.9
2.5
3.5
1.5

1.7
2.9
2.6
3.2
1.1

.9
4.1
2.6
5.0
6.9

.8
3.7
3.1
4.8
7.1

2.3
3.3
2.5
4.6
5.1

2.0
3.1
2.9
4.6
5.0

7.3
6.4
6.6
8.3
9.5

7.0
6.5
6.7
7.9
9.6

1.2
2.1
3.2
1.9

1.0
2.1
3.3
1.6

6.5
3.1
3.3
6.2

6.6
3.3
3.4
6.0

4.7
4.9
4.0
6.4
9.6

4.9
5.0
3.6
4.8

9.7
8.9
7.8
8.5
9.7

9.7
8.4
7.7
8.6
9.5

-1.6

-.5
3.0
3.9
.3
-4.0

.6
-1.1

-1.3

-.3
3.1
4.3
.4
-4.0

2.9
4.0
4.9
3.2

3.4
4.3
5.1
3.5

-.8
.7

-.7
.7

-2.7

1.7
6.0
2.4
-5.2
-1.6
-3.5
-3.5

-2.7

1.5
6.3
2.8
-5.3
-1.2
-3.5
-3.7

10.5

9.2
7.8
4.3
3.9
4.0
10.4

10.5

9.4
7.7
4.7
3.7
3.7
10.5

6.8
7.5
4.5

6.1
7.5
5.0

2.0
5.9
7.1
6.8

1.2
5.5
7.3
8.6

4.4
2.1
1.7
5.8

5.6
3.2
1.8
3.8

8.8
4.2
2.4
3.1

5.2
2.1
4.2
3.7

5.0
3.7
3.4
3.1

3.0
1.6
2.2
4.5

4.5
3.8
4.5
4.1

4.8
3.8
2.8
3.5

7.5
1.3
1.7

7.2
1.2
1.8

3.6
2.3
2.5
2.5

3.6
2.3
2.6
2.6

3.4
1.4
.6
3.9

12.1

8.5
3.0

1.6
.6
1.6

-1.6

8.7
5.4
1.8
2.4

13.6

4.4

8.5
1.7

-1.3

.5
2.9
1.3
.8

-1.3

.5
2.5
1.2
.9

11.9

7.6
5.9
6.0
7.7

12.0

7.8
5.7
6.1
7.7

6.3
6.6
7.0
8.9

8.3
8.4
1.3
2.0

9.0
9.6
5.9
3.3
3.8

9.7
9.7
6.3
3.4
3.5

3.7

2.7

3.3

5.5
4.6
5.6
2.4

5.4
4.1
5.7
3.0

-1.6

11.1

11.2

-2.7
-1.0

-2.7

10.8

11.0

-.9
1.5
1.5
-.5

.5

.1

6.5
1.3
.2
3.0

6.5
.6
.2
3.6

4.0
-2.2
-2.4

5.2
-1.1
-2.3

1.7

7.7
8.2
1.6
1.8
3.7
10.8

5.3
7.0
1.3

10.2
10.8

5.9
6.4
7.3
9.1

-1.4

1.6
1.0
-.4

10.3

10.5

4.6
7.4
2.4

2.9
3.2

1.2
3.5

2.3
2.6
4.4
3.3

2.4
3.3
3.3
3.4

.2
-2.1

-.7
-2.9

.5
.2

-.3
-.1
-.3
_ 5

.6
0
4.6
4.5

1.9
.8
4.7
4.4

4.4
3.7
3.6
3.5

2.4
4.4
4.4
3.6

1.2
-.4
2.0
.0

1.5
-.3
.4
-.5

4.4
2.8
2.5
5.5

4.3
3.1
2.5
5.4

2.1
2.8
2.0
2.7

2.7
3.7
2.6
2.0

-,1
-1.6

1

Output refers to gross domestic product originating in the sector in 1982 dollars.
2
tours of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily on
establishment data.
3
Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an
estimate of wages, salaries, and supplemental payments for the self-employed.
4
Hourly compensation divided by the consumer price index for all urban consumers.
5
Current dollar gross domestic product divided by constant dollar gross domestic product.
Note.—Data relate to all persons engaged in the sector. Percent changes are based on original data and therefore may differ slightly
from percent changes based on indexes in Table B-43.
Data reflect the comprehensive revision in the national income and product accounts.
Source: Department of Labor, Bureau of Labor Statistics.




303

PRODUCTION AND BUSINESS ACTIVITY
TABLE B-45.—Industrial production indexes, major industry divisions, 1939-85
[1977 = 100; monthly data seasonally adjusted]

1977 proportion
1939
1940
1941
1942
1943
1944
,
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985 "
1984: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1985: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov"
Dec"

Manufacturing

Total
industrial
production

Year or month

s

,

,

Total

84.21
15.8
18.6
23.8
27.7
34.5
37.3
31.2
25.9
28.9
30.0
28.3
33.0
35.6
37.1
40.4
37.8
42.6
44.4
44.9
41.7
47.0
48.0
48.1
52.4
55.5
59.3
65.7
71.7
73.1
77.2
80.6
77.0
78.2
86.4
94.0
92.6
83.4
91.9
100.0
107.1
111.5
108.2
110.5
102.2
110.2
123.9
127.1
119.6
121.0
122.0
122.8
123.2
124.1
125.4
125.9
125.6
125.5
126.0
125.8
125.9
125.8
126.3
126.6
126.6
126.7
126.9
128.2
127.7
127.1
128.0
129.0

100.0
16.0
18.4
23.3
26.7
32.4
34.9
29.9
25.8
29.0
30.2
28.6
33.1
35.9
37.2
40.4
38.2
43.0
44.9
45.5
42.6
47.7
48.8
49.1
53.2
56.3
60.1
66.1
72.0
73.5
77.6
81.2
78.5
79.6
87.3
94.4
93.0
84.8
92.6
100.0
106.5
110.7
108.6
111.0
103.1
109.2
121.8
124.5
118.4
119.3
120.1
120.7
121.3
122.3
123.2
123.5
123.3
122.7
123.4
123.3
123.6
123.7
124.0
124.1
124.1
124.3
124.1
125.2
125.1
124.4
125.1
126.0

Source: Board of Governors of the Federal Reserve System.




304

Mining

Utilities

Durable

Nondurable

49.10

35.11

9.83

5.96

13.6
18.1
24.2
30.7
41.8
46.1
34.9
24.4
29.0
30.3
27.5
33.5
37.7
40.0
45.2
39.9
45.6
47.1
47.4
41.5
47.7

17.9

37.6

6.9

18.8
22.7
23.7
25.4
26.4
26.3
27.1
28.2
29.2
28.7

41.8
44.4
45.7
46.8
50.2
49.2
48.3
54.6
57.4
50.9

7.6
8.6
9.7
10.7
11.4
11.6
12.0
13.0
14.5
15.5

56.9
62.4
61.9
63.5
62.3
69.5
73.1
73.2
67.1
70.2

17.6
20.1
21.8
23.6
25.4
28.4
31.2
33.3
34.9
38.4

71.6
72.1
74.1
77.1
80.2
83.1
87.6
89.3
92.7
96.4

41.1
43.4
46.6
49.8
54.1
57.4
61.8
64.9
70.2
76.4

77.6
77.3
86.3
96.3
94.3
82.6
91.1
100.0
108.2
113.9
109.1
111.1
99.9
107.7
124.8
128.2

31.9
33.0
33.6
35.0
35.2
39.1
41.1
41.8
42.1
46.3
47.4
48.8
51.8
54.6
58.2
62.1
66.0
68.1
72.5
76.3
76.3
79.4
86.5
90.8
90.2
84.5
93.1
100.0
105.5
108.2
107.0
109.7
105.5
113.7
122.5
125.4

119.6
121.0
122.2
123.3
123.8
124.7
126.4
127.7
127.2
127.0
127.5
127.4

119.5
121.0
121.6
121.9
122.3
123.2
123.9
123.2
123.1
123.3
123.8
123.4

81.1
85.0
90.4
94.0
92.8
93.7
97.4
100.0
103.1
105.9
107.3
107.1
104.8
105.2
110.9
113.2
112.7
109.4
111.6
111.4
111.6
111.4

127.8
127.2
128.0
128.2
127.9
127.6
127.9
129.4
128.3
127.8
129.2
130.0

123.2
123.8
123.9
124.3
124.7
125.5
125.6
126.6
126.9
126.1
126.4
127.6

98.9
96.4
98.4
99.3
98.8
96.6
97.4
100.0
103.6
106.4
112.4
117.5
109.3
102.9
110.9
108.9
110.9
109.4
109.6
109.8
111.7
113.5
114.8
113.0
113.6
107.2
108.8
108.9
110.5
109.5
110.5
109.6
109.8
110.6
108.7
108.3
108.4
108.0
106.3
106.6

48.5
47.6
52.8
56.3
60.3
68.6
76.2
77.0
80.8
84.0

109.8
110.0
109.7
109.4
112.1
111.6
113.0
115.8
113.9
113.6
113.7
113.4
110.7
110.3
113.2
112.6
113.2
114.7

TABLE B-46.—Industrial production indexes, market groupings, 1947-85
[1977=100; monthly data seasonally adjusted]
Materials

Final products
Consumer goods

Equipment

Total
industrial
production

Total

AutoTotal » motive
products

100.00

44.77

25.52

2.98

3.91

29.0
30.2
28.6

29.9
30.8
30.6
35.0
34.6
35.4
37.5
37.3
41.6
43.1
44.2
43.8
48.0

25.8
27.0
26.7

33.1
35.9
37.2
40.4
38.2
43.0
44.9
45.5
42.6
47.7

29.0
30.1
29.1
32.9
35.5
38.1
40.7
38.5
41.6
44.1
45.4
43.3
47.5

33.6
29.8
26.8
33.9
31.5
41.9
34.5
36.1
28.7
36.0

26.1
27.2
25.2
34.7
29.9
29.9
33.9
31.3
36.9
38.8
38.0
35.8
41.1

48.8
49.1
53.2
56.3
60.1
66.1
72.0
73.5
77.6
81.2

49.1
49.5
53.7
56.7
59.9
65.8
72.1
75.0
78.6
81.1

49.8
50.9
54.3
57.3
60.5
65.3
68.6
70.3
74.5
77.3

41.2
37.6
45.6
49.9
52.3
64.4
64.2
56.4
67.2
67.5

41.4
42.7
46.4
50.0
54.6
61.9
68.2
69,1
74.0
78.9

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

78.5
79.6
87.3
94.4
93.0
84.8
92.6
100.0
106.5
110.7

78.2
78.9
85.6
92.0
91.7
86.3
92.4
100.0
106.9
111.0

76.4
80.8
87.3
91.2
88.4
84.9
93.3
100.0
104.3
103.9

1980
1981
1982
1983
1984
1985"

108.6
111.0
103.1
109.2
121.8
124.5

112.2
115.2
109.5
114.7
127.8
132.0

1984- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Deci

118.4
119.3
120.1
120.7
121.3
122.3
123.2
123.5
123.3
122.7
123.4
123.3
123.6
123.7
124.0
1241
124.1
124.3
124.1
125.2
125.1
124.4
125.1
126.0

Year or month

1977 proportion

1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

. .

..

.

,

1985- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct p
Nov
Dec"

Total 3

DuraNonble durable
goods goods

12.94

42.28

20.50

10.09

29.9
31.6
29.9
34.8
36.5
36.3
38.8
38.7
43.9
45.9
45.9
44.9
49.6

28.8
30.0
27.3
32.7
36.2
36.7
40.8
37.7
44.6
45.7
45.7
41.1
47.4

28.5
29.3
26.3
33.1
37.6
38.4
44.9
38.7
47.4
47.6
47.5
40.0
47.7

29.1
33.3
34.8
34.7
34.5
39.4

81.1
82.4
95.4
102.9
99.6
110.3
129.6
147.8
148.1
141.0

49.9
50.9
54.0
57.0
60.7
64.6
68.6
71.4
75.5
79.6

48.1
48.1
52.4
55.8
60.3
67.2
73.2
72.5
77.3
81.9

48.3
47.1
52.4
55.9
60.9
69.8
76.9
74.2
78.6
82.7

40.1
41.7
45.2
47.9
52.1
57.2
61.8
62.9
69.1
74.8

72.9
76.5
69.3
81.0
92.7 ""sTs" 79.0
92.4
93.S
98.1
96.5
90.7
96.6
86.1
79.9
88.5
91.5
89.3
89.5
100.0 100.0 100.0
104.7
110.3 112.2
120.4 124.7
103.7

119.4
107.3
104.3
101.9
100.4
98.5
100.1
100.0
101.2
105.6

78.4
80.8
90.2
96.0
92.6
83.6
92.1
100.0
106.9
110.8

79.0
80.2
88.4
96.8
94.8
83.2
93.0
100.0
105.9
110.3

75.1
75.4
85.2
97.4
94.6
78.8
90.8
100.0
108.8
114.4

75.2
78.4
86.4
92.7
93.2
82.9
93.9
100.0
105.6
109.3

97.7
98.1
86.5
101.1
114.8
110.9

124.7
129.9
120.2
121.7
140.5
147.2

125.1
127.6
113.6
115.4
134.9
141.3

115.4
119.8
133.0
143.1
157.9
173.7

106.9
107.3
101.7
111.2
124.9
130.6

105.3
107.7
96.7
102.8
114.6
114.6

106.1
109.7
94.2
103.7
122.3
121.8

103.4
107.1
96.6
106.2
111.2
112.1

110.7
111.2
111.6
110.4
108.9
110.4
110.4
111.6
107.4
104.2
110.2
111.6

114.9
114.4
113.7
115.0
114.1
112.7
116.4
114.6
114,7
116.9
115.8
114.3

132.8
133.9
135.3
136.4
138.8
141.0
142.5
144.5
145.0
145.0
145.5
144.9

127.1
128.5
130.4
131.2
133.3
135.5
137.0
139.1
139.2
139.1
139.8
138.4

148.8
151.3
151.9
155.6
156.0
157.2
158.5
160.7
163.4
163.5
163.3
165.3

120.9
121.9
122.8
123.0
124.2
125.4
127.0
126.9
125.6
126.2
127.2
127.3

112.4
113.3
114.1
114.4
114.7
115.2
115.8
116.1
115.9
114.2
114.6
114.6

118.1
120.1
120.6
121.6
121.7
122.4
123.5
124.4
124.0
123.7
123.9
123.4

110.3
111.2
111.8
111.3
111.4
111.2
111.6
111.5
111.4
111.2
110.7
110.7

114.2
115.4
115.1
113.1
113.6
113.4
115.0
120.0
117.8
112.9
116.6
117.2

111.6
110.9
112.2
110.2
110.4
110.9
108.4
109.5
109.3
110.1
113.0
114.1

145.7
145.3
145.4
146.9
147.1
146.6
147.3
149.0
148.6
147.1
148.5
148.9

140.4
140.0
140.2
142.0
141.9
140.7
141.3
143.0
142.2
140.2
141.9
142.1

165.3
167.3
169.0
170.1
171.2
173.4
173.9
175.5
177.5
178.9
181.1
182.0

126.8
127.7
128.6
129.3
130.3
131.4
130.7
132.0
132.3
132.0
132.3
133.2

115.4
115.4
115.5
115.0
114.2
114.3
113.8
114.5
114.2
114.0
114.2
115.1

124.2
123.3
123.3
122.8
120.7
120.8
120.2
121.8
120.2
120.3
121.8
122.6

110.9
111.4
110.3
110.4
111.3
111.8
112.8
113.5
114.7
112.9
112.6
113.4

Business

19.25

14.34

3.67

25.9
27.0
23.6
25.2
30.8
34.9
36.3
31.9
34.6
40.1
41.7
35.2
39.5

15.2
17.8
18.6
21.9
53.8
75.7
90.6
79.8
73.1
71.4
74.6
74.9
78.9

40.6
39.4
42.8
44.9
50.3
57.6
66.7
68.0
71.0
75.6

56.8
72.4
78.1
86.2
74.5
70.2
87.1
100.0
102.4
94.9

102.7
104.1
101.4
109.3
118.2
120.5

76.1
78.8
78.1
95.1
109.8
115.1

123.4
124.2
125.0
126.1
126.8
128.2
129.2
129.7
129.8
129.9
130.7
130.6

116.2
116.9
117.3
118.3
117.7
118.5
119.1
118.4
118.3
118.5
119.6
119.7

130.4
130.4
130.8
131.3
131.7
131.6
131.8
133.3
133.3
132.0
133.4
134.2

118.8
119.1
119.8
119.5
120.0
120.4
120.1
121.5
121.8
120.7
122.0
123.0

1
Includes
2
Includes
3

clothing and consumer staples, not shown separately.
rigs and prefabs, not shown separately.
Includes energy materials, not shown separately.
Source: Board of Governors of the Federal Reserve System.




Intermediate
Defense products
and
space

2
Home
goods Total

305

TABLE B-47.—Industrial production indexes, selected manufactures, 1947-85
[1977 = 100; monthly data seasonally adjusted]
Nondurable manufactures

Durable manufactures
Primary
metals

Year or month

Total

May
June
July
Aug
Sept
Oct
Nov
Dec

1985- Jan
Feb
Mar
May
June
July
Aug
Sept
Oct
Nov"
Dec"

Fabricated
metal
products

NonElectrieleccal
trical machinmachinery
ery

Total

Motor
vehicles
and
parts

Lumber
and
products

Apparel Printing
and
prod- publishucts
ing

Chemicals
and
products

Foods

5.33

3.49

6.46

9.54

7.15

9.13

5.25

2.30

2.79

4.54

8.05

7.96

57.8
60.1
50.5
63.6
69.2
63.2
71.6
57.9
75.3
74.8
716
56.8
66.4
66.1
64.9
69.6
75.1
84.7
93.2
98.9
91.4
94.7
101.9
94.8
89.9
100.7
114.3
110.7
88.2
98.7
100.0
107.0
108.5
90.4
95.0
65.8
73.0
82.4
808
84.3
85.1
83.6
84.2
82.8
80.4
80.6
84.0
82.9
81.3
80.9
78.4
81.7
80.2
81.8
81.4
76.4
78.3
79.0
82.0
80.3
83.0
84.4
83.0

70.4
73.6
62.9
77.5
86.6
76.2
87.9
68.3
90.8
89.1
859
64.7
74.5
75.7
72.3
75.3
82.1
93.4
102.4
105.5
97.5
100.7
109.7
102.1
93.4
103.8
118.2
114.5
92.0
101.4
100.0
107.5
108.0
86.3
92.5
57.5
66.1
73.5

40.4
41.2
37.2
45.5
48.6
47.4
53.5
48.2
55.0
55.8
572
51.3
57.6
57.6
56.2
61.1
63.1
67.0
73.6
78.8
82.5
86.9
88.4
81.9
81.5
89.4
99.4
95.4
82.7
91.6
100.0
105.7
109.4
101.8
101.6
86.6
89.1
102.8
108.0
97.2
99.1
102.1
101.5
101.9
103.3
103.7
104.1
104.8
104.8
105.4
105.9
106.4
107.6
108.6
109.1
108.3
107.4
107.3
107.8
107.5
108.4
108.8
109.9

26.7
26.8
22.9
25.7
32.6
35.5
36.9
31.6
34.6
39.7
396
33.2
38.8
39.0
37.9
42.5
45.4
51.7
58.2
67.6
68.9
69.5
75.2
72.8
67.6
78.5
91.7
97.7
84.5
88.8
100.0
111.7
122.6
123.3
129.8
115.6
118.3
142.0
146.4
131.6
133.4
136.5
138.9
141.9
143.7
146.1
147.8
146.5
146.6
145.8
144.6
145.0
144.9
146.5
148.9
149.1
145.6
147.5
149.2
146.5
143.5
144.9
145.9

14.5
15.1
14.1
19.4
19.5
22.3
25.6
22.8
26.1
28.3
281
25.7
31.2
33.8
35.9
41.3
42.4
44.9
53.5
64.2
64.5
68.1
72.5
69.3
69.6
79.7
90.7
89.8
77.2
86.8
100.0
112.9
125.7
130.3
134.1
128.4
143.8
172.4
168.9
163.0
164.6
165.9
169.2
169.2
171.4
175.3
176.2
176.8
178.4
178.9
180.2
176.0
173.2
173.1
168.9
169.3
169.5
165.7
166.1
165.1
164.8
167.3
168.7

26.6
29.0
29.2
34.9
38.9
45.2
56.8
49.4
56.8
55.1
590
46.5
52.7
54.6
51.3
59.3
65.1
66.8
79.4
85.1
83.2
90.4
89.7
75.3
81.5
87.0
99.1
90.1
81.0
92.2
100.0
106.3
108.3
96.9
95.1
87.6
99.2
113.6
123.4
112.1
112.3
112.3
112.0
111.2
112.4
114.2
116.2
114.3
113.4
116.0
117.8
120.4
120.5
120.8
120.7
120.9
121.8
123.7
126.8
126.2
124.6
126.8
127.7

28.8
31.2
32.0
41.2
37.8
32.4
40.8
35.1
47.1
38.2
40 1
29.6
38.5
43.4
38.1
46.3
51.3
52.7
67.3
66.2
58.2
69.7
70.0
56.3
70.6
77.1
89.8
77.5
65.7
86.5
100.0
104.6
95.9
71.1
71.6
66.8
85.8
105.6
112.3
106.5
106.0
106.5
103.6
103.4
104.3
105.4
108.3
104.6
103.1
107.5
109.5
113.0
112.5
111.3
110.9
110.5
110.5
112.8
116.8
115.3
111.7
114.5
115.6

47.2
49.1
43.3
52.7
52.5
51.8
54.8
54.5
60.8
60.1
552
56.0
63.6
59.8
62.6
66.1
69.2
74.3
77.2
80.1
79.3
81.6
81.5
81.1
83.2
95.3
95.6
86.8
80.8
91.9
100.0
102.4
102.0
92.9
90.1
82.8
100.2
109.1

47.0
49.1
48.6
52.3
51.3
54.0
54.7
54.1
59.7
61.1
609
59.2
65.2
66.5
66.9
69.6
72.5
75.0
79.3
81.3
80.9
82.9
85.6
82.2
83.2
88.3
89.0
85.0
77.6
91.5
100.0
103.1
98.3
97.3
96.1
87.3
95.3
102.8

10.4
11.3
11.1
13.9
15.7
16.5
17.8
18.1
21.1
22.6
23.9
24.7
28.8
29.9
31.4
34.8
38.1
41.7
46.5
50.7
53.0
59.6
64.5
67.1
71.4
80.3
87.8
91.0
82.9
92.8
100.0
106.8
111.4
106.4
112.6
103.8
114.0
121.7

41.9
41.5
41.9
43.4
44.3
45.2
46.1
47.0
49.8
52.6
53.4
54.7
57.4
59.0
60.7
62.6
64.9
67.8
69.4
72.0
75.2
77.2
79.8
81.0
83.6
88.0
89.8
91.0
90.4
95.6
100.0
104.3
106.7
111.4
113.7
114.9
120.4
127.1

106.7
108.1
109.5
110.0
108.3
109.8
107.9
109.4
110.4
110.2
109.5
109.4
109.2
109.1
109.5
110.9
112.2
113.5
113.0
114.8
115.9
116.5

104.1
104.7
104.6
106.1
104.2
102.9
102.3
101.3
100.1
100.5
101.1
102.5
102.6
103.1
101.3
100.2
100.3
99.2
100.6
100.4
101.8
102.6
103.6

34.3
36.0
37.0
38.8
39.5
39.4
41.2
42.9
47.2
50.2
519
50.7
54.1
56.3
56.5
58.6
61.7
65.5
69.7
75.0
79.1
80.4
84.3
82.0
82.7
88.2
90.6
89.2
83.5
91.2
100.0
107.8
112.7
115.1
118.6
120.2
129.8
147.9
155 1
139.7
141.6
143.5
144.1
148.2
149.4
152.3
151.5
148.8
149.5
153.5
151.2
150.4
150.3
152.6
154.2
155.4
156.7
154.3
156.3
156.2
156.1
158.3
160.0

118.2
120.1
120.3
119.9
119.5
122.1
122.9
122.0
124.2
123.5
124.3
123.4
125.7
125.8
126.5
125.8
126.7
126.4
126.4
128.2
129.0
127.5
126.9

123.4
124.4
125.5
126.8
126.7
127.4
127.8
127.7
128.2
129.1
128.7
129.0
128.2
129.4
128.5
130.8
131.4
131.8
132.2
132.6
132.5
131.0
130.6

1977 proportion

1947
1948
1949
1950 .
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985 >>
1984: Jan
Feb
Mar

Iron
and
steel

Transportation
equipment

77.9
78.1
75.6
76.0
74.3
71.0
69.0
74.6
73.6
71.0
71.1
68.9
71.0
68.5
73.2
71.9
65.4
67.6
68.7
71.6
69.7
74.4
75.8

Source-. Board of Governors of the Federal Reserve System.




306

TABLE B-48.—Capacity utilization rates, 1948-85
[Percent; quarterly data seasonally adjusted]
Manufacturing
Year or
quarter

Total
industry

Total

Durable
goods

Nondurable
goods

Primary
processing

Advanced
processing

1948
1949

825
742

873
762

828
854

885
902
849

89.3

89.4

801

806

859
893
800

1955
1956
1957
1958
1959

870
861
836

920
894
847

842
844
831

75.0

75.4

830

74.9
81 1

801

798

Industrial
materials

798

85.8

Utilities

800
732

1950
1951
1952
1953
1954

Mining

805

816

1960
1961
1962
1963
1964

83.4

814
835
856

77.9

77.2

815

816

83.8

83.4

878

846

895

91 0

888

77.3

1965
1966
1967
1968
1969

87.1
874
87.4

91 1
86.7
870
86.7

87.0
867
86.1

86.6
877
88.0

85.3
869
87.7

91 1
87.6
870
86.1

82.9
846
87.0

93.2
939
95.6

85.1
86.8
88.1

1970
1971
1972
1973
1974

80.9
79.0
840
87.9
836

79.2
77.4
828
87.0
826

76.1
73.3
797
86.2
816

83.9
83.5
874
88.1
842

80,9
79.5
864
91.3
854

78.3
76.1
81 1
85.1
815

89.0
87.3
902
91.4
91 1

95.1
93.7
945
92.8
868

81.8
80.4
86.0
91.1
86.1

1975
1976
1977
1978
1979

741

723

696

763

722

726

892

843

78.8
82.4
84.8
852

77.4
81.4
84.2
846

74.8
79.4
82.9
841

81.4
84.5
86.1
853

79.3
83.1
86.0
866

76.8
80.5
83.1
835

89.7
89.9
90.3
907

85.3
85.1
85.0
856

73.4
80.3
84.1
86.3
87.1

1980
1981
1982
1983
1984

809

793

779

800

932

854

78.3
703
74.0
808

76.7
669
70.3
790

81 3
80.7
755
79.5
836

779

79.9
721
74.7
812

78.1
676
74.2
81 6

78.3
71 7
73.9
804

92.9
834
77.9
836

84.2
814
80.5
838

81.1
81.1
71.7
75.3
82.3

1985 "

806

803

783

832

823

793

814

839

80.2

1984: Jan
Feb
Mar

May:::.""::
June

80.0
80.4
80.8
81.0
81.2
81.6

79.2
80.0
80.4
80.7
80.7
81.1

76.9
77.6
78.2
78.6
78.7
79.0

82.6
83.4
83.6
83.6
83.7
84.1

80.1
81.3
81.8
81.6
81.7
81.8

78.8
79.3
79.6
80.2
80,3
80.7

83.8
82.7
82.7
82.8
84.3
85.5

85.6
83.0
84.6
84.3
84.4
84.2

81.6
82.1
82.5
82.6
82.6
82.8

July
Aug
Sept
Oct
Nov
Dec

82.0
82.0
81.7
81.1
81.3
81.1

81.7
81.8
81.3
81.1
81.2
80.9

79.8
80.4
79.9
79.5
79.5
79.3

84.4
83.7
83.5
83.4
83.6
83.1

81.7
82.3
82.0
81.8
81.7
80.9

81.6
81.4
80.9
80.7
80.9
80.8

86.4
85.0
85.4
80.6
81.7
81.7

82.9
83.0
82.6
82.4
84.3
83.8

83.0
83.1
82.7
81.3
81.5
81.3

1985: Jan
Feb
Mar

June

81.1
80.9
81.0
80.8
80.6
80.5

80.7
80.4
80.5
80.5
80.3
80.1

79.3
78.7
78.9
78.9
78.5
78.0

82.8
83.0
82.9
83.0
83.0
83.4

81.6
81.5
81.8
82.1
81.5
82.0

80.2
79.8
79.8
79.7
79.8
79.3

82.9
82.1
82.8
82.1
82.2
82.7

84.7
86.7
85.0
84.6
84.5
84.1

81.7
81.5
81.4
80.9
80.1
80.1

July
Aug
Sept
Oct
Nov"
Dec ".

80.2
80.7
80.5
79.8
80.1
80.5

80.1
80.7
80.1
79.5
79.9
80.3

78.0
78.7
77.8
77.3
77.9
78.2

83.3
83.7
83.7
83.0
83.0
83.6

82.3
82.9
82.8
82.9
83.0
83.4

79.1
79.6
79.0
78.0
78.5
78.9

81.2
80.9
81.0
80.6
79.2
79.4

81.9
81.5
83.4
82.8
83.1
84.0

79.5
79.9
79.5
79.2
79.1
79.6

May"":::::

914

Source: Board of Governors of the Federal Reserve System.




307

TABLE B-49.—Neu' construction actitity. 1929-85
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Public construction

Private construction

Year or month

Total
new
construction

Residential
buildings 1
Total

Nonresidential buildings and other
construction *

Total 2

New
housing
units

Total
Total

Commercial 3

Industrial

Federal

State and
local 5

2.3

Other 4

1929..

10.8

8.3

3.6

3.0

4.7

1.1

0.9

2.6

2.5

0.2

1933

2.9

1.2

.5

.3

.8

.1

.2

.5

1.6

.5

1.1

1939

8.2

4.4

2.7

2.3

1.7

.3

.3

1.2

3.8

.8

3.1

1940
1941
1942
1943
1944

8.7
12.0
14.1
8.3
5.3

5.1
6.2
3.4
2.0
2.2

3.0
3.5
1.7
.9
.8

2.6
3.0
1.4
.7
.6

2.1
2.7
1.7
1.1
1.4

.3
.4
.2
.0
.1

.4
.8
.3
.2
.2

1.3
1.5
1.2
.9
1.1

3.6
5.8
10.7
6.3
3.1

1.2
3.8
9.3
5.6
2.5

2.4
2.0
1.3
.7
.6

1945
1946

5.8
14.3

3.4
12.1

1.3
6.2

.7
4.8

2.1
5.8

.2
1.2

.6
1.7

1.3
3.0

2.4
2.2

1.7
.9

.7
1.4

1947
1948
1949

20.0
26.1
26.7

16.7
21.4
20.5

9.9
13.1
12.4

7.8
10.5
10.0

6.9
8.2
8.0

1.0
1.4
1.2

1.7
1.4
1.0

4.2
5.5
5.9

3.3
4.7
6.3

.8
1.2
1.5

2.5
3.5
4.8

1950
1951
1952
1953
1954

33.6
35.4
36.8
39.1
41.4

26.7
26.2
26.0
27.9
29.7

18.1
15.9
15.8
16.6
18.2

15.6
13.2
12.9
13.4
14.9

8.6
10.3
10.2
11.3
11.5

1.4
1.5
1.1
1.8
2.2

1.1
2.1
2.3
2.2
2.0

6.1
6.7
6.8
7.3
7.2

6.9
9.3
10.8
11.2
11.7

1.6
3.0
4.2
4.1
3.4

5.2
6.3
6.6
7.1
8.3

1955
1956
1957
1958
1959

46.5
47.6
49.1
50.0
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

I960
1961
1962
1963
1964....

54.7
56.4
60.2
64.8
68.0

38.9
39.3
42.3
45.5
47.7

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
19.7

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
10.7

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...

74.1
76.8
78.5
87.5
94.3

52.0
52.8
52.9
59.9
66.3

27.9
25.7
25.6
30.6
33.2

21.7
19.4
19.0
24.0
25.9

24.1
27.1
27.3
29.3
33.1

e.b"
6.8

15.5"
16.9

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
24.6

1970
1971
1972
1973
1974

95.2
110.3
124.4
138.4
139.2

67.1
80.4
94.2
105.9
100.9

31.9
43.3
54.3
59.7
50.4

24.3
35.1
44.9
50.1
40.6

35.3
37.2
40.0
46.2
50.5

9.8
11.6
13.5
15.5
15.9

6.5
5.4
4.7
6.2
7.9

19.0
20.1
21.8
24.5
26.7

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
27.6
33.0

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

135.9
154.9
180.8
215.9
241.9

95.1
115.8
142.6
170.0
193.1

46.5
64.3
87.9
103.8
110.5

34.4
51.1
72.7
86.2
90.1

48.6
51.4
54.7
66.2
82.6

12.8
12.8
14.8
18.6
24.9

8.0
7.2
7.7
11.0
15.0

27.8
31.5
32.2
36.7
42.7

40.9
39.1
38.2
45.9
48.8

6.3
7.0
7.3
8.4
8.6

34.6
32.1
30.9
37.5
40.2

1980
1981
1982
1983
1984

238.0
246.7
236.9
268.7
313.0

183.0
193.3
186.1
218.0
257.8

94.5
94.1
80.6
121.3
145.1

70.4
70.2
57.7
95.7
114.6

88.4
99.2
105.5
96.7
112.7

29.9
34.2
37.3
35.8
48.1

13.8
17.0
17.3
12.9
13.7

44.7
47.9
50.9
48.1
50.9

55.0
53.3
50.8
50.7
55.2

9.6
10.4
10.0
10.6
11.2

45.4
42.9
40.8
40.2
44.0

New series

See next page for continuation of table.




308

7.8"
9.4

TABLE B-49.—New construction activity, 1929-85—Continued
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Public construction

Private construction
Total
Year or month

new

construction

Residential
buildings 1
Total

Nonresidential buildings and other
construction 1

New

Total 2

1984- Jan
Feb
Mar
Apr
May
June
July

Aug
Sept

Oct
Nov
Dec

1985- Jan
Feb
Mar
Apr
May

100.6
103.5
105.8
109.0
113.2
113.1

Total

Federal State and
local 5

Industrial

Other 4

40.1
41.8
44.1
45.6
47.7
47.8

12.2
12.8
13.6
13.2
13.7
13.2

48.3
48.8
48.1
50.2
51.8
52.2

51.1
52.9
53.5
54.3
54.2
56.9

10.2
10.5
10.8
11.3
11.2
11.7

40.9
42.4
42.6
43.0
43.0
45.2

mercial

3

261.5

260.8

319.1
321.2
321.0
318.2
313.1
310.1

263.5
265.4
264.3
262.0
257.5
254.5

150.3
149.8
149.4
144.0
137.9
134.3

117.9
117.0
116.3
115.9
113.5
111.9

113.2
115.6
115.0
117.9
119.6
120.3

47.6
49.1
50.8
52.1
52.5
54.5

13.5
14.0
14.7
14.3
14.6
14.4

52.1
52.5
49.5
51.5
52.4
51.3

55.6
55.9
56.6
56.2
55.6
55.5

10.5
11.2
12.0
11.3
11.9
11.5

45.1
44.7
44.6
44.9
43.7
44.0

341.0

283.7
276.5
274.6
282.0
276.4
278.9

155.3
146.0
146.2
146.5
142.3
147.2

113.0
110.3
110.8
112.6
112.0
112.2

128.4
130.4
128.4
135.4
134.2
131.8

58.5
58.9
59.4
61.2
60.1
58.3

15.2
15.8
14.6
17.3
16.4
15.2

54.7
55.7
54.4
56.9
57.7
58.3

57.4
57.8
59.1
59.9
63.5
64.9

11.8
11.7
11.7
11.3
12.5
13.1

45.5
46.1
47.5
48.6
51.0
51.8

279.5
279.4
282.5
282.7
283.7

148.7
146.9
148.9
150.6
150.3

112.8
113.4
113.8
115.9
115.9

130.8
132.5
133.6
132.1
133.4

58.0
59.9
61.2
60.8
61.5

15.4
15.1
15.6
15.4
15.5

57.5
57.5
56.8
55.8
56.3

64.7
63.9
63.6
63.6
64.5

13.0
12.0
12.5
12.7
13.1

51.7
51.8
51.0
50.9
51.4

334.3
333.7

341.9

July

344.2
343.2

Oct
Nov"

107.6
112.0
112.9
113.5
117.0
116.8

Com-

315.7
317.8

339.9
343.8

Sept

Total

132.7
146.1
150.1
146.6
148.4
147.7

284.4
302.5
309.4
309.9

June

Aug

housing
units

346.1

346.3
348.2

233.3
249.6
255.9
255.6

1
Beginning 1960, farm residential buildings included in residential buildings; prior to 1960, included in nonresidential buildings and
other construction.
2
Total includes additions and alterations and nonhousekeepmg 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.
Note.—Data beginning 1976 are not strictly comparable with earlier data.
Source: Department of Commerce, Bureau of the Census.




309

TABLE B-50.—New housing units started and authorized, 1959-85
[Thousands of units]
New private housing units authorized 2

New housing units started
Private and public

l

Private (farm and nonfarm)

Year or month

1

Type of structure

Type of structure

Total
(farm and
nonfarm)

Nonfarm

1959

1,553.7

1,531.3

1,517.0

1,234.0

1960
1961
1962
1963
1964

1,296.1
1,365.0
1,492.5
1,634.9
1,561.0

1,274.0
1,336.8
1,468.7
1,614.8
1,534.0

1,252.2
1,313.0
1,462.9
1,603.2
1,528.8

994.7
974.3
991.4
1,012.4
970.5

1965
1966
1967
1968
1969

1,509.7
1,195.8
1,321.9
1,545.4
1,499.5

1,487.5
1,172.8
1,298.8
1,521.4
1,482.3

1,472.8
1,164.9
1,291.6
1,507.6
1,466.8

963.7
778.6
843.9
899.4
810.6

1970
1971
1972
1973
1974

14690
2,084.5
2,378.5
2,057.5
1,352.5

(3)

1,433.6
2,052.2
2,356.6
2,045.3
1,337.7

1975
1976
1977
1978
1979

1,171.4
1,547.6
1
2,001.7
2,036.1
1,760.0

1980
1981
1982
1983
1984

1,312.6
1,100.3
1,072.1
1,712.5
1,755.8

1985"

1,735.9

( 33 )
()
( 33 )
()
( 33 )
(3)
(3)
(3)
()
(3)

M

w)
(
3

Total

1 unit

2 to 4
units

Total

5 units
or more

1 unit

2 to 4
units

5 units
or more

1,208.3

938.3

77.1

192.9

251 .4
338 .7
471 .5
59C).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

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

812.9
1,151.0
1,309.2
1,132.0
888.1

84.8
120.3
141.3
118.3
68.1

535.9
780.9
906.2
795.0
381.6

1,351.5
1,924.6
2,218.9
1,819.5
1,074.4

646.8
906.1
1,033.1
882.1
643.8

88.1
132.9
148.6
117.0
64.3

616.7
885.7
1,037.2
820.5
366.2

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

1,292.2
1,084.2
1,062.2
1,703.0
1,749.5

852.2
705.4
662.6
1,067.6
1,084.2

109.5
91.1
80.0
113.5
121.4

330.5
287.7
319.6
522.0
544.0

1,190.6
985.5
1,000.5
1,605.2
1,681.8

710.4
564.3
546.4
901.5
922.4

114.5
101.8
88.3
133.6
142.6

365.7
319.4
365.8
570.1
616.8

1,732.8

1,070.2

93.7

568.9

1,740.8

961.1

123.4

656.3

28C .0

Seasonally adjusted annual rates
1984:Jan

Feb
Mar
Apr
May
June

109.3
130.4
138.1
173.0
182.2
184.3

Aug
Sept
Oct
Nov
Dec

163.1
147.8
149.6
152.7
126.5
99.0

1985: Jan
Feb
Mar
Apr
May
June

105.4
95.8
145.2
176.0
170.5
163.4

July

July

Aug
Sept
Oct
Nov
Dec"

161.0
161.1
148.6
173.2
120.9
114.7

( 33 )
(3)
(3)
(3)
(3)
()

!=!)
(
3
3
(3)
(3)

( )
(3)
(3)
(3)
(3)
(3)
(3)
(3)
3
(3)
(3)
(3)
(3)
( )

1,933
2,208
1,700
1,949
1,787
1,837

1,256
1,440
1,076
1,163
1,118
1,077

117
142
133
160
118
108

560
626
491
626
551
652

1,840
1,976
1,739
1,788
1,765
1,805

1,023
1,127
981
972
944
939

147
165
160
155
156
150

670
684
598
661
665
716

1,730
1,590
1,669
1,564
1,600
1,630

996
962
1,009
979
1,043
1,112

116
114
107
109
115
119

618
514
553
476
442
399

1,591
1,542
1,517
1,477
1,616
1,599

864
853
866
827
8.46
843

142
132
125
121
127
132

585
557
526
529
643
624

1,849
1,647
1,889
1,933
1,681
1,701

1.060
1,135
1,168
1,155
1,039
1,031

105
96
106
113
109
92

684
416
615
665
533
578

1,635
1,624
1,741
1,704
1,778
1,712

903
927
993
948
933
961

150
114
138
118
131
130

582
583
610
638
714
621

1,663
1,740
1,616
1,772
1,566
1,840

1,062
1,059
975
1,120
961
1,113

86
97
83
77
80
91

515
584
558
575
525
636

1,694
1,784
1,808
1,688
1,661
1,873

967
990
949
965
918
978

121
127
127
112
111
123

606
667
732
611
632
772

1
Units in structures built by private developers for sale upon completion to local public housing authorities under the Department of
Housing and Urban Development "Turnkey" program are classified as private housing. Military housing starts, including those financed
with mortgages insured by FHA under Section 803 of the National Housing Act, are included in publicly owned starts and excluded from
total private starts.
2
Authorized by issuance of local building permit: in 17,000 permit-issuing places beginning 1984; in 16,000 places for 1978-83; in
14,000 places for 1972-77; in 13,000 places for 1967-71; in 12,000 places for 1963-66; and in 10,000 places prior to 1963.
3
Not available separately beginning January 1970.
Source: Department of Commerce, Bureau of the Census.




310

TABLE B-51.—Business expenditures for new plant and equipment, 1947-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Industries surveyed quarterly
Manufacturing
Year or quarter

1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963 ..
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985 4
19864
1984:1

II
Ill
IV
1985: I
II
Ill 4
IV
1986: I 4 4

II

All
industries

Total

20.11
22.78
20.28
21.56
26.81
28.16
29.96
28.86
30.94
37.90
40.54
33.84
35.88
39.44
38.34
40.86
43.67
51.26
59.52
70.40
72.75
76.42
85.74
91.91
92.91
103.40
120.03
139.67
142.42
158.44
184.82
217.76
254.96
282.80
315.22
310.58
304.78
354.44
384.22
393.52
337.95
349.97
361.48
368.29
371.16
387.83
388.90
388.98
402.13
405.99

8.73
9.25
7.32
7.73
11.07
12.12
12.43
12.00
12.50
16.33
17.50
12.98
13.76
16.36
15.53
16.03
17.27
21.23
25.41
31.37
32.25
32.34
36.27
36.99
33.60
35.42
42.35
52.48
53.66
58.53
67.48
78.58
95.92
112.33
126.54
120.68
116.20
138.82
152=42
152.30
129.91
135.96
142.44
146.96
145.65
154.33
154.04
155.68
154.74
159.16

Dura- Nonble durable Total »
goods goods

3.39
3.54
2.67
3.22
5.12
5.75
5.71
5.49
5.87
8.19
8.59
6.21
6.72
8.28
7.43
7.81
8.64
10.98
13.49
17.23
17.83
17.93
19.97
19.80
16.78
18.22
22.63
26.77
25.37
27.50
32.77
39.46
48.50
55.36
59.81
55.35
53.08
66.24
72.53
70.76
61.23
64.03
68.26
71.43
69.87
73.96
72.85
73.46
71.95
74.55

Addenda

Nonmanufacturing
Total
nonComSur- SurManuPublic mercial farm facturing
Min- Trans- utiliTotal veyed veyed
busiquar- annuand
ing portation ties
ness 2
other
terly ally 3
Nonmanufacturing

5.34
5.71
4.64
4.51
5.95
6.37
6.72
6.51
6.62
8.15
8.91
6.77
7.04
8.08
8.10
8.22
8.63
10.25
11.92
14.15
14.42
14.40
16.31
17.19
16.82
17.20
19.72
25.71
28.28
31.03
34.71
39.13
47.42
56.96
66.73
65.33
63.12
72.58
79.89
81.54
68.68
71.93
74.18
75.53
75.78
80.36
81.19
82.22
82.79
84.60

11.38
13.53
12.96
13.83
15.74
16.04
17.53
16.85
18.44
21.57
23.04
20.86
22.12
23.08
22.80
24.83
26.40
30.04
34.12
39.03
40.50
44.08
49.47
54.92
59.31
67.98
77.67
87.19
88.76
99.91
117.34
139.18
159.04
170.47
188.68
189.89
188.58
215.61
231.79
241.23
208.04
214.01
219.04
221.33
225.51
233.51
234.86
233.30
247.39
246.83

0.69
.93
.88
.84
1.11
1.21
1.25
1.29
1.31
1.64
1.69
1.43
1.35
1.29
1.26
1.41
1.26
1.33
1.36
1.42
1.38
1.44
1.77
2.02
2.67
2.88
3.30
4.58
6.12
7.63
9.81
11.22
12.81
15.99
21.39
20.05
15.19
16.86
15.84
14.85
17.24
16.38
16.82
17.00
15.66
16.51
15.94
15.24
15.30
15.75

1

2.69
3.17
2.80
2.87
3.60
3.56
3.58
2.91
3.10
3.56
3.84
2.72
3.47
3.54
3.14
3.59
3.64
4.71
5.66
6.68
6.57
6.91
7.23
7.17
6.42
7.14
8.00
9.16
9.95
11.10
12.20
13.36
16.05
16.60
15.84
14.79
13.97
16.52
17.77
18.67
15.29
17.01
17.49
16.28
16.22
17.50
19.09
18.25
18.80
18.98

1.64
2.67
3.28
3.42
3.75
3.96
4.61
4.23
4.26
4.78
5.95
5.74
5.46
5.40
5.20
5.12
5.33
5.80
6.49
7.82
9.33
10.52
11.70
13.03
14.70
16.26
17.99
19.96
20.23
22.90
27.83
31.50
35.63
37.74
41.21
45.43
44.96
47.48
48.23
46.13
47.08
47.94
47.92
46.92
48.46
48.47
48.14
47.85
48.99
47.53

6.38
6.77
6.01
6.70
7.29
7.31
8.09
8.42
9.77
11.59
11.56
10.97
11.84
12.86
13.21
14.71
16.17
18.20
20.SO
23.11
23.22
25.22
28.77
32.71
35.52
41.69
48.39
53.49
52.47
58.29
67.51
83.09
94.56
100.14
110.24
109.63
114.45
134.75
149.96
161.58
128.42
132.67
136.80
141.13
145.17
151.02
151.69
151.96
164.30
164.57

22.27
25.97
24.03
25.81
31.38
32.16
34.20
33.62
37.08
45.25
48.62
42.55
45.17
48.99
48.14
51.61
53.59
62.02
70.79
82.62
83.82
88.92
100.02
106.15
109.18
120.91
139.26
159.83
162.60
179.91
208.15
245.34
284.94
314.47
349.26
347.47
343.35
398.99

8.73
9.25
7.32
7.73
11.07
12.12
12.43
12.00
12.50
16.33
17.50
12.98
13.76
16.36
15.53
16.03
17.27
21.23
25.41
31.37
32.25
32.34
36.27
36.99
33.60
35.42
42.35
52.48
53.66
58.53
67.48
78.58
95.92
112.33
126.54
120.68
116.20
138.82
152.42
152.30
129.91
135.96
142.44
14696
145.65
154.33
154.04
155.68
154.74
159.16

13.54
16.73
16.72
18.08
20.31
20.04
21.77
21.62
24.58
28.91
31.11
29.57
31.41
32.63
32.60
35.58
36.33
40.80
45.39
51.25
51.57
56.58
63.74
69.16
75.58
85.49
96.91
107.35
108.95
121.38
140.67
166.76
189.02
202.15
222.72
226.79
227.15
260.16

11.38
13.53
12.96
13.83
15.74
16.04
17.53
16.85
18.44
21.57
23.04
20.86
22.12
23.08
22.80
24.83
26.40
30.04
34.12
39.03
40.50
44.08
49.47
54.92
59.31
67.98
77.67
87.19
88.76
99.91
117.34
139.18
159.04
170.47
188.68
189.89
188.58
215.61
231.79
241.23
208.04
214.01
219.04
221.33
225.51
233.51
234.86
233.30
24739
246.83

2.16
3.19
3.76
4.25
4.57
4.00
4.23
4.76
6.14
7.35
8.08
8.72
9.29
9.55
9.80
10.75
9.93
10.76
11.27
12.22
11.07
12.50
14.27
14.24
16.26
17.51
19.24
20.16
20.19
21.47
23.33
27.58
29.98
31.68
34.04
36.89
38.56
44.55

Excludes forestry, fisheries, and agricultural services; medical services; professional services; social services and membership
organizations; and real estate, which, effective with the April-May 1984 survey, are no longer surveyed quarterly. See last column
("nonmanufacturing surveyed annually") for data for these industries.
2
"All industries plus the part of nonmanufacturing that is surveyed annually.
3
Consists of forestry, fisheries, and agricultural services; medical services; professional services; social services and membership
organizations; and real estate.
4
Planned capital expenditures as reported by business in late October and November 1985, corrected for biases.
Source: Department of Commerce, Bureau of Economic Analysis.




311

TABLE B-52.—Sales and inventories in manufacturing and trade 1948-85
[Amounts in millions of dollars; monthly data seasonally adjusted]
Manufacturing

Total manufacturing and
trade
Sales »
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
,
1978
1979
1980
1981
1982
1983
1984
1984: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1985: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov

35,260
33,788
38,596
43,356
44,840
47,987
46,443
51,694
54,063
55,879
54,201
59,729
60,827
61,159
65,662
68,995
73,682
80,283
87,187
90,419
98,184
105,088
107,536
116,110
130,144
. . 153,566
177,861
182,404
204,463
230,000
260,810
298,344
328,074
356,927
344,656
368,747
411,733
402,489
402,395
404,612
408,342
412,524
413,976
412,233
413,300
412,276
414,243
417,635
421,613
417,350
418,667
420,776
426,472
428,275
418,378
422,483
430,417
428,998
426,033
432,110

Inventories2

Ratio3

52,507 1.42
49,497 1.53
59,822 1.36
70,242 1.55
72,377 1.58
76,122 1.58
73,175 1.60
79,516 1.47
87,304 1.55
89,052 1.59
87,093 1.60
92,129 1.50
94,713 1.56
95,594 1.54
101,063 1.50
105,480 1.49
111,503 1.47
120,907 1.45
136,790 1.47
144,920 1.56
155,831 1.53
169,482 1.55
177,719 1.62
187,929 1.58
202,132 1.49
233,419 1.41
286,098 1.45
288,651 1.57
318,833 1.48
351,459 1.46
399,561 1.44
451,354 1.43
493,958 1.45
527,739 1.44
509,213 1.51
520,281 1.38
573,434 1.34
524,733 1.30
532,141 1.32
538,817 1.33
545,926 1.34
550,503 1.33
552,421 1.33
557,168 1.35
561,715 1.36
565,475 1.37
568,750 1.37
571,239 1.37
573,434 1.36
575,802 1.38
578,940 1.38
578,768 1.38
580,201 1,36
577,781 1.35
579,665 1.39
580,116 1.37
578,182 1.34
578,918 1.35
582,173 1.37
583,600 1.35

Sales1
17,316
16,126
18,634
21,714
22,529
24,843
23,355
26,480
27,740
28,736
27,247
30,286
30,879
30,923
33,357
35,058
37,331
40,995
44,870
46,487
50,228
53,501
52,805
55,906
63,027
72,931
84,790
86,589
98,797
113,202
126,905
143,936
154,391
168,129
159,027
170,441
189,578
184,558
185,616
187.940
187,669
188,397
189,255
189,896
191,155
189,330
191,275
193,043
196,181
191,724
192,261
194,303
193,509
194,638
193,871
193,793
196,593
194,229
197,229
200,131

Merchant wholesalers

Invento- Ratio
ries2
28,543
26,321
31,078
39,306
41,136
43,948
41,612
45,069
50,642
51,871
50,241
52,945
53,780
54,885
58,186
60,046
63,409
68,185
77,952
84,666
90,618
98,203
101,653
102,656
108,237
124,626
157,792
159,935
175,195
189,214
210,509
241,100
264,281
282,645
264,909
260,682
285,709
261,494
264,315
268,234
270,640
274,268
277,207
279,774
282,774
284,531
285,597
285,668
285,709
285,785
286,146
286,171
286,049
284,900
285,678
285,036
284,688
284,030
282,444
281,993

3

1.57
1.75
1.48
1.66
1.78
1.76
1.81
1.62
1.73
1.80
1.84
1.70
1.75
1.74
1.70
1.69
1.64
1.60
1.62
1.76
1.74
1.77
1.90
1.83
1.67
1.58
1.65
1.84
1.69
1.61
1.57
1.57
1.66
1.64
1.73
1.52
1.45
1.42
1.42
1.43
1.44
1.46
1.46
1.47
1.48
1.50
1.49
1.48
1.46
1.49
1.49
1.47
1.48
1.46
1.47
1.47
1.45
1.46
1.43
1.41

Retail trade

Sales *

Invento- Ratio3 Sales
ries2

6,808
6,514
7,695
8,597
8,782
9,052
8,993
9,893
10,513
10,475
10,257
11,491
11,656
11,988
12,674
13,382
14,529
15,611
16,987
19,520
20,926
22,694
24,031
26,350
29,695
38,173
47,989
46,803
50,885
56,364
66,674
79,481
93,721
102,021
96,290
100,448
114.071
111,795
111,053
112,147
113,230
116,186
115,636
114,774
114,749
114,573
113,994
114,337
114,913
114,654
114,310
114,619
117,612
118,753
110,777
114,273
116,847
115,231
113,944
116,359

7,957
7,706
9,284
9,886
10,210
10,686
10,637
11,678
13,260
12,730
12,739
13,879
14,120
14,488
14,936
16,048
17,000
18,317
20,765
24,955
26,268
28,762
32,199
35,210
38,816
45,556
57,239
56,97?
64,365
72,801
86,442
99,348
113,623
118,438
118.290
120,476
132,208
121.337
122,918
123,977
125,659
126,742
126,745
128,577
129,433
130,610
131,023
132,501
132,208
132,247
133,631
133,865
133,968
134,014
135,479
135,841
135,500
134,967
135,531
135,596

1

1.13
1.19
1.07
1.16
1.12
1.17
1.18
1.13
1.19
1.23
1.24
1.15
1.22
1.20
1.16
1.15
1.14
1.15
1.15
1.24
1.23
1.21
1.26
1.27
1.24
1.11
1.07
1.21
1.19
1.21
1.20
1.18
1.14
1.13
1.24
1.17
1.11
1.09
1.11
1.11
1.11
1.09
1.10
1.12
1.13
1.14
1.15
1.16
1.15
1.15
1.17
1.17
1.14
1.13
1.22
1.19
1.16
1.17
1.19
1.17

11,135
11,149
12,268
13,046
13,529
14,091
14,095
15,321
15,811
16,667
16,696
17,951
18,294
18,249
19,630
20,556
21,823
23,677
25,330
24,413
27,030
28,893
30,700
33,853
37,422
42,462
45,082
49,012
54,781
60,434
67,231
74,926
79,963
86,777
89,339
97,858
108,085
106,136
105,726
104,525
107,443
107,941
109,085
107,563
107,396
108,373
108,974
110,255
110,519
110,972
112,096
111,854
115,351
114,884
113,730
114,417
116,977
119,538
114,860
115,620

Invento- Ratio3
ries2
16,007
15,470
19,460
21,050
21,031
21,488
20,926
22,769
23,402
24,451
24,113
25,305
26,813
26,221
27,941
29,386
31,094
34,405
38,073
35,299
38,945
42,517
43,867
50,063
55,079
63,237
71,067
71,744
79,273
89,444
102,610
110,906
116,054
126,656
126.014
139,123
155,517
141.902
144,908
146,606
149,627
149,493
148,469
148,817
149,508
150,334
152,130
153,070
155,517
157,770
159,163
158,732
160,184
158,867
158,508
159,239
157,994
159,921
164,198
166,011

1.39
1.41
1.38
1.64
1.52
1.53
1.51
1.43
1.47
1.44
1.43
1.40
1.45
1.43
1.38
1.39
1.40
1.39
1.44
1.43
1.38
1.41
1.41
1.41
1.40
1.40
1.48
1.44
1.38
1.39
1.43
1.44
1.42
1.40
1.40
1.34
1.37
1.34
1.37
1.40
1.39
1.38
1.36
1.38
1.39
1.39
1.40
1.39
1.41
1.42
1.42
1.42
1.39
1.38
1.39
1.39
1.35
1.34
1.43
1.44

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.
2

3

Note.—Earlier data are not strictly comparable with data beginning 1958 for manufacturing and beginning 1967 for wholesale and
retail trade.
The inventory figures in this table do not agree with the estimates of change in business inventories included in the gross national
product since these figures cover only manufacturing and trade rather than all business, and show inventories in terms of current book
value without adjustment for revaluation.
Source: Department of Commerce, Bureau of the Census.




312

TABLE B-53.—Manufacturers' shipments and inventories, 1947-85
[Millions of dollars; monthly data seasonally adjusted]
Inventories2

1

Shipments
Year or
month

1947
1948
1949
1950
1951
1952
1953
1954
1955....
1956 . ...
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976. ...
1977
1978
1979
1980
1981
1982
1S83
1984
1984: Jan ......
Feb
Mar
Apr
May.. ..
June...
July....
Aug.. ..
Sept...
Oct
Nov....
Dec .. ..
1985-. Jan
Feb
Mar....

Total

15,513
17,316
16,126
18,634
21,714
22,529
24,843
23,355
26,480
27,740
28,736
27,247
30,286
30,879
30,923
33,357
35,058
37,331
40,995
44,870
46,487
50,228
53,501
52,805
55,906
63,027
72,931
84,790
86,589
98,797
113,202
126,905
143,936
154,391
168,129
159,027
170,441
189,578
184,558
185,616
187,940
187,669
188,397
189,255
189,896
191,155
189,330
191,275
193,043
196,181
191,724
192,261
194,303
193,509
May"! " 194,638
June. .. 193,871
July
193,793
Aug
196,593
Sept.... 194,229
Oct
197,229
Nov
200,131

Durable goods industries

Durable
goods
industries

Nondurable
goods
industries

Total

6,694
7,579
7,191
8,845
10,493
11,313
13,349
11,828
14,071
14,715
15,237
13,563
15,609
15,883
15,616
17,262
18,280
19,637
22,221
24,649
25,267
27,659
29,437
28,188
29,954
34,027
39,681
44,230
43,659
50,700
59,267
67,848
76,060
77,550
83,872
76,693
84,951
98,502
95,168
96,352
96,313
95,460
96,895
97,732
97,841
100,254
98,214
100,807
102,394
103,939
101,966
101,724
102,116
102,068
102,718
102,657
102,478
105,311
103,656
106,479
107,007

8,819
9,738
8,935
9,789
11,221
11,216
11,494
11,527
12,409
13,025
13,499
13,684
14,677
14,996
15,307
16,095
16,778
17,694
18,774
20,220
21,220
22,570
24,064
24,617
25,952
29,000
33,250
40,560
42,931
48,097
53,935
59,057
67,876
76,841
84,257
82,334
85,491
91,076
89,390
89,264
91,627
92,209
91,502
91,523
92,055
90,901
91,116
90,468
90,649
92,242
89,758
90,537
92,187
91,441
91,920
91,214
91,315
91,282
90,573
90,750
93,124

25,897
28,543
26,321
31,078
39,306
41,136
43,948
41,612
45,069
50,642
51,871
50,241
52,945
53,780
54,885
58,186
60,046
63,409
68,185
77,952
84,666
90,618
98,203
101,653
102,656
108,237
124,626
157,792
159,934
175,193
189,214
210,509
241,100
264,281
282,645
264,909
260,682
285,709
261,494
264,315
268,234
270,640
274,268
277,207
279,774
282,774
284,531
285,597
285,668
285,709
285,785
286,146
286,171
286,049
284,900
285,678
285,036
284,688
284,030
282,444
281,993

Materials
and
supplies

Total

13,061
14,662
13,060
15,539
20,991
23,731
25,878
23,710
26,405
30,447
31,728
30,258
32,077
32,371
32,544
34,632
35,866
38,506
42,257
49,920
55,005
58,875
64,739
66,780
66,289
70,250
81,398
101,739
102,874
112,581
121,601
137,891
160,533
174,620
186,347
175,103
171,629
191,109
171,910
173,595
176,475
178,381
180,543
182,474
184,588
187,035
188,619
190,088
190,669
191,109
192,153
192,030
192,355
192,475
191,546
192,239
192,163
192,037
191,930
190,508
190,284

8,966
7,894
9,194
10,417
10,608
10,032
10,776
10,353
10,279
10,810
11,068
11,970
13,325
15,489
16,455
17,376
18,693
19,182
19,759
20,860
26,028
35,151
33,920
37,548
40,251
45,252
52,687
55,121
57,927
52,454
51,604
56,469
51,881
52,248
53,014
53,215
53,950
54,470
55,491
56,155
56,592
56,619
56,101
56,469
56,033
55,768
55,445
55,638
54,693
54,714
54,257
54,217
53,844
53,644
52,999

1
2

Monthly average for year and total for month.
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.




313

Work
in
process

10,720
9,721
10,756
12,317
12,837
12,387
13,063
12,772
13,203
14,159
14,871
16,191
18,075
21,939
25,005
27,336
30,408
29,848
28,650
30,788
35,545
42,603
43,369
46,345
50,620
58,634
69,254
76,997
81,105
77,813
77,463
88,105
77,317
78,456
80,349
81,536
82,730
83,817
84,797
86,170
86,886
87,685
88,290
88,105
88,672
88,967
89,684
89,537
89,654
90,306
91,383
91,473
92,181
91,072
91,020

Nondurable goods industries

Finished
goods

Total

6,206
6,040
6,348
7,565
8,125
7,839
8,239
9,245
9,063
9,662
9,925
10,344
10,854
12,491
13,547
14,163
15,639
17,751
17,880
18,601
19,823
23,985
25,586
28,690
30,730
34,005
38,592
42,502
47,315
44,836
42,562
46,535
42,712
42,891
43,112
43,630
43,863
44,187
44,300
44,710
45,141
45,784
46,278
46,535
47,448
47,295
47,226
47,300
47,199
47,219
46,523
46,347
45,905
45,792
46,265

12836
13,881
13,261
15539
18,315
17,405
18,070
17,902
18,664
20,195
20,143
19,983
20,868
21,409
22,341
23,554
24,180
24,903
25,928
28,032
29,659
31,743
33,463
34,871
36,368
37,988
43,230
56,053
57,060
62,612
67,613
72,618
80,567
89,661
96,298
89,806
89,053
94,600
89,584
90,720
91,759
92,259
93,725
94,733
95,186
95,739
95,912
95,509
94,999
94,600
93,632
94,116
93,816
93,574
93,354
93,439
92,873
92,651
92,100
91,936
91,709

Materials
and
supplies

8,317
8,167
8,556
8,971
8,775
8,662
9,080
9,082
9,493
9,813
9,978
10,131
10,448
11,155
11,715
12,289
12,724
13,150
13,683
14,676
18,132
23,699
23,542
25,833
27,398
29,317
32,451
36,206
37,758
35,165
36,170
36,635
36,435
36,890
36,895
36,868
37,447
37,387
37,595
37,513
37,534
37,387
37,197
36,635
36,731
36,914
36,400
36,399
36,107
36,448
35,917
35,974
35,433
35,539
35,051

Work
in
process

Finished
goods

2,472
2,440
2,571
2,721
2,864
2,828
2,944
2,946
3,110
3,296
3,406
3,511
3,806
4,204
4,421
4,848
5,122
5,274
5,665
5,982
6,707
8,175
8,837
9,933
11,003
11,907
13,741
15,732
16,074
14,308
14,480
14,811
14,700
14,816
14,835
14,877
15,027
15,152
14,943
15,135
14,968
15,014
14,810
14,811
14,656
14,642
14,524
14,351
14,318
14,336
14,216
14,161
14,310
14,607
14,680

7,409
7,415
7,666
8,622
8,624
8,491
8,845
9,380
9,738
10,444
10,796
11,261
11,674
12,673
13,523
14,606
15,617
16,448
17,019
17,330
18,391
24,179
24,681
26,846
29,212
31,394
34,375
37,723
42,466
40,333
38,403
43,154
38,449
39,014
40,029
40,514
41,251
42,194
42,648
43,091
43,410
43,108
42,992
43,154
42,245
42,560
42,892
42,824
42,929
42,655
42,740
42,516
42,357
41,790
41,978

TABLE B-54.—Manufacturers' new and unfilled orders, 1947-85
[Amounts in millions of dollars; monthly data seasonally adjusted]
Unfilled orders2

New orders J

Unfilled orders— shipments
ratio3

Durable goods
industries
Year or month
Total
Total

1347
1948 .
1949
1950
1951
1952
1953
1954 .
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1984: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1985- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov

15,256
17,693
15,614
20,110
23,907
23,204
23,586
22,335
27,465
28,368
27,559
27,002
30,724
30,235
31,104
33,436
35,524
38,357
42,100
46,402
47,056
50,687
53,950
52,038
55,983
64,167
76,056
87,244
85,220
99,532
115,032
131,546
147,403
156,161
167,752
157,255
173,259
191,634
189,061
191,409
195,792
189,360
192,384
189,911
194,061
192,384
189,217
186,799
194,982
193,671
195,210
193,057
191,532
191,081
195,019
198,261
195,793
198,782
197,332
195,381
196,865

6,388
8,126
6,633
10,165
12,841
12,061
12,147
10,768
14,996
15,365
14,111
13,290
16,003
15,303
15,759
17,374
18,709
20,652
23,278
26,177
25,825
28,116
29,871
27,388
29,998
35,064
42,726
46,835
42,099
51,403
61,082
72,339
79,451
79,350
83,553
74,996
87,631
100,611
99,548
101,794
104,454
97,307
100,950
98,340
101,979
101,860
98,210
96,506
104,434
101,307
105,447
102,467
99,544
99,839
102,971
106,780
104,370
107,661
106,641
104,495
103,796

NonCapital durable
goods
goods
indus- industries
tries,
nondefense

6,903
7,660
6,738
7,444
8,622
10,971
12,673
11,011
12,791
15,291
19,458
23,231
23,259
24,050
20,681
22,764
27,017
25,718
27,020
26,760
26,332
28,562
27,721
28,140
26,736
27,394
25,259
26,836
26,893
23,633
29,493
27,206
25,461
25,594
27,984
26,685
27,554
29,240
27,092
25,788

8,868
9,566
8,981
9,945
11,066
11,143
11,439
11,566
12,469
13,003
13,448
13,712
14,720
14,932
15,345
16,061
16,815
17,705
18,823
20,225
21,231
22,571
24,079
24,650
25,986
29,104
33,330
40,409
43,122
48,129
53,950
59,207
67,953
76,801
84,199
82,260
85,627
91,024
89,513
89,615
91,338
92,053
91,434
91,571
92,082
90,524
91,007
90,293
90,548
92,364
89,763
90,590
91,988
91,242
92,048
91,481
91,423
91,121
90,691
90,886
93,069

1

Total

34,473
30,736
24,045
41,456
67,266
75,857
61,178
48,266
60,004
67,375
53,183
47,370
52,732
45,080
47,407
48,577
54,327
66,882
80,071
98,401
104,547
109,926
115,422
106,158
107,147
121,061
158,884
188,467
172,037
180,562
203,475
259,770
302,145
323,393
319,094
296,918
330,924
355,640
335,427
341,220
349,072
350,763
354,750
355,406
359,571
360,800
360,687
356,211
358,150
355,640
359,125
359,926
357,151
354,731
355,112
359,502
361,502
363,691
366,794
364,946
361,680

NonDurable
durable
goods
goods
industries industries

28,579
26,619
19,622
35,435
63,394
72,680
58,637
45,250
56,241
63,880
50,352
44,559
49,373
42,514
44,375
45,965
51,270
63,691
76,298
94,575
100,576
105,950
111,250
101,566
102,119
114,725
151,504
182,925
164,139
172,273
195,008
249,483
290,921
312,648
309,066
287,796
320,123
345,443
324,503
329,945
338,086
339,933
343,988
344,596
348,734
350,340
350,336
346,035
348,075
345,443
348,924
349,671
347,096
344,874
345,127
349,250
351,142
353,492
356,477
354,493
351,282

5,894
4,117
4,423
6,021
3,872
3,177
2,541
3,016
3,763
3,495
2,831
2,811
3,359
2,566
3,032
2,612
3,057
3,191
3,773
3,826
3,971
3,976
4,172
4,592
5,027
6,336
7,380
5,542
7,898
8,288
8,467
10,287
11,224
10,745
10,028
9,122
10,801
10,197
10,924
11,275
10,986
10,830
10,762
10,810
10,837
10,460
10,351
10,176
10,075
10,197
10,201
10,255
10,055
9,857
9,985
10,252
10,360
10,199
10,317
10,453
10,398

Total

3.42
3.63
3.87
3.35
3.09
3.01
2.78
2.63
2.69
2.80
3.10
3.33
3.81
3.70
3.85
3.75
3.65
3.38
3.31
3.86
4.13
3.76
3.30
3.27
3.59
3.88
3.81
3.77
3.76
3.38
3.36
3.48
3.51
3.57
3.59
3.57
3.53
3.58
3.55
3.55
3.46
3.45
3.36
3.47
3.47
3.40
3.40
3.38
3.39
3.41
3.41
3.47
3.37
3.32

NonDurable durable
goods
goods
industries industries

4.12
4.27
4.55
4.00
3.69
3.54
3.37
3.13
3.24
3.37
3.72
3.95
4.55
4.40
4.65
4.50
4.39
4.06
3.90
4.56
4.96
4.52
3.94
3.89
4.22
4.61
4.55
4.57
4.65
4.10
4.06
4.24
4.27
4.35
4.39
4.37
4.31
4.36
4.32
4.32
4.20
4.18
4.06
4.23
4.21
4.14
4.12
4.12
4.11
4.14
4.11
4.22
4.06
4.00

0.96
1.12
1.04
.85
.86
.94
.72
.79
.68
.73
.72
.80
.76
.73
.69
.69
.77
.77
.88
.93
.64
.84
.76
.70
.78
.76
.67
.59
.53
.55
.49
.55
.57
.55
.54
.53
.52
.52
.51
.50
.49
.49
.49
.49
.50
.48
.48
.47
.49
.49
.49
.48
.50
.49

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.
2

3




314

PRICES
TABLE B-55.—Consumer price indexes, major expenditure classes, 1946-85
[1967 = 100]
Food and
beverages
Year or
month

All
items
Total *

Food

Housing

Total

2

HouseApparel
hold
Transand
Fuel and furnishportation
Shelter
other
ings
upkeep
utilities 3
and
operation 2

94.2
94.4
94.7
95.0
94.6
96.3
97.8
100.0
101.5
104.2

60.6
65.2
69.8
70.9

67.5
78.2
83.3
80.1

50.3
55.5
61.8
66.4

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

72.1
778
79.5
801

74.5
828
84.3
83.0
82.8
81.6
82.2
84.9
88.5
87.1

72.8
772
78.7
80.8
81.7
82.3
83.6
86.2
87.7
88.6
90.2
90.9
91.7
92.7
93.8
94.9
97.2
100.0
104.0
110.4

79.0
86.1
85.3
84.6
84.5
84.1
85.8
87.3
87.5
88.2

843
86.6
87.3
88.7
89.6
90.6
91.7
92.9
94.5
97.2
100.0
104.2
109.8
116.3
121.3
125.3
133.1
147.7
161.2
170.5
181.5
195.4
217.4

1980
1981
1982
1983
1984
1985

246.8
272.4

1984: Jan
Feb
Mar

305.2
306.6
307.3
308.8
309.7

289.1
298.4
311.1
322.2

May"!"
June
July

Aug
Sept
Oct
Nov
Dec

1985: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec

310.7
311.7
313.0
314.5
315.3
315.3
315.5
316.1
317.4
318.8
320.1
321.3
322.3
322.8
323.5
324.5
325.5
326.6
327.4

100.0
103.6
108.8
114.7
118.3
123.2
139.5
158.7
172.1
177.4
188.0
206.3
228.5
248.0
267.3
278.2
284.4
295.1
302.0
291.6
294.2
294.3
294.5
293.6
294.3
295.3
296.9
296.4
296.6
296.3
297.2
299.3

301.4
301.6
301.6
301.0
301.4
301.6
301.8
302.1
302.5
303.6
305.6

76"5"
78.2
79.1
80.4
83.4
85.1
86.0

83"o'
83.5
85.1
87.3
89.9
91.7
93.8

87.8
88.5
89.6
90.7
92.2
93.8
96.8
100.0
104.8
113.3

95.9
97.1
97.3
98.2
98.4
98.3
98.8
100.0
101.3
103.6

93.8
93.7
93.8
94.6
95.0
95.3
97.0
100.0
103.8
107.7

89.6
90.4
90.9
91.9
92.7
93.7
96.1
100.0
105.4
111.5

89.6
90.6
92.5
93.0
94.3
95.9
97.2
100.0
103.2
107.2

79.1
81.4
83.5
85.6
87.3
89.5
93.4
100.0
106.1
113.4

123.6
128.8
134.5
140.7
154.4
169.7
179.0
191.1
210.4
239.7

107.6
115.0
120.1
126.9
150.2
167.8
182.7
202.2
216.0
239.3
278.6
319.2
350.8
370.3
387.3
393.6

111.5
115.7
118.3
121.6
135.3
151.0
160.1
167.5
177.7
190.3
205.4
221.3
233.2
238.5
242.5
247.2

116.1
119.8
122.3
126.8
136.2
142.3
147.6
154.2
159.6
166.6
178.4
186.9
191.8
196.5
200.2
206.0

112.7
118.6
119.9
123.8
137.7
150.6
165.5
177.2
185.5
212.0
249.7
280.0
291.5
298.4
311.7
319.9

120.6
128.4
132.5
137.7
150.5
168.6
184.7
202.4
219.4
239.7

291.7
302.9
309.8

118.2
123.4
128.1
133.7
148.8
164.5
174.6
186.5
202.8
227.6
263.3
293.5
314.7
323.1
336.5
349.9

299.4

329.2

302.1
302.2
302.3
301.4
302.0
303.2
304.8
304.2
304.4
304.1
305.1
307.3
309.5
309.7
309.6
308.9
309.3
309.5
309.7
309.9
309.8
311.0
313.2

331.0
331.5
333.2
334.6
336.2
338.1
339.5
341.4
341.2
340.9
341.2

353.2
354.0
355.5
357.8
358.9
360.2

376.0
383.0

240.4
240.4

380.1
380.9
385.5
390.0
393.9
395.5
397.0
392.4
387.5
386.0
387.2
386.5
388.2
388.7
393.0
399.4

241.2
242.3
242.4
242,3
241.9
242.2
244.1
244.3
244.2
244.2
244.2
246.2
246.9
247.9
247.6
247.1

196.4
196.2
198.8
199.2
198.9
197.4
196.6
200.1
204.2
205.7
205.2
203.2

306.0
305.8
306.9
309.6

399.9
398.9
400.5
395.6

246.5
247.0

88.0
89.1
89.9
91.2
92.4
94.4
99.1
100.0
103.6
108.9
114.9
118.4
123.5
141.4
161.7
175.4
180.8
192.2
211.4
234.5
254.6
274.6
285.7

342.0
343.6
344.7
345.9
348.5
350.4

351.6
352.9
353.8
354.4
355.0
355.8

281.7
314.7
337.0
344.8
361.7
382.0

362.7
364.6
366.5
367.8
368.9

370.1
371.2
373.3
374.3
375.9
379.5
381.0
383.2
385.9
386.9
389.1
391.3
392.3

392.1
393.3

1

247.1
248.4
248.9
248.8

199.8
201.8
205.3
205.9
205.3
204.6
202.8
205.3
209.6

211.1
211.2
209.0

gy3

90.1
90.3
91.8

58.1
70.6
76.6
73.5

9L3"
90.9
89.9
89.9
91.9
92.3
93.1

Ener-

and
services

68.2
72.5
77.3
79.5
78.3
77.4
78.8
83.3
86.0
89.6

58.5
66.9
72.1
71.4

805

Other
goods

44.4
48.1
51.1
52.7
53.7
56.3
59.3
61.4
63.4
64.8
67.2
69.9
73.2
76.4

1946
1947
1948
1949

80.2
81.4

Medical Entercare tainment

312.2
313.1
312.9
312.9
313.7
315.5
316.1
315.8
314.7
314.3
316.7
320.0
321.4
321.8
321.8
320.7
319.7
320.9
323.2
324.0

265.9
294.5
328.7
357.3
379.5

403.1
369.5
373.2
374.5
375.7
376.8
378.0
380.3

381.9
383.1
385.5
387.5
388.5
391.1
393.8
396.5
398.0
399.5
401.7
404.0
406.6
408.3

410.5
413.0
414.7

100.0
105.2
110.4

100.0
105.7
111.0
116.7
122.9
126.5
130.0
139.8
152.2
159.8
167.7
176.6
188.5
205.3
221.4
235.8
246.0
255.1
265.0

214.5
235.7
259.9
288.3
307.7
326.6

249.9

300.5

416.7

251.5
251.7
253.8
253.5
254.5
255.3
256.4
257.3
258.3
259.0
260.1
261.0
261.3
262.2
263.3
263.6
264.8
265.7
265.7
266.8
268.4
269.0
268.3

301.5
302.1
302.8
303.2
304.4
306.5
307.2
314.6
315.8
316.5
316.7

420.2

116.8
122.4
127.5
132.5
142.0
153.9
162.7
172.2
183.3
196.7

319.1
320.5
321.1
321.8
322.3
323.0
325.0
326.0
333.3
334.9
335.3
336.5

107.0
111.2
114.3
123.5
159.7
176.6
189.3
207.3
220.4
275.9
361.1
410.0
416.1
419.3
423.6
426.5

418.1
421.3
426.1
428.5
428.3
427.3
429.0
426.7
421.8
418.9
414.5
411.4
416.6
424.4
431.7
436.8
437.1
433.8
432.6
427.1
425.1
426.5

Includes alcoholic beverages, not shown separately.
Series beginning 1967 not comparable with series for earlier years.
See Tables B-56 and B-57.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
Data beginning 1983 incorporate a rental equivalence measure for homeowners' costs and therefore are not strictly comparable with
earlier figures. See Economic Report of the President, February 1983 for homeownership costs as measured prior to 1983.
2

3

Source: Department of Labor, Bureau of Labor Statistics.




315

TABLE B-56.—Consumer price indexes, selected expenditure classes, 1946-85

[1967 = 100]
Food and beverages

Renters' costs

Year or month
Total '
Total

At
home

Fuel and other utilities

Shelter

Food
Away
from
home

Total
Total

Rent,
residential

Household fuels
Homeowners'
costs

Maintenance

and

Fuel oil,
coal,
Total

repairs

and

and
electricity

public
services

592

513

774

76.5
78.2
79.1
80.4
83.4
85.1
86.0

61.1
65.1
68.0
70.4
73.2
762
80.3
83.2
84.3
85.9
875
89.1
90.4

71.2
724
74.1
77.2
805
81.8
83.2

83.0
835
85.1
87.3
899
91.7
93.8

58.4
68.6
70.3
72.7
76.5
78.0
81.5
81.2
82.3
85.9
90.3
88.7
89.8

77.1
79.1
81.0
81.2
81.5
82.6
84.2
85.3
87.5
88.4
89.3
92.4
94.7

87.8
88.5
89.6
90.7
92.2
93.8
96.8
100.0
104.8
113.3

917
92.9
94.0
95.0
95.9
96.9
98.2
100.0
102.4
105.7

846
85.9
86.5
87.7
89.5
91.3
95.2
100.0
106.1
115.0

959
97.1
97.3
98.2
98.4
98.3
98.8
100.0
101.3
103.6

101.4
103.4

89.2
91.0
91.5
93.2
92.7
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

123.6
128.8
134.5
140.7
154.4
169.7
179.0
191.1
210.4
239.7
281.7
314.7
337.0
344.8
361.7
382.0

110.1
115.2
119.2
124.3
130.6
137.3
144.7
1535
164.0
176.0
191.6
208.2
224.0
236.9 ""102:5
107.3
249.3
113.1
264.6

124.0
133.7
140.7
151.0
171.6
187.6
199.6
214.7
233.0
256.4
285.7
314.4
334.1
.346.3
359.2
368.9

107.6
115.0
120.1
126.9
150.2
167.8
182.7
202.2
216.0
239.3
278.6
319.2
350.8
370.3
387.3
293.6

107.9
115.3
120.1
128.4
160.7
183.8
202.3
228.6
247.4
286.4
349.4
407.0
446.2
469.2
48*.5
48'd.l

110.1
117.5
118.5
136.0
214.6
235.3
250.8
283.4
298.3
403.1
556.0
675.9
667.9
628.0
641.8
619.5

107.3
114.7
120.5
126.4
145.8
169.6
189.0
213.4
232.6
257.8
301.8
345.9
393.8
428.7
445.2
452.7

356.7
353.5
355.3
356.3
357.3
358.9

376.0
383.0
380.1
380.9
385.5
390.0
393.9
395.5
397.0
392.4
387.5
386.0

470.4
47,9.6
476.2
476.0
483.5
490.7

642.8
688.6
660.0
650.7
649.2
646.0

427.3
429.0
429.5
432.3

496.5
498.6

637.4
625.5

500.1
492.1
482.6
480.2

622.1
626.8
626.9
625.9

459.1
463.9
466.4
456.0
444.7
442.2

230.6

251.1
252.4
253.8
254.8
256.1

104.9
105.1
105.6
106.2
106.5
106.8
107.6
108.1
108.7
109.1
109.4
109.8

481.2
480.8
482.2
483.0
490.0
497.7

621.6
623.4
620.8
623.5
620.8
612.0

444.1
443.3
445.5
445.9
454.7
465.6

235.3
234.3
236.3
236.4
236.8

399.9 497.3
398.9 494.4
400.5 496.8
395.6 488.4

601.9
594.6
601.7
615.3
641.6
657.3

467.1
465.1
466.5
453.9
440.5
439.9

242.8
244.2
244.6
244.7
245.9
245.8

581
70.6
76.6
73.5
745
82.8
84.3
83.0
82.8
81.6
82.2
84.9
88.5
87.1

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

73.5
79.8
76.7
776
86.3
87.8
86.2
85.8
84.1
84.4
87.2
91.0
88.8

68.9
70.1
70.8
72.2
74.9
77.2
79.3
81.4
88.0
89.6
83.2
89.1 90.4
89.9
91.0 85.4
92.2
91.2
87.3
92.4
93.2
88.9
94.4
95.5 90.9
99.1 100.3
95.1
100.0 100.0 100.0 100.0
103.6 103.6 103.2 105.2
108.8 108.9 108.2 111.6
114.7 114.9 113.7 119.9
118.3 118.4 116.4 126.1
123.2 123.5 121.6 131.1
139.5 141.4 141.4 141.4
158.7 161.7 162.4 159.4
172.1 175.4 175.8 174.3
177.4 180.8 179.5 186.1
188.0 192.2 190.2 200.3
206.3 211.4 210.2 218.4

1960
1961
1962
1963
1964.
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985

228.5 234.5
248.0 254.6
267.3 274.6
278.2 285.7
284.4 291.7
295.1 302.9
302.0 309.8

232.9

242.9

251.5
269.9
279.2
282.2
292.6
296.8

267.0

1984- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec

291.6
294.2
294.3
294.5
293.6
294.3
295.3
296.9
296.4
296.6
296.3
297.2

299.4

290.2
293.6

327.2
328.5
329.8
330.9
332.6

1985: Jan
Feb
Mar
Apr
May
June

299.3

307.3 296.1 339.9 371.2
309.5 298.6 341.4 373.3
309.7 298.4 342.6 374.3
309.6 297.7 343.9 375.9
308.9 296.2 345.1 379.5
309.3 296.0 346.9 381.0

111.8
112.4
112.9
113.5
114.5
115.1

257.1
258.4
259.2
260.4
262.6
263.6

110.0
110.7
110.8
111.3
112.4
112.8

366.0 387.2
366.8 386.5
370.0 388.2
368.0 388.7
366.2 393.0
367.6 399.4

296.2 347.3 383.2
295.9 348.4 385.9
295.6 349.9 386.9
295.3 350.3 389.1
311.0 296.6 351.3 391.3
313.2 299.3 352.1 392.3

115.8
116.6
117.0
117.9
118.4
118.3

265.0
266.6
267.7
269.9

113.5
114.3
114.6
115.1
115.8
116.3

367.8
370.6
368.7
368.5
372.7
373.7

July

Aug
Sept
Oct
Nov
Dec

301.4
301.6
301.6
301.0
301.4
301.6
301.8
302.1
302.5
303.6
305.6

302.1
302.2
302.3
301.4
302.0
303.2
304.8
304.2
304.4
304.1
305.1

293.1
292.8
290.7
291.4
292.5
294.4
293.4
293.4
292.4
293.2

309.5
309.7
309.9
309.8

291.0
306.5
319.9
333.4
346.6

"ioio
108.6
115.4

105.7
106.0
106.5
107.4
107.8
108.2
334.4 362.7 108.9
335.5 364.6 109.6
335.8 366.5 110.2
336.6 367.8 110.7
337.7 368.9 110.9
339.2 370.1 111.3
353.2
354.0
355.5
357.8
358.9
333.1 360.2

242.9
243.6
244.8
246.4
247.2
248.4
249.7

271.7
272.4

See next page for continuation of table.




Other
utilities

and
gas

1946
1947
1948
1949

Gas
(piped)

bottled

Total

316

360.3

360.1
362.7
361.6
362.9
364.4

"iob"o'

392.1 481.5
393.3 483.6

441.4
450.6

100.0
101.2
104.0
107.4
114.7
120.6
124.1
130.3
137.1
145.4
152.0
158.3
159.5
165.2
181.0
200.2
213.7
230.2
240.7
224.6
228.0
227.4
228.2
228.8
229.4

231.3
232.7
232.9
234.4
234.1

241.1

TABLE B-56.—Consumer price indexes, selected expenditure classes, 1946-85—Continued
[1967-100]
Medical care

Transportation
Private transportation
Year or month

Total

Total 2

New
cars

248.2
249.8
251.9
253.9
255.2
257.0

287.6
287.7
285.8
289.6
293.9
295.2

402.4
403.7
408.0
411.5
412.8
412.9

404.0
406.6
408.3
410.5
413.0
414.7

257.8
259.3
260.2
261.3
262.7
262.9

435.8
438.6
440.5
443.0
445.8
448.0

267.6
267.7
268.3
269.0
270.4
271.5
272.4
274.9
275.9
278.7
280.7
282.3

309.1
308.7
311.0
314.6
316.0
316.3

213.1
213.9
214.1
214.1
214.5
214.7

382.8
384.6
386.1
386.4
384.2
380.3

357.6
352.4
360.6
374.2
381.6
384.7

346.9
348.2
348.5
348.2
349.6
350.4

316.1
314.9
313.6
314.7
317.0
317.8

214.7
214.6
214.5
216.2
218.4
219.4

376.7
374.0
374.3
375.3
376.4
375.6

385.5
381.9
377.7
374.6
376.7
377.5

351.1
351.9
353.5
355.7
355.8
357.5

321.8
320.7
319.7
320.9
323.2
324.0

4

391.1
393.8
396.5
398.0
399.5
401.7

400.2
404.4
405.3
406.3
407.1
408.4
410.9
412.7
413.9
416.5
418.5
419.3
422.4
425.3
428.1
429.4
430.9
433.0

336.1
337.4
338.3
338.9
340.2
340.7
341.6
342.7
344.2
345.3
345.8
346.2

314.7
314.3
316.7
320.0
321.4
321.8

1

231.2
232.9
235.0
236.9
238.7
239.4
240.7
241.6
242.4
244.1
245.6
247.3

370.6
369.4
369.1
374.3
376.9
375.2
370.2
366.6
368.5
370.9
369.8
366.4

1985- Jan
Feb
Mar
Apr
May
June

3

369.5
373.2
374.5
375.7
376.8
378.0
380.3
381.9
383.1
385.5
387.5
388.5

283.9
284.4
284.5
285.8
285.6
286.6

378.2
377.4
377.4
378.0
380.7
385.2
389.3
390.8
389.5
391.1
391.8
392.8
394.5
394.4
397.3
398.0
398.4
399.3

357.3
357.2
362.2
370.0
378.0
382.0
383.2
383.8
384.2
384.6
383.6
382.7

300.9
300.8
301.9
304.8
307.4
308.1
307.5
307.5
308.4
310.2
310.8
310.4

Medical
care
services

40.1
43.5
46.4
48.1
49.2
51.7
55.0
57.0
58.7
60.4
62.8
65.5
68.7
72.0
74.9
77.7
80.2
82.6
84.6
87.3
92.0
100.0
107.3
116.0
124.2
133.3
138.2
144.3
159.1
179.1
197.1
216.7
235.4
258.3
287.4
318.2
356.0
387.0
410.3
435.1

207.2
207.2
207.2
207.4
207.6
207.7
208.1
208.1
208.2
209.6
211.4
212.0

306.0
3L5.8
306.9
309.6
312.2
313.1
312.9
312.9
313.7
315.5
316.1
315.8

Medical
care
commodities

76.2
81.8
86.1
87.4
88.5
91.0
91.8
92.6
93.7
94.7
96.7
99.3
102.8
104.4
104.5
103.3
101.7
100.8
100.5
100.2
100.5
100.0
100.2
101.3
103.6
105.4
105.6
105.9
109.6
118.8
126.0
134.1
143.5
153.8
168.1
186.5
205.7
223.3
239.7
256.7

100.0
103.4
109.7
119.2
128.4
129.1
127.8
132.4
141.2
163.1
177.3
184.6
198.6
222.6
241.3
257.8
260.8
273.3
287.6

69.2
75.6
82.8
83.4
87.4
94.9
95.8
94.3
90.9
93.5
98.4
101.5
105.9
104.5
104.5
104.1
103.5
103.2
100.9
99.1
100.0
102.8
104.4
107.6
112.0
111.0
111.1
117.5
127.6
135.7
142.9
153.8
166.0
179.3
190.2
197.6
202.6
208.5
215.2

Total

44.4
48.1
51.1
52.7
53.7
56.3
59.3
61.4
63.4
64.8
67.2
69.9
73.2
76.4
79.1
81.4
83.5
85.6
87.3
89.5
93.4
100.0
106.1
113.4
120.6
128.4
132.5
137.7
150.5
168.6
184.7
202.4
219.4
239.7
265.9
294.5
328.7
357.3
379.5
403.1

89.2"
75.9
71.8
69.1
77.4
80.2
89.5
83.6
86.9
94.8
96.0
100.1
99.4
97.0
100.0
(4)
103.1
1Q4.3
110.2
110.5
117.6
122.6
146.4
167.9
182.8
186.5
201.0
208.1
256.9
296.4
329.7
375.7
379.7

54.3
61.5
68.2
72.3
72.5
75.8
80.8
82.4
80.3
78.9
80.1
84.7
87.4
91.1
90.6
91.3
93.0
93.4
94.7
96.3
97.5
100.0
103.0
106.5
111.1
116.6
117.5
121.5
136.6
149.8
164.6
176.6
185.0
212.3
249.2
277.5
287.5
293.9
306.6
314.2

Public
transportation

34.4
36.0
40.7
45.2
48.9
54.0
57.5
61.3
65.5
67.4
70.0
72.7
76.1
78.3
81.0
84.6
87.4
88.5
90.1
91.9
95.2
100.0
104.6
112.7
128.5
137.7
143.4
144.8
148.0
158.6
174.2
182.4
187.8
200.3
251.6
312.0
346.0
362.6
385.2
402.8

52.0
56.4
59.6
61.1
62.3
67.0
68.6
72.3
74.8
76.5
79.5
82.4
83.7
85.5
87.2
89.3
90.4
91.6
92.8
94.5
96.2
100.0
105.5
112.2
120.6
129.2
135.1
142.2
156.8
176.6
189.7
203.7
220.6
242.6
268.3
293.6
315.8
330.0
341.5
351.4

50.3
55.5
61.8
66.4
68.2
72.5
77.3
79.5
78.3
77.4
78.8
83.3
86.0
89.6
89.6
90.6
92.5
93.0
94.3
95.9
97.2
100.0
103.2
107.2
112.7
118.6
119.9
123.8
137.7
150.6
165.5
177.2
185.5
212.0
249.7
280.0
291.5
2^8.4
311.7
319.9

2

Other

54.9
62.2
70.4
72.3
71.8
73.9
75.8
80.3
82.5
83.6
86.5
90.0
88.8
89.9
92.5
91.4
91.9
91.8
91.4
94.9
97.0
100.0
101.4
104.7
105.6
106.3
107.6
118.1
159.9
170.8
177.9
188.2
196.3
265.6
369.1
410.9
389.4
376.4
370.7
373.8

1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982 . .
1983
1984
1985
1984: Jan
Feb
Mar
Apr
May .
June
July
Aug
Sept
Oct
Nov. ..
Dec

July....
Aug
Sept..
Oct
Nov 7
Dec '

Motor
fuel 3

Used
cars

Automobile
maintenance
and
repair

Includes alcoholic beverages, not shown separately.
Includes direct pricing of new trucks and motorcycles, beginning September 1982.
Includes direct pricing of diesel fuel and gasohol beginning September 1981.
Not available.

Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
See also Note, Table B-55.
Source: Department of Labor, Bureau of Labor Statistics.




317

TABLE B-57.—Consumer price indexes, commodities, services, and special groups, 1940-85
[1967 = 100]
Commodities

Year or
month

1940
1941
1942
1943
1944 . .
1945
1946
1947
1948
1949

All
items

42.0
44.1
48.8
51.8
52.7
53.9
58.5
66.9
72.1
71.4

All
commodities

40.6
43.3
49.6
54.0
54.7
56.3
62.4
75.0
80.4
78.3

Food

35.2
38.4
45.1
50.3
49.6
50.7
58.1
70.6
76.6
73.5

All

Special indexes

Services

Commodities less food

Durable

Nondurable

All
services

Medical
care
services

Services
less
medical
care

43.6
44.2
45.6
46.4
47.5
48.2
49.1
51.1
54.3
56.9
58.7
61.8
64.5
67.3
69.5
70.9
72.7
75.6
78.5
80.8

32.5
32.7
33.7
35.4
36.9
37.9
40.1
43.5
46.4
48.1

88.4
95.1
96.4
95.7
93.3
91.5
91.5
94.4
95.9
97.3
96.7
96.6
97.6
97.9
98.8
98.4
98.5
100.0
103.1
107.0

44.7
46.7
51.6
53.8
56.6
58.6
62.9
72.2
77.8
76.3
76.2
82.0
82.4
83.1
83.5
83.5
85.3
87.6
88.2
89.3
90.7
91.2
91.8
92.7
93.5
94.8
97.0
100.0
104.1
108.8

49.2
51.7
55.0
57.0
58.7
60.4
62.8
65.5
68.7
72.0

77.6
80.4
82.5

83.5
85.2
86.8
88.5
90.2
92.2
95.8
100.0
105.2
112.5

74.9
77.7
80.2
82.6
84.6
87.3
92.0
100.0
107.3
116.0

85.2
86.7
88.1
89.6
91.2
93.2
96.4
100.0
104.9
112.0

111.8
116.5
118.9
121.9
130.6
145.5
154.3
163.2
173.9
191.1
210.4
227.1
241.1
253.0
266.5
270.7

113.1
117.0
119.8
124.8
140.9
151.7
158.3
166.5
174.3
198.7
235.2
257.5
261.6
266.3
270.8
277.2

121.6
128.4
133.3
139.1
152.1
166.6
180.4
194.3
210.9
234.2
270.3
305.7
333.3
344.9
363.0
381.5

124.2
133.3
138.2
144.3
159.1
179.1
197.1
216.7
235.4
258.3
287.4
318.2
356.0
387.0
410.3
435.1

121.3
127.7
132.6
138.3
151.0
164.7
177.7
190.6
206.9
230.1
266.6
302.2
328.6
338.1
355.6
373.3

88.8
89.7
90.8
92.0
93.2
94.5
96.7
100.0
104.4
110.1
116.7
122.1
125.8
130.7
143.7
157.1
167.5
178.4
191.2
213.0
244.0
270.6
288.4
298.3
311.3
323.3

1950 .
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962 .
1963
1964
1965
1966
1967
1968
1969

72.1
77.8
79.5
80.1
80.5
80.2
81.4
84.3
86.6
87.3
88.7
89.6
90.6
91.7
92.9
94.5
97.2
100.0
104.2
109.8

78.8
85.9
87.0
86.7
85.9
85.1
85.9
88.6
90.6
90.7

74.5
82.8
84.3
83.0
82.8
81.6
82.2
84.9
88.5
87.1

91.5
92.0
92.8
93.6
94.6
95.7
98.2
100.0
103.7
108.4

1970
1971
1972 .
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985

116.3
121.3
125.3
133.1
147.7
161.2
170.5
181.5
195.4
217.4
246.8
272.4
289.1
298.4
311.1
322.2

113.5
117.4
120.9
129.9
145.5
158.4
165.2
174.7
187.1
208.4
233.9
253.6
263.8
271.5
280.7
286.7

88.0
89.1
89.9
91.2
92.4
94.4
99.1
100.0
103.6
108.9
114.9
118.4
123.5
141.4
161.7
175.4
180.8
192.2
211.4
234.5
254.6
274.6
285.7
291.7
302.9
309.8

93.1
93.4
94.1
94.8
95.6
96.2
97.5
100.0
103.7
108.1
112.5
116.8
119.4
123.5
136.6
149.1
156.6
165.1
174.7
195.1
222.0
241.2
250.9
259.0
267.0
272.5

1984: Jan
305.2
Feb
306.6
Mar.... 307.3
308.8
309.7
June.. 310.7

276.8
278.3
278.7
280.1
280.4
280.6

299.4
302.1
302.2
302.3
301.4
302.0

263.0
263.8
264.4
266.5
267.4
267.4

261.4
260.9
262.2
265.2
267.0
267.8

267.4
269.1
269.3
270.7
271.1
270.5

353.9
355.3
356.5
358.1
359.9
361.9

400.2
404.4
405.3
406.3
407.1
408.4

346.6
347.8
349.0
350.6
352.5
354.5

311.7
313.0
314.5
315.3
315.3
315.5

280.6
281.4
282.3
283.1
283.0
282.8

303.2
304.8
304.2
304.4
304.1
305.1

266.8
267.1
268.8
269.8
269.9
269.2

267.8
267.8
268.7
269.3
270.0
269.8

269.5
270.0
272.3
273.6
273.3
272.2

364.5
366.5
368.9
369.7
369.9
370.6

410.9
412.7
413.9
416.5
418.5
419.3

1985: Jan.... 316.1
Feb.... 317.4
Mar... 318.8

307.3
309.5
309.7
309.6
308.9
309.3

267.8
268.6
270.6
272.8
273.4
273.1

270.2
271.4
271.9
272.6
271.6
270.4

269.7
270.2
273.2
276.5
278.0
278.4

372.1
373.5
375.0
376.2
378.9
381.3

309.5
309.7
309.9
309.8
311.0
313.2

272.4
272.3
273.1
274.4
275.7
275.7

269.3
268.6
268.7
270.2
271.5
271.4

277.9
278.1
279.6
280.7
282.0
282.0

383.3
384.9
386.5
387.7
388.7
389.5

July...
Aug...
Sept..
Oct....
Nov...
Dec...

June..

ft:

320.1
321.3
322.3

282.7
284.0
285.3
286.8
287.0
286.9

July...
Aug...
Sept..
Oct....
Nov...
Dec. ..

322.8
323.5
324.5
325.5
326.6
327.4

286.5
286.5
287.1
287.9
289.2
289.9

48.1
51.4
58.4
60.3
65.9
70.9
74.1
80.3
86.2
87.4

All
items
less
energy

All
items
less
food
and
energy

Energy 1

47.3
487

48.0
50.4
56.0
58.4
61.6
64.1
68.1
76.8
82.7
81.5
81.4
87.5
88.3
88.5
87.5
86.9
87.8
90.5
91.5
92.7

fc

All
items
less
food

521
53.6

557
569
59.4

649
69.6

703
71 1

757

77.5

790
79.5

797

81 1
83.8
85.7
87.3

83.9
86.3
87.0
88.3
89.3
90.4
91.6
92.9
94.3
97.3
100.0
104.4
110.3

83.3
85.2
87.0

90.1
90.3
91.8

88.3
89.3
90.5
91.6
93.0
94.3
96.6
100.0
104.6
110.7

94.2
94.4
94.7
95.0
94.6
96.3
97.8
100.0
101.5
104.2

117.0
122.0
126.1
133.8
146.9
160.2
169.2
179.8
193.8
213.1
238.0
261.7
279.3
289.3
302.9
314.8

117.6
123.1
126.9
131.3
142.2
155.3
165.5
175.8
188.7
207.0
232.8
257.1
276.1
287.0
301.2
314.4

107.0
111.2
114.3
123.5
159.7
176.6
189.3
207.3
220.4
275.9
361.1
410.0
416.1
419.3
423.6
426.5

304.8
305.9
306.8
308.6
310.0
311.0

297.0
298.2
299.2
300.5
301.1
301.9

294.6
295.5
296.7
298.3
299.3
300.2

416.7
420.2
418.1
421.3
426.1
428.5

357.1
359.2
361.7
362.3
362.3
363.0

312.0
313.2
315.2
316.1
316.2
316.2

303.1
304.6
306.1
307.1
307.7
308.2

301.3
302.8
304.9
306.1
306.9
307.3

428.3
427.3
429.0
426.7
421.8
418.9

422.4
425.3
428.1
429.4
430.9
433.0

364.3
365.5
366.9
368.1
370.9
373.3

316.3
317.4
319.1
320.8
322.4
323.6

309.2
310.9
312.0
312.7
313.3
313.9

307.9
309.5
310.8
311.8
312.8
313.4

414.5
411.4
416.6
424.4
431.7
436.8

435.8
438.6
440.5
443.0
445.8
448.0

375.2
376.7
378.3
379.3
380.1
380.8

324.2
325.0
326.2
327.4
328.5
328.9

314.5
315.6
316.8
318.4
319.8
320.5

314.1
315.3
316.9
318.9
320.4
320.7

437.1
433.8
432.6
427.1
425.1
426.5

1
Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel. Motor oil, coolant, etc. also included through 1982.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
See also Note, Table B-55.
Source: Department of Labor, Bureau of Labor Statistics.




318

TABLE B-58.—Changes in special consumer price indexes, 1958-85
[Percent change]
All items less
food

All items

All items less
energy

All items less
food and
energy

All items less food,
energy, and shelter

Year or month
Year
to
year

Dec.

to
Dec.1

Year
to
year

Dec.

to
Dec.1

Year
to
year

Dec.

to
Dec.1

Year
to
year

Dec.

to
Dec.1

Year
to
year

Dec.

to
Dec.1

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
.7
1.2
1.6
1.2

1.6
1.0
1.1
1.2
1.3

1.0
1.1
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
1.1
1.2
1.3
1.4

.8
1.5
1.1
1.8
1.2

1.5
1.1
1.3
1.2
1.5

1965
1966
1967
1968
1969

1.9
3.4
3.0
4.7
6.1

1.7
2.9
2.9
4.2
5.4

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

1970
1971

5.5
3.4
3.4
8.8

5.9
4.3
3.3
6.2

6.5
3.1
3.0
5.6

6.0
4.6
3.0
3.9
9.9

5.6
3.3
3.5
8.3

6.1
4.3
3.4
6.1
9.8

6.6
3.1
3.0
4.7

6.2
4.7
3.1
3.5
8.3

1972
1973
1974

12.2

1980
1981
1982
1983
1984

12.2

11.0

7.0
4.8
6.8
9.0

1975
1976
1977
1978
1979

7.1
6.2
6.3
8.5

9.1
5.8
6.5
7.7

11.5

6.7
4.6
6.8
9.2

9.3
6.6
6.5
7.2

11.3

13.3

11.3

14.0

11.4

11.1

10.0

13.5
10.4

12.9

14.6
10.9

11.7

11.7
10.0

.

6.1
3.2
4.3
3.6

3.8

1985

9.9
4.0
4.1
4.0
4.0

6.6
3.4
4.4
3.9

6.7
3.6
4.7

4.0

11.3

8.9
7.0
6.0
5.7
6.9

9.9
9.4
6.1
5.0
4.4

8.8
9.5
7.7
5.2
5.0

3.7

3.8

12.5
10.4

9.6
4.5
4.9
4.7

3.9

8.6
4.2
4.4
4.5

5.1
4.9
2.4
3.0
7.6

4.4

12.1

8.9
3.9
3.8
4.0

..

5.7
3.2
2.6
3.5

7.4
3.9
4.9

11.3

12.4

4.6
4.8

6.4
7.0
5.2
6.5
7.2

9.2
6.6
6.2
7.3
9.7

6.7
6.1
6.4
8.5

9.1
5.6
6.3
7.8

4.6
5.0

4.4

Change from preceding month
Sea-

Unadjusted

Sea-

Unadjusted

sonally
adjusted

Unadjusted

Sea-

Sea-

Sea-

sonally
adjusted

sonally
adjusted

Unadjusted

sonally
adjusted

sonally
adjusted

Unadjusted

1984: Jan
Feb
Mar
Apr
May
June

0.6
.5
.2
.5
.3
.3

0.6
.4
.3
.4
.2
.2

0.3
.4
.3
.6
.5
.3

0.5
.3
.4
.6
.3
.2

0.7
.4
.3
.4
.2
.3

0.7
.4
.3
.4
.2
.3

0.3
.3
.4
.5
.3
.3

0.5
.3
.4
.5
.3
.3

0.3
.3
.5
.5
.3
.3

0.6
.4
.3
.4
.4
.3

July
Aug
Sept
Oct
Nov
Dec

.3
.4
.5
.3
0
.1

.3
.4
.4
.3
.2
.3

.3
.4
.6
.3
.0

.4
.4
.4
.3
.2
.2

.4
.5
.5
.3
.2
.2

.4
.5
.3
.3
.2
.3

.4
.5
.7
.4
.3
.1

.4
.4
.4
.3
.2
.3

.3
.5
.7
.4
.3

.3
.4
.4
.3
.2
.3

1985: Jan
Feb
Mar
Apr
May
June

.2
.4
.4
.4
.4
.3

.2
.3
.5
.4
.2
.2

.3
.5
.5
.5
.4

.3
.3
.6
.5
.3
.2

.3
.5
.4
.2
.2
.2

.4
.5
.3
.2
.3
.2

.2
.5
.4
.3
.3
.2

.4
.6
.4
.3
.3
.3

.2
.5
.5
.3

.5
.5
.4
.2

July
Aug
Sept
Oct
Nov
Dec

.2
.2
.3
.3
.3
.2

.2
.2
.2
.3
.6
.4

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

.2
.2
.2
.3
.5
.3

.2
.3
.4
.5
.4
.2

.3
.3
.2
.5
.5
.4

.2
.4
.5
.6
.5
.1

.3
.3
.2
.5
.4
.3

1

0
0

0

0

0
.1

.2

.1
.2
.6
.7
.4
.0

.1
.2
.2
.5
.4
.2

Changes from December to December are based on unadjusted indexes.

Note.— Data beginning 1978
See also Note, Table B-55.

are for

all

urban consumers; earlier

Source: Department of Labor, Bureau of Labor Statistics.




319

data

are for

urban wage earners and clerical

workers.

TABLE B-59.—Changes in consumer price indexes, commodities and services, 1929-85
[Percent change]
All items

Commodities
Total

Year

1929
1933
1939
1940
1941
1942
1943
1944

Dec.
to
Dec.1

0.2
.5

to
year

0
-5.1
-1.4

Dec.
to
Dec.1

Year

to
year

Dec.
to
Dec.1
2.3
7.0

1.0
9.7
9.3
3.2
2.1

1.0
5.0
10.7
6.1
1.7

1.2
13.5
13.0
4.0
2.2

-2.0
1.0
6.7
14.5
8.9
1.3

-2.5
2.6
16.4
17.5
3.1
.2

1945
1946
1947
1948
1949
1950
1951
1952
1953
1954

2.3
18.2
9.0
2.7
-1.8

2.9
24.9
10.4
1.7
-4.1

2.9
10.8
20.2
7.2
-2.6

3.0
31.5
11.2
-0.8
-3.7

7.7
5.9
-.7
-.6
-1.4

1955
1956
1957
1958
1959
1960
1961
1962
1963
1964

.4
2.9
3.0
1.8
1.5

2.3
8.5
14.4
7.8
-1.0
1.0
7.9
2.2
.8
.5
-.4
1.5
3.6
2.7
.8

-.4
2.6
2.6
1.3
.6

.6
9.0
1.3
-.3
-.9
-.9
.9
3.1
2.3
.1

1.1
0
1.0
1.4
.8

.9
.5
.9
.9
1.1

1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985

19
3.4
3.0
4.7
6.1
5.5
3.4
3.4
8.8
12.2
7.0
4.8
6.8
9.0
13.3
12.4
8.9
3.9
3.8
4.0

1.6
1.0
1.1
1.2
1.3
17
2.9
2.9
4.2
5.4
5.9
4.3
3.3
6.2
11.0
9.1
5.8
6.5
7.7
11.3
13.5
10.4
6.1
3.2
4.3

16
2.5
2.5
3.8
5.5
4.0
2.9
3.4
10.4
12.7

12
2.6
1.8
3.7
4.5
4.7
3.4
3.0
7.4
12.0
8.9
4.3
5.8
7.1
11.4
12.2
8.4
4.0
2.9
3.4

3.8

3.6

9.6
7.4
-1.1
-1.3
-1.6
-.9
3.1
2.8
2.2
-.8
3.1
-.9
1.5
1.9
1.4
34
3.9
1.2
4.3
7.2
2.2
4.3
4.7
20.1
12.2
6.5
.6
8.0
11.8
10.2
10.2
4.3
3.1
2.6
3.8
2.7

-.5

5.8
5.9
.9
.6

Commodities
less food

Food

Year

1.5
.7
1.2
1.6
1.2

-1.0

6.3
3.3
6.1
8.9
13.0
11.1
6.0
3.6
2.9
2.6
2.5

2.1

Year

to
year

1.3
-2.9
-2.8
1.7
9.1
17.4
11.5
-1.4
2.2
14.6
21.5
8.5
-4.0
1.4
11.1
1.8
-1.5
-.2
-1.4
.7
3.3
4.2
-1.6
1.0
1.3
.9
1.4
1.3
22
5.0
.9
3.6
5.1
5.5
3.0
4.3
14.5
14.4
8.5
3.1
6.3
10.0
10.9
8.6
7.9
4.0
2.1
3.8
2.3

Energy 2

Services

Dec.
to
Dec.1

0.2
.4
10.8
6.4
5.4
5.0
3.0
12.9
9.1
5.3
-4.8
5.7
4.6
-.5
.2
-1.4
0
2.5
2.2
.8
1.5
-.3
.6
.7
1.2
.4
7
1.9
3.1
3.7
4.5
4.8
2.3
2.5
5.0
13.2
6.2
5.1
4.9
7.7
14.3
11.5
6.7
3.8
3.1
2.0
2.4

1

Total

Medical care
services

Dec.
to
Dec. 1

Dec.
to
Dec. 1

year

Dec.
to
Dec. 1

-1.6

0.2

0.2

.7
2.5
2.0
2.6
1.7

.2
1.4
3.2
1.8
2.4

0.3
0
1.5
3.9
5.8
2.8

1.0
3.5
5.2
6.1
3.6

1.5
1.9
4.1
6.3
4.8

2.9
8.9
6.5
7.0
2.1

3.6
5.2
4.6
4.2
1.9

3.2
5.3
4.4
4.3
3.3

3.3
5.8
5.5
3.6
2.6

2.3
5.1
6.4
3.6
3.0

2.3
3.1
4.5
2.7
3.7

2.0
2.5
4.0
3.8
2.9

3.2
4.1
4.5
4.9
4.6

2.9
4.0
4.3
4.9
4.8

2.7
1.9
1.7
2.3
1.8

3.8
3.5
3.0
2.6
2.6
3.5
8.1
7.9
7.4
7.0
8.3
5.3
3.8
5.8
13.3
10.3
10.7
9.0
9.2
10.6
10.0
12.7
11.2
6.1
5.8

4.0
3.7
3.2
3.0
2.4

26
4.9
4.0
6.1
7.4
8.2
4.1
3.6
6.2
11.3
8.1
7.3
7.9
9.3
13.7
14.2
13.0
4.3
4.8
5.4

3.3
2.0
1.9
2.0
1.9
22
3.9
4.4
5.2
6.9
8.1
5.6
3.8
4.4
9.3
9.5
8.3
7.7
8.5
11.0
15.4
13.1
9.0
3.5
5.2

-0.7
4.3
1.5
-1.1
2.1
-.8
_ 2

3.2
5.4
8.7
7.3
8.1
7.1
7.3
3.7
4.4
10.3
12.6
10.1
9.9
8.6
9.7

2.0
1.8
1.4
1.7
3.1
4.5
3.1
2.8
16.8
21.6
11.6
6.9
7.2
8.0
37.4

18.1
11.9
1.3

5.1

5.1

6.8

11.3
10.7
11.9
8.7
6.0
6.0

to

2.7
5.8
8.5
6.7
3.7

-.1
7.5
.9
.2
-1.1
-.7
1.0
3.1
1.1
1.3
.4
.3
.7
.7
.8
6
1.4
2.6
3.7
4.2
4.1
3.8
2.2
3.4
10.6
9.2
5.0
5.4
5.8
11.7

Year

0.3

.6
5.0
11.1
4.3
5.5
4.1
6.2
12.8
7.7
-1.5

Year

to

13.8
8.6
4.0
3.2
3.1
2.1

Year

to
year

Year

to
year

year

0
.6
3.1
5.0
4.2

'.2
1.8

6.2
1.7
2.6
.2
.3
.3
-.4
1.8
1.6
2.2
1.5
2.7
2.7
3.9
2.8
8.0
29.3
10.6
7.2
9.5
6.3
25.2
30.9
13.5
1.5
.8
1.0
.7

Changes from December to December are based on unadjusted indexes.
Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel. Motor oil, coolant, etc. also included through 1982.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
See also Note, Table B-55.
Source-. Department of Labor, Bureau of Labor Statistics.
2




320

TABLE B-60.—Producer price indexes by stage of processing, 1947-85

[1967 = 100]
Finished goods
Consumer foods
Year or month

Total
finished
goods

Total

Crude

Finished goods excluding consumer foods
Processed

Consumer goods
Total

Total

Durable

Nondurable

Capital
equipment

Total
finished
consumer
goods

1947
1948
1949

74.0
79.9
77.6

82.8
90.4
83.1

99.4
107.1
101.3

80.2
87.6
80.1

79.0
84.0
82.2

74.6
79.7
81.8

80.7
85.8
82.3

55.4
60.4
63.4

80.5
86.5
82.5

1950
1951
1952
1953
1954

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

1955
1956
1957
1958
1959

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

I960
1961
1962
1963
1964

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

1965
1966
1967
1968 ...
1969

95.7
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

1970
1971
1972
1973
1974

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

1975
1976
1977
1978
1979

163.4
170.6
181.7
195.9
217.7

181.0
180.4
189.9
207.2
226.2

181.2
193.9
201.0
216.8
233.1

181.3
177.8
187.3
204.6
223.8

156.2
166.1
177.7
190.7
213.3

153.1
162.6
174.3
186.7
211.5

138.2
144.5
152.8
166,9
183.2

163.0
174.8
189.3
200.0
231.3

162.5
173.4
184.6
199.2
216.5

163.6
169.7
180.7
194.9
217.9

1980
1981
1982
1983 . .
..
1984

239.5
253.6
259.3
261.8
273.3
271.2

237.2
263.8
252.7
258.7
281.6

237.8
250.6
257.7
260.0
270.3

247.8
273.3
285.8
290.8
294.8

261.9

269.9

299.1

250.8
276.5
287.8
291.4
294.1
297.4

206.2
218.6
226.7
233.1
236.8

19851

247.0
269.8
280.7
285.2
291.1
293.8

241.5

283.9
319.6
333.6
335.3
337.3
339.4

239.8
264.3
279.4
287.2
294.0
300.5

248.9
271.3
281.0
284.6
290.3
291.9

1984- Jan .
Feb
Mar
Apr
May
June

289.5
290.6
291.4
291.2
291.1
290.9

272.2
274.7
276.6
274.3
271.7
270.8

306.9
313.6
323.7
299.0
270.7
258.9

266.9
269.0
270.2
269.9
269.6
269.7

292.9
293.6
294.0
294.6
295.3
295.4

292.5
293.1
293.6
293.5
294.9
294.9

235.9
236.1
236.6
236.7
236.6
236.4

335.0
336.1
336.7
336.4
338.9
339.2

291.6
292.3
292.3
294.5
293.9
293.9

288.9
290.1
291.1
290.3
290.3
290.1

July
Aug
Sept
Oct
Nov
Dec

292.3
291.3
289.5
291.5
292.3
292.0

275.3
274.0
273.0
271.1
272.0
273.6

270.8
274.6
270.3
269.5
257.6
263.0

273.4
271.7
271.1
269.1
271.0
272.3

295.7
294.8
292.7
296.1
296.9
295.8

295.0
293.8
291.7
295.0
295.9
294.8

236.6
236.7
233.0
238.3
239.0
239.2

339.2
336.9
336.2
337.8
338.9
336.7

294.6
294.6
292.5
295.9
296.5
295.6

291.6
290.4
288.7
290.3
291.2
290.9

1985- Jan
Feb
Mar
Apr
May
June

292.1
292.6
292.1
293.1
294.1
294.0

273.7
275.6
273.7
272.2
269.5
268.7

255.4
279.4
275.5
279.9
254.2
237.0

273.1
273.1
271.3
269.3
268.7
269.3

296.0
295.9
296.0
297.8
300.1
300.2

294.3
293.5
293.6
295.9
299.0
299.0

240.2
240.9
240.4
240.7
241.4
241.9

334.9
332.7
333.4
337.4
342.4
342.1

297.4
299.2
299.3
299.9
300.3
300.5

290.6
290.7
290.1
291.2
292.4
292.2

July l
Aug
Sept
Oct
Nov
Dec

294.8
293.5
290.2
294.8
296.7
297.2

271.2
268.7
266.5
268.7
272.0
274.4

261.5
251.2
249.1
247.3
265.3
287.3

269.9
268.1
265.9
268.4
270.3
271.0

300.5
299.5
296.0
301.4
302.7
302.5

299.2
297.8
294.7
299.4
301.1
301.1

241.9
241.8
234.4
244.9
245.0
244.4

342.4
340.0
340.3
340.2
343.3
343.7

300.8
301.0
296.4
303.7
303.8
303.5

293.1
291.4
288.5
292.4
294.7
295.4

See next page for continuation of table.




321

TABLE B-60.—Producer price indexes by stage of processing, 1947-85—Continued
[1967 = 100]
Crude materials for further processing

Intermediate materials, supplies, and components

Year or month
Total

Foods
and
feeds 3

Materials and
components
Other

For
manufacturing

For
construction

Processed
fuels
and
lubricants

Containers

Supplies

Total

Foodstuffs
and
feedstuffs

Other

Total

Fuel

Other

1947
1948
1949

72.4
78.3
752

70.0
76.1
74.2

72.1
77.8
74.5

66.0
73.1
73.2

85.5
96.9
88.2

66.8
69.8
70.1

77.5
81.0
76.3

101.2
110.9
96.0

111.7
120.8
100.3

66.6
78.7
78.3

90.6
100.7
91.6

1950
1951
1952
1953
1954

78.6
88.1
855
86.0
86.5

77.7
87.0
84.3
85.3
85.7

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

104.7
120.7
104.6
100.1
98.2

1955
1956
1957
1958
1959

88.1
92.0
94.1
94.3
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

1960
1961
1962
1963
1964

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
100.7
102.4

1965
1966
1967
1968
1969

96.8
99.2
100.0
102.3
105.8

100.0
99.4
102.7

96.9
98.9
100.0
102.5
106.1

97.4
99.3
100.0
102.2
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
102.4
106.3

95.2
99.4
100.0
101.0
102.8

99.3
105.7
100.0
101.6
108.4

97.1
105.9
100.0
101.3
109.3

100.t)
102.2
106.8

93.5
96.3
100.0
102.3
106.6

104.5
106.7
100.0
102.1
106.9

1970
1971
1972
1973
1974

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
148.7
164.5
219.4

109.8
110.7
121.9
161.5
205.4

1975
1976
1977
1978
1979

180.0
189.1
201.5
215.6
243.2

195.3
185.3
190.5
203.1
226.1

178.6
189.4
202.3
216.5
244.4

178.7
185.4
195.4
208.7
234.4

176.4
188.4
203.4
224.7
247.4

233.0
250.1
282.5
295.3
364.8

171.4
180.2
188.3
202.8
226.8

168.1
179.0
188.7
198.5
218.2

196.9
202.7
209.2
234.4
274.3

191.8
190.2
192.1
216.2
247.9

206.9
228.5
245.0
272.3
330.0

271.5
305.3
372.1
426.8
507.6

188.3
206.7
212.2
233.1
284.5

1980
1981
1982
1983
1984

280.3
306.0
310.4
312.3
320.0

252.6
250.3
239.4
247.9
253.1

282.3
310.1
315.7
317.1
325.0

265.7
286.1
289.8
293.4
301.8

268.3
287.6
293.7
301.8
310.3

503.0
595.4
591.7
564.8
566.2

254.5
276.1
285.6
286.6
302.3

244.5
263.8
272.1
277.1
283.4

304.6
329.0
319.5
323.6
330.8

259.2
257.4
247.8
252.2
259.5

401.0
482.3
473.9
477.4
484.5

615.0
751.2
886.1
931.5
931.3

346.1
413.7
376.8
372.2
380.5

318.7

232.7

325.0

299.4

315.2

549.4

311.2

284.2

306.2

235.0

459.7

912.3

355.4

926.1
926.6
910.6
920.8
928.4
932.6

380.1
385.5
387.8
388.8
389.9
386.1

1985

l

••"""•"••

1984: Jan
Feb
Mar
Apr
May
June

316.3
317.6
319.7
320.3
320.9
321.6

260.7
255.1
257.5
259.1
260.8
257.8

320.6
322.3
324.4
325.0
325.4
326.4

298.9
299.8
301.8
302.9
303.3
303.4

305.5
307.8
309.6
310.5
309.8
310.3

556.4
561.3
567.8
562.9
567.2
575.2

292.3
294.8
297.3
299.4
300.9
301.8

282.6
282.2
283.0
284.2
284.3
283.9

333.5
332.6
338.8
339.4
338.0
333.0

264.0
260.5
269.9
269.7
266.4
260.3

483.4
488.1
487.5
490.1
492.3
489.6

July
Aug
Sept
Oct
Nov
Dec

321.7
321.1
320.3
320.1
320.4
319.9

255.3
251.4
248.1
244.0
244.3
243.0

326.7
326.3
325.7
325.8
326.1
325.6

303.2
302.5
301.9
301.4
301.7
301.1

310.9
312.0
311.7
311.8
311.8
312.4

576.6
569.2
565.3
564.1
566.6
561.3

303.0
304.1
305.2
308.8
310.1
310.4

283.2
284.1
283.6
283.2
282.9
283.1

334.1
328.9
326.2
319.6
323.2
322.4

263.6
256.5
252.7
244.9
252.8
253.0

486.4
485.0
484.6
480.3
475.2
472.0

940.2
953.1
937.6
935.9
934.0
929.8

380.9
376.8
379.3
374.7
369.2
366.4

1985: Jan
Feb
Mar
Apr
May
June

319.5
318.7
318.6
319.3
319.9
319.3

240.7
239.2
236.7
235.4
232.6
232.2

325.4
324.5
324.7
325.5
326.4
325.7

300.6
300.5
300.0
300.6
300.5
300.3

313.4
313.3
313.5
314.0
315.9
317.3

556.3
546.3
547.9
552.3
558.0
549.1

311.1
311.8
313.1
312.4
311.7
312.0

283.9
283.8
283.8
283.7
283.4
283.3

318.9
318.1
312.3
311.0
309.1
305.6

250.7
250.0
242.9
239.9
236.3
233.7

466.0
465.1
462.0
464.2
466.0
460.5

916.6
930.5
910.8
915.0
938.8
924.8

361.9
358.2
358.4
360.2
357.7
354.0

318.6
317.9
317.9
317.8
318.1
318.8

231.7
227.1
225.5
228.5
231.0
231.7

325.0
324.5
324.6
324.3
324.5
325.2

299.8
299.1
298.3
298.0
297.6
297.6

316.9
316.5
315.5
315.4
315.1
315.4

544.0
539.8
546.3
544.9
550.7
557.3

311.4
310.3
309.9
310.4
309.8
310.7

283.6
284.1
284.3
285.0
285.8
285.9

303.9
295.3
292.4
298.0
305.6
304.7

231.6
221.0
215.9
224.5
236.7
236.8

459.6
454.7
456.4
455.8
454.2
451.3

921.6
904.0
908.1
899.6
894.9
883.0

353.5
351.2
352.5
353.3
352.3
351.1

July
Aug1
Sept
Oct
Nov
Dec

1
Data have been revised through August 1985 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.




322

TABLE B-61.—Producer price indexes by stage of processing, special groups, 1974-85
[1967 = 100]
Finished goods
Excluding foods and
energy
Year or month

Total

Foods

Energy

Total

Consumer
Cap- goods
ital excluding
equipment foods
and
energy

Intermediate materials, supplies,
and components

Crude materials for further
processing

Total

Foods
and
feeds1

Energy

Other

Total

Foodstuffs
and
feedstuffs

Energy

Other

1974
1975
1976
1977
1978
1979

147.5
163.4
170.6
181.7
195.9
217.7

166.9
181.0
180.4
189.9
207.2
226.2

215.2
252.4
282.3
326.7
347.7
469.9

133.3
148.5
156.8
166.3
178.7
194.7

141.0
162.5
173.4
184.6
199.2
216.5

129.1
141.0
148.1
156.6
168.0
183.3

162.9
180.0
189.1
201.5
215.6
243.2

200.2
195.3
185.3
190.5
203.1
226.1

188.7
220.8
236.8
267.3
280.3
348.6

156.7
174.7
185.0
196.1
210.4
234.2

196.1
196.9
202.7
209.2
234.4
274.3

189.4
191.8
190.2
192.1
216.2
247.9

223.0
266.9
283.1
323.5
362.5
439.9

198.3
165.0
191.0
190.1
209.2
253.0

1980
1981
1982
1983
1984
1985 2

247.0
269.8
280.7
285.2
291.1
293.8

239.5
253.6
259.3
261.8
273.3
271.2

701.3
835.4
822.9
783.6
750.3
721.4

216.4
235.1
248.6
256.1
262.3
268.7

239.8
264.3
279.4
287.2
294.0
300.5

204.2
220.1
232.6
239.9
245.9
252.1

280.3
306.0
310.4
312.3
320.0
318.7

252.6
250.3
239.4
247.9
253.1
232.7

484.9
573.6
570.8
543.9
545.0
528.8

261.8
283.4
290.1
294.8
303.6
305.2

304.6
329.0
319.5
323.6
330.8
306.2

259.2
257.4
247.8
252.2
259.5
235.0

586.1
783.4
801.5
791.1
785.2
749.1

269.4
266.0
238.1
250.7
266.1
249.7

1984: Jan
Feb
Mar
June

289.5
290.6
291.4
291.2
291.1
290.9

272.2
274.7
276.6
274.3
271.7
270.8

753.8
757.3
757.9
751.1
762.7
764.8

260.1
260.6
261.0
262.0
262.1
262.0

291.6
292.3
292.3
294.5
293.9
293.9

243.8
244.2
244.7
245.2
245.6
245.5

316.3
317.6
319.7
320.3
320.9
321.6

260.7
255.1
257.5
259.1
260.8
257.8

536.2
540.8
546.7
542.2
546.2
553.5

299.5
301.0
302.7
303.8
303.9
304.2

333.5
332.6
338.8
339.4
338.0
333.0

264.0
260.5
269.9
269.7
266.4
260.3

786.0
786.4
780.1
783.1
786.4
787.7

263.7
271.1
274.3
276.4
277.8
272.8

July
Aug
Sept
Oct
Nov
Dec

292.3
291.3
289.5
291.5
292.3
292.0

275.3
274.0
273.0
271.1
272.0
273.6

755.6
741.0
732.1
743.5
747.6
736.0

262.8
262.9
261.2
264.1
264.6
264.3

294.6
294.6
292.5
295.9
296.5
295.6

246.4
246.4
245.0
247.5
248.1
248.0

321.7
321.1
320.3
320.1
320.4
319.9

255.3
251.4
248.1
244.0
244.3
243.0

554.5
547.7
544.0
543.0
545.2
540.4

304.4
304.8
304.5
304.7
304.8
304.8

334.1
328.9
326.2
319.6
323.2
322.4

263.6
256.5
252.7
244.9
252.8
253.0

790.5
795.0
788.5
787.2
778.4
773.1

265.6
260.4
264.0
258.0
255.5
253.9

1985: Jan
Feb
Mar
Apr
May
June

292.1
292.6
292.1
293.1
294.1
294.0

273.7
275.6
273.7
272.2
269.5
268.7

711.7
692.0
693.2
714.9
746.1
741.4

266.0
267.2
267.2
267.7
268.2
268.6

297.4
299.2
299.3
299.9
300.3
300.5

249.6
250.5
250.5
251.1
251.5
252.0

319.5
318.7
318.6
319.3
319.9
319.3

240.7
239.2
236.7
235.4
232.6
232.2

535.7
526.0
527.5
531.5
536.7
528.6

305.1
305.3
305.2
305.6
305.9
306.0

318.9
318.1
312.3
311.0
309.1
305.6

250.7
250.0
242.9
239.9
236.3
233.7

757.5
754.1
746.4
749.1
760.7
754.5

254.4
255.3
255.4
257.3
252.3
247.4

294.8
293.5
290.2
294.8
296.7
297.2

271.2
268.7
266.5
268.7
272.0
274.4

733.8
719.9
718.9
716.1
732.9
736.1

269.4
269.4
265.6
271.6
271.8
271.4

300.8
301.0
296.4
303.7
303.8
303.5

252.9
252.9
249.5
254.9
255.1
254.7

318.6
317.9
317.9
317.8
318.1
318.8

231.7
227.1
225.5
228.5
231.0
231.7

523.8
519.8
526.0
524.4
529.5
536.3

305.6
305.5
304.9
304.6
304.2
304.2

303.9
295.3
292.4
298.0
305.6
304.7

231.6
221.0
215.9
224.5
236.7
236.8

752.6
742.9
745.4
743.4
742.9
739.5

247.2
245.8
246.9
247.2
244.9
242.6

July 2
Aug
Sept
Oct
Nov
Dec

1
Intermediate materials for food manufacturing and feeds.
2
Data have been revised through August 1985 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.




323

TABLE B-62.—Producer price indexes for major commodity groups, 1941-8
[1967-100]
Industrial commodities

Farm products and processed
foods and feeds
Year or month
Total

. . .

.

.

.

.

19852

1984- Jan
Feb
Mar

Apr

.. .

May
June
July

Aug
Sept
Oct

Nov
Dec

1985- Jan

Feb
Mar

Apr

May
June
July
Aug2
Sept

Oct
Nov
Dec
1

Textile
products

and
apparel

Hides,
skins,
leather,

and
related
products

94.3
101.5
89.6
93.9
106.9
102.7
96.0
95.7
91.2
90.6
93.7
98.1
93.5
93.7
93.7
94.7
93.8
93.2
97.1
103.5
100.0
102.4
108.0

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

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

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

103.6
108.1
98.9

83.3
84.2
79.9

102.7
114.6
103.4
100.8
98.6
98.7
98.7
98.8
97.0
98.4

86.3
99.1
80.1
81.3
77.6
77.3
81.9
82.0
82.9
94.2

89.5
91.0
91.9
92.5
92.3
95.5
101.2
100.0
102.2
107.3

99.5
97.7
98.6
98.5
99.2
99.8
100.1
100.0
103.7
106.0

90.8
91.7
92.7
90.0
90.3
94.3
103.4
100.0
103.2
108.9

111.0
112.9
125.0
176.3
187.7
186.7
191.0
192.5
212.5
241.4
249.4
254.9
242.4
248.2
255.8
230.4

112.1
114.5
120.8
148.1
170.9
182.6
178.0
186.1
202.6
222.5
241.2
248.7
251.5
255.9
265.0
260.5

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

107.1
109.0
113.6
123.8
139.1
137.9
148.2
154.0
159.8
168.7

110.3
114.1
131.3
143.1
145.1
148.5
167.8
179.3
200.0
252.4
248.9
260.9
262.6
271.1
286.3
286.2

263.4

263.8
263.4

264.9

...

261.4
259.4
255.3
258.1
258.6
257.6
258.0
254.6

253.1
250.2
249.1
249.6
244.0
241.4
245.3
251.0
252.1

Prices for some items in this grouping are
items was eliminated beRinning with the June l
See next page for continuation of table.




Total

264.4
263.4
267.9
267.3
265.8
262.8

. .. .
. .

.

Processed
foods and
feeds

111.7
113.9
122.4
159.1
177.4
184.2
183.1
188.8
206.6
229.8
244.7
251.5
248.9
253.9
262.4
250.5

1947
1948
1949
1950.
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961 .
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971 .
1972
1973
1974
1975
1976
1977
1978 .
1979
1980
1981
1982
1983
1984

Farm
products

209.4
236.5
274.8

304.1
312.3
315.7
322.6
323.9

183.5
199.7
204.6

205.1
210.0
210.4

96.1
97.2
96.7
96.3
93.7
95.5
97.8
100.0
98.9
100.9
106.2
115.2
118.6
134.3
208.3
245.1
265.6
302.2
322.5
408.1
574.0
694.5
693.2
664.7
656.8
634.2

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
260.3
287.6
292.3
293.0
300.8
303.0

283.7
283.7
282.4
284.7
284.2
285.5

636.8
625.3
625.3
633.9
647.3
640.6

301.6
302.2
302.6
303.3
303.2
303.7

284.6
286.3
287.0
289.4
290.4
292.6

635.4
627.6

304.6
304.6
303.3
302.8
302.6

210.5
210.2
210.5
210.1
210.7
210.4
210.2
210.0

279.1
283.3
286.7
286.8
288.5
290.1
288.9
288.7
288.7
287.7
283.8
283.6

243.2
245.3
238.8
236.8
230.4
229.4

264.4
263.9
262.3
260.9
260.0
258.8

322.9
322.2
322.5
323.8
325.3
324.8

210.3
210.6
210.5
210.7
210.5
210.2

229.3

259.7
257.3
256.0
258.4

324.4
323.7
322.5
324.4
325.0
325.2

210.2
210.4
210.6
210.2
210.2
210.7

261.5
262.3

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

Chemicals
and allied
products *

665.0
657.9
652.3
654.4
655.3
648.5

208.2
209.6
209.9
209.9

257.1
258.7
253.3
249.8
240.2
245.7
245.7

319.1
320.6
321.9
322.6
323.2
323.8
323.9
323.3
322.2
323.4
323.8
323.0

218.0
212.9
219.5
230.1
231.6

and
power l

298.1
296.5
300.1
302.0
302.7
302.2
302.6
301.1
300.9
301.3
301.6
300.7

267.1
267.2
267.5
264.8
267.3
264.8
263.6
262.6
263.8
264.5

261.6
267.4
265.4
260.8

Fuels and
related
products,

652.1
656.0
658.7
654.7
660.6
665.9

631.2
629.2
636.8
640.9

301.5

and refer to 1 month earlier than the index month; the lag for refined petroleum
data.

324

TABLE B-62.—Producer price indexes for major commodity groups, 1947-85—Continued
[1967 = 100]
Industrial commodities— Continued
Pulp,
Rubber Lumber paper,
Metals Machinery Furniture
Nonand
and
and
metallic
and
and
and
wood
metal equipment household mineral
plastic
allied
products products products products
durables products

Year or month

1947
1948
1949
1950
1951
1952
1953
1954..
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967.
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979.
1980
1981
1982.
1983
1984 2
1985
1984: Jan
Feb.
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec

.

.

1985: Jan
Feb
Mar
Apr ...
May
June
July 2. ...
Aug
Sept ....
Oct
Nov
Dec.

..

Transportation
equipment:
Motor
vehicles
and
equipment 3

Miscellaneous
products

70.5
72.8
70.5
85.9
105.4
95.5
89.1
90.4
102.4
103.8
103.4
103.3
102.9
103.1
99.2
96.3
96.8
95.5
95.9
97.8
100.0
103.4
105.3
108.3
109.1
109.3
112.4
136.2
150.2
159.2
167.6
174.8
194.3
217.4
232.6
241.4
243.2
246.8
245.8

73.4
84.0
77.7
89.3
97.2
94.4
94.3
92.6
97.1
98.5
93.5
92.4
98.8
95.3
91.0
91.6
93.5
95.4
95.9
100.2
100.0
113.3
125.3
113.6
127.3
144.3
177.2
183.6
176.9
205.6
236.3
276.0
300.4
288.9
292.8
284.7
307.1
307.4
303.6

72.5
75.7
72.4
74.3
88.0
85.7
85.5
85.5
87.8
93.6
95.4
96.4
97.3
98.1
95.2
96.3
95.6
95.4
96.2
98.8
100.0
101.1
104.0
108.2
110.1
113.4
122.1
151.7
170.4
179.4
186.4
195.6
219.0
249.2
273.8
288.7
298.1
318.5
327.3

54.9
62.5
63.0
66.3
73.8
73.9
76.3
76.9
82.1
89.2
91.0
90.4
92.3
92.4
91.9
91.2
91.3
93.8
96.4
98.8
100.0
102.6
108.5
116.6
118.7
123.5
132.8
171.9
185.6
195.9
209.0
227.1
259.3
286.4
300.4
301.6
307.2
316.1
314.9

53.7
58.2
61.0
63.1
70.5
70.6
72.2
73.4
75.7
81.8
87.6
89.4
91.3
92.0
91.9
92.0
92.2
92.8
93.9
96.8
100.0
103.2
106.5
111.4
115.5
117.9
121.7
139.4
161.4
171.0
181.7
196.1
213.9
239.8
263.3
278.8
286.4
293.1
298.9

77.0
81.6
82.9
84.7
91.8
90.1
91.9
92.9
93.3
95.8
98.3
99.1
99.3
99.0
98.4
97.7
97.0
97.4
96.9
98.0
100.0
102.8
104.9
107.5
110.0
111.4
115.2
127.9
139.7
145.6
151.5
160.4
171.3
187.7
198.5
206.9
214.0
218.7
221.7

66.3
71.6
73.5
75.4
80.1
80.1
83.3
85.1
87.5
91.3
94.8
95.8
97.0
97.2
97.6
97.6
97.1
97.3
97.5
98.4
100.0
103.7
107.7
112.9
122.4
126.1
130.2
153.2
174.0
186.3
200.5
222.8
248.6
283.0
309.5
320.2
325.2
337.3
347.8

64.1
70.8
75.7
75.3
79.4
84.0
83.6
83.8
86.3
91.2
95.1
98.1
100.3
98.8
98.6
98.6
97.8
98.3
98.5
98.6
100.0
102.8
104.8
108.7
114.9
118.0
119.2
129.2
144.6
153.8
163.7
176.0
190.5
208.8
237.6
251.3
256.8
261.5
267.3

73.5
76.5
78.0
79.2
83.9
83.4
85.6
86.4
86.5
87.6
90.2
92.0
92.2
93.0
93.3
93.7
94.5
95.2
95.9
97.7
100.0
102.2
105.2
109.9
112.9
114.6
119.7
133.1
147.7
153.7
164.3
184.3
208.7
258.8
265.7
276.4
289.6
295.9
302.3

244.8
246.2
246.4
247.3
247.5
247.6
247.5
247.7
248.3
246.6
246.1
245.9

309.1
315.7
316.8
315.1
308.5
307.1
304.4
304.7
303.3
300.3
301.0
303.0

309.1
312.0
314.0
316.3
317.7
318.4
319.8
321.3
322.0
323.1
324.1
324.1

312.9
314.8
316.8
317.9
317.4
317.3
316.1
316.2
315.6
316.0
316.4
315.5

289.7
290.2
291.0
292.2
292.6
293.1
294.0
294.1
294.3
294.8
295.3
295.6

216.8
217.2
217.4
218.2
219.1
219.1
219,2
219.2
219.0
219.2
220.0
220.1

330.1
332.2
333.4
335.8
337.6
338.3
339.8
340.8
340.5
340.0
339.6
340.1

261.1
261.2
261.5
261.9
261.5
261.1
261.4
261.1
255.2
263.8
264.3
263.5

294.5
294.9
294.9
294.6
294.3
295.7
297.3
298.2
296.7
296.5
296.5
296.7

246.7
246.4
246.5
246.6
246.4
246.2
245.8
244.8
244.5
245.3
245.2
244.8

304.4
303.4
303.1
301.5
306.8
313.1
310.1
305.5
300.5
300.1
297.1
297.9

327.1
327.6
327.7
327.6
327.3
327.1
326.8
326.9
326.9
327.4
327.6
327.5

315.0
315.6
315.4
316.8
316.4
314.9
314.5
314.7
314.5
314.3
313.5
313.5

297.0
297.6
297.8
298.1
298.4
298.9
299.2
299.6
299.9
299.8
300.1
300.2

220.3
220.8
221.1
221.7
221.7
221.6
222.0
222.0
222.3
222.0
222.2
222.4

341.7
342.6
343.9
345.5
348.1
349.3
349.7
350.3
349.8
350.4
350.8
351.2

265.2
266.7
266.2
266.2
267.3
267.5
267.7
267.7
254.7
273.5
273.3
272.0

299.2
300.7
300.6
301.6
301.4
301.3
303.5
303.4
303.2
303.7
304.3
304.6

2
Data have been revised through August 1985 to reflect the availability of late reports and corrections by respondents. All data are
subject to revision 4 months after original publication.
3
Index for total transportation equipment is not shown but is available beginning December 1968.

Source: Department of Labor, Bureau of Labor Statistics.




325

TABLE B-63.—Changes in producer price indexes for finished goods, 1955-85
[Percent change]
Total
finished
goods
Year or month

Finished
consumer
foods

Finished goods
excluding foods
and energy

Finished
energy
goods

Finished goods excluding consumer foods

Consumer
Capital
Total
goods
equipment
Dec. to Year Dec. to Year
Dec. to Year Dec. to Year
Dec. 1 to year Dec.1 to year Dec. to Year Dec. to Year Dec. to Year
Dec.1 to year Dec.1 to year
1
1
1
Dec. to year Dec. to year Dec. to year
02
28
3.6
2.3
2

-2.9
36
5.3
.4
37

-25
2
3.5
5.8
47

1.7
2.5
1.7
.2
.8

0.8
2.4
2.5
.1
1.3

5.6
8.3
4.3
1.3
1.0

3.0
7.4
6.2
2.6
1.9

.8

.3
-.3
.4

5.2
-1.8
.5
-1.3
.4

2.2
-.4
.9
-1.2
.5

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

.4
-.1
-.2
0
-.1

.1
.2
.3
.5
.9

.2
.1
.4
.2
1.0

3.3
2.2
1.6
3.1
4.8

1.7
3.2
1.2
2.8
3.7

9.1
1.4
-.4
4.8
8.2

3.8
6.5
-1.6
3.6
6.2

2A
3.4

2!e
2.7

.9
1.7
2.1
2.0
2.9

.7
1.6
1.9
2.1
2.4

1.5
3.9
3.1
3.0
4.6

1.2
2.5
3.3
3.5
3.3

1970."
1971
1972
1973
1974

2.2
3.2
3.8
11.8
18.3

3.5
3.1
3.1
9.1
15.3

-2.5
5.9
8.0
22.5
13.0

3.2
1.6
5.6
20.3
14.0

4.3
2.1
2.1
6.6
21.2

3.5
3.7
2.0
4.1
16.0

3.9
2.0
2.0
7.4
20.5

3.0
3.4
1.9
4.5
16.9

4.9
2.4
2.0
5.3
22.6

4.8
4.1
2.5
3.3
14.2

1975
1976
1977
1978
1979

6.6
3.7
6.9
9.2
12.8

10.8
4.4
6.5
7.8
11.1

5.5
-2.5
6.9
11.7
7.4

8.4
-.3
5.3
9.1
9.2

7.2
6.2
6.9
8.3
14.8

12.1
6.3
7.0
7.3
11.9

6.7
6.0
6.7
8.5
17.5

10.5
6.2
7.2
7.1
13.3

8.2
6.4
7.3
7.9
8.8

15.2
6.7
6.5
7.9
8.7

16.4
11.5
12.1
8.5
58.0

17.3
11.8
15.7
6.4
35.1

6.1
5.6
6.3
8.3
9.4

11.4
5.6
6.1
7.5
9.0

1980.
1981
1982
1983
1984

11.8
7.1
3.7
.6
1.7

13.5
9.2
4.0
1.6
2.1

7.5
1.4
2.1
2.3
3.5

5.9
5.9
2.2
1.0
4.4

13.3
8.8
4.1
.0
1.1

16.2
10.3
4.6
1.7
1.4

14.2
8.5
4.2
-.8
.8

18.6
10.2
4.1
1.3
.9

11.4
9.2
3.9
1.9
1.8

10.8
10.2
5.7
2.8
2.4

27.8
14.1
-.1
-9.2
-4.1

49.2
19.1
-1.5
-4.8
-4.2

10.7
7.8
4.9
1.8
2.1

11.1
8.6
5.7
3.0
2.4

1.8

.9

.3

-.8

2.3

1.5

2.1

1.1

2.7

2.2

.0

-3.9

2.7

2.4

Seasonally
adjusted

Unadjusted

Unadjusted

Seasonally
adjusted

1955
1956
1957
1958
1959

12
42
3.2
.5
4

1960
1961
1962
1963
1964

1.8
-.5
.1
-.2
.5

1965
1966
1967
1968
1969

1985

2

0

Percent change from preceding month
SeaSeaSeaSeaUnad- son- Unad- son- Unad- son- Unad- sonjusted ally justed ally justed ally justed
adadadjusted
justed
justed
justed
^
1984: Jan
Feb
Mar
Apr
May
June

0.8
.4
.3
-.1
-.0
_i

0.7
.3
.5
.0
-.1
0

3.0
.9
.7
-.8
-.9
-.3

2.4
.2
1.0
-1.1
-.8
0

0.1
.2
.1
.2

July
Aug
Sept
Oct
Nov
Dec

.5
-.3
-.6
.7
.3
-.1

.2
_2

1.7
— .5
_4
-.1
.3
.6

1.5
-.3
-.1
-.1
.5
.4

1985: Jan
Feb
Mar
Apr
May
June

.0
.2
-.2
.3
.3
-.0

-.0

.0
.7
-.7
-.5
-1.0
-.3

July 2
Aug
Sept
Oct
Nov
Dec

.3
-.4
-1.1
1.6
.6
.2

.9
-.9
-.8
.8
1.2
.9

o'
_i
o'

.1
.1

.4
.2
-.2

.3
-!6
.9
.8
.4

Unadjusted

Season-

3

justed

0

!o

0.1
.3
.4
.4
.1
0

.2
.2
-.0
.5
0

0.1
.3
.4
.3
.2
-.1

0.4
.2
0
.8
-.2
0

0.3
.4
.3
.6
-.2
.1

-1.8
.5
.1
-.9
1.5
.3

-1.0
.8
-1.1
2.1
.2
-1.0

0.5
.2
.2
.4
.0
-.0

0.3
.2
.7
.1
.1
.2

.1
-.3
-.7
1.2
.3
-.4

-.2
-.2
.0
-.0
.3
-.1

.0
-.4
-.7
1.1
.3
-.4

-.3
-.3
-.0
.0
.3
-.0

.2
0
_7
12
.2
-.3

.2
.2
.2
_2
'.3
-.3

-1.2
-1.9
-1.2
1.6
.6
-1.6

-2.2
-2.3
-1.0
1.4
.6
-.6

.3
.0
-.6
1.1
.2
-.1

.2
.2
.2
—3
'.2
-.0

-.5
.1
-.4
-.9
-1.1
-.0

.1
-.0
.0
.6
.8
.0

.1
.0
.3
.8
.6
-.2

-.2
_3
'.0
.8
1.0
13

-.1
-.2

-3.3
-2.8
.2
3.1
4.4
-.6

-2.6
-2.5
-.9
6.1
3.0
-2.8

.6
.5

n

.4
.8
.3
.0
.2
.1

0

.8
-.4

.6
.6
.0
.2
.1
.1

.2
.2
.1

.6
.5
.5
-.1
.2
.2

1.0
-.8
-.7
1.4
1.6
.8

.1
-.3
-1.2
1.8
.4
-.1

.0
-.2
-.5
.6
.6
.3

.1
-.5
-1.0
1.6
.6
0

0
-.3
-.5
.5
.8
.4

.1
.1
-1.5
2.5
.0
-.1

.1
.3
-.6
1.0
.1
-.1

-1.0
-1.9
-.1

-1.5
-1.7
-.2
_2
3.1
1.8

.3
0
-1.4
2.3
.1
-.1

.3
.1
-.6
.8
.1
-.0

_ 4

2.3
.4

1
Changes from December to December are based on unadjusted indexes.
2
Data have been revised through August 1985 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.




326

MONEY STOCK, CREDIT, AND FINANCE
TABLE B-64.—Money stock, liquid assets, and debt measures, 1959-85
[Averages of daily figures; billions of dollars, seasonally adjusted]

Ml

M2

M3

L

Debt 1

Sum of
currency,
demand
deposits,
travelers
checks, and
other
checkable
deposits
(OCDs)

Ml plus
overnight
RPs and
Eurodollars,
MMMF
balances
(general
purpose and
broker/
dealer),
MMDAs, and
savings and
small time
deposits

M2 plus
large time
deposits,
term RPs,
term
Eurodollars,
and
institutiononly MMMF
balances

M3 plus
other liquid
assets

Debt of
domestic
nonfinancial
sectors
(monthly
average)

December:
1959

141.0

297.8

299.8

388.7

638.4

I960
1961
1962
1963
1964

141.8
146.5
149.2
154.7
161.9

312.3
335.5
362.7
393.2
424.8

315.3
341.0
371.4
406.0
442.5

403.7
430.8
466.1
503.8
540.4

673.7
716.6
769.5
825.5
889.1

0.6
3.3
1.8
3.7
4.7

4.9
7.4
8.1
8.4
8.0

5.2
8.2
8.9
9.3
9.0

5.5
6.4
7.4
7.3
7.7

1965
1966
1967
1968
1969

169.5
173.7
185.1
199.4
205.8

459.4
480.0
524.3
566.3
589.5

482.2
505.1
557.1
606.2
615.0

584.5
614.8
666.6
728.9
763.6

957.8
1.025.1
1,102.2
1,197.5
1,285.5

4.7
2.5
6.6
7.7
3.2

8.1
4.5
9.2
8.0
4.1

9.0
4.7
10.3
8.8
1.5

7.7
7.0
7.5
8.6
7.3

1970
1971
1972
1973
1974

216.6
230.8
252.0
265.S
277.5

628.2
712.8
805.2
861.0
908.4

677.5
776.2
886.0
985.0
1,070.4

816.4
903.2
1,023.1
1,141.8
1,249.2

1,375.6
1,510.5
1,670.3
1,861.4
2,036.9

5.2
6.6
9.2
5.5
4.4

6.6
13.5
13.0
6.9
5.5

10.2
14.6
14.1
11.2
8.7

7.0
9.8
10.6
11.4
9.4

1975
1976
1977
1978
1979

291.1
310.3
335.3
363.0
389.0

1,023.1
1,163.6
1,286.6
1,388.9
1,497.9

1,172.2
1,311.8
1,472.5
1,646.4
1,803.6

1,367.6
1,516.5
1,704.3
1,909.7
2,115.8

2,225.8
2,468.3
2,784.1
3,157.0
3,543.5

4.9
6.6
8.1
8.3
7.2

12.6
13.7
10.6
8.0
7.8

9.5
11.9
12.3
11.8
9.5

9.3
10.9
12.8
13.4
12.2

1980
1981
1982
1983
1984

414.8
441.8
480.8
528.0
558.5

1,631.4
1,794.4
1,954.9
2,188.8
2,371.7

1,988.5
2,235.8
2,446.8
2,701.7
2,995.0

2,324.8
2,596.6
2,854.8
3,168.9
3,541.3

3,881.7
4,255.7
4,649.8
5,177.1
5,927.0

6.6
6.5
8.8
9.8
5.8

8.9
10.0
8.9
12.0
8.4

10.3
12.4
9.4
10.4
10.9

9.5
9.6
9.3
11.3
14.5

1985"

624.7

2,563.6

3,213.5

11.9

8.1

7.3

1985: Jan
Feb
Mar
Apr
May
June

562.7
569.4
572.1
574.9
581.6
591.2

2,398.9
2,421.0
2,429.6
2,427.7
2,444.9
2,472.9

3,020.5
3,041.0
3,055.9
3,056.9
3,076.9
3,104.5

3,564.0
3,595.5
3,623.3
3,625.9
3,644.5
3,675.1

5,992.6
6,048.2
6,103.8
6,165.4
6,228.6
6,290.8

5.9
7.6
7.6
9.9
10.3
12.1

10.7
11.5
10.8
9.6
8.6
8.7

11.4
11.6
11.0
9.2
8.1
7.4

14.8
14.3
14.2
14.0
13.3
12.7

595.8
605.9
611.9
611.1
617.9
624.7

2,490.6
2,514.1
2,528.9
2,533.0
2,547.1
2,563.6

3,117.2
3,142.6
3,169.3
3,179.7
3,194.7
3,213.5

3,694.6
3,732.9
3,766.7
3,781.7
3,816.8

6,356.0
6,419.7
6,479.2
6,542.1
6,626.0

12.1
13.2
14.4
13.0
12.9
11.7

7.8
7.8
8.3
8.9
8.5
7.5

6.5
6.8
7.6
8.2
7.8
7.1

12.5
12.7
12.7
12.6
13.2

Period

„

July
Aug ..
Sept
Oct
Nov"
Dec p

Percent change from year or 6
months earlier 2

Ml

M2

M3

Debt

8.4

1
Consists of outstanding credit market debt of the U.S. Government, State and local government and private nonfinancial sectors;
data from flow of funds accounts.
2
Annual changes are from December to December, and monthly changes are from 6 months earlier at an annual rate.
Note.—The nontransactions portion of M2 is seasonally adjusted as a whole to reduce distortions caused by substantial portfolio
shifts arising from regulatory and financial changes in recent years, especially shifts to MMDAs in 1983. A similar procedure is used to
seasonally adjust the remaining nontransactions balances in M3. See Table B-65 for components.
Source: Board of Governors of the Federal Reserve System.




327

TABLE B-65.—Components of money stock measures and liquid assets, 1959-85
[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]

Currency

Period

Travelers
checks

Demand
deposits

Overnight
repurchase
agreeOther
ments
checkable
(RPs)
deposits net, plus
(OCDs)
overnight
Eurodollars
NSA

Money market mutual
fund (MMMF)
balances
General
purpose
and
broker/
dealer
NSA

Institution only

Money
market
deposit
accounts
(MMDAs)

NSA

NSA

Savings
deposits

December:
1959

29.0

0.4

111.6

0.0

0.0

0.0

0.0

0.0

146.4

1960
1961
1962
1963
1964

28.9
29.5
30.6
32.5
34.3

.4
.4
.4
.5
.5

112.5
116.5
118.2
121.7
127.0

.0
.0
.0
.1
.1

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

159.1
175.5
194.8
214.4
235.2

36.3
38.3
40.4
43.4
46.1

.6
.6
.7
.8
.8

132.5
134.6
143.9
155.1
158.8

.1
.1
.1
.1
.1

.0
.0
.0
.0
2.2

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

256.9
253.1
263.7
268.9
263.7

1970
1971
1972
1973
1974

49.2
52.6
56.8
61.6
67.9

1.0
1.1
1.3
1.5
1.8

166.3
176.9
193.7
202.4
207.4

.1
.2
.2
.3
.4

1.3
2.3
2.8
5.3
5.6

.0
.0
.0
.1
1.7

.0
.0
.0
.0
.2

.0
.0
.0
.0
.0

261.0
292.2
321.4
326.7
338.5

1975
1976
1977
1978
1979

73.8
80.6
88.6
97.6
106.4

2.3
2.8
3.1
3.5
3.8

214.1
224.3
239.4
253.4
261.3

.9
2.7
4.2
8.5
17.5

5.8
10.6
14.7
20.3
21.2

2.7
2.4
2.4
6.4
33.4

.4
.6
.9
3.1
9.5

.0
.0
.0
.0
.0

388.8
453.2
492.1
481.7
423.3

1980
1981
1982
1983
1984

116.7
124.0
134.3
148.4
158.7

4.2
4.4
4.3
4.9
5.2

265.7
235.2
238.6
243.5
248.6

28.2
78.2
103.5
131.3
146.0

28.3
35.9
38.8
53.8
57.6

61.6
150.6
185.2
138.2
167.5

15.2
38.0
51.1
43.2
62.7

.0
.0
43.2
379.2
415.1

400.8
344.4
357.8
307.0
288.6

1965
1966
1967
1968
1969

.

. . . .

.

. . .

p

170.8

5.9

270.8

177.2

72.9

175.8

64.5

509.0

305.0

1984- Jan
Feb
Mar
Apr
May
June

149.4
150.2
151.2
152.1
152.8
154.3

4.9
5.0
5.0
5.1
5.1
5.1

244.3
245.2
245.5
245.9
246.3
248.9

132.7
133.8
135.6
136.1
138.3
139.0

56.1
57.3
56.6
56.3
58.3
55.9

137.8
142.1
144.8
145.9
146.5
148.9

43.5
44.6
45.0
45.0
45.3
45.7

384.0
390.0
396.9
401.0
399.4
397.8

305.1
303.8
302.9
301.9
301.5
300.8

July
Aug
Sept
Oct
Nov
Dec

155.0
155.9
156.8
157.1
157.9
158.7

5.2
5.2
5.1
5.0
5.1
5.2

247.3
246.8
247.5
244.5
246.8
248.6

139.4
141.0
142.2
141.8
143.9
146.0

56.3
58.5
56.7
56.8
58.0
57.6

150.5
150.6
152.1
155.6
162.0
167.5

46.1
46.2
46.9
52.2
58.3
62.7

394.2
388.9
388.6
392.0
402.4
415.1

299.1
296.5
294.6
292.6
290.7
288.6

1985- Jan
Feb
Mar
ft
June

159.4
160.5
161.3
161.7
163.1
164.5

5.3
5.3
5.4
5.5
5.5
5.7

249.1
251.7
251.9
252.5
255.8
260.7

149.0
151.8
153.6
155.3
157.3
160.3

62.9
69.6
68.1
59.4
64.1
63.0

171.9
175.1
177.6
176.2
172.2
175.4

65.0
62.2
59.5
59.6
63.5
67.1

433.7
448.3
457.9
460.3
463.8
475.1

288.6
289.4
288.6
287.8
289.3
292.1

July
Aug
Sept
Oct
Nov
Dec *

165.4
167.1
167.9
168.8
170.0
170.8

5.9
5.9
5.9
5.9
5.9
5.9

260.9
264.1
266.8
264.0
266.3
270.8

163.6
168.9
171.3
172.4
175.7
177.2

62.6
66.1
66.6
67.1
68.8
72.9

175.8
176.8
176.7
177.0
176.5
175.8

65.0
63.6
62.3
63.3
64.5
64.5

484.1
492.1
496.7
501.1
506.5
509.0

296.0
300.3
301.7
304.3
305.8
305.0

1985

See next page for continuation of table.




328

TABLE B-65.—Components of money stock measures and liquid assets, 1959-85—Continued
[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]
Term
repurchase
agreements
(RPs)
NSA

Small
denomination
time
deposits »

114

Period

December:
1959

Large
denomination
time
deposits J

1.2

0.0

0.7

46.1

38.6

0.6

3.6

.8
1.4
16
1.9
24

45.7
46.5
46.9
48.1
49.0

36.8
37.0
39.9
40.7
38.5

.9
1.1
1.1
1.2
1.3

5.1
5.2
6.8
7.7
9.1

Term
Eurodollars

Savings
bonds

Shortterm
Treasury
securities

Bankers
acceptances

Commercial paper

NSA

1960
1961
1962
1963
1964

125
14.8
201
25.5
292

20
3.9
70
10.8
152

0
.0
0
.0
0

1965
1966
1967
1968
1969

345
55.0
778
100.5
1204

212
23.1
309
37.4
204

0
.0
0
.0
26

17
2.1
21
2.9
27

49.6
50.2
51.2
51.8
51.7

408
43.3
38.8
46.2
595

1.6
1.8
1.8
2.3
3.3

10.2
14.4
17.8
22.5
34.0

1970
1971
1972
1973
1974

151 1
189.7
2316
265.8
287.9

452
57.7
733
111.1
144.8

16
2.7
35
6.8
7.9

22
2.7
36
5.4
8.0

52.0
54.3
57.6
60.4
63,3

489
36.1
408
49.5
52.9

3.5
3.8
3.5
5.0
12.6

34.5
32.7
35.2
41.9
50.1

1975
1976
1977
1978
1979

337.9
3908
445.6
521.2
634.6

129.7
1181
145.0
195.1
222.0

8.2
140
19.1
26.6
29.5

-9.7
148
20.2
31.8
44.7

67.2
71.8
76.4
80.3
79.6

69.5
70.4
78.3
81.9
108.4

10.7
10.8
14.1
22.0
27.2

48.0
51.7
62.9
79.0
97.0

7290
823.6
8515
7846
885.6

2589
302.1
3283
3308
416.2

340
36.0
345
51.8
69.7

503
67.5
817
91.5
83.2

72.3
67.8
67.9
71.1
74.1

133.9
150.4
1862
216.3
267.2

32.0
39.7
43.9
44.1
43.2

98.1
102.8
107.0
135.2
161.8

1985 p

8783

441 1

764

768

1984: Jan
Feb
Mar
Apr
May
June

790.3
7962
8023
8112
8226
8340

336.1
3430
3497
3577
3698
3795

50.1
514
535
573
595
592

89.0
894
932
92.1
930
89.3

71.4
71.8
72 1
72.5
72.7
73.0

220.5
222.8
2307
235.4
235.7
244.8

43.3
42.9
44.0
44.7
46.5
47.7

134.9
138.1
142.9
146.1
152.0
155.5

July.
Aug
Sept
Oct
Nov
Dec

8436
855.0
8645
8727
8785
8856

3893
392.6
3960
4052
4107
4162

600
64.1
666
693
707
697

88.3
86.5
85.6
806
819
832

73.1
73.3
73.6
73.7
73.9
74.1

252.1
261.1
273.5
273.1
268.0
267.2

48.2
47.8
46.8
44.8
43.4
43.2

159.4
160.5
157.2
156.7
157.6
161.8

881.9
877.6
878.6
8853
892.0
894.2

416.9
419.3
423.6
4273
428.2
424.1

65.0
65.7
68.9
719
68.8
66.9

81.1
81.3
84.7
81.0
81.8
79.9

74.4
74.9
75.3
75.8
76.2
76.6

266.6
270.2
275.9
278.2
277.9
286.5

42.8
44.6
46.4
46.1
44.8
42.8

159.6
164.8
169.8
168.9
168.6
164.7

8885
8784
874.4
871.6
8717
878 3

4200
4214
428.6
4333
4377
441 1

65.0
676
70.7
70.6
743
764

79.4
802
80.8
80.3
797
768

76.7
77.2
78.1
78.5
78.9

286.9
288.1
290.0
288.2
303.3

42.7
42.9
42.9
43.6
42.5

171.1
182.0
186.6
191.7
197.4

1980
1981
1982
1983...
1984

...

..

.

.

. .

1985: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct p
N o vp
Dec

1
Small denomination and large denomination deposits are those issued in amounts of less than $100,000 and more than $100,000,
respectively.
Note.—NSA indicates data are not seasonally adjusted.
See also Table B-64.
Source: Board of Governors of the Federal Reserve System.




329

TABLE B-66.—Aggregate reserves of depository institutions and monetary base,
[Averages of daily figures; millions of dollars; seasonally adjusted, except as noted]

Adjusted for changes in reserve requirements *
Reserves of depository institutions
Year and month
Total

Nonborrowed

Nonborrowed
plus
extended
credit

Required

Monetary base

Borrowings of depository
institutions from the Federal
Reserve, NSA

Total

Seasonal

Extended
credit

1959- Dec

13,695

12,754

12,754

13,189

43,425

941

I9601961:
19621963:
1964-

Dec
Dec
Dec
Dec
Dec

13,863
14.293
14,556
14,856
15,336

13,789
14,160
14,296
14,524
15,072

13,789
14,160
14,296
14,524
15,072

13,120
13,709
13,985
14,366
14,930

43,408
44,437
45,683
47,935
50,285

74
133
260
332
264

196519661967:
19681969:

Dec
Dec
Dec
Dec
Dec

15,881
15,875
17,279
18,181
18,471

15,437
15,342
17,051
17,435
17,352

15,437
15,342
17,051
17,435
17,352

15,458
15,536
16,904
17,755
18,185

52,961
55,036
58,453
62,533
65,678

444
532
228
746
1,119

1970:
19711972:
19731974-

Dec
Dec
Dec
Dec
Dec

19,356
20,594
22,663
23,671
24,904

19,023
20,468
21,613
22,373
24,176

19,023
20,468
21,613
22,373
24,323

19,107
20,412
22,379
23,368
24,645

69,685
74,377
80,921
87,436
94,629

332
126
1,050
1,298
727

41
32

1975- Dec
1976: Dec
1977- Dec
1978- Dec
1979- Dec

25,044
25,596
26,627
27,906
29,200

24,914
25,543
26,057
27,038
27,728

24,926
25,543
26,057
27,038
27,728

24,778
25,322
26,437
27,674
28,759

100,771
108,347
117,461
128,043
139,016

130
53
569
868
1,473

14
13
55
135
81

12

198019811982:
19831984-

31,038
32,096
34,283
36,138
39,081

29,348
31,460
33,649
35,364
35,895

29,351
31,608
33,835
35,366
38,499

30,524
31,777
33,783
35,578
38,229

150,342
158,097
170,145
185,485
199,032

1,690
636
634
774
3,186

116
54
33
96
113

3
148
186
2,604

1985: Dec"

45,186

43,867

44,367

44,128

216,935

1,318

56

499

1984-. Jan
Feb
Mar....,
Apr
May
June

36,357
37,093
37,019
36,973
37,397
37,986

35,642
36,526
36,068
35,739
34,409
34,686

35,646
36,531
36,095
35,784
34,446
36,558

35,744
36,150
36,308
36,482
36,818
37,212

187,484
188,938
189,828
190,515
191,715
193,659

715
567
952
1,234
2,988
3,300

86
103
133
139
196
264

4
5
27
44
37
1,873

July
Aug
Sept
Oct
Nov
Dec

38,050
38,284
38,086
37,961
38,466
39,081

32,126
30,268
30,844
31,944
33,849
35,895

37,134
37,311
37,303
37,001
37,686
38,499

37,437
37,595
37,458
37,341
37,773
38,229

194,460
195,568
196,206
196,397
197,672
199,032

5,924
8,017
7,242
6,017
4,617
3,186

308
346
319
299
212
113

5,008
7,043
6,459
5,057
3,837
2,604

1985- Jan
Feb
Mar
Apr
May
June

39,635
40,432
40,471
40,710
41,323
42,177

38,240
39,143
38,878
39,387
39,989
40,972

39,290
39,947
39,937
40,256
40,522
41,638

38,890
39,529
39,705
39,972
40,519
41,272

200,206
202,049
202,945
203,562
205,355
207,658

1,395
1,289
1,593
1,323
1,334
1,205

62
71
88
135
165
151

1,050
803
1,059
868
534
665

42,606
43,193
43,507
43,651
44,377
45,186

41,500
42,121
42,218
42,464
42,636
43,867

42,006
42,690
42,874
43,093
43.167
44,367

41,751
42,366
42,841
42,898
43,449
44,128

208,831
211,154
212,384
213,456
215,255
216,935

1,107
1,073
1,289
1,187
1,741
1,318

167
221
203
172
107
56

507
570
656
629
530
499

..

Dec
Dec
Dec
Dec
Dec

July
Aug
Sept
Oct
Nov
Dec "

...

147

1
Aggregate reserves incorporate adjustments for discontinuities associated with the implementation of the Monetary Control Act and
other regulatory changes to reserve requirements. For details on aggregate reserves series see Federal Reserve Bulletin.

Source: Board of Governors of the Federal Reserve System.




330

TABLE B-67.—Commercial bank loans and securities, 1972-85
[Monthly average, billions of dollars, seasonally adjusted *]

Year and month

Loans and leases

Total loans
and
securities

Total

Commercial
and
industrial

Government
securities

U.S.

Other
securities

1972:
1973:
1974:
1975:
1976:
1977:
1978:
1979:

Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec

572.0
647.8
713.7
745.1
804.6
891.4
1,013.8
1,135.4

390.0
460.1
519.8
517.1
554.8
632.2
746.9
849.1

137.1
165.0
196.6
189.3
190.9
211.0
246.1
291.1

88.6
88.2
86.3
116.7
136.3
136.6
137.6
144.4

93.4
99.4
107.5
111.2
113.5
122.7
129.2
141.9

1980:
1981:
1982:
1983:
1984:
1985:

Dec
Dec
Dec
Dec
Dec
Dec "

1,239.7
1,307.4
1,400.5
1,553.0
1,716.8
1,895.5

914.5
967.4
1,032.8
1,122.7
1,316.5
1,450.3

326.9
355.1
391.5
412.8
469.0
493.9

170.9
179.6
202.7
260.8
260.3
270.7

154.4
160.4
165.0
169.6
140.0
174.5

1,565.0
1,584.2
1,599.8
1,613.2
1,630.1
1,637.0

1,160.9
1,181.3
1,196.5
1,213.5
1,232.3
1,243.6

414.1
421.8
432.2
438.5
448.1
452.3

260.4
260.7
261.0
257.6
257.4
253.7

143.7
142.2
142.3
142.1
140.5
139.7

455.1
458.2
460.2
463.2
467.6
469.0

256.4
257.2
258.1
257.1
259.5
260.3

139.5
140.8
141.9
141.5
141.2
140.0

1984: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1985: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec*

2

1,653.2
1,662.9
1,675.8
1,684.1
1,702.8
1,716.8

2

1,257.2
1,264.9
1,275.7
1,285.5
1,302.1
1,316.5

2

1,726.3
1,744.8
1,761.6
1,768.8
1,788.5
1,802.7

1,323.4
1,337.7
1,355.6
1,367.1
1,380.0
1,391.0

469.2
474.2
481.2
481.9
484.3
484.3

260.3
266.0
267.1
261.4
266.3
267.1

142.6
141.1
138.9
140.2
142.2
144.5

1,819.0
1,828.8
1,841.3
1,844.4
1,869.6
1,895.5

1,402.1
1,409.2
1,416.9
1,419.7
1,433.9
1,450.3

484.1
485.7
487.2
487.0
490.6
493.9

271.6
271.4
273.1
270.0
275.0
270.7

145.4
148.2
151.3
154.8
160.7
174.5

1
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.
2
Beginning September 26, 1984, a transfer of loans from Continental Illinois National Bank to the Federal Deposit Insurance
Corporation reduced total loans and investments and total loans by $1.9 billion, commercial and industrial loans by $1.4 billion, and real
estate loans (not shown here) by $0.4 billion.

Note.—Data are not strictly comparable because of breaks in the series.
Source: Board of Governors of the Federal Reserve System.




331

TABLE B-68.—Bond yields and interest rates, 1929-85
[Percent per annum]
U.S. Treasury securities
Year and

Bills
(new issues) J
3-month

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

6-month

Highgrade
munici-

Corporate
bonds
(Moody's)

Cons tant
matur

3-

10-

year

Aaa3

Baa

year

Comhome
pal
mercial
mortgage
bonds
paper, 6
yields
5
(Stand4 months
ard & (FHLBB)
Poor's)

Prime rate
charged by
banks 6

Discount
rate,
Federal
Reserve
Bank of
New York 6

Federal
funds
rate 7

4.73
4.49
3.01

.014
.103
.326
.373
.375
.375
.375

594

1.040
1 102

1218
1.552
1766
1.931
953
1.753

5.90
7.76
4.96

4.27
4.71
2.76

5.85
1.73
.59

5.50-6.00
1.50-4.00

2.84
2.77
2.83
2.73
272
2.62
2.53
2.61
2.82
2.66

0.515
.023

4.75
4.33
4.28
3.91
3.61
3.29
3.05
3.24
3.47
3.42

2.50
2.10
2.36
2.06
1.86
1.67
1.64
2.01
2.40
2.21

.56
.53
.66
.69
.73
.75
.81
1.03
1.44
1.49

1.50
1.50
1.50
1.50
1.50
1.50
1.50
2.00

1.00
1.00
1.00
8
1.00
8
1.00
8
1.00
8
1.00
1.00
1.34
1.50

3.24
3.41
3.52
3.74
3.51
3.53
3.88
4.71
4.73
5.05

1.98
2.00
2.19
2.72
2.37
2.53
2.93
3.60
3.56
3.95

1.45
2.16
2.33
2.52
1.58
2.18
3.31
3.81
2.46
3.97

2.07
2.56
3.00
3.17
3.05
3.16
3.77
4.20
3.83
4.48

1.59
1.75
1.75
1.99
1.60
1.89
2.77
3.12
2.15
3.36

L78
2.73
3.11
1.57
3.30

4.82
4.50
4.50
4.50
4.50
4.54
5.63
5.61
6.30
7.96

3.53
3.00
3.00
3.23
3.55
4.04
4.50
4.19
5.16
5.87

3.22
1.96
2.68
3.18
3.50
4.07
5.11
4.22
5.66
8.20

2.85
2.40
2.82
3.18
3.65
3.32
4.33

2.62
2.86
2.96
3.20
2.90
3.06
3.36
3.89
3.79
4.38

5.16
2.56
1.00

1.50

1.50-1.75
1.75-2.00

8

3.405

1832"

2.47
1.63
2.47
3.19
3.98
2.84
4.46

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

2.928
2.378
2.778

3.247
2.605
2.908
3.253
3.686
4.055
5.082
4.630
5.470
6.853

3.98
3.54
3.47
3.67
4.03
4.22
5.23
5.03
5.68
7.02

4.12
3.88
3.95
4.00
4.19
4.28
4.92
5.07
5.65
6.67

4.41
4.35
4.33
4.26
4.40
4.49
5.13
5.51
6.18
7.03

5.19
5.08
5.02
4.86
4.83
4.87
5.67
6.23
6.94
7.81

3.73
3.46
3.18
3.23
3.22
3.27
3.82
3.98
4.51
5.81

5.89
5.82
5.81
6.25
6.46
6.97
7.80

3.85
2.97
3.26
3.55
3.97
4.38
5.55
5.10
5.90
7.83

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

6.458
4.348

6.562

7.29
5.65
5.72
6.95
7.82
7.49
6.77
6.69
8.29
9.71

7.35
6.16
6.21
6.84
7.56
7.99
7.61
7.42
8.41
9.44

8.04
7.39
7.21
7.44
8.57
8.83
8.43
8.02
8.73
9.63

9.11
8.56
8.16
8.24
9.50
10.61
9.75
8.97
9.49
10.69

6.51
5.70
5.27
5.18
6.09
6.89
6.49
5.56
5.90
6.39

8.45
7.74
7.60
7.96
8.92
9.00
9.00
9.02
9.56
10.78

7.71
5.11
4.73
8.15
9.84
6.32
5.34
5.61
7.99
10.91

7.91
5.72
5.25
8.03
10.81
7.86
6.84
6.83
9.06
12.67

5.95
4.88
4.50
6.44
7.83
6.25
5.50
5.46
7.46
10.28

7.18
4.66
4.43
8.73
10.50
5.82
5.04
5.54
7.93
11.19

11.55
14.44
12.92
10.45
11.89
9.64

11.46
13.91
13.00
11.10
12.44
10.62

11.94
14.17
13.79
12.04
12.71
11.37

13.67
16.04
16.11
13.55
14.19
12.72

8.51
11.23
11.57
9.47
10.15
9.18

12.66
14.70
15.14
12.57
12.38

12.29
14.76
11.89
8.89
10.16
8.01

15.27
18.87
14.86
10.79
12.04
9.93

11.77
13.42
11.02
8.50
8.80
7.69

13.36
16.38
12.26
9.09
10.23
8.10

High-low

High-low

10.88
12.84
14.05
12.02
9.44
8.91
9.27
10.63
11.57
12.01
13.31
13.65

10.80
12.41
12.75
11.47
10.18
9.78
10.25
11.10
11.51
11.75
12.68
12.84

11.09
12.38
12.96
12.04
10.99
10.58
11.07
11.64
12.02
12.31
12.97
13.21

12.42
13.57
14.45
14.19
13.17
12.71

7.21
8.04
9.09
8.40
7.37
7.60

12.66
13.60
16.50
14.93
9.29
8.03

15.25-15.25
16.75-15.25
19.50-16.75
20.00-19.50
19.00-14.00
14.00-12.00

12.00-12.00
13.00-12.00
13.00-13.00
13.00-13.00
13.00-12.00
12.00-11.00

13.82
14.13
17.19
17.61
10.98
9.47

12.65
13.15
13.70
14.23
14.64
15.14

8.08
8.62
8.95
9.11
9.55
10.09

11.87
11.93
12.62
13.03
13:68
12.66
12.48
12.25
12.35
12.61
13.04
13.28

8.29
9.61
11.04
12.32
14.73
16.49

12.00-11.00
11.50-11.00
13.00-11.50
14.50-13.50
17.75-14.50
21.50-17.75

11.00-10.00
10.00-10.00
11.00-10.00
11.00-11.00
12.00-11.00
13.00-12.00

9.03
9.61
10.87
12.81
15.85
18.90

1980
1981
1982
1983
1984
1985

2.658
3.267

1.839

3.157
3.549
3.954
4.881
4.321
5.339
6.677

4.071
7.041
7.886
5.838
4.989
5.265
7.221
10.041

4.511
4.466
7.178
7.926
6.122
5.266
5.510
7.572
10.017

11.506
14.029
10.686

11.374
13.776
11.084

8.63
9.58
7.48

8.75
9.80
7.66

12.036
12.814
15.526
14.003

11.851
12.721
15.100
13.618

9.150
6.995
8.126
9.259
10.321
11.580
13.888
15.661

9.149
7.218
8.101
9.443
10.546
11.566
13.612
14.770

1980:

Jan
Feb
Mar

iviay":: :

June....
July

Aug
Sept....
Oct
Nov
Dec
1

Rate on new issues within period; bank-discount basis.
Yields on the more actively traded issues adjusted to constant maturities by the Treasury Department.
Series excludes public utility issues for January 17, 1984 through October 11, 1984 due to lack of appropriate issues.
4
Effective rate (in the primary market) on conventional mortgages, reflecting fees and charges as well as contract rate and
assuming, on the average, repayment at end of 10 years. Rates beginning January 1973 not strictly comparable with prior rates.
See next page for continuation of table.
2

3




332

TABLE B-68.—Bond yields and interest rates, 1929-85—Continued
[Percent per annum]
U.S. Treasury securities
Year
and
month

Bills
(new issues) J
3-month

6-month

Constant
maturities 2
3year

10year

Corporate
bonds
(Moody's)
Aaa 3

Baa

Highgrade
NewCommunici- home
mercial
pal
bonds mortgage paper, 6
yields
(Stand- (FHLBB) 4 months 5
ard &
Poor's)

Prime rate
charged 6by
banks

Discount
rate,
Federal
Federal
funds
Reserve
rate 7
Bank of
New York 6

High-low
1981'
Jan
Feb
Mar....
Apr
May....
June...
July
Aug....
Sept ...
Oct
Nov
Dec
1982:
Jan
Feb
Mar....
Apr
May....
June...
July
Aug....
Sept ...
Oct
Nov
Dec
1983:

Jan
Feb
Mar....
Apr
May....
June...
July
Aug ....
Sept ...
Oct
Nov
Dec

1984:

Jan
Feb
Mar....
Apr
May....
June...
July
Aug....
Sept ...
Oct
Nov
Dec

1985:

Jan
Feb....
Mar....
Apr....
May...
June..
July....
Aug...
Sept..
Oct....
Nov....
Dec....

High-low

14.724
14.905
13.478
13.635
16.295
14.557
14.699
15.612
14.951
13.873
11.269
10.926

13.883
14.134
12.983
13.434
15.334
13.947
14.402
15.548
15.057
14.013
11.530
11.471

13.01
13.65
13.51
14.09
15.08
14.29
15.15
16.00
16.22
15.50
13.11
13.66

12.57
13.19
13.12
13.68
14.10
13.47
14.28
14.94
15.32
15.15
13.39
13.72

12.81
13.35
13.33
13.88
14.32
13.75
14.38
14.89
15.49
15.40
14.22
14.23

15.03
15.37
15.34
15.56
15.95
15.80
16.17
16.34
16.92
17.11
16.39
16.55

9.65
10.03
10.12
10.55
10.73
10.56
11.03
12.13
12.86
12.67
11.71
12.77

13.26
13.54
14.02
14.15
14.10
14.67
14.72
15.27
15.29
15.65
16.38
15.87

15.10
14.87
13.59
14.17
16.66
15.22
16.09
16.62
15.93
14.72
11.96
12.14

21.50-20.00
20.00-19.00
19.00-17.50
18.00-17.00
20.50-18.00
20.50-20.00
20.50-20.00
20.50-20.50
20.50-19.50
19.50-18.00
18.00-16.00
15.75-15.75

13.00-13.00
13.00-13.00
13.00-13.00
13.00-13.00
14.00-13.00
14.00-14.00
14.00-14.00
14.00-14.00
14.00-14.00
14.00-14.00
14.00-13.00
13.00-12.00

19.08
15.93
14.70
15.72
18.52
19.10
19.04
17.82
15.87
15.08
13.31
12.37

12.412
13.780
12.493
12.821
12.148
12.108
11.914
9.006
8.196
7.750
8.042
8.013

12.930
13.709
12.621
12.861
12.220
12.310
12.236
10.105
9.539
8.299
8.319
8.225

14.64
14.73
14.13
14.18
13.77
14.48
14.00
12.62
12.03
10.62
9.98
9.88

14.59
14.43
13.86
13.87
13.62
14.30
13.95
13.06
12.34
10.91
10.55
10.54

15.18
15.27
14.58
14.46
14.26
14.81
14.61
13.71
12.94
12.12
11.68
11.83

17.10
17.18
16.82
16.78
16.64
16.92
16.80
16.32
15.63
14.73
14.30
14.14

13.16
12.81
12.72
12.45
11.99
12.42
12.11
11.12
10.61
9.59
9.97
9.91

15.25
15.12
15.67
15.84
15.89
15.40
15.70
15.68
14.98
14.41
13.81
13.69

13.35
14.27
13.47
13.64
13.02
13.79
13.00
10.80
10.86
9.21
8.72
8.50

15.75-15.75
17.00-15.75
16.50-16.50
16.50-16.50
16.50-16.50
16.50-16.50
16.50-15.50
15.50-13.50
13.50-13.50
13.50-12.00
12.00-11.50
11.50-11.50

12.00-12.00
12.00-12.00
12.00-12.00
12.00-12.00
12.00-12.00
12.00-12.00
12.00-11.50
11.50-10.00
10.00-10.00
10.00-9.50
9.50-9.00
9.00-8.50

13.22
14.78
14.68
14.94
14.45
14.15
12.59
10.12
10.31
9.71
9.20
8.95

7.810
8.130
8.304
8.252
8.19
8.82
9.12
9.39
9.05
8.71
8.71
8.96

7.898
8.233
8.325
8.343
8.20
8.89
9.29
9.53
9.19
8.90
8.89
9.14

9.64
9.91
9.84
9.76
9.66
10.32
10.90
11.30
11.07
10.87
10.96
11.13

10.46
10.72
10.51
10.40
10.38
10.85
11.38
11.85
11.65
11.54
11.69
11.83

11.79
12.01
11.73
11.51
11.46
11.74
12.15
12.51
12.37
12.25
12.41
12.57

13.94
13.95
13.61
13.29
13.09
13.37
13.39
13.64
13.55
13.46
13.61
13.75

9.45
9.48
9.16
8.96
9.03
9.51
9.46
9.72
9.57
9.64
9.79
9.90

13.49
13.16
13.41
12.42
12.67
12.36
12.50
12.38
12.54
12.25
12.34
12.42

8.15
8.39
8.48
8.48
8.31
9.03
9.36
9.68
9.28
8.98
9.09
9.50

11.50-11.00
11.00-10.50
10.50-10.50
10.50-10.50
10.50-10.50
10.50-10.50
10.50-10.50
11.00-10.50
11.00-11.00
11.00-11.00
11.00-11.00
11.00-11.00

8.50-8.50
8.50-8.50
8.50-8.50
8.50-8.50
8.50-8.50
8.50-8.50
8.50-8.50
8.50-8.50
8.50-8.50
8.50-8.50
8.50-8.50
8.50-8.50

8.68
8.51
8.77
8.80
8.63
8.98
9.37
9.56
9.45
9.48
9.34
9.47

8.93
9.03
9.44
9.69
9.90
9.94
10.13
10.49
10.41
9.97
8.79
8.16

9.06
9.13
9.58
9.83
10.31
10.55
10.58
10.65
10.51
10.05
8.99
8.36

10.93
11.05
11.59
11.98
12.75
13.18
13.08
12.50
12.34
11.85
10.90
10.56

11.67
11.84
12.32
12.63
13.41
13.56
13.36
12.72
12.52
12.16
11.57
11.50

12.20
12.08
12.57
12.81
13.28
13.55
13.44
12.87
12.66
12.63
12.29
12.13

13.65
13.59
13.99
14.31
14.74
15.05
15.15
14.63
14.35
13.94
13.48
13.40

9.61
9.63
9.92
9.98
10.55
10.71
10.50
10.03
10.17
10.34
10.27
10.04

12.29
12.23
12.02
12.04
12.18
12.10
12.50
12.43
12.53
12.77
12.75
12.55

9.18
9.31
9.86
10.22
10.87
11.23
11.34
11.16
10.94
10.16
9.06
8.55

11.00-11.00
11.00-11.00
11.50-11.00
12.00-11.50
12.50-12.00
13.00-12.50
13.00-13.00
13.00-13.00
13.00-12.75
12.75-12.00
12.00-11.25
11.25-10.75

8.50-8.50
8.50-8.50
8.50-8.50
9.00-8.50
9.00-9.00
9.00-9.00
9.00-9.00
9.00-9.00
9.00-9.00
9.00-9.00
9.00-8.50
8.50-8.00

9.56
9.59
9.91
10.29
10.32
11.06
11.23
11.64
11.30
9.99
9.43
8.38

7.76
8.22
8.57
8.00
7.56
7.01
7.05
7.18
7.08
7.17
7.20
7.07

8.03
8.34
8.92
8.31
7.75
7.16
7.16
7.35
7.27
7.32
7.26
7.09

10.43
10.55
11.05
10.49
9.75
9.05
9.18
9.31
9.37
9.25
8.88
8.40

11.38
11.51
11.86
11.43
10.85
10.16
10.31
10.33
10.37
10.24
9.78
9.26

12.08
12.13
12.56
12.23
11.72
10.94
10.97
11.05
11.07
11.02
10.55
10.16

13.26
13.23
13.69
13.51
13.15
12.40
12.43
12.50
12.48
12.36
11.99
11.58

9.55
9.66
9.79
9.48
9.08
8.78
8.90
9.18
9.37
9.24
8.64
8.51

12.27
12.21
11.92
12.05
12.01
11.75
11.34
11.24
11.17
11.09
11.01
10.87

8.15 10.75-10.50
8.69 10.50-10.50
9.23 10.50-10.50
8.47 10.50-10.50
7.88 10.50-10.00
10.00-9.50
7.38
7.57
9.50-9.50
7.74
9.50-9.50
7.86
9.50-9.50
9.50-9.50
7.79
9.50-9.50
7.69
7.62
9.50-9.50

8.00-8.00
8.00-8.00
8.00-8.00
8.00-8.00
8.00-7.50
7.50-7.50
7.50-7.50
7.50-7.50
7.50-7.50
7.50-7.50
7.50-7.50
7.50-7.50

8.35
8.50
8.58
8.27
7.97
7.53
7.88
7.90
7.92
7.99
8.05
8.27

5
Bank-discount basis; prior to November 1979, data are for 4-6 months paper.
6
For monthly data, high and low for the period. Prime rate for 1929-33 and 1947-48 are ranges of the rate in effect during the
period.
7
Since July 19, 1975, the daily effective rate is an average of the rates on a given day weighted by the volume of transactions at
these rates. Prior to that date, the daily effective rate was the rate considered most representative of the day's transactions, usually
the one at which most transactions occurred.
8
From October 30, 1942, to April 24, 1946, a preferential rate of 0.50 percent was in effect for advances secured by Government
securities maturing in 1 year or less.

Sources: Department of the Treasury, Board of Governors of the Federal Reserve System, Federal Home Loan Bank Board (FHLBB),
Moody's Investors Service, and Standard & Poor's Corporation.




333

TABLE B-69.—Total funds raised in credit markets by nonfinancial sectors, 1976-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Item

1976

1977

1978

1979

1980

1981

1982

1983

1984

Net credit market borrowing by nonfinancial sectors
Total net borrowing by domestic nonfinancial sectors
U.S. Government
Treasury issues
Agency issues and mortgages
Private domestic nonfinancial sectors
Debt capital instruments
Tax-exempt obligations
Corporate bonds
Mortgages
Home mortgages
Multi-family residential
Commercial
Farm
Other debt instruments
Consumer credit
Bank loans n e e
Open-market paper
Other
By borrowing sector-. Total
State and local governments
Households
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
Foreign net borrowing in United States

243.5

319.4

371.7

388.7

340.0

371.6

398.3

538.9 755.6

69.0

56.8

53.7

37.4

79.2

87.4

161.3

186.6 198.8

69.1

57.6

87.8

-.9

38.8
-1.4

79.8

-.1

55.1
-1.4

-.6

-.5

162.1
-.9

186.7 199.0
-.1 -.2

174.5

262.6

318.0

351.3

260.8

284.2

237.0

352.3 556.8

123.6

171.1

201.6

213.9

186.3

153.7

153.5

249.1 322.1

15.7
22.8
85.1

21.9
22.9

28.4
21.1

30.3
17.3

30.3
26.7

23.4
21.8

126.3

152.1

166.2

129.4

108.5

48.6
18.7
86.2

175.7 214.1

63.9

94.0

113.6
9.4

121.7
8.3

93.8

71.6

50.4

21.9

19.2

7.2

24.4
11.8

9.3

9.9

74.5

130.5

83.6
20.1
54.1
-4.7
14.0

59.8
26.7
-1.6
18.3

352.3 556.8

3.9
11.6

5.7

7.1
18.1

7.1

50.9

91.6

116.5

137.5

25.4

40.2
27.1

48.8
37.4

7.1

4.7

4.8

5.3

22.2

25.2

5.3

57.3
16.0

65.8
42.3

115.6 139.2
9.4 14.0
47.6

3.0

58.8

2.1

103.3 234.8

16.9

21.3

25.1

45.4
51.2
11.1
29.7

27.1

22.7
54.7
19.2
33.9

174.5

262.6

318.0

351.3

260.8

284.2

237.0

13.2
91.5
69.8

12.0

16.5

17.6

17.2

140.7
110.0

173.4
128.1

181.0
152.7

117.9
125.7

6.8
119.2
158.3

25.9
90.4

10.2
15.4
44.2

12.3
28.0
69.7

14.6
32.8
80.6

21.4
35.3
96.0

14.3
31.0
80.4

103.4

40.9
71.9

65.2
54.6

181.7

19.3

13.5

33.8

20.2

27.2

27.2

15.7

18.9

1.7

4.5
4.0

2.9

Bonds
Bank loans n e e
Open-market paper
U.S. Government loans

8.6
5.6
1.9
3.3

5.1
3.1
2.4
3.0

Total domestic plus foreign

262.8

332.9

5.2

4.2
19.1

6.6
3.9

405.5

37.0

5.7

16.4
38.4

120.7
7.9

45.0

190.4 249.5
124.3 262.4
4.5

2.9
77.8

2.9

4.7

4.2

4.5

4.1
3.8
4.9 -7.8
1.4
6.0
4.0
4.3

408.9

367.2

398.8

414.0

557.8 757.4

3.9
2.3
11.2

.8
11.5
10.1

5.4
3.7
13.9

6.7

37.6

96.5
79.4
23.7
35.2

-6.2
10.7

Direct and indirect supply of funds to credit markets
Total funds supplied to domestic nonfinancial sectors
Private domestic nonfinancial sectors
Deposits and currency
Checkable deposits and currency
Time and savings deposits
Money market Fund shares
Security repurchase agreements
Foreign deposits
Credit market instruments
Foreign funds
At banks
Credit market instruments
U.S. Government and related loans, net
U S Government cash balances
Private insurance and pension reserves
Other sources

243.5

319.4

371.7

388.7

340.0

371.6

398.3

538.9 755.6

170.7

185.5

218.4

246.5

227.6

294.7

270.1

367.2 484.5

132.1

149.0

153.9

146.8

181.1

221.9

181.6

224.4 292.2

17.8

25.3

25.4

15.5

120.0
.2
2.2
1.3

112.1
6.9
7.5
2.0

27.5
83.9

25.1

110.3
.0
2.3
1.7

26.2
78.1
34.4

38.7

36.5

64.4

99.7

10.6

41.0

39.8

23.1

1.6

27.6
-4.5

-21.7

-4.5
15.2

1.1
-.1
41.5
19.7

1.4
39.6

4.1
4.3
55.4
29.1

See next page for continuation of table.




334

6.5
33.3
-6.5

6.8
74.8
38.6

6.6
1.5

11.6

.4
72.9
34.2

128.7
29.2

6.5
1.1
46.5

23.3

1.8
-2.6
83.7
27.9

107.5
2.5
.5
72.9

7.6
-8.7
16.2

6.9

130.5
24.7

3.8
-2.5
88.5

37.4

30.0

212.0 225.0
-44.1 47.2
14.3

-5.8

4.8 -4.0

142.8 192.2

-3.9

49.2

62.4

-26.7

22.1
27.1

19.0
43.4

22.8
10.7

-1.1
90.7

6.1
103.2

-27.2

12.1

3.7
-5.3
95.1
28.9

22.3

4.0
111.7
70.8

TABLE B-69.—Total funds raised in credit markets by nonfinancial sectors, 1976-85—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
1984

1985

Item

1

II

III

IV

1

1!

III

Net credit market borrowing by nonfinancial sectors
Total net borrowing by domestic nonfinancial sectors

661.0

747.0

704.7

909.9

675.5

760.4

742.2

173.5

171.9

194.9

254.9

144.1

218.1

166.4

173.8
3

172.1
1

195.1
1

255.0
1

144.2
2

218.2
1

166.4
_ }

487.5

575.1

509.8

655.0

531.4

542.4

575.8

258.4

305.2

333.2

391.5

323.0

376.3

404.1

42.1
19.8
196.4

35.7
28.9
240.6

72.3
49.4
211.5

113.0
70.9
207.7

73.9
53.7
195.5

103.2
69.2
203.9

145.8
56.9
201.5

136.8
12.3
45.8
1.7

152.9
19.7
65.5
2.4

131.8
9.5
67.4
2.8

135.2
14.5
56.6
1.4

130.6
19.3
45.7
-.1

142.8
11.0
53.8
-3.6

149.1
13.0
48.5
-9.1

Other debt instruments

229.1

269.9

176.6

263.5

208.4

166.0

171.7

Consumer credit
Bank loans n.e.c
Open-market paper
Other

78.8
93.5
26.7
30.1

125.4
86.8
40.3
17.3

90.2
35.3
22.6
28.5

91.5
102.0
5.0
64.9

121.3
17.0
24.0
46.2

112.1
33.9
8.6
11.5

115.2
35.0
1.5
20.0

487.5

575.1

509.8

655.0

531.4

542.4

575.8

23.9
215.5
248.1

18.8
280.9
275.3

52.9
232.1
224.8

84.3
269.3
301.4

61.1
263.5
206.8

82.2
272.6
187.6

116.8
295.3
163.7

3.8
74.6
169.7

.4
91.4
183.5

6.5
75.0
143.4

1.1
70.1
230.3

-11.0
73.9
144.0

33
68.9
122.1

-8.1
73.3
98.5

-.4

-8.0

U.S. Government
Treasury issues
Agency issues and mortgages
Private domestic nonfinancial sectors
Debt capital instruments
Tax-exempt obligations
Corporate bonds
Mortgages
Home mortgages
Multi-family residential
Commercial
Farm

By borrowing sector: Total
State and local governments
Households
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
Foreign net borrowing in United States

-6.5

52.3

-38.5

Bonds
Bank loans n e e
Open-market paper
U S Government loans

-1.1
-2.8
-9.1
6.5

3.3
-6.4
50.9
4.5

2.4
-14.2
303
3.7

11.7
-7.8
59
1.5

Total domestic plus foreign

654.5

799.3

666.2

909.4

-6.1

2.3
8.0
-12.2
.3
-.1 -17.5
2.0
3.1

667.5

754.3

5.8
5.5
-6.7
5.5
1.5

748.0

Direct and indirect supply of funds to credit markets
661.0

U S Government and related loans net
U S Government cash balances
Private insurance and pension reserves
Other sources
Source: Board of Governors of the Federal Reserve System.




335

425.1

285.6

221.7

370.2

182.5

193.6

204.3

30.7
236.9
15.4
8.1
-5.4

-19.8
241.2
20.5
-15.8
-4.4

57.9
221.4
107.9
-14.2
-2.8

-11.8
196.4
-12.1
10.8
-.9

63.7
130.5
20.4
-13.3
-7.8

116.4
115.4
-21.2
-3.5
-2.8

236.1

226.2

193.1

253.4

167.1

220.9

67.2

48.7

86.8

44.0

75.3

130.2

25.3
41.9

16.1
32.6

5.7
81.2

28.9
15.2

-7.3
82.6

40.5
89.7

25.8
5.1
109.0
69.2

At banks
Credit market instruments

742.2

360.7

29.1
17.8

Foreign funds

760.4

435.8

46.9

Credit market instruments

675.5

563.3

113.5

Checkable deposits and currency
Time and savings deposits
Money market fund shares
Security repurchase ageements
Foreign deposits

909.9

447.9

51.0
200.3
44.9
14
-3.5

Deposits and currency

704.7

521.7

291.4

Private domestic nonfinancial sectors

747.0

404.9

Total funds supplied to domestic nonfinancial sectors

-24.1
-1.8
126.9
57.1

15.6
16.3
93.9
82.3

71.7
-3.5
117.0
74.5

67.8
-12.1
68.5
71.4

49.7
50.9
166.2
57.7

20.7
-71.7
137.4
100.5

TABLE B-70.—Mortgage debt outstanding by type of property and of financing, 1939-85
[Billions of dollars]
Nonfarm properties

Nonfarm properties by type of mortgage
Conventional 3

Government underwritten
End of year
or quarter

All
properties

Farm
properties

Total

1- to 4family
houses

MultiComfamily mercial
proper- properties
ties 1

1- to 4-family houses
Total 2
Total

FHA
insured

VA

Total

guaranteed

1- to 4family
houses

1939

35.5

6.6

28.9

16.3

5.6

7.0

1.8

1.8

1.8

27.1

14.5

1940
1941
1942
1943
1944

36.5
37.6
36.7
35.3
34.7

6.5
6.4
6.0
5.4
4.9

30.0
31.2
30.8
29.9
29.7

17.4
18.4
18.2
17.8
17.9

5.7
5.9
5.8
5.8
5.6

6.9
7.0
6.7
6.3
6.2

2.3
3.0
3.7
4.1
4.2

2.3
3.0
3.7
4.1
4.2

2.3
3.0
3.7
4.1
4.2

27.7
28.2
27.1
25.8
25.5

15.1
15.4
14.5
13.7
13.7

1945
1946
1947
1948
1949

35.5
41.8
48.9
56.2
62.7

4.8
4.9
5.1
5.3
5.6

30.8
36.9
43.9
50.9
57.1

18.6
23.0
28.2
33.3
37.6

5.7
6.1
6.6
7.5
8.6

6.4
7.7
9.1
10.2
10.8

4.3
6.3
9.8
13.6
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

26.5
30.6
34.1
37.3
40.0

14.3
16.9
18.9
20.8
22.6

1950
1951
1952
1953
1954

72.8
82.3
91.4
101.3
113.7

6.1
6.7
7.2
7.7
8.2

66.7
75.6
84.2
93.6
105.4

45.2
51.7
58.5
66.1
75.7

10.1
11.5
12.3
12.9
13.5

11.5
12.5
13.4
14.5
16.3

22.1
26.6
29.3
32.1
36.2

18.8
22.9
25.4
28.1
32.1

8.5
9.7
10.8
12.0
12.8

10.3
13.2
14.6
16.1
19.3

44.7
49.1
54.9
61.5
69.3

26.3
28.9
33.2
38.0
43.6

1955
1956
1957
1958
1959

129.9
144.5
156.5
171.8
190.8

9.0
9.8
10.4
11.1
12.1

120.9
134.6
146.1
160.7
178.7

88.2
99.0
107.6
117.7
130.9

14.3
14.9
15.3
16.8
18.7

18.3
20.7
23.2
26.1
29.2

42.9
47.8
51.6
55.2
59.3

38.9
43.9
47.2
50.1
53.8

14.3
15.5
16.5
19.7
23.8

24.6
28.4
30.7
30.4
30.0

78.0
86.8
94.6
105.5
119.4

49.3
55.1
60.4
67.6
77.0

I960

207.5
228.0

12.8
13.9
15.2
16.8
18.9

194.7
214.1
236.2

261.7
287.0

141.9
154.6
169.3
186.4
203.4

20.3
23.0
25.8
29.0
33.6

32.4
36.5
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
95.5
107.1
120.5
134.1

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
283.2

37.2
40.3
43.9
47.3
52.2

54.5
60.1
64.8
71.4
76.9

81.2
84.1
88.2
93.4
100.2

73.1
76.1
79.9
84.4
90.2

42.0
44.8
47.4
50.6
54.5

31.1
31.3
32.5
33.8
35.7

231.0
249.3
267.9
290.1
312.0

147.4
156.9
167.4
180.4
193.0

30.3
32.2
35.1
39.5
44.7

443.2

297.4
325.9
366.5
407.9
440.7

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

333.9

491.8
562.0
632.8
687.5

430.9
497.7
547.3

200.2
220.7
253.5

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

61.6
67.0
73.6
82.0
92.0

1,042.7

354.3
412.8
501.0
600.2
697.6

225.1

195.2

238.9
248.9
279.8
294.8

207.6

93.6
101.3
108.0
127.4
136.7

101.6
106.2
109.9
121.4
129.1

1,136.7
1,219.3
1,272.4
1,419.0
1,616.0

768.8
830.9
856.8
944.0
1,063.7

1961
1962
1963
1964

251.4
278.5
305.9

1965
1966
1967
1968
1969

333.3
356.5

1970
1971
1972
1973
1974

473.5
524.0

381.2
410.9
441.4

597.1
672.3
732.3

1975
1976
1977
1978 .
1979

878.5
1,009.8
1,161.9
1,327.3

49.7
55.3
63.5
71.6
85.6

742.0
823.2
946.4
1,090.2
1,241.7

482.1
546.3
642.7
753.5
870.5

100.6
105.7
114.0
124.9
134.9

159.3
171.2
189.7
211.8
236.3

1980
1981
1982
1983
1984

1,457.5
1,564.0
1,631.3
1,811.4
2,022.5

95.8
105.8
110.0
112.6
111.6

1,361.8
1,458.2
1,521.2
1,698.8
1,910.9

963.9
1,038.5
1,074.7
1,192.8
1,329.6

142.3
142.1
145.8
156.7
170.5

255.5
277.5
300.8
349.2

1983- 1

110.3
111.3
112.1
112.6

1,549.4
1,592.6
1,646.8
1,698.8

1,093.2
1,120.9
1,158.2
1,192.8

146.6
149.8
153.5
156.7

309.6
322.0

III
IV

1,659.7
1,703.9
1,759.0
1,811.4

1984- 1
II
Ill
IV

1,855.9
1,917.2
1,972.8
2,022.5

112.4
112.6
112.7
111.6

1,743.6
1,804.6
1,860.1
1,910.9

1,223.4
1,261.8
1,296.5
1,329.6

160.3
165.4
167.9
170.5

359.9
377.5
395.7

1985- 1
II

2,068.3
2,126.9
2,183.9

111.5
110.8
109.0

1,956.8
2,016.1
2,074.9

1,360.3
1,402.0
1,443.7

175.5
178.5
181.5

791.7

||

Ill

..

410.7

217.9
248.8
265.9

371.1

595.0
669.0
784.6

913.9

291.7
319.4

252.5

222.1

261.1
273.7
279.8

230.0

241.7
248.8

110.8
115.8
123.8
127.4

111.3
114.3
117.9
121.4

1,296.9
1,331.5
1,373.2
1,419.0

871.1
890.8
916.5
944.0

410.7

286.8
290.5
292.9
294.8

255.9
260.5
263.6
265.9

131.1
133.6
135.6
136.7

124.8
126.9
128.0
129.1

1,456.8
1,514.2
1,567.3
1,616.0

967.5
1,001.3
1,032.9
1,063.7

421.0
435.7
449.8

299.7
305.4
323.8

270.6
276.0
282.6

139.8
144.3
148.3

130.8
131.6
134.3

1,657.1
1,7107
1,751.1

1,089.7
1,126.0
1,161.0

335.1
349.2

. 1 Includes negligible amount of farm loans held by savings and loan associations.
2
Includes FHA insured multifamily properties, not shown separately.
3
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.




336

TABLE B-71.—Mortgage debt outstanding by holder, 1939-85
[Billions of dollars]
Major financial institutions
End of year
or quarter

Total
Total

Savings
and loan
associations

Other holders

Commercial
banks 1

Savings
banks

Life
insurance
companies

Federal
and
related
agencies2

Individuals and
others

1939

35.5

18.6

3.8

4.8

4.3

5.7

5.0

11.9

1940
1941
1942
1943
1944

36.5
37.6
36.7
35.3
34.7

19.5
20.7
20.7
20.2
20.2

4.1
4.6
4.6
4.6
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
6.7
6.7

4.9
4.7
4.3
3.6
3.0

12.0
12.2
11.7
11.5
11.5

1945
1946
1947
1948
1949

35.5
41.8
48.9
56.2
62.7

21.0
26.0
31.8
37.8
42.9

5.4
7.1
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
8.7
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
15.6
18.4
22.0
26.1

8.3
9.9
11.4
12.9
15.0

13.7
14.7
15.9
16.9
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
21.7
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
7.7
8.0
10.2

25.3
27.1
29.1
32.3
35.1

I960
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
52.7

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

473.5
524.0
597.1
672.3
732.3

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
82.2

79.3
83.4
92.5
102.2
107.5

1975
1976
1977
1978
1979

791.7
878.5
1,009.8
1,161.9
1,327.3

581.2
647.5
745.2
848.2
938.2

278.6
323.0
381.2
432.8
475.7

77.2
81.6
88.2
95.2
98.9

136.2
151.3
179.0
214.0
245.2

89.2
91.6
96.8
106.2
118.4

101.1
116.7
140.5
170.6
216.0

109.4
114.3
124.1
143.1
173.1

1980
1981 . .
1982
1983
1984

1,457.5
1,564.0
1,631.3
1,811.4
2.022.5

996.8
1,040.5
1,021.3
1,108.2
1,241.2

503.2
518.5
483.6
494.8
555.3

99.9
100.0
94.5
131.9
154.4

262.7
284.2
301.3
330.5
374.8

131.1
137.7
142.0
151.0
156.7

256.8
289.4
355.4
433.4
491.1

203.9
234.1
254.5
269.7
290.3

1983: 1
||
III
IV

1,659.7
1,703.9
1,759.0
1,811.4

1,026.3
1,045.7
1,077.5
1,108.2

477.4
475.2
483.3
494.8

101.6
114.7
125.5
131.9

303.9
311.1
321.2
330.5

143.3
144.7
147.4
151.0

375.3
395.5
415.7
433.4

258.1
262.6
265.8
269.7

1984: 1

1,855.9
1,917.2
1,972.8
2,022.5

1,133.6
1,177.3
1,214.7
1,241.2

503.5
528.2
550.1
555.3

139.1
143.4
146.1
154.4

339.7
352.3
363.2
374.8

151.3
153.5
155.4
156.7

448.4
458.9
472.3
491.1

274.0
280.9
285.7
290.3

2,068.3
2,126.9
2,183.9

1,261.9
1,292.4
1,321.2

559.3
569.3
575.6

161.0
165.7
173.5

383.4
396.0
408.2

158.2
161.5
163.9

511.3
531.7
555.2

295.1
302.8
307.5

...

1970
1971
1972
1973
1974

..

||
III
IV

1985: 1

||
III

1
includes
2

.

loans held by nondeposit trust companies, but not by bank trust departments.
Includes former Federal National Mortgage Association (FNMA) and new Government National Mortgage Association (GNMA), as well
as Federal Housing Administration, Veterans Administration, Public Housing Administration, Farmers Home Administration (FmHA), and in
earlier years Reconstruction Finance Corporation, Homeowners Loan Corporation, and Federal Farm Mortgage Corporation. Also includes
U.S.-sponsored agencies such as new FNMA, Federal Land Banks, Federal Home Loan Mortgage Corporation (FHLMC), and mortgage
pass-through securities issued or guaranteed by GNMA, FHLMC, FNMA or FmHA. Other U.S. agencies (amounts small or current separate
data not readily available) included with "individuals and others."
Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations.




337

TABLE B-72.—Consumer credit outstanding, /930-85
[Amount outstanding (end of month); millions of dollars, seasonally adjusted]
Year and month
December:
1950 . .. .
1951
1952
1953
1954
1955
1956
1957
1958
1959

Total
consumer
credit

Installment credit '
Total

Automobile

Revolving2

Mobile home3

Other

Noninstallment
credit4

25,018
26,576
31,830
35,928
37,293
44,319
48,224
51,136
51,595
59,432

15,166
15,859
20,121
23,870
24,470
29,809
32,660
34,914
34,736
40,421

6,035
5,981
7,651
9,702
9,755
13,485
14,499
15,493
14,267
16,641

9,131
9,878
12,470
14,168
14,715
16,324
18,161
19,421
20,469
23,780

9,852
10,717
11,709
12,058
12,823
14,510
15,564
16,222
16,859
19,011

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

63,928
66,569
72,830
81,578
91,279
101,726
108,227
113,628
124,915
135,431

44,335
45,438
50,375
57,056
64,674
72,814
78,162
81,783
90,112
99,381

18,108
17,656
20,001
22,891
25,865
29,378
31,024
31,136
34,352
36,946

2,022
3,563

26,227
27,782
30,374
34,165
38,809
43,436
47,138
50,647
53,738
58,872

19,593
21,131
22,455
24,522
26,605
28,912
30,065
31,845
34,803
36,050

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

141,010
155,537
175,286
200,894
210,634
219,772
244,932
284,599
332,849
377,486

103,905
116,434
131,258
152,910
162,203
169,387
190,725
226,646
269,392
307,115

36,348
40,522
47,835
53,740
54,241
57,279
67,798
82,890
101,863
116,523

4,900
8,252
9,391
11,318
13,232
14,467
16,505
36,427
45,004
53,174

2,433
7,171
9,468
13,505
14,582
14,382
14,530
14,897
15,199
16,843

60,224
60,489
64,564
74,347
80,148
83,259
91,892
92,432
107,326
120,575

37,105
39,103
44,028
47,984
48,431
50,385
54,207
57,953
63,457
70,371

1980
1981
1982
1983
1984

369,842
392,287
412,811
471,551
566,919

296,290
312,907
328,275
376,006
452,372

112,134
119,796
124,938
142,497
172,461

54,900
60,309
65,019
76,453
94,940

18,783
19,890
22,491
23,773
24,552

110,473
112,912
115,827
133,283
160,419

73,552
79,380
84,536
95,545
114,547

1984- Jan
Feb
Mar
Apr
May .
June

477,437
485,001
491,615
500,241
511,891
521,172

381,273
387,461
393,389
400,182
409,275
416,357

145,451
147,885
148,933
151,273
154,914
157,639

76,998
78,069
81,029
82,880
85,518
86,874

23,799
23,745
23,768
23,911
24,049
24,240

135,025
137,762
139,660
142,118
144,794
147,604

96,164
97,540
98,226
100,059
102,616
104,815

July
Aug
Sept
Oct
Nov....
Dec

529,505
537,591
543,148
550,624
557,867
566,919

422,838
428,860
433,842
439,473
445,553
452,372

160,726
163,208
164,721
167,225
169,774
172,461

87,646
88,909
90,393
91,881
93,495
94,940

24,574
24,791
24,918
24,526
24,435
24,552

149,892
151,952
153,810
155,841
157,849
160,419

106,667
108,731
109,306
111,151
112,314
114,547

1985- Jan
Feb
Mar
Apr
May .
June

575,873
586,842
597,235
607,308
618,555
625,254

459,595
468,636
476,978
485,248
494,290
499,517

175,348
178,546
181,937
185,425
189,217
191,903

96,897
99,424
102,055
104,181
106,610
106,537

24,393
24,675
24,664
24,882
25,068
25,264

162,957
165,991
168,322
170,760
173,395
175,813

116,278
118,206
120,257
122,060
124,265
125,737

July
Aug .
Sept
Oct
Nov

633,980
641,634
654,377
662,417
667,870

505,764
511,490
523,021
531,146
536,029

194,268
196,474
203,678
207,332
208,417

107,393
108,329
110,303
112,345
115,201

25,588
25,787
25,955
26,133
26,129

178,515
180,900
183,085
185,336
186,282

128,216
130,144
131,356
131,271
131,841

1
Installment credit covers most short- and intermediate-term credit extended to individuals through regular business channels,
usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be
repaid (or with the option of repayment) in two or more installments. Credit secured by real estate is generally excluded.
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.
3
Not reported separately prior to July 1970.
4
Noninstallment credit is credit scheduled to be repaid in a lump sum, including single-payment loans, charge accounts, and service
credit. Because of inconsistencies in the data and infrequent benchmarking, series is no longer published by the Federal Reserve Board
on a regular basis. Data are shown here as a general indication of trends.
Source-. Board of Governors of the Federal Reserve System.




338

GOVERNMENT FINANCE
TABLE B-73.—Federal receipts, outlays, surplus or deficit, and debt, selected fiscal years 1929-87
[Billions of dollars; fiscal years]
On-budget

Total
Fiscal year
or period

Receipts

Surplus
Outlays

or

Re-

deficit

ceipts

Outlays

(-)

Gross Federal debt
(end of period)

Off-budget
Surplus

or

Re-

deficit

ceipts

Surplus
Outlays

or

Held by

deficit

Total

the
public

(-)

(-)

1

Adden-

dum:
Gross
national
product

1929
1933
1939

3.9
20
6.3

3.1
46
9.1

0.7
-26
-2.8

5.8

9.2

-3.4

0.5

0.0

0.5

1940
1941
1942
1943
1944

6.5
87
14.6
240
43.7

9.5
137
35.1
786
91.3

-2.9
-49
-20.5
-546
-47.6

6.0
80
13.7
229
42.5

9.5
136
35.1
785
91.2

-3.5
-56
-21.3
-556
-48.7

.6
7
.9
11
1.3

.0
0
.1
1
.1

.6
7
.8
10
1.2

79.2
1426
204.1

67.8
1278
184.8

1945
1946
1947
1948
1949

45.2
393
38.5
41.6
39.4

92.7
552
34.5
29.8
38.8

-47.6
-159
4.0
11.8
.6

43.8
381
37.1
39.9
37.7

92.6
550
34.2
29.4
38.4

-48.7
-170
2.9
10.5
-.7

1.3
12
1.5
1.6
1.7

.1
.2
.3
.4
.4

1.2
10
1.2
1.2
1.3

260.1
2710
257.1
252.0
252.6

235.2

1950
1951
1952
1953
1954

39.4
51.6
66.2
69.6
69.7

42.6
45.5
67.7
76.1
70.9

-3.1
6.1
-1.5
-6.5
-1.2

37.3
48.5
62.6
65.5
65.1

42.0
44.2
66.0
73.8
67.9

-4.7
4.3
-3.4
-8.3
-2.8

2.1
3.1
3.6
4.1
4.6

.5
1.3
1.7
2.3
2.9

1.6
1.8
1.9
1.8
1.7

256.9
255.3

219.0
214.3
214.8
218.4
224.5

266.9

1955
1956
1957
1958
1959

65.5
74.6
80.0
79.6
79.2

68.4
70.6
76.6
82.4
92.1

-3.0
3.9
3.4
-2.8
-12.8

60.4
68.2
73.2
71.6
71.0

64.5
65.7
70.6
74.9
83.1

-4.1
2.5
2.6
-3.3
-12.1

5.1
6.4
6.8
8.0
8.3

4.0
5.0
6.0
7.5
9.0

1.1
1.5
.8
.5
-.7

274.4
272.8
272.4
279.7
287.8

226.6
222.2

387.6

219.4
226.4
235.0

418.0
441.2
449.8
479.5

1960
1961
1962
1963
1964

92.5
94.4
99.7
106.6
112.6

92.2
97.7
106.8
111.3
118.5

.3
-3.3
-7.1
-4.8
-5.9

81.9
82.3
87.4
92.4
96.2

81.3
86.0
93.3
96.4
102.8

.5
-3.8
-5.9
-4.0
-6.5

10.6
12.1
12.3
14.2
16.4

10.9
11.7
13.5
15.0
15.7

-.2
.4
-1.3
-.8
.6

290.9
292.9
303.3

310.8
316.8

237.2
238.6
248.4
254.5
257.6

507.7
519.0
556.6
588.6
629.4

116.8
130.8
148.8
153.0
186.9

118.2
134.5
157.5
178.1
183.6

-1.4
-3.7
-8.6
-25.2
3.2

100.1
111.7
124.4
128.1
157.9

101.7
114.8
137.0
155.8
158.4

-1.6
-3.1
-12.6
-27.7
-.5

16.7
19.1
24.4
24.9
29.0

16.5
19.7
20.4
22.3
25.2

.2
-.6
4.0
2.6
3.7

323.2
329.5
341.3
369.8
367.1

261.6
264.7
267.5
290.6
279.5

673.6
740.5
793.5
852.4
929.5

-2.8
-230
-23.4
-14.9
-6.1

159.3
1513
167.4
184.7

-8.7
-261
-26.4
-15.4
-8.0

33.5
35.8
39.9
46.1
53.9

27.6
32.8
36.9
45.6
52.1

5.9
3.0
3.1
.5
1.8

382.6
409.5
437.3
468.4
486.2

284.9
304.3
323.8
343.0

209.3

168.0
1773
193.8
200.1
217.3

346.1

990.5
1,057.1
1,151.2
1,285.5
1,417.0

-53.2
-73.7

216.6
231.7

271.9

-55.3
-70.5

62.5
66.4

60.4
69.6

2.0
-3.2

544.1
631.9

396.9
480.3

1,523.5
1,699.6

-14.7
-53.6
-59.2
-40.2

63.2

76.6

365.3

403.5

18.0
76.8
85.4
98.0

19.4
80.7
89.7
100.0

-1.4
-3.9
-4.3
-2.0

498.3

328.5

-13.3
-49.7
-54.9
-38.2

646.4

278.7

709.1
780.4
833.8

551.8
610.9
644.6

448.7
1,935.8
2,173.4
2,452.2

-73.8
-78.9

403.9

851.8

474.3
453.2
500.4

476.6
543.0
594.3

-72.7
-73.9

-127.9
-207.8
-185.3

686.0

-120.0
-208.0
-185.6

113.2
130.2
143.5
147.3
166.1

114.3
135.2
151.4
147.1
165.8

-1.1
-5.0
-7.9
.2
.3

1,003.9
1,147.0
1,381.9
1,576.7

715.1
794.4
929.4
1,141.8
1,312.6

2,667.6
2,986.2
3,141.5
3,320.9
3,695.3

946.3
979.9
994.0

-212.3
-202.8
-143.6

547.9
579.2

769.5
795.2
795.4

-221.6
-216.0
-159.3

186.2
197.9
214.3

176.8
184.7
198.6

13.2
15.7

1,827.5
2,112.0
2,320.6

1,509.9
1,714.0
1,855.7

3,936.8
4,192.2
4,538.1

1965
1966
1967
1968
1969

....

1970
1971
1972
1973
1974

192.8
1871

195.6
2102

207.3
230.8
263.2

230.7
245.7
269.4

1975
1976

279.1
298.1

332.3

Transition
quarter ...

371.8

1977
1978
1979

81.2

96.0

355.6
399.6
463.3

409.2
458.7
503.5

1980
1981
198Z
1983
1984

517.1

590.9
678.2
745.7
808.3

1985 2
1986 2
1987

734.1
777.1

599.3

617.8
600.6
666.5

850.4

314.2

469.1

636.1

302.2

369.1

661.2

9.4

16.9
225
48.2

41.4

50.7

1

42.8

575

259.1
266.0
270.8

914.3

482

2419
224.3

216.3
214.3

95.8
1130
142.2
1758
202.0

212.4
2129
225.0
248.5
264.1
314.7
342.7
365.1
369.4

1

Not strictly comparable with later data.
Estimates.
N0te.—Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal
year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 is a separate fiscal
period known as the transition quarter.
Refunds of receipts are excluded from receipts and outlays.
See "Budget of the United States Government, FY 1987" for additional information.
2

Sources: Department of the Treasury, Office of Management and Budget, and Department of Commerce (Bureau of Economic
Analysis).




339

TABLE B-74.—Federal receipts, outlays, and debt, fiscal years 1978-87
[Millions of dollars; fiscal years]
Actual
1978

1979

1980

1981

1982

399,561
458 729

463,302
503 464

517,112
590 920

599,272
678 209

617,766
745 706

-59,168

-40,162

-73,808

-78,936

-127,940

314,169
369 072

365,309
403 486

403,903
476 591

469,097
543 013

474,299
594 302

54 902

38 178

72 689

73 9}5

120 003

85,391
89657

97,994
99978

113,209
114329

130,176
135 196

143,467
151 404

-4,266

-1,984

-1,120

-5,020

-7,937

780 425

833 751

914317

1 003 941

1 146 987

169 477
610,948

189 162
644,589

199212
715,105

209 507
794,434

217 560
929,427

115,480
495,468

115,594
528,995

120,846
594,259

124,466
669,968

134,497
794,930

399,561

463,302

517,112

599,272

617,766

180,988
59952
120,967

217,841
65677
138,939

244,069
64600
157,803

285,917
61 137
182,720

297,744
49207
201,498

35576
85,391

40945
97,994

44594
113,209

52545
130,176

58,031
143,467

18,376
5285
6,573

18,745
5411
7,439

24,329
6389
7,174

40,839
6787
8,083

36,311
7,991
8,854

6,641
778

8,327
925

11,767
981

12,834
956

15,186
975

458 729

503 464

590 920

678 209

745,706

104,495
7482
4926
7,992
10,983
11357
6,254
15,521
11841
26,710
18,524
22768
61 488
93861

116,342
7459
5235
9,180
12,135
11236
4,686
17,532
10480
30,223
20,494
26495
66359
104 073

133,995
12714
5832
10,156
13,858
8839
9,390
21,329
11252
31,843
23,169
32090
86540
118547

157,513
13,104
6469
15,166
13,568
11323
8,206
23,379
10,568
33,709
26,866
39,149
99723
139,584

185,309
12,300
7,200
13,527
12,998
15,944
6,256
20,625
8,347
27,029
27,445
46,567
107717
155,964

RECEIPTS AND OUTLAYS:
Total receipts
Total outlays
Total surplus or deficit ( — )
On-budget receipts
On-budget outlays
On-budget surplus or deficit (

)

Off-budget receipts...
Off-budget outlays
Off-budget surplus or deficit ( — )
OUTSTANDING DEBT, END OF PERIOD:
Gross Federal debt
Held by Government agencies
Held by the public
Federal Reserve System
Other
RECEIPTS: ON-BUDGET AND OFF-BUDGET
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions
On-budget
Off-budget
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts:
Deposits of earnings by Federal Reserve System
All other
OUTLAYS- ON-BUDGET AND OFF-BUDGET
National defense
Internationa! affairs
General science space and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development .
Education, training, employment, and social services
Health
Medicare
Income security
Social security

741

See next page for continuation of table.




340

155,120

19,931
4169
3,928
8,369
42,615

21,185
4582
4,448
8,582
52,512

22,991
4762
4,582
6,854
68,734

23,958
4,703
4,532
6,390
84,995

44,839
-2224

54,851
-2339

71,022
-2288

87,065
-2,071

-17,476

- 19,942

-28,041

-26,099

14660
-1060

On-budget
Off-budget

844

138,914

-15,720

Allowances
Undistributed offsetting receipts

670

117,872

37,843
-2403

On-budget
Off-budget

675

103,316

18,978
3810
3,576
8,442
35,441

Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Net interest

757

93,120

On-budget
Off-budget

16362
-1 114

18738
-1,204

26611
-1,430

-24453
-1,646

TABLE B-74.—Federal receipts, outlays, and debt, fiscal years 1978-87—Continued
[Millions of dollars; fiscal years]
Estimates

Actual
Description
1983

1984

1985

1986

1987

600,562
808,327

666,457
851,781

734,057
946,323

777,139
979,928

850.372
994,002

-207,764

-185,324

-212,266

-202,789

-143,630

453,242
661,219

500,382
685,968

547,886
769,515

579,201
795,185

636,097
795,386

-207,977

-185,586

-221,629

-215,984

-159,288

147,320
147,108

166,075
165,813

186,170
176,807

197,938
184,743

214,275
198,617

212

262

9,363

13,195

15,658

1,381,886

1,576,748

1,827,470

2,112,011

2,320,630

240,116
1,141,770

264,159
1,312,589

317,612
1,509,857

398,003
1,714,008

464,942
1,855,688

155,527
986,243

155,122
1,157,467

169,806
1,340,051

600,562

666,457

734,057

777,139

850,372

288,938
37,022
208,994

298,415
56,893
239,376

334,531
61,331
265,163

353,738
70,865
280,438

385,984
86,729
302,804

61,674
147,320

73,301
166,075

78,992
186,171

82,500
197,938

88,529
214,275

35,300
6,053
8,655

37,361
6,010
11,370

35,992
6,422
12,079

34,628
6,073
12,404

35,203
5,661
12,937

14,492
1,108

15,684
1,347

17,059
1,480

16,532
2,461

16,560
4,494

808,327

851,781

946,323

979,928

994,002

209,903
11,848
7,935
9,353
12,672
22,901
6,681
21,334
7,560
26,606
28,641
52,588
122,598
170,724

227,413
15,876
8,317
7,086
12,593
13,613
6,917
23,669
7,673
27,579
30,417
57,540
112,668
178,223

252,748
16,176
8,627
5,685
13,357
25,565
4,229
25,838
7,680
29,342
33,542
65,822
128,200
188,623

265,827
17,141
8,899
4,433
12,905
25,871
3,802
27,106
7,922
30,671
35,669
68,661
118,093
200,053

282,238
18,619
9,188
4,017
11,958
19,541
1,359
25,503
6,525
27,447
34,997
70,234
118,374
212,213

19,993
150,731

7,056
171,167

5,189
183,434

8,050
192,004

5,702
206,510

24,846
5,099
4,789
6,452
89,774

25,614
5,660
5,053
6,768
111,058

26,352
6,277
5,228
6,353
129,436

26,619
6,788
6,270
6,236
142,740

26,420
6,948
6,060
1,739
147,996

91,619
-1,845

114,368
-3,310

133,554
-4,118

147,158
-4,418

152,713
-4,716

-33,976

-31,957

-32,759

-35,776

754
-38,128

-32,198
-1,778

-29,913
-2,044

-30,250
-2,509

-32,933
-2,843

-34,951
-3,177

RECEIPTS AND OUTLAYS:
Total receipts
Total outlays
Total surplus or deficit ( — )
On-budget receipts
On-budget outlays
On-budget surplus or deficit ( — )
Off-budget receipts
Off-budget outlays
Off-budget surplus or deficit (-)
OUTSTANDING DEBT, END OF PERIOD:
Gross Federal debt
Held by Government agencies
Held by the public
Federal Reserve System
Other
RECEIPTS- ON-BUDGET AND OFF-BUDGET
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions
On-budget
Off-budget
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts:
Deposits of earnings by Federal Reserve System
All other
OUTLAYS- ON-BUDGET AND OFF-BUDGET
National defense .
International affairs.
General science, space, and technology.
Energy...
Natural resources and environment.
Agriculture.
Commerce and housing credit,
Transportation.
Community and regional development.
Education, training, employment, and social services .
Health...
Medicare
Income security.
Social security.
On-budget..
Off-budget .
Veterans benefits and services.
Administration of justice
General government
General purpose fiscal assistance
Net interest.
On-budget.
Off-budget .
Allowances.
Undistributed offsetting receipts.
On-budget.
Off-budget

.

Note.—Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis. Beginning October 1976 (fiscal year 1977), the fiscal
year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 is a separate fiscal
period known as the transition quarter.
Refunds of receipts are excluded from receipts and outlays.
See "Budget of the United States Government, Fiscal Year 1987" for additional information.
Sources: Department of the Treasury and Office of Management and Budget.




341

TABLE B-75.—Relation of Federal Government receipts and expenditures in the national income and
product accounts to the budget, fiscal years 1985-87
[Billions of dollars; fiscal years]

Estimate
Receipts and expenditures

1985
1986

1987

734.1

777.1

850.4

32.4
14.6
-6.4
-1.9
0.3

33.9
13.7
1.3
-1.9
0.1

36.0
17.4
3.2
-1.9
0.1

773.1

824.2

905.2

RECEIPTS
Total on-budget and off-budcet receipts
Government contributions for employee retirement (grossing)
Other netting and grossing
Timing adjustments
Geographic exclusions
Federal sector national income and product accounts receipts
EXPENDITURES
946.3

Total on-budget and off-budget outlays
Lending and financial transactions
Government contributions for employee retirement (grossing)
Defense timing adjustment
Bonuses on Outer Continental Shelf land leases
Geographic exclusions
Other
Federal sector, national income and product accounts, expenditures

979.9

994.0

-25.3
32.4
14.6
1.3
2.0
-5.3
-2.8

-10.5
33.9
13.7
3.5
1.9
-5.4
-1.1

-6.3
36.0
17.4
7.0
1.6
-5.4
-0.6

963.2

1,015.9

1,043.7

Note.—See Note, Table B-73.
See Special Analysis B, "Special Analyses, Budget of the United States Government, Fiscal Year 1987"
categories.

for description of these

Sources-. Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and
Budget.




342

TABLE B-76.—Federal and State and local government receipts and expenditures, national income and
product accounts, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Total government

State and local
government

Federal Government

Surplus or
deficit
Calendar year or quarter
Receipts

Expenditures

Surplus or
deficit

(-),

(-),

national
income

Receipts

and

Expenditures

product
accounts

103

1929
1933.
1939

113
9.4
15.4

10.7
17.6

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

17.8
25.0
32.7
49.2
51.2
53.4
52.6
57.8
59.6
56.6

18.5
28.8
64.1
93.4
103.1
92.9
47.2
43.4
51.1
60.0

_ 7
-3^8
-31.4
-44.2
-51.8
-39.5

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

69.4
85.6
90.5
95.0
90.4
101.6
110.2
116.7
115.7
130.3

61.4
79.5
94.3
102.0
97.5
98.5
105.0
115.8
128.3
131.9

8.0
6.1

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

140.4
145.9
157.9
169.8
175.6
190.2
214.4
230.8
266.2
300.1

137.3
150.1
161.6
169.1
177.8
189.6
215.6
245.0
272.2
290.2

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

306.8
327.3
374.0
419.6
463.1
480.0
549.1
616.6
694.4
779.8

317.4
346.8
377.3
411.7
467.4
544.9
587.5
635.7
694.8
768.3

-10.6
-19.5
-3.4

855.1
977.2
1,000.8
1,059.6
1,171.3
1,262.2
991.1
1,003.1
1,000.7
1,008.4
1,017.4
1,061.3
1,069.2
l',090!e
1,143.6
1 1663
1,176.3
1,198.9
1,254.4
1,227.3
1,271.8

889.6
1,006.9
1,111.6
1,190.4
1,279.8
1,401.2
1,067.0
1,080.8
1,123.2
1,175.3
1,167.4
1,185.1
1 1962
1,212.8
1,237.4
1,263.6
1,292.3
1,325.7
1,353.9
1,379.2
1,416.3
14556

1980
1981
1982
1983
1984
1985 " .
1982 1

II
III

IV
1983: 1
||

Ill
IV
1984: I

||
HI
IV

1985: I

||
III
IV

national
income

Surplus or
deficit
Receipts

and

Expenditures

product
accounts

27
4^0
9.0

12
-1.3
-2.2

76
7^2
9.6

8.7
15.5
23.0
39.3
41.1
42.7
40.7
44.1
43.9
39.4

10.0
20.5
56.1
85.9
95.6
84.7
37.2
30.8
35.5
42.0

-1.3
-5.1
-33,1
-46.6
-54.5
-42.1

10.0
10.4
10.6
10.9
11.1
11.6
13.0
15.4
17.7
19.5

11.1
14.4
17.6
20.2

50.4
64.6
67.7
70.4
64.2
73.1
78.5
82.5
79.3
90.6

41.2
58.1
71.4
77.6
70.3
68.6
72.5
80.2
89.6
91.7

21.3
23.4
25.4
27.4
29.0
31.7
35.0
38.5
42.0
46.6

22.5
23.9
25.5
27.3
30.2
32.9
35.9
39.8
44.4
47.0

96.9
99.0
107.2
115.6
116.2
125.8
143.5
152.6
176.9
199.7

93.9
102.9
111.4
115.3
119.5
125.3
145.3
165.8
182.9
191.3

8.4

50.0
54.1
58.6
63.4
69.8
75.5
85.2
94.1
107.9
120.8

49.9
54.5
58.2
62.9
68.8
75.5
84.7
95.2
107.8
119.3

11.5

195.4
202.7
232.2
263.7
293.9
294.9
340.1
384.1
441.4
505.0

207.8
224.8
249.0
269.3
305.5
364.2
393.7
430.1
470.7
521.1

-12.4
-22.0
-16.8
-5.6
-11.6
-69.4
-53.5
-46.0
-29.3
-16.1

135.8
153.6
179.3
196.4
213.1
239.6
270.1
300.1
330.3
355.3

134.0
151.0
165.8
182.9
205.9
235.2
254.9
273.2
301.3
327.7

-34.5
-29.7
-110.8
-130.8
-108.5
-139.0
-76.0
-77.7
-122.5
166.8
-150.0
-123.8
1270
122.2
-93.8
97.3
116.0
-126.8
-99.4
151.9
144.5

553.8
639.5
635.3
658.1
725.1
785.7
636.7
641.1
630.3
633.1
636.3
665.2
6597
671.1
709.4
721.8
727.1
742.1
789.7
754.9
790.7

615.1
703.3
781.2
837.5
898.0
983.0
745.9
754.0
789.1
835.7
824.2
835.8
8394
850.6
867.2
884.9
905.2
934.7

-61.3
-63.8
-145.9
-179.4
-172.9
-197.3
-109.2
-112.9
-158.8
202.6
-187.9
-170.6
1797
-179.5
-157.8
-163.0
-178.1
192.7
-162.6
-209.1
-201.3

390.0
425.6
449.4
487.7
539.8
575.4
437.2
446.8
453.7
459.8
466.9
481.8
4966
505.7
525.5
537.4
542.2
554.1

363.2
391.4
414.3
439.1
475.4
517.1
404.0
411.5
417.4
424.1
429.0
435.1
4439
448.5
461.5
471.7
480.1
488.3
497.2
512.7
524.9
533.6

5.4

14.4

8.4
-3.4

-3.8
-7.0
-7.1

3.1
5.2
.9
-12.6
-1.6

3.1
-4.3
-3.8

.7

-2.3

.5

-1.3
-14.2
-6.0

9.9

7.9

-4.3
-64.9
-38.4
-19.1

-.4

952.4
964.0
992.0
1,023.4

3.5
13.4

8.3
-2.6

9.2
6.5
-3.7
-7.1
-6.0

4.4
6.1
2.3
-10.3
-1.1

3.0
-3.9
-4.2

.3
-3.3

.5
-1.8
-13.2
-6.0

and

product
accounts

38
2.7
6.8

10
-1.4
-2.2

(-),

national
income

560.5
570.0
581.8

78

l.l

9.6
9.3
9.1
8.8
8.4
8.5
9.0

02
-.1
.0
.6
1.3
1.8
2.4
2.7
2.6
1.9
1.0
.1
-.7
-1.2

-.4
-.0
.1
-1.1
-1.3

-.9
-1.4
-2.4

-.4
.1
-.4
.5
.5
1.0
-.0
.5
-1.1

.1
1.5

1.8
2.6
13.5
13.5

7.2
4.5

15.2
26.9
28.9
27.6
26.8
34.1
35.1
48.6
64.4
58.3
33.2
35.2
36.3
35.8
37.9
46.8

527
57.2
64.0
65.7
62.1
65.8
63.2
57.3
56.9

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.




343

TABLE B-77.—Federal and State and local government receipts and expenditures, national income and
product accounts, by major type, 1929-85
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Expenditures

Receipts

Year or quarter

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956 .
1957
1958
1959
1960
1961
1962. . .
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981 . .
1982
1983
1984 p
1985
1982- 1 . . .
II
Ill
IV
1983:1
||
III
IV
1984:1
||
III
IV
1985- 1
II
Ill
IV P.

Total

11.3
9.4
15.4
17.8
25.0
32.7
49.2
51.2
53.4
52.6
57.8
59.6
56.6
69.4
85.6
90.5
95.0
90.4
101.6
110.2
116.7
115.7
130.3
140.4
145.9
157.9
169.8
175.6
190.2
214.4
230.8
266.2
300.1
306.8
327.3
374.0
419.6
463.1
480.0
549.1
616.6
694.4
779.8
855.1
977.2
1,000.8
1,059.6
1,171.3
1,262.2
991.1
1,003.1
1,000.7
1,008.4
1,017.4
1,061.3
1,069.2
1,090.6
1,143.6
1,166.3
1,176.3
1,198.9
1,254.4
1,227.3
1,271.8
1,295.2

Personal
tax
and
nontax
receipts

2.6
1.4
2.4
2.6
3.3
5.9
17.8
18.9
20.8
18.7
21.4
21.0
18.5
20.6
28.9
34.0
35.5
32.5
35.4
39.7
42.4
42.2
46.1
50.5
52.2
57.0
60.5
58.8
65.2
74.9
82.4
97.7
116.3
116.2
117.3
142.0
152.0
171.8
170.6
198.7
228.1
261.1
304.7
340.5
393.3
409.3
411.1
441.8
493.1
407.1
414.1
405.0
411.1
407.4
418.0
404.4
414.4
423.6
433.6
447.5
462.4
501.7
462.4
498.2
510.1

Corporate
profits
tax accruals

1.4
.5
1.4
2.8
7.6
11.4
14.1
12.9
10.7
9.1
11.3
12.4
10.2
17.9
22.6
19.4
20.3
17.6
22.0
22.0
21.4
19.0
23.6
22.7
22.8
24.0
26.2
28.0
30.9
33.7
32.7
39.4
39.7
34.4
37.7
41.9
49.3
51.8
50.9
64.2
73.0
83.5
88.0
84.8
81.1
63.1
75.2
93.6
85.7
64.2
64.0
64.3
59.8
58.9
73.8
84.1
84.0
99.1
100.6
87.4
87.4
83.4
82.3
87.4
89.8

Indirect
business
tax
and
nontax
accruals
7.1
7.1
9.4
10.1
11.3
11.8
12.8
14.2
15.5
17.1
18.4
20.1
21.3
23.4
25.3
27.7
29.7
29.6
32.2
35.0
37.4
38.6
41.7
45.3
48.0
51.5
54.6
58.7
62.5
65.2
70.1
78.7
86.3
94.0
103.4
111.1
120.8
129.0
140.0
151.7
165.7
178.1
189.4
213.3
251.5
258.8
282.5
310.6
328.5
254.5
256.2
260.1
264.5
267.0
281.1
288.3
293.7
302.4
308.8
314.0
317.4
321.3
329.8
329.8
333.0

Net interest paid
Purchases Transof
fer
goods payand ments
services

Contributions
for
social Total »
insurance

0.3

2.2
2.4
2.8
3.5
4.6
5.2
6.3
7.7
6.7
6.0
6.6
7.4
8.8
9.3
9.6
10.6
12.0
13.5
15.5
15.9
18.8
21.9
22.9
25.4
28.5
30.1
31.6
40.6
45.5
50.4
57.9
62.2
68.9
79.0
97.6
110.5
118.5
134.5
149.8
171.7
197.8
216.5
251.2
269.6
290.8
325.2
354.9
265.2
268.7
271.3
273.0
284.1
288.3
292.4
298.5
318.6
323.2
327.4
331.7
348.0
352.9
356.4
362.3

10.3
10.7
17.6
18.5
28.8
64.0
93.3
103.1
92.9
47.2
43.4
51.1
60.0
61.4
79.5
94.3
102.0
97.5
98.5
105.0
115.8
128.3
131.9
137.3
150.1
161.6
169.1
177.8
189.6
215.6
245.0
272.2
290.2
317.4
346.8
377.3
411.7
467.4
544.9
587.5
635.7
694.8
768.3
889.6
1,006.9
1,111.6
1,190.4
1,279.8
1,401.2
1,067.0
1,080.8
1,123.2
1,175.3
1,167.4
1,185.1
1,196.2
1,212.8
1,237.4
1,263.6
1,292.3
1,325.7
1,353.9
1,379.2
1,416.3
1,455.6

8.9
8.3
13.6
14.2
25.0
59.8
88.9
97.1
83.0
29.1
26.4
32.6
39.0
38.8
60.4
75.8
82.8
76.0
75.3
79.7
87.3
95.4
97.9
100.6
108.4
118.2
123.8
130.0
138.6
158.6
179.7
197.7
207.3
218.2
232.4
250.0
266.5
299.1
335.0
356.9
387.3
425.2
467.8
530.3
588.1
641.7
675.7
736.8
814.6
622.1
625.7
647.1
671.8
669.3
673.8
681.1
678.6
696.5
735.1
747.3
768.4
777.2
794.8
832.5
853.7

1.0
1.5
2.6
2.7
2.6
2.7
2.4
3.0
6.0
13.1
13.1
14.5
16.9
18.0
14.8
14.3
15.1
17.1
18.5
19.4
22.2
26.5
27.6
29.4
33.7
34.8
36.8
38.3
41.3
46.0
54.7
62.9
69.7
84.1
99.8
111.3
127.0
150.9
189.6
207.2
221.6
239.5
268.0
319.2
362.2
404.0
435.1
448.1
478.5
382.7
393.1
410.4
429.7
428.5
436.8
434.0
441.0
441.9
444.7
449.3
456.5
470.2
474.4
483.2
486.0

Total

0.7
1.0
1.1
1.2
1.2
1.4
1.9
2.4
3.2
4.1
4.2
4.2
4.3
4.4
4.5
4.5
4.6
4.7
4.7
5.2
5.6
5.4
6.3
6.9
6.4
6.9
7.4
7.9
8.1
8.5
8.9
10.3
11.5
12.4
12.5
12.9
15.2
16.5
18.8
23.2
25.1
28.2
30.8
36.3
52.2
60.1
68.1
88.4
102.7
57.9
59.3
61.9
61.4
62.1
65.1
70.5
74.6
80.3
83.3
92.4
97.7
99.9
103.8
100.9
106.1

Less:
InterInter- est reest ceived
by
paid
government

10.1
9.9
10.8
11.6
12.5
13.2
14.5
15.7
18.1
19.8
22.3
23.1
24.8
29.6
33.6
37.7
43.6
47.9
56.5
68.2
83.2
109.1
128.3
145.1
173.9
193.8
122.0
126.3
131.5
133.2
136.1
140.8
148.7
155.0
162.7
168.4
178.8
185.7
188.6
193.1
194.1
199.3

Less:
Dividends
received
by
government

3.3
3.5
3.9
4,2
4.6
5.1
6.0
6.8
7.7
8.3
9.9
10.6
11.9
14.3
17.1
18.9
20.4
22.8
28.3
37.5
46.9
56.9
68.1
77.1
85.4
91.1
64.1
67.0
69.6
71.8
74.0
75.8
78.1
80.4
82.4
85.1
86.3
88.0
88.6
89.3
93.2
93.2

1
Includes an item for the difference between wage accruals and disbursements, not shown separately.
Source: Department of Commerce, Bureau of Economic Analysis.




344

bT

.2
.2
.3
.3
.5
.9
.9
.9
1.3
1.7
2.0
1.9
2.3
2.9
2.8
3.5
4.7
2.8
2.9
3.0
3.1
2.8
2.7
2.7
2.9
3.2
3.4
3.6
3.8
4.1
4.5
4.8
5.2

Subsidies
less
current
surplus of
government
enterprises

Surplus
or
deficit
(-),
national
income
and
product accounts

-0.2
1.0
14
.0
.4 -2.2
.4
-.7
.1
38
.1 -31.4
.1 -44.1
.6 -51.8
-39.5
5.4
!9
_2
14.4
-!i 8.4
-.3 -3.4
.1
8.0
-.1
6.1
-.3
38
_ 5 -7.0
-'.3 -7.1
.0
3.1
.7
5.2
.7
.9
1.1 -12.6
.1
1.6
.4
3.1
1.7 -4.3
1.8 -3.8
.7
1.1
1.7 -2.3
1.6
2.5 -U
1.6 -14.2
1.4 -6.0
9.9
1.9
2.9 -10.6
2.6 -19.5
3.7 -3.4
3.5
7.9
1.2 -4.3
2.4 -64.9
1.0 -38.4
3.0 -19.1
-.4
3.9
11.5
3.5
5.7 -34.5
6.7 -29.7
8.7 -110.8
13.9 -130.8
10.1 -108.5
9.9 -139.0
6.9 -76.0
5.6 -77.7
6.7 122.5
15.4 -166.8
10.3 -150.0
10.8 -123.8
13.0 -127.0
21.5 -122.2
22.0 -93.8
4.0 -97.3
6.9 -116.0
7.4 -126.8
10.7 -99.4
9.5 -151.9
4.4 -144.5
14.9 -160.4

Addendum:
Grantsin-aid
to
State
and
local
governments

0.1
LO
.9
.8
.9
.9
.9
.9
1.1
1.7
2.0
2.2
2.3
2.5
2.6
2.8
2.9
3.1
3.3
4.2
5.6
6.8
6.5
7.2
8.0
9.1
10.4
11.1
14.4
15.9
18.6
20.3
24.4
29.0
37.5
40.6
43.9
54.6
61.1
67.5
77.3
80.5
88.7
87.9
83.9
86.2
93.6
98.9
82.9
84.7
83.3
84.5
85.8
85.8
87.1
86.2
91.3
93.0
93.0
97.3
95.7
97.6
100.6
101.5

TABLE B-78.—Federal Government receipts and expenditures, national income and product accounts,
1964-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Receipts

Indirect
Personal Corpo- business
rate
Total tax and profits tax and
nontax tax
nontax
receipts accruals accruals

Year or
quarter

Fiscal: 2
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975..
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985 3
1986 3
1987

Expenditures
Purcha ses of
goods and
serv

Contributions
for
social Total !
insurTotal
ance

Net
interest
paid

Subsidies
less
current
surplus
of
government
enterprises

Surplus
or
deficit
( ),
national
income
and
product
accounts

Transfer
payments

Grantsin-aid
to
State
and
To for- local
To
National persons eign- govdefense
ers
ernments

116.8
121.4
134.0
148.1
162.1
192.5
198.0
196.2
217.9
245.3
277.2
290.5
322.6
374.7
424.3
491.2
538.6
623.8
643.3
644.6
710.1
773.1
823.2
905.2

50.7
51.4
57.5
64.4
71.4
90.2
94.0
87.9
100.5
107.5
122.7
127.5
137.1
165.9
186.5
222.9
250.7
289.6
310.0
292.9
304.0
345.2
360.1
392.1

25.7
27.1
30.8
30.3
33.1
36.8
32.9
31.9
34.2
40.9
43.4
42.1
52.1
59.0
67.8
75.7
70.2
69.4
52.1
54.5
73.6
67.6
84.8
104.1

15.5
16.8
15.4
15.7
17.0
18.6
19.1
20.0
19.8
20.6
21.3
22.1
24.2
24.5
27.1
29.0
35.3
53.4
50.0
50.2
54.9
56.4
55.8
60.7

25.0 118.4
26.0 119.9
30.2 134.3
37.7 156.7
40.6 174.4
46.9 187.3
52.0 198.7
56.5 216.8
63.4 237.1
76.3 260.4
89.8 283.9
98.8 335.7
109.1 378.9
125.4 419.6
142.9 459.9
163.6 506.4
182.3 589.0
211.4 682.4
231.1 755.9
247.0 833.5
277.6 875.6
304.0 963.2
322.5 1,015.9
348.3 1,043.7

67.0
65.8
73.9
87.6
97.0
100.3
99.8
98.3
104.4
105.3
109.3
123.9
132.2
146.8
158.6
173.1
199.9
231.8
264.4
288.2
299.5
342.2
358.6
372.7

51.5
49.4
55.7
68.8
77.0
78.5
78.2
75.7
76.2
77.1
78.8
86.3
91.5
99.2
106.3
117.7
137.2
160.7
187.3
211.3
230.8
255.7
269.9
289.4

27.4
28.4
31.8
37.2
42.9
48.9
55.3
68.1
76.5
87.6
102.3
131.9
154.3
167.1
179.3
198.5
235.4
274.6
305.6
339.7
342.3
359.9
378.4
393,8

2.3
9.8 7.7
2.3 10.9 8.2
2.4 12.7 8.7
2.3 14.8 9.6
2.2 17.8 10.4
2.3 19.2 12.0
2.2 22.6 13.5
2.5 26.8 14.1
3.0 32.6 14.0
2.8 40.4 15.7
3.2 41.6 19.6
3.7 48.4 21.7
3.7 57.5 25.1
4.1 66.3 28.5
4.4 74.7 33.5
5.1 79.1 40.7
5.8 86.7 50.8
6.7 90.1 66.7
7.2 83.4 82.2
7.7 85.7 90.6
9.9 90.7 109.7
13.1 97.8 128.7
15.5 102.6 139.8
14.1 93.9 146.1

4.1
4.3
4.8
5.2
4.1
4.7
5.5
7.0
6.5
9.1
7.7
5.9
6.2
6.9
9.7
9.9
10.4
12.5
13.0
21.2
23.5
21.4
21.0
23.1

-1.5
1.4
-.3
86
123
5.2
_7
-20.5
-19.2
-15.2
-6.8
-45.3
-56.3
-44.8
-35.6
-15.2
-50.4
-58.5
-112.6
-188.9
-165.5
-190.1
-192.7
-138.6

116.2
125.8
143.5
152.6
176.9
199.7
195.4
202.7
232.2
263.7
293.9
294.9
340.1
384.1
441.4
505.0
553.8
639.5
635.3
658.1
725.1
785.7

48.6
53.9
61.7
67.5
79.7
95.1
92.6
90.3
108.2
114.7
131.3
125.9
147.3
169.8
194.9
231.0
257.9
298.9
304.5
295.0
311.3
351.1

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
71.4
74.4
70.3
65.7
49.0
59.3
74.4
67.6

16.1
16.4
15.5
16.2
17.9
18.9
19.2
20.3
19.9
21.1
21.6
23.8
23.3
25.0
28.0
29.3
38.8
56.2
48.1
51.6
55.8
57.0

25.4
26.6
34.9
38.9
43.2
49.6
52.9
58.7
67.5
84.6
95.9
101.6
115.0
127.7
147.0
170.3
186.8
218.8
233.7
252.2
283.6
309.9

119.5
125.3
145.3
165.8
182.9
191.3
207.8
224.8
249.0
269.3
305.5
364.2
393.7
430.1
470.7
521.1
615.1
703.3
781.2
837.5
898.0
983.0

66.4
68.7
80.4
92.7
100.1
100.0
98.8
99.8
105.8
106.4
116.2
129.2
136.3
151.1
161.8
178.0
2081
242.2
272.7
284.8
312.9
353.9

50.4
51.0
62.0
73.4
79.1
78.9
76.8
74.1
77.4
77.5
82.6
89.6
93.4
100.9
108.9
121.9
142.7
167.5
193.8
215.7
237.0
262.0

27.9
30.3
33.5
40.2
46.2
50.8
61.6
73.0
80.9
93.7
115.0
146.8
159.3
170.1
182.4
205.6
247.0
282.1
316.3
340.0
344.4
366.4

2.3
2.3
2.4
2.4
2.3
2.2
2.3
2.7
2.9
2.9
3.6
4.0
4.4
4.2
4.7
5.2
6.5
6.5
7.8
8.5
10.7
13.3

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
80.5
88.7
87.9
83.9
86.2
93.6
98.9

8.0
8.4
9.2
9.8
11.3
12.7
14.1
13.8
14.4
18.0
20.7
23.0
26.8
29.1
35.2
42.5
53.3
72.4
84.6
94.3
115.5
129.0

4.5
4.6
5.5
4.7
4.5
5.2
6.5
6.3
7.9
7.8
5.6
6.9
5.8
8.2
9.5
9.2
11.5
12.3
16.0
23.2
21.1
21.3

-3.3
.5
-1.8
-13.2
-6.0
8.4
-12.4
-22.0
-16.8
-5.6
-11.6
-69.4
-53.5
-46.0
-29.3
-16.1
-61.3
-63.8
-145.9
-179.4
-172.9
197.3

1983:1

II
Ill
IV

636.3
665.2
659.7
671.1

297.1
304.2
286.2
292.5

46.5
58.2
66.4
66.1

46.3
52.8
53.7
53.6

246.5
250.1
253.4
258.8

824.2
835.8
839.4
850.6

287.1
287.0
286.0
279.2

209.4
214.5
215.8
222.9

338.2
343.6
338.2
340.1

6.2
7.2
8.4
12.2

85.8
85.8
87.1
86.2

88.0
91.1
96.8
101.2

18.8
19.8
22.5
31.6

-187.9
-170.6
-179.7
-179.5

1984- 1
II
III
IV

709.4
721.8
727.1
742.1

297.8
303.9
315.7
327.8

78.9
80.1
69.4
69.2

54.6
55.8
56.7
56.2

278.1
282.0
285.4
288.9

867.2
884.9
905.2
934.7

285.6
314.8
318.5
332.9

228.3
235.8
236.2
247.5

342.5
3