Full text of Economic Report of the President : 1988
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Tifcn^tted.totheQ Economic Report of the President Transmitted to the Congress February 1988 TOGETHER WITH THE ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1988 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*..... 11 CHAPTER 1. T H E U.S. ECONOMY: PERFORMANCE AND PROSPECTS . 19 CHAPTER 2. RISING EMPLOYMENT, PRODUCTIVITY, AND INCOME.... 57 CHAPTER 3. ADJUSTMENT AND GROWTH IN A CHANGING WORLD ECONOMY 89 CHAPTER 4. EXPANDING TRADE AND AVOIDING PROTECTIONISM ... 127 CHAPTER 5. KNOWLEDGE, MARKETS, AND ECONOMIC PROGRESS.... 163 CHAPTER 6. AIRLINE DEREGULATION: MAINTAINING THE MOMENTUM 199 APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE COUNCIL OF ECONOMIC ADVISERS DURING 1987 APPENDIX B. STATISTICAL TABLES EMPLOYMENT, AND PRODUCTION RELATING - TO *For a detailed table of contents of the Council's Report, see page 15. (Ill) 231 INCOME, 241 ECONOMIC REPORT OF THE PRESIDENT ECONOMIC REPORT OF THE PRESIDENT TO THE CONGRESS OF THE UNITED STATES: My first Economic Report, issued in 1982 after a year in office, could look only to the future for encouraging economic news. The task of rebuilding the economy was just beginning, and hard choices were being made. Inflation had begun to come down from double-digit rates, but America was mired in recession, its second in as many years. Today, however, we can point to real, solid economic progress. The policies of this Administration have spurred and sustained a record economic expansion—the longest in U.S. peacetime. Fifteen million new jobs have been created during this expansion, with strong gains widespread across industries and demographic groups. Real gross national product (GNP) has risen nearly 23 percent during these 5 years of growth. And the accomplishments are not all in the past. Our policies will continue to contribute to rising standards of living in the years ahead. By enhancing private incentives and opportunities for work, investment, and entrepreneurship, we have laid the groundwork for growth far into the future. To ensure that the renewed energy of the private sector remains a force for growth, we must continue our efforts to bring down the Federal deficit through restraint on spending, to resist the siren song of protectionism, to support policies that foster noninflationary economic growth, and to rein in government when it threatens to make our markets less open, our industries less responsive, or our economy less flexible. THE ECONOMIC EXPANSION Since November 1982, the U.S. economy has grown without interruption and without a resurgence of inflation. Only twice before in our Nation's history—but never during peacetime—has recorded economic growth continued for so long. During the current expansion a strong increase in employment, combined with low rates of inflation and higher productivity growth, have meant rising standards of living for the American people. Employment has increased dramatically, and all demographic groups have benefited. While overall employment has risen about 15 percent since November 1982, employment of blacks has increased by more than 25 percent and employment of Hispanics by more than 40 percent. Correspondingly, unemployment rates—especially among minorities—have fallen rapidly, although those rates are still unacceptably high. I believe that all who want jobs should be able to obtain employment commensurate with their skills and abilities. As the unemployment rate has declined by almost one-half, some have claimed that the new jobs are low-quality, dead-end positions, while others have argued that booming employment has put us on the verge of another round of inflation. Neither view is accurate. The facts show that the strongest job growth has been in the higher paid, high-skill occupations. The bulk of the new jobs created have been full-time positions in occupations that pay well. While it is true that the number of jobs in manufacturing has risen more slowly than in the service-producing sector of the economy, this is a reflection of the innovation of American business and the skill of American workers, not a sign that the United States is "deindustrializing." The share of manufacturing output in total output actually has risen over the course of the expansion, and it is now above its postwar average. However, rapid increases in manufacturing productivity have meant slower growth in employment in this sector. This strong productivity growth, in combination with the downward adjustment of the dollar's exchange rate, has lifted the competitiveness of our products on world markets. Around the globe, products "Made in the U.S.A.*' are becoming more common and more sought after. Moreover, I do not believe that our economy has yet reached its full potential, or that our economic growth threatens price stability. Growth can and should continue. With sound and stable economic policies, saving and investment will be encouraged, and the Nation's productive capacity will continue to expand. I remain committed to the goal of price level stability, and I view the decline in inflation during my Administration as a major accomplishment. I would not take lightly the prospect of a resurgence of inflation. But economic growth itself will not lead to a spiral of worsening inflation; only irresponsible economic policies would do that. Our economic projections show inflation slowing during the coming years, even as output grows at a robust average annual rate of 3.2 percent. But continued economic progress requires that policymakers adhere to forward-looking principles, pursuing the long-term best interests of the Nation through a sustained commitment to growth and stability. The prospects for growth in the immediate future have been diminished somewhat by last year's plunge in the stock market, as well as by the increase in interest rates and tightening of monetary policy during 1987. Nevertheless, I anticipate that the U.S. economy will continue to post gains in 1988, as the expansion moves through its 6th year. The past 5 years have marked an outstanding period of economic growth in the United States. It has been unusual in its longevity, unusual for the fact that inflation has remained subdued, and unusual relative to the performance of other industrial economies. Between 1982 and 1986, American businesses, large and small, created two and one-half times as many new jobs as Japan and the major industrial countries of Europe combined. In 1987 this trend appears to have continued, as the U.S. economy again generated new jobs at a remarkable rate. The U.S. unemployment rate has fallen 5 percentage points, and now stands well below those in most other major industrialized countries, where unemployment rates have yet to recover fully from the last recession. Overall, we have not lost jobs because of foreign trade. Instead, growth-oriented policies of lower and fairer taxes, reduced interference by government, and free and open international trade have been a source of strength for the economy. Indeed, the U.S. economy has flourished, and the outlook is full of promise. THE ROLE OF GOVERNMENT IN THE ECONOMY It is hard to believe that at the beginning of the 1980s the prevailing attitude toward the economy could best be described as despair. Inflation and interest rates had ratcheted higher with each successive business cycle, and, as the economy suffered through its second recession in 2 years, the goal of sustainable growth appeared increasingly elusive. Amid double-digit inflation and unemployment rates, there were calls for the Federal Government to do more and more, thereby compounding the failed policies of the past. Instead, I took government policy back to the basics, and the last 5 years of economic growth testify to the vitality of free markets and the productivity of the American people. Government intrusions in the Nation's economic life have been reduced, and the private sector has responded with an explosion of activity, creating new products and new jobs at a very rapid rate. The Federal Government has an important role to play in the Nation's economy, but it is a limited role. As a general proposition, economic decisions should be left to the private sector, which has been our economy's strength throughout its history, or to State and local governments when the issues cannot be handled satisfactorily by the private sector. Only in issues truly national in scope is there a role for the Federal Government. We have made efforts to restrain Federal spending, to limit it to only the government's vital functions, and those efforts have borne fruit. Last fiscal year, for the first time in 14 years, Federal outlays, after adjustment for inflation, declined. Government spending on goods and services absorbs resources that might be used better by the private sector, and any Federal outlay must be financed eventually by inflation or taxes. Because there is no free lunch, we must make the hard choices, funding only those programs that are in the best interest of the Nation, not those that happen to have the most influential lobbyists. For example, while a strong national defense is rightly the responsibility of the Federal Government, a continued proliferation of pork-barrel projects is not. America's sense of fair play is violated when hard-earned tax dollars are needlessly turned over to powerful special interests. In the conduct of macroeconomic policies, we have turned away from the stop-and-go policies of the past. My Administration has adopted a long-term view that fiscal policy determines the division of economic activity between the public and private sectors and is not meant to respond to every rise and fall in the economic data. Similarly, monetary policy should provide adequate liquidity for sustained noninflationary growth. Together, these policies create a stable environment in which individuals and businesses can plan for the future and make the most of their economic opportunities. For too long the Federal Government has interfered unnecessarily in private economic decisions. There is a legitimate, although limited, role for the Federal Government in certain industries—for example, in ensuring the safety and soundness of the Nation's banking and payments systems. But many government regulations impede the operation of markets, inhibit competition, or impose costs on firms and raise the prices faced by consumers, without providing commensurate benefits. Regulations that interfere with the efficient use of labor, investment, and raw materials ultimately reduce our productive potential, making this country worse off. While my Administration has been successful in reducing many regulations and intrusions into markets, much remains to be done. We must lessen remaining disincentives to work, diminish the burden of Federal regulations, and dismantle government programs that needlessly subsidize inefficient producers. In particular, we must release financial institutions from outdated legal restraints, eliminate the remaining controls on interstate trucking, deregulate natural gas, and repeal mileage standards for new automobiles. We must resist appeals for even more government intervention that would introduce additional inefficiencies, such as requiring advance notification of layoffs and plant closings. With few exceptions, the private sector is best able to allocate resources to their most highly valued uses, and it should be allowed to do so without excessive paperwork and restrictions. That is why privatization, deregulation, and private sector initiatives have been important elements of my economic program. I be- lieve in the inherent dynamism of the private sector, and I believe that the most constructive thing government usually can do is simply get out of the way. THE INTERNATIONAL ENVIRONMENT This Administration has been a force for economic change in the United States and, by our example, in the world at large. Our proven market-oriented policies are being adopted in more and more countries around the globe, as they recognize the high costs of big government and the harmful effects of stifling the entrepreneurial spirit. In order to enhance growth and economic opportunity, many nations have followed our lead, undertaking reductions in sky-high tax rates that diminish incentives to work, save, and produce. In addition, tax reform is becoming a worldwide movement. Just as in the United States, tax reform abroad promises to end many distortions and inefficiencies, allowing businesses and individuals to make decisions about production and investment in order to increase their economic well-being, rather than simply to reduce their tax bills. From continent to continent, the benefits of privatization and deregulation are becoming appreciated. Even China, and perhaps now even the Soviet Union, appear to be edging toward freer economic systems. Instead of viewing private enterprise as the adversary, many governments now see it as their best hope for progress and prosperity. Developing as well as industrialized nations are reducing market rigidities and interferences, thereby expanding economic freedom and opportunity for their citizens. In those developing countries that encourage investment and private enterprise, the ensuing economic growth should contribute to lessening their debt problems. The debt burden carried by developing countries is not just their problem; we all have a vital interest in finding solutions that promote growth and protect open international financial markets. And we will continue to work with all who display a real determination to deal with this difficult issue. The United States has been a constructive force in the world economy, not only by demonstrating the benefits of private enterprise, but also by our commitment to free trade and international economic cooperation. In addition, this Nation's strong demands for imports helped support output growth abroad during much of this decade. The world economy has become increasingly interdependent, as trade has multiplied and financial markets have become essentially global. To continue to reap the benefits of an open international trading system, we are committed to reducing further the barriers that interfere with the free flow of goods, services, and capital. To this end, the United States has entered into, and will continue to seek out, bilateral and multilateral agreements to lower impediments to international commerce. The Free-Trade Agreement recently negotiated with Canada is an historic accomplishment. Once the necessary implementing legislation is passed, it will establish the largest international free-trade area in the world. At the same time, in the Uruguay Round of the multilateral negotiations under the General Agreement on Tariffs and Trade, we have been working to lower trade barriers worldwide. In that forum, we have placed special emphasis on eliminating spiraling subsidies to agricultural production and harmful barriers to agricultural imports, on establishing and enforcing adequate protections for intellectual property, on liberalizing trade in services, and on ensuring evenhanded treatment of foreign investment. Through these avenues and others, we will continue to pursue the goal of free and fair trade, which can only expand opportunity and prosperity both at home and abroad. THE CHALLENGES AHEAD The American people elected me to this office with a vision of a reinvigorated economy, and I have watched that vision become reality. The resurgence of America has confirmed my optimism. The accomplishments of the last 7 years should inspire us, but not blind us to the important challenges that remain. Foremost among our challenges is the continued high level of Federal spending and the budget deficit. Federal receipts last year were $255 billion above their level in 1981; nevertheless, the deficit has nearly doubled since then, bloated by a $326 billion increase in outlays. Although we have succeeded recently in slowing the growth of spending, and the deficit declined by $71 billion in the last fiscal year, the deficit is still too large. Recent progress in controlling Federal outlays notwithstanding, as a percent of GNP, outlays remain well above the postwar average. The government continues to spend too much, absorbing resources that could be put to better use by the private sector. There are several essential functions of the Federal Government, such as providing a strong national defense and ensuring an appropriate safety net for those in need, but in many areas the government's presence is oppressive and unnecessary. Tax increases are not the key to eliminating the deficit. Some taxes are unavoidable—the necessary functions of the Federal Government must be paid for. But tax reform and the cuts that have been instituted in income tax rates represent successful efforts to find less distorting, less burdensome, and more equitable means of financing government. Undoing tax reform through tax increases would affect eco- nomic activity adversely by raising uncertainty about government policy and reducing incentives to work and produce. Rather, in coming years we should look to ways to enhance incentives for investment in future productive capacity, including reducing the tax rate on capital gains. The Gramm-Rudman-Hollings law and our recent agreement with the Congress on a 2-year budget-trimming package have charted the course for additional deficit reduction. Those are steps in the right direction. But the budget process itself remains a major obstacle to eliminating the deficit. And I am not the only one to have noticed that the budget process is a disaster; a recent survey of Members of Congress identified it as a major source of frustration. The process is not working and it must be reformed; discipline and responsibility must be restored. Current budget practice is to deliver a pair of mammoth bills that must be passed and signed in a matter of hours—or the government has to shut down. This is not responsible government, and I will not sign another of these behemoths. This budget process does not serve the best interests of the Nation, it does not allow sufficient review of spending priorities, and it undermines the checks and balances established by the Constitution. So that such massive appropriations bills do not have to be an allor-nothing proposition, I have asked for the line-item veto, a power that 43 State Governors already have. With a line-item veto, future Presidents could pare away waste and enforce budget discipline. In addition, expanded rescission powers would allow the Executive to cut unnecessary spending on programs that, in many cases, have outlived their usefulness. Finally, to ensure that balanced budgets become a permanent feature of our fiscal landscape, the legislatures of 32 States have asked for—and I endorse—a constitutional amendment to force the Federal Government to live within its means. These steps must be taken, because the current budget process is impeding budget progress. By its very nature, the democratic process is often messy and unfocused. But we know that democracy works and that tough decisions can be made. We must rise to the challenge again and prove that we can craft sound budgets through a sensible process. We also must resist efforts to push the Nation into protectionism. Our foreign trade deficit is very large, but it has turned the corner in real terms. Last year foreign trade contributed significantly to our economic growth. Moreover, further improvements are on the way. At this point especially, it would be a tragic mistake to attempt to close the trade gap by closing our markets. Isolating U.S. markets could only lead to a global downward spiral in trade and economic activity. My Administration is committed to working diligently with the Congress to draft responsible trade legislation, but if that legislation is not free of harmful protectionist measures, I will veto it. Our goal is to see the trade deficit reduced in an environment of sustained economic growth and low inflation. To this end, we are working with the other major industrial countries to coordinate economic policies that sustain noninflationary economic growth, encourage an orderly reduction of international imbalances, and thereby foster stability of exchange rates. We must maintain the confidence of foreigners and our citizens alike in the ability of the United States to generate profitable investment opportunities and to follow responsible economic policies. The vitality of free and open markets, full of opportunity and promise, is the best foundation for investment. We must see to it that our tax structures and regulations do not discourage saving and investing. We must encourage investment not only in plant and equipment, but also in the American people themselves. Education, skills, research and development—these are some of the most fruitful areas for investment; expanded knowledge enhances the productive potential of our most valuable resource, our people. CONCLUSION America is blessed with great gifts—abundant land and natural resources, a diverse and hard-working people, an unshakable tradition of democratic values. My confidence in America has been shown to be well-founded over these past few years. The economy has been revitalized, and the record peacetime economic expansion has brought with it renewed opportunities and enhanced well-being. We set ourselves a formidable task: to reduce and to rationalize the role of government in the economy. That effort has been richly rewarded. During our watch, the U.S. economy again has shown its strength. But our job is not finished. The Federal budget must be controlled in order to build a solid foundation for future economic growth. And I will not be satisfied until all Americans share in this prosperity; there are still too many enmeshed in poverty and without jobs. We must rise to our remaining challenges, heartened by our triumphs and inspired by the resilience of a resurgent America. THE WHITE HOUSE FEBRUARY 19, 1988 10 THE ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS 11 LETTER OF TRANSMITTAL COUNCIL OF ECONOMIC ADVISERS, Washington, D.C, February 16, 1988. MR. PRESIDENT: The Council of Economic Advisers herewith submits its 1988 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 X Michael L. Mussa Member 13 C O N T E N T S Page CHAPTER 1. THE U.S. ECONOMY: PERFORMANCE AND PROSPECTS . Overview of the Report The Macroeconomic Setting Employment, Productivity, and Income External Imbalances Opening Markets and Avoiding Protectionism Knowledge and Progress Airline Deregulation The U.S. Economy in 1987 Sources of Demand Inflation and Relative Price Changes Industrial Composition Macroeconomic Policies Fiscal Restraint Monetary Policy The Break in the Stock Market The Crash The Economic Implications . The Policy Response The Economic Outlook Forecast for 1988 Projections for 1989-93 Determinants of Growth 1988-93 ; Conclusion CHAPTER 2. RISING EMPLOYMENT, PRODUCTIVITY, AND INCOME.... Employment and Output The Breadth of Employment Gains Changes in Job Quality Shifts in Sectoral Output and Employment Changing Patterns of Demand and Productivity Income and Productivity Increases in Living Standards Labor Compensation and Per Capita Income Determinants of Productivity Growth Sectoral Differences in Productivity Growth Problems of Productivity Measurement 15 19 19 19 20 21 21 22 23 23 24 26 28 30 30 32 39 40 41 43 45 46 49 51 55 57 58 59 60 61 64 66 67 69 72 72 75 Page Competition and Adjustment in Manufacturing Unemployment and Inflation Frictional Unemployment Inflation and Unemployment Tradeoff...... Prospects for Reducing Unemployment Conclusion 76 79 80 81 84 87 CHAPTER 3. ADJUSTMENT AND GROWTH IN A CHANGING WORLD ECONOMY 89 The Significance of External Imbalances Measures of the External Balance Growth of Employment Strength of Manufacturing Growth of Foreign Debt The Level of National Saving Demand Growth and the Saving-Investment Balance The Macroeconomic Character of the External Deficit Differential Demand Growth The Role of the Federal Deficit Exchange Rates and Relative Prices The Extent of Exchange-Rate Movements The Dollar and Relative Export Prices The Dollar and Relative Import Prices Profit Margins and Import Prices The Adjustment Process Conclusion 91 91 94 97 98 99 102 102 104 109 113 113 114 117 118 123 125 CHAPTER 4. EXPANDING TRADE AND AVOIDING PROTECTIONISM.... 127 Expanding Trade Opportunities Abroad Canada-United States Free-Trade Agreement The United States-Mexico Framework Understanding . General Agreement on Tariffs and Trade The Protectionist Threat at Home Protectionist Textile Legislation Embracing Protectionism—The Omnibus Trade Bill... Conclusion 128 128 137 138 147 149 150 162 CHAPTER 5. KNOWLEDGE, MARKETS, AND ECONOMIC PROGRESS.... Human Capital Investments in Education, Training, and Experience Rationales for Government Support Policy Issues Science and Innovation Expenditures and Returns Role of Government Intellectual Property Rights 16 163 165 Work 166 172 173 177 178 182 184 Page Incentives in Government Research Market Flexibility.. Market Barriers and Distortions Labor Market Flexibility Policies for Labor Adjustment Conclusion CHAPTER 6. MOMENTUM AIRLINE DEREGULATION: 185 186 187 189 192 196 MAINTAINING THE 199 The Regulatory Environment Results of Deregulation Lower Fares Efficient Routing: The Hub and Spoke Effects on Labor Increases in Productivity, Profits, and Welfare International Consequences Managing the Increased Demand for Airspace, Safety Delays Making the System More Responsive and Efficient Concerns About Market Organization and Monopoly The Viability of New Entrants and Smaller Airlines Mergers and Consolidation at Hubs Computerized Reservation Systems Airport Capacity Limits Conclusion 200 202 203 203 205 206 206 207 208 212 215 222 222 224 225 227 229 APPENDIXES A. Report to the President on the Activities of the Council of Economic Advisers During 1987 B. Statistical Tables Relating to Income, Employment, and Production 231 241 List of Tables and Charts Tables 1-1. 1-2. 1-3. 1-4. 2-1. Growth of Real GNP and its Components, 1982-87 Economic Outlook for 1988 Administration Economic Assumptions, 1988-93 Accounting for Growth in Real GNP, 1948-93 Changes in Employment and Unemployment by Selected Demographic Groups, 1975-87 2-2. Growth in Real GNP per Capita and Productivity, 1948-87 2-3. Growth in Value Added per Hour Paid, 1948-86 2-4. Measures of Changes in Compensation and Wages, 1981-87 17 25 48 50 52 59 67 73 79 List of Tables and Charts—Continued Tables 2-5. Regional Unemployment Rates, Selected Years, 1976-87 2-6. Unemployment by Reason and Duration, Selected Years, 1967-87 3-1. Economic Growth, 1982-87 3-2. Saving and Investment as Percent of GNP, 1949-87 3-3. Selected Real Net Exports, 1980-87 3-4. Growth in Real Domestic Demand and Real GNP in Major Industrial Countries, 1980-87 4-1. Canadian and U.S. Bilateral Tariffs by Sector 4-2. Agricultural Subsidies for Producers and Consumers, Selected Countries, 1979-86 4-3. Principal U.S. Trade Law Provisions 5-1. Relation of Income and Education, Selected Years, 1969-86 ' 85 86 96 100 103 105 132 143 152 169 Charts 1-1. 1-2. 1-3. 1-4. 1-5. 2-1. 2-2. 2-3. 3-1. 3-2. 3-3. 3-4. 3-5. 4-1. 4-2. 4-3. 4-4. 5-1. 5-2. 5-3. 5-4. 6-1. The Dollar and Real Net Exports Wages and Prices Federal Receipts and Outlays as Percent of GNP Interest Rates and Velocity of Money Weekly Interest Rates, 1987 . Real Output and Employment Shares in Manufacturing . Real Hourly Earnings and Compensation Wage Inflation and Unemployment Net Exports and the Current Account Balance Unemployment Rates in the Seven Summit Countries .... Components of the Saving-Investment Balance Relative Prices of Exports and Imports and the Exchange Rate U.S. and Foreign Exporters* Price-Cost Ratios and the Exchange Rate Shares of U.S. & Canadian Merchandise Trade in 1986.. U.S. Agricultural Exports Contracting Spiral of World Trade Trade Interventions Years of Schooling of the Labor Force Earnings by Age and Education Research and Development Expenditures Labor Force Shares by Industry Airline Accident Rate 18 27 29 31 35 37 65 70 82 92 95 110 116 120 129 142 148 160 167 172 179 190 209 CHAPTER 1 The U.S. Economy: Performance and Prospects THE LONGEST PEACETIME EXPANSION in the history of the U.S. economy entered its sixth year in 1987. Growth was vigorous, with the economy's real output rising by nearly 4 percent last year. Three million additional jobs were created in 1987, beyond the 12 million generated earlier in the expansion. The unemployment rate dropped almost a percentage point to its lowest level in 8 years. Significant improvement in the real trade deficit contributed importantly to growth of output and employment, for the first time since 1980. The inflation rate remained in the 4 percent range that has characterized most of the expansion—well down from the double-digit rates at the start of the decade. Dramatic progress was made in reducing the Federal budget deficit. Judged by these accomplishments, leaving aside the extraordinary events in financial markets, the U.S. economy enjoyed a good year in 1987. OVERVIEW OF THE REPORT The past 5 years of sustained and vigorous growth in production, income, and employment did not occur by accident. It was shaped by government policies explicitly directed toward fostering the inherent dynamism of the private sector. In reviewing the record of the current expansion and looking to the future, this Report highlights the appropriate role for government in the economy—its macroeconomic responsibilities, such as fiscal and monetary policy, as well as its microeconomic responsibilities, which concern particular markets and industries. This chapter begins with a summary of the Report, THE MACROECONOMIC SETTING Nineteen eighty-seven was a year of robust economic growth, strong increases in employment, and—despite a temporary acceleration early in the year—continued moderate inflation. The composition of demand changed in a welcome direction, as the foreign trade sector contributed to overall growth. But late in the year, the plunge in the stock market and a sharp buildup in inventories raised ques- 19 tions about the outlook. With appropriate economic policies, however, growth should continue through 1988—albeit at a more moderate rate than in 1987. A more balanced and sustainable pattern of growth in 1988 then will set the stage for a resumption of more rapid growth in the future, together with gradual reductions in both the unemployment and inflation rates. Chapter 1 first reviews the macroeconomic performance of the United States in 1987 and the factors that shaped it. In particular, the chapter discusses the role of fiscal and monetary policy in fostering noninflationary growth and economic adjustment. During 1987 macroeconomic policies turned toward restraint: growth of the monetary aggregates slowed sharply, interest rates climbed, and the Federal budget deficit was cut by one-third. Partly as a result, inflation remained low and progress was made in reducing the trade deficit. Important adjustments occurred in the U.S. economy last year. Real exports rose by nearly 17 percent, helping to turn business fixed investment around and to produce large gains in output and employment in the manufacturing sector. Consumer expenditure growth slowed significantly from the rapid pace set during the first 4 years of the expansion, restraining the increase in imports. Last year the U.S. economy enjoyed both trade deficit reduction and good growth; with appropriate policies, this combination can be expected to continue into the future. EMPLOYMENT, PRODUCTIVITY, AND INCOME The most important measures of economic progress concern people: the number of people with jobs; the productivity of each person; and real income per capita. Chapter 2 reviews the record of the current economic expansion with respect to such measures of well-being, and finds that, in both quantity and quality terms, the past 5 years of growth have been good ones. Genuine economic progress has been made, with benefits widespread across major demographic groups and across regions. Since 1982 the U.S. economy has created 15 million new jobs—the strongest record of employment growth among the major industrial countries. Unemployment rates have dropped substantially for all major demographic groups, with especially large improvements for blacks, Hispanics, and youths. The bulk of new jobs have been full-time and in higher paying occupations. Along with the rapid rise in employment, growth rates of both productivity and real per capita income have picked up, after a period of slow growth in the 1970s. Manufacturing has experienced particularly strong productivity growth, while retaining its traditional share in the value of total output. The Nation's industrial base remains strong. Moreover, the expansion's accomplishments should continue to build, provided the Administration's growth-oriented economic policies are followed in the future. The unemployment rate has not reached a natural barrier beyond which further reductions necessarily imply serious risk of accelerating inflation. EXTERNAL IMBALANCES Since late 1986 the Nation's large trade deficit has been narrowing in real terms, contributing to output and employment growth in the United States. Chapter 3 discusses the significance of external imbalances—the problems they do and do not pose for the United States and the world economy. It then examines the forces behind the evolution of worldwide imbalances, as well as the processes that are under way to reduce them. In assessing the significance of the country's external deficit, the chapter finds that, because of strong demand growth within the U.S. economy, the widening trade gap did not impair overall employment growth. Nor did it cripple the manufacturing sector. Moreover, U.S. investment was aided by substantial net inflows of foreign capital which offset a relatively low national saving rate. The buildup of net foreign claims on the United States remains modest relative to U.S. income and wealth, and future problems arising from a continued rapid buildup can be forestalled by adequate progress in reducing the external deficit. To sustain such progress, it is essential that the fundamental macroeconomic causes of worldwide imbalances continue to be addressed. A substantial reduction in the foreign exchange value of the dollar has helped to restore the international competitiveness of U.S. industry, and it is a major factor in the turnaround and expected further improvement in the real trade deficit. To maintain noninflationary growth in the world economy while external imbalances are being corrected, it is vital that Federal deficit reduction continue in the United States, that internal growth in foreign countries remains strong, and that markets function freely and flexibly to bring about necessary structural adjustments here and abroad. It is equally vital that national markets remain open to international trade and that the world avoid a descent into protectionism. OPENING MARKETS AND AVOIDING PROTECTIONISM Chapter 4 amplifies the conclusion of the preceding chapter: protectionism is not the answer. Instead, economic progress here and around the world is enhanced by the benefits of further liberalizing international trade. 21 During 1987 significant progress was made toward a more open trading system. Chapter 4 discusses the steps taken in three important areas: the Free-Trade Agreement (FTA) with Canada; the United States-Mexico Framework Understanding; and the Uruguay Round of negotiations under the General Agreement on Tariffs and Trade (GATT). When approved, the FTA will culminate 140 years of efforts to establish free trade as the guiding principle governing what has become the world's largest commercial trading relationship between any two nations, thereby providing substantial and enduring benefits for businesses and consumers in both the United States and Canada. In the Uruguay Round, the United States is vigorously pursuing the proposals it has made to strengthen the free and fair trade principles of GATT and to broaden their application in services, investment, intellectual property, and agriculture. At the same time, however, threats to trade liberalization have emerged within the United States. Pending legislation, while including some useful features, also contains numerous protectionist provisions. Enactment of these protectionist provisions would violate U.S. obligations under GATT, increase costs to consumers, damage relations with our trading partners, and invite retaliation. The United States has a choice: it can continue to lead the movement toward freer world trade, building on the progress of the last year, or it can turn inward, embracing protectionist measures that point only toward economic stagnation. KNOWLEDGE AND PROGRESS Chapter 5 examines three of the major factors that underlie rising living standards in the longer term and considers the role of government in supporting and sustaining economic progress. The chapter first examines investment in human capital, reviewing trends in schooling, training, and work experience, as well as their effects on earnings and output. It then discusses expenditures on research and development and their relationship to economic growth. Finally, the chapter reviews the importance of economic incentives and flexible markets in supporting economic progress by assuring that resources are directed toward their most highly valued uses. The government has a constructive, but limited, role to play in ensuring that these building blocks of economic progress are strong. In education, government plays a large direct role, primarily at the State and local level where it can be most responsive to community needs. For investment in human capital and in research and development, government support is most effective when it relies on private incentives that guide such investment toward its most productive uses. To maintain economic incentives, government has an important respon- 22 sibility to protect the rights of individuals to benefit from their own labor, investment, innovation, and entrepreneurship. Beyond this, the best role for government is often a minimal one—ensuring that it does not interfere with the efficient use of resources or introduce market barriers and distortions that impede productive economic activity. AIRLINE DEREGULATION The success of deregulation is well illustrated by the airline industry. The final chapter of this Report focuses on the effects of the Airline Deregulation Act of 1978, which led to a surge in air travel as a result of lower fares and greater choice. Recently, however, more complaints about service and on-time performance, as well as safety concerns, have prompted calls for reregulation. Reregulation would be a mistake. The benefits of having removed regulation of entry and pricing in the airline industry are clear. They are also sizable, on the order of $11 billion per year. Despite airline mergers and fears of monopoly pricing, competition remains vigorous. More air travel—a reflection of the very success of deregulation—unquestionably has meant more crowded skies and busier airports. However, the answer to this congestion is not less reliance on market forces, but more. Deregulation should be expanded to allow a greater role for market forces in the management of the Nation's airspace and airport services. Concerns that air safety is being undermined by the increased competition of a deregulated environment are not supported by the facts. The rapid increase in airline business in the last 10 years has led to no deterioration in the safety of air travel; instead, the record is good and compares favorably with the period before 1978. More people are flying to more places than ever before, and they are traveling more safely. THE U.S. ECONOMY IN 1987 U.S. economic growth strengthened in 1987, and the sources of growth shifted markedly. Starting in the fourth quarter of 1986, real gross national product (GNP) growth began to exceed domestic demand growth, as—for the first time in 7 years—the foreign trade sector contributed on a sustained basis to economic growth in the United States. On the inflation front, the increase in consumer prices moved up into the 5 percent range early in 1987, spurred largely by the rebound in world petroleum prices. Non-oil import prices, which had tended to restrain inflation during the first half of the 1980s, also contributed upward pressure on consumer prices. But this accel- 23 eration, which largely reflected a one-time shift in relative prices, proved short-lived, and inflation in the second half of the year fell back to the 4 percent rate that has characterized most of the current economic expansion. SOURCES OF DEMAND The economic expansion continued through 1987, and in October it claimed the record as the longest period of uninterrupted growth that the United States has experienced in peacetime. Ironically, the record was set just as the stock market's optimism was shaken, and the Dow Jones Industrial Average dropped more than 20 percent in a single day. Clearly, some stresses and imbalances had emerged during the expansion, but data on the real economy indicated that favorable adjustments were occurring, and that they were occurring within a context of continued growth. The trade deficit was narrowing in real terms, the Federal budget deficit had dropped by onethird, and business fixed investment was rebounding from its 1986 decline. Real GNP grew 3.8 percent from the fourth quarter of 1986 through the fourth quarter of 1987, rising more than half again as fast as in the preceding year. But this acceleration was by no means uniform across components of demand. In fact, the largest component, personal consumption expenditures, slowed almost to a standstill, posting just a 0.6 percent rise after 4 consecutive years of 4-plus percent increases (Table 1-1). Similarly, investment in housing declined for the first time since 1981. While the growth of government purchases picked up slightly last year to 3.0 percent, the primary source of the acceleration in GNP was the rebound in three components that had been a drag on growth in 1986: net exports, business fixed investment, and inventories. The strengthening of exports, the turnaround in business fixed investment, and the slower growth of consumer spending all were part of a welcome pattern of economic adjustment necessary to redress the major imbalances of the U.S. economy. The figures presented on the composition of output growth in 1987 were influenced importantly by the weakening of consumer expenditures and business fixed investment in the final quarter of last year, but the fundamental pattern was not altered. Combined with continued strong growth of production, the drop in consumer and nonresidential fixed investment demand at the end of 1987 meant a large increase in inventories, which consequently accounted for one-half of the total increase in real GNP last year. Growth of real consumption expenditures was dampened by slower growth of real personal income in 1987. As a result of the faster rise 24 TABLE 1-1.—Growth of Real GNP and Its Components, 1982-87 1985 IV 1982 IV to 1985 IV Item 1986 IV to 1987 IV1 to 1986 IV Average annual percent change Real GNP Domestic demand Personal consumption expenditures Nonresidential fixed investment Residential fixed investment Government purchases of goods and services Exports of goods and services Imports of goods and services 4.9 2.2 3.8 6.3 4.7 9.7 2.7 4.1 3.2 .6 3.7 -2.9 3.0 16.9 8.2 [5.8 4.5 2.9 15.2 -4.7 12.5 2.4 5.9 8.9 Contribution to real GNP growth in percentage points2 Total change in real GNP Final domestic demand Change in inventories Net exports of goods and services 1 Preliminary. Detail may not add to totals because of rounding. Source: Department of Commerce, Bureau of Economic Analysis. 2 in consumer prices last year, the growth of real disposable personal income slowed to 2.0 percent. Within consumer expenditures, only spending on services recorded an increase. After rising 2.4 percent in 1986, real services expenditures increased 3.8 percent in 1987. By contrast, spending on durables and nondurables fell. Consumer spending on motor vehicles dropped 5.9 percent in 1987, reversing half of the 12 percent rise in the year before. With so many households having recently bought automobiles, fewer remained interested in and able to make a purchase in 1987. In general, purchases of motor vehicles have been highly volatile in recent years, as manufacturers have instituted on-again ofF-again incentive plans. These huge fluctuations in car sales—routine 40 percent annual rates of increase or decrease in a quarter—have induced large swings in the pattern of consumption expenditures, despite the fact that motor vehicles account for less than 10 percent of total consumer spending. The housing sector was affected adversely last year as interest rates climbed. Real residential investment dropped 2.9 percent, a reversal from 1986 when it had soared 12.5 percent as interest rates on new 30-year mortgages had moved into the single digits for the first time in the 1980s. Early in 1987 mortgage rates continued to ease to a 9year low of 9.0 percent, but then they turned higher and in mid-October peaked at nearly 11.6 percent. The plunge in the stock market then changed the financial landscape, and mortgage rates ended the year about 1 percentage point below their October highs. The impact of higher rates during most of last year was softened somewhat by a shift toward adjustable-rate financing, which accounted for more than 25 half of all mortgage originations by early autumn. In addition, by most indications, inflation expectations picked up at times last year, so that the increase in real (inflation-adjusted) rates was not so large as that in nominal interest rates. In the multifamily sector, however, high vacancy rates and tax code changes that reduced the attractiveness of multifamily homes as tax shelters acted as added deterrents to new construction. During 1987 business investment appeared influenced primarily by the strength of the economy—especially improved export prospects. Business fixed investment rose 3.7 percent, reversing most of the 4.7 percent decline of the preceding year. Improved export demand was evident in sales, production, and employment figures. Real exports grew almost 17 percent last year, finally rebounding above their peak levels of 1980-81. The increased international competitiveness of U.S. products, owing to the drop in the dollar's exchange rate, rising manufacturing productivity, and moderate wage increases, lifted export sales. As a result, the external sector contributed significantly to GNP growth last year. Growth of imports, while well below the rates recorded during the early years of this expansion, remained relatively rapid. Imports increased more than 8 percent in real terms last year, as U.S. domestic demand picked up. Although real domestic demand grew at a 3.2 percent rate last year, substantial progress was made in reducing the real external deficit. The improved net export performance stemmed primarily from relative price changes that made U.S. goods increasingly attractive both at home and abroad (Chart 1-1). In coming quarters these relative price changes should continue to improve the external balance. But even faster progress will be made if demand abroad strengthens, and if growth of U.S. domestic demand slows—preferably as a result of Federal spending restraint that narrows the budget deficit. INFLATION AND RELATIVE PRICE CHANGES The consumer price index (CPI) rose at more than a 5 percent annual rate during each of the first 4 months of 1987, but this initial acceleration did not herald a sustained resurgence of inflation. Last year the economy had to contend with significant increases in the prices of imports and energy—two categories that earlier in the economic expansion had tended to act as restraining influences on inflation. In addition, aided in part by the accommodative monetary policy of 1985-86, the economy was moving through a fifth year of growth, capacity utilization was rising, and the unemployment rate was continuing to fall. In similar circumstances in the 1970s, inflation had accelerated. But in 1987 most broad measures of inflation, al- 26 The Dollar and Real Net Exports Index, March 1973 = 100 80 Dollar Exchange Rate Lagged Six Quarters Billions of 1982 dollars 100 Dollar Exchange Rate^/ (Inverted) (left scale) 100 120 -100 140 iIt111r11 111 11111111111111111r11 160 LU 1970 1973 1976 1979 1982 llJ-200 1985 -/Nominal multilateral trade-weighted value of the dollar against the currencies of the other G-10 countries plus Switzerland. Sources: Department of Commerce and Board of Governors of the Federal Reserve System. though up from 1986 when oil prices had dropped sharply, remained close to their averages for the first 3 years of the current expansion. For example, the GNP fixed-weighted price index rose 4.0 percent, compared with an average of 3.7 percent during 1983-85. In 1986 crude oil prices had fluctuated wildly, dropping from more than $25 per barrel for West Texas Intermediate at the beginning of the year to a low of less than half that in July, then climbing back up to more than $18 per barrel around the end of the year. During 1987 the price of oil was less volatile, ending the year only a little below its level at the beginning of the year. The deflationary impact of the earlier drop in oil prices was completed at the retail level during 1986, as the energy component of the CPI declined almost 20 percent over the year. The inflationary effect of the subsequent rebound in oil prices, however, was strongest during the first 3 months of 1987, when the energy component of the CPI rose at a 26 percent annual rate. Thereafter, the energy component increased at about the same rate as the aggregate CPI. 27 In early 1987 the higher relative price of oil gave a one-time boost to the aggregate price level, with no apparent effect on the economy^ underlying inflation rate. Similarly, the rising import prices of recent quarters are a relative price adjustment which should produce only transitory upward pressure on inflation. But, in the case of imports, the relative price adjustment is likely to be a more drawn-out process. Prices of non-oil imports have been rising more rapidly than overall inflation since the end of 1985, and they likely will continue to do so for several more quarters as the dollar's drop on foreign exchange markets gradually affects prices. A fixed-weighted index of non-oil import prices has increased at a 9 percent annual rate during the last 2 years. Although the passthrough effects of the lower dollar can be expected to take some time, rising import prices nevertheless represent a one-time change in relative prices and are a necessary factor in reducing the Nation's trade deficit. Only if macroeconomic policies are unduly expansionary, and wage increases fully reflect the increases in import prices, will the increased relative price of imports turn into a sustained higher rate of inflation. The increase in measured inflation early in 1987, in combination with the economy's stronger growth, may have contributed to slightly higher wage demands later in the year (Chart 1-2). Data on wage costs and average earnings indicate that wage increases bottomed out during the first half of the year and began to edge up during the second half. The acceleration was modest, however, and the 12month change in wages remained in the 2.5 to 3.5 percent range. By most measures, the increase in wage costs last year was among the lowest of the postwar period, and the rise in unit labor costs, at 1.3 percent, was also relatively low. At times during 1987, inflation expectations appeared to flare up. Early in the spring, both the price of gold and interest rates rose sharply, apparently reflecting higher inflation expectations as broad indexes of commodity prices surged. Throughout much of the year the strong growth of industrial production also raised demand for inputs and put upward pressure on the prices of intermediate and crude goods, especially metals. In the 12 months through December, the producer price index for crude materials rose 8.8 percent, but this increase had little effect last year on the price index for finished producer goods, which rose just 2.2 percent. INDUSTRIAL COMPOSITION Along with the shifts in sources of demand and in relative prices last year, the sectoral composition of output also changed. After more than 2 years of sluggish increases, industrial output rose a 28 Chart 1-2 Wages and Prices Percent change from year earlier 12 / 10 - - / 8 * 6 \ >, Employment Cost Index \ (Wages and Salaries) - t" t 4 _ i Fixed-Weighted Price Index for Personal Consumption Expenditures * 2 — 0 l t l 1977 111. i ' M i i t i 1978 1979 1980 | i i i I i i i t i i i t i i i 1 i i i 1981 1982 1983 1984 1985 *— ^_ — I i i ] I I I I 1986 1987 Note.—Data for fourth quarter 1987 are preliminary. Sources: Department of Commerce and Department of Labor. healthy 5.2 percent in the 12 months through December 1987. Some industries benefited from the surge in exports and the renewed competitiveness vis-a-vis imports, while others were aided by the strength of equipment investment. The rebound in oil prices encouraged activity in energy-related industries. And the agricultural sector appears to have improved, aided by government support as well as by stronger exports. In 1987 the growth of goods production outpaced that of services by the widest margin since 1984. Similarly, after 2 years of declining employment, an additional 628,000 people were put to work last year in goods-producing industries. However, the predominant increase in employment remained in service-producing industries, where more than 2 million new jobs were created. Among industries there were some remarkable reversals. Iron and steel production increased by nearly 30 percent in the 12 months through November 1987, having fallen about that much during the preceding 3 years. Similarly, the output of construction, mining, and farm equipment rose 18 percent through November, back to levels last reached in 1982. Oil and gas well drilling was another very 29 strong component of industrial production in 1987; it increased by 37 percent, thereby retracing about half the drilling decline that had followed the collapse in oil prices at the end of 1985. After a number of years of severe financial stress, agriculture may well have turned the corner. Farmland prices and net worth on farms rose in 1987, after declining in each of the preceding 7 years. Agricultural exports turned higher, crop prices rose, and huge stockpiles declined. In 1986 net farm income was at a high level as a result of record government transfers to farmers, high livestock prices, and low production expenses. In 1987 net income rose further, supported in addition by the strength of exports. As the economic expansion continued through 1987, certain industries and sectors that had not fully participated in the recovery, or that had suffered setbacks more recently, were caught up in the spreading cycle of growth. Earlier in the expansion the high exchange rate had stymied export growth; but by 1987, after the dollar declined roughly 40 percent on the Federal Reserve Board's tradeweighted index from its peak in the first quarter of 1985, export-dependent industries (and those that compete with imports) regained some ground. MACROECONOMIC POLICIES Both fiscal and monetary policy turned toward restraint last year. The Federal deficit narrowed by one-third in fiscal 1987, and even on a cyclically adjusted basis—that is, abstracting from the deficit-reducing effect of faster economic growth—the restraint was clear. Moreover, measured either in real terms or as a share of GNP, Federal outlays fell below the level of the previous fiscal year. At the same time, rising interest rates and sharply lower money growth rates indicated a tightening of monetary policy during much of 1987. FISCAL RESTRAINT In fiscal 1987 the reduction in the Federal budget deficit was remarkable. The deficit was cut $71 billion, or 1.9 percent of GNP, in a single year. This salutary development reduced the government's demands on credit markets, while restraint on Federal spending released more resources for use by the private sector and, by holding down growth of domestic demand, contributed to the improvement in the Nation's real trade gap. Despite the contractionary impulse from fiscal policy last year—equivalent on a cyclically adjusted basis to roughly 1 percent of GNP—economic growth did not slow. The economy performed well in 1987, supported in part by the monetary 30 stimulus of the preceding years and in part by the strong export growth that stemmed from a lower dollar. A portion of the deficit decline was made up of one-time occurrences, such as loan asset sales, small changes in the timing of receipts and expenditures, and higher revenues due to the phase-in of the Tax Reform Act, but much was real, substantive deficit reduction. The Federal budget as measured by the national income and product accounts, which exclude some of these special factors, showed a $55 billion narrowing in the deficit infiscal1987. The growth of total Federal outlays (both on- and off-budget) slowed to just 1.4 percent in fiscal 1987, which translated into the first inflation-adjusted decline in 14 years. Similarly, as a share of GNP, Federal outlays dropped to 22.8 percent, down from 23.6 percent in fiscal 1986 (Chart 1-3). Boosted by stronger economic growth and roughly $30 billion in additional revenues brought in by tax reform, total Federal receipts rose 11.1 percent infiscal1987. Federal revenues thus rose to 19.4 percent of GNP, 1 percentage point above the 1960-80 average. Chart 1 -3 Federal Receipts and Outlays as Percent of GNP Percent of GNP 261 24 22 20 18 16 n\ Receipts - • 1960 . I i . 1963 I . 1966 . I . 1969 • I i i 1972 I . 1975 i I t 1978 Fiscal Years Note.—Includes on-budget and off-budget items. Sources: Department of Commerce and Office of Management and Budget. 31 i I i 1981 i I i 1984 i I I 1987 The fiscal 1987 deficit of $150 billion came close to the $144 billion target specified in the original Gramm-Rudman-Hollings (GRH) legislation passed in 1985. After the method of imposing automatic spending cuts in that law was found to be unconstitutional, amendments to GRH, with new enforcement mechanisms and new deficit targets, were signed into law in September 1987. The amendments extended the deadline for a balanced budget by 2 years to 1993, and they eased the deficit reduction requirements for fiscal 1988 and 1989 by providing "safe harbors" in the form of caps on the amount of cuts mandated. For fiscal 1988 the amendments exchanged a $108 billion target, as specified in the original act, for a new $144 billion target with a maximum automatic cut of $23 billion. In October, as fiscal 1988 opened, the Federal budget for the year remained far from settled. A short-term continuing resolution kept the government operating, while lawmakers worked on appropriations and reconciliation legislation that would allow them to avoid the across-the-board spending cuts mandated by GRH. But the likelihood of agreement on a satisfactory budget package appeared to diminish as October progressed, making automatic cuts more likely. Automatic cuts are preferable to some alternatives—such as no deficit reduction at all, or higher taxes that undo the benefits of tax reform—but they have a serious drawback: they do not recognize priorities. In other words, programs that may legitimately merit more funds are cut just as much as those programs that may have outlived their usefulness. For fiscal 1988, automatic cuts were avoided eventually, but not until the stock market break had encouraged the parties involved in the budget-making process to reach an agreement. MONETARY POLICY During 1987 the Federal Reserve continued the eclectic approach that has characterized decisionmaking within the Nation's central bank in recent years. The creation of new deposit instruments, wide fluctuations in market interest rates, the deregulation of deposit rates, and the accelerated process of general financial innovation had raised questions about how movements in money and credit aggregates should be interpreted. As the 1980s progressed, the Federal Reserve had watched the historical relationships between money and income and interest rates apparently break down in response to these influences, and it came to rely less on the monetary aggregates and more on a wide range of economic and financial variables as indica- 32 tors of emerging trends. Finally, in 1987 the Federal Reserve refrained from specifying an annual growth range for Ml, the measure of money which in the past had been related most closely and reliably to income growth. Thus, for the first time since 1975—when the Federal Reserve began to set money targets publicly—neither a target nor a monitoring range for Ml was announced. And while target ranges for M2 and M3 (broader measures of money) were specified, the Federal Reserve's midyear report to the Congress explicitly recognized that *'[in certain circumstances,] some shortfall from the annual ranges might well be appropriate." In view of heightened uncertainty about the behavior of the monetary aggregates, the sharp slowing in money growth in 1987 did not alarm the Federal Reserve, as it continued to tighten policy through September. Annual rates of growth in the second and third quarters of 1987 averaged between just 2V2 and 4x/2 percent for Ml, M2, and M3. When measured from the fourth quarter of 1986, the growth rates were somewhat higher: through September, Ml grew at a 6.1 percent annual rate, M2 at a 4.2 percent rate, and M3 at 5.4 percent. Nevertheless, even these rates represented substantial decelerations from those in the preceding year, and left M2 well below, and M3 just below, their target growth ranges. MIA, which consists of currency and checking accounts that cannot pay interest, increased at less than a 2 percent annual rate through September, after having risen 10 percent in 1986. Background The lessened reliance on money as an indicator was an outgrowth of the experience of the 1980s, but especially of 1985-86. The Federal Reserve had begun to ease policy in the second half of 1984, reversing its earlier restraint in order to support the flagging economic expansion, and more than 2 years of falling interest rates and rapid money growth followed. From their peaks in mid-1984, most interest rates declined 5 to 6 percentage points by the end of 1986, and many short-term rates were cut in half. The monetary aggregates, especially the narrower aggregates, soared in 1985 and accelerated further in 1986. Over the four quarters of 1986, even the slowest growing of the commonly cited aggregates, M3, rose 8.9 percent, while the fastest growing measure, Ml, ballooned 15.3 percent. By comparison, nominal GNP increased just 4.5 percent during the same period. In other words, by any measure, velocity (the ratio of nominal GNP to the money supply) dropped steeply in 1986. 33 The decline in the velocity of Ml, at 9.4 percent, was particularly steep and provided additional evidence that the relationship between that measure of money and income had shifted. The relationship between nominal GNP and Ml, as summarized by velocity, apparently veered off track in the early 1980s (Chart 1-4). Rather than trending higher at a rate of roughly 3 percent a year as it had during the preceding 20 years, velocity declined on balance after 1981. There always had been some cyclical variations in velocity, with changes in interest rates altering the "opportunity cost'* of holding idle balances. But the experience of the 1980s clearly was different. Ml velocity appeared to be responding far more emphatically than in the past to changes in market interest rates, while M2 velocity—although also affected—remained closer to its historical behavior. The two most likely explanations for this increased interest rate responsiveness of money balances are deregulation and the sharpest disinflation since the late 1940s. The drop in inflation early in the 1980s fed through to expectations: as the public expects lower inflation, they tend to become more willing to hold money. Thus, to the extent that falling interest rates reflected declining inflation expectations, the disinflation/more-stable-purchasing-power argument provides an additional link between lower interest rates and increased demand for money. Financial deregulation had its effect by changing the composition of the monetary aggregates. Interest-bearing transaction accounts were permitted, and interest rate caps were eliminated on all types of accounts except demand deposits, on which interest payments remained prohibited. In the case of Ml, the shift in composition was profound: by 1986 interest-bearing deposits had grown to nearly one-third of Ml from a negligible share just 8 years earlier. As a result, the 1984-86 decline in market interest rates meant that, by the end of that period, the opportunity cost of a major component of Ml dropped below one-half percent. This opportunity cost, measured as the 3-month Treasury bill rate less the interest rate paid on negotiable order of withdrawal (NOW) accounts, was the lowest for any transaction account in 40 years. Such a narrow spread is clearly atypical; it developed in part because deposit rates on NOW accounts and other variable-rate accounts have adjusted relatively slowly to changes in market interest rates. This rate-setting behavior has accentuated the effect of variations in market rates on the demand for money. 34 Chart 1-4 Interest Rates and Velocity of Money Percent per annum 16 Treasury Bill Rate is Two-Quarter Moving Average 14 Ratio 7.5 12 5.5 A 3-Month Treasury Bill Rate (left scale) V 4.5 'V - 3.5 ulo 1959 1963 1967 1971 1975 1979 1983 Percent per annum 1987 Ratio 16 1.9 Treasury Bill Rate is Two-Quarter Moving Average 3-Month Treasury Bill Rate (left scale) -1.5 nJo olinlinlin 1959 1963 1967 1971 1975 1979 1983 & Ratio of GNP to M1 or M2. Sources: Department of the Treasury and Board of Governors of the Federal Reserve System. 35 1987 Federal Reserve Actions in 1987: Before October 19 In 1987 monetary policymakers continued to face uncertainties concerning the strength of the economy, the extent of the inflationary threat, and the interpretation of movements in the monetary aggregates. Evaluating financial and economic indicators and predicting the precise effects of policy moves remain inexact sciences. On the domestic front, financial markets indicated that inflation expectations may have surged at times, although inflation itself exceeded the 4 percent range only briefly, early in the year. And on the international front, the value of the dollar came under pressure several times. Throughout the year, however, U.S. economic activity remained robust, and the unemployment rate dropped nearly a percentage point. As 1987 began, the deciphering of economic and financial market trends was complicated by a year-end surge of transactions prompted by a change in tax laws. Because many provisions of the Tax Reform Act were to take effect at the turn of the year, individuals and businesses rushed to complete real estate transactions, mergers, sales of equities, car purchases, etc., before the end of 1986. In the process they generated huge demands for money and credit; for example, Ml rose at a 30.5 percent annual rate in December 1986, and business loans increased at a 36 percent rate. In view of the difficulty in separating tax effects from underlying economic trends during this period, the Federal Open Market Committee (FOMC), the Federal Reserve's principal monetary policymaking body, chose not to make any substantive changes in its instructions to the Open Market Desk, which implements policy on a day-today basis. Thus the thrust of the directive that had been in place since the last discount rate cut in August 1986 remained in force. At the same time, however, the FOMC indicated its bias toward future tightening and noted that, at least with regard to Ml, money growth would have to slow from the 1986 pace in order to sustain progress toward price stability. As the year-end bulge in the monetary aggregates dissipated and the economy continued to grow at a moderate pace, the Federal Reserve made no explicit changes in monetary policy until late April. Then, in April and again in May, the market for bank reserves was tightened as policymakers responded to downward pressure on the dollar in exchange markets and a perceived ratcheting upward of inflation expectations. News on the real economy was generally good: growth was maintained, and the unemployment rate was dropping substantially. But the rebound in energy prices, with some help from higher import prices, had boosted the inflation rate above 5 percent, and expectations of inflation were heating up. While oil prices had 36 roughly stabilized, broad indexes of commodity prices rose sharply in April and early May, as did the price of gold. Long-term interest rates also appeared to reflect an increase in inflation expectations: the rate on 30-year Treasury bonds increased 1 Vz percentage points in 2 months, to a peak of 9.0 percent (Chart 1-5). The dollar also told a similar story about expectations during this period, losing nearly 5 percent of its value on a trade-weighted basis in those 2 months. Chart 1-5 Weekly Interest Rates, 1987 Percent per annum 12 tg. „ Commitment Rate 11 _ Mortgage ;30-Year Mortgages) 30-Year Treasury Bonds (Constant Maturity) 10 4\ 1111 Jan 11111111 n 11111111111111 11111 v\ 11111 111111111 i n Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1987 Sources: Department of the Treasury, Board of Governors of the Federal Reserve System, and Federal Home Loan Mortgage Corporation. The Federal Reserve actions, complemented by measures taken abroad to ease policy, generally were successful in reassuring the domestic financial and foreign exchange markets. The dollar appreciated through mid-August, and interest rates remained below their highs of the spring. Meanwhile, the economy showed signs of additional strength, inflation dropped back from the elevated levels of early in the year, and wage increases remained subdued. Under the influence of higher interest rates and tighter Federal Reserve policy, growth of the monetary aggregates continued to weaken. Ml rose at just a 2.7 percent annual rate in the 6 months through July, and MIA fell slightly, while M2 growth remained well below, and M3 just below, their 5V2 to 8 ¥2 percent target ranges. To some, this sharp slowdown in money growth raised concerns about potential economic weakness. In early September the Federal Reserve again tightened policy, both by restricting reserve availability further—which it did "in light of the potential for greater inflation, associated in part with weakness in the dollar"—and by raising the discount rate one-half percentage point to 6 percent. In the preceding 3 weeks the dollar had dropped nearly 5 percent on a trade-weighted basis, and interest rates had begun to move up very steeply in the last few days of August. Once again, foreign exchange markets apparently were reassured by the Federal Reserve's actions. The dollar stabilized, but this time interest rates continued to climb. The spur for the dollar's drop and the bond market's weakness appears to have been the release in mid-August of the June foreign trade figures, which showed a $15.7 billion deficit—substantially worse than the markets had expected. With the trade deficit thus narrowing more slowly than anticipated, the financial markets surmised that further adjustments were required—either a lower dollar, reduced demand in the United States, or increased demand in our major trading partners. Against a background of rising interest rates abroad, and with little additional action expected to be taken to reduce the U.S. budget deficit or to augment demand abroad, attention focused on the foreign exchange market and U.S. interest rates. Specifically, a rise in U.S. interest rates appeared increasingly likely, perhaps reflecting expectations that further dollar depreciation would add to inflationary pressures. Higher rates also would have been expected to result from an effort to dampen business investment and consumer spending—and thereby U.S. imports, which would reduce the extent of the needed dollar decline. The trade figures for the next 2 months also were worse than generally expected, and financial markets reacted adversely. On October 14, when the August data were released, the Dow Jones Industrial Average posted a 1-day drop of 3.8 percent, and the rate on 30-year Treasury bonds rose 20 basis points (0.20 percentage point). The dollar also declined, but by less than 1 percent. On balance between September 4 (when the discount rate was increased) and October 16, the trade-weighted value of the dollar remained unchanged, the Dow Jones Industrial Average dropped 12 percent, and interest rates rose 50-150 basis points. The extent of Federal Reserve tightening through mid-October was most dramatic as measured by the sharp deceleration of money and reserve growth. In view of the relative looseness of money-GNP relationships in recent years, however, other indicators provide addi- tional evidence on the stance of Federal Reserve policy. Judging by the level of the Federal funds rate in early October, the progressive tightening of monetary policy had effectively reversed most of the easing that had occurred during 1986. At their peaks, short-term interest rates had increased roughly 150-250 basis points since the beginning of the year, and long-term rates had risen a bit more than that. Although these nominal increases were offset in part by higher inflation expectations, real interest rates, which adjust for inflation expectations, also appear to have risen during 1987—albeit by a more modest amount than during some other periods of real rate increases in the 1980s. Two other variables that sometimes can be used as indicators of monetary policy did not appear to point to a tightening last year. In particular, the dollar's exchange rate declined on balance, and the yield spread between long- and short-term securities widened somewhat, rather than narrowing or even turning negative as it tends to do in periods of severe monetary policy restraint. Nevertheless, the balance of the evidence points to a tightening of monetary policy last year. There is little question that a turn toward some restraint in 1987 was desirable; continued growth of money at the high rates experienced in 1985 and 1986 would have had inevitable inflationary consequences. With output growth apparently well-maintained and inflation expectations building at times, the Federal Reserve acted to forestall a resurgence of deep-rooted inflation and to retain hardwon gains toward price stability. As always, because monetary policy actions affect the economy with sizable lags, the tightening of policy last year had implications for future growth and price performance. THE BREAK IN THE STOCK MARKET As the third quarter ended, preliminary evidence suggested—and data later confirmed—that the U.S. economy was growing strongly. The unemployment rate continued to edge down, reaching its lowest level since late 1979, and the index of leading indicators pointed to sustained economic growth. However, the outlook for further substantial improvement in the Federal deficit was clouded by an apparent deadlock between the Congress and the Administration over the budget for fiscal 1988, which began October 1. In financial markets, the Federal Reserve had tightened monetary policy in September. Interest rates, both short- and long-term, rose further in the first weeks of October. 39 THE CRASH In mid-October the stock market posted a string of large declines, culminating in a 1-day plunge of unprecedented magnitude. The stock market had soared more than 40 percent in value from the start of the year through its August peak, but, by the close of business on October 16, nearly half of that gain had been erased. And the following Monday, October 19, after stock markets elsewhere in the world had posted sharp declines, the Dow Jones Industrial Average lost 22.6 percent in a single day. Trading volume was enormous, the markets were chaotic, many stocks opened very late, and the word "panic" aptly described the atmosphere. It was a worldwide phenomenon with potentially worldwide consequences. On that 1 day, the total value of the stock market dropped by roughly half a trillion dollars. The next day, again amid an enormous volume of transactions, market conditions worsened. Trading in many stocks and index futures halted for a time, but the market managed to recover and closed higher. In subsequent days and weeks, investors remained nervous, but they drew reassurance from the Federal Reserve's prompt provision of liquidity and the large number of corporations announcing stock buy-backs. During the remainder of the year, the market settled into a trading range that left the Dow at the end of 1987 quite close to its year-earlier level. A wide range of explanations for the crash has been offered, and many factors may have contributed. However, no political or economic event occurred between the market's close on Friday and on Monday that appears capable of explaining such a huge revaluation of the net worth of U.S. corporations. To an extent, the stock market appeared to be reacting simply to itself; in increasingly heavy trading on the preceding Wednesday, Thursday, and Friday, the Dow had lost a total of 261 points, and on October 19, as more individuals and institutions became aware of the deepening plunge in stocks that day and tried to sell, the decline cumulated. A survey regarding the factors that had propelled stock prices downward was included in The Report of the Presidential Task Force on Market Mechanisms, which reviewed the stock market break. A majority of the market participants and other interested parties that responded to the survey viewed technical and psychological factors, especially "sheer panic," as the cause of the intense selling pressure on October 19. By contrast, fundamental factors, such as rising interest rates, overvaluation of the market, and the large trade and budget deficits, were described as the primary cause of the preceding week's decline. Some commonly watched measures of stock values lend support to the proposition that stocks were overvalued before mid-October. Dividend yields on stocks were well below their postwar average, while 40 price/earnings ratios had soared to highs attained only briefly in recent decades. Since the beginning of 1987, stock prices had skyrocketed amid reports of escalating corporate earnings and robust economic growth. But while stock prices were soaring, bond prices were dropping, creating an unusual divergence between the two markets. In a sense, on October 19 the stock market caught up with the bond market. Rising interest rates certainly were a factor in the stock market's decline. As noted above, rates had risen sharply in the weeks preceding the crash, and one major bank announced another half percentage point hike in its prime rate on the Thursday before the plunge. Moreover, the outlook for even higher interest rates had been bolstered by the lack of improvement in the monthly U.S. trade figures. The slower-than-expected turnaround in the trade deficit implied to some that further adjustments—either to exchange rates or to foreign or domestic fiscal or monetary policies—would be necessary to stimulate U.S. exports and reduce U.S. import growth. Several additional factors may have played a role in the market's decline. In particular, publication of the large trade deficits appeared to strengthen the position of those supporting protectionist trade legislation, the passage of which would seriously impair the ability of U.S. firms to do business abroad and would signal the abandonment of a longstanding U.S. commitment to an open trading system. There also were other indications that international economic policy cooperation might be endangered. In addition, the House Ways and Means Committee had just approved a tax package containing several items adversely affecting business, including a measure that would increase the cost of corporate takeovers. THE ECONOMIC IMPLICATIONS The damage to the financial system as a direct result of the stock market break was remarkably minor. Several brokerage firms closed their doors or merged with larger, better capitalized companies, a number of Wall Street firms announced layoffs, and the demand for portfolio insurance—which was supposed to provide a hedge against declining stocks—dropped off amid evidence that such insurance had failed to perform as expected. Recent studies have provided much useful information concerning the events surrounding October 19. These studies deserve, and will receive, serious and careful attention. In response to the crash, however, it is important to avoid precipitous actions that might make financial markets less efficient and less flexible. The resilience of the financial system in the face of the unprecedented dive in stock prices can be read as eloquent testimony to the general adequacy of gov- 41 ernment regulations in this area. Regulatory authorities and market participants worked together effectively to ensure that, despite the large declines in stock prices, the financial system continued to function. The implications of the market break for the economy, however, are harder to gauge and may ultimately be more serious, requiring a careful balance of macroeconomic policies to avoid the threat of an economic downturn. The stock market is a good, but not infallible, predictor of economic trends. While it is sufficiently reliable to be included in the Department of Commerce's index of leading indicators, it represents only 1 of 11 components in that index. The stock market tends to be overly pessimistic, erroneously predicting several additional recessions in the postwar period. But in those circumstances when a stock drop has not been followed by an economic downturn, it is often because economic policies have shifted direction, effectively preempting a recession. For example, in 1966, after the stock market had declined more than 20 percent, the Federal Reserve did an about-face, reversing much of its earlier tightening. The economy responded to the support, and a recession was avoided. Stock prices are a leading indicator because they distill expectations about future corporate earnings, and because they affect decisions about spending and investment. Until October, when the break in the stock market affected attitudes, surveys had shown steady increases in consumer confidence during 1987. Thereafter, consumer sentiment dipped sharply, and although it has largely recovered, consumer spending behavior appears to have become more cautious. The stock market is a barometer of confidence in the outlook, and it is a major component of the Nation's wealth. At the end of September the market value of corporate equities totaled roughly $4.4 trillion, about $2.3 trillion of which was held directly by the household sector. This $2.3 trillion represented nearly one-sixth of that sector's total net worth of $15 trillion, so a large change in the value of stocks could be expected to have an impact on household spending. Some econometric models have estimated that a $1 decline in the value of the stock market reduces consumer spending by about 4 cents over a horizon of roughly 1 year. Thus a $500 billion drop in stocks would mean about a $20 billion (or 0.8 percent) reduction in consumer expenditures by the fall of 1988. The repercussions for consumption should be mitigated, however, by the fact that the lost wealth this time had been so recently acquired. While many individuals and institutions were badly hurt financially by the plunge in prices, the decline reversed only about 1 year's gain in stock values. Even after October 19, the Dow Jones remained more than double its mid-1982 level. Nonetheless, in the at- 42 mosphere of uncertainty that followed the crash, there were convincing reasons to postpone decisions to spend and invest. The stock market crash was not, as one observer put it, "a necessary, marvelous correction," but it may have had its silver lining. In particular, as discussed below, it helped move macroeconomic policy in the direction of a more balanced posture, by adding impetus to efforts to reduce Federal spending and the deficit. In addition, by drawing an explicit parallel to the Great Depression, the stock market decline highlighted the serious dangers associated with protectionism, thereby undercutting support for protectionist trade legislation and encouraging the reduction of trade barriers. Moreover, the crash may have made enactment less likely for ill-considered Federal legislation that would inappropriately restrict the market for corporate control. If the plunge in stock prices also causes consumers to become slightly more cautious in their spending patterns, a gentle rise in the personal saving rate and consequent added improvement in the trade balance will ensue. In this case, however, it is not true that if a little consumer retrenchment is good, a lot is better. And it is the responsibility of policymakers to watch closely and to take additional actions if it appears that a downward spiral is threatening. With appropriate policies, 1987—the market break notwithstanding—need not herald the end of the longest peacetime expansion in U.S. history. THE POLICY RESPONSE In the days and weeks following October 19, U.S. macroeconomic policies were reassessed. The Federal Reserve reacted promptly, indicating by word and deed that ample liquidity would be provided to help the financial system and the economy weather the stresses associated with the market break. The fiscal policy response required more negotiation and more time, but 1 month after the plunge in stock prices, the Administration and the Congress concluded an agreement to continue efforts in the direction of restraint by cutting the fiscal 1988 and 1989 budget deficits by $30 billion and $46 billion, respectively, from a specified baseline. Fiscal Policy Deficit reduction through Federal spending restraint was, and is, a high priority of the Administration. The stock market drop added urgency to Administration and congressional efforts to forge a 1988 budget that consolidated and built upon the deficit reduction progress made in fiscal 1987. At the "budget summit'* set up in the wake of the stock market drop, participants agreed to a 2-year $76 billion deficit reduction package; the resulting legislation rendered GRH automatic spending cuts unnecessary for fiscal 1988. The 43 spending cuts and revenue increases enacted preserve the progress on the deficit made in fiscal 1987 and set the stage for further gains. While deficit reduction is a very important objective, it is not paramount. For example, GRH wisely allows for suspending the targets should the economy weaken markedly. In current circumstances, with the deflationary impact of the stock market decline not yet clear, progress on the fiscal deficit should continue to be made, but cautiously. The Federal Government's budget has the attractive property of providing the economy with automatic stabilizers, moving in the direction of deficit when the economy sinks and in the direction of surplus when it soars. These stabilizers should not be overridden in the pursuit of deficit reduction. Nor should the deficit reduction imperative run roughshod over considerations of economic efficiency by raising taxes that undo the benefits of tax reform and reduce incentives to work, produce, and invest. Without question, in the long run the potential for growth in this country will be enhanced by moving toward a balanced Federal budget. Over the medium term, a tighter fiscal policy would play a major role in improving the balance between income and spending in the United States. As the government significantly reduces its demands on resources, there is an increased likelihood that the external imbalance can be righted without impairing the growth of private sector investment expenditures. If, instead, investment expenditures were to be stunted by a combination of loose fiscal policy and tight money, America's potential for future growth might be jeopardized by an increasingly outdated capital stock. Monetary Policy The stock market crash required—and received—an immediate monetary policy response. By the end of the day on October 19, billions of dollars of financial wealth had been lost, and fears of a possible collapse of the financial system and, ultimately, of the economy were palpable. The Federal Reserve responded promptly and unequivocally to these threats by issuing a brief statement the next day that emphasized its willingness to support the system with adequate liquidity. This statement was buttressed by open market operations that satisfied increased demands for liquidity and eased money market conditions. In the 2 weeks immediately following the crash, borrowing from the Federal Reserve declined to a level not seen since the initial tightening of policy in the spring, excess reserves soared to nearly double their usual amount, and the Federal funds rate dropped back to the 6% percent range that prevailed during the summer. The stock market plunge changed the circumstances faced by monetary policymakers in an important way. The market break caused an 44 abrupt loss of wealth and consumer confidence, removing some of the impetus for higher growth and higher prices. The balance of risks shifted as the possibility of recession increased, and the general level of uncertainty about the outlook was heightened enormously. In these circumstances, it was appropriate for the Federal Reserve to respond by making reserves freely available. After its initial response, however, monetary policy began to take a more cautious tack. Amid signs that the economy had strong momentum going into the fourth quarter, and with few clear indications of economic retrenchment in reaction to the crash, the Federal Reserve took no further moves to ease policy, keeping the discount rate at 6 percent. Most monetary and reserve aggregates weakened over the balance of the year. Ml, MIA, and total reserves each ended the year below their pre-crash levels, and M2 remained well below its target growth range, rising at just a 4 percent rate for the year as a whole. Immediately following the 508-point drop in the Dow, the Federal Reserve's operations were exemplary. It was in the right place at the right time, supporting the financial system with ample liquidity. While it was appropriate for the conduct of policy to change subsequently (once constant reassurances to the markets were no longer needed), the stance of monetary policy at the end of 1987 may have underestimated the risks to adequate economic growth. At the end of the year, interest rates were down from their October highs, but they remained above the levels of January through August, while monetary aggregate growth remained weak. More recently, declining interest rates and increased money growth suggest that the Federal Reserve has been more supportive of economic growth. THE ECONOMIC OUTLOOK The Administration's economic forecast anticipates that the rate of economic expansion will slow this year from the rapid pace set in 1987. Subsequently, growth is projected to resume at a rate that more fully reflects the economy's long-term potential and that promises further reductions in unemployment. Improvement in the U.S. real trade balance is expected to contribute to output and employment growth in coming years, as it did in 1987; this contribution will play an especially important role in 1988. Increases in the workingage population, in labor force participation rates, and in the education, skill, and experience of the work force, together with an expanding capital stock and improving technology, are projected to sustain growth of the economy's output at a rate sufficient to meet rising domestic and international demand. The inflation rate is projected to move gradually downward from the 4 percem range charac- 45 teristic of the current expansion toward the long-term goal of price stability. Underlying this outlook are economic policies that are assumed to support these developments. FORECAST FOR 1988 Real GNP is forecast to rise 2.4 percent from the fourth quarter of 1987 to the fourth quarter of 1988, somewhat slower than the 3.8 percent increase in 1987. Nevertheless, output growth in 1988 is expected to generate employment growth sufficient to match increases in the labor force and to keep the unemployment rate at about its current level. As a result, the average unemployment rate during 1988 is likely to be the lowest in 13 years. The expected slowing of real GNP growth in 1988, also widely anticipated by private forecasters, reflects economic developments during 1987, especially those during the last quarter of the year. The low rate of personal saving and the slow growth of real disposable income through the third quarter of last year already suggested some prospective slowing of growth in consumer spending—even before the stock market crash lowered household wealth and consumer confidence. Interest rates declined significantly after the market break, but they remained above their levels at the beginning of the year. Slow growth of monetary aggregates throughout 1987 points to some possible weakening of economic growth in 1988. The buildup of inventories at the end of 1987 also indicates a likely need to reduce production growth relative to final sales growth in the new year. Weighing on the other side, gains in disposable income at the end of 1987 and tax rate reductions taking effect in January 1988 are likely to support consumer spending. Declines in mortgage interest rates promise a future boost for residential construction. Perhaps most important, prospects for continued strong growth of U.S. exports look excellent. All told, however, real GNP growth in 1988 appears likely to lag behind the rapid pace of 1987. Probably the most immediate concern is the fast pace of inventory accumulation during the fourth quarter of 1987. In particular, nonfarm inventories appeared to rise at an unsustainable rate. To correct this situation, production will have to decrease relative to final sales. Final sales are expected to show renewed growth in 1988, after being essentially flat in the final quarter of 1987. Consequently, an outright decline in production can be avoided. The inventory adjustment can be achieved through slower production growth relative to final sales growth. This essentially reverses the situation in 1987. As discussed earlier, inventory building accounted for one-half of overall economic growth last year, more than offsetting deceleration in other domestic components of GNP. In 1988 inventories are expected to accumulate at a slower and more sustainable pace. This slowdown will have a negative impact on real GNP growth, possibly with much of the effect felt in the first half of the year. Modest gains for most other domestic components of demand and strong gains for the U.S. trade sector are expected to keep real GNP growing. Real net exports will be one of the main sources of growth in the economy in 1988, providing nearly half of overall output growth. Rapid productivity gains in manufacturing, moderate wage increases, and the effects of past exchange-rate adjustments will continue to help U.S. businesses expand exports in foreign markets and compete against imports at home. In addition, anticipated slow growth of final demand within the U.S. economy and the possible effect of the inventory correction on imports are expected to restrain growth of imports and to contribute to net export gains. In 1987 growth of real consumption slowed to a 0.6 percent rate from the rapid pace set earlier in the expansion, and it actually fell at a 3.8 percent annual rate in the fourth quarter. The personal saving rate finished the year 1.3 percentage points above the year-earlier rate, due entirely to the drop in consumer spending and a strong gain in disposable income during the last quarter of the year. Given the high rate of auto purchases in the third quarter of 1987, the low personal saving rate for most of the year, and the likely effects of October's stock market decline, it was widely anticipated late last year that there would be some downward adjustment in consumer spending. It appears that much of that adjustment occurred in the fourth quarter. Accordingly, as indicated in Table 1-2, real consumption spending is forecast to rise at a modest 1.9 percent rate during 1988, slightly below the projected growth rate of real disposable income, and substantially below the 4 V2 percent annual growth rate of real consumer spending during the first 4 years of the current expansion. Despite slower growth of aggregate output this year, fixed investment is expected to accelerate somewhat. As reported in Table 1-2, nonresidential fixed investment is forecast to increase 4.4 percent during the current year, up from 3.7 percent last year. The improving trade picture, which is lifting capacity utilization rates in many manufacturing industries, will provide much of the motivation for increased investment. The need for additional capacity to meet demands both for exports and for import substitutes should continue to stimulate investment in equipment and nonresidential structures. Lower interest rates in 1988, partly as the result of slower economic growth and lower expected inflation, should strengthen housing demand. Residential investment, after falling in 1987, is forecast to increase 3.4 percent in 1988. 47 TABLE 1-2.— Economic Outlook for 1988 1988 forecast Item Percent change, fourth quarter to fourth quarter Real gross national product.. Personal consumption expenditures Nonresidential fixed investment Residential investment Federal purchases of goods and services State and local purchases of goods and services.. GNP implicit price deflator.. Compensation per hour2 Output per hour2 Unemployment rate (percent) 3 Housing starts (millions of units, annual rate).. 1 Preliminary. Nonfarm business, all persons. Unemployed as percent of labor force including resident Armed Forces. Note.—Based on seasonally adjusted data. Sources: Department of Commerce (Bureau of the Census and Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), and Council of Economic Advisers. 2 3 The deficit reduction agreement concluded by the Congress and the Administration, together with earlier efforts to control Federal spending, will contribute to a decline in real Federal purchases in the current year. Increases in State and local spending are expected to offset much of this decline, leaving a small negative contribution to GNP growth from the government sector as a whole. As discussed in Chapter 2, the United States has been notable among industrialized nations in its ability to create jobs both to meet the needs of an expanding labor force and to reduce unemployment. During the current expansion 15 million jobs have been created. Between the fourth quarter of 1986 and the fourth quarter of 1987, when real GNP rose 3.8 percent, 3 million new jobs were created, and the unemployment rate dropped from 6.8 percent to 5.8 percent. Even though slower real growth in the current year is not expected to bring further immediate reductions in the unemployment rate, it is anticipated that some IV2 million new jobs will be created as employment growth keeps pace with an expanding labor force. Higher oil prices and higher import prices increased the 1987 inflation rate (as measured by the CPI) above the very low rate recorded in 1986. Higher import prices also are expected to contribute to consumer price inflation in 1988. However, after a year of slow growth of monetary aggregates, and in view of the expected slowing of real GNP growth, acceleration of inflation is not seen as a likely danger in 1988. On a fourth-quarter to fourth-quarter basis, the CPI 48 is forecast to rise 4.3 percent in 1988, a small decline from the rise in 1987. The GNP deflator, which is not affected directly by import prices, is forecast to rise 3.9 percent in 1988. The increase from 1987 primarily reflects a shifting of weights attached to different component prices used to calculate the deflator. It does not signify an acceleration of inflation. The Administration's forecast for 1988 takes account of the favorable effects of tax reform, i.e., full implementation in January 1988 of the reduced marginal tax rates mandated by the Tax Reform Act of 1986 and continued confidence in the preservation of tax reform's incentives for growth and efficiency. Embodied in the forecast is the expectation that the budget compromise agreed to by the Administration and the Congress will be followed, and that rates of demand growth in other industrial countries will be sufficient to sustain world output growth while the U.S. trade deficit is being reduced. Also critical for the forecast is the assumption that monetary authorities will provide sufficient liquidity to support real growth without fueling an acceleration of inflation. PROJECTIONS FOR 1989-93 The Administration's medium-term projections show real GNP growth strengthening after 1988, with growth averaging 3.3 percent annually for the period 1989 through 1993. This projection is based on the assessment that recent events in financial markets and slower growth in 1988 will not materially alter the longer run growth potential of the U.S. economy. Table 1-3 presents yearly estimates for major components of the medium-term projections. These estimates are not intended to be year-to-year forecasts; rather, they are meant to reflect underlying economic trends and Administration policies. Implicit in the Administration's medium-term projections are important economic policy assumptions similar to those underlying the forecast for 1988. First, tax increases that would dull incentives to work, invest, and produce and that would impair the efficient allocation of resources are avoided, and the benefits of tax reform are preserved. Second, continued progress is made in reducing the Federal deficit, primarily by restraining the growth of Federal spending while allowing Federal revenues to rise with the growth of the economy. Third, government regulation continues to be directed toward legitimate interests of public policy and does not again become an excessive and unnecessary burden to enterprise and growth. Fourth, monetary authorities supply adequate liquidity to sustain economic expansion while fostering progress toward the long-run goal of price level stability. Fifth, protectionist pressures, which could provoke retaliation and hamper U.S. access to foreign markets, continue to be 49 TABLE 1-3.—Administration Economic Assumptions, 1988-93 [Calendar years] Item 1988 1990 1989 1991 1992 1993 Percent change, year to year Real GNP... 2.9 3.1 3.5 3.4 3.3 .0 .8 1.5 1.9 2.0 1.9 Output per hour1 1.4 1.8 2.0 2.0 2.0 2.0 Consumer price index2 4.3 4.1 3.6 3.2 2.7 2.2 116.1 118.1 120.0 121.9 123.8 125.5 5.8 5.6 5.4 5.3 5.2 5.2 Real compensation per hour1 3.2 Annua level Employment (millions)3 Unemployment rate (percent) 4 1 2 3 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. resisted successfully. This last assumption is especially important in view of the contribution that an improving U.S. trade balance is projected to make to overall U.S. economic growth in the medium term. It is crucial that American businesses be permitted to compete in markets that are as free as possible from the distorting effects of trade barriers. 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 goals specified in the act. Business fixed investment grew 3.7 percent in 1987, and it is expected to continue expanding over the next 6 years in response to a growing economy. Strong growth of manufacturing output and increases in capacity utilization in manufacturing industries provided an important stimulus to investment growth in 1987. This development was related to strong growth of U.S. exports, which is expected to persist in 1988 and later years and thus support future investment growth. More generally, it is the view of the Administration that the best way to promote investment is to maintain a stable, growing, and flexible economy that can profitably employ an ever-larger stock of physical and human capital. The Administration has sought by means of tax reform, deregulation, privatization, and other policies to provide such an environment. Chapter 5 of this Report discusses in greater detail the proper governmental role in promoting economic efficiency and investment, particularly investment in human capital and in research and development. 50 The Administration's estimates of important measures that address goals specified in the Full Employment and Balanced Growth Act are summarized in Table 1-3. Projected increases in output and employment, higher real income and productivity growth, and lower inflation and unemployment will move the economy along the path to the targets set by the act. As was discussed earlier, 15 million jobs have been created during this expansion in an environment of decelerating inflation, and more can be accomplished in coming years. Chapter 2 documents in more detail the progress made so far in attaining the goals specified in the act and outlines the prospects for future gains. DETERMINANTS OF GROWTH 1988-93 The long-run improvement in the Nation's standard of living implied by the Administration's economic projections hinges on the continued expansion of the economy's capacity to produce. Important determinants of this capacity are the supply of labor, its level of utilization, and its productive ability. The supply of labor is influenced by the size of the population and its demographic characteristics, by incentives to undertake employment in the market economy, and by the cyclical state of the economy. The level of utilization of the labor force, of course, responds primarily to fluctuations in the level of economic activity. The productivity of labor depends on the education, experience, and skills of the labor force, on the supplies of physical capital and other cooperating factors of production, on the technological efficiency of production processes, and on the economic efficiency of resource allocation. Except for the level of utilization of labor, the behavior of the determinants of the economy's productive capacity is governed mainly by long-term developments in the economy, and is influenced by government policies that affect these longer term developments. Favorable longer term trends and policies directed at improving growth are projected to maintain the momentum that the economy has developed during the 1980s, returning it to the trend rate of growth of the postwar era. The sources of growth in the economy's productive potential that underlie the Administration's medium-term projections are organized into an accounting framework in Table 1-4. In order to focus on trends in the economy and to avoid the complications of cyclical fluctuations, the first two columns of the table show growth rates from business cycle peak to business cycle peak for historical periods. The third column displays growth from the peak of the last business cycle through 1987, and the final column presents growth rates over the projection period, which extends through 1993. 51 TABLE 1 - 4 . —Accounting for Growth in Real GNP, 1948-93 [Average annual percent change] 1948 IV to 1981 III Item 1973 IV to 1 9 8 1 III 1 9 8 1 III to 1987 IV1 1987 IV1 to 1993 IV GROWTH IN: 1) Civilian noninstitutional population aged 16 and over 2) PLUS: Civilian labor force participation rate 0.9 .5 3) EQUALS: Civilian labor force 4) PLUS: Civilian employment rate 1.8 -.1 2.4 -.4 1.4 .1 5) EQUALS: Civilian employment 6) PLUS: Nonfarm business employment as share of civilian employment 7) 8) 9) 10) EQUALS: Nonfarm business employment PLUS: Average weekly hours (nonfarm business) EQUALS: Hours of all persons (nonfarm business) „ PLUS: Output per hour (productivity, nonfarm business) 11) EQUALS: Nonfarm business output 12) LESS: Nonfarm business output as share of real GNP 13) EQUALS: Real GNP 1.5 .2 1.7 -.4 3.3 2.1 -.6 1.7 -.1 2.0 1.4 1.6 1.9 2.0 -.1 3.4 .6 3.5 .3 2.2 2.8 3.2 1 Data for 1987 are preliminary. Note.—Based on seasonally adjusted data. Detail may not add to totals due to rounding. Sources: Department of Commerce (Bureau of the Census and Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), and Council of Economic Advisers. Growth of the labor force is expected to be somewhat slower during the projection period than earlier in the postwar era. As Table 1-4 shows, labor force growth is determined by growth in the adult population and by increases in labor force participation (the fraction of the adult population in the labor force). The gradual decline in the growth rate of the adult population that has occurred since the baby-boom generation reached adulthood in the 1960s and 1970s is expected to continue into the next decade. Also, strongly rising rates of labor force participation that have existed since the 1970s are expected to continue in coming years. Increases in overall participation likely will reflect continued entry of women into the work force, higher participation by youth as they make up a smaller proportion of the population, and a slowing of the decline in participation by people over 55. Significantly lower marginal tax rates on labor income are expected to encourage labor force participation in the years ahead. Furthermore, maintenance of a stable, growing economy with expanding employment opportunities encourages increased labor force participation. Overall, the civilian labor force is projected to rise 1.4 percent per year during the projection period. Civilian employment is projected to grow slightly faster than the labor force from 1988 to 1993, reflecting further modest declines in the rate of unemployment. The 0.1 percent annual increase in the employment rate documented in the last column of the table reflects the estimated decline in the unemployment rate from current levels 52 to 5.2 percent by 1993. (Chapter 2 discusses the prospects for reductions in unemployment in coming years.) The estimate of civilian employment growth is adjusted to cover the nonfarm business sector in order to match published statistics for productivity. A further adjustment to account for a slight projected decline in the length of the workweek yields the growth rate of total hours available for production indicated in Table 1-4. The sum of the growth rate of total hours and the growth rate of output per hour (productivity for nonfarm business) determines the growth rate of nonfarm business output over the medium term. After adjustments are made for the effect of relatively stronger growth in the nonfarm business sector than in other sectors in the economy, the rate of growth of real GNP is arrived at on the final line of Table 1-4. The table shows that the average growth rate of the economy through 1993 is projected to be almost the same as the average rate of the postwar era, despite slower growth of the adult population. Growth of nonfarm business output averages 3.5 percent annually for the projection period, slightly higher than the 3.3 percent average for the 1948-87 period. Slower population growth is projected to be offset by continued strong increases in labor force participation and a higher rate of productivity growth. Critical to these projections is the assumption of a continued pickup in productivity growth from the low rates experienced during the 1970s and early 1980s. This assumption recognizes a number of favorable trends in the economy that are lifting productivity growth, as well as policy initiatives that should promote technological change and growth in physical and human capital. Aging of the baby-boom generation implies a trend toward a more experienced, more educated, and more skilled work force that should translate into improved productivity growth in coming years. Furthermore, labor productivity growth should rise as the result of increasing the ratio of the stock of physical capital to labor. Slower growth of the labor force will facilitate this process of "capital deepening" in coming years. Continued stability and gradual decline of the inflation rate also should contribute to stronger productivity growth by removing a major cause of distortions in the allocation of capital. Oil and energy prices are expected to remain lower than in the late 1970s and early 1980s, implying that firms will have more resources to spend on investments that enhance general productivity rather than having to focus so heavily on investments that reduce energy costs. Government policies also should contribute to increased productivity growth. Partly as a result of government initiatives, research and development expenditures as a share of GNP are expected to remain higher than in the 1970s, thus promoting innovation and technologi- 53 cal change. Government initiatives to improve education and to promote investment in knowledge and human capital also should lift productivity growth. Tax reform has lessened the distortions to investment decisions by establishing more equal effective tax rates across investment activities. This effect, coupled with policy initiatives to lower market barriers and distortions, will allow capital and labor to realize more fully their productive potential. CONCLUSION The current economic expansion entered its sixth year in 1987 and became the longest peacetime expansion in U.S. economic history. Real GNP recorded a strong 3.8 percent gain last year, 3 million new jobs were created, and the unemployment rate dropped by nearly a full percentage point. Early in the year, inflation rose temporarily into the 5 percent range, due primarily to rising energy prices. For the year as a whole, however, inflation remained in the 4 percent range characteristic of the current expansion. An important transition was made from an expansion led by growth of domestic demand and with a deteriorating trade position, to one in which improving real net exports made an important positive contribution to growth. The manufacturing sector in particular benefited from the improving trade situation, recording substantial gains in employment and output. Dramatic progress was made in reducing the Federal deficit, with a cut of one-third achieved in fiscal 1987. However, some of the developments in 1987, particularly in the last quarter, suggest a slower pace of economic advance in 1988. Interest rates rose persistently through the first three quarters of 1987, due primarily to the vigor of the expansion, to increased worries about higher inflation and a lower dollar, and to a tightening of monetary policy after 2 years of relative ease. After the stock market drop on October 19, interest rates declined significantly, but still closed the year above the levels at which they had started it. The decline in stock prices cut the market value of equities back essentially to the level at the end of 1986. This loss of wealth, together with the,effect of the stock market break on consumer confidence, was widely anticipated to dampen the growth of consumer spending somewhat. In the fourth quarter of 1987 output continued to grow strongly, but it ran well ahead of final demand, leading to a buildup of inventories. Correction of this situation implies a period in which output grows more slowly than final demand. During 1988 strong growth of exports, some recovery of consumer spending, and anticipated growth of fixed investment should enable this inventory correction to be achieved in the context of continued economic expansion. 54 In sum, the longevity of the current expansion and the robust growth exhibited in its most recent year testify convincingly to the dynamism and resilience of the U.S. economy. Inevitably, no economic expansion proceeds at an absolutely even pace. The economy had a good year in 1987—better than in 1986, and certainly much better than in past years of recession or high inflation. This year does not promise to be quite as good as 1987. However, the mistakes of the past are not being repeated. Inflationary pressures are not being built up that will once again distort the economy and impair its growth, ultimately bringing on the wrenching readjustments of disinflation before a stable foundation for economic progress can be reestablished. Further progress toward the long-term goal of price level stability is in prospect. The Federal deficit has been reduced substantially, and agreement has been reached on further reductions that do not undermine the benefits of low and stable marginal tax rates. The real trade deficit has begun to decline, and its further narrowing promises to be an important source of strength for the U.S. economy. The present economic expansion, and the substantial benefits it brings, can continue through 1988 and beyond. 55 CHAPTER 2 Rising Employment, Productivity, and Income "MAXIMUM EMPLOYMENT, PRODUCTION, and purchasing power" are the fundamental goals of economic policy established by the Employment Act of 1946. These goals are among the most important criteria by which the success of the Administration's economic policies must be assessed. The overall record of the last 7 years is good. Since the longest peacetime expansion began in November 1982, 15 million new jobs have been created; production, as measured by real gross national product (GNP), has increased by almost 23 percent; living standards, as measured by real GNP per capita, have grown at an average annual rate of 3.2 percent; and inflation is down from double digits to a 4 percent annual rate. Despite these accomplishments questions have been raised about the breadth of U.S. economic growth, the strength of the industrial base, and the rate at which incomes and productivity are rising. And as the unemployment rate recently approached its lowest levels in 15 years, people have wondered if further reductions in unemployment will accelerate inflation, as has happened in the past. Many of these concerns are based on misconceptions about recent trends in employment, productivity, and income growth. These trends indicate that (1) most major demographic groups have shared in the employment and income gains realized during the current expansion; (2) employment growth has been strong particularly in highpaying occupations; (3) the U.S. industrial base remains strong and has not lost ground to other sectors of the economy; (4) incomes and productivity have rebounded after a period of slow growth in the 1970s; and (5) as U.S. economic growth continues, further reductions in the unemployment rate can be sustained without the damaging effects of accelerated wage and price inflation. These features of the current expansion have not only ensured increased employment, production, and income; they also have improved the prospects for future growth. By virtue of its longevity and steadiness, the recent economic expansion has simultaneously improved both living standards, through increased employment and incomes, and competitiveness, through improved productivity. These 57 gains in competitiveness can be expected to generate further gains in employment and incomes in the future. EMPLOYMENT AND OUTPUT Strong employment growth is one of the outstanding features of the current expansion. Since the expansion began in November 1982, total employment has increased by 15 million, and the unemployment rate has fallen by 4.9 percentage points to 5.7 percent. By December 1987 the proportion of the working-age population employed reached a record 62.3 percent, and the unemployment rate stood at its lowest level since July 1979, and within 0.2 percentage point of its lowest level since 1974. These employment gains exceeded the average rate of growth experienced in other postwar expansions, and they far surpassed the growth rates of other major industrial countries. Employment has risen at a 2.7 percent annual rate as compared to a 2.5 percent rate in past expansions. The U.S. economy has added three times as many workers as the six other economic summit countries combined, as measured from either 1973 or 1982. This accomplishment is remarkable, considering that the combined working-age populations of these countries are more than one and one-half times the workingage population of the United States. This difference in growth reflects not only the rapidly growing U.S. labor force, but also the more than tripling of unemployment rates in France, Germany, and the United Kingdom since the mid-1970s. These strong gains in U.S. employment have been associated with a brisk rate of growth in real output. The real value of goods and services produced in the U.S. economy has increased at an annual rate of 4.2 percent since the expansion began, a pace that is comparable to the average rate of growth in other U.S. postwar expansions, but exceeds the rate of growth experienced by many other major industrial countries. Only two other postwar expansions, the first beginning in 1949 and including the Korean war, and the second beginning in 1961 and including the Vietnam war, have had faster real output growth over a 5-year period. The recent strength of GNP growth in the United States as compared to other industrial countries marks a break from past trends. Between 1960 and 1980 real GNP growth in the United States lagged behind output growth in the other six economic summit countries, except the United Kingdom. In contrast, since 1982 only output growth in Canada has exceeded growth in the United States. 58 THE BREADTH OF EMPLOYMENT GAINS Increases in employment and reductions in unemployment during the current expansion have affected all major demographic groups and virtually all areas of the country. During the current expansion unemployment rates for men and women have fallen by 5.4 and 4.3 percentage points, respectively, recording their largest declines of any expansion in the postwar era. This progress reflects both the depth of the 1981-82 recession, and the durability of the current expansion. Moreover, during this expansion, the unemployment rate for women has fallen to nearly the same level as the unemployment rate for men, in contrast to earlier periods when the rates for women were significantly higher than those for men. Gains in employment and reductions in unemployment rates have been particularly large for minority groups. Employment of black workers has risen by 2.4 million since November 1982, with black female employment rising by 1.3 million and black male employment rising by 1.1 million. As shown in Table 2-1, these employment gains are significantly larger than those for other workers. As employment has risen, unemployment rates for black males and black females have fallen by 9.9 and 6.1 percentage points, respectively. Both the gains in employment and reductions in unemployment rates are substantially larger than those recorded during the 1975-80 expansion. TABLE 2-1.—Changes in Employment and Unemployment by Selected Demographic Groups, 1975-87 Unemployment rate Employment Demographic group1 1975 to 1980 1980 to 1982 1975 to 1980 1982 to 1987 1980 to 1982 1982 to 1987 Percentage point change Average annual percent change ALL CIVILIAN WORKERS 3.3 0.3 2.7 -2.3 4.5 5.0 Females Males Both sexes 16-19 4.8 2.3 2.6 .9 -1.2 7.3 3.3 2.3 1.0 2.7 -2.1 3.4 3.3 5.3 7.6 -4.3 -5.4 -8.0 Black 3.8 .8 4.7 -2.1 7.2 -8.0 4.9 2.9 2.3 .1 1.7 -9.3 5.1 4.4 8.2 -2.3 -1.8 -2.9 5.6 8.7 11.2 -6.1 -9.9 -16.1 9.3 1.2 6.8 -3.4 6.5 -7.1 Females Males Both sexes 16-19 Hispanic 1 Persons 16 years of age and over, except as noted. Note.—Changes are measured from business cycle trough in March 1975 to business cycle peak in January 1980, from peak in January 1980 to trough in November 1982, and from trough in November 1982 to December 1987. Source: Department of Labor, Bureau of Labor Statistics. Civilian employment of Hispanic workers has risen 2.3 million since the expansion began. In percentage terms the employment of Hispanics has risen much faster than the rest of the work force, although more slowly than the rapid pace set during the late 1970s. 59 The rapid pace of Hispanic employment growth during the 1970s was partially due to rapid growth in the Hispanic labor force, which between 1973 and 1980 grew by 8.6 percent per year. Since 1982 the rate of Hispanic labor force growth has fallen by about one-third, and this slowdown accounts for the difference in employment growth during these two expansions. In recent years the pace of Hispanic employment growth has exceeded the rate of growth in their labor force, thus allowing their unemployment rate to fall by 7.1 percentage points. Youth employment has risen relatively slowly during the current expansion, reflecting slower growth of the population between 16 and 19 years of age than during the 1970s. Yet employment gains for black youths have been among the strongest of all demographic groups. During 1987 alone employment of black teenagers increased by nearly the same amount as it did during the entire 1975-80 expansion. At the same time unemployment rates, especially for black youths, have declined dramatically. For all youths the unemployment rate declined by 8.0 percentage points between November 1982 and December 1987 to reach its lowest level in 8 years. For black youths the unemployment rate declined by 16.1 percentage points to reach its lowest level in 13 years. Unemployment among black youths is, however, still unacceptably high. Gains in employment and reductions in unemployment rates also have been widespread geographically. Between November 1982 and November 1987, total employment increased in all but three States. It increased by more than 5 percent in 43 States, and by more than 10 percent in 38 States. During this period unemployment rates decreased in all but 2 States, declining by at least 2 percentage points in 39 States, and by at least 4 percentage points in 27 States. Most States with small employment gains and small unemployment rate reductions were energy producers that were affected adversely by the decline in energy prices, especially during 1986. The large and widespread gains in employment and reductions in unemployment rates during the past 5 years are primary benefits of a long and vigorous economic expansion. These gains demonstrate the principle that economic growth benefits all groups who participate in the economic system. And conversely, as shown in Table 2-1, virtually all groups are injured during periods without economic growth, as occurred between 1980 and 1982. CHANGES IN JOB QUALITY Employment gains during the current expansion have been largest in higher paying occupations. Nearly two-thirds of the new employment growth has been in managerial, professional, technical, sales, or 60 precision production occupations. Within these broadly defined occupational categories, employment growth has been strong for a wide variety of jobs. It has been less vigorous in lower paying, low-skilled occupations and in part-time work. For full-time workers, data recently available on employment and earnings in nearly 500 occupations show that about 50 percent of the increase in full-time employment between 1983 and 1986 occurred in occupations with real median earnings of at least $20,000 per year. The median earnings of these occupations were at least 10 percent above the median earnings of all full-time workers. Managerial and administrative jobs, which tend to pay the highest wages and salaries and employ the most educated workers, accounted for 21 percent of the gains in employment, even though these occupations accounted for only 11 percent of all existing jobs in 1983. In contrast, in low-paying occupations such as food preparation and services, janitorial services, and retail sales, where new job growth is commonly thought to be strong, the share of new employment growth was almost the same as the share of existing jobs. Employment growth was smallest, relative to its share of all jobs, for machine operators and other semiskilled blue-collar occupations. Moreover, studies have indicated that the share of total full-time employment accounted for by the lowest paying occupations declined during the 1970s and has continued to fall during the current expansion, while the share accounted for by mid- and high-paying occupations has increased. Thus the growth in employment during the current expansion has not occurred solely in higher or lower paying occupations with fewer employed in the occupations in between. The shift in employment toward higher paying occupations among full-time workers does not mask a shift from full-time to part-time employment. More than 90 percent of the increase in employment during the current expansion has been in full-time work. This share exceeds the share of full-time employment in the civilian workforce. For those employees who work part time, the vast majority, nearly 80 percent, work part time voluntarily, according to surveys conducted by the Bureau of Labor Statistics (BLS). The fraction of part-time workers who report that they would prefer to work full time rose in the late 1970s. After increasing substantially during the 1980 and 1981-82 recessions, it has fallen steadily during the current expansion. SHIFTS IN SECTORAL OUTPUT AND EMPLOYMENT During the current expansion real manufacturing output has increased more rapidly than real GNP, offsetting the effects of the recession and pushing the share of manufacturing output in real GNP 61 very close to its peak for the postwar period. The share of final goods (as distinct from services and structures) has also risen and approached its highest level since 1960. In fact, except for business cycle movements, the shares of real manufacturing output and real final goods output have been remarkably stable for 25 years. In contrast, there has been a long and relatively steady decline in the fraction of all workers who are employed in manufacturing or in goods-producing industries, and a consistent upward trend of the fraction employed in service-producing industries. More rapid gains in productivity in manufacturing and in goods-producing industries than in the rest of the economy have allowed declining shares of workers in these sectors to produce roughly constant shares of real GNP. Shifts in Final Product The value of the economy's total final product, as measured by real GNP, is divided officially into three broad categories: goods, services, and structures. The value of these products includes the contribution of intermediate goods and services from many different industries. For example, the price of an automobile includes the value of the transportation provided by the railroad industry, the value of the electricity provided by the utility industry, and the value of the salesperson's time provided by the retail industry. These particular services are not included as final services, since their value is already embodied in the output of the goods sector. Final goods and structures account for more than one-half of total output. These products' share of real GNP has fallen slowly during the postwar era, while the share of final services has risen gradually. However, since 1960 final goods' share of GNP has remained roughly unchanged. In 1987 final goods represented 43 percent of GNP, the same share as in 1965 and only 0.7 percentage point below its level in 1960. During the last two decades the slight gains in final services have coincided with a declining share of output in structures. The relative stability of the shares of final goods, services, and structures in total GNP demonstrates that the United States is not becoming primarily a service economy. While final goods' share of GNP has remained stable over the last two decades, there have been dramatic changes in the types of final goods produced and consumed. Since 1948 production of durable goods has risen substantially relative to nondurable goods. Even within these product categories, there have been changes in the goods demanded by consumers. In durables, consumption of books and kitchen appliances has fallen relative to motor vehicles and electronic equipment. Similarly, in nondurables, consumption of basic food stuffs has fallen relative to processed foods. These changes in 62 the distribution of production across final products reflect the responses of the economy to changes in consumer demand. Shifts in Value Added GNP also can be partitioned based on the contributions that particular industries or sectors make to the value of the final product. Value added (or GNP originating) in an industry is the difference between the value of its output and the value of inputs purchased from other industries. For example, the measure of value added in the motor vehicle industry removes the contribution of the railroad, public utility, and retail industries from the total value of an automobile. The remaining portion, the value added, represents the industry's contribution to GNP. Therefore the value added of the goods-producing sector (which includes agriculture, mining, construction, and manufacturing) is not equal to the final value of goods and structures. In 1986 real value added by the goods-producing sectors accounted for 32 percent of GNP, whereas the share accounted for by final goods and structures was 53 percent. The share of value added for the goods-producing industries has declined throughout the postwar period. The economy's goods-producing sector accounted for 42 percent of GNP in 1948, 40 percent in 1960, and 36 percent in 1973. The declining share in this sector has occurred entirely as a result of declining shares of value added in agriculture, mining, and construction. The share of value added in manufacturing has remained remarkably stable throughout the postwar years, fluctuating in a narrow range between 19 and 23 percent. The manufacturing sector's share of value added has risen since the last business cycle peak in 1981. In 1986 manufacturing accounted for 22 percent of GNP, about 1 percentage point above its share in 1981, and only 0.7 percentage point below its peak share in 1973. Manufacturing's share of GNP has remained stable despite substantial changes in the types of final goods, services, and structures produced in the economy. These changes reflect the shifting demands for final goods by consumers and for intermediate goods by producers. To accommodate the shifting demand for new products, capital and labor have been reemployed in new tasks in the manufacturing sector. This sector has maintained its share of total output because it has adapted to the changing demand for final goods, and because it continues to be an important supplier of intermediate products for final services. Shifts in Employment Large shifts in employment of labor across industrial sectors have occurred during the postwar period. The share of employment in 63 service-producing industries has risen steadily. In 1948 these industries (which include transportation, communications, public utilities, wholesale and retail trade, finance, insurance, and real estate, and other business and personal services) accounted for nearly 58 percent of all nonfarm payroll employees, and they contributed more than 59 percent of total GNP. Over the years the share of employment in the service-producing sector increased faster than its share of GNP. Recently the share of employed individuals working in this sector has exceeded 75 percent, while the share of total value added in this sector has topped 67 percent. Movements in the share of employment in goods-producing industries are roughly the opposite of such movements in the share for service-producing industries. The share of goods-producing employment and manufacturing employment has declined throughout the postwar era. Currently there are 1.6 million fewer nonfarm jobs in the goods-producing sector and more than 1.9 million fewer jobs in manufacturing than in 1979. The share of total employment in manufacturing has declined from 35 percent in 1948 to 26 percent in 1973 to 19 percent in 1987. Moreover, this trend is not confined to the United States. In all the major industrial countries, shares of employment in manufacturing have been declining since at least 1960, and in all except Japan the absolute level of employment in manufacturing has been declining since 1979. CHANGING PATTERNS OF DEMAND AND PRODUCTIVITY While manufacturing's share of employment has declined, its share of value added has remained roughly constant. These trends are illustrated by Chart 2-1, which compares the ratio of manufacturing employment to total nonfarm employment with the ratio of value added in manufacturing to real nonagricultural gross domestic product (GDP). In 1960 about 31 percent of all nonfarm workers were employed in manufacturing and produced approximately 21 percent of total output. By 1986 a slightly larger proportion of total output was produced by 19 percent of nonfarm workers. This trend does not suggest any long-term weakness in the manufacturing sector. Instead, it reflects stronger productivity growth in manufacturing than in other sectors of the economy. More generally, the rise in the share of employment in the serviceproducing sector and the corresponding decline in the manufacturing sector reflect expected responses to changing patterns of demand for goods and services as well as differential rates of productivity growth among various sectors of the economy. For most of the past 40 years the output of services has risen faster than real GNP, because households have wanted to spend a larger fraction of their rising incomes 64 Real Output and Employment Shares in Manufacturing Percent 32 30 28 Employment ShareV 26 24 22 , 2 18 Real Output Shared b ru i 1960 i i i I i 1965 i i i i I I 1970 I I I 1975 I I I I I I 1 I 1980 I 1 1985 -V Manufacturing as percent of nonfarm payroll employment. -2/Manufacturing as percent of real gross domestic product less agriculture, forestry, and fisheries. Sources: Department of Commerce and Department of Labor. on services. The output of services can rise faster than GNP when productivity growth is more rapid in the service-producing sector than in the rest of the economy, or when employment expands more quickly in services than in goods. However, productivity growth in much of the service-producing sector lagged somewhat behind productivity growth in the goods-producing sector until 1973, and it has stagnated since then. The large gains in output of services have been fueled not by productivity advances but by relatively large increases in employment. Thus the increase in the share of employment in the service sector is the result of growing demand and lagging measured productivity. Like manufacturing, the agricultural sector's share of total employment has exhibited a downward trend for some time. Productivity growth in agriculture has been quite strong, while its share of national output has been falling. As discussed in Chapter 5, it is estimated that in 1810 approximately 80 percent of the U.S. labor force was employed in agriculture. In 1910 agriculture's share was approximately 30 percent; in 1987 it had fallen to 3 percent. During this 65 long period the share of agricultural output declined less rapidly than the share of agricultural employment, reflecting rapid increases in productivity. Even though agricultural employment as a share of total employment and agricultural output as a share of total output have decreased, Americans today are significantly better fed and spend a smaller fraction of their incomes on agricultural products than they did during the 19th century. Because of rapid and sustained increases in agricultural productivity, the small fraction of the U.S. labor force working in agriculture is able to produce all the food required for domestic consumption, plus a substantial surplus available for export. Forestalling the downward trends in the shares of agricultural employment and output would have been counterproductive. Despite the interference of many agricultural policies, resources have moved into and out of agriculture in response to changes in consumer demand, agricultural productivity, and nonfarm opportunities. Similarly, it would be a serious policy error to attempt to maintain the share of output or employment in manufacturing, or in any other industry. The relative constancy of the share of U.S. manufacturing output for the past 40 years is a consequence of particular circumstances. It is not an appropriate objective for economic policy. The declining share of employment in manufacturing in the United States and other industrial countries is not a sign of economic weakness. Indeed, even though it has contributed to a decline in the share of employment in manufacturing, the acceleration of productivity growth in U.S. manufacturing during the 1980s is unambiguously a source of economic strength. INCOME AND PRODUCTIVITY By the broadest available measure, American living standards have resumed a steady rate of increase during the 1980s, after a period of sluggish growth in the 1970s. To a large extent, these gains reflect improved productivity growth. During the 1970s, gains in real GNP per capita resulted primarily from an increasing proportion of working-age persons in the population and signified little gain for individual workers. During the 1980s, by contrast, improved productivity growth has allowed more rapid growth in compensation per worker. These gains in labor compensation are broad-based, benefiting all major demographic groups. Furthermore, the upswing in productivity growth will sustain gains in both per capita income and labor compensation in the coming years. Another beneficial effect of improved productivity growth has been its impact on the competitiveness of the manufacturing sector. Com- 66 bined with slower compensation growth, higher productivity growth in manufacturing has reduced the real cost of producing manufactured goods. The benefits of these cost savings have been realized broadly across the economy through lower consumer prices. Together with the recent depreciation of the dollar, lower real costs and lower relative prices of manufactured products have enhanced the competitiveness of U.S. manufacturers in world markets, thereby contributing to recent strong growth of exports. These gains would have been impossible, however, had labor and management failed to take advantage of opportunities for productivity improvement, or if they had failed to meet the challenges posed by foreign competition. The many collective bargaining agreements that have called for wage freezes or concessions, and that have addressed labor's concerns about job security and management's concerns about work rules, reflect the cooperation of labor and management. As a result, the manufacturing sector has corrected many of the important problems that plagued it a decade ago, and it stands wellpositioned for the future. INCREASES IN LIVING STANDARDS The broadest measure of the economy's ability to support the living standards of the American people is the real value of all goods and services produced in the economy each year, divided by the total population, i.e., real GNP per capita. As indicated in Table 2-2, real GNP per capita has grown at an annual rate of 1.8 percent since the last business cycle peak in 1981. This rate of growth has approached the rapid rate recorded between 1948 and 1973, has exceeded the rate experienced between the business cycle peaks in 1973 and 1981, and has equaled the average rate achieved in the United States since 1900. TABLE 2-2.—Growth in Real GNP per Capita and Productivity, 1948-87 [Average annual percent change] Contribution to real GNP per capita Real GNP per capita Period Real GNP per worker Employmentpopulation ratio Workingage population as share of total Business sector productivity 1 2.2 2.6 0.1 -0.4 3.2 2.0 .8 .2 1.0 2.0 1973 IV to 1981 III 1.1 .2 .2 .8 .7 1981 III to 1987 IV 2 1.8 .8 .8 .2 1.5 1948 IV to 1966 IV 1966 IV to 1973 IV 1 2 .. . . . Output per hour, all persons. Preliminary. Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics). 67 Real GNP per capita rises when a larger fraction of the population works or when those who work produce more. As indicated in Table 2-2, the importance of these two factors in generating higher living standards has differed over time. Between 1948 and 1966 real GNP per worker grew rapidly and more than offset the decline in the proportion of the population at work. The high birth rates of the 1950s increased the share of children in the population, thus causing a decline in the share of working-age persons. Between the mid-1960s and the early 1980s productivity growth declined significantly, but an increase in the fraction of the population at work partially offset these losses and helped to maintain a steady rate of growth in real GNP per capita. Productivity growth slowed during the mid-1960s, just as the babyboom generation began to enter the labor force. This influx of inexperienced workers slowed productivity growth but did not entirely account for the slowdown. From 1966 to 1973 growth in real GNP per worker averaged only one-third of its earlier postwar rate, and it nearly ground to a halt between 1973 and 1981. Yet living standards continued to rise during these periods, because the fraction of the population employed increased dramatically. As the baby-boom generation matured, the proportion of children in the population fell, and the potential pool of workers increased. During the middle and late 1970s nearly all gains in living standards resulted from an increase in the share of the population at work. In contrast, living standards have risen faster since 1981 because of accelerated productivity growth. While the rate of growth of real GNP per worker remains well below that achieved during the early -postwar era, these gains represent a substantial improvement over the 1970s. In addition to the encouraging gains in productivity growth, increases in the fraction of the population working continue to contribute to rising living standards. During the current decade, as women have entered the labor force in increasing numbers, the employment to population ratio has grown rapidly. This effect has been offset by slower growth in the share of the population 16 years of age and older. The decline in the birth rate since 1960 ensured that during the 1980s the share of adults in the population would grow more slowly and that increases in this share would play a lesser role in raising living standards than they did in earlier decades. In the longer term, strong growth in living standards at rates comparable to those of the early postwar era will require continued steady growth in productivity. Increases in the fraction of the population at work are likely to slow to about 0.8 percent per year; the share of working-age persons in the population is forecast to grow at 0.1 percent, and the employment-population ratio is forecast to grow 68 at 0.7 percent over the next 5 years (Chapter 1). Thus in the years ahead further gains in real GNP per worker will be the key to continuing rapid increases in living standards. Gains in real GNP per worker are closely related to standard measures of productivity growth. These measures differ because labor productivity usually refers to output per hour in the business sector of the economy, rather than output per worker for the whole economy. If the second and last columns of Table 2-2 are compared, it is apparent that labor productivity growth is generally somewhat higher, but follows the same general pattern, as growth of real GNP per worker. This difference reflects both a decline in the number of hours worked per worker during the postwar period and slower measured productivity growth in the nonbusiness sector, which constitutes one-seventh of the economy. Nonetheless, the implication from these two productivity measures is that recent gains in living standards are the consequence of recent increases in labor productivity growth, and that future gains in living standards depend critically on continued labor productivity growth. LABOR COMPENSATION AND PER CAPITA INCOME The growth of labor productivity exerts a powerful influence on the compensation earned by workers. Payments to workers, either in the form of wages and salaries or nonwage benefits, cannot consistently outstrip labor productivity growth without diminishing incentives for investment. Over time, slower investment is likely to mean slower growth in labor demand, labor productivity, and labor compensation. Conversely, strong labor productivity growth means that firms can increase their workers' pay and benefits without impairing profits. The experience of the United States and other major industrial countries is broadly consistent with this linkage between hourly compensation and labor productivity growth. After a period of sluggish or declining growth during the 1970s, U.S. productivity and compensation growth rebounded after 1981. Recent rates of growth, however, remain below the levels attained between 1948 and 1973, when compensation and nonfarm business sector productivity grew by 2.7 percent and 2.3 percent, respectively. After 1973 the rates of productivity growth slowed considerably, and real compensation actually declined slightly. Since 1981 productivity growth has averaged 1.4 percent per year, up from 0.6 percent during the previous decade, while compensation growth has resumed its upward trend, averaging 0.7 percent per year. Similarly, in the other leading industrial countries there has been a significant slowdown in labor productivity and compensation growth since the early 1970s. 69 After the early 1970s measures of real labor earnings in the United States showed an even more pronounced slowdown in growth than real labor compensation. As shown in Chart 2-2, real hourly earnings (for production and nonsupervisory workers) grew rapidly during the late 1960s, reaching a peak in 1973. They then fell by 10.1 percent between 1973 and 1981, and in 1987 real hourly earnings remained 9.5 percent below their peak level. Other measures of earnings, such as real weekly earnings of usual full-time workers, are similar and were lower in 1986 than in 1973. Chart 2-2 _ , ,, , _ . _ Real Hourly Earnings and Compensation {Deflated by CPI-W and CPI-U-X1) Index, 1967 = 100 128 124 — Real Compensation (CPI-U-X1) y/ — / - 120 - 116 112 "" 108 " " 104 ~~ y^\ \ /f / / ' / \ fS 9^/ /V*~" Real Earnings {CPI-U-X1} \ y \\ % \ \ Real Earnings (CPI-W) 100 - A *^% \ 1967 i i 1969 i i 1971 i l 1973 i i 1975 i _ i 1977 i i 1979 i ^y i 1981 "* i i 1983 i ••— i 1985 t 1987 Note.—Data relate to average hourly earnings of production workers or nonsupervisory employees on nonfarm payrolls and to average hourly compensation in the nonfarm business sector (all persons). CPI-U-X1 is the consumer price index for all urban consumers incorporating a rental equivalence measure for homeownership costs. Data for 1987 are preliminary. Sources: Department of Labor and Council of Economic Advisers. The pattern exhibited by the real earnings data is broadly consistent with movements in labor productivity, but it significantly distorts the impression of what has been happening to the level of real payments to labor. The consumer price index (CPI), used to correct for inflation in constructing real earnings series, overstated increases in homeowner costs before 1982. This distortion caused the rate of inflation to be overstated and measures of real earnings to be too low. Furthermore, data on earnings do not include employer-provided benefits (such as most pensions and health insurance) and employer 70 contributions to social security. The share of such employer-provided benefits and contributions is estimated to have risen from 10 percent of labor earnings in 1967 to 16 percent in 1987. Real labor compensation growth slowed during the 1970s, but nevertheless maintained an upward trend and is substantially above its levels of the early 1970s. The second line in Chart 2-2 shows the effect of using an alternative price index to correct for inflation when calculating real earnings. The BLS devised this index, the CPI-U-X1, to correct for the biases in the CPI during the 1970s. As seen in the chart, real earnings deflated by the CPI-U-X1 do not exhibit a substantial decline after 1973. If the measure of earnings is broadened to include other nonwage and nonsalary income, real hourly labor compensation of all workers is even higher. The third line in Chart 2-2 shows that real compensation grew between 1973 and 1981, and that it is presently 9 percent higher than in 1973. In general, the real incomes of American families also have risen since 1973, with most of these gains recorded after 1981. Real family income measures the total labor compensation and nonlabor money income of households with two or more related persons. Real income for the median family, measured in 1986 dollars, declined from $29,730 in 1973 to $26,990 in 1981, and rose to only $29,460 in 1986. As with measures of real earnings for workers, measures of real family incomes suffer from the bias in the CPI, which overestimates inflation during the 1970s. After correcting for this bias by using the CPI-U-X1, real family income still shows a $790 decline between 1973 and 1981. However, the adjusted real median family income in 1986 was the highest in U.S. history, and $1,430 higher than in 1973. Changes in the composition of families account for part of the trend in real family income. Over time, an increasing number of people have set up households separate from their parents or children. Thus the number of separate households (made up of either families or unrelated individuals) has grown relative to the size of the population, and average family size has decreased. Data on income per capita confirm that the trend toward lower family incomes during the 1970s was mainly due to smaller family sizes, not lower compensation. When the standard CPI is used to correct for inflation, real income per capita, measured in 1986 dollars, was unchanged at $10,220 between 1973 and 1981, and then rose $1,450 to $11,670 in 1986. When the CPI-U-X1 is used to correct for inflation, income per capita rose $680 between 1973 and 1981, and $1,360 between 1981 and 1986. Gains in real per capita income have been widespread across major demographic groups. When the CPI-U-X1 is used to adjust for infla- 71 tion, real per capita income for whites rose 7.7 percent between 1973 and 1981, and 13.1 percent between 1981 and 1986. For blacks, real per capita income rose 6.4 percent between 1973 and 1981, and 15.5 percent between 1981 and 1986. For Hispanics, real per capita income was up 14.0 percent between 1973 and 1981, and 7.6 percent between 1981 and 1986. These gains in real per capita income for major demographic groups, and the gains for the total population, are broadly consistent with movements in real GNP per capita and productivity. DETERMINANTS OF PRODUCTIVITY GROWTH Productivity growth, which contributes to gains in living standards and compensation, results from the combined effects of many factors. The productivity of labor is increased by human capital (such as education and work experience), by physical capital, by research and development, and by energy and other inputs that cooperate with labor in production. Studies that have sought to identify the total contribution of these factors generally have been able to account for about one-half of the productivity gains during the postwar period. In most studies a significant fraction of productivity growth remains ascribed to general "technological advance" that is not observed directly. Nevertheless, there is some consensus concerning the factors that contributed to the slowing of productivity growth during the middle and late 1970s, and its subsequent reversal during the 1980s. These factors include a growing proportion of persons in the labor force with little work experience, a proliferation of new government regulations, a lower level of research and development (R&D) expenditures relative to GNP, and higher energy prices. The impact of these factors was reversed during the 1980s, yielding higher productivity growth, which seems likely to continue into the future. In the coming years the increasing work experience of a maturing labor force and higher levels of educational attainment should yield significant gains in productivity. In addition, the policies and investments of the current decade should also contribute substantially to productivity growth. In the years ahead, the effects of tax reform, higher R&D spending, and the removal of burdensome regulation will improve productivity by encouraging greater efficiency in production. SECTORAL DIFFERENCES IN PRODUCTIVITY GROWTH The increase in productivity growth since 1981 has not occurred evenly across different sectors of the economy. Productivity in manufacturing rose at a rapid 4.2 percent annual rate between 1981 and 1987. These considerable productivity gains represent a substantial 72 improvement over the rates of growth achieved during the rest of the postwar era. From 1973 to 1981 productivity growth in this sector slowed to a 1.3 percent annual rate, after growing by 2.8 percent per year between 1948 and 1973. By comparison, the productivity performance of the nonmanufacturing sector during the last 20 years has been poor. In this sector unofficial measures of productivity growth slowed starting in the mid-1960s, remained unchanged between 1973 and 1981, and began to creep upward once again at a 0.4 percent annual rate during the current decade. Not only are these rates of growth substantially lower than those in the manufacturing sector, but they are also considerably lower than the 2.6 percent annual rate of growth realized in the nonmanufacturing sector between 1948 and 1966. The BLS does not report official estimates of labor productivity growth for the nonmanufacturing sector or for the major components of this sector. However, the Department of Commerce's measures of real value added, together with BLS's measures of hours paid, can be used to estimate labor productivity growth for each industry between 1948 and 1986. These measures of the growth of real value added per hour are shown in Table 2-3. The data suggest that labor productivity has failed to grow in several nonmanufacturing industries since 1981, in contrast to the strong growth that has occurred in manufacturing. TABLE 2-3.—Growth in Value Added per Hour Paid, 1948-86 [Average annual percent change, except as noted] 1986 output share (percent) 1 Sector 1948 1973 to 1981 to 1973 1981 to 1986 Goods-producing: 2.8 5.2 -6.8 -2.7 1.3 6.4 4.8 -1.1 4,5 2.4 3.4 1.1 1.7 6.0 2.1 4.3 3.2 3.5 21.7 2.3 5.2 5.9 2.7 -.2 4.3 .4 .5 .7 3.8 1.2 3.0 9.5 12.2 3.1 2.4 -.1 .5 4.0 2.5 11.0 15.4 1.5 1.4 2.2 -.1 _ 4 .3 1.2 -.3 — 1 100.0 2.9 2.6 4.0 5.7 27.3 4.6 4.0 .6 17.4 9.9 Transportation... Communication.. Utilities Trade Wholesale.. Retail Farm Mining Construction Manufacturing.. Durable manufacturing Nondurable manufacturing... Service-producing: Finance, insurance, and real estate.. Services Government enterprises BUSINESS.. 1 1.7 Detail does not add to total because of rounding. Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), and Council of Economic Advisers. 73 By these value-added measures of productivity growth, productivity gains in agriculture and communications have been strong throughout the postwar period. In manufacturing, mining, and wholesale and retail trade, productivity grew rapidly until the early 1970s, slowed after 1973, and has accelerated since 1981 to match or exceed its early postwar performance. In transportation and public utilities, the pattern is similar to manufacturing, but productivity growth since 1981 has not returned to early postwar levels. In construction, in finance, insurance, and real estate (FIRE), and in services (including business services and personal services such as health care), value added per hour grew steadily until the mid-1960s and very little thereafter. Since 1981 productivity in these areas actually has fallen. In construction, for example, real value added per hour peaked in 1965 and now has fallen to its 1948 level. Given the strong recovery of productivity growth in manufacturing, and the apparent gains in mining and in wholesale and retail trade, it appears that the failure of total business sector productivity to regain its early postwar growth rate can be attributed largely to the continued sagging productivity in construction, FIRE, and service industries. Alternative measures of productivity developed by the BLS confirm these differing patterns of productivity growth across industries. The BLS's productivity measures use gross output, instead of value added, to measure product. They are available on a selective basis for 150 industries for which the BLS has been able to quantify final output with reasonable reliability. For manufacturing industries, coverage is quite broad but not complete. The available data for manufacturing industries generally show a slowdown of productivity growth between 1973 and 1981, and an acceleration after 1981. The same holds true for most specific industries in mining and in wholesale and retail trade, though coverage is less extensive than for manufacturing. In the transportation sector, airlines, railroads, and petroleum pipelines show a dramatic resurgence of productivity growth after a significant slowdown between 1973 and 1981. Only the series for bus carriers indicates continued sluggish productivity growth after 1981. Data on telephone productivity confirm the pattern of rapid growth in value added per hour in the communications industry indicated in Table 2-3. For FIRE, the only series available is for commercial banks; it shows a significant acceleration of productivity growth after 1981. For other service industries, coverage is limited; the available series for hotels and motels, laundry and cleaning, and beauty and barber shops cover about 7 percent of total employment in this sector. These data show declining or much slower growth in produc- 74 tivity since 1981. For construction, there is no available measure of productivity growth based on final output. PROBLEMS OF PRODUCTIVITY MEASUREMENT Based on measures of both value added and gross output per hour, productivity growth appears strong in agriculture, mining, manufacturing, communications, and wholesale and retail trade. In transportation and FIRE, the data show mixed results on the strength of productivity growth. In construction and services, measured productivity has stagnated or even fallen. The recent decline in value added per hour an construction, ^FIRE, and services occurred despite the introduction of new communication and information processing systems and many advances in health care technology. For these sectors, not only does the pattern of growth in value added per hour diverge from that seen in manufacturing, it also appears inconsistent with observed improvements in technology. The forces behind the apparent deterioration of productivity in construction, FIRE, and services are not well understood. Problems in measuring value added and in apportioning output across sectors may partly explain the apparent poor productivity performance in these sectors. For example, measures of real value added are derived by deflating the nominal value of outputs and inputs by appropriate price deflators. Constructing price indexes that correctly account for changes in the quality of outputs and inputs can be difficult, especially when there is no physical output, or when changes in quality are hard to measure or even observe. The limited coverage of productivity measures based on gross output in construction, FIRE, and services indicates the problems faced in these sectors. The BLS currently is expanding the coverage of these productivity measures. In the meantime, however, they recommend that productivity measures based on value added should not be used as reliable measures of productivity in construction, FIRE, and services. The quality of productivity measures in these sectors does not necessarily affect the reliability of measures for the business sector as a whole. Business sector productivity is not a weighted average of productivity in each industry, but is the real value of final goods, services, and structures produced per hour worked. However, since value added can be hard to measure both because of problems in measuring real output and real input, the potential for mismeasurement of business sector productivity exists as long as industries with poor measures of value added also produce final products. The final sales of construction, FIRE, and services account for about one-third of the final product in the business sector. Thus distortions of these sectors' valued added increases the possibility of mismeasuring busi- 75 ness sector productivity. If the price index used to deflate the nominal value of final services understates the impact of quality changes, real output and business sector productivity also will be understated. The possibility that problems of measurement may be the cause of apparently slower productivity growth in the business sector should not be overstated. For one thing, some studies indicate that only about 5 percent of final product is measured poorly. For another thing, the same procedures measured significant gains in valued added per hour in construction, FIRE, and services before the mid-1960s. Thus there is nothing inherent in these measurement procedures that would cause productivity growth in these sectors to appear to, worsen in recent years. The disparity between measures of value added per hour in construction, FIRE, and services before and after the mid1960s could be explained either by workers becoming less productive, or by increasingly severe problems of measurement. Currently, however, there is insufficient evidence to support either hypothesis. In sum, there is clear evidence of a substantial improvement in the rate of productivity growth in manufacturing and several other sectors of the economy. These gains seem likely to continue. In contrast, there is no compelling explanation for the apparent decline in productivity in construction, FIRE, and services. It may be due partly to measurement problems. However, until improved output measures are developed, it is unlikely that productivity growth in these sectors will be better understood than it is now. COMPETITION AND ADJUSTMENT IN MANUFACTURING The increase in productivity growth in the business sector, and the increase in living standards since 1981, are explained largely by the dramatic strengthening of productivity growth in U.S. manufacturing. However, the benefits of stronger productivity growth in manufacturing have not been realized primarily in the real wages of manufacturing workers or in the profits of manufacturing enterprises. Instead, they have resulted in lower prices for manufactured products and greater purchasing power for consumers. This result reflects the normal operation of a competitive economy, supplemented by intense international competition in manufactured products. In a competitive economy, relatively strong productivity growth in one sector generally will not translate into relatively faster real wage growth for that sector's workers or strong profit growth for that sector's enterprises. Price competition and the mobility of labor and capital ensure that sectoral differences in wage growth and profit growth will not persist. Instead, sectoral differences in productivity growth tend to result in lower costs in sectors with faster growing productivity, and these lower costs are passed on to consumers in the 76 form of lower product prices. Over the long run, wage growth in different sectors generally reflects average labor productivity growth in the whole economy. And since higher rates of return attract additional capital investment, profit rates in different sectors also tend over time to reflect the rate of return for the economy as a whole. This process has been apparent in U.S. agriculture for many decades. Labor productivity in agriculture typically has increased two or three times faster than productivity in the U.S. economy as a whole. However, the earnings of agricultural workers and the profits of farm owners have not risen relative to comparable earnings and profits in the rest of the economy. Instead, consumers have been the primary beneficiaries of strong productivity growth in agriculture through declining relative prices of agricultural products. Similarly, in U.S. manufacturing since 1981 the real hourly compensation of manufacturing workers has risen by 0.3 percent per year, while labor productivity growth has surged ahead at a 4.1 percent annual rate. Profits of manufacturing corporations generally leveled off during the 1980s but rose sharply in 1987. Relative to net sales, real after-tax profits of manufacturing corporations were still 10 percent below their 1978-79 averages through the first three quarters of 1987. The primary benefit from stronger productivity growth in U.S. manufacturing has been lower unit labor costs relative to the total private business sector. This reduction in costs has translated into substantial reductions in prices of manufactured products. Between 1981 and 1986 the relative unit labor costs for manufactured products have fallen by 13 percent, and the relative prices of manufacturing output have fallen by 10 percent. Intense international competition enhanced productivity growth and influenced the allocation of its benefits among consumers, workers, and firms. The relative price of foreign manufactured products sold in U.S. markets fell sharply between 1980 and 1985. This decline in import prices was caused in large part by the strong appreciation of the U.S. dollar between 1980 and early 1985 (Chapter 3). Intense competition from foreign producers put pressure on U.S. manufacturers to keep their costs and prices down by limiting wage and profit growth and by enhancing productivity growth. The consumers of manufactured products thus were the primary beneficiaries of foreign competition and stronger productivity growth in U.S. manufacturing. The adjustment of U.S manufacturing to increased international competition was facilitated by the cooperation of labor and management. In manufacturing, where more than one-third of the wage and salary workers were union members in 1979, these adjustments required a break from the customary patterns of collective bargaining 77 agreements, in which wage increases often reflected trends in productivity growth and inflation. During the 1970s union real wage growth slowed just as productivity growth slowed, but the wages of comparable nonunion workers tended to grow even more slowly. As a consequence, the difference between the earnings of union and nonunion workers widened during the decade, implying higher relative costs for unionized firms. The combination of higher relative costs and increased foreign competition threatened the competitiveness of many U.S. industries. Manufacturing was particularly sensitive to these problems because of the relatively high levels of unionization and import competition in this sector. Continued growth of this sector required adjustments in wage demands and improvements in labor productivity. The adjustment of U.S. workers and manufacturing firms in many cases has been especially difficult and costly. Some workers have been displaced, the real earnings of others have declined, and profits have fallen. Partially as a result of these changes, the level of unionization dropped to about 25 percent of wage and salary workers in manufacturing. Since 1984 the compensation of private nonfarm union workers has grown more slowly than for nonunion workers. As illustrated in Table 2-4, pay increases have been smaller for unionized workers in manufacturing than elsewhere in the economy. Effective nominal average wage increases in major collective bargaining settlements (agreements affecting more than 1,000 workers) in manufacturing have ranged between 1.5 percent and 5.2 percent from 1982 through 1987. Moreover, because inflation has averaged roughly 4 percent per year, many of these settlements have reduced workers' real wages. This downward trend in real wages is due partly to the relatively large fraction of collective bargaining agreements negotiated during the 1980s that froze or cut wages. Before 1980 widespread negotiated wage freezes or outright cuts in pay were unusual, even during periods of low inflation. However, since 1981, particularly in the manufacturing sector, these agreements have become common. Even in 1987, after 5 years of economic growth, 15 percent of manufacturing workers covered by new major collective bargaining agreements accepted wage freezes or pay cuts over the life of their contracts. Moreover, the recent decline in the real compensation of union members has continued even when taking into account noncpntingent lump-sum payments, which have appeared in many recent agreements. By recognizing the challenges posed by foreign competitors, labor and management cooperated to improve the international competitiveness of U.S. manufacturing. The U.S. economy benefited substan- 78 TABLE 2-4.—Measures of Changes in Compensation and Wages, 1981-87 [Private nonfarm industries] Sector 1981 1982 1984 1983 1986 1985 1987^ Percent change2 Compensation: All industries Union workers Nonunion workers 64 7.2 6.0 98 10.7 9.4 5.7 5.8 5.7 4.9 4.3 5.2 3.9 2.6 4.6 3.2 2.1 3.6 3.3 2.8 3.6 3.3 2.8 3.6 2.3 1.5 2.9 3.1 3.4 2.9 21 43 14 14 15 14 Percent Average effective wage adjustment:3 All industries Manufacturing Nonmanufacturing 6.8 5.2 7.9 9.5 9.4 9.5 4.0 2.7 4.8 3.7 4.3 3.3 Percent of.workers affected 4 Settlements with no wage increase: All industries Manufacturing Nonmanufacturirtg . .... 6 10 3 36 48 23 27 44 18 16 7 22 15 18 13 1 2 3 Preliminary. Percent change from December to December. Average effective wage adjustment in collective bargaining settlements covering 1,000 workers or more. Includes increases, decreases, and no changes in wages stemming from current settlements, agreements reached in a prior period, and cost-of-living adjustment clauses. 4 Annual wage adjustments over the life of the contract for settlements covering 1,000 workers or more reached in year. Source: Department of Labor, Bureau of Labor Statistics. tially through increased productivity growth and improved living standards. Now that the foreign exchange value of the U.S. dollar has fallen back to the level of the early 1980s, U.S. manufacturing is exceptionally well positioned to expand sales in both domestic and foreign markets—a process that has been under way at a rapid pace for more than a year and that is likely to provide the key to continued growth for the U.S. economy in the years immediately ahead. UNEMPLOYMENT AND INFLATION After hovering close to 7.0 percent for nearly 2 years, the unemployment rate fell by nearly 1 percentage point during 1987 to its lowest level since 1979. This sudden drop in the unemployment rate has raised concerns that labor markets may be tightening to the point where wage inflation may begin to accelerate. In 1978, when the unemployment rate was 6.0 percent and before the second oil shock, there were already clear signs of increases in the rates of wage and price inflation. In the present situation, however, there is little evidence of an acceleration of inflation, and there are signs that further gradual reductions in the unemployment rate can be achieved without an increase in inflationary pressures. 79 FRICTIONAL UNEMPLOYMENT Even at full employment, there is some "factional unemployment" associated with job changes by current workers and entry of new workers into the labor force. Matching workers to jobs is costly and time consuming. Firms and workers seek employment relationships that best match the skills of the worker with the production requirements of the firm. Workers do not necessarily accept their first job offer, nor do employers fill vacancies with the first job applicant. Even when job opportunities are relatively abundant, workers who lose their jobs at one firm, workers who quit voluntarily to seek better jobs, and workers who enter or reenter the labor force often take some time to find suitable employment. Consequently, even when the supply of and demand for labor are evenly balanced in the aggregate, there will be some unemployment in the economy associated with job transitions. Since demographic groups differ in their job turnover rates and in the frequency with which they leave and reenter the labor force, changes in the demographic composition of the labor force affect the level of unemployment. During the 1970s the composition of the labor force changed as increasing numbers of young persons, single persons, and married women entered the workforce. Since these groups have higher unemployment rates, the overall level of unemployment would have risen. This upward pressure on the unemployment rate was mitigated, however, by the growing fraction of workers with either higher levels of education or with white-collar and service sector jobs. These groups have lower unemployment rates relative to other labor force participants. Studies differ as to the combined effect of these changes in the labor force, but by the late 1970s they may have increased the unemployment rate by as much as a percentage point. The growing number of two-earner families and the effects of unemployment insurance do not appear to have contributed to increases in frictional unemployment. The available evidence suggests that husbands with working wives do not remain unemployed for longer periods of time than husbands whose wives do not work. In fact the unemployment rates for married men with working wives are slightly lower than those for married men whose wives remain at home. Although studies show that unemployment compensation increases the duration of unemployment, the fraction of wages replaced by unemployment benefits has not risen significantly since the late 1960s. Moreover, the share of unemployed workers who receive unemployment benefits has fallen since the early 1970s, especially in recent years. 80 The factors that have caused frictional unemployment to increase since the early 1970s explain only a fraction of the total increase in unemployment rates since that time. Overall, U.S. unemployment rates have been substantially higher since 1973 than they were in the early postwar period. Between 1948 and 1973 the civilian unemployment rate averaged 4.8 percent; it averaged more than 6.0 percent in only 2 recession years, 1958 and 1961. Since 1973 the civilian unemployment rate has averaged 7.3 percent, and it has averaged less than 6.0 percent in only 2 years, 1974 and 1979. Furthermore, unemployment rates have risen for all demographic groups. Even adult married men, a group with traditionally low unemployment rates, have experienced the same proportional increase in their unemployment rates as teenagers, a group with traditionally high unemployment rates. Increases in frictional unemployment associated with shifting demographic patterns cannot explain these broad increases in unemployment rates since the early 1970s. The deep recessions of 1974-75 and 1981-82 and the brief recession in 1980 partly explain higher average unemployment after 1973.. During these years unemployment rates rose to their highest levels since the Great Depression; thus they have influenced the average level of unemployment during the last 15 years. The depth of these recessions, and limits on the feasible speed of securing reductions in the unemployment rate, especially in the face of a rapidly expanding labor force, also partly may explain the high average level of unemployment. However, there is no evidence that increases in frictional unemployment can account for unemployment rates in 1979 or 1987 that are higher than in the later years of expansions during the 1950s and 1960s. Moreover, demographic shifts that tended to increase unemployment during the 1970s more recently have been pushing down the frictional unemployment rate, reversing perhaps one-half of the earlier rise/Further downward movement in frictional unemployment from anticipated demographic shifts, especially the continuing decline in the share of younger workers, suggests that further reductions in unemployment are feasible in the coming years. INFLATION AND UNEMPLOYMENT TRADEOFF With the unemployment rate below 6.0 percent during the second half of 1987, some people have been concerned that further reductions in unemployment may not be possible without serious risk of accelerating inflation. The belief that further reductions in the unemployment rate may not be feasible is based on the view that there is a systematic tradeoff between lower unemployment and higher inflation, and that the unemployment rate has fallen to a level where inflation is likely to accelerate. This view states that when the unem- 81 ployment rate is low and labor markets are tight, firms will face increased pressures to raise wages in order to attract and maintain a qualified and stable work force. Thus without a corresponding increase in productivity, unit labor costs also will rise, and these increased costs will be reflected in higher product prices. The performance of the U.S. economy during the 1950s and 1960s, as illustrated in Chart 2-3, was consistent with the notion of a stable tradeoff between inflation and unemployment. Unemployment tended to be low in the years when inflation rates were high. Chart 2-3 Wage Inflation and Unemployment Percent change in average hourly earnings^ 0 9 \ • 51 81 \ . «78 79 8 7? •74 7 72 \ 6 5 \ «53\ •52 x 76 • 71 73 »69 »68 82 \ 4 • 56 •57 — 4 V \ ^ 65 •55 50 ^•^1 64 60 84 ^^-^f«.8 •63 •54 g? — I I 83 *49 62 3. 1 75 •70 67 2 80 t I I 6 5 ^~^~^--_ »61 ~~^~—•86 I I 8 ^ ^ » — \ 10 Civilian Unemployment Rate (Percent) -I/For production workers or nonsupervisory employees on nonfarm payrolls. Sources: Department of Labor and Council of Economic Advisers. During the stagflation of the 1970s, however, this empirical relationship ceased to hold. Years of high inflation often were associated with high unemployment rates. In the absence of a stable tradeoff between inflation and unemployment, some studies postulated that the tradeoff shifted over time due to changes in inflationary expectations. Support for this view came from the observation that during each of the prior postwar expansions, wage inflation tended to rise as the unemployment rate fell. However, the observation of a shifting relationship between inflation and unemployment explains little, if most of 82 the actual behavior of inflation and unemployment is attributed to unexplained shifts rather than to the purported relationship. Recent data provide little evidence of a tradeoff between inflation and unemployment. In the United States the inflation rate as measured by the CPI has been running close to 4 percent per year since the end of 1981. The inflation rate fell temporarily to 1.1 percent in 1986, and then it rose temporarily to more than 5 percent in early 1987, mainly due to swings in energy prices. However, when energy prices are excluded from the CPI, inflation has been approximately 4 percent for 6 years (Chapter 1). During this 6-year period, the inflation rate has been essentially constant, while the unemployment rate has fallen almost 5 full percentage points—from 10.6 percent at its peak in November 1982 to 5.7 percent in December 1987. Wages and earnings also have shown little evidence of accelerating as the unemployment rate has declined during the current expansion. The average unemployment rate fell from 6.9 percent in 1986 to 6.1 percent in 1987—below the level at which inflation was beginning to accelerate during the 1975-80 expansion. Unemployment rates fell in every region of the country during 1987, with especially sharp reductions in the Northeast and in the energy-producing States. Yet this substantial reduction in unemployment during 1987 was not accompanied by a sharp increase in nominal wage rates. For the year the wages of production and nonsupervisory workers increased by 2.5 percent, compared with an average annual rate of increase of 3.3 percent during the previous 4 years of the expansion. Recent experience in other countries also appears to contradict the notion of a stable tradeoff between inflation and unemployment. In many Western European countries unemployment rates generally have been rising since the early 1970s, and they have risen throughout most of the current expansion. In contrast, rates of wage and price inflation in these countries generally have fallen since 1982, and they are now typically lower than they were in the middle and late 1970s. Based on the experience of the 1950s and 1960s, these reductions in inflation rates have been much smaller than would have been expected given the increases in unemployment rates. Comparisons of inflation rates with unemployment rates for Western European countries for the 1950s through the 1980s show no consistent relationship. Evidence concerning a possible relationship between inflation and unemployment suggests that the U.S. economy can reduce unemployment rates further without suffering from accelerating inflation. Perhaps, as recent experience appears to show, there is no meaningful tradeoff. Over wide ranges, inflation and unemployment can move largely independently. Further reductions in unemployment that are 83 the result of natural economic adjustments, as opposed to monetary or fiscal stimulation, can occur without increased risk of accelerating inflation. Alternatively, if there is a shifting tradeoff between inflation and unemployment, the evidence in Chart 2-3 would suggest that the U.S. economy has returned to the relationship that existed in the 1950s and 1960s. If this is the situation, then it would also appear that further reductions of unemployment can occur without a serious risk of significant increases in inflation. PROSPECTS FOR REDUCING UNEMPLOYMENT In assessing the potential for further reductions in the unemployment rate, and the problems in securing such reductions, it is helpful to examine the distribution of unemployment by geographic region and by duration of unemployment. Regional data point to the promise of reducing the national unemployment rate toward the low levels now prevailing in some regions, and securing this reduction in regions where unemployment remains high. Data on the duration of unemployment point to the significance of long-term unemployment associated with job displacements of more experienced workers, and to the benefits of avoiding deep recessions and massive economic disruptions that tend to generate long-term unemployment on a broad scale. While employment gains have been widespread across regions during the current expansion, substantial regional differences in unemployment rates continued to exist in 1987. As shown in Table 2-5, the unemployment rate in New England was 3.4 percent in 1987, well below the national average of 6.2 percent, and down 4.4 percentage points from the unemployment rate in this region during the recession year of 1982. In contrast, unemployment in 1987 in the West South Central region (Louisiana, Oklahoma, Texas, and Arkansas) was 8.9 percent, well above the national average, and 1.4 percentage points above the unemployment rate in this region during 1982. This energy-producing region was sheltered somewhat from the effects of the 1981-82 recession by continued high energy prices, but it suffered significantly from the sharp decline of energy prices in 1986. The relatively low rates of unemployment in the Middle Atlantic, South Atlantic, and especially the New England regions indicate that there is no inherent barrier that prevents the unemployment rate from falling below 5 percent. Studies have shown that the difference among regional unemployment rates is not explained by differences in the characteristics of the region's labor force and the composition of the region's industrial base. The data reported in Table 2-5 show that the regions with relatively high unemployment rates during the 84 TABLE 2-5.—Regional Unemployment Rates, Selected Years, 1976-87 [Percent1] Region 1979 1976 19872 1984 1982 New England 9.1 5.4 7.8 4.9 3.4 Middle Atlantic 9.6 7.0 9.4 7.6 5.0 South Atlantic 7.4 5.5 8.7 6.5 5.2 East North Central 7.3 6.1 12.5 9.4 7.2 West North Central 5.0 4.0 7.8 6.2 5.3 East South Central 6.2 6.1 12.0 9.8 8.2 6.0 4.7 7.5 7.0 8.9 Mountain .. 7.2 5.0 8.8 6.2 7.3 Pacific 9.1 6.4 10.2 8.1 6.1 U.S. unemployment rate 7.7 5.8 9.7 7.5 6.2 West South Central. . .. 1 Unemployment as percent of civilian labor force. 2 January-November average. Source: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers. 1975-80 expansion were not the same as those which had relatively high unemployment rates in 1987. Thus for the most part, regional characteristics do not appear to cause unemployment rates to be permanently higher in some parts of the country than in others. Recent data indicate somewhat higher rates of wage increase in regions where unemployment rates are relatively low. The rate of wage inflation, however, remains moderate even in New England, where the unemployment rate has been at or below 4 percent since mid1986. Since the national unemployment rate is well above New England's rate, the data on regional unemployment and wage inflation certainly do not suggest that the economy is about to suffer from a general acceleration of inflation. Moreover, higher rates of wage increases in regions with relatively low unemployment rates can play an important role in reducing overall unemployment. Since workers tend to move to areas with higher relative wage rates and lower unemployment rates, they reduce unemployment when they leave one place, and they relieve tight labor market conditions when they arrive at another. Furthermore, higher wage rates in areas with low unemployment induce firms to shift jobs to areas with lower wage rates and higher unemployment. Through this process of shifting workers and jobs, unemployment rates in different regions tend to be equalized over time, and the aggregate unemployment rate gradually is reduced. When unemployment rates approach frictional levels in some regions, efforts to drive down aggregate unemployment through stimulative policies may be especially inappropriate and counterproductive. 85 ^6 time for workers to migrate to areas with rising wages and ior firms to create new production capacity and new jobs in areas with high unemployment rates. These adjustments can occur naturally and gradually; they should not be forced. Resorting to stimulative macroeconomic policies could accelerate inflation without significantly affecting unemployment. Indeed, in a short time the need to combat inflation could lead to policies that would increase unemployment. Reducing the unemployment rate further to the levels of the early 1970s requires reversing the effects of either or both of two trends: an increase in the proportion of workers who lose their jobs, and an increase in the length of time workers remain unemployed. Both of these trends have contributed to higher unemployment rates over the last 20 years. As indicated by the data in Table 2-6, an increase in the proportion of workers who lost their jobs accounts for almost all of the increase in unemployment rates between 1973 and 1987, although increases in the proportion of workers who quit their jobs or who entered the labor force were important contributors to rising unemployment rates between 1967 and 1973. Moreover, as indicated in Table 2-6, since 1973 there has been a significant increase in the portion of the unemployed who report that they have been out of work for 15 weeks or longer. Some studies have indicated that prolonged (and often repeated) spells of unemployment by experienced workers who lose their jobs are an important reason for the increase in the aggregate unemployment rate since the early 1970s, TABLE 2-6.—Unemployment by Reason and Duration, Selected Years, 1967-87 [Percent] Year Reason for unemployment All unemployed Job losers Job leavers Duration of unemployment ' Entrants Percent of civilian labor force Less than 5 weeks 5=14 weeks 15 weeks and over Percent distribution 1967 3.8 1.6 0.6 1.7 54.9 30.0 15.1 1973 4.9 1.9 .8 2.2 51.0 30.1 18.9 1979 5.8 2.5 .8 2.5 48.1 31.7 20.2 1987 6.2 3.0 .8 2.4 43.7 29.6 26.7 Source: Department of Labor, Bureau of Labor Statistics. Comprehensive data that detail the reasons for job loss and prolonged unemployment are not available. However, it reasonably may be inferred that deep and prolonged recessions and sudden massive shifts in relative prices and in the structure of output are primary causes of job loss, particularly for experienced workers. Certainly the recessions of 1974-75 and 1981-82 generated job losses on a large 86 scale. The sudden decline of energy prices in 1986 clearly resulted in widespread job losses in energy-producing states. Recessions are costly to the economy in terms of lost output, but more importantly to the workers who lose their jobs. These costs continue even after the recovery from a recession has begun, since a substantial amount of time is required to bring the level of unemployment down to its prerecession levels. Elimination of all fluctuations in the economy is, of course, neither feasible nor practical. Such fluctuations are an essential counterpart of economic progress. Changes in relative prices and in the structure of output are necessary if the economy is to adjust to changes in demand and technology. However, there is no need to repeat the destructive sequence of expansions, marked by progressively rising inflation rates and punctuated by deep recessions, that afflicted the U.S. economy in the 1970s and early 1980s. Moreover, as discussed in last year's Report, avoiding a resurgence of inflation and the subsequent need for disinflation probably would remove an important cause of large swings in relative prices and real interest rates like those that buffeted the U.S. economy during the last 20 years. The U.S. economy today can continue economic expansion and gradual reduction of the unemployment rate without resorting to potentially inflationary policies. Reduction of the U.S. trade deficit is under way, and it is projected to continue in 1988 and beyond. Thus the tradable goods sector of the U.S. economy (predominantly manufacturing) should expand more rapidly than the rest of the economy, reversing the pattern of 1985 and 1986. These gains should aid in the further gradual reduction of unemployment. CONCLUSION Since 1981 the United States has enjoyed large gains in employment and production, accelerated growth of productivity and real per capita income, and substantial reductions of unemployment without a resurgence of inflation. The gains during this extended period of economic growth have been shared widely by all major demographic groups. The achievements of the last 7 years did not result from specific government programs, but rather from a general approach to policy that emphasizes reliance on the private sector. The desire for economic gain, disciplined by the forces of competition in free and open markets, provided the essential incentives for the productive efforts, the physical and human investments, the technological innovations, and the entrepreneurial advances that form the foundation of prosperity and growth. Little progress generally results from governmental efforts to control, manage, or fine tune the processes that 87 generate growth. The proper role for government is to provide a stable economic environment in which private enterprise can flourish, to protect the rights of individuals so they can benefit from their labors, investments, and entrepreneurship, and to avoid the dulling or distortion of economic incentives through excessive taxation or burdensome regulation. While private business has clearly been the direct source of the most important economic gains during the current expansion, government policy has played a critical role by shaping the economic environment for this success. The Administration's key priority was to enhance the stability of general economic conditions by avoiding a recurrence of the cycles of accelerating inflation, rising interest rates, and deep recessions that seriously impaired the performance of the economy during the 1970s and early 1980s. In pursuing these objectives, fiscal policy limited Federal spending, reduced marginal tax rates, and provided greater certainty about future tax policies. Monetary policy provided money growth that was sufficient to sustain economic expansion, while avoiding the resurgence of rapid inflation. And microeconomic policy promoted the efficient operation of markets and avoided intrusive regulation. The strong growth of the economy at low rates of inflation indicates that these policies have been very successful. Thus this Administration has made substantial progress toward the goals of "maximum employment, production, and purchasing power." The Administration's economic program has become a blueprint for promoting and maintaining noninflationary growth worldwide. This approach to economic policy is especially important in today's highly interdependent world. The events of the 1970s and 1980s demonstrate that the U.S. economy is affected increasingly by events in the world economy and economic policies of other nations. The rapid growth of the U.S. economy has fostered growth in other countries as rising living standards have allowed Americans to buy more products from abroad. Likewise, rising living standards abroad will allow other nations to buy more products from the United States and enhance U.S. economic growth. 88 CHAPTER 3 Adjustment and Growth in a Changing World Economy MAINTAINING NONINFLATIONARY GROWTH, while reducing external imbalances, is the primary objective of economic policy in the United States and other leading industrial nations. Market forces and economic policies have combined to reduce external imbalances, at least in volume terms, for more than a year. Further reductions are in prospect and are important to maintaining the long-run health of the world economy. Even more important, this progress should be continued in a manner that does not undermine economic growth, reignite inflation, or yield to the temptation of protectionism. The problems associated with present external imbalances are real and require attention, but unfortunately they often are exaggerated or misunderstood. Despite a large increase in the U.S. external deficit since 1980 and problems in specific industries, overall employment growth in the United States has been very strong—the strongest of all the major industrial countries. The U.S. unemployment rate has dropped 5 percentage points since late 1982, while unemployment rates in many other industrial countries have risen and now are well above the U.S. rate. Improvement in the trade balance is expected to contribute to job growth when it is most needed—during 1988 when domestic spending is expected to grow only slowly. Nor has U.S. manufacturing performed poorly. During the past 5 years its share of total real output has been running at the postwar average, and in 1987 it stood just below its postwar peak. But despite substantial gains in employment, persistence of a large U.S. trade deficit fuels protectionist sentiment that threatens the open system of world trade and could impair future employment gains. In the 1980s the measured rate of national saving has been low, and the United States has been a substantial net importer of foreign capital. Yet net foreign claims against the United States remain very small relative to U.S. income and wealth. Thus the general economic problems arising from the U.S. external deficit are primarily problems of the future—problems that will arise only if adequate progress is not maintained in reducing external imbalances. The immediate concern, therefore, is to continue visible progress in reducing these 89 imbalances in order to reassure financial markets and enhance prospects for sustaining noninflationary growth in the world economy. Current external imbalances have arisen primarily from macroeconomic causes and require primarily macroeconomic solutions. The $219 billion deterioration in U.S. real net exports of goods and services between 1980 and late 1986 was widespread across product categories and trading partners. Although some U.S. exports have suffered from barriers in some foreign markets, the growth of the U.S. trade deficit was not caused by an increase in unfair trade practices in foreign countries. Instead, the growth of the U.S. trade deficit in the 1980s primarily reflects the influence of several interrelated macroeconomic developments. Rapid growth of spending (domestic demand) in the United States relative to both growth of spending in other countries and to growth of production (gross national product, or GNP) in the United States spurred U.S. demand for foreign imports and restrained foreign demand for U.S. exports. The need for many heavily indebted developing countries to reduce their international borrowing and improve their trade balances also cut into U.S. exports and tended to expand imports into U.S. markets. Growth of U.S. spending relative to production and income implied a deterioration in the national saving-investment balance, which, in turn, owed much to the persistence of a large Federal deficit late into the current expansion. An increasing net inflow of foreign capital offset a declining national saving rate and helped to finance reasonably robust U.S. investment. This capital inflow, which was partly motivated by high prospective after-tax returns on U.S. investment, was one among several important factors that contributed to the strong appreciation of the U.S. dollar between 1980 and early 1985. Dollar appreciation, in turn, was the critical proximate cause of much of the deterioration in the U.S. trade balance, because it made U.S. exports more expensive in foreign markets and foreign imports less expensive in U.S. markets. Efforts to reduce external imbalances have focused on reversing their underlying macroeconomic causes and on facilitating structural adjustments essential to an altered pattern of world trade. In the United States, a continued slowing of domestic demand growth and further reductions in the Federal deficit promise continued improvements in the national saving-investment balance. In contrast, demand growth in other leading industrial countries has increased, due to government policies and market forces. In the United States relative price changes have encouraged economic adjustments directed toward higher output, increased employment, and greater investment in tradable goods industries. Relative price changes also appear to have assisted in reorienting economic activity toward stronger inter- 90 nally led growth in some countries with trade surpluses. A large correction in the foreign exchange value of the U.S. dollar has been especially important in improving international competitiveness of U.S. industry and, in turn, the U.S. real trade balance. This chapter first assesses the economic significance of present external imbalances. It then discusses two of the key macroeconomic causes of present imbalances: the strong growth of domestic demand in the United States relative to other industrial countries, and the decline of the U.S. national saving-investment balance in the presence of persistently large Federal deficits. It next considers the role of exchange-rate movements and relative price changes in creating and correcting external imbalances. The chapter concludes with a discussion of the adjustment process that will sustain progress in reducing external imbalances in an environment of noninflationary growth. THE SIGNIFICANCE OF EXTERNAL IMBALANCES The external trade and payments position of the U.S. economy moved from surplus to substantial deficit in the early 1980s. This deterioration reflects several closely related phenomena. However, it does not signal a defect in the general performance of the U.S. economy, nor does it necessarily portend serious problems for the future. The significance of the U.S. trade and payments imbalance—the problems that it does and does not pose for the U.S. and the world economy—are best understood with reference to alternative measures of these imbalances. MEASURES OF THE EXTERNAL BALANCE All measures of the U.S. external position show broadly similar movement during the past two decades and exhibit sharp deterioration since 1980-82. For example, as measured in the national income and product accounts (NIPA), the merchandise trade balance—the difference between exports and imports of goods alone—moved from a $29 billion deficit in 1980-82 to a $143 billion deficit in 1986. In 1987 the merchandise trade deficit grew further to $153 billion. These movements in the merchandise trade balance indicate that, since 1980-82, the value of U.S. imports has grown far more rapidly than U.S. exports. Expanding the measure of the trade balance to include services (and factor income) yields the NIPA concept of "net exports." Chart 3-1 shows that nominal net exports were in surplus in 1980-82, before deteriorating through the end of 1987. Movements in nominal net exports have closely paralleled movements in the merchandise trade balance. However, since the United States runs a surplus of 91 trade in services, the deficit in nominal net exports is somewhat smaller than the deficit in merchandise trade. Net Exports and the Current Account Balance Billions of dollars {seasonally adjusted annual rates) 801 \ \ \ -40' Nominal Net Exports \ \ \ Real Net Exports^ -80,' -120 Current Account Balance -160 -7Om I I 1 I I 1| I | M 1975 1977 I M I I I M 1979 I I 11I I M 1981 ll 1 I I 1 1 I I I I 1 I 1 1I I I I I I 1983 1985 1987 ^Billions of 1982 dollars. Note.—Net exports for fourth quarter 1987 are preliminary; current account balance not available. Source: Department of Commerce. Measuring the balance between exports and imports of goods and services in constant 1982 dollars, rather than in current dollars, produces the NIPA measure of "real net exports," the measure most closely related to real GNP. As illustrated in Chart 3-1, real net exports fell more than nominal net exports between 1980-82 and late 1986; since then real net exports have improved, while nominal net exports have continued to deteriorate. The behavior of real net exports since late 1986 indicates that the external sector has made a net positive contribution to growth in real GNP and employment. The recent divergence in the movements of real and nominal net exports primarily reflects movements in import prices. The price of imports, as measured by the import price deflator, fell between 1980-82 and late 1986, with an especially sharp drop in 1986 due to the fall in the price of imported oil. As a result, the increase in nominal spending on imports was less than the increase in the real quantity of imports. Since late 1986 import prices generally have been rising faster than the price deflator for domestically produced goods 92 and services. Consequently, nominal spending on imports rose more than the real quantity of imports and more than the nominal value of exports. This phenomenon usually is referred to as the "J-curve" effect of currency depreciation. The initial effect of depreciation is often to raise nominal spending on imports because of higher prices and to lead to a deterioration in the nominal trade balance. However, over time the depreciation will tend to improve both real and nominal net exports. A deficit in net exports necessarily implies that total spending by domestic residents is greater than the value of domestic production (GNP) and domestic income. When domestic demand exceeds domestic production, the excess is imported and the country runs a deficit on goods and services. Accordingly, the decline of U.S. real net exports between 1980-82 and late 1986 corresponded to a growing gap between real domestic demand and real GNP. Similarly, the decline in nominal net exports corresponded to the growing gap between nominal domestic demand and nominal GNP. The decline in nominal net exports also was closely related to the deterioration of the national saving-investment balance. This is a direct consequence of national income accounting relationships. Aside from some relatively minor items, the excess of national saving over national investment is equal to the excess of GNP over domestic demand and, therefore, equal to nominal net exports. As will be discussed later, growth of the government deficit (which counts as a negative element in national saving) played an important role in the deterioration of the national saving-investment balance. The difference between national saving and national investment equals the flow of net foreign investment. When U.S. residents save more than is required to finance national investment, the remainder is available to finance net accumulation of foreign assets—either direct ownership of assets located abroad or ownership of stocks, bonds, or other financial claims on foreigners. Conversely, when national investment in the United States exceeds national saving, the excess is financed through net foreign accumulation either of direct claims on U.S. assets or of financial claims on U.S. residents (include ing the government). Since 1980-82 foreigners have increased their net claims on U.S. assets and U.S. residents as the deficit in international trade has grown. Finally, except for some relatively minor accounting differences, the current account balance is conceptually similar to a measure of the national saving-investment balance. Moreover, the net capital inflow—which is conceptually similar to net foreign saving—equals the current account deficit, except for a statistical discrepancy. Thus the decline of the current account balance since 1980-82, illustrated 93 in Chart 3-1, describes the decline of national saving relative to national investment. GROWTH OF EMPLOYMENT A loss of jobs to foreign competitors and a general slowing of growth of the U.S. economy often are suggested as important adverse effects of the deterioration of the U.S. trade position since the early 1980s. In fact, however, the only significant declines in U.S. employment since 1979 occurred during the recessions of 1980 and 1981-82, when the U.S. current account was in surplus. The deterioration of the U.S. external position began in earnest in late 1982, which also marks the beginning of the longest peacetime expansion in U.S. history. As discussed in Chapter 2, employment growth during this expansion has been outstanding. International comparisons of employment growth and reductions in unemployment do not indicate that the United States has been "losing jobs" to other industrial countries. Between 1982 and 1986 the United States sustained the strongest growth of employment in percentage terms among the seven large industrial countries that participate in the annual economic summits, creating about two and one-half times as many jobs as the other six countries combined. Especially striking is a comparison with Japan and West Germany, the two countries with the largest current account surpluses among the seven summit countries. The United States created 10 million new jobs between 1982 and 1986—almost five times as many jobs as Japan, and more than 100 times as many jobs as West Germany. The large increase in employment does not simply reflect the size of the U.S. economy or an increase in the labor force. Since 1982 the United States has enjoyed the largest reduction in the unemployment rate of all seven of the summit countries. As the top panel of Chart 3-2 shows, as of the third quarter of 1987, the United States had the lowest unemployment rate among the summit countries, except for Japan. This reverses the situation that existed in the 1950s, 1960s, and early 1970s, when unemployment rates in Western Europe typically ran at about half the U.S. rate. Furthermore, as shown in the lower panel of Chart 3-2, unemployment rates in a number of Western European countries have increased since 1982. Despite 5 years of economic expansion, these unemployment rates now stand not only well above the U.S. unemployment rate, but also near or above the peak levels recorded for these countries between 1959 and 1981. It has been suggested that employment in the United States would have grown even more and the unemployment rate would have dropped even further, if the U.S. external imbalance had not developed since 1982. Analysis of the strength of employment growth 94 Chart 3-2 „ . . « ~ . * Unemployment Rates in the Seven Summit Countries Unemployment Rate (Percent) in Third Quarter 1987 Percentage Point Change from Fourth Quarter 1982 to Third Quarter 1987 4 2 0 BSD 1.4 - 0.6 mmmm 0.4 i! |S^I!!lW^.HJ ^ -2 -1.9 -4 -^3.9 -6 France Italy West Germany Japan United Kingdom Canada -4.6 United States Note.—Unemployment rates used approximate the U.S. concept. Source: Department of Labor. over the course of the expansion, however, does not support this notion. During the initial phase of the expansion, from the end of 1982 through the middle of 1984, output and employment grew very rapidly (Table 3-1). Real GNP rose at a 7.0 percent annual rate, setting a 35-year record for real GNP growth during a six-quarter period. Real domestic demand grew even more rapidly than real GNP—the fastest rate, over a six-quarter period, in nearly 35 years. In these six quarters employment rose at a very strong 3.9 percent annual rate. The exceptionally strong growth of real domestic demand relative to the strong growth of real GNP is directly reflected in the $99 billion deterioration of real net exports between the end of 1982 and the middle of 1984. With the same rate of real domestic demand growth, if real net exports had not deteriorated, real GNP would have grown at a 9.1 percent annual rate. However, an effort to meet domestic demand growth entirely with U.S. production, even if that 95 TABLE 3-1.—Economic Growth, 1982-87 [Average annual percent change, except as noted] 1984 Jl to 1986 III 1982 IV to 1984 II Item 1986 III to 1987 IV» RealGNP 7.0 2.7 3.4 Real domestic demand 9.1 3.6 2.6 2.5 Civilian employment Change in real net exports 2 Change in civilian unemployment rate 3 3.9 2.1 -99.0 -74.3 30.9 -3.2 -.5 -1.1 1 2 3 Preliminary. Change over the period in billions of 1982 dollars (seasonally adjusted annual rate). Change over the period in percentage points. Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics). had been feasible, probably would have been misguided. By March 1984 the Federal Reserve already was becoming concerned that the U.S. economy might be overheating and tightened monetary policy to forestall the risk of accelerating inflation. If real GNP had grown 9.1 percent rather than 7.0 percent, possible overheating of the economy—and a resurgence of inflation—surely would have been even more of a concern in 1984. A policy reaction to forestall such a development could have cut short the expansion. Thus it is not clear that more rapid growth of real GNP during the initial phase of the expansion would have been particularly good for the economy or would have contributed to employment growth in the longer term. During the second phase of the expansion, from the second quarter of 1984 through the third quarter of 1986, the growth rates of real domestic demand, real GNP, and employment all declined from the very rapid rates recorded initially. Some slowing probably was inevitable as the expansion matured. The sharp oil price decline in early 1986 led to increased unemployment in the energy-producing States, and probably contributed to slower overall employment growth. The further decline in U.S. real net exports during this period probably also contributed to slower employment growth, and a smaller decline in real net exports probably would have been beneficial for the economy. In the latest phase of the expansion, since the third quarter of 1986, improving real net exports have contributed positively to real GNP and employment growth. The unemployment rate dropped rapidly during this period. While further reductions in the unemployment rate appear possible for the future (Chapter 2), the feasibility of a significantly more rapid decline during the past five quarters is open to question. Thus strong growth of domestic demand early in the expansion contributed to a growing trade deficit, without generally damaging 96 effects on overall employment growth. Now it is widely anticipated that improvements in real net exports will help to sustain growth of real GNP and employment during a period when growth of domestic demand is expected to be weak. The timing of movements in the trade balance may not have been exactly right to maintain the precisely optimal pace of employment growth. However, the deterioration of the trade balance did help to absorb some of the effect of very strong domestic demand growth when that could have been a serious problem for the economy. Improvement of the trade balance now promises to assist output and employment growth at a time when such assistance appears particularly useful. STRENGTH OF MANUFACTURING A related complaint about the trade and payments deficit is that it has crippled U.S. manufacturing and led to a massive loss of manufacturing jobs. This issue was examined extensively in Chapter 2. In the face of intense international competition, substantial and often difficult adjustments have been made in many manufacturing industries. The output of some manufacturing industries declined. However, the cause of the general decline in manufacturing output in 198182 clearly was the recession, not the trade imbalance. Since 1982 manufacturing output has recovered very strongly. In fact, manufacturing's share of total real output currently stands near the record level for the postwar era. In the 1980s manufacturing's share of total employment has continued its long-term decline, and the absolute level of manufacturing employment at the end of 1987 remained below its peak level of 1979. These developments, however, reflect the generally stronger growth of productivity in manufacturing than in other sectors of the economy. Perhaps if foreign competition had been less intense, productivity growth in U.S. manufacturing would have been slower and more jobs would now exist in that sector. Americans as a whole, however, would be less well off. And unless real wage growth had been reduced to match slower productivity growth, manufacturing would not be as well positioned to expand exports in the future. In comparison with other leading industrial countries, manufacturing has been relatively strong in the United States. Between 1979 and 1986 manufacturing output grew slightly more rapidly in the United States than in Canada and considerably more rapidly than in Western Europe. Only Japan recorded significantly stronger growth of manufacturing output, and only in Japan and Denmark did manufacturing employment increase. In Canada the decline in manufacturing employment was proportionally smaller than in the United States, reflecting Canada's slower growth of productivity. In France, Italy, 97 and the United Kingdom, the proportional decline in manufacturing employment was significantly larger than in the United States. If there were no U.S. trade deficit, production of manufactured goods and employment in manufacturing industries in the United States probably would be higher than they are at present; but total U.S production and total U.S. employment would not necessarily be any higher. As discussed in Chapter 2, there appears to be some room for further gradual reductions in the unemployment rate without automatically stimulating an acceleration of inflation. There is no evidence that output and employment in manufacturing and other tradable goods industries could have been increased sufficiently to replace net imports of tradable goods in 1987, without largely offsetting reductions of output and employment in other industries. Similarly, over time, as the trade deficit is corrected gradually, output and possibly employment in the manufacturing sector may expand more rapidly than in the rest of the economy. These changes, however, will reflect a shifting distribution of the economy's productive resources, not a net increase in the supply of those resources. GROWTH OF FOREIGN DEBT The present size of net foreign claims on the United States and their rate of increase often are cited as problems arising from continued large current account deficits. The recorded net international investment position of the United States, -$264 billion in 1986 (the latest data available), represents the difference between U.S. assets abroad ($1,068 billion) and foreign assets in the United States ($1,332 billion). The net international investment position often is referred to as the net debt of the United States, even though the value of U.S. assets abroad and foreign assets in the United States include assets such as land, buildings, and stocks, as well as interestbearing assets such as bonds and bank accounts. The net international investment position of the United States has deteriorated over the last few years. In 1981 the U.S. net international investment position was $171 billion (valued in 1986 dollars). The deterioration to -$264 billion in 1986 reflects the cumulative effect of a string of large external deficits as well as some valuation changes. Estimates of the flow of net foreign investment suggest that the U.S. net international investment position may have grown roughly $150 billion, to approximately $400 billion in 1987. The net international investment position of the United States may be overstated by these estimates. According to Department of Commerce estimates, in 1986 the United States received income of $88 billion on assets owned abroad, and it paid $67 billion on foreignowned assets in the United States, This excess of receipts over pay- 98 ments reflects, in part, undervaluation of some U.S.-owned assets located abroad (especially direct investments made years ago that are valued at historical cost), as well as a generally higher rate of return on U.S.-owned assets abroad than on foreign-owned assets in the United States. Therefore, in terms of income received and paid, the United States may have been a net creditor in 1986. However, in the third quarter of 1987, for the first time in recent history, payments on foreign-owned assets exceeded income on assets owned abroad. By this measure, the United States crossed the boundary between net creditor and net debtor only in the middle of 1987. Even at $400 billion, net foreign claims on the United States are not large relative to the income generated by the U.S. economy that can be used to service them. Net foreign claims of $400 billion represent less than 10 percent of U.S. GNP. Assuming a 5 percent real rate of return, the income required to service these claims would amount to less than one-half of one percent of U.S. GNP. And based on the amount of income paid on foreign-owned assets in the United States and U.S.-owned assets abroad, the income required for net debt service in 1987 was about 0.1 percent of U.S. GNP. Consequently, concerns about the current stock of net foreign claims on the United States may be overstated. While the current level of net foreign claims should not be cause for alarm, persistent growth of such claims at an annual rate equivalent to 3V2 percent of U.S. GNP (about $150 billion in 1987) would be a source of worry. At this rate, net foreign claims on the United States would reach 40 percent of U.S. GNP by the end of the century. Servicing these claims, assuming a 5 percent real rate of return, would consume about 2 percent of U.S. GNP—still not a large percentage, but a very substantial absolute sum. Relative to the size of the economy, U.S. net indebtedness would not be much larger than Canada's has been in recent years. However, the absolute figure would be very large—more than $2 trillion in 1987 dollars. This could present difficulties for the world financial system, especially if for some reason foreigners suddenly become less willing to hold claims on the United States. Evidence of a steady reduction of the U.S. external deficit over the next few years will prevent these difficulties from emerging. THE LEVEL OF NATIONAL SAVING When a foreign net capital inflow is used to finance productive investment, even a relatively large and persistent inflow need not be a source of concern. The increased productive capacity financed by the capital inflow can generate the income to pay foreign creditors. Because of taxes and for other reasons, the entire return from invest- 99 merit is not always paid to creditors. Furthermore, a net capital inflow means that the level of productive capital stock in the importing country probably is higher than it would be otherwise. Hence, a country can gain from a net inflow of foreign capital, when this capital is used to increase productive investment. For much of its history—until about 1920—the United States was a fairly consistent net importer of foreign capital. For example, foreign borrowing helped to finance construction of U.S. railroads during the 19th century. As indicated in Table 3-2, the recent net inflow of foreign capital has enabled the United States to maintain a ratio of gross investment to GNP that is close to the postwar average at a time when the ratio of national saving to GNP has been relatively low by postwar standards. The recent strong performance of the U.S. economy suggests that investment in the United States has paid an attractive return. Given the level of national saving, financing some investment through a net capital inflow—measured by net foreign saving—appears to have been worthwhile. The problem, to the extent that there currently is a problem, does not arise from the net capital inflow; it arises from the relatively low rate of national saving. TABLE 3-2.—Saving and Investment as Percent of GNP, 1949-87 [Percent of GNP] 1949-81 average Item 1982-86 average 1987 * Current dollars: Gross private domestic investment Gross national saving Net foreign saving 2 Net national saving 16.0 16.3 -.3 8.0 15.7 13.7 1.9 2.7 16.0 12.6 3.3 2.2 16.6 16.9 7.9 16.7 14.6 5.5 17.9 14.2 6.7 96.3 94.1 Constant (1982) dollars: Gross private domestic3 investment... Gross national saving Net private domestic investment2 Relative price of investment (1982=100) 4 1 Preliminary. 23 As percent of net national product. Gross national saving deflated by the implicit price deflator for gross private domestic investment. 4 Ratio of gross private domestic investment and GNP implicit price deflators, multiplied by 100. Sources: Department of Commerce (Bureau of Economic Analysis) and Council of Economic Advisers. 89.0 . National saving is a matter of concern because, when properly measured, national saving measures the increase in national wealth and thus the potential for future improvements in living standards. If the national saving rate is relatively low, future living standards may not rise as quickly. The relevant measure of national saving, however, must take into account the many forms of saving that contribute to rising living standards. Such saving includes not only the usually measured accumulation of claims to physical investments and the income streams they generate, but also investments in human capital 100 and in research and development leading to new products and technologies (discussed in Chapter 5), as well as the accumulation of consumer assets that contribute directly to production within the household. Making such adjustments, a recent study of broadly defined measures of national saving and capital formation found that the United States has not been a particularly "low-saving" country in the postwar period. Moreover, even the narrow measures of national saving and national investment look more robust when recent declines in the relative price of capital goods are considered. Specifically, as indicated in Table 3-2, the ratio of real gross investment to real GNP recently has been somewhat higher than its average in the postwar period, thus implying that the recent net capital inflow has helped to finance a somewhat higher rate of real gross investment. Nevertheless, the measured rate of gross national saving in recent years has been lower than the postwar average. Even allowing for problems in measuring depreciation, the standard measure of real net investment relative to real net national product (NNP) has not been particularly high in recent years. The standard measure of net national saving relative to NNP has been running at less than half its postwar average since 1981, and the net capital inflow has financed roughly half of net national investment. Broadening the measures of national saving and national investment to include human capital, research and development, and consumer durables diminishes the relative importance of the net capital inflow. However, it still appears that the national saving rate has been relatively low in recent years. Whether the appearance of a low national saving rate actually portends slower growth of living standards is far from clear. The rate of national saving between 1973 and 1981—whether measured in nominal, real, gross, or net terms—was not particularly low by postwar standards. Yet, as discussed in Chapter 2, the rate of increase in living standards, measured by the rate of growth of real per capita GNP, was quite slow by earlier postwar standards. Since 1981 the rate of growth of real per capita GNP has increased, notwithstanding the decline in the measured rate of national saving. Judged by the outcome, therefore, the rate of national saving would appear to have risen since the middle and late 1970s, although not back to the level of the earlier postwar period. In any event, a higher rate of national saving probably would mean more rapid improvement of living standards, and both natural economic adjustments and economic policies indicate an increase in the national saving rate. With national investment projected to remain strong but not increase substantially as a share of GNP, the anticipated increase in the national saving rate would imply a significantly 101 smaller net inflow of foreign capital and hence a significantly slower increase in net foreign claims on the United States. The anticipated increase in national saving relative to national investment also implies a reduction in the growth rate of real domestic demand relative to that of real GNP. This is consistent with the expectation that improvements in U.S. real net exports will make important contributions to output and employment growth in coming years. Because improvements in real net exports must come to a large extent in net trade in manufactured products, these anticipated developments also suggest continuing strength of output and employment growth in the manufacturing sector. DEMAND GROWTH AND THE SAVING-INVESTMENT BALANCE The external deficit of the United States has been improving in real terms since late 1986. Continued progress in reducing this deficit, in an environment of noninflationary growth, is an important goal of economic policy. Assessing the likelihood of such progress, and the policies that will help to sustain it, requires clear understanding of the macroeconomic forces that are fundamentally responsible for the growth of the U.S. external deficit. Specifically, strong demand growth in the United States after the worldwide recession of 1980-82 and relatively weak demand growth in other industrial countries during the early phases of recovery spurred the growth of U.S. imports and retarded the growth of U.S. exports. Simultaneously, the growth of the Federal deficit and its persistence late into the current expansion contributed to the deterioration of the U.S. national saving-investment balance and to a corresponding increase in the net inflow of foreign capital. THE MACROECONOMIC CHARACTER OF THE EXTERNAL DEFICIT The U.S. external position deteriorated between 1980 and 1986, with all measures of the trade and payments balance moving into substantial deficit. In particular, U.S. real net exports (measured in 1982 dollars) moved from a surplus of $57.1 billion in 1980 to a deficit of $145.8 billion in 1986, with the deficit reaching a maximum of $161.6 billion on an annualized basis in the third quarter of 1986. As indicated in Table 3-3, all but one component of the trade balance— other goods—shared in the deterioration. The surplus in services was cut in half in real terms. Merchandise trade, which accounts for the bulk of total trade, absorbed over 80 percent of the total decline in real net exports. Most major end-use categories of the real merchandise trade balance (foods, feeds, and beverages; industrial supplies 102 and materials; capital goods; automobiles; and consumer goods) experienced a decline. Within merchandise, manufactured products moved from a surplus in 1980 to a large deficit in 1986. Agricultural exports, which are influenced by economic forces and policies somewhat different from other merchandise exports, also suffered from shrinking markets between 1980 and 1986. Furthermore, the aggregate trade balance deteriorated against most major regions and trading partners: against the industrial countries as well as the developing countries; against Europe and East Asia as well as Africa and Latin America. TABLE 3-3.—Selected Real Net Exports, 1980-87 [Billions of 1982 dollars] 1982 IV 1980 Item 1986 II! 1987 IV* Seasonally adjusted annual rates Net exports of goods and services.. Services Factor income.... Other Merchandise Foods, feeds, and beverages Industrial supplies and materials (including petroleum). Capital goods (except automobiles) Automobiles Consumer goods Other 57.1 11.7 -161.6 -130.7 68.9 55.5 13.3 55.3 47.9 7.3 31.4 31.1 .3 22.9 18.6 4.3 -43.6 12.2 -49.3 31.6 -16,7 -25.0 3.6 -193.0 2.6 -94.7 .6 -48.7 -61.5 8.6 -153.6 6.0 -=83.9 10.9 -43.2 -57.3 13.3 -17.1 -137.2 -106.0 -11.8 16.9 -61.9 55.9 -11.6 -17.2 6.1 MEMORANDUM: Nonagricultural exports minus nonpetroleum imports.. 31.9 1 Preliminary. Source: Department of Commerce, Bureau of Economic Analysis. Exceptionally strong growth of imports into the United States led the deterioration in real net exports. Between the beginning of the expansion and the third quarter of 1986, real imports grew at an average annual rate of 14.6 percent, more than double the average growth rate recorded between 1948 and 1980. Real exports also grew, but their 3.3 percent annual growth rate was much less than that of imports and about half the annual growth rate of real exports between 1948 and 1980. Between the third quarter of 1986 and the end of 1987, real net exports improved by $31 billion, narrowing the real trade deficit from 4.3 to 3.4 percent of real GNP. A $74 billion increase in real exports outstripped a $43 billion increase in real imports. The 15.4 percent annual rate of real export growth was more than double the average between 1948 and 1980. Strong gains in real merchandise exports were widespread across major product categories. At 6.4 percent, the annualized growth rate of real imports was well below the pace set between 1982 and late 1986 and about equal to the average 103 growth rate between 1948 and 1980. Increases in real merchandise imports were generally modest (negative in the case of consumer goods and petroleum products), except for capital goods excluding autos. Strong import growth in capital goods presumably reflected increased business purchases of durable equipment and substantial inventory accumulation. Contrary to the improvement in merchandise trade, the surplus in factor income deteriorated by $13 billion— the effect of a growing stock of foreign claims on the United States. This led to a deterioration in the real trade balance in services; the surplus on services other than factor income showed the same pattern as merchandise trade. The influence of broad macroeconomic forces, rather than specific developments in markets for particular products or trading relationships with particular countries, is readily apparent in the development of the U.S. real trade balance during the 1980s. Broad macroeconomic forces caused the strong growth of U.S. imports and the weak growth of U.S. exports across so many products and trading partners. Similarly, broad macroeconomic forces played a critical role in the recent resurgence of real export growth and in the general slowing of real import growth. These forces must continue to be major factors in the gradual process of reducing the U.S. external imbalance. DIFFERENTIAL DEMAND GROWTH During the 1970s both real domestic demand and real GNP in the United States generally grew more slowly than in Japan, Canada, and Western Europe. Differences between demand growth and real GNP growth, however, were relatively small in all countries, and trade imbalances remained small by recent standards. The situation changed during the 1980s, as indicated by the data in Table 3-4. During the general period of slow growth and world recession in 1980-82, U.S. real GNP fell slightly more rapidly than real domestic demand; thus as a share of real GNP, U.S. real net exports fell by 1.0 percentage point. In Canada the pattern was essentially the reverse; real domestic demand fell a little more rapidly than real GNP, and real net exports increased modestly. During the period of world recession, real GNP growth in Japan slowed from a 5 percent average annual rate in the 1970s to 3.2 percent. Real net exports contributed about 1 percentage point to Japanese economic growth, since real GNP grew about 3 percent annually and real domestic demand grew about 2 percent per year. In West Germany, real domestic demand fell at a rapid 2.6 percent annual rate, but improving real net exports cushioned the effect on output growth, and real GNP fell at only a 1 percent annual rate. The pic- 104 TABLE 3-4.—Growth in Real Domestic Demand and Real GNP in Major Industrial Countries, 1980-87 [Average annual percent change] Country/region United States Japan Germany France United Kingdom.. Italy Canada Europe (Big Four) 4 G-7 less United States4 1980 I to 1982 IV Real domestic2 demand -0.5 2.1 -2.6 1.1 -.2 -.5 -1.0 .1 1984 II to 1986 III 1982 IV to 1984 tl Real GNP3 -0.8 3.2 -1.0 1.4 -.0 domestic2 demand domestic2 demand 1986 III to 1987 III1 Real GNP3 domestic2 demand Real GNP3 2^3 2.8 7.1 3.6 4.1 2.9 3.4 3.4 3.4 4.1 2.7 3.7 3.3 2.1 3.3 3.0 3.6 4.8 *3.3 2.5 5.7 3.0 5.0 4.3 '1.6 2.0 5.2 2.4 4.1 2.0 3.2 3.2 3.6 2.9 3.2 3.2 3.8 2.4 3.1 9.1 3.0 2.9 -.5 4.1 3.2 6.7 7.0 4.4 2.5 2.2 2.8 1 2 3 4 Data for United States and Germany are preliminary estimates for 1987 IV. Real domestic demand is real GNP minus real net exports. Data for France, United Kingdom, Italy, and Canada are real GDP. Data for Europe (Big Four) and G-7 less United States use GNP weights. Big Four consists of Germany, France, United Kingdom, and Italy. Sources: Department of Commerce (Bureau of Economic Analysis) and country sources. ture was mixed in the other three large European economies (France, Italy, and the United Kingdom). During the initial phase of the expansion, from the end of 1982 to the middle of 1984, real domestic demand in the United States shot up at a 9.1 percent annual rate, exceeding by 2.1 percentage points the rapid growth rate of U.S. real GNP. The strong growth of demand and income reflected the recovery of the economy from a particularly deep recession, aided by the shift to a quite expansionary monetary policy early in the second half of 1982, and spurred on by significant reductions in marginal tax rates on both labor and capital income. In most of the other six leading industrial countries, recovery was less robust, as indicated in Table 3-4. For these six countries, combined real GNP growth averaged 3.2 percent, slightly exceeding the 2.8 percent annual growth rate of real domestic demand. The very strong growth of real domestic demand in the United States, together with relatively weak demand growth in other industrial countries, clearly contributed to the strong growth of U.S. imports and the weak growth of U.S. exports during this period. In the second phase of the expansion, from the middle of 1984 through the third quarter of 1986, growth of real domestic demand in the United States slowed to a 3.6 percent annual rate. As real net exports deteriorated further, U.S. real GNP grew at a moderate 2.7 percent annual rate. Growth of real domestic demand picked up in some of the other six leading industrial countries and equaled the U.S. rate during this period. Because U.S. imports already were substantially larger than U.S. exports by 1984, equal rates of demand 105 growth in the United States and abroad implied further deterioration of the U.S. trade balance. Moreover, growth of real domestic demand during this period may give an exaggerated impression of the strength of spending, particularly for countries whose currencies appreciated against the dollar. In early 1986, the dollar prices of oil and many primary commodities fell. These price declines made possible increased purchases of oil and other primary commodities (measured in volume terms), even though the amount spent (measured in dollars) fell. And when spending is measured in foreign currencies that appreciated against the dollar, the effect of falling dollar prices of primary commodities was amplified. This observation partly explains how real domestic demand could grow more rapidly than real GNP in Japan between the second quarter of 1984 and the third quarter of 1986, and yet Japan's current account surplus could increase from 3.1 to 4.6 percent of GNP. Some of the benefits that Japan enjoyed from the large decline in the yen prices of oil and other primary commodities ended up in increased saving rather than increased spending. Similarly, during this period West Germany recorded a large increase in its current account surplus, from 0.5 to 3.6 percent of GNP, despite only a small excess of real GNP growth over real domestic demand growth. In the most recent phase of the expansion, starting in late 1986 and continuing through 1987, the growth rate of real domestic demand in the United States slowed to 2.6 percent per year, due primarily to slower growth of consumption spending. In the other six leading industrial countries the growth rate of real domestic demand moved up slightly. The latest available data show that between their peak in the fourth quarter of 1986 and the third quarter of 1987 the current account surpluses of Japan and West Germany (as a share of GNP) declined by 1.4 and 1.8 percentage points, respectively. The reversal of the demand growth differential contributed to an improvement in U.S. real net exports, thus allowing the growth rate of U.S. real GNP to rise to 3.4 percent despite the slower growth rate of U.S. real domestic demand. The growth rate of U.S. real domestic demand probably had to fall below the 3.6 percent annual rate experienced during the second phase of the expansion if the decline in U.S. real net exports was to be reversed. As discussed in Chapter 1, if the U.S. unemployment rate declines further and productivity grows further, the mediumterm growth rate for U.S. real GNP is probably about 3.2 percent per year. Improvement of U.S. real net exports at an average annual rate equivalent to, for example, 0.8 percent of real GNP implies an aver- 106 age annual growth rate of real domestic demand of about 2.4 percent, which is very close to the 2.6 percent growth rate actually realized since the turnaround in real net exports began in late 1986. In 1988 it appears likely that real domestic demand will grow relatively slowly in the United States, for the reasons discussed in Chapter 1. In particular, consumption spending is expected to grow relatively slowly as households seek to increase their saving rates above the low average level of 1987 (but probably not much above the rate achieved in the fourth quarter). Furthermore, investment spending for inventory accumulation is expected to decline. The strong growth of both real exports and real net exports is expected to play a key role in maintaining a moderate rate of economic growth. Rapid growth of real domestic demand in other industrial countries, particularly those with large external surpluses, is critical to reducing their external surpluses, maintaining worldwide demand growth, and improving the U.S. external balance. If U.S. real domestic demand growth declines without an offsetting increase in other countries, total demand growth in the world economy would fall. If this happens, the rate of growth of world output also would fall. Output and employment growth in all the industrial countries, including the United States and the surplus countries, probably would be curtailed. The economic problems of many developing countries, especially those with large external debts, would become more severe. Recent developments indicate that domestic demand in other industrial countries is beginning to strengthen. In surplus countries recent growth of real domestic demand has been running well ahead of growth of real GNP, reversing the pattern of export-led growth that had prevailed for many years. Between the third quarters of 1986 and 1987, domestic demand growth exceeded real GNP growth by 1.1 percentage point in West Germany and by 0.5 percentage point in Japan. Furthermore, recent domestic demand growth in Japan has been exceptionally strong—5.2 and 7.6 percent in the second and third quarters of 1987. In these two quarters domestic demand growth in Japan exceeded GNP growth by an average of 2 percentage points. Strong growth of real domestic demand in Canada and the United Kingdom also has contributed significantly to recent demand growth in the world economy. The Organization for Economic Cooperation and Development (OECD) estimates that real GNP in Western Europe will grow only about 1 y% percent per year during the next 2 years, while real domestic demand is expected to rise by 2V4 percent per year. Some countries that enjoyed relatively vigorous demand and output growth during the past 2 years may face worsening balance of payments po- 107 sitions. Consequently, it is especially important for countries with substantial external surpluses to increase their demand growth in order to maintain their own output and employment growth while their external surpluses contract. More rapid demand growth in surplus countries also is essential for the health of the world economy, because domestic demand growth is expected to be relatively weak in the United States, and a shrinking U.S. trade deficit will subtract from demand growth in other countries. Market forces have provided, and are likely to continue to provide, strong incentives for rapid growth of domestic demand in surplus countries. In particular, the real appreciation of the yen and the lower dollar price of imported oil have substantially reduced the real cost of goods imported by Japan relative to goods and services produced in Japan. The passthrough of a substantial part of this decline in real import costs has boosted the purchasing power of Japanese consumers, thereby contributing to rising living standards and to growth of domestic demand. Moreover, yen appreciation has induced consumers to shift their purchases from domestic to imported goods. The passthrough of the benefits of currency appreciation and lower oil prices apparently has been important in stimulating stronger growth of consumer spending in West Germany as well. The government of Japan has carried out commitments made at the Louvre Accord in February 1987 and the Venice Economic Summit in June 1987 to boost domestic demand growth. On May 29, 1987, the Japanese government announced a 6 trillion yen ($41.3 billion) emergency stimulus package, including 5 trillion yen in public works and 1 trillion yen in tax cuts. At the end of last year the government of Japan approved a 1988 budget including $58.7 billion for public works—20 percent above the figure a year ago and equal to the high level established by last year's supplementary budget. West Germany also has taken actions to boost domestic demand growth. For example, the West German government increased the amount of tax cuts for 1988 and later years to about DM14 billion ($8.7 billion), and it will provide special loans at preferential rates for private and public investment projects. In addition, the German Bundesbank moved to reduce short-term interest rates in late 1987. Continued domestic demand growth in other industrial countries will contribute to the health of the world economy in another important way. A growth-oriented solution to the international debt crisis requires that the heavily indebted developing countries expand their exports. During the 1980s the United States increased its purchases of goods exported by these countries while other industrial countries reduced their purchases. Now, as the United States reduces its trade deficit, other industrial countries must absorb more of the exports of 108 these heavily indebted developing countries if they are to solve their debt problems. As a result, developing countries would be better able to service their debts and would provide better markets for the exports of the industrial countries. THE ROLE OF THE FEDERAL DEFICIT Because a deterioration in the U.S. external position corresponds to a decline in the national saving-investment balance and to an associated increase in the net capital inflow, the deterioration of the U.S. external position also must have an explanation in terms of factors that affect the national saving-investment balance and the net capital inflow. This explanation does not contradict the earlier discussion of differential demand growth in the United States and other countries, nor does it conflict with the later discussion of exchange-rate movements. All are part of the same puzzle. The importance of different forces affecting the external balance may be more readily apparent from one perspective than another, but all the pieces fit together in the end. The deterioration of the national saving-investment balance and the corresponding increase in the net capital inflow since 1982 reflect primarily the decline in the national saving rate (as officially measured). The low rate of national saving since 1982 is accounted for primarily by the high rate of government dissaving which, in turn, is attributable to large Federal deficits. Measured on a NIPA basis, the government deficit (Federal, State, and local combined) has averaged 3.2 percent of GNP since 1982, compared with an average deficit of 0.3 percent of GNP between 1947 and 1982. The Federal deficit alone has increased to an average of 4.6 percent of GNP since 1982, compared with a pre-1982 average of only 0.6 percent of GNP. The personal saving rate also has been relatively low since 1982, but the rate of business saving has been relatively high. Since 1982 the private saving rate (personal plus business saving) has run about the same as its postwar average. The causal linkages between the government deficit and national saving, national investment, and the capital inflow, however, are more complex than these averages suggest. As shown in the upper panel of Chart 3-3, movements in th^ general government deficit as a share of GNP have tended to parallel movements in the private saving-investment balance as a share of GNP. This parallelism has offsetting implications for movements in the net capital inflow, as measured by net foreign saving in the national income and product accounts: an increase in the private saving-investment balance implies a smaller net capital inflow, while an increase in the government deficit implies a larger net capital inflow. As shown in the lower panel of 109 Chart 3-3, movements in the net capital inflow generally have been smaller than movements in either the private saving-investment balance or the government deficit. Chart 3-3 Components of the Saving-Investment Balance Percent of GNP General Government Deficit*/ Private Saving-Investment Balance b 1955 1960 1965 1970 1975 1980 1985 -VGross private saving minus gross private domestic investment, i/Federal, State, and local deficit, a/Defined as net foreign saving. Note.—Data for 1987 are preliminary. Source: Department of Commerce. In the United States the dominant economic factor affecting movements in both the government deficit and the private saving-investment balance has been the business cycle. Usually during recessions, private investment has declined more than private saving, so the private saving-investment balance has improved. Also during recessions government revenues tend to fall and government expenditures tend to expand, so the government deficit grows. In contrast, during expansions private investment usually grows relative to private saving, so the private saving-investment balance deteriorates. Also, government revenue tends to rise relative to government expenditure, so the government deficit declines. Because business cycle effects on the private saving-investment balance typically have been a little stronger than business cycle effects on the government deficit, the net capital 110 inflow has tended to decline during recessions and to increase during expansions. In this regard, the recessions of 1980 and 1981-82 were not very different from earlier recessions. However, as is apparent in Chart 33, the pattern changed during the current expansion. As usual, the private saving-investment balance declined during 1983-86, reflecting the strong growth of private investment. But the government deficit did not decline during 1983-86 as it usually does during a vigorous expansion—a result more than accounted for by the persistence of quite large Federal deficits. Therefore, the net capital inflow grew much more than normal between the end of 1982 and late 1986. In fiscal 1987, due to a large decline in the Federal deficit, the total government deficit dropped substantially from 3.6 to 2.5 percent of GNP. By itself, this reduction should have cut the net capital inflow and the current account deficit by nearly one-third from its level in fiscal 1986. However, the private saving-investment balance deteriorated substantially between fiscal 1986 and fiscal 1987, from 0.3 percent to minus 0.8 percent of GNP. This fall in the privatesaving investment balance reflected both a strong gain in gross private domestic investment (due largely to higher inventory investment) and an outright decline in private saving (because of lower personal saving). Thus, despite a substantial decline in the government deficit, the net capital inflow and the current account deficit both increased modestly. Future improvements in the private saving-investment balance and future reductions in the Federal deficit should cause the national saving-investment balance to improve and the net capital inflow to decline. Because the rate of inventory investment in the nonfarm sector at the end of 1987 is probably unsustainable for any significant length of time, downward adjustment in this component of private sector investment should contribute to an improved private saving-investment balance in 1988. The personal saving rate in 1987 was very low by postwar standards, although it rose in the fourth quarter. Assuming that the personal saving rate remains close to its fourth quarter 1987 level in 1988 (which implies growth of consumption spending about even with growth of real disposable income), the average saving rate in 1988 will be well above that of 1987—a further factor tending to improve the private saving-investment balance. The Federal budget deficit as a share of GNP is expected to decline only modestly in 1988 after the large drop registered in 1987. However, the revised Gramm-Rudman-Hollings budget law mandates a gradual reduction in the Federal deficit in later years and a balanced budget by 1993. The budget compromise agreed to by the Administration and the Congress last autumn provides for further steps 111 in this gradual process. Of course, the desirability of particular measures to reduce the Federal deficit must be assessed on the basis of their likely effects on the economy. The Federal deficit has grown because Federal outlays as a share of GNP have risen substantially since the 1960s (despite a lower share for defense spending), while Federal revenues as a share of GNP have risen modestly. Specifically, Federal outlays averaged 19.0 percent of GNP in the 1960s; they were 22.8 percent in 1987. Federal revenues also rose, but by less than the increase in Federal outlays: from 18.2 percent of GNP in the 1960s to 19.4 percent in 1987. Increases in taxes, without effective restraint on spending growth, could fail to reduce the budget deficit. Moreover, increasing taxes and undoing tax reform would impair incentives to work, invest, and produce—the foundations of future growth. Thus reduction of the Federal deficit, but only through appropriate means, is the proper policy for improving the national saving-investment balance. Finally, the behavior of the net capital inflow cannot be viewed as entirely passive. The apparent attractiveness of U.S. investment to foreigners and the inflow of capital it helped to stimulate probably contributed to the appreciation of the dollar between 1980 and early 1985, which played a major role in the deterioration of the U.S. trade balance. In the overall equilibrium of the economy, this deterioration was the necessary counterpart of both the increase in real domestic demand relative to real GNP and the growing gap between national investment and national saving. If foreigners had not supplied capital willingly, the pattern of real domestic demand, real GNP, national investment, national saving, and the government deficit all would have been different. Nevertheless, it is fair to say that the low rate of national saving, which reflects primarily the persistence of a large Federal deficit late into the current expansion, has played a key role in the development of the U.S. external deficit. It is equally and simultaneously true that the strong growth of real domestic demand in the United States and the relatively weak growth of real domestic demand in other industrial countries between 1982 and late 1986 played critical roles in the evolution of the U.S. external deficit. Therefore, reduction of this external deficit in an environment of continued economic growth in the United States and other countries requires two important and simultaneous developments. First, the U.S. national saving-investment balance must improve through government spending restraints leading to a reduced Federal deficit. Second, the growth of real domestic demand in other industrial countries must remain sufficiently high to sustain world output growth, while growth of real domestic demand 112 remains restrained in the United States, leading to a gradual contraction of worldwide external imbalances. EXCHANGE RATES AND RELATIVE PRICES Strong appreciation of the U.S. dollar between 1980 and early 1985 and its lingering effects in 1986 were important proximate causes of the deterioration of the U.S. trade balance—the ultimate causes lying with the economic forces that induced the dollar to appreciate. The full effects of dollar appreciation were not felt immediately; it took time for the relative prices of imports and exports to respond fully to exchange-rate changes, and it took more time for trade quantities to respond to changes in relative prices. As illustrated in Chart 1-1 of Chapter 1, there is about a six-quarter lag between movements in the foreign exchange value of the U.S. dollar and movements in U.S. real net exports. The recent upturn in real net exports beginning in late 1986 followed six quarters after the beginning of dollar depreciation in early 1985. The improvement in the trade balance through the end of 1987, however, is somewhat smaller than normally would be expected from dollar depreciation through the middle of 1986, after allowing for lags. Analysis of this shortfall requires examination of the responses of relative export and import prices to dollar depreciation. This analysis is important for assessing the likelihood of recovering lost ground and of further improving real net exports commensurate with the further depreciation of the dollar since the middle of 1986. THE EXTENT OF EXCHANGE-RATE MOVEMENTS The value of the U.S. dollar increased substantially against the currencies of most industrial countries between 1980 and the first quarter of 1985. The extent of appreciation was somewhat uneven across currencies. The dollar rose 109 percent against the British pound and 79 percent against the West German deutsche mark, but only 14 percent against the Japanese yen and 16 percent against the Canadian dollar. According to the Federal Reserve staffs trade-weighted index of the foreign exchange value of the dollar against the currencies of 10 large industrial countries (used in subsequent discussions), the dollar rose substantially over this period. Adjusted for movements of the price level in the United States and in other industrial countries, the real foreign exchange value of the dollar rose a similar amount. The dollar's appreciation during the early 1980s probably was spurred in part by the shift in monetary policy from perceived ease and accommodation in the late 1970s to an actual and ultimately 113 credible anti-inflationary stance. Continued dollar appreciation after 1982 probably also reflected the strong recovery in the United States in comparison with most other industrial countries, as well as the general restoration of confidence in the U.S. economy. High real interest rates in the United States during the early 1980s, as well as changes in U.S. tax laws that increased the attractiveness of investment in the United States, may have attracted foreign capital that tended to push up the value of the dollar. The increase in U.S. interest rates and the tightening of monetary policy that began in early 1984 may have contributed to the upward surge in the value of the dollar in 1984. No single factor, however, is the exclusive cause of the dollar's appreciation; several different factors probably played important roles. Since February 1985 the U.S. dollar generally has been depreciating. Substantial declines have been recorded against the currencies of all the large industrial countries, except Canada. Based on the Federal Reserved index, by the end of 1987 the dollar had fallen—in real and nominal terms—about 40 percent and was slightly below its 1980-81 level. The adjustment was less, however, against the currencies of some developing countries. As with the dollar's appreciation in the early 1980s, the exact causes of its depreciation since early 1985 are difficult to isolate. The deceleration in U.S. real GNP growth after mid-1984 probably contributed to the dollar's fall. The intentions of the G-5 countries (France, Japan, the United Kingdom, the United States, and West Germany) to seek a lower dollar, as implied by the Plaza Agreement of September 1985, and their subsequent actions to back up these intentions probably hastened the dollar's fall. The easing of U.S. monetary policy that began in late 1984 and extended through 1986 also may have contributed to the dollar's decline. THE DOLLAR AND RELATIVE EXPORT PRICES The rising dollar in the early 1980s increased the relative price of U.S. produced goods exported to foreign markets. The price of U.S. exports in foreign currencies relative to overall foreign price levels rose 52 percent between 1980 and the first quarter of 1985. It is not surprising, therefore, that U.S. exporters became less competitive. In 1986 U.S. real exports of goods and services had fallen 3 percent below their 1980 level, compared with about 40 percent growth that would have been expected based on the trend rate of growth between 1948 and 1980. Dollar appreciation, not slow productivity growth or spiraling wage costs, was the primary cause of the decline in the international competitiveness of U.S. manufacturing in the first half of the 1980s. Be- 114 tween the cyclical peak in the third quarter of 1981 and the first quarter of 1985, labor productivity in manufacturing increased at a 4.4 percent annual rate—more than one and a half times as fast as the 1948-80 average—and only slightly below the 5.0 percent growth rate of labor compensation in manufacturing. As a result, U.S. unit labor costs rose at only a 0.6 percent rate from late 1981 to the first quarter of 1985. This was less than the growth in a trade-weighted average of unit labor costs in 11 of the largest foreign industrial countries, measured on a national currency basis, during the first half of the 1980s. However, once dollar appreciation is factored in, the International Monetary Fund (IMF) estimates that unit labor costs for U.S. manufacturing, relative to unit labor costs for manufacturing in other industrial countries, rose substantially during this period. The depreciation of the U.S. dollar since early 1985 now has enabled U.S. exporters to regain the international competitiveness they lost earlier. Since the dollar began to decline, relative unit labor costs have fallen significantly. Continued strong productivity growth and wage restraint in U.S. manufacturing have contributed to improved cost competitiveness. Between the first quarter of 1985 and the fourth quarter of 1987, manufacturing productivity increased at a 3.7 percent annual rate, and hourly compensation of manufacturing workers grew at a 2.7 percent annual rate. As a result, unit labor costs for U.S. manufacturing have fallen at a 1.0 percent annual rate since the first quarter of 1985. Adding to this the effect of dollar depreciation, the IMF estimates that unit labor costs for U.S. manufacturing, relative to those in other industrial countries, fell 39 percent between the first quarter of 1985 and the second quarter of 1987 (the latest data available), and they are currently below their 1980 level. Dollar depreciation also has contributed to a significant decline in the relative price of U.S. nonagricultural exports in foreign markets, as measured by a foreign currency price of U.S. nonagricultural exports divided by a foreign consumer price index (CPI). As Chart 3-4 illustrates, movements in the relative price of nonagricultural exports have been dominated by movements in the exchange rate. As the dollar appreciated in the early 1980s, the relative price of U.S. nonagricultural exports rose in foreign markets. As the dollar depreciated, this relative price declined, and it is now lower than it was in 1980. As might be expected on the basis of improved price and cost competitiveness, U.S. exports recently have enjoyed very strong growth. Real nonagricultural exports have grown at a 19.5 percent annual rate since the third quarter of 1986—nearly triple their rate of growth between 1967 and 1980. Reflecting this export growth, U.S. 115 Chart 3-4 Relative Prices of Exports and Imports and the Exchange Rate Index, 1982 = 100 140 Exchange Rate A Index y l \ 130 Relative Price of Nonpetroleum Imports^ 120 \ \ 110 \ 100 _ / / / \ 7A\\ - / \\ 90 J) y 80 - 70 60 i n i• 1975 'y{ / \ \ Relative Price of \ Nonagricultural Exports^ \ 11111 i t 1 1 1 1 1 1 1 1 1 1 i f i t i 1 i i i 1 i i t 1 i i i t i i i 1 i i i 1 1977 1979 1981 1983 1985 — M'I 1987 -I/Multilateral trade-weighted value of the dollar against the currencies of the G-10 countries plus Switzerland. V Ratio of the implicit price deflator for nonpetroleum imports to the U.S. consumer price index. -S'Ratio of the implicit price deflator for nonagricultural exports multiplied by the exchange rate index to a GNP-weighted consumer price index for the G-10 countries (excluding the United States) plus Switzerland. Note.—Data for fourth quarter 1987 are preliminary. Sources: Department of Commerce, Department of Labor, and Board of Governors of the Federal Reserve System. manufacturing output has increased at a 5.4 percent annual rate, and manufacturing employment has increased by 380,000. Econometric estimates suggest that nonagricultural exports rise about three-fourths of a percent for every 1 percent decline in their relative price, with about half the effect occurring within three quarters. Based on these estimates, the 43 percent decline in the relative price of nonagricultural exports between the first quarter of 1985 and the third quarter of 1987 should increase U.S. nonagricultural exports by about 30 percent within 2 years. By the end of 1987 real nonagricultural exports had risen 36 percent above their level in the first quarter of 1985. Since a part of this export gain probably was due to normal export growth associated with rising foreign incomes, it would appear that substantial further export growth should result from relative export price adjustments made through the third quarter of 1987. 116 Moreover, relative export prices in the third quarter of 1987 may not yet fully reflect the depreciation of the dollar since early 1987. Following the Louvre Accord in February 1987, exchange rates among the group of seven summit countries (the G-7 countries) remained fairly stable until the fourth quarter, allowing for much of the adjustment of relative export prices to exchange rates to occur by the end of the third quarter. However, the dollar continued to depreciate against the currencies of important trading partners outside the G-7 during the spring and summer, and it declined a further 6 to 7 percent against other G-7 currencies (except the Canadian dollar) in the fourth quarter. Therefore, there is reason to anticipate further reductions in relative prices of U.S. goods in foreign markets that will contribute to further increases in U.S. exports. To correct the U.S. external deficit in a noninflationary manner, U.S. manufacturing industries must be able to expand output to serve domestic and foreign markets without incurring rapidly rising costs. Recent data on capacity utilization suggest that existing capacity in most manufacturing industries appears ample to meet output growth in the near term. The ability to expand capacity beyond existing levels is aided by the availability of unused capacity in the durable goods industries that produce business equipment, as well as by the slack that exists in the construction industry. The incentive to expand capacity is indicated by recent data that show manufacturers' profits from current production running well above their average rate in 1986. Additional incentive is provided by the knowledge that the correction of the trade imbalance should assure continued strong growth in the manufacturing sector. According to the most recent Department of Commerce survey of investment intentions, U.S. manufacturers plan to increase spending for plant and equipment in real terms by S.6 percent in 1988. THE DOLLAR AND RELATIVE IMPORT PRICES The price of nonpetroleum imports relative to the U.S. consumer price index fell until the fourth quarter of 1985, at which time it was 28 percent below its 1980 level. Allowing 2 further years for this relative price decline to work its full effect on import quantities, econometric estimates suggest that a relative price decline of this magnitude would have induced about a 30 percent increase in real nonpetroleum imports. In the fourth quarter of 1985, nonpetroleum imports were about 90 percent above their 1980 level. The additional increase reflects large increases in U.S. income and real domestic demand, and the need for the heavily indebted developing countries to run external surpluses in order to service their debts. There is, 117 therefore, little mystery about the rapid growth of real imports between 1980 and the end of 1985. From the end of 1985 to the end of 1986, U.S. real nonpetroleum imports increased 10 percent; from the end of 1986 to the end of 1987, they increased a further 6 percent. Some of these increases can be explained by the growth of real domestic demand (2.7 percent in 1986 and 3.2 percent in 1987) and, especially for 1986, by the delayed effects of earlier reductions in relative import prices. However, in view of the substantial depreciation of the dollar beginning in early 1985, the continued rapid growth of real nonpetroleum imports in 1986 and 1987 appears somewhat out of line with earlier empirical relationships. This continued strong growth of real imports, not a smaller than normal response of real exports, accounts for the failure of U.S. real net exports to improve as rapidly as would normally be expected, given the large adjustment in the foreign exchange value of the dollar. Although the recent strength in real nonpetroleum imports is unusual given the sharp depreciation of the dollar, this strength is not unusual given the behavior of the relative price of such imports. As illustrated in Chart 3-4, the relative price of nonpetroleum imports increased very little during the period of dollar depreciation. At the end of 1987 it stood just 0.5 percent above its level in the first quarter of 1985 (and only 2.9 percent above its lowest level in the fourth quarter of 1985), despite a 40 percent depreciation of the dollar. Econometric studies suggest that the relative price of nonpetroleum imports normally would have risen about 25 percent in response to dollar depreciation, rather than the amount actually recorded. It appears that the very limited response of relative import prices largely accounts for the failure of real import growth to slow to the extent that normally would be expected, given the size of the dollar's decline. PROFIT MARGINS AND IMPORT PRICES A substantial decline in the cost of materials purchased by foreign exporters partially accounts for the slow rise in relative import prices in the United States since 1985, Measured in U.S. dollars, the price of oil in 1986 averaged about half its level in 1985. One commonly cited index of the dollar price of raw commodities fell 13 percent between early 1985 and late 1986. Other factors being equal, reductions in the dollar cost of raw materials allow foreign exporters to reduce the dollar prices of U.S. imports without reducing their profit margins. However, if appreciation of foreign currencies and movements in foreign labor costs are considered, the decline in materials costs only partly explains the limited increase of import prices in the 118 United States during the period of dollar depreciation. Apparently, the profit margins of foreign exporters have absorbed much of the effect of dollar depreciation. The profit margins of exporting firms typically absorb some of the effect of movements in exchange rates. This appears to be true to a limited extent for U.S. firms exporting to foreign markets and to a greater extent for foreign firms exporting to the United States. When the dollar appreciates, U.S. exporters—whose costs often are determined in U.S. dollars—may not raise their prices in foreign markets (quoted in foreign currencies) in the same proportion as the dollar appreciates. Instead, to help preserve their market share abroad or for other reasons, they sometimes will absorb part of the effect of dollar appreciation by reducing their profit margins on export sales. Conversely, when the dollar depreciates, U.S. exporters may not cut their prices in foreign markets in the same proportion as the dollar's decline, and their profit margins may expand. Similarly, foreign exporters to the United States may not cut their prices in U.S. markets as much as the dollar appreciates or raise their prices here as much as the dollar depreciates. The evidence concerning adjustment of profit margins in response to exchange-rate changes is largely inferential. Some evidence is available in some specific cases, but there are no comprehensive data on profit margins in different national markets for U.S. firms or for foreign firms. It is possible, however, to construct proxy measures of the ratio of prices to costs that indicate general movements in profit margins. For U.S. exporters, the dollar price of U.S. nonagricultural exports is taken as a measure of prices received in foreign markets. If this price is divided by the U.S. producer price index (PPI) for finished goods, a proxy price-cost ratio for U.S. exporters can be constructed. For foreign exporters to the United States, the dollar price of U.S. nonpetroleum imports is one measure of prices received. If this price is divided by the foreign wholesale price index converted into U.S. dollars using market exchange rates, a proxy price-cost ratio for foreign exporters to the United States also can be constructed. An increase in this price-cost ratio generally suggests an increase in the corresponding profit margin, but the relationship probably is not exact. However, alternative measures of the price-cost ratio show generally similar movements. The behavior of the price-cost ratios for U.S. and foreign exporters is illustrated in Chart 3-5. The levels of the two indexes are not particularly meaningful, but their movements in comparison with movements in the Federal Reserve's index of the foreign exchange value of the U.S. dollar are important. Basically, the price-cost ratio for U.S. exporters shows relatively little movement, although there is a 119 fairly consistent downward trend beginning in 1982. In contrast, the price-cost ratio for foreign exporters moves in fairly close sympathy, although somewhat less than in proportion, with movements in the exchange rate. U.S. and Foreign Exporters' Price-Cost Ratios and the Exchange Rate lnde>c, 1982 = 100 140 Exchange Rate A Index^ / \ 130 - 120 - / 110 — \ SA\ U.S. Exporters' Price-Cost Ratio*/ 100 "" " - 4 90 Foreign Exporters' \ \ Price-Cost Ratio ^ ->+** 80 70 x -^> s/ i 1 i i i 1i i i 1i i i 1i i t 1i i i 1t t t 1 1 1i 1 1f I 1 11I 1 1I I 1 1I 1 1 11I 1 1 1975 1977 1979 1981 1983 1985 1987 -VMultilateral trade-weighted value of the dollar against the currencies of the, G-10 countries plus Switzerland. -2/Ratio of the implicit price deflator for nonagricultural exports to the U.S. producer price index for finished goods. .2/Ratio of the implicit price deflator for nonpetroleum imports to a trade-weighted wholesale price index for eight industrial countries excluding the United States divided by the exchange rate index. Note.—Data for fourth quarter 1987 are preliminary. Sources: Department of Commerce, Department of Labor, Board of Governors of the Federal Reserve System, and Data Resources, Inc. The behavior of the price-cost ratios relative to the exchange rate illustrated in Chart 3-5 is broadly consistent with the behavior of relative import and export prices illustrated in Chart 3-4. It appears that U.S. exporters basically price their products in dollars and in line with movements in domestic costs. The relative price of U.S. exports in foreign markets, therefore, moves in close sympathy with the exchange rate (Chart 3-4), while the price-cost ratio for U.S. exporters shows little relation with the exchange rate (Chart 3-5). The reverse largely holds for foreign exporters. The relative price of foreign exports moves to some extent in response to exchange-rate movements (indicated by the inverse relation between movements in the relative price of nonpetroleum imports and movements in the ex- 120 change rate in Chart 3-4), while the foreign price-cost ratio appears to absorb most of the effect of exchange-rate changes (Chart 3-5). The decline in the price-cost ratio for U.S. exporters between 1982 and 1985 or 1986 is consistent with the fact that U.S. exporters were under heavy competitive pressure in foreign markets and chose to absorb some of this pressure in lower profit margins. The further decline of the price-cost ratio for U.S. exporters through 1987 is*peculiar in view of the very large correction in the value of the dollar. Part of this anomaly may be due to deficiencies in the proxy measure of the price-cost ratio. An alternative measure, based on unit labor costs and raw materials prices rather than the PPI, does not show a decline in 1987; it is roughly constant throughout the 1980s. The strong growth of corporate profits for manufacturing firms in 1987 and the strong growth of exports suggest that profit margins were not falling. The recent behavior of the price-cost ratio for foreign exporters suggests that their absorption of the effects of dollar depreciation at least partly explains the less-than-expected relative price increase of U.S. imports. The extent of such absorption also appears to have exceeded previous experience. Studies using alternative measures of the price-cost ratio or the profit margin for foreign exporters generally have confirmed these impressions. Less than complete passthrough of measured dollar depreciation to import prices may result from changes in the pattern of international trade. For example, the sources of U.S. imports may have been shifting in the direction of exporters with relatively lower production costs measured in U.S. dollars, including exporters located in countries whose currencies have appreciated relatively little against the U.S. dollar. In addition, some products imported into the United States have been subject to quantitative restrictions imposed by the United States or by the countries of origin. The prices of such imported products in U.S. markets are influenced strongly by these restrictions, rather than by exchange rates. Less than complete passthrough is also consistent with economic theory. Foreign producers whose costs tend to rise with increased output and whose sales have been falling (in both domestic and foreign markets) probably have been experiencing declining production costs, especially at the margin. Such producers naturally would cut their prices in line with declines in their marginal production costs, even if their profits (taking account of fixed costs) were falling. Furthermore, for a foreign producer whose dollar prices are higher than production costs, holding the dollar price constant and cutting the profit margin may retain more profits when the dollar depreciates than raising the dollar price and suffering substantial sales losses. 121 Moreover, if a large share of a foreign producer's total sales are in the U.S. market, primarily in competition with U.S. producers, there may be little alternative to maintaining dollar prices even when production costs in terms of dollars rise due to appreciation of the producer's home currency. Some of the profit shrinkage may be passed back to the foreign producer's workers and suppliers, who also recognize their indirect dependence on sales in the U.S. market. Because of the large size of the U.S. market, this situation is more likely to arise for foreign firms selling in the United States than for U.S. firms selling abroad. Finally, as a general marketing strategy, firms may find it advantageous to maintain stable prices despite fluctuations in production costs arising from exchange-rate changes or other factors. This may be especially important if brand loyalty is a significant sales factor, if production costs are a relatively small share of the final sales price, or if fluctuations in production costs are viewed as temporary. Whatever the reason for the relatively limited passthrough of dollar depreciation to U.S. import prices through the end of 1987, the most recent depreciation of the dollar and some of the residual effects of earlier depreciation may have a more substantial effect on import prices in the future. During the past year dollar depreciation has become more general against a broader range of currencies, and some quantitative restrictions on imports that were previously important are becoming redundant. Presumably there is also a limit beyond which profit margins cannot reasonably be squeezed. Furthermore, foreign producers may now recognize that much of the dollar's depreciation since 1985 is likely to prove permanent, so previously delayed price adjustments may now be made. In sum, U.S. exports appear to have a good potential for growth, while economic forces are working to slow, if not partially reverse, the growth of imports. Because of strong productivity growth, effective cost containment, and exchange-rate adjustment, U.S. exporters already have regained the international competitive position they held in 1980-81 when the United States had a substantial surplus of real net exports. The additional depreciation of the dollar during the fourth quarter of 1987, and the continuing passthrough of some of the effects of earlier depreciation, should enhance export competitiveness further. Provided that costs remain effectively contained and demand growth continues in foreign markets, real U.S. exports should continue their recent vigorous growth. For real U.S. imports, increasing passthrough to relative import prices of the effects of recent and earlier dollar depreciation should limit growth. Anticipated slow growth of real domestic demand is an additional factor limiting likely growth of imports. Thus with import growth restrained and 122 exports growing strongly, improvements in real net exports should contribute substantially to overall U.S. economic growth. THE ADJUSTMENT PROCESS Reduction of external imbalances requires substantial macroeconomic and structural adjustments that may be difficult to achieve rapidly without endangering the fundamental objective of maintaining economic growth with low inflation. To be successful, therefore, the process of reducing external imbalances must be gradual. It also must be persistent. The apparent response of financial markets to disappointing news about external imbalances suggests that an undesirably rapid pace of adjustment could be forced if external imbalances are not steadily reduced. Moreover, the incentives to undertake the necessary structural adjustments probably are enhanced when the need for, and reward from, such adjustments are apparent. Consider the necessary macroeconomic adjustment in the United States. In the fourth quarter of 1987 the U.S. deficit in real net exports was equivalent to about 3 percent of real GNP. As a matter of arithmetic, elimination of this deficit requires that real GNP rise about 3 percent relative to real domestic demand, or equivalently, that real domestic demand fall by about 3 percent relative to real GNP. Yet, since the Korean war, there has been only one period longer than a year and a half when annual growth of real GNP has consistently exceeded annual growth of real domestic demand by close to a percentage point. This period lasted just over 2 years and it included 1980, when a sudden drop in real domestic demand drove the economy into a sharp recession. The danger is that without the assurance of substantial, persistent improvement in the trade balance, slow growth of real domestic demand increases the risk of recession. Prudence, therefore, suggests that several years be allowed to achieve the large necessary reductions in the U.S. real net export deficit. For other countries, excessively rapid reduction of the U.S. net export deficit also poses significant macroeconomic problems. In the world as a whole, demand growth must equal output growth. Therefore, if slower domestic demand growth in the United States is not offset by more rapid domestic demand growth in other countries, world output growth would suffer, and the effects would not be limited to the United States. Slow growth or outright decline of U.S. imports means slow growth or outright decline of other countries' exports. This process could be mutually reinforcing, increasing the risk of worldwide recession. Moreover, there appear to be practical limits to the growth of real domestic demand that can be expected in other 123 countries. Given the objective of sustaining world output growth, therefore, there are practical limits to the desirable rate of reduction of external imbalances. Because the tradable goods and services sector of the U.S. economy is roughly 40 percent of the total economy, the structural adjustments required to reduce the U.S. trade deficit are relatively larger than the macroeconomic adjustments. To reduce the real net export deficit by 3 percent of GNP, production of tradable goods (including tradable services) must expand by about 7.5 percent relative to consumption of tradable goods. Except in an economic downturn, U.S. consumption of tradable goods is unlikely to decline over a sustained period. Indeed, the need to expand productive capacity in the tradable goods sector is likely to keep domestic demand for tradable capital goods relatively strong. Therefore, reduction of the trade deficit in an environment of economic growth likely will require significant expansion of domestic production of tradable goods. In 1987 production of tradable goods probably expanded at about a 5 percent rate (the growth rate of industrial production), and the rate of capacity utilization increased significantly. Sustaining output growth at a 5 percent rate probably would be feasible if productive capacity were expanded sufficiently rapidly. However, at this rate of output growth, it would take several years to close the gap between production and consumption of tradable goods. In a growing economy with the unemployment rate already down to 5.7 percent, pushing adjustment of the tradable goods sector too fast could generate undesirable cost pressures that, among other problems, could erode the international competitiveness of U.S. producers. For other countries whose trade positions must adjust as the U.S. position improves, their structural adjustment problem is essentially the opposite. Production of tradable goods must decline relative to consumption of tradable goods. This adjustment will be easier and less painful to achieve, especially for workers and firms in the tradable goods sector, if it occurs gradually through a shift in the relative growth rates of tradable goods production and consumption, rather than suddenly through an absolute decline of tradable goods production. In the United States, it should be recalled, even though adjustments in tradable goods industries often were difficult during the period of the growing U.S. trade deficit, output of most tradable goods industries (particularly manufactures) continued to expand in line with the overall economy. Moreover, outright contraction or very slow growth of tradable goods industries in foreign countries could impair overall economic growth there. Resources need to shift away from tradable goods and toward nontradable goods. However, unemployment of resources in 124 the tradable goods sector means temporary income losses that may limit spending and thereby impair domestic demand growth essential to maintaining overall growth in the world economy. These difficulties could be magnified if investment in the tradable goods sector drops precipitously without offsetting increases of investment in other sectors. Thus all trading nations share a common interest in avoiding adjustment pressures that are ultimately too strong and selfdefeating. CONCLUSION Macroeconomic and structural adjustments in the United States and other countries have begun to reduce external imbalances in an environment of sustainable noninflationary growth. That process will continue in 1988 and beyond. Growth of real domestic demand has slowed in the United States, and it appears likely to remain relatively slow in the period ahead. Federal deficit reduction, together with prospective improvement in the private saving-investment balance, should improve the national saving-investment balance. Growth of real domestic demand abroad has accelerated due to government policies and market forces. Relative price adjustments resulting from the substantial correction in the foreign exchange value of the dollar already have brought, and will continue to bring, reductions in worldwide external imbalances. These relative price adjustments have helped to stimulate stronger internally led growth in foreign economies and to motivate necessary structural adjustments both in the United States and abroad. Clearly, it is important to maintain policy momentum in the macroeconomic area, as well as to continue progress in reducing structural rigidities and barriers to adjustment, especially in economies with high unemployment rates. Reduction of marginal tax rates, of burdensome government regulations, and of inefficient government subsidies and, when appropriate, judicious easing of monetary policy and increased spending on worthwhile public investments can contribute to demand and output growth without raising risks of inflation. Elimination of restrictive work practices, excessive nonwage labor costs, expensive job security arrangements, rigid work rules and wage restraints, and other labor market practices that impair mobility and discourage job creation can contribute to both growth and adjustment. On the consumption side, reform of government policies that prevent efficient use of scarce land and removal of artificial restraints on mortgage and consumer credit can aid growth under appropriate circumstances. 125 Finally, maintenance of an open system of world trade is essential to the process of reducing external imbalances in an environment of noninflationary growth for the world economy. Specifically, the growth-oriented method for gradually reducing external imbalances requires stronger demand growth in foreign countries while demand growth remains restrained in the United States. This will allow improvements in the U.S. trade balance to come primarily from an expansion of exports, rather than a sharp cut in imports. For this method to work, foreign markets must be open to U.S. exports. The alternative method for reducing the U.S. trade deficit—protectionism at home and retaliatory market-closing measures abroad—is a prescription for worldwide economic stagnation. Especially now, when U.S. industries have regained international competitiveness and export growth appears likely to sustain economic expansion, the United States has a particular interest in avoiding protectionism and pursuing instead its program for freer and fairer trade. 126 CHAPTER 4 Expanding Trade and Avoiding Protectionism TWICE IN THIS CENTURY the United States has taken the lead in setting a new course for the world's trading system. The first time was in 1930 with the passage of the Smoot-Hawley Act, which led to global protectionism and contributed to the Great Depression. The second time was after World War II with the process of trade liberalization brought about through the General Agreement on Tariffs and Trade (GATT). The result was more rapid recovery from the destruction of war, the unprecedented expansion of world commerce, and increased prosperity in the industrialized and developing countries. The Smoot-Hawley Act and GATT both taught that the United States has a large influence on the world economy, for better or worse. Likewise, the actions taken in the coming months regarding American trade policy have the potential to influence the course of international trade for years to come. Recognition of the immense benefits of trade is a fundamental principle of American economic policy. The framers of the U.S. Constitution saw the wisdom of prohibiting all tariffs and duties on the trade between the States. Today those trading States, together with the States that were added later, are among the most prosperous in the world. The same principles of trade apply to commerce between countries. Although recent negotiations are improving U.S. access to a substantial portion of world markets, current domestic legislative proposals threaten to close U.S. markets and reverse many of the market-opening gains made over the past 40 years. On the positive side are the Canada-United States Free-Trade Agreement entered into on January 2, 1988, the United States-Mexico Framework Understanding signed on November 6, 1987, and other initiatives proposed by the United States in the ongoing Uruguay Round negotiations of GATT. On the negative side are proposed changes to domestic trade law contained in the Omnibus Trade and Competitiveness Act of 1987, the effects of which are potentially dangerous. 127 EXPANDING TRADE OPPORTUNITIES ABROAD Both bilateral and multilateral initiatives are vital for expanding trade opportunities. In the past year bilateral agreements were successfully completed, and substantial progress was made at the multilateral GATT negotiations. During the coming year the multilateral GATT negotiations will become increasingly important. CANADA-UNITED STATES FREE-TRADE AGREEMENT In many respects a free-trade agreement between the United States and Canada is a natural consequence of longstanding friendship, common economic interests, and geographic proximity. Nevertheless, there is a history of numerous unsuccessful attempts over more than a century to reach a free-trade agreement. That an agreement was reached in 1987 stands as a major achievement. The two nations had to overcome special interests, internal pressures for the status quo, fears about loss of identity, and protectionism in order to craft a final document. The outcome represents a victory for both countries. For the first time, the agreement firmly anchors free trade as the fundamental principle governing commerce between the two countries. It now remains for the U.S. Congress and the Canadian government to approve the understanding. Canada and the United States are each other's largest trading partner. Measured in terms of national product, they will make up the largest free-trade area in the world. Chart 4-1 shows the relative importance of Canadian trade to the United States. In terms of bilateral trade, Canada represents 19 percent of all U.S. trade. As the chart shows, trade with Mexico represents 5 percent of U.S. trade, and trade with all other countries in the Western Hemisphere amounts to 7.5 percent. History The United States and Canada share common origins as former British colonies. In spite of different political histories, the natural economic proclivities of the two nations have led them to greater cooperation and economic interdependence as the years have passed. The earliest attempt at a free-trade agreement dates back over 140 years. Canada initiated discussions with the United States for bilateral free trade in the middle and late 1840s, in response to growing separation from the British market brought about by Britain's unilateral movement toward free trade and the repeal of the Corn Laws. In 1854, under the impetus of the U.S. desire for fishing rights on the east coast, a reciprocity treaty was signed covering free trade in natural products. The treaty was abrogated in 1866 by the United States, 128 Chart 4-1 Shares of U.S. and Canadian Merchandise Trade in 1986 Shares of U.S. Trade Shares of Canadian Trade Japan Canada 18.9% 5.6% Rest of World 20.6% Other Western Hemisphere 2.0% Other Western Hemisphere Mexico 0.7% 7.5% Rest of World 50.1% United States 71.1% Note.—Shares are based on the sum of bilateral exports and imports in dollars. Source: Council of Economic Advisers, based on International Monetary Fund data. due in some measure to British support for the South in the American Civil War and the ties between Britain and Canada. In 1867 the Canadian provinces joined together in confederation. Seven years later the United States and Canada negotiated a new reciprocity treaty which failed to be confirmed by the U.S. Senate. Since that time sentiment in both countries has alternated on the notion of bilateral free trade, and the free-trade issue has been revisited frequently, including a half dozen times in this century. Over the years the tariffs of both countries have been used to provide differing amounts of protection. In 1850 the average U.S. tariff level was 27 percent, and Canadian tariffs were 16 percent. U.S. tariffs rose to a high of 59 percent in 1932 following passage of the Smoot-Hawley Act, while average Canadian tariffs reached 24 percent in 1929. After World War II both countries* tariffs were reduced. The post-Tokyo Round average U.S. tariff was 4 percent, and the average Canadian rate was 7 percent, although tariffs on selected products were substantially higher. Recognizing the natural economic benefits to both countries, the Canadian Royal Commission on the Economic Union and Develop- 129 ment Prospects for Canada concluded in August 1985 that it was in Canada's interest "to engage the United States more directly in bilateral free-trade negotiations." In the United States the Trade Agreements Act of 1979 already had instructed the President to study "the desirability of entering into trade agreements with countries in the northern portion of the western hemisphere" for the mutual expansion of market opportunities. On September 26, 1985, the Canadian Prime Minister requested that the United States and Canada consider the potential for negotiating a comprehensive free-trade agreement. The request was accepted, and the President notified the Congress on December 10, 1985, of his intent to enter into bilateral negotiations, which began formally on June 17, 1986. Benefits of a Free-Trade Area Three-fourths of the trade between the United States and Canada is already duty free. Moving to a free-trade area expands the range of duty-free trade to cover all goods. The reasons for creating a free-trade area are essentially the same as the reasons for encouraging free trade generally. Moving to an open trading regime brings gains associated with the freer flow of goods and better allocation of resources to productive uses. Allowing the Nation's households and firms to trade freely with foreigners means that domestic sellers can add the net demand of foreigners to domestic demand, thus expanding their market. Similarly, buyers can add the net foreign supply to domestic supply, expanding the total supply and lowering the prices of goods they purchase. Because, on average, prices fall for the products for which the country is a net purchaser and rise for the products for which the country is a net seller (a terms-of-trade improvement), the cumulative effect of freer trade is to increase welfare in both countries. Gains by one do not imply losses to the other. Another benefit from enlargement of the market is greater opportunity for economies of scale in production, marketing, and distribution. Many products can be produced and sold at lower cost per unit if a larger volume is manufactured. A larger volume generally means lower prices to the consumer and a greater variety of products which can be profitably offered for sale in the marketplace. In addition, the incentives to invest in research and development in order to enhance technical knowledge and create new products are greater in a larger market. Again, these benefits can accrue to both countries at the same time. Many of the effects of the Free-Trade Agreement, such as enhanced growth and the momentum given to ongoing negotiations to open markets worldwide, are difficult to quantify. Benefits in the form of lower prices to consumers (reduced cost of living) and in- 130 creased profits to firms, however, can be modeled and quantified. Studies of the effects of the Free-Trade Agreement estimate that these economic gains to the United States are on the order of $1.1 billion to $2.9 billion annually. Most studies show that gains to Canada are of a similar absolute size. This stream of benefits is like an annuity that will grow over time with economic growth in the two countries. The present value of these gains ranges between $30 billion and $90 billion. Because Canada is the smaller country, however, the effect of the free-trade area on returns-to-scale gains is more important for Canada. Studies show that these harder-to-quantify effects have the potential to increase Canadian gains severalfold. If there are such obvious benefits to freer trade, then why is there opposition to it? One reason is the claim that removing trade barriers eliminates jobs or sends them abroad. But this argument is misleading because overall employment in an economy is determined by internal conditions and macroeconomic policy, not by the existence of trade barriers or the level of trade flows. The United States created nearly 15 million payroll jobs over the course of the current economic expansion, a period of U.S. trade deficits and relatively open U.S. markets. During the same period the European Community (EC) created virtually no net new jobs, even though they experienced trade surpluses. The same level of employment can be obtained in the total absence of foreign trade as when trade is completely free. But without foreign trade a nation will be worse off economically because, in effect, it will throw away part of its productive capability—the ability to convert surplus goods into other goods through foreign trade. Free trade leads to industrial expansion in those industries in which a country has a comparative advantage. To expand in one sector, however, productive resources, including labor, must shift from other sectors. Thus employment may decline in some sectors, and there may be temporary unemployment during the transition. To halt such economic adjustments in order to prevent the loss of jobs in a particular sector, however, is to lose the benefits of international trade. (For a discussion of the Administration's proposal to aid the transition of workers to new employment, see the summary of the Worker Readjustment Program in Chapter 5.) Elements of the Agreement Visible Barriers. If both countries approve the agreement, beginning on January 1, 1989, all bilateral tariffs will be eliminated either immediately or in five or ten equal annual stages, depending on the product. Table 4-1 displays the average tariff rates by sector for each country as they apply to the other. In the clothing and footwear sectors, for example, Canadian tariffs on U.S. products are over 20 per- 131 cent. Other sectors in both countries are protected by tariffs ranging from 12 percent down to nearly zero. Because each country retains its own tariffs on third-country trade, the agreement provides for rules of origin that require articles imported into one country to be sufficiently processed in the importing country before they can be exported duty free to the other. Thus goods cannot be imported into the country with the lower tariff and then exported duty free to the other country. TABLE 4-1 .—Canadian and U.S. Bilateral Tariffs by Sector [Percent] Canada Share subject to tariffs Sector Agricultural products United States Average tariff 1 Share subject to tariffs Averai tariff 9.0 4.1 Forest products 10.6 3.7 Textiles, apparel, and footwear.. 20.9 10.4 Energy and chemicals 11.7 1.8 Minerals and metals 9.2 3.2 Machinery and equipment Miscellaneous manufactures , ALL SECTORS 9.2 4.5 11.8 6.1 10.4 3.3 1 Canadian averages are weighted by imports from the United States and vice versa. Average tariffs are calculated using only those products subject to tariffs. Source: U.S. International Trade Commission estimates based on 1985 trade data. The agreement also eliminates almost all quantitative restrictions on trade between the United States and Canada. In energy, quantitative restrictions on imports or exports are prohibited, with exceptions for national security considerations, prevention of the exhaustion of a finite energy resource, and a special exception placing an upper bound on the sales of Alaskan oil to Canada. If restrictions are imposed to prevent resource exhaustion, access must be granted to the other party sufficient to maintain a prescribed proportion of their purchases relative to total supply. Canada is the largest supplier of energy to the United States, and it is also the largest importer of U.S. coal. Two-way energy trade has amounted to about $10 billion annually and is likely to increase as a result of the Free-Trade Agreement. Canadians sometimes have argued that it is harmful for Canada to sell its energy resources to foreign countries. It is hard to support such a position when the move to free trade in energy implies higher prices for Canadian sellers, and when contracts to sell are freely entered into by both buyer and seller. From the Canadian point of view, the Free-Trade Agreement represents an assured market in the 132 United States. From the U.S. perspective, a unified market reduces uncertainties about future energy supply. In agriculture, several significant quantitative restrictions will be liberalized, in addition to the elimination of tariffs and export subsidies. The United States has a comparative advantage in most fruit and vegetable trade. Seasonal quantitative restrictions remain in place, but they are relaxed under the agreement. Import restrictions on poultry products also will be lessened. Of general significance to agriculture, trade in fertilizers and other agricultural inputs will be liberalized. Invisible Barriers. The past two decades have seen growth in the less visible, but economically damaging, nontariff and rule-based trade barriers. Invisible barriers to trade can take virtually an unlimited number of forms. Examples include discriminatory access to distribution systems for foreign goods relative to domestic goods, the application of standards and codes that restrict foreign goods, rules about government purchases (e.g., the "Buy American'* provisions of U.S. law), failure to provide intellectual property protection for foreign processes and goods, and various procedural restrictions on foreign investment. The Canada-United States Free-Trade Agreement makes progress in reducing a number of these barriers. For example, both countries now have agreed to provide national treatment to the investors of the other, subject to grandfathering existing regulations. Direct U.S. and Canadian investment in each other's economy currently totals over $68 billion. The free movement of capital across geographic boundaries allows resources to move to the location of their greatest usefulness and profitability, making the opportunities of the combined market available to the resources of both regions. After 3 years Canada will screen direct acquisitions by U.S. investors only when the Canadian company being sold has assets of $150 million or more in constant Canadian dollars. Canadian screening of indirect acquisitions (where a firm's ownership changes when ownership of its parent firm outside the country changes) by U.S. investors will be phased out completely. Other provisions eliminate certain performance requirements imposed by one party on investors of the other. Another section of the agreement ensures ease of border crossing by individuals traveling for business purposes. The Canada-United States Free-Trade Agreement breaks new ground as the first bilateral agreement involving the United States which governs the entire financial sector. The agreement frees the capital, market share, and growth restrictions placed on U.S. banks in Canada (currently at least 15 U.S. institutions are affected), and it makes it possible for U.S. insurance firms to establish or acquire 133 closely held commercial banks and federally regulated insurance and trust companies. Canadian financial institutions will continue to enjoy the open access already received in the United States. In addition, they are granted certain guarantees giving security of access to the U.S. financial sector. The General Agreement on Tariffs and Trade is supplemented by an agreement on government procurement describing rules for foreign participation in domestic government procurement. After February 14, 1988, provisions of the code will apply to purchases by covered agencies of signatory governments of 130,000 special drawing rights (in 1987 $167,000) or greater in value. The previous cutoff was 150,000 special drawing rights. Under the Free-Trade Agreement that threshold is reduced for U.S.-Canadian procurement to $25,000. Previously, approximately three-fifths of Canadian government procurement was not covered by the code due to the high threshold. The procurement market affected by this agreement is estimated to be on the order of $500 million in Canada and almost $3 billion in the United States. Measures which strengthen current code disciplines and negotiations to improve the openness of the government procurement process are provided for in the agreement. Both countries have agreed to refrain from using domestic technical standards as a barrier to trade. For example, they have agreed not to use in-country requirements for accreditation of testing facilities and certification bodies, and to recognize each other's systems for laboratory accreditation. Moreover, both countries will work to harmonize Federal standards when appropriate and to consult about potential problems before new standards are implemented. Both Canada and the United States already have similar and effective laws for protecting intellectual property. However, the agreement resolves a number of problems in this area. In particular, Canada will extend copyright protection to the retransmission of copyrighted programming. Both countries have agreed to work in the Uruguay Round negotiations to enhance intellectual property rights protection worldwide. The Canada-United States Free-Trade Agreement is the first major agreement to apply binding rules to trade in the services sector. Scores of service categories are covered, including telecommunications network-based enhanced services, computer services, professional services (accountants, architects, engineers, scientists, management consultants), tourism, insurance, construction engineering, and retail and wholesale trade. The basic principles underlying the agreement for services are national treatment (equivalent treatment of foreign and domestic nationals), access to domestic distribution systems, 134 establishment of a commercial presence, transparency of rules and procedures, and dispute settlement arrangements. Currently there are relatively few barriers to U.S.-Canadian trade in services, and bilateral trade is already open in most areas. The Free-Trade Agreement insures that the environment will remain open, governed by the principles enunciated in the agreement. Other Provisions, The machinery and transport equipment sector, which includes road vehicles, accounted for $55 billion of bilateral trade in 1986, over 45 percent of bilateral trade between Canada and the United States. Under the Automotive Products Agreement of 1965 between Canada and the United States, a large part of trade in automotive products is already duty free. Under the Free-Trade Agreement, tariffs on all original equipment, tires, and parts will be eliminated; the Canadian embargo on used-car trade will be phased out in 5 years; and duty waivers on imports of automobile products linked to exports of automobiles to the other party will be stopped. At least one-half of the assembly costs and production materials in automobiles freely traded across the border must originate in the exporting country. To meet this requirement, averaging over a 12month period on the relevant vehicle class is permitted. Recognizing the fast-changing nature of the automobile industry, the agreement mandates the establishment of a select panel to assess the state of the industry and make further recommendations for later consideration. The concern over cultural identity, primarily by the Canadians, led the negotiators to exempt cultural industries from the provisions of the Free-Trade Agreement. Cultural industries include the publication of books, magazines, periodicals, or newspapers; the production and sale of films and video and audio recordings; the sale of music; and communication media for the general public (radio, television, and cable television). However, if one party takes actions which normally would have been prohibited, the other party is permitted to take measures of an equivalent commercial effect. Actions inconsistent with free trade, therefore, should be taken only rarely and for strongly held reasons. The Institutional Features. As with any agreement between two sovereign parties, arrangements must be made to resolve misunderstandings and disputes that arise after implementation. Devising a dispute resolution mechanism suitable to both countries was a major difficulty in reaching a final agreement. The solution chosen to resolve disputes successfully and ingeniously blends the binational settlement process with the separate laws of each nation. The agreement establishes the Canadian-United States Trade Commission to supervise implementation of the agreement and resolve disputes. The Commission, composed of members from both 135 countries and led by Cabinet-level representatives, will meet at least once a year in regular sessions. Either country may request ad hoc consultations; if consultations are unsuccessful in resolving a dispute, either country may request a meeting of the Commission. If the Commission is unsuccessful in resolving a dispute promptly, it may establish a panel consisting of two members chosen by each country and a fifth member chosen by both countries from a predetermined roster. The recommendation of the panel would form the basis for the Commission's final determination, normally resulting in the nonimplementation or removal of a measure. If a country fails to implement the findings of a panel, then the other country has the right to suspend equivalent benefits. The safeguards provisions, which address problems faced by industries harmed by increased fair trade, are separated into two parts. One part regulates safeguards for third-country trade. The United States and Canada are excluded from any actions taken by the other under Article XIX (the safeguards article) of GATT, unless goods of the other party contribute importantly to and are a substantial cause of the injury. If the other party is included in the action, the remedy cannot cut back imports from the other party to less than the level of imports over the base period specified by the agreement, with allowance for growth. The other part addresses agreement-related injuries where it can be established that duty reductions resulting from the agreement caused the injury. In this case, the remedy cannot exceed the lesser of the most-favored-nation rate of duty in effect at that time, or preagreement rates of duty. Furthermore, the remedy can remain in effect for only 3 years. In cases involving antidumping and countervailing duty law, the agreement sets up a separate binational dispute settlement mechanism. A panel is made up of two members chosen by each country and a fifth member chosen by both countries from a predetermined roster. The panel would replace judicial review by both the United States and Canada. Each country would continue to apply its own domestic antidumping and countervailing duty laws, but, upon request, the binational panel would review the administrative record of a disputed decision. After reviewing the antidumping or countervailing duty order for its consistency with the relevant law (statutes and judicial precedent) of the country applying the order, the panel has binding authority to sustain or remand the decision back to the relevant investigating authority. No future changes to antidumping or countervailing duty law would apply to the other party, unless it is specifically stated to apply to the other country in the legislation, the changes are fully consist- 136 ent with the GATT antidumping code and subsidies code, the other party is notified, and prior negotiations are entered into upon request. If a panel requires modification of the changes to the statutes because they are inconsistent with GATT, or because they overturn a prior decision of a binational dispute settlement panel, compulsory negotiations are mandated for 90 days. If a solution is not found, the other party may enact comparable legislation, take equivalent executive action, or terminate the agreement with 60 days' notice. Viewed from the perspectives of economics, history, and international relations, the Canada-United States Free-Trade Agreement represents a remarkable achievement. In its implications for the future of U.S.-Canadian trade, the benefits which it secures for both countries, and the example which it sets for trade liberalization worldwide, it is truly an historic document. THE UNITED STATES-MEXICO FRAMEWORK UNDERSTANDING On November 6, 1987, the United States and Mexico signed an understanding concerning a framework of principles and procedures for consultations regarding trade and investment relations between the two countries. A bilateral consultative mechanism was set up to review trade and investment issues, resolve disputes, and negotiate the removal of trade barriers. The agreed upon principles and procedures supplement those in GATT. Mexico is the third largest purchaser of U.S. goods, behind Canada and Japan. In 1986 U.S. exports to Mexico were $12.4 billion, while U.S. imports from Mexico were $17.6 billion, of which some $3.4 billion was crude petroleum. In trade terms the United States is more than 10 times as large as Mexico's second most important trading partner (Japan). The United States accounts for a full two-thirds of Mexico's total trade with the world. In spite of the importance of trade between the United States and Mexico, the two countries have been without a formal mechanism to govern their commercial relations. Although the United States and Mexico generally grant one another most-favored-nation treatment and other benefits similar to those found in GATT, there was no formal channel to pursue the complaints that inevitably arise with such a large volume of trade. Agreeing to overcome this deficiency, the Presidents of the United States and Mexico decided in August 1986 to pursue the idea of a bilateral framework understanding. Formal discussions began in February 1987. Under the bilateral mechanism, either party may request consultations at any time, to be held within 30 days of the request. Annual consultations will be held to review the status of the two countries' trade and investment relationship. The United States and Mexico 137 also agreed to initiate discussions promptly in such areas as investment, intellectual property, electronics, textiles, agriculture, steel, and services sector information exchange. The United States-Mexico Framework Understanding reflects the size and importance of the two countries' bilateral economic relationship. This step adds further stability to the relationship and signals the mutual commitment to resolve trade and investment problems expeditiously. GENERAL AGREEMENT ON TARIFFS AND TRADE In the past 35 years both world production and international trade have grown rapidly. Real global output rose at an average annual rate of 4.5 percent, while the real volume of international trade expanded by 6.5 percent per year. Through more efficient use of global resources, increased international trade leads to higher global living standards. GATT is partly responsible for the flowering of world trade. GATT is a multilateral agreement that defines the responsibilities and operating rules of international trade that have been agreed upon by 95 signatory governments (contracting parties). As its preamble states, GATT's goal is to raise living standards through "reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce.*' Four basic principles underlie GATT: (1) Member countries should work to lower trade barriers in general, and to eliminate the use of quotas in particular; (2) any barrier to trade should be applied on a nondiscriminatory basis to all member countries (the principle of most-favored-nation treatment); (3) once a tariff concession is made, it cannot later be rescinded without extending compensation to affected trade partners; and (4) trade conflicts should be settled by consultation. The Uruguay Round of multilateral trade negotiations, officially launched at a Ministerial Meeting of GATT contracting parties in Punta del Este, Uruguay, in September 1986 is the eighth GATTsponsored negotiating round since World War II and the first since the 1973-79 Tokyo Round. While an attempt was made to address nontariff barriers in earlier rounds, real progress was not made until the Tokyo Round, which resulted in nine agreements or codes pertaining to issues such as customs valuation, import licensing, technical standards for products, subsidies and countervailing duties, government procurement, antidumping duties, and rules governing trade in civilian aircraft. 138 This Administration played the principal role in developing a broad consensus among GATT members to launch the Uruguay Round. The centerpiece of the U.S. approach to the Uruguay Round is a bold effort to bring GATT discipline to agricultural subsidies and agricultural trade barriers. Also, due in large part to the efforts of U.S. negotiators, barriers to trade in services, restrictions on foreign investment, and the protection of intellectual property rights (beyond the limited area of counterfeiting) are on the negotiating table for the first time. In pressing for the launching of GATT's most ambitious multilateral trade negotiation ever, the United States is seeking to revitalize and strengthen an institution which has served it and the rest of the world well. Functioning of the GA TT System The Punta del Este Ministerial Declaration endorsed a threepronged approach to improve the functioning of the GATT system: enhanced surveillance (on a country basis as well as on a subject basis) of the contracting parties' trade policies; greater ministerial involvement; and closer links between GATT, the International Monetary Fund (IMF), and the World Bank. The Administration believes that these are among the most important reforms to GATT contemplated in the Uruguay Round. Besides fostering transparency and predictability, periodic individual country reviews under the surveillance mechanism would encourage trade policies that benefit the functioning of the international trading system in conformity with GATT intents and precedents. Increased ministerial involvement is expected to raise countries' political accountability within the GATT system and reinforce the free-trade principles on which it was founded. Improving GATT's policy management by linking its activities more closely to those of the IMF and the World Bank would ensure that their activities are complementary in improving the outlook for continued trade liberalization among GATT member states. Dispute Settlement Another institutional issue aimed at improving the effectiveness of the GATT system is reform of the dispute settlement mechanism of the General Agreement. There is widespread recognition that the existing consensual dispute settlement procedures do not always foster expeditious resolution of trade disputes. The United States has suggested possible improvements which might include an enhanced GATT mediation role, process timetables, improved panel procedures, avenues for recourse should panel reports be blocked, and the possibility of binding arbitration in certain instances. 139 Intellectual Property Rights Reward for creativity and innovation are the principal driving forces for technological change which, in turn, is a great source of dynamism for world trade. But because of inadequate laws, or laws inadequately enforced, patent, trademark, and copyright infringement has grown worldwide. Legitimate firms have reduced incentives to invest in research and development when some of the returns will be pirated. Intellectual property thieves do not devote the large sums of capital needed to develop a new product. Hence, they are able to undersell legitimate competitors. And since the pirates only copy proven successes, they need never absorb the cost of failures. The U.S. International Trade Commission has estimated that lost sales due to infringement of intellectual property are up to $20 billion annually. Under the auspices of GATT, the Administration seeks a comprehensive intellectual property agreement to establish and enforce intellectual property rights. The U.S. negotiating team has proposed a consultation and dispute settlement mechanism combined with strong rules governing domestic and border enforcement. Such an agreement covering inter- and intracountry measures would increase legitimate trade by raising standards of protection and the obligation to enforce them. Services Despite their large and growing role in world trade, now accounting for approximately 20 percent of the total, services have never been a significant area of negotiation in GATT before the Uruguay Round. Difficult new issues arise in services trade that do not arise in goods trade. For example, trade in services often requires local production of the service and, therefore, involves sensitive right-of-establishment and investment issues. The GATT concept of national treatment is based on the notion that a good receives the same treatment as domestic products once it has crossed the border into the importing country. The concept does not immediately carry over to services trade, because it must be applied to service providers as well as to the service itself. The issue of defining the proper "border," and when it is crossed, is different. This Administration seeks a GATT services agreement which will provide a framework for future negotiations. The United States has proposed an umbrella agreement stating general trade liberalizing principles and second-level agreements or protocols for individual sectors. U.S. goals for services trade include greater transparency of domestic laws; nondiscrimination and national treatment for foreignprovided services; discipline on state-sanctioned monopolies; antisub- 140 sidy provisions; and consultation and dispute settlement mechanisms for trade in services. Since liberalization of trade in services is expected to continue for many years, the framework developed in the Uruguay Round must incorporate the flexibility needed to allow for growth and consideration of new issues. Investment Direct investment encourages trade in goods and services, boosts development, and contributes to the efficient allocation of resources throughout the world. With a free market in foreign investment, capital is allocated to those projects with the highest rates of return. The United States is an example of the benefits of foreign direct investment, both as a host country and as an investor. In the 19th century the United States became a leading economic power with the help of foreign capital. After World War II, the United States became a leading provider of foreign direct investment in the world. More recently, the United States again has been attracting increased capital flows from abroad. Unfortunately, many countries have attempted to stifle or distort the free flow of foreign investment, an action that also affects trade flows. Distortions include domestic content requirements, exchange controls, licensing requirements, technology transfer requirements, and requirements for a minimum level of exports by the foreign corporation operating in the host country. The U.S. goal in these negotiations is to identify and systematically address investment restrictions which have a trade-distorting effect and then to bring those practices within the framework of GATT. Agriculture in the Uruguay Round The United States has proposed the elimination of all policies that distort world agricultural production, prices, and trade. Since domestic farm programs and trade policy are fundamentally bound together, free trade in agriculture requires reform of domestic agricultural policies as well as border measures such as tariffs and quotas. World Agriculture in Disarray. The current round of multinational trade negotiations has begun at a time of stress in world agriculture. Recently, both world market prices and trade volumes have been low, and farm programs worldwide have become more costly and distortionary. Chart 4-2 shows the changes in the real value of U.S. agricultural exports and the U.S. share of world exports. World and U.S. agricultural exports both expanded rapidly in the 1970s, reached a peak in 1980, and have fallen since then. The U.S. share of world agricultural trade rose from 14 percent in 1972 to over 18 percent in 1981. Agricultural prices rose dramatically during the 1970s, increasing nominal 141 exports sixfold while the real value of exports doubled. Then in the 1980s U.S. agricultural export prices and quantities fell for most commodities. In 1987 the quantities, values, and market shares for U.S. agricultural exports rose and prospects are good for the rest of the decade. Chart 4-2 U.S. Agricultural Exports Billions of 1982 dollars 50 20 ~ Share of World Agricultural Exports (right scale) 20 — 10 10 1970 1980 1975 1985 Note.— U.S. value for 1987 estimated; world value not available. Sources: Department of Agriculture, Food and Agricultural Organization, and Council of Economic Advisers. World farm production, prices, and trade have been governed by numerous distortionary agricultural programs that frequently work at cross purposes. Many countries use a variety of policy measures that subsidize production or raise prices to consumers. These measures include tariffs, import quotas, variable import levies, export subsidies, price supports, direct government payments based on output levels, paid land diversions, production or input quotas, and subsidies for storage and inputs such as fertilizer, credit, insurance, fuel, and transportation. One summary indicator of farm program effects, the producer subsidy equivalent (PSE), measures the loss of farm income that would result from the removal of a given set of policies (often reported as a percent of farm revenues). An analogous measure, the consumer subsidy equivalent (CSE), measures the total policy contribution to costs 142 of farm output, often reported as a percent of expenditures. Table 42 shows average PSE and CSE measures for a variety of countries. TABLE 4-2. —Agricultural Subsidies for Producers and Consumers, Selected Countries, 1979-86 [Percent of value1] Country Australia Producers 1982 1979 2 4 Consumers 1986 7 13 11 1979 38 33 41 -22 68 67 79 -43 United States 5 . 11 15 Taiwan South Korea Nigeria6 -89 India 1986 <3) Japan.. European Community (EC-10) 1982 30 -32 -43 -47 34 -10 -17 15 23 25 -29 60 58 52 -65 34 27 63 40 -27 -11 12 3 1 Producer figures are subsidy equivalents as percent of farm sales value (PSEs); consumer figures are percents of value at first sate after the farm gate (CSEs). For dairy subsidies, sales value of primary dairy products is used. For Taiwan, Korea, Nigeria, and India, consumer subsidies are percents of consumer values at wholesale or retail levels. Positive figures indicate net subsidy; negative figures indicate that policies provide a net tax relative to no such policies. Commodity coverage varies, but for each country major grains, oilseeds, sugar, and livestock products are included, except as noted for Nigeria. 2 Estimates do not include state policies, which would raise PSEs. 3 Not available. 4 Estimates do not include individual country policies, which would raise PSEs and lower CSEs. For 1979, data are for EC-9. 5 State policies are minor and are not included, but general Federal subsidies such as for farm credit are included. 6 Commodity coverage is limited to wheat, corn, rice, sugar, cotton, and cocoa. Sources: Department of Agriculture (Economic Research Service), Organization for Economic Cooperation and Development, and Council of Economic Advisers. In many developing countries, where farmers are a large but not particularly influential segment of the economy, producers are taxed and consumers subsidized for many agricultural goods. Thus PSEs are negative and CSEs are positive for most developing countries over a wide range of commodities. (See, for example, the average PSE and CSE for Nigeria and India.) During the last decade policy distortions have been slowly reduced in developing countries, especially in Asia and Latin America. At the urging of the United States, the International Monetary Fund, and the World Bank, farm prices in developing countries have been allowed to rise so that they more nearly reflect world market levels. In most wealthy nations, where agriculture is a small part of the economy and generally has been heavily subsidized, farm programs have become increasingly distortionary, leading to higher farm prices relative to world prices, more restrictive import barriers, and increased government subsidies. Crops such as sugar or wheat are grown at high cost in nations using price supports and import barriers, and then surpluses are exported to the world market with the aid of large subsidies. World prices of many commodities have been depressed by these policies, imposing a severe economic burden on export-dependent countries that would have a comparative advantage in the absence of these distortions. 143 In the United States, farm programs have become particularly costly and complex. Table 4-2 shows that overall PSEs in the United States doubled in the 4 years from 1982 to 1986. The 1981 Agriculture and Food Act mandated high price supports at a time when world market prices were falling. In 1983 farmers were paid to cut back output; surpluses were reduced temporarily, but U.S. participation in world markets also declined. The Food Security Act of 1985 reduced price supports, increased the removal of land and other resources from production, expanded the use of Federal Government programs to aid exports, and maintained target prices at up to twice the market price or more. In 1985 the United States also began the Export Enhancement Program, to counter the subsidies of other exporters (mainly the EC). As a result of these policies, Federal outlays for commodity programs reached $26 billion in 1986, and net farm incomes have been high, despite low market prices. Agricultural production and consumption also is distorted throughout Europe. The Nordic countries, Switzerland, Austria, and the EC all maintain high producer and consumer prices and restrict imports. During the 1980s EC surpluses have been sold on world markets with the help of export subsidies. Table 4-2 shows that the average PSE for the EC is above 40 percent, and EC buyers pay over 30 percent more because of these farm programs. The Common Agricultural Policy cost taxpayers and consumers of the EC about $60 billion in 1986. Japan has long been a net agricultural importer, but it distorts world agricultural trade by holding its domestic prices high and limiting access to its markets. For wheat and rice, Japan now has a support price greater than five times the world market price. Japanese producer and consumer prices for many agricultural goods are often twice the world market price. Japanese consumers spend about 20 percent of their income for food, compared to less than 15 percent spent by consumers in the United States. Many countries continued to pursue policies that increased agricultural trade distortions during a period of slowly liberalizing world trade partly because, at the urging of the United States over 30 years ago, GATT prohibitions on import quotas and export subsidies were not applied to agriculture. During the GATT negotiations held over the past 30 years, few important agreements have been reached for liberalizing trade in agricultural commodities. The most serious distortions and barriers related to international agricultural trade are caused by domestic programs in the industrialized countries that transfer income from consumers and taxpayers to owners of agricultural resources. Because these programs have been considered part of domestic policy, rather than international trade 144 policy, it has been particularly difficult to include them in international negotiations. The U.S. GATT Proposal in Agriculture. In July 1987 the United States put forward a GATT proposal on agriculture consisting of three major parts: (1) an elimination, gradually over 10 years, of all subsidies that distort agricultural trade either directly or indirectly; (2) an elimination, gradually over 10 years, of all barriers to agricultural imports; and (3) international harmonizing of health and sanitation regulations so that differences cannot be used as indirect trade barriers. The U.S. proposal would not prohibit GATT contracting parties from transferring income to agricultural groups. Nor would it restrict bona fide foreign aid or domestic food assistance. Only those programs that have a direct or indirect effect on international trade, including output subsidies, would be restricted. Reactions to the U.S. proposal have been encouraging. The October and December meetings in Geneva of the negotiating group on agriculture included additional formal proposals. The proposals by both Canada and the Cairns Group (an informal organization of selfproclaimed "nonsubsidizing" nations that includes major exporters from developed and developing nations) were consistent with the U.S. initiative. These proposals sent a clear signal that Canada and other Cairns Group members would be working together with the United States in this GATT round. The EC and Japan have been expected to resist efforts to liberalize agricultural trade. However, at the October GATT meeting the EC endorsed multilateral reductions of subsidies and the separation of income support from production. As was expected, the EC also suggested a number of short-term measures involving supply controls and market sharing that would run counter to a move to freer trade. Their proposal as a whole, however, leaves the negotiations on track. Formal GATT proposals from the Nordic countries, Japan, and some other importers were made available in December. The Japanese agreed that subsidies generally should be reduced, but they have emphasized the maintenance of some of the current array of import barriers. Japan and some other countries have argued that, since they are already major importers of farm goods, their production subsidies and import barriers are not a significant problem. However, they undoubtedly would import much more in the absence of barriers. The Japanese recognize that they have much to gain from the Uruguay Round because of Japan's position as a major exporter of manufactured goods. Domestic political pressures in Japan in support of agriculture are strong, but international and domestic pressures to join in the move toward free trade are also considerable. 145 Consequences of Liberalization. Because liberalization offers very significant potential benefits, organizations such as the World Bank, the Organization for Economic Cooperation and Development (OECD), and the U.S. Department of Agriculture have studied the likely pattern of prices, production, and trade flows that would follow as a consequence of world policy reform. A variety of studies have used different methodologies, different underlying assumptions, different base periods for comparison, and somewhat different policy scenarios. Given these differences, the conclusions are remarkably robust. Removing agricultural barriers and ending subsidies is projected to foster a major expansion in international trade. Compared to what agricultural trade would likely be in the mid-1990s without reforms, world wheat exports are projected to rise somewhat, and coarse grain and rice exports are projected to expand substantially. In red meats and dairy products, international trade is projected to more than double. East Asia, Europe, and other restricted markets are expected to experience major growth in imports. The United States is expected to profit from a major expansion in exports of several commodities such as tobacco, coarse grain, and meats. U.S. coarse grain sales also would expand in the domestic market because of the expansion of the U.S. livestock industry, which in turn would be free to sell meat directly to currently restricted import markets. Export prices under free trade are projected to be slightly higher for coarse grains and poultry, in the range of 10 to 30 percent higher for wheat, rice, and sugar, and up to 50 percent higher, or more, for beef and dairy products. Prices paid to U.S. producers of program crops are projected to be higher under free trade than current world prices, but lower than current target prices (or support prices in the case of sugar and dairy products). Removing trade barriers also would reduce substantially the instability of world commodity prices, a factor now used as a rationale for many farm programs. Because consumers and producers in many countries now are insulated from world markets, weather and yield shocks are not dampened and absorbed through supply and demand responses in the full world market. Free trade is projected to reduce world price variability by 20 to 80 percent for major farm commodities. Large reductions in price variability are projected for beef, wheat, and dairy products, and smaller changes are expected for coarse grains and sugar. Potential world welfare gains from free trade are substantial. A variety of estimates for large but limited groups of countries and commodities range from $40 billion to $70 billion per year. Trade liberalization that included all industrialized and developing countries and all major crop and livestock markets probably would increase world 146 well-being by significantly more. One careful study has found that, compared to projections without reform, U.S. farmers would gain from multilateral liberalization, and, compared to a potential unilateral reduction in subsidies, their gains would be substantial. Farmers in the developing countries clearly would gain, although their urban consumers would lose. Consumers in Europe, East Asia, and other restricted markets also would benefit. They would enjoy lower food and fiber costs, because they would be allowed to import without restriction from the United States and other efficient producers. Their income gains would be spent on increased imports of nonfarm goods as well, thus improving trade balances. Under the GATT proposal, the United States would end its distortionary and costly farm production subsidies and the output restrictions that accompany them. However, the United States and other nations would be free to provide transition support and income transfers as long as such aid did not subsidize production or otherwise interfere with trade. The removal of barriers would expand the use of the more efficient agricultural resources in the United States and could increase the demand for farm inputs and marketing services as well. Potential now exists to achieve the first substantial reform since the series of ever-increasing agricultural distortions began. Major international agreement requires patience and persistence, but success in the Uruguay Round would improve well-being throughout the world. THE PROTECTIONIST THREAT AT HOME The United States has gone through numerous periods in its history when the sentiments for protectionism gained ascendancy. These episodes typically were associated with times of economic downturn or regionalist sentiment, the early counterpart of special interest politics today. The most recent period of this nature occurred more than 50 years ago with the passage of the Smoot-Hawley Act of 1930, probably one of the most damaging pieces of legislation ever signed in the United States. Passed after the stock market crash of 1929, Smoot-Hawley attempted to benefit U.S. agriculture and manufacturing by raising tariff rates. But it had the opposite effect and caused retaliatory tariffs to be put in place by foreign trade partners. More than 60 nations responded within 2 years with tariffs of their own. World trade fell dramatically. Chart 4-3 shows the spiraling decline in world trade between the beginning of 1930 and the first part of 1933. Far from being beneficial, Smoot-Hawley helped turn the 1930s into a depression. 147 Chart 4-3 Contracting Spiral of World Trade April > October Millions of dollars Note —Data are total imports of 75 countries. Sources: Charles P. Kindleberger, The World in Depression, 1929-39 (Berkeley, California: University of California Press, 1973); data from League of Nations, Monthly Bulletin of Statistics, February 1934. The concerns and frustrations over trade felt today by the Congress, the President, and the American public stem from the large trade deficits which the United States has been running since 1982. As discussed in Chapter 3, the macroeconomic cause of the trade deficit is related to the tremendous growth in Federal spending (22.8 percent of gross national product (GNP) in 1987 versus 20.6 percent in 1979) relative to the also substantial growth in taxes (19.4 percent of GNP in 1987 versus 18.9 in 1979) and the harmful effect of the resulting Federal deficit on the savings-investment balance in the United States. Yet the Congress has responded by seeking to eliminate various foreign trade practices. Many provisions of the trade bill (H.R. 3) passed by the House of Representatives, and the version passed by the Senate, both of which embody these frustrations, are distinctly protectionist. Protectionism is also the motive of recent legislative proposals such as the Textile and Apparel Trade Act (H.R. 1154) passed by the House of Representatives. Ironically, since the macroeconomic causes of the trade deficit are not addressed by these actions, they are likely to have little or no influence on reducing the 148 trade deficit, although their protectionist influence could be harmful and long lasting. The lesson from Smoot-Hawley is that passage of protectionist trade legislation by the United States will increase protectionist activity in the rest of the world, poison the international climate for trade diplomacy in general, and slow the process of trade liberalization for years to come. Since the United States is a major trading nation, it could suffer major economic losses in the event of increased global protectionism. PROTECTIONIST TEXTILE LEGISLATION Two of the most protected industries in the United States today are textiles and apparel. The costs which this protection places on the American family and consumer are enormous, running in the range of $200 to $400 per year per household. In a major protectionist effort, the House of Representatives passed in 1987 the Textile and Apparel Trade Act which would raise the wall of protection even higher, adding another $280 to $420 in costs per household over the first 5 years. Similar textile legislation was passed by the Congress in 1986 and vetoed by the President. The current bill would set a 1 percent annual growth limit on U.S. global imports of textiles and apparel, freeze shoe imports at 1986 levels, and, for the first time, restrict imports from Canada and the European Community. The textile and apparel industries do not need greater protection. In 1986 textile industry profits rose 67 percent. Capacity utilization for textile mills was 94.2 percent in the third quarter of 1987, compared with an average capacity utilization rate of 81.2 percent for all U.S. industries. U.S. textile and apparel exports rose 15 percent in 1986 and are estimated to rise another 18 percent in 1987. Average hourly earnings and employment in both sectors continued to rise through the third quarter of 1987. And while the Congress would seek to limit textile import growth to 1 percent a year, U.S. consumption of textiles rose 8.7 percent in 1986. Regrettably, the Congress frequently considers the larger economic interests of American consumers to be less important than the interests of particular industries. As with other protectionist measures, consumers would have to pay for the special interest legislation, losing more in increased costs than the gains to those who benefit from the legislation. In the United States, the equivalent rate of tariff protection on textiles and apparel already amounts to roughly 50 percent—ten times higher than average U.S. tariffs. H.R. 1154 would cost consumers between $25 billion and $37 billion in the first 5 149 years, above and beyond the $20 billion to $40 billion annually they already pay because of existing tariffs and quotas. In addition to generating net economic losses for the country as a whole, the textile bill would act like a regressive tax, hurting those most who can afford it least. Because of the large share of income they are forced to devote to clothing, low-income families—especially those with children—would be burdened disproportionately by this legislation. EMBRACING PROTECTIONISM—THE OMNIBUS TRADE BILL The most threatening proposal being considered by the Congress is the Omnibus Trade and Competitiveness Act of 1987, the House and Senate versions of which amount to about 1,000 pages. The bill, which now must be considered in conference committee, includes many features which have only a tangential relationship to trade policy or which are inconsistent with U.S. policy in GATT. Among these are sections dealing with education grants, plant closing restrictions (Chapter 5), subsidies to agricultural programs, changes to domestic tax laws, and investment screening regulations. With so many provisions grouped together in one bill, the President is given little opportunity to consider them on their separate merits. Furthermore, the Administration is on record stating that many of the provisions are unwise and damaging to U.S. interests. Although the trade bill would include tariffs and trade barriers, as Smoot-Hawley did, it represents a fundamentally different kind of protectionism. In the area of trade policy, the legislation would change the rules for administering U.S. trade law and for granting protection to U.S. producers. Helpful Features Every President since 1934 has had authority to enter into international trade agreements involving the reduction of tariffs, and to reduce U.S. tariffs by Presidential proclamation to carry out the country's trade objectives. This authority originally was employed to extricate the country from the economic disorder created by high tariffs after passage of the Smoot-Hawley Act. Tariff proclamation authority was renewed for every President thereafter until January 3, 1980. Reinstatement of this authority is a desirable feature of the trade bill. A second desirable feature is the so-called "fast track" trade agreement authority which was used in the Canadian free-trade agreement negotiations and in the last round of GATT. Under a modification of the operating rules of the House of Representatives and Senate, the President is allowed to negotiate a trade agreement and present it with necessary implementing legislation to the Congress for accept- 150 ance or rejection without amendment within a specified period of time. This authority is important for U.S. credibility in international negotiations, because foreign countries are assured that agreements made at the bargaining table will not be undone later, apart from overall acceptance or rejection. However, the Senate version of the trade bill contains harmful "reverse fast track" provisions allowing the Congress to remove fast track authority at any time. A third desirable feature of the trade bill is the authority to implement the Harmonized System of tariff schedules. Common tariff schedules greatly facilitate international interaction in trade issues. It is regrettable, and a keen source of disappointment to the Administration, that the Congress chose not to grant this authority in earlier legislation in time for the United States to join in implementing the new system on January 1, 1988. The United States, which was one of the original and principal supporters of the development of the Harmonized System, is now the only major trading country not to have implemented it. Harmful Features Unfortunately, the protectionist features of the trade bill outweigh the helpful features in number and in potential for harm. Legislation whose result is protectionist (increasing the number of trade cases filed and the amount of protection offered in response to them) would hamper the attainment of U.S. trade objectives in the rest of the world, damage global perceptions of the United States, and invite retaliation on U.S. products. Many other countries perceive international trade agreements such as GATT as mechanisms to restrain U.S. antidumping and countervailing duties, whereas the United States views them as a way to control foreign subsidies and alleged unfair trade. In recent years the United States has filed more antidumping and countervailing duty cases than any other nation. The extensive use of U.S. antidumping and countervailing duty law as applied to Canada, for example, was the major difficulty in reaching agreement in the Canada-United States Free-Trade Agreement. The Canadians insisted on establishing a binational panel to review issues related to these laws before an agreement could be reached. With passage of the omnibus trade bill, damaging protectionism would become embedded in U.S. trade law. Among the dangers are changes to the law designed to: (1) increase the number of cases brought against foreign competitors; (2) rearrange legal definitions and structures to increase the likelihood of finding injury or "unfairness" once a case is brought; and (3) increase the likelihood and magnitude of protection once a case is concluded. 151 The omnibus trade bill would remove Presidential judgment and discretion from the protection-granting process. Converting important portions of U.S. trade law to mechanical rules for bringing trade cases against foreign trade partners and eliminating case-by-case evaluation by the President would be a serious change in current practice. Table 4-3 summarizes the four main sections of current U.S. trade law. The origins of present provisions date back many years, and their forms often represent decades of experience. Adjustments to the statutes, the most recent in 1984, frequently have been made to enhance industry access to protection under the various sections. The changes recently suggested, however, represent a sharp break from the past; they would throw out the wisdom that has been crafted into the statutes over time and replace it with untried and potentially dangerous alternatives. TABLE 4-3.—Principal U.S. Trade Law Provisions Statute Focus Response Criteria for action Duties, quotas, tariffrate quotas, orderly marketing arrangements, adjustment assistance Responsibility President (ITC recommendation) Section 201: Fair Trade (Escape Clause) Increasing imports Increasing imports are substantial cause of injury Section 301: Unfair Trade Foreign practices violating a trade agreement or injurious to U.S. trade Unjustifiable, Al! appropriate and unreasonable, or feasible action discriminatory practices, burdensome to U.S. commerce President (Interagency recommendation) Section 701: Subsidized Imports Manufacturing, production, or export subsidies Material injury or threat of material injury Duties ITC—Injury determination Commerce—Subsidy determination Section 731: Dumped Imports Imports sold below cost of production or below foreign market price Material injury or threat of material injury Duties ITC—Injury determination Commerce—pumping determination Note.—Origin of current provisions: Tariff Act of 1930 (Smoot-Hawley), as amended; Trade Act of 1974, as amended; Trade Agreements Act of 1979, as amended; Trade and Tariff Act of 1984. Source: Council of Economic Advisers. Section 20L The escape clause provisions of current U.S. trade law provide assistance to industries injured as a result of an increase in fairly traded imports. The law is not designed to provide permanent protection, but to aid workers and firms temporarily as they adjust to increased imports. The petitioner submits its case to the U.S. International Trade Commission, which then undertakes an investigation, including public hearings, to determine if the growth in imports is a substantial cause of serious injury. If the U.S. International Trade Commission finds affirmatively and recommends that import relief be granted, the President must decide what method and amount of relief he will provide, including possible adjustment assistance. 152 Granting relief inevitably burdens other parts of the U.S. economy. Therefore, in his decision, the President is required to consider whether such relief is in the overall national economic interest. Relevant considerations include the impact of relief on industries and firms facing higher prices for their inputs, the effect of the relief on other U.S. international interests, the probability that the relief will be effective in promoting adjustment, and the costs imposed on taxpayers, consumers, workers, communities, and other "innocent" parties. In other words, a favorable recommendation by the U.S. International Trade Commission does not and should not lead automatically to protection being granted. Changes proposed in the trade bill would narrow the definition of domestic industry used in Section 201 cases to cover only the domestic portion of production, only that subset of the industry which produces the like or competitive article causing the damage, and/or only the geographic area where the imports are concentrated. Narrowing the definition of domestic industry, of course, means that an injury finding would be easier, since non-injured parts of the industry would be removed from consideration. Another change would alter the procedures for recommending protection once injury is found. The proposal would change the law to say that only those commission members who voted affirmatively (found injury) in the review would be eligible to vote on recommendations about relief. Without the moderating voice of the minority dissenters who failed to find that the foreign fairly traded goods injured the domestic industry, more protection is likely to be granted. When a Section 201 case reaches the President, proposed changes in the Senate version would effectively require the President to accept the recommendation for protection, or else, in the House version, he would be removed from the process altogether. In the House version the President's authority would be given to the United States Trade Representative (USTR). In the Senate bill the exceptions to granting protection would be rigidly curtailed. The President would be required to impose protection unless he certifies that protection endangers national security, disproportionately burdens agriculture, results in a net U.S. job loss, causes serious injury to a downstream industry, or burdens the poor disproportionately. The burden of proof would be changed, too. Protection would be imposed unless the President takes action to prevent it. With fewer reasons why protection could be rejected, and with overall national economic interest not among them, the probability of protection would be increased substantially. Antidumping and Countervailing Duty Law. In the United States, as in GATT, dumping is considered unlawful when it injures domestic, 153 import-competing industries. Dumping is deemed to occur when a product is sold in the United States at less than "fair value," that is, at a price lower than it is sold in the selling country's home market, or below its cost of production. Companies might engage in dumping because they maintain high prices in their less competitive home market, or because they lower export prices in hopes of capturing foreign market share. Furthermore, because exchange rates vary over time, firms may choose to hold dollar prices constant to retain export market shares and let profit margins in their domestic currency change. Section 731 of the TarifF Act of 1930, as amended, directs the Department of Commerce to examine claims of dumping to determine whether imports are being sold at less than fair value. If the Department rules in the affirmative, the U.S. International Trade Commission then determines whether a U.S. industry has suffered material injury or the threat of material injury as a result of the specified imports. Countervailing duty law is intended to offset any unfair advantages foreign producers might enjoy as a result of government production or export subsidies. In Section 701 of the Tariff Act of 1930, as amended, the Department of Commerce determines whether the specified imports have received foreign government subsidies. If the Department finds in the affirmative, the U.S. International Trade Commission determines whether a domestic import-competing industry has suffered material injury or the threat of material injury as a result of the subsidized imports. If the International Trade Commission rules in the affirmative, countervailing duties are assessed on the offending products. There are legitimate reasons for opposing dumping and subsidies. However, improper use of antidumping and countervailing duty law also can be damaging to the country imposing it. Dumping and subsidies are, in and of themselves, beneficial to the importing country (and are costly to the exporting country), because the buyers of the product obtain their goods more cheaply (at the expense of the selling company or country). Subsidies and dumping are harmful to the importing country as a whole if the lower prices drive competitors out of existence (as in predatory pricing) or cause unnecessary adjustment costs to the domestic industry and labor (as in foreign business cycle dumping), and prices of products sold by foreign suppliers subsequently are raised above what they would have been. The threat of ultimately higher prices, burdensome and unnecessary adjustment costs, and reduced competition is the fundamental reason for opposing dumping and subsidies. But the remedy for dumping also raises domestic prices by imposing duties. If abused, 154 duties have the effect of reducing competition from foreigners in the domestic market as well as harming domestic buyers of the product through higher prices. Thus care must be taken to ensure that misuse of antidumping and countervailing duty law does not make the cure worse than the disease. The interests of competition and the benefits to consumers and domestic producers, as well as the interests of the import-competing industry, all must be considered. Because current law already offers adequate protection from harmful dumping and subsidies, changes to expand the use of antidumping duties would be protectionist. For example, in some cases dumping margins are extremely difficult to establish clearly, since the foreign country may not be selling the exported good in its home market, legitimate related costs of selling may be higher in the foreign market, and the costs of foreign production may be difficult to ascertain. Under current law, when a product's fair value is calculated, it is assumed that exporters must sell at a price high enough to provide an 8 percent profit margin, even though the before-tax average rate of profit on sales reported in 1986 for manufacturing, wholesale, and retail trade in the United States was less than 5 percent. Trade bill proposals for antidumping and countervailing duties would move the law closer to a mechanism for granting protection independent of a legitimate threat to the domestic economy. One proposed change to U.S. antidumping and countervailing duty law would require antidumping cases against products which are not dumped themselves, but which incorporate inputs alleged to have been purchased by the manufacturer at a price below fair value. The amendment proposed in reaction to this newly defined "input dumping" is protectionist and GATT-illegal, and it makes the law less administrable because the foreign producer may not know if he is purchasing dumped inputs or what their fair value is supposed to be. The effect of the proposal is to expand the range of activities against which protection can be offered and encourage the initiation of cases. Proposals to increase the likelihood of protection once a case is brought would alter the way dumping margins and subsidies are computed. One which would harm American subsidiaries of foreign firms would change the way indirect selling expenses are treated in determining foreign market value for transactions between related parties. The proposal would require that the administering authority not deduct "indirect selling expenses from the foreign market value in order to offset expenses deducted from an exporter's sale price." For example, firm XYZ-Europe produces a product at a cost of $100. 155 Its selling expenses in Europe are $20 and its profit margin is $5. The product, therefore, sells for $125 per unit. Firm XYZ-America, the subsidiary, sells the same product in the United States for $125 per unit. According to the new proposal, the product would have a dumping margin of 25 percent. The Department of Commerce would be required to deduct U.S. selling expenses and profit on sales as not part of the product cost. In America, the product cost would be $100, while in Europe the product cost would be $125. Thus would come a charge of dumping, whereas a proper calculation would find none. Historically, the definition of subsidies has been based on quantifiables such as government provision of capital, loans or loan guarantees on better than commercial terms, provision of goods or services at preferential rates, forgiveness of debts, and contributions toward manufacturing expenses. In subsidy cases the Department of Commerce has uniformly held that generally available benefits, applicable to all companies and industries within an economy, are not countervailable subsidies. This position conforms with GATT interpretations. The trade bill would define a subsidy to include actually conferred benefits which bestow a "competitive advantage" on a class of beneficiaries, regardless of the number of firms or industries receiving the advantage. Expanding the definition, of course, widens the class of actions which could be found countervailable. Applying such a definition to the United States, for example, one might ask whether national weather forecasts would be considered subsidies to agriculture, since the forecasts create greater competitive advantage for U.S. agricultural beneficiaries. The subjectivity of such a definition is dangerous in its possibilities for protectionist abuse and creates unfair uncertainty for trading partners about its application. Section 30L Section 301 of the Trade Act of 1974, as amended, provides the President with extremely wide discretionary authority to act against the unfair trade practices of U.S. trade partners. This authority can be used to enforce the rights of the United States under a trade agreement, to respond to a foreign practice that has the effect of denying benefits to the United States under a trade agreement, or to eliminate any foreign practice that is unjustifiable, unreasonable, or discriminatory and which burdens or restricts U.S. commerce. "Unjustifiable" is usually taken to mean any act, policy, or practice in violation of, or inconsistent with, the international legal rights of the United States. "Unreasonable" is taken to mean unfair and inequitable, while "discriminatory" typically means acts, policies, or practices which deny national or most-favored-nation treatment to U.S. goods, services, or investments. 156 Under Section 301 the President can take all appropriate and feasible actions within his power to enforce U.S. rights to obtain the elimination of the objectionable act, policy, or practice. The response can be on a nondiscriminatory basis or solely against the guilty trade partner or party. It can be taken without regard to whether the goods or sector employed were involved in the act, policy, or practice identified as the original cause of the action. Among the responses, the President may suspend or withdraw benefits of trade agreement concessions or impose duties on goods or services as he deems appropriate. The President can act in response to petitions filed by private parties or on his own initiative. Investigations are administered by the Office of the U.S. Trade Representative in cooperation with other U.S. Government agencies. USTR negotiates with the foreign government, resolves the dispute if possible, and recommends actions to the President after interagency consultation. The Section 301 statute has shown itself to be effective when used in a judicious and discerning manner. This Administration has been more vigorous in its active use of Section 301 than any other, increasing the yearly caseload by more than 50 percent and, for the first time, initiating at the President's request a number of cases such as the Japanese tobacco products case. But the mere act of instigating a Section 301 case does not magically ensure a solution to the problem at hand. While many Section 301 cases have been successful, others resulted in long and inconclusive negotiations, or only modest gains relative to the effort expended. In a sense, cases that end in retaliation or counterretaliation, as some have, represent failures of policy and diplomacy. Because the Senate trade bill mandates mechanical retaliation against unjustifiable foreign trade practices without regard to whether retaliation is in the national economic interest, or without exercise of Presidential discretion, long-run gains to the United States could be sacrificed. More cases would be brought, but this would be less desirable than if the cases were brought on the basis of discretion. The trade bill also requires retaliation against countries deemed deficient in their provision of intellectual property rights, and against countries which do not give reciprocal treatment in the telecommunications area. Since the United States has the most open telecommunications market in the world, virtually every country could be covered, even countries which in segments of the market are as free as the United States was only some 10 or 15 years ago before the breakup of the national telephone system. Schemes for Deficit Reduction by Threats of Trade Sanctions. The trade bill would require retaliation against countries which are found to have "excessive and unwarranted" trade surpluses with the United 157 States. The term "excessive" is defined according to a formula, and "unwarranted" means that USTR has found the country to have a pattern of unfair trade practices that have an adverse effect on U.S. commerce and contribute to the trade surplus of the country. The provision would allow 6 months to reach an agreement to improve the bilateral trade balance by 10 percent annually, or retaliation is mandated. It does not specify what would be done to reinstate free trade and reduce international tension after the United States has branded one of its trading partners as an "unfair trader" and imposed a retaliatory set of tariffs. Apart from a misplaced faith in negotiations as the method for reducing the U.S. trade imbalance, belief that bilateral trade balances should be required to stay within some fixed range exhibits a certain amount of confusion over the nature of international trade. Consider the simplest possible example of three countries A, B, and C, each of which produces a single good a, b, and c. Each country can make use of only two of the goods: country A trades some of its a to B, using the revenues to buy c from C; B trades some of its b to C, using the revenues to buy a from A; and similarly for country C. Each country has balanced trade, although no pair of countries has bilaterally balanced trade. Forcing bilateral balance not only would severely restrict trade, but in this case it also would shut down trade altogether. Situations similar to this example are not difficult to find. For example, in 1986 the United States had a trade surplus with respect to Australia (primarily selling machinery and transport equipment), Australia had a trade surplus with Japan (selling primarily food and raw materials), and Japan had a trade surplus with the United States (selling primarily motor vehicles and sound and image reproduction equipment). Although the stylized example is simplistic, it shows how simplistic it is to believe that trade sanctions should be used to keep bilateral trade balances within a mathematical norm. Retaliations also would damage U.S. international relations. Finally, limitations on bilateral trade balances may not be in U.S. interests in the 1990s when America may need trade surpluses to pay back some of its borrowing of the 1980s. The Climate for Protection and Removal of Presidential Discretion. T h e House bill would transfer the President's authority under Sections 201 and 301 (as well as under other sections not discussed here, such as Sections 337 and 406) to USTR, and both the House and Senate bills would transfer to USTR the President's authority to determine whether foreign government practices are unfair under Section 301. In combination with the mandating of Section 301 cases, these transfers of authority would represent a major change in the operation of U.S. law. 158 Since protection benefits the few at the expense of the many, the President, who speaks for the Nation, usually has been less willing to institute protection than those who speak for selected interests. By design, the executive branch as a whole is also broader in its perspective than its component agencies. The Departments of Agriculture, Commerce, and Labor, for example, have missions to speak for important components of the population, just as members of the Congress represent different regions. The President, however, can take the entire country and economy into consideration, as well as foreign policy objectives, through the interagency process which advises the President from many sources. The need for advocating and balancing different interests within the American economic structure was recognized by the founding fathers. U.S. trade law similarly should seek to preserve necessary checks and balances. Thus Presidential discretion should not be removed in Section 201 and 301 cases, as has been suggested, since no single agency has as broad a perspective as the President. The proposed procedural changes in U.S. trade law and removal of the President from his traditional role in the process are a sad, but perhaps expected, consequence of the growing demand for protection in the United States. Chart 4-4 compares the amount of protection granted in the United States under Section 201, dealing with fair trade where the President has discretion, and interventions under Sections 701 and 731, dealing with unfair trade where he does not, in the periods 1975 to 1980 and 1981 to 1986. As shown, protection granted under Section 201 changed little, but the number of petitions resulting in interventions under Section 701 increased 335 percent, and the number resulting in interventions under Section 731 increased 258 percent. It is difficult to believe that the frequency of foreign subsidies during this Administration are more than three and one-third times what they were previously, or that dumping has risen to more than two and one-half times its previous level (especially since the strong dollar during the latter period made selling to the United States easier for foreigners rather than harder). More likely, the higher intervention rate derives from changes made in U.S. trade law in 1979, the large trade deficit, and the consequent increased demand for protection inside this country. The net effect of the definitional changes, the procedural changes, the loss of checks and balances, and the removal of Presidential discretion would be to further increase the amount of protection afforded domestic import-competing producers. Since passage of the Trade Act of 1974, the President has found that it was in the national economic interest to grant protection in response to 46 percent of the Section 201 U.S. International Trade Commission recommendations. 159 Chart 4-4 Trade Interventions Cases per Year 20 18 — I I 1975 80 i—i i » / 3-ou Unfair Trade j N o p r e S j,j e n t j a | Discretion) — H 1981-86 16 14 12 - - ••• .."y.V";V 10 - . '.•• '•', — — '.•.;-::i.' •• " ••_• \ 8 6 -. : • ' • : • ' • ; : .'••'.:'• 4 - rair i raue (P«jsidential Discretion) •.-.•• ••'.•'• ; • ' ' • . — ! • • . - ' , ' •• • ' • • ' ' • ' "'•"••' '.'•.• 2 "... 0 Section 201 ,-•_ •. • Section 701 • !; 'Mi "';••• Section 731 Source: Council of Economic Advisers, based on data from Office of U.S. Trade Representative. Thus, in the absence of Presidential participation, protection under Section 201 could more than double if trade bill proposals became law. The figure would be substantially higher if curtailing the President's role also created an incentive for industries to file more cases. Mandating the initiation of cases under Section 301 would increase their number while reducing the success ratio. Enlargements of the definition of actionable practices and altered procedures for deciding cases would make Sections 701 and 731 affirmative findings and the subsequent market interventions easier. The Pork Barrel. In addition to the procedural issues, there are many <( pork barrel" amendments in the two trade bills. The Senate version of the trade bill contains a provision establishing a lamb import quota fashioned after the protectionist U.S. meat import law. This provision would place an upper bound on the amount of lamb that could enter the United States each year. Such a restriction is contrary to U.S. obligations under GATT. This trade barrier, like its sister meat import quota, would raise the cost of meat in the United States. Protection on meat is equivalent to voting a new tax on product users, and handing part of it over to domestic sellers. Part of the 160 users' losses (in the form of higher prices paid) would go to domestic producers, but another part (resulting from the cessation of consumer purchases because of higher prices) would end up in no one's hands and thus be wasted. The legislation also contains protectionist provisions for steel, adding additional products to those currently being protected by voluntary restraint agreements with foreign sellers, a form of quota. Users of wire fence panels, wire fabric, and reinforcing mesh would have to pay higher prices because of these imposed barriers to trade. Since another provision would include downstream steel products (those products incorporating steel components) in the quota of the country where the basic steel input was melted and poured, these products also would cost more to Americans. The bill also calls for the amount of U.S. coal purchased by Japan to be "taken into consideration" in any agreement with Japan regarding imports of steel. That is, U.S. willingness to buy Japanese steel would be linked to Japanese willingness to buy U.S. coal, thus distorting the market. In addition to the above examples, the trade bills also contain provisions that would provide payments to special interest groups. One such provision is the proposed exception to the requirement that the tobacco program be operated at no net cost to the U.S. taxpayer for government-assisted exports. Pressure to use the public treasury to subsidize tobacco exports could increase Commodity Credit Corporation outlays by many millions of dollars. Another handout is the sugar duty drawback provision. It is a usual practice in international trade for a firm that imports a product for domestic processing and then exports the good again to receive a refund or "drawback" of the duty paid upon reexport. The drawback normally is applied within a reasonably short period of time after actual import and reexport. The trade bill would extend the drawback period for sugar retroactively to allow drawbacks for exports as late as October 2, 1991, claimed against imports as early as October 30, 1977. This means that future exports (which need not have been imported themselves, and which may have nothing to do with earlier sugar which was not reexported because it was more profitable to sell domestically) would receive duty drawbacks. In effect, the law arranges to give money from the public treasury to refiners of sugar in the United States. Estimates place the transfer at more than $265 million, and possibly higher than $700 million. Because the U.S. Customs Service has not been able to verify potential claims, the loss to the treasury could be even higher. 161 CONCLUSION In the area of trade policy, the United States today faces a choice. It can continue its commitment to foster an environment of trade liberalization, or it can turn to protectionism. The choice will be determined by how the Nation shapes domestic law and how it deals with its trade partners in the international forum, rather than by public statements of intentions. U.S. negotiators have made substantial and historic progress this past year in forging agreements with other countries which free major international markets from trade restrictions. Pacts with Canada and Mexico, and U.S. participation in the ongoing Uruguay Round of GATT negotiations, offer real hope for the future of American trade relations. The U.S. GATT proposal for major reform of agricultural policies that distort international trade offers the prospect for progress in that important sector. At the same time, spurred by its unwillingness to reduce Federal Government spending and the desire, nevertheless, to appear responsive to the large American trade deficit, many in the Congress appear ready to reconfigure U.S. trade law. Due regard for the macroeconomic and Federal deficit-related causes of the trade deficit suggests, however, that the proposed legislation is unlikely to have any substantive effect on the trade balance. A reasoned review of the various proposed trade provisions suggests that they are protectionist in nature, violate our international obligations under GATT, increase costs to consumers and business purchasers of imported inputs, and distort existing U.S. trade law. The recent textile and apparel legislation also would be damaging and costly. Because protection favors some groups at the expense of the rest of the country, there always will be pressures from within the United States to provide greater protection. The same pressures exist abroad. But now, as bilateral and multilateral negotiations show signs of success, it is time to resist pressures for protection and international confrontation. The choice is between contraction or further liberalization. Contraction points down the road of economic stagnation, while liberalization will result in continued growth, strengthening the groundwork for international trade well into the 21st century. 162 CHAPTER 5 Knowledge, Markets, and Economic Progress THE ECONOMY OF THE UNITED STATES has generated rising standards of living for most of its history. During this century, real output increased twelvefold, while population tripled, approximately quadrupling the goods and services available to the average American. Output per hour of work doubled in the first half of the century and has since doubled again. This enormous and sustained gain in productivity has led to rapid increases in living standards. Real per capita income rose at a 1.7 percent annual rate in the first half of the century and at a 2.0 percent annual rate in the postwar period. Long-term economic progress is assessed not only by output and productivity, but also in terms of the means and choices that allow people to enjoy full, healthy, and satisfying lives. Gains in real per capita income improve well-being, as reflected in other indicators. The infant mortality rate in the United States declined from roughly 150 per thousand in 1900 to 11 per thousand in 1987. Life expectancy increased from 47 years in 1900 to 75 years for persons born in 1987. Retirement from work, a rare phenomenon a century ago and associated primarily with ill health, is now the norm, thanks to longer lifespans and higher incomes. Steadily rising income and its broader benefits are not inevitable. In many societies throughout much of history, living standards rose only slowly and at times even declined. Indeed, the postwar period may be unique in terms of both the high overall rate of increase in real per capita income in the world and the widespread nature of the gains. In a world linked by trade, the benefits of economic progress are shared widely. Increased productivity and growth in one country enhance prospects for growth in other countries. This chapter examines the factors that underlie increases in living standards over the long term and considers the role of government in supporting and sustaining the determinants of economic progress. Business cycle fluctuations aside, the output available for current consumption, or for investment to augment future consumption, is determined by (1) the quantity and quality of labor, capital, and natural resources; (2) the technology used in production processes; and 163 (3) the mechanisms that allocate inputs in production processes and distribute goods and services to final users. Government policies enhance the rise in living standards when they encourage increases in supplies of factors of production, support the advance and application of knowledge that increases productive efficiency, and improve allocative mechanisms. In the United States, government policies have played an important positive role in supporting increased standards of living. Constitutional and common law traditions that protect individual rights and private property have provided the foundation for freedom and economic progress. Resulting improvements in well-being continue to attract those in search of better opportunities. Individual efforts to earn maximum returns in a competitive environment promote effective allocation of resources. Individuals have powerful incentives to increase supplies of productive resources, especially their own knowledge and skills (human capital), and to develop new products and technologies that promise economic rewards. In addition, government has supported public education, which has played a critical role in increasing the supply of human capital, and has financed basic research that contributes to economic advance but may generate little private reward. Recent actions in the United States to reduce high marginal tax rates and to remove burdensome regulations, both of which impair economic efficiency and diminish incentives for growth, have strengthened prospects for further improvements in living standards. These policies also have set an example for growth-oriented policies in other countries. Expansion of the physical capital stock is a major contributor to economic progress and productivity. During the postwar years physical capital accounted for approximately one-third of output growth and 40 percent of growth in output per hour of work. Most measures of investment include only physical capital. It is estimated, however, that human capital accounts for three-quarters of the Nation's total stock of productive capital. Thus much investment is not identified as such in standard accounts of national income. Recognizing the importance of knowledge and effective resource allocation to economic progress, studies of the sources of growth have come to include contributions of human capital, technical innovations, and shifts in productive resources. In the past in the United States, and still in some very poor countries, investments in human capital that led to better diets and improved health increased human capacity for physical labor. Today, the forms of human capital most important for progress are those that expand skill and knowledge. Investment in education, training, and work experience increases productivity and earnings. Individuals, 164 families, and businesses gain directly, and society at large benefits indirectly. The widely shared benefits of investment in human capital, and problems in borrowing to finance it, suggest that government should encourage such investment. The strong incentives of individuals and families to invest in the most useful forms of human capital also suggest the value of individual choice and market allocation mechanisms. Investments in human capital, and the government's role in promoting them, are the main issues discussed in the first major section of this chapter. Advances in scientific and technical knowledge and their application to the development of new products, services, and technologies are widely recognized as important for economic progress. Without definition and enforcement of property rights that allow discoverers of valuable new knowledge to reap at least part of the benefits, incentives for these socially valuable activities would be inadequate. Governmental support also is needed for advances in knowledge in areas that are public by their nature, such as national security. As with investment in human capital, economic incentives are critical in allocating resources to research and development. These are the main issues discussed in the second major section of this chapter. Finally, one of the key advantages of a competitive market system is its ability to respond quickly and appropriately to the rapidly changing conditions that accompany high rates of economic progress. Interventions that slow necessary adjustments in a dynamic economy are impediments to economic growth. Governmentally imposed barriers and distortions that diminish incentives for work, investment, and innovation, or that divert resources from their most productive uses, are further barriers to progress. In particular, growth often requires reallocations of labor. Policies intended to reduce adjustment costs and protect existing jobs often can reduce employment and stifle growth. The harmful effects of such policies and the benefits of a more flexible, market-oriented approach to economic adjustment are the main subject of the third major section of this chapter. HUMAN CAPITAL The United States devoted roughly $500 billion in 1987 to gross investment in formal education. Another $100 billion was spent for worker training, not including informal efforts to improve skills and performance on the job. Investment in human capital is thus more than one-third larger than the approximately $440 billion spent last year for gross private nonresidential investment in physical capital. 165 Human capital investment has contributed substantially to the productive capacity of the labor force and the growth of the U.S. economy. Recent studies indicate that, in the postwar period, increases in human capital have contributed 10 to 20 percent of real output growth and a similar percentage of the gains in output per hour of work. Over the last 40 years, the education and skill of the U.S. labor force has improved continuously but unevenly. An index of human capital, primarily representing schooling and work experience, developed by the Bureau of Labor Statistics (BLS), grew at an average rate of about 0.25 percent per year over the postwar period. During the mid-1970s, as many new workers entered the labor force, the average human capital per worker stopped increasing. In contrast, during the 1980s this index has grown by almost 0.5 percent per year. INVESTMENTS IN EDUCATION, TRAINING, AND WORK EXPERIENCE Aggregate rates of human capital investment are affected by population growth and the age distribution of the population. In the United States, both the population and the labor force have grown steadily. Better health and increased longevity have increased potential years of working life. Demographic changes, such as the aging of the baby-boom generation, and labor market trends, such as increased employment of women outside the home and earlier retirement, also have affected patterns of schooling, training, and work experience. Education Direct annual expenditures for schooling, public and private, are currently about $310 billion. About 60 percent, or $185 billion, is spent on grade schools and high schools and the rest on post-secondary schooling, which includes vocational schools as well as colleges and universities. Expenditures for schooling have remained in the range of 6 to 7 percent of gross national product (GNP) for two decades, after having risen rapidly during the schooling of the babyboom generation. The number of students has declined from a peak of almost 61 million in the mid-1970s to just under 58 million in the mid-1980s. A large component of total investment in schooling at the higher levels, in addition to direct costs, is the forgone earnings of the students themselves. The time and effort devoted to study could otherwise be spent at work or leisure. The forgone earnings of students aged 16 and over are estimated to be about $200 billion per year, most of which is accounted for by post-secondary students. The share of total social costs of education attributable to the postponed earnings of students has increased in recent years, because a larger 166 proportion of schooling is for post-secondary students with higher potential wages. In the early 1970s about 15 percent of the student population was enrolled in post-secondary schools, compared with 23 percent today. Increases in years of schooling of the labor force are indicated in Chart 5-1. During the last 30 years the percent of the labor force not completing high school has fallen by more than half, while the percent having attended college has more than doubled. These trends have occurred primarily because retirees have had relatively little schooling. High school completion rates have been fairly stable for a decade at about 85 percent of persons 20 to 24 years old, and the proportion of persons 25 to 29 years old with 4 years or more of college has remained about 22 percent. Chart 5-1 Years of Schooling of the Labor Force Percent of civilian labor force 60 50 4 Years High School \ 40 ___- An ^X^ 30 Y College Less than 4 years High School 20 =~^r^_ _ "**•- — ----- 10 - 0 - I . . . . I 1960 . 1965 < . . I t i i 1970 t I . i . i 1975 I > i 1980 t < I i . 1985 Note.—Data are for March and relate to highest years of schooling attained. Source: Department of Labor. Data on hours of work by educational level and gender indicate that the amount of schooling has increased for both male and female workers, but more so for males. The BLS estimates that in 1948 twothirds of the hours worked by men, and more than half the hours worked by women, were accounted for by those with fewer than 12 years of schooling. These proportions have declined to 17 percent for men and 13 percent for women. In 1948 only about 12 percent of 167 total work hours were accounted for by those with more than 12 years of schooling, compared with more than 40 percent now. Currently, about 25 percent of work hours of men and 18 percent of work hours of women are performed by those with 16 or more years of schooling. Years of schooling and expenditures are inputs to the process of acquiring human capital; they do not measure learning. A variety of measures have documented the decline in the academic achievement of American students at every level during the 1960s and 1970s, with evidence of partial reversal of this trend in the 1980s. Some of the decline of Scholastic Aptitude Test (SAT) scores in the 1960s can be attributed to the increasing proportion of high school students taking the test. But in the 1970s the proportion taking the test declined while scores continued to fall; now the proportion of students taking the SAT is rising again, and scores are rising. Concerns about student achievement are due not only to evidence of academic declines, but also to indications that achievement has been low relative to perceived requirements for success in today's economy. Although basic literacy rates have increased steadily during this century, a number of surveys document low reading comprehension and other academic deficiencies among U.S. students compared with students in other countries. Young Americans score particularly poorly in science and mathematics. Yet evidence indicates that mastery of these subjects is useful in many occupations, not only in science and engineering. Not all of the benefits of education are reflected in increased productivity and earnings. Education may contribute to a person's wellbeing in other ways as well. For many people, learning is enjoyable. Formal education contributes to continued learning. Education also provides information and skills that encourage fuller appreciation and enjoyment of science, art, and culture, as well as effective participation in public affairs. Schooling contributes to more efficient household management, to better health and nutrition, and to the higher educational achievement and earnings of one's children. The clearest relationship between education and economic success is indicated by earnings patterns. Workers with more schooling consistently earn more. In 1986, for example, the median income of persons with only an elementary school education was about $9,000 per year, compared to high school graduates' median income of about $20,000. Persons with 4 or more years of college had median incomes of about $33,000. As Table 5-1 indicates, after declining in the 1970s, the relative incomes of those with more education increased in the 1980s. During this decade, incomes of those with fewer than 4 years of high school 168 have declined compared to high school graduates, while the relative incomes of college-trained workers have risen. Thus the returns to investments in schooling have increased. Gains have been especially pronounced for younger workers, who will continue to benefit from more schooling for many years. TABLE 5-1.—Relation of Income and Education, Selected Years, 1969-86 [Index, income of high school graduates = 1.00] Females Males Years 1-3 years high school 1-3 years college 4 years college1 1-3 years high school 1-3 years college 4 years college1 1.44 1969-71 0.89 1.16 1.39 0.84 1.17 1974-76 .87 1.09 1.28 .82 1.14 1.33 1979-81 .83 1.08 1.26 .82 1.14 1.30 1984-86 .81 1.12 1.37 .78 1.16 1.39 1 Excludes those with more than 4 years of college. Note.—Data are 3-year averages of indexes of median annual income for year-round, full-time workers, aged 25 and over. Source: Department of Commerce, Bureau of the Census. Changes in relative earnings are due to cyclical and demographic factors and to longer term economic changes. People with more schooling, for example, usually are more able to maintain employment and earnings during recessions. The relative earnings of college graduates declined during the 1970s as the highly schooled babyboom generation entered the labor market, but they rose recently as this group gained experience in the 1980s. Over the longer term, increased demand for technical and managerial skills may be expected to raise the future relative earnings of workers with more education. Earnings are higher for those with more years of schooling for reasons other than the productive value of education. Personal characteristics such as ability and effort, which contribute to success in both school and the workplace, account for some of the earnings differential. Higher earnings also are associated with factors such as parental income, gender, race, and geographic location. Research has confirmed, however, that schooling raises earnings even after accounting for the effects of these other measurable factors. Estimated real private rates of return for investments in schooling in the United States have been 10 to 13 percent for secondary schooling and 8 to 10 percent for higher education during the 1970s and early 1980s. These estimates may be biased upward, because they cannot fully adjust for workers' ability and effort. Recent increases in relative earnings for more educated workers, however, suggest that estimates based on data from the mid-1980s would show even higher rates of return. Studies during the last 30 years consistently have shown that rates of return on investments in education 169 have been comparable to those available on alternative long-term investments. A number of studies have shown that schooling increases earnings for managers and the self-employed, as well as for employees, and have suggested that the benefits of schooling are greater in more dynamic economic environments. More schooling for farmers, for example, increases the payoff from agricultural research, increases the rate of adoption of innovative technology, and reduces the lag between price changes and appropriate market responses. Returns to schooling are higher in industries with more technical progress and productivity growth. Workers with more schooling not only have higher earnings but also safer, more comfortable working conditions and lower rates of unemployment. The unemployment rate for workers with fewer than 4 years of high school is double that for workers with 4 years of high school. Workers with a college education had unemployment rates of less than 4 percent throughout the last 15 years, and they experienced smaller cyclical swings in unemployment than those with less schooling. But increased schooling of the labor force has not resulted in lower overall unemployment rates; unemployment rates of all schooling groups have risen over the last 20 years (Chapter 2). Training and Experience The human capital that workers accumulate while employed includes formal training and learning-by-doing. Post-school training is pervasive in the United States. About 40 percent of workers report having taken training to improve their job skills. Workers with more years of schooling also acquire more training on the job. While much on-the-job training is of general value, some has value only in a specific firm. The worker bears the cost of general training, usually in the form of lower wages, because its value will be fully reflected in wage growth, whether the worker stays at the current firm or goes to another. The cost of firm-specific human capital investment is borne jointly by the worker and the firm, and the benefits of future productivity improvements are shared. Thus firm-specific investments encourage both the worker and the firm to maintain the employment relationship. Conversely, when job tenure is expected to be long, both the worker and the firm have more incentive to invest jointly in training. The investment in formal, employer-sponsored training has been estimated to be about $60 billion per year and has been rising. About half this total reflects the wages and forgone output of employees receiving training. The $60 billion does not include the value of reduced wages that workers accept for jobs that offer training, nor 170 does it include the informal, everyday activities of workers and firms to improve productivity. In addition to schooling and training, the work experience of the labor force is an important source of productive human capital. Unpublished estimates by the BLS indicate an increase in the approximate years of work experience for private business workers from 17.4 years in 1950 to 18.1 years in 1964. Since 1964 average experience has fallen by more than 15 percent to 15.3 years in the mid-1980s. For men, average work experience has fallen by about 10 percent since peaking in the late 1950s, and it has held steady at about 17.6 years in the 1980s. The average work experience of women rose by about 15 percent between 1950 and 1965, to 13.2 years. In the late 1960s and the 1970s, many young women entered the labor force, and average experience fell back to about 11.6 years, where it has remained since about 1980. Four major demographic and labor market factors have contributed to these changes in work experience. First, more years in school have meant that workers enter the labor force at a later age. Second, with the labor market entry of the baby-boom generation during the 1970s, the age distribution of the labor force has shifted dramatically toward younger workers. Third, men are leaving the labor force at earlier ages than in the past. In 1948 about half the men 65 and over and 90 percent of those 55 to 64 were in the labor force. In the 1980s less than 20 percent of men 65 and over and about 70 percent of those 55 to 64 are labor force participants. Fourth, the share of women in the labor force has risen from less than 30 percent in 1948 to 45 percent today, and women generally have had less work experience than men. Wages tend to rise with age through most of work life. Chart 5-2 shows that older workers have higher earnings and also that earnings rise faster and peak later for those with more schooling. This increase in wages over work life has become more pronounced during the 1980s. Younger workers are paid less, because they devote more time and effort to on-the-job learning. Their wages also rise as training and experience increase productivity. Some of the wage gains associated with experience are due to workers' finding employment that better matches their skills and interests. Younger workers change jobs frequently while they learn about the labor market, occupations, and particular jobs, and while employers learn about the capabilities of particular workers. Job or occupation change is part of a search process, and when a better job match is found, earnings and profits improve. Work experience and training of the U.S. labor force will rise for the next two decades as a result of the large group of workers now 171 Chart 5-2 Earnings by Age and Education Thousands of dollars 50 4 or More Years College 40 30 4 Years High School 1-3 Years High School 20 10 - L _L _L 25-29 30-34 35-39 _L 40-44 Age group _L J_ 45-49 50-54 55-59 Note. Data are mean annual earnings of male year-round full-time workers, average for 1984-85 in 1985 dollars. Source: Department of Commerce. gaining experience and the smaller group of young workers entering the labor market. These demographic factors should contribute to reduced unemployment and improved productivity growth. RATIONALES FOR GOVERNMENT SUPPORT Human capital investment contributes to the well-being of individuals and to the long-term performance of the economy. But economic returns alone do not imply that the government should regulate or subsidize investment. Government involvement in human capital formation is predicated on three premises. First, there are major social benefits to increased levels of education that are not fully realized in the returns to individuals. Second, government support of human capital investment widens economic opportunity. Third, there are particular difficulties in private financing of investment in schooling. Social, political, and economic interaction is facilitated by a common language, basic skills, and shared knowledge. A broad base of educated individuals allows for a more efficient economy and a more viable democratic system. The effectiveness of the military, 172 moreover, is enhanced by a higher level of general knowledge and skills in the population, especially as national security relies increasingly on complex technology. These broad societal benefits of education provide one rationale for government funding and regulation of primary and secondary schooling. Giving every child the opportunity for an education is considered necessary for a democratic society. Human capital contributes to individual earnings, and public support for schooling has been used to widen economic opportunities. Government support for human capital investment is also one way to help reduce dependence on other transfer programs. Most Federal funds devoted to education and public training programs are directed toward people with low incomes. Private financing of human capital investment is relatively difficult, because most such investments are made by the young, and human capital itself cannot serve as collateral. For other investment opportunities, one can usually borrow funds by demonstrating profitability and pledging the investment itself as collateral, but for investments in schooling it is difficult for a lender to enforce repayment. Thus schooling generally is financed by the assets or income of parents or other family members. Parents commonly borrow to finance investments in their children's human capital. Adult students use their own resources, and if continued employment is assured, they may be able to obtain assistance from their employers. For individuals with insufficient access to private resources, there may be grounds for public support to help secure financing for education. Public support for worker training generally is not provided, because training is funded jointly by the worker receiving lower wages and by the firm paying direct costs and allowing work time to be used for learning. Workers and firms realize the rewards from investments in job training through increased future wages and productivity. POLICY ISSUES Public policy affects all human capital investment, directly through government spending or indirectly through taxation and regulation. Education is the third largest object of government spending, after national defense and social security. State and local governments provide most of the public spending for education. The Federal Government pays about 6 percent of the approximately $185 billion annual direct cost of primary and secondary education, and about 12 percent of the approximately $125 billion in direct costs for higher education. Federal spending for training programs is about $5 billion. The Federal Government also provides training for its own em- 173 ployees, spending close to $20 billion each year for military training alone. Government operation of schools is not a necessary consequence of government support of education. At the primary and secondary levels, State and local governments both fund and manage school systems. In post-secondary education almost all Federal support is provided to the student directly, allowing choice among public and private institutions. State government support of higher education also allows wider individual choice than at the lower levels. Primary and Secondary Education Poor achievement levels in primary and secondary schools have neither obvious causes nor simple remedies. Schools and teachers differ in their effectiveness, but there is no consensus on the underlying reasons. Low quality of teachers, low spending on teachers relative to school administration, curricula that fail to stress basic academic subjects, inadequate school discipline, poor early childhood preparation, and home environments that fail to encourage learning are among the suggested explanations. Increased spending has not been effective in improving student performance. Public school expenditures per student rose steadily and most rapidly as student achievement was declining. In the early 1980s real spending per student was more than double that in 1960. Student-teacher ratios have fallen and the education and experience of teachers have increased, but none of these changes has been linked statistically with better student performance. State and local school districts have introduced a number of reforms to promote quality. Some school systems have required students to meet minimum standards, and some have rewarded teachers for gains in student achievement. Many States have instituted statewide testing for high school graduation, and some withhold funds or exercise other sanctions when local school districts have poor records of academic progress. Several States are using alternative certification to attract new teachers who are proficient in their subject but lack the required coursework in teacher education. Such flexible certification gives school systems wider latitude in hiring teachers and removes barriers that prevent skilled people from entering teaching. A dominant role for State and local governments is consistent with principles of federalism. Traditionally, Federal spending for primary and secondary schooling has been quite limited and directed toward the disadvantaged. Close to $4 billion per year is provided to State and local school districts to serve low-income students. Other major Federal programs support vocational, bilingual, and special education. 174 The Federal Government also supports research and the dissemination of information on student achievement in order to encourage choice and accountability in the Nation's schools. The ability of families to choose the schools their children attend is a critical factor in improving the quality of education. This Administration has proposed legislation and supported reforms that would encourage wider opportunities for parental choice and greater accountability in education assistance programs. More scope for choice would provide incentives for schools to improve. In school systems that are accountable for the quality of education, special programs and good reputations attract students. Schools that perform poorly face declining enrollments and reduced budgets. Magnet schools provide an alternative that incorporates parental choice, allowing parents and students to select among particular schools in a public school district. One direct way for government to encourage schools to respond to demand for better education would be to provide financial support directly to families through vouchers. Families could use the vouchers at any school that meets basic standards. Voucher-type programs currently are used in Federal food and housing assistance programs, medicare, and in higher education. The GI Bill, which is an example of a successful Federal educational voucher program, has helped many veterans complete schooling, receive vocational training, and increase their earnings capacities. Competition among schools for students and support provides market incentives lacking in the current system of government-operated schools. Even partial voucher systems allowing choice among public schools would offer substantially increased competition and accountability, thereby promoting educational achievement. Post-Secondary Education Many U.S. institutions of higher education are operated by State and local governments. These institutions provide subsidies to local residents and others in the form of low tuition. Private operation and funding, however, play a much larger role than in primary and secondary schooling. Private schools account for close to one-third of total college and university expenditures, and proprietary schools are a major source of formal occupational education. State systems allow a large degree of student choice. Thus the higher education system in the United States, in contrast to primary and secondary education, has allowed students and their families some choice among institutions, thereby encouraging higher quality. One measure of the success of this approach is the large and growing number of students from other nations that choose to study in this country. Consistent with the policy emphasis on choice and accountability, the major Federal programs in post-secondary education provide aid 175 directly to students. In the last decade the number of student aid grants has increased by more than 65 percent. The largest Federal expenditure for support of post-secondary education is in the form of grants to low-income students. Close to $4 billion in such grants was provided in 1987. The Guaranteed Student Loan Program makes funds available by providing government guarantees to banks and other private lending sources. More than $9 billion annually is borrowed under this program. Students are responsible for repayment of principal and interest (after the period of schooling), but the Federal Government guarantees repayment if students fail to meet their obligations. These loans carry interest rates far below those that would be required without Federal backing. Other aid in the form of loans, work-study programs, and grants is provided to students through the educational institutions themselves. Student loan defaults cost about $1.5 billion in 1987. A large proportion of defaults are concentrated at relatively few schools. Student loan default rates exceed 50 percent at more than 500 schools, which make up about 7 percent of the post-secondary institutions that participate in loan programs. By more strongly encouraging the repayment of loans, the Federal Government can increase the amount available for investment in education. Sanctions now are applied to students, but incentives for schools to provide better monitoring and better education also should help encourage loan repayment. Worker Training Workers and firms invest in job training and retraining to obtain the future private returns that result from increased productivity. Many government policies influence investments in job training and experience. Direct government support of training programs is intended to raise the earnings capacity of the disadvantaged and to ease the adjustment of displaced workers to new jobs. During the last 25 years the Federal Government has spent more than $115 billion on training and related programs, including classroom training, training on the job, and job search assistance, but there is no consensus that these training programs have significantly increased the earnings of participants. Past evaluations have been inconclusive, partly because of methodological problems. Evidence suggests that training for the disadvantaged has improved the earnings of adult women, but it has had little, and perhaps even adverse, effect on the earnings of youths and adult males. This Administration has encouraged recent efforts to develop more effective training programs with designs that facilitate better evaluation. 176 Education in Science and Engineering Private and social returns to education and training are affected not only by the years of schooling but also by the student's field of study. Undergraduate specialization in engineering, for example, generally leads to high earnings. Because they can command high starting salaries, engineers are less likely to postpone labor market entry and forgo current earnings in order to pursue post-baccalaureate education. As a result, most Americans with the requisite abilities and interest do not pursue masters or doctoral training. Post-baccalaureate study in the sciences and engineering, however, is vital for research and innovation. A major factor in maintaining the high level of research and development (R&D) activity in the United States is the attraction of U.S. graduate programs for students and scientists from abroad, about half of whom remain to pursue careers in this country. Foreign students comprise a growing proportion of full-time graduate students in science and engineering, having risen from 17 percent of the total in 1977 to 27 percent in 1986. Most people who complete doctoral degrees in science and engineering pursue careers in research, for which much of the funding is provided by the Federal Government. This close link has encouraged Federal support for graduate studies and post-doctoral training in the sciences. The Federal Government provides fellowships and parttime employment for graduate students in federally funded research projects carried out under the supervision of faculty or other senior researchers. Some of the Federal support for post-baccalaureate training is similar to the joint funding of specific on-the-job training by firms and workers in the private sector. Since the Federal Government is a large consumer of R&D, it captures some of the benefits from training through a larger supply of scientists and engineers. Furthermore, R&D carried out in the private sector may have benefits that extend broadly through society. SCIENCE AND INNOVATION Research and development leads to scientific discoveries and new technologies that enhance economic progress. In the United States private and public expenditures for formal R&D have reached more than $120 billion per year. The contribution of this investment to the productivity of the economy and the quality of life is large and pervasive. Research and development usually is divided into three categories: basic research, which investigates scientific questions with no readily foreseeable applications; applied research, which is intended for application; and development, which aims to produce particular prod- 177 ucts or processes. Formal investments in knowledge are described largely in these terms, but the distinctions are somewhat arbitrary. Solving problems of development can shed light on basic scientific problems, and some firms undertake basic research in hopes of eventual commercial applications. In addition, many informal R&D efforts are not measured as R&D. Technological progress, which is at least partly a result of formal and informal R&D investments, has led to higher incomes, better working conditions, and a greater variety and abundance of products. Standard productivity measures, however, cannot capture many of the most visible improvements made possible by advances in science and technology. Much publicly supported R&D, for example, is devoted to public goods such as national defense and public health, the benefits of which are not measured as increased productivity. Even R&D that helps create better products and more efficient production processes provides benefits that are not easily measured, such as improvements in computers and calculators. EXPENDITURES AND RETURNS U.S. expenditures for R&D have increased considerably in real terms since World War II, as shown in Chart 5-3. Expenditures grew at about 9 percent per year from 1941 to 1967, when they abruptly leveled off. Since 1977, expenditures have been rising again with rapid growth of defense R&D, growth of privately sponsored industrial research, and restoration of government support for basic research. For the last 10 years, total real R&D expenditures have been growing at a rate of approximately 5 percent per year. Private Investment In 1987 approximately half of total national R&D expenditures were funded by private sources, up from about one-third in 1965. For the last 15 years private sources have provided more than twothirds of U.S. expenditures on industrially performed R&D. About three-quarters of funding for nondefense R&D is provided by private sources, and about 20 percent of funding for basic research is private. The emergence of the private sector as a major provider of R&D funding is one of the most important developments in science and technology in the last two decades. Private R&D has a strong relationship to economic growth. According to one study, from 1948 to 1985 private R&D investment accounted for an estimated 7 percent of growth in output per hour of work and about 13 percent of growth in productivity in the nonfarm business sector. Estimates of rates of return to private R&D vary considerably, but are consistently high. Privately funded basic research 178 Research and Development Expenditures Billions of 1 9 8 7 dollars 120 / 100 Total 80 - 60 Federal Government 40 ^ X/ 20 Private^ ^^z^^— 0 ff rT'"r~t>*T i 1941 1945 i 1 . i i i 1 i i i i 1i i i i 1 i i i i 1 i i i |*T i | i i | i i i i I i i | 1950 1955 ^—"**' 1960 1965 1970 1975 1980 1985 J/Private includes a small amount of State and local government funds. Note.—GNP implicit price deflator used to deflate expenditures. Sources: Department of Defense (1941-52) and National Science Foundation (1953-87). has particularly strong effects on productivity growth, in part because its results raise the overall level of technology in an industry. The gains to society from private R&D that are not captured by the firm performing it are significant. Knowledge produced by private R&D spreads first to technologically related firms and then throughout the economy. Patent studies reveal that firms whose technological neighbors invest relatively large amounts in R&D produce more patents per dollar of their own R&D and have higher rates of productivity growth than do firms in less research-intensive environments. Firms cannot simply adopt research, however; they generally must do a certain amount of research themselves to be able to take advantage of knowledge that other firms produce. The extensive spillover benefits from private R&D are also apparent in the fact that firms often imitate the innovations of their rivals. One study found that 60 percent of patented inventions had been imitated within 4 years. The fast depreciation of patent values confirms that knowledge created by research and innovation spreads quickly and can be appropriated by other firms. 179 Federal Support Federal spending for R&D was about $60 billion in 1987, almost half of the national total. In addition, a special tax credit is intended to encourage private investment in research. Defense R&D has increased from 51 percent of Federal R&D spending in 1977 to 69 percent today. From 1980 to 1987 Federal spending for basic research (defense and nondefense) increased by about 25 percent in real terms to $9.7 billion. During the same period nondefense basic research grew from 28 to 46 percent of Federal nondefense R&D. From the late 1940s to the mid-1960s, federally sponsored R&D advanced mainly defense and space technology. From 1967 to 1977 overall Federal funding for R&D slowed, but larger amounts were devoted to health and applied research, especially in the social and environmental sciences. Applied energy research and demonstration projects, heavily funded in the 1970s, have been curtailed in recent years as unproductive and inappropriate objects of Federal support. Recent concerns about international competitiveness, health, and national defense have prompted a surge in Federal support of basic and defense research. Returns to federally sponsored research are sometimes dramatic and easy to see. Federal investment in satellite technology, for example, revolutionized the communications industry. Federal expenditures on defense and medical research help prevent war and improve health, but these results, by contrast, are more difficult to quantify. The results of basic research diffuse gradually into industries and lead to increased innovation. One study of commercial innovations in chemistry has found that university research, which was largely federally funded, accounted for a large proportion of footnotes in the scientific articles that announced the innovations. The most direct measurement of returns to Federal R&D tries to discern its effect on productivity, taking R&D (along with labor and capital) to be an input, and production of goods and services to be the output. Such studies have not shown a strong relationship between industrial productivity and Federal R&D. One study has found a rate of return of only 1.5 percent to Federal R&D, compared to returns to private R&D of between 9.2 and 33.4 percent. These meager results have been questioned as a measure of the contribution to overall well-being, however, because most Federal R&D is directed toward public goods that do not generate significant private returns. In some areas, such as agriculture and health, returns to Federal R&D appear to be robust. If public expenditures stimulate private R&D, moreover, a portion of the high returns to private R&D could be attributable to complementary Federal research. Studies of wheth- 180 er Federal R&D increases private R&D have yielded conflicting results. Case studies of Federal R&D also have attempted to measure returns to investment. Some have shown high returns to particular Federal R&D investments, but these results cannot be generalized. It is difficult to assign R&D inputs, especially in basic research, to the appropriate outputs. Furthermore, researchers tend to study successful R&D projects and may fail to account adequately for the costs of unsuccessful efforts. International Comparisons Because of intense competition in international markets, the level of U.S. investment in R&D has been questioned. The United States invests far more in R&D than any other country in the free world, spending more than two and one-half times as much as Japan, the next largest investor. The United States, Japan, West Germany, France, and the United Kingdom all devote about 2.5 percent of GNP to R&D. If defense R&D is excluded, Japan's and West Germany's outlays relative to GNP are higher than those of the United States by nearly 1 percentage point. The United States leads Japan and West Germany, however, in the ratio of nondefense R&D expenditures to manufacturing sales. The U.S.S.R. reportedly devotes the largest share of GNP to R&D. The productivity effects of this spending, much of which is probably military, appear mixed. In part because of its large investments, the United States sells much more in R&D outputs, such as patent licenses, plans, and blueprints, than it buys. The balance of U.S. receipts minus payments for royalties and fees has grown 3.4 percent annually in real terms from 1961 until 1986, reaching almost $1.7 billion in 1986. Relatively large amounts of technological knowledge enter the United States in the form of improved products, and large amounts diffuse out in the form of licensed technology. Another indication that scientific knowledge is an important U.S. export is the large role American universities play in training scientists and engineers from other countries. The United States has led the worldwide advance in science and technology for many years, but the size of the U.S. lead has diminished. The number of patent applications made abroad by U.S. citizens, for example, fell by about half between 1969 and 1982, while Japanese external patent applications grew by almost 55 percent. The U.S. real trade balance in high-technology products, often used as an indicator of competitiveness, fell by $41 billion (1987 dollars) between its peak in 1980 and 1986. This decline, however, coincided with a large increase in the value of the dollar and a decline in all other trade sectors. 181 The term "competitiveness" suggests to some that growth in one country disadvantages others. In fact, the United States gains from scientific and technological progress made by other countries. That penicillin was discovered in England and relativity in Switzerland does not diminish their contributions to U.S. health and scientific understanding. Advances in science and technology, which diffuse into and out of the United States and every other country, would be deterred by the closing of national borders to the transfer of knowledge. The decrease in the the U.S. lead in science and technology has prompted some to call for increased government support for R&D. It is not clear, however, that U.S. firms invest too little in R&D or that their returns are not competitive. One recent study has suggested that applied R&D yields a higher return to Japanese firms, which in some industries may be better than U.S. firms in transforming externally produced technologies into marketable applications. Both the levels and overall returns to R&D investment in the United States, however, compare favorably to those in Japan. Another study of American and Japanese manufacturing firms found that Japanese firms spend about the same amounts on research relative to sales as U.S. firms, and they appear to gain similar returns. ROLE OF GOVERNMENT Because returns to investments in knowledge are difficult to measure, government research policy has no straightforward guide. Private firms must estimate the appropriate levels of R&D under conditions of greater uncertainty than is common for other kinds of investment. Private firms, however, unlike governments, both bear the costs and realize the gains from their investments in knowledge. The costs of government research, by contrast, are borne by taxpayers, while the benefits accrue to the public at large or to particular industries or firms. Private firms have incentives to invest the amount that produces the greatest net return, but governments do not face similar incentives or constraints. Thus governments usually can encourage R&D most efficiently by defining and enforcing property rights so that private researchers and their sponsors can undertake such activities profitably. Providing incentives for R&D often involves extending the application of property rights in new ways. The definition of property rights in the use of satellites and their orbits, for example, has advanced telecommunications substantially. The definition of new property rights creates incentives for continued technological advancement that leads, in turn, to the more productive use of resources. 182 Defining property rights to research in a way that creates incentives for private firms to sponsor it is sometimes difficult or impossible. Purely basic research, for example, creates new knowledge that spreads into the world at large, improving life in unpredictable ways. Experience suggests that payoffs from basic research can be very high, even if they cannot be fully anticipated. The basic research that unraveled the molecular structure of DNA (deoxyribonucleic acid), for example, led to the birth of a new industry—genetic engineering. Individuals and firms that sponsor research can expect to capture only a fraction of the total yield it produces. One study estimates that the social returns of industrial innovations are about double the private returns. Firms tend to invest only where their gains are expected to cover costs. Thus, for basic research that produces unpatentable but potentially valuable new knowledge, an absence of public support would leave social benefits unexploited. The appropriate amount of basic research, the desirable level of public support, and the best allocation of resources among competing research opportunities are difficult to determine. Policymakers must estimate the prudent level of investment without exact quantitative evidence of rates of return, weighing the costs of diverting resources from productive private uses. Firms sometimes may capture significant returns from research even without well-defined rights to innovations, if the research is applied to a product or service for which they represent a large share of the market. A very large computer firm, for example, may find it profitable to invest in relatively basic research on superconductivity, because it may hope to create highly profitable new products on the basis of resulting innovations. If no single firm has a large enough share of the industry to fund research profitably, users of that research may form organizations to sponsor it. Private cooperative research efforts in the computer industry and voluntary organizations of farmers that fund research on plant disease are examples. For potential innovations with many beneficiaries, however, the costs of organizing and operating a voluntary organization may be high, and access to the innovation by nonparticipants may be almost impossible to preclude. Compulsory funding through specific taxes or, if benefits are broad and indirect, through general funding is then sometimes used. Government funding of relatively basic, agricultural and health research often is justified in these terms. Public goods that require large research inputs present a much clearer case for government support. Projects such as the superconducting super collider, if they are to be carried out at all, must be supported by government. National defense and protection from 183 contagious diseases depend on specialized research for which private individuals do not have adequate incentives. About 80 percent of federally funded R&D is devoted to defense or basic research. INTELLECTUAL PROPERTY RIGHTS Investment in knowledge, like other investment, depends on rights to future returns. Even in research that is publicly supported, the incentives created by property rights have powerful effects. Patent, licensing, trademark, copyright, and trade secrets laws are critical in determining the share of the returns from commercially valuable ideas and inventions to which an inventor or investor is entitled. The dramatic advance of commercial biotechnology since 1980, for example, was aided by the U.S. Supreme Court decision that microorganisms produced by genetic engineering were patentable. Building on the long-established principle that specially bred lines of plants and animals belong to their breeders, genetically engineered higher organisms, such as improved goats and cattle, now are protected by property rights. Legislation such as the Plant Variety Protection Act of 1970 and subsequent regulatory changes have made property rights in agricultural innovations easier to establish. As a result, research previously supported by government can be undertaken profitably by private firms, which now fund more than 60 percent of agricultural research. This Administration has supported many actions that protect intellectual property, including stronger international enforcement of property rights, facilitation of joint ventures, and improved procedures for regulatory review. For example, incentives for pharmaceutical innovations have been strengthened by reducing the time for regulatory approval and extending patent life to make up for most of the time lost during government review. International enforcement of intellectual property rights is increasingly important as national economies become more closely linked by trade and investment. U.S. firms encounter myriad problems in protecting their intellectual property abroad. Some countries offer only limited protection to process patents. Others do not recognize patents on pharmaceuticals and chemicals or copyrights on computer software. Most newly industrialized countries lack rules sufficiently flexible to offer protection to new technologies such as biotechnology and satellite communications. This Administration strongly supports protection of intellectual property rights through the General Agreement on Tariffs and Trade, and it is working to end piracy that erodes incentives to innovate (Chapter 4). U.S. inventors have been defended against the importation of goods made abroad with unlicensed technology by vig- 184 orous enforcement of existing trade law. The Administration also supports changes in the law to strengthen intellectual property provisions. The United States has proposed that the Organization for Economic Cooperation and Development (OECD) work to establish a framework in which nations cooperatively support basic scientific research and training and enforce intellectual property rights. Intellectual property rights, broadly conceived, include not only the right to exclude others from the use of one's knowledge, but also the right to share knowledge for productive purposes. Private firms may want to conduct joint research in order to realize economies of scope and scale. In the past, fear of inappropriate application of antitrust laws has inhibited cooperative research among competing firms. By defining antitrust liability more clearly, the National Cooperative Research Act of 1984 opened the way to research joint ventures which may make research profitable in areas where property rights are difficult to define or enforce. In the computer industry, for example, cooperative research already has yielded important innovations and marketable products. Fear of antitrust liability sometimes has prevented firms from broad licensing of intellectual property. This Administration supports legislation that would promote the dissemination of new technology by preventing the award of multiple antitrust damages in cases where patent licensing has no anticompetitive effect. Federally sponsored research can benefit from the incentives created by property rights. The Patent Law Amendments of 1980 provided a uniform system for assigning title to inventions made at universities that conduct government-sponsored research. Between 1980 and 1986 cooperative ventures increased, and the number of patents issued to American academic institutions grew by 70 percent. Before these reforms, patenting such inventions was uncertain, and cooperative research ventures between private firms and universities were difficult to establish because of the complex regulations that accompanied Federal funding. The Technology Transfer Act of 1986 also should allow government scientists to respond better to market demands by simplifying the process by which Federal laboratories' discoveries may be patented and developed. For example, a Federal laboratory and a private biotechnology firm jointly are exploring vaccines against poultry disease. INCENTIVES IN GOVERNMENT RESEARCH The Federal Government does not have the appropriate information and incentives to determine the most useful outputs of R&D, except when the government is the principal user. For example, in areas of defense research such as aviation, computers, and semicon- 185 ductors, the Federal Government was for many years not only the primary funder but also the primary user of the R&D product. Government thus had extensive knowledge of its needs and could guide research toward successful applications. Federal support for R&D in health and agriculture often is mentioned as an example of government research that has produced large social benefits. Research in these fields illustrates the importance of close contact between the performers and users of R&D. The close association of most schools of agriculture and medicine with the decentralized farming and health care industries may allow scientists to have more contact with the ultimate users of R&D outputs when deciding how to allocate R&D resources than would be the case were research more centrally directed. In contrast to research concerning public goods, the Federal Government's efforts to fund innovations in the private sector often have been unsuccessful. Government-sponsored energy research and research into building materials and low-cost housing design produced little that was ultimately marketable. Support of synthetic fuels is perhaps the most notable example of inappropriate government-directed investment in recent years. Citing the dangers of dependence on imported oil, the previous Administration proposed spending $88 billion to speed the development of synthetic fuels. The Energy Security Act of 1980 established price supports, direct subsidies, tax credits, and loan guarantees to encourage participation in the program. After the synfuel program began, higher world energy prices induced greater supplies and conservation. In 1981, after deregulation, oil prices declined. However, the synfuel policy was based on the assumption that oil prices would reach $40 to $70 per barrel. Weak energy prices and political controversy helped convince the Congress to reduce the Synthetic Fuels Corporation's funding substantially in 1984. With the fall of world oil prices, much of the Federal Government's support of windmills and other quixotic energy projects came to an end. The history of these energy initiatives suggests that government should not try to impose new technologies on an industry which is unwilling to commit its own resources to them, and that political influence can make policies that are obvious economic failures difficult to abandon. MARKET FLEXIBILITY Economic growth requires many adjustments, including the expansion of productive activities and the abandonment of those that prove unproductive. In a dynamic economy, markets for all productive fac- 186 tors—labor, capital, and natural resources—must accommodate shifting patterns of demand and changing technologies. As the economy grows, capital is assembled and used in new configurations, and industrial as well as occupational shifts take place in the labor force. The value of aggregate output is increased when factors of production shift to more highly valued uses in response to changes in demand and in costs of production. Many changes result from investments in human and other forms of capital and from new technology. The development of aircraft and computers, for example, has opened new opportunities for consumption, production, and employment. Increased income per capita, as well as relative price changes, lead to shifts in demand patterns. Consumers with higher incomes demand a wider variety of products and more services relative to goods; they spend a smaller share of their income on the basic necessities of life. At the turn of the century, households spent more than 30 percent of disposable income on food, compared to about 15 percent today. Thus, choices available to consumers have increased as has discretionary spending for travel, recreation, and other services. Changes in output, consumption, and technology are essential features of economic progress. Rigidities and distortions in markets can impede natural responses to economic change, reducing potential gains from investment and slowing productivity and income growth. Maintaining the flexibility of labor markets is particularly important for a healthy economy. MARKET BARRIERS AND DISTORTIONS Throughout the world there is increasing recognition that economic growth requires the reduction of structural barriers and distortions within domestic markets, as well as the reduction of protectionism in international trade. Constraints on capital and labor markets stand in the way of shifts in comparative advantage, barring allocation of resources to more productive uses. Taxation and regulation are major sources of market distortion, inhibiting activities that otherwise would expand or providing subsidies to activities that otherwise would be curtailed. Taxation In general, taxes are distortionary, because they interfere with the efficient allocation of productive resources and reduce incentives to work, save, and invest. These burdens can be limited by keeping marginal tax rates as low as possible and by imposing similar tax rates on similar products, resources, or activities. The Tax Reform Act of 1986 moved the U.S. tax system substantially in the direction of lower and more equal marginal tax rates. As discussed in Chapter 2 of the 1987 Report, tax reform reduced the 187 marginal Federal tax rate on labor income from 25.8 percent to an average 21.7 percent, and it has significantly lessened differences in tax rates on the income from alternative forms of investment. The higher after-tax yield of labor income encourages work and investments in human capital, which in turn increase the productivity of labor. More equal taxation of investments also encourages a more productive distribution of capital, because investors' decisions will be made on the basis of expected economic returns rather than tax consequences. It is estimated that over the long term tax reform will increase real net national product by approximately 2 percent and raise aggregate consumption by roughly 4 percent. The net improvement in economic welfare is equivalent to about $50 billion per year. Tax distortions, however, cannot be avoided entirely. Any practical system of taxation induces distortions, as discussed in Chapter 2 of the 1985 Report. Costs of resource misallocation have been estimated to range between 20 and 50 cents per additional tax dollar collected. The costs of private compliance with personal income taxes are estimated to add another 5 to 7 cents per dollar collected. Because government outlays must be financed by tax revenues—now or in the future—and because taxes have such sizable indirect costs, government spending should be undertaken only if the expected value of the activity is substantially higher than its outlay costs. Government services and transfer programs that fail to meet this test should be cut back. Regulation Although often intended to correct externalities and other market imperfections, government regulation frequently causes distortions that reduce allocative efficiency and impede growth. The regulation of financial services, for example, has reduced the efficiency of capital markets. While in force, Federal interest rate ceilings on bank deposits lowered the returns available to small savers and constrained the amount of credit that depository institutions could provide to businesses and homeowners. Similarly, interstate banking laws restrict the flow of funds to productive investments and interfere with diversification of risks, thus reducing the gains that would be available to both savers and borrowers in nationwide capital markets. During the past 50 years, regulation of agriculture has posed significant obstacles to economic efficiency and adjustment. Agricultural regulation has restricted imports, subsidized production, raised prices, and kept land idle. Federal outlays and consumer costs of farm commodity programs are estimated to have been about $22 billion in 1987. Furthermore, the regulation of agriculture has slowed the movement of labor and capital to other industries. It has wasted 188 resources by distorting investment within agriculture and by diverting investment from more profitable activities. Rent controls, remaining controls on trucking, natural gas regulation, automobile fuel economy standards (discussed in Chapter 5 of the 1986 Report), import barriers such as voluntary agreements to restrict imports of automobiles, and some rules designed to control environmental risks (discussed in Chapter 6 of the 1987 Report) are all examples of regulations that reduce market flexibility. Price controls distort resource allocation. Regulation often reduces incentives for investment by insulating firms from competition, by creating hidden subsidies and uncertainty about future changes in rules, and by requiring adherence to rigid standards that preclude innovation and the introduction of lower cost methods of production. Safety and health regulations that require the installation of particular equipment, for example, may stifle incentives for developing better ways of improving workplace safety. In recent years the United States has made substantial progress in deregulating oil prices as well as major industries such as airlines (Chapter 6), buses, and railroads. Deregulation of transportation industries has been associated with a resurgence of productivity growth (Chapter 2); one study has estimated savings for the economy of roughly $50 billion per year. Procedures also have been established for review of Federal regulations on a systematic basis to ensure that new regulations are worth their costs. LABOR MARKET FLEXIBILITY Flexibility in labor markets is particularly significant for allocative efficiency and growth, because labor is the dominant input to production. In the United States, labor has contributed about 70 percent to output for well over a hundred years. Compensation of employees now accounts for almost 75 percent of national income, up from about 55 percent at the turn of the century. In addition to improving the allocation of productive resources, flexible labor markets expand employment opportunities and further contribute to growth by encouraging investment. Adaptable labor markets increase returns to investment, particularly in knowledge, by rewarding the acquisition of skills that are in demand and the adoption of cost-saving innovations in production. As discussed in Chapter 2, U.S. labor markets have been remarkably successful in generating new jobs for a growing labor force and in accommodating structural change. Primarily as a result of strong growth in productivity, the share of the U.S. labor force devoted to agriculture fell from more than 80 percent in 1810 to about 3 percent today, as shown in Chart 5-4. The share of the labor force in 189 manufacturing rose earlier in this century, but has declined in recent decades, also reflecting strong productivity growth. Shares in finance, government, and other services have increased. Employment has shifted toward jobs that are safer and less physically arduous, and that demand more human capital. Work fatality rates in service industries, for example, are less than one-sixth of those in agriculture. Employment in manual and farm occupations, which accounted for about three-fourths of U.S. jobs in 1900, fell to less than 40 percent in 1970, and the decline has continued. Chart 5-4 Labor Force Shares by Industry Percent 100 90 80 70 60 50 40 30 20 10 0 1810 1830 j j Agriculture 1850 1870 § | Nonagriculture ^ 1890 1910 £2 Manufacturing1 1930 1950 1970 [ H Transportation and Trade Other Services J/Also includes fisheries, mining, and construction. Sources: Department of Commerce and Department of Labor. Contrary to popular notions, increased unemployment in the postwar years in the United States has not been associated with unusually rapid changes in industrial structure. Measures of the structure of employment by industry in the United States do not indicate greater turbulence or increasingly rapid shifts in employment, across either major or more narrowly defined industrial sectors. The level of unemployment accounted for by workers' changing industry has been steady since 1970. 190 Flexible labor markets facilitate change, but they do not preclude job attachment or long careers in a single firm. Long-term employment is common among American workers. About half stay with a single employer for 8 or more years, and almost 30 percent do so for at least 20 years. Most changes in employment patterns take place as a result of employment growth and voluntary job change. Workers, particularly the young, change jobs as they find opportunities that better suit their skills and preferences. Evidence shows that the changing employment patterns of workers under 25 years of age account for much of the sectoral reallocation of jobs. In manufacturing, voluntary quit rates have ranged from about 15 to 25 percent of the work force in recent years, and layoffs typically have accounted for less than half of all job separations. However, job losses that occur in mid-career as a result of declining employment in particular industries or firms can pose serious problems for workers and their families, leading to unemployment, reduced earnings, and other hardships. The BLS estimates that, between 1981 and 1985, 5.1 million workers lost jobs they had held for more than 3 years, due to slack work, job abolition, or a plant or business closing. On average, a little more than one-half million of these workers lost jobs each year because their plants closed or their employers went out of business. Most of the affected workers experienced some unemployment, and some had lengthy unemployment spells. Other research based on these data, however, has found that the duration of joblessness over the year for displaced workers was similar to that of average workers who had spells of unemployment. Evidence suggests that earnings losses do not persist over the long term. Losses for workers whose jobs were abolished vary considerably, reflecting losses in specific human capital and sometimes higher wages associated with unionization. On average, wages upon reemployment have been about 90 percent of prior wages. Losses typically have been higher in smaller and weaker labor markets. Workers with more job tenure experienced larger losses, as did those with less education. More educated workers had less unemployment. Workers with more schooling have better access to labor market information, a greater capacity to identify new opportunities, and more skills of general value. In addition, forgone earnings during unemployment are higher for workers with more human capital. Evidence shows that schooling eases the transition for those leaving agricultural as well as industrial jobs. Employment growth and a general absence of impediments to mobility have facilitated the voluntary reallocation of labor to expanding sectors. When jobs have been lost involuntarily, problems for individ- 191 uals typically have been temporary and usually mitigated by their general knowledge and skills and by the availability of alternative employment. POLICIES FOR LABOR ADJUSTMENT The flexibility of the U.S. labor market, and the relative ease with which workers can move between geographic areas and avail themselves of better job opportunities, have contributed substantially to economic growth. Government can improve labor adjustment by reducing existing market interventions and avoiding the imposition of new ones. A number of labor market regulations, such as the minimum wage, many occupational safety and health rules, and occupational licensing, impair flexibility and adjustment. Many studies have shown that the minimum wage is a barrier to work and job-training opportunities for inexperienced and unskilled workers. Erosion in the real value of the minimum wage has contributed to substantial recent employment growth and reduced unemployment among black teenagers, both of which are documented in Chapter 2. Further lowering of the minimum wage would increase employment and accumulation of human capital among young people, thereby raising future wages as well as economic output. Providing unemployment insurance and training may produce net economic gains by broadening public support for the removal of trade barriers and other market distortions. But programs intended to ease the transitions of workers to new jobs can slow economic change by creating work disincentives and other sources of inefficiency. Improving current policies that directly address adjustment—unemployment insurance, pension rules, and retraining—would increase market flexibility and enhance prospects for growth. Establishing protection for existing jobs, such as requiring advance notice of layoffs, would introduce new market rigidities. Reducing the Inefficiencies of Unemployment Insurance The Federal-State unemployment insurance program, established more than 50 years ago, provides partial wage replacement for experienced workers who lose their jobs because of temporary layoffs or job terminations. With few restrictions, States establish the amount as well as the duration of compensation and the structure of payroll taxes. Weekly benefits replace about 35 percent of prior wages on average; in most States compensation may be received up to 26 weeks. Total benefits were about $14 billion in 1987. Benefit outlays are greater in years of higher unemployment; for example, they were $23.8 billion in 1982, about 70 percent higher in nominal dollars than in 1987. 192 Compensation is intended to reduce earnings losses that result from changing market conditions and thus to cushion labor adjustment. By replacing a portion of wages during unemployment, benefits support the search for a new job. At the same time, benefits tend to prolong unemployment by reducing its costs for workers and allowing them to search longer, but they do not appear to increase subsequent wages. Recent Federal reforms and State actions to tighten eligibility and job search requirements have reduced work disincentives substantially. Additional policy options to enhance reemployment incentives and the effectiveness of job search efforts are being explored. Further improvements can be realized in the program's financing. Risk rating, or experience rating, is fundamental to private insurance, because, when higher premiums are charged to insure against greater risk, insured parties have an incentive to reduce risk. Since the unemployment insurance system is only partially experience rated, it provides incentives that increase unemployment. When a firm can lay off workers temporarily and spread much of the cost to other firms that also pay taxes into the program, it is more likely to generate layoffs. Strengthening experience rating would reduce unemployment by making individual firms bear more of the cost, thereby encouraging them to explore alternatives to temporary layoffs, such as rescheduling work or modifying inventories. Financial transfers that are generated by the tax structure of the unemployment insurance system subsidize declining firms and those in seasonal or cyclical industries at the expense of growing or stable firms. Studies have found that agricultural and construction firms are heavily subsidized by firms engaged in trade and in finance, insurance, and real estate. States have made a number of changes during the 1980s to improve experience rating, partly in response to Federal law. The Department of Labor, in an effort to increase information and accountability, recently has required more complete State reporting of experience rating. Improving Pension Rules Pension termination insurance, which has been a Federal responsibility since 1974, has been funded by a flat premium per worker. As a result, firms that fund their pension plans inadequately have been subsidized at the expense of firms that maintain sound funding. These indirect subsidies to poorly funded plans have reduced incentives for adequate funding and benefited failing firms at the expense of healthier firms. This Administration strongly supported recently enacted legislation that establishes partial risk rating of pension premiums and improved pension funding rules. This legislation will reduce the automatic financial transfers generated by the system. An 193 additional step would allow pensions to be insured privately, provided basic standards are met. Private pension insurance would have major advantages. Premiums would be based on risk, thus preserving incentives for adequate pension funding as well as eliminating remaining automatic subsidies, and insurance would likely be provided at an even lower cost for well-funded plans. Government regulation of pensions can distort resource allocation through the effect on job tenure and training as well as through cross subsidies among firms. Rules such as those requiring early vesting may increase worker mobility, but at the same time such rules diminish employer incentives to provide training. Employer investments in job training are based on expectations of future returns from increased worker productivity. To the extent that employment contracts are precluded from offering pension inducements for longer worker tenure with the firm, the amount of training is likely to be reduced, along with future productivity. Among other features of privately negotiated employment contracts, pension provisions reflect the benefits and costs of job attachment to workers and firms. Government mandates with regard to pensions and other employment benefits can prevent employers from offering the most desirable pay packages to workers and can slow investment in human capital. Retraining Government-supported retraining may facilitate reemployment following job loss. Job training and retraining, however, are primarily a private responsibility. Since private firms know best what skills they require, they can tailor training to their needs. In its role as employer, the Federal Government provides substantial amounts of training for military and other Federal occupations. As discussed earlier, however, the wider effectiveness of government-run training programs in raising earnings over the long term has not been established. The Administration's proposed Worker Readjustment Assistance Program (WRAP) would replace Trade Adjustment Assistance (TAA) and other existing retraining programs. In addition to training, TAA provides compensation which, in combination with unemployment insurance, can be received for as many as 78 weeks. Evidence shows that TAA has failed to facilitate adjustment and has prolonged unemployment. WRAP would offer training to all experienced workers who have lost their jobs, in recognition that adjustment costs are unrelated to the cause of job loss, whether changing trade patterns or other factors. At the options of States, vouchers for purchasing training in the market could be offered along with traditional retraining services and job search assistance. 194 Costs of Job Protection Government actions to insulate industries and jobs from international competition, or to protect existing jobs by requiring employers to provide advance notification of layoffs and plant closings, would reduce market flexibility and diminish overall employment opportunities. Proponents argue that advance notice of layoffs would ease worker adjustment. Mandated notice, however, as called for in proposed trade legislation, would constrain the responses of firms to changing market conditions and reduce employment. Because required notice means that employers would incur greater liabilities in the event of business contractions, hiring during expansions would be curtailed. Higher costs and increased risks also would discourage new business formation. In contrast, when job security provisions are chosen in the marketplace, they can be weighed against other forms of compensation according to workers' preferences and employers' costs. Employers frequently provide their workers with advance notice. Recent government surveys have found that advance notice of the specific date of an impending layoff was given in about one-half to two-thirds of the cases surveyed, and general notice in one-third to three-fourths of the cases. On average, general notice was given 46 days in advance. Notice was not the result of collective bargaining alone; the likelihood of receiving notice was about equal in union and nonunion establishments. Although labor market performance is affected by numerous forces, including macroeconomic and tax policies, an important reason for high unemployment and lack of job growth in Europe has been labor market rigidities. Many European governments severely restrict an employer's ability to dismiss workers, and they require substantial severance pay and notice prior to layoff. Unemployment benefits are higher and last longer than in the United States, commonly replacing at least 70 percent of prior wages for a year or more, and more of the unemployed qualify for benefits. Financing, moreover, is not experience rated. Employment in Western Europe has been flat since 1970; during the same period, employment in the United States has increased by more than 40 percent. Unemployment rates in Western Europe have approximately tripled since the early 1970s, and they are now higher than in the United States, thus reversing earlier patterns. The incidence of long spells of unemployment is substantially higher in Western Europe than in the United States, as is unemployment among youth. European governments have realized that the inflexibility of their labor markets due to job security mandates, along with a variety of other labor market interventions, have impaired growth in employ- 195 ment and spawned high unemployment rates, particularly among youth. During the 1980s, European countries have begun to reverse previous policies of increasing job protection, unemployment compensation, and other measures that impose constraints on labor markets and distort incentives. A number of countries have reduced the costs of employment termination by relaxing job protections and increasing the ability of employers to effect dismissals. Governmentmandated severance pay in Western Europe has been reduced from the levels of the late 1970s. In a majority of OECD countries, unemployment benefits, which had risen during the 1970s, have been reduced. Stricter eligibility conditions have been applied and work incentives strengthened. In a number of countries, minimum wages have been held constant in nominal terms and reduced in real terms. Several countries have reduced minimum wages for youth. Policies such as those in Western Europe that had attempted to reduce adjustment costs by preserving existing jobs at the expense of new jobs have been recognized as shortsighted, benefiting some workers by shifting high costs to others. In addition to the steps that individual countries have taken to reverse such policies, the OECD and the Venice Economic Summit formally recognized the need for removing labor market barriers and increasing flexibility. At its May 1987 Ministerial meeting, the OECD concluded that improved functioning of labor markets is essential for sustained economic growth. CONCLUSION Investments in human capital and in science and technology have made substantial contributions to productivity and economic progress. In the future such investments 'may assume even greater importance. Market incentives provide the primary mechanism for the accumulation and allocation of investments in knowledge and skill as well as in physical capital. Government support for education and research can improve prospects for long-term economic growth, but it should be linked closely to private incentives. Public support of most education and training and of research should be limited to investments for which individuals and firms do not have adequate incentives and for which benefits exceed costs, including costs that arise from tax distortions. Many government interventions, including those that are designed to spur increases in knowledge, generate costs and inefficiencies that in the end retard growth. Economic progress requires change, and to realize the gains from investments in human capital and in research and development it is vital that markets remain flexible and responsive. To resist change and to introduce protection that slows change will stifle investment 196 and diminish opportunities for future growth. Policies that reduce market barriers and strengthen the incentives of individuals and businesses to invest and to innovate are the surest ways to improve economic performance. Government can encourage further advances in knowledge and economic progress by maintaining flexible markets and a stable framework in which property rights are protected and initiatives are rewarded. 197 CHAPTER 6 Airline Deregulation: Maintaining the Momentum DURING THE LAST DECADE there have been dramatic changes in the way America's transportation sector is regulated. The railroad, bus, trucking, and airline industries all have become more efficient as a result. Since virtually all aspects of the economy depend on the transportation system, gains in this sector help the overall economy, thereby improving U.S. competitiveness. The principal force underlying these changes in productivity has been a deregulatory environment that allowed greater price flexibility for businesses while reducing government interference. The deregulation of trucking, railroads, buses, and airlines began in the 1970s when government officials recognized that regulation was stilling competition. After the regulatory bodies began to reduce their control over prices and entry, the Congress enacted landmark legislation loosening or abolishing Federal controls over the transportation industries. For example, the Staggers Rail Act of 1980 allowed railroads to set prices freely in markets where they could not exercise market dominance. Railroads no longer are subject to rate regulation in these markets, and price intervention on the part of the Federal Government has been reduced. The Motor Carrier Act of 1980 relaxed government regulation of trucking. Because barriers to entry have been lowered, many new competitors have entered the market. Trucking firms now have greater freedom in setting rates. The Bus Regulatory Reform Act of 1982 relaxed both entry and fare restrictions for the intercity bus industry. Although government regulation has not been eliminated entirely from these industries, the role of the government has been reduced significantly. While deregulation substantially improved productivity and efficiency in the transportation sector, the Airline Deregulation Act of 1978 has had the greatest immediate impact on the public. The benefits to travelers from airline deregulation have been estimated to exceed $11 billion per year. The deregulation of the airline industry has permitted greater competition which, in turn, has led to a dramatic restructuring of the airline industry. The industry has become more streamlined. Fares 199 generally are much lower than they would have been under regulation, and a wider menu of travel options is available to the consumer. Although there had been concern about air service to small communities following deregulation, such service, as measured by the frequency of flights and flight length, has improved. Despite the economic gains from deregulation, complaints about a possible decline in the level of safety and an increase in flight delays have increased. It is sometimes argued that regulation should be restored. These concerns must be examined in the context of the evolution of the airline industry since deregulation. While airline safety is a serious public concern, the record indicates that safety has not deteriorated under deregulation; in fact, it appears to have improved. Moreover, while airport and airspace congestion has worsened, this is a direct result of the success of deregulation. More people are flying now than ever before, but the local and Federal authorities charged with managing the airports and airspace have been unable to adjust to the dramatic growth in demand. Congestion is a natural consequence of the fact that growth in demand for air travel has exceeded the supply of airport and airspace services. The solution to the problem of increased congestion lies not in resurrecting an outmoded system of regulation with onerous restrictions on entry and fares. Rather, the solution lies in devising economic approaches that will enable the supply of airport and airspace services to keep pace with the growing demands of the American public for air transport. THE REGULATORY ENVIRONMENT For nearly four decades before the enactment of the Airline Deregulation Act in 1978, the Civil Aeronautics Board (CAB) exercised extensive regulatory control over the domestic airline industry. The CAB controlled the entry and exit of carriers on interstate routes and approved the fares charged on those routes. The CAB appears to have tried to stabilize the industry, attempting to shield existing carriers from entry and price competition, and to provide service to a large number of communities. To the extent that airlines competed, they focused on features other than price, such as departure frequency and food quality. This competition over service quality limited the CAB's ability to use price and entry regulation to achieve its goals concerning profits, service, and stability. In order to provide service to more places, the CAB attempted to favor short-haul service in two ways. First, for long-haul routes, fares were set at high levels relative to costs, and fares for short-haul routes were set at low levels relative to costs. As a result, passengers on 200 long-haul routes paid significantly higher prices than they would have under competition. Second, direct subsidies were given to airlines that served small communities. The Federal Government frequently has used subsidies to ensure that services were provided to less densely populated areas. For example, subsidies have been provided for post offices and telephone service in small towns and remote areas. Thus it is not surprising that subsidies were given to the airline industry for similar purposes. These direct subsidies have created a number of problems. For example, because airlines were subsidized on the basis of the number of departures, they had an incentive to schedule flights with multiple stops, thereby resulting in lengthy flight times from small communities to major cities. Since the subsidies did not vary with the time of day, airlines typically scheduled their service to small communities during off-peak periods. Because the planes used on these subsidized routes often were borrowed from other routes, they were not efficiently tailored to the size of the subsidized markets. Even with the subsidy program, many carriers chose to limit service provided to small communities. From 1970 to 1975, the CAB permitted certificated carriers to reduce their service to small communities by nearly 25 percent. At the same time, unsubsidized commuter carriers not under the CAB's regulatory jurisdiction were increasing service to these communities. Subsidies to airlines peaked in 1981 at $109 million. As traffic on commuter airlines grew, fewer subsidies were needed to maintain service; consequently, subsidies now have fallen to less than $30 million. A 1987 study by the Department of Transportation (DOT) projected that an end to these subsidies would result in a loss of service to 70 of the 102 airports (excluding Alaska) currently in the program. None of these 70 communities board more than 13 passengers per day, and over half board fewer than five passengers per day. In addition, almost half of these airports are less than 75 miles from other communities with air transportation, and only eight are more than 150 miles from alternative air transport. Although the Airline Deregulation Act would have ended these subsidies in 1988, legislation has just been enacted extending the program for another 10 years. In order to maintain service to small communities and stability in the industry, the CAB regulated entry into the profitable long-haul markets and exit from the less-profitable short-haul markets. The type and extent of route regulation depended on the category of the carrier. Route restrictions were imposed on all interstate carriers, except for commuter airlines and charters. For example, carriers often were precluded from operating beyond a stated point. In addi- 201 tion, carriers sometimes were required to make intermediate stops. Restrictions on entry into the major interstate "trunk" markets were particularly stringent. From 1938 through 1978, the CAB did not permit a single new interstate trunk airline to enter the market. The CAB did allow limited entry in some markets. After World War II the Congress pressured the CAB to permit the creation of "local service" airlines. These airlines replaced much of the federally subsidized service that the trunks provided to smaller communities. Initially, local service airlines were precluded from competing with the trunk airlines. Then, in an effort to reduce the growing cost of the subsidy, the government allowed local airlines to offer service in selected markets served by the trunks. This policy helped foster limited competition between the trunks and the local service airlines. The few areas where the CAB did not regulate rates, entry, and route structure included small commuter airlines, airlines providing charter services, and intrastate carriers. However, the CAB did limit commuters by setting the maximum gross takeoff weight at 12,500 pounds, which permitted approximately 20 seats. This limitation subsequently was relaxed somewhat, but it still served to restrict commuter service to less densely populated markets. Intrastate airline carriers had complete flexibility in choosing routes and fares. The intrastate carriers in California and Texas charged significantly lower fares than the interstate trunks charged on routes of similar distances yet made profits. The fare per mile in unregulated markets was often half as much as fares in comparable regulated markets. Fare comparisons between interstate and intrastate markets made it easy to see that there could be substantial gains from deregulation. RESULTS OF DEREGULATION Several factors have affected the performance of the airline industry over the last decade. Deregulation, while important, must not be given undue credit or unjust blame for the recent performance of the industry. Technical innovation, for example, has contributed to improvements in fuel efficiency and safety. The performance of the domestic economy also is linked to the overall health of the domestic airline industry, because more people travel when the economy is doing well. Since 1982 the United States has enjoyed its longest postwar peacetime economic expansion. Thus it is important to differentiate between the gains resulting from economic expansion and those resulting from deregulation. Even controlling for such changes in the economy, however, it is clear that deregulation has had a substantial positive effect. 202 LOWER FARES The most important economic benefits that have resulted from U.S. airline deregulation are decreases in fares and increases in the frequency of service. The use of discount fares, which offer reductions from the standard coach fare, has increased dramatically. In 1976, 15 percent of travelers enjoyed discount fares; by 1987 this number had grown to 90 percent. The substantial rise in the availability of discount fares has been accompanied by a 15 percent decrease in these fares, adjusting for inflation. Since the old regulatory policies tended to keep long-haul fares relatively high, the greatest reductions in discount fares have occurred for longer flights. For example, discount prices for flights over 2,500 miles have dropped by 35 percent in real terms. The availability of discount fares has increased significantly in short-haul markets as well. For flights less than 500 miles, the prices of discount tickets have dropped by about 10 percent in real terms. In contrast to discount fares, average full undiscounted coach fares have increased by more than 10 percent in real terms; however, only about 10 percent of current ticket sales are for full coach fare. Changes in real coach fares also vary with trip length. For trips less than 2,000 miles, average coach fares have increased. For trips exceeding 2,000 miles, real average coach fares have declined. The widespread reduction in fares is caused by several factors. The elimination of regulated fares was important in long-haul markets. In high-density markets, two other factors contributed to lower fares. First, high passenger volumes in these markets permitted airlines to reduce their cost per passenger mile by making more efficient use of their equipment. Second, these markets also tended to have more discretionary travelers, who could take advantage of discount fares. Indeed, discount fares are used most widely in those markets with the highest passenger volume. EFFICIENT ROUTING: THE HUB AND SPOKE The route structure that evolved under regulation has undergone major changes as a result of increased competition. Free entry into city-pair markets has permitted the airlines to develop much more efficient routing patterns than under regulation. The most significant change has been the growth of a "hub-and-spoke" delivery system. As the name suggests, airlines have developed a series of networks analogous to a bicycle wheel. The hub represents the center of the network; the spokes link different origin and destination points. For example, a flight from Hartford to San Diego may be routed through a hub at Chicago. 203 Leading hubs of all major airlines have shown large increases in traffic since 1978. In several cases airline departures from the major hubs have more than doubled. In addition, the expansion of the huband-spoke system following deregulation has permitted four major innovations benefiting fliers. First, service to airports with low traffic volume has been expanded. While demand may not be sufficient to justify direct flights from small airports to certain other locations, the new distribution system allows the traffic from small airports to be combined at the hubs with traffic from other spokes. This traffic then is routed through the various spokes of the hub. Thus being connected to a hub allows convenient access to many destinations. Second, flight frequency is greater at both hubs and spokes, allowing the traveler to find more convenient flight times. Pooling traffic at the hubs permits greater departure frequency to and from the smaller airports. The convergence of traffic from the various spokes also permits more frequent hub service. With the expanded set of options, most travelers now are able to schedule their departures closer to their preferred times. Deregulation appears to have led to an overall increase in the frequency of service; however, there is a wide variation across different markets based on passenger travel demand. Using a random sample of markets from 1976 and 1984, researchers have found that service improved across all market groups. Significantly, markets with the lowest passenger volumes experienced the greatest increase in both service and estimated welfare gain per traveler. Although some communities have lost scheduled service, only in rare instances has deregulation been the primary cause. A study which took into account the economic and demographic changes in the United States has concluded that the introduction of deregulation has helped to slow the rate at which small communities have lost service. Moreover, deregulation has allowed commuters and regional carriers to expand more rapidly, feeding passengers into the hubs and thereby strengthening the hub-and-spoke system. Since 1978 the regional and commuter airlines have more than doubled the number of their passengers and added service to over 140 airports not previously served by these carriers. While the growth of hubs has improved the frequency of service, it also has increased average travel time somewhat. Hub-and-spoke configurations are partly responsible for this increase, since they typically involve a tradeoff between departure frequency and travel time. More flights to a particular destination may be available, but some of these flights may involve brief stopovers in other cities. Comparing airline regulation in 1977 with a simulated deregulation scenario, re- 204 searchers have found that the average time increase for flights under 2,500 miles has been less than 10 percent, while average flight times have decreased about 4 percent on trips over 2,500 miles. A study has shown that consumers place greater value on the increase in departure frequency than on the losses that result from the small average increase in travel time. In some cases, the hub-and-spoke system has had a salutary effect on travel time. For example, hub-and-spoke networks have resulted in a dramatic reduction in flights with two or more intermediate stops, thus leading to a reduction in travel time for many city-pairs. A third benefit from hub-and-spoke networks is that larger aircraft can be used, because traffic has been consolidated. Bigger planes cost less to operate per seat mile than smaller planes. In addition to the cost savings, larger aircraft usually are thought to afford greater comfort, so fliers also benefit in this quality dimension. A fourth benefit of the growth of hub-and-spoke systems is that more fliers have the opportunity to book on a single airline for their entire flight. Research has shown that fliers strongly prefer traveling on a single carrier to reach a destination rather than changing airlines on one-stop flights. Benefits include better coordination of flight times and better baggage services. The consolidation of airlines at a hub can provide more opportunities for passengers to choose single-line service. In 1977, 68 percent of all connecting passengers changed airlines, whereas only 12 percent do today. EFFECTS ON LABOR While airline productivity has increased, the effects of deregulation on the airline labor market have been mixed. Employment in the airline industry has increased as a result of increased air travel. From 1977 to 1986 total airline employment increased by more than onethird. Because of general changes in the economy and dramatic changes in energy prices, it is difficult to isolate the effect of deregulation on wages. From 1977 to 1984 it appears that airline wages did as well as other sectors of the economy, if not better. The aggregate impact on wages masks an important change in the • wage structure resulting from deregulation. The introduction of deregulation led to intense pressure to cut costs so that lower prices could be offered. This downward pressure on costs induced airlines to seek work rule changes as well as changes in wage rates. These changes have in some cases led to a dual wage structure in which newly hired workers earn less for performing the same jobs than previously hired workers. 205 INCREASES IN PRODUCTIVITY, PROFITS, AND WELFARE Besides leading to lower fares and increased service, airline deregulation has resulted in more productive uses of inputs, such as labor and equipment. The hub-and-spoke system, for example, has helped to deploy aircraft fleets more efficiently, so more passengers can be served better using the same resources. For example, commercial planes flew with 55 percent of their seats filled in 1976 and this load factor increased to 60 percent in 1986. Moreover, airlines have installed more seats in their aircraft since deregulation to accommodate the growth in demand. U.S. airline productivity increased by 7 percent from 1976 to 1983, while the productivity of non-U.S. carriers decreased by nearly 40 percent over the same period. This comparison lends strong support to the view that deregulation has had a dramatic positive impact on U.S. airline productivity growth. The effect of deregulation on industry profits is difficult to estimate. The difference between the average return on capital invested in the airline industry in the period following deregulation and in the decade preceding deregulation is relatively small. Both before and after deregulation the industry experienced financial losses during periods of sharp fuel price increases and economy-wide recessions. Attempts to control for macroeconomic factors and changes in input prices suggest that the financial performance of the airline industry is better than it would have been under continued regulation. One study has estimated that profits in 1977 would have increased by more than $4 billion if the airlines had been fully deregulated at that time. To measure the overall welfare effects of deregulation, it is necessary to quantify effects on airlines and travelers. Travelers have been affected principally through reduced fares, increased frequency of service, and changes in travel time between destinations. Both business travelers and pleasure travelers have benefited. Moreover, travelers using all sizes of airports experienced a net average gain in welfare. The welfare increase for the average traveler amounts to roughly $20 per trip. Summing the estimated aggregate gains to travelers and airline companies yields a total of approximately $15 billion in annual benefits from deregulation. INTERNATIONAL CONSEQUENCES The U.S. experience with deregulation has been influential in leading other countries to deregulate air travel. Great Britain recently privatized its major state-owned airline. Canada and Japan are considering similar moves. New Zealand has taken steps parallel to those in the United States to deregulate its air transport industry, and Australia plans to phase in airline deregulation by the early 1990s. After 206 nearly 3 years of debate the European Community (EC) has approved the first steps of a liberalization package that took effect at the start of 1988. Greater entry by carriers within the EC will be permitted, and it is estimated that fares for flights within Europe will decline by an average of 10 to 15 percent. The International Air Transport Association (IATA) plays a major role in attempting to cartelize international air travel by providing a forum for price coordination exempt from the antitrust laws. Limitations on international competition also result from government regulation of entry and prices in international markets. Through a series of bilateral agreements, countries have divided international markets. In many cases only one carrier from each country is permitted to serve a particular route. These restrictions on entry and price competition have led to a market structure reminiscent of the domestic U.S. market under the CAB. Fares tend to be higher, and firms compete, if at all, on service rather than on price. Governments sometimes negotiate bilateral agreements that not only limit total capacity but also divide the airline traffic and profits between themselves. The principal source of price competition in European markets comes from charter services, which are outside of IATA's purview. Indeed, charter services currently account for more than half of all travel in Europe. In order to promote competition in international aviation, the United States has entered into a number of bilateral negotiations with other nations to increase the access of U.S. carriers to foreign destinations in return for greater foreign access to U.S. destinations. Where these agreements permit greater entry and price flexibility, the increased competition on international routes has resulted in lower fares. The United States is pursuing further liberalization of international airline travel through similar bilateral negotiations. Although such negotiations are only a first step toward greater international competition, they could result in global economic gains. Allowing U.S. carriers free entry into foreign markets would provide significant benefits to consumers and domestic carriers. Offering foreign airlines free access to U.S. destinations would provide much more convenient international direct flight service to consumers worldwide. MANAGING THE INCREASED DEMAND FOR AIRSPACE Deregulation has given rise to the highest levels of commercial air travel ever experienced in the world. If not managed properly, increased air traffic could lead to greater congestion, and in some situations could raise safety concerns. The deregulated environment has 207 been quite effective in maintaining air safety. The growth of air traffic, however, has raised some important issues concerning the compatibility of airline deregulation with continued government management of airspace and airport services. If the benefits of deregulation are to be enhanced, market forces should be introduced to reform those elements of the air transport industry that are still regulated by the government. SAFETY Airline accidents have declined steadily since the 1950s and this trend has continued since the advent of deregulation in 1978. From 1978 to 1986 departures increased by 28 percent, miles flown by 48 percent, revenue passenger miles by 61 percent, and revenue passengers by 52 percent. In light of this large increase in air travel, the accident rate statistics under deregulation appear even more favorable. The decline in fatality rates is particularly encouraging, since load factors and the number of seats per plane have risen since the end of regulation. Chart 6-1 shows that accident and fatal accident rates for all scheduled passenger and cargo operations have declined dramatically during the last 30 years, reaching an all-time low in the period since deregulation. Even if extremes rather than averages are compared, air safety looks quite good following deregulation. A comparison of the worst year for accidents following deregulation with the previous 30 years shows that in only 3 years prior to 1978 were there fewer accidents. A similar picture emerges if the best year achieved under regulation is used as the benchmark for safety. In 4 of the 10 years following deregulation, there have been fewer accidents than in regulation's best year, notwithstanding the sharp increase in air travel. Improvements in flight safety performance have not been confined to the major carriers. Although only recent data are available for nonscheduled service, commuters, and air taxis, their safety records from 1971 to 1978 can be compared with those from 1979 to 1986. For nonscheduled operations, accidents per 100,000 flight hours have fallen 7 percent, and fatalities per 100,000 flight hours have declined 53 percent. Accident and fatality rates for commuters and air taxis have shown similar improvement, falling 27 percent and 36 percent, respectively. These statistics demonstrate that safety performance has improved in all segments of the industry since deregulation. Critics of deregulation have argued that airline safety would deteriorate under competition, because competitive pressures would induce firms to cut back on safety expenditures. Under such circumstances the incentives to reduce costs could result in the airlines exposing passengers to greater risks. In addition, price regulation had 208 Chart 6-1 Airline Accident Rate Rate* 2.2 Rate* i 1955 i i i I i i i i I i r i i I i i i i 1 i i 1960 1965 1970 1975 i 1980 1985 'Accidents per 100,000 departures. Note.'—Data relate to scheduled passenger and cargo operations of U.S. certificated air carriers; data for 1987 are preliminary. Sources: Civil Aeronautics Board and National Transportation Safety Board. forced airlines to focus their competition on nonprice factors such as safety, and deregulation would end that incentive. Thus it was argued, airlines would pay less attention to safety in a deregulated environment, and the skies would become less safe. After nearly a decade of experience with deregulated air travel, these fears have proven to be unfounded. Studies have found no evidence of a decline in the safety performance of the airline industry following deregulation. Furthermore, there appears to be little or no correlation between safety and financial performance in the airline industry, either before or after deregulation. In addition, profitability appears to have had no effect on maintenance expenditures, and there is no systematic evidence that airlines have cut corners on safety. If deregulation were leading to reduced safety precautions, then this change should affect the characteristics of accidents that do occur. For example, if airlines were taking less time to train pilots or were overworking them, then the share of accidents caused primarily by pilot error should rise. Similarly, if there were less emphasis on 209 maintenance, then the percentage of accidents primarily due to equipment failure should rise. The statistics show, however, that the proportion of accidents primarily due to pilot error as well as the share primarily due to equipment failure have changed little since deregulation. The relative ranking of the factors contributing to fatal airline accidents before and after deregulation also has been quite stable. Pilot error is the most common factor followed by the weather and then by air traffic control. Maintenance is the least common factor. In the decade prior to deregulation, pilot error was a contributing factor in 32 fatal accidents, while maintenance was a contributing factor in 2 accidents. In contrast, pilot error was a contributing factor in 12 accidents and maintenance in only 1 accident in the period since deregulation. Recently the public has expressed concern that the rapid growth in air traffic stemming from deregulation has put unusual stress on the air traffic control system. At the same time there have been reports that air traffic controllers may feel overburdened. Since reaching a low in late 1981 following the illegal strike by the air traffic controllers union, controller staffs have been growing to meet the increasing demand. The evidence does not support the claim that changes in controller staffing have led to a decline in safety. Indeed, the share of accidents primarily due to air traffic control error has not changed since deregulation. Although the accident and fatality statistics point to improved rather than deteriorating safety since 1978, some observers have claimed that the "safety margin" is declining. However, measurement of the safety margin is problematic. Near midair collision statistics play a major role in this concept. Unfortunately, there is no consistent near midair collision data that would permit a comparison of performance before and after deregulation. In addition, a 1985 change in the procedures for processing near midair collision reports makes it difficult to discern reliable trends after deregulation. A near midair collision is defined as an incident in which the possibility of a collision occurs as a result of aircraft coming within 500 feet of each other. A pilot or crew member also can report a near midair collision if the individual believes that a hazard existed between two or more aircraft, even if the 500-foot criterion were not met. Near midair collisions then are categorized as critical (the most serious), potential, and no hazard (collision improbable). Approximately 70 percent of the total increase in near midair collision reports from 1985 to 1986 has been in the "no hazard" category. The number of reported near midair collisions does not appear to be cor- 210 related with any measure of accidents, fatalities, or number of actual midair collisions. Midair collisions constitute a very small fraction of all aircraft accidents involving a commercial carrier. Most accidents occur at takeoff or landing and do not involve another aircraft. Since the passage of the Airline Deregulation Act of 1978, only one midair collision involving a domestic commercial jetliner has occurred in the United States. Since near midair collision reports do not appear to be correlated with air carrier accidents or accident rates, and actual midair collisions involving commercial jets have been rare, the concern about the safety margin appears to be exaggerated. An often neglected but very significant consequence of deregulation is that lower fares and more frequent service have caused air travel to be substituted for other modes of transportation. Since air travel is safer than other forms of intercity travel, overall transportation safety is improved as people substitute a safer form of transport for a less safe one. Between 1980 and 1984, for example, deaths per billion passenger miles for passenger car travel averaged 35.7, whereas for airline travel they averaged 0.3. Thus, for every billion miles of air travel that people substitute for car travel, there will be approximately 35 fewer deaths. A study has estimated that more than 800 lives are saved each year because people now travel by plane rather than by car. It is important to recognize that deregulation did not affect the Federal Government's role in the regulation of safety. The Federal Aviation Administration (FAA) has continued to monitor airlines' safety-related activities. One study has concluded that airlines consider the FAA standards to be "bare-bones" minima for operation, and they routinely do more than the FAA calls for. For example, the airlines have voluntarily set standards for aviation equipment through a nonprofit corporation owned by the airlines. While there is likely to be a valuable role for an external body to oversee safety in the airline industry, government regulation represents but one of many approaches that could be adopted. In many other industries, private organizations such as Underwriters Laboratories and insurance groups provide monitoring and safety standards. The market provision of such services might work similarly in the airline industry. As the safety statistics suggest, competition does not appear to provide airlines an incentive to reduce safety. In fact, market forces may reinforce airline safety considerations. When an airline experiences an accident, the price of its stock suffers a loss. If carriers attempted to reduce safety precautions to an unacceptable level, they could be affected adversely by FAA enforcement actions, increased 211 insurance premiums, increased costs of borrowing, and a loss of reputation. Thus, firms will consider these consequences when they develop their safety management practices. In summary, the evidence shows that safety has not deteriorated as a result of airline deregulation. Even if safety were declining, a return to price and entry regulation would not be the answer. Protecting airline profits through regulation of price and entry is unlikely to result in improved safety, since there is scant evidence that changes in financial variables lead to changes in safety performance. With a return to regulation, however, the safety gains from intermodal substitution of air travel for other, less safe forms of transport would be forgone. DELAYS One feature not addressed by airline deregulation was the management of delays. Delays occur when the demand for system capacity exceeds the available supply. Delays usually are caused by congestion. Just as highways often become congested during rush hours, so do airports and airspace. Most delays occur at crowded airports during peak periods, just as most highway delays occur during rush hour traffic jams around major cities. In 1987, for example, 85 percent of total recorded delays were associated with only 22 airports. The primary responsibility for managing the U.S. airspace continues to lie with the FAA. The policies adopted by the FAA have an important effect on the amount and distribution of delays. To understand appropriate remedies for problems related to delays, it is useful to have some understanding of how the air traffic control system works. In the United States more than 600 airport control towers clear planes for takeoff and landing. To help regulate traffic between airports, there are 20 domestic en route air traffic control centers which span the continental United States. These facilities help manage more than 40 million flights per year. To simplify this task, the airspace is divided into a number of sectors. Each sector corresponds to a parcel of airspace within which a controller is responsible for the safe passage of aircraft. Of the 47,000 people employed by the FAA, about 15,000 are air traffic controllers. Weather conditions play a major role in contributing to delays. Because bad weather reduces an airport's capacity to handle flights, it can generate delays. The FAA reports that in 1987 approximately 70 percent of flight delays were weather-related, and 23 percent were volume-related. More specifically, the FAA estimates that 11 percent of delays were due directly to traffic volume at airports, while 12 percent resulted from high traffic volume at en route centers. Prior to 212 deregulation in the 1970s, all volume-related delays constituted less than 5 percent of total delays, and weather accounted for roughly 80 percent of total delays. Unfortunately, incomplete measurement of delays, together with changes in the definition of "delay," make it difficult to assess longterm trends. The FAA attempts to measure only major delays due to air traffic control. Prior to 1982 only delays over 30 minutes were reported. Since then the FAA has recorded delays of 15 minutes or more. The number of delays varies greatly from one year to the next, due mainly to the vagaries of weather. While delays are unpleasant, some amount of delay at peak periods is usually appropriate. Actions taken to control delays should balance the benefits of reducing delay during peak periods against the cost of additional capacity. Even if it were possible to eliminate all delays, such a policy would not necessarily be efficient, because the costs of eliminating delays during peak periods would exceed the benefits. For example, although it might be possible to build a superhighway that could accommodate all rush hour traffic, most of the lanes of this highway would remain empty for the vast majority of the day. The costs incurred in building such a highway are likely to far exceed the benefits of eliminating congestion and delays at rush hour. Current Approaches for Managing Congestion The FAA and DOT have taken a variety of actions to address concerns about air traffic congestion. After the strike by air traffic controllers in 1981, the FAA adopted a new policy to minimize the number of aircraft that the system must track at any one time without reducing the overall volume of daily flight activity. When congestion is anticipated at the destination airport, the FAA requires that a plane wait on the ground. This policy, while perhaps addressing safety, actually may have introduced significant delays. If planes were allowed to circle in the vicinity of destination airports, waiting for weather or congestion to clear, unnecessary delays could be avoided. To help ease the delay problem, the FAA has undertaken a major restructuring of the airspace along the east coast. The FAA significantly expanded air traffic capabilities through an improvement in routing procedures. This change required only a very small addition of personnel and equipment. The airspace reorganization is analogous to reducing traffic jams by increasing the number of lanes on a roadway and improving the timing of stoplights. The creation of additional departure routes and airways was accomplished primarily through better charting, efficient realignment of existing paths, and increased coordination among air traffic facilities. Similar plans for restructuring airways along the west coast are under development. 213 The Department of Transportation periodically has attempted to enlist the help of the airlines in sorting out scheduling problems. In 1984 and again in 1987, the DOT brought the airlines together to engage in scheduling discussions aimed at reducing delays. The DOT believes that these meetings have helped to reduce excessive bunching of departures at peak periods. Since pricing mechanisms are not used to allocate takeoffs and landings at the most desirable times, the airlines have little incentive to transfer some of their peak traffic to off-peak periods. Reliance upon DOT meetings to deal with scheduling issues arises at least in part because pricing of airport usage does not reflect congestion costs. Due to the increasing concern about delays and service, the DOT recently required airlines to provide information on all delays, except those related to maintenance. Beginning in September 1987, monthly tabulations covering approximately 80 percent of all flights have been made available on a flight-by-flight basis. Delay statistics for all flights at the reporting airports also are being calculated. If airport services were priced to reflect congestion costs accurately, then prices would convey much of the information that this disclosure rule attempts to provide. In the absence of price signals, the DOT statistics may encourage some travelers to switch to flights that are less likely to experience delays. The response of travelers would provide an incentive for the airlines to improve scheduling and operations. While the publication of delay statistics provides consumers and planners with some information about the specific sources of delay, the disclosure requirement may not lead to improved consumer service. For example, the willingness of an airline to hold a connecting flight for the late arrival of another flight may be affected. Particularly at a hub, one plane arriving late could cause a number of other planes to be held for connecting passengers. If the airline holds the connecting flights, its on-time performance record will be harmed. If it does not hold the flight and passengers miss their connections, the airline's performance may appear better. Thus, actual delays experienced by travelers could increase as the reported statistics appear to improve. To meet capacity needs in the longer term, the FAA is attempting to increase the pace at which the airport and airways system is being modernized. The agency is in the process of designing and building a new system of radars, communication devices, and computer hardware and software as part of the National Airspace System Plan. These improvements will allow the system to handle more air traffic. The FAA is also in the process of training more controllers. Unfortu- 214 nately, the implementation of many aspects of the National Airspace System Plan are much behind schedule. Technical problems have slowed the development and introduction of improved facilities to accommodate more volume. In the United States, there is only one major new commercial passenger airport planned to be built before the turn of the century. Direct airport capacity expansion faces a number of significant obstacles. There is strong opposition in many communities to the construction of new airports as well as to the expansion of existing local airports. Local noise standards limit traffic growth at many airports. A number of communities recently have passed ordinances explicitly restricting airport traffic. The Federal authorities who manage the overall capacity of the system often have goals conflicting with those of the local communities. The Federal Government and the airlines have taken a number of steps to address the problems related to delays with varying degrees of effectiveness. The recent trend in delays looks promising. Total delays as recorded by the FAA declined by 15 percent from 1986 to 1987, even though traffic volume continued to climb. Despite this improvement, it is likely that the delay issue will resurface periodically, unless fundamental structural changes are made in the way the airspace is managed and in the way decisions about investment in capacity are made. MAKING THE SYSTEM MORE RESPONSIVE AND EFFICIENT Because traffic volume has risen since deregulation, it has become increasingly difficult for the supply of airspace services to keep up with the demands imposed upon the system. Part of the problem is the way the system currently is financed. Instead of paying for services actually rendered by the air traffic control system, operators and travelers pay taxes only indirectly related to costs. The primary source of funding for the system is an 8 percent tax on each airline ticket sold. In 1987 the ticket tax yielded $2.7 billion in revenues, accounting for 88 percent of the revenues collected from users. The remaining revenues come from a tax on aviation fuel, a 5 percent tax on cargo, and a $3 passenger tax on international departures. These revenues flow into the Airport and Airway Trust Fund, out of which part of the Federal spending related to air transportation is financed. FAA expenditures for fiscal 1987 totaled $4.9 billion. The difference between FAA expenditures and revenues raised from user taxes in 1987 was $1.9 billion. Not all of this difference represents a subsidy from the general public, since the public should pay for the use of the airspace by government agencies such as the Department of Defense. Nonetheless, a sizable portion of this revenue shortfall does 215 represent a subsidy from U.S. taxpayers to the aviation system. The FAA estimates that commercial airlines pay roughly 90 percent of the costs they impose on the system. General aviation, which includes small, privately owned aircraft and business jets, pays less than 10 percent of the costs they impose on the system. The total subsidy from taxpayers to the beneficiaries of general aviation and air carrier activity was approximately $1.1 billion for fiscal 1987. There are two basic problems with this policy for funding air traffic control and safety services. First, the primary beneficiaries of airline travel are not bearing the full cost. Ending the subsidy to the air transport sector not only would help allocate the supply of airspace services rationally and result in better allocation among transportation modes, but it also would result in a small decrease in the Federal budget deficit. The second problem is that the payments made by travelers and operators are not linked to the use of specific services. The charges are related only tangentially to the costs they impose on the system. To develop a sensible response to short-term congestion problems and long-term planning issues, it would be useful to obtain information on the value people place on airspace services, a task best accomplished by asking users to pay for services actually rendered. More accurate information on how travelers value capacity would make it possible to determine where adjustments in system capacity are needed. There are a variety of short- and long-term options that could enhance the efficiency of the air traffic control system. In the short term, the most attractive options include the introduction of realistic pricing of services that could ease particularly troublesome bottlenecks in the system. In the longer term, it is possible to design efficient approaches which avoid the types of delays that have been experienced in the recent past, and that also can meet the demands of a rapidly changing airline industry. Short-Term Options for Easing Congestion Virtually none of the measures developed by Federal authorities to address the short-term congestion problem incorporates economic approaches. Because of the way the system currently is managed, airlines have very little incentive to consider the costs they impose on others when flying at peak periods. Charges to aircraft operators do not reflect the full costs of using the airspace and airport facilities at these times. For example, if a plane lands at a congested airport during a peak period, all other planes waiting to land are delayed. Similarly, if a plane takes off during a peak period, planes waiting in line behind it are delayed. Operators will not take these costs into 216 account unless a system is implemented in which they are charged for them. There are two basic approaches that would help alleviate the congestion problem during peak periods while at the same time promote a more efficient use of available capacity. One would set a price for takeoffs and landings that adequately reflects direct and indirect costs. Direct costs include normal operating and maintenance costs, while indirect costs include the costs of congestion. The other approach would limit the quantity of takeoff and landing slots during peak periods and allow these slots to be bought and sold. Both the fee system and the slot system would allow passengers who value peak-period travel the most highly to have access to airports during these periods. Those passengers who have greater flexibility could elect to take flights during off-peak periods and, thus, take advantage of the lower fares that would be offered then. The best way to strike an appropriate balance between the costs and benefits of congestion is to introduce tradable slots or variable fees that reflect the costs that each individual imposes on other travelers at peak times. These economic approaches would ensure that operators and customers take congestion costs into account in their travel decisions. Reducing the level of congestion at airports would increase the value\pf peak-period flights and would promote economic efficiency. Variants of these approaches already are in use. Airports typically assess landing fees based on aircraft weight because runway wear is generally thought to be related to aircraft landing weight. Few of these fees, however, vary with airport usage or time of day. Distinctions between peak and off-peak periods rarely are made. In addition, the fees typically are quite low. For example, a small private plane can land during a peak period at Washington's National Airport for no more than $6.00. Airports receiving funds from the Airport and Airway Trust Fund are constrained to some extent in the fees they may charge to users. Fees must be nondiscriminatory; this is interpreted to mean that they must be related directly to costs. Such a condition does not preclude the use of peak landing and takeoff fees, provided that costs are interpreted to include the congestion costs that each airplane imposes on others. These congestion costs should be included in the calculation of peak prices to the extent feasible. Under the current fee system, on-time performance cannot be purchased. Those travelers who incur high costs when delayed have no way to signal their costs to the system. Passengers cannot simply pay a premium to assure that their flights will arrive on schedule. Except at a very limited number of airports, airlines wishing to offer better 217 on-time services cannot pay more to obtain a takeoff or landing preference. The current system rations airspace and airport services through waiting time and delays, whereas a pricing mechanism would permit a more efficient allocation of landings and takeoffs among those who place different values on their time. Without accurate information on the costs of delays, the airlines and airports lack the criteria to decide how to improve flight schedules to suit passenger demands. If landing fees adequately reflected congestion costs, some passengers and flights would be induced to switch to off-peak periods when fees were lower. Some airports have begun to use such fees. For example, in 1968 peak and off-peak fees were introduced for general aviation at three major New York airports. The peak-period fee was raised to $25, while the off-peak landing fee remained at $5. This fee schedule resulted in a 30 percent decrease in peak-period traffic and a 19 percent overall decrease in general aviation activity. In addition, there was a marked decrease in delays. This example shows that the introduction of peak/off-peak pricing differentials can be quite effective. Recently, Boston's Logan Airport announced plans to implement general aviation fees intended to address congestion problems. In 1972 London's Heathrow Airport adopted a peak-load pricing approach. Some U.S. airlines have objected to the charges at Heathrow on the grounds that they discriminate against transatlantic traffic. These arguments notwithstanding, it is clear that proper application of peak-load pricing has the potential to reduce congestion and enhance the efficiency of airline service significantly. An alternative to peak-period fees is a restriction on the number of landing and takeoff slots available during peak periods. At most airports there are no restrictions on landings and takeoffs other than those imposed by air traffic controllers. Planes typically are handled on a first-come, first-served basis. At O'Hare, La Guardia, Kennedy, and National Airports, however, the FAA has limited the number of takeoff and landing slots available. The FAA, in consultation with the airlines, has allocated slots to the carriers by criteria related to historical usage. The FAA can change this allocation and require one airline to transfer slots to another. Beginning in April 1986, the FAA authorized the purchase and sale of slots at the four "slot-constrained" airports. Although all airlines currently are free to participate in this slot market, the FAA retains the right to withdraw this privilege and reallocate slots at its discretion. An initial 6-week experiment in 1982, in which over 190 slots were bought and sold, provided evidence of the workability of a slot market. During this experiment a private firm began to offer special- 218 ized brokerage services for the airlines. Since April 1986 there have been more than 1,000 slot transactions at the four slot-constrained airports. However, many of the slots have been transferred on only a temporary basis. The uncertainty surrounding the FAA's ability to direct the reallocation of slots or even to close the slot market may make short-term leasing arrangements more desirable for the airlines than outright purchases or sales. Allowing purchases and sales of slots is a major improvement over the previous system, which allocated slots by committee. The committee process did not allocate slots on the basis of their most highly valued use. In contrast, the slot market allows firms that have a better product to expand their operations by buying slots from other firms. Since the exchange is voluntary, both the buyer and the seller are better off. In addition, consumers generally will be better off, since the airlines have more flexibility to respond to the demands of travelers with different valuations of time. Thus the tradable slot system is similar to the fee system in that it tends to reduce delays while increasing efficiency. Slots and fees can be tailored to meet particular problems that arise in the air traffic control system. For example, two types of service could be offered in the event of bad weather or problems with the air traffic control system. In the event of such a contingency, some firms could receive priority service, which would entitle them to have priority in taking off or landing. Operators would be assessed a fee for this service, or, alternatively, special rights to priority service could be auctioned or allocated to operators. The details of a tradable slot or variable fee approach would vary, depending on the needs and characteristics of the various airports. But overall, such economic incentives could help address short-term congestion problems. Moreover, these schemes could be extended to other aspects of the airspace system. For example, a cost-based pricing system for air traffic control and other airspace services could be explored. In Europe, charges are assessed for the usage of some airspace services. At present, users are not charged directly for using the air traffic control network in the United States. By effectively leaving these services unpriced, the system encourages overutilization of this resource. As in the case of allocating services for landing and takeoff, it is important to develop pricing schemes that reflect the actual costs that users impose on the air traffic network. Such schemes could provide valuable information on ways to improve services provided by air traffic controllers. Economic incentives are but one means of addressing some of the short-term congestion problems. Airport capacity is determined by more than the number of runways. Many other factors limit the over- 219 all capacity of the air traffic system. The FAA already has increased capacity through improved routing and planning. It is also possible to increase capacity by adding more support staff at terminals, by changing the distribution of air traffic controllers, and by improving air traffic control procedures. The effectiveness of these changes will depend on where the bottlenecks in the system lie. However, all such changes can be used in conjunction with economic incentives to help address short-term congestion problems. Long-Term Options for Air Traffic Management Variable fees and tradable slot systems, two useful approaches for controlling short-term congestion, also could aid in expanding air travel capacity over the long term. For example, revenues from fees or the auction of slots could be used to expand the capacity of the system where it is most needed. In some cases such expansion might include adding runways; in other situations new controllers or computers might be more appropriate. Even if the revenues from fees or slots were not used to add directly to capacity, these approaches could provide very useful information for long-term planning. The price of a slot during the peak period at an airport provides a good measure of what people would be willing to pay for a small increase in capacity at that airport. When this value exceeds the cost of adding capacity, then an increase in capacity is warranted. To reap the full benefits of deregulation, it is necessary to have a system that is responsive to changes in capacity needs. The current system for planning capacity was developed under an environment in which change was predictable. Routes and traffic patterns were stable as a result of CAB regulation. This stability disappeared with deregulation. The FAA has found itself in the unenviable position of trying to manage the capacity of a rapidly changing industry without having the necessary information. Capacity planners could make two changes that would help enhance the benefits of deregulation. First, the planning function needs to be linked to data on the value of capacity additions. At present, very little information is available on the value of adding capacity because users are not asked to pay directly for the services they are offered. Second, planning should be more responsive to the needs of local airports. Decentralizing planning would help achieve this goal. There are several alternatives for restructuring the current system that could help address some of the basic concerns related to congestion. These include redefining the role of the FAA, restructuring the FAA, and changing the organization of the air traffic control system. The FAA currently must try to implement two largely independent mandates: the regulation of aviation safety and the general promotion of aviation. Some observers have argued that the FAA is well- 220 suited to handle aviation safety regulation, but a government agency may be less well-suited to meeting the capacity needs of an industry that is evolving quickly. One proposal would have the FAA retain its primary role in regulating safety, but relinquish its role as a central planner in the air traffic control system. Some groups have recommended that the control of air traffic be placed under the supervision of a special Federal corporation that would distribute airport grants, hire air traffic controllers, and contract out services. The corporation would have more flexibility than a Federal agency in hiring and paying its employees and in procurement. A board of directors representing the users of the system would help make the corporation more responsive to the needs of its users than the current system is. Recognizing the potential for inefficiency in a federally sponsored corporation, another proposal calls for placing the supply of air traffic services in the hands of the private sector. Instead of a Federal corporation, a nonprofit corporation owned by the various users would be created. Unlike the current air traffic control system, such a corporation would be funded from user fees, including charges for the use of the controller network. Financing the system on the basis of user fees would provide improved information on where capacity expansion is most needed. A private, user-funded corporation would be free from the constraints of the budget process faced by a Federal corporation, and would have a strong incentive to provide services that meet the needs of travelers. A similar nonprofit, user-owned corporation has operated for over 50 years providing extensive airline radio communications and navigation services. In addition, this corporation has played an important role in setting aviation engineering and communications standards. Another possibility is for local airports to own and operate their own air traffic control towers. These control towers still would follow the standards set by the FAA and the entity in charge of controlling air traffic. The staffing and investment decisions for such control towers, however, would be made by the management of the local airport. By returning this function to the local airports, the system could become more responsive to the needs of users. The FAA currently allows 17 small Level I control towers to be operated privately. Moreover, a private concern has expressed interest in buying and managing the remainder of the federally owned Level I control towers. In contrast to the United States, Great Britain implemented a system in 1972 which encouraged widespread use of the private sector in managing various airspace functions. A private company now competes with a governmental body in the training of air traffic 221 controllers. Airports in Great Britain contract with this company or with the government to supply their air traffic control needs. The largest British airports charge variable landing fees and use these revenues to finance airport growth. In this way, local British airports can respond directly to changes in demands for their facilities. Two main themes underlie these proposals to reorganize the air traffic control system. The first relates to the value of separating safety regulation from the provision of air traffic services. While the two activities are linked, the Federal Government may not be in the best position to implement policies that ease congestion. The second is that user fees directly related to services are necessary to understand more clearly the level of services needed now and in the future. Only with a pricing system that allows operators and air travelers to register the extent to which they value various services will it be possible to plan sensibly for the needs of the future. Moreover, this pricing system can be used to generate the revenues needed to improve the system. CONCERNS ABOUT MARKET ORGANIZATION AND MONOPOLY Deregulation has led to greater price competition, lower average fares for travelers, and a more efficient industry structure. The evidence suggests that the industry is much more competitive now than under regulation, and that attempts to reregulate would produce substantial net losses for both consumers and the airline industry. Nonetheless, concern has been voiced that the emerging industry structure is oligopolistic in character, allowing firms to exert substantial control over various markets. Four specific issues have been raised. First, the viability of new entrants and smaller carriers in the deregulated marketplace has been a source of concern. Second, the growth of particular airlines at hub airports, along with some recent mergers, have raised questions about consolidation in the industry. Third, since information about flights and fares has become more important in airline competition, the influence of airline-owned computerized reservation systems used by travel agents has come under scrutiny. Fourth, by making entry more difficult, capacity limitations set on airport usage may pose a threat to competition. THE VIABILITY OF NEW ENTRANTS AND SMALLER AIRLINES Deregulation has radically transformed the organization of the airline industry. Freedom of entry has played an important role in this change. Under regulation, the existing interstate airlines were pro- 222 tected against new entry. The number of carriers gradually dwindled until 1978, when there were only 36 certificated airline operators left. Since deregulation many new airlines have emerged. More than 200 firms have been certified since 1978. As in any dynamic industry, some firms have failed, some have merged, and others have grown on their own. As of July 1987 there were 78 certificated airline carriers, although nearly one-half operated outside of the continental United States. More than three-fourths of carriers flying today received their certification following deregulation. There was some initial concern that smaller carriers would have difficulty entering the industry to compete against large incumbents. Studies indicated that larger airlines had lower costs per seat mile than smaller airlines; however, company size itself was found to confer no advantages on a particular route. The differences instead were found to be attributable to the different types of service offered by large trunks and local carriers. Smaller airlines tended to make shorter flights with smaller planes than the major carriers. Bigger planes flying longer distances operated at lower costs per seat mile. In other words, there appear to be economies of scale in aircraft size and usage, but not necessarily in overall airline size. The evolution of airline operations toward hub-and-spoke systems following deregulation, however, may provide some advantages to larger airlines. The ability of a single airline to offer a variety of routes at convenient departure times may be valuable to prospective passengers. Carriers may be able to use their aircraft more efficiently by having multiple hubs rather than a single hub. The economics of disseminating fare information and using this information for developing fare structures also may favor larger firms. Since deregulation the success of local and regional airlines has helped to relieve concerns about the viability of smaller airlines coexisting with the trunks. Local and regional carriers have enjoyed greater profitability than the large trunk airlines. The common stock of small carriers has performed better than stocks of the larger airlines. Furthermore, many smaller airlines have found market niches, in which they have prospered, such as feeder services to larger carriers or connections between less densely populated areas. New entrants generally have enjoyed cost advantages over the established airlines. The employment contracts and management organization developed under regulation were not compatible with a deregulated environment. New carriers have been able to achieve lower labor costs and improved utilization of equipment. The established airlines have responded to the competitive pressure by reducing operating costs, thereby mitigating the advantages of entrants. 223 MERGERS AND CONSOLIDATION AT HUBS In order to coordinate and consolidate traffic in a hubbing network, a carrier must have a large number of flights at its hub airports. Naturally, as an airline routes more of its traffic through its hubs, its share of flights at those airports will grow. Thus some increase in airline concentration at individual airports is a consequence of building an efficient route structure. Airline hub-and-spoke networks have expanded in two ways: through internal growth by offering more flights and leasing more gate space; and through mergers of existing airlines. Expanding the reach of an airline's network by adding new hub locations and spoke routes affords more opportunities for single-line travel. Yet expansion of a carrier at an existing hub, through the merger of two airlines' operations at a particular airport, has raised concerns that firms may be able to exert market power. Potential anti-competitive problems from mergers can be addressed through normal antitrust review. The application of the antitrust laws to the airline industry is not an issue of deregulation per se, but a matter of general competitive policy. Changes in airline organization and operation that cause traffic at a hub airport to be concentrated in the hands of one or two airlines do not, by themselves, reveal much about the competitive level in the industry. Where barriers to entry are low and alternatives are available, the benefits of competition can be achieved regardless of airline concentration or the actual number of competitors in a market. Where those conditions do not hold, conclusions about the vigor of competition must be drawn with more caution. Thus the potential impediments to competition must be analyzed in order to evaluate the consequences of consolidation in the airline industry. At hubs where one or two carriers already use a large share of the gate space, another airline may find it difficult to establish a major presence there. The relevant statistic, however, may not be the concentration at the individual airport. Competition among hubs at different locations provides a significant disciplinary force. The hub airports in one carrier's system are the spoke airports of other carriers' systems. If travelers living near a concentrated hub become dissatisfied with the fare and service of the dominant carrier(s), they often have the option of taking another airline to its hub and flying to their destinations from there. For long journeys passengers can choose among a number of hubs in order to reach their destination. A traveler from Boston to Phoenix, for example, can choose among nine connecting points, including Chicago, Kansas City, and St. Louis. Many hubs have been created since deregulation, and airlines are continuing to add new hubs 224 to their systems, such as Charlotte, Cincinnati, Dayton, Philadelphia, and Raleigh-Durham. In addition, metropolitan areas with multiple airports may experience competition among them, since an attempt by an airline to raise its fares at one airport may be disciplined by travelers switching to an airline at another airport. Competitive conditions for shorter flights are different from those for longer ones. Interhub competition is most effective for the longer flights. On shorter routes flying through an out-of-the-way hub to arrive at one's ultimate destination may not be a feasible alternative. For example, flying from Minneapolis to Madison via Chicago may not be a very good substitute for a nonstop flight from Minneapolis to Madison. On thinly traveled shorter routes, service from small commuter airlines may provide alternatives to the dominant carriers feeding into the hub. For shorter distances surface transportation, such as cars, buses, and trains, may provide a viable alternative means of travel. On routes where reasonable alternatives are quite limited, there have been complaints of monopoly pricing. These cases often involve markets with small traffic volume that can accommodate only single plane scheduled service. In some cases, regular air service to small communities is feasible only as a result of pooling passengers, which is made possible by the existence of a hub into which traffic from small communities can feed. A policy that would weaken the hubbing structure also would reduce the network economies available from careful route coordination. Such a policy could result in the denial of air service to these communities altogether. Recent research has found that fares tend to be higher on routes on which there are fewer competitors. Yet it is not clear if increases in concentration actually imply higher prices. Moreover, even if this were true, if travelers paying these higher prices received higher quality service, they could be better off. More research will be necessary to determine how specific changes in industry concentration have affected consumer welfare. While the concentration of major carriers at the national level and at some hubs has increased recently, it is not clear that concentration has risen in the economically relevant markets, namely, individual city-pair markets. Easier entry into these markets appears to have brought more airlines into competition on more routes. Preliminary research suggests that the average number of carriers per route is higher today than it was under regulation. COMPUTERIZED RESERVATION SYSTEMS The development of computerized reservation systems (CRS) by a few airlines has been pointed to as a danger to free competition 225 among the airlines. Prior to CRS most travel agents would look up flights and fares in the Official Airline Guide. Then they would call each airline individually to check seat and fare availability. CRS provides an up-to-date listing of flights, fares, and seat availability on a terminal screen. Reservations, seat assignments, and ticket purchases then can be made by computer. The initial plans to develop a computerized system of reservations and flight information dates back to 1953. Technical difficulties in implementation were formidable. The data processing requirements stretched the limits of existing computer hardware and software. In the late 1960s and early 1970s, attempts were made to develop a common system for airlines and travel agents. After an industry-wide effort to develop a CRS broke down in the early 1970s, two airlines invested heavily to develop and market their own systems. The success of these systems spurred others to enter, and now three other domestic airline-owned systems compete for travel agents. While CRS was developed prior to deregulation, it is well-suited to a market environment in which prices are changing constantly. The key benefit provided by CRS is information. The development of the hub-and-spoke structure has made finding convenient connections extremely important. While fare structures have grown more complex, CRS allows prices, schedules, and routes to be accessed and conveyed to the traveler in an inexpensive and timely manner. CRS also has played an important role in managing the information that enables airlines to offer deep discount fares. The airlines themselves had to develop sophisticated techniques for monitoring the inventory of seats on their flights in order to plan their route structure and thus to use their aircraft efficiently. CRS has helped contribute to the rapid advances in the management and productivity of the U.S. airline industry. Because CRS provides airlines with the ability to react quickly, change their fares, and disseminate information, it functions as an important marketing and advertising tool. The order in which the offerings appear on the travel agent's computer screen, however, has been a point of controversy. The owner-developer of each system initially listed its own flights first and permitted others to purchase preferential placement on the screen. There are two sides to the CRS market. CRS owners negotiate with travel agents to use their services. They also negotiate with other airlines to list their flights on a particular CRS. Since entry into the travel agency business is unrestricted, agents compete with each other to offer the best service to their customers. Thus travel agents will choose a system that best helps them to in- 226 crease earnings, so CRS services and screen presentations are developed to suit their demands and those of their customers. Airlines purchasing CRS services argued it was unfair for CRS owners to charge airlines different prices for their booking services. In response to these concerns, the CAB required CRS owners to charge the same price for all airline bookings. Whether in fact CRS prices could be anticompetitive is a matter that currently is being litigated. Airlines without their own CRS have complained that the preferential placement of the CRS owner's information puts the non-owners at a competitive disadvantage. Just before its demise, the Civil Aeronautics Board issued an order requiring nondiscriminatory flight listings on a CRS. This order effectively limited the options available to CRS owners in listing flights on the computer screen. There has been vigorous debate over the desirability of the rule. Proponents argue that the airlines that owned CRS systems have been able to capture excessive profits as a result of having access to all the information in a CRS system. Opponents argue that the government's attempt to regulate screen display places an unnecessary restraint on competition and that the potential to exercise monopoly power is limited by the existence of several firms that currently offer CRS services. AIRPORT CAPACITY LIMITS Capacity constraints can present obstacles to entry and competition. Setting well-defined limits on airport landings and takeoffs could reduce delays. The price of such a measure, however, could be a weakening of competition, since a major disciplinary force in the airline market is the threat of entry by another carrier. The working of competitive forces could be compromised significantly by capacity restrictions that make it more difficult for carriers to expand service at an airport. The difficulties generated by capacity limitations may be eased through the introduction of appropriate market incentives. When there are such constraints, the allocation method for these limited landing rights has important competitive consequences. Without flexibility to reallocate the slots among rival airlines, those airlines holding the slots are protected against the entry of other carriers. If these slots were tradable, however, new airlines could bid for slots and enter the market. In this way, some of the cartelizing effects of capacity limits could be mitigated. Regardless of whether the landing and takeoff rights are tradable or not, the setting of capacity limits may create incentives that could result in airline operators being reluctant to have the airport expand 227 in the future. Airlines holding slots could have an incentive to oppose an increase in the capacity of the airport because such expansion would lower the value of the slots. Thus temporary capacity constraints could turn into long-term limits on capacity growth. A very similar situation has arisen with the issuance of taxi medallions in major cities. The number of authorized taxis in many cities today was set many years ago. There has been much reluctance, even in the face of consumer dissatisfaction, to augment the number of medallions. Taxi owners argue the local authority would be acting improperly if it took actions to diminish the value of the taxi owners' existing assets. The structure of contracts between airports and airlines also may provide some incentives to slow capacity expansion. Airlines play an important role in determining capacity changes at airports. Airports typically are operated by local authorities, and airport construction usually is financed through the issue of revenue bonds. In order to assure a stream of revenue to support the bond issue, the airport authority signs long-term leases with the airlines for the use of the airport facilities. In return for long-term commitments, as is common in similar long-term agreements, the airlines receive some voice in future capital investments at the airport. These lease contracts typically grant to the airlines leasing a majority of the facilities the power to veto major airport alterations and capital improvements. There have been some complaints that the current operation of slot markets has not been fully effective in allocating landing rights efficiently, and periodic lotteries and auctions have been suggested as a remedy. At the four slot-constrained airports, the FAA can take back a certain percentage of slots from the incumbent airlines and hold a lottery in which new entrants and smaller carriers have a greater chance of winning slots than the larger incumbent airlines. While this procedure may facilitate entry by new carriers, it does so in an inefficient manner. The slots are not allocated by a price mechanism; they are distributed arbitrarily. The careful coordination of incoming and outgoing flights is extremely important for effective route planning. Taking slots from existing hub-and-spoke operations and reallocating them without regard to route structure does not promote airline efficiency. An alternative allocation mechanism to those involving explicit capacity limits is variable landing and usage fees. Such fees would allow the number of operators who can choose to land during a period to vary, subject to safety considerations. Instead of setting a predetermined limit on takeoffs and landings, changes in technology, airport staffing, and airway management then can be used to augment capacity at ppiiits of peak demand. 228 The effective limit will be determined by the demand for airspace at the specified fee. A variable fee structure avoids the incentives for airlines to be opposed to capacity growth. The airlines will prefer lower fees at peak periods, so they will desire an increase in airport capacity, as mentioned above. The use of variable fees also allows the airport to observe demand at different prices for different time periods. Moving toward variable landing and usage fees may help to avoid potential threats to competition posed by capacity limits and to foster capacity expansion. CONCLUSION The passage of the Airline Deregulation Act of 1978 has led to substantial gains, both for the airline industry and the general public. Productivity within the industry has improved, air fares have declined on average, and airlines are providing more frequent service. The total social benefits resulting from airline deregulation during the last decade are estimated to be on the order of $100 billion. The U.S. experience with deregulation is beginning to have an impact on the way other countries manage air travel. Several countries are following the lead of the United States in relaxing price and entry regulation, thereby enhancing the efficiency of the world's transportation system. Changes designed to reduce barriers to international competition would be the next step. An opening of all markets would bring benefits to travelers, airlines, and the global economy. One of the principal benefits of deregulation has been to make air travel available to many Americans who would not even have considered this transportation option 10 years ago. The rapid growth of air travel has, however, strained the limits of the air traffic system in some areas. The Airline Deregulation Act eased entry constraints and promoted greater competition among airlines, but it did not foresee the changes that would be needed to accommodate a revitalized airline industry. To make the system more responsive to future changes, it might be helpful to introduce variable landing and takeoff fees at airports. Revenues from the fees then could be used to enhance the capacity of the system. It is time to reexamine how planning decisions are made, with an eye toward developing market-based approaches that are better suited to meeting the needs of air travelers. The introduction of such changes is the key to increasing the benefits from airline deregulation. 229 Appendix A REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE COUNCIL OF ECONOMIC ADVISERS DURING 1987 LETTER OF TRANSMITTAL COUNCIL OF ECONOMIC ADVISERS, Washington, D.C., December 31, 1987. MR. PRESIDENT: The Council of Economic Advisers submits this report on its activities during the calendar year 1987 in accordance with 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 Michael L. Mussa, Member 233 Council Members and their Dates of Service Name Edwin G. Nourse Leon H. Keyserling John D. Clark Roy Blough Robert C. Turner Arthur F. Burns Neil H. Jacoby Walter W. Stewart Raymond J. Saulnier.. Joseph S. Davis Paul W. McCracken.. Karl Brandt Henry C. Wallich Walter W. Heller James Tobin Hermit Gordon Gardner Acktey 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. Malkiet Charles L Schultze William D. Nordhaus Lyle E. Gramley George C. Eads Stephen M. Goldfeld Murray L Weidenbaum.. William A. Niskanen Jerry L. Jordan Martin Feldstein William Poole Beryl W. Sprinkel Thomas Gale Moore Michael L Mussa Position Oath of office date August 9, 1946 August 9 ( 1946 November 2, 1949 May 10, 1950 August 9, 1946 May 10, 1950 June 29, 1950 September 8, 1952..., March 19, 1953 September 15,1953... December 2, 1953 April 4,1955 December 3, 1956.... May 2, 1955 December 3, 1956 November 1, 1958.... May 7, 1959 January 29, 1961 January 29, 1961 January 29, 1961 August 3 t 1962 November 16, 1964.. May 17, 1963 September 2, 1964... November 16, 1964.. February 15, 1968.... February 2, 1966 February 15, 1968.... July 1, 1968 February 4, 1969 February 4, 1969 February 4, 1969 January 1, 1972 September 9, 1971... March 13, 1972 July 23, 1973 October 31, 1973 September 4, 1974... June 13, 1975 July 22, 1975... January 22, 1977 March 18, 1977 March 18, 1977 June 6, 1979 August 20, 1980 February 27, 1981.... June 12, 1981 July 14, 1981 October 14, 1982 December 10, 1982.. April 18, 1985 July 1, 1985 August 18, 1986 Chairman Vice Chairman Acting Chairman.. Chairman Member Vice Chairman Member Member.... ChairmanMember.. Member Member ChairmanMember Member Member Member Chairman.., Member Member Member ChairmanMember Member Member Chairman... Member Member Member Chairman... Member Member Chairman... Member Member Member...., ChairmanMember Member Chairman.. Member Member Member ChairmanMember lYlBfflDCf ...i ChairmanMember ChairmanMember Member.... 234 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. March 30,1985. July 31, 1982. July 10, 1984. January 20, 1985. Report to the President on the Activities of the Council of Economic Advisers During 1987 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 performance of the Nation's economy. Beryl W. Sprinkel, Thomas Gale Moore, and Michael L. Mussa continued to serve as Council Members in 1987, with Dr. Sprinkel as Chairman. MACROECONOMIC POLICIES As is its tradition, the Council devoted much of its time during 1987 to assisting the President in formulating economic policy objectives and designing programs to achieve them. In this regard, the Chairman kept the President informed of important macroeconomic developments and advised the President and senior Administration officials on major policy issues. Briefings were conducted on a variety of domestic issues, especially the economic outlook, and on international issues, especially in preparation for the Venice Economic Summit. The Council chaired an interagency forecasting group, that also included the Department of the Treasury and the Office of Management and Budget. The forecasting group developed economic projections that were presented to the President and used in the Federal budget. The Council also participated actively in discussions of macroeconomic policy issues within the Administration, in conjunction with outside agencies, and with international organizations. The Council testified before the Congress several times on the economic outlook and on the conduct of monetary policy. The Chairman of the Council continued to serve as the Chairman of the Economic Policy Committee (EPC) of the Organization for Economic Cooperation and Development (OECD). Through its participation in other OECD committees and meetings, the Council continued to analyze a number of economic policy issues, including macroeconomic performance in a multinational context, problems of international policy coordination and payments imbalances, and bar- 235 riers to economic development and structural adjustment. During the year, the Chairman led discussions on structural adjustment at the EPC. The Chairman also represented the EPC at the Ministerial Meeting where the EPC's recommendations on structural reform were adopted. MICROECONOMIC POLICIES A wide variety of microeconomic issues received Council attention during the year. The Council actively participated in the Cabinetlevel Domestic Policy Council and Economic Policy Council, which addressed a number of issues, including: stratospheric ozone, which resulted in an international agreement on controlling and reducing chlorofluorocarbon emissions; international trade policy, which culminated in the signing of a Free-Trade Agreement with Canada; and agricultural policy, which led to the U.S. proposal under the General Agreement on Tariffs and Trade to abolish all distortionary subsidies for and barriers to agricultural products. The Council also continued its membership on the Vice President's Task Force on Regulatory Relief; its membership on the interagency working groups on acid rain, energy security, health policy, research and development policy including superconductivity, alternative fuels, antipoverty policies, the Pension Benefit Guaranty Corporation and steel pensions, and farm credit. The Council retained its chairmanship of the Working Group on Privatization, and began chairing the Working Group on Corporate Sentencing. The Council also devoted a great deal of attention to issues considered by the interagency Trade Policy Review Group, including: intellectual property rights, textile and apparel trade, competitiveness initiatives, Generalized System of Preferences, and a number of Section 301 cases dealing with foreign trade practices and market-opening initiatives. The Council testified before the Congress on mandated health benefits, corporate control issues, and agricultural policy reform. The Council also participated actively in various OECD fora, working on a variety of issues, including the economic effects of agricultural policies and tax policies. 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 also is 236 provided to the public through speeches, testimony, 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 through personal discussions and written reports on economic developments. The Chairman also represents the Council at Cabinet meetings, meetings of the Economic Policy Council and the Domestic Policy Council, daily White House senior staff meetings, weekly issues lunches with the President, and many other formal and informal meetings with the President, senior White House staff, and other senior government officials. The Chairman guides and oversees the work of the Council and exercises ultimate responsibility for directing the work of the Members and the professional staff. This year, the Chairman was elevated to Cabinet rank. COUNCIL MEMBERS Members of the Council are involved in the full range of issues within the Council's purview, and they are responsible for supervising the daily 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 continued to be, however, an informal division of subject matter. Dr. Mussa has been primarily responsible for domestic and international macroeconomic analysis and economic projections. Dr. Moore has been primarily responsible for microeconomic and sectoral analysis and regulatory issues. PROFESSIONAL STAFF The professional staff of the Council consists of the Special Assistant, the Senior Statistician, 10 senior staff economists, 6 junior staff economists, and 1 research assistant. The professional staff and their respective areas of concentration at the end of 1987 were: 237 Special Assistant to the Chairman Margot E. Machol Senior Staff Economists Deborah J. Danker Earl L. Grinols Robert W. Hahn Craig S. Hakkio Arlene S. Holen Robert J. LaLonde J. Steven Landefeld Thomas A. Smith Daniel A. Sumner Peter M. Taylor Macroeconomics, Money, and Finance. ** International Macroeconomics and Trade Energy, Transportation, Environment, and Regulation International Macroeconomics Labor, Health, and Regulation Macroeconomics and Labor Macroeconomics and Taxation Law and Economics Agriculture and Labor Macroeconomics and Forecasting Statistician Catherine H. Furlong Senior Statistician Junior Staff Economists Peter H. Barlerin Lesley A. Cameron Andrew J. Filardo Julie Ann Hewitt Randall S. Kroszner Scott Schuh International Macroeconomics and Trade Macroeconomics and International Finance Macroeconomics and Finance Microeconomics, Agriculture, and Environment Industrial Organization, Regulation, and Finance International and Labor Macroeconomics Research Assistant William A. Teichner Macroeconomics and Forecasting Mrs. Furlong manages the Statistical Office assisted by Natalie V. Rentfro, Linda A. Reilly, and Deborah D. Miller. They administer the Council's statistical information system, overseeing the publication of Economic Indicators and the statistical appendix to the Economic Report, as well as the verification of statistics in memoranda, testimony, and speeches. Thomas L. Super, from the Environmental Protection Agency, provided editorial assistance in the preparation of the 1988 Economic Report. Four former staff members returned to assist in the preparation of the 1988 Report: Richard H. Clarida (senior staff economist), John J. Dziak (research assistant), Lorraine A. Ambrosio (administrative 238 aide), and Dorothy Bagovich (statistical assistant). H. Hague Ollison (Georgetown University), Jana C. Stull (Nebraska Wesleyan University), and Ellen H. Zimmerman (Johns Hopkins University) joined the staff in early 1988 as student interns for the winter semester. 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 1987 were Lisa D. Branch, Gerardo Garcia, Mary E. Jones, Sandra F. Medwid, Francine P. Obermiller, Margaret L. Snyder, Suzanne M. Tudor, and Alice H. Williams. DEPARTURES The Council's senior staff economists, in most cases, are on leave of absence from faculty positions at academic institutions, or are from other government agencies or research institutions. Their tenure with the Council is usually limited to 1 or 2 years. Many of the senior staff economists who resigned during the year returned to their previous affiliations. They are: Richard H. Clarida (Yale University), Stephen J. DeCanio (University of California, Santa Barbara), Steven L. Husted (University of Pittsburgh), Randall P. Mariger (University of Washington), Aline O. Quester (Center for Naval Analyses), and Gordon C. Rausser (University of California, Berkeley). Others went on to new positions. They are: J. David Germany (Morgan Stanley & Co., Inc.), Carol A. Leisenring (Philadelphia National Bank), J. Gregory Sidak (Federal Communications Commission), and Susan E. Woodward (Department of Housing and Urban Development). Staff economists usually have just completed their dissertations and spend 1 year at the Council as additional preparation for their professional careers. Staff economists who took new positions are: Edward T. Gullason (University of Hartford) and Ellen L. HughesCromwick (Trinity College). Junior staff economists generally are graduate students who spend 1 year with the Council and then return to complete their dissertations. Those who returned to their graduate studies in 1987 are: Douglas A. Irwin (Columbia University) and Marjorie B. Rose (University of California, Los Angeles). Junior economists who went on to new positions are: Diana E. Furchtgott-Roth (American Petroleum Institute) and Darrell L. Williams (Securities and Exchange Commission). After graduating from the University of Chicago, Lisa E. Bernstein spent a year at the Council as a research assistant and has now begun studies at Harvard Law School. 239 In addition, a number of other staff provided support to the Council during the year. David K. Carlson (now at Goldman, Sachs & Co.) continued to serve as an intern through the first half of 1987 while he was completing his studies at the University of Maryland, and John J. Dziak (University of Chicago, Graduate School of Business) served as a research assistant during the summer of 1987. Hannah R. Hopkins served as a student aide during the summer of 1987. Support staff who resigned in 1987 were Bonnie D. Brown, Audrey L. Carlson, and Sheila J. Moat. 240 Appendix B STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION CONTENTS NATIONAL INCOME OR EXPENDITURE: Page B-l. B-2. B-3. B-4. B-5. B-6. B-7. B-8. B-9. B-10. B-ll. B-12. B-l3. B-14. B-15. B-16. B-17. B-18. B-19. B-20. B-21. B-22. B-23. B-24. B-25. B-26. B-27. B-28. B-29. B-30. Gross national product, 1929-87 Gross national product in 1982 dollars, 1929-87 Implicit price deflators for gross national product, 1929-87 Fixed-weighted price indexes for gross national product, 1982 weights, 1959-87 Changes in gross national product, personal consumption expenditures, and related price measures, 1933-87 Gross national product by major type of product, 1929-87 Gross national product by major type of product in 1982 dollars, 1929-87 Gross national product by sector, 1929-87 Gross national product by sector in 1982 dollars, 1929-87 Gross national product by industry, 1947-86 Gross national product by industry in 1982 dollars, 1947-86 Gross domestic product of nonfinancial corporate business, 192987 Output, costs, and profits of nonfinancial corporate business, 1948-87 Personal consumption expenditures, 1940-87 Personal consumption expenditures in 1982 dollars, 1940-87 Gross and net private domestic investment, 1929-87 Gross and net private domestic investment in 1982 dollars, 192987 Inventories and final sales of business, 1946-87 Inventories and final sales of business in 1982 dollars, 1947-87 Foreign transactions in the national income and product accounts, 1929-87 Exports and imports of goods and services in 1982 dollars, 192987 Relation of gross national product, net national product, and national income, 1929-87 Relation of national income and personal income, 1929-87 National income by type of income, 1929-87 Sources of personal income, 1929-87 Disposition of personal income, 1929-87 Total and per capita disposable personal income and personal consumption expenditures in current and 1982 dollars, 1929-87 Gross saving and investment, 1929-87 Saving by individuals, 1946-87 Number and median income (in 1986 dollars) of families and persons, and poverty status, by race, selected years, 1963-86 243 248 250 252 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 276 278 279 280 281 282 POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY: Page 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. B-45. B-46. B-47. Population by age groups, 1929-87 Population and the labor force, 1929-87 Civilian employment and unemployment by sex and age, 1947-87 .. Civilian employment by demographic characteristic, 1954-87 Civilian unemployment by demographic characteristic, 1954-87 Labor force participation rate and employment/population ratio, 1948-87 Civilian labor force participation rate by demographic characteristic, 1954-87 Civilian employment/population ratio by demographic characteristic, 1954-87 Unemployment rate, 1948-87 Civilian unemployment rate by demographic characteristic, 194887 Unemployment by duration and reason, 1947-87 Unemployment insurance programs, selected data, 1955-87 Employees on nonagricultural payrolls, by major industry, 194687 Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-87 Average weekly earnings in selected private nonagricultural industries, 1947-87 Productivity and related data, business sector, 1947-87 Changes in productivity and related data, business sector, 1948-87. 283 284 286 287 288 289 290 291 292 293 294 295 296 298 299 300 301 PRODUCTION AND BUSINESS ACTIVITY: B-48. B-49. B-50. B-51. B-52. B-53. B-54. B-55. B-56. B-57. Industrial production indexes, major industry divisions, 1939-87 .... Industrial production indexes, market groupings, 1947-87 Industrial production indexes, selected manufactures, 1947-87 Capacity utilization rates, 1948-87 New construction activity, 1929-87 New housing units started and authorized, 1959-87 Business expenditures for new plant and equipment, 1947-88 Manufacturing and trade, sales and inventories, 1948-87 Manufacturers' shipments and inventories, 1947-87 Manufacturers' new and unfilled orders, 1947-87 302 303 304 305 306 308 309 310 311 312 Consumer price indexes, major expenditure classes, 1946-87 Consumer price indexes, selected expenditure classes, 1946-87 Consumer price indexes, commodities, services, and special groups, 1946-87 Changes in special consumer price indexes, 1958-87 Changes in consumer price indexes, commodities and services, 1929-87 Producer price indexes by stage of processing, 1947-87 Producer price indexes by stage of processing, special groups, 1974-87 Producer price indexes for major commodity groups, 1947-87 Changes in producer price indexes for finished goods, 1955-87 313 314 PRICES: B-58. B-59. B-60. B-61. B-62. B-63. B-64. B-65. B-66. 244 316 317 318 319 321 322 324 MONEY STOCK, CREDIT, AND FINANCE: Page B-67. B-68. B-69. B-70. B-71. B-72. B-73. B-74. B-75. Money stock, liquid assets, and debt measures, 1959-87 Components of money stock measures and liquid assets, 1959-87... Aggregate reserves of depository institutions and monetary base, 1959-87 Commercial bank loans and securities, 1972-87 Bond yields and interest rates, 1929-87 Total funds raised in credit markets by nonfinancial sectors, 197887 Mortgage debt outstanding by type of property and of financing, 1939-87 Mortgage debt outstanding by holder, 1939-87 Consumer credit outstanding, 1950-87 325 326 328 329 330 332 334 335 336 GOVERNMENT FINANCE: B-76, B-77. B-78. B-79. B-80. B-81. B-82. B-83. B-84. B-85. B-86. Federal receipts, outlays, surplus or deficit, and debt, selected fiscal years, 1929-89 Federal receipts, outlays, and debt, fiscal years 1980-89 Relation of Federal Government receipts and expenditures in the national income and product accounts to the budget, fiscal years 1987-89 Federal and State and local government receipts and expenditures, national income and product accounts, 1929-87 Federal and State and local government receipts and expenditures, national income and product accounts, by major type, 1929-87... Federal Government receipts and expenditures, national income and product accounts, 1966-89 State and local government receipts and expenditures, national income and product accounts, 1946-87 State and local government revenues and expenditures, selected fiscal years, 1927-86 Interest-bearing public debt securities by kind of obligation, 196787 Maturity distribution and average length of marketable interestbearing public debt securities held by private investors, 1967-87. Estimated ownership of public debt securities, by private investors, 1976-87 337 338 340 341 342 343 344 345 346 347 348 CORPORATE PROFITS AND FINANCE: B-87. B-88. B-89. B-90. B-91. B-92. B-93. B-94. B-95. Corporate profits with inventory valuation and capital consumption adjustments, 1929-87 Corporate profits by industry, 1929-87 Corporate profits of manufacturing industries, 1929-87 Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-87 Relation of profits after taxes to stockholders' equity and to sales, all manufacturing corporations, 1947-87 Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-87 State and municipal and business securities offered, 1940-87 Common stock prices and yields, 1949-87, Business formation and business failures, 1945-87 245 349 350 351 352 353 354 355 356 357 AGRICULTURE: Page B-96. B-97. B-98. B-99. B-100. B-101. Farm income, 1929-87 Farm output and productivity indexes, 1947-86 Farm input use, selected inputs, 1947-86 Indexes of prices received and prices paid by farmers, 1946-87 U.S. exports and imports of agricultural commodities, 1940-87 Balance sheet of the farm sector, 1939-87 358 359 360 361 362 363 INTERNATIONAL STATISTICS: B-102. U.S. international transactions, 1946-87 B-103. U.S. merchandise exports and imports by principal end-use category, 1965-87 B-104. U.S. merchandise exports and imports by area, 1978-87 B-105. U.S. merchandise exports and imports by commodity groups, 1970-87 B-106. International investment position of the United States at year-end, 1979-86 B-107. International reserves, selected years, 1952-87 B-108. Foreign exchange rates, 1967-87 B-109. Industrial production and consumer prices, major industrial countries, 1962-87 B-110. Civilian unemployment rate, and hourly compensation, major industrial countries, 1960-87 B- 111. Growth rates in real gross national product, 1961-87 246 364 366 367 368 369 370 371 372 373 374 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). Data in these tables reflect revisions made by the source agencies during 1987 and early 1988. 247 NATIONAL INCOME OR EXPENDITURE TABLE B-l.—Gross national product, 1929-87 [Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates] Personal consumption expenditures Gross private domestic investment Fixed investment Year or quarter Gross national product Nonresidential Total Durable goods Nondurable Services Total 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 1986 1987 ' 1982: IV... 1983: IV... 1984: IV... 1985:1 II.... III... IV... 1986:1 II.... III... IV .. 1987:1 II.... 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 3,405.7 3,772.2 4,010.3 4,235.0 4,486.2 3,212.5 3,545.8 3,851.8 3,921.1 3,973.6 4,042.0 4,104.4 4,174.4 4,211.6 4,265.9 4,288.1 4,377.7 4,445.1 4,524.0 4,598.0 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 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 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 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 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 63.2 69.0 75.1 82.1 88.0 94.3 101.6 108.5 115.7 125.0 85.7 97.6 111.2 124.7 123.8 135.4 161.5 184.5 205.6 219.0 98.2 109.2 114.7 117.8 119.7 124.7 130.8 137.1 141.7 148.5 153.2 157.4 163.8 169.4 179.7 191.9 208.5 216.9 235.0 252.2 270.3 283.3 305.1 339.6 380.9 416.2 452.0 490.4 541.8 613.2 219.3 239.9 252.7 289.1 335.5 368.7 402.4 413.9 2,117.0 2,315.8 2,493.4 2,549.9 2,602.0 2,665.4 2,700.1 2,737.9 2,765.8 2,837.1 2,858.6 2,893.8 2,943.7 3,011.3 3,015.1 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 2,234.5 2,430.5 2,629.4 2,799.8 2,966.0 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 41.2 105.2 109.6 123.0 145.9 160.6 162.9 180.0 214.2 259.0 302.8 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 40.5 55.1 68.6 73.3 64.8 62.3 81.7 108.6 129.2 139.1 445.3 491.5 471.8 509.4 597.1 631.6 655.2 670.6 322.8 369.2 366.7 356.9 416.0 442.6 436.9 442.1 113.9 138.5 143.3 124.0 141.1 152.5 137.4 134.1 208.9 230.7 223.4 232.8 274.9 290.1 299.5 308.0 122.5 122.3 105.1 152.5 181.1 189.0 218.3 228.5 409.6 579.8 661.8 638.6 648.4 628.6 650.8 683.4 679.4 660.8 660.2 469.5 548.8 616.8 617.3 629.9 631.0 648.3 645.1 651.9 657.3 666.6 354.9 383.9 435.0 431.5 445.6 442.0 451.5 440.7 433.8 433.5 439.7 137.6 127.4 146.6 150.6 154.4 152.9 152.1 149.6 135.9 131.1 132.9 217.3 256.5 288.4 280.8 291.3 289.1 299.3 291.0 297.9 302.4 306.7 114.7 164.9 181.8 185.8 184.3 189.0 196.8 204.4 218.1 223.8 226.9 699.9 702.6 707.4 755.6 648.2 662.3 684.5 687.4 422.8 434.6 456.6 454.3 128.7 129.7 137.1 140.7 294.1 304.9 319.5 313.6 225.4 227.7 227.9 233.1 134.0 141.8 151.1 160.6 172.8 185.4 200.3 216.0 236.4 259.4 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 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 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 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 91.4 102.3 284.0 310.7 341.3 373.0 411.9 461.2 515.9 582.3 656.1 734.6 148.8 172.5 202.0 238.8 240.8 219.6 277.7 344.1 416.8 454.8 145.7 164.7 191.5 219.2 225.4 225.2 261.7 322.8 388.2 441.9 681.4 740.6 771.0 816.7 867.3 913.1 939.4 980.4 831.9 934.7 1,027.0 1,128.7 1,227.6 1,347.5 1,458.0 1,571.6 437.0 515.5 447.3 502.3 664.8 641.6 671.0 716.4 263.8 310.0 346.7 358.2 362.4 383.7 370.5 375.9 386.4 427.6 419.8 786.6 837.9 879.6 894.4 910.4 918.4 929.3 936.8 934.3 940.0 946.3 1,066.5 1,167.9 1,267.1 1,297.3 1,329.2 1,363.3 1,400.3 1,425.2 1,445.1 1,469.5 1,492.4 396.1 409.0 436.8 413.8 969.9 982.1 986.4 983.4 1,527.7 1,552.6 1,588.1 1,618.0 248 Producers' Residuedential able equipment 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 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 See next page for continuation of table. Structures 14.9 3.1 9.1 TABLE B-l.—Gross national product, 1929-87—Continued [Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates] Net exports of goods and services Percent change from preceding Government purchases of goods and services Federal Year or quarter Net Exports Imports exports 1929 1933 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 1970 1971 1972 1973 1974 1975. 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 P 1982- IV 1983: IV 1984-IV 1985-1 II lit IV 1986-1 II III IV 1987:1 || Ill IV P 5.9 2.1 3.4 18 7.1 2.4 4.6 54 1.5 6.1 4.7 5.0 4.6 5.5 7.4 15.2 20.3 17.5 16.4 14.5 19 8 19.2 18.1 18.8 21.1 25 2 28.2 24.4 25.0 29.9 311 33.1 35 7 40.5 42 9 46.6 49 5 54.8 60.4 68 9 72.4 814 1141 151.5 1613 177 7 1916 227 5 291.2 3510 382.8 361.9 352.5 383 5 369 9 376.2 426.7 335.9 364.7 385.7 376 3 370 6 364.2 368.7 373 5 3713 376 6 383.3 397.3 416.5 439.2 453.9 4.8 6.5 7.2 7.9 7.3 8.3 10.6 9.8 12.3 15 3 16.0 16.8 16.3 18.1 19 9 20.9 21.1 23.5 24.0 23 9 26.2 27 5 29.6 33 2 39.1 421 49.3 54.7 60 5 66.1 78 2 97 3 135.2 130.3 158 9 189.7 223.4 272.5 318 9 348.9 335.6 358.7 442.4 449 2 481.7 546.7 321.9 390.5 453.6 427 7 447 8 448.9 472.2 467.3 4721 4871 500.2 509.5 534.8 562.9 579.4 1.1 .4 1.2 -is -1.7 l.B 11.9 7.0 6.5 2.2 45 3.2 1.3 26 3.0 53 . . 7.3 3.3 15 5.9 72 6.9 82 10.9 97 7.5 74 5.5 5.6 85 6.3 32 16 8 16.3 311 18 8 19 4.1 18.8 321 33.9 26.3 -61 -58 9 -79 2 -105.5 -119.9 14.1 -25.8 -67.9 -515 77 3 -84.7 -103 5 -93 8 100 8 110 5 -116.9 -112.2 -118.4 -123.7 -125.5 3.7 Total Total 8.9 8.3 13.6 14.2 25.0 59.9 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 1084 118.2 123 8 130.0 1386 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 3 588.1 641.7 675.0 735 9 8186 869.7 923.8 671.8 676.1 764.5 784.1 800 5 832.8 857.0 846.9 867.2 878.5 886.3 896.2 917.1 929.0 952.8 Source: Department of Commerce, Bureau of Economic Analysis. 249 1.5 2.2 5.2 6.1 17.0 52.0 81.4 89.4 74.8 19.2 13.6 17.3 21.1 19.1 38.6 52.7 57.9 48.4 44.9 46.4 50.5 54.5 54.6 54.4 58 2 64.6 65 7 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 242.2 272.7 283.5 310.5 353 9 366.2 380.6 293.2 276.1 326.0 336.3 339 4 361.9 378.0 356 7 368 4 3712 368.6 366.9 379.6 382.1 393.7 National defense Nondefense State and local 1.3 23 13.8 49.4 79.8 87.5 73.7 16.4 10.0 11.3 13 9 14.3 338 46.2 49.0 416 39.0 40 7 3.9 39 7.4 6.1 8.3 8.1 3.2 8.0 2.6 1.6 2.0 1.1 2.8 3.6 6.0 7.2 4.7 48 6.5 8.9 68 6.0 57 446 5.9 7.8 7.5 7.6 8.2 9.9 12.8 15.3 180 19.8 218 23.1 24.8 27 7 30.3 333 36.9 40.8 43.3 46.1 502 53.5 581 63.5 699 78.2 87 0 97.6 107.2 119.4 132.5 144.2 1601 182.9 205.9 2206 236.2 263.4 289.9 322 2 345.9 369.0 391.5 425.3 464 7 503.5 543.2 378.7 400.0 438.5 447.8 461.1 470.9 479.0 490.2 498.8 507.3 517.7 529.3 537.6 546.9 559.1 46.3 46.4 45.3 47 9 52.1 515 50.4 510 62.0 73 4 79.1 78.9 76 8 74.1 77 A 77 5 82.6 89 6 93 4 100.9 108.9 121.9 142 7 167.5 193.8 214 4 234 3 259 3 277.8 295.2 205.4 221.5 244.1 250.2 253 7 265.1 268.2 266.6 278.2 287.6 279.0 287.5 294.5 299.0 300.0 8.3 8.2 9.2 10 2 12.6 14 2 16.0 17 7 18.3 19 3 21.0 21.1 22 0 25.8 28 4 28 9 33.6 396 42 9 50.3 52.9 56.1 65 4 74.8 78.9 69.1 76 2 94 6 88.4 85.3 87.7 54.6 81.9 86.1 85 7 96.8 109.8 90.1 90.2 83.6 89.6 79.4 85.1 83.0 93.7 Final sales 102.2 57.6 90.9 983 121.0 157.2 193.4 212.3 214.4 206.0 235.7 256.9 263.4 281.4 323 2 348.6 371.1 3741 400.2 4236 449.6 458.3 490.0 512.3 5314 568.5 601.1 644.4 695.2 757.8 806.1 884.8 954.1 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 2,740.3 3,028.6 3,190.5 3,412.8 3,704.5 4,000.3 4,219.3 4,440.4 3,272.4 3,514.8 3,806.8 3,899.8 3,955.1 4,044.4 4,101.9 4,136.1 4,184.0 4,262.4 4,294.6 4,326.0 4,404.8 4,501.1 4,529.9 Gross national product 7.0 100 25.0 26.6 21.2 9.7 .9 —5 10*8 11.2 -.5 10.7 15.7 5.5 5.7 .2 9.0 55 Final sales 55 5.4 8.1 23.2 29.9 23.0 9.8 1.0 -3.9 14.4 9.0 2.5 6.8 14.8 7.9 6.5 .8 7.0 58 5.3 6.1 1.3 8.5 3.9 3.6 7.6 5.6 7.1 8.5 9.5 5.8 9.3 8.0 " 5.4 8.6 10.0 12.1 8.3 8.5 11.5 11.7 13.0 11.5 8.9 11.7 3.7 7.6 10.8 1.9 6.9 4.6 3.7 7.0 5.7 6.3 5.6 5.9 4.2 12.4 4.7 7.4 5.5 7.1 6.3 7.0 3.6 5.3 2.1 8.6 6.3 7.3 6.7 7.2 7.9 9.0 6.4 9.8 7.8 6.1 8.2 9.8 11.4 8.8 10.1 10.1 11.5 12.8 12.3 9.8 10.5 5.3 7.0 8.5 8.0 5.5 5.2 11.0 7.8 7.0 10.1 5.8 9.3 5.fi 3.4 4.7 7.7 3.1 3.0 7.5 9.0 2.6 TABLE B-2.—Gross national product in 1982 dollars, 1929-87 [Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates] Personal consumption Gross private domestic investment Fixed investment 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 ill!:::::::::::: 1982 1983 1984 1985 1986 1987 * 1982: IV 1983: IV 1984: IV 1985:1 II Ill IV 1986:1 II Ill IV 1987:1 II Gross national product Nonresidential Total Durable goods Nondurable Services goods Total Total Total Structures Producers' durable equipment Residential 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 1,109.0 471.4 378.7 480.5 502.6 531.1 527.6 539.9 557.1 592.7 655.0 666.6 681.8 695.4 40.3 20.7 35.7 40.6 46.2 31.3 28.1 26.3 28.7 47.8 56.5 61.7 67.8 211.4 181.8 248.0 259.4 275.6 279.1 284.7 297.9 323.5 344.2 337.4 338.7 342.3 219.7 176.2 196.7 202.7 209.3 217.2 227.2 232.9 240.5 262.9 272.6 281.4 285.3 139.2 22.7 86.0 111.8 138.8 76.7 50.4 56.4 76.5 178.1 177.9 208.2 168.8 128.4 33.5 82.1 97.4 111.1 64.7 49.7 61.6 84.9 150.2 178.9 196.0 178.4 93.0 25.8 53.2 65.0 76.6 47.4 39.4 52.6 74.2 105.5 121.7 127.4 114.8 54.7 14.3 25.2 28.5 33.4 20.9 15.6 20.4 27.0 50.9 47.5 50.5 49.3 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 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 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 3,279.1 3,501.4 3,607.5 3,713.3 3,819.6 3,159.3 3,365.1 3,535.2 3,568.7 3,587.1 3,623.0 3,650.9 3,698.8 3,704.7 3,718.0 3,731.5 3,772.2 3,795.3 3,835.9 3,875.1 733.2 748.7 771.4 802.5 822.7 873.8 899.8 919.7 932.9 979.4 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 80.7 74.7 73.0 80.2 81.5 96.9 92.8 92.4 86.9 96.9 299.8 311.1 321.9 334.1 347.4 363.6 380.1 392.6 406.1 426.7 234.9 235.2 211.8 216.6 212.6 259.8 257.8 243.4 221.4 270.3 210.8 204.3 201.8 213.8 217.3 243.5 244.9 240.4 224.8 253.8 124.0 131.7 130.6 140.1 137.5 151.0 160.4 161.1 143.9 153.6 86.7 72.6 71.2 73.8 79.8 92.4 84.4 79.3 81.0 100.2 443.9 461.4 481.8 502.3 532.3 558.5 585.3 612.3 641.8 671.7 260.5 259.1 288.6 307.1 325.9 367.0 390.5 374.4 391.8 410.3 252.7 251.8 272.4 290.5 310.2 341.8 353.7 345.6 370.7 385.1 159.4 158.2 170.2 176.6 194.9 227.6 250.4 245.0 254.5 269.7 93.3 93.6 102.2 113.9 115.3 114.2 103.2 100.6 116.2 115.4 381.5 419.3 465.4 520.8 481.3 383.3 453.5 521.3 576.9 575.2 152.9 151.0 167.5 199.6 202.7 178.4 186.2 215.7 242.8 258.8 109.3 141.3 166.6 163.4 130.2 114.9 140.8 168.1 178.0 170.8 762.6 764.4 771.0 800.2 825.9 849.5 877.2 875.9 778.6 812.7 831.2 841.2 847.6 853.5 855.7 868.8 880.0 879.8 880.3 883.2 879.0 875.7 865.6 373.3 399.7 443.7 480.8 448.0 396.1 431.4 492.2 540.2 560.2 516.2 521.7 471.8 510.4 596.1 628.7 640.2 643.0 468.1 550.3 614.0 612.7 628.4 628.9 644.9 639.1 637.6 638.8 645.4 624.2 634.7 657.3 655.9 264.0 258.4 277.0 317.3 317.8 281.2 290.6 324.0 362.1 389.4 245.9 250.8 252.7 283.1 323.1 352.7 383.5 388.1 262.0 300.5 333.1 342.4 346.6 366.8 355.1 359.8 369.6 405.5 399.0 375.9 385.4 406.9 384.4 697.0 720.2 756.0 786.1 803.1 829.8 862.8 898.5 939.8 971.2 991.9 1,009.0 1,027.0 1,062.7 1,100.3 1,150.4 1,189.8 1,231.2 1,038.1 1,078.6 1,116.8 1,130.5 1,142.8 1,155.7 1,172.5 1,181.2 1,184.7 1,192.2 1,201.1 1,216.9 1,223.1 1,238.1 1,246.6 52.8 56.5 57.3 62.3 64.9 69.4 75.5 75.2 70.6 71.9 76.1 77.7 81.3 81.6 87.9 101.8 108.0 105.4 108.0 112.9 111.1 107.3 109.5 117.7 115.2 102.8 104.4 108.3 119.3 130.6 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 95.1 107.0 125.8 142.4 139.6 146.5 156.8 162.5 178.3 200.4 220.3 204.9 205.6 232.3 253.9 267.4 266.5 352.8 362.9 376.6 388.2 393.8 413.2 426.9 434.7 439.9 455.8 463.3 470.1 484.2 494.3 517.5 543.2 569.3 579.2 602.4 617.2 632.5 640.3 665.5 683.2 666.1 676.5 708.8 731.4 753.7 766.6 379.2 395.2 366.7 361.2 425.2 454.1 443.8 446.8 352.3 390.4 444.4 440.0 457.2 454.1 465.2 453.2 441.0 437.7 443.2 426.0 437.9 463.8 459.6 136.2 148.8 143.3 127.2 143.8 149.4 130.3 124.3 138.3 131.6 147.1 149.1 151.7 149.5 147.2 145.4 128.4 122.7 124.6 120.4 120.4 127.2 129.2 243.0 246.4 223.4 233.9 281.4 304.8 313.5 322.5 214.1 258.8 297.3 291.0 305.5 304.5 318.0 307.8 312.6 315.0 318.6 305.6 317.5 336.6 330.4 137.0 126.5 105.1 149.3 170.9 174.6 196.4 196.2 115.8 159.9 169.6 172.6 171.2 174.9 179.7 185.9 196.5 201.1 202.2 198.2 196.8 193.5 196.3 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 2,146.0 2,249.3 2,352.6 2,450.5 2,495.2 2,078.7 2,191.9 2,281.1 2,314.1 2,337.0 2,376.1 2,383.2 2,409.7 2,434.3 2,477.5 2,480.5 2,475.9 2,487.5 2,520.7 2,496.6 98.0 93.6 103.0 111.8 120.8 134.6 144.4 146.2 161.6 167.8 See next page for continuation of table. 250 509.3 545.5 447.3 504.0 658.4 636.1 654.0 685.4 408.8 577.2 655.7 632.1 645.7 623.2 643.3 674.4 665.6 645.0 631.0 671.8 673.7 681.9 714.2 Change in business inventories TABLE B-2.—Gross national product in 1982 dollars, 1929-87—Continued [Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates] Federal Year or quarter Net Exports Imports exports 4.7 1929 1933 1939 1940 1941 1942 1943 1944 1945 1946 1947.... 1948 1949 1950 1951 1952. 1953 1954 1955 1956 1957 1958 1959 IV 1986-1 II III IV 1987:1 II III IV P Total National defense -10.3 -18.2 -4.0 -2.7 -75 -1.9 5.9 -2.7 -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 9 -84.0 -108.2 -145 8 -134.3 11.7 -46.2 -94.8 -81.0 -107.7 -114.9 -129.3 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 3434 335 6 3681 455.8 473.6 523 2 560.1 324.3 401.6 471.4 450.7 472.4 475.4 495.8 94.2 98.5 144.1 150.2 235.6 483 7 708.9 790.8 704.5 2369 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 7 427.1 449 4 459.8 470.8 487.0 532.6 576 2 597.6 591.2 572.6 566.5 570.7 565.3 573 2 580.9 580.3 589.1 6041 609.1 620.5 629 7 6417 649 0 677.7 726.9 754 5 773.3 660.1 642.2 693.2 703.4 712.1 738.6 753.7 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 6 232.9 249 3 247.8 244.2 244.4 273.8 304 4 309.6 295.6 268.3 250.6 246.0 230.0 2264 226.3 224.2 231.8 233 7 236.2 246.9 259 6 272 7 2751 290.8 324.2 332 5 337.7 289.5 266.0 300.5 308.4 310.7 332.5 345.3 185.3 171.0 163 3 161.1 157.5 159.2 160 7 164.3 171.2 180.3 193 8 206 9 218.5 236.7 250.7 264.3 201.4 211.6 225.3 229.8 232.8 243.3 241.1 -123 0 -146 8 -161.6 -151.8 -135.2 -132.7 -138 4 -130.7 3715 370 2 379.6 388.3 397.8 414.5 437 1 453.8 494 4 517 0 541.2 540.1 533.0 547.2 575.6 584.5 737 6 7516 757.2 771.8 759.6 766.7 771.7 795.0 322.1 330 6 332.6 344.6 327.3 332.6 336.3 354.5 240.0 2501 259.8 252.7 257.4 263.5 268.3 267.8 7.0 1960 1961 1962 1963 1964 1965.... 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987" 1982: IV 1983: IV. 1984- IV 1985-1 If Ill Total 42.1 22.7 36.2 40.0 42.0 291 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 2691 259.7 274.4 281.6 312 6 356.8 388.9 392 7 3619 3481 371.8 365 3 377 4 425.8 336.0 355.5 376.6 369.7 364.7 360.5 366.5 -1.4 6.1 8.2 3.9 -77 -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 43 Source: Department of Commerce, Bureau of Economic Analysis. Percent change from pniceding per Government purchases of goods and services Net exports of goods and services 251 Nondefense State and local Final sales 60.7 59.1 63.1 65.2 66.8 72.7 73.0 71.9 75.7 79.3 78.9 68.2 72.3 87.5 81.8 73.4 88.2 54.4 75.2 78.6 77.8 89.3 104.2 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 3 157.0 170.4 176.2 183.1 194.2 200.1 212.0 226.6 242.5 258.8 271.8 288.0 295.6 304.3 315.9 324.7 335.3 346.8 354.6 356.0 357.2 370.4 373.0 373.6 370.1 369.0 373.9 387.0 402.7 422.1 435.6 370.6 376.2 392.7 395.0 401.4 406.1 408.4 698 7 509.2 712.7 758.5 881.6 1,068.3 1,275.5 1,385.7 1,363.3 1,069.0 1,067.7 1,096.4 1,118.7 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 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 2,407.9 2,465.2 2,586.8 2,704.1 2,696.0 2,707.8 2,804.6 2,929.5 3,078.4 3,177.4 3,194.0 3,225.0 3,190.5 3,285.5 3,439.1 3,600.1 3,699.5 3,777.2 3,218.6 3,338.1 3,493.5 3,549.2 3,569.9 3,628.7 3,652.5 82.0 80.4 72.8 91.9 69.9 69.1 67.9 86.7 415.5 421.0 424.6 427.1 432.3 434.1 435.4 440.5 3,663.4 3,676.7 3,711.9 3,745.8 3,724.5 3,756.3 3,811.4 3,816.7 Gross national product Final sales -3.1 -2.1 6.3 7.9 6.4 7.8 16.2 17.7 212 18.8 19.4 18.1 8.6 8.2 -1.9 16 -19.0 - 2 1 6 .1 -2.8 2.7 3.9 2.0 .0 5.4 8.5 10.0 10.3 5.6 3.9 4.6 4.0 -.8 -1.3 4.1 5.6 2.3 2.1 1.7 2.3 -.8 5.8 2.2 2.6 5.3 4.1 5.3 5.8 5.8 2.9 4.1 2.4 -.3 2.8 5.0 5.2 -.5 -1.3 4.9 4.7 5.3 2.5 -.2 1.9 -2.5 -.4 4.5 2.8 2.6 4.8 4.1 5.4 5.4 5.3 3.6 6.8 3.0 2.9 2.9 .6 7.3 1.7 3.8 2.1 4.1 3.1 5.4 .6 1.4 1.5 4.4 2.5 4.3 4.2 3.3 4.5 2.3 .4 2.4 4.9 4.5 .3 .4 3.6 4.5 5.1 3.2 .5 1.0 -1.1 3.0 4.7 4.7 2.8 2.1 7.1 3.8 4.0 6.5 2.4 6.8 2.6 1.2 1.5 3.9 3.7 -2.3 3.5 6.0 .6 TABLE B-3.—Implicit price deflators for gross national product, 1929-87 [Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted] 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 1986 1987 p .. 1982: IV 1983: IV 1984: IV 1985:1 II Ill IV 1986:1 lILl IV 1987:1 II Ill IV.. Gross national product Fixed investment Presidential Total Durable goods Nondurable Services goods Total Total Structures Producers' durable equipment 14.6 11.2 12.7 16.4 12.1 13.9 22.9 16.8 18.7 17.8 12.2 14.2 13.8 11.4 12.8 11.6 9.4 11.1 11.8 9.8 11.5 10.0 7.6 8.8 14.3 12.5 13.9 13.0 13.8 14.7 15.1 15.3 15.7 19.4 22.1 23.6 23.5 14.1 15.2 16.8 18.4 19.4 20.2 22.0 24.3 25.7 25.6 19.2 20.9 22.0 23.3 25.4 27.7 33.0 36.1 37.1 36.9 14.3 15.5 18.2 20.6 21.6 22.2 24.0 26.9 28.5 27.7 12.9 13.5 14.3 15.1 16.0 16.5 17.3 18.6 19.7 20.5 11.5 12.4 13.2 13.8 14.2 14.5 16.7 19.8 21.7 22.2 11.9 12.7 13.3 13.8 14.0 14.3 16.4 19.3 21.0 21.7 9.0 9.7 10.7 11.4 11.6 12.3 14.5 17.1 18.9 18.6 14.2 14.9 15.3 15.4 15.6 15.4 18.2 20.7 22.5 24.0 23.9 25.1 25.5 25.9 26.3 27.2 28.1 29.1 29.7 30.4 26.2 27.8 28.4 29.0 29.1 29.5 30.1 31.0 31.6 32.3 38.1 40.0 40.1 40.8 39.4 40.1 41.2 42.9 42.8 44.2 27.8 30.1 30.5 30.4 30.4 30.2 30.6 31.5 32.2 32.6 21.1 22.2 23.3 24.6 25.3 25.9 26.7 27.6 28.5 29.3 22.9 24.6 25.0 25.5 25.6 26.3 27.8 29.0 28,9 29.3 22.4 24.2 24.4 25.1 25.2 25.8 27.7 29.5 29.5 30.2 18.8 21.1 21.3 21.8 21.4 21.8 24.1 25.2 24.8 25.0 25.0 26.4 26.9 27.7 28.6 29.3 31.0 33.3 34.0 34.7 30.9 31.2 31.9 32.4 32.9 33.8 35.0 35.9 37.7 39.8 32.9 33.3 33.9 34.4 35.0 35.6 36.7 37.6 39.3 41.0 44.4 44.8 45.7 46.3 47.0 47.1 47.5 48.3 50.1 51.4 33.1 33.5 33.8 34.3 34.7 35.3 36.6 37.5 39.0 40.9 30.2 30.7 31.4 32.0 32.5 33.2 34.2 35.3 36.8 38.6 29.7 29.7 29.9 30.1 30.4 31.1 32.4 33.4 34.8 37.2 30.6 30.5 30.9 31.3 31.5 32.1 33.3 34.4 35.9 37.9 25.2 25.0 25.2 25.5 25.9 26.9 28.2 29.1 30.4 32.9 35.6 35.9 36.1 36.2 36.2 36.4 37.2 38.4 39.9 41.5 42.0 44.4 46.5 49.5 54.0 59.3 63.1 67.3 72.2 78.6 85.7 94.0 100.0 103.9 107.7 1U.2 114.1 117.5 42.9 44.9 46.7 49.6 54.8 59.2 62.6 66.7 71.6 78.2 52.7 54.7 55.5 56.6 60.4 65.9 69.5 72.7 76.9 82.1 40.7 43.1 45.1 47.4 51.3 55.6 59.8 64.8 69.8 75.6 39.0 41.2 43.2 45.6 50.3 56.9 60.7 65.6 71.9 78.9 39.9 42.4 44.4 46.0 50.5 57.9 61.9 66.1 71.5 77.8 89.2 957 100.0 102.1 103.8 104.5 104.9 106.6 83.9 92.6 100.0 106.2 111.6 117.1 122.5 127.6 86.3 94.2 100.0 99.8 100.2 100.5 102.3 104.3 85.1 93.4 100.0 98.8 97.9 97.5 98.5 98.9 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 97.5 98.2 102.1 105.5 107.9 43.2 45.5 46.8 47.3 51.1 59.7 64.4 68.3 73.3 78.6 86.6 94.6 100.0 104.1 108.1 111.8 114.3 118.9 42.7 44.2 45.8 49.7 57.2 61.5 63.8 67.1 71.9 80.0 89.4 96.9 100.0 102.1 105.0 107.5 107.1 111.9 86.0 93.7 100.0 99.5 97.7 95.2 95.5 95.5 101.7 101.8 100.7 101.0 102.7 100.3 100.7 99.5 101.5 105.4 105.7 103.1 103.1 108.3 99.7 98.3 96.8 99.1 109.0 109.3 104.1 105.8 113.5 100.5 97.9 99.6 97.0 109.9 110.8 111.6 112.4 110.2 111.3 112.2 113.3 104.6 104.5 104.6 104.3 106.3 107.4 107.6 108.6 114.8 116.3 118.0 119.4 100.7 100.2 100.3 100.5 98.0 97.5 97.3 97.1 101.0 101.8 102.3 103.3 96.5 95.3 94.9 94.1 112.9 113.7 114.7 114.9 113.6 113.6 114.5 115.2 104.5 104.6 105.4 105.2 107.8 106.2 106.8 107.5 120.7 122.0 123.3 124.3 100.9 102.2 102.9 103.3 97.2 98.4 99.0 99.2 102.9 105.9 106.8 106.7 94.5 95.3 96.0 96.3 116.1 117.1 117.9 118.7 116.9 118.3 119.5 120.8 105.4 106.1 107.4 107.7 109.8 111.7 112.6 113.6 125.5 126.9 128.3 129.8 103.9 104.4 104.1 104.8 99.3 99.2 98.4 98.9 106.9 107.8 107.8 108.9 96.3 96.0 94.9 94.9 See next page for continuation of table. Gross private domestic investment' 252 TABLE B-3.—Implicit price deflators for gross national product, 1929-87—Continued [Index numbers, 1982—100, except as noted; quarterly data seasonally adjusted] Exports and imports of goods and services l Year or quarter . Federal Total 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 1986 1987 P 1982:1V 1983:1V 1984- IV 1985-1 It Ill IV. 1986:1 II til IV 1987:1 II. Ill IV *> Government purchases of goods and services 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 30.4 309 31.0 311 31.4 32 5 33.7 34 5 35.2 36.6 38.7 40.4 417 47.1 56.3 621 64.8 68.0 72.8 81.6 90.2 97.5 100 0 1013 103.2 101.3 99 7 100.2 100.0 102.6 102.4 101.8 101.6 1010 100.6 100.6 100 3 99.2 98.7 99.9 100 5 100.5 100.0 Total Imports 15.9 86 11.3 11.6 12 3 13.1 13.6 141 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 23.4 231 22.9 23 6 24.1 24 7 25.7 26 2 26.6 27.4 29 0 30.2 32 0 35 5 50.4 541 55.7 59.8 65.8 77.1 96.0 101.6 100 0 97 4 97.1 94 8 921 97.6 99.3 97.2 96.2 94.9 94 8 94 4 95.2 94.5 913 90.0 92.6 95 6 97 7 97.8 99.1 9.4 84 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 22.9 241 24.6 24.9 25 4 26.3 26 9 27.6 28 5 29.8 312 33.1 35.1 381 41.0 43 8 471 52.2 57 7 61.5 65.8 70.4 76.8 85.5 93.4 100 0 104 0 108.6 112 6 115 3 119.5 101.8 105.3 110.3 111.5 112 4 112 7 113.7 114 8 115 4 116.0 114.8 118 0 119 6 120.4 119.9 8.1 80 9.7 9.7 111 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 27.2 281 29.4 30 5 32.3 33.8 36 8 39.8 43 0 46 2 51.3 571 60.8 65.2 69.2 75.4 84.3 93.3 100 0 103 1 106.8 109 2 110 2 112.7 101.3 103.8 108.5 109.0 109 3 108 8 109.5 110 7 1114 111.6 107.0 1121 1141 113.6 111.1 National Nondefense defense 418 45 3 50.6 55 6 59.3 63.4 67.8 74.2 83.4 92.9 100 0 103 6 107.2 109 5 110 8 111.7 102.0 104.7 108.3 108.9 109 0 109 0 111.2 mi 1112 110.7 110.4 1117 1118 111.4 112.0 46 8 48.9 53.3 60.6 64.3 69.1 72.4 78.0 86.4 94.3 100.0 101.4 105.5 108.1 1081 116.2 99.5 100.3 108.9 109.5 110.1 108.4 105.4 109.8 112.2 115.0 97.5 113.6 123.1 122.2 108.2 State and local 9.7 86 9.2 9.3 97 10.2 10.6 112 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 71.1 111 86.2 93.4 100.0 104 7 109.9 115.4 119 3 124.7 102.2 106.3 111.7 113.4 114.9 116.0 117.3 118.0 118.5 119.5 121.2 122.4 123 8 125.6 126.9 Final sales 14.6 113 12.8 13.0 13 7 14.7 15.2 153 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 93.9 100.0 103.9 107.7 m.i 114.1 117.6 101.7 105.3 109.0 109.9 110.8 111.5 112.3 112.9 113.8 114.8 114.7 116.1 117.3 118.1 118.7 Percent change from preceding period, GNP implicit price deflator2 1 -2 2 -.8 2.0 62 6.6 2.6 14 2.9 22.9 13.9 70 5 2.0 4.8 15 1.6 1.6 32 3.4 3.6 2.1 2.4 1.6 10 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 67 7.3 8.9 9.0 9.7 6.4 3.9 3.7 3.2 26 3.0 3.6 4.7 3.0 3.3 3.3 29 2.9 1.8 29 3.6 .7 42 35 2.8 2.7 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. 253 TABLE B-4.—Fixed-weighted price indexes for gross national product, 1982 weights, 1959-87 [Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted] Gross private domestic investment1 Year or quarter Personal conGross national sumption product expenditures Fixed investment Total Government purchases of goods ana services Exports and imports of goods and services1 Nonresi- Residen- Exports dential tial Imports Percent Federal Total Total National defense Non- State and local from preceding period, GNP fixedweighted price index2 1959 37.6 35.2 58.0 65.9 30.2 32.8 27.0 25.8 26.9 24.9 1960 1961 1962 1963 1964 38.1 38.4 38.7 39.1 39.6 35.7 36.1 36.4 36.8 37.2 58.1 58.0 58.0 58.0 58.2 66.1 66.0 66.1 66.2 66.4 30.3 30.2 29.9 29.5 29.6 33.5 34.0 34.1 34.4 34.8 27.3 27.0 26.7 27.1 27.7 26.4 27.0 27.8 28.5 29.3 27.3 27.8 28.4 29.3 30.1 25.7 26.4 27.3 27.9 28.5 1.4 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 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 43.3 45.3 46.5 50.8 59.8 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 94.1 100.0 104.1 108.3 86.8 94.6 100.0 104.2 108.4 86.9 94.5 100.0 100.4 101.5 86.1 93.9 100.0 99.9 100.2 89.4 96.6 100.0 102.2 106.0 90.5 97.7 100.0 101.6 104.3 96.3 101.5 100.0 97.7 97.5 86.3 94.1 100.0 104.5 109.2 86.4 94.9 100.0 104.1 108.0 84.7 93.8 100.0 103.7 107.6 90.6 97.4 100.0 105.1 108.9 86.2 93.5 100.0 104.8 110.1 9.3 9.3 6.2 4.1 4.0 1985 1986 1987 " 112.1 115.1 119.1 112.3 115.2 120.0 103.2 104.9 107.4 101.8 103.2 104.9 108.2 110.9 116.1 103.7 103.6 105.9 95.7 92.6 99.5 113.7 116.5 121.2 110.8 111.3 114.4 111.1 112.1 115.3 110.0 109.3 112.1 115.8 120.3 126.2 3.6 2.7 3.4 1982:1V... 101.7 101.8 100.2 100.5 99.1 100.0 101.7 101.8 101.4 102.2 105.8 100.5 99.6 103.3 103.2 106.0 105.4 104.7 107.0 106.4 109.6 109.7 102.3 100.9 107.2 104.0 110.7 109.0 109.0 109.1 111.9 4.0 4.0 3.2 110.7 111.7 112.5 113.5 110.7 111.9 112.8 114.0 102.6 102.9 103.4 104.0 101.2 101.6 102.0 102.5 107.6 107.6 108.0 109.4 103.9 104.0 103.6 103.5 99.3 97.6 96.8 95.4 95.6 95.1 96.6 102.0 105.7 112.3 113.2 113.9 115.2 110.5 110.4 110.4 111.7 110.7 110.6 110.7 112.3 110.1 110.1 109.7 110.1 113.7 115.2 116.4 117.8 4.1 3.7 2.9 3.4 114.1 114.7 115.5 116.1 114.4 114.5 115.5 116.4 104.1 104.8 105.1 105.7 102.4 103.1 103.3 103.9 109.9 110.7 11U 112.0 103.9 103.8 103.5 103.5 95.1 91.4 91.6 93.5 115.7 116.0 116.5 117.6 111.7 111.4 111.0 111.1 112.4 112.0 111.9 112.1 109.9 109.9 108.7 108.7 118.7 119.4 120.5 122.4 2.2 2.2 2.6 2.3 117.4 118.6 119.6 120.7 118.0 119.5 120.7 121.9 106.4 107.1 107.9 108.4 104.3 104.7 105.2 105.5 113.5 115.3 117.4 118.2 104.5 105.6 106.4 107.0 96.3 98.9 100.7 101.9 119.3 120.6 121.7 123.1 113.2 114.3 114.4 115.6 114.2 115.3 115.3 116.3 110.5 111.7 112.4 113.7 123.8 125.2 127.1 128.6 4.5 4.1 3.4 3.7 1983: IV... 1984: IV... 1985:1 II .... III... IV... 1986:1 II.... III ... IV .. 1987:1 II .... III... IV P. 1.0 1.2 1 Separate price indexes 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. 254 TABLE B-5.—Changes in gross national product, personal consumption expenditures, and related price measures, 1933-87 [Percent change from preceding period; quarterly data at seasonally adjusted annual rates] Gross national product Year or quarter 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 1986 1987" 1982- IV 1983- IV 1984: IV 1985:1 tl III IV 1986:1 1! Ill IV 1987:1 II Ill IV P Current dollars -4.2 7.0 10.0 25.0 26.6 21.2 9.7 9 108 11.2 -.5 10 7 15.7 5.5 57 .2 9.0 5.5 5.3 13 8.5 3.9 3.6 7.6 5.6 71 8.5 9.5 5.8 9.3 8.0 54 8.6 100 12.1 83 8.5 115 11.7 13.0 11.5 8.9 11.7 3.7 76 10.8 6.3 5.6 5.9 4.2 12.4 4.7 7.4 55 71 6.3 7.0 3.6 53 2.1 8.6 6.3 73 6.7 Constant (1982) dollars -2.1 7.9 78 17.7 18.8 18.1 8.2 -1.9 -19.0 -28 3.9 .0 85 10.3 3.9 4.0 -1.3 5.6 2,1 1.7 -.8 5.8 2.2 2.6 5.3 4.1 53 5.8 58 2.9 4.1 2.4 _3 2.8 50 5.2 _ 5 -1.3 49 4.7 5.3 2.5 -.2 1.9 -2.5 36 6.8 3.0 2.9 2.9 .6 7.3 1.7 3.8 21 41 3.1 5.4 .6 14 1.5 4.4 2.5 43 4.2 Implicit price deflator Personal consumption expenditures Chain price index -2 2 8 20 6.2 6.6 26 1.4 29 22.9 13 9 7.0 5 20 4.8 1.5 16 1.6 3.2 3.4 3.6 21 2.4 1.6 10 2.2 1.6 15 2.7 36 2.6 50 5.6 55 5.7 47 6.5 91 9.8 64 6.7 7.3 8.9 9.0 9.7 6.4 39 3.7 3.2 2.6 3.0 3.6 4.7 3.0 33 33 29 2.9 1.8 29 36 .7 4.2 35 28 2.7 1.5 10 1.2 1.3 15 1.8 30 2.8 43 5.0 52 4.8 42 5.9 89 9.2 59 6.1 7.2 8.7 9.0 9.4 6.3 41 3.9 3.5 2.4 3.2 4.1 3.9 3.1 40 38 28 3.4 1.7 19 26 2.0 4.2 37 33 3.3 Source: Department of Commerce, Bureau of Economic Analysis. 255 Fixedweighted price index (1982 weights) 1.4 7 .8 1.0 12 1.4 25 2.6 37 4.4 36 3.5 29 5.5 78 8.0 53 5.1 6.2 8.5 9.3 9.3 6.2 41 4.0 3.6 2.7 3.4 4.0 4.0 3.2 41 37 29 3.4 2.2 22 26 2.3 4.5 4.1 34 3.7 Current dollars -5.7 4.6 60 13.8 9.7 12.2 8.8 10.5 20.4 12 5 8.0 1.9 77 8.3 5.3 6.2 3.1 7.5 4.9 5.4 33 7.4 4.6 31 6.1 5.5 72 7.7 83 5.5 97 8.2 70 8.1 95 10.5 95 10.5 115 11.3 11.6 11.6 10.6 10.5 7.1 90 8.8 8.2 6.5 5.9 10.3 9.7 7.2 9.4 84 101 5.3 5.7 4.1 10 7 3.1 5.0 7.1 9.5 .5 Constant (1982) dollars -1.6 5.1 46 5.7 -.7 2.3 3.2 6.4 10.5 1.8 2.3 2.0 54 2.1 3.0 4.0 2.5 6.2 3.0 2.2 14 5.0 2.6 2.0 4.3 3.7 56 5.6 51 3.0 51 3.6 24 3.1 54 4.2 _9 2.3 5.4 4.4 4.1 2.2 -.2 1.2 1.3 46 4.8 4.6 4.2 1.8 5.3 5.5 4.3 5.9 4.0 69 1.2 4.5 4.1 7.3 -.7 1.9 5.4 -3.8 Implicit price deflator Chain price index Fixedweighted price index (1982 weights) -4.2 13 7.7 10.4 9.6 5.4 3.9 8.9 10 6 5.6 -.1 22 6.1 2.2 2.1 .6 13 19 32 1.8 2.2 1.9 1.2 1.8 1.5 17 1.7 3.1 2.5 4.5 4.3 4.6 4.7 4.0 6.2 10.5 8.0 5.7 6.5 7.3 9.2 10.7 9.2 5.7 4.1 3.8 3.4 2.2 4.0 4.4 4.3 3.0 3.3 4.1 3.3 4.0 1.1 .0 3.2 2.5 6.0 4.9 4.1 4.4 1.7 1.1 1.1 1.4 1.2 1.5 2.7 2.5 4.0 4.4 4.7 4.3 3.6 6.0 10.3 8.0 5.7 6.4 7.2 9.2 10.9 9.2 5.7 4.2 3.9 3.6 2.5 4.1 4.8 4.1 3.1 3.5 4.4 3.2 4.2 1.5 3.6 3.0 5.5 5.2 4.0 4.1 1.5 .9 .9 1.1 12 1.2 2.2 2.5 3.8 4.3 4.6 4.2 3.5 5.7 9.4 7.7 5.6 6.3 7.0 8.8 10.5 9.0 5.6 4.2 4.0 3.7 2.6 4.2 4.8 4.1 3.2 3.4 4.5 3.3 4.2 1.7 .3 3.6 .3.0 5.7 5.2 4.0 4.2 TABLE B-6.—Gross national product by major type ofproduct, 1929-87 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Goods Year or quarter Gross national product Final sales Inventory change Durable goods Total Total Final sates Nondurable goods Services Inventory change Final Inventory change Final sales Inventory change Structures 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 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 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 U -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 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 288.3 333.4 351.6 371.6 372.5 405.9 428.2 451.0 456.8 495.8 281.4 323.2 348.6 371.1 374.1 400.2 423.6 449.6 458.3 490.0 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 -2.% 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 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 1.6 -.1 3.4 2.7 4.0 6.7 10.2 5.5 4.7 6.4 160.3 164.8 172.0 177.4 188.5 200.6 218.1 230.4 250.4 266.7 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 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 13.0 467.8 464.7 493.0 485.2 537.4 526.9 616.4 596.8 663.1 647.7 714.7 720.3 798.9 782.9 882.0 860.7 991.4 962.8 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 2.8 7.2 15.0 11.2 -7.0 10.3 9.7 20.1 10.3 282.6 295.8 317.2 354.9 390.4 432.2 459.3 491.3 545.9 613.0 441.1 3.2 484.9 4.9 533.2 3.3 4.6 586.6 4.3 650.6 1.3 725.2 5.7 803.5 11.6 895.9 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 1980 1981 1982 1983 1984 1985 1986 1987 " 2,732.0 3,052.6 3,166.0 3,405.7 3,772.2 4,010.3 4,235.0 4,486.2 2,740.3 - 8 . 3 3,028.6 24.0 3,190.5 -24.5 3,412.8 - 7 . 1 3,704.5 67.7 4,000.3 10.0 4,219.3 15.7 4,440.4 45.7 683.8 757.8 800.8 827.9 872.4 931.0 956.1 987.4 = 5.4 17.2 -7.7 -6.1 27.5 2.7 10.9 19.2 1,265.0 1,415.4 1,547.5 1,682.5 1,813.9 1,969.3 2,116.2 2,270.4 1982: IV 3,212.5 3,272.4 -59.9 1,309.8 1,369.7 -59.9 817.9 -17.2 1983: IV 3,545.8 3,514.8 31.0 1,473.7 1,442.7 31.0 1984: IV 3,851.8 3,806.8 45.0 1,599.9 1,554.9 45.0 1985:1 3,921.1 3,973.6 4,042.0 4,104,4 3,899.8 3,955.1 4,044.4 4,101.9 21.4 18.5 -2.4 2.5 1,620.5 1,629.4 1,649.7 1,651.9 1,599.1 1,611.0 1,652.1 1,649.4 21.4 18.5 -2.4 2.5 499.4 - 2 . 9 541.1 6.8 542.9 - 1 6 . 8 575.3 - 1 . 0 641.3 40.2 696.9 7.3 721.9 4.8 747.5 26.5 551.8 -42.7 611.9 16.7 667.6 33.0 681.4 16.3 6.4 692.9 714.4 699.0 1> 917.7 918.1 937.7 950.4 4,174.4 4,211.6 4,265.9 4,288.1 4,136.1 4,184.0 4,262.4 4,294.6 38.3 27.5 3.5 -=6.4 1,682.8 1,689.9 1,703.5 1,698.9 1,644.5 1,662.4 1,700.0 1,705.3 38.3 27.5 3.5 -6.4 25.9 691.1 707.0 10.1 747.9 - 1 2 . 1 741.8 =4.5 4,377.7 4,445.1 4,524.0 4,598.0 4,326.0 4,404.8 4,501.1 4,529.9 51.6 40.3 22.9 68.1 1,738.7 1,763.5 1,798.3 1,821.8 1,687.1 1,723.2 1,775.4 1,753.7 51.6 40.3 22.9 68.1 711.9 734.6 787.6 755.7 IV 1986:1 II IV 1987:1.. IV »..., 1,174.9 1,322.9 1,319.1 1,396.1 1,581.4 1,637.9 1,693.8 1,780.6 1,183.2 - 8 . 3 1,298.9 24.0 1,343.7 - 2 4 . 5 1,403.2 =7.1 1,513.7 67.7 1,627.9 10.0 1,678.0 15.7 1,734.8 45.7 Source: Department of Commerce, Bureau of Economic Analysis. 256 35.2 22.1 -1.9 50.7 292.0 314.4 299.4 327.1 377.0 403.1 425.1 435.2 1,598.9 303.9 830.9 14.3 1,730.1 342.0 887.3 12.0 1,866.5 385.4 5.1 12.1 -2.3 -4.2 1,907.6 1,943.3 1,985.5 2,040.6 393.0 400.8 406.8 411.9 953.4 955.4 952.1 963.5 12.5 17.5 15.6 = 1.9 2,070.2 2,097.9 2,136.6 2,160.0 421.4 423.8 425.7 429.3 975.2 988.6 987.8 997.9 16.5 18.2 24.8 17.4 2,212.0 2,252.2 2,289.3 2,328.2 426.9 429.4 436.4 448.0 TABLE B-7.—Gross national product by major type of product in 1982 dollars, 1929-87 [Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates] Goods Year or quarter Gross national product Final sales Inventory change Total 709.6 498.5 716.6 Final sales Inventory change Final sates 698.7 10.8 509.2 - 1 0 . 7 712.7 3.9 308.1 210.0 331.7 10.8 297.3 220.7 - 1 0 . 7 327.8 3.9 85.8 34.9 74.8 14.4 27.8 12.0 370.3 431.9 504.1 608.6 664.6 639.1 521.0 517.1 531.7 517.9 355.9 404.2 492.1 607.9 669.8 647.5 493.1 518.1 519.4 527.6 14.4 27.8 12.0 91.9 122.9 163.3 254.4 292.4 263.1 129.6 164.7 166.5 166.8 561.4 623.0 641.3 676.6 643.5 683.9 697.1 699.3 674.2 716.6 537.2 592.2 631.3 673.8 648.2 667.6 684.1 696.3 677.6 700.1 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 1,109.0 758.5 881.6 1,068.3 1,275.5 1,385.7 1,363.3 1,069.0 1,067.7 1,096.4 1,118.7 1950 1951.. 1952.. 1953.. 1954.. 1955.. 1956.. 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 -4.8 16.3 12.9 1957 1958 1959 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 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 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 1980 1981 1982 1983 1984 1985 . 1986 1987 * .7 -5.2 8.4 27.9 -1.0 12.3 -9.7 24.2 30.8 10.0 2.8 3.0 -3.4 16.5 Nondurable goods Services Total 1929 1933 1939 Durable goods .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 7.7 726.8 719.1 730.2 723.0 773.5 757.3 797.5 780.8 845.2 829.5 904.0 878.8 974.7 937.8 993.1 964.3 1,024.8 1,003.7 1,048.5 1,023.3 16.2 16.6 15.7 25.2 36.9 28.8 21.0 25.1 8.2 2,407.9 2,465.2 19.6 2,586.8 21.8 2,704.1 40.0 2,696.0 33.3 2,707.8 - 1 2 . 8 22.1 2,804.6 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 1,017.9 1,072.1 1,135.0 1,125.9 1,137.8 1,172.5 1,227.1 1,292.4 1,339.6 3,187.1 3,248.8 3,166.0 3,279.1 3,501.4 3,607.5 3,713.3 3,819.6 3,194.0 - 6 . 9 3,225.0 23.9 3,190.5 - 2 4 . 5 3,285.5 - 6 . 4 62.3 3,439.1 3,600.1 7.4 3,699.5 13.8 3,777.2 42.4 1,344.2 1,386.0 1,319.1 1,367.0 1,509.2 1,548.6 1,595.0 1,655.1 1982: IV 3,159.3 1983: IV 3,365.1 1984: IV 1985:1 II HI IV 1986:1 II Ill IV 180.0 208.8 229.8 245.4 230.6 245.2 248.3 251.3 229.1 236.8 7.5 -4.5 1.6 7.2 17.4 7.5 1.4 -3.8 -7.8 23.1 2.8 3.4 -6.1 11.4 19.1 3.6 4.7 -7.7 9.5 6.3 1.9 -7.1 8.2 4.0 -.1 8.4 7.1 Final sales 211.5 185.7 253.1 264.0 281.2 328.8 353.5 377.4 384.4 363.5 353.4 353.0 360.8 357.1 383.4 401.5 428.4 417.7 422.3 435.8 445.0 448.6 463.4 Inventory change 3.3 -6.2 2.3 7.2 10.3 4.5 -.7 -1.4 .6 4.8 -3.8 8.8 -3.6 12.8 11.7 6.4 -2.0 2.9 6.8 6.7 1.1 3.7 8.3 3.7 7.3 7.7 9.5 4.5 7.8 Structures Auto output 290.0 252.1 306.4 111.4 36.5 78.5 318.1 367.1 460.4 598.9 665.0 662.3 472.0 431.0 438.1 450.1 84.5 110.3 115.8 68.7 50.9 53.5 104.0 118.6 138.9 141.0 24.1 27.6 35.5 470.4 537.7 567.3 577.6 579.5 601.0 619.7 645.4 654.7 681.5 171.9 167.5 171.4 181.2 193.2 210.0 208.9 206.5 210.3 231.0 44.9 38.3 34.9 44.8 43.3 58.2 45.8 48.3 37.4 45.7 709.9 743.0 777.0 811.5 852.8 891.6 942.7 990.6 1,032.0 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 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 19.6 21.8 40.0 33.3 12.8 22.1 29.1 36.8 15.0 -.5 381.7 375.5 7.1 15.4 409.4 30.8 474.9 20.0 476.0 471.1 -11.4 15.9 490.9 14.2 534.0 27.5 572.5 13.3 604.6 640.1 642.4 662.7 660.1 649.9 666.7 681.7 693.1 719.9 735.1 8.8 1,092.4 12.5 1,126.1 6.4 1,169.4 9.2 1,218.7 13.3 1,256.4 - 1 . 4 1,286.4 6.3 1,324.4 14.9 1,368.7 9.3 1,426.9 1.7 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 1,351.1 - 6 . 9 1,362.2 23.9 1,343.7 - 2 4 . 5 1,373.4 - 6 . 4 1,446.9 62.3 1,541.2 7.4 1,581.3 13.8 1,612.7 42.4 584.0 - 3 . 2 578.5 6.9 542.9 - 1 6 . 8 566.3 - 1 . 2 38.2 623.5 681.6 6.4 712.6 4.3 748.1 24.1 767.1 783.7 800.8 807.0 823.3 859.7 868.6 864.6 -3.7 16.9 -7.7 -5.2 24.2 1,511.1 1,533.4 1,547.5 1,585.5 1,625.2 .9 1,679.5 9.5 1,730.8 18.2 1,781.4 331.8 329.4 299.4 326.6 367.1 379.4 387.4 383.2 67.1 73.3 66.5 85.9 98.5 105.6 106.4 98.7 3,218.6 - 5 9 . 3 1,297.9 1,357.1 - 5 9 . 3 543.8 -42.4 813.4 -16.9 1,555.5 305.9 63.3 3,338.1 27.0 1,423.8 1,396.8 27.0 598.0 16.1 798.8 10.9 1,600.7 340.6 96.4 3,535.2 3,493.5 41.7 1,520.2 1,478.5 41.7 647.8 31.1 830.7 10.6 1,644.7 370.3 104.2 3,568.7 3,587.1 3,623.0 3,650.9 3,549.2 3,569.9 3,628.7 3,652.5 19.5 17.3 -5.7 -1.6 1,537.0 1,540.7 1,557.7 1,558.9 1,517.6 1,523.4 1,563.5 1,560.5 19.5 17.3 -5.7 -1.6 660.3 677.1 699.2 689.6 15.0 4.5 1,657.7 5.5 -.4 5.6 857.2 846.3 864.2 870.9 373.9 379.0 382.2 382.4 104.8 104.2 107.4 106.1 3,698.8 3,704.7 3,718.0 3,731.5 3,663.4 35.3 3,676.7 28.1 3,711.9 6.1 3,745.8 -14.4 1,589.5 1,594.4 1,593.7 1,602.6 1,554.1 35.3 1,566.4 28.1 1,587.5 6.1 1,616.9 -14.4 23.6 682.1 9.0 696.9 735.9 - 1 1 . 1 735.5 - 4 . 3 872.0 869.5 851.6 881.4 11.7 19.1 17.2 -10.0 1,718.9 1,724.2 1,738.7 1,741.3 390.4 386.0 385.6 387.5 106.0 106.7 103.1 109.6 1,626.0 1,638.2 1,666.8 1,689.2 1,578.4 1,599.2 1,642.2 1,630.9 707.8 733.4 787.3 763.9 31.4 19.9 -1.0 46.2 870.6 865.9 854.9 866.9 16.2 19.1 25.5 12.1 1,764.0 1,777.4 1,787.1 1,797.0 382.1 379.7 382.0 388.8 102.3 97.0 93.5 102.1 1987:1 3,772.2 3,724.5 II 3,795.3 3,756.3 Ill 3,835.9 3,811.4 IV '... 3,875.1 3,816.7 47.6 39.0 24.6 58.3 7.3 8.2 47.6 39.0 24.6 58.3 Source: Department of Commerce, Bureau of Economic Analysis. 257 242.2 239.2 260.2 273.4 295.4 322.2 354.2 363.6 378.5 389.7 Inventory change 10.6 14.4 9.3 9.9 11.8 1,667.5 - 5 . 3 1,683.1 - 7 . 2 1,709.6 TABLE B-8.—Gross national product by sector, 1929-87 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Gross domestic product Year or quarter Gross national product Business1 Total Total1 Nonfarm1 Farm Statistical discrepancy 9.4 1.4 11.1 16.6 19.3 19.1 18.3 19.0 19.6 20.2 21.3 21.7 10.1 11.2 12.3 13.3 14.7 15.8 17.6 19.6 21.6 23.1 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 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 89.3 101.0 112.7 122.9 132.7 142.2 152.2 164.2 288.3 316.7 343.9 366.4 390.6 418.8 443.9 473.1 96.1 107.4 117,0 124.7 132.1 140.5 143.9 150.3 192.2 209.3 226.9 241.7 258.5 278.3 299.9 322.8 47.6 6.8 116.9 353.4 120.7 232.6 487 2.5 126.6 373.1 126.0 247.2 51.3 74.0 2.1 136.1 399.1 134.0 265.1 46.0 3,256.9 3,314.3 3,376.3 3,412.9 74.5 74.6 72.5 78.7 .7 -11.9 -9.1 2.3 138.3 140.7 143.6 146.1 410.0 415.7 421.1 428.4 139.1 139.9 140.3 142.7 270.9 275.8 280.8 285.7 40,7 40.2 37.6 40.5 3,551.6 3,587.9 3 630 7 3,650.8 3,480.6 3,509.9 3 557 9 3)586.6 73.9 77.1 78 8 75.7 2.9 .9 -6.1 -11.6 148.8 151.2 153.4 155.4 434.3 440.3 446.3 454.5 143.2 143.7 144.0 144.7 291.1 296.7 302.3 309.8 39.8 32.2 35.5 27.5 3,725.2 3,785.0 3,858 5 3,922.9 3,650.4 3,704.1 3,785 5 3,849.4 76.9 84.1 83.9 84.4 -2.2 -3.1 -10.9 -10.9 158.9 162.2 165.9 169.8 462.9 470.0 476.2 483.4 148.8 150.2 150.6 151.8 314.1 319.8 325.6 331.6 30.7 27.8 23.4 71.9 96.0 49 3 81.0 84.8 43.6 73.0 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 100.4 125.5 159.0 192.7 2114 213.4 212.4 235.2 261.6 260.4 100.1 125.0 158 5 192.3 210 9 213 0 211.6 2341 260.1 259.0 89.8 113.0 140 4 163.4 174 9 173.5 184.8 2113 236.4 232.9 82.0 103.4 128.0 149.8 156 9 153.5 165.2 189.3 214.4 213.3 13.0 15.3 15.3 16.0 18.8 20.2 23.3 18.8 1950. . 1951 1952 1953 1954 1955 1956 1957 . 1958 1959 288.3 333.4 3516 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 3 399.5 435.5 238.3 271.1 286.7 306.3 306.7 338.8 361.4 380.1 378.9 417.9 20.0 22.9 22.2 20.3 19.7 18.8 18.6 18.4 20.7 19.0 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 5118 530.0 5701 602.0 644 4 699.3 7663 810 4 885.9 957.1 449 9 463.9 4991 526.0 5621 610.7 666 7 699 7 762.0 820.1 432.5 445.0 478 6 506.2 544 3 590.0 6417 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 1970 1971 1972 1973.... 1974 1975... 1976 1977 1978 1979 1 015.5 1102 7 1,212.8 1359 3 1,472.8 1 598.4 1,782.8 1 990.5 2)249.7 2,508.2 1008 2 1093 4 1,201.6 13431 1,453.3 1580 9 1,761.7 1,965 1 2,219.1 2,464.4 856 3 927 4 1,020.0 1145 0 1,237.5 13412 1)500.7 1,682 1 1,908.4 2,125.3 831.2 897 5 988.8 1098 3 1,190.0 1288 4 U48.7 1,631 7 1,850.0 2,054.5 26.3 -1.1 32.8 51.0 49.2 50.3 48.5 50.4 60.3 71.8 -1.6 -4.3 1980 1981 1982.. 1983 1984 1985 1986 1987 " 2,732.0 3 052.6 3,166.0 3,405.7 3,772.2 4 010.3 4235 0 4,486.2 2,684.4 3,000 5 3,114.8 3,355.9 3,724.8 3,970 5 4 2013 4,460.2 2,306.8 2,582 8 2,658.2 2,866.6 3,201.5 3,409 5 3 605 2 3,822.9 2,236.4 2,498.9 2,581.3 2,802.1 3,118.5 3,340.1 3 533 8 3,747.3 65.5 79.8 77.0 59.3 77.6 75.1 ' 76 4 82.3 1982: IV 3.212.5 3,163.8 2,693.6 2,607.7 79.0 1983: IV 3,545.8 3,494.6 2,994.8 2,932.7 59.6 1984- IV 3,851.8 3,805.9 3,270.6 3,198.7 1985:1 II Ill 3,921.1 3,973.6 4,042.0 4,104.4 3,880.4 3,933.4 4,004.4 4,063.9 3,332.1 3,377.0 3,439.7 3,489.3 4,174.4 4,211.6 4 265 9 4,288.1 4,134.7 4,179.4 4 230 4 4,260.6 4,377.7 4,445.1 4 524.0 4,598.0 4,346.9 4,417 3 4 500 6 4)576.1 IV 1987-1 II Ill IV " 1 Includes compensation of employees in government enterprises. 2 Compensation of government employees. Source: Department of Commerce, Bureau of Economic Analysis. Federal Rest of the world 10.7 103.2 55 7 90.9 lit Total State and local 0.8 .3 .4 .4 .5 .5 .4 .5 1.5 1.2 1.7 1.4 103.9 56 0 91.3 IV Government2 3.5 3.5 4.2 4.3 4.4 4.5 4.7 4.9 5.4 6.2 7.3 8.5 9.7 4.6 6.3 6.4 8.9 1929 1933 1939 1986-1 Households and institutions 258 281 -.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 12 .0 -.6 -1.4 1.2 2.1 -.4 -1.1 -3.9 1.8 1.7 2.5 3.6 .0 1.9 -1.0 4.9 4.1 -.1 5^4 -5.6 -4.9 -6.8 4.4 4.7 7.6 7.8 9.5 0.9 1.2 3.5 3.5 5.1 15.2 25.6 32.3 35.3 22.4 17.6 18.1 20.1 10.7 21.0 27.3 30.0 16.2 10.3 10.6 11.5 12.4 21.2 27.7 31.5 32.4 33.0 34.8 37.2 39.8 42.9 44.8 13.9 14.5 15.6 16.7 17.9 19.3 21.3 23.4 26.1 29.5 2.9 1.7 2.3 2.4 2.5 2.9 3.2 3.7 4.1 4.5 5.1 5.6 5.9 6.5 6.9 7.2 7.8 8.1 9.1 9.9 9.6 .7 1.2 1,5 1.5 2.2 2.2 3.0 3.4 3.1 3.5 3.8 4.5 4.9 54 5.8 56 6(1 6.8 68 7,3 9.3 11.? 16.2 19.5 17.5 21.1 75,4 30.5 43,8 51.2 49.9 47.4 39.8 33.7 25.9 TABLE B-9.—Gross national product by sector in 1982 dollars, 1929-87 [Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates] Gross domestic product Year or quarter Gross national product Business1 Total Total > Nonfarm 1 Farm Statistical discrepancy Households and institutions Government2 Total Federal State and local 1929 1933 1939 709.6 498.5 716.6 704.6 496.1 713.5 611.6 404.9 586.8 547.8 338.7 518.3 54.1 56.6 56.4 9.7 9.6 12.1 34.4 27.1 33.3 58.6 64.0 93.4 13.2 16.2 38.9 45.3 47.9 54.6 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 1,109.0 770.3 906.0 1,077.1 1,273.4 1,377.7 1,352.6 1,093.3 1,061.6 1,102.5 1,103.4 635.5 738.7 832.9 891.6 934.3 914.3 866.3 886.1 925.4 916.7 571.2 675.8 774.4 841.6 862.5 839.3 809.0 828.6 875.1 858.5 54.6 58.1 62.4 59.2 57.2 53.7 54.0 49.9 55.2 55.0 9.7 4.8 -4.0 -9.2 14.6 21.3 3.3 7.6 -4.9 3.2 35.8 35.8 36.9 34.3 34.3 34.4 35.4 37.9 41.2 42.4 99.0 131.5 207.4 347.6 409.1 403.8 191.6 137.7 135.8 144.2 44.1 76.2 152.9 294.6 357.5 350.7 135.0 76.7 73.2 77.1 55.0 55.3 54.4 52.9 51.7 53.2 56.6 61.0 62.6 67.1 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 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 1,197.4 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 1,002.8 1,080.5 1,114.7 1,170.0 1,154.6 1,229.7 1,254.1 1,274.0 1,260.4 1,345.8 941.4 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 58.3 56.0 57.2 59.3 60.9 62.0 60.7 58.8 61.2 58.8 3.1 45.0 46.1 46.2 47.7 48.4 53.2 56.1 57.7 60.7 62.7 149.6 193.7 210.7 209.7 204.8 202.6 204.8 208.0 208.6 210.6 80.3 122.8 137.5 133.2 125.0 119.2 116.1 114.5 109.5 107.5 69.3 71.0 73.3 76.5 79.8 83.4 88.7 93.5 99.2 103.1 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 1,654.1 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 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 2,009.3 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 61.1 60.2 59.8 59.8 57.7 59.0 54.7 57.7 55.7 57.2 -l.B -4.1 -3.4 5.9 -1.0 -2.8 -9.5 67.4 68.0 70.7 72.5 74.6 77.4 80.4 83.1 85.6 88.2 217.1 225.4 233.9 239.2 247.3 255.8 275.0 291.0 301.2 308.2 108.9 111.5 116.7 116.1 116.8 117.3 128.1 138.5 140.7 141.0 108.2 113.9 117.3 123.1 130.5 138.5 146.9 152.4 160.5 167.2 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 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 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 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 60.7 62.3 62.0 61.1 60.7 64.8 62.5 62.2 61.0 64.6 -2.7 4.2 -3.4 -8.6 -3.3 4.2 5.6 .1 -2.8 -1.4 87.0 88.8 91.2 93.4 93.9 96.4 97.0 98.0 101.0 103.7 307.7 307.4 307.1 309.3 315.7 319.6 321.9 326.0 332.8 336.5 133.2 125.5 118.3 113.6 113.5 112.8 112.7 112.7 113.9 113.0 174.5 181.9 188.8 195.7 202.1 206.8 209.2 213.3 219.0 223.5 1980 1981 1982 1983 1984 1985 1986 1987 " 3,187.1 3,248.8 3,166.0 3,279.1 3,501.4 3,607.5 3,713.3 3,819.6 3,131.7 3,193.6 3,114.8 3,231.2 3,457.5 3,571.5 3,683.5 3,797.3 2,683.2 2,739.8 2,658.2 2,770.1 2,990.1 3,095.1 3,197.9 3,303.1 2,613.1 2,659.6 2,581.3 2,703.7 2,916.6 3,021.3 3,117.5 3,223.6 64.2 75.7 77.0 61.3 68.5 78.9 84.7 85.3 5.9 4.4 5.0 -5.1 -4.3 -5.8 107.3 109.9 112.7 114.9 117.6 121.1 125.9 130.9 341.2 343.9 343.9 346.3 349.8 355.3 359.7 363.3 114.4 115.8 117.0 119.0 120.5 122.3 122.6 122.9 226.8 228.1 226.9 227.3 229.3 232.9 237.1 240.4 1982: IV 3,159.3 3,111.3 2,654.1 2,567.1 80.3 6.7 113.8 343.5 117.6 225.9 1983:1V 3,365.1 3,316.6 2,853.2 2,795.3 55.6 2.3 115.8 347.5 119.4 228.1 1984: IV 3,535.2 3,493.1 3,022.2 2,953.0 71.1 -1.9 119.0 351.9 121.2 230.7 1985:1 H Ill IV 3,568.7 3,587.1 3,623.0 3,650.9 3,531.6 3,550.7 3,589.0 3,614.6 3,058.9 3,075.7 3,111.1 3,134.6 2,983.6 3,008.5 3,038.7 3,054.2 74.7 78.0 80.6 82.4 .6 -10.8 -8.2 -2.0 119.2 120.5 121.8 123.1 353.5 354.5 356.1 357.0 122.0 122.2 122.6 122.5 231.4 232.3 233.5 234.5 1986:1 II Ill IV 3,698.8 3,704.7 3,718.0 3,731.5 3,663.4 3,676.3 3,686.9 3,707.3 3,181.1 3,191.5 3,200.2 3,218.5 3,100.4 3,106.7 3,120.2 3,142.5 83.2 84.0 85.3 86.3 -2.6 .8 -5.4 -10.2 124.2 125.8 126.6 127.2 358.1 359.0 360.2 361.6 122.6 122.4 122.5 123.0 235.6 236.6 237.7 238.6 1987:1 II Ill IV 3,772.2 3,795.3 3,835.9 3,875.1 3,745.6 3,771.4 3,815.9 3,856.4 3,254.7 3,278.4 3,320.3 3,358.9 3,171.4 3,196.2 3,243.7 3,283.2 85.2 84.9 86.0 85.1 -1.9 -2.7 -9.4 -9.3 128.9 130.0 131.9 133.0 362.0 363.0 363.7 364.5 122.7 122.8 122.9 123.0 239.3 240.2 240.8 241.5 P..., 1 Includes compensation of employees in government enterprises. Compensation of government employees. Source: Department of Commerce, Bureau of Economic Analysis. 2 259 9.7 6.5 9.4 9.5 6.2 -6.2 -3.8 -l!6 -8.7 -3.7 ~io Rest of the world TABLE B-10.—Gross national product by industry, 1947-86 [Billions of dollars] Gross domestic product Wholesale and retail trade Finance, insurance, and real estate Manufacturing Year Gross national product Agriculture, forestry, and fisheries Mining 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 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 288.3 333.4 351.6 371.6 372.5 20.8 23.9 23.2 21.4 20.8 405.9 428.2 451.0 456.8 495.8 1985 1986 Note.—The Construction Total Durable goods Nondurable Transportation and utilities Serv- Government and government enterprises Statistical discrepancy Rest of the world 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 48.4 48.0 23.8 26.9 29.2 20.2 21.9 22.6 20.2 20.8 23.2 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 59.0 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 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 53.9 54.3 60.3 36.8 39.6 41.7 41.9 45.1 67.0 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 1.8 41.2 - 1 . 9 44.5 - 1 . 2 47.8 -.1 50.8 - 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 98.2 107.1 72.8 76.9 81.7 86.5 92.0 51.4 54.9 59.2 63.3 69.0 54.2 - 2 . 8 57.6 - 1 . 2 62.1 .0 67.0 = .6 72.5 - 1 . 4 3.5 3.8 4.5 4.9 5.4 705.1 772.0 816.4 892.7 963.9 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 82.6 115.0 98.9 74.6 124.1 106.9 82.5 132.9 115.6 90.6 146.8 125.1 99.1 159.2 136.3 110.5 78.2 - 1 . 2 2.1 88.1 -.4 98.4 110.5 - 1 . 1 121.0 - 3 . 9 5.8 5.6 6.0 6.8 6.8 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 97.1 108.0 118.7 129.1 168.7 145.8 183.7 161.4 202.6 174.8 225.6 190.5 246.0 206.7 120.2 130.2 144.6 163.2 179.4 134.0 145.9 160.1 173.1 189.0 -1.1 1.8 -1.6 -4.3 -1.7 7.3 9.3 11.2 16.2 19.5 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 76.5 357.3 46.0 86.2 409.3 50.2 97.9 465.3 56.5 115.6 518.8 72.7 131.4 561.8 206.3 239.7 277.7 317.4 345.2 151.0 169.7 187.7 201.4 216.5 141.7 160.4 178.9 201.0 216.1 273.7 29S.7 332.8 373.5 415.8 221.7 246.1 280.3 326.3 363.3 199.8 224.9 253.4 289.1 328.7 2.5 210.1 229.7 3.6 247.4 .0 270.3 - 1 . 9 292.4 - 1 . 0 17.5 21.1 25.4 30.5 43.8 2,732.0 3,052.6 3,166.0 3,405.7 3,772.2 77.2 92.0 89.6 74.3 92.9 107.3 143.7 132.1 118.4 119.4 581.0 643.1 634.6 683.2 771.9 351.8 385.8 362.5 385.6 451.1 229.2 257.3 272.1 297.6 320.8 240.8 269.6 288.4 320.0 354.4 438.8 483.1 506.5 542.9 614.0 400.6 449.3 475.1 536.4 572.8 374.0 422.6 463.6 515.5 580.2 322.1 354.7 383.9 410.5 442.5 4.9 4.1 = .1 5.2 5.4 47.6 52.1 51.2 49.9 47.4 4.010.3 4,235.0 90.6 93.0 118.2 184.4 799.3 95.3 197.9 824.3 469.9 478.5 329.3 345.8 376.2 391.4 663.6 622.8 643.7 702.5 695.0 700.2 477.4 - 5 . 6 506.6 - 4 . 9 39.8 33.7 industry classification 9.1 11.5 11.5 137.7 138.4 140.9 149.6 171.5 is on an establishment basis and is based -on the 1972 Standard Industrial Source: Department of Commerce, Bureau of Economic Analysis. 260 1.2 1.5 1.4 Classification. TABLE B-U.—Gross national product by industry in 1982 dollars, 1947-86 [Billions of 1982 dollars] Gross domestic product Year AgriGross Connational culture, forestproduct strucry, and Mining tion fisheries Manufacturing Total FiTranspor- Whole- nance, tation sale insur- Servance, and and Dura- Nonices and ble durable public retail real goods goods util- trade estate ities Government and government enterprises Statistical discrepancy Rest the Resid- of world ual > 88.0 100.0 93.5 98.7 93.1 90.7 157.8 161.9 166.1 103.0 124.7 107.7 128.9 112.2 129.0 156.2 7.6 -13.6 155.5 - 4 . 9 - 7 . 5 164.0 3.2 - 4 . 2 5.1 6.2 5.6 101.0 107.0 107.6 111.5 110.8 95.3 104.9 104.5 106.7 104.1 182.1 183.7 189.5 195.6 197.1 119.7 126.4 134.7 142.2 149.5 133.8 136.9 139.4 142.7 145.9 169.2 214.0 231.9 230.9 225.4 3.1 9.7 6.5 9.4 9.5 -.6 2.0 5.3 9.4 3.5 6.2 7.9 8.3 7.9 208.5 207.3 208.7 180.1 203.0 119.2 123.3 123.8 123.4 135.0 112.3 117.7 119.9 116.1 123.5 215.0 221.5 225.1 225.0 240.7 160.2 168.8 178.3 184.5 195.9 153.0 161.1 168.6 174.3 183.5 6.2 223.4 225.6 - 6 . 2 229.2 - 3 . 8 230.1 - . 5 232.8 - 4 . 6 -6.6 = 11.1 -14.7 -8.1 -11.0 9.4 10.7 11.5 9.5 10.0 338.7 339.4 368.3 397.4 425.4 202.4 199.9 220.5 238.9 259.3 136.3 139.5 147.8 158.5 166.2 127.8 130.0 136.3 143.8 150.4 245.4 247.8 263.9 273.9 290.7 206.5 215.0 226.5 235.9 245.8 190.2 197.7 207.7 217.4 230.7 240.3 - 8 . 7 249.2 - 3 . 7 258.4 264.5 274.0 - 4 . 1 -11.6 -6.9 -13.3 -19.7 -12.6 11.1 12.1 13.9 14.9 16.1 193.7 194.4 190.7 190.2 183.6 462.5 497.9 496.6 522.0 536.7 286.9 312.3 311.9 326.2 334.1 175.6 185.6 184.7 195.8 202.6 161.5 174.2 178.1 189.5 200.3 309.8 326.5 335.4 354.8 361.7 259.8 271.1 282.4 296.0 314.0 240.4 253.9 265.2 274.7 287.8 284.3 305.5 322.3 332.6 340.2 - 3 . 4 -14.0 5.9 - 1 4 . 5 -.2 -1.0 -2.8 2.8 -9.5 -2.7 17.0 15.9 16.3 17.7 17.0 134.5 132.4 134.4 133.4 130.3 168.0 162.7 166.7 170.4 162.3 506.8 515.5 561.2 621.3 591.6 304.8 305.5 336.5 377.0 363.5 202.0 210.0 224.8 244.3 228.1 203.9 209.8 223.8 243.0 248.8 367.6 385.7 414.8 437.0 426.2 320.7 335.9 350.9 367.7 381.6 295.7 302.4 320.0 340.2 347.5 339.6 340.0 340.5 343.4 350.6 -2.7 -3.9 4.2 4.8 -3.4 5.1 -8.6 -6.2 -3.3 -11.8 17.1 20.7 23.7 32.2 35.9 73.1 71.5 71.6 71.8 76.1 125.6 124.4 126.2 128.8 130.0 149.4 158.1 165.1 176.7 173.5 547.5 600.6 645.0 683.4 697.1 325.2 357.4 386.2 415.9 423.5 222.2 243.2 258.9 267.5 273.5 246.4 257.1 268.5 284.8 293.4 433.1 454.4 479.2 502.3 511.7 387.6 403.1 417.7 442.5 459.2 352.4 367.7 388.4 411.9 429.8 4.2 355.0 5.6 357.7 .1 362.9 371.5 - 2 . 8 376.2 - 1 . 4 = 8.7 =6.6 -3.4 2.1 -9.0 29.3 33.0 37.4 42.1 55.7 3,187.1 3,248.8 3,166.0 3,279.1 3,501.4 76.2 88.0 89.6 74.5 82.2 135.6 139.8 132.1 125.4 133.0 161.6 147.4 140.9 147.3 159.2 665.4 676.1 634.6 675.5 757.9 401.5 404.9 362.5 390.4 466.8 263.9 271.2 272.1 285.1 291.1 293.4 296.2 288.4 300.8 320.4 500.4 507.3 506.5 529.1 578.9 464.3 474.2 475.1 489.0 506.6 442.6 462.5 463.6 486.6 514.0 382.7 385.3 383.9 387.4 392.1 5.9 4.4 -.1 5.0 5.0 3.5 12.5 .0 10.6 8.1 55.5 55.2 51.2 47.9 43.9 3,607.5 3,713.3 93.6 100.4 612.1 523.6 541.3 644.7 551.3 564.9 399.0 405.4 -5.1 -4.3 -3.1 = 5.7 36.0 29.8 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 1955.. 1956.. 1957.. 1958.. 1959.. lf494.9 1,525.6 1,551.1 1,539.2 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 I960.. 1961.. 1962.. 1963.. 1964.. 1,665.3 1,708.7 1,799.4 1,873.3 1,973.3 68.3 67.5 67.1 67.2 65.2 94.2 95.6 98.1 102.2 105.7 163.1 165.1 172.5 177.5 185.9 1965.. 1966.. 1967.. 1968.. 1969.. 2,087.6 2,208.3 2,271.4 2,365.6 2,423.3 66.7 62.4 65.5 63.6 65.3 109.4 115.0 120.2 124.7 128.9 1970.. 1971.. 1972.. 1973.. 1974.. 2,416.2 2,484.8 2,608.5 2,744.1 2,729.3 68.8 70.6 70.9 70.3 69.7 1975.. 1976.. 1977.. 1978.. 1979.. 2,695.0 2,826.7 2,958.6 3,115.2 3,192.4 1980.. 1981.. 1982.. 1983.. 1984.. 1985.. 1986.. 76.7 226.1 138.1 90.0 238.5 145.0 89.4 226.3 133.2 130.6 164.2 790.3 501.4 118.1 168.3 812.2 517.7 288.9 325.0 294.4 328.3 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. 261 TABLE B-12.—Cross domestic product of nonfinancial corporate business, 1929-87 [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 1986 1987 "... 1982: IV 1983: IV 1984: IV 1985:1... II. Ill IV 1986:I... II. Ill IV 1987:1... II. Ill IV 1 Gross domestic product of nonfinancial corporate business 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 1,914.2 2,146.7 2,282.8 2,376.1 2,495.4 1,779.4 2,012.5 2,201.8 2,230.9 2,266.2 2,312.4 2.321.8 2,353.3 2,358.6 2,387.7 2,404.7 2,434.8 2,465.4 2,521.1 Capital consumption allowances with capital Total consumption adjustment 5.3 4.2 4.8 5.0 5.4 6.0 6.1 6.2 6.3 7.4 9.0 10.5 11.2 12.1 13.9 14.9 15.9 16.8 17.9 20.1 22.1 23.2 24.3 25.3 26.0 27.0 28.2 29.6 31.6 34.5 37.8 41.7 45.7 50.2 55.1 60.5 65.6 76.8 92.5 103.0 115.1 130.8 150.7 172.5 200.2 223,0 229.8 240.1 252.8 264.4 275.9 229.7 232.2 245.0 248.1 251.2 254.3 257.4 259.4 262.9 265.6 269.6 271.8 274.3 277.2 280.1 45.1 20.4 39.1 45.6 60.5 77.3 93.0 96.4 89.5 92.4 112.2 128.4 123.9 141.5 162.4 169.1 180.7 176.7 200.7 213.5 221.9 214.8 242.8 252.4 259.1 284.2 303.0 328.0 361.1 395.7 414.8 458.0 496.6 510.2 550.0 611.3 687.4 736.0 789.0 892.5 1,010.9 U43.3 1,266.7 1,368.2 1,538.1 1,559.3 1,684.4 1,906.6 2,030.1 2,111.7 2,219.5 1,549.7 1,780.3 1,956.7 1,982.8 2,015.0 2,058.0 2.064.4 2,093.9 2,095.8 2,122.1 2,135.1 2,163.0 2,191.2 2,243.9 Net domestic product Domestic income Indirect business tax, etc. * Corporate profits with inventory valuation and capital consumption adjustments Total 3.4 41.8 3.8 16.5 5.1 34.1 5.5 40.2 6.4 54.1 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 1,144.7 138.5 165.9 166.9 182.9 204.2 218.2 226.4 238.1 169.7 189.6 210.6 212.8 219.4 219.7 221.0 226.7 220.0 230.5 228.5 231.4 237.0 242.0 242.0 1,229.7 1,372.3 1,392.4 1,501.5 1,702.5 1,811.8 1,885.3 lt981.4 1,379.9 1,590.7 1,746.1 1,770.0 1,795.7 1,838.4 1,843.4 1,867.2 1,875.8 1,891.6 1,906.6 1,931.6 1,954.2 2,001.9 Compensation of employees Profits Total 32.3 16.7 28.2 31.2 39.8 51.0 62.2 65.1 61.9 67.2 79.1 87.7 85.2 8.0 -1.9 4.4 7.6 13.0 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 94.7 110.2 118.2 128.6 126.4 138.4 151.3 159.0 155.8 171.5 181.2 185.3 200.1 211.1 226.7 59.3 246.5 69.1 274.0 73.7 292.3 70.5 323.2 74.8 358.8 69.6 378.7 55.4 402.0 65.2 447.1 75.7 505.9 82.4 556.8 69.4 580.4 91.6 656.3 113.3 741.0 134.9 847.4 146.0 962.0 139.1 1,051.1 123.1 1,160.5 144.2 1,203.9 111.9 1,266.1 165.6 1,399.8 222.4 1,492.6 227J 1,560.7 225.8 1,630.6 245.7 1,206.5 100.1 1,319.7 199.5 1,436.8 222.1 1,459.6 220.7 1,481.7 223.7 1,501.7 244.9 1,527.2 221.7 1,544.2 225.7 1,551.8 225.0 1,564.1 227.7 1,582.6 224.6 1,598.4 233.4 1,615.1 235.9 1,638.6 256.2 1,670.1 Profits Profits before tax tax liability Total 1.2 6.1 8.8 16.4 20.1 23.6 22.2 17.8 22.0 29.1 31.8 24.9 38.5 39.1 33.8 34.9 32.1 42.0 41.8 39.8 33.7 43.1 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 96.9 107.2 109.2 138.3 160.5 182.1 195.8 181.8 181.5 129.7 159.3 196.0 175.9 174.6 214.9 116.3 183.2 181.9 173.3 168.3 183.4 178.7 158.4 168.7 179.0 192.1 196.9 207.9 226.0 \A 2.7 7.5 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 59.4 73.5 69.9 78.3 108.9 41.0 70.6 66.4 69.6 65.8 73.5 70.8 71.2 74.9 79.8 87.2 99.8 105.3 114.4 7.3 .1 4.7 6.1 9.0 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 99.9 122.5 106.0 96.3 106.0 75.4 112.7 115.5 103.7 102.5 109.9 107.9 87.2 93.9 99.3 104.9 97.1 102.6 111.6 Indirect business tax and nontax liability plus business transfer payments less subsidies. Source: Department of Commerce, Bureau of Economic Analysis. Inven- Capital tory convalu- sumpation tion Undisadjust- adjustDivitributed ment ment dends profits Profits after tax 262 5.1 2.0 3.3 3.5 3.9 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 69.5 70.9 74.1 87.3 62.2 68 8 68.6 68.2 75.6 68.9 71.0 69.8 76.6 74.6 75.6 82.4 86.3 89.9 90.5 2.2 = 1.9 1.4 2.6 5.0 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 23.7 33.4 53.0 35.1 22.2 18.8 13.2 43.9 46.9 35.5 26.9 41.0 36.9 17.4 17.3 24.7 29.2 14.7 16.4 21.7 0.5 = 0.9 = 2.1 - . 7 -~L0 -1.0 -~Z5 - 1 . 0 -1.2 = .7 = .8 = .4 .3 = .3 -.6 - 5 . 3 -2.3 - 5 . 9 = 2.8 =2.2 = 3.0 1.9 = 2.9 - 5 . 0 =2.9 = 1.2 = 3.2 1.0 - 3 . 0 = 1.0 =2.4 -1.6 -~L7 -2.7 = 1.5 = 1.2 - . 3 -1.2 -.3 = .8 = .2 = .2 .3 .3 .0 3.1 .1 3.9 4.4 5.2 -~L2 5.5 =2.1 5.5 -1.6 5.3 -3.7 5.9 -5.9 5.0 -6.6 4.2 -4.6 -6.6 5.5 5.6 -20.0 1.7 =39.5 = 11.0 - 6 . 6 -14.9 -10.2 -16.6 -9.0 = 25.3 = 10.9 =43.2 - 1 3 . 5 -43.1 -15.5 - 2 4 . 2 = 13.1 -10.4 -7.5 = 10.9 17.1 = 5.8 32.1 -.7 52.6 6.5 44.6 -17.4 48.1 : = 13.4 - 2 . 8 = 8.1 24.4 41.8 -1.6 48.9 -1.5 1.8 53.6 6.5 54.9 =9.8 52.8 17.8 49.6 11.3 45.0 6.0 42.7 = 8.9 41.4 - 1 1 . 3 47.8 =20.0 47.9 -17.6 47.8 =20.7 49.0 TABLE B-13.—Output, costs, and profits of nonfinancial corporate business, 1948-87 [Quarterly data at seasonally adjusted annual rates] Current-dollar cost and profit per unit of output (dollars) l Gross domestic product of Year or quarter nonfinancial corporate business (billions of dollars) Current dollars 1982 dollars Total cost and profit 2 Capital consumption allowances with capital consumption adjust* ment Compensation of employees Indirect business tax, etc. 3 Corporate profits with inventory valuation and capital consumption adjustments Total Profits tax liability Profits after4 tax Output per hour of all Net interest Compensation per hour employof all ees employ(1982 ees dollars) (dollars) 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 138.9 135.2 538.9 515.7 0.258 .262 0.019 .022 0.025 .027 0.163 .165 0.049 .046 0.022 .018 0.027 .028 0.002 .002 153.6 176.3 184.0 196.6 193.5 218.5 233.6 244.1 238.0 267.1 570.4 622.4 637.3 668.4 650.8 719.3 747.0 758.1 725.2 798.5 .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 .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 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 277.6 285.2 311.1 331.1 357.7 392.7 430.2 452.6 499.7 542.2 820.8 839.1 904.8 964.4 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 .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 3.321 3.502 3.685 3.948 4.206 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 .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 6.510 7.040 7.581 8.219 9.002 1980 1981 1982 1983 1984 1985 1986 1987 P. 1,540.8 1,738.4 1,782.2 1,914.2 2,146.7 2,282.8 2,376.1 2,495.4 1,807.9 1,837.2 1,782.2 1,886.0 2,036.5 2,127.1 2,182.2 2,240.9 .852 .946 1.000 1.026 1.054 1.073 1.089 1.114 .095 .109 .125 .123 .118 .119 .121 .123 .077 .090 .094 .098 .100 .103 .104 .106 .581 .632 .676 .679 .687 .702 .715 .728 .068 .078 .063 .089 .109 .107 .103 .110 .037 .035 .026 .032 .036 .033 .036 .049 .031 .044 .037 .057 .073 .074 .068 .061 .031 .037 .043 .037 .039 .043 .045 .047 17.096 17.194 17.318 17.867 18.288 18.674 18.969 9.939 10.861 11.699 12.124 12.570 13.103 13.566 1982: IV 1,779.4 1,760.2 1.011 .131 .096 .685 .057 .023 .034 .042 17.382 11.914 1983: IV.. 2,012.5 1,940.5 1.037 .120 .098 .680 .103 .036 .066 .037 18.029 12.261 1984: IV.. 2,201.8 2,069.5 1.064 .118 .102 .694 .107 .032 .075 .042 18.359 12.746 1985:1.... 2,230.9 2,266.2 2,312.4 2,321.8 2,091.1 2,115.1 2,148.7 2,153.5 1.067 1.071 1.076 1.078 .119 .119 .118 .120 .102 .104 .102 .103 .701 .699 .709 .106 .106 .114 .103 .033 .031 .034 .033 .072 .075 .080 .070 .043 .043 .043 .044 18.458 18.588 18.849 18.787 12.883 13.022 13.173 13.324 1986:1.... 2,353.3 2,358.6 2,387.7 2,404.7 2,176.7 2,171.9 2,180.8 2,199.3 1.081 1.086 1.095 1.093 .119 .121 .122 .123 .104 .101 .106 .104 .709 .714 .717 .720 .104 .104 .104 .102 .033 .034 .037 .040 .071 .069 .068 .062 .045 .046 .046 .045 18.941 18.930 18.974 19.073 13.437 13.525 13.608 13.724 1987:!.. 2,434.8 2,207.6 2,465.4 2,219.9 2,521.1 2,254.4 1.103 1.111 1.118 .123 .124 .123 .105 .107 .107 .724 .728 .727 .106 .106 .114 .045 .047 .051 .061 .059 .063 .045 .046 .048 18.933 18.964 19.119 13.708 13.798 13.897 IV.. 1 Output is measured by gross domestic product of nonfinancial corporate business in 1982 dollars. 2 This is equal to the deflator for gross domestic product of nonfinancial corporate business with the decimal point shifted two places to the left. 3 Indirect business tax and nontax liability plus business transfer payments less subsidies. 4 With inventory valuation and capital consumption adjustments. Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics). 263 TABLE B-14.—Personal consumption expenditures, 1940-87 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Durable goods Year or quarter 1940.. 1941.. 1942.. 19431944.. 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.. 1986... 1987 P., Personal consumption l expendi- Total tures Nondurable goods FurniMotor ture vehiand cles house- Total » Food and hold parts equipment and shoes Gasoline and oil Cloth- Services Fuel oil and coal Household operation Totall Housing2 TransElecportation tricity Total »• and gas 1.0 4.1 6.6 8.0 10.6 3.8 4.8 4.6 3.9 3.8 4.5 8.4 10.6 11.5 11.3 37.0 42.9 50.8 58.6 64.3 71.9 82.7 90.9 96.6 94.9 20.2 23.4 28.4 33.2 36.7 40.6 47.4 52.3 54.2 52.5 7.5 8.8 11.0 13.4 14.6 16.5 18.2 18.8 20.1 19.3 2.3 2.6 2.1 1.3 1.4 1.8 3.4 4.0 4.8 5.3 1.5 1.7 1.9 2.0 2.0 2.2 2.5 3.0 3.4 3.1 26.2 28.3 31.0 34.3 37.2 39.7 45.4 50.6 55.5 58.4 9.7 10.4 11.2 11.8 12.3 12.8 14.2 16.0 17.9 19.6 4.0 4.3 4.8 5.2 5.9 6.4 6.8 7.5 8.1 8.5 1.5 1.5 1.6 1.7 1.8 1.9 2.1 2.3 2.6 2.9 2.1 2.4 2.7 3.4 3.7 4.0 5.0 5.3 5.8 5.9 30.8 29.9 29.3 32.7 32.1 38.9 38.2 397 37.2 42.8 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 98.2 109.2 114.7 117.8 119.7 124.7 130.8 137.1 141.7 148.5 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 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 63.2 69.0 75.1 82.1 88.0 94.3 101.6 108.5 115.7 125.0 21.7 24.3 27.0 29.9 32.3 34.4 36J 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 6.8 7.3 8.0 8.2 8.5 8.9 9.4 9.7 10.5 330.7 341.1 361.9 381.7 409.3 440.7 477.3 503.6 552.5 597.9 43.5 41.9 47.0 51.8 56.8 63.5 68.5 70.6 81.0 86.2 19.7 17.8 21.5 24.4 26.0 29.9 30.3 20.0 36.1 38.4 18.0 18.3 19.3 20.7 23.2 25.1 28.2 30.0 32.9 34.7 153.2 157.4 163.8 169.4 179.7 191.9 208.5 216.9 235.0 252.2 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 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 4.6 134.0 141.8 151.1 160.6 172.8 185.4 200.3 216.0 236.4 259.4 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 11.2 11.7 12.2 12.7 13.4 14.5 15.9 17.3 18.9 20.9 640.0 691.6 757.6 916.5 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 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 82.1 270.3 283.3 305.1 339.6 380.9 416.2 452.0 490.4 541.8 613.2 142.1 4.8 147.5 51.7 158.5 56.4 176.1 62.5 198.2 66.0 218.7 70.8 236.2 76.6 255.9 84.1 282.2 94.8 317.3 102.2 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 15.8 284.0 310.7 341.3 373.0 411.9 461.2 515.9 582.3 656.1 734.6 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 23.7 27.1 29.8 31.2 33.3 35.7 41.3 49.2 53.5 59.0 1,732.6 1,915.1 2,050.7 2,234.5 2,430.5 2,629.4 2,799.8 2,966.0 219.3 239.9 252.7 289.1 335.5 368.7 402,4 413.9 90.3 100.5 108.9 130.4 157.4 177.6 194.9 194.5 86.2 92.7 94.7 107.1 118.8 128.7 139.9 146.3 681.4 740.6 771.0 816.7 867.3 913.1 939.4 980.4 349.1 376.5 398.8 421.9 448.5 472.8 497.8 514.5 109.0 119.9 124.4 135.1 146.7 157.2 167.5 176.5 83.7 92.7 89.1 90.2 90.0 92.6 75.3 79.9 18.0 19.4 18.6 17.5 17.8 17.5 16.0 15.9 831.9 934.7 1027.0 1,128.7 1,227.6 1,347.5 1,458.0 1,571.6 261.5 113.9 295.6 127.5 321.1 143.4 344.1 156.0 371.3 166.9 402.4 174.7 436.9 178.6 469.2 182.2 56.4 63.5 72.8 80.0 84.8 88.9 87.6 87.3 64.5 68.3 69.7 74.8 82.0 88.6 95.1 105.4 2,117.0 263.8 115.7 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 25.0 192.1 208.1 219.1 232.6 239.8 257.9 270.6 285.3 294.6 316.3 837.2 1982: IV.. 1983: IV.. 1984: IV.. 99.1 786.6 407.0 26.5 89.8 18.2 1,066.5 330.3 148.0 74.8 71.1 2,315.8 310,0 144.4 112.4 837.9 430.8 141.1 91.9 18.1 1,167.9 353.8 161.4 84.1 77.6 2,493.4 346.7 162.3 122.7 879.6 456.1 149.8 89.0 16.8 1,267.1 382.2 169.3 86.3 84.5 1985:1.... II... III.. IV.. 2,549.9 2,602.0 2,665.4 2,700.1 358.2 362.4 383.7 370.5 171.1 173.3 191.9 174.1 125.0 127.0 129.5 133.5 894.4 910.4 918.4 929.3 463.5 471.2 474.9 481.7 153.2 155.8 158.8 160.9 90.6 94.3 93.5 92.1 17.0 17.2 17.5 18.4 1,297.3 1,329.2 1,363.3 1,400.3 388.9 397.3 407.0 416.5 172.8 171.0 175.4 179.5 90.3 85.5 88.3 91.5 86.5 87.9 89.3 90.7 1986:1.... 2,737.9 2,765.8 2,837.1 2,858.6 375.9 386.4 427.6 419.8 177.4 184.2 217.0 201.2 134.7 138.3 142.9 143.8 936.8 934.3 940.0 946.3 489.4 494.7 499.6 507.5 163.4 167.2 169.8 169.6 87.7 74.4 70.6 68.4 17.4 16.0 15.5 15.1 1,425.2 1,445.1 1,469.5 1,492.4 424.1 175.4 433.4 177.8 440.9 181.5 449.0 179.8 86.3 87.0 89.6 87.5 93.5 93.9 95.5 97.6 2,893.8 2,943.7 3,011.3 3,015.1 396.1 409.0 436.8 413.8 177.6 189.6 215.2 195.8 146.0 146.0 147.9 145.4 969.9 982.1 986.4 983.4 514.8 515.0 514.0 514.1 174.0 175.8 178.7 177.3 75.8 80.6 82.7 80.5 15.4 16.1 15.6 16.3 1,527.7 1,552.6 1,588.1 1,618.0 456.3 176.6 464.1 179.6 472.9 186.2 483.5 186.3 84.8 85.8 90.0 88.7 102.1 103.7 106.3 109.6 III.. IV.. 1987:1 II.... 1 2 Includes other items not shown separately. Includes imputed rental value of owner-occupied housing. Source: Department of Commerce, Bureau of Economic Analysis. 264 TABLE B-15.—Personal consumption expenditures in 1982 dollars, 1940-87 [Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates] Durable goods Year or quarter Personal consumption expendi- Total 1 tures Nondurable goods Motor vehicles and parts Furniture and tousehold equipment Cloth- Total] shoes Gasoline and oil Food Services Fuel oil and coal Household operation Total» Housing 2 Total ] Electricity and gas Transportation 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 502.6 531.1 527.6 539.9 557.1 592.7 655.0 666.6 681.8 695.4 40.6 46.2 31.3 28.1 26.3 28.7 47.8 56.5 61.7 67.8 18.6 20.6 8.4 7.7 7.1 7.4 15.2 21.8 25.5 32.7 17.6 20.4 17.4 14.0 12.4 13.7 22.9 25.7 27.1 26.4 259.4 275.6 279.1 284.7 297.9 323.5 344.2 337.4 338.7 342.3 150.6 158.3 161.8 166.3 178.5 193.0 202.2 193.9 191.5 193.6 36.3 38.9 40.3 43.0 41.7 43.4 44.7 42.5 42.7 43.0 17.2 19.2 14.5 9.2 9.5 12.5 22.7 24.1 25.7 27.9 23.8 24.6 25.3 25.7 25.5 27.2 29.2 30.8 31.0 27.3 202.7 209.3 217.2 227.2 232.9 240.5 262.9 272.6 281.4 285.3 53.6 56.0 58.1 59.8 61.9 62.6 67.2 72.8 76.5 80.9 32.4 32.0 33.4 31.2 31.5 32.4 35.1 37.6 39.0 40.1 7.1 7.3 7.9 8.2 8.6 9.2 10.3 11.7 12.8 13.7 17.7 19.7 21.9 26.9 29.2 31.0 35.9 35.3 35.1 33.2 1950... 1951... 1952... 1953... 1954... 1955... 1956... 1957... 1958... 1959... 733.2 748.7 771.4 802.5 822.7 873.8 899.8 919.7 932.9 979.4 80.7 74.7 73.0 80.2 81.5 96.9 92.8 92.4 86.9 96.9 41.3 36.3 34.1 39.9 40.6 51.5 45.3 45.8 40.8 47.4 30.1 28.9 28.9 29.9 30.1 33.7 34.9 33.7 33.2 35.5 352.8 362.9 376.6 388.2 393.8 413.2 426.9 434.7 439.9 455.8 196.6 202.5 209.8 217.7 222.0 231.3 238.8 243.5 243.5 252.1 44.3 43.7 45.8 46.2 46.2 48.6 49.7 49.3 49.9 52.3 29.0 31.5 34.1 36.0 37.1 40.3 42.8 44.4 46.5 48.9 29.4 29.3 28.5 27.6 28.1 29.9 29.9 29.7 30.8 29.4 299.8 311.1 321.9 334.1 347.4 363.6 380.1 392.6 406.1 426.7 86.1 91.9 97.5 102.5 107.1 112.1 117.1 122.6 127.7 133.6 43.8 46.2 47.0 48.9 50.5 55.5 59.3 61.2 63.3 65.7 15.6 17.6 19.0 20.4 22.4 24.2 26.4 28.0 29.5 31.2 32.4 33.2 33.4 34.2 33.3 34.2 35.6 36.2 35.4 36.8 1960... 1961... 1962... 1963... 1964... 1965... 1966... 1967... 1968... 1969... 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 98.0 93.6 103.0 111.8 120.8 134.6 144.4 146.2 161.6 167.8 49.2 44.6 51.0 56.4 59.0 67.5 68.5 67.4 77.3 80.4 34.9 35.3 37.4 39.9 44.7 48.5 53.8 55.8 59.2 60.9 463.3 470.1 484.2 494.3 517.5 543.2 569.3 579.2 602.4 617.2 255.5 259.7 263.7 266.5 277.2 290.4 299.4 304.0 317.0 324.3 52.7 53.7 56.0 56.9 61.5 64.0 68.3 68.8 71.7 73.0 50.7 51.0 53.2 54.7 57.4 60.2 63.9 66.0 70.6 75.2 28.5 26.7 26.7 28.0 29.5 31.0 31.8 31.8 30.1 28.6 443.9 461.4 481.8 502.3 532.3 558.5 585.3 612.3 641.8 671.7 139.8 145.7 153.0 159.4 166.1 174.4 181.7 189.3 197.9 207.6 68.7 70.9 74.4 77.0 80.5 83.9 87.8 91.9 95.1 99.3 32.9 34.6 37.1 38.8 40.8 42.7 44.9 47.4 49.7 52.4 37.9 38.2 39.6 41.2 43.4 45.5 48.3 51.4 54.7 58.1 1970... 1971... 1972... 1973... 1974... 1975... 1976... 1977... 1978... 1979... 1,492.0 1,538.8 1,621.9 1,689.6 1,674.0 1,711.9 1,803.9 1,883.9 1,961.0 2,004.4 162.5 178.3 200.4 220.3 204.9 205.6 232.3 253.9 267.4 266.5 73.5 86.4 98.3 106.7 90.3 91.1 109.6 121.2 125.9 119.4 61.1 63.5 70.2 77.9 78.2 75.9 80.6 87.3 92.3 97.1 632.5 640.3 665.5 683.2 666.1 676.5 708.8 731.4 753.7 766.6 334.5 72.0 79.9 335.9 75.3 83.6 344.2 80.3 87.0 340.8 86.0 91.7 336.6 84.9 87.2 346.4 88.1 89.8 363.6 92.2 93.4 377.1 97.4 96.4 379.6 107.1 100.9 387.5 112.1 97.1 26.7 25.9 28.6 30.9 24.3 24.2 27.0 26.1 26.9 26.2 697.0 720.2 756.0 786.1 803.1 829.8 862.8 898.5 939.8 971.2 216.1 102.2 224.5 103.6 235.5 108.6 246.5 112.6 258.6 112.8 265.7 117.5 273.2 122.3 279.6 128.2 292.8 134.0 304.1 138.3 54.4 55.8 58.5 59.8 60.2 63.3 65.5 68.1 70.7 71.1 59.8 62.1 66.0 67.8 68.4 69.4 72.6 77.8 80.2 82.9 1980... 1981... 1982.. 1983.. 1984.. 1985.. 1986.. 1987* 2,000.4 2,024.2 2,050.7 2,146.0 2,249.3 2,352.6 2,450.5 2,495.2 245.9 250.8 252.7 283.1 323.1 352.7 383.5 388.1 103.8 106.3 108.9 126.8 148.0 163.6 175.7 169.9 95.4 96.5 95.7 106.1 118.4 130.2 144.7 152.4 762.6 764.4 771.0 800.2 825.9 849.5 877.2 875.9 394.9 392.5 398.8 414.0 422.8 436.5 444.9 440.1 114.8 88.4 122.2 87.8 124.4 89.1 132.6 93.2 142.2 94.5 147.9 96.5 158.0 100.3 159.0 100.6 21.6 19.2 18.6 18.6 18.5 18.9 21.5 21.1 991.9 1,009.0 1,027.0 1,062.7 1,100.3 1,150.4 1,189.8 1,231.2 312.5 318.9 321.1 325.4 333.0 341.0 350.0 358.8 142.6 142.0 143.4 146.2 148.8 151.0 151.3 153.7 73.1 72.0 72.8 74.2 75.4 77.4 76.8 77.7 77.4 73.3 69.7 71.4 75.9 81.0 84.4 88.2 1982: IV 2,078.7 262.0 115.0 69.1 1983: IV 2,191.9 300.5 138.1 1984: IV 2,281.1 333.1 151.6 1985:1 II Ill IV 2,314.1 2,337.0 2,376.1 2,383.2 342.4 346.6 366.8 355.1 1986:1 II Ill IV 2,409.7 2,434.3 2,477.5 2,480.5 1987:1 II Ill IV "... 2,475.9 2,487.5 2,520.7 2,496.6 1 2 778.6 404.6 126.2 89.7 17.6 1,038.1 322.1 143.1 71.6 111.1 812.7 418.2 137.4 94.4 19.4 1,078.6 328.2 149.4 76.9 72.6 122.7 831.2 426.2 143.5 94.7 18.0 1,116.8 335.8 148.9 75.7 78.0 158.1 159.9 176.6 159.9 125.4 128.0 131.4 135.9 841.2 847.6 853.5 855.7 431.1 436.8 438.8 439.4 145.4 146.7 149.5 150.1 97.0 96.3 96.3 96.4 18.6 18.4 19.3 19.4 1,130.5 1,142.8 1,155.7 1,172.5 337.7 339.7 342.0 344.3 151.2 148.1 150.6 154.3 78.8 74.2 76.6 80.2 79.3 80.7 81.4 82.7 359.8 369.6 405.5 399.0 162.3 167.0 194.3 179.1 137.5 142.5 148.3 150.7 868.8 880.0 879.8 880.3 445.9 447.3 442.2 444,0 154.3 97.4 159.0 99.6 160.4 101.5 158.4 102.5 19.8 21.2 22.5 22.3 1,181.2 1,184.7 1,192.2 1,201.1 346.7 349.0 351.1 353.1 149.3 150.1 152.9 152.8 75.0 75.7 78.4 78.2 83.3 83.7 85.2 85.5 375.9 385.4 406.9 384.4 158.1 166.4 186.6 168.6 151.5 152.5 154.1 151.7 883.2 879.0 875.7 865.6 447.5 441.6 437.1 434.1 160.4 99.8 157.3 102.1 161.7 100.9 156.6 99.5 21.0 21.4 20.4 21.6 1,216.9 1,223.1 1,238.1 1,246.6 355.3 357.7 360.0 362.2 150.0 151.4 156.5 156.8 75.8 76.1 79.8 79.1 86.9 87.5 88.6 89.6 98.4 Includes other items not shown separately. Includes imputed rental value of owner-occupied housing. Source: Department of Commerce, Bureau of Economic Analysis. 265 TABLE B-16.—Gross and net private domestic investment, 1929-87 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Year or quarter Gross private domestic investment 1929 1933 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 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 P. 1982: IV 1983: IV 1984: IV 1985:1 II Ill IV 1986-1 fl Ill IV 1987- 1.. II III IV P 16 7 16 9.5 13.4 18 3 10.3 62 7.7 113 315 35.0 471 36.5 55.1 60 5 53.5 54 9 541 69.7 72 7 71.1 63 6 80.2 78.2 77.1 87.6 931 99.6 116.2 128.6 125 7 137.0 153.2 148.8 172.5 202.0 238 8 240.8 219 6 277.7 344.1 416.8 454.8 437.0 515.5 447.3 502.3 664 8 6416 671.0 716.4 409 6 579.8 661.8 638.6 648 4 628 6 650.8 683.4 679.4 660 8 660.2 699.9 702.6 707 4 755.5 Less: Equals: Net private domestic investment consumption allowances with capital consumption adjustment Net fixed investment 9.9 76 9.0 9.4 103 11.3 116 12.0 12 4 14.2 17.6 204 22.0 23.6 27 2 29.2 309 32 5 34.4 381 41.1 42 8 44.6 46.4 47.8 49.4 514 53.9 57.4 62.1 67 4 73.9 81.4 88.8 97.5 107.9 1181 137.5 1618 179.2 201.5 229.9 265.8 303.8 347.8 383.2 396.6 415 5 437 6 456.7 479.4 393 2 400.8 423.5 428.2 433 3 4416 447.2 447.8 454.1 458 9 465.9 469.7 476.6 483 0 488.2 Nonresidentia1 Total Total 5.0 =4 5 6.7 -61 .5 4.1 80 -1.0 -5 3 -4.2 -11 17.3 17.5 26 7 14.5 31.5 33 3 24.4 24 0 216 35.3 34 6 29.9 20 8 35.5 31.8 29.4 38.2 418 45.7 58.8 66.5 58 3 63.1 71.8 60.0 74.9 94.1 1207 103.4 57 8 98.4 142.5 186.9 189.1 133.1 167.7 64.1 105.7 249 4 204 0 214.3 237.0 16 4 179.0 238.3 210 4 2151 187 0 203.6 235.6 225.3 2019 194.3 230.2 226.0 224 4 267.3 1.9 35 = 2.7 -4 7 -3.2 = 1 10.9 17.9 22 0 17.6 24.6 231 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 52.3 480 55.2 62.0 56.9 67.2 83.6 1011 87.9 63 4 82.4 121.3 158.3 176.1 141.5 143.7 88.7 112.8 1817 194 0 198.6 191.3 76 3 148.0 193.3 189.0 196 6 189 4 201.1 197.3 197.8 1984 200.7 178.6 185.7 201.5 199.2 Source: Department of Commerce, Bureau of Economic Analysis. 266 Total 3.3 -3.5 — .7 .7 2.0 -2.1 3.1 -1.3 1.7 6.9 10.7 11.8 8.7 10.3 11.6 10.1 119 10.2 13.2 15.6 15.9 96 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 45.8 911 1015 81.0 Structures 1.8 -1.7 -1.1 = .8 _3 -1.7 -2 4 -1.9 -10 2.4 1.9 25 2.2 2.8 39 3.8 48 50 5.9 79 7.9 63 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 17.4 217 22.0 15 6 16.0 17.6 25.0 34.5 39.4 51.7 45.9 25.9 39 3 45 5 26.6 Producers' durable equipment 1.4 -1.8 .4 1.5 23 -=-.5 _ 7 28 4.5 8.7 93 6.5 7.5 77 6.4 71 5.2 7.3 77 8.1 32 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 33.7 219 24.8 41.0 57.2 64.5 49.5 46.9 19.6 19.9 518 55 9 54.4 Residential 1.7 -1.0 .8 1.2 1.5 =.6 = 1.6 = 1.9 = 18 4.0 7.3 10 2 8.9 14.4 11.5 11.2 117 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 67.0 90.6 92.5 117.6 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 -7.1 67.7 10.0 15.7 45.7 = 59.9 31.0 45.0 21.4 18.5 -2.4 2.5 38.3 27.5 3.5 6.4 51.6 40.3 22.9 68.1 TABLE B-17.—Gross and net private domestic investment in 1982 dollars, 1929-87 [Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates] Less: Equals: Net private domestic investment Pam'tal Year or quarter Gross private domestic investment consumption allowwith capital consumption adjust- . ment Net fixed investment Nonresidentta Total Total Total Structures Producers' durable equipment Residential Change in business inventories 1929 1933 1939 139.2 22.7 86.0 86.8 86.5 84.4 52.4 -63.8 1.6 41.6 -53.0 -2.3 26.2. 40 2 -10.1 16.8 -24.3 -12.0 9.4 16.0 1.9 15.4 -12.8 7.8 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 111.8 138.8 76 7 50.4 56.4 76.5 178.1 177 9 208.2 168.8 84.9 86.3 86 9 85.7 84.8 85.4 88.0 91.8 96.8 101.7 26.9 52 5 -10 2 -35.3 -28.4 -8.9 90.1 86.1 111.4 67.1 12.5 24.7 -221 -36.0 -23.3 62^2 87.1 99.1 76.7 1.5 12 0 17 5 -24.4 10 5 10.5 39.5 52.6 54.3 37.9 -8.5 -3.5 -159 -20.7 -15.2 -8.3 15.4 11.7 14.3 12.7 10.0 15 6 16 -3.8 4.7 18.8 24.1 40.9 40.0 25.2 11.1 111 46 -11.5 -12.8 -11.0 22.7 34 5 44.8 38.9 10.8 107 3.9 14.4 27.8 12 0 .7 -5.2 -8.4 27.9 -1.0 12.3 -9.7 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 234 9 235.2 2118 216.6 212 6 259.8 257.8 243.4 221.4 270.3 106.5 111.8 117 0 122.1 127 4 132.6 138.3 143.5 147.7 151.9 128 4 123.3 94 8 94.4 85 2 127.2 119.5 99.9 73.7 118.4 104.2 92.5 84 8 91.7 90 0 110.9 106.5 96.9 77.1 101.9 43 3 46.9 417 47.0 404 49.9 54.9 51.7 31.5 38.5 15.7 18.8 18.8 22.9 24.4 27.7 32.5 30.7 24.8 25.0 27.6 28.1 22 9 24.1 160 22.2 22.4 20.9 6.6 13.6 60 9 45.6 43 2 44.7 49 6 60.9 51.6 45.2 45.6 63.4 24 2 30.8 10 0 2.8 -4 8 16.3 12.9 3.0 -3.4 16.5 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 260.5 2591 288.6 3071 325.9 367.0 390 5 374.4 3918 410.3 156.3 160 6 165.1 170.3 176.3 183.7 192 2 201.1 209 8 219.8 104.1 98 4 123.5 136 8 149.6 183.4 198 3 173.4 1819 190.5 96.4 912 107.3 1201 133.9 158.1 1614 144.6 160 9 165.3 41.4 37 3 46.4 49 2 63.3 90.4 106 3 93.6 961 103.1 27.9 28.1 30.3 29.1 34.0 46.2 50.4 45.9 46.7 49.7 13.6 93 16.0 20.1 29.2 44.2 558 47.7 49.3 53.4 55.0 53 8 61.0 709 70.6 67.7 551 50.9 64.8 62.2 7.7 7.3 16.2 16.6 15.7 25.2 36.9 28.8 21.0 25.1 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 3815 419.3 465.4 520 8 481.3 383.3 453 5 521.3 576.9 575.2 229 8 239.5 253.4 263 6 276.1 287.0 297 3 309.6 323.7 341.3 1518 179.8 212.1 2571 205.3 96.3 156 2 211.7 253.3 234.0 143 6 160.2 190.3 2171 172.0 109.1 1341 182.6 216.5 218.9 89 3 76.1 85.3 1165 106.9 60.8 618 85.2 111.6 124.3 1980 1981 1982 1983 1984 1985 1986 1987 * 509.3 545.5 447 3 504 0 658 4 6361 654.0 685.4 356.1 369.7 383.2 394 4 407 2 426 3 442.0 458.7 153.2 175.8 641 109 6 2512 209 8 212.0 226.7 160.1 152.0 88.7 116 0 188 9 202 5 198.2 184.3 101.3 105.5 65 5 50 4 103 3 1171 92.3 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 26.2 39.8 41.8 20.2 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 24.1 63.5 75 3 72.2 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 65.6 85 6 85 4 105.9 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 -6.4 62.3 7.4 13.8 42.4 1982- IV .. 408.8 577.2 655.7 632 1 645 7 623 2 643.3 674.4 665.6 645.0 631.0 390.0 397.9 413.5 4181 422 6 4301 434.3 435.3 439.6 444.2 449.1 18.8 179.3 242.2 214 0 2231 1931 209.0 239.1 226.0 200.8 181.9 78.0 152.3 200.5 194 5 205.8 198 8 210.6 203.8 197.9 194.7 196.3 -59.3 27.0 41.7 19 5 17.3 -5.7 -1.6 35.3 28.1 6.1 -14.4 6718 673.7 681.9 714.2 453 2 456.6 460.4 464.6 218 6 217.1 221.5 249.6 1710 178.1 196.9 191.3 47.6 39.0 24.6 58.3 ... 1983- IV 1984- IV 1985-1 II.... III.. IV 1986-1 II III IV... 19871 . || III IV * Source: Department of Commerce, Bureau of Economic Analysis. 267 TABLE B-18.—Inventories and final sales of business, 1946-87 [Billions of dollars, except as noted; seasonally adjusted] Inventory-final sales ratio Inventories» Quarter Fourth quarter: 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976. 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 » 1982: IV 1983: IV 1984: IV 1985: I II Ill IV 1986: I It III IV 1987: I II Ill IV Nonfarm Total 2 Farm Total 2 Manufacturing trade Final sales ^ Retail trade Other Total 71.0 80.3 85.6 77.5 96.7 109.4 108.6 109.6 107.3 114.6 123.4 127.0 126.2 131.7 19.6 21.0 19.3 16.7 51.4 59.3 66.3 60.8 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 15.8 18.4 19.8 19.7 4.48 4.36 4.33 3.94 22.5 24.9 23.3 22.0 21.2 19.9 19.9 21.2 22.6 22.1 74.2 84.5 85.3 87.6 86.1 94.7 103.5 105.8 103.7 109.6 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 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 4.44 4.40 4.11 3.98 3.84 3.80 3.87 3.82 3.68 3.64 135.5 137.2 143.8 149.6 155.3 169.1 185.2 197.4 211.8 232.4 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 33J 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 3.38 240.3 257.8 285.6 352.6 423.3 428.8 463.3 505.7 588.2 674.8 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 3.68 739.3 789.0 771.5 787.2 858.2 863.4 863.4 945.2 84.5 81.6 79.2 79.4 80.9 71.1 66.7 79.8 654.8 707.4 692.2 707.8 777.3 792.3 796.7 865.4 310.7 330.2 316.1 315.9 343.4 335.6 324.3 343.2 154.8 164.7 162.2 163.8 177.5 180.4 181.5 198.3 122.7 134.0 134.7 148.2 166.7 180.1 189.5 209.8 66.7 78.5 79.2 79.9 89.6 96.3 101.4 114.0 201.1 217.8 229.5 247.0 268.8 290.6 304.8 321.2 3.68 3.62 3.36 3.19 3.19 2.97 2.83 2.94 771.5 787.2 858.2 862.1 862.5 857.2 863.4 856.9 861.9 863.3 863.4 884.6 906.9 921.4 945.2 79.2 692.2 316.1 162.2 134.7 79.2 229.5 3.36 79.4 707.8 315.9 163.8 148.2 79.9 247.0 3.19 80.9 777.3 343.4 177.5 166.7 89.6 268.8 3.19 80.1 77.3 73.2 71.1 782.0 785.1 784.0 792.3 342.6 340.3 337.2 335.6 178.5 179.7 178.9 180.4 169.4 171.4 173.4 180.1 91.6 93.7 94.5 96.3 275.9 279.9 286.8 290.6 3.12 3.08 2.99 2.97 68.5 70.6 71.2 66.7 788.4 791.3 792.1 796.7 327.6 325.0 323.9 324.3 178.7 179.6 181.6 181.5 185.8 187.6 187.1 189.5 96.4 99.1 99.5 101.4 292.8 296.7 302.3 304.8 2.93 2.91 2.86 2.83 69.4 76.3 79.3 79.8 815.2 830.5 842.1 865.4 327.7 329.3 336.6 343.2 185.2 189.8 192.2 198.3 197.8 204.3 203.2 209.8 104.5 107.2 110.2 114.0 306.1 312.1 319.6 321.2 2.89 2.91 2.88 2.94 1 2 Nonfarm* End of quarter. Beginning 1959, inventories of construction establishments are included in "other" nonfarm inventories. Prior to 1959, they are included in total and total nonfarm inventories, but not in the detailed categories shown. 3 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. 4 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. 268 TABLE B-19.—Inventories and final sales of business in 1982 dollars, 1947-87 [Billions of 1982 dollars, except as noted; seasonally adjusted] Inventories1 Invento ry-final sales Nonfarm Quarter Total2 Farm Total Fourth quarter: 1947 1948 1949 2 Manu- Wholesale facturing trade Final sales3 Retail trade 3 36 3.42 3.28 2 78 2.83 2.71 49.5 49.6 49.6 50.8 51.2 57.1 57.8 59.8 59-4 61.9 82.6 90.4 93.9 98.0 97.7 102.5 104.7 105.9 107.7 111.4 3 37 3.42 3 40 3.28 3.24 3.25 3.31 3.30 3.21 3.25 2.79 2.85 2.81 2.73 2.67 2.70 2.79 2.78 2.68 2.73 61.8 631 65.0 68.9 72 6 76.5 851 90.7 93 5 98.9 65.2 64.2 67.5 70.3 73-4 79.2 84.3 84.2 90.5 96.4 28.8 30.3 30.1 32.4 34.9 37.4 38.7 45.0 46.5 50.0 114.1 118.7 123.4 130.4 136.3 147.7 150.2 156.4 163.7 165.4 3.24 3.18 3.19 3.14 3.12 3.05 3.25 3.30 3.28 3.40 2.72 2.67 2.67 2.64 2.65 2.60 2.81 2.87 2.87 2.98 248.3 2461 251.7 267 9 288.5 2819 294 0 3019 3141 324.7 105.8 110 7 114.0 1184 128.4 124 0 1312 140.5 1516 156.1 96.6 107.2 114.0 1221 121.1 115.9 122 3 130.9 1391 136.7 50.5 53.2 56.9 62.6 66.4 68.6 68.5 73.7 78.4 76.1 166.8 172.6 185.4 188.9 184.3 191.5 199.3 209.0 221.5 225.6 3.42 3.42 3.30 3.45 3.72 3.51 3.49 3.47 3.44 3.44 3.00 3.00 2.89 3.02 3.28 3.0fi 3.09 3.10 3.08 3.08 691.4 710.3 687.2 687.2 744.8 756.9 772.5 805.6 326.8 330 3 315.2 309 3 330.0 322 2 317.0 322.7 161.6 165 0 161.5 157.9 171.0 173 6 177.6 184.9 130-4 135.5 132.9 142.4 157.8 168.2 174.8 188.1 72.7 79.5 77.6 77.5 86.0 92.9 103.2 109.9 225.3 224.6 226.1 235.5 248.4 261.3 269.4 275.1 3.41 3.53 3.40 3.24 3.32 3.18 3.14 3.23 3.07 3.16 3.04 2.92 3.00 2.90 2.87 2.95 81.2 687.2 315.2 161.5 132.9 77.6 226.1 3.40 3.04 74.9 687.2 309.3 157.9 142.4 77.5 235.5 3.24 2.92 824.2 79.4 744.8 330.0 171.0 157.8 86.0 248.4 3.32 3.00 829.1 833.5 832.1 831.7 80.4 81.6 79.3 74.8 748.8 751.9 752.7 756.9 329.4 327.5 325.2 322.2 171.4 173.2 173.0 173.6 159.5 161.2 163.3 168.2 88.4 90.0 91.3 92.9 253.3 254.9 259.7 261.3 3.27 3.27 3.20 3.18 2.96 2.95 2.9C 2.90 840 6 847 6 849.3 845.8 74 8 75 9 77.4 73.2 765 7 7718 771.9 772.5 3210 320 2 318.2 317.0 175 2 176 3 179.0 177.6 174.2 1751 173.1 174.8 95.4 100.1 101.6 103.2 262.1 263.6 266.2 269.4 3.21 3.22 3.19 3.14 2.92 2.93 2.90 2.8> 857 7 867 4 873.6 888.1 741 78 2 81.3 82.5 783 5 789 2 792.2 805.6 318 3 317 2 320.2 322.7 179.2 180 6 181.0 184.9 181.1 185 0 183.0 188.1 104.9 106.4 108.0 109.9 267.3 270.0 274.6 275.1 3.21 3.21 3.18 3.23 2.93 2.92 2.88 2.9- 208.0 218.1 209.5 1051 108.6 102.9 39 9 42.7 42.8 39.6 43.7 42.8 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 2781 308.9 3189 321.6 316.9 333.2 346.1 349.1 345.7 362.2 47 7 51.5 54 6 54.3 55.9 56.0 53.7 54.9 57.3 58.1 230.4 257.4 264.3 267.4 260.9 277.1 292.4 294.2 288.4 304.2 109 8 133.2 139 0 142.7 135.0 142 5 153.2 152.1 146.8 153.5 47.6 49.0 50 0 50.4 51.1 54.8 56.6 56.0 56.0 60.7 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 370.0 377 2 393.4 410.1 425 8 451.0 487 9 516.6 537 7 562.8 59.4 608 63.5 65.8 64 0 66.3 661 67.7 68 2 69.0 310.5 316 5 329.9 344.2 361.8 384.7 421.7 449.0 469.4 493.8 154.7 1588 167.2 172.6 180 9 191.6 213 6 229.2 2390 248.5 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 571.1 590 7 612.4 652 5 685.7 673 0 6951 724.2 7610 776.0 69.8 73 4 75.9 814 81.3 82 6 791 77.2 77 8 82.4 501.2 517 3 536.6 571.0 604.5 590.3 6161 647.0 683 2 693.6 1980 1981 1982 1983 1984 1985 1986 1987 P 769.1 793 0 768.4 762 0 824.2 8317 845.8 888.1 77.8 82 6 81.2 74 9 79.4 74 8 73.2 82.5 1982: IV 768.4 1983- IV 762.0 1984- IV 1985- 1 || Ill III IV 1987- 1 III IV P Nonfarm 4 74.8 77.1 77.3 43 3 45.4 44.4 IV Total 23.5 23.1 21.1 23.4 25.6 25.8 23.5 23.6 22.7 24.8 26.3 26.3 28.1 2513 263.5 253.9 1986- 1 Other 1 End of quarter. 2 Beginning 1959, inventories of construction establishments are included in "other" nonfarm inventories. Prior to 1959, they are included in total and total nonfarm inventories, but not in the detailed categories shown. 3 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. 4 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. 269 TABLE B-20.—Foreign transactions in the national income and product accounts, 1929-87 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Receipts from foreigners Exports of goods and Year or quarter Total Total Merchan- Serv- Payments to foreigners Capital grants received by the United States (net) Imports of goods and services Transfer payments (net) Merchandise From persons (net) Total Total Services Total 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 0.3 •.2 .2 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 '.8 2.9 2.6 4.5 5.6 .2 .2 .1 .2 .4 .5 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 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 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 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 44.5 24.4 45.6 26.8 51.7 29.6 73.9 40.2 101.0 50.5 109.6 51.7 117.5 60.2 123.1 68.6 144.7 82.8 183.3 107.9 69.8 73.1 82.1 114.1 - 2 . 0 149.5 161.3 0 177.7 0 191.6 0 227.5 0 1.1 292.4 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 1980 1981 1982 1983 1984 1985 1986 1987 * 352.1 383.9 361.9 352.5 383.5 369.9 376.2 426.7 351.0 382.8 361.9 352.5 383.5 369.9 376.2 426.7 225.1 238.3 214.0 206.1 224.1 220.8 224.9 257.6 352.1 383.9 361.9 352.5 383.5 369.9 376.2 426.7 318.9 348.9 335.6 358.7 442.4 449.2 481.7 546.7 247.5 266.5 249.5 271.3 334.3 341.0 367.5 410.6 71.4 82.4 86.1 87.3 108.2 108.2 114.2 136.0 1982: IV 335.9 335.9 196.3 139.6 335.9 321.9 239.9 1983: IV 364.7 364.7 215.6 149.1 364.7 390.5 298.3 1929 1933 1939 125.9 144.5 148.0 146.4 159.4 149.1 151.3 169.1 From Interest paid by government to Net ffjrpjgn investment ("net) 0.0 .0 .0 0.0 .0 .0 0.8 .2 1.0 .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 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 -1.8 .9 .6 -1.3 .3 !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 A .5 .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 7.7 7.5 9.0 9.5 12.3 15.4 15.7 12.8 1.1 1.0 1.3 1.0 1.5 2.0 1.7 1.5 6.5 6.5 7.8 8.5 10.7 13.4 14.0 11.4 82.0 10.6 1.1 9.5 92.2 13.4 1.2 12.2 385.7 453.6 342.7 110.9 0.9 7 .7 .5 A .5 A .4 3 '.6 '.S A 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 1984: IV 385.7 385.7 228.0 157.7 17.0 1.6 15.5 1985:1 II Ill IV 376.3 370.6 364.2 368.7 376.3 370.6 364.2 368.7 225.0 221.6 218.0 218.6 151.3 149.0 146.2 150.2 376.3 370.6 364.2 368.7 427.7 447.8 448.9 472.2 321.5 339.8 341.0 361.8 106.3 108.0 107.9 110.4 13.3 14.1 16.7 17.4 2.1 1.7 2.2 1.9 11.1 12.5 14.5 15.5 12.6 13.0 16.9 10.6 18.3 -1.0 17.8 - 3 3 . 5 19.8 -90.9 21.3 -115.9 22.6 -143.9 24.0 -156.8 18.9 -15.4 18.3 -57.4 21.2 -106.1 21.2 -85.9 21.1 -112.5 21.5 -122.9 21.5 -142.3 1986:1 II Ill IV 373.5 371.3 376.6 383.3 373.5 371.3 376.6 383.3 220.7 221.4 225.7 231.7 152.8 149.8 150.8 151.6 373.5 371.3 376.6 383.3 467.3 472.1 487.1 500.2 354.0 357.9 375.4 382.8 113.3 114.3 111.7 117.5 12.2 16.7 17.4 16.6 1.7 1.6 1.6 1.9 10.4 15.1 15.8 14.7 22.5 22.2 22.8 22.9 1987:1 II Ill 397.3 416.5 439.2 453.9 397.3 416.5 439.2 453.9 235.6 247.4 267.2 280.1 161.7 169.0 171.9 173.8 397.3 416.5 439.2 453.9 509,5 534.8 562.9 579.4 386.1 401.8 421.7 432.9 123.4 133.0 141.1 146.5 12.4 11.6 11.0 16.2 1.7 1.2 1.2 1.7 10.7 10.5 9.8 14.4 23.1 -147.7 24.5 -154.5 24.3 -159.0 24.2 -165.9 1.2 1.1 0 0 0 0 0 Source-. Department of Commerce, Bureau of Economic Analysis. 270 -128.5 -139.8 = 150.7 -156.5 TABLE B-21.—Exports and imports of goods and services in 1982 dollars, 1929-87 [Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates] 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 1986 1987 ". 1982: IV.... 1983: IV..,. 1984: IV.... 1985:1 II III.... IV.... 1986:1 II III.... IV.... 1987:1 || III.... IV *. Total Total Durable goods Imports of goods and services Services Merchandise Nondurable goods Total Merchandise Factor income l Other Total Total Durable goods Services durable goods Factor Total 42.1 22.7 36.2 29.7 15.9 26.5 12.3 4.5 13.3 17.5 11.4 13.1 12.3 6.8 9.8 7.6 3.7 5.2 4.8 3.1 4.5 37.4 24.2 30.1 29.3 19.2 24.0 7.4 4.0 6.9 22.0 15.2 17.0 8.0 4.9 6.1 2.6 1.3 2.2 40.0 42.0 29.1 25.1 27.3 35.2 69.0 82.3 66.2 65.0 30.5 31.7 19.5 15.2 16.4 24.0 54.1 65.5 49.1 48.4 18.9 20.2 13.4 10.5 11.0 12.6 23.1 34.4 24.5 24.1 11.6 11.6 6.1 4.8 5.4 11.3 31.0 31.1 24.6 24.2 9.4 10.3 9.6 9.8 10.9 11.2 14.9 16.9 17.1 16.7 4.6 5.2 4.8 4.6 4.9 4.8 5.6 7.2 8.5 8.2 4.8 5.1 4.9 5.2 6.0 6.5 9.4 9.7 8.6 8.5 31.7 38.2 36.9 48.0 51.1 54.1 42.0 39.9 47.1 46.2 25.6 29.4 21.0 25.0 26.5 26.0 30.0 29.3 33.9 33.3 8.8 11.0 6.7 6.5 6.7 6.9 7.8 7.8 9.4 8.9 16.8 18.4 14.3 18.5 19.7 19.1 22.2 21.5 24.5 24.4 6.2 8.8 15.8 23.0 24.6 28.2 12.0 10.6 13.1 13.0 2.0 1.9 1.7 1.9 2.1 2.5 1.9 2.1 2.3 2.6 59.2 72.0 70.1 66.9 70.0 76.9 87.9 94.9 82.4 83.7 42.2 51.1 49.0 46.4 48.8 53.2 61.8 66.6 56.6 56.1 21.0 23.8 25.3 25.8 26.9 30.3 34.4 37.2 31.0 30.5 21.3 27.3 23.7 20.6 21.9 22.9 27.4 29.4 25.6 25.6 17.0 20.9 21.2 20.5 21.2 23.7 26.1 28.3 25.8 27.6 9.1 10.9 11.3 11.0 11.6 13.0 14.1 14.8 13.2 14.0 7.9 10.0 9.9 9.5 9.6 10.7 12.0 13.5 12.6 13.5 54.6 57.4 63.3 69.7 67.5 76.9 83.6 87.9 92.8 101.9 40.9 40.4 41.9 44.6 42.1 48.3 53.6 56.1 58.1 68.0 11.5 11.5 13.0 13.7 11.9 14.7 16.8 17.1 16.9 22.8 29.5 28.9 28.9 30.9 30.3 33.5 36.8 39.0 41.3 45.3 13.6 17.1 21.4 25.1 25.4 28.6 30.0 31.8 34.6 33.8 2.8 3.1 2.9 3.1 3.3 3.6 3.4 3.4 3.7 4.0 98.4 100.7 106.9 114.7 128.8 132.0 138.4 143.6 155.7 165.0 68.8 69.1 72.2 77.6 87.7 88.2 94.0 96.5 104.9 110.0 37.9 38.0 39.8 42.1 48.2 50.0 53.6 58.8 64.8 69.5 30.9 31.1 32.4 35.5 39.5 38.2 40.4 37.7 40.1 40.5 29.6 31.6 34.7 37.1 41.1 43.8 44.4 47.1 50.8 55.0 15.7 16.9 18.5 20.0 21.8 23.2 22.8 23.8 26.3 29.0 13.9 14.7 16.2 17.2 19.3 20.6 21.6 23.3 24.5 26.0 102.4 103.3 114.4 116.6 122.8 134.7 152.1 160.5 185.3 199.9 67.5 69.0 78.9 81.2 86.3 97.0 109.1 113.0 135.7 144.6 21.7 21.1 24.8 26.2 29.0 35.6 44.0 48.0 61.7 65.6 45.8 47.9 54.0 55.0 57.4 61.4 65.2 65.0 74.0 79.0 34.9 34.3 35.5 35.4 36.5 37.7 43.0 47.5 49.6 55.2 4.6 4.8 4.6 5.1 5.6 6.2 7.0 7.5 8.6 12.0 178.3 179.2 195.2 242.3 269.1 259.7 274.4 281.6 312.6 356.8 120.6 119.3 131.3 160.6 175.8 171.5 177.5 178.1 196.2 218.2 74.3 72.9 80.0 99.3 113.9 112.1 112.9 111.2 121.9 136.6 46.3 46.4 51.3 61.3 62.0 59.5 64.7 66.9 74.3 81.6 57.6 59.9 64.0 81.7 93.3 88.2 96.8 103.6 116.4 138.6 29.6 30.5 33.9 46.2 53.5 45.6 49.7 53.5 63.2 86.6 28.0 29.4 30.1 35.4 39.8 42.6 47.1 50.1 53.2 52.0 208.3 218.9 244.6 273.8 268.4 240.8 285.4 317.1 339.4 353.2 150.9 166.2 190.7 218.2 211.8 187.9 229.3 259.4 274.1 277.9 66.8 74.4 84.4 88.9 89.2 72.4 88.5 99.3 113.7 115.7 84.1 91.8 106.4 129.4 122.5 115.5 140.8 160.1 160.4 162.2 57.4 52.7 53.9 55.6 56.6 52.9 56.1 37.7 65.3 75.3 12.5 9.8 10.2 13.9 17.7 16.3 16.7 16.1 21.1 30.8 388.9 392.7 361.9 348.1 371.8 365.3 377.4 425.8 336.0 355.5 376.6 369.7 364.7 360.5 366.5 371.5 370.2 379.6 388.3 241.8 238.5 214.0 207.6 223.8 231.1 244.6 282.0 199.1 214.4 231.9 231.9 230.2 229.5 232.7 235.7 238.1 248.1 256.7 258.7 270.5 291.4 307.3 150.0 143.8 121.9 119.6 132.3 142.2 153.1 177.2 91.9 94.6 92.1 88.0 91.5 88.9 91.5 104.8 88.3 88.1 93.7 147.1 154.3 148.0 140.5 148.0 134.3 132.8 143.9 136.9 141.1 144.7 55.7 57.9 56.3 55.5 55.4 55.0 58.2 65J 332.0 343.4 335.6 368.1 455.8 473.6 523.2 560.1 324.3 401.6 471.4 253.6 258.7 249.5 282.2 351.1 370.2 420.2 443.5 242.7 311.6 364.2 116.1 126.1 125.3 150.4 201.6 219.2 248.1 263.2 117.1 172.5 211.4 35.9 41.1 40.5 37.1 48.7 43.3 44.8 55.9 137.8 134.5 131.0 133.8 450.7 472.4 475.4 495.8 347.6 368.4 372.4 392.3 135.8 132.1 131.5 131.7 79.8 75.2 72.6 70.7 56.9 54.1 53.8 55.3 56.0 56.9 58.9 61.0 494.4 517.0 541.2 540.1 139.2 144.0 145.7 146.5 74.7 77.9 78.7 81.3 64.5 66.1 67.1 65.2 533.0 547.2 575.6 584.5 390.5 413.4 441.1 435.7 425.2 432.8 454.9 460.9 209.6 216.5 221.4 229.3 235.5 246.6 254.6 255.7 137.5 132.6 124.2 131.9 149.5 150.9 172.1 180.3 125.6 139.1 152.8 138.0 151.9 151.0 162.9 154.9 166.8 186.6 179.9 171.7 174.5 188.8 186.3 78.4 84.7 86.1 85.8 104.7 103.4 103.0 116.7 81.6 90.1 107.2 91.2 87.2 87.1 90.0 88.6 86.8 93.9 96.9 96.9 103.6 109.7 109.1 91.4 96.3 91.6 85.0 92.6 79.2 74.5 78.2 83.0 88.2 89.5 80.9 80.4 77.2 78.5 397.8 414.5 437.1 453.8 110.8 126.3 138.2 140.7 142.9 142.4 142.7 147.1 151.3 154.2 159.8 161.7 166.9 181.7 198.2 53.8 52.9 55.2 1 Factor income exports less factor income imports equals rest-of-the-world product. Source: Department of Commerce, Bureau of Economic Analysis. 271 253.5 258.3 266.2 274.7 103.1 104.0 103.0 103.5 104.0 103.6 100.1 104.5 107.8 114.4 120.6 123.6 35.1 39.7 47.4 43.8 43.9 43.2 42.2 44.4 46.8 41.5 46.5 48.1 54.0 58.7 62.7 TABLE B-22.—Relation of gross national product, net national product, and national income, 1929-87 [Billions cf dollars; quarterly data at seasonally adjusted annual rates] Year or quarter Gross national product Less: Less: Capital consumption allowances with capital consumption adjustment Equals: Net national product PIUS: Indirect business tax and nontax liability Business transfer payments Statistical discrepancy Subsidies less current surplus of government enterprises Equals: National income 1929 '. 1933 1939 103.9 56 0 91.3 9.9 7.6 9.0 94.0 48.4 82.3 7.1 7.1 9.4 0.6 .7 .5 1.5 1.2 1.7 -0.2 .0 84.7 39.4 71.2 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 100.4 125 5 159.0 192 7 211.4 2134 212.4 235 2 2616 260.4 9.4 10.3 11.3 11.6 12.0 12.4 14.2 17.6 20.4 22.0 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 .4 .5 .5 .5 .5 .5 .5 .6 .7 .8 1.4 .7 .4 .1 -1.7 2.7 4.0 .1 .6 .7 .9 -.2 -.1 .3 79.6 102.8 136.2 169.7 182.6 181.6 180.7 196.6 221.5 215.2 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 288.3 333 4 351.6 3716 372 5 405.9 4282 4510 456.8 495.8 23.6 27.2 29.2 30 9 32.5 34.4 381 41.1 42.8 44.6 264.6 306.2 322.5 340 7 340.0 371.5 3901 409.9 414.0 451.2 23.4 25.3 27.7 29.7 29.6 32.2 35.0 37.4 38.6 41.7 .8 .9 1.0 1.2 1.1 1.2 1.4 1.5 1.6 1.8 .8 2.7 1.8 2.6 2.7 1.8 -1.9 -1.2 -.1 1.5 .1 -.1 -.3 .0 .7 .7 1.1 .1 239.8 277.3 291.6 306.6 306.3 336.3 356.3 372.8 375.0 409.2 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 5153 533 8 574 6 606 9 649 8 705.1 772 0 816 4 892 7 963.9 46 4 47.8 494 51.4 53 9 57.4 621 67.4 73.9 81.4 468 9 486.1 525 2 555.5 595 9 647.7 709 9 749.0 818 7 882.5 45.3 48.0 515 54.6 58 7 62.5 65 2 70.1 78.7 86.3 2.0 2.0 2.1 2.4 2.7 2.8 3.0 3.1 3.4 3.9 2.8 -1.2 .0 -.6 -1.4 -1.2 2.1 -.4 -1.1 -3.9 .4 1.7 1.8 1.1 1.7 1.6 2.5 1.6 1.4 1.9 424.9 439.0 473.3 500.3 537.6 585.2 642.0 677.7 739.1 798.1 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1015 5 1,102 7 1212 8 1,359 3 1,472.8 1,598 4 1782 8 1,990 5 2 249 7 2,508.2 88 8 97.5 107 9 118.1 137.5 161.8 1792 201.5 229 9 265.8 926 6 1,005.1 1104 8 1,241.2 1,335.4 1,436.6 1603 6 1,789.0 2,019 8 2,242.4 94 0 103.4 111 1 120.8 129.0 140.0 1517 165.7 1781 189.4 41 4.4 49 5.5 5.8 7.4 79 8.6 9.3 10.3 -1.1 1.8 -1.6 -4.3 -1.7 2.5 3.6 .0 -1.9 -1.0 2.9 2.6 3.7 3.5 1.2 2.4 1.0 3.0 3.9 3.5 832,6 898.1 994.1 1,122.7 1,203.5 1,289.1 1,441.4 1,617.8 1,838.2 2,047.3 1980 1981 1982 1983 1984 1985 1986 1987 " 2 732 0 3,052.6 3,1660 3405 7 3 772 2 4,010.3 4,235.0 4,486.2 303 8 347.8 3812 3966 415.5 437.6 456.7 479.4 2 4281 2,704.8 2,782.8 3,009 1 3,356 8 3,572.7 3,778.4 4,006.8 213 3 251.5 258.8 282 6 313 9 333.2 347.7 367.6 121 12.4 14.3 160 18 7 21.6 22.3 23.2 4.9 4.1 5.2 5.4 -5.6 -4.9 -6.8 5.7 6.7 8.7 14.1 9.9 6.3 8.7 13.1 2,203.5 2,443.5 2,518.4 2,719.5 3,028.6 3,229.9 3,422.0 3,635.9 3,212.5 393.2 2,819.3 264.5 15.2 6.8 15.4 2,548.2 3,545.8 400.8 3,145.0 294.1 16.5 2.5 19.6 2,851,5 1984- IV 3.851.8 423.5 3,428.3 322.7 20.0 -2.1 8.4 3,096.1 1985:1 || Ill IV 3,9211 3 973 6 4,042.0 4,104.4 428 2 433 3 441.6 447.2 3,492.9 3 540 3 3!600.4 3,657.2 325.9 334 9 334.4 337.3 21.1 216 21.8 21.9 .7 -11.9 -9.1 -2.3 11.2 8.8 1.1 4.2 3,156.5 3,204.4 3,254.4 3,304.4 1986:1 || .... Ill IV 4,174 4 4,2116 4 265 9 4,288.1 447.8 454.1 458 9 465.9 3,726.6 3,757 5 3,807 0 3,822.3 345.6 340 7 352 8 351.9 22.0 22.2 22 4 22.6 -2.9 .9 -6.1 -11.6 2.3 20.4 .7 11.6 3,364.2 3,414.1 3,438.7 3,471.0 1987-1 || 111 IV P 4,377 7 4 4451 4,524.0 4,598.0 469.7 4766 483.0 488.2 3,907.9 3,968 5 4,040.9 4,109.8 358.3 365 2 371.8 375.1 22.8 231 23.3 23.6 -2.2 -3.1 19.3 9.9 2.3 21.0 3,548.3 3,593.3 3,659.0 .. . 1982-.IV 1983- IV . Source: Department of Commerce, Bureau of Economic Analysis. 272 1.8 -1.3 .8 -10.9 TABLE B-23.—Relation of national income and personal income, 1929-87 [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 1986 1987 P 1982- IV 1983- IV 1984: IV 1985-1 II III IV 1986-1 || III IV 1987-1 || Ill IV » National income 84 7 39.4 71.2 796 102.8 136.2 169.7 182.6 1816 180.7 196.6 221.5 215.2 239.8 277 3 2916 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 8981 994.1 1122 7 1203 5 U89.1 14414 1617 8 1,838.2 2,047.3 2 203 5 2 443 5 2 5184 2 719 5 3,028.6 3 229.9 3 422.0 3,635.9 2,548.2 2,851.5 3,096.1 3 156 5 3,204.4 3,254.4 3,304.4 3 364 2 3,414.1 3,438.7 3,471.0 3 548.3 3,593.3 3,659.0 96 -1.5 5.5 88 14.3 19.7 24.0 24.2 197 17.2 22.9 30.3 28.0 34.9 399 37 5T 37.7 36 6 471 45.7 45 3 40 3 51.4 49 5 503 58 3 63.6 70 7 813 86 6 84.1 90.7 87.4 74.7 871 100.7 113 3 1017 117.6 145 2 174 8 197.2 200.1 177 2 188 0 150 0 213 7 266.9 277.6 284 4 305.3 146.1 248.5 266.9 265 6 274.2 292.8 277.8 288 0 282.3 286.4 281.1 294 0 296.8 314.9 4.7 4.1 3.6 3.3 3.3 3.2 2.7 2.3 2.2 1.8 2.3 2.4 2.6 3.0 35 3.9 i 4.4 5.2 58 6.5 7.8 95 10.2 113 12.9 14 6 16.3 182 20.9 24 3 27.4 29.8 34.6 41.2 463 51.0 596 75 5 83.8 88.8 105 3 126.3 158.3 200.9 2481 2723 2810 304.8 315.3 326.1 336.7 266.9 290.2 313.1 316 5 313.2 313.7 317.9 326.6 328.7 327.5 321.7 323 6 331.1 340.6 351.5 03 .3 2.2 24 2.8 3.5 46 5.2 63 7.7 6.7 6.0 6.6 7.4 88 9.3 9.6 10 6 12 0 13 5 15 5 15 9 18.8 219 22 9 254 28.5 301 316 40 6 45.5 50.4 57.9 62.2 689 79.0 97 6 110 5 118.5 134 5 149 8 171.7 197.8 216 5 2512 269 6 2910 324.9 352.7 374 3 394.4 273.0 299.2 331.5 346 2 350.6 354.1 360.0 369 3 371.9 374.9 381.0 386 7 390.9 396.6 403.6 Source: Department of Commerce, Bureau of Economic Analysis. Equals: Plus: Less: Corporate profits with GovernWage inventory ment Contribu- accruals Personal Business valuation transfer Personal tions for Net interest dividend transfer Personal less and payments social interest income payments income income disbursecapital insurance ments to consumppersons tion adjustments. 273 0.0 .0 .0 .0 .0 .0 .2 -.2 ,0 .0 .0 .0 .0 .0 .1 .0 -.1 .0 o .0 .0 o o.0 o .0 o .0 o .0 .0 .0 .0 .0 6 .0 — 1 5 \l 1 .3 -.2 .0 1 _ 4o .2 -.2 .0 .0 .0 .0 .6 .1 -1.0 .0 .0 .0 .0 .0 .0 .0 .0 .3 -.3 0.9 1.5 2.5 2.7 2.6 2.7 2.5 3.1 5.6 10.8 11.2 10.6 11.7 14.4 11.6 12.2 13.1 15.3 164 17.5 20.3 24 7 25.7 27 5 31.5 32 6 34.5 360 39.1 43 6 52.3 60.6 67.5 81.8 970 108.4 1241 147 4 185.7 202.8 217.5 234.8 262.8 312.6 355 7 3962 426 6 437.9 468.2 496.0 519.8 420.2 429.0 443.0 461.3 464.8 471.6 474.9 486.6 492.3 501.2 504.1 510.9 518.4 522.5 527.5 6.9 5.5 5.3 53 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 13.7 149 16.6 18.7 20 3 22.3 24 9 26.3 289 32.2 35 5 39.6 44 2 48.2 53.2 60.9 69.3 74 7 80.8 93.3 1119 122.5 134.1 155.4 182.5 221.5 271,9 335.4 369.7 3931 444.7 476.5 497.6 515.8 366.2 411.6 464.4 472.2 474.2 475.0 484.6 495.7 500.0 498.1 496.8 499.8 506.3 520.0 537.2 5.8 2.0 3.8 40 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 11.5 113 12.2 129 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 68.7 75.5 76.3 81.2 87.5 65.4 71.0 76.8 76.6 76.4 75.9 76.3 78.8 81.0 82.1 82.9 84.5 86.3 88.7 90.5 843 46.3 72.1 77 6 95.2 122.4 .5 150.7 .5 164.5 170.0 .5 177.6 190.2 .6 209.2 206.4 '.B .8 228.1 256.5 .9 273.8 1.0 290.5 1.2 293.0 1.1 314.2 1.2 337.2 1.4 356.3 1.5 367.1 1.6 390.7 1.8 409.4 2.0 426.0 2.0 453.2 2.1 476.3 2.4 510.2 2.7 552.0 2.8 600.8 3.0 644.5 3.1 707.2 3.4 772.9 3.9 831.8 4.1 4.4 894.0 4.9 981.6 5.5 1,101.7 5.8 1,210.1 7.4 1,313.4 7.9 1,451.4 8.6 1,607.5 9.3 1,812.4 10.3 2,034.0 12.1 2,258.5 12.4 2,520.9 14.3 2,670.8 16.0 2,838.6 18.7 3,108.7 21.6 3,327.0 22.3 3,534.3 23.2 3,745.8 15.2 2,729.2 16.5 2,941.8 20.0 3,188.3 21.1 3,259.2 21.6 3,304.4 21.8 3,338.2 21.9 3,406.4 22.0 3,463.4 22.2 3,526.6 22.4 3,553.6 22.6 3,593.6 22.8 3,662.0 23.1 3,708.6 23.3 3,761.0 23.6 3,851.5 0.6 .5 4 TABLE B-24.~National income by type of income, 1929-87 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Compensation of employees 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 1986.. 1987" 1982: IV 1983: IV 1984: IV 1985-1 H III IV 1986-1 f| III IV 1987:1 || III IV P National income1 : .... Farm Wages and salaries Supplements to wages and salaries2 Total 51.1 29.6 48.2 50.5 29.0 46.0 0.7 .6 2.2 52.2 64.8 85.3 109.6 121.3 123.3 119.6 130.1 142.1 142.0 49.9 62.1 82.1 105.8 116.7 117.5 112.0 123.1 135.5 134.7 155.4 181.6 196.3 210.4 209.4 225.9 244.7 257.8 259.8 281.2 Nonfarm Total Proprietors' income3 Capital consumption adjustment 14.4 5.4 11.4 6.1 2.5 4.4 6.3 2.5 4.5 -0.2 .0 -.1 8.3 2.9 7.1 8.8 3.9 7.6 0.1 -.5 2.3 2.8 3.2 3.8 4.5 5.8 7.6 7.0 6.5 7.3 12.6 17.1 23.9 28.8 30.0 31.5 36.3 35.5 40.4 35.9 4.4 6.4 10.1 12.0 11.9 12.4 14.8 15.1 17.5 12.8 4.5 6.5 10.3 12.2 12.2 12.6 15.2 15.6 18.2 13.5 -.1 8.2 10.8 13.8 16.8 18.1 19.1 21.5 20.4 22.9 23.1 8.6 11.7 14.4 17.1 18.3 19.3 23.3 21.8 23.1 22.2 .0 -.6 -.4 -.2 147.2 171.6 185.6 199.0 197.2 212.1 229.0 239.9 241.3 259.8 8.2 10.0 10.7 11.5 111 13.8 15.7 17.8 18.5 21.4 38.8 44.0 44.4 43.4 43.5 45.4 46.9 48.8 51.5 51.7 13.6 16.0 15.0 13.0 12.4 11.3 11.1 11.0 13.1 10.8 14.3 16.8 15.9 13.9 13.2 12.1 12.0 11.9 14.0 11.7 -.7 -.8 -.9 -.9 25.2 28.0 29.4 30.4 31.1 34.0 35.8 37.8 38.5 40.9 25.7 27.7 28.5 29.8 30.4 33.5 35.4 37.2 37.7 40.1 = 1.1 -.3 296.7 305.6 327.4 345.5 371.0 399.8 443.0 475.5 524.7 578.4 272.8 280.5 299.3 314.8 337.7 363.7 400.3 428.9 471.9 518.3 23.8 25.1 28.1 30.7 33.2 36.1 42.7 46.6 52.8 60.1 52.1 54.3 56.6 57.7 60.5 65.1 69.6 71.1 75.4 79.3 11.6 12.0 12.1 11.9 10.7 13.0 14.0 12.7 12.8 14.6 12.4 12.8 12.9 12.6 11.4 13.7 14.8 13.6 13.7 15.8 39.7 41.7 43.8 45.1 49.1 51.8 55.5 58.4 63.1 65.1 .0 .0 .0 .0 -.1 -.9 -1.1 40.5 42.3 44.4 45.7 49.8 52.1 55.5 58.4 62.6 64.7 618.3 659.4 726.2 812.8 891.3 948.7 1,057.9 1,176.6 1,329.2 1,491.4 551.5 584.5 638.7 708.6 772.2 814.7 899.6 994.0 1,119.6 1,251.9 66.8 74.9 87.6 104.2 119.1 134.0 158.3 182.6 209.7 239.5 80.2 86.8 98.3 119.0 118.8 125.4 137.7 152.9 176.2 191.9 14.7 15.5 19.4 33.7 27,5 25.4 20.6 20.5 27.0 31.7 16.0 16.8 21.1 35.6 30.1 29.0 24.6 25.1 32.4 38.0 -1.3 -1.3 -1.7 -1.9 -2.6 -3.6 -4.0 =4.6 = 5.3 =6.3 65.4 71.4 79.0 85.3 91.3 100.0 117.1 132.4 149.2 160.1 66.0 72.3 79.6 95.3 102.2 119.6 135.1 152.8 164.0 -3.8 -1.2' -1.3 -1.3 -2.3 -2.9 1,638.2 1,807.4 1.907.0 2,020.7 2,213.9 2,370.8 2,504.9 2,647.5 1,372.0 1,510.4 1,586.1 1,676.2 1,838.8 1,974.7 2,089.1 2,212.7 266.3 297.1 320.9 344.5 375.1 396.1 415.8 434.8 180.7 186.8 175.5 190.9 234.5 257.3 289.8 327.8 20.5 30.7 24.6 12.4 30.5 29.7 37.2 48.8 28.1 39.4 33.9 21.8 39.6 38.3 45.4 56.4 -7.6 -8.7 -9.3 -9.4 -9.2 -8.6 =8.1 -7.7 160.1 156.1 150.9 178.4 204.0 227.6 252.6 279.1 164.3 155.2 148.5 167.3 182.4 196.0 217.7 239.0 = 2.9 = 1.4 1,931.1 2,092.7 2,272.7 2,314.9 2,351.5 2,386.3 2,430.5 1,603.7 1,739.4 1,891.1 1,926.5 1,957.6 1,987.9 2,026.7 327.4 353.4 381.7 188.3 207.8 237.8 38.0 28.5 37.5 = 9.4 159.8 156.9 -.6 -9.3 188.6 172.7 -.7 -9.3 388.4 393.9 398.4 403.8 252.1 256.4 252.4 268.0 28.5 19.3 28.1 31.7 32.2 22.9 31.7 40.7 40.9 31.4 40.1 182.5 191.4 194.0 197.3 201.3 .3 -.5 = 1.3 2,464.8 2,487.6 2,515.1 2,552.0 2,055.3 2,074.6 2,097.9 2,128.5 409.5 413.0 417.2 423.5 270.8 298.1 292.5 297.8 28.0 48.1 36.3 36.6 242.8 250.1 256.2 261.2 209.2 217.4 220.2 223.9 -.2 -1.6 .7 .4 2,589.9 2,623.4 2,663.5 2,713.4 2,163.3 2,191.4 2,226.5 2,269.9 426.6 432.0 437.0 443.5 320.9 323.1 322.7 344.6 51.3 47.3 40.6 55.8 -9.0 = 8.7 -8.5 -8.4 -8.2 = 8.2 -8.0 -7.9 -7.7 =7.7 -7,7 -7.5 209.7 220.4 224.2 229.5 236.3 269.7 275.8 282.1 288.7 232.4 236.5 240.6 246.6 = 1.8 -1.5 -.9 -1.5 Total 841 39.4 71.2 79 6 102.8 136 2 169.7 182 6 1816 180 7 196.6 221.5 215.2 239 8 277.3 2916 306.6 306 3 3363 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 12891 1,441.4 1,617.8 1,838.2 2,047.3 2,203.5 2,443.5 2,518.4 2,719.5 3 028 6 3.229.9 3,422.0 3,635.9 2,548.2 2,851.5 3,096.1 3,156.5 3,204.4 3,254.4 3,304.4 3.364.2 3,414.1 3,438.7 3,471.0 3,548.3 3,593.3 3,659.0 Proprietors' income with inventory valuation and capital consumption adjustments 1 36.2 56.3 44.3 44.5 59.0 55.0 48.3 63.3 -'.2 -'.3 -.4 -.5 -.7 -.7 -.9 =.9 -.9 -.9 -.7 -.7 -.7 Total Proprietors' income4 87.2 Inven- Capital tory convalua- sumption tion adjust- adjustment ment -7.7 -1.5 = .4 .5 -1 .0 -.2 -.3 -.1 .0 ~'.2 -A -.5 -!6 -l'.O ~'.8 -.4 -.2 -.2 -1.4 7.6 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-22. 2 Employer contributions for social insurance and to private pension, health, and welfare funds. See next page for continuation of table. 274 TABLE B-24.—National income by type of income, 1929-87—Continued [Billions of dollars; quarterly data at seasonally adjusted annual rates] Rental income of persons Corporate profits with inventory valuation and capital consumption adjustments Profits with inventory valuation adjustment and without capital consumption adjustment 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 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987" 1982: IV 1983- IV 1984- IV 1985-1 II III IV 1986-1 II III IV 1987:1 II III IV P. Rental Capital conincome sumption of adjustpersons ment 4.9 20 2.6 2.7 32 4.1 4.6 4.8 5.0 58 5.8 6.4 6.7 77 8.3 94 10 7 116 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 18.0 161 k 13.5 11.9 8.2 93 5.6 6.6 13.3 13.6 13 2 8.5 9.0 16.7 18.5 15.8 12.4 5.6 73 9.1 9.3 10.1 14 0 17.4 17.2 18.4 20 0 18 9 17.3 18.1 5.6 21 3.2 3.3 4.0 5.1 5.7 6.1 6.5 75 8.2 9.1 9.4 10.5 11.5 12.7 139 14.9 153 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 55 0 51.9 54.0 62.2 67.1 56.5 54.3 49.6 510 52.7 55.2 56.9 58 7 62.8 62.8 64.6 662 67 2 66.9 68.0 -0.7 1 -.5 6 -8 -.9 11 -13 -1.5 17 -2.4 -2.7 27 -28 -3.2 33 33 -3 2 33 -3 5 -3.5 -3.4 -3.4 34 -3.3 33 -3.2 -3.2 -3.3 -3.6 -3.9 -4.5 -5.8 64 -7.4 86 -10.1 12 7 -15.0 -17.0 20 6 24 9 -30.1 -34.8 -38.9 40 8 418 -43.3 -45.0 -45.5 48 5 -40.7 -41.9 44 0 43 7 -43.6 -46.0 -46.8 44 7 -45.4 -45.6 -46.2 46 3 48 3 -49.6 -50.0 Capital Net conInveninterest sumption tory Profits after tax adjustvalument ation Undis- adjustDivi- tributed Total dends ment profits Profits Total Total 9.6 15 5.5 8.8 143 19.7 24.0 24.2 19.7 17 2 22.9 30.3 28.0 34.9 39.9 37 5 37 7 36.6 471 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 1017 117.6 145.2 174.8 197 2 200.1 177.2 188.0 150 0 213 7 266.9 277.6 284.4 305.3 146.1 248.5 266.9 265 6 274.2 292.8 277.8 288 0 282.3 286.4 281.1 294 0 2968 314.9 10.5 12 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 9 107.1 994 123.9 155.3 183.8 208 2 214.1 194.0 202.3 159 2 196 7 234.2 224.1 238.4 257.2 150.7 223.4 224.6 2161 219.8 236.8 223.7 236 7 235.6 242.4 239.0 245 7 248 8 267.3 Profits Profits before tax tax liability 10.0 10 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 39.6 412 38 7 49 2 49 6 48.1 41.9 52.6 49 9 49.8 551 59.8 66.7 77.4 83.3 80.1 89.1 87.2 76 0 87.3 1015 127.2 1389 134.8 170.3 200.4 233 5 257.2 237.1 226.5 169 6 207 6 240.0 224.8 231.9 274.6 164.1 231.5 226.1 217 6 218.0 230.2 233.5 218 9 224.4 236.3 247.9 257 0 268 7 284.9 3 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 37.7 419 49.3 518 50.9 64.2 73.0 83 5 88.0 84.8 81.1 631 111 93.9 96.7 105.0 137.5 59.8 88.1 87.0 94 0 93.2 100.5 99.1 981 102.1 106.1 113.9 128 0 134 2 143.0 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 27.1 312 33.5 38.7 46.5 49.6 47.5 49.7 47.5 417 49.6 596 77.9 871 83.9 106.0 127.4 150.0 169.2 152.3 145.4 106.5 130 4 146.1 128.1 126.8 137.1 104.3 143.4 139.2 123.6 124.8 129.7 134.4 120.9 122.3 130.2 134.0 129.0 134.5 141.9 With inventory valuation adjustment and without capital consumption adjustment. Without inventory valuation and capital consumption adjustments. Source: Department of Commerce, Bureau of Economic Analysis. 4 275 5.8 20 3.8 4.0 44 4.3 4.4 4.6 4.6 56 6.3 7.0 7.2 88 8.5 88 91 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 39.5 447 50.1 54.7 63.6 669 715 79.0 81.3 86.8 93.8 68.5 73.9 80.8 812 81.3 81.2 81.7 84 3 86.6 87.7 88.6 90 3 92 4 95.2 97 3 2.8 16 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 58.9 67.0 46.8 40.0 43.3 35.8 69.5 58.4 42.4 43.5 48.5 52.7 36.6 35.7 42.5 45.4 38.7 42.1 46.7 0.5 21 -.2 25 -1.2 8 _ 3 -.6 -5 3 -5.9 22 1.9 5.0 -1.2 1.0 -10 -.3 -1.7 2.7 -1.5 _2 .3 0 .1 -.5 12 -2.1 16 -3.7 59 66 -4.6 66 -20.0 -39 5 -11.0 -14.9 -16.6 -25.3 -43.2 431 24 2 -10.4 -10.9 -5.8 6.5 -17.4 -13.4 81 -1.6 -1.5 1.8 6.5 -9.8 17.8 11.3 6.0 -8.9 -11.3 -20 0 -17.6 -20.7 -0.9 -1.0 -1.1 -.8 -.5 .2 -2A -2.9 -3.2 -3.0 -3.0 -3.4 -3.2 -2.5 -1.8 -1.2 -1.3 -1.3 -.8 -.3 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 -10.9 -14.0 -16.8 -14.4 -9.2 17.0 32.7 53.5 46.0 48.1 -4.5 25.1 42.3 49.5 54.4 56.0 54.2 51.3 46.7 44.0 42.1 48.2 48.0 47.7 48.5 4.7 41 3.6 3.3 33 3.1 2.7 23 2.2 18 2.3 2.4 2.6 3.0 3.5 3.9 4.4 5.2 58 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 34.6 412 46.3 510 59.6 75.5 83.8 88.8 105.3 126.3 158.3 200.9 248.1 272.3 281.0 304.8 315.3 326.1 336.7 266.9 290.2 313.1 316.5 313.2 313.7 317.9 326.6 328.7 327.5 321.7 323.6 331.1 340.6 351.5 TABLE B-25.—Sources of personal income, 1929-87 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Proprietor s income Wage and salary disbursements * Year or quarter Personal income Commodityproducing industries Total Total Manufacturing Distributive industries Service industries 8.4 5.2 7.1 7.5 8.1 9.0 9.9 Government and government enterprises 5.0 5.2 8.2 8.5 1929 1933 1939 84.3 46.3 72.1 50.5 29.0 46.0 21.5 17.4 13.6 13.3 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 49.9 62.1 82.1 105.6 116.9 117.5 112.0 123.1 135.5 134.8 19.7 27.5 39.1 49.0 50.4 45.9 46.0 54.2 61.1 57.8 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 10.9 11.9 14.3 16.1 17.9 18.5 10.2 16.0 26.6 33.0 34.9 20.7 17.5 19.0 20.8 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 228.1 256.5 273.8 290.5 293.0 314.2 337.2 356.3 367.1 390.7 147.2 171.5 185.6 199.0 197.2 212.1 229.0 239.9 241.3 259.8 64.8 76.4 82.1 89.8 85.8 93.3 100.8 104.4 100.3 109.9 50.3 59.4 64.2 71.3 67.6 73.9 79.5 82.5 78.7 86.9 39.9 44.4 47.0 49.9 50.3 53.6 58.0 60.7 61.1 65.1 19.9 21.6 23.2 25.0 26.2 28.7 31.5 33.8 35.9 38.8 22.6 29.2 33.3 34.4 34.9 36.6 38.8 41.0 44.1 46.0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 409.4 426.0 453.2 476.3 510.2 552.0 600.8 644.5 707.2 772.9 272.8 280.5 299.3 314.8 337.7 363.7 400.3 428.9 471.9 518.3 113.4 114.0 122.2 127.4 136.0 146.6 161.6 169.0 184.1 200.4 89.8 89.9 96.8 100.7 107.3 115.7 128.2 134.3 146.0 157.7 68.6 69.6 73.3 76.8 82.0 87.9 95.1 101.6 110.8 121.7 49.2 52.4 56.3 80.0 64.9 69.9 78.3 86.4 96.6 105.5 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 2,034.0 551.5 583.9 638.7 708.7 772.6 814.6 899.5 993.9 1,119.3 1,252.1 203.7 209.1 228.2 255.9 276.5 277.1 309.7 346.1 392.3 441.4 158.4 160.5 175.6 196.6 211.8 211.6 238.0 266.7 300.1 334.8 131.2 140.4 153.3 170.3 186.8 198.1 219.5 242.7 274.6 307.8 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 1980 1981 1982 1983 1984 1985 1986 1987 * 1,372.0 1,510.3 1,586.1 1,676.6 1,838.6 1,974.9 2,089.1 2,212.7 470.7 512.2 511.7 523.1 577.6 609.2 623.3 641.2 1,603.6 1,739.4 501.8 545.4 355.6 386.7 384.0 397.4 439.1 460.9 470.5 484.0 377.4 335.5 366.8 384.2 404.2 442.8 473.0 497.1 522.8 389.3 420.8 1,890.5 1,926.4 1,958.6 1,987.9 2,026.7 591.6 415.5 449.5 600.0 606.3 610.8 619.7 2,055.3 2,074.6 2,097.9 2,128.5 620.8 621.2 622.8 628.4 2,163.3 2,191.4 2,226.1 2,270.2 632.9 635.0 641.8 655.1 1982: IV. 2,258.5 2,520.9 2,670.8 2,838.6 3,108.7 3,327.0 3,534.3 3,745.8 2,729.2 1983: IV. 2,941.8- 1984:1V.. 1985:1 II.. III. IV. 3,188.3 3,259.2 3,304.4 3,338.2 3,406.4 3,463.4 3,526.6 3,553.6 3,593.6 3,662.0 3,708.6 3,761.0 3,851.5 1986:1 II.. III. IV. 1987; I II.. III. IV 16.1 9.8 7.8 454.5 458.1 462.0 469.0 469.0 468.7 470.0 474.5 477.2 479.0 485.1 494.8 15.6 8.8 455.1 461.7 469.2 476.7 484.5 491.4 493.7 498.6 504.7 511.5 518.9 526.3 534.4 Other labor income1 valuation and cap mi consuniption adjust nents Farm 0.5 .4 .6 .6 .7 .9 1.1 1.5 1.8 2.0 2.4 2.7 2.9 3.7 4.6 5.2 5.9 6.1 7.0 8.0 9.0 9.4 6.1 2.5 4.4 4.4 6.4 Nonfarm 8.3 2.9 7.1 8.2 10.1 12.0 11.9 12.4 14.8 15.1 17.5 12.8 10.8 13.8 16.8 18.1 19.1 21.5 20.4 22.9 23.1 10.6 13.6 16.0 15.0 13.0 12.4 11.3 11.1 11.0 13.1 10.8 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 11.6 12.0 12.1 11.9 10.7 13.0 14.0 12.7 12.8 14.6 40.5 42.3 44.4 45.7 49.8 52.1 55.5 58.4 62.6 64.7 117.1 126.5 137.4 148.7 160.9 176.0 188.6 202.3 219.4 236.1 32.5 36.7 43.0 49.2 56.5 65.9 79.3 94.1 107.7 122.7 14.7 15.5 19.4 33.7 27.5 25.4 20.6 20.5 27.0 31.7 65.4 71.4 79.0 85.3 91.3 100.0 117.1 132.4 149.2 160.1 305.6 346.9 384.4 425.1 472.1 520.4 573.9 627.3 398.5 260.2 284.4 305.9 324.3 346.1 372.3 394.8 421.5 314.0 138.4 150.3 163.6 173.6 182.9 192.3 201.1 210.2 20.5 30.7 24.6 12.4 30.5 29.7 37.2 48.8 28.5 160.1 156.1 150.9 178.4 204.0 227.6 252.6 279.1 443.2 489.6 330.0 354.3 177.8 185.4 19.3 28.1 188.6 209.7 500.7 512.9 526.1 541.9 363.9 370.2 374.3 380.6 386.1 391.6 397.7 403.8 412.2 418.1 424.2 431.4 188.3 191.3 193.8 195.8 197.8 199.8 202.3 204.4 31.7 32.2 22.9 31,7 28.0 48.1 36.3 36.6 51.3 47.3 40.6 55.8 220.4 224.2 229.5 236.3 242.8 250.1 256.2 261.2 269.7 275.8 282.1 288.7 557.0 568.1 578.8 591.6 606.7 619.3 633.9 649.3 168.0 206.7 209.5 211.1 213.5 159.8 1 The total of wage and salary disbursements and other labor income differs from compensation of employees in Table 8-24 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. 276 TABLE B-25.—Sources ofpersonal income, 1929-87—Continued [Billions of dollars; quarterly data at seasonally adjusted annual rates] Year or quarter Rental income of persons Personal Personal with interest capital dividend income income conption adjustment 1929... 1933... 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.. 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 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 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 12.9 13.3 14.4 15.5 17.3 19.1 19.4 20.2 21.9 22.4 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 * 1982: IV 1983: IV 1984:1V 1985:1 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 13.2 8.5 9.0 16.7 18.5 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 68.7 75.5 76.3 81.2 87.5 15.8 12.4 5.6 7.3 9.1 9.3 10.1 14.0 17.4 17.2 18.4 20.0 18.9 17.3 18.1 65.4 71.0 76.8 76.6 76.4 75.9 76.3 78.8 81.0 82.1 82.9 84.5 86.3 88.7 90.5 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 93.3 111.9 122.5 134.1 155.4 182.5 221.5 271.9 335.4 369.7 393.1 444.7 476.5 497.6 515.8 366.2 411.6 464.4 472.2 474.2 475.0 484.6 495.7 500.0 498.1 496.8 499.8 506.3 520.0 537.2 III IV 1986:1 II Ml IV 1987:1 II Ill IV "... 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 Old-age, Governsurvivors, Government ment disability, unememployand Veterans ployment ees health insur- benefits retireinsurance ment ance benefits benefits benefits 0.0 .0 .1 .2 .3 .7 1.0 1.9 2.2 3.0 3.6 4.9 5.7 7.3 8.5 10.2 85.9 101.5 113.3 129.6 153.2 193.1 210.7 226.1 244.0 273.1 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 92.9 104.9 116.2 131.8 324.7 368.1 410.6 442.6 456.6 489.7 518.3 543.0 154.2 182.0 204.5 221.7 235.7 253.4 269.2 282.9 435.4 445.5 463.0 482.3 486.4 493.4 496.8 508.6 514.5 523.6 526.6 533.7 541.5 545.8 551.1 216.6 227.0 241.7 249.0 251.0 256.5 257.1 264.5 266.4 272.4 273.5 278.0 282.3 284.4 286.8 2 0.4 .5 .4 .4 .1 0.6 .6 0.1 .2 .5 .5 .3 .3 i!o A 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 15.7 16.4 14.6 31.8 20.0 15.6 16.7 15.8 15.1 15.3 15.6 16.3 17.1 16.6 15.6 14.9 14.5 13.4 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 A A .5 .7 .7 .7 .9 Aid to families with depend- Other ent children (AFDC) 0.3 .4 .5 Less: Personal contribu- Nonfarm tions for personal income2 social insurance 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 0.1 .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 7.9 159.9 172.0 188.3 190.6 211.2 237.1 255.4 274.2 277.5 299.6 322.8 341.9 350.4 376.2 '.S 1.0 1.1 1.2 1.4 1.5 1.7 1.9 2.2 2.5 2.8 .6 .6 .5 3.1 3.4 3.7 4.2 4.7 5.2 6.1 6.9 7.6 8.7 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 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 9.3 9.7 10.3 11.8 12.6 13.3 17.8 20.6 22.9 26.2 393.9 409.9 436.7 460.0 494.9 534.0 581.5 626.3 688.7 752.1 27.9 30.7 34.5 42.6 47.9 50.4 55.5 61.2 69.8 81.0 12.4 13.0 13.3 14.2 14.8 15.4 16.2 16.7 84.0 91.8 96.5 105.1 112.6 121.1 128.7 136.1 100.6 107.3 116.1 118.6 120.6 121.9 123.4 125.9 128.0 129.6 131.3 133.1 134.7 136.3 140.2 88.6 104.5 112.3 120.1 132.7 148.9 159.6 169.9 113.5 123.6 135.2 146.1 148.0 149.6 151.9 157.6 158.8 160.1 161.8 166.7 168.4 170.7 173.7 810.4 871.8 955.0 1,059.7 1,172.6 1.276.9 1,417.9 1.572.6 1,769.3 1,983.2 2f215.8 2,465.6 2,618.7 2,799.0 3,052.1 3,273.5 3,475.2 3,675.5 15.0 16.1 16.4 16.6 16.4 16.7 16.8 16.6 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 61.4 67.4 71.0 76.2 16.6 16.5 16.3 16.8 16.8 16.7 16.5 17.0 16.9 16.7 16.4 16.6 16.7 16.6 16.5 56.1 60.2 58.5 66.2 67.0 67.8 68.7 69.7 70.6 71.5 72.4 73.9 76.0 77.3 77.6 .6 .6 .6 13.6 14.5 14.8 15.0 15.3 15.6 15.7 16.0 16.2 16.4 16.4 16.5 16.7 16.8 16.7 2,672.8 2,895.6 3,134.7 3,202.6 3,248.0 3,291.7 3,3517 3,413.0 3,456.6 3,495.7 3,535.7 3,589.9 3,639.7 3,698.6 3,773.7 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. 277 TABLE B-26.—Disposition of personal income, 1929-87 [Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates] Percent of disposable personal income Less: Personal outlays Year or quarter Personal income Less: Personal tax and nontax payments Equals: Disposable personal income Personal Interest transfer paid by payconconsumsumption ers to ments to expendibusifortures ness eigners (net) Personal Total Personal outlays Equals: Personal saving Total Personal consump- Personal saving tion expenditures 0.3 .2 .2 2.6 -1.6 1.8 96.8 103.6 97.4 94.5 102.1 96.2 .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 94.9 192.1 208.1 219.1 232.6 239.8 257.9 270.6 285.3 294.6 316.3 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 91.8 338.1 348.9 370.2 391.2 419.9 452.5 489.9 516.9 567.1 614.5 330.7 341.1 361.9 381.7 409.3 440.7 477.3 503.6 552.5 597.9 7.0 7.3 7.8 8.8 9.9 11.1 12.0 12.5 13.8 15.6 .4 .5 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 90.6 91.0 715.6 776.8 839.6 949.8 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 90.6 340.5 393.3 409.3 410.5 440.2 485.9 512.2 564.7 1,918.0 2,127.6 2,261.4 2,428.1 2,668.6 2,841.1 3,022.1 3,181.1 1,781.1 1,968.1 2,107.5 2,297.4 2,504.5 2,714.1 2,891.5 3,060.9 1,732.6 1,915.1 2,050.7 2,234.5 2,430.5 2,629.4 2,799.8 2,966.0 47.4 52.0 55.5 61.9 72.5 82.7 89.9 93.5 1.1 1.0 1.3 1.0 1.5 2.0 1.7 1.5 136.9 159.4 153.9 130.6 164.1 127.1 130.6 120.2 92.9 92.5 93.2 94.6 93.9 95.5 95.7 96.2 90.3 90.0 90.7 92.0 91.1 92.5 92.6 93.2 2,729.2 411.1 2,318.1 2,174.9 2,117.0 56.8 1.1 143.1 93,8 91.3 2,941.8 413.9 2,527.9 2,382.5 2,315.8 65.5 1.2 145.4 94.2 91.6 1984: IV 3,188.3 459.7 2,728.6 2,571.3 2,493.4 76.3 1.6 157.3 94.2 91.4 1985: I || III IV 3,259.2 3,304.4 3,338.2 3,406.4 497.0 455.9 491.0 499.7 2,762.2 2,848.4 2,847.2 2,906.6 2,631.0 3,685.6 2,751.5 2,788.1 2,549.9 2,602.0 2,665.4 2,700.1 79.0 81.9 83.8 86.2 2.1 1.7 2.2 1.9 131.2 162.8 95.7 118.5 95.3 94.3 96.6 95.9 92.3 91.3 93,6 92.9 1986: I II Ill IV 3,463.4 3,526.6 3,553.6 3,593.6 497.4 504.2 515.3 532.0 2,966.0 3,022.4 3,038.2 3,061.6 2,827.6 2,856.4 2,929.4 2,952.6 2,737.9 2,765.8 2,837.1 2,858.6 87.9 89.0 90.7 92.1 1.7 1.6 1.6 1.9 138.4 166.0 108.9 109.0 95.3 94.5 96.4 96.4 92.3 91.5 93.4 93.4 1987: I II Ill IV » 3,662.0 3,708.6 3,761.0 3,851.5 536.1 578.0 565.7 578.9 3,125.9 3,130.6 3,195.3 3,272.6 2,987.5 3,037.4 3,106.5 3,112.2 2,893.8 2,943.7 3,011.3 3,015.1 92.1 92.6 93.9 95.3 1.7 1.2 1.2 1.7 138.4 93.2 88.8 160.4 95.6 97.0 97.2 95.1 92.6 94.0 94.2 92.1 1929 1933 1939 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 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 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 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 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 1980 1981 1982 1983 1984 1985 1986 1987 " 2,258.5 2,520.9 2,670.8 2,838.6 3,108.7 3,327.0 3,534.3 3,745.8 1982: IV 1983: IV Source: Department of Commerce, Bureau of Economic Analysis. 278 .9 .7 .5 !s ^6 TABLE B-27.—Total and per capita disposable personal income and personal consumption expenditures in current and 1982 dollars, 1929-87 [Quarterly data at seasonally adjusted annual rates, except as noted] Disposable personal income Year or quarter Total (billions of dollars) Personal consumption expenditures Per capita (dollars) Current dollars 1982 dollars Total (billions of dollars) Per capita (dollars) Population (thousands) ' Current dollars 1982 dollars 1929 1933 1939 81.7 44.9 69.7 498.6 370.8 499.5 671 357 532 4,091 2,950 3,812 77.3 45.8 67.0 471.4 378.7 480.5 634 365 511 3,868 3,013 3,667 121,878 125,690 131,028 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 75.0 91.9 116.4 132.9 145.6 149.2 158.9 168.8 188.1 187.9 530.7 604.1 693.0 721.4 749.3 739.5 723.3 694.8 733.1 733.2 568 689 863 972 1,052 1,066 1,124 1,171 1,283 1,260 4,017 4,528 5,138 5,276 5,414 5,285 5,115 4,820 5,000 4,915 71.0 80.8 88.6 99.5 108.2 119.6 143.9 161.9 174.9 178.3 502.6 531.1 527.6 539.9 557.1 592.7 655.0 666.6 681.8 695.4 538 606 657 727 782 855 1,018 1,123 1,193 1,195 3,804 3,981 3,912 3,949 4,026 4,236 4,632 4,625 4,650 4,661 132,122 133,402 134,860 136,739 138,397 139,928 141,389 144,126 146,631 149,188 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 207.5 227.6 239.8 255.1 260.5 278.8 297.5 313.9 324.9 344.6 791.8 819.0 844.3 880.0 894.0 944.5 989.4 1,012.1 1,028.8 1,067.2 1,368 1,475 1,528 1,599 1,604 1,687 1,769 1,833 1,865 1,946 5,220 5,308 5,379 5,515 5,505 5,714 5,881 5,909 5,908 6,027 192.1 208.1 219.1 232.6 239.8 257.9 270.6 285.3 294.6 316.3 733.2 748.7 771.4 802.5 822.7 873.8 899.8 919.7 932.9 979.4 1,267 1,349 1,396 1,458 1,477 1,560 1,608 1,666 1,692 1,786 4,834 4,853 4,915 5,029 5,066 5,287 5,349 5,370 5,357 5,531 151,684 154,287 156,954 159,565 162,391 165,275 168,221 171,274 174,141 177,073 1960 1961 1962 1963 . 1964 1965 1966 1967 1968 1969 . . . 358.9 373.8 396.2 415.8 451.4 486.8 525.9 562.1 609.6 656.7 1,091.1 1,123.2 1,170.2 i;207.3 1,291.0 1,365.7 1,431.3 1,493.2 1,551.3 1,599.8 1,986 2,034 2,123 2,197 2,352 2,505 2,675 2,828 3,037 3,239 6,036 330.7 341.1 361.9 381.7 409.3 440.7 477.3 503.6 552.5 597.9 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 1,829 1,857 1,940 2,017 2,133 2,268 2,428 2,534 2,752 2,949 5,561 5,579 5,729 5,855 6,099 6,362 6,607 6,730 7,003 7,185 180,760 183,742 186,590 189,300 191,927 194,347 196,599 198,752 200,745 202,736 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 P 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 2,428.1 2,668.6 2,841.1 3,022.1 3,181.1 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 3,489 3,740 4,000 4,481 4,855 5,291 5,744 6,262 6,968 7,682 8,134 8,322 8,562 9,042 8,867 8,944 9,175 9,381 9,735 9,829 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 3,121 3,330 3,609 3,950 4,285 4,689 5,178 5,707 6,304 6,960 7,275 7,409 7,726 7,972 7,826 7,926 8,272 8,551 .8,808 8,904 205,089 207,692 209,924 211,939 213,898 215,981 218,086 220,289 222,629 225,106 2,214.3 2,248.6 2,261.5 2,331.9 2,469.8 2,542.2 2,645.1 2,676.1 8,421 9,243 9,724 10,340 11,257 11,872 12,508 13,048 9,722 9,769 9,725 9,930 10,419 10,622 10,947 10,976 640.0 691.6 757.6 837.2 916.5 1,012.8 1,129.3 1,257.2 1,403.5 1,566.8 1,732.6 1,915.1 2,050.7 2,234.5 2,430.5 2,629.4 2,799.8 2,966.0 2,000.4 2,024.2 2,050.7 2,146.0 2,249.3 2,352.6 2,450.5 2,495.2 7,607 8,320 8,818 9,516 10,253 10,987 11,588 12,165 8,783 8,794 8,818 9,139 9,489 9,830 10,142 10,234 227,754 230,182 232,549 234,829 237,051 239,323 241,620 243,809 1982: IV 2,318.1 2,276.1 9,929 9,749 2,117.0 2,078.7 9,068 8,904 233,466 1983: IV 2,527.9 2,392.7 10,725 10,151 2,315.8 2,191.9 9,825 9,299 235,707 1984: IV.... 1985:1 II Ill ... IV.... 2,728.6 2,496.3 11,467 10,491 2,493.4 2,281.1 10,479 9,587 237,946 2,762.2 2,848.4 2,847.2 2,906.6 2,506.8 2,558.4 2,538.2 2,565.5 11,584 11,919 11,882 12,099 10,513 10,705 10,592 10,679 2,549.9 2,602.0 2,665.4 2,700.1 2,314.1 2,337.0 2,376.1 2,383.2 10,694 238,452 238,977 239,618 240,246 1986:1 It Ill ... IV.... 1987:1 II III ... IV P. 2,966.0 3,022.4 3,038.2 3,061.6 2,610.5 2,660.2 2,653.2 2,656.7 12,318 12,525 12,560 12,626 10,842 11,024 10,968 10,956 2,737.9 2,765.8 2,837.1 2,858.6 10,008 10,088 10,242 10,229 240,782 241,313 241,896 242,489 3,125.9 3,130.6 3,195.3 3,272.6 2,674.6 2,645.5 2,674.7 2,709.7 12,865 12,858 13,090 13,374 11,008 10,865 10,958 11,074 2,893.8 2,943.7 3,011.3 3,015.1 2,409.7 2,434.3 2,477.5 2,480.5 2,475.9 2,487.5 2,520.7 2,496.6 11,124 11,239 11,371 11,461 11,729 11,789 9,705 9,779 9,916 9,920 11,910 12,090 12,337 12,322 10,190 10,217 10,327 10,203 242,971 243,480 244,094 244,690 6,378 6,727 7,027 7,280 7,513 7,728 7,891 Current dollars 1982 dollars Current dollars 1982 dollars 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). 279 TABLE B-28.—Gross saving and investment, 1929-87 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Gross saving Gross investment Government surplus or deficit Capital StatisGross grants ( - ) , national income and tical Net private foreign received Gross product accounts discrepby the Total domestic investbusiancy 3 investState United ness ment ment and States savTotal Federal local (net)^ ing» Gross private saving Year or quarter Total Total Personal saving 16.7 17.4 1.5 1929 15.9 14.9 1.2 2.6 1.0 -0.2 0.8 12.3 1.7 1.2 1933 .6 1.9 - 1 . 6 -1.3 3.6 -1.4 1.6 10.6 1939 i!o 9.3 -2.2 ~!o 1.7 8.9 11.1 -2.2 1.8 9.5 1.4 13.6 14.3 3.0 13.4 1940 -.7 1.5 11.3 .6 -1.3 15.0 .7 18.8 22.6 10.0 1941 18.3 1.3 12.6 1.3 -3.8 19.5 -5.1 10.9 42.3 27.0 -.7 1942 10.3 15.3 1.8 -31.4 10.2 -33.1 5.8 50.0 32.7 1943 6.2 17.3 2.4 -1.7 -44.2 4.1 -46.6 3.0 54.9 36.5 1944 7.7 18.4 2.7 -51.8 5.8 -2.0 -54.5 2.7 5.9 45.4 1945 28.7 16.8 2.6 -39.5 -42.1 10.0 11.3 -1.3 4.0 1946 35.7 30.3 16.7 1.9 13.6 5.4 3.5 36.4 31.5 4.9 1947 23.0 1.0 42.5 28.1 14.4 13.4 44.3 l".8 5.2 35.0 9.3 1948 31.3 .1 8.4 8.3 49.6 50.8 42.4 47.1 2.4 -1.3 U.I -.7 1949 -3.4 32.5 -2.6 37.3 36.5 .9 .8 36.5 39.9 7.4 52.5 44.5 12.6 1950. 9.2 31.8 -1.2 .8 8.0 55.1 53.2 -1.8 58.7 52.6 16.6 1951 -.4 2.7 6.5 61.4 36.0 6.1 60.5 .9 52.3 56.1 17.4 1952 .0 -3.7 38.7 -3.8 54.2 53.5 .6 1.8 51.0 58.0 18.4 .1 1953 39.6 -7.0 -7.1 53.6 54.9 2,6 -1.3 51.6 58.8 16.4 1954 -1.1 -7.1 54.3 -6.0 54.1 42.3 .2 2.7 68.4 65.2 1955 16.0 70.2 4.4 69.7 49.2 3.1 -1.3 1.8 1956 77.3 72.1 75.4 21.3 6.1 72.7 2.8 50.8 5.2 -.9 -1.9 1957 77.1 76.1 2.3 75.9 4.8 53.5 .9 -1.4 71.1 -1.2 227 1958 64.5 -10.3 52.9 -12.6 -2.4 63.6 64.5 77.1 24.3 .9 -~L5 1959 79.0 60.3 -1.6 -1.1 -.4 80.2 80.5 82.1 21.8 -1.2 84.2 81.1 20.8 1960 .1 81.4 78.2 60.3 3.1 -2.8 3.0 3.2 82.6 86.8 24.9 1961 77.1 62.0 -.4 81.3 -1.2 -4.3 -3.9 4.2 91.4 95.2 1962 ... 25.9 87.6 69.3 .5 91.5 .0 -3.8 -4.2 3.8 1963 98.7 97.9 24.6 93.1 .5 -.6 98.1 73.3 4.9 1964 108.5 110.8 1.0 -1.4 31.5 107.1 99.6 79.3 -2.Z -3.3 7.5 1965 .0 -1.2 123.5 123.0 116.2 88.7 122.3 34.3 6.2 1966 128.6 2.1 95.6 132.4 130.3 131.6 -1.8 36.0 -U j.8 1967 125.7 -.4 98.6 129.2 -13.2 - U -14.2 129.5 143.8 3.5 45.1 1968 137.0 .1 138.6 -6.0 -6.0 -1.1 1.6 139.7 145.7 42.5 103.3 1969 153.2 9,9 1.5 154.9 8.4 -3.9 1.7 158.8 148.9 42.2 106.7 154.7 164.5 57.7 106.7 1970 4.8 148.8 -1.1 1.8 -10.6 -12.4 0.9 153.6 171.9 190.6 1971 66.3 124.3 172.5 1.8 2.6 -19.5 -22.0 .7 173.7 1.3 1972 200.7 203.4 61.4 142.0 202.0 -1.6 13.5 -3.4 -16.8 .7 199.1 -2.9 1973 251.9 244.0 238.8 -4.3 13.5 89.0 155.0 7.9 -5.6 0 247.6 8.8 1974 240.8 7.2 l - 2 . 0 246.2 -1.7 247.9 254.3 -4.3 5.4 96.7 157.6 -11.6 1975 219.6 4.5 2.5 -64.9 0 241.2 21.6 238.7 303.6 104.6 198.9 -69.4 1976 277.7 15.2 3.6 -38.4 0 286.6 9.0 -53.5 283.0 321.4 95.8 225.6 1977 344.1 .0 -19.1 26.9 0 335.3 -8.7 -46.0 335.4 354.5 90.7 263.8 1978 416.8 - 1 0 . 1 -1.9 28.9 0 406.7 -29.3 408.6 409.0 110.2 298.9 1979 454.8 -1.0 27.6 1.1 457.4 2.6 iiis -16.1 458.4 445.8 118.1 327.7 445.0 478.4 136.9 341.5 1980 13.0 437.0 4.9 1.2 450.0 -34.5 -61.3 26.8 1981 522.0 550.5 159.4 391.1 10.6 515.5 -63.8 1.1 526.1 -29.7 34.1 4.1 1982 446.4 557.1 153.9 403.2 -110.8 -145.9 0 446.3 447.3 -1.0 35.1 1983 " ~ii 502.3 -33.5 0 468.8 463.6 592.2 130.6 461.6 -128.6 -176.0 47.5 1984 5.4 664.8 - 9 0 . 9 0 573.9 568.5 673.5 164.1 509.5 -105.0 -169.6 64.6 1985 5 .6 641.6 -115.9 525.7 0 531.3 664.2 127.1 537.2 -132.9 -196.0 63.1 -4.9 671.0 -143.9 0 527.1 1986 „...:.; 532.0 679.8 130.6 549.3 -147.8 -204.7 56.8 6 .8 716.4 -156.8 -152.6 553.4 559.6 0 566.4 673.6 120.2 1987 P -107.2 45.4 6.8 409.6 -15.4 0 394.2 387.4 554.2 143.1 411.1 -166.8 -202.6 35.8 1982: IV 519.9 632.8 145.4 487.3 -112.9 -169.2 2.5 579.8 - 5 7 . 4 0 522.4 56.4 1983: IV 557.8 679.9 157.3 522.6 -122.1 -187.5 65.4 661.8 -106.1 -2.1 0 555.7 1984: IV 552.0 649.9 131.2 -97.8 65.1 .7 638.6 -85.9 0 552.7 547.7 695.8 162.8 518.7 -148.1 -162.9 1985:1 62.2 648.4 -112.5 -11.9 0 535.9 514.7 648.4 95.7 533.1 -133.7 -210.3 62.1 II -9.1 -195.8 628.6 -122.9 0 505.6 510.7 662.8 118.5 552.7 62.9 544.3 -152.1 -215.0 650.8 -142.3 -2.3 0 508.5 III 557.8 691.8 138.4 -134.0 62.1 -2.9 683.4 -128.5 0 555.0 538.7 713.7 166.0 553.4 -175.0 -196.1 IV 55.1 .9 547.7 -139.8 679.4 -230.2 0 539.6 1986:1 516.2 660.4 108.9 -144.1 -203.7 59.6 -150.7 551.5 510.1 660.8 -6.1 0 II 515.3 653.4 109.0 544.4 -138.1 50.6 -188.7 503.7 -156.5 660.2 0 -11.6 Ill 554.3 683.8 138.4 -129.5 -170.5 41.0 IV -2.2 0 552.1 699.9 -147.7 551.3 639.9 93.2 545.3 -88.6 -139.2 50.6 1987:1 702.6 -154.5 -3.1 0 548.1 559.3 648.7 88.8 546.7 - 8 9 . 3 -135.8 46.5 II 707.4 548.4 1 0.9 559.8 0 -159.0 160.4 Ill 0 589.6 755.5 -165,9 IV P 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. 280 TABLE B-29.—Saving by individuals, 1946-871 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Increase Year or quarter Total Total Checkable Time and depos- savits ings and cur- derency posits 5.6 .1 9.7 - 2 . 9 2.6 2.4 4.6 4.7 1.6 78 1.0 8.1 2.2 9.1 1.2 8.6 18 94 -.4 11.9 38 139 1.0 11.0 -.3 -.6 2.5 2.4 .8 5.7 45 2.7 18.8 12.1 1950 1951 1952... 1953 1954 1955 1956... 1957 1958 1959 31.7 35.3 14.0 19.4 23.4 23.1 21.9 28.3 37.0 34 9 37.8 36.8 1960 1961 1962 1963... 1964 1965 1966 1967... 1968..; 1969 37.7 37.3 43 0 48 2 58.0 65.2 72.8 79 5 83.0 74.6 1.0 32.5 35.7 -.9 40.7 - 1 . 2 47.6 42 5.3 56.5 59.0 7.6 57.8 2.4 70.7 99 76.8 11.1 25 66.7 315 384 10.2 - 2 . 0 308 28.8 315 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 89.5 98.9 125.5 142.5 140.6 169.0 169.4 183.1 210.3 212.0 83.3 101.3 136.6 148.0 149.2 182.3 206.9 239.4 279.8 299.3 1980 1981 1982 1983 1984 1985 1986 231.2 266.3 318.8 311.7 421.0 366.2 392.6 314.5 328.0 391.9 468.5 544.1 549.5 532.8 1985:1 II .... Ill ... IV... 1986: I II .... III... IV... Govern- Corpoment rate securi- equities 2 ties * -1.7 25.0 19.3 25.8 22.0 33.2 28.0 35.5 Money market fund shares .3 1.7 1.9 -2 5 8.8 2.4 1.5 1.3 6 4.9 3.9 12.0 18.3 26.1 26 2 26.1 27.8 19.0 35 3 31.1 -0.9 .7 1.8 1.4 1.1 .5 1.0 20 1.5 15 .5 -.7 .3 .0 .0 .7 2.3 -.2 -.5 13 .4 .7 2.3 52 7.9 -1.5 -16 .1 -1.7 10.7 .0 -3 6 -6.0 — 1.7 9.1 25.8 -5.9 -12.5 -.6 87 12.7 13.1 17.3 16 2 13.8 12 8 17.0 10.3 3.2 4.2 3.4 31 3.3 3.8 4.0 67 7.8 4.1 15.7 13.5 14.0 15 5 15.7 15.3 14.5 12 6 17.0 17.2 7.3 4.5 8.6 119 6.3 3.4 7.5 6.2 7.7 14.6 22.3 29.2 33.1 27.9 27.5 41.9 61.0 77.8 86.7 7.0 12.7 88 7.9 37 7.7 15.1 20.2 23.2 2.2 2.8 2.2 7.2 6.7 4.4 6.6 1.9 6.2 7.6 .8 1.7 8.7 2.9 12.2 1.0 112 2.1 8.9 95 29 4.3 12.8 4.8 1.6 5.3 4.2 1.5 7.1 39 2.9 5 8.0 5.0 3.7 2.6 1.9 5.5 6.3 32 18 60 7.2 3.2 4.9 7.0 9.2 8.8 4.4 2.5 6.3 8.9 9.8 5.0 6.6 7.3 12.4 9.9 213 10.7 10.0 13.3 19.9 25.7 34.8 41.2 29.9 28.4 42.9 53.3 58.8 54.0 13.1 19.5 26.6 31.9 14.9 26.9 26.2 11.7 12.2 13.8 16 6 17.5 17.0 13.8 12.4 17.0 18.6 10.6 6.5 5.7 11.5 10.9 5.5 -0.4 10.5 10.9 14.2 12:2 17.8 19.2 19.4 21.8 19.3 56.6 90.4 94.6 65.8 76.3 81.4 73.2 112.6 112.0 148.1 129.5 65.5 -28.0 43.7 125.6 159.5 203.3 230.6 182.9 34.2 14.4 71.6 71.0 99.8 92.2 91.6 97.7 110.5 6.2 110.5 10.2 127.0 - 2 . 5 108.4 - 1 0 . 1 141.8 101.0 135.3 89.6 163.7 106.0 163.1 81.8 84.6 152.7 121.8 233.4 4.9 21.4 68.1 -28.2 36.1 169.9 175.9 279.6 179.7 57.7 25.0 30.0 79.3 110.0 110.6 113.2 126.0 108.8 1.3 114.8 24.1 150.3 15.9 135.7 - 8 . 3 138.8 179.8 241.3 222.4 62.3 79.8 85.2 36.0 100.6 82.8 119.5 214.8 37.3 -93.5 -92.0 45.5 49.5 70.6 303.6 217.9 243.5 20.1 134.1 105.8 - 7 . 2 176.8 -.3 127.9 113.1 6.3 235.4 24.3 140.1 132.4 - 6 . 8 186.6 6.1 32.8 40.4 31.9 143.8 138.3 359.0 347.5 377.3 381.0 470.0 16.5 150.3 512.0 24.4 138.3 552.7 138.9 141.5 663.3 - 2 3 . 1 89.4 -5.9 32.6 -13.5 35.2 131.0 163.5 -59.8 194.2 -81.2 -36.5 421.6 363.8 344.1 440.8 503.2 63.4 125.6 456.6 86.1 90.0 510.7 85.7 130.2 660.7 162.0 77.4 42.0 51.0 62.8 14.5 1.7 21.4 35.1 25.5 1987:1 421.6 11 .... 243.5 Ill ... 390.9 403J - 5 6 . 0 - 9 . 8 408.2 69.7 66.4 490.6 105.0 102.5 -9.3 1.2 188 19.9 21.8 117 14.9 11.4 3.7 3.2 3.2 33.4 66.6 31.9 - 6 . 2 96.4 29.3 59.7 37.4 19.5 75.0 26.7 35.6 37.2 - 4 . 0 49.5 19.9 67.8 62.7 - 7 . 3 110.8 35.9 94.6 98.8 15.0 129.0 47.8 95.4 114.1 .9 151.0 48.0 114.9 127.4 8.3 195.6 -10.9 -39.5 -5.2 22.4 11.5 12.1 13.0 13.9 16.4 17.0 19.3 11.9 12.1 12.1 3.1 118.5 117.9 139.0 153.6 152.4 194.1 201.3 30.5 52.3 76.4 98.5 124.3 107.2 -10.3 72.3 97.2 14.3 2.4 2.2 23 2.2 2.3 2.3 26 2.8 34 3.8 3.6 4.7 4.6 4.4 2.0 1.3 6.9 2.0 6.9 24.5 90.7 32.8 -31.1 44.0 12.1 42.6 -74.7 -75.0 106.8 6.9 6.3 7.7 7.9 7.8 8.5 9.5 9.5 104 3.8 6.7 7.0 9.4 9.5 10.2 8.7 10.9 -15.7 -12.3 -13.6 -10.2 5.1 51.7 24.3 30.6 123.8 64.4 118.0 196.9 221.6 129.9 105.8 4.6 9.9 6.9 6.6 .1 9.5 3.1 2.7 2.5 1.7 Conon sumer Other8 8 non- credit debt farm homes 24.2 38.1 46.7 42.7 10.3 25.2 17.7 36.8 16.7 39.2 99.3 19.2 20.1 20.9 10.0 5.3 5.4 5.3 5.6 Mort- 11.1 17.3 17.4 28.0 32.9 31.5 52.8 2.4 1.3 -.0 -.2 6.0 -'$ 1.0 10 .8 10 -.2 Other finan- Owner- Concial occu- sumer aspied durasets 6 homes bles Noncorporate business assets 8 13.4 25.3 38.3 44.6 34.8 7.5 38.2 2.7 59.4 15.2 89.7 18.9 108.6 12.4 117.6 15.7 19.7 22.3 25.7 6.5 6.1 -.8 .0 -.4 Insurance and pension reserves 5 24.2 28.0 48.5 39.9 43.7 71.9 56.6 78.6 95.0 101.8 -4.1 -8.0 -3.5 67.7 73.9 63.4 56.1 77.7 107.2 106.7 99.2 72.2 1.0 Other securities 4 1.2 1.1 1.0 .7 -15 5.0 8.9 43.6 12.3 13.6 13.3 Less: Net increase in ffoht Securities 6.3 3.4 2.2 2.6 1946 1947 1948.... 1949 Net investment in T in financial assets -.6 -3.9 -1.9 -7.1 -12.5 -23.7 4.1 -56.0 -32.4 21.7 -.2 -11.9 1 2 13.3 -2.8 7.3 14.5 10.3 14.8 19.8 24.0 9.9 9.1 2.9 22.6 29.9 43.5 43.2 36.6 29.3 41.3 57.9 69.7 80.1 Saving by households, personal trust funds, nonprofit institutions, farms, and other noncorporate business. Consists of U.S. savings bonds, other U.S. Treasury securities, U.S. Government agency securities and sponsored agency securities, 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. 8 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. 281 TABLE B-30.—Number and median income (in 1986 dollars) of families and persons, and poverty status, by race, selected jears, 1963-86 Persons below poverty level Families > fclOW poverty level Median income of persons 15 years old and over with income 2 Femdies lYldiCi Year ALL RACES 1963 1964 1965 1966 3 1967 1968 1969 Number (millions) 47.5 48.0 48.5 49.2 50.1 50.8 51.6 $22,379 23,221 24,177 25,448 26,052 27,205 28,213 52.2 53.3 54.4 55.1 27,862 27,845 29,134 29,734 28,687 27,949 28,811 28,966 29,647 29,588 27,974 26,991 26,619 27,155 27,903 28,269 29,458 1970 1971 1972 1973 1974 3 1975 1976 1977 1978 1979 4 56.2 56.7 57.2 57.8 59.6 1980 1981 1982 1983 1984 1985 1986 60.3 61.0 61.4 62.0 62.7 63.6 64.5 WHITE 1970 1971 1972 1973 1974 3 1975 1976 1977 1978 1979 4 1980 1981 1982 1983 1984 1985 1986 3 BLACK 1970 1971 1972 1973 1974 3 1975 1976 1977 1978 1979 4 1980 1981 1982 1983 3 1984 1985 1986 Median income 557 rerridit: Total Number (millions) 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 7.2 7.0 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 55.0 55.7 28,904 28,893 30,269 31,076 29,812 29,067 29,926 30,289 30,870 30,875 29,146 28,352 27,948 28,435 29,226 29,713 30,809 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 5.0 4.8 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 6.9 7.1 17,730 17,435 17,990 17,935 17,801 17,885 17,801 17,303 18,284 17,483 16,864 15,993 15,447 16,025 16,289 17,109 17,604 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 2.0 2.0 Rate 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 11.4 10.9 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 9.1 8.6 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 28.7 28.0 householder Number Rate (millions) 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 3.5 3.6 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 2.0 2.0 .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 1.5 1.5 Number (millions) Rate All persons Yearround full-time workers All persons Yearround fulltime work- ers $4,914 $12,735 5,122 13,116 5,285 13,263 5,535 13,601 5,915 13,786 6,363 14,397 6,377 15,185 $21,740 22,213 22,929 23,499 23,937 24,627 25,925 12.6 12.5 11.9 11.1 11.2 12.3 11.8 11.6 11.4 11.7 $16,154 16,426 17,456 17,927 18,236 18,847 19,228 18,834 18,689 19,526 19,877 18,792 18,036 18,155 18,316 18,378 17,793 25,933 26,074 27,619 28,295 27,041 26,349 26,694 27,267 26,995 26,403 6,317 6,519 6,812 6,899 6,853 6,896 6,888 7,131 6,837 6,574 15,361 15,435 15,864 16,008 15,951 15,725 16,010 15,948 16,203 15,908 29.3 31.8 34.4 35.3 33.7 33.1 32.4 13.0 14.0 15.0 15.2 14.4 14.0 13.6 16,673 16,243 15,846 16,135 16,468 16,625 17,114 25,512 24,946 24,599 24,769 25,339 25,480 25,894 6,547 6,580 6,687 7,049 7,250 7,356 7,610 15,423 15,018 15,520 15,945 16,280 16,565 16,843 25.0 26.5 24.3 24.5 24.8 25.9 25.2 24.0 23.5 22,3 17.5 17.8 16.2 15.1 15.7 17.8 16.7 16.4 16.3 17.2 9.9 9.9 9.0 8.4 8.6 9.7 9.1 8.9 8.7 9.0 19,797 19,593 20,480 20,856 19,686 18,946 19,140 19,185 19,249 18,588 26,676 26,808 28,615 29,114 27,568 26,959 27,489 27,824 27,496 27,166 6,399 6,628 6,856 6,965 6,930 6,967 6,946 7,239 6,919 6,636 15,632 15,613 16,176 16,279 16,087 15,762 16,133 16,049 16,356 16,047 25.7 27.4 27.9 28.3 27.1 27.4 28.2 19.7 21.6 23.5 24.0 23.0 22.9 22.2 10.2 11.1 12.0 12.1 11.5 11.4 11.0 17,735 17,235 16,753 16,975 17,383 17,440 18,060 26,240 25,532 25,254 25,430 26,207 26,187 26,617 6,583 6,654 6,778 7,172 7,335 7,499 7,760 15,572 15,269 15,729 16,158 16,441 16,799 17,101 54.3 53.5 53.3 52.7 52.2 50.1 52.2 51.0 50.6 49.4 7.5 7.4 7.7 7.4 7.2 7.5 7.6 7.7 7.6 8.1 49.4 52.9 56.2 53.7 51.7 50.5 50.1 8.6 9.2 9.7 9.9 9.5 8.9 9.0 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 31.3 31.1 11,693 11,571 12,334 12,615 12,198 11,327 11,524 11,385 11,531 11,506 10,657 10,249 10,039 9,927 9,973 10,975 10,822 18,171 18,331 19,324 19,623 19,355 20,063 19,689 19,183 21,059 19,579 18,463 18,064 17,936 18,131 17,885 18,317 18,766 5,825 5,807 6,406 6,287 6,257 6,330 6,545 6,251 6,230 6,039 6,094 5,911 5,978 6,129 6,507 6,398 6,566 12,808 13,786 13,838 13,805 14,165 15,059 15,083 15,000 15,160 14,704 14,524 13,789 14,058 14,343 14,817 14,871 14,964 40.4 36.4 38.4 33.1 33.3 32.3 32.7 36.4 36.1 33.2 28.5 27.8 25.4 24.1 19.5 19.0 17.3 14.7 14.2 12.8 12.1 32.5 33.9 32.7 32.2 32.1 32.5 33.0 31.7 31.4 30.4 25.4 25.6 24.5 23.0 23.4 25.9 25.0 24.7 24.5 26.1 32.7 34.6 36.3 36.0 34.5 34.0 34.6 1 The term "family" refers to a group of two or more persons related by blood, marriage, or adoption and residing together; all such persons are considered members of the same family. Beginning 1979, based on householder concept and restricted to primary families. 2 Prior to 1979, data are for persons 14 years and over. 3 Based on revised methodology; comparable with succeeding years. 4 Based on 1980 census population controls; comparable with succeeding years. Note.—The poverty level is based on the poverty index adopted by a Federal interagency committee in 1969. That index reflected different consumption requirements for families based on size and composition, sex ana 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. 158. Source: Department of Commerce, Bureau of the Census. 282 POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY TABLE B-31.—Population by age groups, 1929-87 [Thousands of persons] Age (years) July 1 Total Under 5 5-15 16-19 20-24 25-44 45-64 65 and over 1929 121,767 11,734 26,800 9,127 10,694 35,862 21,076 6,474 1933 125,579 10,612 26,897 9,302 11,152 37,319 22,933 7,363 1939 130,880 10,418 25,179 9,822 11,519 39,354 25,823 8,764 1940 1941 1942 1943 1944 132,122 133,402 134,860 136,739 138,397 10,579 10,850 11,301 12,016 12,524 24,811 24,516 24,231 24,093 23,949 9,895 9,840 9,730 9,607 9,561 11,690 11,807 11,955 12,064 12,062 39,868 40,383 40,861 41,420 42,016 26,249 26,718 27,196 27,671 28,138 9,031 9,288 9,584 9,867 10,147 1945 1946 1947 1948 1949 139,928 141,389 144,126 146,631 149,188 12,979 13,244 14,406 14,919 15,607 23,907 24,103 24,468 25,209 25,852 9,361 9,119 9,097 8,952 8,788 12,036 12,004 11,814 11,794 11,700 42,521 43,027 43,657 44,288 44,916 28,630 29,064 29,498 29,931 30,405 10,494 10,828 11,185 11,538 11,921 1950 1951 1952 1953 1954 152,271 154,878 157,553 160,184 163,026 16,410 17,333 17,312 17,638 18,057 26,721 27,279 28,894 30,227 31,480 8,542 8,446 8,414 8,460 8,637 11,680 11,552 11,350 11,062 10,832 45,672 46,103 46,495 46,786 47,001 30,849 31,362 31,884 32,394 32,942 12,397 12,803 13,203 13,617 14,076 1955 1956 1957 1958 1959 165,931 168,903 171,984 174,882 177,830 18,566 19,003 19,494 19,887 20,175 32,682 33,994 35,272 36,445 37,368 8,744 8,916 9,195 9,543 10,215 10,714 10,616 10,603 10,756 10,969 47,194 47,379 47,440 47,337 47,192 33,506 34,057 34,591 35,109 35,663 14,525 14,938 15,388 15,806 16,248 1960 1961 1962 1963 1964 180,671 183,691 186,538 189,242 191,889 20,341 20,522 20,469 20,342 20,165 38,494 39,765 41,205 41,626 42,297 10,683 11,025 11,180 12,007 12,736 11,134 11,483 11,959 12,714 13,269 47,140 47,084 47,013 46,994 46,958 36,203 36,722 37,255 37,782 38,338 16,675 17,089 17,457 17,778 18,127 1965 1966 1967 1968 1969 194,303 196,560 198,712 200,706 202,677 19,824 19,208 18,563 17,913 17,376 42,938 43,702 44,244 44,622 44,840 13,516 14,311 14,200 14,452 14,800 13,746 14,050 15,248 15,786 16,480 46,912 47,001 47,194 47,721 48,064 38,916 39,534 40,193 40,846 41,437 18,451 18,755 19,071 19,365 19,680 1970 1971 1972 1973 1974 205,052 207,661 209,896 211,909 213,854 17,166 17,244 17,101 16,851 16,487 44,816 44,591 44,203 43,582 42,989 15,289 15,688 16,039 16,446 16,769 17,202 18,159 18,153 18,521 18,975 48,473 48,936 50,482 51,749 53,051 41,999 42,482 42,898 43,235 43,522 20,107 20,561 21,020 21,525 22,061 1975 1976 1977 1978 1979 215,973 218,035 220,239 222,585 225,055 16,121 15,617 15,564 15,735 16,063 42,508 42,099 41,298 40,428 39,552 17,017 17,194 17,276 17,288 17,242 19,527 19,986 20,499 20,946 21,297 54,302 55,852 57,561 59,400 61,379 43,801 44,008 44,150 44,286 44,390 22,696 23,278 23,892 24,502 25,134 1980 1981 1982 1983 1984 227,757 230,138 232,520 234,799 237,001 16,458 16,931 17,298 17,650 17,830 38,844 38,190 37,876 37,668 37,657 17,160 16,770 16,255 15,704 15,141 21,584 21,821 21,807 21,700 21,536 63,494 65,619 67,856 69,970 72,048 44,515 44,569 44,601 44,678 44,817 25,704 26,236 26,827 27,428 27,973 1985 1986 1987 239,283 241,596 243,773 18,017 18,128 37,691 37,701 14,819 14,802 21,214 20,613 74,076 76,126 44,931 45,053 28,536 29,173 Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950. Source: Department of Commerce, Bureau of the Census. 283 TABLE B-32.—Population and the labor force, 1929-87 [Monthly data seasonally adjusted, except as noted] Period Labor Employforce Civilian ment noninsti- Resiincluddent including tutional Armed resident populaForces * Armed Armed tion 1 Forces Forces Unemployment rate Civilian labor force Employment Total Total Agricultural Nonagricultural Unemployment Labor Civil- force par- merit/ ian tici- popwork-2 workulaers ers pation rate 3 All Thousands of persons 14 years of age and over 1929.... 1933.... 1939 1940 1941 1942.... 1943.... 1944.... 1945.... 1946.... 1947.... 49,180 51,590 55,230 55,640 55,910 56,410 55,540 54,630 53,860 57,520 60,168 99,840 99,900 98,640 94,640 93,220 94,090 103,070 106,018 47,630 10,450 38,760 10,090 45,750 9,610 47,520 9,540 50,350 9,100 53,750 9,250 54,470 9,080 53,960 8,950 52,820 8,580 55,250 8,320 57,812 8,256 Civilian Percent 37,180 28,670 36,140 37,980 41,250 44,500 45,390 45,010 44,240 46,930 49,557 1,550 12,830 9,480 8,120 5,560 2,660 1,070 670 1,040 2,270 2,356 3.2 24.9 17.2 14.6 9.9 4.7 1.9 1.2 55.7 56.0 57.2 58.7 58.6 1.9 3.9 3.9 57.2 55.8 56.8 3.9 3.8 5.9 58.3 58.8 58.9 Thousands of persons 16 years of age and over 1947 1948 1949 1950 1951 1952 1953s 1954 1955 1956 1957 1958 1959 1960* 1961 19625 1963 1964 1965 1966 1967 1968 1969....... 1970 1971 19725 1973* 1974 1975 1976 1977s 1978 1979 1980.. 1981 1982 1983 1984 1985 1986 * 1987 1983:Jan Feb Mar June July Aug Sept Oct Nov Dec 101,827 103,068 103,994 104,995 104,621 105,231 107,056 108,321 109,683 110,954 112,265 113,727 115,329 117,245 118,771 120,153 122,416 124,485 126,513 128,058 129,874 132,028 134,335 137,085 140,216 144,126 147,096 150,120 153,153 156,150 159,033 161,910 164,863 167,745 170,130 172,271 174,215 176,383 178,206 180,587 182,753 173,354 173,505 173,656 173,794 173,953 174,125 174,306 174,440 174,602 174,779 174,951 175,121 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 11656 1,631 1,597 1,604 1,645 1,668 1,676 1,697 1,706 1,706 1,737 1,667 1,664 1,664 1,671 1,669 1,668 1,664 1,682 1,695 1,695 1,685 1,688 63,377 64,160 64,524 65,246 65,785 67,087 68,517 68,877 69,486 70,157 71,489 72,359 72,675 73,839 75,109 76,401 77,892 79,565 80,990 82,972 84,889 86,355 88,847 91,203 93,670 95,453 97,826 100,665 103,882 106,559 108,544 110,315 111,872 113,226 115,241 117,167 119,540 121,602 112,362 112,298 112,251 112,499 112,465 113,547 113,420 113,913 113,993 113,621 113,913 114,015 60,087 62,104 62,636 63,410 62,251 64,234 65,764 66,019 64,883 66,418 67,639 67,646 68,763 69,768 71,323 73,034 75,017 76,590 78,173 80,140 80,796 81,340 83,966 86,838 88,515 87,524 90,420 93,673 97,679 100,421 100,907 102,042 101,194 102,510 106,702 108,856 111,303 114,177 100,828 100,753 100,843 101,231 101,311 102,301 102,872 103,290 103,711 103,734 104,414 104,684 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 73,737 80,734 82,771 84,382 87,034 89,429 91,949 93,775 96,158 99,009 102,251 104,962 106,940 108,670 110,204 111,550 113,544 115,461 117,834 119,865 110,695 110,634 110,587 110,828 110,796 111,879 111,756 112,231 112,298 111,926 112,228 112,327 See next page for continuation of table. 284 57,038 58,343 57,651 7,890 7,629 7,658 49,148 50,714 49,993 2,311 2,276 3,637 58,918 59,961 60,250 61,179 60,109 62,170 63,799 64,071 63,036 64,630 7,160 6,726 6,500 6,260 6,205 6,450 6,283 5,947 5,586 5,565 51,758 53,235 53,749 54,919 53,904 55,722 57,514 58,123 57,450 59,065 3,288 2,055 1,883 1,834 3,532 2,852 2,750 2,859 4,602 3,740 5.2 3.2 2.9 2.8 5.4 4.3 4.0 4.2 6.6 5.3 5.3 3.3 3.0 2.9 5.5 4.4 4.1 4.3 6.8 5.5 59.2 59,2 59.0 58.9 58.8 59.3 60.0 59.6 59.5 59.3 65,778 65,746 66,702 67,762 69,305 71,088 72,895 74,372 75,920 77,902 5,458 5,200 4,944 4,687 4,523 4,361 3,979 3,844 3,817 3,606 60,318 60,546 61,759 63,076 64,782 66,726 68,915 70,527 72,103 74,296 3,852 4,714 3,911 4,070 3,786 3,366 2,875 2,975 2,817 2,832 5.4 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 59.4 59.3 58.8 58.7 58.7 58.9 59.2 59.6 59.6 60.1 78,678 79,367 82,153 85,064 86,794 85,846 88,752 92,017 96,048 98,824 3,463 3,394 3,484 3,470 3,515 3,408 3,331 3,283 3,387 3,347 75,215 75,972 78,669 81,594 83,279 82,438 85,421 88,734 92,661 95,477 4,093 5,016 4,882 4,365 5,156 7,929 7,406 6,991 6,202 6,137 4.8 5.8 5.5 4.8 5.5 8.3 7.6 6.9 6.0 5.8 4.9 5.9 5.6 4.9 5.6 8.5 7.7 7.1 6.1 5.8 60.4 60.2 60.4 60.8 61.3 61.2 61.6 62.3 63.2 63.7 99,303 100,397 99,526 100,834 105,005 107,150 109,597 112,440 3,364 95,938 7,637 3,368 97,030 8,273 96,125 10,678 3,401 3,383 97,450 10,717 3,321 101,685 8,539 3,179 103,971 8,312 3,163 106,434 8,237 3,208 109,232 7,425 7.0 7.5 9.5 9.5 7.4 7.1 6.9 6.1 7.1 7.6 9.7 9.6 7.5 7.2 7.0 6.2 63.8 63.9 64.0 64.0 64.4 64.8 65.3 65.6 99,161 99,089 99,179 99,560 99,642 100,633 3,439 3,382 3,360 3,341 3,328 3,462 95,722 95,707 95,819 96,219 96,314 97,171 11,534 11,545 11,408 11,268 11,154 11,246 10.3 10.3 10.2 10.0 9.9 9.9 10.4 10.4 10.3 10.2 10.1 10.1 63.9 63.8 63.7 63.8 63.7 64.3 101,208 101,608 102,016 102,039 102,729 102,996 3,481 3,502 3,347 3,303 3,291 3,332 97,727 98,106 98,669 98,736 99,438 99,664 10,548 10,623 10,282 9,887 9,499 9,331 9.3 9.3 9.0 8.7 8.3 8.2 9.4 9.5 9.2 8.8 8.5 8.3 64.1 64.3 64.3 64.0 64.1 64.1 TABLE B-32.—Population and the labor force, 1929-87—Continued [Monthly data seasonally adjusted, except as noted] Period Labor EmployCivilian force ment Resinomnstiincludincluding dent tutional Armed ing resident populaArmed Forces1 resident tion 1 Armed Forces Forces Civilian labor force Unemployment rate Employment Total Total Agricultural Nonagricultural Unemployment Labor Civil- force All parian workticiers 2 workpation ers rate3 Thousands of persons 16 years of age and over Employment/ population ratio4 Percent 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 1,690 113,899 114,314 114,397 114,822 115,310 115,521 104,883 105,511 105,659 106,058 106,849 107,300 112,213 112,630 112,711 113,129 113,620 113,831 103,197 103,827 103,973 104,365 105,159 105,610 3,296 3,354 3,234 3,309 3,319 3,377 99,901 100,473 100,739 101,056 101,840 102,233 9,016 8,803 8,738 8,764 8,461 8,221 7.9 7.7 7.6 7.6 7.3 7.1 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 1,698 115,645 115,404 115,556 115,720 115,884 116,268 107,127 106,879 107,198 107,339 107,684 107,910 113,947 113,692 113,836 114,015 114,185 114,570 105,429 105,167 105,478 105,634 105,985 106,212 3,340 3,295 3,388 3,195 3,400 3,387 102,089 101,872 102,090 102,439 102,585 102,825 8,518 8,525 8,358 8,381 8,200 8,358 7.4 7.4 7.2 7.2 7.1 7.2 1985: Jan.... Feb.... Mar... Apr.... May... JuneJuly... Aug... Sept.. Oct.... Nov... Dec... 177,384 177,516 177,667 177,799 177,944 178,096 1,697 1,703 1,701 1,702 1,705 1,702 116,457 116,606 117,012 117,040 116,916 116,723 107,993 108,276 108,691 108,644 108,612 108,309 114,760 114,903 115,311 115,338 115,211 115,021 106,296 106,573 106,990 106,942 106,907 106,607 3,331 3,325 3,260 3,319 3,238 3,147 102,965 103,248 103,730 103,623 103,669 103,460 8,464 8,330 8,321 8,396 8,304 8,414 7.3 7.1 7.1 7.2 7.1 7.2 178,263 178,405 178,572 178,770 178,940 179,112 1,704 1,726 1,732 1,700 1,702 1,698 116,993 117,037 117,613 117,787 117,857 118,017 108,513 108,851 109,367 109,488 109,702 109,861 115,289 115,311 115,881 116,087 116,155 116,319 106,809 107,125 107,635 107,788 108,000 108,163 3,134 3,141 3,059 3,059 3,073 3,147 103,675 103,984 104,576 104,729 104,927 105,016 8,480 8,186 8,246 8,299 8,155 8,156 1.1 7.0 7.0 7.0 6.9 6.9 1986: Jan *. Feb.... Mar... Apr.... May... June.. 179,670 179,821 179,985 180,148 180,311 180,503 1,691 1,691 1,693 1,695 1,687 1,680 118,442 118,642 118,876 119,029 119,168 119,792 110,595 110,215 110,546 110,656 110,724 111,351 116,751 116,951 117,183 117,334 117,481 118,112 108,904 108,524 108,853 108,961 109,037 109,671 3,307 3,097 3,213 3,168 3,099 3,176 105,597 105,427 105,640 105,793 105,938 106,495 7,847 8,427 8,330 8,373 8,444 8,441 6.6 7.1 7.0 7.0 7.1 7.0 July... Aug... Sept.. Oct.... Nov... Dec... 180,682 180,828 180,997 181,186 181,363 181,547 1,672 1,697 1,716 1,749 1,751 1,750 119,787 119,847 120,061 120,173 120,422 120,326 111,509 111,732 111,763 111,943 112,208 112,407 118,115 118,150 118,345 118,424 118,671 118,576 109,837 110,035 110,047 110,194 110,457 110,657 3,127 3,106 3,164 3,142 3,233 3,153 106,710 106,929 106,883 107,052 107,224 107,504 8,278 8,115 8,298 8,230 8,214 7,919 6.9 6.8 6.9 6.8 6.8 6.6 1987: Jan.... Feb..., Mar.., Apr.... May.., June. 181,827 181,998 182,179 182,344 182,533 182,703 1,748 1,740 1,736 1,735 1,726 1,718 111,014 111,344 111,455 111,806 112,334 112,300 3,174 3,225 3,237 3,250 3,269 3,192 6.6 6.5 6.4 6.2 6.2 6.0 1,720 1,736 1,743 1,741 1,755 1,750 119,890 120,306 119,963 120,387 120,594 120,722 112,639 113,050 112,872 113,210 113,504 113,744 3,212 3,143 3,184 3,249 3,172 3,215 107,840 108,119 108,218 108,556 109,065 109,108 109,427 109,907 109,688 109,961 110,332 110,529 7,964 7,886 7,791 7,557 7,573 7,308 182,885 183,002 183,161 183,311 183,470 183,620 112,762 113,084 113,191 113,541 114,060 114,018 114,359 114,786 114,615 114,951 115,259 115,494 118,978 119,230 119,246 119,363 119,907 119,608 July.., Aug.., Sept. Oct..., Nov... Dec... 120,726 120,970 120,982 121,098 121,633 121,326 121,610 122,042 121,706 122,128 122,349 122,472 7,251 7,256 7,091 7,177 7,090 6,978 6.0 5.9 5.8 5.9 5.8 5.7 1 2 3 Civilian 8.0 7.8 7.8 7.7 7.4 7.2 7.5 7.5 7.3 7.4 7.2 7.3 7.4 7.2 7.2 7.3 7.2 7.3 7.4 7.1 7.1 7.1 7.0 7.0 6.7 7.2 7.1 7.1 7.2 7.1 7,0 6.9 7.0 6.9 6.9 6.7 6.7 6.6 6.5 6.3 6.3 6.1 6.0 6.0 5.9 6.0 5.9 5.8 63.9 64.1 64.1 64.3 64,5 64.6 58.8 59.1 59.1 59.3 59.7 59.9 64.6 64.4 64.4 64.4 64.5 64.6 59.8 59.6 59.7 59.7 59.8 59.9 64.7 64.7 64.9 64.9 64.7 64.6 59.9 60.0 60.2 60.1 60.1 59.9 64.7 64.6 64.9 64.9 64.9 64.9 59.9 60.0 60.3 60.3 60.4 60.4 65.0 65.0 65.1 65.1 65.2 65.4 60.6 60.4 60.5 60.5 60.5 60.8 65.4 65.3 65.4 65.4 65.4 65.3 60.8 60.9 60.8 60.8 60.9 61.0 65.4 65.5 65.5 65.5 65.7 65.5 61.1 61.2 61.2 61.3 61.5 61.5 65.6 65.7 65.5 65.7 65.7 65.7 61.6 61.8 61.6 61.8 61.9 61.9 Not seasonally adjusted. Unemployed as percent of labor force including resident Armed Forces. Civilian labor force as percent of civilian noninstitutional population. *5 Civilian employment as percent of civilian noninstitutional population. Not strictly comparable with earlier data due to population adjustments as follows.- Beginning 1953, introduction of 1950 census data added about 600,000 to population and 350,000 to labor force, total employment, and agricultural employment. Beginning 1960, inclusion of Alaska and Hawaii added about 500,000 to population, 300,000 to labor force, and 240,000 to nonagriculturaf employment. Beginning 1962, introduction of 1960 census data reduced population by about 50,000 and labor force and employment by 200,000. Beginning 1972, introduction of 1970 census data added about 800,000 to civilian noninstitutional population and 333,000 to labor force and employment. A subsequent adjustment based on 1970 census in March 1973 added 60,000 to labor force and to employment. Beginning 1978, changes in sampling and estimation procedures introduced into the household survey added about 250,000 to labor force and to employment. Unemployment levels and rates were not significantly affected. Beginning 1986, the introduction of revised population controls added about 400,000 to the civilian population ana labor force and 350,000 to civilian employment. Unemployment levels and rates were not significantly affected. Note.—Labor force data in Tables B-32 through 8-41 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. 285 TABLE B-33.—Civilian employment and unemployment by sex and age, 1947-87 [Thousands of persons 16 years of age and over; monthly data seasonally adjusted] Civilian employment Males Year or month Total Total 1947 1948 1949 1950 1951 1952 1953 l 1954 1955 1956 1957 1958 1959 1960* 1961 1962' 1963 1964 1965... 1966 1967 1968 1969 1970 1971 19721 1973 1 1974 1975 1976 1977 1978» 1979 1980 1981 1982 1983 1984 1985 1986 ' 1987 1986: Jan 1 Feb Mar '. 20 years and over Total 16-19 years 20 years and over Total Total Females 20 16-19 years years and 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 40,995 41,725 40,925 41,578 41,780 41,682 42,430 41,619 42,621 43,379 43,357 42,423 43,466 2,218 2,344 2,124 2,186 2,156 2,107 2,136 1,985 2,095 2,164 2,115 2,012 2,198 38,776 39,382 38,803 39,394 39,626 39,578 40,296 39,634 40,526 41,216 41,239 40,411 41,267 16,045 16,617 16,723 17,340 18,181 18,568 18,749 18,490 19,551 20,419 20,714 20,613 21,164 1,691 14,354 1,682 14,936 1,588 15,137 1,517 15,824 1,611 16,570 1,612 16,958 1,584 17,164 1,490 17,000 1,547 18,002 1,654 18,767 1,663 19,052 1,570 19,043 1,640 19,524 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 1,692 1,559 2,572 2,239 1,221 1,185 1,202 2,344 1,854 1,711 1,841 3,098 2,420 270 256 353 318 191 205 184 310 274 269 300 416 398 1,422 1,305 2,219 1,922 1,029 980 1,019 2,035 1,580 1,442 1,541 2,681 2,022 65,778 65,746 66,702 67,762 69,305 71,088 72,895 74,372 75,920 77,902 43,904 43,656 44,177 44,657 45,474 46,340 46,919 47,479 48,114 48,818 2,361 2,315 2,362 2,406 2,587 2,918 3,253 3,186 3,255 3,430 41,543 41,342 41,815 42,251 42,886 43,422 43,668 44,294 44,859 45,388 21,874 22,090 22,525 23,105 23,831 24,748 25,976 26,893 27,807 29,084 3,852 4,714 3,911 4,070 3,786 3,366 2,875 2,975 2,817 2,832 2,486 2,997 2,423 2,472 2,205 1,914 1,551 1,508 1,419 1,403 426 479 408 501 487 479 432 448 426 440 2,060 2,518 2,016 1,971 1,718 1,435 1,120 1,060 993 963 78,678 79,367 82,153 85,064 86,794 85,846 88,752 92,017 96,048 98,824 99,303 100,397 99,526 100,834 105,005 107,150 109,597 112,440 108,904 108,524 108,853 108,961 109,037 109,671 109,837 110,035 110,047 110,194 110,457 110,657 3,409 3,478 3,765 4,039 4,103 3,839 3,947 4,174 4,336 4,300 4,085 3,815 3,379 3,300 3322 3,328 3,323 3,381 3,225 3,264 3,297 3,336 3,350 3,330 3,347 3,354 3,360 3,367 3,360 3,247 3,342 3,373 3,308 3,299 3,304 3,352 45,581 45,912 47,130 48,310 48,922 48,018 49,190 50,555 52,143 53,308 53,101 53,582 52,891 53,487 55,769 56,562 57,569 58,726 57,606 57,294 57,361 57,374 57,273 57,550 57,551 57,620 57,625 57,607 57,893 58,120 58,220 58,324 58,380 58,516 58,673 58,632 29,688 29,976 31,257 32,715 33,769 33,989 35,615 37,289 39,569 41,217 42,117 43,000 43,256 44,047 45,915 47,259 48,706 50,334 111,014 111,344 111,455 111,806 112,334 112,300 48,990 49,390 50,896 52,349 53,024 51,857 53,138 54,728 56,479 57,607 57,186 57,397 56,271 56,787 59,091 59,891 60,892 62,107 60,831 60,558 60,658 60,710 60,623 60,880 60,898 60,974 60,985 60,974 61,253 61,367 61,562 61,697 61,688 61,815 61,977 61,984 112,639 113,050 112,872 113,210 113,504 113,744 62,150 62,341 62,368 62,468 62,581 62,656 3,367 3,516 3,401 3,431 3,417 3,471 58,783 58,825 58,967 59,037 59,164 59,185 50,489 50,709 50,504 50,742 50,923 51,088 fc::::::::::: June July Aug Sept Oct Nov Dec 1987:Jan Feb Mar Apr May June Juty Aug Sept Oct Nov Dec 16-19 years Unemployment Males Females 48,073 47,966 48,195 48,251 48,414 48,791 48,939 49,061 49,062 49,220 49,204 49,290 49,452 49,647 49,767 49,991 50,357 50,316 16-19 years 144 153 223 195 145 140 123 191 176 209 197 262 256 1,768 1,793 1,833 1,849 1,929 2,118 2,468 2,496 2,526 2,687 20,105 20,296 20,693 21,257 21,903 22,630 23,510 24,397 25,281 26,397 619 717 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 2,735 2,730 2,980 3,231 3,345 3,263 3,389 3,514 3>34 3,783 3,625 3,411 3,170 3,043 3,122 3,105 3,149 3,260 3,093 3,138 3,211 3,154 3,141 3,168 3,124 3,157 3,122 3,207 3,127 3,169 599 1,638 1,855 26,952 4,093 2,238 693 2,097 2,227 27,246 5,016 2,789 711 1,948 2,222 28,276 4,882 2,659 653 1,624 2,089 29,484 4,365 2,275 757 1,957 2,441 30,424 5,156 2,714 966 3,476 3,486 30,726 7,929 4,442 939 3,098 3,369 32,226 7,406 4,036 874 2,794 3,324 33,775 6,991 3,667 813 2,328 3,061 35,836 6,202 3,142 811 2,308 3,018 37,434 6,137 3,120 913 3,353 3,370 38,492 7,637 4,267 962 3,615 3,696 39,590 8,273 4,577 40,086 10,678 6,179 1,090 5,089 4,499 41,004 10,717 6,260 1,003 5,257 4,457 812 3,932 3,794 42,793 8,539 4,744 806 3,715 3,791 44,154 8,312 4,521 779 3,751 3,707 45,556 8,237 4,530 732 3,369 3,324 47,074 7,425 4,101 723 3,521 3,603 44,980 7,847 4,244 788 3,766 3,873 44,828 8,427 4,554 770 3,778 3,782 44,984 8,330 4,548 817 3,724 3,832 45,097 8,373 4,541 821 3,836 3,787 45,273 8,444 4,657 819 3,791 3,831 45,623 8,441 4,610 45,815 8,278 4,602 782 3,820 3,676 45,904 8,115 4,454 793 3,661 3,661 45,940 8,298 4,632 801 3,831 3,666 46,013 8,230 4,570 753 3,817 3,660 46,077 8,214 4,570 763 3,807 3,644 46,121 7,919 4,449 721 3,728 3,470 758 3,691 3,515 46,290 7,964 4,449 768 3,606 3,512 46,485 7,886 4,374 774 3,553 3,464 46,582 7,791 4,327 760 3,454 3,343 46,761 7,557 4,214 803 3,456 3,314 47,028 7,573 4,259 658 3,422 3,228 47,088 7,308 4,080 637 3,323 3,291 47,206 7,251 3,960 763 3,258 3,235 47,308 7,256 4,021 709 3,118 3,264 47,251 7,091 3,827 725 3,174 3,278 47,480 7,177 3,899 710 3,135 3,245 47,634 7,090 3,845 722 3,063 3,193 47,750 6,978 3,785 506 568 598 583 665 802 780 789 769 743 755 800 886 825 687 661 675 616 683 693 673 730 671 698 651 656 675 653 673 644 3,162 3,162 3,185 3,230 3,329 3,228 3,283 3,401 3,253 3,262 3,289 3,338 1 See footnote 5, Table B-32. Note.—See Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. Total 286 286 349 313 383 385 395 405 391 412 413 638 654 632 610 614 594 611 574 593 663 625 582 TABLE B-34.—Civilian employment by demographic characteristic, 1954-87 [Thousands of persons 16 years of age and over; monthly data seasonally adjusted] White Year or month All civilian workers Black and other Total Males Females Both sexes 16-19 Total Black Males Females Both sexes 16-19 Total Mates Females 1954 1955 1956 1957 1958 1959 60,109 62,170 63,799 64,071 63,036 64,630 53,957 55,833 57,269 57,465 56,613 58,006 37,846 38,719 39,368 39,349 38,591 39,494 16,111 17,114 17,901 18,116 18,022 18,512 3,078 3,225 3,389 3,374 3,216 3,475 6,152 6,341 6,534 6,604 6,423 6,623 3,773 3,904 4,013 4,006 3,833 3,971 2,379 2,437 2,521 2,598 2,590 2,652 396 418 430 407 365 362 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 65,778 65,746 66,702 67,762 69,305 71,088 72,895 74,372 75,920 77,902 58,850 58,913 60,622 61,922 63,446 65,021 66,361 67,750 69,518 39,755 39,588 40,016 40,428 41,115 41,844 42,331 42,833 43,411 44,048 19,095 19,325 19,682 20,194 20,807 21,602 22,690 23,528 24,339 25,470 3,700 3,693 3,774 3,851 4,076 4,562 5,176 5,114 5,195 5,508 6,928 6,833 7,003 7,140 7,383 7,643 7,877 8,011 8,169 8,384 4,149 4,068 4,160 4,229 4,359 4,496 4,588 4,646 4,702 4,770 2,779 2,765 2,843 2,911 3,024 3,147 3,289 3,365 3,467 3,614 430 414 420 404 440 474 545 568 584 609 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 78,678 79,367 82,153 85,064 86,794 85,846 88,752 92,017 96,048 98,824 70,217 70,878 73,370 75,708 77,184 76,411 78,853 81,700 84,936 87,259 44,178 44,595 45,944 47,085 47,674 46,697 47,775 49,150 50,544 51,452 26,039 26,283 27,426 28,623 29,511 29,714 31,078 32,550 34,392 35,807 5,571 5,670 6,173 6,623 6,796 6,487 6,724 7,068 7,367 7,356 8,464 8,488 8,783 9,356 9,610 9.435 9,899 10,317 11,112 11,565 4,813 4,796 4,952 5,265 5,352 5,161 5,363 5,579 5,936 6,156 3,650 3,692 3,832 4,092 4,258 4,275 4,536 4,739 5,177 5,409 574 538 573 647 652 615 611 619 703 727 7,802 8,128 8,203 7,894 8,227 8,540 9,102 9,359 4,368 4,527 4,527 4,275 4,404 4,565 4,796 4,923 3,433 3,601 3,677 3,618 3,823 3,975 4,307 4,436 1980 1981 1982 1983 1984 1985 1986 1987 99,303 100,397 99,526 100,834 105,005 107,150 109,597 112,440 87,715 88,709 87,903 88,893 92,120 93,736 95,660 97,789 51,127 51,315 50,287 50,621 52,462 53,046 53,785 54,647 36,587 37,394 37,615 38,272 39,659 40,690 41,876 43,142 7,021 6,588 5,984 5,799 5,836 5,768 5,792 5,898 11,58811,688 11,624 11,941 12,885 13,414 13,937 14,652 6,059 6,083 5,983 6,166 6,629 6,845 7,107 7,459 5,529 5,606 5,641 5,775 6,256 6,569 6,830 7,192 689 637 565 543 607 666 681 742 9,313 9,355 9,189 9,375 10,119 10,501 10,814 11,309 4,798 4,794 4,637 4,753 5,124 5,270 5,428 5,661 4,515 4,561 4,552 4,622 4,995 5,231 5,386 5,648 108,904 108,524 108,853 108,961 109,037 109,671 95,136 94,775 95,020 95,109 95,098 95,735 53,787 53,559 53,569 53,632 53,481 53,758 41,349 41,216 41,451 41,477 41,617 41,977 5,687 5,778 5,837 5,787 5,788 5,799 13,792 13,761 13,855 13,839 13,901 13,930 7,076 7,027 7,080 7,067 7,111 7,121 6,716 6,734 6,775 6,772 6,790 6,809 10,720 10,694 10,786 10,828 10,880 10,829 5,403 5,377 5,422 5,432 5,487 5.446 5,317 5,317 5,364 5,396 5,393 5,383 July Aug Sept.... Oct Nov Dec 109,837 110,035 110,047 110,194 110,457 110,657 95,854 96,114 96,046 96,162 96,343 96,544 53,738 53,888 53,880 53,869 54,094 54,188 42,116 42,226 42,166 42,293 42,249 42,356 5,762 5,811 5,811 5,883 5,819 5,750 13,961 13,853 13,974 14,092 14,111 14,174 7,140 7,042 7,102 7,141 7,158 7,228 6,821 6,811 6,872 6,951 6,953 6,946 652 688 687 696 688 700 681 619 670 715 678 689 10,809 10,669 10,798 10,883 10,904 10,968 5,430 5,340 5,389 5,430 5,450 5,530 5,379 5,329 5,409 5,453 5,454 5,438 1987:Jan Feb Mar Apr May... Jun 111,014 111,344 111,455 111,806 112,334 112,300 96,749 97,001 97,074 97,338 97,829 97,698 54,273 54,403 54,323 54,403 54,591 54,553 42,476 42,598 42,751 42,935 43,238 43,145 5,840 5,880 5,813 5,846 5,935 5,842 14,295 14,320 14,392 14,467 14,475 14,582 7,321 7,304 7,353 7,408 7,357 7,410 6,974 7,016 7,039 7,059 7,118 7,172 680 695 683 679 679 731 10,995 11,086 11,072 11,114 11,129 11,238 5,553 5,565 5,579 5,600 5,570 5,614 5,442 5,521 5,493 5,514 5,559 5,624 July Aug.... Sept... Oct 112,639 113,050 112,872 113,210 113,504 113,744 97,917 98,181 98,069 98,317 98,492 98,779 54,651 54,779 54,801 54,895 54,976 55,111 43,266 43,402 43,268 43,422 43,516 43,668 5,904 6,017 5,857 5,915 5,917 6,021 14,725 14,804 14,778 14,946 15,017 15,008 7,485 7,518 7,559 7,601 7,613 7,582 7,240 7,286 7,219 7,345 7,404 7,426 736 822 795 797 805 794 11,381 11,513 11,421 11,556 11,589 11,605 5,689 5,750 5,738 5,753 5,763 5,754 5,692 5,763 5,683 5,803 5,826 5,851 . .. 1986: Jan Feb Mar Apr £:::: Nov.... Dec... Note.—See footnote 5 and Note, Table 8-32. Source: Department of Labor, Bureau of Labor Statistics. 287 Both sexes 16-19 month TABLE B-35.—Civilian unemployment by demographic characteristic, 1954-87 [Thousands of persons 16 years of age and over; monthly data seasonally adjusted] White Year or month All civilian workers Total Males Black Black and other Females Both sexes 16-19 Total Males Females Both sexes 16-19 Total Males Fe- 1954 1955 1956 1957 1958 1959 3,532 2,852 2,750 2,859 4,602 3,740 2,859 2,252 2,159 2,289 3,680 2,946 1,913 1,478 1,366 1,477 2,489 1,903 946 774 793 812 1,191 1,043 423 373 382 401 541 525 673 601 591 570 923 793 431 376 345 364 610 517 242 225 246 206 313 276 79 77 95 96 138 128 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 3,852 4,714 3,911 4,070 3,786 3,366 2,875 2,975 2,817 2,832 3,065 3,743 3,052 3,208 2,999 2,691 2,255 2,338 2,226 2,260 1,988 2,398 1,915 1,976 1,779 1,556 1,241 1,208 1,142 1,137 1,077 1,345 1,137 1,232 1,220 1,135 1,014 1,130 1,084 1,123 575 669 580 708 708 705 651 635 644 660 788 971 861 863 787 678 622 638 590 571 498 599 509 496 426 360 310 300 277 267 290 372 352 367 361 318 312 338 313 304 138 159 142 176 165 171 186 203 194 193 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 4,093 5,016 4,882 4,365 5,156 7,929 7,406 6,991 6,202 6,137 3,339 4,085 3,906 3,442 4,097 6,421 5,914 5,441 4,698 4,664 1,857 2,309 2,173 1,836 2,169 3,627 3,258 2,883 2,411 2,405 1,482 1,777 1,733 1,606 1,927 2,794 2,656 2,558 2,287 2,260 871 1,011 1,021 955 1,104 1,413 1,364 1,284 1,189 1,193 754 930 977 924 1,058 1,507 1,492 1,550 1,505 1,473 380 481 486 440 544 815 779 784 731 714 374 450 491 484 514 692 713 766 774 759 235 249 288 280 318 355 355 379 394 362 906 846 965 1,369 1,334 1,393 1,330 1,319 448 395 494 741 698 698 641 636 458 451 470 629 637 695 690 683 1980 1981 1982 1983 1984 1985 1986 1987 7,637 8,273 10,678 10,717 8,539 8,312 8,237 7,425 5,884 6,343 8,241 8,128 6,372 6,191 6,140 5,501 3,345 3,580 4,846 4,859 3,600 3,426 3,433 3,132 2,540 2,762 3,395 3,270 2,772 2,765 2,708 2,369 1,291 1,374 1,534 1,387 1,116 1,074 1,070 995 1,752 1,930 2,437 2,588 2,167 2,121 2,097 1,924 922 997 1,334 1,401 1,144 1,095 1,097 969 830 933 1,104 1,187 1,022 1,026 999 955 377 388 443 441 384 394 383 353 1,553 1,731 2,142 2,272 1,914 1,864 1,840 1,684 815 891 1,167 1,213 1,003 951 946 826 738 840 975 1,059 911 913 894 858 1986: Jan Feb.... Mar.... Apr.... May... June... 7,847 8,427 8,330 8,373 8,444 8,441 5,799 6,346 6,223 6,205 6,304 6,290 3,159 3,446 3,449 3,438 3,547 3,515 2,640 2,900 2,774 2,767 2,757 2,775 1,015 1,096 1,010 1,119 1,088 1,115 2,053 2,082 2,121 2,171 2,146 2,198 1,085 1,105 1,102 1,111 1,115 1,137 968 977 1,019 1,060 1,031 1,061 401 388 435 429 411 418 1,822 1,827 1,859 1,887 1,864 1,913 946 953 962 952 949 971 876 874 897 935 915 942 July.... Aug.... Sept... Oct.... Nov.... Dec... 8,278 8,115 8,298 8,230 8,214 7,919 6,198 5,984 6,178 6,148 6,147 5,930 3,490 3,320 3,514 3,472 3,498 3,416 2,708 2,664 2,664 2,676 2,649 2,514 1,049 1,070 1,093 1,059 1,105 1,027 2,046 2,100 2,136 2,063 2,069 1,989 1,105 1,095 1,129 1,100 1,074 1,020 941 1,005 1,007 963 995 969 348 379 384 335 341 344 1,798 1,848 1,868 1,844 1,819 1,738 947 945 979 967 914 861 851 903 889 877 905 877 1987:Jan Feb.... Mar.... Apr..., May... June... 7,964 7,886 7,791 7,557 7,573 7,308 5,920 5,824 5,762 5,634 5,587 5,452 3,391 3,332 3,321 3,238 3,219 3,149 2,529 2,492 2,441 2,396 2,368 2,303 1,038 1,044 1,049 1,018 1,061 944 2,046 2,061 2,042 1,935 1,997 1,892 1,052 1,031 1,007 993 1,048 963 994 1,030 1,035 942 949 929 368 383 356 354 361 322 1,812 1,808 1,781 1,664 1,760 1,654 895 885 856 827 911 819 917 923 925 837 849 835 July.... Aug..., Sept.., Oct..., Nov.... Dec..., 7,251 7,256 7,091 7,177 7,090 6,978 5,331 5,335 5,288 5,352 5,239 5,128 2,992 3,016 2,945 3,048 2,935 2,858 2,339 2,319 2,343 2,304 2,304 2,270 905 984 979 1,000 969 949 1,886 1,893 1,816 1,809 1,852 1,845 960 973 893 860 911 913 926 920 923 949 941 932 314 350 322 372 374 359 1,658 1,637 1,607 1,596 1,604 1,610 823 821 757 747 773 776 835 816 850 849 831 -834 Note.—See footnote 5 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 288 TABLE B-36.—Labor force participation rate and employment/population ratio, 1948-87 [Percent; monthly data seasonally adjusted] Employment/population ratio3 Labor force participation rate 2 Civilian Civilian Year or month 1948 1949 1950 1951 1952 1953 , .. 1954 1955 1956 1957 1958 1959 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 . .. 1980 1981 1982 1983 1984 1985 1986 1987 1986: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1987: Jan Feb Mar Apr fay June Aug Sept Oct Nov Dec 1 Total FeTotal Males males Both Black sexes and Black 16-19 White other years 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 59.8 602 60.3 60.8 610 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 65.6 65.9 58.8 86.6 58.9 86.4 864 59.2 86.3 59.0 86.3 *)R9 860 58.8 85.5 V H 85 4 60.0 85.5 S9fi 84 8 59.5 84.2 59.3 83.7 S9 4 83.3 591 82 9 58.8 82.0 58.7 81.4 S8 7 810 58.9 80.7 59.2 80.4 S9R 804 59.6 80.1 60.1 79.8 60 4 79 7 fin? 79.1 60.4 78.9 60.8 78.8 61.3 78.7 61.2 77.9 61.6 77.5 62.3 77.7 63.2 77.9 63.7 77.8 63.8 77.4 63.9 77.0 64.0 76.6 64 0 764 64.4 76.4 64.8 76.3 65.3 76.3 65.6 76.2 32.7 33.1 33.9 34.6 34.7 34.4 34.6 35 7 36.9 369 37.1 37.1 37.7 381 37.9 38.3 38 7 39.3 40.3 411 41.6 42.7 43 3 43.4 43.9 44.7 45.7 46.3 47.3 48.4 50.0 50.9 51.5 52.1 52.6 52 9 53.6 54.5 55.3 56.0 52.5 52.2 51.8 52.2 51.3 50.2 48.3 489 50.9 49 6 47.4 46.7 47.5 46 9 46.1 45.2 44 5 45.7 48.2 484 48.3 49.4 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 54.7 54.7 58.2 58 7 59.4 59.1 58.9 58.7 58.8 588 58.3 58.2 582 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 65.5 65.8 64.0 64.2 64.9 64.4 64.8 64.3 64.5 641 63.2 63.0 631 62.9 63.0 62 8 62.2 62.1 618 fiO9 60.2 60.5 60.3 59.6 59.8 60.4 62.2 62.2 61.7 61.3 61.6 621 62.6 63.3 63.7 64.3 65 3 65.4 65.4 65 5 65.5 65.8 65 7 65.7 65.7 65 7 65 8 65.6 6 t )0 65.0 65.1 fiSl 65.2 65.4 6S4 65.3 65.4 fiM KM 65.3 763 76.2 76.3 76 2 76.2 76.4 76 3 76.2 76.3 761 76 4 76.3 54 8 54.9 55.0 551 55.2 55.5 55 5 55.6 55.5 55 6 55 5 55.4 534 54.5 54.9 55 5 55.1 55.4 54 6 54.9 54.9 54 9 54 4 53.4 65.8 65.8 65.8 65.8 66.0 65.8 65.9 66.1 65.8 66.0 66.1 66.1 65.4 65.5 65.5 65.5 65.7 65.5 BSfi 65.7 65.5 65.7 6S7 65.7 76.4 76.4 76.2 76.2 76.3 76.0 76.0 76.3 76.0 76.1 76.1 76.1 55.5 55.7 55.7 55.8 56.1 55.9 56.1 56.2 56.0 56.2 56.3 56.4 54.3 54.7 54.3 54.2 55.2 53.6 54.0 56.3 54.4 55.1 54.8 55.5 Total Total Males Females Both sexes 16-19 years White Black and other Black 59.9 60.2 59.8 58.8 59.0 59.8 61.5 61.4 61.0 60.8 61.0 615 62.2 62.9 63.3 63.8 56.6 58.2 58.2 58.0 56.4 57.5 58.2 57.8 56.1 56.7 56.8 56.1 56.3 56.1 56.4 56.9 57.6 58.0 58.2 58.7 580 57.2 57.5 58.3 58.3 56.5 57.3 58.3 59.7 60.3 59.6 59.4 58.2 58 3 59.9 60.5 61.1 61.9 56.6 55.4 56.1 57,3 57.3 57.1 55.5 56.7 57.5 57.1 55.4 56.0 56.1 554 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 60.7 61.5 83.5 81.3 82.0 84.0 83.9 83.6 81.0 81.8 82.3 81.3 78.5 79.3 78.9 77.6 77.7 77.1 77.3 77.5 77.9 78.0 77.8 77.6 76.2 74.9 75.0 75.5 74.9 71.7 72.0 72.8 73.8 73.8 72.0 71.3 69.0 68 8 70.7 70.9 71.0 71.5 31.3 31.2 32.0 33.1 33.4 33.3 32.5 34.0 35.1 35.1 34.5 35.0 35.5 35.4 35.6 35.8 36.3 37.1 38.3 39.0 39.6 40.7 40.8 40.4 41.0 42.0 42.6 42.0 43.2 44.5 46.4 47.5 47.7 48.0 47.7 48.0 49.5 50.4 51.4 52.5 47.7 45.2 45.5 47.9 46.9 46.4 42.3 43.5 45.3 43.9 39.9 39.9 40.5 39.1 39.4 37.4 37.3 38.9 42.1 42.2 42.2 43.4 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 44.6 45.5 55 2 565 57.3 56.8 55.3 55.9 55.9 55.3 55.4 55.3 55.5 56.0 56.8 57.2 57.4 58.0 57.5 56.8 57.4 58.2 58.3 56.7 57.5 58.6 60.0 60.6 60.0 60.0 58.8 58.9 60.5 61.0 61.5 62.3 580 58 7 59.5 59.3 56.7 57.5 57.9 56.2 56.3 56.2 57.0 57.8 58.4 58.2 58.0 58.1 56.8 54.9 54.1 55.0 54.3 51.4 52.0 52.5 54.7 55.2 53.6 52.6 50.9 51.0 53.6 54.7 55.4 56.8 53.7 54.5 53.5 50.1 50.8 51.4 53.6 53.8 52.3 51.3 49.4 49 S 52.3 53.4 54.1 55.6 65 2 65.3 65.3 65 3 65.3 65.7 65 6 65.6 65.6 65 6 65 7 65.6 63 7 63 2 63.5 63.0 64.0 . 63.6 64 0 63 8 64.0 63.9 64.2 63.8 63 6 63 0 63.2 62.5 63.7 63.2 63.8 63 4 63 7 63 2 63.5 63.1 610 60.7 60.8 60 9 60.8 61.1 61.1 61.2 61.2 61.2 613 61.3 60 6 60.4 60.5 60 5 60.5 60.8 60 8 60.9 60.8 60.8 60.9 61.0 713 70.9 70.9 70.9 70.8 71.0 70.9 71.0 70.9 70.8 71.1 71.1 51.0 50.8 51.0 51.0 51.2 51.5 51.6 51.7 51.6 51.8 51.7 51.7 43.7 44.3 44.9 44.8 44.8 44.9 44.7 44.9 44.7 45.3 44.6 44.1 61.5 61.2 61.3 61.3 61.3 61.6 61.6 61.8 61.7 61.7 61.8 61.8 55.4 55.2 55.5 55.3 55.4 55.4 55.4 54.9 55.3 55.6 55.6 55.7 54 0 53.8 54.2 54 4 54.6 54.2 54 0 53.3 53.8 54? 54? 54.4 65.7 65.7 65.7 65.7 65.9 65.7 65.7 65.9 65.7 65.9 fi5 9 66.0 64.0 64.1 64.2 63.9 64.0 63.9 64.3 64.5 64.0 64.5 64 8 64.7 63.4 63.8 63.5 63.0 63.5 63.4 64.0 64.5 63.8 64.3 64.4 64.4 61.4 61.5 61.5 61.7 61.9 61.8 61.9 62.1 62.0 62.1 62.2 62.3 61.1 61.2 61.2 61.3 61.5 61.5 61.6 61.8 61.6 61.8 61.9 61.9 71.2 71.3 71.2 71.3 71.4 71.3 71.5 71.6 71.6 71.7 71.7 71.7 51.8 52.0 52.1 52.3 52.6 52.5 52.6 52.8 52.6 52.8 52.9 53.1 44.7 44.9 44.6 44.8 45.4 45.0 45.5 47.2 45.5 45.7 45.7 46.6 61.9 62.0 62.0 62.1 62.4 62.3 62.3 62.5 62.4 62.5 62.6 62.7 56.0 56.0 56.2 56.4 56.3 56.6 57.0 57.2 57.0 57.6 57.7 57.6 54.5 54.8 54.7 54.8 54.8 55.2 55.9 56.4 55.9 56.5 56.6 56.6 1 Labor force including resident Armed Forces as percent of noninstitutional population including resident Armed Forces. Civilian labor force as percent of civilian noninstitutional population in croup specified. Employment as percent of noninstitutional population in group specified. Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 2 3 289 TABLE B-37.—Civilian labor force participation rate by demographic characteristic, 1954-87 [Percent;1 monthly data seasonally adjusted] Black and other or black White Year or month All civilian work- Total ers Total 16-19 years Males 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 Black and other 1954 1955 1956 1957 1958 1959 58.8 59.3 60.0 59.6 59.5 59.3 58.2 58.7 59.4 59.1 58.9 58.7 85.6 85.4 85.6 84.8 84.3 83.8 57.6 58.6 60.4 59.2 56.5 55.9 87.8 87.5 87.6 86.9 86.6 86.3 33.3 34.5 35.7 35.7 35.8 36.0 40.6 40.7 43.1 42.2 40.1 39.6 32.7 34.0 35.1 35.2 35.5 35.6 64.0 64.2 64.9 64.4 64.8 64.3 85.2 85.1 85.1 84.2 84.1 83.4 61.2 60.8 61.5 58.8 57.3 55.5 87.1 87.8 87.8 87.0 87.1 86.7 46.1 46.1 47.3 47.1 48.0 47.7 31.0 32.7 36,3 33.2 31.9 28.2 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 59.4 59.3 58.8 58.7 58.7 58.9 59.2 59.6 59.6 60.1 58.8 58.8 58.3 58.2 58.2 58.4 58.7 59.2 59.3 59.9 83.4 83.0 82.1 81.5 81.1 80.8 80.6 80.6 80.4 80.2 55.9 54.5 53.8 53.1 52.7 54.1 55.9 56.3 55.9 56.8 86.0 85.7 84.9 84.4 84.2 83.9 83.6 83.5 83.2 83.0 36.5 36.9 36.7 37.2 37.5 38.1 39.2 40.1 40.7 41.8 40.3 40.6 39.8 38.7 37.8 39.2 42.6 42.5 43.0 44.6 36.2 36.6 36.5 37.0 37.5 38.0 38.8 39.8 40.4 41.5 64.5 64.1 63.2 63.0 63.1 62.9 63.0 62.8 62.2 62.1 83.0 82.2 80.8 80.2 80.1 79.6 79.0 78.5 77.7 76.9 57.6 55.8 53.5 51.5 49.9 51.3 51.4 51.1 49.7 49.6 86.2 85.5 84.2 83.9 84.1 83.7 83.3 82.9 82.2 81.4 48.2 48.3 48.0 48.1 48.6 48.6 49.4 49.5 49.3 49.8 32.9 32.8 33.1 32.6 31.7 29.5 33.5 35.2 34.8 34.6 1970 1971 1972 60.4 60.2 60.4 60.2 60.1 60.4 80.0 79.6 79.6 57.5 57.9 60.1 82.8 82.3 82.0 42.6 42.6 43.2 45.6 45.4 48.1 42.2 42.3 42.7 61.8 60.9 60.2 76.5 74.9 73.9 47.4 44.7 46.0 81.4 80.0 78.6 49.5 49.2 48.8 34.1 31.2 32.3 1972 1973 1974 1975 1976 1977 1978 1979 60.4 60.8 61.3 61.2 61.6 62.3 63.2 63.7 60.4 60.8 61.4 61.5 61.8 62.5 63.3 63.9 79.6 79.4 79.4 78.7 78.4 78.5 78.6 78.6 60.1 62.0 62.9 61.9 62.3 64.0 65.0 64.8 82.0 81.6 81.4 80.7 80.3 80.2 80.1 80.1 43.2 44.1 45.2 45.9 46.9 48.0 49.4 50.5 48.1 50.1 51.7 51.5 52.8 54.5 56.7 57.4 42.7 43.5 44.4 45.3 46.2 47.3 48.7 49.8 59.9 60.2 59.8 58.8 59.0 59.8 61.5 61.4 73.6 73.4 72.9 70.9 70.0 70.6 71.5 71.3 46.3 45.7 46.7 42.6 41.3 43.2 44.9 43.6 78.5 78.4 77.6 76.0 75.4 75.6 76.2 76.3 48.7 49.3 49.0 48.8 49.8 50.8 53.1 53.1 32.2 34.2 33.4 34.2 32.9 32.9 37.3 36.8 1980 1981 1982 1983... 1984 ... 1985 1986 1987 63.8 63.9 64.0 64.0 64.4 64.8 65.3 65.6 64.1 64.3 64.3 64.3 64.6 65.0 65.5 65.8 78.2 77.9 77.4 77.1 77.1 77.0 76.9 76.8 63.7 62.4 60.0 59.4 59.0 59.7 59.3 59.0 79.8 "51.2 79.5 51.9 79.2 52.4 78.9 52.7 78.7 53.3 78.5 54.1 78.5 55.0 78.4 55.7 56.2 55.4 55.0 54.5 55.4 55.2 56.3 56.5 50.6 51.5 52.2 52.5 53.1 54.0 54.9 55.6 61.0 60.8 61.0 61.5 62.2 62.9 63.3 63.8 70.3 70.0 70.1 70.6 70.8 70.8 71.2 71.1 43.2 41.6 39.8 39.9 41.7 44.6 43.7 43.6 75.1 74.5 74.7 75.2 74.8 74.4 74.8 74.7 53.1 53.5 53.7 54.2 55.2 56.5 56.9 58.0 34.9 34.0 33.5 33.0 35.0 37.9 39.1 39.6 1986:Jan Feb 65.0 65.0 65.1 65.1 65.2 65.4 65.2 65.3 65.3 65.3 65.3 65.7 76.9 76.9 76.9 76.9 76.8 77.0 57.6 59.1 58.4 59.6 59.6 60.0 78.6 78.5 78.5 78.4 78.3 78.5 54.5 54.6 54.7 54.7 54.8 55.2 55.4 56.8 57.0 56.7 56.2 56.4 54.4 54.4 54.5 54.5 54.7 55.1 63.2 63.0 63.6 63.8 63.9 63.8 71.5 71.1 71.7 71.6 72.0 71.7 43.7 45.4 45.8 45.8 48.5 44.4 75.2 74.6 75.1 75.0 75.2 75.3 56.5 56.5 57.0 57.6 57.3 57.4 39.6 38.6 41.9 42.2 38.5 42.6 65.4 65.3 65.4 65.4 65.4 65.3 65.6 65.6 65.6 65.6 65.7 65.6 76.9 76.8 77.0 76.9 77.1 77.1 59.3 59.8 60.4 59.8 60.0 57.7 78.4 78.3 78.5 78.4 78.6 78.8 55.3 55.3 55.2 55.3 55.2 55.1 55.4 56.0 55.8 56.9 56.3 56.3 55.3 55.3 55.2 55.2 55.1 55.0 63.0 62.5 63.2 63.4 63.2 63.1 71.1 70.0 70.9 71.1 70.6 70.8 43.4 40.3 42.7 42.4 39.8 41.7 74.8 74.0 74.6 74.9 74.7 74.6 56.4 56.4 56.9 57.1 57.3 56.8 36.2 36.0 39.5 39.2 38.2 37.6 65.4 65.5 65.5 65.5 65.7 65.5 65.7 65.7 65.7 65.7 65.9 65.7 77.0 77.1 76.9 76.8 77.0 76.8 59.3 60.3 59.0 58.5 59.3 57.6 78.6 78.5 78.4 78.4 78.5 78.4 55.2 55.3 55.4 55.5 55.8 55.6 56.3 55.9 56.0 56.5 57,8 55.8 55.2 55.3 55.4 55.5 55.7 55.6 63.4 63.8 63.5 63.0 63.5 63.4 71.3 71.2 70.9 70.7 71.1 70.5 43.7 43.0 41.5 42.1 41.7 40.3 74.9 74.9 74.8 74.4 75.0 74.5 57.1 57.8 57.5 56.8 57.2 57.6 35.7 40.2 38.7 37.2 38.4 38.8 65.6 65.7 65.5 65.7 65.7 65.7 65.7 65.9 65.7 65.9 65.9 66.0 76.6 76.8 76.7 76.9 76.8 76.8 57.1 78.3 59.9 78.2 58.6 78.2 59.3 .78.4 58.7 78.3 60.1 78.2 55.7 55.9 55.7 55.8 55.9 56.0 56.7 57.1 55.7 56.5 56.7 57.0 55.7 55.8 55.7 55.7 55.8 55.9 64.0 64.5 63.8 64.3 64.4 64.4 71.2 71.8 70.9 70.9 71.1 71.0 42.2 48.4 43.3 44.5 45.8 45.6 75.1 74.9 74.5 74.3 74.5 74.3 58.1 58.5 58.0 59.0 58.9 59.1 37.4 41.5 42.3 43.1 40.8 41.8 Black Mar fezi June July Aug Sept Oct Nov Dec 1987:Jan Feb Mar Jay"."!'.'.."' 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-32. Source: Department of Labor, Bureau of Labor Statistics. 290 TABLE B-38,—Civilian employment/population ratio by demographic characteristic, 1954-87 [Percent1; monthly data seasonally adjusted] White Year or month A!) civilian workers Black and other or black Males Females Total 16-19 years 20 years and over Total Males Total 16-19 years 20 years and over Total Total 16-19 years Females 20 years and over Total 16-19 years 20 years and over Black and other 1954 1955 1956 1957 1958 1959 55.5 56.7 57.5 57.1 55.4 56.0 55.2 56.5 57.3 56.8 55.3 55.9 81.5 82.2 82.7 81.8 79.2 79.9 49.9 52.0 54.1 52.4 47.6 48.1 84.0 84.7 85.0 84.1 81.8 82.8 31.4 33.0 34.2 34.2 33.6 34.0 36.4 37.0 38.9 38.2 35.0 34.8 31.1 32.7 33.8 33.9 33.5 34.0 58.0 58.7 59.5 59.3 56.7 57.5 76.5 77.6 78.4 77.2 72.5 73.8 52.4 52.7 52.2 48.0 42.0 41.4 79.2 80.4 81.3 80.5 76.0 77.6 41.9 42.2 43.0 43.7 42.8 43.2 24.7 26.4 28.0 26.5 22.8 20.3 43.7 43.9 44.7 45.5 45.0 45.7 1960 1961 1962 1963 1964 1965 1966 1967 1969 56.1 55.4 55.5 55.4 55.7 56.2 56.9 57.3 57.5 58.0 55.9 55.3 55.4 55.3 55.5 56.0 56.8 57.2 57.4 58.0 79.4 78.2 78.4 77.7 77.8 77.9 78.3 78.4 78.3 78.2 48.1 45.9 46.4 44.7 45.0 47.1 50.1 50.2 50.3 51.1 82.4 81.4 81.5 81.1 81.3 81.5 81.7 81.7 81.6 81.4 34.6 34.5 34.7 35.0 35.5 36.2 37.5 38.3 38.9 40.1 35.1 34.6 34.8 32.9 32.2 33.7 37.5 37.7 37.8 39.5 34.5 34.5 34.7 35.2 35.8 36.5 37.5 38.3 39.1 40.1 57.9 56.2 56.3 56.2 57.0 57.8 58.4 58.2 58.0 58.1 74.1 71.7 72.0 71.8 72.9 73.7 74.0 73.8 73.3 72.8 43.8 41.0 41.7 37.4 37.8 39.4 40.5 38.8 38.7 39.0 77.9 75.5 75.7 76.2 77.7 78.7 79.2 79.4 78.9 78.4 43.6 42.6 42.7 42.7 43.4 44.1 45.1 45.0 45.2 45.9 24.8 23.2 23.1 21.3 21.8 20.2 23.1 24.8 24.7 25.1 45.8 44.8 44.9 45.2 46.1 47.3 48.2 47.9 48.2 48.9 1970... 1971... 1972... 57.4 56.6 57.0 57.5 56.8 57.4 76.8 75.7 76.0 49.6 49.2 51.5 80.1 79.0 79.0 40.3 39.9 40.7 39.5 38.6 41.3 40.4 40.1 40.6 56.8 54.9 54.1 70.9 68.1 67.3 35.5 31.8 32.4 76.8 74.2 73.2 44.9 43.9 43.3 22.4 20.2 19.9 48.2 47.3 46.7 1972 1973 1974 1975 1976 1977 1978 1979 57.0 57.8 57.8 56.1 56.8 57.9 59.3 59.9 57.4 58.2 58.3 56.7 57.5 58.6 60.0 60.6 76.0 76.5 75.9 73.0 73.4 74.1 75.0 75.1 51.5 54.3 54.4 50.6 51.5 54.4 56.3 55.7 79.0 79.2 78.6 75.7 76.0 76.5 77.2 77.3 40.7 41.8 42.4 42.0 43.2 44.5 46.3 47.5 41.3 43.6 44.3 42.5 44.2 45.9 48.5 49.4 40.6 41.6 42.2 41.9 43.1 44.4 46.1 47.3 53.7 54.5 53.5 50.1 50.8 51.4 53.6 53.8 66.8 67.5 65.8 60.6 60.6 61.4 63.3 63.4 31.6 32.8 31.4 26.3 25.8 26.4 28.5 28.7 73.0 73.7 71.9 66.5 66.8 67.5 69.1 69.1 43.0 43.8 43.5 41.6 42.8 43.3 45.8 46.0 19.2 22.0 20,9 20.2 19.2 18.5 22.1 22.4 46.5 47.2 46.9 44.9 46.4 47.0 49.3 49.3 1980 1981 1982 1983 1984 1985 1987 59.2 59.0 57.8 57.9 59.5 60.1 60.7 61.5 60.0 60.0 58.8 58.9 60.5 61.0 61.5 62.3 73.4 72.8 70.6 70.4 72.1 72.3 72.3 72.7 53.4 51.3 47.0 47.4 49.1 49.9 49.6 49.9 75.6 75,1 73.0 72.6 74.3 74.3 74.3 74.7 47.8 48.3 48.1 48.5 49.8 50.7 51.7 52.8 47.9 46.2 44.6 44.5 47.0 47.1 47.9 49.0 47.8 48.5 48.4 48.9 50.0 51.0 52.0 53.1 52.3 51.3 49.4 49.5 52.3 53.4 54.1 55.6 60,4 59.1 56.0 56.3 59.2 60.0 60.6 62.0 27.0 24.6 20.3 20.4 23.9 26.3 26.5 28.5 65.8 64.5 61.4 61.6 64.1 64.6 65.1 66.4 45.7 45.1 44.2 44.1 46.7 48.1 48.8 50.3 21.0 19.7 17.7 17.0 20.1 23.1 23.8 25.8 49.1 48.5 47.5 47.4 49.8 50.9 51.6 53.0 1986:Jan Feb Mar..., Apr May.... June.., 60.6 60.4 60.5 60.5 60.5 60.8 61.5 61.2 61.3 61.3 61.3 61.6 72.6 72.3 72.2 72.2 72.0 72.3 48.9 49.3 49.3 49.6 49.6 49.6 74.7 74.3 74.2 74.2 73.9 74.3 512 51.0 51.3 51.3 51.4 51.8 46.9 48.1 49.1 47.8 47.9 48.1 51.6 51.3 51.5 51.5 51.7 52.1 54.0 53.8 54.2 54.4 54.6 54.2 60.8 60.4 60.9 60.9 61.4 60.8 25.6 27.7 26.4 27.4 29.6 26.8 65.5 64.8 65.5 65.3 65.6 65.4 48.5 48.5 48.9 49.1 49.0 48.8 23.2 23.5 24.5 24.3 23.2 25.6 51.4 51.2 51.5 51.8 51.8 51.4 July Aug.... Sept... 60.8 60.9 60.8 60.8 60.9 61.0 61.6 61.8 61.7 61.7 61.8 61.8 72.2 72.4 72.3 72.2 72.4 72.5 49.8 49.9 50.3 50.4 50.2 48.6 74.2 74.3 74.2 74.1 74.4 74.6 52.0 52.1 51.9 52.1 52.0 52.0 47.2 47.9 47.4 48.5 47.6 48.2 52.3 52.4 52.3 52.3 52.3 52.4 54.0 53.3 53.8 54.2 54.2 54.4 60.6 59.5 60.0 60.3 60.4 61.2 25.6 24.0 26.0 26.1 25.7 26.6. 65.2 64.2 64.5 64.9 65.1 65.8 48.7 48.2 48.9 49.2 49.1 48.9 23.0 20.3 23.7 26.2 24.2 23.7 51.5 51.3 51.6 51.7 51.8 51.6 1987:Jan Feb Mar... Apr.... May... June.. 61.1 61.2 61.2 61.3 61.5 61.5 61.9 62.0 62.0 62.1 62.4 62.3 72.5 72.6 72.4 72.5 72.7 72.6 49.7 50.7 49.1 48.9 49.2 49.1 74.5 74.5 74.5 74.5 74.7 74.6 52.1 52.3 52.4 52.6 52.9 52.8 48.4 48.0 48.3 49.0 50.1 48.6 52.4 52.6 52.7 52.9 53.1 53.1 54.5 54.8 54.7 54.8 54.8 55.2 61.4 61.4 61.4 61.6 61.1 61.5 27.7 26.7 26.5 26.2 25.8 27.7 65.8 66.0 66.1 66.3 65.8 66.0 48.9 49.5 49.2 49.3 49.6 50.1 20.6 24.9 24.0 23.7 24.3 25.0 51.9 52.2 51.9 52.1 52.4 52.9 July.... Aug... Sept.. Oct.... Nov.... Dec... 61.6 61.8 61.6 61.8 61.9 61.9 62.3 62.5 62.4 62.5 62.6 62.7 72.6 72.8 72.7 72.8 72.9 73.0 49.4 50.8 49.8 50.3 50.0 51,1 74.7 74.7 74.7 74.8 74.9 74.9 52.9 53.0 52.8 53.0 53.1 53.2 49.3 49.8 48.2 48.7 49.2 50.0 53.2 53.3 53.2 53.3 53.4 53.5 55.9 56.4 55.9 56.5 56.6 56.6 62.2 62.9 62.6 62.7 62.7 62.5 28.6 32.1 29.6 30.1 31.1 30.4 66.7 66.9 67.0 67.0 66.9 66.8 50.7 51.2 50.5 51.5 51.6 51.7 25.0 30.2 29.6 27.9 26.2 27.9 53.5 53.5 52.7 54.0 54.3 54.3 1968 Black Oct Nov Dec 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-32. Source: Department of Labor, Bureau of Labor Statistics. 291 TABLE B-39.—Unemployment rate, 1948-87 [Percent; monthly data seasonally adjusted] Year or month Unemployment UnemployMales Females ment All rate, civil20 20 all ian 16- years 16work- work- Total 19 years Total 19 and and ers » ers years over years rate, civilian workers 2 Both sexes 1619 years 3.8 5.9 9.8 14.3 8.3 12.3 9.2 13.4 Black White and Black other Experienced wage and salary workers Married men, spouse present 3 5.9 8.9 4.3 6.8 3.5 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 17 4.0 2.6 2.3 2.8 5.1 3.6 57 6.8 5.6 5.6 5.0 4.3 3.5 3.6 3.4 3.3 37 4.6 3.6 3.4 2.8 2.4 1.9 1.8 1.6 1.5 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 12.7 8.1 8.9 7.9 13.5 11.6 11.1 12.4 17.1 15.3 11.4 8.3 8.0 7.2 11.4 10.2 11.2 10.6 14.3 13.5 12.2 8.2 8.5 7.6 12.6 11.0 11.1 11.6 15.9 14.6 3.5 5.6 4.9 3.1 2.8 2.7 5.0 3.9 3.6 3.8 6.1 4.8 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 15.3 17.1 14.7 17.2 15.8 14.1 11.7 12.3 11.6 11.4 13.9 16.3 14.6 17.2 16.6 15.7 14.1 13.5 14.0 13.3 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 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 15.0 16.6 15.9 13.9 15.6 20.1 19.2 17.3 15.8 15.9 15.6 17.2 16.7 15.3 16.6 19.7 18.7 18.3 17.1 16.4 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 9.0 9.9 13.8 13.1 13.1 11.9 11.3 10.4 9.4 10.5 14.8 14.0 14.0 12.8 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 27 5.1 4.2 3.6 2.8 2.8 1980 1981 1982 1983 1984 1985 1986 1987 7.0 7.5 9.5 9.5 7.4 7.1 6.9 6.1 7.1 7.6 9.7 9.6 7.5 7.2 7.0 6.2 18.3 20.1 24.4 23.3 19.6 19.5 19.0 17.8 17.2 19.0 21.9 21.3 18.0 17.6 17.6 15.9 17.8 19.6 23.2 22.4 18.9 18.6 18.3 16.9 6.3 6.7 8.6 8.4 6.5 6.2 6.0 5.3 13.1 14.2 17.3 17.8 14.4 13.7 13.1 11.6 14.3 15.6 18.9 19.5 15.9 15.1 14.5 13.0 6.9 7.3 9.3 9.2 7.1 6.8 6.6 5.8 4.2 4.3 6.5 6.5 4.6 4.3 4.4 3.9 1986: Jan.... Feb.... Mar... Apr.... May... June.. 6.6 7.1 7.0 7.0 7.1 7.0 6.7 7.2 7.1 7.1 7.2 7.1 18.3 19.4 18.9 19.7 19.7 19.7 18.1 18.1 17.3 18.8 17.6 18.1 18.2 18.8 18.1 19.2 18.7 18.9 57 6.3 6.1 6.1 6.2 6.2 13.0 13.1 13.3 13.6 13.4 13.6 14.5 14.6 14.7 14.8 14.6 15.0 6.3 67 67 67 6.8 6.6 4.3 4.4 4.5 4.2 4.5 4.5 July... Aug... Sept.. Oct.... Nov... Dec... 6.9 6.8 6.9 6.8 6.8 6.6 7.0 6.9 7.0 6.9 6.9 6.7 18.9 19.1 19.3 18.3 18.5 18.2 17.2 17.2 17.8 16.9 17.7 16.9 18.1 18.2 18.5 17.6 18.1 17.5 6.1 5.9 6.0 6.0 6.0 5.8 12.8 13.2 13.3 12.8 12.8 12.3 14.3 14.8 14.7 14.5 14.3 137 6.6 6.5 6.5 6.6 6.5 6.3 4.4 4.2 4.3 4.5 4.4 4.3 1987: Jan.... Feb.... Mar... 6.6 6.5 6.4 6.2 6.2 6.0 6.7 6.6 6.5 6.3 6.3 6.1 18.5 18.5 19.0 18.7 19.6 16.4 16.8 17.1 16.6 15.9 15.6 15.5 17.7 17.9 17.8 17.3 17.6 16.0 5.8 5.7 5.6 5.5 5.4 5.3 12.5 12.6 12.4 11.8 12.1 11.5 14.1 14.0 13.9 13.0 13.7 12.8 6.3 6.2 6.1 5.9 5.9 5.8 4.2 4.1 4.1 4.1 4.0 4.0 6.0 5.9 5.8 5.9 5.8 5.7 6.0 6.0 5.9 6.0 5.9 5.8 15.9 17.8 17.3 17.4 17.2 17.2 15.7 14.4 15.4 16.9 16.0 14.8 15.8 16.2 16.4 17.2 16.6 16.1 5.2 5.2 5.1 5.2 5.1 4.9 11.4 11.3 10.9 10.8 11.0 10.9 12.7 12.4 12.3 12.1 12.2 12.2 5.8 57 5.5 5.5 5.5 5.4 3.8 37 37 3.7 3.5 3.4 1948.. 1949.. May"!! JuneJuly... Aug... Sept.. Oct.... Nov... Dec... 1 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-32. Source: Department of Labor, Bureau of Labor Statistics. 2 3 292 TABLE B-40.—Civilian unemployment rate by demographic characteristic, 1948-87 [Percent;l monthly data seasonally adjusted] Black and other or blaclt White Year or month All civilian work- Total Total ers Females Males 16-19 years 20 years and over Total 16-19 years •ernaies Males 20 years and over Total Total 16-19 years 20 years and over Total 16-19 years 20 years and over Black and other 1948 1949 3.8 59 3.5 56 3.4 56 3.8 57 5.9 89 5.8 96 6.1 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 5.3 3.3 4.9 3.1 4.7 2.6 9.0 53 9.4 4.9 5.0 39 3.6 38 6.1 4.8 4.8 3.7 3.4 3.6 6.1 4.6 13.4 113 10.5 115 15.7 14.0 4.4 3.3 3.0 3.2 5.5 4.1 84 6.1 5.7 4.1 5.5 4.4 4.1 4.3 6.8 5.5 53 4.2 3.3 3.1 5.5 43 4.2 43 6.2 5.3 10.4 9.1 9.7 9.5 12.7 12.0 5.1 3.9 3.7 3.8 5.6 4.7 9.9 8.7 8.3 7.9 12.6 10.7 10.3 8.8 7.9 8.3 13.7 11.5 14.4 134 15.0 18 4 26.8 25.2 9.9 84 7.4 76 12.7 10.5 9.2 8.5 8.9 7.3 10.8 9.4 20.6 19 2 22.8 20 2 28.4 27.7 8.4 77 7.8 64 9.5 8.3 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 5.5 6.7 5.5 5.7 5.2 4.5 3.8 3.8 36 3.5 5.0 60 4.9 5.0 4.6 4.1 34 3.4 32 3.1 4.8 5.7 4.6 4.7 4.1 3.6 2.8 2.7 26 2.5 14.0 15.7 13.7 15.9 14.7 12.9 10 5 10.7 101 10.0 4.2 5.1 4.0 3.9 3.4 2.9 2.2 2.1 20 1.9 5.3 6.5 5.5 5.8 5.5 5.0 43 4.6 43 4.2 12.7 14.8 12.8 15.1 14.9 14.0 12.1 11.5 12.1 11.5 4.6 5.7 4.7 4.8 4.6 4.0 3.3 3.8 3.4 3.4 10.2 12.4 10.9 10.8 9.6 8.1 7.3 7.4 6.7 6.4 10.7 12.8 10.9 10.5 8.9 7.4 61 6.0 5.6 5.3 24.0 26 8 22.0 27.3 24.3 23.3 21.3 23.9 22.1 21.4 9.6 117 10.0 9.2 7.7 6.0 4.9 4.3 3.9 3.7 9.4 11.9 11.0 11.2 10.7 9.2 8.7 9.1 8.3 7.8 24.8 29.2 30.2 34.7 31.6 31.7 31.3 29.6 28.7 27.6 8.3 10 6 9.6 9.4 9.0 7.5 66 7.1 63 5.8 1970 1971 1972 4.9 59 5.6 4.5 54 5.1 4.0 49 4.5 13.7 151 14.2 3.2 40 3.6 5.4 63 5.9 13.4 151 14.2 4.4 5.3 4.9 8.2 99 10.0 7.3 9.1 25.0 28 8 29.7 5.6 7.3 9.3 10.9 11.4 34.5 35.4 38.4 6.9 8.7 8.8 1972 1973 1974 1975 1976 1977 1978 1979 5.6 4.9 5.6 85 7.7 71 6.1 5.8 45 3.8 4.4 72 6.4 55 4.6 4.5 14 2 12.3 13.5 183 17.3 15 0 13.5 13.9 36 3.0 3.5 62 5.4 47 3.7 3.6 4.9 4.3 5.1 75 6.8 6.2 5.2 5.0 10.4 9.4 10.5 14 8 14.0 140 12.8 12.3 93 8.0 9.8 14.8 13.7 13.3 11.8 11.4 31.7 27.8 33.1 38.1 37.5 39.2 36.7 34.2 6.0 7.4 12.5 11.4 10.7 9.3 9.3 11.8 11.1 11.3 14.8 14.3 14.9 13.8 13.3 40.5 36.1 37.4 41.0 41.6 43.4 40.8 39.1 9(1 8.6 8.8 1?? 11.7 7.1 76 9.7 9.6 75 7.2 7.0 6.2 6.1 65 8.8 8.8 64 6.1 6.0 5.4 16.2 17 9 21.7 20.2 168 16.5 16.3 15.5 5.3 56 7.8 7.9 57 5.4 5.3 4.8 59 5.3 6.1 86 7.9 73 6.2 5.9 6.5 69 8.3 7.9 65 6.4 6.1 5.2 14 2 13.0 14.5 17 4 16.4 15 9 14.4 14.0 1980 1981 1982 1983 1984 1985 1986 1987 51 4.3 5.0 78 7.0 62 5.2 5.1 6.3 67 8.6 8.4 65 6.2 6.0 5.3 14.8 16 6 19.0 18.3 15 2 14.8 14.9 13.4 5.6 59 7.3 6.9 58 5.7 5.4 4.6 14.3 156 18.9 19.5 15 9 15.1 14.5 13.0 14.5 15 7 20.1 20.3 16.4 15.3 14.8 12.7 37.5 40 7 48.9 48.8 42 7 41.0 39.3 34.4 12.4 13.5 17.8 18.1 14.3 13.2 12.9 11.1 14.0 15.6 17.6 18.6 15.4 14.9 14.2 13.2 39.8 42.2 47.1 48.2 42.6 39.2 39.2 34.9 11.9 114 15.4 16.5 1986- Jan Feb 6.7 7.2 71 7.1 7.2 7.1 5.7 6.3 61 6.1 6.2 6.2 5.5 6.0 60 6.0 fi? 6.1 15.1 16.5 15 6 16.8 16.8 17.3 4.9 5.4 5.4 5.3 5.5 5.4 6.0 6.6 63 6.3 6.2 6.2 15.2 15.4 13.9 15.6 14.8 14.8 5.3 5.9 5.6 5.5 5.5 5.5 14.5 14.6 14.7 14.8 14.6 15.0 14.9 15.1 15.1 14.9 147 15.1 41.3 39.1 42.5 40.2 39.0 39.6 12.9 13.1 12.8 12.9 12.7 13.2 14.1 14.1 14.3 14.8 14.5 14,9 41.4 39.2 41.4 42.5 39.7 39.8 12.1 7.0 61 59 60 6.0 6.0 5.8 6.1 58 61 6.1 6.1 5.9 16 0 6.0 59 59 6.0 5.9 5.6 14.8 14 5 14 9 14.7 15.4 14.5 5.4 14.3 14.8 14 7 14.5 14.3 13.7 14.9 15.0 15.4 15.1 14.4 13.5 41.0 40.4 39.2 38.3 35.5 36.2 12.8 13.2 13.6 13.4 12.9 11.8 13.7 14.5 14.1 13.9 14,2 13.9 36.5 43.7 16 6 15.7 16.4 15.8 5.4 51 54 5.4 5.4 5.3 1?1 12 5 1?? 12.6 36.5 37.1 12.3 58 57 56 5.5 5.4 5.3 59 58 5.8 5.6 5.6 5.5 161 16 0 16.8 16.3 17.0 14.8 52 51 5.0 4.9 4.8 4.9 56 55 5.4 5.3 5.2 5.1 14.0 5.0 14.1 14 0 13.9 13.0 13.7 12.8 13.9 13.7 36.5 37.9 36.1 37.8 38.3 31.4 12.1 11.9 11.6 11.0 12.3 11.4 14.4 14.3 14.4 13.2 13.2 12.9 42.3 38.0 38.0 36.3 36.6 35.4 12 6 12 7 11.6 11.6 11.3 52 52 5.1 52 5.1 4.9 5.2 52 5.1 5.3 5.1 4.9 13.5 4.7 46 4.4 4.6 4.4 4.3 5.1 51 5.1 5.0 5.0 4.9 32.4 33.7 31.5 32.5 32.2 33.5 11.2 10.7 10.1 12.8 12.4 9.8 12.8 12.5 12.5 33.1 27.1 30.0 35,? 35.8 33.4 3.0 2.9 2.8 2.7 2.5 2.5 5,4 4,5 79 4.8 8.9 6.9 Black Mar JfayZZZZ June July Aug Sept Oct 69 70 Nov Dec 6.9 6.9 6.7 1987-Jan 67 Feb Mar.... Apr May June July 66 6.5 6.3 6.3 6.1 6.0 Oct 60 5.9 6.0 Nov Dec 5.9 5.8 SeDt 165 152 15.1 15.1 14.8 14.9 141 13.7 13.3 13.3 13.0 13.1 12.9 13.4 13.8 13.3 12.3 1 Unemployed as percent of civilian labor force in group specified. Note.—See footnote 5 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 293 5.2 5.2 5.2 5.1 4.9 4.8 4.7 4.6 4.5 4.4 4.5 4.4 4.5 4.3 4.4 4.4 12.7 12.4 12.3 12.1 12.2 12.2 113 12.9 14.1 12.7 12 5 117 115 11.8 11.9 7.0 10.2 10.1 130 11? 10.9 13.1 11.6 1?? 12.7 12 9 114 113 11.7 in 10.8 10.9 TABLE B-41.—Unemployment by duration and reason, 1947-87 [Monthly data seasonally adjusted 1 ] Duration of unemployment Year or month Unemployment Less than 5 weeks 5-14 weeks 15-26 27 weeks and over Thousands of persons 16 years of age and over Reason for unemployment Average (mean) duration Weeks 1947 1948 1949 2,311 2,276 3,637 1,210 1,300 1,756 704 669 1,194 234 193 428 164 116 256 1950 1951 1952 1953 ... 1954 I.. 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 2 1968 1969 1970 1971 1972 1973 1974 1975 .... 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1986:Jan Feb.... Mar.... 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 1,450 1,177 1,135 1,142 1,605 1,335 1,412 1,408 1,753 1,585 425 166 148 132 495 366 301 321 785 469 357 137 84 78 317 336 232 239 667 571 503 728 534 535 491 404 287 271 256 242 454 804 585 553 482 351 239 177 156 133 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 4,093 5,016 4,882 4,365 5,156 7,929 7,406 6,991 6,202 6,137 7,637 8,273 10,678 10,717 8,539 8,312 8,237 7,425 7,847 8,427 8,330 8,373 8,444 8,441 2,139 2,245 2,242 2,224 2,604 2,940 2,844 2,919 2,865 2,950 3,295 3,449 3,883 3,570 3,350 3,498 3,448 3,246 1,055 574 516 482 U16 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 1,946 428 668 601 483 574 1,303 1,018 913 766 706 1,052 1,122 1,708 1,652 1,104 1,025 1,045 943 235 519 566 343 381 1,203 1,348 1,028 648 535 820 1,162 1,776 2,559 1,634 1,280 1,187 1,040 8.6 11.3 12.0 10.0 9.8 14.2 15.8 14.3 11.9 10.8 11.9 13.7 15.6 20.0 18.2 15.6 15.0 14.5 1,005 1,139 1,082 949 1,045 1,008 1,062 1,091 1,118 989 1,063 1,042 1,023 1,004 944 984 974 973 1,099 1,192 1,169 1,171 1,161 1,264 1,203 1198 1,237 1,215 1,172 1,152 1,164 1,125 1,111 1,076 1,093 1,056 975 1,062 987 957 935 899 15.0 15.4 14.6 14.6 14.7 15.1 15.2 15.5 15.4 15.2 15.0 15.0 Apr May.... June... July.... Aug.... Sept... Oct Nov.... Dec... 1987:Jan Feb.... Mar.... Apr May.... June... July.... Aug.... Sept... Oct Nov..., Dec..., 8,278 8,115 8,298 8,230 8,214 7,919 7,964 7,886 7,791 7,557 7,573 7,308 7,251 7,256 7,091 7,177 7,090 6,978 1,719 1,806 1,663 1,751 1,697 1,628 1,573 1634 1,594 1,629 3,331 3,520 3,510 3,615 3,574 3,463 3,425 3,453 3,416 3,419 3,374 3,335 3,365 3,343 3,352 3,195 3,308 3,138 3,186 3,203 3,220 3,223 3,218 3,229 2,470 2,539 3,311 2,937 2,451 2,509 2,557 2,196 2,466 2,588 2.597 2,675 2,720 2,690 2,546 2,393 2,555 2,547 2,589 2,403 2,489 2,444 2,411 2,256 2,165 2,151 2,144 2,142 1,949 2,093 2,029 1,968 945 834 917 844 899 892 1 2 Median duration Job losers Job leavers trants Thousands of persons 16 years of age and over 8.6 10.0 15.0 14.8 14.9 14.8 14.8 14.7 14.2 14.3 14.2 14.1 14.0 14.2 6.5 6.9 8.7 10.1 7.9 6.8 6.9 6.5 1,229 1,070 1,017 1,811 2.323 2,108 1,694 2,242 4.386 3,679 3.166 2.585 2,635 3.947 4,267 6.268 6,258 4,421 4,139 4,033 3.566 6.8 7.0 6.9 6.5 6.8 7.2 7.0 7.1 7.2 7.0 7.0 7.1 7.0 6.7 6.7 6.9 6.6 6.6 3,797 4,145 4.187 4.005 4,212 4,264 4,064 3.887 4,066 3,959 3.942 3,913 3,971 3.835 3,791 3,705 3.612 3,554 6.6 6.4 5.8 6.2 6.1 6.0 3,529 3,389 3.313 3,388 3,307 3,200 4.5 4.4 4.9 6.3 6.2 5.2 5.2 8.4 8.2 7.0 5.9 5.4 891 923 840 830 823 877 1,015 965 945 909 965 1,228 M72 1,456 1,340 l|463 1,892 1,928 1,963 1,857 1,806 1,927 2,102 2,384 2,412 2,184 2,256 2,160 1,974 992 976 986 1,105 999 1,018 1,011 976 1,027 1,015 1,058 1,024 2,085 2,264 2,168 2,211 2,177 2,113 2,222 2172 2,164 2,239 2,093 2,005 1,033 996 955 931 959 2,059 2,038 2,078 1,965 1,995 1,980 992 981 960 926 946 1,930 1,969 1.908 1,845 1,974 1.945 438 431 436 550 590 641 683 768 827 903 909 874 880 Because of independent seasonal adjustment of the various series, detail will not add to totals. Data for 1967 by reason for unemployment are not strictly comparable with those for later years and the total by reason is not equal to total unemployment. Note.—See footnote 5 and Note, Table 8-32. Source: Department of Labor, Bureau of Labor Statistics. 294 TABLE B-42.—Unemployment insurance programs, selected data, 1955-87 All programs Year or month Covered Insured unemployment (weekly aver- State programs Total benefits paid (millions of dollars) 2 * 40,018 42,751 43,436 44,411 45,728 46,334 46,266 47,776 48,434 49,637 51,580 54739 56,342 57,977 59,999 59,526 59,375 66,458 69,897 72,451 71,037 73,459 76,419 88,804 92,062 92,659 93,300 91,628 91,898 96,474 99,186 ' 101,099 Initial claims Exhaustions s Insured unemp!oy~ merit as percent covered Benefits paid Total (millions of dollars) 4 Average weekfy check (dollars) • 1,350.3 1,380.7 1,733.9 3,512.7 2,279.0 2,726.7 3,422.7 2,675.4 2,774.7 2,522.1 2,166.0 1,771.3 2,092.3 2,031.6 2,127.9 3,848.5 4,957.0 4,471.0 4,007.6 5,974.9 11,754.7 8,974.5 8,357.2 7,717.2 8,612.9 13,761.1 13,262.1 20,649.5 17,762.8 12,594.7 13,977.8 15,402.8 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 98.95 106.70 119.37 123.59 123.47 128.23 135.72 1,662.6 1,495.7 1,539.3 1,472.1 1,260.8 1,177 5 133.57 135.00 135.59 135.23 135.81 135.39 Weekly average; thousands Thousands 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 Insured unemployment 226 227 270 369 277 331 350 302 7 298 268 232 203 226 201 200 296 295 261 247 363 478 386 375 346 388 488 460 583 438 377 396 378 3.5 3.2 3.6 6.4 4.4 1,399 1,323 1,571 2,773 1,860 2,071 2,994 1,946 7 1,973 1,753 1,450 1,129 1,270 1,187 1,177 2,070 2,608 2,192 1,793 2,558 4,937 3,846 3,308 2,645 2,592 3,837 3,410 4,594 3,775 2,561 2,693 2,746 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 14,495.1 15,892.1 1,265 1,215 1,446 2,510 1,684 1,908 2,290 1,783 7 1,806 1,605 1,328 1,061 1,205 1,111 1,101 1,805 2,150 1,848 1,632 2,262 3,986 2,991 2,655 2,359 2,434 3,350 3,047 4,061 3,396 2,476 2,611 June.. 3,370 3,295 3,144 2,799 2,556 2,474 1,715.1 1,543.5 1,585.0 1,516.8 1,297.5 1,224.4 2,602 2,594 2,625 2,610 2,666 2,673 381 381 391 384 383 377 2.8 ** 2.8 2.8 2.8 2.8 2.9 2.9 July... Aug... Sept.. Oct.... Nov.... Dec... 2,632 2,483 2,335 2,296 2,478 2,841 1,368.1 1,211.6 1,192.6 1,196.1 1,074.9 1,507.5 2,675 2,688 2,694 2,622 2,571 2,529 375 390 372 364 356 355 2.8 2.9 2.9 2.8 2.7 2.7 1,315.7 1,166.8 1,152.5 1,157.6 1,130.6 1,466.7 134.13 135.05 136.90 138.01 137.51 137.86 1987: Jan.... Feb.... Mar... 3,276 3,155 2,933 2,526 2,216 2,108 1,599.2 1,554.1 1,662.6 1,413.1 1,116.0 1,135.2 2,523 2,470 2,439 2,367 2,321 2,297 363 361 342 334 333 331 2.7 2.6 2.6 2.5 2.4 2.4 1,532.7 1,499.8 1,606.8 1,372.1 1,084.3 1,105.3 139.11 140.79 140.98 140.22 140.53 139.66 2,210 2,030 1,800 1,759 1,931 1,143.8 1,031.3 978.3 991.6 2,273 2,223 2,102 2,035 2,037 2,090 329 307 289 293 303 317 2.4 2.3 2.2 2.1 2.1 2.2 1,114.9 1,005.0 952.7 967.4 866.3 138.13 139.07 140.19 141.52 138.97 1986: Jan... Feb... Mar.. fc June.. July... Aug... Sept.. Oct.... Nov.... Dec... 886.5 1,274.4 26 5S 4.8 5.6 4.4 4.3 3.8 3.0 2.3 2.5 2.2 2.1 3.4 4.1 3.5 2.7 3.5 6.0 4.6 3.9 3.3 2.9 3.9 3.5 4.6 3.9 2.8 2.9 "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). z ' Includes State. UCFE, RR, UCX, UCV (unemployment compensation for veterans, October 1952-January 1960), and SRA (Servicemen's Readjustment Act, September 1944-September 1951) programs. Also includes Federal and State extended benefit programs. Does not include FSB (Federal supplemental benefits), SUA (special unemployment assistance), and Federal Supplemental Compensation programs. 3 Covered workers who have completed at least 1 week of unemployment. 4 Annual data are net amounts and monthly data are gross amounts. 8 Individuals receiving final payments in benefit year. *7 For total unemployment only. 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. 295 TABLE B-43.—Employees on nonagricultural payrolls, by major industry, 1946^87 [Thousands of persons; monthly data seasonally adjusted] Goods-producing industries Manufacturing Year or month 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 .... 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 p 1986: Jan Feb.... Mar... May"!! June.. «:: It: Nov.... Dec... 1987: Jan.... Feb... Mar... IKPSV'.'.'. June.. July... Aug... Sept.. Oct.... Nov... Dec". Total 41,652 43,857 44,866 43,754 45,197 47,819 48,793 50,202 48,990 50,641 52,369 52,853 51,324 53,268 54,189 53,999 55,549 56,653 58,283 60,765 63,901 65,803 67,897 70,384 70,880 71,214 73,675 76,790 78,265 76,945 79,382 82,471 86,697 89,823 90,406 91,156 89,566 90,200 94,496 97,519 99,610 102,110 98,776 98,914 99,013 99,252 99,389 99,323 99,601 99,772 100,039 100,209 100,415 100,567 100,919 101,150 101,329 101,598 101,708 101,818 102,126 102,275 102,434 102,983 103,285 103,596 See next page for continuation of table. 296 Total 17,248 18,509 18,774 17,565 18,506 19,959 20,198 21,074 19,751 20,513 21,104 20,964 19,513 20,411 20,434 19,857 20,451 20,640 21,005 21,926 23,158 23,308 23,737 24,361 23,578 22,935 23,668 24,893 24,794 22,600 23,352 24,346 25,585 26,461 25,658 25,497 23,813 23,334 24,727 24,859 24,681 24,884 24,821 24,768 24,711 24,770 24,708 24,628 24,628 24,639 24,620 24,611 24,630 24,630 24,708 24,743 24,749 24,759 24,752 24,761 24,850 24,886 24,917 25,064 25,169 25,258 ting 862 955 994 930 901 929 898 866 791 792 822 828 751 732 712 672 650 635 634 632 627 613 606 619 623 609 628 642 697 752 779 813 851 958 1,027 1,139 1,128 952 966 927 783 742 886 867 838 812 786 769 764 748 739 735 730 724 718 719 722 729 735 738 744 751 759 764 759 759 Construction 1,683 2,009 2,198 2,194 2,364 2,637 2,668 2.659 2,646 2,839 3,039 2,962 2,817 3,004 2,926 2,859 2,948 3,010 3,097 3,232 3,317 3,248 3,350 3,575 3.588 3,704 3,889 4,097 4,020 3,525 3,576 3,851 4.229 4,463 4,346 4,188 3,905 3,948 4,383 4,673 4,904 5,031 4,810 4,811 4,830 4,919 4,910 4,900 4,924 4,946 4,948 4,942 4,946 4,936 5,034 5,038 5,032 5,019 4,999 5,008 5,002 5,006 4,989 5.053 5,074 5,122 Total ' 14,703 15,545 15,582 14,441 15,241 16,393 16,632 17,549 16,314 16,882 17.243 17,174 15,945 16,675 16,796 16,326 16,853 16,995 17,274 18.062 19.214 19,447 19,781 20,167 19,367 18,623 19,151 20,154 20,077 18,323 18,997 19,682 20,505 21,040 20,285 20,170 18,781 18,434 19,378 19,260 18,994 19,112 19,125 19,090 19,043 19,039 19,012 18,959 18,940 18.945 18,933 18,934 18.954 18,970 18,956 18.986 18.995 19.011 19.018 19,015 19,104 19,129 19,169 19,247 19,336 19,377 NondurDurable , able goods " goods 7,742 8,385 8,326 7,489 8,094 9,089 9,349 10,110 9,129 9,541 9,833 9,855 8,829 9,373 9,459 9,070 3,480 9,616 9,816 10,405 11,282 11.439 11,626 11,895 11,208 10,636 11,049 11,891 11,925 10,688 11,077 11,597 12,274 12,760 12,187 12,109 11.039 10,732 11,505 11,490 11,244 11,236 11.377 11.345 11.307 11,305 11,277 11,218 11,199 11,206 11,181 11,169 11,174 1U75 11.157 11,179 11,176 11,175 11,175 11.176 11,195 11,248 11.268 11,319 11,367 11,401 6,962 7,159 7,256 6,953 7,147 7,304 7,284 7,438 7,185 7,341 7,411 7,321 7,116 7,303 7,337 7,256 7,373 7,380 7,458 7,656 7,930 8,007 8,155 8,272 8,158 7,987 8,102 8,262 8,152 7,635 7,920 8,086 8,231 8,280 8,098 8,061 7,741 7,702 7,873 7,770 7,750 7,875 7,748 7,745 7,736 7,734 7,735 7,741 7,741 7,739 7,752 7,765 7,780 7,795 7,799 7,807 7,819 7,836 7,843 7,839 7,909 7,881 7,901 7,928 7,969 7,976 TABLE B-43.—Employees on nonagricultural payrolls, by major industry, 1946-87—Continued [Thousands of persons; monthly data seasonally adjusted] Service-producing industries Year or month 1946 1947 1948. 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973. 1974 1975. 1976 1977 1978 1979 1980 1981. 1982 1983 1984 1985 1986 1987 P 1986: Jan ..... Feb Mar..... May'"" June... July Aug Sept.... Oct Nov Dec 1987:Jan Feb Mar .. May.... June... July Aug Sept.... Oct Nov Dec.. Total 24,404 25,348 26,092 26,189 26,691 27,860 28,595 29,128 29,239 30,128 31,266 31,889 31,811 32,857 33,755 34,142 35,098 36,013 37,278 38,839 40,743 42,495 44,160 46.023 47,302 48,278 50,007 51,897 53,471 54,345 56,030 58,125 61,113 63,363 64,748 65,659 65,753 66,866 69,769 72,660 74,930 77,226 73,955 74,146 74,302 74,482 74,681 74,695 74,973 75,133 75,419 75,598 75,785 75,937 76,211 76,407 76,580 76,839 76,956 77,057 77,276 77,389 77,517 77,919 78,116 78,338 Transportation and public utilities 4,061 4,166 4,189 4,001 4,034 4,226 4,248 4,290 4,084 4,141 4,244 4,241 3,976 4,011 4,004 3,903 3,906 3,903 3,951 4,036 4,158 4,268 4,318 4,442 4,515 4,476 4,541 4,656 4,725 4,542 4,582 4,713 4,923 5,136 5,146 5,165 5,082 4,954 5,159 5,238 5,244 5,377 5,265 5,260 5,259 5,245 5,247 5,142 5,237 5,202 5,255 5,251 5,278 5,286 5,304 5,315 5,333 5,348 5,344 5,350 5,363 5,377 5,416 5,436 5,459 5,468 Wholesale trade 2,291 2,471 2,605 2,602 2,635 2,727 2,812 2,854 2,867 2,926 3,018 3,028 2,980 3,082 3,143 3,133 3,198 3,248 3,337 3,466 3,597 3,689 3,779 3,907 3,993 4,001 4,113 4,277 4,433 4,415 4,546 4,708 4,969 5,204 5,275 5,358 5,278 5,268 5,555 5,717 5,735 5,797 5,744 5,742 5,735 5,745 5,749 5,712 5,735 5,736 5,736 5,731 5,728 5,725 5,741 5,757 5,766 5,772 5,775 5,781 5,797 5,807 5,815 5,831 5,851 5,873 trade 6,084 6,485 6,667 6,662 6,751 7,015 7,192 7,393 7,368 7,610 7,840 7,858 7,770 8,045 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 15,035 15,189 15,179 15,613 16,545 17,356 17,845 18,262 17,635 17,670 17,731 17,756 17,798 17,821 17,866 17,913 17,939 17,980 18,009 18,007 18,080 18,140 18,136 18,197 18,205 18,226 18,274 18,256 18,314 18,408 18,443 18,433 Finance, insurance, and real 1,675 1,728 1,800 1,828 1,888 1,956 2,035 2,111 2,200 2,298 2,389 2,438 2,481 2,549 2,629 2,688 2,754 2,830 2,911 2,977 3,058 3,185 3,337 3,512 3,645 3,772 3,908 4,046 4,148 4,165 4,271 4,467 4,724 4,975 5,160 5,298 5,341 5,468 5.689 5,955 6,297 6,589 6,127 6,159 6,186 6,227 6,257 6,287 6,323 6,351 6,374 6,395 6,418 6,451 6,480 6,501 6,526 6,558 6,576 6,586 6,608 6,624 6,629 6,650 6,657 6,667 Government Services Total 4,697 5,025 5,181 5,240 5,357 5,547 5,699 5,835 5,969 6,240 6,497 6,708 6,765 7,087 7,378 7,620 7,982 8,277 8,660 9,036 9,498 10,045 10,567 11,169 11,548 11,797 12,276 12,857 13,441 13,892 14,551 15,303 16,252 17,112 17,890 18,619 19,036 19,694 20,797 22,000 23,099 24,138 22,617 22,696 22,772 22,868 22,971 23,080 23,202 23,284 23,317 23,369 23,452 23,544 23,670 23,759 23,842 23,926 24,025 24,083 24,214 24,279 24,295 24,406 24,493 24,623 5,595 5,474 5,650 5,856 6,026 6,389 6,609 6,645 6,751 6,914 7,278 7,616 7,839 8,083 8,353 8,594 8,890 9,225 9,596 10,074 10,784 11,391 11,839 12,195 12,554 12,881 13,334 13,732 14,170 14,686 14,871 15,127 15,672 15,947 16,241 16,031 15,837 15,869 16,024 16,394 16,711 17,063 16,567 16,619 16,619 16,641 16,659 16,653 16,610 16,647 16,798 16,872 16,900 16,924 16,936 16,935 16,977 17,038 17,031 17,031 17,020 17,046 17,048 17,188 17,213 17,274 Federal 2,254 1,892 1,863 1,908 1,928 2,302 2,420 2,305 2,188 2,187 2,209 2,217 2,191 2,233 2,270 2,279 2,340 2,358 2348 2,378 2,564 2,719 2,737 2,758 2,731 2,696 2,684 2,663 2,724 2,748 2,733 2,727 2,753 2,773 2,866 2,772 2,739 2,774 2,807 2,875 2,899 2,943 2,916 2.916 2,915 2,911 2,899 2,878 2,872 2,882 2,902 2,897 2,900 2,904 2,912 2,916 2,922 2,933 2,935 2,935 2,936 2,940 2,962 2,965 2,977 2,979 State and local 3,341 3,582 3,787 3,948 4,098 4,087 4,188 4,340 4,563 4,727 5,069 5,399 5,648 5,850 6,083 6,315 6,550 6,868 7,248 7,696 8,220 8,672 9,102 9,437 9,823 10,185 10,649 11,068 11,446 11,937 12,138 12,399 12,919 13,174 13,375 13,259 13,098 13,096 13,216 13,519 13,811 14,120 13,653 13.704 13,705 13,731 13,762 13,777 13,736 13,752 13,896 13,978 14,001 14,020 14,025 14,020 14,055 14,105 14,096 14,096 14,084 14,106 14,086 14,223 14,236 14,295 Note.—Data in Tables B-43 through B-45 are based on reports from employing establishments and relate to full- and part-time wage and salary workers in nonagricultural establishments who received pay for any part of the pay period which includes the 12th of the month. Not comparable with labor force data (B-32 through B-41), which include proprietors, self-employed persons, domestic servants, and unpaid family workers; which count persons as employed when they are not at work because of industrial disputes, bad weather, etc., even if they are not paid for the time off; and which are based on a sample of the working-age population. For description and details of the various establishment data, see "Employment and Earnings." Source: Department of Labor, Bureau of Labor Statistics. 297 TABLE B-44.—Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-87 [For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted] Average weekly hours Year or month Average hourly earnings, current dollars Adjusted hourly earnings, total private nonagricultural2 Total private nonagricultural 1 Index. 1977=100 Total private nonagricul- Manufacturing Construction 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 1986 1987 * 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 35.2 34.9 34.8 34.8 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 40.7 41.0 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 37.8 37.7 37.4 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 29.8 29.4 29.2 29.3 $1,131 1.225 1.275 1986: Jan.... Feb.... Mar.... 35.0 34.8 34.9 34.8 34.8 34.7 40.8 40.6 40.7 40.7 40.7 40.6 38.2 36.4 36.9 37.5 37.5 37.2 34.7 34.7 34.7 34.7 34.8 34.6 40.6 40.8 40.8 40.7 40.8 40.8 34.7 34.9 34.8 34.7 34.9 34.8 34.8 34.9 34.6 34.9 34.9 34.7 fc June... July.... Aug.... Sept... Oct.... Nov.... Dec... 1987: Jan.... Feb.... Mar.... May*;;; July,... Aug..., Sept... Oct..., Nov.... Dec".. Retail ManufacConturing struction Retail trade Percent change from a year 1977 Current Current dollars dollars» dollars 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 8.32 8.57 8.76 8.98 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 9.19 9.54 9.73 9.91 1712 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 12.13 12.32 12.47 12.66 .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 5.85 5.94 6.03 6.11 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 92.9 100.0 108.2 116.8 127.3 138.9 148.5 155.4 160.3 165.2 169.3 173.5 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 94.6 94.1 95.0 94.0 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 9.1 6.9 4.6 3.2 3.1 2.5 2.5 29.4 29.3 29.3 29.2 29.2 29.1 8.68 8.71 8.73 8.72 8.74 8.75 9.65 9.69 9.71 9.70 9.73 9.72 12.31 12.36 12.28 12.38 12.42 12.46 6.00 6.00 6.00 6.01 6.01 6.02 167.5 168.2 168.5 168.5 168.9 169.2 93.6 94.4 95.1 95.4 95.3 95.2 2.9 2.9 2.9 2.6 2.7 2.5 37.3 37.5 37.6 37.5 37.3 37.3 29.2 29.2 29.1 29.1 29.2 28.9 8.74 8.77 8.78 8.82 8.86 8.84 9.74 9.75 9.75 9.77 9.78 9.79 12.44 12.48 12.48 12.57 12.70 12.65 6.02 6.03 6.05 6.06 6.07 6.09 169.1 169.5 169.8 170.2 171.2 171.1 95.1 95.2 95.0 95.1 95.5 95.3 2.4 2.4 2.0 2.4 2.6 2.0 40.9 41.1 40.9 40.6 41.0 41.0 38.1 38.0 37.9 37.4 38.1 37.6 29.0 29.3 29.3 29.5 29.4 29.2 8.88 8.91 8.91 8.95 8.94 9.79 9.81 9.83 9.86 9.88 9.88 12.51 12.48 12.62 12.61 12.65 12.72 6.05 6.04 6.05 6.08 6.09 6.10 171.2 171.8 172.2 172.6 172.9 172.9 94.7 94.6 94.4 94.2 94.0 93.8 2.2 2.1 2.2 2.5 2.4 2.2 41.0 41.0 40.6 41.3 41.2 41.0 37.8 37.8 ' 35.5 38.3 38.0 38.2 29.3 29.6 29.6 29.3 29.2 28.8 8.96 9.02 9.02 9.08 9.12 9.10 9.87 9.93 10.02 10.00 10.01 10.02 12.67 12.71 12.67 12.68 12.84 12.65 6.11 6.13 6.19 6.16 6.17 6.19 173.2 174.1 174.6 174.9 175.8 175.4 93.7 93.7 93.8 93.7 93.8 93.6 2.4 2.7 2.9 2.8 2.7 2.6 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 $1,216 1 $1,540 $0,838 8.3 Also includes other private industry groups shown in Table 6-43. Adjusted for overtime (in manufacturing only) and for interindustry 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-43. Source: Department of Labor, Bureau of Labor Statistics. 2 3 298 TABLE B-45.—Average weekly earnings in selected private nonagricultural industries, 1947-87 [For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted] Average weekly earnings Year or month Total private nonagricultural1 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 1986 1987" 1986-Jan Feb Mar Apr May June July AUB Sept oct..::::::;::::::: Nov Dec 1987-Jan Feb Mar Apr May June July Aug Sept Oct :.::.::::::::: Nov Dec* $45.58 49.00 50.24 5313 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 70 292.86 299 09 304.85 312.50 303.80 30311 304.68 303 46 30415 303.63 303.28 304 32 304 67 306.05 308.33 305.86 307 44 309.91 310.07 309.18 312 36 311.11 311.81 314 80 312 09 316 89 318 29 315.77 1977 dollars2 $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 17517 178.38 183.21 184 37 184.83 187.68 189.44 186.94 190.58 19841 198.35 190.12 184.16 186.85 189.00 189.31 183.41 172.74 170.13 168.09 17126 172.78 170.42 171.07 169.28 169.82 17010 171.84 171.83 17174 170.77 170.57 170.97 170 59 171.07 171.96 170.40 170 04 170.75 170.09 168.77 169.95 168.71 168.73 169.52 167.70 169 64 169 85 168.41 Manufacturing (current dollars) $49.13 53.08 53.80 58 28 63.34 66.75 7047 70.49 75.30 78.78 81.19 82.32 88.26 89.72 92.34 96.56 99 23 102.97 107.53 11219 114.49 122.51 129.51 . 133 33 142.44 154 71 166.46 176.80 190.79 209.32 228.90 249.27 269.34 288.62 318 00 330.26 354 08 374.03 386 37 396.01 406.31 393.72 393 41 395.20 394.79 396 01 394.63 395.44 397 80 397 80 397.64 399.02 399.43 400 41 403.19 402.05 400.32 405 08 405.08 404.67 407.13 406.81 413.00 412.41 410.82 1 Percent change from a year earlier, total private nonagricultural3 Construction (current dollars) Retail trade (current dollars) Current dollars $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 12719 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 97 458.51 464 46 466.38 477.28 470.24 449 90 453.13 464.25 465.75 463.51 464.01 468.00 469.25 471.38 473.71 471.85 476.63 474.24 478.30 471.61 481.97 478.27 478.93 480.44 449.79 485.64 487.92 483.23 $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 9185 96.32 102.68 108.86 114.60 121.66 130.20 138.62 147.38 15803 163.85 17105 174.33 174 64 176.08 179.02 176.40 175 80 175.80 175.49 175.49 175.18 175.78 176.08 176.06 176.35 177.24 176.00 175 45 176.97 177.27 179.36 179.05 178.12 179.02 181.45 183.22 180.49 180.16 178.27 7.5 2.5 58 8.9 4.8 5.1 1.2 5.0 4.5 3.7 2.4 4.9 2.4 2.4 4.0 30 3.2 4.5 3.5 3.1 5.8 6.4 4.6 6.2 7.5 6.2 6.4 5.7 7.3 7.7 7.8 8.0 6.9 8.5 4.7 5.0 4.3 2.1 1.9 2.5 3.1 2.5 2.5 2.5 2.0 1.2 1.5 1.7 1.2 1.5 2.1 .5 1.2 2.4 1.8 1.8 2.6 2.6 3.0 3.3 2.4 3.7 3.2 3.2 1977 dollars -0.1 3.6 47 .8 2.7 44 .5 5.4 3.1 .4 4.1 .7 1.4 3.0 17 1.8 2.7 .6 .2 1.5 .9 1.3 1.9 4.1 .0 -4.1 3.1 1.5 1.2 .2 3.1 -5.8 -1.5 -1.2 1.9 .9 -1.4 .4 1.0 .6 .6 1.3 .8 .3 .5 3 1.2 -.2 .1 -1.0 -1.9 -1.1 -1.0 g -.9 -1.8 -.9 -1.3 -1.2 Also includes other private industry groups shown in Table B-43. 2 Earnings in current dollars divided by the consumer price index for urban wage earners and clerical workers on a 1977=100 base. 3 Based on data not seasonally adjusted. Note.—See Note, Table B-43. Source: Department of Labor, Bureau of Labor Statistics. 299 TABLE B-46.—Productivity and related data, business sector, 1947-87 [1977=100; quarterly data seasonally adjusted] Output per hour of all persons Voar nr Tear or Hours of all persons 2 Output1 Compensation per hour 3 Real compensation per hour 4 Nonfarm business sector Business sector Nonfarm business sector Business sector Nonfarm business sector Business sector Nonfarm business sector Business sector Nonfarm business sector Unit labor costs Business sector Nonfarm business sector Business sector Nonfarm business sector ! 44.9 47.2 All 51.4 53.3 54.2 36.2 38.3 37.4 35.2 37.2 36.4 80.6 81.2 78.5 68.6 69.8 67.0 16.6 18.1 18.4 18.0 19.6 20.2 45.2 45.5 46.7 48.9 49.3 51.3 37.0 38.3 38.5 35.1 36.7 37.2 35.5 38.0 37.8 34.0 36.4 36.9 1950 1951 1952 1953..,. "" 1954 51.7 53.8 55.4 57,5 58.4 57.7 59.4 60.7 62.1 63.0 41.0 43.9 45.3 47.4 46.5 39.9 43.0 44.4 46.4 45.5 79.3 81.6 817 82.5 79.7 69.1 72.3 73.0 74.8 72.2 19.7 21.6 23.0 24.6 25.3 21.4 23.3 24.6 26.0 26.8 49.6 50.5 52.5 55,6 57.2 53.9 54.3 56.1 58.8 60.5 38.1 40.3 41.5 42.7 43.4 37.1 39,2 40.5 41.9 42.6 38.4 40.8 41.4 417 42.2 37.5 39.6 40.4 41.1 41.8 1955. 1956 1957 1958 1959 60.1 60.9 62.5 64.4 66.5 64.8 65.2 66.5 68.0 70.2 49.7 51.1 51.7 50.7 54.4 48.7 50.2 50.9 49.8 53.7 82.7 83.9 82.7 78.8 81.8 75.1 77.0 76.6 73.3 76.4 26.0 27.7 29.5 30.9 32.2 27.8 29.5 31.2 32.5 33.8 58.8 61.8 63.6 64.8 67.1 62.9 65.8 67.2 68.1 70.3 43.2 45.5 47.2 48.0 48.5 42.9 45.3 47.0 47.7 48.2 43.2 44.6 46.2 46.9 47.8 43.1 44.5 46.1 46.6 47i 1960 1961 1962 1963 1964 67.6 70.0 72.5 75.4 78.7 71.0 73.2 75.6 78.3 81.4 55.4 56.5 59.4 62.1 65.9 54.6 55.7 58.7 61.5 65.4 81.9 80.7 81.9 82.4 83.7 76.9 76.0 77.6 78.5 80.3 33.6 34.9 36.6 37.9 39.9 35.3 36.5 38.0 39.3 41.1 68.9 70.8 73.2 75.1 78.0 72.3 73.8 76.0 77.7 80.3 49.7 49.9 50.4 50.3 507 49.7 49.8 50.2 50.2 50.5 48.5 48.8 49,7 50.2 507 48.5 48.8 49.7 50.2 50i 1965... 1966 1967 1968 1969 81.0 83.2 85.5 87.8 87.8 83.4 85.2 87.1 89.4 89.0 70.0 73.6 75.6 78.9 81.1 69.5 73.4 75.3 78.8 80.9 86.4 88.5 88.5 89.9 92.3 83.3 86.2 86.4 88.1 90.9 41.5 44.3 46.7 50.4 53.9 42.5 45.0 47.5 51.1 54.4 79.6 82.7 84.8 87.8 89.1 81.6 84.0 86.2 89.0 90.0 51.2 53.3 547 57.4 61.4 50.9 52.8 54.5 57.1 61.2 51.9 53.6 54.9 57.5 60.4 51.9 53.5 55.0 57.5 60.4 1970 1971 1972.. 1973 1974 88.4 91.3 94.1 95.9 93.9 89.3 91.9 94.7 96.4 94,3 80.3 82.5 87.7 92.9 91.3 80.0 82.2 87.5 92.9 91.2 90.8 90.4 93.2 96.9 97.3 89.7 89.4 92.3 96.3 96.7 57.8 61.6 65.5 70.9 77.6 58.2 62.0 66.0 71.2 78.0 90.2 92.1 94.9 96.7 95.4 90.8 92.8 95.7 97.1 95.9 65.4 67.4 69.6 73.9 82.7 65.2 67.4 69.7 73.9 82.7 63.2 66.4 69.0 73.4 80.5 63.4 66.6 69.0 72.3 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 99.3 89.4 94.5 100.0 105.8 107.9 89.1 94.4 100.0 106.0 107.9 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 94.3 100.0 107.6 119.5 89.2 94.3 100.0 107.7 119,7 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 99.3 100.7 100.3 103.0 105.6 98.8 99.8 99.2 102.5 104.6 106.7 108.9 105.5 109.9 119.2 106.7 108.5 104.9 110.1 119.2 107.5 108.2 105.2 106.7 112.9 108.0 108.7 105.7 107.5 114.0 131.5 143.7 154.9 161.5 168.0 131.3 143,6 154.8 161.5 167.8 967 95.7 97.3 98.2 98.0 96.6 95.7 97.2 98.2 97.9 132.5 1427 154.5 156.7 159.1 132.9 144.0 156.0 157.6 160.4 127.6 139.8 148.1 153.0 158.2 127.8 140.3 149.2 154.3 159.0 1985 1986 1987" 107.5 109.5 105.8 107.5 108.4 123.9 128.0 132.3 123.6 127.5 131.9 115.2 116.9 119.7 116.8 118.6 121.6 175.9 182.8 188.2 175.2 182.0 187.1 99.1 101.0 100.3 98.7 100.6 99.8 163.6 166.9 170.2 165.6 169.3 172.6 162.4 165.8 170.0 164,1 167.8 171.8 1982: IV 101.0 99.7 105.0 104.2 103.9 104.5 158.3 158.2 98.0 97.9 156.8 158.7 150.2 151.4 1983: IV 103.7 103.3 113.6 114.1 109.4 110.4 163.6 163.4 98.0 97.9 157.7 158.2 155.2 156.2 quarter 1947 1948 1949 no.5 Business 1984: IV 105.9 104.8 120.8 120.7 114.0 115.2 170.3 170.2 98.1 98.0 160.8 162.4 159.8 161.0 1985:1 II Ill IV 106.5 107.2 111.3 111.1 105.2 105.7 109.1 109.0 122.2 123.3 133.1 134.7 122.0 123.1 132.7 134.4 114.7 115.0 119.6 121.2 115.9 116.4 121.7 123.2 172.4 174.6 189.1 190.5 172.2 174.1 187.9 189.5 98.5 98.6 100.3 100.2 98.4 98.3 99.6 99.6 161.9 162.8 169.8 171.4 163.6 164.7 172.2 173.8 160.8 162.0 170.7 171.3 162.2 163.6 172.5 173.1 1986:1 109.5 109.7 109.6 109.6 107.7 107.7 107.5 107.5 127.3 127.5 128.1 129.0 126.9 127.1 127.6 128.5 116.3 116.3 116.9 117.8 117.9 118.0 118.7 119.6 180.7 182.2 183.6 185.2 180.0 181.3 182.6 184.4 100.1 101.3 101.4 101.6 99.7 100.8 100.9 101.2 165.0 166.2 167,5 169.0 167.2 168.4 169.8 171.5 164.3 165.4 166.9 166.7 166.4 167.3 168.8 168.8 109.7 110.1 111,3 111.1 107.6 108.0 109.1 109.0 130.2 131.1 133.1 134.7 129.7 130.7 132.7 134.4 118.7 119.1 119.6 121.2 120.6 121.1 121.7 123.2 185.8 187.3 189.1 190.5 184.9 186.3 187.9 189.5 100.7 100.3 100.3 100.2 100.2 99.7 99.6 99.6 169.4 170.2 169.8 171.4 171.8 172.5 172.2 173.8 168.2 169.6 170.7 171.3 170.3 171.4 172.5 173.1 in'""!! IV 1987:1 II Ill IV "... 1 2 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. <6 Hourly compensation divided by the consumer price index for alt urban consumers. Current dollar gross domestic product divided by constant dollar gross domestic product. Source: Department of Labor, Bureau of Labor Statistics. 300 TABLE B-47.—Changes in productivity and related data, business sector, 1948-87 [Percent change from preceding period; quarterly data at seasonally adjusted annual rates] Output per hour of all persons Year or quarter Hours of all persons2 Output* Compensation per hour 3 Real compensation per hour 4 Unit labor costs Implicit price deflator6 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 1948 1949 5.0 1.1 3.8 1.7 5.9 =2.3 5.6 -2.3 0.8 -3.4 1.7 -3.9 8.5 1.7 8.5 3.0 0.7 2.7 8.3 4.0 3.1 3.6 1.6 6.4 3.0 2.2 2.2 1.5 9.5 7.1 3.2 4.6 -1.8 9.7 7.7 3.2 4.6 -2.0 1.1 2.9 .1 .9 -3.4 3.0 4.6 1.0 2.4 -3.4 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 3.3 .6 -.9 5.6 3.1 3.0 1.6 4.6 1.3 1950 1951 1952 1953 1954 0.8 4.0 5.1 .7 3.3 4.9 2.8 -.3 5.6 3.3 3.5 1.8 7.2 = .6 1.5 6.3 1.3 .7 1.2 7.2 1.3 1.8 5.6 2.0 1.8 1.5 1955 1956. 1957 1958 1959 3.0 1.3 2.6 3.0 3.3 2.9 .6 1.9 2.4 3.2 6.9 2.8 11 -1.8 7.3 7.1 3.1 13 -2.0 7.7 3.7 1.5 -15 -4.7 3.8 4.0 2.5 -.6 -4.3 4.3 2.5 6.7 6.5 4.6 4.4 3.6 6.2 5.7 4.1 4.1 2.9 5.1 3.0 1.8 3.5 4.0 4.6 2.2 1.3 3.3 -.5 5.3 3.8 1.6 1.0 .7 5.5 3.8 1.6 .9 1960 1961 1962 1963 1964 17 3.5 3.6 40 4.3 11 3.1 3.3 36 3.9 18 19 5.2 46 6.0 1.7 2.0 5.5 4.7 6.3 .1 -16 1.6 .6 1.6 .6 -1.1 2.1 11 2.3 43 Z.S 4.7 38 5.2 4.4 3.3 4.1 3.5 4.6 2.7 2.8 3.5 2.5 3.8 28 2.2 2.9 23 3.3 2.6 .3 1.1 _2 .8 3.3 .1 .8 _ 1 .7 2.6 3.2 3.5 1.6 2.0 1.4 .5 1.9 9 1.0 3.2 3.3 3.6 1.2 2.5 1.4 .6 2.0 .9 1.2 1965 1966 1967 1968 1969 30 2.8 27 2.7 2.5 2.1 23 2.6 63 5.2 2.7 44 2.7 64 5.6 2.5 47 2.7 32 2.4 0 1.7 2.6 38 3.4 .3 2.0 3.2 3.8 6.9 54 7.9 7.0 3.4 5.9 55 7.6 6.6 2.1 3.9 25 3.5 1.6 17 2.9 2.6 32 1.1 9 4.1 26 5.0 6.9 8 3.7 32 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 3.2 3.0 20 -2.1 .3 3.0 3.1 18 -2.2 -.9 2.7 6.3 60 -1.8 -1.1 2.7 6.4 62 -1.8 -1.6 -.5 3.1 39 .4 -1.3 -.3 3.3 43 .4 7.3 6.4 6.4 83 9.5 7.0 6.5 6.5 79 9.6 1.2 2.1 3.0 19 -1.3 .9 2.1 3.1 15 = 1.3 65 3.1 3.3 62 U.9 6.7 3.4 3.4 6.0 12.0 4.7 4.9 4.0 6.4 9.6 4.9 5.0 3.6 4.8 10.2 1975 1976 1977 1978 1979 2.0 2.8 1.7 .8 -1.2 1.8 2.6 1.6 .8 -1.6 -2.1 5.8 5.8 5.8 2.0 -2.3 6.0 5.9 6.0 1.9 -4.0 2.9 4.0 4.9 3.2 9.7 8.9 7.8 8.5 9.7 9.7 8.4 7.7 8.6 9.5 .5 2.9 1.3 .8 -1.4 .5 2.5 1.2 .9 -1.6 7.6 5.9 6.0 7.6 11.1 7.8 5.7 6.1 7.7 11.2 10.3 5.9 6.4 7.3 9.0 10.8 6.3 6.6 7.0 8.9 1980 1981 1982 1983 1984 -.3 1.4 -.4 1.0 -.6 3.3 2.1 -1.1 21 -3.1 4.2 8.4 -1.2 17 -3.3 5.0 8.3 -.8 7 -2.8 1.5 5.7 -4.0 3.4 4.3 5.1 3.5 7 7 -2.7 1.6 6.0 10.5 92 7.8 4.2 4.1 10.5 9.4 7.8 4.3 3.9 -2.7 -1.0 1.6 1.0 -2.7 -9 1.5 1.1 10.9 7.7 8.3 1.4 1.5 11.0 8.3 8.4 1.0 1.8 9.0 9.6 5.9 3.3 3.3 9.7 9.7 6.3 3.5 3.0 !:§ 4.0 3.3 3.4 3.6 3.2 3.4 2.1 1.4 2.4 2.5 1.6 2.6 4.7 3.9 2.9 4.4 3.9 2.8 1.1 2.0 .8 1.9 -.8 2.8 2.0 2.0 3.2 2.2 2.0 2.7 2.1 2.5 3.2 2.3 2.4 -1.2 —3 4 -3.5 1970 1971 1972 1973 1974 ; ~2J 2.5 1987'""!";; 1.8 1.9 .9 1982: IV 1983: IV 3.0 .8 2.4 —5 4.5 5.0 3.2 3.7 1.5 2.6 2.4 3.0 3.0 1.4 10.4 9.8 7.2 8.3 5.4 4.3 1.5 .4 2.4 2.9 4.8 3.1 1984: IV 1.5 1.0 3.5 3.1 2.1 2.1 3.8 3.9 .4 .6 2.3 2.9 2.7 3.3 1985:1 II Ill IV 2.2 2.9 3.7 -1.0 1.5 1.7 2.6 -1.6 4.8 3.8 4.4 2.2 4.3 3.4 4.1 2.0 2.5 1.0 .7 3.2 2.8 1.7 1.5 3.6 5.1 5.1 5.7 5.1 4.8 4.5 4.9 4.9 1.7 .6 3.3 1.2 1.4 2.8 2.2 1.9 6.2 3.2 2.7 2.2 6.6 2.5 3.0 2.5 2.5 3.0 3.5 3.2 2.0 1986:1 II Ill IV 5.8 .6 6.6 6.4 6.4 .6 1.7 2.9 .5 21 3.1 -.2 .6 2.3 2.9 3.2 3.5 3.0 3.6 3.9 2.9 2.8 4.0 1.6 4.8 .5 .9 -2.5 2.8 3.3 3.7 -2.6 2.8 3.5 4.0 .9 2.6 3.7 -.5 1.6 2.3 3.7 .0 1987:1 II Ill IV *.. .5 1.4 4.7 -.7 3.8 3.2 6.3 5.1 3.0 1.6 1.5 5.6 3.4 1.7 2.0 5.3 1.4 3.3 3.8 3.1 1.1 3.0 3.6 3.4 -3.7 -1.6 -5 .9 1.8 -.9 3.9 .8 1.5 -.6 3.7 3.7 3.4 2.5 1.6 3.4 2.6 2.7 1.5 .0 .4 1.4 4.2 -.2 1*8 3.0 3.5 3.0 6.3 4.8 1 2 l!s .9 2.3 4.2 U -3.9 -1.8 -.3 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, ana 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 dividedi by fc 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-46. Source: Department of Labor, Bureau of Labor Statistics. 301 PRODUCTION AND BUSINESS ACTIVITY TABLE B-48,—Industrial production indexes, major industry divisions, 1939-87 [1977=100; monthly data seasonally adjusted] Year or month 1977 proportion , 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 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 . .. 1986 1987 P 1986: Jan Feb Mar Apr May June July Aug Sept ocf. Nov Dec 1987-Jan Feb Mar Apr May. . June July Aug sept :::::::: . :.;;;;:::.:;:::::::::;:::: oc? Novp Dec' :.::: Total Durable Nondurable 100.00 84.21 49.10 16.0 184 23.3 26 7 32 4 34.9 29 9 25.8 29 0 30.2 28.6 331 35.9 37.2 404 38.2 43 0 44.9 45.5 42 6 47.7 48.8 491 53 2 56.3 601 66.1 72 0 73.5 77 6 81.2 78 5 796 87.3 94 4 93 0 84 8 92 6 100.0 1065 110.7 108 6 1110 1031 109 2 1214 123.7 125.1 129.8 126 4 125.5 123.9 124 7 124 3 124.1 124 8 124 9 124 5 125 3 125 7 126.8 126.2 1271 127 4 127.4 128.2 129.1 130 6 1312 131.0 132 5 1331 133.3 15.8 18.6 23.8 27.7 34.5 37.3 31.2 25.9 289 30.0 28.3 33 0 35.6 37.1 40.4 37.8 42.6 44.4 44.9 41.7 47.0 48.0 481 52.4 55.5 59 3 65.7 717 73.1 77 2 80.6 77.0 78 2 86.4 940 92 6 83 4 919 100.0 1071 111.5 108 2 110 5 102 2 110.2 1234 X26.4 129.1 134.6 129 3 128.6 127.4 128 7 128 5 128.3 129.2 129.2 129 2 129 7 1301 131.3 130.7 131.6 132 4 132.4 133.2 134.0 135 6 135 9 135.7 137.4 138.0 138.3 13.6 181 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 39.9 456 47.1 47.4 41.5 47.7 Source: Board of Governors of the Federal Reserve System. Manufacturing Total industrial production 302 48.5 47 6 52.8 56.3 603 68.6 762 77.0 80 8 84.0 77.6 77 3 86.3 96 3 94 3 82 6 911 100.0 108 2 113.9 1091 1111 999 107.7 124 2 127.6 128.4 133.1 129 8 128.9 127.4 128 5 127 7 126.9 128.1 127 9 128 4 128 6 129 0 129.7 129.3 130 8 1315 130.9 131.4 132.0 133 5 133 8 133.7 136.7 137.0 136.8 Min lltiti ing ties 35.11 9.83 5.96 17.9 18.8 22.7 23.7 25.4 26.4 26.3 27.1 28.2 29.2 28.7 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 84.5 931 100.0 105.5 108.2 107 0 109.7 1055 113.7 122.3 124.6 130.1 136.7 128 6 128.2 127.3 128.9 129 7 130.2 130.6 131.1 130.3 1312 1317 133.4 132.7 132.9 133 7 134.6 135.7 136.9 138 5 138 8 138.6 138.3 139.5 140.3 37.6 41.8 44.4 45 7 46.8 50.2 49.2 48.3 54.6 57.4 50.9 56.9 62.4 61.9 63.5 62.3 69 5 73.1 73.2 67.1 70.2 71.6 721 74.1 77.1 80.2 83.1 87.6 89.3 92.7 96.4 6.9 7.6 8.6 97 10.7 11.4 116 12.0 130 14.5 15.5 17 6 20.1 21.8 23.6 25.4 284 31.2 33.3 34.9 38.4 41.1 43 4 46.6 49.8 54.1 57.4 61.8 64.9 70 2 76.4 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 3 102.9 111.1 108.9 100.4 100.4 110 0 107.6 105.2 102.1 100 5 98.2 97.8 96.9 95 8 96 2 97 5 97.1 99.4 98.8 98 3 98.6 99.2 99.2 99 2 100 9 101.9 103.2 103.0 103.3 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 8 105.2 110.7 111.1 108.5 110.3 1115 109.9 107.9 108.1 1061 106.9 108.6 107.0 106 2 108 6 109 6 109.0 108.0 108 5 107 9 106.0 109.6 109.4 1112 112 9 111.2 112.1 112.9 112.4 TABLE B-49.—Industrial production indexes, market groupings, 1947-87 [1977=100; monthly data seasonally adjusted] Final products Year or month Total industrial production Materials Consumer goods Total Equipment Total l Automotive products Home goods Total 2 Busi- Defense and space Intermediate products Total 3 Durable 100.00 44.77 25.52 2.98 3.91 19.25 14.34 3.67 12.94 42.28 20.50 1947 1948 1949 29.0 30.2 28.6 29.0 30.1 29.1 29.9 30.8 30.6 25.8 27.0 26.7 26.1 27.2 25.2 25.5 26.8 24.0 25.9 27.0 23.6 15.2 17.8 18.6 29.9 31.6 29.9 28.8 30.0 27.3 28.5 29.3 26.3 1950 33.1 35.9 37.2 40.4 38.2 43.0 44.9 45.5 42.6 47.7 32.9 35.5 38.1 40.7 38.5 41.6 44.1 45.4 43.3 47.5 35.0 34.6 35.4 37.5 37.3 41.6 43.1 44.2 43.8 48.0 33.6 29.8 26.8 33.9 31.5 41.9 34.5 36.1 28.7 36.0 34.7 29.9 29.9 33.9 31.3 36.9 38.8 38.0 35.8 41.1 26.0 36.1 43.3 47.0 41.1 42.0 46.1 48.0 42.9 47.2 25.2 30.8 34.9 36.3 31.9 34.6 40.1 41.7 35.2 39.5 21.9 53.8 75.7 90.6 79.8 73.1 71.4 74.6 74.9 78.9 34.8 36.5 36.3 38.8 38.7 43.9 45.9 45.9 44.9 49.6 32.7 36.2 36.7 40.8 37.7 44.6 45.7 45.7 41.1 47.4 33.1 37.6 38.4 44.9 38.7 47.4 47.6 47.5 40.0 47.7 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 48.4 47.8 53.2 56.3 59.6 67.3 78.4 83.4 85.8 88.1 40.6 39.4 42.8 44.9 50.3 57.6 66.7 68.0 71.0 75.6 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 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987" 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 56.8 72.4 78.1 86.2 74.5 70.2 87.1 100.0 102.4 94.9 76.5 81.0 92.7 98.1 90.7 79.9 89.5 100.0 104.7 103.7 81.8 76.6 83.8 93.6 96.6 88.5 91.5 100.0 110.3 120.4 72.9 69.3 79.0 92.4 96.5 86.1 89.3 100.0 112.2 124.7 119.4 107.3 104.3 101.9 100.4 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 90.8 100.0 108.8 114.4 108.6 111.0 103.1 109.2 121.4 123.7 125.1 129.8 112.2 115.2 109.5 114.7 127.3 131.0 132.5 136.8 102.7 104.1 101.4 109.3 118.0 119.8 124.0 127.8 76.1 78.8 78.1 95.1 109.4 114.1 115.3 118.5 97.7 98.1 86.5 101.1 114.3 111.2 115.8 122.0 124.7 129.9 120.2 121.7 139.6 145.8 143.6 148.8 125.1 127.6 113.6 115.4 134.2 140.2 139.5 144.4 115.4 119.8 133.0 143.1 156.4 171.4 182.0 189.2 105.3 107.7 96.7 102.8 114.2 114.3 113.8 118.1 1986;Jan Feb Mar Apr May June 126.4 125.5 123.9 124.7 124.3 124.1 123.6 122.9 121.4 123.8 123.8 123.7 114.5 116.2 110.8 115.9 114.6 114.7 116.6 115.8 118.4 115.7 114.9 115.3 133.3 134.8 135.1 134.5 135.5 136.2 124.5 125.0 123.6 124.8 125.0 126.6 125.5 126.4 126.7 125.5 127.3 127.2 147.7 146.1 143.7 143.3 142.1 140.8 142.7 142.8 143.4 143.7 143.4 144.0 137.9 138.4 137.8 139.5 139.5 139.4 128.9 129.4 127.7 129.3 129.5 129.7 117.5 118.0 114.2 124.3 121.3 115.8 120.5 119.8 118.4 118.1 121.2 119.3 122.5 123.6 121.9 124.6 126.9 128.7 143.5 146.0 146.2 146.4 146.3 148.1 149.7 150.2 151.2 153.1 152.8 152.4 142.1 141.3 139.2 139.6 138.6 137.2 139.4 139.1 139.6 139.4 138.8 139.5 138.6 141.7 141.9 142.1 141.7 144.2 178.9 178.0 178.6 179.8 180.2 180.7 124.8 124.9 124.5 125.3 125.7 126.8 126.2 127.1 127.4 127.4 128.2 129.1 115.8 114.2 111.6 113.4 113.5 114.0 115.4 116.5 116.7 117.6 119.3 122.6 106.1 109.7 94.2 103.7 121.5 121.7 120.0 124.8 122.4 121.3 119.4 120.1 119.4 118.7 July Aug Sept Oct 134.0 132.9 131.0 132.2 131.7 131.0 132.3 132.7 132.1 132.9 132.9 134.1 106.9 107.3 101.7 111.2 124.7 129.3 136.2 143.4 134.2 134.2 134.0 134.9 135.1 136.3 1977 proportion 1951 1952 . 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965.. . 1966 1967 1968... 1969 Nov Dec 1987: Jan Feb Mar Apr May June July Aug Sept Oct Nov. p Dec 1 2 3 . 130.6 131.2 131.0 132.5 133.1 133.3 116.6 122.6 121.6 115.0 118.8 114.9 145.6 145.6 146.3 148.7 148.7 148.2 182.4 183.7 184.6 185.6 185.5 186.2 187.3 188.9 188.6 189.2 189.3 188.6 188.7 189.1 189.8 190.2 190.0 191.1 137.1 136.8 136.4 138.3 138.1 139.2 138.8 139.9 140.9 140.3 141.8 143.3 145.0 145.3 144.9 146.0 146.9 147.5 115.9 115,0 113.2 113.7 113.2 113.0 113.2 113.1 112.9 113.3 114.3 115.2 114.9 114.9 115.2 115.9 116.3 U7.2 118.5 119.4 119.7 121.0 122.0 122.5 Nondurable goods 119.1 118.9 118.9 119.7 120.6 121.6 120.5 121.3 122.3 122.2 122.6 124.0 125.2 125.5 126.4 128.7 129.7 130.5 Includes clothing and consumer staples, not shown separately. Two components—oil and gas well drilling and manufactured homes—are included in total equipment, but not in detail shown. Includes energy materials, not shown separately. Source: Board of Governors of the Federal Reserve System. 303 TABLE B-50.—Industrial production indexes, selected manufactures, 1947-87 [1977=100; monthly data seasonally adjusted] Nondurable manufactures Durable manufactures Year or month Primary metals Total 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 Z! 1980 1981 1982 1983 1984 1985 1986 1987 * " I " 1986: Jan Feb Mar niay'ZZ"! June {my Aug Sept Oct NOV Dec 1987: Jan Feb Mar Apr May June J"iy Aug Sept Oct N o v p. Dec :.iz Iron and steel FabriNonElectricated eleccal metal trical machinprod- machinery ery ucts Transportation equipment Lumber Apparel Textile Printing Chemicals and and mill and prod- prodMotor publish- products vehicles proding ucts ucts Total ucts and parts 3.49 6.46 9.54 7.15 9.13 5.25 2.30 2.79 2.29 4.54 8.05 70.4 73.6 62.9 40.4 41.2 37.2 26.7 26.8 22.9 14.5 15.1 14.1 26.6 29.0 29.2 47.2 49.1 43.3 47.0 49.1 48.6 38.5 41.1 38.0 34.3 36.0 37.0 10.4 11.3 11.1 77.5 86.6 76.2 87.9 68,3 90.8 89.1 85.9 64.7 74.5 45.5 48.6 47.4 53.5 48.2 55.0 55.8 57.2 51.3 57.6 25.7 32.6 35.5 36.9 31.6 34.6 39.7 39.6 33.2 38.8 19.4 19.5 22.3 25.6 22.8 26.1 28.3 28.1 25.7 31.2 34.9 38.9 45.2 56.8 49.4 56.8 55.1 59.0 46.5 52.7 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 52.7 52.5 51.8 54.8 54.5 60.8 60.1 55.2 56.0 63.6 52.3 51.3 54.0 54.7 54.1 59.7 61.1 60.9 59.2 65.2 43.2 42.8 42.4 43.5 40.7 46.4 47.7 45.5 44.8 50.7 38.8 39.5 39.4 41.2 42.9 47.2 50.2 51.9 50.7 54.1 13.9 15.7 16.5 17.8 18.1 21,1 22.6 23.9 24.7 28.8 75.7 72.3 75.3 82.1 93.4 102.4 105.5 97.5 100.7 109.7 57.6 56.2 61.1 63.1 67.0 73.6 78.8 82.5 86.9 88.4 39.0 37.9 42.5 45.4 51.7 58.2 67.6 68.9 69.5 75.2 33.8 35.9 41.3 42.4 44.9 53.5 64.2 64.5 68.1 72.5 54.6 51.3 59.3 65.1 66.8 79.4 85.1 83.2 90.4 89.7 43.4 38.1 46.3 51.3 52.7 67.3 66.2 58.2 69.7 70.0 59,8 62.6 66.1 69.2 74.3 77.2 80.1 79.3 81.6 81.5 66.5 66.9 69.6 72.5 75.0 79.3 81.3 80.9 82.9 85.6 49,8 51.2 54.7 56.7 61.2 66.6 70.7 70.7 78.9 83.0 56.3 56.5 58.6 61.7 65.5 69.7 75.0 79.1 80.4 84.3 29.9 31.4 34.8 38.1 41.7 46.5 50.7 53.0 59.6 64.5 102.1 93.4 103.8 118.2 114.5 92.0 101.4 100.0 107.5 108.0 81.9 81.5 89.4 99.4 95.4 82.7 91.6 100.0 105.7 109.4 72.8 67.6 78.5 91.7 97.7 84.5 88.8 100.0 111.7 122.6 69.3 69.6 79.7 90.7 89.8 77.2 86.8 100.0 112.9 125.7 75.3 81.5 87.0 99.1 90.1 81.0 92.2 100.0 106.3 108.3 56.3 70.6 77.1 89.8 77.5 65.7 86.5 100.0 104.6 95.9 81.1 83.2 95.3 95.6 86.8 80.8 91.9 100.0 102.4 102.0 82.2 83.2 88.3 89.0 85.0 77.6 91.5 100.0 103.1 98.3 81.2 85.7 93.9 97.8 89.0 84.8 94.2 100.0 102.8 104.4 82.0 82.7 88.2 90.6 89.2 83.5 91.2 100.0 107.8 112.7 67.1 71.4 80.3 87.8 91.0 82.9 92.8 100.0 106.8 111.4 90.4 95.0 65.8 73.0 82.3 80.4 75.1 81.4 86.3 92.5 57.5 66.1 73.4 70.4 63.4 101.8 101.6 86.6 89.1 102.6 107.1 108.0 110.8 123.3 129.8 115.6 118.3 141.8 146.2 145.0 152.3 130.3 134.1 128.4 143.8 170.5 168.3 165.7 172.5 96.9 95.1 87.6 99.2 112.2 122.8 127.5 129.2 71.1 71.6 66.8 85.8 104.4 111.9 111.5 111.8 92.9 90.1 82.8 100.2 109.1 114.3 124.1 97.3 96.1 87.3 95.3 102.7 100.4 103.1 100.8 98.1 89.2 100.9 104.2 102.2 109.2 115.1 118.6 120.2 129.8 146.5 151.4 160.9 172.1 106.4 112.6 103.8 114.0 121.6 126.4 132.0 80.7 78.8 76.3 76.5 75.1 72.5 70.8 68.2 64.9 64.9 62.1 60.5 109.3 108.5 107.3 108.9 107.0 107.2 147.9 146.5 145.1 143.8 143.6 143.6 165.4 163.4 162.6 164.5 165.0 161.9 128.5 128.7 125.2 128.1 127.0 127.5 114.1 115.1 109.0 113.0 110.7 112.1 103.4 102.2 102.0 102.4 102.5 102.7 106.4 107.9 105.3 108.6 108.2 108.8 62.5 60.3 60.2 61.0 63.5 61.3 106.7 106.9 107.8 108.9 108.3 109.6 145.6 145.0 144.9 145.0 144.5 144.8 166.6 166.6 166.5 167.3 167.9 170.4 127.2 126.9 128.9 127.6 126.9 126.8 111.4 109.6 113.0 110.3 109.1 109.7 123.8 124.6 130.3 133.5 103.5 103.2 102.6 103.9 103.8 104.9 108.6 110.7 110.6 110.2 112.2 113.4 158.0 155.5 155.9 159.1 160.0 161.5 161.4 161.7 161.7 164.4 164.8 166.4 130.7 130.4 128.8 131.0 132.2 132.1 73.6 72.6 72.8 73.1 75.5 73.4 122.0 121.2 121.1 123.2 123.1 121.5 122.5 123.6 132.8 132.6 132.2 133.3 132.3 135.7 72.8 75.1 77.0 76.1 77.0 78.8 59.5 62.3 65.4 65.0 65.7 68.3 143.4 145.5 148.5 150.4 149.7 151.8 170.4 171.0 168.5 168.4 171.1 170.5 129.0 132.7 132.2 127.8 129.4 126.5 112.0 117.7 116.5 109.8 112.0 107.4 128.5 129.6 128.9 127.8 130.3 131.1 106.1 106.5 105.4 105.3 106.4 107.7 136.4 135.7 135.3 137.3 138.1 139.3 70.9 76.0 74.6 82.0 81.8 155.3 154.3 156.6 158.0 157.6 156.5 172.5 174.3 173.4 175.5 176.4 177.6 127.6 128.1 125.5 131.8 130.6 128.6 109.4 109.1 105.6 116.0 114.0 110.4 132.8 131.1 126.9 129.4 109.7 108.4 107.6 108.0 109.2 110.8 112.6 116.6 115.7 117.2 118.3 119.8 118.2 117.3 119.3 166.3 164.4 167.6 169.2 171.4 174.1 81.4 85.1 84.5 90.5 91.3 90.6 108.4 108.3 110.5 109.9 108.5 111.1 111.1 110.1 111.1 113.1 113.5 114.0 174.0 174.7 174.9 175.2 175.7 176.4 140.8 142.3 142.4 141.8 143.4 5.33 57.8 60.1 50.5 63.6 69.2 63.2 71.6 57.9 75.3 74.8 71.6 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 1 Source: Board of Governors of the Federal Reserve System. 304 134.0 TABLE B-51.—Capacity utilization rates, 1948-87 [Percent; monthly data seasonally adjusted] Manufacturing Year or month Total industry 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987" 1986:Jan Feb Mar fe: June July Aug Sept Oct Nov Dec 1987:Jan Feb Mar wfayZ June July Aug Sept Oct Nov.. Dec "... Total Durable goods Nondurable goods Primary processing Advanced processing 82.5 74.2 87.3 76.2 80.0 73.2 82.8 85.8 85.4 89.3 80.1 88.5 90.2 84.9 89.4 80.6 79.8 83.4 85.9 89.3 80.0 87.0 86.1 83.6 75.0 81.6 92.0 89.4 84.7 75.4 83.0 84.2 84.4 83.1 74.9 81.1 80.1 77.3 81.4 83.5 85.6 79.8 77.9 81.5 83.8 87.8 80.5 77.2 81.6 83.4 84.6 Mining Utilities 89.5 91.1 86.7 87.0 86.7 87.0 86.7 86.1 86.7 87.7 88.0 91.0 91.4 85.3 86.9 87.7 91.1 87.6 87.0 86.1 82.9 84.6 87.0 79.2 77.4 82.8 87.0 82.6 76.1 73.3 79.7 86.2 81.6 83.9 83.5 87.4 88.1 84.2 80.9 79.5 86.4 91.3 85.4 78.3 76.1 81.1 85.1 81.5 87.3 90.2 91.4 91.1 72.3 77.4 81.4 84.2 84.6 74.8 79.4 82.9 84.1 76.3 81.4 84.5 86.1 85.3 72.2 79.3 83.1 86.0 86.6 72.6 76.8 80.5 83.1 83.5 89.2 89.7 89.9 90.3 90.7 84.3 85.3 85.1 85.0 85.6 79.3 78.2 70.3 73.9 80.5 77.9 76.7 66.9 70.3 78.7 81.3 80.6 75.4 79.4 83.3 77.9 78.1 67.5 73.9 80.9 80.0 78.3 71.7 74.0 80.3 93.2 92.9 83.4 77.9 84.0 85.4 84.2 81.4 80.0 83.0 80.1 79.7 81.0 78.5 77.2 78.4 82.4 83.5 84.9 80.9 81.8 84.6 79.7 78.8 79.4 82.4 76.4 77.6 82.3 79.1 79.5 81.0 80.3 79.2 79.5 79.2 78.9 80.7 80.2 79.2 79.9 79.6 79.3 78.7 78.0 77.0 77.5 76.9 76.4 83.8 83.3 82.5 83.3 83.6 83.7 82.9 82.0 80.9 81.7 81.4 81.1 79.8 79.3 78.4 79.1 78.8 78.4 83.4 81.6 79.9 77.6 76.4 74.7 81.8 80.5 79.0 79.1 77.6 78.1 79.2 79.1 78.8 79.1 79.2 79.7 79.7 79.6 79.4 79.5 79.6 80.2 76.9 76.7 76.9 76.9 77.0 77.3 83.8 83.8 83.1 83.5 83.5 84.4 81.3 81.5 81.5 81.8 82.5 83.1 78.9 78.6 78.4 78.5 78.3 78.7 74.5 73.9 73.1 73.4 74.5 74.2 79.4 78.1 77.5 79.2 79.8 79.3 79.2 79.7 79.7 79.6 79.9 80.3 79.6 80.0 80.3 80.2 80.4 80.8 76.9 77.6 77.9 77.5 77.6 77.8 83.7 83.6 83.9 84.2 84.6 85.2 82.7 82.4 83.1 83.5 83.2 84.0 78.2 79.0 79.1 78.7 79.2 79.2 76.1 75.8 75.5 75.9 76.5 76.6 78.5 78.8 78.2 76.8 79.2 79.0 81.1 81.4 81.1 81.9 82.0 82.1 81.5 81.5 81.3 82.1 82.3 82.2 78.6 78.6 78.4 80.0 80.1 79.8 85.9 85.8 85.5 85.0 85.5 85.8 85.4 85.3 85.1 86.1 87.0 87.4 79.8 79.9 79.5 80.2 80.2 80.0 76.8 78.2 79.1 80.2 80.2 80.6 80.2 87.1 87 4 87.4 80.9 790 84.0 87.9 83.6 74.1 78.8 82 4 84.8 85.2 80.9 79.9 721 74.6 81.0 80.4 79.4 80.7 Source: Board of Governors of the Federal Reserve System. 305 93.2 93.9 95.6 95.1 93.7 94.5 92.8 81.3 80.0 80.5 81.0 80.5 Industrial materials TABLE B-52.—New construction activity, 1929-87 [Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates] Public construction Private construction Tntal Year or month new construction Nonresidential buildings and other construction' Residential1 buildings Total New Total a housing units Total and Federal State local6 Total Commercial3 Industrial Other4 1.1 .1 .3 .3 .4 .2 0.9 .2 .3 .4 .8 .3 2.6 .5 1.2 1.3 1.5 1.2 .9 1.1 2.5 1.6 3.8 3.6 5,8 10.7 6.3 3.1 0.2 .5 .8 12 3.8 9.3 5.6 2.5 2.3 1.1 3.1 2.4 2.0 1.3 1929 1933 1939 1940 1941 1942.. 1943 1944 10.8 29 8.2 87 12.0 141 8.3 5.3 8.3 12 4.4 51 6.2 3.4 2.0 2.2 3.6 5 2.7 30 3.5 17 ,9 .8 3.0 3 2.3 26 3.0 14 .6 4.7 8 1.7 21 2.7 17 1.1 1.4 1945 1946 5.8 14.3 3.4 12.1 1.3 6.2 .7 4.8 2.1 5.8 .2 1.2 .6 1.7 1.3 3.0 2.4 2.2 1.7 .9 .7 1.4 New series 1947 1948 1949 20.0 261 26.7 16.7 21.4 20.5 9.9 131 12.4 7.8 105 10.0 6.9 82 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 12 1.5 2.5 3.5 4.8 1950 1951 1952 1953 1954 33 6 35.4 36.8 391 41.4 26.7 26.2 26.0 27.9 29.7 181 15.9 15.8 166 18.2 15 6 13.2 12.9 13 4 14.9 86 10.3 10.2 113 11.5 1.4 1.5 1.1 1.8 2.2 1.1 2.1 2.3 2.2 2.0 61 6.7 6.8 73 7.2 6.9 9.3 10.8 11.2 11.7 16 3.0 4.2 41 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 39.3 219 20.2 19.0 19 8 24.3 18 2 16.1 14.7 154 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 28 2.7 3.0 3.4 3.7 8.9 10.0 11.1 12.1 12.3 1960 1961 1962 1963 54 7 56.4 60 2 64.8 389 39.3 42 3 45.5 23 0 23.1 25 2 27.9 17 3 17.1 194 21.7 15 9 16.2 17 2 17.6 42 4.7 51 5.0 29 2.8 28 2.9 89 8.7 92 9.7 15.9 17.1 17.9 19.4 36 3.9 39 4.0 12.2 13.3 14.0 15.4 1964 72.6 52.4 30.5 24.1 21.8 6.8 3.6 11.5 20.2 3.7 16.5 1965 1966 1967 1968 1969 78.5 818 83.5 93 2 100.5 56.6 58.0 58.1 65.7 72.7 30.2 286 28.7 342 37.2 23.8 218 21.5 26.7 29,2 26.3 294 29.4 316 35.5 8.1 8.1 8.0 9.0 10.7 5.1 66 6.0 6.0 6.8 13.1 14.7 15.4 16.6 17.9 21.9 23.8 25.4 27.4 27.8 3.9 38 3.3 3.2 3.2 18.0 20.0 22.1 24.2 24.6 1970 1971 1972 1973 1974 1013 117.9 133 9 147 4 147.8 734 88.2 103.9 115 0 109.6 359 48.5 607 Ho 271 38.7 501 546 43!4 37 5 39 7 43 2 49 9 53.7 111 13.0 154 17 7 17.6 65 5.4 47 62 7.9 199 21.3 231 26 0 28.2 27.9 29.7 30.0 32.3 38.1 31 3.8 4.2 47 5.1 24.8 25.9 25.8 27.6 33.0 1975 1976 1977 1978 1979 144.3 163 0 188.0 225.9 252.4 102.6 122.1 148.6 178.4 200.7 51.6 68 3 92.0 109.8 116.4 36.3 50 8 72.2 85.6 89.3 51.0 53 8 56.6 68.6 84.3 13.9 13 7 15.7 19.7 27.1 8.0 72 7.7 11.0 15.0 29.1 33 0 33.2 37.9 42.3 41.7 40.9 39.4 47,5 51.7 6.1 6.8 7.1 8.1 8.6 35.6 34.1 32.4 39.3 43.1 1980 1981 1982 1983 1984 251.7 260 2 246 6 281.3 328.2 193.3 203.6 192.9 227.5 271.0 100.4 99 2 84 7 125.5 153.8 69.6 694 57 0 94!6 113.8 92.9 104 4 108 2 102.0 117.1 32.9 38.0 414 41.0 54.9 13.8 17.0 17 3 12.9 13.7 46.2 49.4 49.5 48.1 48.5 58.5 56.5 53.7 53.8 57.7 9.6 10 4 10 0 10.6 11.2 48.8 46.1 43.7 43.2 46.4 1985 1986 1987 K. 356.0 3888 399.5 291.7 3166 324.1 158.5 1871 198.1 114 7 1332 139.6 133 2 129 4 126.0 66.9 64.2 60.3 15.8 13.7 13.1 50.5 51.5 52.6 64.3 72.2 75.4 12 0 12 5 13.9 52.3 597 61.5 .0 .1 .6 New series See next page for continuation of table. 306 TABLE B-52.—New construction activity, 1929-87—Continued [Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates] Public construction Private construction Trttal Year or month new construction Residential buildings > Nonresidential buildings and other constructionl Total Total 2 housing units Total Total Commercial a Industrial 4 Federal State and local5 Other May June Apr 376.5 375 7 389.3 417.8 383.2 371.6 305 3 305 0 3191 345.2 309.1 299.9 167 0 1686 187.4 213.0 181.2 172.0 121.4 123 7 125.3 128.2 131.3 135.1 138.3 136.5 131.7 132.1 127.9 127.9 69.7 68.0 66.2 65.4 62.9 63.1 15.5 15.2 13.4 14.4 13.4 13.0 53.1 53.2 52.1 52.3 51.7 51.8 71.3 70.7 70.2 72.6 74.1 71.7 12.7 12.9 12.2 12.5 12.5 12.1 58.6 57.8 58.0 60.1 61.6 59.7 July Aug Sept Oct Nov Dec 391.0 395.3 400.1 394.9 3906 380.2 318.4 322 6 324.9 322.9 320 4 306.8 191.9 194.0 198.8 192.6 194 5 181.7 136.5 136.5 137.6 139.0 138.5 137.6 126.5 128.6 126.1 130.3 126.0 125,1 62.6 64.4 62.8 63.8 61.7 62.3 12.9 13.2 13.0 14.6 13.4 13.2 51.1 51.0 50.3 51.9 50.8 49.7 72.6 72.7 75.2 71.9 70.2 73.3 12.1 12.2 14.3 11.3 12.3 13.0 60.5 60.5 60.9 60.6 57.9 60.3 1987-Jan Feb Mar Apr May June 384.7 401.6 388.3 3962 396.7 397.2 310.2 326.5 312.2 320 5 321.4 324.3 187.8 203.1 190.8 199 5 195.9 200.9 137.3 137.0 139.5 139.7 139.4 138.2 122.4 123.3 121.4 121.0 125.5 123.4 58.3 60.7 59.9 58.4 60.4 58.9 12.1 12.1 11.4 11.5 13.4 13.0 52.0 50.5 50.1 51.1 51.7 51.4 74.5 75.2 76.1 75.7 75.3 72.9 13.4 11.6 12.8 12.4 14.6 14.0 61.2 63.6 63.4 63.3 60.7 58.9 July Aug Sept Oct Nov Oec p 398.5 402 9 402.8 403.5 4113 409.7 323 8 329 8 324.9 326.7 333 6 330.1 198 0 2002 197.0 198.8 199 8 200.8 137.9 138 2 140.0 141.0 142 4 143.2 125.8 129 6 127.9 127.9 133 8 129.3 59.6 61.6 59.7 60.6 64.7 60.8 13,0 13.7 14.4 13.6 14.4 13.4 53.2 54.4 53.8 53.7 54.7 55.1 74.6 73.0 77.9 76.8 77.7 79.6 14.8 14.2 16.2 13.7 14.9 13.8 59.8 58.8 61.7 63.1 62.8 65.9 1986* Jan Feb Mar 1 Beginning 1960, farm residential buildings included in residential buildings; prior to 1960, included in nonresidential buildings and other construction. 2 Includes residential improvements, not shown separately. Prior to 1964, also includes nonhousekeeping units (hotels, motels, etc.) 3 Office buildings, warehouses, stores, restaurants, garages, etc., and, beginning 1964, hotels and motels; prior to 1964 hotels and motels are included in total residential. 4 Religious, educational, hospital and institutional, miscellaneous nonresidential, farm (see also footnote 1), public utilities, and all other private. 6 Includes Federal grants-in-aid for State and local projects. Source: Department of Commerce, Bureau of the Census. 307 TABLE B-53.—New bousing units started and authorized, 1959-87 [Thousands of units] New private housing units authorized2 New housing units started Private and public' Year or month 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 86.6 61.1 71.6 80.9 85.0 1970 1971 1972 1973 1974 1,469.0 2,084.5 2,378.5 2,057.5 1,352.5 1,433.6 2,052.2 2,356.6 2,045.3 1,337.7 812.9 1,151.0 1,309.2 1,132.0 888.1 1,171.4 1,547.6 2,001.7 2,036.1 1,760.0 1,160.4 1,537.5 1,987.1 2,020.3 1,745.1 1980... 1981.. 1982.. 1983.. 1984... 1,312.6 1,100.3 1,072.1 1,712.5 1,755.8 1985 1986 1987 "... 1,745.0 1,807.1 1975.. 1976.. 1977.. 1978.. 1979.. 1 Type of structure Private (farm and nonfarm)* Total 1 unit 2 to 4 units Total 1 unit 5 units or more 2 to 4 units 5 units or more 1,208.3 938.3 77.1 192.9 998.0 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 87.1 118.9 100.8 187.4 273.8 383.3 465.6 464.9 422.5 325.1 376.1 527.3 571.2 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 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 1,037.2 820.5 366.2 892.2 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 1,741.8 1,805.4 1,617.1 1,072.4 1,179.4 1,143.7 93.4 84.0 65.3 576.1 542.0 408.2 1,733.3 1,769.4 1,539.0 956.6 1,077.6 1,036.3 120.1 108.4 87.3 656.6 583.5 415.3 283.0 257.4 338.7 471.5 590.8 108.4 450.0 Seasonally adjusted annual rates 1986:Jan Feb Mar SE Nov Dec 1987:Jan Feb Mar Apr May.... June.... July Aug Sept.... Oct Nov Dec... 115.9 107.2 151.1 188.3 186.8 183.6 2,004 1,923 1,887 1,945 1,848 1,842 1,302 1,183 1,195 1,220 1,219 1,212 100 106 82 81 83 79 602 634 610 644 546 551 1,848 1,769 1,810 1,874 1,778 1,793 1,058 1,024 1,038 1,132 1,083 1,110 131 112 104 115 120 106 659 633 668 627 575 577 172.2 163.8 154.3 154.9 115.9 113.1 1,786 1,800 1,689 1,657 1,637 1,813 1,147 1,180 1,123 1,114 80 88 62 85 71 108 559 532 504 458 437 472 1,778 1,728 1,687 1,664 1,667 1862 1,098 1,059 1,071 1,036 1,028 1,184 108 108 99 104 94 105 572 561 517 524 545 573 105.1 102.8 141.3 159.6 158.3 163.2 1,816 1,838 1,730 1,643 1,606 1,586 1,253 1,303 1,211 1,208 1,130 79 76 85 67 67 85 484 459 434 368 409 413 1,652 1,676 1,719 1,598 1,493 1,517 1,085 1,204 1,150 1,058 1,009 1,039 96 109 94 94 91 85 471 363 475 446 393 393 152.5 143.9 152.3 139.1 116.6 1,598 1,585 1,685 1,537 1,639 1,374 1,143 1,111 1,211 1,105 1,110 1,023 59 59 50 66 51 48 396 415 424 366 478 303 1,487 1,502 1,502 1,463 1,469 1,361 993 1,023 992 977 983 974 87 83 80 79 82 81 407 396 430 407 404 306 1 Units in structures built by private developers for sale upon completion to local public housing authorities under the Department of Housing and Urban Development "Turnkey" program are classified as private housing. Military housing starts, including those financed with mortgages insured by FHA under Section 803 of the National Housing Act, are included in publicly owned starts and excluded from total private starts. 2 Authorized by issuance of local building permit: in 17,000 permit-issuing places beginning 1984; in 16,000 places for 1978-83; in 14,000 places for 1972-77; in 13,000 places for 1967-71; in 12,000 pfaces for 1963-66; and in 10,000 places prior to 1963. 3 Not available separately beginning January 1970. Source: Department of Commerce, Bureau of the Census. 308 TABLE B-54.—Business expenditures for new plant and equipment, 1947-88 [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 1986 4 1987 4 1988 1986:1 III"""!!!! IV 1987:1 III!!!!!!!I IV4 1988: I 4 All industries 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 92.91 103.40 120.03 139.67 142.42 158.44 184.82 217.76 254.96 282.80 315.22 310.58 304.78 354.44 387.13 379.47 390.57 419.00 380.04 376.21 375.50 386.09 374.23 377.65 393.13 417.25 427.97 429.07 Total Addenda Nonmanufacturing NonDurable durable Total l goods goods ComPublic mercial Min- Transutiliing portaand tion ties other Total nonfarm busi-2 ness Nonmanufacturing Manufacturing Total Surveyed quarterly Surveyed annu-3 ally 8.73 9.25 7.32 3.39 3.54 2.67 5.34 5.71 4.64 11.38 13.53 12.96 0.69 .93 .88 2.69 3.17 2.80 1.64 2.67 3.28 6.38 677 6.01 22.27 25.97 24.03 873 9.25 7.32 13.54 1673 1672 11.38 13.53 12.96 2.16 3.19 376 7.73 11.07 12.12 12.43 12.00 3.22 5.12 5.75 5.71 5.49 4.51 5.95 6.37 6.72 6.51 13.83 15.74 16.04 17.53 16.85 .84 1.11 1.21 1.25 1.29 2.87 3.60 3.56 3.58 2.91 3.42 3.75 3.96 4.61 4.23 6.70 7.29 7.31 8.09 8.42 25.81 31.38 32.16 34.20 33.62 7.73 11.07 12.12 12.43 12.00 18.08 20.31 20.04 2177 21.62 13.83 1574 16.04 17.53 16.85 4.25 4.57 4.00 4.23 476 12.50 16.33 17.50 12.98 13.76 5.87 8.19 8.59 6.21 6.72 6.62 8.15 8.91 6.77 7.04 18.44 21.57 23.04 20.86 22.12 1.31 1.64 1.69 1.43 1.35 3.10 3.56 3.84 2.72 3.47 4.26 4.78 5.95 5.74 5.46 9.77 11.59 11.56 10.97 11.84 37.08 45.25 48.62 42.55 45.17 12.50 16.33 17.50 12.98 13.76 24.58 28.91 31.11 29.57 31.41 18.44 21.57 23.04 20.86 22.12 6.14 7.35 8.08 872 9.29 16.36 15.53 16.03 17.27 21.23 8.28 7.43 7.81 8.64 10.98 8.08 8.10 8.22 8.63 10.25 23.08 22.80 24.83 26.40 30.04 1.29 1.26 1.41 1.26 1.33 3.54 3.14 3.59 3.64 4.71 5.40 5.20 5.12 5.33 5.80 12.86 13.21 14.71 16.17 18.20 48.99 48.14 51.61 53.59 62.02 16.36 15.53 16.03 17.27 21.23 32.63 32.60 35.58 36.33 40.80 23.08 9.55 22.80 9.80 24.83 1075 26.40 9.93 30.04 10.76 25.41 31.37 32.25 32.34 38.27 13.49 17.23 17.83 17.93 19.97 11.92 14.15 14.42 14.40 16.31 34.12 39.03 40.50 44.08 49.47 1.36 1.42 1.38 1.44 1.77 5.66 6.68 6.57 6.91 7.23 6.49 7.82 9.33 10.52 11.70 20.60 23.11 23.22 25.22 28.77 7079 82.62 83.82 88.92 100.02 25.41 31.37 32.25 32.34 36.27 45.39 51.25 51.57 56.58 6374 34.12 11.27 39.03 12.22 40.50 11.07 44.08 49.47 14.27 36.99 33.60 35.42 42.35 52.48 19.80 16.78 18.22 22.63 26.77 17.19 16.82 17.20 19.72 25.71 54.92 59.31 67.98 77.67 87.19 2.02 2.67 2.88 3.30 4.58 7.17 6.42 7.14 8.00 9.16 13.03 14.70 16.26 17.99 19.96 3271 35.52 41.69 48.39 53.49 106.15 109.18 120.91 139.26 159.83 69.16 36.99 33.60 75.58 35.42 85.49 42.35 96.91 52.48 107.35 54.92 14.24 59.31 16.26 67.98 17.51 77.67 19.24 87.19 20.16 53.66 58.53 67.48 78.58 95.92 25.37 27.50 32.77 39.46 48.50 28.28 31.03 34.71 39.13 47.42 88.76 6.12 99.91 7.63 117.34 9.81 139.18 11.22 159.04 12.81 9.95 11.10 12.20 13.36 16.05 20.23 22.90 27.83 31.50 35.63 52.47 58.29 67.51 83.09 94.56 162.60 179.91 208.15 245.34 284.94 53.66 108.95 88.76 20.19 58.53 121.38 99.91 21.47 67.48 140.67 117.34 23.33 78.58 16676 139.18 27.58 95.92 189.02 159.04 29.98 112.33 126.54 120.68 116.20 138.82 55.36 59.81 55.35 53.08 66.24 56.96 66.73 65.33 63.12 72.58 170.47 188.68 189.89 188.58 215.61 16.60 15.84 14.79 13.97 16.52 37.74 41.21 45.43 44.96 47.48 100.14 110.24 109.63 114.45 13475 314.47 349.26 347.47 343.35 398.99 153.48 142.69 147.86 159.85 73.27 69.14 71.85 73.98 80.21 73.56 76.01 85.87 233.65 15.88 18.02 236.78 11.22 18.80 242.71 11.18 19.10 259.15 11.85 20.63 48.81 46.38 44.53 45.04 150.94 160.38 167.89 181.63 431.94 153.48 427.23 142.69 147.86 159.85 145.11 142.19 139.43 144.07 68.71 68.56 69.42 69.87 76.39 73.62 70.01 74.20 234.93 13.13 18.50 47.17 156.14 234.03 11.29 18.40 46.43 157.91 236.07 10.14 18.81 45.81 161.31 242.02 10.31 19.50 46.12 166.08 145.11 142.19 139.43 144.07 234.93 234.03 236.07 242.02 140.65 140.79 147.56 162.45 70.47 68.76 71.78 76.40 70.18 72.03 75.78 86.05 233.58 10.31 18.98 236.87 11.02 17.67 245.58 11.64 19.17 254.80 11.74 20.60 160.70 164.69 169.87 176.29 140.65 14079 147.56 162.45 233.58 236.87 245.58 254.80 164.68 165.94 78.41 77.70 86.27 263.29 88.23 263.14 11.86 22.92 45.36 183.15 12.04 20.53 46.56 184.01 164.68 165.94 263.29 263.14 15.99 21.39 20.05 15.19 16.86 43.60 43.48 44.90 46.16 112.33 126.54 120.68 116.20 138.82 202.15 22272 22679 227.15 260.16 170.47 188.68 189.89 188.58 215.61 31.68 34.04 36.89 38.56 44.55 278.46 233.65 44.81 284.54 236.78 47.75 242.71 259.15 1 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 tne 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 October and November 1987, corrected for biases. Source: Department of Commerce, Bureau of Economic Analysis. 309 TABLE B-55.—Manufacturing and trade, sales and inventories, 1948-87 [Amounts in millions of dollars; monthly data seasonally adjusted] Total manufacturing and trade Year or month 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1986:Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1987; Jan Feb Mar June.... July Aug Sept Oct Nov Dec p... Sales 1 Inventories 2 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 90,765 98,607 105,585 108,100 116,769 130,931 153,762 177,946 182,402 204,381 229,773 260,587 298,139 327,871 356,697 348,746 369,266 408,721 419,459 425,752 424,035 419,567 415,687 421,276 417,493 422,031 421,167 423,040 437,226 429,250 429,782 443,623 424,550 443,169 445,032 444,357 446,282 451,734 452,652 457,499 462,434 462,411 460,616 466,573 52,507 49,497 59,822 70,242 72,377 76,122 73,175 79,516 87,304 89,052 87,093 92,129 94,713 95,594 101,063 105,480 111,503 120,907 136,790 144,870 155,771 169,420 177,493 187,722 201,862 233,171 285,883 288,417 318,647 351,164 399,220 451,166 493,921 527,756 574,126 589,280 641,328 650,695 652,771 651,884 652,872 653,905 654,980 652,853 653,566 656,371 655,553 653,666 655,614 655,257 652,624 659,001 660,470 663,010 665,877 671,609 674,753 677,743 678,442 682,323 689,926 696,416 701,868 Ratio1 1.42 1.53 1.36 1.55 1.58 1.58 1.60 1.47 1.55 1.59 1.60 1.50 1.56 1.54 1.50 1.49 1.47 1.45 1.47 1.60 1.58 1.60 1.64 1.61 1.54 1.52 1.61 1.58 1.56 1.53 1.53 1.51 1.51 1.48 1.67 1.56 1.52 1.54 1.54 1.54 1.56 1.57 1.55 1.56 1.55 1.56 1.55 1.50 1.53 1.52 1.47 1.55 1.49 1.49 1.50 1.50 1.49 1.50 1.48 1.48 1.49 1.51 1.50 Manufacturing Sales' Inventories 2 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 98,797 113,202 126,905 143,936 154,391 168,129 163,350 171,242 187,869 189,928 189,442 190,391 188,618 185,483 189,276 187,361 188,957 186,331 187,249 190,384 189,744 190,159 197,474 189,956 195,608 197,430 195,958 196,929 200,591 199,395 200,404 205,732 206,396 207,226 211,695 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 98,203 101,653 102,656 108,237 124,626 157,792 159,935 175,195 189,214 210,509 241,100 264,281 282,645 311,421 312,152 334,163 326,780 318,238 325,756 324,551 323,774 323,315 322,216 321,261 320,888 319,613 318,356 318,276 318,755 318,238 320,654 320,535 320,090 320,785 321,848 321,621 323,333 325,394 326,670 328,554 331,812 333,221 Merchant wholesalers Ratio 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 1.77 1.74 1.77 1.90 1.83 1.68 1.59 1.67 1.84 1.69 1.62 1.58 1.58 1.67 1.65 1.95 1.80 1.74 1.74 1.70 1.71 1.72 1.75 1.71 1.72 1.70 1.72 1.71 1.67 1.68 1.68 1.61 1.69 1.64 1.62 1.64 1.63 1.60 1.62 1.62 1.59 1.59 1.60 1.57 Sales 1 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 66,669 79,472 93,704 102,013 96,290 100,424 113,404 114,563 115,109 115,251 113,359 112,945 113,887 110,625 113,469 114,358 114,056 117,741 117,284 117,892 118,462 116,545 123,281 123,009 123,439 124,486 124,836 126,196 128,164 129,912 130,384 127,400 127,419 Inventories 2 Ration 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 56,972 64,365 72,801 86,405 99,262 113,478 118,259 128,196 129,803 140,865 144,244 147,375 144,952 144,967 145,518 145,900 145,650 146,585 147,711 147,939 148,253 147,268 147,548 147,352 149,347 149,408 149,565 150,050 152,673 153,093 152,648 151,222 153,245 156,632 157,287 158,183 Retail trade Sales 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 1.27 1.25 1.24 1.29 1.30 1.28 1.17 1.15 1.31 1.29 1.28 1.27 1.25 1.20 1.20 1.35 1.27 1.21 1.25 1.28 1.26 1.28 1.29 1.28 1.32 1.29 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 24,758 27,453 29,390 31,264 34,513 38,209 42,658 45,167 49,010 54,699 60,207 67,013 74,731 79,776 86,555 89,107 97,599 107,448 114,968 121,201 118,393 117,590 117,259 118,113 119,507 119,605 1.29 1.30 1.26 1.26 1.25 1.24 1.28 1.21 1.22 1.22 1.23 1.23 1.21 1.18 1.18 1.20 1.23 1.24 120,478 121,735 129,101 122,222 121,731 127,687 118,049 124,280 124,593 124,960 124,867 126,307 127,061 128,931 126,790 125,631 125,990 127,459 Inventories2 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 35,249 38,885 42,455 43,641 49,856 54,809 62,989 70,852 71,510 79,087 89,149 102,306 110,804 116,162 126,854 134,509 147,325 166,300 179,671 187,158 181,176 183,354 184,613 185,765 184,987 185,720 187,772 188,001 187,057 190,070 188,954 187,034 189,000 190,527 193,355 195,042 197,088 200,039 201,762 201,826 202,408 204,740 207,317 210,464 1 Monthly average for year and total for month. 2 Seasonally adjusted, end of period. Inventories beginning January 1982 for manufacturing and December 1980 for wholesale and retail trade are not comparable with earlier periods. 3 Inventory/sales ratio. Beginning 1967 annual data are averages of monthly figures except for manufacturing and trade combined, which are based on December inventories and monthly average sales for the year. For earlier periods, data are weighted averages. For monthly data, ratio of inventories at end of month to sales for month. Note.—Earlier data are not strictly comparable with data beginning 1958 for manufacturing and beginning 1967 for wholesale and 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. Source: Department of Commerce, Bureau of the Census. 310 TABLE B-56.—Manufacturers' shipments and inventories, 1947-87 [Millions of dollars; monthly data seasonally adjusted] 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 1983 1984 1985 1986 1987 P. 1986:Jan Feb Mar.... Apr MayJune... July..., Aug..., Sept.., Oct Nov.... Dec... 1987:Jan Feb Mar... Apr.... MayJune.. July... Aug... Sept.. Oct.... Nov... Dec P. 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 98,797 113,202 126,905 143,936 154,391 168,129 163,350 171,242 187,869 189,928 189,442 200,716 190,391 188,618 185,483 189,276 187,361 188,957 186,331 187,249 190,384 189,744 190,159 197,474 189,956 195,608 197,430 195,958 196,929 200,591 199,395 200,404 205,732 206,396 207,226 211,695 1 Inventories2 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 79,352 84,956 96,623 98,930 100,142 105,323 98,396 99,082 97711 100,941 98,619 99,602 99,712 98,185 100,655 101,031 100,009 106,394 99,318 103,601 104,750 102,747 102,477 104,476 103,032 104,135 108,433 108,251 108,378 113,282 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 83,998 86,286 91,246 90,997 89,300 95,393 91,995 89,536 87,772 88,335 88,742 89,355 86,619 89,064 89,729 88,713 90,150 91,080 90,638 92,007 92,680 93,211 94,452 96,115 96,363 96,269 97,299 98,145 98,848 98,413 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 98,203 101,653 102,656 108,237 124,626 157,792 159,935 175,195 189,214 210,509 241,100 264,281 282,645 311,421 312,152 334,163 326,780 318,238 333,221 325,756 324,551 323,774 323,315 322,216 321,261 320,888 319,613 318,356 318,276 318,755 318,238 320,654 320,535 320,090 320,785 321,848 321,621 323,333 325,394 326,670 328,554 331,812 333,221 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 81,398 101,739 102,874 112,581 121,601 137,891 160,533 174,620 186,347 200,711 200,220 218,524 213,750 207,854 216,348 213,429 212,598 212,697 212,226 211,951 211,063 210,462 209,684 209,402 209,033 209,219 207,854 209,090 208,644 207,987 208,683 209,096 208,654 209,951 210,921 211,680 213,436 215,931 216,348 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 58,755 60,047 64,759 62,163 59,371 60,249 61,236 60,901 60,500 60,596 60,211 60,326 59,835 59,478 59,465 58,966 59,292 59,371 59,817 59,499 59,226 59,770 59,723 59,759 59,417 59,328 59,554 59,587 60,031 60,249 1 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 87,508 87,802 97,828 97,219 95,310 100,799 97,858 97,361 97,998 97,760 97,672 97,565 97,137 97,011 96,978 96,892 96,108 95,310 95,589 95,617 95,069 95,335 95,768 96,060 96,904 97,706 98,623 99,390 100,824 100,799 Nondurable goods industries Finished goods 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 54,448 52,371 55,937 54,368 53,173 55,300 54,335 54,336 54,199 53,870 54,068 53,172 53,490 53,195 52,959 53,175 53,819 53,173 53,684 53,528 53,692 53,578 53,605 52,835 53,630 53,887 53,503 54,459 55,076 55,300 Total 12,836 13,881 13,261 15,539 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 96,298 110,710 111,932 115,639 113,030 110,384 116,873 112,327 111,953 111,077 111,089 110,265 110,198 110,426 109,929 108,954 109,243 109,536 110,384 111,564 111,891 112,103 112,102 112,752 112,967 113,382 114,473 114,990 115,118 115,881 116,873 Monthly average for year and total for month., Seasonally adjusted, end of period. Data beginning 1982 are not comparable with data for prior periods. Note.—Data beginning 1958 are not strictly comparable with earlier data. Source: Department of Commerce, Bureau of the Census. 2 311 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 43,798 44,550 44,826 42,865 42,986 45,635 42,894 42,801 42,444 42,376 42,159 42,178 42,593 42,502 42,092 42,181 42,123 42,986 43,021 43,023 43,191 43,624 44,045 44,184 44,394 44,602 45,288 45,109 45,420 45,635 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 18,357 18,649 18,807 18,775 17,338 18,793 18,016 18,061 17,618 17,411 17,303 17,395 17,270 17,021 17,084 17,272 17,269 17,338 17,612 17,914 18,018 17,832 18,029 18,134 18,034 18,385 18,432 18,554 18,736 18,793 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 48,555 48,733 52,006 51,390 50,060 52,445 51,417 51,091 51,015 51,302 50,803 50,625 50,563 50,406 49,778 49,790 50,144 50,060 50,931 50,954 50,894 50,646 50,678 50,649 50,954 51,486 51,270 51,455 51,725 52,445 TABLE B-57.—Manufacturers' new and unfilled orders, 1947-87 [Amounts in millions of dollars; monthly data seasonally adjusted] Unfilled orders 2 New orders 1 Unfilled orders—shipments ratio 3 Durable goods industries Year or month Capital Total Total 1947 1948!! 1949 1950.. 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 15,256 17,693 15,614 1980 1981 1982 1983 1984 1985 1986 1987" 1986: Jan Feb Mar May June July Aug Sept Oct. Nov Dec 1987: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec" , 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 99,532 115,032 131,546 147,403 156,161 167,752 161,600 173,915 190,065 190,631 189,482 203,270 190,981 190,928 188,769 186,606 186,127 187,022 186,334 185,208 193,043 188,841 190,153 196,894 187,356 194,485 199,399 200,624 201,397 205,454 206,065 203,157 206,719 209,399 209,626 214,769 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 79,360 83,553 77,676 87,485 98,875 99,600 100,131 107,672 99,022 101,265 100,937 98,176 97,298 97,899 99,679 96,303 102,947 99,976 99,979 105,681 96,434 101,932 106,213 106,977 106,992 109,181 109,213 106,678 109,345 111,095 110,949 116,409 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 21,469 22,143 26,714 26,970 26,671 29,624 24,956 27,659 26,613 25,357 25,429 25,851 26,404 25,340 27,155 27,542 27,268 29,142 27,024 26,856 27,396 28,310 30,031 29,987 31,982 29,540 29,753 30,416 30,085 33,559 Nondurable Total industries 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 83,924 86,431 91,189 91,030 89,351 95,598 91,959 89,663 87,832 88,430 88,829 89,123 86,655 88,905 90,096 88,865 90,174 91,213 90,922 92,553 93,186 93,647 94,405 96,273 96,852 96,479 97,374 98,304 98,677 98,360 1 2 9 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 98,401 104,547 109,926 115,422 106,158 107,147 121,061 158,884 188,467 172,037 180,562 203,475 259,770 302,145 323,393 319,094 306,302 338,849 365,177 373,495 372,974 404,104 374,085 376,395 379,681 377,011 375,777 373,842 373,845 371,804 374,463. 373,560 373,554 372,974 370,374 369,251 371,220 375,886 380,354 385,217 391,887 394,640 395,627 398,630 401,030 404,104 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 94,575 100,576 105,950 111,250 101,566 102,119 114,725 151,504 182,925 164,139 172,273 195,008 249,483 290,921 312,648 309,066 297,344 328,103 355,114 363,030 361,855 390,393 363,656 365,839 369,065 366,300 364,979 363,276 363,243 361,361 363,653 362,598 362,568 361,855 358,971 357,302 358,765 362,995 367,510 372,215 378,396 380,939 381,851 384,695 387,266 390,393 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 8,958 10,746 10,063 10,465 11,119 13,711 10,429 10,556 10,616 10,711 10,798 10,566 10,602 10,443 10,810 10,962 10,986 11,119 11,403 11,949 12,455 12,891 12,844 13,002 13,491 13,701 13,776 13,935 13,764 13,711 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 Durable goods 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 3.60 3.48 3.43 3.53 3.56 3.53 4.39 4.06 3.90 4.56 4.96 4.52 3.94 3.89 4.22 4.61 4.55 4.57 4.62 4.19 4.29 4.36 4.22 4.22 4.61 4.53 4.62 4.49 4.55 4.47 4.49 4.51 4.44 4.42 4.41 4.22 4.52 4.34 4.25 4.40 4.44 4.41 3.59 3.60 3.48 3.52 3.52 3.43 4.51 4.49 4.30 4.38 4.38 4.22 3.65 3.38 3.31 3.86 4.13 3.76 3.30 3.27 3.59 3.88 3.81 3.77 3.75 3.45 3.52 3.57 3.41 3.43 3.72 3.67 3.73 3.65 3.68 3.60 3.63 3.61 3.57 3.55 3.53 3.41 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. 312 PRICES TABLE B-58.—Consumer price indexes, major expenditure classes, 1946-87 [1967=100] Food and Year or month 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1986:Jan Feb Mar All items 58 5 66 9 72.1 714 721 77.8 79 5 801 805 80 2 814 84 3 86 6 87 3 88 7 89.6 90 6 917 92 9 94 5 97 2 100 0 104.2 109.8 116 3 1213 125 3 133.1 147 7 1612 170.5 1815 195.4 217 4 246 8 272.4 2891 298 4 311 1 322.2 328 4 340 4 328.4 327.5 326.0 325.3 iday".'.'"" 326.3 June 327.9 July 328.0 Aug 328.6 Sept 330.2 Oct , 330.5 Nov 330.8 Dec...;.... 331.1 1987: Jan 333.1 Feb 334.4 Mar 335.9 337.7 A/Pay"""" 338.7 June 340.1 July 340.8 Aug 342.7 Sept 344.4 Oct 345.3 Nov 345.8 Dec 345.7 Total1 Housing 2 Food 581 70.6 76.6 73 5 74.5 82.8 84 3 83.0 82 8 81.6 82.2 84 9 88.5 871 88 0 89.1 89 9 912 924 94.4 991 100 0 100 0 103.6 103.6 108.8 108.9 114 7 114.9 118 3 118 4 123.2 123.5 139.5 141.4 158.7 161.7 1721 175 4 177.4 180.8 1880 192 2 206.3 211.4 228 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 3118 319 7 324 5 333 0 307.9 315.6 307.7 315.3 307.8 315.4 308.5 316.1 309.4 317.0 309.5 317.1 312.2 320.1 314.6 322.7 315.1 323.2 315.6 323.7 316.4 324.6 317.0 325.2 320.5 328.9 321.6 330.1 321.6 330.0 322.5 331.0 324.0 332.5 325.4 334.1 325.1 333.6 325.4 333.8 326.4 334,9 326.9 335.3 3267 335.1 328.1 336.7 Total 60 6 65 2 69.8 70 9 72 8 77.2 78 7 80.8 817 82 3 83.6 86 2 87.7 88 6 90 2 90.9 917 92 7 93 8 94.9 97 2 100 0 104.0 110.4 118 2 123 4 128.1 133.7 148.8 164 5 174 6 1865 202 8 227 6 263 3 293.5 314 7 3231 336 5 349.9 360 2 3710 356.8 356.5 357.0 358.0 358.5 361.2 361.5 362.4 363.7 363.0 361.7 362.1 363.9 365.1 366.4 367.7 368.9 371.3 372.5 374.9 375.4 375.2 374.9 375.3 Other hold Apparel Trans- Medical Enter- goods Fuel and furnish- and portation and care tainment ings upkeep Shelter other services utilities 3 and operation 2 76 5 78 2 791 804 83 4 851 86 0 87 8 88.5 89 6 90 7 92 2 93 8 968 100 0 104 8 113.3 123 6 128 8 134 5 140.7 154 4 169 7 179 0 1911 210 4 239 7 2817 314 7 337 0 344 8 3617 382 0 402 9 4218 393.8 394.8 397.0 400.1 400.9 401.6 403.5 405.2 407.6 409.5 410.2 410.4 412.3 414.0 415.9 418.0 419.2 420.2 422.1 425.1 426.2 428.6 429.2 430.4 83.0 83 5 851 87.3 89 9 91.7 93 8 959 97.1 97 3 98 2 98 4 98.3 98 8 100 0 101.3 103.6 107 6 115 0 1201 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 6 384 7 380 7 394.6 390.0 385.5 381.8 382.5 393.8 389.4 389.5 388.3 379.1 371.1 371.0 373.7 374.8 374.9 374.2 377.5 387.6 388.1 391.1 389.8 381.3 378.2 376.9 1 2 3 913 90 9 89 9 89.9 919 92 3 93 1 93 8 93.7 93 8 94 6 95 0 95 3 97 0 100 0 103 8 107.7 1115 115 7 118 3 121.6 135 3 1510 1601 167 5 177 7 190 3 205 4 2213 233 2 238 5 242 5 247 2 250 4 254 9 248.8 249.0 249.8 249.6 249.9 250.2 250.5 250.5 251.5 251.6 251.2 252.4 253.1 253.5 254.3 255.2 254.9 254.9 255.1 255.4 255.8 255.6 255.6 255.3 67 5 78 2 83.3 801 79 0 86.1 85 3 84.6 84 5 84.1 85.8 87 3 87.5 88 2 89 6 90.4 90 9 919 92 7 93.7 961 100 0 105.4 111.5 116.1 119 8 122.3 126.8 136 2 142 3 147.6 154 2 159 6 166 6 178 4 186.9 1918 196 5 200 2 206.0 207 8 216 9 205.0 204.1 206.3 207.3 206.4 204.5 203.2 207.0 212.1 213.2 213.1 210.9 207.1 208.4 215.2 218.7 218.0 214.5 210.5 214.7 222.2 226.3 226.4 221.1 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 1506 165.5 177 2 185.5 212 0 249 7 280.0 2915 298 4 3117 319.9 307.5 316 8 323.9 319.2 309.6 303.3 305.7 308.6 304.7 301.3 302.2 302.6 304.3 304.8 308.5 310.0 310.6 313.3 314.6 316.7 318.5 320.2 320.4 321.9 324.1 323.3 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 89.5 934 100.0 106.1 113.4 120.6 128 4 132.5 137.7 150.5 168 6 184.7 202.4 219.4 239 7 2659 294.5 328.7 357.3 379 5 403.1 433.5 462.2 418.2 422.3 425.8 428.0 429.7 432.0 434.8 437.5 439.7 442.3 444.6 446.8 449.6 452.4 455.0 457.3 458.9 461.3 464.1 466.1 467.8 469.8 471.7 472.9 100.0 105.7 111.0 116.7 1229 126.5 130.0 139.8 152 2 159.8 167.7 176.6 188.5 205.3 221.4 235.8 246.0 2551 265.0 274.1 283.2 270.8 272.0 271.9 272.3 272.9 273.9 274.4 274.7 275.3 276.5 277.4 277.4 278.3 278.7 279.8 281.3 282.0 282.3 283.5 283.9 285.2 287.1 288.1 288.5 Energy3 901 90.3 918 94.2 94.4 94.7 95 0 94.6 96.3 97 8 100.0 100 0 101.5 105.2 • 110.4 104.2 107.0 116.8 1112 122 4 114.3 127.5 123.5 132.5 159.7 142.0 176.6 153 9 189.3 162.7 207.3 172 2 220.4 183.3 275.9 196.7 361.1 214.5 235.7 410.0 416.1 259.9 288.3 419.3 307 7 423.6 326.6 426.5 346.4 370.3 366.5 371.7 339.1 424.7 340.3 408.9 341.1 381.3 341.8 361.8 342.1 367.6 342.6 380.6 344.9 366.5 346.4 358.6 353.3 360.6 354.6 348.6 354.9 341.7 355.2 342.4 358.1 352.2 359.7 359.2 360.3 360.C 361.1 362.4 362.0 366.9 362.9 380.6 365.1 382.4 366.6 388.9 373.9 387.4 375.5 376.7 376.1 373.5 376.9 370.4 Includes alcoholic beverages, not shown separately. Series beginning 1967 not comparable with series for earlier years. See Tables 6-59 and B-60. 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. Source.- Department of Labor, Bureau of Labor Statistics. 313 TABLE B-59.—Consumer price indexes, selected expenditure classes, 1946-87 [1967=100, except as noted] Food Total 1946 1947 58.1 70.6 76.6 73.5 74.5 82.8 84.3 83.0 82.8 81.6 1948 1949 1950 1951 1952 1953!" 1954 1955 : 82.2 84.9 88.5 87.1 88.0 1956 1957 1958 1959 I960 96i::: 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986.!'. 1987 :: \Z 1986:Jan Feb Mar fez June July Aug Sept Oct Nov Dec 1987: Jan Feb Mar.. fe:: j* June Aug Sept Oct Nov Dec 1 100.0 103.6 108.8 114.7 118.3 123.2 139.5 158.7 172.1 177.4 188.0 206.3 228.5 248.0 267.3 278.2 284.4 295.1 302.0 311.8 324.5 307.9 307.7 307.8 308.5 309.4 309.5 312.2 314.6 315.1 315.6 316.4 317.0 320.5 321.6 321.6 322.5 324.0 325.4 325.1 325.4 326.4 326.9 326.7 328.1 89.1 89.9 91.2 92.4 94.4 99.1 100.0 103.6 108.9 114.9 118.4 123.5 141.4 161.7 175.4 180.8 192.2 211.4 234.5 254.6 274.6 285.7 291.7 302.9 309.8 319.7 333.0 315.6 315.3 315.4 316.1 317.0 317.1 At home Away from home Total Rent, residential Total 85.8 84.1 84.4 87.2 91.0 88.8 89.6 90.4 91.0 92.2 93.2 95.5 100.3 100.0 103.2 108.2 113.7 116.4 121.6 141.4 162.4 175.8 179.5 190.2 210.2 232.9 251.5 269.9 279.2 68.9 70.1 70.8 72.2 74.9 77.2 79.3 81.4 83.2 85.4 87.3 88.9 90.9 95.1 100.0 105.2 111.6 119.9 126.1 131.1 141.4 159.4 174.3 186.1 200.3 218.4 242.9 267.0 291.0 306.5 282.2 319.9 292.6 333.4 296.8 305.3 318.5 302.5 301.5 301.2 301.5 302.1 301.6 305.5 320.1 322.7 308.9 323.2 309.0 323.7 309.5 324.6 309.9 325.2 310.2 328.9 315.2 330.1 316.6 330.0 315.8 331.0 316.9 332.5 318.8 334.1 320.4 333.6 319.1 333.8 319.0 334.9 319.8 335.3 319.9 335.1 319.0 336.7 321.0 346.6 360.1 374.4 353.1 354.2 355.5 357.0 358.8 360.2 360.8 361.8 363.3 364.0 365.| 367.1 368.6 369.6 370.9 371.5 372.3 373.8 374.9 375.9 377.4 378.4 379.6 380.4 76.5 78.2 79.1 80.4 83.4 85.1 86.0 87.8 88.5 89.6 90.7 92.2 93.8 96.8 100.0 104.8 113.3 123.6 128.8 134.5 140.7 154.4 169.7 179.0 191.1 210,4 239.7 281.7 314.7 337.0 344.8 361.7 382.0 402.9 421.8 393.8 394.8 397.0 400.1 400.9 401.6 403.5 405.2 407.6 409.5 410.2 410.4 412.3 414.0 415.9 418.0 419.2 420.2 422.1 425.1 426.2 42«.6 429.2 430.4 68.0 70.4 73.2 76.2 80.3 83.2 84.3 85.9 87.5 89.1 90.4 91.7 92.9 94.0 95.0 95.9 96.9 98.2 100.0 102.4 105.7 110.1 115.2 119.2 124.3 130.6 137.3 144.7 153.5 164.0 176.0 191.6 208.2 224.0 103.0 236.9 108.6 249.3 115.4 121.9 128.1 118.8 119.0 119.6 120.9 121.1 121.6 122.5 122.9 123.6 124.0 124.3 124.2 125.3 125.8 126.4 127.1 127.3 127.9 129.3 130.1 129.8 129.4 129.2 129.1 264.6 280.0 291.5 273.4 273.7 275.0 277.9 278.4 279.4 281.2 281.7 283.2 284.6 285.6 286.0 287.1 288.0 288.3 288.8 289.4 289.6 291.2 293.1 294.5 295.4 295.5 297.2 Includes alcoholic beverages, not shown separately. «December 1982=100. See next page for continuation of table. Homeowners' costs 2 Maintenance and repairs Total Total 314 102.5 107.3 113.1 119.4 124.8 116.7 117.0 117.9 118.7 118.9 119.0 119.4 119.9 120.7 121.3 121.5 121.6 122.9 122.5 123.0 123.6 124.0 124.2 124.4 125.4 126.0 127.1 127.4 128.0 71.2 72.4 74.1 77.2 80.5 81.8 83.2 84.6 85.9 86.5 87.7 89.5 91.3 95.2 100.0 106.1 115.0 124.0 133.7 140.7 151.0 171.6 187.6 199.6 214.7 233.0 256.4 285.7 314.4 334.1 346.3 359.2 368.9 373.8 387.3 379.1 379.6 367.5 367.6 367.1 366.6 369.2 3?8.4 376.2 379.0 377.1 380.0 382.1 381.9 383.4 382.4 381.9 385.0 392.4 391.3 390.5 390.9 393.2 392.7 Fuel oil and other household fuel commodities 89.9 51.3 58.4 68.6 70.3 72.7 76.5 78.0 81.5 81.2 82.3 85.9 90.3 91.7 93.8 95.9 97.1 97.3 91.0 91.5 59.2 61.1 65.1 73.5 79.8 76.7 77.6 86.3 87.8 86.2 Household fuels Renters' costs Year or month Total * Fuel and other utilities Shelter Food and beverages 83.0 83.5 85.1 87.3 88.7 89.8 89.2 98.2 98.4 98.3 98.8 100.0 101.3 103.6 107.6 115.0 120.1 126.9 150.2 167.8 182.7 202.2 216.0 239.3 278.6 319.2 350.8 370.3 387.3 393.6 384.7 380.7 394.6 390.0 385.5 381.8 382.5 393.8 380.4 389.5 388.3 379.1 371.1 371.0 373.7 374.8 374.9 374.2 377.5 387.6 388.1 391.1 389.8 381.3 378.2 376.9 93.2 100.0 101.4 103.4 107.9 115.3 120.1 128.4 160.7 183.8 202.3 228.6 247.4 286.4 349.4 407.0 446.2 469.2 485.5 488.1 463.1 454.3 484.7 476.3 467.6 459.6 460.6 477.0 469.2 469.0 467.2 450.3 437.8 438.1 443.7 445.1 444.6 442.0 448.7 470.8 468.9 473.6 471.6 452.6 445.9 444.3 92.7 94.6 97.0 100.0 103.1 105.6 110.1 117.5 118.5 136.0 214.6 235.3 250.8 283.4 298.3 403.1 556.0 675.9 667.9 628.0 641.8 619.5 501.5 503.0 650.3 591.2 549.9 518.3 496.8 486.6 459.4 447.3 453.5 451.9 452.0 460.6 487.9 503.2 500.6 500.5 497.7 498.6 497.9 502.3 501.0 507.0 518.8 520.2 Gas (piped) and electricity Other utilities and public services 77.4 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 98.6 99.4 99.4 99.4 99.4 99.4 99.6 100.0 100.9 102.8 107.3 114.7 120.5 126.4 145.8 169.6 189.0 213.4 232.6 297.8 301.8 345.9 393.8 428.7 445.2 452.7 446.7 438.8 442.6 444.5 442.3 439.2 444.6 466.0 462.3 464.5 461.1 441.4 426.7 425.3 428.8 428.9 428.7 425.9 433.3 456.8 454.8 459.4 457.4 436.6 428.4 426.6 100.0 101.2 104.0 107.4 114.7 120.6 124.1 130.3 137.1 145.4 152.0 158.3 159.5 165.2 181.0 200.2 213.7 230.2 240.7 253.1 257.9 247.3 247.9 249.0 251.3 251.5 255.2 255.6 255.9 255.6 257.1 255.4 254.9 254.9 255.6 256.2 257;0 257.2 256.4 258.6 259.9 259.3 260.2 260.3 259.5 TABLE B-59.—Consumer price indexes, selected expenditure classes, 1946-87—Continued [1967=100, except as noted] Transportation Medical care Private transportatior Year or month Total 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1986:Jan Feb . . .. . Mar Apr May June July Aug Sept Oct ... . Nov Dec 1987-Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec ...... 50 3 55.5 618 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 2915 298.4 3117 319 9 307.5 316.8 323 9 319 2 309.6 303 3 305 7 308.6 304.7 3013 302 2 302 6 304 3 304.8 308 5 310 0 310.6 313 3 314 6 316.7 318.5 320.2 320.4 3219 3241 323.3 Total 3 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 93.0 934 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 2 299.5 308.5 317 3 312 2 302.1 295.3 297 8 300.8 296.5 292.8 293 7 2941 295 8 295.9 299 8 3013 301.9 304.8 306 3 308.6 310.5 312.0 312.1 313.8 316 0 315.1 New cars 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 1110 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 2 224.4 232.5 219 9 220 4 220.3 221.2 223 0 224.2 224.7 224.7 224 5 2271 230 7 232.2 233 0 230 2 229.4 230.4 231.3 232.0 232.7 232.1 231.6 233.8 2366 236.6 Used cars Motor fuel* 89.2" 75.9 718 691 77.4 80 2 89.5 83.6 86 9 94.8 96 0 1001 99 4 97 0 100.0 104 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 7 363.2 377.6 3741 370 7 367.2 364 8 363 6 362.5 360 3 358 0 359 5 360 6 3610 356 6 354 6 356 9 363.0 3716 378 6 383.0 385.5 385.7 387.3 388.0 389 0 388.4 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 91.9 918 91.4 94 9 97.0 100.0 1014 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 8 292.1 303.9 373 3 3515 308.5 279 5 289 3 299.4 280.2 265 9 2711 263 2 260 9 261.9 275 8 2881 290.0 297.2 299 7 306.0 311.2 319.5 318.4 315.2 315 2 310.6 3 4 Automobile maintenance and repair 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 90.4 916 92.8 94 5 96.2 100.0 105.5 112.2 120 6 129.2 1351 142.2 156.8 176.6 189.7 203.7 220.6 242.6 268.3 293.6 315 8 330.0 3415 3514 363.1 377.7 357 9 358 9 359.3 360.6 3613 362.1 363.4 364.3 365 0 365 7 368 4 370.7 3713 373 0 373.0 376.1 376.1 376.3 376.8 378.6 380.7 382.0 383.5 384.7 Other 100.0 103.4 109.7 119 2 128.4 1291 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 6 303.9 318.9 297.7 299 2 301.5 301.6 301.3 303.0 304.5 304.5 302.3 307.6 3116 312.0 314.9 314.0 314.4 315.1 315.9 317.6 318.8 318.6 319.7 324.1 326.9 326.8 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 8 426.4 441.4 419 6 422 2 421.2 422.2 423 7 425.4 428.0 428.0 428 5 428 7 4317 437.5 438.9 439 8 441.4 440.8 439.6 438.1 438.3 442.8 445.1 442.0 444.8 445.3 Total 44.4 48.1 511 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 1206 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 1 433.5 462.2 418.2 422.3 425.8 428.0 429.7 432.0 434.8 437.5 439.7 442.3 444 6 446.8 449.6 452.4 455.0 457.3 458.9 461.3 464.1 466.1 467.8 469.8 471.7 472.9 Medical care commodities 76.2 81.8 861 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 6 105.4 105.6 105.9 109.6 118.8 126.0 134.1 143.5 153.8 168.1 186.5 205.7 223.3 239.7 256.7 273.6 291.9 264.5 267.4 269.4 271.3 272.3 273.3 275.4 276.0 276.7 277.5 278.2 280.8 282.4 283.9 286.3 287.5 289.6 291.5 293.4 294.6 295.8 297.4 299.1 300.7 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 92.0 100.0 107.3 116.0 124.2 133.3 138.2 144.3 159.1 179.1 197.1 216.7 235.4 258.3 287.4 318.2 356.0 387.0 410.3 435.1 468.6 499.6 451.9 456.2 460.1 462.3 464.2 466.8 469.8 473.0 475.7 478.8 481.5 483.4 486.5 489.6 492.1 494.7 496.0 498.4 501.5 503.6 505.4 507.4 509.3 510.3 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-58. Source: Department of Labor, Bureau of Labor Statistics. 315 TABLE B-60.—Consumer price indexes, commodities, services, and special groups, 1946-87 [1967=100] Services Commodities Commodities less food Year or month 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 I960 1961 . 1962 1963 .. 1964.. 1965 1966 1967 ... 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1986:Jan Feb Mar.... All items 58 5 66 9 72.1 71.4 721 77 8 79.5 801 80.5 80 2 814 84.3 86 6 87.3 887 89 6 90.6 917 92.9 94 5 97!2 100 0 104.2 109.8 116 3 121.3 125.3 133.1 147 7 1612 170.5 1815 195 4 217.4 246.8 2724 2891 298 4 311.1 322.2 328 4 340.4 328.4 327.5 326.0 325.3 326.3 327.9 328.0 328.6 330.2 330.5 330.8 331.1 333.1 334.4 335.9 337.7 338.7 340.1 340.8 342.7 344.4 345.3 345.8 345.7 fc: June... July.... Aug.... Sept... Oct Nov.... Dec... 1987:Jan Feb Mar.... fiJay"'' June... July.,.. Aug.... Sept... Oct Nov.... Dec... MaHt All commodities 62 4 750 80 4 78.3 78 8 85 9 87.0 86 7 85 9 851 859 88.6 90 6 90.7 91.5 92 0 92.8 93 6 94.6 95 7 98.2 100 0 103 7 108.4 113 5 117.4 120.9 129.9 145 5 1584 165.2 174.7 187 1 2084 233.9 253.6 263 8 271*5 280.7 286.7 283 9 29310 290.1 287.4 283.7 281.2 282.1 282.8 281.9 281.9 283.5 283.6 284.0 284.2 286.3 287.7 289.5 291.4 292.3 292.8 292.8 294.2 296.1 297.3 297.9 297.2 Food 581 706 76 6 73.5 74 5 82 8 84.3 83 0 82 8 816 82 2 84.9 88 5 87.1 88.0 891 89.9 912 92 4 94 4 99.1 100 0 103 6 108.9 114 9 11814 123.5 141.4 1617 1754 180.8 192.2 2114 234*5 254.6 274 6 2857 291*7 302.9 3098 319 7 333.0 315.6 315.3 315.4 316.1 317.0 317.1 320.1 322.7 323.2 323.7 324.6 325.2 328.9 330.1 330.0 331.0 332.5 334.1 333.6 333.8 334.9 335.3 335.1 336.7 All 68 1 76.8 82 7 81.5 814 87.5 88.3 88.5 87,5 86 9 87.8 90.5 915 92.7 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 1491 156 6 1651 1747 195*1 222.0 2412 2509 259*0 267^0 272 5 263 4 270.2 274.7 270.9 265.2 261.2 262.1 263.0 260.2 259.0 261.1 260.9 261.2 261.2 262.5 264.0 266.5 268.9 269.4 269.5 269.6 271.6 273.8 275.4 276.3 274.5 All Non- services Durable durable 741 80.3 86 2 87.4 884 95.1 96.4 95.7 93.3 915 91.5 94.4 95 9 97.3 96.7 96 6 97.6 97.9 98.8 98 4 98.5 100 0 1031 107.0 1118 116.5 118 9 121.9 1306 1455 154.3 163.2 173 9 19U 210.4 227.1 241.1 2530 266.5 270.7 270 2 2743 271.4 270.5 269.7 269.2 269.6 269.9 269.6 269.0 269.3 270.5 271.8 271.7 272.4 271.2 271.7 273.0 273.6 274.2 274.9 274.6 274.6 276.0 277.8 277.6 62 9 72.2 77 8 76.3 76 2 82.0 82.4 831 83 5 83 5 85.3 87 6 88 2 89.3 90 7 912 91.8 92.7 93 5 94 8 97.0 100 0 1041 108.8 1131 117!0 119 8 124.8 140.9 1517 158.3 166.5 174.3 1987 235.2 257 5 261*6 2663 270.8 277.2 262 2 270.9 280.4 274.5 265.6 259.2 260.5 261.8 257.3 255.6 258.9 257.8 257.4 257.5 259.2 262.6 266.4 269.6 270.0 269.8 269.5 273.1 276.8 278.4 278.9 276.0 491 511 54 3 56.9 58 7 61.8 64.5 67.3 69 5 709 72.7 75.6 78 5 80.8 83.5 85 2 86.8 88.5 90 2 92 2 95.8 100 0 1052 112.5 1216 \2ZA 133 3 139.1 152.1 1666 180.4 194.3 210.9 234*2 270.3 305 7 333I3 3449 363'0 3815 4005 417*1 391.7 393.3 394.9 396.8 397.9 401.0 402.3 403.7 405.5 406.1 406.1 406.6 408.6 409.9 411.2 412.8 414.2 416.7 418.3 420.7 422.4 423.1 423.4 424.0 Meatcal care services 401 43*5 464 48.1 49 2 51.7 55.0 57.0 58 7 60 4 62.8 65.5 68 7 72.0 74.9 m 80.2 82.6 84.6 87 3 92.0 1000 107 3 116.0 124 2 133'3 138.2 144.3 159.1 1791 197.1 216.7 235.4 258*3 287.4 318 2 35g'O 3870 410*3 435.1 468 6 499.6 451.9 456.2 460.1 462.3 464.2 466.8 469.8 473.0 475.7 478.8 481.5 483.4 486.5 489.6 492.1 494.7 496.0 498.4 501.5 503.6 505.4 507.4 509.3 510.3 Special indexes Services less medical care 77.6 80 4 82.5 85 2 86 7 88.1 89.6 912 93 2 96.4 1000 104 9 112.0 1213 127.7 132.6 138.3 151.0 1647 mi 190.6 2069 230'l 266.6 302.2 328.6 338 1 355.6 373.3 390 6 405.7 382.7 384.0 385.4 387.2 388.3 391.3 392.5 393.6 395.4 395.7 395.4 395.8 397.6 398.8 400.0 401.5 402.9 405.4 406.8 409.3 410.9 411.5 411.7 412.2 All items less food Ait items less energy itomc All items less food and energy Energy 1 59 4 64.9 69 6 70.3 711 75 7 77 5 79 0 79 5 79 7 811 83.8 85 7 87.3 88 8 89 7 90.8 92.0 93 2 94 5 96.7 1000 104 4 110.1 116 7 122.1 125.8 130 7 143 7 1571 167 5 178.4 1912 21310 244.0 270.6 288.4 2983 311.3 323.3 328 6 340.1 329.5 328.5 326.6 325.7 326.7 328.6 328.0 328.1 330.0 330.2 330.4 330.6 332.2 333.6 335.4 337.3 338.3 339.6 340.5 342.7 344.6 345.6 346.2 345.7 83.9 86 3 87.0 88 3 89 3 90.4 91.6 92 9 94 3 97.3 100 0 104 4 110.3 117 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*3 302.9 314.8 327 0 340.4 321.8 322.3 .323.3 324.4 325.0 325.5 326.9 328.3 330.0 331.4 332.3 332.6 334.0 334.9 336.5 338.2 339.0 339.5 340.1 341.6 343.6 345.4 346.2 346.3 83 3 85 2 87.0 88 3 89 3 90.5 91.6 93.0 94 3 96.6 100 0 104 6 110.7 117 6 123.1 126.9 131.3 142 2 155.3 165.5 175.8 188 7 207.0 232.8 257.1 2761 287 0 301.2 314.4 327 1 340.5 321.6 322.3 323.6 324.8 325.3 325.9 326.9 327.9 329.9 331.6 332.5 332.8 333.6 334.5 336.4 338.3 338.9 339.1 339.9 341.7 343.9 346.1 347.0 346.8 90.1 90 3 91.8 94.2 94 4 94.7 95 0 94.6 96 3 97.8 100.0 1015 104.2 107 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 3 423.6 426.5 370 3 371.7 424.7 408.9 381.3 361.8 367.6 380.6 366.5 358.6 360.6 348.6 341.7 342.4 352.2 359.2 360.0 362.4 366.9 380.6 382.4 388.9 387.4 376.7 373.5 370.4 1 Household fuels—gas (piped), electricity, fuel oil, etc.—and motor fuel. Motor oil, coolant, etc. also included through 1982. Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers. See also Note, Table B-58. Source: Department of Labor, Bureau of Labor Statistics. 316 TABLE B-61.—Changes in special consumer price indexes, 1958-87 [Percent change] All items less food All items Year or month 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 Dec. to Dec 1 :.. Dec. to Dec.1 Year to year 2.7 .8 1.6 1.0 1.1 1.2 1.3 1.7 2.9 2.9 4.2 5.4 5.9 4.3 3.3 6.2 11.0 9.1 58 6.5 7.7 11.3 13.5 10.4 6.1 3.2 4.3 3.6 19 3.7 1.8 1.5 1.5 .7 1.2 1.6 1.2 1.9 3.4 3.0 4.7 6.1 5.5 3.4 3.4 88 12.2 7.0 48 6.8 9.0 13.3 12.4 8.9 3.9 3.8 4.0 3.8 1.1 4.4 1.6 2.3 10 11 12 1.6 1.0 1.6 3.3 35 4.9 5.7 6.5 31 3.0 56 12.2 7.1 62 6.3 85 14.0 12.9 9.9 4.0 4.1 4.0 4.0 5 4.6 All items less energy Year to year Year to year Dec. to Dec 1 2.3 1.9 1.7 10 1.2 1.3 1.3 1.4 2.3 3.4 4.4 5.5 6.0 4.6 3.0 39 9.9 9.3 66 6.5 72 11.4 14.6 10.9 6.6 3.4 4.4 3.9 16 3.5 All items less food and energy 1.9 1.4 1.4 8 1.2 1.8 1.3 1.9 3.5 3.1 4.9 6.4 5.6 3.3 3.5 83 11.5 6.7 46 6.8 92 11.1 11.7 8.6 4.2 4.4 4.5 4.0 38 4.1 Dec. to Dec 1 1.8 2.2 .8 15 11 1.8 1.2 1.5 3.3 3.9 5.1 6.1 6.6 31 3.0 47 11.3 6.7 61 6.4 85 11.3 12.1 9.6 4.5 4.9 4.7 4.4 38 4.2 2.9 .8 1.5 11 1.2 1.3 1.4 1.5 3.2 2.8 4.4 5.7 6.1 • 43 3.4 61 9.8 9.1 56 6.3 78 10.0 11.7 10.0 6.7 3.6 4.7 3.9 39 4.1 All items less food, energy, and shelter Dec. to Dec.1 Year to year 2.3 2.1 1.5 11 13 1.2 1.5 1.4 2.4 3.5 4.6 5.8 6.2 47 3.1 35 8.3 9.2 66 6.2 73 9.7 12.5 10.4 7.4 3.9 4.9 4.4 4.0' 4.1 Year to year 4.6 5.0 5.7 32 2.6 35 11.3 6.4 70 5.2 65 7.2 9.9 9.4 6.1 5.0 4.4 3.7 3.4 3.9 4.6 4.8 5.1 4.9 2.4 3.0 7.6 8.9 7.0 6.0 5.7 6.9 8.8 9.5 7.7 5.2 5.0 3.8 3.4 3.8 Change from preceding month Seasonally adjusted Unadjusted 1986-Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1987-Jan Feb Mar May June SS :::::: Sept oct..:::::::::::.... Nov Dec 0.3 .3 -,2 .3 .5 .0 .2 .5 1 .1 .1 .6 4 .4 .5 .3 .2 .6 !3 -.0 0.3 3 -.4 -.3 .2 Unadjusted .2 7 4 .4 .4 .3 .4 .2 .5 .2 02 3 -.6 _3 3 .6 -.2 0 6 1 .1 .1 5 4 .5 .6 3 .4 .3 6 .6 *3 .1 2 -.1 .0 .2 3 2 Seasonally adjusted Seasonally adjusted Unadjusted Unadjusted 0.4 2 0.4 2 2 3 2 :3 2 -.2 0 .3 1 .4 .4 5 4 .5 \z :i 4 3 \l 5 3 .4 .4 .3 0.4 3 -A .7 4 .5 .5 .3 .3 .5 .1 .4 3 .0 '.5 2 .2 .4 .6 .5 2 .0 3 4 .2 A .2 .5 2 0.3 2 .4 .4 2 .2 .3 .3 .6 5 :i 2 3 .6 .6 .2 .1 .2 .5 .6 .6 .3 -.1 Seasonally adjusted 0.5 2 .4 .3 .2 .3 .4 .3 .3 4 .3 .5 3 .5 .5 .3 .2 .3 .2 .5 .3 .1 Seasonally adjusted Unadjusted 0.2 .2 0.5 .2 .1 .2 .2 .3 .6 .5 .3 .1 .1 .2 .6 .6 .1 -.0 .1 .4 .9 :i 'A A -.1 -.3 .4 .2 .1 .2 .5 5 .6 .3 .2 .4 .3 .2 1 Changes from December to December are based on unadjusted indexes. Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers. See also Note, Table B-58. Source: Department of Labor, Bureau of Labor Statistics. 317 TABLE B-62.—Changes in consumer price indexes, commodities and services, 1929-87 [Percent change] All items Year Dec. to Dec.1 Year to year Commodities Food Year to year Dec. to Dec 1 Year to year Dec. tn 10 Dec.1 1929 1933 1939 1940 1941"!... 1942.. 1943 1944 1945 1946 1947 " 1948.1. 1949 1950.. 1951 1952;;!;.. 1953 1954;;;... 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 0.2 .5 -.5 1.0 9.7 9.3 3.2 2.1 23 0 -5.1 -2.9 -1.0 -2.0 -2.5 -2.8 1.0 5.0 12 1.0 6.7 26 ISA 17 9.1 14.5 17 5 17.4 11.5 -1.4 1.8 — 15 -2 -.9 31 28 2.2 -.8 3.1 -.9 1.5 1.9 1.4 3.4 3.9 1.2 4.3 7.2 2.2 4.3 4.7 -1.4 .7 33 4.2 -1.6 1.0 1.3 .9 1.4 1.3 2.2 5.0 .9 3.6 5.1 5.5 3.0 4.3 11.0 10.4 12.7 12.0 20.1 12.2 14.5 14.4 7.0 4.8 6.8 9.0 9.1 5.8 6.5 7.7 6.3 3.3 6.1 8.9 8.9 4.3 5.8 7.1 6.5 .6 8.0 8.5 3.1 6.3 8.9 3.9 3.8 4.0 3.8 1.1 4.4 6.1 3.2 4.3 3.6 1.9 3.7 6.0 3.6 2.9 2.6 2.5 8.4 4.0 2.9 3.4 2.1 -2.0 -1.0 4.6 3.2 6.7 3.8 3.1 2.0 2.4 8.6 4.0 3.2 3.1 2.1 11.0 15.4 13.1 -5.3 -3.3 5.1 2.6 4.3 4.8 5.4 5.1 4.4 4.3 9.0 3.5 5.2 5.1 5.0 4.1 -1.1 _ 7 -l'.l — 13 -l'.6 22 12.2 11.4 12.2 13.7 14.2 13.0 -1.4 .6 90 13 -3 -.9 -.9 .9 3.1 2.3 .1 .9 .5 .9 .9 1.1 1.2 2.6 1.8 3.7 4.5 4.7 3.4 3.0 7.4 13.0 ll.l 11.7 13.8 _.l 75 .9 2 77 59 -7 11.3 13.5 10.4 14.3 11.5 57 46 -.5 2 -2.6 13.3 12.4 8.1 7.3 7.9 9.3 14 111 -4.1 _,4 2.6 2.6 1.3 .6 1.1 0 1.0 1.4 .8 1.6 2.5 2.5 3.8 5.5 4.0 2.9 3.4 11.3 96 74 -1.0 _ 6 -1.4 9.2 5.0 5.4 5.8 -1.5 -1.8 10 79 22 8 .5 -.4 15 3.6 2.7 .8 1.6 1.0 1.1 1.2 1.3 1.7 2.9 2.9 4.2 5.4 5.9 4.3 3.3 6.2 10.6 -4.8 7.2 5.8 59 .9 .6 -.5 .4 29 3.0 1.8 1.5 1.5 .7 1.2 1.6 1.2 1.9 3.4 3.0 4.7 6.1 5.5 3.4 3.4 8.8 6.2 5.1 4.9 7.7 -4.0 10 8 20.2 1.7 13.2 9.1 5.3 -3.7 24 9 10.4 7.8 10 31 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 12 9 14.4 18 2 year 0.2 2 l!4 3.2 1.8 2.4 1.5 19 41 6;3 4.8 32 53 4!4 43 13 2,0 25 40 18 2.9 3.3 2.0 1.9 2.0 1.9 2.2 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 8.5 9.0 2.7 3.1 .2 30 315 112 -.8 8.9 1.3 2.9 Year to 0.2 7 2.5 2.0 2.6 1.7 1.0 35 5.2 6.1 3.6 36 52 4.6 42 1.9 23 31 45 2.7 3.7 2.7 1.9 1.7 2.3 1.8 2.6 4.9 4.0 6.1 7.4 8.2 4.1 3.6 6.2 -1.6 14 6 21.5 13.5 13.0 4.0 2.2 29 0.2 4 6 5.0 111 4.3 5.5 41 62 10.7 Dec. to Dec.1 services Dec. tn IU Dec 1 Dec Year *n 10 year to Dec 1 Year to year 1.3 2.3 70 -1.4 6.1 1.7 23 85 Year tn lu year Medical care Total less food Dec. to Dec.1 Energy * Services Commodities Total 11.8 10.2 10.2 10.0 10.9 8.6 4.3 3.1 2.6 3.8 2.7 3.8 3.5 7.9 4.0 2.1 3.8 2.3 3.2 4.2 10.8 64 5.4 5.0 30 0 2.5 22 .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 1 12.8 7.7 0.3 0.3 0 0 1.5 .6 39 31 5.8 5.0 2.8 4.2 2.9 27 8.9 5.8 6.5 8.5 7.0 6.7 2.1 3.7 33 23 58 51 55 6.4 36 36 2.6 3.0 3.2 2.9 41 4.0 43 45 4.9 4.9 4.6 4.8 3.8 4.0 3.5 3.7 3.0 3.2 2.6 3.0 2.6 2.4 3.2 3.5 8.1 5.4 7.9 8.7 7.4 7.3 7.0 8.1 7.1 8.3 5.3 7.3 3.8 . 3.7 5.8 4.4 13.3 10.3 10.3 10.7 12.6 10.1 9.0 9.2 9.9 8.6 9.7 10.6 10.0 12.7 11.2 11.3 10.7 11.9 6.1 5.8 6.8 7.9 5.6 8.7 6.0 6.0 7.7 6.6 -0.7 4.3 1.5 -1.1 2.1 -.8 -.2 2.0 1.8 1.4 1.7 3.1 4.5 3.1 2.8 0.2 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 16.8 21.6 29.3 11.6 10.6 6.9 7.2 8.0 7.2 9.5 6.3 37.4 18.1 11.9 25.2 30.9 13.5 1.3 -.5 .2 1.8 1.5 .8 1.0 .7 -19.7 -13.2 8.2 .4 Changes from December to December are based on unadjusted indexes. 2 Household fuels—gas (piped) electricity, fuel oil, etc.—and motor fuel. Motor oil, coolant, etc. also included through 1982. Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers. See also Note, Table B-58. Source: Department of Labor, Bureau of Labor Statistics. 318 TABLE B-63.—Producer price indexes by stage of processing, 1947-87 [1967=100) Finished goods Consumer foods Year or month Total finished goods Finished goods excluding consumer oods Tntal Consumer goods Total Crude Processed Total Total Durable Capital Non- equipment durable 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 1955 1956 1957 1958 1959 79 0 86.5 86 0 85.1 85.3 85.5 87.9 91.1 93.2 93.0 84.7 95.2 94 3 89.4 88.7 86.5 86.3 89.3 94.5 90.1 92.2 105.9 112 8 105.2 94.7 98.8 98.7 97.4 103.5 94.3 834 93.2 913 86.7 87.6 84.4 84.3 87.9 93.1 89.5 83 5 89.5 88 3 89.1 89.4 90.1 92.3 94.6 94.7 95.9 82 7 88.2 88 9 89.6. 90.3 912 94.3 97.1 98.4 99.6 83 6 90.0 87 8 88.6 88.9 89 4 91.1 93 2 92.6 94.0 64.9 71.2 724 73.6 74.5 76.7 82.4 87.5 89.8 91.5 83 9 91.8 907 89.2 89.1 88.5 89.8 92.4 94.4 93.6 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 93.7 93.7 940 93.7 941 95.7 98.8 100.0 102.8 106.6 92.1 91.7 92.5 91.4 919 95.4 101.6 100.0 103.6 110.0 100.6 96.1 97 0 95.5 98 2 98.6 104.8 100.0 107.5 116.0 90.7 90.9 917 90.7 908 94.9 101.0 100.0 103.0 108.9 100.0 102.6 105.4 96.3 96.2 96.0 96.0 95 9 96.6 98.1 100.0 102.1 104.6 99.2 98.8 98 3 97.8 98 2 97.9 98.5 100.0 102.2 104.0 94.7 94.7 94 8 95.1 94 8 95.9 97.8 100.0 102.2 105.0 91.7 91.8 92.2 92.4 93 3 94.4 96.8 100.0 103.5 106.9 94.5 94.3 94.6 94.1 94 3 96.1 99.4 100.0 102.7 106.6 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 110.3 113.7 117.2 127.9 147.5 163.4 170 6 181.7 195 9 217.7 113.5 115.3 121.7 146.4 166.9 181.0 180.4 189.9 207 2 226.2 116.3 115.8 121.2 160.7 180.8 181.2 193 9 201.0 216 8 233.1 113.1 115.1 121.7 143.9 164 6 181.3 177 8 187.3 204 6 223.8 109.1 113.1 115.4 120.1 139.3 156.2 1661 177.7 190 7 213.3 107.7 111.4 113.5 118.6 138.6 153.1 162 6 174.3 186 7 211.5 106.9 110.8 113.3 115.4 125 9 138.2 144 5 152.8 166 9 183.2 108.3 111.7 113.6 120.5 146 8 163.0 174 8 189.3 200 0 231.3 112.0 116.6 119.5 123.5 141.0 162.5 173.4 184.6 199.2 216.5 109.9 112.9 116.6 129.2 149.3 163.6 169.7 180.7 194.9 217.9 1980 1981 1982 1983 1984 1985 1986 l 1987 247 0 269.8 280 7 285 2 291.1 293.7 289.7 295.7 239 5 253.6 259.3 2618 273.3 271.2 278.1 283.9 237 2 263.8 252 7 258 7 281.6 260.0 266.7 271.9 237 8 250.6 257 7 2600 270.3 270.0 276.7 282.4 247 8 273.3 285.8 2908 294.8 299.0 291.1 297.1 250 8 276.5 287.8 2914 294.1 297.3 283.5 289.7 2062 218.6 226.7 2331 236.8 241.5 246.8 252.7 283 9 319.6 333.6 3353 337.3 339.3 311.2 316.4 239.8 264.3 279.4 287.2 294.0 300.5 306.4 312.1 248.9 271.3 281.0 284.6 290.3 291.8 284.9 291.0 1986-Jan Feb Mar 296 0 291.9 288.0 287.2 288 9 289.3 275 0 272.0 271.6 271.9 274.8 275.1 268 9 245.9 250.0 265.3 270 6 255.2 273 2 271.8 271.1 270.1 272 9 274.4 300.7 296.3 291.2 289.9 291.2 291.6 298 3 291.8 284.6 282.2 284.0 284.4 243 5 243.9 243.7 245.7 245.5 245.9 339 6 328.0 315.4 309.8 313.0 313.5 303.9 304.3 304.3 305.6 305.7 306.1 293.8 288.4 283.4 281.9 284.1 284.5 287.6 2881 287 3 290 7 290 7 290.4 280.4 284.0 282 9 283 6 283 1 282.9 262.3 268 9 268 6 280 2 284 0 280.9 279.5 282 9 2817 2815 280 7 280.7 287.4 286.8 286.1 290 4 290 7 290.4 278.3 277.5 277.4 2810 2812 280.8 246.2 245.8 241.7 253 5 253 5 252.8 302.6 301.6 304 5 3019 302 2 302.1 306.4 306.2 303.9 309.9 310.4 310.1 282.3 283.0 282.5 285.2 285.1 284.8 2918 292 3 292 6 294.9 295.8 296.2 280.1 280 8 280 3 283.2 286.6 286.7 263 2 272 5 277 0 267.6 265.6 271.3 279 0 2791 278 2 282.0 285.9 285.5 293 2 293 6 294 3 296.3 296.3 296.7 284 4 285 3 286 3 288.6 288.6 289.5 253 2 250 7 250 6 252.5 252.1 252.1 307 7 310 5 312 2 314.7 314.9 316.3 311.2 310.7 310.5 311.8 311.8 311.4 286.2 287.1 287.5 290.1 291.3 291.9 297 4 297 3 2967 298 2 298.1 296.8 287.5 284.0 286 0 2841 284.9 282.2 276.7 246 6 266 5 263 7 309.9 281.8 285.9 284 5 285 2 283 3 280.6 279.8 298.1 299.3 297.7 300.5 300.1 299.2 291.4 292.9 291.1 293 5 293.0 291.8 252.3 251.4 249 4 257 6 256.0 254.3 319 3 322 3 320 5 319 4 319.7 318.8 311.7 312.0 311.0 314.7 314.3 314.2 293.4 293.2 292.7 293.5 293.6 291.8 Apr May June July Aug Sept Oct Mov Dec 1987-Jan Feb Mar Apr May June julv Augi Sept Oct Nov Dec , See next page for continuation of table. 319 TABLE B-63.—Producer price indexes by stage ofprocessing, 1947-87—Continued [1967 = 100] Crude materials for further processing Intermediate materials, supplies, and components Year or month Foods Total and feeds* For manufacturing For construction Processed fuels and lubricants Materials and components Other Containers Supplies Total Foodstuffs and feedstuffs Other Total Fuel Other 1947 1948 1949 72.4 78.3 75.2 70.0 76.1 74.2 72.1 77.8 74.5 66.0 73.1 73.2 85.5 96.9 88.2 66.8 69.8 70.1 77.5 81.0 76.3 101.2 110.9 96.0 111.7 120.8 100.3 66.6 78.7 78.3 90.6 100.7 91.6 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 78.6 88.1 85.5 86.0 86.5 92.0 94.1 94.3 95.6 77.7 87.0 84.3 85.3 85.7 88.3 92.6 95.0 94.8 96.4 78.1 88.5 84.8 86.2 86.3 88.4 92.6 94.8 95.2 96.5 77.0 84.3 83.7 85.1 85.5 88.9 93.5 94.0 94.0 96.6 89.9 93.9 92.8 93.4 93.3 93.3 96.2 101.9 96.0 95.6 72.0 84.5 79.9 80.0 81.5 82.6 88.6 92.5 94.7 94.2 78.9 88.8 88.8 84.3 86.3 84.8 87.1 88.0 90.0 91.2 104.6 120.1 110.3 101.9 101.0 97.1 97.6 99.8 102.0 99.4 107.6 124.5 117.2 104.9 104.9 95.1 93.1 97.2 103.0 96.2 77.9 79.4 79.9 82.7 79.0 78.8 84.4 89.2 90.3 91.9 104.7 120.7 104.6 100.1 98.2 103.8 107.6 106.2 102.2 105.8 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 95.6 95.0 94.9 95.2 95.5 96.8 99.2 100.0 102.3 105.8 100.0 99.4 102.7 96.8 95.5 95.3 95.0 95.6 96.9 98.9 100.0 102.5 106.1 96.5 95.3 94.7 94.9 95.9 97.4 99.3 100.0 102.2 105.8 95.9 94.6 94.2 94.5 95.4 96.2 98.8 100.0 105.0 110.8 98.2 99.4 99.0 98.1 96.0 97.4 99.2 100.0 97.6 98.5 95.5 94.7 95.9 94.7 94.0 95.8 98.4 100.0 102.4 106.3 90.7 91.8 93.8 95.2 94.3 95.2 99.4 100.0 101.0 102.8 97.0 96.5 97.5 95.4 94.5 99.3 105.7 100.0 101.6 108.4 95.1 93.8 95.7 92.9 90.8 97.1 105.9 100.0 101.3 109.3 100.0 102.2 106.8 92.8 92.6 92.1 93.2 92.8 93.5 96.3 100.0 M2.3 106.6 101.4 102.5 102.0 100.7 102.4 104.5 106.7 100.0 102.1 106.9 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 109.9 114.1 118.7 131.6 162.9 180.0 189.1 201.5 215.6 243.2 109.1 111.7 118.5 168.4 200.2 195.3 185.3 190.5 203.1 226.1 109.9 114.3 118.9 128.1 159.5 178.6 189.4 202.3 216.5 244.4 110.0 112.8 117.0 127.7 162.2 178.7 185.4 195.4 208.7 234.4 112.6 119.7 126.2 136.7 161.6 176.4 188.4 203.4. 224.7 247.4 105.0 115.2 118.9 131.5 199.1 233<O 250.1 282.5 295.3 364.8 111.4 116.6 121.9 129.2 152.2 171.4 180.2 188.3 202.8 226.8 108.0 111.0 115.6 140.6 154.5 168.1 179.0 188.7 198.5 218.2 112.3 115.1 127.6 174.0 196.1 196.9 202.7 209.2 234.4 274.3 112.0 114.2 127.5 180.0 189.4 191.8 190.2 192.1 216.2 247.9 112.7 117.0 128.0 162.5 208.9 206.9 228.5 245.0 272.3 330.0 122.6 139.0 148.7 164.5 219.4 271.5 305.3 372.1 426.8 507.6 109.8 110.7 121.9 161.5 205.4 188.3 206.7 212.2 233.1 284.5 1980 1981 1982 1983 1984 1985 1986 1987 * 280.3 306.0 310.4 312.3 320.0 318.7 307,6 315.2 252.6 250.3 239.4 247.9 253.1 232.8 230.3 237.3 282.3 310.1 315.7 317.1 325.0 325.0 313.3 320.9 265.7 286.1 289.8 293.4 301.8 299.5 296.1 305.1 268.3 287.6 293.7 301.8 310.3 315.2 317.4 322.5 503.0 595.4 591.7 564.8 566.2 548.9 430.2 434.1 254.5 276.1 285.6 286.6 302.3 311.2 314.9 326.9 244.5 263.8 272.1 277.1 283.4 284.2 287.3 293.1 304.6 329.0 319.5 323.6 330.8 306.1 280.3 299.2 259.2 257.4 247.8 252.2 259.5 235.0 231.0 238.3 401.0 482.3 473.9 477.4 484.5 459.2 386.8 416.4 615.0 751.2 886.1 931.5 931.3 909.6 817.2 744.4 346.1 413.7 376.8 372.2 380.5 355.3 286.4 333.4 1986: Jan.... Feb.... Mar... June.. 317.4 313.5 309.5 307.1 306.7 306.8 232.6 228.9 227.8 227.0 229.3 229.0 323.6 319.7 315.5 313.0 312.4 312.5 297.1 296.5 296.4 295.5 295.4 295.1 316.2 316.5 317.0 318.3 318.3 317.8 540.8 500.8 453.4 428.5 424.2 426.7 311.2 310.9 312.3 312.8 3116 314.0 286.6 286.4 286.8 287.2 2«.l 287.3 301.0 289.0 281.1 273.7 279.4 276.9 231.7 227.2 224.4 229.3 229.9 227.1 450.6 422.7 403.9 389.4 386.9 384.8 871.9 855.6 891.8 865.4 859.5 837.4 352.4 321.8 290.5 278.8 277.1 279.5 July.... Aug... Sept.. Oct.... Nov.... Dec... 304.8 304.5 306.1 304.8 304.8 305.0 230.3 232.1 233.2 230.3 231.0 231.5 310.4 309.9 311.5 310.4 310.3 310.5 295.6 296.0 296.2 296.4 296.4 296.4 317.9 317.6 317.6 317.3 317.5 316.9 401.1 395.0 409.1 394.9 392.8 395.5 314.6 316.2 317.4 318.1 319.0 319.2 287.2 287.1 288.0 287.5 288.0 288.2 277.7 276.3 275.4 277.2 279.2 277.0 234.4 238.1 233.5 235.0 236.8 233.5 370.8 358.3 365.6 367.9 370.3 370.6 ?92.3 783.9 757.2 761.8 769.8 760.2 272.6 259.8 273.7 275.4 276.6 278.9 1987: Jan.... Feb.... Mar... 307.0 308.9 309.3 311.0 313.1 315.2 229.5 230.0 227.6 231.9 240.4 241.1 312.8 314.7 315.3 316.9 318.5 320.7 297.8 298.7 299.5 301.4 303.2 304.5 317.1 317.9 318.7 319.3 319.9 320.9 406.7 418.5 416.0 421.3 429.3 440.8 320.7 323.6 324.9 325.4 325.5 326.2 289.0 289.5 289.6 290.5 292.0 292.8 284.2 287.2 288.6 295.3 302.9 303.7 227.6 229.9 229.6 240.1 251.7 247.0 394.2 398.5 402.0 405.3 409.4 416.8 7*4.6 743.4 763.9 759.5 745.5 744.5 306.5 313.3 313.6 318.1 325.3 333.8 316.9 318.2 318.9 320.0 321.3 322.0 241.2 238.3 241.4 240.5 242.0 243.8 322.6 324.2 324.6 325.9 327.2 327.8 305.8 306.6 308.0 310.7 311.8 313.4 322.4 323.6 325.4 326.8 328.2 330.3 450.0 457.6 450.1 442.0 443.0 433.7 326.0 326.5 329.6 331.0 332.2 331.4 293.2 293.4 294.5 295.9 297.7 299.6 306.8 308.4 305.4 304.3 302.2 301.3 243.8 240.6 238.8 237.7 235.8 237.5 427.7 435.0 430.3 428.9 426.3 422.2 743.2 745.4 748.1 734.1 718.3 732.8 346.4 354.2 348.4 349.4 349.3 342.0 lay... JSPaj A MaV: June.. July Aug> Nov Dec 1 Data have been revised through August 1987 to reflect the availability of late reports and corrections by respondents. AH 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. 320 TABLE B-64.—Producer price indexes by stage of processing, special groups, 1974-87 [1967=100] Intermediate materials, supplies, and components Finished goods Crude materials for further processing Excluding foods and energy Year or month Total Foods Energy Total Capital equipment Consumer goods exclud- Total Foods and Energy Other Total Foodstuffs and feedstuffs Energy Other and energy 1974 147.5 166.9 215.2 133.3 141.0 129.1 162.9 200.2 188.7 156.7 196.1 189.4 223.0 198.3 1975 1976 1977 1978 1979 163.4 170.6 181.7 195.9 217.7 181.0 180.4 189.9 207.2 226.2 252.4 282.3 326.7 347.7 469.9 148.5 156.8 166.3 178.7 194.7 162.5 173.4 184.6 199.2 216.5 141.0 148.1 156.6 168.0 183.3 180.0 189.1 201.5 215.6 243.2 195.3 185.3 190.5 203.1 226.1 220.8 236.8 267.3 280.3 348.6 174.7 185.0 196.1 210.4 234.2 196.9 202.7 209.2 234.4 274.3 191.8 190.2 192.1 216.2 247.9 266.9 283.1 323.5 362.5 439.9 165.0 191.0 190.1 209.2 253.0 1980 1981 1982 1983 1984 247.0 269.8 280.7 285.2 291.1 239.5 253.6 259.3 261.8 273.3 701.3 835.4 822.9 783.6 750.3 216.4 235.1 248.6 256.1 262.3 239.8 264.3 279.4 287.2 294.0 204.2 220.1 232.6 239.9 245.9 280.3 306.0 310.4 312.3 320.0 252.6 250.3 239.4 247.9 253.1 484.9 573.6 570.8 543.9 545.0 261.8 283.4 290.1 294.8 303.6 304.6 329.0 319.5 323.6 330.8 259.2 257.4 247.8 252.2 259.5 586.1 783.4 801.5 791.1 785.2 269.4 266.0 238.1 250.7 266.1 1985 1986 1987 2 293.7 289.7 295.7 271.2 278.1 283.9 720.9 518.5 508.2 268.7 274.9 281.6 300.5 306.4 312.1 252.1 258.4 265.6 318.7 307.6 315.2 232.8 230.3 237.3 528.3 414.4 417.2 305.2 304.4 312.8 306.1 280.3 299.2 235.0 231.0 238.3 748.1 249.7 575.8 245.6 601.2 275.2 1986:Jan Feb Mar 296.0 291.9 288.0 287.2 288.9 289.3 275.0 272.0 271.6 271.9 274.8 275.1 700.9 629.3 554.1 517.2 534.1 536.4 272.1 272.5 272.5 273.9 274.0 274.3 303.9 304.3 304.3 305.6 305.7 306.1 255.5 256.0 256.0 257.3 257.5 257.7 317.4 313.5 309.5 307.1 306.7 306.8 232.6 228.9 227.8 227.0 229.3 229.0 520.0 482.0 437.0 413.3 409.1 411.1 304.3 304.2 304.5 304.3 304.0 303.8 301.0 289.0 281.1 273.7 279.4 276.9 231.7 227.2 224.4 220.3 229.9 227.1 732.8 662.9 614.5 577.0 570.6 563.9 245.8 246.5 247.9 249.1 249.3 250.1 Jufy Aug 287.6 288.1 287.3 290.7 290.7 290.4 280.4 284.0 282.9 283.6 283.1 282.9 461.6 456.2 471.7 452.1 453.7 454.6 275.0 274.8 272.9 278.9 279.1 278.7 306.4 306.2 303.9 309.9 310.4 310.1 258.7 258.4 256.7 262.6 262.6 262.2 304.8 230.3 304.5 232.1 306.1 233.2 304.8 230.3 304.8 231.0 305.0 .231.5 386.6 380.7 393.8 380.3 378.3 380.7 304.1 304.2 304.6 304.8 304.9 304.8 277.7 276.3 275.4 277.2 279.2 277.0 234.4 238.1 233.5 235.0 236.8 233.5 528.8 520.4 533.9 534.4 537.0 533.2 250.0 235.9 239.1 242.3 244.4 247.1 280.1 280.8 280.3 283.2 286.6 286.7 477.4 489.6 495.5 507.4 506.9 514.3 279.8 279.3 279.5 280.7 280.7 280.7 311.2 310.7 310.5 311.8 311.8 311.4 263.4 262.9 263.3 264.4 264.5 264.6 307.0 308.9 309.3 311.0 313.1 315.2 229.5 230.0 227.6 231.9 240.4 241.1 391.3 402.6 400.3 405.3 412.2 423.2 306.2 307.2 308.1 309.3 310.5 311.7 284.2 287.2 288.6 y June.. 291.8 292.3 292.6 294.9 295.8 296.2 303.7 227.6 229.9 229.6 240.1 251.7 247.0 578.0 584.4 590.1 594.1 597.4 606.3 §3 252.8 254.4 257.4 263.2 270.2 July 2 Aug . Sept.. Oct Nov Dec 297.4 297.3 296.7 298.2 298.1 296.8 287.5 284.0 286.0 284.1 284.9 282.2 522.0 533.9 521.8 514.5 513.5 501.0 281.5 281.8 281.1 284.7 284.4 284.5 311.7 312.0 311.0 314.7 314.3 314.2 265.8 265.9 265.5 269.1 268.7 269.0 316.9 318.2 318.9 320.0 321.3 322.0 241.2 238.3 241.4 240.5 242.0 243.8 432.1 439.4 432.5 424.8 425.6 416.8 312.9 313.9 315.3 317.8 319.3 321.0 306.8 308.4 305.4 304.3 302.2 301.3 243.8 240.6 238.8 237.7 235.8 237.5 623.8 632.3 615.4 604.9 598.3 589.4 275.5 282.6 291.2 300.1 301.8 302.4 Nov... Dec... 1987: Jan... Feb.... Mar.. 1 2 Intermediate materials for food manufacturing and feeds. Data have been revised through August 1987 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. 321 TABLE B-65.—Producer price indexes for major commodity groups, 1947-87 [1967=100] Industrial commodities Farm products and processed foods and feeds Textile products and apparel Hides, skins leather, and related products Fuels and related products, and power l Chemicals and allied products1 70.8 76.9 75.3 103.6 108.1 98.9 83.3 84.2 79.9 76.9 90.5 86.2 93,7 95.9 87.6 83.4 92.7 91.6 87.4 88.9 85.0 84.9 87.4 91.8 89.4 78.0 86.1 84.1 84.8 85.0 86.9 90.8 93.3 93.6 95.3 102.7 114.6 103.4 100.8 98.6 98.7 98.7 98.8 97.0 98.4 86.3 99.1 80.1 81.3 77.6 77.3 81.9 82.0 82.9 94.2 87.1 90.3 90.1 92.6 91.3 91.2 94.0 99.1 95.3 95.3 88.9 101.7 96.5 97.7 98.9 98.5 99.1 101.2 102.0 101.6 97.2 96.3 98.0 96.0 94.6 98.7 105.9 100.0 102 5 109.1 89.5 91.0 91.9 92.5 92.3 95.5 101.2 100.0 102 2 107.3 95.3 94.8 94.8 94.7 95.2 96.4 98.5 100.0 102.5 106.0 99.5 97.7 98.6 98.5 99.2 99.8 100.1 100.0 103.7 106.0 90.8 91.7 92.7 90.0 90.3 94.3 103.4 100.0 103.2 108.9 96.1 97.2 96.7 96.3 93.7 95.5 97.8 100.0 98.9 100.9 101.8 100.7 99,1 97.9 98.3 99.0 99.4 100.0 99.8 99.9 111.0 1129 125.0 176 3 187.7 186 7 191.0 192 5 212 5 241.4 112.1 114 5 120.8 1481 170.9 182 6 178.0 1861 202.6 222.5 110.0 114.1 117.9 1259 153.8 1715 182.4 1951 209.4 236.5 107.1 109.0 113.6 123.8 139.1 137.9 148.2 154.0 159.8 168.7 110.3 114.1 131.3 143.1 145.1 148.5 167.8 179.3 200.0 252.4 106.2 115.2 118.6 134.3 208.3 245.1 265.6 302.2 322.5 408.1 102.2 104.1 104.2 110.0 146.8 181.3 187.2 192.8 198.8 222.3 1980 1981 1982 1983 1984 1985 1986 1987 2 111.7 113 9 122.4 1591 177 4 184 2 183.1 188 8 206 6 229.8 244 7 2515 248.9 253 9 262 4 250 5 2519 258.1 249 4 254 9 242.4 248 2 255 8 230 5 225 2 231.2 2412 248 7 251.5 255 9 265 0 260.4 2651 271.3 274.8 304 1 312.3 315.7 322 6 323.8 312.2 320.4 183.5 199.7 204.6 205.1 210.0 210.4 211.2 215.0 248.9 260.9 262.6 271.1 286.3 286.1 296.7 316.2 574.0 694.5 693.2 664.7 656.8 633.6 483.5 486.9 260.3 287.6 292.3 293.0 300.8 303.2 299.8 311.1 1986: Jan Feb Mar Apr May June 251.5 248 3 247 3 246.2 250.8 249 8 227.4 2218 220 2 218.6 227,0 222 6 263.3 261.4 260 7 259.9 262.3 263.2 323.8 318.9 314.0 311.6 311.6 311.8 210.7 210.9 211.4 211.1 211.2 211.1 293.7 294.1 293.6 295.0 296.5 297.9 620.3 567.0 512.1 482.4 483.8 484.7 305.1 303.7 303.8 300.2 298.5 298.4 254 2 255 5 254.0 254.8 255 5 254.7 228 6 227 0 224.1 227.4 2301 227.4 266 8 269 6 269.0 268.4 267 9 268.2 308.5 307.9 308.7 309.6 309.8 309.8 21L4 211.2 211.1 211.2 211.3 211.4 297.4 297.0 296.4 297.8 299.3 301.6 444.3 438.4 452.6 438.8 438.5 439.6 298.4 297.0 297.5 298.2 298.6 298.1 251.6 252.8 252 0 2571 263 7 262.6 220.8 222.9 223 3 2319 242 0 239.3 266.8 267.6 266 2 269 5 274 3 274.0 313.5 314.9 315.7 317 3 318 3 319.9 212.0 212.1 212.5 2131 213 5 214.3 301.9 302.0 305.9 310 6 317 0 315.8 461.6 471.5 473.2 478.9 483 0 492.6 301.1 302.8 304.9 307.4 309.6 313.1 261.9 2589 260 0 258 7 258 9 258.6 237.2 231.9 2321 229 0 232 6 231.2 274.1 272.2 273 7 273 4 2719 272.1 322.1 323.8 323.3 324.9 325 4 325.3 215.4 215.9 216.9 217.8 218.1 218.4 317.8 318.5 321.4 326.5 326.1 330.6 503.2 511.8 501.1 492.9 491.4 481.8 312.9 313.1 314.1 317.1 318.8 318.8 Year or month Farm products Processed foods and feeds 94 3 101.5 896 109.4 117.5 101.6 82.9 88.7 80.6 93 9 106.9 102.7 96.0 95.7 91.2 90.6 93 7 98.1 93 5 106.7 124.2 U7.2 106.2 104.7 98.2 96.9 99.5 103.9 97.5 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969. 93.7 93.7 94.7 93.8 93 2 97.1 103 5 100.0 102 4 108.0 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Total 1947 1948. 1949 1950 1951 1952 1953 1954 1955 1956. 1957 1958.. 1959 ... ;::: :::;:: .. July Aug Sept oct Nov Dec 1987:Jan Feb Mar :.:::: .. Apr May June July Aug2 Sept oct Nov Dec :::::::::. :::::: :. Total 1 Prices for some items in this grouping are lagged and refer to 1 month earlier than the index month; the lag for refined petroleum items was eliminated beginning with the June 1985 data. See next page for continuation of table. 322 TABLE B-65.—Producer price indexes for major commodity groups, 1947-87—Continued [1967-100] Industrial commodities—Continued Year or month Pulp, NonMetals Machinery Furniture Rubber Lumber paper, and and metallic and and and and household mineral wood metal plastic allied products equipment durables products products products products 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 2 1987 70.5 72.8 70.5 85.9 105.4 95.5 891 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 1362 150.2 159 2 167.6 174 8 194.3 217 4 232.6 2414 243.2 246.8 245.9 245.9 248.5 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 95.3 910 916 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 2056 236.3 276 0 300.4 288 9 292.8 284 7 307.1 307.4 303.6 305.3 320.9 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 1011 104.0 108 2 110.1 113 4 122.1 1517 170.4 179 4 186.4 195 6 219.0 249 2 273.8 288 7 298.1 318.5 327.2 335.3 351.8 1986-Jan Feb Mar Apr May June 246 9 247 5 246.7 246 7 246 3 246.1 298 9 297 1 3012 308 6 3081 306.0 July Aug Sept Oct Nov Dec 245.4 246.2 245 7 2451 244 4 244.2 1987-Jan Feb Mar Anr May::::::::::::::::::::::::::::::::::::: June . . July 2 Aug Sept Oct Nov Dec 54.9 62.5 63.0 66.3 73.8 73.9 76 3 76.9 82.1 89.2 91.0 Transportation equipment: Motor vehicles and Miscellaneous products ssr. 904 92.3 92.4 919 91.2 91.3 93 8 96.4 98 8 100.0 102 6 108.5 116 6 118.7 123 5 132.8 1719 185.6 195 9 209.0 2271 259.3 286 4 300.4 3016 307.2 316.1 314.9 311.2 323.0 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 1961 213.9 239 8 263.3 278.8 286.4 293.1 298.9 303.3 307.8 77.0 81.6 82.9 84.7 91.8 90.1 919 92.9 93.3 95 8 98.3 991 99.3 99.0 984 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 7 198.5 206.9 214.0 218.7 221.6 224.0 227.5 66.3 71.6 73.5 75.4 80.1 80.1 83 3 85.1 87.5 91.3 94.8 958 97.0 97.2 97 6 97.6 97.1 97.3 97.5 98.4 100.0 103.7 107.7 112.9 122.4 126.1 130.2 153.2 174.0 186.3 200.5 222.8 248.6 283.0 309.5 320.2 325.2 337.3 347.8 352.1 352.3 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 98.6 100.0 102.8 104.8 108.7 114.9 118.0 119.2 129.2 144.6 153.8 163.7 176.0 190.5 208.8 237.6 251.3 256.8 261.5 267.3 274.2 280.9 73.5 76.5 78.0 79.2 83 9 83.4 856 86.4 86.5 87.6 90.2 92 0 92.2 93.0 93 3 93.7 94.5 95.2 95.9 97.7 100.0 102.2 105.2 109.9 112.9 114.6 119.7 133.1 147.7 153.7 164.3 184.3 208.7 258.8 265.7 276.4 289.6 295.9 302.3 308.6 317.2 330 6 3311 3313 332 8 333 8 334.2 3110 3112 311.2 311.0 310 6 310.7 3011 3016 302.0 302.7 302.9 303.1 222 7 223 0 223.2 223.6 224.1 224.2 352.5 352.3 352.4 352.8 353.6 353.0 270.3 270.8 270.2 272.9 272.6 273.0 307.3 306.9 307.2 307.3 307.2 306.8 306.8 307.2 308 8 3071 307 5 306.8 335.2 336.4 337 8 339 4 340 4 340.9 310.4 311.1 311.7 311.9 312.0 311.7 303.9 304.1 304.2 304.5 304.9 305.2 224.1 224.2 224.2 224.6 224.9 224.9 352.9 351.8 351.4 351.3 351.1 350.0 273.3 272.0 264.2 284.3 283.9 282.7 309.4 309.7 310.0 310.4 310.7 310.2 245 0 245 2 244 8 245 6 246.1 246.9 307 9 3116 314 8 315 2 315.2 317.2 345 0 347 4 3481 349 2 349.2 350.0 312.8 313.2 313.8 315.0 317.4 319.0 306.1 306.5 306.7 306.7 307.1 306.9 225.5 225.7 226.1 226.8 227.2 227.4 350.0 350.8 351.2 351.9 351.8 352.4 283.0 278.7 279.2 282.2 280.8 280.0 312.6 312.7 313.2 314.8 315.1 315.3 248 3 249 2 250 0 252.1 254.0 255.1 320 0 323 8 3311 330.2 331.8 332.3 3512 352 9 354 9 356.9 357.6 358.9 322.0 324.7 327 7 333.3 336.0 340.6 307.7 308.2 3084 309.0 309.5 310.4 227.7 228.2 2281 228.8 229.1 229.7 352.5 352.0 352.5 354.2 354.2 354.2 279.8 278.3 274.0 287.9 285.1 281.3 318.3 319.2 319.8 320.1 321.0 324.0 2 Data have been revised through August 1987 to reflect the availability of late reports and corrections by respondents. All data are ubject 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. 323 TABLE B-66.—Changes in producer price indexes for finished goods, 1955-87 [Percent change] Finished consumer foods Total finished goods Year or month 1955 1956 1957 1958 1959 1960 1961 1962 1963 .. 1964 1965 1966 1967 1968 1969 1970 1971 1972 . 1973 1974 . 1975 .. 1976 1977 1978 1979 1980 . 1981 1982 1983 1984 1985 1986 1987 2 Finished energy goods Finished goods excluding consumer foods Finished goods excluding foods and energy Consumer Capital Total goods equipment Dec. to Year Dec. to Year Dec. to Year Dec. to Year 1 1 Dec. to year Dec. 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 12 4.2 32 .5 4 18 -.5 1 2 5 3.3 22 1.6 31 48 2.2 32 38 118 183 66 3.7 69 9.2 12 8 118 7.1 37 6 1.7 18 23 2.2 02 28 36 23 2 8 0 3 —3 4 1.7 32 12 28 37 35 31 31 91 15 3 10 8 4.4 65 78 111 13 5 9.2 40 16 21 9 14 2.1 29 36 53 4 37 52 -1.8 5 -13 4 9.1 14 48 82 =2 5 59 80 22 5 13 0 55 -2.5 69 117 74 75 1.4 21 23 35 5 29 -.2 17 25 17 2 3 4 _ 3 \ 1 1 .9 17 2.1 20 29 3.9 20 20 74 20 5 67 6.0 67 85 17 5 14 2 8.5 42 3 8 20 66 3.9 25 -I 35 58 47 22 -4 9 -12 5 3.8 65 -16 36 62 32 16 56 203 14 0 84 53 91 92 59 5.9 22 10 44 3 25 2.1 24 34 43 21 21 66 212 72 6.2 69 83 14 8 13 3 8.8 41 11o 22 40 3.0 26 27 35 37 20 41 16 0 121 6.3 70 73 119 16 2 10.3 46 17 14 14 26 2.1 08 24 25 1 13 4 - 1 2 0 1 .7 16 19 21 24 30 34 19 45 16 9 10 5 6.2 72 71 13 3 18 6 10.2 41 13 9 \ i 46 2.2 56 83 43 1.3 10 1 .2 3 5 9 1.5 39 3.1 30 4.6 4.9 24 20 53 22 6 82 6.4 73 79 88 114 9.2 39 19 18 27 21 1.3 30 7.4 62 2.6 19 2 .1 4 .2 10 1.2 2.5 3.3 35 3.3 4.8 41 2.5 33 14.2 15.2 6.7 65 7.9 87 10 8 10.2 57 28 24 22 20 1.9 164 11.5 121 85 58 0 27 8 14.1 - 1 92 41 3 38 0 10.2 17.3 11.8 15 7 6.4 351 49 2 19.1 = 15 48 -4 2 39 281 -2.0 6.1 5.6 6.3 8.3 94 10.7 7.8 4.9 18 2.1 27 27 2.1 11.4 5.6 61 7.5 90 111 8.6 57 30 24 24 23 2.4 Percent change from preceding month Unadjusted Seasonallu 7 Unadjusted justed 1986: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1987:Jan Feb Mar June July Aug 2 Sept Oct Nov Dec -0.4 -1.4 -1.3 -.3 .6 .1 -.6 .2 -.3 1.2 0 -.1 .5 .2 .1 .8 -0.4 0.0 -1.5 -1.1 -.9 -.1 -.5 .1 .5 1.1 .2 .1 -.8 1.9 .4 1.3 -.4 .3 .2 .3 -.2 .0 -.1 .1 .4 - 1 . 0 .2 .1 -.2 .5 1.0 .5 .2 1.2 .1 .2 .0 .4 .2 .3 -.0 .2 - 1 . 2 -.2 .3 .7 .5 -.2 -.7 —0 0 .3 — .4 — .3 -.9 Season- tl SeaUnadjusted .9 -.2 = .5 -1.8 -.1 .1 1.4 1.4 .1 -.3 -1.1 1.0 -.1 .3 -1.3 7 Unadjusted justed justed -0,8 -1.4 .2 A 1.4 .1 1.3 1.4 sonal in -0.6 -1.5 -1.7 -.4 -0.2 -1.5 -1.2 8 .1 -1.4 -.2 -.2 1.5 .1 -.1 1.0 .1 .2 .7 0 .1 .5 A -.5 .9 -.1 -.3 .2 -1.5 .0 .4 .1 .2 .2 1.2 .1 .7 .2 -.2 .2 A .6 .0 -.1 .1 -0.8 -2.2 -2.5 -.8 .6 .1 -2.1 -.3 -.0 1.3 .1 -.1 1.3 .3 .4 .8 0 .3 .7 .5 -.6 .8 -.2 — .4 Seasonad^ justed -0.3 = 2.2 -1.9 -14 .2 .2 -2.2 0 .4 .0 .1 .3 1.7 .3 1.0 .2 -.4 .4 .6 .8 -.3 -.2 -.2 0 Unadjusted Seasonollu ad- justed 0.1 .1 0 .4 .0 .1 .1 -.1 -.8 2.0 .2 -.1 .4 -.2 -.1 .4 0 -.1 .1 .1 -.3 1.2 -.1 -.0 SeaUnadjusted sonal i» 7 Unadjusted allu tl justed justed - 4 . 5 = 1.8 0.0 .1 -=10.2 - 1 0 . 3 .2 - 1 1 . 9 = 11.4 .3 =67 - 8 . 1 3.3 2.2 .2 .4 .5 .1 - 1 3 . 9 - 1 3 . 9 .1 - 1 . 2 -.8 .3 3.4 1.8 .4 - 4 . 2 - 3 . 7 .4 .4 = .2 .1 .2 .7 .2 7.7 5.0 -.2 2.6 2.5 .1 1.2 1.8 2.4 .9 .3 -.1 -1.1 -.1 1.5 1.5 .1 1.7 1.5 .3 2.3 2.6 .7 - 2 . 3 - 3 . 6 -.4 -1.4 -1.0 .1 -.2 = .8 .2 - 2 . 4 - 1 . 9 Season- 0.3 .1 0 .5 .0 .1 .3 =.1 -.7 2.2 .1 -.1 .4 -.2 .1 .4 0 0 .3 .1 -.2 1.3 = .1 .0 0.1 .1 5 .3 -.1 .2 .2 .1 .2 .6 .2 .2 .4 = .3 .6 .1 — 1 .0 2 .4 .6 = .2 0 .4 2 DataTiave been revised through August 1987 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. 324 MONEY STOCK, CREDIT, A N D FINANCE TABLE B-67.—Money stock, liquid assets, and debt measures, 1959-87 [Averages of daily figures; billions of dollars, seasonally adjusted] Year and month Ml M2 M3 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 M2 plus large time deposits, term RPs, ; term Eurodollars, and institutiononly MMMF balances Debt 1 M3 plus other liquid assets Debt of domestic nonfinancial sectors (monthly average) Percent change from year or 6 months earlier2 Ml M2 M3 Debt December: 1959 141.0 297.8 299.8 388.6 659.5 1960 1961 1962 1963 1964 141.8 146.5 149.2 154.7 161.9 312.3 335.5 362.7 393.2 424.8 315.3 341.0 371.4 406.0 442.5 403.6 430.8 466.1 503.8 540.4 694.7 737.0 789.4 845.1 908.3 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 5.3 6.1 7.1 7.1 7.5 1965 1966 1967 1968 1969 169.5 173.7 185.1 199.4 205.8 459.4 480.0 524.3 566.3 589.5 482.2 505.1 557.1 606.2 615.0 584.4 614.8 666.5 728.9 763.5 977.0 1,044.4 1,120.9 1,216.1 1,305.9 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 7.6 6.9 7.3 8.5 7.4 1970 1971 1972 1973 1974 216.6 230.8 252.0 265.9 277.5 628.2 712.7 805.1 861.0 908.5 677.5 776.2 886.0 985.0 1,070.4 816.3 903.1 1,023.0 1,142.7 1,250.4 1,396.2 1,529.8 1,686.2 1,874.5 2,048.1 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 6.9 9.6 10.2 11.2 9.3 1975 1976 1977 1978 1979 291.1 310.4 335.3 363.0 391.1 1,023.2 1,163.7 1,286.8 1,389.2 1,500.3 1,172.2 1,311.9 1,472.9 1,647.1 1,806.7 1,367.1 1,516.7 1,705.5 1,911.2 2,119.6 2,231.5 2,471.7 2,785.9 3,158.6 3,541.6 4.9 6.6 8.0 8.3 7.7 12.6 13.7 10.6 8.0 8.0 9.5 11.9 12.3 11.8 9.7 9.0 10.8 12.7 13.4 12.1 1980 1981 1982 1983 1984 416.6 443.2 481.3 526.9 557.5 1,633.1 1,795.5 1,953.8 2,184.6 2,369.1 1,990.9 2,236.4 2,443.1 2,692.8 2,985.4 2,327.6 2,598.9 2,853.0 3,154.6 3,528.1 3,880.9 4,262.1 4,645.5 5,181.7 5,932.6 6.5 6.4 8.6 9.5 5.8 8.9 3.9 8.8 11.8 8.4 10.2 12.3 9.2 10.2 10.9 9.6 9.8 9.0 11.5 14.5 1985 1986 1987 » 627.0 730.5 753.2 2,569.5 2,801.2 2,894.8 3,205.0 3,493.1 3,661.8 3,837.1 4,140.7 4,330.3 6,749.4 7,606.1 8,299.0 12.5 16.5 3.1 8.5 9.0 3.3 7.4 9.0 4.8 13.8 12.7 9.1 1987: Jan Feb.... Mar.... Apr May.... June.. 737.7 737.4 739.5 750.3 753.1 746.6 2,823.5 2,823.0 2,826.5 2,839.9 2,840.3 2,841.6 3,519.1 3,522.7 3,527.4 3,544.0 3,560.3 3,577.5 4,173.3 4,180.8 4,169.8 4,181.8 4,215.8 4,230.7 7,673.6 7,710.9 7,754.3 7,815.6 7,882.8 7,943.2 18.9 15.2 13.8 14.4 11.8 4.5 9.9 7.8 6.7 5.8 4.7 2.9 9.2 7.6 6.2 5.9 5.7 4.9 13.8 12.2 10.8 10.7 10.1 9.1 July... Aug... Sept.. Oct 747.6 751.0 751.2 760.8 756.7 753.2 2,847.9 2,862.7 2,875.6 2,892.2 2,890.9 2,894.8 3,584.2 3,604.8 3,621.1 3,644.4 3,657.7 3,661.8 4,226.1 4,252.1 4,280.7 4,316.3 4,330.7 4,330.3 7,985.9 8,037.5 8,098.0 8,166.2 8,243.4 8,299.0 2.7 3.7 3.2 2.8 1.0 1.8 1.7 2.8 3.5 3.7 3.6 3.8 3.7 4.7 5.4 5.7 5.5 4.8 8.3 8.7 9.1 9.2 9.4 9.2 Now Dec ». - 1 8.2 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; 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 M l See Table B-68 for components. Source: Board of Governors of the Federal Reserve System. 325 TABLE B-68.—Components of money stock measures and liquid assets, 1959-87 [Averages of daily figures; billions of dollars, seasonally adjusted, except as noted] Year and month Currency Travelers checks Demand deposits Other checkable deposits (OCDs) Overnight repurchase agreements (RPs) net, plus overnight Eurodollars NSA Money market mutual fund (MMMF) balances General purpose and broker/ dealer NSA Institution only 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 I960 1961 1962 1963 1964 28.9 29 5 30.6 32 5 34.3 .4 112.5 116.5 118.2 1217 127.0 .0 .0 .0 .0 .0 4 .4 5 .5 .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 1965 1966 1967 1968 1969 363 6 .6 .7 8 .8 132 5 134.6 143.9 155.1 158.8 .1 .1 .1 .0 .0 .0 .0 2.2 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 256.9 253.1 263.7 268.9 263.7 166.3 176.9 193 7 202.4 207.4 .1 .2 .3 1.3 2.3 2.8 5.3 .0 ,0 .0 .1 .0 .0 .0 .0 .0 .0 .0 .0 .4 5.6 1.7 261.0 292.2 321.4 326.7 338.4 2141 224.3 239 4 253.4 261.1 .9 2.7 19.8 5.8 10.6 14.7 20.3 21.2 265 2 234 6 237 9 242 3 248.3 30 5 80.2 104 7 131.4 145.5 28 3 35.9 38 8 53.8 56.3 272 2 308 3 291.7 1783 232.3 254.7 270 3 270.3 274 6 277 7 282 2 285.0 63 65 6.7 6.8 68 67 June 186 0 187.2 187.7 188 9 190 2 191.1 July Aug Sept Oct p Nov Dec p 192.1 193.2 194 5 196.2 198 4 199.7 6.8 6.9 7.0 38.3 40.4 434 . . 46.1 1970 1971 1972 1973 1974 49 2 52.6 56 8 61.6 67.9 10 1.1 13 1.5 1975 1976 1977 1978 1979 73 8 80.6 88 6 97.6 106.4 23 1980 1981 1982 1983 1984 116 7 1241 134 3 148.3 158.5 42 1985 1986 1987 170 6 183 5 199.7 59 1718 172.7 173 8 174.4 175 8 176.7 59 6.0 61 p 1986- Jan Feb... Mar Apr May June ::::::::::"::::::::::: 177 6 179.0 179 7 181.2 182.4 183.5 July Aug Sept Oct Nov Dec 1987- Jan Feb Mar Apr May " 1.8 2.8 31 3.5 3.8 44 43 49 5.2 64 7.0 61 61 6.2 6.4 64 6.4 6.4 64 6.8 70 70 7.0 .1 .1 .0 33.4 9.5 .0 616 150.6 185.2 138.2 167.5 15.2 38.0 51.1 43.2 62.7 43.2 379.0 417.4 400.8 344.3 357.3 306.2 288.8 70 2 78.4 77.6 176.5 207.6 221.2 65.1 84.1 88.6 513.2 571.4 523.7 303.6 366.3 410.6 180 9 183.1 186.0 189.9 195.5 199.6 68.8 68.4 67.3 68.2 68.9 66.3 177.7 181.0 186.2 191.4 193.2 197.3 67.3 67.7 70.2 74.1 76.1 75.0 516.6 517.1 521.0 526.1 531.6 541.0 304.0 304.8 306.6 311.1 316.8 321.8 288.2 291.2 292 2 293.4 297.8 308.3 204.5 210.4 214.7 220.3 225.8 232.3 72.0 75.0 73.1 78.2 77.5 78.4 199.7 200.5 202.2 206.9 207.1 207.6 77.5 80.8 84.4 84.5 84.4 84.1 546.6 553.6 558.8 564.4 568.7 571.4 327.4 334.6 341.4 350.5 358.5 366.3 3051 300.8 299.3 303.9 303 9 297.4 240.1 242.9 245.7 250.7 252.2 251.2 84.7 80.1 76.9 76.9 76.0 74.5 209.0 210.7 211.6 211.0 208.9 209.6 84.0 84.7 84.9 83.1 81.8 81.3 574.3 570.8 570.6 565.5 557.1 553.5 376.7 387.2 396.3 406.1 411.7 415.2 296.2 296.4 294.1 300 5 295 8 291.7 252.6 254.6 255.6 257.1 255.5 254.7 75.1 79.2 82.8 85.4 79.0 77.6 209.6 212.2 215.4 217.9 219.9 221.2 83.4 83.4 80.7 81.6 88.5 88.6 548.1 543.7 539.2 532.6 526 3 523.7 416.7 419.9 419.3 416.8 412.0 410.6 2.7 4.2 8.5 See next page for continuation of table. .0 .4 .6 .9 3.1 326 2.4 2.4 6.4 .0 .0 .0 .0 .0 388.7 453.1 492.0 481.7 423.5 TABLE B-68.—Components of money stock measures and liquid assets, 1959-87—Continued [Averages of daily figures; billions of dollars, seasonally adjusted, except as noted] Year and month Small denomination time deposits' Urge, denomination time deposits1 Term repurchase agreements <RPs) Term Eurodollars NSA NSA Savings bonds Shortterm Treasury securities Bankers acceptances Commercial paper December: 1959 11.4 1.2 0.0 0.7 46.1 38.6 0.6 3.6 I960 1961 1962. 1963 1964 12.5 14.8 201 25.5 29.2 2.0 3.9 7.0 10.8 15.2 .0 .0 0 .0 .0 .8 1.4 1.6 1.9 2.4 45.7 46.5 46.9 48.1 49.0 36.7 37.0 39.8 40.7 38.5 .9 1.1 1.1 1.2 1.3 5.1 5.2 6.8 7.7 9.1 1965 1966 1967 1968 1969 34.5 55.0 77.8 100 5 120.4 21.2 23.1 30.9 37 4 20.4 .0 .0 .0 0 2.6 1.7 2.1 2.1 2.9 2.7 49.6 50.2 51.2 518 51.7 40.7 43.2 38.7 46.1 59.5 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 45.2 57 7 73.3 111.1 144 8 1.6 27 3.5 6.8 79 2.2 27 3.6 5.4 8.0 52.0 54 3 57.6 60.4 63.3 48.9 361 40.7 49.3 52.8 3.5 38 3.5 5.0 12.6 34.5 32 7 35.2 43.0 51.4 1975 1976 1977 1978 1979 337 9 390.7 445 5 521.0 634.4 129 7 118.1 145 2 195.5 222.8 82 14.0 191 26.6 29.5 9.7 14.8 20 2 31.8 44.7 67.2 71.8 764 80.3 79.6 68.4 69.8 78.1 81.1 107.8 10.7 10.8 14.1 22.0 27.2 48.5 52.5 64.1 80.7 98.4 1980 1981 1982 1983 1984 728 7 823.3 8510 783 8 885.3 259 8 302.1 326 2 326 2 417.0 34 0 36.0 34 5 518 61.9 50 3 67.5 817 915 82.9 72 3 67.8 68 0 71.1 74.2 133.4 149.4 183 7 212.6 263.5 32.1 40.0 44.5 45.1 45.7 98.9 105.3 113.6 133.0 160.3 1985 1986 1987^ 884.2 853 5 913.4 436.1 4471 488.5 65.7 84 0 106.7 76.6 83 8 92.7 79.4 917 100.4 304.6 288.1 271.3 42.4 37.5 44.6 206.6 230.2 252.2 1986: Jan Feb Mar Apr May June 888.1 889 8 892.0 8931 888.0 883.0 445.0 447 6 448.5 4513 447.6 447.5 68.5 70 2 71.1 70 9 73.2 73.9 75.9 791 82.7 814 79.5 79.7 79.9 80 5 81.2 81.9 82.7 83.5 302.9 306.0 299.4 298.5 304.0 298.3 42.4 42.5 41.4 40.6 39.8 39.8 209.5 208.6 208.8 206.1 210.7 212.6 880 9 876 7 872.2 864.7 8571 853.5 448 3 449 4 448.4 445.5 445 8 447.1 73 4 74 9 78.1 78.8 83 8 84.0 78 3 78 0 81.4 78.0 80 2 83.8 84 3 85 3 86.4 87.7 89.8 91.7 292.6 286.2 285.7 284.2 288.8 288.1 39.0 37.3 36.9 37.7 38.0 37.5 214.5 219.7 223.9 228.4 228.4 230.2 851.6 848 5 846.1 843.9 843 2 850 1 449.7 448 2 450.1 454.6 459.7 4651 83.6 87 2 87.2 94.5 102.8 107.8 85.4 88.0 88.4 83.8 87.0 89.7 92.7 93.5 94.3 95.1 95.9 96.5 284.1 285.6 269.2 256.5 262.9 261.1 37.8 39.3 39.8 41.2 42.4 43.5 239.7 239.8 239.1 244.9 254.3 252.1 858.5 865.5 8715 882 5 909 9 913.4 465.1 466.8 468.9 475© 485 0 488.5 107.5 108.0 109.7 106 9 109 7 106.7 85.7 90.5 94.8 93.7 93.1 92.7 97.3 97.8 98.2 98.7 99.5 100.4 252.9 256.3 260.1 272.3 277.8 271.3 43.4 42.9 43.8 44.5 45.1 44.6 248.4 250.2 257.5 256.4 250.6 252.2 , July Aug " sept:::::::::::::::::::..:::..:..:.::;::::::: Oct Nov Dec 1987* Jan Feb Mar Apr /ay June July Aug Sept Oct Nov" 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 8-67. Source: Board of Governors of the Federal Reserve System. 327 TABLE B-69-—Aggregate reserves of depository institutions and monetary base, 1959-87 [Averages of daily figures; millions of dollars; seasonally adjusted, except as noted] Adjusted for changes in reserve requirementsl Borrowings of depository institutions from the Federal Reserve, NSA Reserves of depository institutions Year and month Total December: Nonborrowed rowed plus extended credit Monetary Required 1959 1960 1961 1962 1963 1964 13,552 13,722 14,148 14,412 14,711 15,187 12,611 13,648 14,015 14,151 14,378 14,923 12,611 13,648 14,015 14,151 14,378 14,923 13,046 12,979 13,564 13,840 14,220 14,781 43,277 43,248 44,271 45,516 47,765 50,111 1965 1966 1967 1969 15,732 15,727 17,123 18,015 18,292 52,784 54,858 58,265 62,340 65,469 19,180 20,415 22,474 23,481 24,713 15,288 15,195 16,895 17,270 17,173 18,848 20,289 21,424 22,183 24,132 15,308 15,388. 16,748 17,589 18,005 1970 1971 1972 1973 1974 18,932 20,233 22,190 23,178 24,454 69,477 74,165 80,693 87,204 94,393 1975 1976 1977 1978 1979 24,846 25,386 26,411 27,686 28,971 30,808 32,077 34,320 36,107 39,909 46,056 56,166 57,436 46,116 46,715 47,379 48,039 49,016 49,726 15,288 15,195 16,895 17,270 17,173 18,848 20,289 21,424 22,183 23,985 24,716 25,333 25,842 26,818 27,498 24,728 25,333 25,842 26,818 27,499 24,580 25,112 26,221 27,453 28,529 100,523 108,082 117,185 127,754 138,709 29,118 31,440 33,686 35,333 36,723 44,738 55,340 56,658 45,345 45,832 46,619 47,146 48,140 48,923 49,950 50,628 51,294 52,384 53,737 55,340 56,304 56,317 56,325 56,961 57,317 56,930 56,929 57,229 56,885 57,553 57,362 56,658 29,121 31,589 33,872 35,335 39,327 30,294 31,757 33,820 35,546 39,057 44,999 54,798 56,407 45,005 45,618 46,483 47,238 48,178 48,795 49,780 50,761 51,576 52,479 53,511 54,798 55,816 55,662 55,936 57,127 57,273 56,516 56,841 56,844 57,032 57,368 57,064 56,407 150,021 157,918 169,964 185,235 199,596 1968 1980.... 1981..., 1982.... 1983.... 1984..., 1985.... 1986.... 1987 ». 1986:Jan Feb.... Mar.... l/ayl June.., y June- 50,690 51,501 52,302 53,225 54,489 56,166 56,884 56,873 56,852 57,954 58,352 57,706 July Aug Sept..... Oci Nov "... Dec... 57,602 57,876 57,825 58,496 57,987 57,436 Sz Nov Dec 1987: Jan Feb.. Mar.. 45,237 55,643 57,142 45,843 46,324 47,137 47,780 48,725 49,454 50,328 51,094 51,864 52,881 54,155 55,643 56,529 56,600 56,589 57,231 57,604 57,203 57,124 57,360 57,294 58,003 57f756 57,142 Total Seasonal Extended credit 941 74 133 260 332 264 532 228 746 1,119 332 126 1,050 1,298 727 217,323 239,513 256,702 218,540 220,003 221,846 223,104 225,332 226,933 228,605 230,826 232,281 234,426 236,875 239,513 242,431 243,970 244,563 246,586 248,372 248,481 130 53 569 868 1,473 1,690 636 634 774 3,186 1,318 827 777 770 884 761 893 876 803 741 872 1,008 841 752 827 580 556 527 993 1,035 776 249,457 250,798 251,852 254,352 256,079 256,702 672 647 940 943 625 777 41 32 14 13 55 135 81 116 54 33 96 113 56 38 93 36 56 68 73 94 108 116 144 137 99 70 38 34 71 91 120 196 259 283 279 231 189 126 93 147 12 3 148 186 2,604 499 303 483 497 492 518 634 584 531 378 465 570 497 418 303 225 283 264 270 288 273 194 132 409 449 394 483 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. Note,—NSA indicates data are not seasonally adjusted. Source-. Board of Governors of the Federal Reserve System. 328 TABLE B-70.—Commercial bank loans and securities, 1972-87 [Monthly average, billions of dollars, seasonally adjusted '] Loans and leases Year and month December: 1972 1973 1974 Total loans and securities Total Commercial and industrial loans U.S. Government securities. Other securities 572.5 647.9 713.9 390.1 460.3 520.0 137.1 165.0 196.6 89.0 88.2 86.3 93.4 99.4 107.5 1975 1976 1977 1978 1979 745.3 804.9 891.9 1,014.3 1,136.1 517.3 555.1 632.6 747.5 849.8 189.3 190.9 211.0 246.2 291.4 116.7 136.3 136.6 137.6 144.3 111.2 113.5 122.7 129.3 141.9 1980 1981 1982 1983 1984 1,239.0 1,307.2 1,401.0 1,553.0 1,722.6 913.9 967.2 1,033.8 1,123.5 1,319.9 325.7 355.2 392.4 414.1 473.1 170.6 179.3 201.8 259.4 260.6 154.5 160.7 165.4 170.2 142.1 1985 1986 1987 "... 1,908.0 2,089.8 2,222.4 1,456.0 1,583.0 1,691.9 499.9 541.4 570.9 271.4 309.9 334.0 180.6 196.9 196.4 1986: Jan... Feb... Mar.. 1,937.5 1,944.1 1,955.7 1,960.5 1,969.8 1,978.3 1,475.9 1,481.1 1,498.1 1,502.2 1,508.5 1,515.6 503.0 505.1 507.5 510.0 509.9 512.9 269.1 272.3 270.2 272.0 275.7 275.7 192.5 190.7 187.5 186.3 185.6 187.0 1,998.2 2,022.6 2,044.6 2,052.3 2,063.5 2,089.8 1,523.7 1,535.1 1,545.4 1,553.0 1,561.5 1,583.0 512.6 515.2 517.3 520.0 525.7 541.4 284.7 291.5 294.9 299.6 304.1 309.9 189.7 196.0 204.2 199.8 197.9 196.9 June.. 2,118.3 2,119.7 2,126.2 2,147.3 2,160.6 2,167.1 1,611.8 1,610.7 1,616.4 1,634.3 1,642.9 1,651.7 554.1 553.8 551.7 553.9 555.9 558.0 316.3 315.2 314.3 315.8 320.1 316.9 190.2 193.9 195.5 197.2 197.6 198.5 July Aug Sept Oct Nov Dec * 2,169.5 2,189.0 2,206.7 2,225.5 2,223.5 2,222.4 1,652.8 1,665.5 1.680.4 1.699.0 1,696.0 1,691.9 555.5 555.6 560.5 565.7 567.0 570.9 319.8 328.6 3317 332.2 331.0 334.0 196.9 194.9 194.6 194.3 196.4 196.4 fez June July... Aug... Sept.. Oct.... Nov... Dec... 1987: Jan.... Feb.... Mar.. 1 Data are prorated averages of Wednesday figures for domestically chartered banks and averages of weekly data for foreign-related institutions beginning July 1981. Prior to July 1981, data for foreign-related institutions are averages of current and previous month-end data. Lease financing receivables are included in total loans and investments and in total loans. Note.—Data are not strictly comparable because of breaks in the series. Source: Board of Governors of the Federal Reserve System. 329 TABLE B-71.—Bond yields and interest rates, 1929-87 [Percent per annum] U.S. Treasury securities Year and month Bills (new issues) * 3-month 6-month Constant maturities2 3year 10year Corporate bonds (Moody's) Aaa<> Baa Highgrade NewCommunici- home mercial pal mortgage paper, bonds yields months65 (Stand- (FHLBB)* ards Poor's) nice mtnt Prime rate charged by banks* rate, Federal Federal funds7 Reserve rate Bank of New York • 5.16 2.56 !"!!".'.!*.!". 1.00 1929 1933 1939 0.515 023 4 73 4.49 3.01 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 1.50 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 014 !lO3 .326 .373 375 .375 375 .594 1040 U02 2.84 277 2.83 2 73 2 72 2.62 2 53 2.61 2.82 2^66 4 75 4.33 4.28 3.91 3 61 3.29 3 05 3.24 347 3.42 2 50 2'.10 2.36 2.06 186 1.67 164 2.01 2 40 2.21 56 .53 .66 .69 73 .75 81 1.03 144 1.49 150 1.50 1.50 1.50 1.50 1.50 1.50 1.50-1.75 1 75-2.00 2.00 1950 1951 1952.. 1953 1954 1955 1956 ... 1957 1958 .... 1959 1.218 1.552 1766 1.931 .953 1.753 2658 3.267 1839 3.405 3.24 3.41 3 52 3.74 3.51 3.53 3 88 4.71 4 73 5.05 1.98 2.00 219 2.72 2.37 2.53 2 93 3.60 3 56 3.95 1.45 2.16 2 33 252 1.58 2.18 3 31 3 81 2 46 3.97 2.07 2.56 3.00 317 3.05 3.16 3.77 4.20 3.83 4.48 1.59 1.75 1.75 1.99 1.60 1.89 """i'.78 2.77 2.73 3.12 3.11 157 215 3.36 3.30 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 2.928 2.378 2.778 3.157 3.549 3.954 4.881 4.321 5.339 6.677 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 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 6.458 4.348 4.071 7.041 7.886 5.838 4.989 5.265 7.221 10.041 11.506 14.029 10.686 8.63 9.58 7.48 5.98 5.82 12.412 13.780 12.493 12.821 12.148 12.108 11.914 9.006 8.196 7.750 8.042 8.013 1.00 1.00 134 1.50 3.832 247 1.63 2 47 319 3 98 2 84 4.46 £85 2.40 2 82 318 365 3 32 4.33 2 62 2.86 2 96 3 20 2.90 3.06 3 36 3.89 3 79 4.38 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 7.03 519 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 5.81 535" 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 6.562 4.511 4.466 7.178 7.926 6.122 5.266 5.510 7.572 10.017 11.374 13.776 11.084 8.75 9.80 7.66 6.03 6.05 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 7.06 7.68 11.46 13.91 13.00 11.10 12.44 10.62 7.68 8.39 11.94 14.17 13.79 12.04 12.71 11.37 9.02 9.38 13.67 16.04 16.11 13.55 14.19 12.72 10.39 10.58 8.51 11.23 11.57 9.47 10.15 9.18 7.38 7.73 12.66 14.70 15.14 12.57 12.38 11.55 10.17 9.31 12.29 14.76 11.89 8.89 10.16 8.01 6.39 6.85 15.27 18.87 14.86 10.79 12.04 9.93 "8.33 8.22 11.77 13.42 11.02 8.50 8.80 7.69 6.33 5.66 13.36 16.38 12.26 9.09 10.23 8.10 6.81 6.66 High-low 1982: Jan Feb . Mar...." Apr May June July Aug Sept Oct Nov Dec 100 1.00 8 1.00 8 1.00 9 1.00 8 1.00 8 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 High-low 13.35 15.75-15.75 12.00-12.00 14.27 17.00-15.75 12.00-12.00 13.47 16.50-16.50 12.00-12.00 13.64 16.50-16,50 12.00-12.00 13.02 16.50-16.50 12.00-12.00 13.79 16.50-16.50 12.00-12.00 13.00 16.50-15.50 12.00-11.50 10.80 15.50-13.50 11.50-10.00 10.86 13.50-13.50 10.00-10.00 9.21 13.50-12.00 10.00- 9.50 8.72 12.00-11.50 9.50- 9.00 8.50 11.50-11.50 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 1 Rate on new issues within period; bank-discount basis. 2 Yields on the more actively traded issues adjusted to constant maturities by the Treasury Department. a4 Series excludes public utility issues for January 17, 1984 through October 11, 1984 due to lack of appropriate issues. 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 Deginning January 1973 not strictly comparable with prior rates. See next page for continuation of table. 330 TABLE B-71.—Bond yields and interest rates, 7929-S7-—Continued [Percent per annum] U.S . Treasury securities Year and month Bills (new issues) 1 3-month 1983: Jan Feb Mar Apr lyfay 6-month Constant maturities2 3year 10year Corporate hnnrlc bonds (Moody's) Aaa 3 Baa HighMQIJU grade rtewCommunicihome mercial pal paper, 6 bonds months5 (Standard & (FHLBB)4 •SET Prime rate charged by banks6 Discount rate, Federal Reserve Bank of New York 6 Poor's) Federal funds rate7 Dec 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 8.508.508.508.508.508.508.508.508.508.508.508.50- 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 1304: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 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 8.508.508.509.009.009.009.009.009.009.009.008.50- 8.50 8.50 8.50 8.50 9.00 9.00 9.00 9.00 9.00 9.00 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 10.94 8.15 8.69 9.23 8.47 7.88 7.38 7.57 7.74 7.86 7.79 7.69 7.62 10.75-10.50 10.50-10.50 10.50-10.50 10.50-10.50 10.50-10.00 10.00- 9.50 9.50- 9.50 9.50- 9.50 9.50- 9.50 9.50- 9.50 9.50- 9.50 9.50- 9.50 8.008.008.008.008.007.507.507.507.507.507.507.50- 8.00 8.00 8.00 8.00 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 7.04 7.03 6.59 6.06 6.12 6.21 5.84 5.57 5.19 5.18 5.35 5.49 7.13 7.08 6.60 6.07 6.16 6.28 5.85 5.58 5.31 5.26 5.42 5.53 8.41 8.10 7.30 6.86 7.27 7.41 6.86 6.49 6.62 6.56 6.46 6.43 9.19 8.70 7.78 7.30 7.71 7.80 7.30 7.17 7.45 7.43 7.25 7.11 10.05 9.67 9.00 8.79 9.09 9.13 8.88 8.72 8.89 8.86 8.68 8.49 11.44 11.11 10.49 10.19 10.29 10.34 10.16 10.18 10.21 10.24 10.07 9.97 8.06 7.44 7.07 7.32 7.67 7.98 7.62 7.31 7.14 7.12 6.86 6.93 10.89 10.68 10.50 10.27 10.22 10.15 10.30 10.26 10.17 10.02 9.91 9.69 7.62 7.54 7.08 6.47 6.53 6.63 6.24 5.83 5.61 5.61 5.69 5.88 7.507.507.507.006.506.506.506.005.505.505.505.50- 7.50 7.50 7.00 6.50 6.50 6.50 6.00 5.50 5.50 5.50 5.50 5.50 8.14 7.86 7.48 6.99 6.85 6.92 6.56 6.17 5.89 5.85 6.04 6.91 5.45 5.59 5.56 5.76 5.75 5.69 5.78 6.00 6.32 6.40 5.81 5.80 5.47 5.60 5.56 5.93 6.11 5.99 5.86 6.14 6.57 6.86 6.23 6.36 6.41 6.56 6.58 7.32 8.02 7.82 7.74 8.03 8.67 8.75 7.99 8.13 7.08 7.25 7.25 8.02 8.61 8.40 8.45 8.76 9.42 9.52 8.86 8.99 8.36 8.38 8.36 8.85 9.33 9.32 9.42 9.67 10.18 10.52 10.01 10.11 9.72 9.65 9.61 10.04 10.51 10.52 10.61 10.80 11.31 11.62 11.23 11.29 6.63 6.66 6.71 7.62 8.10 7.89 7.83 7.90 8.36 8.84 8.09 8.07 9.51 9.23 9.14 9.21 9.37 9.45 9.41 9.38 9.37 9.25 9.30 9.15 5.76 5.99 6.10 6.50 7.04 7.00 6.72 6.81 7.55 7.96 7.17 7.49 5.50-5.50 5.50-5.50 5.50-5.50 5.50-5.50 5.50-5.50 5.50-5.50 5.50-5.50 5.50-5.50 6.00-5.50 6.00-6.00 6.00-6.00 6.00-6.00 6.43 6.10 6.13 6.37 6.85 6.73 6.58 6.73 7.22 7.29 6.69 6.77 June .'."Z July Aug Sept Oct Nov Jan Feb Mar May";;;" June July Aug Sept Oct Nov Dec 1986: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1987: Jan Feb Mar xJune July Aug Sept Oct Nov Dec 6 9.509.509.509.008.508.508.508.007.507.507.507.50- 9.50 9.50 9.00 8.50 8.50 8.50 8.00 7.50 7.50 7.50 7.50 7.50 7.50-7.50 7.50-7.50 7.50-7.50 7.75-7.75 8.25-8.00 8.25-8.25 8.25-8.25 8.25-8.25 8.75-8.25 9.25-8.75 9.00-8.75 8.75-8.75 Bank-discount basis; prior to November 1979, data are for 4-6 months paper. 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 ' 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. • 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. 6 7 331 TABLE B-72.—Total funds raised in credit markets by nonfinancial sectors, 1978-87 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Item 1978 1979 1980 1981 1982 1983 1984 1985 1986 371.9 385.7 341.7 375.9 388.9 550.2 753.9 854.8 829.9 53.7 37.4 79.2 87.4 161.3 186.6 198.8 223.6 215.0 55.1 -1.4 38.8 -1.4 79.8 -.6 87.8 -.5 162.1 -.9 186.7 -.1 199.0 -.2 223.7 -.1 214.7 .4 318.2 348.4 262.5 288.5 227.6 363.6 555.1 631.1 614.9 200.7 212.5 189.1 155.5 148.3 253.4 313.6 447.8 450.9 28.4 21.1 151.2 30.3 17.3 164.9 30.3 27.7 131.2 23.4 22.8 109.3 44.2 18.7 85.4 53.7 16.0 183.6 50.4 46.1 217.1 136.4 73.8 237.7 30.8 121.3 298.8 110.2 10.9 21.9 8.2 116.6 10.0 24.4 14.0 94.2 7.6 19.2 10.2 72.2 4.8 22.2 10.0 50.5 5.4 25.2 4.2 117.5 14.2 49.3 2.6 129.7 25.1 63.2 -.9 151.9 29.2 62.5 -6.0 199.4 33.1 74.6 -8.4 Other debt instruments U7.6 135.9 73.3 133.0 79.3 110.2 241.5 183.3 164.0 Consumer credit Bank loans n.e.c Open-market paper 46.7 40.3 27.9 42.7 48.5 9.0 35.7 2.9 36.5 4.0 30.0 21.8 48.1 14.7 48.5 19.3 50.4 -6.1 15.8 56.6 23.3 -.8 31.3 90.4 67.1 21.7 62.2 94.6 38.6 14.6 35.5 65.8 66.5 -9.3 41.0 318.2 348.4 262.5 288.5 227.6 363.6 555.1 631.1 614.9 16.5 167.2 134.5 17.6 173.7 157.1 17.2 118.4 126.8 6.8 120.7 161.1 21.5 90.0 116.1 34.0 188.2 141.4 27.4 234.6 293.0 91.8 293.4 245.9 44.3 279.3 291.2 15.6 33.8 85.2 23.5 37.9 95.7 15.2 31.8 79.8 16.6 38.5 106.0 6.8 40.2 69.0 4.1 77.0 60.3 -.1 97.0 196.0 -13.9 93.1 166.7 -15.1 116.1 190.2 24.0 15.0 24.2 23.5 16.0 17.3 8.3 1.2 9.0 4.0 18.3 1.0 3.7 3.1 1.7 6.5 1.2 11.8 2.4 8.8 5.5 3.0 3.9 11.1 6.6 -5.5 1.9 13.0 3.1 3.6 6.5 4.1 3.8 -6.6 6.2 5.0 3.8 -2.8 6.2 -6.0 2.6 -1.0 11.5 -4.0 365.8 399.4 404.8 567.5 762.2 856.0 838.9 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 By borrowing sector: State and local governments. Households Nonfinancial business Farm Nonfarm noncorporate Corporate Foreign net borrowing in United States Bonds •. Bank loans n.e.c Open-market paper U.S. Government loans Total domestic plus foreign 2.7 395.9 400.7. . 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 371.9 385.7 341.7 375.9 388.9 550.2 753.9 854.8 829.9 220.0 252.6 231.3 295.8 311.5 389.9 517.1 496.7 379.4 148.4 147.5 183.2 217.9 205.5 232.8 320.4 223.5 291.8 26.2 108.3 6.4 5.5 2.0 27.9 16.7 128.3 28.5 6.8 2.8 28.1 84.0 102.2 5.2 -1.7 27.7 133.6 33.5 11.1 -.4 42.9 207.3 -39.0 18.5 36.5 235.1 49.0 5.0 53.8 146.3 8.9 16.6 -2.1 112.8 110.9 43.8 18.3 5.9 48.2 77.9 106.0 74.8 33.0 6.7 5.1 Credit market instruments 71.5 105.1 Foreign funds 36.9 1.8 -7.7 16.0 At banks Credit market instruments U.S. Government and related loans, net U.S. Government cash balances Private insurance and pension reserves Other sources -5.1 196.7 273.2 87.6 80.1 115.0 29.7 -25.1 25.3 -23.7 26.4 25.5 -31.4 23.7 40.0 16.3 23.7 57.9 17.7 62.3 12.4 102.6 3.2 6.8 76.0 29.0 -10.4 16.9 .4 74.7 25.1 4.8 -2.6 86.1 21.8 10.5 -1.1 83.4 -14.5 10.4 6.1 106.0 -37.4 5.2 -5.3 109.7 10.8 16.5 4.0 118.6 34.4 37.2 10.3 141.0 89.6 30.0 1.7 152,8 151.1 7.3 See next page for continuation of table. 3.1 157.0 332 63.3 5.4 TABLE B-72,—Total funds raised in credit markets by nonfinancial sectors, 1978-87—Continued [Billions of dollars,- quarterly data at seasonally adjusted annual rates] 1986 Item 1987 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.c Open-market paper Other 793.1 932.5 1,029.0 512.9 758.2 605.7 188.5 226.0 210.4 235.2 162.3 139.1 68.0 188.8 -.3 226.0 208.9 -1.5 235.0 162.4 -.1 141.0 -1.9 68.5 -.5 376.5 567.1 722.0 793.8 350.6 619.1 537.7 323.5 407.6 587.1 485.3 444.1 459.3 442.9 -45.4 129.7 239.2 14.2 140.8 252.6 137.1 113.7 336.2 17.3 100.8 367.2 46.9 146.9 250.3 18.6 108.0 332.7 37.9 135.2 269.9 143.1 184.7 25.7 37.0 65.8 53.6 - 6 . 7 -11.3 246.4 36.8 59.0 -6.0 223.6 178.7 32.8 28.2 120.2 55J - 9 . 4 -12.3 238.1 31.2 69.8 -6.4 188.2 28.2 56.5 135.0 308.5 -93.6 159.8 53.0 , 159.5 State and local governments Households Nonfinancial business Farm Nonfarm noncorporate Corporate Foreign net borrowing in United States Bonds Bank loans n.e.c U.S. Government loans Total domestic plus foreign -2.9 376.5 567.1 722.0 793.8 350.6 94.8 32.8 40.4 75.6 34.8 10.8 40.8 -12.0 31.6 619.1 537.7 -21.5 195.5 202.5 30.1 270.4 266.6 138.3 352.6 231.2 30.4 298.8 464.6 45.7 161.2 143.7 25.0 286.7 307.5 39.2 264.3 234.3 -14.8 -19.0 -13.4 -13.3 -23.0 -12.0 89.6 99.9 171.1 78.9 122.7 103.9 87.8 196.8 113.3 196.1 144.6 306.9 -4.5 83.3 155.6 79.8 62.3 47.2 -22.9 -16.2 -10.1 42.7 29.8 By borrowing sector: 85.2 6.1 36.0 14.8 226.8 -124.8 5.2 -16.3 - 1 . 8 29.8 61.9 26.9 34.7 8.2 16.5 -23.5 -10.1 -3.4 23.7 18.2 -1.5 20.3 -2.3 -5.8 4.5 17.9 -8.4 2.4 - 4 . 6 -7.7 .6 15.8 - 8 . 1 6.0 -11.4 2.7 -2.3 -4.3 -6.2 -4.8 -4.1 -6.2 11.7 5.6 -1.3 21.4 -2.0 599.8 801.3 949.0 1,005.5 502,7 754.9 629.4 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 ageements 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 333 512.9 758.2 605.7 88.5 280.7 398.2 319.9 323.3 -64.4 139.3 294.3 85.4 119.9 64.7 35.9 14.1 184.7 -73.1 35,4 93.5 16.5 - 6 . 9 15.7 17.1 11.6 -35.5 45.6 64.3 29.8 -1.1 96.9 100.2 23.3 52.4 21.5 103.9 565.0 793.1 932.5 1,029.0 302.4 300.8 350.7 563.6 262.8 261.0 81.7 130.1 41.7 4.5 4.8 99.6 100.4 52.2 15.4 -6.6 39.6 39.8 30.8 240.3 152.9 141.4 127.2 122.5 128.8 81.7 110.3 109.1 97.2 44.4 -19.7 82.7 142.2 5.6 123.2 19.5 62.3 45.2 65.0 29.1 80.0 48.7 48.4 24.0 15.2 132.3 198.2 35.8 19.4 236.7 161.1 -34.8 -23.7 140.9 53.0 Source: Board of Governors of the Federal Reserve System. 565.0 94.8 -21.1 - 4 . 2 -34.7 101.2 277.3 92.6 191.9 19.2 -28.3 43.4 30.9 156:0 231.6 149.9 -123.8 TABLE B-73.—Mortgage debt outstanding by type of property and of financing, 1939-87 [Billions of dollars] Nonfarm properties End of year or quarter All properties Farm properties Nonfarm properties by type of mortgage Conventional2 Government underwritten Total Multi- Com1- to 4- family family proper- mercial properhouses ties ties 1- to 4-family houses Total i Total VA FHA guarinsured anteed Total 1939 35.5 6.6 28.9 16.3 5.6 7.0 1.8 1.8 1.8 27.1 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 36.5 37.6 36.7 35.3 34.7 35.5 41.8 48.9 56.2 62.7 6.5 6.4 6.0 5.4 4.9 4.8 4.9 5.1 5.3 5.6 30.0 31.2 30.8 29.9 29.7 30.8 36.9 43.9 50.9 57.1 17.4 18.4 18.2 17.8 17.9 18.6 23.0 28.2 33.3 37.6 5.7 5.9 5.8 5.8 5.6 5.7 6.1 6.6 7.5 8.6 6.9 7.0 6.7 6.3 6.2 6.4 7.7 9.1 10.2 10.8 2.3 3.0 3.7 4.1 4.2 4.3 6.3 9.8 13.6 17.1 2.3 3.0 3.7 4.1 4.2 4.3 6.1 9.3 12.5 15.0 2.3 3.0 3.7 4.1 4.2 4.1 3.7 3.8 5.3 6.9 0.2 2.4 5.5 7.2 8.1 27.7 28.2 27.1 25.8 25.5 26.5 30.6 34.1 37.3 40.0 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 72.8 82.3 91.4 101.3 113.7 129.9 144.5 156.5 171.8 190.8 6.1 6.7 7.2 7.7 8.2 9.0 9.8 10.4 11.1 12.1 66.7 75.6 84.2 93.6 105.4 120.9 134.6 146.1 160.7 178.7 45.2 51.7 58.5 66.1 75.7 88.2 99.0 107.6 117.7 130.9 10.1 11.5 12.3 12.9 13.5 14.3 14.9 15.3 16.8 18.7 11.5 12.5 13.4 14.5 16.3 18.3 20.7 23.2 26.1 29.2 22.1 26.6 29.3 32.1 36.2 42.9 47.8 51.6 55.2 59.3 18.8 22.9 25.4 28.1 32.1 38.9 43.9 47.2 50.1 53.8 8.5 9.7 10.8 12.0 12.8 14.3 15.5 16.5 19.7 23.8 10.3 13.2 14.6 16.1 19.3 24.6 28.4 30.7 30.4 30.0 44.7 49.1 54.9 61.5 69.3 78.0 86.8 94.6 105.5 119.4 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 207.5 228.0 251.4 278.5 305.9 333.3 356.5 381.2 410.9 441.4 12.8 13.9 15,2 16.8 18.9 21.2 23.1 25.1 27.4 29.2 194.7 214.1 236.2 261.7 287.0 312.1 333.4 356.1 383.5 412.2 141.9 154.6 169.3 186.4 203.4 220.5 232.9 247.3 264.8 283.2 20.3 23.0 25.8 29.0 33.6 37.2 40.3 43.9 47.3 52.2 32.4 36.5 41.1 46.2 50.0 54.5 60.1 64.8 71.4 76.9 62.3 65.6 69.4 73.4 77.2 81.2 84.1 88.2 93.4 100.2 56.4 59.1 62.2 65.9 69.2 73.1 76.1 79.9 84.4 90.2 26.7 29.5 32.3 35.0 38.3 42.0 44.8 47.4 50.6 54.5 29.7 29.6 29.9 30.9 30.9 31.1 31.3 32.5 33.8 35.7 132.3 148.5 166.9 188.2 209.8 231.0 249.3 267.9 290.1 312.0 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 473.5 524.0 597.1 672.3 732.3 791.7 878.5 1,009.8 1,161.9 1,327.3 30.3 32.2 35.1 39.5 44.7 49.7 55.3 63.5 71.6 85.6 443.2 491.8 562.0 632.8 687.5 742.0 823.2 946.4 1,090.2 1,241.7 297.4 325.9 366.5 407.9 440.7 482.1 546.3 642.7 753.5 870.5 60.1 70.1 82.8 93.1 100.0 100.6 105.7 114.0 124.9 134.9 85.6 95.9 112.7 131.7 146.9 159.3 171.2 189.7 211.8 236.3 109.2 120.7 131.1 135.0 140.2 147.0 154.1 161.7 176.4 199.0 97.3 105.2 113.0 116.2 121.3 127.7 133.5 141.6 153.4 172.9 59.9 65.7 68.2 66.2 65.1 66.1 66.5 68.0 71.4 81.0 37.3 39.5 44.7 50.0 56.2 61.6 67.0 73.6 82.0 92.0 333.9 371.1 430.9 497.7 547.3 595.0 669.0 784.6 913.9 1,042.7 1980 1981 1982 1983 1984 1985 1986 1,457.4 1,563.1 1,631.7 1,814.9 2,035.2 2,269.2 2,566.7 95.6 105.8 110.0 112.6 111.6 105.7 96.8 1,361.8 1,457.3 1,521.7 1,702.3 1,923.6 2,163.5 2,470.0 964.0 1,037.6 1,074,1 1,189.7 1,318.5 1,467.4 1,666.4. 142.3 142.1 145.9 161.0 185.6 214.0 247.0 255.5 277.5 301.7 351.6 419.4 482.0 556.6 225.1 238.9 248.9 279.8 294.8 328.3 370.7 195.2 207.6 217.9 248.8 265.9 288.8 328.9 93.6 101.3 108.0 127.4 136.7 153.0 185.5 101.6 106.2 109.9 121.4 129.1 135.8 143.4 1,136.7 1,218.4 1,272.8 1,422.5 1,628.8 1,835.2 2,099.2 1985:1 II Ill IV 2,081.6 2,140.5 2,201.3 2,269.2 111.9 110.9 108.3 105.7 1,969.6 2,029.7 2,093.0 2,163.5 1,346.1 1,382.8 1,424.9 1,467.4 191.0 197.7 203.8 214.0 432.5 449.2 464.3 482.0 299.7 305.4 323.8 328.3 270.6 276.0 282.6 288.9 139.8 144.3 148.3 153.0 130.8 131.6 134.3 135.8 1,669.9 1,724.3 1,769.1 1,835.2 1986:1 II Ill IV 2,318.3 2,386.5 2,472.3 2,566.7 103.8 101.1 99.5 96.8 2,214.5 2,285.3 2,372.8 2,470.0 1,495.3 1,544.4 1,607.9 1,666.4 221.9 229.5 237.8 247.0 497.4 511.4 527.2 556.6 339.9 349.7 360.4 370.7 299.1 308.3 319.5 328.9 160.6 168.9 176.8 185.5 138.5 139.4 142.7 143.4 1,874.7 1,935.6 2,012.3 2,099.2 1987:1 II Ill 2,662.3 2,754.5 2,827.6 93.6 92.2 91.3 2,568.8 2,662.3 2,736.4 1,712.1 1,778.3 1,830.4 257.3 266.4 272.8 599.4 617.6 633.2 386.6 403.7 421.8 344.6 360.9 378.7 196.6 211.6 226.9 147.9 149.3 151.8 2,182.2 2,258.6 2,314.6 1 Includes FHA insured multifamity properties, not shown separately. Derived figures. Total includes multifamily and commercial properties, not shown separately. Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations. 2 334 TABLE B-74.—Mortgage debt outstanding by holder, 1939-87 [Billions of dollars] Major financial institutions End of year or quarter Total Total Savings institutions 1 Commercial banks - Other holders Life insurance companies Federal and related agencies 3 Individuals and others 1939 35.5 18.6 8.6 4.3 5.7 5.0 11.9 1940 1941...., 1942 1943 1944 1945 1946 1947 1948 1949 36.5 37.6 36.7 35.3 34.7 35.5 418 48.9 56.2 62.7 19.5 20 7 207 20.2 20.2 21.0 26 0 31.8 37.8 42.9 9.0 9.4 9.2 9.0 9.1 9.6 115 13.8 16.1 18.3 4.6 4.9 4.7 4.5 4.4 4.8 7.2 9.4 10.9 11.6 6.0 64 6.7 6.7 6.7 6.6 7.2 8.7 10.8 12.9 4.9 4.7 4.3 3.6 3.0 2.4 2.0 1.8 1.8 2.3 12.0 12.2 11.7 11.5 11.5 12.1 13.8 15.3 16.6 17.5 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 72.8 82.3 9L4 101.3 113.7 129.9 144.5 156 5 1718 190.8 51.7 59.5 669 75.1 85.7 99.3 111.2 119 7 1315 145.5 22.0 25.5 29.8 34.9 41.1 48.9 55.4 612 68.9 78.1 13.7 14.7 15.9 16.9 18.6 21.0 12.1 23 3 25.5 28.1 16.1 19.3 21.3 23.3 26.0 29.4 33.0 35 2 37.1 39.2 2.8 3.5 4.1 4.6 4.8 5.3 6.2 7.7 8.0 10.2 18.4 19.3 20.4 21.7 23.2 25.3 27.1 29.1 32.3 35.1 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 207 5 228.0 251.4 278 5 305 9 333.3 356.5 3812 410 9 441.4 157 6 172.6 192.5 2171 2410 264.6 280.8 298 8 319 9 339.1 87 0 97 9 111.1 1271 1419 154.9 161.7 172 3 184.3 196.3 28.8 30.4 34.5 39 4 44.0 49.7 54.4 59 0 65.7 70.7 41.8 44.2 46.9 50.5 55.2 60.0 64.6 67.5 70.0 72.0 11.5 12.2 12.6 11.8 12.2 13.5 17.5 20.9 25.1 31.1 38.4 43.1 46.3 49.5 52.7 55.2 58.2 61.4 65.9 71.2 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 473.5 524.0 5971 672.3 732 3 7917 878.5 1009 8 1,161.9 1,327.3 355.9 394.2 450 0 505.4 542 6 5812 647.5 745 2 848.2 938.2 208.2 236.3 273 8 304.9 324 2 355 8 404.6 469 4 528.0 574.6 73.3 82.5 99.3 119.1 1321 136.2 151.3 179 0 214.0 245.2 74.4 75.5 76.9 81.4 86.2 89.2 91.6 96.8 106.2 118.4 38.3 46.4 54.6 64.8 82.2 101.1 116.7 140.5 170.6 216.0 79.3 83.4 92.5 102.2 107,5 109.4 114.3 124.1 143.1 173.1 1980 1981 1982 1983 1984 1985 1986 1,457.4 1,563.1 16317 1814 9 2,035.2 2,269.2 2,566.7 996.8 1,040.5 10213 1108 2 1,245.9 1,361.5 1,473.7 603.1 618.5 5781 626 7 709.7 760.5 777.3 262.7. 284.2 301.3 330.5 379.5 429.2 502.5 131.1 137.7 142.0 1510 156.7 171.8 193.8 256.8 289.4 355.4 433.4 491.1 582.0 733.6 203.8 233.1 255,0 273.3 298.3 3257 359.5 1985- 1 II Ill , IV 2,081.6 2,140.5 2 2013 2,269.2 1,266.9 1,297.9 1 328.1 1,361.5 720.3 735.0 748.1 760.5 388.2 400.7 415.2 429.2 158.5 162.1 164.8 171.8 511.3 531.7 555.2 582.0 303.3 311.0 318.0 325.7 1986:1 II Ill . IV 2,318.3 2 386 5 2 472 3 2,566.7 1,379.0 1405.1 1432.8 1,473.7 762.9 768.4 772.1 777.3 441.1 456.2 474.7 502.5 175.0 180.5 186.0 193.8 605.7 637.0 682.2 733.6 333.6 344.4 357.2 359.5 1987: 1 )| Ill 2,662.3 2,754.5 2,827.6 1,525.3 1,570.9 1,608.4 810.1 826.1 840.3 519.5 544.4 563.6 195.7 200.4 204.6 771.2 808.9 832.8 365.8 374.7 386.4 1 Includes savings banks and savings and loan associations. Beginning 1987, date reported by Federal Savings and Loan Insurance Corporation-insured institutions include loans in process. 2 Includes loans held by nondeposit trust companies, but not by bank trust departments. 3 Includes Government National Mortgage Association (GNMA), Federal Housing Administration, Veterans Administration, Farmers Home Administration (FmHA), and in earlier years Reconstruction Finance Corporation, Homeowners Loan Corporation, Federal Farm Mortgage Corporation, and Pubfjc Housing Administration. Also includes U.S.-sponsored agencies such as Federal National Mortgage Association (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. 335 TABLE B-75.—Consumer credit outstanding, 1950-87 [Amount outstanding (end of month); millions of dollars, seasonally adjusted] Year and month Total consumer credit Installment credit' Total Automobile RevolvingE Mobile home a Other Noninstallment credit4 December: 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 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 141,010 155,537 175,286 200,894 210,634 217,428 241,989 278,919 324,999 366,431 103,905 116,434 131,258 152,910 162,203 167,043 187,782 221,475 261,976 296,483 36,348 40,522 47,835 53,740 54,241 56,989 66,821 80,948 98,739 112,475 4,900 8,252 9,391 11,318 13,232 14,507 16,595 36,689 45,202 53,357 2,433 7,171 9,468 13,505 14,582 15,388 15,738 16,362 16,921 18,207 60,224 60,489 64,564 74,347 80,148 80,159 88,628 87,476 101,114 112,444 37,105 39,103 44,028 47,984 48,431 50,385 54,207 57,444 63,023 69,948 1980 1981 1982 1983 1984 1985 1986 1987 *.... 369,049 390,067 409,471 468,539 561,489 657,017 723,595 755,585 295,763 310,965 325,136 373,048 446,183 522,805 577,784 612,571 111,936 119,610 125,440 145,874 172,352 208,057 245,055 261,654 54,894 60,750 66,007 78,369 99,620 122,021 134,938 145,940 18,264 19,308 21,728 22,919 24,710 25,488 25,710 25,612 110,669 111,297 111,961 125,886 149,501 167,239 172,081 179,365 73,286 79,102 84,335 95,491 115,306 134,212 145,811 143,014 1986: Jan.. Feb.., Mar. Apr.., May., June, 664,820 670,520 673,867 682,310 687,360 693,205 529,126 534,193 536,589 542,525 546,762 551,770 211,530 214,321 215,457 218,021 221,012 224,407 123,921 125,504 126,539 128,905 129,623 130,737 25,574 25,667 25,750 25,703 25,673 25,806 168,101 168,701 168,843 169,896 170,454 170,820 135,694 136,327 137,278 139,785 140,598 141,435 July... Aug... Sept. Oct... Nov.. Dec... 700,167 706,742 715,061 721,809 723,030 723,595 558,059 563,660 571,280 576,874 577,656 577,784 227,822 231,200 239,014 243,400 243,005 245,055 132,181 133,180 133,123 133,816 134,391 134,938 25,891 25,939 25,732 25,784 25,731 25,710 172,165 173,341 173,411 173,874 174,529 172,081 142,108 143,082 143,781 144,935 145,374 145,811 1987: Jan... Feb..., Mar.., June.... 724,581 726,025 726,890 730,733 730,208 735,101 578,578 579,591 579,913 583,595 583,276 587,821 245,472 246,064 246,290 247,663 247,578 250,130 134,916 135,663 135,166 136,706 136,869 137,401 25,852 25,789 25,614 25,626 25,542 25,685 172,338 172,076 172,844 173,600 173,287 174,605 146,003 146,434 146,977 147,138 146,932 147,280 July Aug Sept.... Oct Nov Dec "... 737,767 741,005 746,284 749,187 752,678 755,585 591,175 596,182 602,607 605,488 608,122 612,571 250,980 254,013 257,470 258,710 259.134 261,654 138,741 139,837 141,704 143,142 143,620 145,940 25,860 25,695 25,699 25,677 25,731 25,612 175,594 176,637 177,733 177,959 179,637 179,365 146,592 144,823 143,677 143,699 144,556 143,014 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. z Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Excludes 30day charge credit held by travel and entertainment companies. Prior to 1968, included in "other," except gasoline companies, included in noninstallment credit prior to 1971. Beginning 197/, includes open-end 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. Oata are shown here as a general indication of trends. Source: Board of Governors of the Federal Reserve System. 336 GOVERNMENT FINANCE TABLE B-76.—Federal receipts, outlays, surplus or deficit, and debt, selectedfiscalyears 1929-89 [Billions of dollars; fiscal years] Total Fiscal year or period Off-budge t On-budge Gross Federal debt (end of period) Receipts Outlays Surplus or deficit (-) Addendum: Gross national product Receipts Outlays Surplus or deficit (-) 07 -2.6 -2.8 5.8 9.2 -3.4 0.5 0.0 0.5 16.9 i 22 5 48.2 41.4 95 13.7 35.1 78.6 91.3 -29 -4.9 -20.5 -54.6 -47.6 60 8.0 13.7 22.9 42.5 95 13.6 35.1 78.5 91.2 35 -5.6 -21.3 -55.6 -48.7 6 .7 .9 1.1 1.3 0 .0 .1 .1 6 .7 .8 1.0 1.2 507 57.5 79.2 142.6 204.1 42 8 48.2 67.8 127.8 184.8 958 113.0 142.2 175.8 202.0 45.2 39.3 38.5 41.6 39.4 92.7 55.2 34.5 29.8 38.8 -47.6 -15.9 4.0 11.8 .6 43.8 38.1 37.1 39.9 37.7 92.6 55.0 34.2 29.4 38.4 48.7 -17.0 2.9 10.5 1.3 1.2 1.5 1.6 1.7 .1 .2 .3 .4 .4 1.2 1.0 1.2 1.2 1.3 260.1 271.0 257.1 252.0 252.6 235.2 241.9 224.3 216.3 214.3 212.4 212.9 223.6 247.8 263.9 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 -31 6.1 -15 -6.5 -1.2 37.3 48.5 62 6 65.5 65.1 42.0 44.2 660 73.8 67.9 -4.7 4.3 -34 -8.3 -2.8 21 3.1 36 4.1 4.6 5 1.3 17 2.3 2.9 16 1.8 19 1.8 1.7 256.9 255.3 259.1 266.0 270.8 219.0 214.3 214.8 218.4 224.5 266.8 315.0 342.4 365.6 369.5 1955 1956 1957 1958 1959 65.5 74 6 80.0 79.6 79.2 68.4 70 6 766 82.4 92.1 -3.0 39 34 -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 25 2.6 -3.3 -12.1 5.1 64 6.8 8.0 8.3 4.0 50 6.0 7.5 9.0 1.1 15 .8 .5 -.7 274.4 272.8 272.4 279.7 287.8 226.6 222.2 219.4 226.4 235.0 386.4 418.1 440.5 450.2 481.5 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 59 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 65 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 .6 290.9 292.9 303.3 310.8 316.8 237.2 238.6 248.4 254.5 257.6 506.7 518.2 557.7 587.8 629,2 1965 1966 1967 1968 1969 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 1117 124.4 128.1 157.9 101.7 114 8 137.0 155.8 158.4 -1.6 31 -12.6 -27.7 -.5 16.7 191 24.4 24.9 29.0 16.5 19 7 20.4 22.3 25.2 .2 - 6 4.0 2.6 3.7 323.2 329.5 341.3 369.8 367.1 261.6 264.7 267.5 290.6 279.5 672.6 739.0 794.6 849.4 929,5 1970 1971 1972 1973 1974 192.8 187.1 207 3 230.8 263.2 195.6 210.2 230 7 245.7 269.4 -2.8 -23.0 23 4 -14.9 -6.1 159.3 151.3 167 4 184.7 209.3 168.0 177.3 193 8 200.1 217.3 -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 1.8 382.6 409.5 437.3 468.4 486.2 284.9 304.3 323.8 343.0 346.1 990.2 1,055.9 1,153.1 1,281.4 1,416.5 1975 1976 Transition quarter... 1977 1978 1979 279.1 298.1 332.3 371.8 -53.2 -73.7 216.6 231.7 271.9 302.2 -55.3 -70.5 62.5 66.4 60.4 69.6 2.0 -3.2 544.1 631.9 396.9 480.3 1,522.5 1,698.2 81.2 355 6 399.6 463.3 96.0 409 2 458.7 503.5 -14.7 — 53 6 -59.2 -40.2 63.2 278 7 314.2 365.3 76.6 328 5 369.1 403.5 -13.3 49 7 -54.9 -38.2 18.0 76 8 85.4 98.0 19.4 80 7 89.7 100.0 -1.4 -39 -4.3 -2.0 646.4 709.1 780.4 833.8 498.3 551.8 610.9 644.6 1980 1981 1982 1983 1984 517.1 599.3 617.8 600.6 666.5 590.9 678.2 745.7 808.3 851.8 -73.8 -78.9 -127.9 -207.8 -185.3 403.9 469.1 474.3 453.2 500.4 476.6 543.0 594.3 661.2 686.0 -72.7 -73.9 -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 .3 914.3 1,003.9 1,147.0 1,381.9 1,576.7 715.1 794.4 929.4 1,141.8 1,312.6 2,670.6 2,986.4 3,139.1 3,321.9 3,687.6 1985 1986 1987 3 1988 3 1989 734.1 769.1 854.1 909.2 964.7 946.3 990.3 1,004.6 1,055.9 1,094.2 -212.3 -221.2 -150.4 -146.7 -129.5 547.9 568.9 640.7 669.3 706.2 769.5 806.8 810.8 852.8 880.9 -221.6 -237.9 -170.0 -183.5 -174.7 186.2 200.2 213.4 239.9 258.5 176.8 183.5 193.8 203.1 213.3 9.4 16.7 19.6 36.8 45.1 1,827.5 2,130.0 2,355.3 2,581.6 2,825.3 1,509.9 1,746.1 1,897.8 2,025.1 2,152.1 3,943.4 4,192.5 4,408.7 4,705.8 5,023.3 Receipts Outlays Surplus or deficit {-) 1929 1933 1939 3.9 2.0 6.3 31 4.6 9.1 1940 1941 1942 1943 1944 65 8.7 14.6 24.0 43.7 1945 1946 1947 1948 1949 Total Held by the public 1 1 2 3 2 1,794.7 1,933.0 2,171.8 2,447.8 Not strictly comparable with later data. Annual rate. Estimates. 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 1989" for additional information. Sources: Department of the Treasury, Office of Management and Budget, and Department of Commerce (Bureau of Economic Analysis). 337 TABLE B-77.—Federal receipts, outlays, and debt,fiscalyears 1980-89 [Millions of dollars; fiscal years] Actual Description 1980 1981 1982 1983 1984 517,112 590,920 599,272 678,209 617,766 745,706 600,562 808,327 666,457 851,781 -73,808 -78,936 -127,940 -207,764 -185,324 403,903 476,591 469,097 543,013 474,299 594,302 453,242 661,219 500,382 685,968 -72,689 -73,916 -120,003 -207,977 -185,586 113,209 114,329 130,176 135,196 143,467 151,404 147,320 147,108 166,075 165,813 -1,120 -5,020 -7,937 212 262 914,317 1,003,941 1,146,987 1,381,886 1,576,748 199,212 715,105 120,846 594,259 209,507 794,434 217,560 929,427 240,114 1,141,771 264,159 1,312,589 124,466 669,968 134,497 794,930 155,527 986,244 155,122 1,157,467 517,112 599,272 617,766 600,562 666,457 298,415 56,893 239,376 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 accounts.. 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 toft taxes Customs duties Miscellaneous receipts: Deposits of earnings by Federal Reserve SystemAll 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 Central Federal credit activities Net interest On-budget... Off-budget.. Allowances Undistributed offsetting receipts On-budget... Off-budget.. See next page for continuation of table. 338 ; 64,600 157,803 285,917 61,137 182,720 297,744 49,207 201,498 •288,938 37,022 208,994 44,594 113,209 52,545 130,176 58,031 143,467 61,674 147,320 73,301 166,075 24,329 6,389 7,174 40,839 6,787 8,083 36,311 7,991 8,854 35,300 6,053 8,655 37,361 6,010 11,370 11,767 981 12,834 956 15,186 975 14,492 1,108 15,684 1,347 590,920 678,209 745,706 808,327 851,781 133,995 12,714 5,832 10,156 13,858 8,839 9,390 21,329 11,252 31,843 23,169 32,090 86,540 118,547 157,513 13,104 6,469 15,166 13,568 11,323 8,206 23,379 10,568 33,709 26,866 39,149 99,723 139,584 185,309 12,300 7,200 13,527 12,998 15,944 6,256 20,625 8,347 27,029 27,445 46,567 107,717 155,964 209,903 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 57,540 112,668 178,223 675 117,872 670 138,914 844 155,120 19,993 150,731 7,056 171,167 21,185 4,582 13,030 22,991 4,762 11,436 23,958 4,703 10,922 24,846 5,099 11,241 25,614 5,660 11,821 52,512 68,734 84,995 89,774 111,058 54,851 -2,339 71,022 -2,288 87,065 -2,071 91,619 -1,845 114,368 -3,310 -19,942 -28,041 =26,099 -33,976 -31.957 -18,738 -1,204 -26,611 -1,430 -24,453 -1,646 -32,198 -1,778 -29,913 -2,044 TABLE B-77.—Federal receipts, outlays, and debt,fiscalyears 1980-89—Continued [Millions of dollars; fiscal years] Actual Description Estimates 1987 1988 769,091 990,258 854,143 1,004,586 909,163 1,055,904 964,674 1,094,215 -212,260 -221,167 -150,444 -146,741 -129,542 547,886 769,509 568,862 806,760 640,741 810,754 669,264 852,778 709,193 880,873 -221,623 -237,898 -170,014 -183,514 -174,680 186,171 176,807 200,228 183,498 213,402 193,832 239,899 203,126 258,481 213,342 9,363 16,731 19,570 36,773 45,139 1985 1986 734,057 946,316 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: 1,827,470 2,130,031 2,355,280 2,581,556 2,825,288 Held by Government accounts Held by the public 317,612 1,509,857 457,444 1,897,836 556,473 2,025,083 673,184 2,152,104 Federal Reserve System.. Other 169,806 1,340,051 383,919 1,746,112 190,855 1,555,257 Gross Federal debt.. 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.., Allother 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 734,057 769,091 854,143 909,163 964,674 334,531 61,331 265,163 348,959 63,143 283,901 392,557 83,926 303,318 393,395 105,567 331,513 412,353 117,704 354,565 78,992 186,171 83,673 200,228 89,916 213,402 91,614 239,899 96,084 258,481 35,992 6,422 12,079 32,919 6,958 13,327 32,457 7[493 15,085 35,342 7,567 16,399 35,213 7,795 17,224 17,059 1,480 18,374 l,510o 16,817 2,490 16,053 3,327 16,421 946,316 990,258 1,004,586 1,055,904 252,748 128,200 188,623 273,375 14,152 8,976 4,735 13,639 31,449 4,890 28,117 7,233 30,585 35,936 70,164 119,796 198,757 281,999 11,649 9,216 4,115 13,363 27,356 6,182 26,228 5,051 29,724 39,968 75,120 123,250 207,353 285,423 9,926 10,903 2,713 15,139 22,352 12,364 27,237 6,321 33,652 44,479 78,857 129,560 219,717 5,189 183,434 8,072 190,684 4,930 202,422 5,022 214,695 5,572 228,197 26,292 6,277 11,582 26,356 6,603 12,533 26,782 7,548 7,569 27,748 8,970 8,796 129,430 135,969 138,570 147,871 29,573 9,894 9,492 -6,282 151,804 133,548 -4,118 140,298 -4,329 143,860 -5,290 155,142 -7,271 161,940 -10,136 -32,698 -33,007 -36,455 -36,123 -48 -41,002 -30,189 -2,509 -30,150 -2,857 -33,155 -3,300 -31,825 -4,298 -36,283 -4,719 16,176 8,627 5,685 13,357 25,565 4,229 25,838 7,680 29,342 33,542 65,822 On-budget.... Off-budget... Veterans benefits and services.... Administration of justice , General government , Central Federal credit activities... Net interest On-budget... Off-budget.. Allowances , Undistributed offsetting receipts.., On-budget... Off-budget.. 212,040 1,685,795 3,398 1,094,215 294,020 13,334 13,103 3,061 16,024 21,732 7,862 27,280 5,879 37,362 47,771 84,015 135,573 233,769 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 1989" for additional information. Sources: Department of the Treasury and Office of Management and Budget. 339 TABLE B-78.—Relation of Federal Government receipts and expenditures in the national income and product accounts to the budget, fiscal years 1987-89 [Billions of dollars; fiscal years] Estimate Receipts and expenditures 1987 RECEIPTS Total on-budget and off-budget receipts.. Government contributions for employee retirement (grossing)., Other netting and grossing Timing adjustments Geographic exclusions Federal sector, national income and product accounts, receipts.. EXPENDITURES 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 produc