Full text of Economic Report of the President : 1991
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•1 & i Transmitted to thf L Febioi 1 1 Economic Report of the President Transmitted to the Congress February 1991 TOGETHER WITH THE ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1991 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402 CONTENTS ECONOMIC REPORT OF THE PRESIDENT. ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS* 11 CHAPTER 1. FOUNDATIONS FOR ECONOMIC GROWTH 21 CHAPTER 2. ECONOMIC DEVELOPMENTS AND PROSPECTS 37 CHAPTER 3. OIL PRICE SHOCKS AND ECONOMIC POLICY 79 CHAPTER 4. FLEXIBILITY AND CHANGE IN THE ECONOMY Ill CHAPTER 5. INNOVATION AND REFORM IN THE FINANCIAL SECTOR 155 CHAPTER 6. ECONOMIES IN TRANSITION AROUND THE WORLD 193 CHAPTER 7. TRADE LIBERALIZATION AND ECONOMIC GROWTH 233 APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE COUNCIL OF ECONOMIC ADVISERS DURING 1990 265 APPENDIX B. STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION 279 *For a detailed table of contents of the Council's Report, seepage 15. (iii) ECONOMIC REPORT OF THE PRESIDENT ECONOMIC REPORT OF THE PRESIDENT To the Speaker of the House of Representatives and the President of the Senate: Just over 8 years ago the longest peacetime economic expansion in U.S. history began. By the start of the 1990s the unemployment rate had fallen to levels not seen since the early 1970s, and inflation remained relatively low and remarkably stable when compared with the 1970s. More than 20 million new jobs were created by our dynamic and diverse market economy—the largest and the most productive in the world. Reflecting both the evolving needs and wants of the American people and the rapid advance of technology, some industries and regions experienced much more robust job growth than others. And, as is normal during economic expansions, the rate of growth of the Nation's output varied from year to year. The events of 1990 were a reminder that even a healthy economy can suffer shocks and short-term setbacks. In early August, Iraq invaded and occupied its small, defenseless neighbor Kuwait and threatened Saudi Arabia. Oil prices rose substantially on the world market, and business and consumer confidence plummeted. These shocks hit an economy that was already growing slowly for several reasons, including worldwide increases in interest rates, tightened credit conditions, and the lingering effects of a successful attempt begun in 1988 by the Federal Reserve to prevent an acceleration of inflation. U.S. output turned down in the fourth quarter of 1990, and it became clear that the economy had entered a recession. I know that in some regions of our country, people are in genuine economic distress. This temporary interruption in America's economic growth does not signal a decline in the basic long-term vitality of the U.S. economy. Indeed, there were important economic achievements in 1990. Even though many analysts had earlier forecast increased inflation, the underlying rate of inflation was contained and showed clear signs of declining by the end of the year. Low inflation is essential to lower interest rates and strong economic growth. The U.S. trade deficit declined for the third year in a row, and U.S. firms remained competitive in world markets. Exports of American products reached an all-time high in 1990 and exceeded those of any other nation. Productivity in U.S. manufacturing continued to grow impressively. Some regions and industries experienced relatively strong job growth. My Administration's economic policies are designed both to mitigate the current downturn and to provide for a solid recovery and the highest possible rate of sustainable economic growth. Because these policies are credible and systematic, they reduce uncertainty and pave the way to higher growth with sustained job-creating expansions. With these policies in place, the current recession is expected to be mild and brief by historical standards. Economic growth is projected to recover by the middle of this year. Inflation and interest rates are expected to decline. With the adoption of my pro-growth initiatives, the recovery and ensuing expansion are projected to be strong and sustained, and to be accompanied by continued progress toward lower inflation. As the Nation proceeds into the 1990s, it is important to remember the simple secret of America's economic success in the 1980s: a government policy that allowed the private sector to serve as the engine of economic growth. We must also remember that economic growth is the fundamental determinant of the long-run success of any nation, the basic source of rising living standards, and the key to meeting the needs and desires of the American people. The process of growth necessarily involves change. Advances in technology, shifts in world market conditions, and changes in tastes and demographics have created major new industries and dramatically altered the fortunes of existing industries. The lesson of history is clear. Attempts to protect special interests by blocking the economy's natural, market-driven evolution—through regulation, subsidy, or protection from competition—reduce the economy's flexibility and impair its ability to grow and to create jobs. Growth and prosperity are enhanced by strengthening and extending the scope of market forces, not by substituting government dictates for the free choices of workers, consumers, and businesses. TOWARD RENEWED GROWTH The budget law enacted last fall gives fiscal policy a strong and credible medium-term framework. It increases the ability of the fiscal system to dampen the impact of the current recession, while providing for strong controls to reduce Federal spending as a percentage of our gross national product. A major reason that the budget deficit is expected to increase this year—before declining steadily thereafter—is the increase in payments to those adversely affected by the current downturn and the reduction in tax receipts as incomes grow more slowly. These automatic responses to the recession will help cushion its effects. I am committed to maintaining a tax system that will sustain strong economic growth. My proposal to reduce the tax rate on capital gains would give a needed boost to the economy and set it on a strong course of economic growth and job creation for years to come. A lower capital gains tax rate would encourage entrepreneurial activity, which plays a critical role in creating new jobs, new products, and new methods of production. It would reduce the bias in favor of debt financing and thereby decrease the financial risks borne by U.S. corporations and their workers and shareholders. The Federal Reserve's control of inflation throughout the recent long expansion has given it the credibility necessary to mitigate the current downturn significantly without triggering an increase in inflationary expectations. Federal Reserve action in recent months will also help to alleviate tight credit market conditions that have hampered the economy. It is important that the Federal Reserve sustain money and credit growth necessary for the maintenance of sustained economic growth, especially during an economic downturn. And, while unwarranted risks should be avoided, I believe that sound banks should be making more sound loans. Comprehensive banking reform will help to alleviate tight credit conditions by reducing unnecessary restrictions on the banking sector. Healthier depository institutions are essential for a sound financial system. Lifting restrictions on interstate banking activities and on the ability of banks to combine with commercial and other financial firms will increase banks' competitiveness. These changes will enhance banks' ability to attract capital and reduce the risk of a contraction in lending. Some have argued that the government should react to the recent oil price shock by reregulating energy markets. They would do well to remember the lessons of the 1970s, when regulation worsened the impacts of two oil shocks and forced Americans to waste many hours in long and unnecessary lines at gas stations. Long-term uncertainties about energy prices make it vital that U.S. energy policy be based, in both the short run and the long run, on the flexibility and efficiency that only well-functioning markets can provide. My Administration's National Energy Strategy calls for removing unnecessary barriers to market forces so that ample supplies of reasonably priced energy can continue to foster economic growth. The Strategy also outlines initiatives to enhance the energy security of the United States and its friends and allies, to encourage costeffective conservation and efficiency measures, to increase the use of alternative fuels, and to continue to mitigate the environmental consequences of energy use. SUPPORTING LONG-RUN GROWTH The Federal Government cannot mandate or effectively direct economic growth, but it can and should create conditions that encourage market-driven growth. That requires reducing barriers to saving, investing, working, and innovating. Encouraging growth also requires sustaining and expanding the role of market forces and, thereby, enhancing the economy's flexibility. Attempts to second-guess the market and to direct government support to particular firms, industries, or technologies in the name of promoting growth are inevitably counterproductive. The multiyear Federal deficit reduction package adopted last year, the largest and most comprehensive such package in U.S. history, will reduce the Federal budget deficit by nearly a half-trillion dollars over the next 5 years relative to baseline projections. This substantial reduction in government borrowing will raise the national saving rate and increase the pool of funds available to finance job-creating private investment in new productive capacity and new technology. My Administration remains firmly committed to taking additional steps to lower the cost of capital and to encourage entrepreneurship, saving, investment, and innovation. I have again asked the Congress to reduce the tax rate on long-term capital gains and to make the research and experimentation tax credit permanent. To encourage private saving, my budget again includes Family Savings Accounts and penalty-free withdrawals from Individual Retirement Accounts for first-time homebuyers. My Administration will seek increased Federal support for research that has broad national benefits, and we will make the results of government-supported research more accessible to the private sector so that they can be brought more quickly to market. Strong economic growth will continue to require a sound national transportation infrastructure. My Administration's proposals for restructuring highway programs, centered around a new National Highway System program, would make a substantial contribution to meeting those demands. Economic growth requires skilled and adaptable workers as well as modern capital and new technology. Excellence in education is the key to increasing the quality of the U.S. labor force. My Administration is strongly committed to making the U.S. educational system second to none, so that U.S. workers can continue to compete effectively with their peers in other nations. To meet this goal, the performance of U.S. elementary and secondary education must be dramatically improved. More money will not ensure excellence; America is already a world leader in spending on education. Fundamental reform is necessary. Government policies should be designed to put power in the hands of individuals and families—to give them the tools and incentives to improve their own lives. Thus students and their families must be given greater freedom to choose among competing schools, and talented and skilled individuals must be freed from unnecessary obstacles to entering the teaching profession. My Administration will seek enactment of a new Educational Excellence Act that would support choice in education, alternative certification for teachers and principals, rewards for outstanding teachers and for schools that improve their students' achievements, and innovative approaches to mathematics and science education. The Immigration Act of 1990, the first major reform of legal immigration in a quarter-century, will substantially increase the overall level of immigration, particularly of skilled workers. These new workers will contribute to U.S. economic growth, as well as to the Nation's social and cultural vitality. The Americans with Disabilities Act is the most significant extension of civil rights legislation in two decades. It will enable more of our citizens with disabilities to enter the economic mainstream and thus to better their own lives while contributing to the Nation's economic strength. Last year important legislation passed that will give power and opportunity to individuals. The expansion of the Earned Income Tax Credit, the new health insurance credit, and the other child care provisions in the 1990s budget legislation will put dollars for child care directly in the hands of parents, instead of bureaucracies. The Homeownership and Opportunity for People Everywhere (HOPE) initiative in the National Affordable Housing Act will expand homeownership and give more families a stake in their communities. My Administration strongly supported the expansion of medicaid to provide health insurance to more pregnant women and children in low-income families. But there is more to be done. My Administration will continue to press for the establishment of enterprise zones to encourage entrepreneurship, investment, and job creation in distressed communities. We will propose initiatives focused on infant mortality, preventive measures, and nutrition to improve the health of those least able to provide for their own needs. FLEXIBILITY AND REGULATION The remarkable flexibility of the U.S. economy, which stems from its reliance on free markets, is a major national asset. Flexibility enables the economy to cushion the effects of adverse developments, such as oil price shocks, and to take full advantage of innovations and other new opportunities. Indeed, the responsiveness of the economy to new opportunities is an important spur to innovation and a source of economic dynamism. Government regulation generally serves to reduce economic flexibility and thus should have a very limited role. Where regulation is necessary, regulatory programs should pass strict cost-benefit tests and should seek to harness the power of market forces to serve the public interest, not to distort or diminish those forces. The lesson of the savings and loan crisis, to which my Administration responded swiftly, is not that competition and innovation are incompatible with safety and soundness in the financial sector. Rather, this experience shows that poorly designed regulation, inadequate supervision, and limits on risk-reducing diversification can combine to produce behavior that undermines creditors' confidence and imposes unnecessary burdens on taxpayers. We can and must ensure the safety and soundness of our banking system and continue to provide full protection for insured deposits while allowing competition to improve efficiency and encourage innovation. My Administration's proposals for comprehensive reform of the regulatory system governing banks will achieve these goals. In addition, these reforms will enhance the ability of U.S. banks to compete in the global markets for financial services. Last year's farm legislation embodied important steps toward a market-oriented agricultural policy and away from government domination of this vital and progressive sector. Farmers have been given additional flexibility in planting decisions, in a way that will both sustain farmers' incomes and save taxpayers' money. Market-based initiatives can and should play a key role in environmental policy as well. In 1989 my Administration proposed comprehensive legislation to combat air pollution. This proposal broke a logjam that had blocked congressional action for more than a decade, and a landmark clean air bill was enacted last year—the most significant air pollution legislation in the Nation's history. The centerpiece of this bill is an innovative, market-based program for controlling—at the least possible cost to the economy—the emissions that produce acid rain. All provisions of this legislation will be implemented so as to minimize unnecessary burdens on American workers and firms. Economic growth and environmental protection are compatible, but only if environmental goals reflect careful cost-benefit analysis and if environmental regulation provides maximum flexibility to meet those goals at least cost. My Administration will continue to be guided by the responsibilities of global stewardship; we will seek both to protect the environment and to maintain economic growth to give all the world's children the chance to lead better lives than their parents. LEADERSHIP IN THE GLOBAL ECONOMY Throughout the postwar period, the United States has led the world toward a system of free trade and open markets. The benefits of global economic integration and expanded international trade have been enormous, at home and abroad. U.S. firms gain from access to global markets; U.S. workers benefit from foreign investment in America; and U.S. consumers can buy goods and services from around the world. Competition and innovation have been stimulated, and businesses have increased their efficiency by locating operations around the globe. The phenomenal prosperity and vitality of market-oriented economies—and the bankruptcy of the socialist model—point the way to future progress and growth. My Administration will continue to push aggressively for open markets in all nations, including our own, and will continue to oppose protectionism. Protectionist trade barriers impose burdens on the many to serve the interests of the few and can only reduce the Nation's competitiveness. Government attempts to overrule the decisions of the international marketplace and to manage trade or investment flows inevitably reduce economic flexibility and lower living standards. My Administration's top trade policy priority continues to be the successful completion of the Uruguay Round negotiations of the General Agreement on Tariffs and Trade (GATT). Success in the Uruguay Round would open agricultural markets, lower or eliminate tariffs on many products, strengthen the GATT system, and extend it to cover important new areas—such as services, investment, and intellectual property—critical to U.S. economic vitality. These improvements would significantly increase the ability of the global economy to raise living standards in the United States and around the world. Failure, on the other hand, would increase trade frictions and could lead to a destructive new round of protectionism. In addition, my Administration has moved to pave the way toward a hemispheric zone of free trade. We have announced our intention to begin negotiations on a free-trade agreement with Mexico. My Enterprise for the Americas Initiative promises to fuel growth and prosperity throughout this hemisphere by removing barriers to trade and investment. This initiative also aims to provide official debt reduction to countries engaged in significant economic reforms and thereby to build on my Administration's ongoing support for commercial debt reduction. America remains a beacon of hope to peoples around the world. Our Nation continues to demonstrate by shining example that political democracy and free markets reinforce each other and together lead to liberty and prosperity. Nations in this hemisphere and the emerging democracies of Eastern Europe are eagerly moving to follow America's example. The challenges these nations face as they fundamentally restructure their economies are enormous. My Administration will continue its strong support and assistance for their vital and historic efforts. LOOKING AHEAD In my Economic Report last year I stated that I looked forward to the 1990s with hope and optimism. Despite the economic events of 1990, we have reason for both hope and optimism in full measure as the Nation approaches the next American century. Following sound economic policy principles, my Administration seeks to achieve the maximum possible rate of sustainable economic growth. We must continue to adhere to those principles if we are to soften the impacts of the current recession and to strengthen the foundation for strong growth in the years to come. Economic growth remains the key to raising living standards for all Americans, to expanding job opportunities, and to maintaining America's global economic leadership. THE WHITE HOUSE (/ FEBRUARY 12, 1991 10 THE ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS LETTER OF TRANSMITTAL COUNCIL OF ECONOMIC ADVISERS, Washington, D.C., February 4, 1991 MR. PRESIDENT: The Council of Economic Advisers herewith submits its 1991 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, Michael J. Boskin Chairman Richard L. Schmalensee Member John B. Taylor Member 13 // CONTENTS Page CHAPTER 1. FOUNDATIONS FOR ECONOMIC GROWTH Recent Developments and Prospects Developments in 1990 The Outlook Building on Strength Policies for Renewed Growth Fiscal Policy Monetary and Financial Sector Policy Policies to Support Growth Encouraging Investment and Improving Education... Strengthening Market Forces Giving Power and Opportunity to Individuals Limiting Regulation and Making It Work U.S. Leadership in the Global Economy International Trade Liberalization International Macroeconomic Issues Support for Economies in Transition Conclusion CHAPTER 2. ECONOMIC DEVELOPMENTS AND PROSPECTS The U.S. Economy in 1990 Monetary Policy and Credit Markets Federal Budget Developments Economic Growth and Employment Prices and Wages Summary Monetary and Fiscal Policy Outlook Monetary Policy Fiscal Policy Summary The Economic Outlook The Outlook for the Short Term The Prospects for Growth in the Longer Term Summary Conclusion CHAPTER 3. OIL PRICE SHOCKS AND ECONOMIC POLICY Size and Duration of Oil Price Shocks Recent Oil Price Movements Comparison with Previous Shocks 15 21 22 22 24 24 25 26 27 28 29 30 31 32 33 33 34 35 35 37 38 38 45 49 57 60 61 62 63 69 69 70 72 76 77 79 80 80 81 Page Summary The Effects of Oil Price Shocks Effects on Inflation Effects on Real Growth Estimates of the Effects Summary Macroeconomic Policies The Advantages of Systematic Policies Designing Fiscal and Monetary Policies Lessons from Previous Shocks Summary Short-Run Energy Policy Response The Dangers of Reregulation Energy Futures Markets and Speculation Strategic Oil Reserves Summary f Longer Term Energy Policies Long-Term Trends in Energy Prices and Use Energy Security Strengthening Market Forces Summary Conclusion CHAPTER 4. FLEXIBILITY AND CHANGE IN THE ECONOMY The Process of Dynamic Change Sources of Economic Change The Changing Structure of the U.S. Economy Preserving the Flexibility of the Economy Summary Education Reform for an Adaptable Work Force The Current State of Education Toward an Effective Educational System Summary Agriculture: Technological Success and the Need for More Flexible Policies Technological Change and Productivity Growth Consumer Demand and International Trade Toward a Market-Oriented Farm Policy Summary Health Care: Dynamic Technology and Changing Demographics Recent Trends Perceived Problems of the Existing System Why Health Care Markets Perform Poorly Summary Telecommunications: Technological and Regulatory Innovation 16 82 82 82 85 88 90 90 91 92 94 97 97 97 98 101 102 102 103 104 106 109 109 Ill Ill 112 113 116 120 121 122 124 127 128 129 130 131 135 135 135 136 139 142 143 Lessons from Deregulation Maintaining a Dynamic Industry Summary Defense Industries: Adjusting to the End of the Cold War Historical Experience The Problem and Potential of Defense Conversion Summary Conclusion CHAPTER 5. INNOVATION AND REFORM IN THE FINANCIAL SECTOR Development of Financial Institutions in the United States Banks and Savings and Loans The Great Depression and Banking Reform Summary The 1970s: Inflation, High Interest Rates, and New Competition Rise of Money Market Funds Internationalization Summary The S&L Crisis Vulnerability to Interest Rate Increases Insolvency and Closure Resolving the S&L Crisis Summary Reform in the Financial Sector Context for Depository Institution Reform Issues in Deposit Insurance Reform Deposit Insurance Reform: Inducing Market-Based Incentives Removing Regulatory Obstacles Federal Credit Programs Summary Conclusion CHAPTER 6. ECONOMIES IN TRANSITION AROUND THE WORLD Forces for Change The Failure of Economic Policies Repercussions of Economic Policy Failures Early Attempts at Reform Summary Principles for Economic Reform Macroeconomic Reforms Structural Reforms Summary Implementing Economic Reforms 17 143 145 148 149 149 150 153 153 155 157 158 160 161 162 162 164 167 167 167 171 173 174 174 175 176 180 184 187 191 191 193 195 195 197 198 199 200 200 207 211 212 Page The Need for Comprehensive Reform Example: Reforming Polish Agriculture Summary Eastern Europe and the Soviet Union Poland, Yugoslavia, and East Germany Hungary and Czechoslovakia The Soviet Union Challenges in 1990 and 1991 Summary Reform in the Americas Recent History of Latin American Reforms Mexico Chile Summary The Role of the United States U.S. Support for Eastern Europe U.S. Support for Latin America Working with Multilateral Institutions and Other Governments The Role of the U.S. Private Sector Summary Conclusion CHAPTER 7. TRADE LIBERALIZATION AND ECONOMIC GROWTH The Gains from Free Trade and Losses from Protectionism Efficiency, Productivity, and Growth Import Protection and Managed Trade Summary Global Trade and the Uruguay Round Process and Timing of the Negotiations Areas of Negotiation Summary U.S. Pro-Trade Initiatives in the Americas and Elsewhere U.S.-Mexico Free-Trade Area Initiatives for the Americas Structural Impediments Initiative Summary Multinational Corporations and the Trade-Investment Linkage The Benefits of Foreign Direct Investment U.S. Foreign Direct Investment Policy Summary Conclusion 18 213 214 215 215 216 217 218 219 220 221 221 222 223 225 225 226 227 228 229 231 231 233 235 235 238 242 243 244 245 252 252 253 253 255 256 256 258 261 262 263 APPENDIXES A. Report to the President on the Activities of the Council of Economic Advisers During 1990 B. Statistical Tables Relating to Income, Employment, and Production Pa e s 265 279 LIST OF TABLES, CHARTS, AND BOXES Tables 2-1 Growth of Real GNP and Components, 1982-90 2-2 Economic Performance and Projections for the United States and other G-7 Nations, 1989-90 2-3 Economic Outlook for 1991 2-4 Alternative Projections and Their Impact on the Deficit, 1991-92 2-5 Accounting for Growth in Real GNP, 1948-96 2-6 Administration Economic Assumptions, 1991-96 4-1 Aging of the U.S. Population, 1960-2040 5-1 Credit Provided by Private Financial Intermediaries.... 7-1 Parents of U.S. Multinational Corporations vs. U.S. Affiliates of Foreign Multinational Corporations: U.S. Operations in 1988 7-2 Parents of U.S. Multinational Corporations and U.S. Affiliates of Foreign Multinational Corporations: Input Supply Choices, 1977 vs. 1987 50 53 71 73 74 75 136 156 260 261 Charts 2-1 2-2 2-3 2-4 2-5 2-6 2-7 2-8 2-9 2-10 2-11 2-12 3-1 3-2 3-3 3-4 3-5 4-1 4-2 5-1 5-2 5-3 Real GNP Growth Federal Funds Rate Money Supply Interest Rates Long-Term Government Bond Yields The Unemployment Rate Regional Employment Growth Consumer Prices Oil Prices The Employment Cost Index Reductions in the Federal Budget Deficit, NIPA Basis. The Fiscal 1992 Budget Cycle Energy Consumption per Dollar of GNP Inflation and Oil Shocks in the United States Inflation and Oil Shocks in Japan Oil Spot Prices and Futures Prices Real Energy Prices Labor Force Shares by Industry Defense Purchases as a Percent of GNP, 1939-1996 Deposits and Money Market Funds Composition of Loans to Businesses Assets at U.S. Offices of Foreign Banks 19 39 40 42 43 44 55 56 58 59 61 66 67 84 95 96 99 103 114 150 165 165 166 Charts 5-4 New Mortgage Interest Rates and Thrift Portfolio Yields 7-1 Estimated Increase in U.S. GNP from a Successful Uruguay Round 7-2 U.S. Trade with Mexico and Canada, 1989 7-3 World Stocks of Foreign Direct Investment, 1988 169 239 254 257 Boxes 2-1 2-2 3-1 3-2 3-3 4-1 4-2 4-3 5-1 5-2 6-1 6-2 6-3 7-1 7-2 7-3 7-4 7-5 Revised National Income and Product Accounts Sectoral and Regional Income and Employment Why Did Gasoline Prices Rise So Fast? Futures Markets Speculation and Price Volatility International Comparisons of Energy Use Texas Alternative Certification Program How the "Triple Base" Provision Works Incentives in the Market for Health Insurance Inflation-Proof Bonds and Mortgages Alternative National Deposit Insurance Systems Economic Reform in China, 1978-90 The 1948 West German Erhard Reforms The Role of the IMF in Economic Reform The Income Effects of a Successful Uruguay Round "Nontrade" Policies Can Cause Trade Disputes Export Subsidies: Who Gains and Who Loses? The Composition of U.S.-Mexico Trade Foreign Direct Investment: Who Invests and Where?... 20 51 57 83 100 105 128 134 140 163 179 199 201 230 239 244 248 254 257 CHAPTER 1 Foundations for Economic Growth THE LONGEST PEACETIME EXPANSION in the Nation's history began in 1982. Throughout the expansion, inflation remained relatively low and stable compared with the 1970s. By the end of the 1980s, the unemployment rate had fallen to levels not experienced since the early 1970s. As is normal in times of robust economic progress, growth varied from year to year during the expansion. After a rapid recovery from late 1982 through 1985, growth slowed temporarily in 1986, gained considerable strength in 1987 and 1988, and turned sluggish in 1989 and 1990. The first year of the 1990s served as a reminder that even a healthy economy faces the risk of short-term setbacks from external shocks and other disturbances. In August Iraq outraged the world by invading and occupying Kuwait. In the weeks that followed, oil prices rose sharply on the world market, and uncertainty about the timing of the resolution of the Persian Gulf crisis caused business and consumer confidence to plummet. These developments were a substantial shock to an economy that had already slowed for several reasons, including worldwide increases in interest rates, tightened credit conditions, and the lingering effects of a monetary policy that had begun to tighten in 1988 in a successful attempt to prevent an increase in inflation. In the fourth quarter of 1990 U.S. output, as measured by real (inflation-adjusted) gross national product (GNP), turned down, and it became clear that the economy had entered a recession. The Administration's economic policies are designed both to mitigate the current downturn and to strengthen the foundations for a solid recovery and a return to sustained economic growth. The dominant factor in the success and failure of nations, long-term growth is the fundamental source of improvements in living standards. By responding systematically and prudently to ongoing developments, the Administration's economic policies reduce uncertainty and maintain the credibility so important to long-run growth and to the ability to respond to shocks that may occur in the future. The global wave of market-oriented reform—most visible in Eastern Europe—shows that the world has learned from America that reliance on free markets is the key to sustainable long-term growth 21 and prosperity. In the U.S. economy, free markets fuel and direct the process of economic growth. Market forces in the financial sector channel savings into growth-enhancing investment opportunities; these forces both reward and encourage entrepreneurship— the economy's sparkplug. The flexibility of the market-based U.S. economy both increases its resilience in the face of disturbances and enhances its ability to make the most of new opportunities. That, in turn increases the incentives for productive innovation. As the global economy becomes more integrated and the pace of technological and economic change quickens, flexibility grows ever more important. The proper role of government is not to supplant or suppress the private market forces that drive the process of economic growth, but to create an environment within which rapid growth can occur. Because regulation inevitably reduces flexibility, its role in the economy must be limited. Barriers to saving, investing, working, and innovating must be reduced. RECENT DEVELOPMENTS AND PROSPECTS The downturn in the U.S. economy in the latter part of 1990 does not signal any decline in its long-run underlying health or basic vitality. As stated in last year's Report, economic expansions end because of external shocks, imbalances in demand, or policy mistakes. The oil price shock of 1990 makes clear that the economy is episodically buffeted by external shocks. If sound fiscal, monetary, regulatory, and trade policies are maintained, however, such shocks will have smaller effects on the economy, downturns will be shallower and shorter, and expansions will be longer. In fact, with such policies now in place, the current downturn is expected to be shorter and milder than the average post-World War II recession. DEVELOPMENTS IN 1990 The oil price shock, the sudden drop in consumer and business confidence, and the uncertainty about when the Persian Gulf crisis would end were undoubtedly the key factors in the downturn in late 1990. Oil prices more than doubled between July and October, before declining toward the end of the year and again in early 1991 after the outbreak of hostilities in the Gulf. Consumer and business confidence may have been reduced by the superficial similarity of this oil price shock to those of the 1970s, when unemployment and inflation soared. The oil price shock hit an economy that was already growing slowly. A worldwide rise in long-term interest rates early in the year—partly due to anticipated increases in the demand for capital in Eastern Europe and to concerns about accelerating inflation— 22 put upward pressure on borrowing rates in the United States and slowed the growth of consumer and business spending. This rise occurred when long-term interest rates were already high, in part because of large Federal budget deficits and the prospect that they might continue indefinitely. The Federal Reserve had initiated a more restrictive monetary policy in the spring of 1988 to ward off an increase in the underlying inflation rate. The lagged effects of this policy also slowed the economy in 1989 and 1990, as higher interest rates discouraged spending. This tightening successfully contained inflationary pressures, and left monetary policy with much more latitude—compared with the inflationary policies of the 1970s—to ameliorate the adverse effects of the oil price shock. Tighter credit markets reduced the availability of loans to some creditworthy borrowers, and this also contributed to the slowdown. Banks and other financial institutions tightened lending standards for a number of reasons: A slowing economy increased the risks of lending to businesses. The value of collateral on residential and commercial real estate loans fell with declining real estate values. Overly zealous bank examiners discouraged some banks from making new loans. And the need to increase the ratio of capital to loan assets to meet minimum capital requirements forced some banks to curtail loan growth. Stricter lending standards for commercial and residential loans slowed business investment and housing construction. There were several favorable economic developments in 1990. The underlying inflation rate was contained. After a temporary increase in the first quarter, the growth rate of the GNP fixedweighted price index, the broadest measure of economy-wide inflation, declined later in the year, as did the rate of change in the employment cost index—a measure of wage pressures in private labor markets. Compared with 1988, when inflationary pressures were becoming evident and the Federal Reserve began to take actions to contain them, the employment cost measure of wage inflation grew more slowly during 1990, rather than more rapidly as many had feared. The continued decline in the trade deficit was also good news. Including trade in both goods and services, the trade deficit has declined from $144 billion in 1987 to $77 billion in 1990. U.S. firms remained competitive in world markets, exports reached a new record, and the United States remained the world's leading exporter. Labor productivity in manufacturing continued its recent strong growth. And, although growth fell for the overall economy, some regions experienced relatively strong employment gains. 23 THE OUTLOOK The Administration projects that real economic growth will be 0.9 percent over the four quarters of 1991, with the downturn continuing through the first quarter and a recovery beginning near the middle of the year. Inflation is expected to remain under control, declining substantially from the temporarily high levels reached as a result of the oil price shock. Continued progress in gradually lowering the underlying rate of inflation is also expected. Interest rates are projected to be lower on average in 1991 than in 1990, reflecting slower growth in credit demand during the downturn, as well as lower inflation rates. The current downturn is expected to be short and shallow for several reasons. Most firms have kept inventories low relative to sales, reducing the need for a sharp cut in production to work off excess inventories. Such inventory corrections accounted for much of the decline in output in earlier postwar recessions. Moreover, net exports are projected to improve, both because the Nation's major trading partners are expected on average to experience stronger growth than the United States, and because the decline in the value of the dollar since 1989 has lowered the price of U.S exports on world markets. Oil prices remain a source of uncertainty in the outlook, but they have declined substantially since their peak in October, particularly since the start of Operation Desert Storm. Finally, both fiscal and monetary policies are well positioned to mitigate the downturn. There is a downside risk that the tightness in credit markets evident in 1990 will continue into 1991, a consideration that poses special challenges for monetary policy. Assuming adoption of the Administration's growth initiatives— including a lower tax rate on long-term capital gains, tax incentives to reduce barriers to household saving, reforms to strengthen the financial sector, and increased investment in children, education, infrastructure, space, and high technology, all within the context of lower structural budget deficits—the long-term outlook is excellent. Growth is expected to strengthen in 1992, with the economy in a relatively high-growth recovery through 1993 before returning to a solid, sustainable expansion. With sound economic policies in place, there is no fundamental obstacle to an expansion in the 1990s at least as long and strong as the record expansion of the 1980s. BUILDING ON STRENGTH In designing policies to cushion the current downturn and enhance long-run U.S. economic performance, it is critical to remember that the Nation already has the largest and most productive economy in the world. The historic changes that began in Eastern 24 Europe in 1989 represent, in part, the triumph of the basic principles upon which the American economy has been built. The flexibility and adaptability of free markets have given America both the highest living standard of any major economy and the means to ensure the Nation's continued prosperity. With less than 5 percent of the world's population, the United States produces about 25 percent of the world's total output (measured by GNP). The U.S. economy is more than twice as large as the next largest economy, that of Japan. The average standard of living of Americans—as measured by GNP per capita—is above that in other major industrialized countries. U.S. productivity is also higher than in those other nations; as measured by GNP per worker in 1989, productivity in West Germany and Japan was only about three-fourths of that in the United States. Economic growth in a flexible market economy involves change as well as expansion; the waxing and waning of individual industries and sectors is natural and healthy. In the United States, as in most other industrialized nations, changes in demand, productivity, and demographics have produced a long-term shift in employment from goods-producing to service-producing sectors. Dramatic advances in productivity have kept manufacturing's share of total real output roughly constant throughout the postwar period, even though its share of total employment has declined. America is unsurpassed in basic research and has by far the world's largest share of contributions to scientific literature. U.S. firms have a distinct edge in many knowledge-intensive products, and the United States continues to produce larger volumes of many high-technology products than any other nation. Recent increases in foreign investment in the United States reflect both the size and health of the American economy and the trend toward greater global economic integration. Those who are concerned about this investment neglect the lessons of history. Fears of foreign investment were widespread in Europe in the 1950s and 1960s, when the issue was American investment overseas. However, as Europeans have since learned, foreign investment that helps to build plants and equip workers can increase productivity and raise standards of living. Foreign investment in the United States is a sign of America's strength and a vote of confidence in its economic future. POLICIES FOR RENEWED GROWTH Fiscal policy—the Federal Government's taxation, expenditure, and borrowing policies—and monetary policy—decisions directly affecting the money supply and interest rates—can have powerful effects on the economy in both the short run and the long run. The 25 government's policy toward the financial sector—the regulation and supervision of banks and other financial institutions—significantly affects both the short-run stability of the economy and its long-run ability to channel savings efficiently into productive investments. When unemployment increases or inflation seems to be accelerating, fiscal and monetary policies can alleviate the economy's immediate problems. But a sequence of short-sighted discretionary reactions can produce poorer performance on average than adherence to well-designed credible, systematic policies. Businesses and households are forward-looking, and expectations about future economic conditions and macroeconomic policies affect their decisions. Frequent discretionary changes in policy impede long-term planning and thus undermine the economy's performance. Signals about the goals and approach that will guide monetary and fiscal decisions must be clear and credible. Credibility provides the latitude to respond to short-run developments without altering the public's expectations that policy will continue to be stable and systematic. But credibility, like respect, must be earned; monetary and fiscal actions must be consistent with stated long-run goals and policies. Accurate and timely economic data reduce uncertainty and enhance the soundness both of private sector decisionmaking and of macroeconomic policy analysis and implementation. The Administration is thus committed to continuing improvements to the Nation's statistical infrastructure. FISCAL POLICY During an economic downturn, government expenditures—such as unemployment compensation—increase, and tax receipts fall relative to what they otherwise would be. Although they temporarily increase the budget deficit, these changes in taxes and expenditures work as "automatic stabilizers" to reduce declines in income and spending and thus to hasten recovery. They are systematic and fast-working, unlike discretionary changes in fiscal policy, which require legislative actions, may take too long to enact, and are difficult to reverse. To sustain robust economic growth, the United States must maintain a high rate of investment in new capital and new technology. That, in turn, requires an adequate flow of national saving. The substantial Federal budget deficits of recent years have decreased the national saving rate. Sound, growth-oriented fiscal policy thus requires that the Federal budget deficit be reduced. The Omnibus Budget Reconciliation Act of 1990 contains the largest and most comprehensive deficit reduction package in U.S. history. It is designed to reduce the Federal deficit by a total of nearly one-half trillion dollars over the next 5 years, relative to 26 what it would otherwise be, with the deduction in the deficit phased so as to minimize adverse short-term effects on the economy. The resulting higher level of national saving will fuel economic growth and contribute to U.S. prosperity for years to come. In addition, the new budget law achieves two key fiscal policy objectives. First, it contains credible enforcement mechanisms, using caps on spending and pay-as-you-go rules, to prevent new legislation from increasing the budget deficit. The caps put into effect the concept of a "flexible freeze": Within each discretionary spending category, any spending increases must be offset by spending cuts to stay within the cap. Across-the-board spending cuts are required whenever the caps or rules are violated. Second, new systematic procedures enhance the ability of the automatic stabilizers to cushion downturns in the short run. Under the new law, deficit targets are adjusted for changes in economic conditions, as reflected in the Administration's forecast. That permits the automatic stabilizers to work more effectively. In contrast, the previous law had no procedure for adjusting the deficit targets without suspending the entire enforcement mechanism. Another important element of the Administration's fiscal policy is a commitment to a tax system with low marginal tax rates and the lowest possible barriers to economic growth. The Administration has proposed a reduction in the tax rate on long-term capital gains. A capital gains tax cut would affect real estate and other asset values favorably, thereby alleviating capital and balance sheet problems in both financial and nonfinancial corporations. It would reduce the existing bias against financing through equity rather than through debt. It would also increase long-term economic growth by stimulating saving, lowering the cost of capital, and encouraging investment. And it would encourage entrepreneurship so essential for the creation of new jobs and the commercialization of new ideas. To further stimulate private saving, the Administration has proposed Family Savings Accounts. Contributions to these accounts would not be tax-deductible, but withdrawals of earnings and contributions after 7 years would not be taxed. The Administration also proposes to ease requirements for withdrawals from Individual Retirement Accounts for people buying a home for the first time. That would make these accounts more attractive to young people and thereby increase private saving. MONETARY AND FINANCIAL SECTOR POLICY Monetary policy also has an important role to play in mitigating the current downturn and providing for strong growth and a gradual reduction in inflation. Because of the past and potential future changes in the structure of the economy, monetary policymakers must necessarily consider a number of indicators—including 27 output, general price indexes, interest rates, exchange rates, futures prices, money, and credit—in judging the direction of the economy and the impact of monetary policy. But, barring changes in the relationship between money and income, an important characteristic of a credible and systematic monetary policy is a commitment to sustain the rate of growth of money and credit during a downturn. Such a commitment would automatically bring about a reduction in interest rates and soften the downturn. It is important to recognize, however, that a decline in interest rates during a downturn may not be a sign of monetary easing, especially if the growth of money and credit has slowed. It is vital to maintain a credible commitment to long-run goals and policies when responding to temporary disturbances. The relatively low and stable inflation rates that prevailed before the 1990 oil price shock permit the Federal Reserve to cushion the downturn without leading businesses and households to expect higher future rates of inflation. Tight credit conditions may create special challenges for monetary policy in the year ahead. The reduction by the Federal Reserve in banks' reserve requirements implemented toward the end of 1990 was aimed at alleviating these conditions and will help to moderate the downturn. In encouraging sound banking practices, the Federal Reserve and other bank regulators should not pursue overly stringent regulations that unnecessarily restrict creditworthy borrowers. Historical experience and research show that sustained money growth can go a long way toward offsetting other sources of credit market tightness. The Administration's proposal for comprehensive banking reform will reduce unnecessary and antiquated restrictions on the banking industry and thereby help to ease tight credit conditions. Healthier banks are essential if the financial system is to provide adequate supplies of credit during economic downturns as well as in periods of expansion. Lifting restrictions on interstate banking activities and on the ability of banks to combine with commercial and other financial firms will enhance banks' ability to attract capital and thus reduce the risk of a contraction in lending. POLICIES TO SUPPORT GROWTH Efforts to protect special interests by resisting the economy's natural evolution are often futile, generally sap the economy's vitality, and always reduce its flexibility and ability to benefit from change. Instead, growth must be supported by policies that increase the role of market forces, while ensuring that opportunities are enhanced for all Americans and that the Nation's environment is protected. 28 ENCOURAGING INVESTMENT AND IMPROVING EDUCATION Continued growth in productivity and living standards requires investment in new buildings and equipment, advances in technology, and improvements in the skills of U.S. workers. All these must be encouraged if America is to leave its children a legacy of global economic leadership. Investment in plant, equipment, and commercial technologies is the task of the private sector. Because market forces guide investment funds to their most productive uses, the government can generally only slow economic growth by second-guessing private investment decisions. Government's primary task is to create conditions under which high levels of productive investment, guided by market forces, can fuel rapid growth. The multiyear deficit reduction program enacted in 1990 is an important step in this direction. Reducing the tax rate on long-term capital gains and enacting the Administration's proposals to increase private saving would also significantly reduce barriers to robust long-term economic growth. In addition, of course, governments at all levels must recognize their shared responsibility to provide an efficient U.S. transportation infrastructure, which is necessary for sustained economic growth. Legislation passed in 1990 will make it easier for airports to finance needed capacity expansions. The Administration will seek both increases in Federal funding for highways and a restructuring of highway programs that will give the States greater flexibility, while ensuring that the 150,000 miles of roads in the National Highway System will be maintained, rehabilitated, and expanded. The Federal Government has an important role to play in the process of technological change. Some research projects offer the potential of large benefits to the economy as a whole but do not offer much prospect of profit to any private firm that might undertake them. The knowledge generated by these projects would be valuable, but no firm could prevent others from capturing most of that value. Such "spillovers" are important in the case of basic research, the results of which cannot generally be directly incorporated into a marketable product or process. The Administration has proposed substantial increases in Federal support for basic research, and the President has announced his intention to double the budget of the National Science Foundation. Some areas of applied research promise advances in generic, precompetitive technologies that would also have large spillovers. The Administration will seek increased support for such research and will make the results of government-supported research more readily available to the private sector for speedier commercialization. Adoption of the Administration's proposed reform of the antitrust 29 law governing joint ventures would increase the ability of the private sector to take advantage of research opportunities with industry-specific benefits. Finally, the Administration will again seek to make the research and experimentation tax credit permanent to enhance incentives for private-sector investment in new technology. Education is the key to increasing the skills of the U.S. labor force. If America's children continue to learn less in school than their counterparts abroad, America's workers will not long continue to earn more. The United States already spends more per pupil in elementary and secondary education than all its major competitors, but it does not receive an adequate educational return on this investment. The Administration will continue its strong support of the fundamental reform necessary to achieve excellence in U.S. elementary and secondary education. The key to successful reform is to harness the power of market forces: Schools should be able to compete for students. Parents and students must be afforded more choice among schools, and unnecessary barriers to entry into the teaching profession must be swept away. The Administration will introduce a new Educational Excellence Act, which will stimulate fundamental reform and restructure the Nation's education system by promoting educational choice and alternative certification for teachers and principals. And, to help ensure that all students enter school ready to learn, the Administration has significantly expanded the Head Start program. The President will continue his close work with the Nation's Governors to advance the vital cause of educational excellence. The Immigration Act of 1990, the first major reform of legal immigration in 25 years, will enhance the quality of the American labor force. This legislation will significantly increase the level of skill-based immigration and reaffirm the Administration's commitment to family reunification as a central tenet of U.S. immigration policy. STRENGTHENING MARKET FORCES Free, competitive markets for goods and resources maintain high U.S. living standards and both guide and stimulate the process of economic growth. The long-run performance of the economy is thus enhanced by policies that extend the scope of market forces and maintain market flexibility. The Administration remains committed to an energy policy that relies on the flexibility and power of market forces to ensure that all the Nation's resources are efficiently utilized. In the aftermath of Iraq's invasion of Kuwait, some called for increased regulation of energy markets. But these policies would increase the economic 30 burden of the oil price shock, bring back the gasoline lines of the 1970s, and make the economy less flexible and efficient. They are firmly opposed by the Administration. The Nation's Strategic Petroleum Reserve was tested in October and November, and an internationally coordinated program to make government-controlled stocks available to the marketplace began with the outbreak of hostilities in the Persian Gulf. The National Energy Strategy, which was under development well before the onset of the Gulf crisis, continues the successful policy of reliance on market forces. It recognizes that in an increasingly integrated global economy, U.S. energy security cannot be separated from that of the Nation's friends, allies, and trading partners; all countries are affected by sharp, unanticipated price changes in world energy markets. It reflects the need to foster economic growth through the availability of ample supplies of reasonably priced energy. Implementation of the National Energy Strategy would enhance energy security by increasing the diversity of energy supplies, removing barriers to competition in energy markets, encouraging economical conservation, and increasing Federal support for. energy-related research with potentially significant spillover benefits. Strong economic growth requires a financial sector that is sound, efficient, and innovative. Banks in the United States still operate under a regulatory system that dates from the 1930s. That system attempts to keep banks healthy and the deposit insurance system sound by limiting competition, but it is simply no longer workable. U.S. banks face increasing competition from other institutions and markets around the world. The long-term vitality of U.S. banks depends on their ability to compete effectively. The Administration's proposal to reform financial sector regulation would make banks financially healthier and better able to compete, while ensuring the soundness of the deposit insurance system. An important planting flexibility provision of farm legislation enacted in 1990 makes market incentives a more important determinant of farm production decisions. This provision will save about $7 billion in Federal spending over the next 5 years. GIVING POWER AND OPPORTUNITY TO INDIVIDUALS Without a healthy, growing economy, poverty in the United States cannot be reduced. But growth alone is not enough. It should be supplemented by policies designed to give power and opportunity to individuals—to give them both the incentive and the means to participate fully in the economy. In 1990, after a 3-year debate, the Congress passed child care legislation consistent with the President's objectives of limiting governmental interference with parents' decisions, not discriminating 31 against working families who care for their own children, and targeting assistance to those most in need. The 1990 budget act provides an increase of about $18 billion in assistance to low-wage workers with children over the next 5 years by expanding the Earned Income Tax Credit. The Administration's Homeownership and Opportunity for People Everywhere (HOPE) initiative was also signed into law in 1990. This initiative will enable low-income families to become homeowners and give them a greater stake in their communities. Increased tenant ownership and control of public housing would further help to build the bonds of community in distressed neighborhoods. And the Administration's enterprise zone proposal would encourage entrepreneurship, investment, and job creation in urban and rural pockets of poverty. The landmark Americans with Disabilities Act is the most important extension of civil rights protection in two decades. It will permit many disabled Americans to participate fully in the Nation's economic mainstream and to contribute to and benefit directly from America's growth and prosperity. Medicaid coverage was expanded in 1990 to improve prenatal care and child health in low-income families and to reduce infant mortality. The Administration's new infant mortality, preventive care, and nutrition initiatives would make significant contributions to the health of low-income Americans. LIMITING REGULATION AND MAKING IT WORK When markets can work well, regulation can only reduce flexibility and slow growth. Even when markets work poorly, the inevitable imperfections of regulation often make its use costly and inefficient. Regulation should be employed only when its benefits clearly exceed its costs. Regulatory targets should be chosen by careful cost-benefit analysis, and the methods of regulation should minimize the costs and disruptions of reaching those targets. Cost-minimization requires that incentives be carefully structured and that firms and workers be allowed maximum flexibility to meet well-designed performance standards. In particular, economic growth and environmental protection can be compatible, but only if environmental regulation does not impose unnecessary costs on the economy. After the President's leadership had broken a logjam that had long blocked congressional action, the first comprehensive amendments to the Clean Air Act in more than a decade were signed into law in 1990. This legislation incorporated a flexible and innovative market-based system that will secure a substantial and permanent reduction in the sulphur dioxide emissions that cause acid rain. The reduction will be achieved at an estimated cost 20 percent 32 lower than the cost of traditional, less flexible command-and-control regulation. The Administration is committed to implementing all provisions of this legislation so as to minimize unnecessary burdens on American workers and firms. U.S. LEADERSHIP IN THE GLOBAL ECONOMY The principle that market forces, not government planners, are the best source of lasting prosperity is as valid in global markets as it is within individual economies. The Administration accordingly remains strongly committed to removing barriers to trade and investment in all nations, to opposing pressures for protectionism and government management of trade, to supporting market-oriented reform around the world, and to pursuing macroeconomic policies conducive to strong noninflationary growth in the United States and the world economy. INTERNATIONAL TRADE LIBERALIZATION Since the end of World War II, the United States has led the world toward a system of free trade and open markets. As a consequence of this policy and of natural economic forces, America's economic prospects have become closely linked with those of other countries. Increased global economic integration has expanded markets for U.S. exports, encouraged innovation, and expanded the choices available to American consumers. World trade, which has grown more than ll/2 times as fast as world income since the early 1960s, has improved the living standards of all Americans. In recent years exports have made an important contribution to U.S. economic growth. Policies that target particular industries for protection from international competition, whether by means of tariffs or quotas, or through the newer device of managed trade, impose costs on the economy as a whole. Such policies limit consumer choice, raise domestic prices, reduce competition, impair the flexibility and competitiveness of the U.S. economy, and invite retaliation against U.S. exports. This Administration will continue to resist protectionist pressures and to work to open markets here and abroad. Sustained strong worldwide growth in the 1990s will depend on continued progress toward a free and open multilateral trading regime. Completing the Uruguay Round of multilateral trade negotiations, under the auspices of the General Agreement on Tariffs and Trade (GATT), remains the top trade priority of the Administration. In the Uruguay Round the United States has sought a significant agreement that reduces or eliminates tariffs in all nations in several broad sectors of manufacturing and that phases out other barriers to trade in textiles and agriculture. A key aim of the 33 negotiations is to strengthen and modernize GATT rules and to extend them to new areas such as services, investment, and intellectual property. In 1990 the Administration undertook several other market-opening initiatives that will both spur growth in this hemisphere and support the wave of market-oriented reform sweeping Latin America. A U.S.-Mexico free-trade agreement was endorsed by the Presidents of both countries. The Enterprise for the Americas Initiative aims to expand trade through free-trade agreements, to encourage liberalization of investment regimes in order to increase capital formation in the region, and to reduce official debt of countries pursuing strong economic reform programs. Additional measures to reduce trade barriers were also undertaken to help support cooperation on anti-narcotics efforts with Andean countries. As the benefits of these programs to the United States and its trading partners in the hemisphere become apparent, a clear signal of the gains from freer trade and sound economic policies will be sent around the world. The Administration also initiated and completed a first round of bilateral market liberalization talks with Japan called the Structural Impediments Initiative. The aim of these talks is to open markets and reduce structural barriers to trade and balance of payments adjustment in both the United States and Japan. INTERNATIONAL MACROECONOMIC ISSUES The increased integration of the world economy has significant implications for macroeconomic policies. Both monetary and fiscal policies in the United States have fundamental effects on exchange rates and trade flows. These policies also affect the economic performance of other economies, although to a lesser extent than the U.S. economy itself. American economic leadership requires that U.S. macroeconomic policy maintain an environment conducive to strong noninflationary growth. That will benefit the U.S. economy and contribute to economic growth and stability abroad. A sustainable trade balance and relatively stable exchange rates are part of such a policy environment. Coordination of macroeconomic policies across countries can help governments increase sustainable growth worldwide. The regular economic meetings of heads of state, finance ministers and other officials of the G-7 nations (United States, Germany, Japan, United Kingdom, France, Canada, and Italy) provide a framework within which economic issues of mutual concern can be discussed. This evolving process of cooperation has achieved some important successes. During the recent expansion, economic growth was strong and inflation rates among countries tended to converge to 34 lower levels. In the last several years, trade imbalances have declined significantly. International macroeconomic policy coordination continues to be essential as the world economy reacts to the effects of the oil price shock and changing credit conditions. SUPPORT FOR ECONOMIES IN TRANSITION The emerging democracies of Eastern Europe, many nations in Latin America, and other countries around the world have learned from America's example. As nations adopt democracy, their new leaders turn away from central planning and government control of economic activity and toward reliance on flexible market forces. The economic collapse of communism has made it clear that free people working in free markets are best able to create high and rising living standards. American support for democracy and free markets throughout the world provided a major impetus to what the President has called the "Revolution of 1989" in Eastern Europe. In 1990 many governments in this region deepened their historic efforts to rebuild their failed economies. Many nations in Latin America increased their reliance on market forces and opened their economies to international trade. The United States continued to provide extensive technical and financial assistance to the emerging democracies of Eastern Europe, and the President was instrumental in establishing the group of 24 Western governments that has already committed about $20 billion in assistance to Eastern Europe. The United States was also instrumental in encouraging the World Bank and the International Monetary Fund to increase lending in this region. And U.S. initiatives aimed at reducing barriers to trade and investment provided powerful support for the forces of reform in Latin America. CONCLUSION Writing on the eve of the American Revolution, Adam Smith was the first to make clear the power of flexible, competitive markets to raise living standards and the costs of misguided interference with market forces. As the United States prepares for a new century, Smith's principles remain central to sound economic policymaking. Policies that remove barriers to market forces and thus increase the economy's flexibility can encourage investment, innovation, entrepreneurship, and growth. Credible and systematic macroeconomic policies can keep the current downturn mild and brief, add strength to the recovery, and provide the foundation for a sustained expansion in the 1990s. The Administration's proposed 35 growth incentives and its proposals for education and financial sector reform and for giving power and opportunity to individuals, along with its other major initiatives, can significantly contribute to the economy's long-term health and vitality. In 1991, as always, the United States confronts both economic challenges and exciting opportunities. The U.S. economy remains the largest and most productive in the world, and its flexibility and resilience give America the ability to meet its challenges and make the most of its opportunities. But the Nation cannot take economic growth for granted. Unless sound policies are followed, there is no guarantee that American living standards will continue to rise substantially from one generation to the next or that the United States will remain the world's leading economy. The Nation must choose between sound policies that will promote long-term growth and policies that will reduce economic flexibility, stunt incentives, and place its economic future at risk. 36 CHAPTER 2 Economic Developments and Prospects AFTER ALMOST 8 YEARS of expansion, the economy entered a recession during the latter part of 1990. In the fourth quarter of the year, real gross national product (GNP) registered its largest decline since 1982, and industrial production fell sharply. The downturn was caused in large part by the economic effects of Iraq's invasion of Kuwait. That caused a jump in oil prices and directly reduced business and consumer confidence. Those factors, coupled with continuing uncertainty about the timing of the resolution of the crisis, dealt a substantial blow to an economy already sluggish from other factors. These included worldwide increases in interest rates, unexpectedly tight credit conditions, and the lingering effects of a tightening of monetary policy from early 1988 through mid1989 that was undertaken in a successful attempt to prevent an increase in inflation. Several factors suggest that the economic downturn is not likely to last long and that a recovery will begin by the middle of 1991. Inflation, after adjusting for the temporary impact of the oil price increase, remained under control during 1990 and slowed at the end of the year, giving the Federal Reserve greater latitude to mitigate the recession without causing an increase in inflation expectations. The prospect for export growth continues to be strong. Inventories remain relatively low, suggesting that firms need not cut production as much as in previous recessions to reduce inventory levels. Interest rates declined toward the end of the year following passage of the new budget law, an easing of monetary policy, and the decline in economic activity. Lower interest rates stimulate credit-sensitive sectors of the economy and, after a lag of several quarters, will increase growth. The Administration forecasts that growth will be 0.9 percent over the four quarters of 1991. It is expected that the downturn will continue through the first part of 1991 and the recovery will begin around the middle of the year. If the Administration's proposed policies are enacted, the long-term economic outlook is good. Growth should strengthen in 1992 and remain well above the rates of the past 18 months through the mid-1990s. Inflation and interest rates are projected to decline gradually. 37 Even greater uncertainty surrounds this year's outlook than has been the case for the past few years. The future path of oil prices remains uncertain. An early resolution of the Persian Gulf crisis could restore consumer and business confidence and strengthen growth early in 1991. However, the rapid political changes in Eastern Europe and the economic effects of Iraq's invasion of Kuwait once again illustrate how quickly widely held views about economic prospects can become outdated. THE U.S. ECONOMY IN 1990 Real GNP grew only 0.3 percent during 1990, well below the very strong 4V4-percent annual rate during 1987-88 (Chart 2-1). Growth in the first part of 1990 was an extension of the modest growth in 1989, when real GNP grew 1.8 percent. But in the last part of 1990 the economy turned down. The unemployment rate rose 0.8 percentage point during the last 6 months of 1990. Despite the increase, the unemployment rate was low compared with the average over the previous 15 years. Consumer price increases excluding food and energy—a measure of core, or underlying, inflation—accelerated in the first quarter but were slowing at the end of the year. These developments in 1990 were influenced by, and in turn, affected monetary policy, fiscal policy, and conditions in credit markets. MONETARY POLICY AND CREDIT MARKETS Monetary policy and credit market developments in 1990 were influenced by policy actions and developments that occurred in previous years. For example, the rapid economic growth in 1987 and 1988 pushed capacity utilization to high levels and reduced unemployment rates to the lowest levels since the early 1970s, but it also spurred serious concern about the possibility of rising inflation. In the spring of 1988, the Federal Reserve began to reduce the flow of money and credit gradually and to increase interest rates. The Federal Reserve's goal was to reduce inflationary pressures by engineering a "soft landing"; that is, by reducing overall demand slowly enough to avoid causing a recession. Since then, the difficulties inherent in distinguishing more permanent threats of rising inflation from temporary but sharp price-level changes, coupled with the long and variable lags through which monetary policy affects economic activity, have complicated the task of predicting the economic consequences of any given level of monetary restraint. After falling about IVz percentage points in the second half of 1989, the Federal funds rate remained relatively constant in the first half of 1990, but it declined sharply in the fourth quarter and in early 1991. (The Federal funds rate, a short-term interest rate at 38 Chart 2-1 Real GNP Growth Real GNP growth slowed in 1990 after rapid growth in 1987 and 1988 and moderate growth in 1989. Percent change (Q4/Q4) 6 5.0 1.9 0.3 1986 1987 1988 1989 1990 Source: Department of Commerce. which banks lend reserves to other banks, is a short-run indicator of the stance of monetary policy.) Long-term interest rates rose early in the year, then declined slightly before rising again in late summer. In the last quarter they fell sharply, responding to a slowing economy, expected declines in short-term interest rates, and the passage of the new budget law. Throughout the year, evidence mounted that credit was becoming less available, causing serious problems in credit-sensitive sectors. Monetary Policy The ultimate goal of the Federal Reserve is to promote strong, noninflationary economic growth. The Federal Reserve pursues its goal by influencing interest rates, especially the Federal funds rate, and by regulating the volume of bank reserves relative to demands by depository institutions—reserve availability. Changes in reserves and the Federal funds rate affect the supply of money and credit, inflation, and economic growth. In general, the Federal Reserve acts to raise the Federal funds rate when inflationary pressures increase and economic growth is very rapid, and it acts to 39 lower the Federal funds rate when inflation expectations appear to be falling and weaker economic growth or recession is more likely. The Federal Reserve maintained a level of reserve availability that resulted in a relatively constant Federal funds rate in the first half of 1990. From January to July the rate averaged 8V4 percent, below the 1989 average, but nearly 1% percentage points above its level in early spring 1988, when the Federal Reserve began to tighten policy to contain inflationary pressures (Chart 2-2). This tightening of policy was a factor in lowering economic growth in 1989 and 1990. Chart 2-2 Federal Funds Rate The Federal funds rate was relatively flat in the first 7 months of 1990 and fell thereafter. By year-end, it had nearly returned to spring 1988 levels. Percent per annum 11 10 1988 1989 1990 Note: Data are monthly averages of daily figures. Source: Board of Governors of the Federal Reserve System. In July 1990 the Federal Reserve noted that lack of credit in some regional and sectoral markets might be creating a tighter monetary policy than suggested by the level of the Federal funds rate alone. Thus, the Federal Reserve increased the availability of reserves, reducing the Federal funds rate 25 basis points (there are 100 basis points in a percentage point) to 8 percent. In October the Federal Reserve again increased reserve availability, reducing the Federal funds rate by another 25 basis points. This reduction came soon after the budget summit negotiations were completed and a comprehensive budget plan was proposed. During the rest of the year mounting concern about declining em- 40 ployment and production, lagging money growth, and tight credit conditions led to a series of reductions in the funds rate, resulting in a cumulative decline of 125 basis points from early July. By early February 1991, the Federal funds rate had fallen further to around 6*A percent, its lowest level in 3 years. In addition, as market interest rates fell at the end of the year, the discount rate—the rate at which the Federal Reserve Banks lend reserves to member institutions—was lowered from 7 percent to 6.5 percent. That was the first reduction in the discount rate since August 1986. An additional reduction to 6 percent occurred in early February 1991. In December the Federal Reserve eliminated the requirement that banks hold reserves against net Eurodollar liabilities and time deposits held by businesses. That was done to enhance bank incentives to lend, in light of accumulating evidence of credit constraints. Movements in other short-term interest rates were either similar to or anticipated the general pattern of the Federal funds rate. The rate on 3-month Treasury bills rose slightly over the first few months of 1990. It then declined, evidently reflecting anticipations of later declines in the Federal funds rate, and fell to 6.4 percent by the end of the year. In addition to considering the Federal funds rate carefully, the Federal Reserve monitors the growth of money and credit and attempts to maintain money supply growth within announced ranges. In February 1990 the Federal Reserve announced it would maintain the 3- to 7-percent target range for growth in its M2 money aggregate, provisionally established in the middle of 1989 for the four quarters of 1990 (see Appendix Table B-67 for definitions of the money supply). The target range for M3 was set at 2*/2 to 6V2 percent for 1990. In July, however, that range was lowered to 1 to 5 percent, as the restructuring of the savings and loan industry reduced actual and expected M3 growth relative to GNP growth. That is, the velocity of M3, the ratio of GNP to M3, appeared likely to have undergone a shift. Growth in monetary aggregates was relatively low in 1989. M2 was below the lower bound of the target range through the first half of 1989, although growth accelerated in the second half. M2 growth was 4.6 percent during 1989, below the 5.2-percent growth during 1988. M3 growth was 3.3 percent during 1989, down from 6.3 percent in 1988. From the fourth quarter of 1989 through the middle of the first quarter of 1990, M2 growth accelerated. However, M2 growth slowed substantially after February, and from early April through the end of the year M2 was consistently in the lower half of the target range. The slower growing economy probably contributed to 41 lower M2 growth by reducing the public's demand for monetary balances (Chart 2-3). M2 grew 3.7 percent during 1990, while M3 grew 1.5 percent. Chart 2-3 Money Supply M2 growth was below the middle of the target range in 1989 and stayed in the lower half of the range through most of 1990. Billions of dollars 3500 | 7% Upper Limit 3400 3300 [ 3200 \- x^CXX^- 3% Lower Limit / ^^^ 7% Upper Limit 3% Lower Limit 3100 3000 i i i i i i i i i i i 1989 1990 Note: Data are weekly. Source: Board of Governors of the Federal Reserve System. Long-Term Interest Rates While short-term interest rates were relatively stable in the first half of the year, long-term interest rates were more volatile (Chart 2-4). After declining somewhat in the second half of 1989, longterm rates rose sharply in the first few months of 1990. The yield on 10-year Treasury bonds increased 75 basis points between December 1989 and March 1990. Concern about a possible increase in the underlying inflation rate caused by the temporary jump in inflation in the first quarter may have contributed to the rise in long-term rates. A more important factor, however, was the anticipated increase in the demand for capital associated with developments in Eastern Europe and the unification of Germany. These events caused interest rates to rise around the world, as shown in Chart 2-5. The expected increase in the demand for financial capital did in fact materialize during 1990. In 1989 West German governments ran a surplus of about 0.2 percent of gross domestic product (GDP). 42 Chart 2-4 Interest Rates While short-term rates were relatively flat, long-term rates rose in early 1990. Both fell toward the end of the year. Percent per annum 9.5 \ \ \ \ 8.5 k \ i\ 10-Year Treasury Bonds (constant maturities) x *- —' / . \ \ N 8.0 7 5 r - 3-Month Treasury Bills 7.0 6.5 1989 1990 Note: Data are monthly averages of daily figures. Source: Board of Governors of the Federal Reserve System. With greater capital needs at home to finance the rebuilding of the deteriorated infrastructure of the former German Democratic Republic, the surplus became a deficit of about 3 percent of GDP in 1990. Because long-term interest rates in the United States are influenced by developments in world markets, and because those rates play a large role in determining real economic activity, their rise contributed to the domestic economic slowdown in the United States. After peaking in May, long-term rates fell 65 basis points through the end of July. This drop was erased after Iraq invaded Kuwait. The jump in oil prices renewed concerns about the risks of higher inflation. The general uncertainty surrounding the Persian Gulf crisis, and, in particular, about the future course of oil prices, increased the riskiness of lending funds for the longer term and put upward pressure on interest rates. By mid-December, however, long-term rates had fallen back to their early January levels, with the yield on 10-year Treasury bonds reaching 8 percent before rising slightly at the very end of the year. One reason long-term rates began to fall was the expectation that the multiyear budget law would lower the Federal Gov- 43 Chart 2-5 Long-Term Government Bond Yields Long-term bond yields rose around the world in early 1990, pushed up by increased demand for capital and concerns about accelerating inflation. Percent per annum 10 Japan 1989 1990 Note: Data are weekly average of daily figures. Source: Board of Governors of the Federal Reserve System. ernment's future credit demands and thus ease demand pressure in long-term credit markets. Other factors including falling oil prices in late November and December, declining economic activity, and easing monetary policy also contributed substantially to the decline. Credit Market Developments By midyear, surveys indicated that bank lending standards had tightened and that credit was becoming more difficult to obtain. As the year progressed, the effects of the tightening began to appear in aggregate bank lending figures. From August through October commercial and industrial loans at commercial banks fell at an annual rate of 3.3 percent. In addition, a Federal Reserve survey of senior bank lending officers in October reported that nearly twothirds of respondents had tightened their lending standards for construction and land development loans in the previous 3 months, and almost half had tightened their standards on commercial and industrial loans. Overall, bank credit increased about 5.1 percent during 1990, compared to a 6.9-percent rise during 1989. 44 Tightened lending standards and slower growth in bank lending were partly the result of a sluggish economy. Demand for credit usually falls as the overall economy weakens. Moreover, as the economy slows, the probability of bankruptcy increases. To compensate for the increased risk of lending, lending standards may have become stricter. Concerns about overzealous bank examiners may have discouraged some banks from making loans, and declining real estate values reduced the value of collateral on residential and commercial real estate loans. Tighter lending standards during the year cannot be entirely attributed to caution in the face of a slow economy or an anticipated recession. The restructuring of bank lending portfolios in anticipation of meeting the capital guidelines established in the Basle framework, an international banking agreement setting minimum capital adequacy requirements, also contributed to credit market tightness. The new guidelines require higher capital reserves on loans with greater risk of default. Thus, for example, more capital must be held against a portfolio of commercial and industrial loans than against a portfolio of equal size that contains only government-backed securities. By changing the relative cost of different types of assets, these guidelines changed the incentives for extending different types of credit. Thus, while the growth of commercial and industrial loans by banks slowed during 1990, the growth of bank credit extended to governments or borrowers with government guarantees increased. Although business borrowing from banks slowed in 1990, business borrowing from other sources offset some of the slowdown. Overall domestic nonfinancial sector debt (excluding Federal debt) was up 5.6 percent at an annual rate for the first 11 months of 1990. By October and November, however, this debt was rising at a slower 4 percent rate. These rates were lower than the 1989 growth rate of 7.6 percent. FEDERAL BUDGET DEVELOPMENTS Federal spending, tax, and borrowing activities have an important influence over economic activity. The slowdown in the economy and the large financial transactions associated with the resolution of the savings and loan (S&L) crisis require that particular care be taken in describing budgetary and deficit changes for 1990 and beyond. In fiscal 1990 (October 1989 through September 1990) total Federal expenditures were $1,253 billion. Transfer payments (including grants-in-aid to State and local governments) accounted for roughly half this total. Federal purchases of goods and services accounted for one-third of Federal spending. The other major component was interest payments on the Federal debt. Among these components, 45 the largest increase from fiscal 1989 occurred in transfer payments, which grew 9.6 percent. Federal purchases of goods and services rose 4.3 percent. Federal tax receipts grew more slowly in fiscal 1990 than in fiscal 1989. That was mainly a result of two factors: slower growth in household income, which reduced the growth of individual income and payroll tax payments; and falling business profits, which reduced corporate income tax receipts. Corporate profits were $299 billion in fiscal 1990, down from $326 billion in fiscal 1989. Corporate income tax receipts fell 9.7 percent in fiscal 1990, after rising 9.6 percent in fiscal 1989. Total receipts rose 4.1 percent in fiscal 1990, compared with 9 percent in fiscal 1989. The Federal Deficit From 1979 to 1983 the consolidated Federal budget deficit as a percentage of GNP increased steadily to 6.3 percent, its highest level since World War II. (The difference between Federal outlays and receipts is the deficit.) The deficit-to-GNP ratio was around 5.2 percent between 1984 and 1986, and then fell to its recent low of 3 percent in 1989, primarily as a consequence of reductions in Federal spending. Since 1980 the ratio of tax receipts to GNP has been 19 percent, while the ratio of outlays to GNP has been 23.1 percent. The ratio of the deficit to GNP rose in 1990, mostly due to spending increases. The ratio was expected to remain high, which led to concerns that interest rates would also remain high, harming prospects for long-run growth. These concerns led to enactment of the Omnibus Budget Reconciliation Act, signed in November 1990. The budget law is expected to reduce future deficits substantially from what they would have been in the absence of the act. Nevertheless, by all conventional measures the current deficit is large and will remain large during the next few years. Federal budget accounting distinguishes between on-budget and off-budget outlays and receipts. The more comprehensive consolidated budget combines both on-budget and off-budget accounts. Some items are classified as off-budget based on economic reasons; others, for legislative or government accounting reasons. Currently, outlays and receipts of the Social Security trust funds are offbudget, yet changes in these trust funds affect total government saving and thereby the net borrowing requirements of the Federal Government. In fiscal 1990 Social Security receipts exceeded outlays, which was the main factor leading to an off-budget surplus of $57 billion. As a result, the fiscal 1990 on-budget deficit of $277 billion substantially exceeded the $220 billion consolidated budget deficit. The financial transactions of the Resolution Trust Corporation (RTC) and other deposit insurance programs have made the inter 46 pretation of the effect of the budget on the economy more complex. The RTC reimburses federally insured depositors in failed savings and loan institutions. The funds required to pay the full value of these deposits are large, and the problems created by the incentives associated with deposit insurance have had negative effects on the economy (see Chapter 5 for a discussion of deposit insurance). Transactions of the RTC and other deposit insurance programs are classified as on-budget. Unlike most other on-budget expenditures and receipts, however, these transactions have little effect on interest rates and the overall economy. Though they are valuable for other reasons, measures of the budget deficit that include deposit insurance financing can be misleading for evaluating the macroeconomic effects of the deficit. As noted above, for this purpose, deposit insurance outlays should be excluded and the Social Security surplus included. Hence, of the various accounting measures, movements in the consolidated budget deficit excluding deposit insurance probably best measure the impact of Federal borrowing on credit markets and the economy. To understand how borrowing to cover deposit insurance differs from borrowing to cover other government outlays, consider the following example. Suppose the RTC acquires a failed S&L with insured deposits of $100 million and assets, such as mortgages and loans, worth only $85 million. To do this, the RTC would borrow $100 million to pay off the depositors and acquire the S&L's assets worth $85 million. The remaining $15 million is an accrual of net Federal indebtedness and acknowledges the liabilities incurred earlier when the S&L could no longer support the insured depositors. (This portion of the RTC outlays is sometimes termed "hole-filling.") The entire $100 million paid out to depositors is likely to be redeposited in the financial sector. The depositors chose to hold $100 million in the S&L on the assumption their money was safe; the RTC's confirmation of its safety is unlikely to cause them to change the level of deposits they hold or any other aspect of their economic behavior. There are also unlikely to be any credit-market effects. The RTC has directly or indirectly provided $100 million to honor the deposit insurance commitment to depositors. Since these funds are likely to be redeposited, the financial sector can be expected to receive an infusion of $100 million that solvent institutions will want to invest in interest-bearing assets. The increased demand for assets corresponds exactly to the $100 million increase in assets the government sells to the market. Therefore, in contrast to what happens when the government borrows to purchase goods and services, there will be no direct effects on interest rates in the financial sector. 47 The acquisition and subsequent disposition of S&L assets by the ETC are expected to lead to a large swing in the consolidated and on-budget deficit measures. Net ETC expenditures are currently large because the RTC is acquiring insolvent S&Ls and paying out funds to depositors. By fiscal 1992, these expenditures are projected to be falling; that is, expenditures for acquiring S&L assets minus the receipts from sales of these assets are expected to be smaller than in the preceding year. An alternative measure of the deficit that is useful for assessing the effects of the deficit on credit markets and the economy comes from the national income and product accounts (NIPA), published by the Department of Commerce. The NIPA deficit does not include transactions, such as loans, that are an exchange of existing assets and liabilities. Accordingly, nonadministrative RTC and deposit insurance funding are excluded from the NIPA deficit, and the Social Security surplus is included. On a NIPA basis, the Federal deficit was $158 billion in fiscal 1990, an increase of roughly $28 billion from 1989. In contrast, the consolidated deficit was $220 billion in fiscal 1990, an increase of $68 billion from 1989. It is also important to distinguish between the actual deficit and the structural deficit, especially when the economy is in a downturn or boom. In a downturn, tax revenues decrease and expenditures, especially for entitlement programs such as unemployment insurance, increase. The rising deficit that results helps keep the economy from going deeper into recession. During booms the opposite happens, and the falling deficit helps keep the economy from overheating. The structural deficit removes the effects of these swings in economic activity from the deficit calculation by assuming a steady level of employment and trend GNP growth. This cyclical adjustment can be made in both the consolidated budget deficit and the NIPA budget deficit measures. In fiscal 1990 the NIPA structural budget deficit was only about $9 billion higher than in 1989, compared with a $28 billion increase for the actual NIPA deficit. That difference suggests that the economic slowdown accounted for more than twothirds of the increase in the actual NIPA deficit in 1990. All these deficit measures are typically reported in current dollars. Even if spending and receipts were to increase only at the rate of inflation, the deficit would rise. Moreover, the economic effects of the Federal deficit depend on its size in relation to the size of the economy. To adjust for the economy's size, the ratio of the deficit to GNP is often reported. Even though the structural deficit increased slightly from 1989 to 1990, for instance, it declined slightly as a percent of GNP. Other issues arise when measuring the deficit and interpreting its economic effects. Some economists have argued that deficit measures should reflect the reduction in the real value of outstanding liabilities caused by inflation. With a Federal debt held by the 48 public of roughly $2.5 trillion, an inflation rate of 4 percent would reduce the real value of the debt outstanding by about $100 billion in one year. This revaluation lowers the real value of government liabilities and therefore could be thought of as lowering the deficit. But even with this adjustment the deficit would still be large. The economic importance of the deficit depends, in part, on the level of private saving. By definition, a decrease in the budget deficit increases public saving. Private saving plus public saving constitute national saving, which, together with inflows of foreign capital, provides the funds available for investment in the United States. Low public saving caused by a large Federal deficit is particularly detrimental to investment and future economic growth when private saving is low, as it has been for several years. ECONOMIC GROWTH AND EMPLOYMENT The growth slowdown during 1990, as in 1989, was concentrated in interest- and credit-sensitive sectors such as residential investment, commercial real estate, and consumer spending on durable goods. In addition, export growth slowed from its extremely fast pace of the previous 3 years. The manufacturing sector was hard hit as both production and employment fell. Consumption and Saving Consumer spending rose 0.2 percent in real terms during 1990, below the 1.2-percent growth in 1989 and substantially below the rates of the mid-1980s (Table 2-1). (Spending in real, or inflationadjusted, terms is measured in constant 1982 dollars. Box 2-1 describes an important upcoming NIPA data revision.) Real disposable personal income, a key determinant of consumer spending, fell 0.4 percent during 1990. That compares with a 1.7-percent gain in 1989 and a 4.3-percent rise during 1988. Consumer outlays and income rose at roughly the same rate in 1990, leaving the personal saving rate at 4.5 percent, essentially unchanged from its average 1989 value. While the saving rate for 1990 was substantially above the 1987 low of 2.9 percent, it remained well below the 6.5-percent average of the post-World War II period and below that of most other industrialized countries. Spending on consumer services rose 2.2 percent during 1990, led by a 6.5-percent spending increase in medical care. However, consumer purchases of nondurable goods, of which food and clothing account for nearly 70 percent, fell during the year, after a slight 0.7-percent rise during 1989. Rising gasoline prices reduced real spending on gasoline and also contributed to the decline in spending on nondurables. Consumer purchases of durable goods declined during 1990. Interest rates on consumer loans, frequently used to finance purchases of durable goods, remained high during the year. Measures 49 TABLE 2-1.—Growth of Real GNPand Components, 1982-90 Item 1982 to 1986 * 1987 1990 2 1989 1988 Percent change, fourth quarter to fourth quarter GNP. Personal consumption expenditures Presidential fixed investment Residential investment Government purchases of goods and services 4.3 5.0 3.5 4.5 2.3 5.5 14.7 6.1 -2.2 4.1 2.0 1.8 0.3 4.1 1.2 .2 5.3 -.1 4.5 -7.1 .9 -8.7 1.1 .3 3.8 Annual level, billions of 1982 dollars Inventory investment Net exports of goods and services 17.7 -84.5 22.8 -118.5 23.6 -75.9 23.8 -54.1 -1.1 -37.5 1 Average annual rate. Preliminary. Source: Department of Commerce. 2 of consumer confidence, which often are directly related to purchases of durables, plunged in the last 5 months of the year. Spending on motor vehicles declined, and the number of autos sold during 1990 was down 4 percent from 1989, the second straight yearly decline. Several additional factors contributed to declining automobile demand, including the large number of vehicles already owned by consumers and the tendency for owners to keep vehicles longer. Financing arrangements also contributed to weak sales. Interest rates on new car loans remained high, the average length of auto loans fell, and lenders required larger downpayments. Residential Investment In 1990 residential investment was 5.1 percent below its 1989 level, the third straight year of decline. Housing starts reached their lowest levels since 1982, averaging more than 13 percent below 1989. For all of 1990, starts in the Northeast were only 44 percent of their recent 1986 peak. For the country as a whole, multiunit starts continued their 5-year slide. Many factors contributed to the decline in residential investment. Housing starts were held down by oversupply in many regions. Vacancy rates for rental housing units remained relatively high. Builders and developers found credit more difficult to obtain. The low growth of consumer income in 1990 and rising mortgage rates in the first half kept demand low. House prices rose in the early part of 1990 but declined somewhat during the rest of the year. The median price of a new singlefamily house reached $130,000 in April 1990, before declining by 7.7 percent by November. For the year the median new house price rose 2.5 percent, its smallest rise since 1982. In the fourth quarter of 1990, prices of existing homes were down nationally about 1 per 50 Box 2-1.—Revised National Income and Product Accounts The Bureau of Economic Analysis (BEA) produces the UJSL national income and product accounts, the most comprehensive and consistent set of production and income statistics available for the United States, The NIPA are frequently revised as new data arrive and measuring methods are improved* In the first month after the end of a calendar quarter, the GNP accounts are released for the previous quarter, These data, the advance figures, are revised in the following 2 months as data for the previous quarter continue to arrive and be processed, These monthly revisions are called thepreliminary and the final. Every year, BEA releases revisions to the NIPA for the current and the previous 3 years, reflecting new data from various annual surveys and other information not available when the final estimate is released. About every 5 years BEA produces a comprehensive "bench* mark" revision, in which all NIPA components are subject to change. In the upcoming benchmark revision, the base year for the calculation of constant-dollar (inflation-adjusted, or real) GNP will change from 1982 to 1987, Real GNP measures the value of goods and services the Nation produces at prices in a given "base" year* Valuing the goods and services at one year's prices is necessary so that physical quantities of goods can be added meaningfully and compared across time. Since late 1985 the base year has been 1982. Maintaining the base year for too many years, however, results in an increasingly inaccurate picture of the economy, since the importance of goods with high relative prices in the base year tends to be overemphasized. This bias is likely to be more important as the economy moves further away from the base year, because producers and consumers are likely to be using fewer goods with high relative prices. Moving to 1987 as a base year should provide a better picture of the current economy, since the current price structure is more like the 1987 structure than the 1982 structure. The differing relative price structure between 1982 and 1987 will result in different real GNP growth rates when measured in constant 1982 and constant 1987 dollars. Since early 1989, BEA has published a small set of GNP data in 1987 dollars in addition to 1982-dollar data. Between 1983 and 1989 real growth averaged 3.6 percent in 1987 dollars and 3.9 percent in 1982 dollars. The difference is typical of benchmark revisions and reflects the size of the bias that builds up as the base year becomes more distant. 51 cent from their average in 1989. Prices fell even more in the regions most affected by the economic slowdown, such as New England. Business Fixed Investment Business fixed investment—spending by businesses on new plant and equipment—grew 0.9 percent in real terms during 1990. Spending on new structures was down 5 percent, with continued weakness in new office-building construction. An oversupply of offices— vacancy rates nationwide were around 20 percent in the third quarter of the year—reduced new construction activity. However, spending on industrial buildings—new plants—was up 8.4 percent during 1990, after a nearly 20-percent increase in 1989. Total equipment purchases rose 2.8 percent in real terms during 1990. Information-processing and related equipment continued to increase faster than total equipment purchases, rising 3.3 percent during the year. Auto purchases by businesses jumped 12.4 percent, but industrial equipment purchases fell during 1990. Inventory Change The real level of business inventories fell by $1.1 billion in 1990, and the ratio of real inventories to sales was below the 1989 figure. This is unusual during the early stages of a downturn, and is one factor pointing to a mild recession rather than a more serious slide. In most business cycles, an overaccumulation of inventories toward the end of the expansion leads to production shutdowns and layoffs, creating a sharper downturn in production and employment than the underlying demand conditions would have produced. Some economists suggest that computerization and the adoption of new inventory and production management techniques (the just-intime method, for example) during the last decade have allowed firms to reduce the size of their normal inventory holdings and to respond more flexibly to changing economic circumstances. With inventories relatively low at the start of this downturn, a protracted period of inventory reduction that would deepen the downturn is less likely than in the typical postwar recession. Exports and Imports Export growth was strong in the second half of the expansion, averaging 14.6 percent at an annual rate between the fourth quarter of 1986 and the fourth quarter of 1989. Though growth in real exports of goods and services slipped to 5 percent in 1990, real exports reached an all-time high during the year, and the United States remained the world's largest exporter. Some categories of exports were stronger than others. Exports of capital goods rose 8.2 percent and exports of consumer goods rose a strong 17.5 percent. Exports of foods, feeds, and beverages fell during 1990. 52 Exports of services (other than profits and interest income) have become increasingly important to the economy, accounting for about 17 percent of total exports in 1990. For the year as a whole, exports of services rose 7.7 percent in real terms, compared with merchandise export growth of 8.6 percent. Two of the major determinants of export demand contributed to slower export growth. First, although it remained at relatively low levels compared with the mid-1980s, the foreign exchange value of the dollar rose about 16 percent from late 1988 to June 1989. By December 1989, it was still 3.3 percent above its level in December 1988. Changes in demand for U.S. exports lag behind price changes, so by increasing the price of U.S. exports in overseas markets, the dollar's rise through most of 1989 may have helped to reduce demand for U.S. export products in 1990. In contrast to 1989, the dollar fell during most of 1990. By December it had fallen almost 7 percent against the yen and almost 14 percent against the deutsche mark compared with December 1989. All else being equal, the declining dollar in 1990 points to rising export growth in 1991. Slower growth in countries that trade extensively with the United States also contributed to slower export growth in 1990. For example, Canada, which typically accounts for about 22 percent of our merchandise exports, and the United Kingdom both were in a recession in the second half of 1990. Growth also slowed in other European economies in 1990 (Table 2-2). However, growth in Germany and Japan increased in 1990. For the first 11 months of 1990, the merchandise trade deficit with Japan was down about 17 percent compared with the first 11 months of 1989. TABLE 2-2.—Economic Performance and Projections for the United States and Other G-7 Nations, 1989-90* [Percent] Country 1989 Canada France Germany iSr"^""""""""»":""":""^"""""i"":" Japan United Kingdom United States Consumer price inflation 2 Real GNP growth 3.0 3.6 3.9 3.2 4.9 2.2 2.5 1990 1989 1990 1.1 2.5 4.2 2.6 6.1 1.6 .9 4.7 3.3 3.2 6.0 1.7 5.9 4.8 Total unemployment rate 1990 1989 4.1 3.4 2.6 6.3 2.4 4.6 5.2 7.5 9.4 5.6 12.1 2.3 6.2 5.2 8.1 8.9 5.0 11.1 2.1 5.8 5.4 1 Data 2 for 1990 are projections, except for the United States, which are preliminary full-year estimates. Consumer prices are measured by the private consumption deflator. Note.—Data for GNP growth and price inflation are percent changes from previous year. Data for Germany are only for western Germany. Source: Organization for Economic Cooperation and Development, OECD Economic Outlook, December 1990; Department of Commerce; and Department of Labor. Imports grew 3.2 percent in 1990, compared with a 6-percent increase in 1989. In contrast to the early part of the expansion, when imports of consumer goods and autos rose rapidly, consumer goods and auto imports posted almost no increase in 1990. Instead, capital goods imports were the fastest growing major category of im 53 ports. For the year, real petroleum imports were up 2.5 percent; however, they fell sharply in the fourth quarter. As a result of continued export growth and slowing import growth, the real net export deficit narrowed for the fourth consecutive year. By the end of the year, the real net export deficit was at its lowest level since mid-1983. Government Purchases of Goods and Services Government purchases of goods and services, at the Federal, State, and local levels, grew 3.8 percent in real terms during 1990. Federal purchases rose 5.5 percent. Nondefense purchases rose 8.3 percent; however, excluding changes in Commodity Credit Corporation inventories, nondefense purchases rose 3.8 percent. Defense purchases rose 4.7 percent during 1990, with an increase in the fourth quarter partially reflecting spending in support of Operation Desert Shield. State and local purchases rose 2.5 percent during 1990, with a relatively strong 8.2-percent increase in spending on structures. Industrial Production and Capacity Utilization Sluggish consumer spending on goods, falling residential construction, and slowing export growth caused manufacturing output to fall during 1990 after slowing substantially in 1989. Sharp declines in the fourth quarter led to a 1.4-percent fall in overall industrial production during 1990, as production of motor vehicles fell more than 20 percent. Excluding motor vehicles and parts, industrial production fell 0.5 percent during 1990, compared with a 1.8-percent rise during 1989. Slowing production in the first half and falling production in the second half pushed down capacity utilization in the industrial sector 3.3 percentage points during 1990. In December capacity utilization in manufacturing fell to 79.3 percent, well below the 85percent rate in April 1989, its recent peak. Utilization rates generally declined across all industries. Utilization in motor vehicle manufacturing fell to 57 percent. Employment The civilian unemployment rate rose in the second half of 1990, after remaining around a 15-year low for most of 1989 and the first half of 1990. By December the unemployment rate had risen to 6.1 percent, about where it had been in mid-1987 (Chart 2-6). From June to December the jobless rate for men rose 0.9 percentage point, while the rate for women rose 0.7 percentage point. In the second half of the year, the unemployment rate rose 1.5 percentage points for blacks and 1.9 percentage points for teenagers. For the entire year the civilian unemployment rate averaged 5.5 percent. Labor force growth slowed in 1990, particularly in the first half of the year. The labor force grew by about 250,000 people in the 54 Chart 2-6 The Unemployment Rate The unemployment rate rose in late 1990 but was still low compared to much of the period since the early 1970s. Percent of civilian labor force 12 December 1982 10.8% ^^ 11 10 December 1990 6.1% \ i 1972 i i I 1974 i 1976 i 1978 1980 1982 1984 1986 1988 1990 Source: Department of Labor. first half, about a quarter of the average gain experienced in the first halves of 1988 and 1989. Much of the slowdown in the first part of 1990 can be traced to a decline in the teenage labor force, which fell by more than 500,000 people. The slower labor force growth, due at least in part to the softening economy, contributed to the stability of the unemployment rate in the first half of the year and tempered the increases in the second half. There was a net gain of about 650,000 jobs in 1990, following a gain of over 2 million jobs in 1989. The net gain for the year consisted of an increase of about 1.4 million jobs in the first 6 months of the year, followed by a decrease of 810,000 jobs in the second half. The number of service-producing jobs rose by 1.4 million during the year, but the number of jobs in the goods-producing sector fell by 790,000. Temporary hiring to conduct the 1990 census accounted for some of the first-half gain and second-half decline. Census hiring added about 365,000 jobs to the first-half gain. The reduction in the census work force following completion of the census accounted for about 45 percent of the second-half decline. Although overall employment growth slowed in 1990, the slowdown was spread unevenly across industries and regions. Every in- 55 dustry is affected by both general economic conditions and factors unique to its business. As a result, during general upswings in economic activity some industries and regions experience shrinking employment and income. Likewise, in downturns, some continue to grow. Chart 2-7 illustrates differences in regional employment growth during 1990, and Box 2-2 summarizes the year's industrial and regional developments. Chart 2-7 Regional Employment Growth Employment declines were concentrated in New England, while employment grew fastest in the Mountain and Pacific regions. New England Middle Atlantic South Atlantic Note: Growth from November 1989 to November 1990. Source: Department of Labor H 4.0% and over H 2.0% to 3.9% Q 1.0% to 1.9% D Less than 0.0% Q 0.0% to 0.9% Productivity Growth in labor productivity in the nonfarm business sector fell 0.8 percent in 1990. Low or negative labor productivity growth is typical in an economic slowdown, as firms tend to keep workers even when demand slows in order to avoid costly search and training when demand increases again. Manufacturing productivity continued its recent trend of relatively strong growth compared with other sectors. Manufacturing productivity grew 3 percent in 1990, compared with 3.3 percent in 1989. Rising labor productivity in manufacturing helped to hold the growth of unit labor costs to 0.3 percent, after a 0.6-percent rise in 1989. Very slow growth of unit labor costs in manufacturing is one 56 Box 2-2.—Sectoral and Regional Income and Employment During any phase of the business cycle, some industries shrink or grow slowly while others expand rapidly* Differences in employment growth across regions depend on the particular mix of expanding and contracting industries in each region. Much of the decline in employment in 1990 in both New England and the Middle Atlantic States can, for example, be traced to the contraction in the construction, real estate, and finance industries. Regions dependent on durable-goods manufacturing were hurt by declining sales of consumer durables such as automobiles. Total manufacturing employment fell by about 570,000 over the year, with more than 79 percent of the decline coming from durable goods manufacturing industries. Some regions had relatively strong employment gains in 1990, Employment in the Mountain region was bolstered by employment gains in service industries, particularly recreation and tourism. Although the decline in construction has hurt the timber industry in the Pacific Northwest, the region's diversified industrial base, especially in the production of aircraft and high-technology goods, permitted relatively strong overall employment growth. However, the changing fortunes of most industries have effects that are spread out across all regions, The contraction in the construction industry was felt nationwide as housing starts reached their lowest levels since 1982. Reflecting the sharp decline in the residential housing market, jobs in construction and real estate declined in the second half of the year. Sluggish orders and sales contributed to the slowdown in employment growth in wholesale and retail trade across all regions. In contrast, all regions gained from the substantial growth in health services, which accounted for nearly 82 percent of the net job gain in the economy over the year. Softening business activity across the country was reflected in the fourth quarter decline in business services employment, which provides support services such as data-processing and advertising. indicator that underlying inflationary pressures did not rise in 1990. PRICES AND WAGES Compared with the expansions of the 1970s, inflation remained relatively low and stable throughout most of the recent expansion, which contributed greatly to its longevity. Consumer price inflation 57 averaged only 3.1 percent a year from the business cycle trough in November 1982 through December 1986. Core consumer price inflation averaged a higher but steadier 4.3 percent over the same period (Chart 2-8). Much of the reduction in inflation from the late 1970s and early 1980s was due to the successful imposition and maintenance of a stable and credible monetary policy. Chart 2-8 Consumer Prices Overall consumer price inflation rose temporarily in 1990. However, "core" inflation, a measure that excludes food and energy prices, remained under control and was declining at the end of the year. Percent change from year earlier 16 Average of All Items Excluding Food and Energy 1982-90 = 4.5% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Source: Department of Labor. Broad-based measures of inflation indicated that inflation was contained in 1990. The GNP fixed-weighted price index, a measure that includes prices of all goods and services in the economy rather than just consumer goods and services, was up 4.5 percent in 1990, the same as in 1989. After rising substantially in the first quarter of 1990, inflation measured by this index was below the 1989 average in each of the last three quarters of the year. Price developments in early 1990 resembled those of the first half of 1989 when a temporary rise in crude oil and food prices pushed consumer price inflation to 5.7 percent. Consumer and producer prices were buffeted by the effects of unusually cold weather in December 1989, which substantially reduced available supplies of fresh fruit and vegetables and drove up the cost of petroleumbased fuels. Led by price increases in energy and food, consumer price inflation rose to an annual rate of 8.5 percent from December 58 1989 to March 1990. A more than 21-percent annual rate increase in apparel prices contributed to core consumer price inflation of 7.5 percent in the first quarter. By the middle of the year, smaller food price increases and falling oil prices were reducing inflation. From March to June, consumer prices rose at a 3.5-percent annual rate, and producer prices for finished goods rose at a negligible 0.3-percent annual rate. Core inflation also retreated substantially, to 3.9 percent at an annual rate. The Iraqi invasion of Kuwait in early August and its impact on oil prices dominated price-level movements in the second half of 1990. Crude oil prices jumped from $22 a barrel on August 1, the day before the invasion, to their 1990 peak of $40 a barrel in the middle of October (Chart 2-9). Prices retreated below $26 a barrel before ending the year at around $28 a barrel. Oil prices fell rapidly to around $20 a barrel in early 1991, following the beginning of Operation Desert Storm. Chart 2-9 Oil Prices Crude oil prices more than doubled from early summer to mid-October but fell thereafter. Dollars per barrel 50 40 30 20 10 J i Jan i Feb i Mar I Apr i May i Jun i Jul i Aug 1990 Note: West Texas Intermediate crude, nearest month futures contract. Source: New York Mercantile Exchange. i Sep i Oct i Nov I Dec Jan 1991 Consumer and producer energy prices responded quickly to the August oil price shock. In the last quarter of 1990, prices of other goods and services that rely heavily on oil as fuel or as material input rose in response to rising energy costs. For example, public 59 transportation prices rose more than 32 percent at an annual rate, primarily because of rising airline fares. The surge in energy and energy-related prices contributed to overall consumer prices rising at an annual rate of 6.4 percent in the second half of the year. The oil price decline since October reduced inflation in November and December and should continue to reduce consumer and producer price inflation in the early part of 1991. Excluding food and energy, the consumer price increase of 4.8 percent in the second half of 1990 was far more moderate than the overall increase in prices. In addition, producer prices for goods before any processing, excluding food and energy, fell for the last 4 months of the year, suggesting that slowing economic activity was reducing upward pressure on prices. Although price changes were affected primarily by changes in energy and, to a lesser extent, food prices, some longer run inflation trends continued in 1990. Price increases for consumer services continued to rise faster than those for consumer goods. From 1982 to 1989 services prices rose 4.8 percent at an annual rate, while prices for consumer goods less food and energy rose 3.3 percent. During 1990 the services price index rose 5.7 percent, led by a 9.9percent rise in the price of medical care services. Wage inflation moderated in 1990, an indication that the underlying inflation rate was under control and even declining. The growth in the employment cost index, a measure that includes the cost of employer-paid benefits as well as wages and salaries, began to fall in the last three quarters of 1990 after rising consistently throughout 1989 and the first quarter of 1990 (Chart 2-10). Continuing a trend from the last few years, benefits increased at a faster pace than wages and salaries: 6.6 percent compared with 4 percent during 1990. Indicators point to moderating inflation in the future. The Commodity Research Bureau's index of futures prices for raw commodities, which fell 8.2 percent during 1989, reached a peak in May 1990 and fell at an annual rate of 16 percent through the rest of the year. A sustained decline of this size suggests continuing moderation of producer and consumer goods prices. SUMMARY • After growing sluggishly for the first part of 1990, the economy entered a recession in the latter part of the year. The jump in crude oil prices reduced spending on other products, and declining business and consumer confidence contributed to reduced spending at the end of the year. • Interest rates were declining by the end of the year in response to a softer economy, lower underlying inflation, monetary policy easing, and the new budget law. 60 Chart 2-10 The Employment Cost Index After being relatively flat from the second half of 1989, growth in wages and salaries, as well as total compensation, fell in the last three quarters of 1990. Percent change from 3 months earlier, annual rate 16 L Total Compensation 12 10 8 6 4i Wages and Salaries Only 2 I i i i I i i i I i i i I i i i I i i i I i i i I i i i I i 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Note: All private industry. Source: Department of Labor. • The budget deficit—as measured in the national income and product accounts—increased as a percent of GNP from 2.5 percent in fiscal 1989 to 2.9 percent in fiscal 1990. After adjusting for the cyclical weakness in the economy, the deficit declined slightly as a percent of GNP from fiscal 1989 to fiscal 1990. • Housing and consumer spending were most affected by the slowdown. Stricter credit conditions also contributed to the slowdown. • The overall inflation rate, as, measured by the fixed-weighted price index for all goods produced in the economy, rose temporarily in the first quarter of 1990 but was below^the 1989 average in each of the last three quarters of the year. MONETARY AND FISCAL POLICY OUTLOOK Monetary and fiscal policies exert a powerful influence on the economy and therefore can have profound effects on the prospects for achieving an early recovery from the current downturn and increasing long-term growth. The Administration strongly supports stable, credible policies that provide the flexibility to mitigate the 61 downturn while maintaining a long-term focus on the goal of strong, noninflationary economic growth. MONETARY POLICY Monetary policy should be credible, systematic, and consistent with the goal of mitigating the downturn and allowing the economy to move toward a higher level of sustainable growth with a low and stable inflation rate. The Federal Reserve faces several challenges in implementing monetary policy in 1991. In July 1990 the Federal Reserve set a preliminary target range of 2V2- to 6V2-percent growth for M2 during 1991, down half a percentage point from the 1990 range. This reduction is consistent with the longer term goal of gradually reducing the underlying rate of inflation. But with a weakening economy, it is essential that money growth stay well within this range. Changes in velocity that appear long-term may require the Federal Reserve to reconsider its preliminary target range. The target range for M3 is set at 1to 5-percent growth, reflecting the expectation that M3 growth will continue to be affected by the ongoing restructuring of thrift institutions. In formulating monetary policy, consideration must be given to the cyclical regularity that interest rates tend to fall as the demand for private credit falls in a weakening economy. This tendency is particularly important to recognize if the Federal funds rate continues to be the focus for short-run implementation of Federal Reserve policy, because a decline in interest rates during a downturn may not be a sign of monetary easing, particularly if the growth of money and credit has slowed. A restrictive monetary policy would jeopardize a solid recovery from the current slowdown and hamper prospects for long-run growth. By further reducing the discount rate and taking action to lower the Federal funds rate as money and credit growth slowed, inflationary pressures eased, and the downturn continued in early 1991, the Federal Reserve has taken action that will help mitigate the current recession. Other challenges arise in the area of bank regulation. Through bank regulations and supervision, the Federal Reserve and other bank regulators have an important influence over lending activity. Regulators should continue prudent oversight of bank lending. It is important, however, that lending be available to creditworthy borrowers, and that regulators not be so stringent that sound banks cannot make sound loans to sound borrowers. The restructuring of bank assets to meet the requirements of the Basle framework may present the Federal Reserve with additional policy challenges. In the longer term, the movement away from short-term, adjustable-rate loans (like commercial and industrial loans) to longer term, fixed-rate loans, such as many mortgages 62 and mortgage-backed securities, may increase the exposure of banks to sudden swings in short-term interest rates. Since banks must offer competitive rates to attract funds, a quick rise in shortterm interest rates would tend to raise their costs relative to their income. These possibilities would adversely affect economic growth. Bank regulators are currently studying ways to incorporate this interest rate risk into capital guidelines. FISCAL POLICY The new budget law, signed in November 1990, includes deficitreduction guidelines and budget process reforms that will have substantial beneficial effects on the economy in 1991 and the years beyond. The budget law is expected to reduce the deficit by almost one-half trillion dollars over the next 5 years from what it otherwise would have been. The Effects of Fiscal Policy Fiscal policy comprises the spending, tax, and borrowing activities of the Federal Government. Earlier in this chapter, several different measures of the deficit were discussed. While changes in the deficit have important effects on the economy, the composition of the underlying expenditure and tax changes can have extremely important effects as well. Increases in Federal purchases have the potential to boost demand and stimulate the economy temporarily, but eventually they put upward pressure on inflation and interest rates. That upward pressure will harm interest-sensitive activities in the economy such as investment and ultimately lower the economy's productive capacity. When considering the composition of Federal spending, investments should be pursued that promote long-run growth, such as research and development and public infrastructure projects that pass stringent cost-benefit criteria. The size and structure of Federal taxes and transfers also have significant effects on the economy. High marginal tax rates have been shown to discourage work effort, saving, and investment. Thus, a guiding principle behind the landmark tax reforms of 1981 and 1986 was to lower tax rates significantly. The effective tax rate, the rate actually paid on earnings or investment income, may differ from the more commonly quoted statutory tax rate. A prime example occurs in the case of capital gains. Consider a growth stock, purchased for $1,000 in 1970 and sold in 1990, that pays no dividends. Over this period the average annual inflation rate was 6 percent. Suppose that the stock had an average annual real return of 2 percent. In 1990, the stock would sell for $3,765.63 more than the purchase price. Tax payments would be 28 percent of this capital gain and would be collected when the asset is sold, rather than each year as the asset increases in value. This 63 deferral of tax payments lowers the effective tax rate. A large portion of the increase in the value of the asset, however, is due to inflation and is not a real gain. In fact, the after-tax real return on the asset is only 0.73 percent, well below the pretax real return of 2 percent. The net effect of inflation and deferral leads to an effective tax rate of 63 percent on the real capital gain, much higher than the 28 percent statutory tax rate. The effects of fiscal policy on the economy also depend crucially on expectations for future spending and taxes as well as on their current levels. The new budget law, for example, reduces the budget deficit from what otherwise would be expected. Economic theory and empirical evidence indicate that expectations of deficit reduction in future years, if the deficit reduction commitment is credible, can lower interest rates as financial market participants observe that the government will be lowering its future demand in the credit market. That can mitigate a potential short-run contractionary effect. In other words, expectations of lower interest rates in the future will lower long-term interest rates today. Lower longterm interest rates will reduce the cost of capital, stimulating investment and economic growth relative to what would be predicted if expectations were ignored. Projected Deficit Reduction: 1991-95 Calculating how much the new budget law and its enforcement provisions, known as the Budget Enforcement Act, are expected to cut the deficit requires an estimate of the preexisting baseline deficit. The baseline is calculated from a simulation of future expenditure and revenue patterns that assumes no intervening policy changes. The calculation depends, for example, on economic assumptions about GNP growth and inflation, and demographic changes in the population. Any tax or spending changes that are already part of the law, such as cost-of-living increases for entitlement recipients, are incorporated in the baseline calculation. By calculating the deficit reduction against the preexisting baseline, the size of the reduction is measured relative to what the deficit would have been had no changes in the law occurred and the underlying baseline assumptions materialized. Obviously, different economic assumptions will produce different baselines and also different future levels of the deficit. However, different economic assumptions will have a relatively small effect on the estimated reduction in the deficit relative to the corresponding baselines. The majority of the budget law's deficit reduction comes from slowing the growth of expenditures. Discretionary spending, which is spending whose levels the Congress sets each year, is expected to account for roughly 40 percent of the reduction from the baseline. 64 Much of this total is expected to come from reductions in defense outlays. Slowing the growth of entitlement and mandatory spending programs, which are statutory obligations such as medicare and agriculture programs, is expected to account for roughly 20 percent of the 5-year deficit reduction. The smaller deficit resulting from the combination of spending and tax changes, relative to the baseline, will also reduce interest payments on the debt by a significant amount over the next 5 years. The new budget law raises almost $150 billion in additional tax revenue over the fiscal 1991-95 period. While marginal tax rates for the upper tail of the income distribution were reduced from 33 to 31 percent, marginal tax rates in the extreme upper tail increased from 28 to 31 percent. The affluent will pay higher taxes as a consequence of a new phaseout of personal exemptions, limitation of itemized deductions, and new excise taxes levied on selected luxury items, such as expensive furs, jewelry, and cars. About onequarter of the total revenue increase comes from excise tax increases on gasoline, alcohol, and tobacco. The new budget law also provides significantly more assistance to the working poor by adding about $18 billion to the earned income tax credit (EITC) over the next 5 years. The EITC is a refundable tax credit given to low-wage taxpayers with children. Chart 2-11 shows the change in the projected NIPA and NIPA structural deficit for the next 5 years. The NIPA structural deficit is expected to decline in each of the next 5 years, as the provisions of the new budget law are fully implemented. In contrast, the NIPA deficit is expected to increase in 1991 as the automatic stabilizers cushion the effect of the downturn. After 1992 the NIPA deficit is also expected to fall steadily. Budget Process Reform By reforming the budget process the new budget law has improved the credibility and stability of fiscal policy. These reforms significantly increase the strength of the previous budget law and give fiscal policy a longer term focus. The new law defines two main types of spending: mandatory and discretionary. Under the new law, mandatory spending and tax legislation is limited by a "pay-as-you-go" test. Under this test any new mandatory spending legislation or proposed tax decreases for the next 5 years must be offset by a corresponding decrease in other mandatory spending or by an increase in tax revenue. Legally binding caps have been established on discretionary spending for each of the next 5 years. For 1991 through 1993, caps are placed on three separate categories of discretionary spending: domestic, defense, and international. In 1994 and 1995, a single cap covers total discretionary spending. In each year the spending on 65 Chart 2-11 Reductions in the Federal Budget Deficit, NIPA Basis With the new budget law, the structural deficit is expected to decrease in each of the next 5 years; the actual deficit is expected to rise before falling. Billions of dollars 80 60 40 While the structural deficit declines... 20 0 ...automatic stabilizers -20 cause the actual deficit to rise. -40 -60 1991 1992 1993 1994 1995 Fiscal Year Reduction in Actual NIPA Deficit from Previous Year Reduction in NIPA Structural Deficit from Previous Year Source: Department of Commerce. different programs within a category can change, but total spending for each category cannot exceed the cap. Hence, the caps impose a "flexible freeze" on spending. Moreover, saving in one category cannot be credited to another category. The discretionary caps will be adjusted for inflation and a limited set of technical factors. Funding for the military operation in the Persian Gulf will not count against the defense discretionary spending caps. Discretionary spending that exceeds the caps, or mandatory spending or receipts legislation that violates the pay-as-you-go rule, will trigger sequesters, which are automatic, across-the-board cuts in discretionary or mandatory spending. "End-of-session" sequesters would take effect 15 days after the Congress adjourns at the end of the fiscal year. They apply to the category that violates the rule. If domestic discretionary spending violates its spending caps, for example, it is cut. If the pay-as-you-go rule is violated, entitlement spending is reduced. An end-of-session sequester has already taken place for the fiscal 1991 budget because new spending legislation, as a result of an unintentional drafting error, violated the spending cap on international discretionary programs. A "within session" sequester can be applied to discretionary spending during the fiscal year if supplemental appropriations leg- 66 islation—appropriations made for the fiscal year, during the fiscal year—violate the discretionary spending caps before the last quarter of the fiscal year. If supplemental legislation violates these caps during the fourth quarter, a "look-back" sequester lowers the following year's caps by the amount of the overrun. An example of how the three types of sequesters would work in the fiscal 1992 budget cycle is given in Chart 2-12. Chart 2-12 The Fiscal 1992 Budget Cycle Fiscal 1992 Jan 1,1991 Apr1 Jul 1 Oct 1 Jan 1,1992 Apr 1 Feb4,1991 I The Administration submits I The Congress adjourns. fiscal 1992 budget to the Congress. Within 15 days, "end of It includes updated economic I session" sequester for forecasts, meets discretionary I both discretionary and spending limits, and abides by »pay-as~you-go" spending the "pay-as-you-go" rule. may take effect JuM Oct 1 Jan 1,1993 A "look-back" sequester may reduce discretionary caps for fiscal 1993. A "within session" sequester on discretionary caps may take effect. The Congress develops and passes concurrent budget resolution and appropriations bills. Sources: Council of Economic Advisers and Office of Management and Budget. Under the new budget process, discretionary funding that the President designates as being required to meet an emergency and that the Congress designates as an emergency by statute, would not count against the discretionary caps. If the emergency funding affected mandatory spending, it would not be counted for pay-asyou-go purposes. Because the President now has the authority to require that all items meet the enforcement provisions, other than those the President designates an emergency, the Congress cannot avoid the discretionary caps or pay-as-you-go rule by passing emergency supplemental appropriations bills. The budget law sets overall deficit targets for each year and allows the deficit targets to be adjusted in response to changes in short-run economic conditions in fiscal 1992 and 1993. If economic growth is lower than expected, the deficit target is raised. If eco- 67 nomic growth is higher than expected, the deficit target is lowered. Adjusting for changing economic conditions preserves the "automatic stabilizers" built into spending programs and the tax code. When growth is low, entitlement spending increases and tax revenues fall, increasing the budget deficit but cushioning personal incomes and spending. The opposite happens when growth accelerates. In fiscal 1994 and 1995 the President can choose not to adjust the deficit targets. Several additional reforms have been made in the budget process. Budget resolutions, which are used by the Congress to place spending limits on its committees, will now cover 5 fiscal years. That will make the long-term implications of budget legislation more apparent when members vote on the resolutions. Furthermore, the Social Security trust fund is now protected by "firewalls," procedural rules in both the House and Senate that make it difficult to pass any resolution that would reduce the actuarial balance of the fund. Federal Credit Reform Another important feature of the new budget law reforms the budgetary treatment of Federal credit programs. Government spending on credit activities is best measured by the subsidies embodied in Federal direct loans and loan guarantees. For years, the budget did not record these expenses, which reduced the scrutiny given to credit programs. The Federal Credit Reform Act of 1990, part of the 1990 budget law, requires that the subsidy cost of Federal credit be treated in the same manner as other Federal spending in the budget process. Additional steps were taken to ensure the financial soundness of federally sponsored, privately funded businesses, called government-sponsored enterprises (GSEs). The contingent liabilities incurred by GSEs have risen dramatically. Both the Treasury Department and the Congressional Budget Office are required to submit studies on the financial soundness of these institutions. These studies will provide the background for legislation, to be introduced by September 15, 1991, that will ensure the fiscal health of GSEs (see Chapter 5 for more detail). Budget Outlook for Fiscal 1991 and Fiscal 1992 The consolidated and NIPA deficits are expected to be higher in fiscal 1991 than they were in fiscal 1990. Automatic stabilizers are likely to add to the budget deficit in fiscal 1991, but they will help mitigate the downturn without altering the course of long-term structural deficit reductions. An increase in expected outlays of deposit insurance funds in fiscal 1991 also contributes to the higher projected consolidated budget deficit, but as described earlier, RTC and other deposit insurance outlays have a negligible net effect on 68 capital markets. For fiscal 1991 the consolidated deficit is expected to be $318 billion, compared with $220 billion in fiscal 1990, with deposit insurance outlays projected to rise by $53 billion. On a NIPA basis, which excludes spending for deposit insurance, the deficit is expected to be $204 billion in fiscal 1991, compared with $158 billion in fiscal 1990. For fiscal 1992 both the consolidated and NIPA deficits are projected to improve, compared with fiscal 1991. The consolidated deficit is expected to be $281 billion, and the NIPA deficit is expected to be $182 billion. Much of this improvement is due to a return to more normal growth projected for fiscal 1992. The economic downturn followed by the projected upswing will obscure the tendency for the structural deficit to decline. The structural NIPA deficit is projected to fall by $7.5 billion in fiscal 1991 and then by an additional $16.2 billion in fiscal 1992. SUMMARY • The Administration supports stable, credible policies that provide the flexibility to mitigate the downturn while maintaining a long-term focus on the goal of strong economic growth and low and stable inflation. • An important characteristic of a credible and systematic monetary policy is a commitment to sustain the rate of growth of money and credit during a downturn. That commitment would allow interest rates to decline and mitigate the downturn. • The Omnibus Budget Reconciliation Act of 1990 is a substantial and credible deficit reduction agreement that is expected to reduce the deficit by almost one-half trillion dollars over the next 5 years and add to national saving and long-term growth. • Because of the downturn, the automatic stabilizers are likely to add to the budget deficit in 1991, but they will help bring the economy to a quick recovery without altering the course of long-term structural deficit reductions. THE ECONOMIC OUTLOOK The Administration projects that the downturn in the economy is likely to continue into the early part of 1991 and that recovery is likely to begin by the middle of the year. After the recovery, the economy is then expected to return to a strong growth path of around 3 percent through the mid-1990s. In the long run, projected reductions in labor force growth may lead to lower real GNP growth, unless they are offset by increased immigration or greater labor force participation. 69 THE OUTLOOK FOR THE SHORT TERM Reductions in real consumer income during the last two quarters of 1990, low levels of consumer and business confidence, and continued tight credit conditions all point to a further decline in real activity in the first quarter of this year. There have been eight other recessions since World War II. The average recession lasted 11 months, two lasted 16 months, and one was only 6 months. The typical recession has been associated with a 2.6-percent decline in real GNP from peak to trough, although declines have been as high as 4.3 percent and as low as 1 percent. Compared with the average of these previous recessions, the current downturn is likely to be shallow and relatively short, and the prospects for a recovery of economic growth by mid-1991 are good. The economy continues to have low inventories relative to sales, indicating that a prolonged period of inventory liquidation is not likely in the short term. More importantly, in the early stages of previous downturns both inflation and interest rates were either high or rising. In 1982, for example, the Federal Reserve had to follow a stringent monetary policy to reduce entrenched inflation expectations. In the current situation, the core inflation rate is moderating and is far lower than in the 1974-75 and 1981-82 recessions, partly because the Federal Reserve has followed a credible, systematic policy in recent years. Moderating inflation, coupled with Federal Reserve credibility in fighting inflation, leaves room for the Federal Reserve's policy to soften the downturn without raising expectations of higher inflation. Additional developments in 1990 point to growth recovering in the second half of 1991. Lower long-term interest rates will begin to have positive effects on investment spending. The loosening of monetary policy that occurred in the fourth quarter of 1990 and early 1991 will also begin to affect consumer and business spending in the middle of 1991. Some analysts estimate that it takes at least five quarters for a change in the value of the dollar to have a substantial effect on exports and imports. Thus, the lagged effects on exports of the decline in the foreign exchange value of the dollar are likely to be felt well into 1991. In addition, real net exports are expected to improve because the Nation's major trading partners are expected, on average, to experience stronger growth than the United States. A final important ingredient to recovery is a successful resolution to the Persian Gulf crisis. Oil prices have already declined substantially, which will remove a large drag on the economy. In addition, successful resolution of the crisis will strengthen the economy by boosting consumer and business confidence. The Administration expects real GNP to increase 0.9 percent from the fourth quarter of 1990 to the fourth quarter of 1991 (Table 2-3). 70 This rate is higher than the 0.3-percent growth during 1990 because of the fourth-quarter decline in 1990. The sectors most likely to contribute to economic growth are those that are particularly sensitive to lower interest rates, easier credit conditions, and the lower dollar in 1990. For example, residential construction, consumer durables, and business spending on new plant and equipment are likely to improve as the year progresses. Exports of manufactured goods and farm commodities are likely to rise. A return to higher export growth for manufacturing would also stimulate further spending on new plant and equipment needed to meet the rising export demand. TABLE 2-3.—Economic Outlook for 1991 1991 Forecast 1990 » Item Percent change, fourth quarter to fourth quarter 0.3 Personal consumption expenditures Nonresidential fixed investment Residential investment Federal purchases of goods and services State and local purchases of goods and services 0.9 !9 Real gross national product .5 1.6 1.5 -8.7 5.5 2.5 6NP implicit price deflator Consumer price index 2 Compensation per hour s Output per hour 8 4.0 6.2 -1.8 -.1 -3.9 1.8 4.3 4.3 6.0 1.6 Fourth quarter level Unemployment rate (percent)4. Housing starts (millions of units, annual rate) 1 Preliminary. 8 For urban wage earners and clerical 3 Nonfarm business, all persons. 4 5.8 1.0 6.6 1.2 workers. Unemployed as percent of labor force including resident Armed Forces. Note.—Based on seasonally adjusted data. Sources: Council of Economic Advisers, Department of Commerce, Department of Labor, Department of the Treasury, and Office of Management and Budget. Inflation in 1991 should be lower than in 1990, barring a resurgence of oil price rises or other price shocks. The economic slowdown in 1990 created excess capacity in many industries and eased tightness in labor markets, which will contribute to downward pressure on underlying inflation during the year. In 1992, growth is expected to be robust as the economy continues to rebound from its sluggish growth in 1989-90 and the downturn that began in late 1990. Business investment and construction activity are expected to be especially strong. The unemployment rate is projected to decline. Forecast Uncertainties Economic forecasting is an imprecise science. Natural disasters and other unexpected developments can cause forecasts to go awry. Changes in the policies upon which the forecasts are based can cause actual events to be substantially different from the forecast. 71 Ultimately, economic forecasts are based largely on predictions about human behavior, usually taking the previous patterns of behavior as a guide. But human behavior is complex, difficult to predict, and subject to change. People do not always respond the same way, or with the same speed, in what appear to be similar circumstances. Forecasts made around turning points of the business cycle are even less precise than those made during extended expansions. Moreover, the conflict in the Persian Gulf creates uncertainty about future oil price developments. In the longer term, another important area of uncertainty arises from the possibility of rising protectionism and increasing trade frictions between countries. If the Uruguay Round of the General Agreement on Tariffs and Trade is not completed successfully, countries may begin to close their markets to protect their domestic industries. That would increase the risk of slower long-term growth for all countries. In addition, an increase in the barriers to trade would lead to a decrease in U.S. exports, which have been a key source of growth for the economy over the last few years. The downturn facing the United States and other countries around the world jeopardizes more open trading, because governments and workers typically seek to maintain domestic employment levels by reducing imports during downturns. (Chapter 7 discusses the role open foreign markets play in economic growth.) Table 2-4 illustrates the uncertainties of economic forecasting by providing a range of short-term outcomes. The higher growth alternative is consistent with a sharper and faster rebound in economic activity than the Administration projection. The lower growth alternative is consistent with the behavior of real growth during an average postwar recession. Since real growth, inflation, interest rates, and employment affect Federal spending and receipts, the projected budget deficit also varies across the three projections. A slow recovery with relatively high unemployment, low income growth, and higher interest rates will lower tax receipts and increase spending through automatic stabilizers, leading to a higher deficit. On the other hand, a faster, more robust acceleration in income and employment growth could substantially cut the deficit from the Administration projection. THE PROSPECTS FOR GROWTH IN THE LONGER TERM Short-term projections are heavily influenced by recent events. Developments that temporarily raise or lower the overall level of demand can have a substantial effect on the near-term outlook for real growth and inflation. In the longer term the main determi- 72 TABLE 2-4.—Alternative Projections and Their Impact on the Deficit, 1991-92 Item Calendar year 1991 Calendar year 1992 Percent change, fourth quarter to fourth quarter Real gross national product: Higher growth Administration Lower growth 1.3 .9 -1.3 3.8 3.6 3.5 GNP implicit price deflator: 4.5 4.3 4.1 Higher growth Administration Lower growth 4.2 3.8 3.6 Percent Total unemployment rate: 6.5 6.7 7.1 6.4 6.6 6.9 6.7 6.4 6.2 Higher growth Administration Lower Growth 6.6 6.0 5.7 Interest rate, 91-day Treasury bills: Higher growth Administration Lower growth . . Billions of dollars (Fiscal years) Budget deficit: 204 207 222 Higher growth Administration Lower growth . . .. 186 193 225 Note.—Deficit on a consolidated basis excluding deposit insurance outlays. Sources: Council of Economic Advisers, Department of the Treasury, and Office of Management and Budget. nants of average growth are the factors that influence the overall supply of goods and services generated in the economy. One way to focus on supply factors is to decompose real GNP growth into four components: (1) labor force growth, the growth in the number of people available for work each year; (2) the change in the share of the labor force that is employed, or the employment rate; (3) the growth in the number of hours an employed person works each year, represented as the growth in average weekly hours; and (4) labor productivity growth, the growth in the amount of goods and services that can be produced with an hour of labor. Table 2-5 shows the contribution of various factors in expected average real GNP growth during the next 6 years, compared with previous periods. Growth During the Next 6 Years Economic growth is projected to average about 2.6 percent a year during the next 6 years (see Table 2-6 for year-by-year projections). This projection assumes an average rise of 1.3 percent a year in the labor force, a lower growth rate than in the 1980s. Slower labor force growth results both from slight reductions in projected labor 73 TABLE 2-5.—Accounting for Growth in Real GNP, 1948-96 [Average annual percent change] 1948 IV 1973 IV 1981 III 1990 III 1981 III 1981 III 1990 III 1996 IV to to Item to to GROWTH IN: 15 .2 18 1.1 .4 0.9 1.8 _l 2.4 _4 1.6 2 1.3 .1 17 .1 20 .1 1.8 1.4 1.8 _4 2.1 -.7 2.1 .0 1.1 _.l 9) EQUALS- Hours of all persons (nonfarm business) 10) PLUS: Output per hour (productivity, nonfarm business) 13 2.0 13 2.1 1.0 1.0 1.8 11) EQUALS: Nonfarm business output 12) LESS- Nonfarm business output as a share of real GNP 2 3.3 o 2.0 _1 3.1 4 2.8 2 13) EQUALS: Real GNP 3.3 2.2 2.8 2.6 1) Civilian noninstitutional population aged 16 and over 2) PLUS: Civilian labor force participation rate 3) EQUALS: Civilian labor force 4) PLUS- Civilian employment rate 5) EQUALS- Civilian employment 6) PLUS: Nonfarm business employment as a share of civilian employment l ... 7) EQUALS: Nonfarm business employment 8) PLUS- Average weekly hours (nonfarm business) 1 Line 8 six translates the civilian employment growth rate into the nonfarm business employment growth rate. Line 13 translates nonfarm business output back into output for all sectors, or GNP, which includes the output of farms and general government. Note.—Data may not add due to rounding. Time periods for the first two columns are from business cycle peak to business cycle peak to avoid cyclical effects. Sources: Council of Economic Advisers, Department of Commerce, Department of Labor, Department of the Treasury, and Office of Management and Budget. force participation rates and from slower growth in the workingage population. In the postwar period, growth in the working-age population averaged 1.5 percent, but it is predicted to rise at only a 0.9-percent rate over the next 6 years. Labor force participation and population growth projections also depend on factors such as immigration. The labor force growth projections assume lower levels of immigration than in the 1980s. However, the Immigration Act of 1990, which allows a substantial increase in immigration and emphasizes skill-based entry criteria, may increase the size of the labor force, which would lead to faster labor force growth than reflected in Table 2-6. It could also increase productivity. Decreases in the unemployment rate are expected to contribute less than 0.1 percentage point on average, each year to real GNP growth from 1991 to 1996. A fall in the unemployment rate in the 1991-92 period, as the economy rebounds from the current slowdown, contributes the most to GNP. As the economy nears full employment, increases in employment make smaller contributions to growth. Average weekly hours are expected to decline slightly and to have little effect on average real GNP growth during 1991-96. In 1991 and 1992, hours seem likely to recover somewhat from their cyclically low levels in 1990. In the latter part of the period the long-term downward trend in average weekly hours is expected to reassert itself. 74 TABLE 2-6.—Administration Economic Assumptions, 1991-96 Item 1990 » 1991 1992 1993 1994 1995 1996 Percent change, fo urth quarter to fourth quarter Real GNP 03 09 36 3.4 3.2 3.0 30 Real compensation per hour * 1.8 1.6 2.0 2.1 2.0 2.0 2.0 _.l 1.6 1.9 1.9 1.9 1.9 1.9 6.2 4.3 3.9 3.6 3.5 3.4 33 Output per hour * .. Consumer price index a /tnnual level 4 Interest rate, 91-day Treasury bills (percent) Unemployment rate (percent)6 7.5 6.4 6.0 5.8 5.6 5.4 5.3 119.6 119.0 120.8 122.9 125.1 127.3 129.2 5.4 6.7 6.6 6.2 5.8 5.4 5.1 1 2 Preliminary. Nonfarm business, 8 all persons. For urban wage earners and clerical workers. > resident Armed Forces. • Unemployed as percent of labor force including resident Armed Forces. Sources: Council of Economic Advisers, Department of Commerce, Department of Labor, Department of the Treasury, and Office of Management and Budget. A key assumption underlying the average 2.6-percent growth rate is that labor productivity will average 1.8 percent over the forecast horizon. After 1991, assuming the Administration's progrowth initiatives are adopted, underlying economic growth is expected to approach 3 percent and labor productivity is projected to be 1.9 percent. That is very close to the 1.7-percent average rate of productivity growth since 1950. It is below the 2.4-percent rise from 1950 to 1969, but higher than average productivity growth in the 1980s. This rise in labor productivity will be facilitated by the higher level of capital accumulation that results from lower Federal borrowing and lower real interest rates. Inflation and interest rate projections are consistent with the longer term assumptions concerning monetary and fiscal policy. These projections reflect a monetary policy aimed at gradually reducing the underlying inflation rate over the next 6 years. In response to lower inflation and reduced Federal borrowing requirements, interest rates, both nominal and real, are likely to decline. Growth Beyond the Mid-1990s For the years beyond the mid-1990s, demographic factors suggest that the average rate of real GNP growth will slow. Labor force growth, for example, is expected to decline substantially throughout the next 40 years. Since 1948 the labor force has grown by 1.7 percent a year. However, from 1990 to 2010 labor force growth is projected to average about 0.9 percent a year and is projected to decline 0.2 percent a year from 2010 to 2030. That is consistent with a projected slowdown in population growth and a projected decline in the overall labor force participation rate. 75 Population growth (the Census Bureau middle projection) is projected to average just under 0.5 percent a year from 1990 to 2030, less than half the rate of annual average population growth between 1960 and 1990. The overall labor force participation rate is projected to rise through about 2000, the last year the baby-boom generation is entirely within the range of working ages that have traditionally had the highest participation rates. As the population ages, the overall participation rate would decline even without a fall in the participation rate of any single demographic group. Overall labor force participation is projected to show little net growth between 1990 and 2010 and to decline after 2010. The projection of slowing real GNP growth over the very long term rests upon demographic projections that are largely extrapolations of current and past population growth and labor force behavior. Several factors would cause the simple extrapolations to understate the average rate of economic growth: an unexpected increase in fertility rates; an increase in labor force participation rates for older Americans, perhaps due to increasing longevity; or an increased number of highly skilled immigrants. Nevertheless, the simple extrapolations provide a benchmark against which longterm growth projections can be compared. It is also important to note that although real GNP growth is likely to decline over the next 40 years, this does not suggest that productivity growth will decline. With real output per hour rising at 1.9 percent a year, the standard of living would more than double by 2030. Sound policies that create incentives for saving and investment and a better educated work force will help to ensure the maximum sustainable rise in the standard of living. SUMMARY • The downturn that began in the second half of 1990 is expected to continue into early 1991, with the economy recovering by mid-1991. While future oil prices remain uncertain, oil prices in the range they reached following the successful beginning of Operation Desert Storm will reduce the drag on the economy caused by the oil shock in the latter half of 1990. • Economic activity will be further strengthened by lower interest rates and the decline in the value of the dollar that occurred in 1990. Inflation is projected to moderate, barring an unexpected rise in oil prices above their late 1990 levels. • In the longer term, several factors have paved the way for increased private capital accumulation and faster productivity growth. The economy's underlying medium-term growth potential is likely to be about 3 percent a year. Inflation and nominal interest rates are projected to decline. 76 • In the very long term, the average rate of real GNP growth is likely to fall, due to a slower growing labor force. If productivity growth holds up, living standards will continue to increase. CONCLUSION The economy, which was already growing sluggishly for various reasons, entered a recession in the latter part of 1990. The downturn was caused in large part by the economic effects of the oil shock following Iraq's invasion of Kuwait. Recovery is likely to begin by mid-1991, making the downturn relatively mild. In contrast to other slowdowns, the economy entered this recession with low inventories, thereby decreasing the likelihood of substantial further cuts in production. Unlike previous postwar recessions when inflation was rising, in the current situation core inflation is relatively low and money growth has been slow, thus there is room for flexibility in Federal Reserve policy to mitigate the downturn without raising inflation expectations. Declines in the exchange value of the dollar in 1990 and the monetary policy easing that occurred at the end of 1990 and early 1991 will also help to increase growth in 1991. Over the longer term, the new multiyear, enforceable budget law will lower the structural Federal deficit and, therefore, Federal borrowing requirements. Combined with a monetary policy aimed at maintaining strong economic growth while gradually reducing the underlying inflation rate, both nominal and real interest rates are likely to decline. Credible monetary policy and growth-oriented fiscal policy will facilitate higher levels of capital accumulation, raise labor productivity, and enhance the economy's growth potential. 77 CHAPTER 3 Oil Price Shocks and Economic Policy IN THE SECOND HALF OF 1990, the world economy was hit with a sudden oil price increase reminiscent of the 1970s. From an average of about $17 a barrel in June 1990, the price of oil rose to an average of $36 in October, before declining in November and December and again in January 1991. This oil price shock was triggered by the Iraqi invasion of Kuwait, and the U.S.-led response to this act of aggression averted an even larger and longer lasting oil price shock. Because oil is used widely, large and abrupt increases in its price have significant implications for the world economy and for both macroeconomic policy—fiscal and monetary policy—and policies concerned with energy and other markets. During 1989 the United States and the other major industrialized market economies used about 37 million barrels of oil products each day. Other countries, including less developed countries, consumed an additional 28 million barrels of these products. In the United States, uncertainty about oil prices and the resolution of the Persian Gulf situation contributed to the erosion of consumer and business confidence evident at the end of 1990. It is widely expected that as the situation is resolved, confidence will rise and oil prices will stabilize in a range not far from that prevailing before the price shock began. But even then considerable uncertainty about future oil prices is likely to remain. Perceptions about the effects of oil price shocks on the U.S. economy reflect, in large part, the extremely high inflation and unemployment rates recorded at the time of the oil price shocks of 197374 and 1979-81. At the time of the first oil price shock, the inflation rate, as measured by the consumer price index, soared to 12.3 percent in 1974, followed by a rise of the unemployment rate to a postwar record high of 9 percent in May 1975. Similar adverse effects occurred at the time of the second oil price shock. Inflation rose to 13.3 percent in 1979, and the unemployment rate eventually reached 10.8 percent, a new postwar high, in November 1982. Although the recent oil price shock increased inflation and unemployment, there is no reason to believe that the deterioration of economic performance will be as large or as long lasting as the experience of the 1970s might suggest. Not only does it now appear that 79 this shock will be less severe, but the U.S. economy is now better able to adjust to any given change in oil prices. Compared with the 1970s, more systematic macroeconomic policies have kept the underlying rate of inflation relatively low and relatively stable in recent years. The resulting credibility that inflation will be contained enables monetary policy to respond to the recent shock without causing a prolonged recession or a permanent increase in inflation. In addition, a policy of deregulation has increased the flexibility of energy and other markets to respond to price shocks, and the amount of oil used has decreased relative to the size of the economy. With the benefit of hindsight, it is clear that misguided macroeconomic policies in the period preceding the previous oil price shocks brought on high and rising underlying inflation. That made it unlikely that a more expansionary monetary policy would have been able to reduce the ensuing output declines without producing unduly large increases in prices. It is just as clear that misguided energy policies, both those in place when the shocks hit and those instituted afterward, significantly reduced the economy's flexibility and thus its ability to temper the effects of the shocks. It was regulation, and not events in the Middle East, that forced U.S. consumers to wait in long lines to buy gasoline. Historical experience, along with economic research on the oil price shocks of the 1970s, has taught us much about designing macroeconomic and energy policies for a world subject to such shocks. Given the prospect of continuing uncertainty regarding future oil prices, it is essential that our policies correctly reflect the meaning and importance of energy security, let markets work to balance the forces of supply and demand, and set out a credible long-term course for the future. SIZE AND DURATION OF OIL PRICE SHOCKS Most price changes merit little attention from policymakers. Indeed, prices that adjust continually to reflect changing conditions are a sign of a healthy, flexible economy. A price shock, on the other hand, is a large and unexpected change in the price of a commodity that can affect the economy as a whole. The most important price shocks to the U.S. economy during the past two decades have been changes in the price of oil. Because oil is consumed in significant amounts and is used intensively in the production of other goods, and because the United States imports a large amount of oil, oil price shocks can have large economy-wide repercussions. RECENT OIL PRICE MOVEMENTS The recent increase in oil prices began in July 1990, when the members of the Organization of Petroleum Exporting Countries 80 (OPEC) began negotiations to reduce their supply of oil to the world market. The spot market price, the price at which crude oil for near-term delivery is bought and sold, rose from an average of about $17 a barrel in June 1990 to almost $21 at the end of July. After Iraq invaded Kuwait on August 2, the spot price rose quickly, reaching about $28 a barrel on August 6. The spot price went as high as $40 a barrel in mid-October and then generally declined through the end of 1990. Soon after the start of Operation Desert Storm in mid-January 1991, the spot price fell to about $20 a barrel, not far from its level just before Iraq invaded Kuwait. Soon after Iraq's invasion, uncertainty concerning the timing of the resolution of the Gulf crisis increased uncertainty about future oil supplies, which in turn increased the precautionary demand for oil inventories. Several countries began to increase their oil production in August, and by November these additional supplies had completely offset the loss of 4-3 million barrels in daily exports from Iraq and Kuwait. However, these production increases left less standby crude supply and unused refining capacity to meet future contingencies. Changes in the spot price of oil reflect uncertainty about future supply conditions. However, the price of oil expected to prevail further in the future has changed relatively little since the oil price shock began; the price of oil to be delivered near the end of 1991 has typically differed by less than $4 a barrel from its pre-invasion level. It is clear that the proximate cause of the rapid oil price increase late in the summer of 1990 was Iraq's invasion of Kuwait and its threat to Saudi Arabia. Had Iraq dominated both Kuwait and Saudi Arabia, it would have controlled almost one-half of the world's proven oil reserves. The international community responded to this aggression vigorously, deploying multinational forces and initiating an embargo against Iraq. These responses to the Iraqi threats to both peace and economic security have averted even sharper and longer lasting increases in the price of oil and a greater deterioration of economic conditions. COMPARISON WITH PREVIOUS SHOCKS The oil price shock that began in 1990 differs significantly from the price shocks of the 1970s in several respects. Before the sharp 1973-74 increases, oil prices had fallen for several decades relative to the prices of nonenergy goods and coal. That decline in real oil prices encouraged greater oil use and discouraged further exploration and investment in oil production. By the early 1970s the rapidly growing oil demand brought on by robust growth of the world economy led to an increasingly tight world oil market. OPEC began to engineer a series of large price increases, eventually tripling the world price of oil from 1973 to 81 1974. Oil prices remained relatively stable until 1979, when the second price shock, often associated with the Iranian revolution and the outbreak of the Iran-Iraq war, began. By the end of 1981 oil prices had more than doubled. Both of the earlier shocks followed several years of stable or slowly falling oil prices. In contrast, oil prices were highly volatile before the recent oil shock. In the first half of 1986 oil prices fell dramatically, plummeting by more than 50 percent to about $12 a barrel in July 1986. Between 1987 and 1989 oil prices fluctuated within the $13 to $22 range. During 1990 oil prices fell from a high of over $23 in early January to a low of less than $16 in late June. Since the recent shock began in July, world oil prices have continued to be far more volatile than they were in the initial stages of earlier shocks. Another difference is the duration of the shocks. In both of the earlier oil shock periods, oil prices increased steeply and fairly steadily over a period of more than 2 years. In the recent episode, oil prices rose substantially through mid-October, generally fell through the end of 1990, and declined sharply after the successful start of Operation Desert Storm in mid-January 1991. SUMMARY • Price shocks are large and unexpected changes in the price of a particular commodity important to the economy as a whole. Oil price shocks are the most common and most significant price shocks. • The recent price shock differs significantly from the oil price shocks of the 1970s. In addition to being less severe, it followed a period of volatile prices in contrast to the period of relatively stable prices that preceded each of the earlier shocks. THE EFFECTS OF OIL PRICE SHOCKS The effect of a shock on the performance of the economy depends on many factors. In addition to the macroeconomic and energy policies pursued before and during an oil price shock, the underlying structure of the economy determines how it is affected by a shock of a given magnitude and duration. In this section the effects are discussed in the context of policies that do not change in response to shocks, and, in particular, of a monetary policy that does not adjust money and credit growth. EFFECTS ON INFLATION Since oil products are used both directly and as inputs to the production of other goods and services, increases in oil prices directly and indirectly raise the overall price level unless rapid offsetting 82 wage and price declines occur elsewhere in the economy. Higher prices for oil immediately raise the price of gasoline, heating oil, and other petroleum products and thereby directly affect the general price level (Box 3-1). The larger the share of expenditures devoted to petroleum products, the larger the direct contribution of oil price shocks to inflation. Indirect effects arise because prices for goods and services often reflect the costs of oil used in their production or distribution. The more oil intensive the economy's production processes, the larger the indirect contribution of oil price shocks to inflation. By raising the overall level of prices, an oil shock may eventually also lead to a higher level of nominal wages. That in turn may lead to further price increases, which would amplify the increase in the aggregate price level caused by the oil shock. The United States is fortunate that its wage-setting arrangements do not rapidly transmit the higher inflation caused by an oil price shock into excessive increases in wages and salaries. Some have suggested that the centralized bargaining more commonly used in many European economies to set wages allows such an excessive reaction of wages to higher prices, even when there have been no compensating productivity gains. The more gradual wage adjustments characteristic of 83 the relatively decentralized labor markets in the United States tend to raise labor costs less when oil price shocks take place. It is important to distinguish between continuing inflation and a once-and-for-all increase in the price level. An increase in oil prices raises overall prices to a higher level, producing a bout of temporarily higher inflation while prices are moving toward this higher level. As prices finish adjusting to the oil price shock, however, this component of inflation disappears. The inflation rate then reverts toward the underlying rate of inflation, which depends on the longrun growth rate of money and credit and of the economy's productive capacity. Oil intensity and, more generally, energy intensity are important indicators of the sensitivity of the general price level to an oil price shock: the greater the intensity, the greater the effect of a price shock on the general price level. The energy intensity of the U.S. economy, measured as the ratio of primary energy use to real national output, decreased by more than 28 percent between 1972 and 1989 (Chart 3-1). At the same time, the share of oil in total energy Xuse fell from 46 percent to 42 percent, with an even larger decline, from 30 percent to 21 percent, outside the transportation sector. Chart 3-1 Energy Consumption per Dollar of GNP Energy intensity in the United States has fallen substantially since the 1973-74 oil price shock. Thousand Btu per 1982 dollar of GNP 28 26 24 22 20 18 I 1949 I 1953 I I 1957 1961 I 1965 I I 1969 1973 Source: Department of Energy. 84 I 1977 I 1981 1985 1989 The trend toward lower energy intensity in the United States, which mirrors a similar trend in other major industrialized countries, reflects two forces. First, the efficiency of residential, commercial, industrial, and transportation energy use has improved significantly since 1973. For example, the average energy intensity of steel production fell by 20 percent between 1973 and 1987, and the amount of energy used to heat 1 square foot of residential space declined by 30 percent. Many of these adjustments reflect a market economy's response to higher relative prices of oil after the price shocks of 1973-74 and 1979-81. At the same time, the mix of outputs in the economy as a whole has shifted away from energyintensive heavy industrial products, such as steel, toward less energy-intensive products and services. Energy and oil intensity in the United States is somewhat higher than in several other large industrialized nations. In addition, oil products are more highly taxed in these countries, so that any given dollar increase in crude oil prices will produce a smaller percentage increase in the prices of gasoline and other oil products than in the United States. These differences suggest that oil price shocks will have a larger effect on inflation in the United States than in these other countries. EFFECTS ON REAL GROWTH The major macroeconomic effects of an oil price shock stem from reduced demand for goods and services by consumers and businesses. This decline in real spending will lead to temporarily slower growth of real gross national product (GNP) and employment. The reduction in output may be large enough to cause a recession, especially if the oil price shock occurs in a weak economy. However, even if oil prices were to remain high, these demand effects are temporary, and eventually the economy would return to its longrun growth path. Terms-of-Trade Effects Higher world oil prices mean that consumers must pay more to foreign suppliers for each barrel of imported oil, leaving them less to spend on goods produced in the United States. Consumers who use relatively more oil to heat homes in colder climates, for example, or to commute longer distances, will be relatively more affected by oil price increases. Hence, consumer spending is likely to fall off more in regions of the country that use relatively more oil. Spending in oil-producing regions in the United States, on the other hand, might rise as incomes increase, especially if higher oil prices lead to more exploration and increased drilling. On balance, however, the overall effect on the economy is to reduce consumer spending. 85 The increase in the relative price of imports affects the terms-oftrade; that is, the terms at which U.S. goods are traded for imports. At current U.S. oil-import levels of more than 7 million barrels daily, each $10 increase in the per-barrel price of oil would, if it persisted for a year, shift about $26 billion from the United States to foreign suppliers of oil. As a result of this increased expenditure for imported oil, the Nation's trade deficit is likely to rise. Money and Credit Market Effects Another important channel through which demand is reduced is through the higher overall price level generated by the oil price shock. The higher price level results in reduced real supplies of money and credit—nominal money or credit deflated by the price level—unless nominal supplies are raised proportionately. Lower real supplies of money and credit cause a tightening in credit markets and thereby raise interest rates above what they would otherwise be. Empirical analysis indicates that the adverse effect on output and unemployment of an oil price shock that stems from the decline in the real volume of money and credit is quantitatively significant. Of course, this credit tightening effect does not take place in the absence of other factors that might affect interest rates. In the second half of 1990, for example, the weakening economy and the new budget legislation started interest rates on a downward trajectory. But, in general, lower real money and credit growth rates that result from an oil shock would tend to keep interest rates higher than they otherwise would be. Higher interest rates reduce household spending on consumer durables like automobiles and furniture, which are often purchased on credit. The tightened money and credit market conditions are also likely to lead to reduced business investment spending for equipment, factories, and inventories. Residential construction may also be adversely affected by the rise in interest rates. It is important to emphasize that both short- and long-term interest rates affect spending. Long-term interest rates are importantly affected by expectations about future short-term interest rates. The shorter and milder an oil price shock is expected to be, the less expectations about future short-term interest rates would be likely to change. Consequently, long-term interest rates would also be expected to change less. Thus, spending that depends on long-term interest rates would not be affected as much by a price shock that is expected to be shorter and milder. Confidence Effects Survey measures of consumer and business confidence dropped dramatically when the recent oil price shock began. That decline may have reflected not only lowered expectations of upcoming eco- 86 nomic performance, but also uncertainty about oil prices, about economic conditions generally, and about prospects for war. Such a loss of confidence typically leads consumers to postpone purchases of big-ticket items such as new homes, furniture, automobiles, and other consumer durables. Heightened uncertainty also induces businesses to postpone investment in plant, equipment, and inventories. The decline in consumer and business confidence in the second half of 1990 may have reflected the perception that the oil price shocks of the 1970s were primarily responsible for the substantial increases in inflation and unemployment rates that ensued. Although the oil price shocks of the 1970s did raise inflation and unemployment rates, the misguided macroeconomic policies carried out around the time of the shocks contributed significantly to those increases. Consumers and businesses therefore may have overestimated the likely adverse economic effects of the recent oil price shock. Overall Demand Effects The terms-of-trade, credit tightening, and confidence effects will reverberate through the economy. Slower consumer spending will lead to a larger cumulative effect on economy-wide spending and income, as growth of output and employment, and thus of income, slow in response to the initial slowdown in spending. If the oil price shock is transitory, as expected, this process will be reversed when prices fall. Structural changes and reforms since the 1970s have made both energy and other markets more flexible and therefore better able to respond to changes in energy prices. In addition, the decline in oil intensity means that each dollar increase in the price of oil puts less upward pressure on costs and therefore on prices. Since the smaller increase in the price level reduces the real supplies of money and credit by a smaller amount, there is less upward pressure on interest rates. And smaller interest rate increases, in turn, mean that spending declines less. For the same reason, countries that have lower oil intensity may experience smaller interest rate increases and spending declines than countries with greater oil intensities. In addition, the now-deregulated energy markets in the United States allow the economy to adjust more flexibly and rapidly to oil price increases, as do energy futures markets, which are discussed below. Effects on Productive Capacity An oil price shock may temporarily reduce the economy's capacity to supply goods and services until producers' plant and equipment and workers' skills realign to higher oil prices. The amount by which capacity is curtailed is influenced significantly by the 87 flexibility and responsiveness of markets. Shifts in the demand for various goods and services as a result of an oil price increase alter the demand for workers in regions and industries that produce these goods and services. Job relocation involves costs and takes time. During the transition, some additional unemployment may result. After an oil price increase, production processes are likely to be too reliant on oil and energy. Depending on how long businesses expect a new, higher level of the relative price of oil to remain in effect, they may switch to production processes that use less energy. They may also produce fewer energy-intensive goods and services, sales of which will decline when higher energy costs are passed on to consumers. Thus, it would be reasonable to expect a shift of plant and equipment and workers' skills away from oil-intensive transportation and the sectors that rely heavily on transportation and toward less oil-intensive sectors. An oil price shock that is expected to be short-lived would not require substantial adjustments of this kind, and associated frictional losses may be minimal. ESTIMATES OF THE EFFECTS Economists generally agree that output and inflation respond to oil price shocks as described above. However, there is more disagreement and uncertainty about the size of the effects. By examining a number of econometric models, which reflect the experience with previous oil shocks, quantitative ranges for the effects that reflect this uncertainty can be developed. The ranges of magnitudes reported here are based on a variety of models and reflect some, but not all, of the structural and expectations effects discussed above. For example, the analysis does not explicitly take into account the economy's reduced energy intensity since the 1970s. Most models based on historical data reflect the past, including past energy intensity, and are thus quite likely to overestimate the effects of oil price shocks on today's economy. In addition, reduced regulation, particularly of the energy sector, now permits the economy to respond more freely to changing oil prices. Thus, historical relationships may somewhat overstate the impact that an oil price shock would have today. Another factor that the analysis has not explicitly allowed for is the decline in consumer and business confidence that may result from an oil price shock, a factor that has been important in the second half of 1990. A factor that the analysis does endeavor to incorporate is that both consumers and businesses base their actions on expectations of the future, sometimes by using data from futures markets. This forward-looking behavior allows a quicker adjustment of output 88 and prices to changing economic conditions. Moreover, long-term interest rates may change in anticipation of upcoming conditions, rather than lagging behind them. Of the econometric models examined, those that incorporate forward-looking behavior suggest that output growth is likely to be curtailed less than other models predict. This difference in models is reflected in the ranges. Consider, for example, the effects on the U.S. economy of an increase in the price of oil of 50 percent from a level of $20 that lasts for four quarters before returning to pre-shock levels. Smaller or shorter oil price shocks will have commensurately smaller effects, while larger shocks will have more serious consequences. Impact on Output Following the onset of an oil price shock, output growth would be expected to slow as the factors described above suppress real demand growth. The diversion of more income to pay for imported oil reduces real consumer spending on U.S. goods and services. In addition, the higher price level reduces the real supplies of money and credit, thereby raising interest rates and reducing credit-sensitive expenditures compared with what they would otherwise be. The spending declines and subsequent repercussions resulting from the four-quarter, 50-percent oil price shock would be expected to reduce real GNP growth by about 1 percentage point to IVfe percentage points on average over the four quarters that follow the onset of the shock. The decline in real output is also likely to slow employment growth. The unemployment rate would be expected to rise by an average of about one-half of 1 percentage point over the same four-quarter period. In the year following the beginning of the shock, higher imported oil prices would raise the trade deficit by about $15 billion to $25 billion. There is less certainty about the quarter-by-quarter pattern of the effects on the economy than about the sizes of the four-quarter effects reported above. The output declines are likely to be largest in the quarters immediately following the onset of an oil price shock. The effects of the oil shock on real GNP growth are expected to diminish as time passes, however. As the frictions associated with a shock dissipate, the economy would be expected to resume growth along its longer run growth path. And as it recovers toward that path, the economy is forecast to grow faster than it would otherwise. Thus, after having its real growth initially suppressed, the economy rebounds. Impact on Inflation Such an oil price shock would also be expected to raise inflation, but, as with the output effects, the change is temporary. As measured by the consumer price index, the inflation rate is forecast to exceed what it would have been otherwise by about IVi percentage 89 points to 2l/2 percentage points over the four quarters following the onset of the shock. The GNP implicit price deflator measures the prices of all the goods and services produced by the Nation. Inflation as measured by the GNP deflator would be less affected because petroleum products constitute a larger share of household expenditures than of total national production. This illustrates the point that the effects on prices, and on the economy generally, are related to oil intensity. The GNP deflator in the four quarters following the onset of the shock could be expected to be about threefourths of 1 percentage point to IVfe percentage points higher than it would have been otherwise. The temporarily higher inflation rate would be expected to reach its peak in the quarter after the shock begins, and would taper off thereafter. Though inflation is raised on average during the four quarters following the beginning of the shock, much of the increase takes place in the first two quarters. By the fourth quarter, inflation would likely revert to near its underlying rate. To the extent that oil prices fall, the mirror image of these processes would be observed; inflation would then be expected to be temporarily lower than otherwise. The temporarily changed pattern of inflation during and after the large, sharp decline in oil prices in 1986 demonstrated how these effects operate. After having been relatively low and relatively steady at about 4 percent for a few years, inflation dropped sharply to about 1 percent after oil prices plummeted in 1986. It then returned to near its earlier level after oil prices stopped their decline. SUMMARY • An abrupt increase in oil prices temporarily raises the inflation rate and lowers the real growth rate. • Oil price shocks lower employment and output by reducing the income consumers have to spend on goods produced in the United States and by reducing the real supplies of money and credit. • Structural changes in the energy sector have significantly increased the flexibility and reduced the vulnerability of the U.S. economy to oil price shocks. • The energy intensity of most industrialized economies and oil's share in total energy use have fallen significantly since the 1970s, reducing their sensitivity to oil price shocks. MACROECONOMIC POLICIES The Administration remains committed to the goal of strong economic growth. Keeping inflation low and stable is essential to achieving this goal. Although the recent oil price shock has reduced 90 economic growth and raised inflation, the proper design of macroeconomic policies can ensure that these effects will be temporary and that the economy will soon return to solid growth with lower inflation. THE ADVANTAGES OF SYSTEMATIC POLICIES Systematic monetary and fiscal policies directed toward longterm goals are likely to lead to better economic performance than a sequence of discretionary reactions to economic news aimed at affecting near-term economic conditions. Businesses and households base their assessments of the future on their expectations of interest rates, inflation, tax rates, and other important economic variables. Such forward-looking assessments are important factors in their plans and decisions. Frequent and unanticipated policy changes produce uncertainty in the private sector and reduce the ability of businesses and households to make informed long-term plans. One of the most important advantages of systematic policies is that they lead to policy credibility, the belief that policies will be adhered to consistently over the long run. Credibility permits policymakers to respond predictably to shocks of various kinds without creating undue concern that long-term expectations will change inappropriately. Even though it might be quite complex, a well-designed systematic policy is likely to lead to better economic performance than either discretionary policies or rigid policies. For example, some argued in the 1960s and 1970s that the growth rate of the money supply should be held constant. While such a policy might have been appropriate at one time, it is clearly too rigid because of shifts in the relationship between money and income in response to deregulation and innovation in the financial sector. Adhering to a systematic policy may require changes in instruments such as the money supply growth rate or interest rates, for example, to address shocks such as sudden steep increases in oil prices and shifts in the relationship between the money supply and income. Under a systematic policy, money and credit growth rates might change in the wake of an oil price shock or other major disturbances to ameliorate the adverse effects on unemployment and output. Once the price shock has passed through the economy, the policy would readjust monetary and credit policy instruments in a way that would continue to guide the economy toward its longer run goals. The response to the October 1987 stock market plunge illustrates how monetary policy can respond predictably and temporarily to a shock without unduly raising long-term inflation expectations. In the period following the decline in the stock market, the Federal 91 Reserve temporarily increased the availability of bank reserves. Because the Federal Reserve's credibility had been enhanced by its having curbed inflation, the public believed that this action was temporary, and therefore it did not change its long-term inflation expectations. And when the Federal Reserve judged that this financial shock had passed through the system, it adjusted the supply of bank reserves to a path consistent with progress toward its goal of price stability. DESIGNING FISCAL AND MONETARY POLICIES Both fiscal policy and monetary policy have a role to play in mitigating the impact of a price shock and allowing the economy to return quickly to its long-run growth path. Changes in government spending or tax receipts, which would occur automatically as the economy fluctuates, alter the aggregate demand effect of a price shock. Similarly, the Federal Reserve's policy tools can influence money growth and interest rates to temper the shortfall in production and employment. Fiscal Policy A well-designed fiscal policy will automatically respond to an oil price shock. To the extent that real GNP, incomes, and employment decline, income tax revenues and other income-related tax payments will automatically fall and transfer payments provided by programs like unemployment insurance will automatically rise. These "automatic stabilizers" will cushion the reduction in aftertax income and spending power and thereby help sustain spending and employment. Such automatic stabilizers mean that the deficit will automatically rise as tax receipts fall and government expenditures rise relative to what they would otherwise be. The Omnibus Budget Reconciliation Act of 1990 makes changes in the budget deficit reduction law that give these automatic stabilizers more flexibility to work effectively. The previous formulation of the deficit reduction law set nominal dollar deficit targets that could be suspended if economic growth was forecast to be less than 1 percent for two consecutive quarters. Otherwise, deficit targets did not change even if oil price or other shocks changed macroeconomic conditions. In this sense, the old law actually put constraints on the operation of these automatic stabilizers. The revisions embodied in the new budget law require the deficit targets to be adjusted through fiscal 1993 in response to changes in economic conditions as reflected in annual forecasts made by the Administration. The new budget legislation has other systematic and credible features: It sets caps on spending levels for the next 5 years, phases in spending and revenue changes over 5 years to avoid causing a shock to aggregate demand, and provides for more stringent en- 92 forcement of the budget rules. The recent oil price shock does not require any alteration in this long-run plan for attaining fiscal balance. It is appropriate for monetary policy to respond to this change in fiscal policy by permitting the decline in interest rates that would accompany the anticipated decline in future government borrowing brought on by the deficit reduction plan. Adjusting the instruments of monetary policy in this direction can encourage the private sector to increase spending, especially on growth-enhancing investment projects, enough to offset declines in employment and production that might otherwise arise from the shift in fiscal policy. The oil price shock does not alter the appropriateness of this monetary policy response. Additional discretionary changes in fiscal policy designed to offset the temporary effects of the price shock would not be appropriate, although tax reform is still needed to improve incentives for saving and investment. Discretionary changes in the instruments of fiscal policy, such as changes in public spending, require legislative approval, which typically takes many months. It may well be that the effects of the recent oil price shock will not last as long as the gestation period for a discretionary fiscal policy response. As a result, automatic fiscal policy responses are likely to be more effective than discretionary responses in addressing oil price increases and many other types of shocks. Monetary Policy Monetary policy has a key role to play in ensuring that a onetime increase in oil prices is not converted into an increase in the underlying inflation rate—via a wage-price spiral, for example. The U.S. economy has benefited during the recent expansion from a monetary policy that has helped keep the underlying rate of inflation relatively low and relatively steady compared with the 1970s. This move to prevent inflation from rising as economic growth quickened in 1987-88 has prevented a repetition of a key policy mistake of the 1970s: that is, policy spurring the economy along a path of accelerating inflation. The credibility that this experience has built, combined with the recent relatively low inflation rates, gives the Federal Reserve more elbow room to allow inflation to rise temporarily when a price shock strikes without causing long-run inflation expectations to rise. As long as the relationship between the M2 measure of the money supply and GNP remains stable, the Federal Reserve can lead the economy toward lower inflation by gradually reducing the long-run growth of the money supply. Such a policy does not preclude allowing higher or lower growth rates of M2 over shorter periods, as called for either by shocks to the relationship between the money supply and GNP or by other shocks. 93 Given the stability of the relationship between GNP and money, keeping money supply growth from falling in the face of a downturn in GNP caused by an oil price shock is essential to preventing an unnecessarily large and prolonged decline in economic growth. Depending on the size of the shock, a temporary increase in money supply growth might be necessary to stabilize economy-wide spending and to help offset ,the decline in GNP that occurs when an oil price shock reduces real income and raises the general price level. Maintaining money supply growth or increasing it somewhat may result in a temporary increase in nominal GNP growth. But eventually nominal GNP growth should return to a path consistent with low and stable inflation. Given credible monetary policy, an increase in nominal GNP growth need not cause an increase in long-run inflation expectations. A one-time increase in the price of oil would warrant only a short-run increase in nominal GNP growth. The oil price shock itself will cause only a temporary increase in the inflation rate if nominal GNP growth reverts to a rate consistent with the trend toward low and stable inflation after the one-time adjustment attributable to the price shock. LESSONS FROM PREVIOUS SHOCKS The experiences of the United States and other large industrialized countries during the previous oil price shocks show the crucial role that maintaining credible and systematic long-run fiscal and monetary policies play in allowing the economy to respond relatively smoothly. Before the onset of each of the oil shocks of the 1970s there was considerable concern that the overly expansionary monetary and fiscal policies during the preceding years were building increasingly high rates of inflation into the major industrialized economies. Thus, the monetary policy authorities had relatively little credibility: There was little reason to believe that inflation would be restrained even before the oil price shock occurred. Chart 3-2 plots U.S. consumer price inflation during the 1970s, with a focus on the periods before and after oil price shocks. The chart reveals the often overlooked fact that the inflation rate was rising, and rising at a fairly rapid rate, in the period preceding each of the oil price shocks of the 1970s. After having been very low and stable until the mid-1960s, inflation then rose steadily, apart from its temporary suppression when price controls were in effect in the early 1970s. The oil shock of 1973-74 then put additional upward pressure on the inflation rate. To prevent inflation and inflation expectations from spiraling further upward, monetary policies were tightened generally. With little credibility, there was little room for monetary policy to permit the price shocks to affect only the price level without giving 94 Chart 3-2 Inflation and Oil Shocks in the United States Inflation was high and rising before the two oil price shocks of the 1970s but was relatively low and steady before the 1990 shock. CPI, Percent change from year earlier 14 12 x*" 10 1971 Q4to1974Q4 1977Q1 to1980Q1 1988Q3to1990Q3 -7 -5 -3 -2 -1 Number of Quarters Before/After the Oil Price Shock Source: Department of Labor. 0 1973 Q4 1 1 g7g Q1 1990 Q3 firms and households the impression of continued accommodation and tolerance of higher inflation. An increase in money growth could not credibly be viewed as temporary. As the contractionary effects of the 1973-74 oil price shock and restrictive policies took hold, policy again returned to an overly accommodative stance. The deceleration in the growth of the money supply that accompanied the 1973-75 recession was followed by a reacceleration: ,The money supply grew at double-digit rates from 1975 through 1977. Fueled by faster growth in the money supply, spending grew at rates incompatible with low inflation, culminating in the high and rising inflation rates at the end of the 1970s. These inflation rates resulted from growth in demand that continually outstripped growth in supply. So long as demand, which was fueled primarily by excessively expansionary monetary policy, grew more rapidly than the economy's ability to supply goods and services, prices rose. Similar boom-and-bust patterns were being repeated in other industrialized countries as well. Having excessively stimulated demand, these countries found they had little credibility to ease policy temporarily in response to the second oil price shock without further raising inflation and expectations of it. Thus, to 95 prevent their already uncomfortably high inflation rates from accelerating, many countries including the United States again tightened monetary policy when the 1979-81 oil price shock struck. Japan, a notable exception, provides a useful comparison. Japan had high and rising inflation rates when the 1973-74 oil price shock occurred, and inflation remained above 20 percent in the period immediately after the onset of the shock (Chart 3-3). Like other countries, Japan experienced a severe recession in 1974-75 because the oil shock hit when there was little policy credibility or room for adjustment of the instruments of policy. To remedy that situation, the Japanese Government moved to a more systematic and credible monetary policy in the latter half of the 1970s. By reducing money growth, the government lowered inflation and then kept it in check. This policy produced inflation that was low and falling by the time the second oil price shock hit. Chart 3-3 Inflation and Oil Shocks in Japan Inflation was high and rising and remained high in the first oil price shock but was low and remained low in the second oil price shock. CPI, Percent change from year earlier 25 20 15 10 1977Q1 to1980Q1^.X '*' -8 -7 -6 - 5 - 4 - 3 Number of Quarters Before/After Oil Price Shock - 2 1 1973Q4 -j 979 Q-J 0 1 2 3 4 1990Q3 Source: Department of Commerce. The more credible systematic stance of monetary policy followed in Japan between the two oil price shocks made it possible for Japan to avoid much of the negative economic impact that other industrialized economies experienced during the second oil shock without generating fears that inflation and expectations of inflation would spiral upward. As a result, inflation was not permanent- 96 ly raised, and output remained close to its longer run path. In fact, by the definition of recession used in the United States, Japan completely avoided a recession following the second oil shock. SUMMARY • Systematic monetary and fiscal policies allow for changes of the instruments of policy in response to oil price shocks without sacrificing long-term policy goals. For example, automatic stabilizers allow for some temporary deficit increases as the economy weakens after an oil price shock, without altering the long-run path to structural deficit reduction. • Macroeconomic policy responses to oil price shocks in the 1970s were constrained because past policy mistakes had engendered a lack of credibility. The United States entered the two oil price shocks of the 1970s with excessive monetary expansion causing high and rising inflation. • The relatively low and steady underlying inflation rate that preceded the 1990 oil price shock enables monetary policy to respond more appropriately without losing its credibility in controlling inflation. SHORT-RUN ENERGY POLICY RESPONSE The principle of providing for flexible responses to changing short-run conditions while maintaining a clear and consistent focus on long-term objectives is an appropriate guide for energy sector policies as well as for monetary and fiscal policies. Given the high value of maintaining flexibility in the face of changing market conditions, pressures to impose price control and allocation schemes and to limit trading in energy futures markets should be resisted. Release of oil from government-controlled strategic reserves can, under some conditions, play a useful role in cushioning the impact of oil price shocks. THE DANGERS OF REREGULATION Energy market regulation, like regulation in other markets, can reduce the efficiency of the economy. Incorrect price signals result in a misallocation of supplies among consumers and, as both investment and innovation are affected over the longer term, can reduce output and adversely affect both producers and consumers. In addition, because regulation reduces flexibility, regulated markets react poorly to price shocks and thus exacerbate their effects. The benefits of relying on markets rather than regulation in the energy sector can best be understood by reviewing how regulation raised the costs of the oil price shocks of the 1970s. 97 In the aftermath of the 1973-74 oil price shock, domestic crude oil prices were held substantially below world market levels. As a result, domestic prices for petroleum products, which reflected an average of the prices of controlled domestic and uncontrolled imported crude oil, were also below world market levels. Individual decisions regarding the use of oil products were based on these distorted prices, even though each additional barrel of oil demanded was met through increased imports at the higher world price. Greater use of oil and increased demand for oil imports was the inevitable result. Although the process of oil price decontrol began before the 1979-81 oil price shock occurred, the combination of the remaining price controls and a burdensome and complex allocation system had a particularly pernicious effect. While artificially low prices inflated demand, the allocation system distributed available products in a way that magnified imbalances between demand and supply. As a direct result, consumers wasted many hours waiting in long gasoline lines. Substantial deregulation of energy markets over the last 15 years now allows markets to respond quickly and flexibly to changing conditions. In the second half of 1990, oil and natural gas markets freed from earlier price controls and restrictions generally functioned well (Box 3-1). In sharp contrast to the 1970s, gasoline lines did not reappear. While the higher petroleum product prices that follow an oil price shock may be unwelcome to consumers and energy-using firms, they are clearly preferable to the alternative of policy-induced shortages caused by misleading price signals and government-directed misallocation of oil supplies. ENERGY FUTURES MARKETS AND SPECULATION In the wake of Iraq's invasion of Kuwait, some commentators have blamed speculation in oil futures markets for oil price volatility and have suggested that the government limit futures market trading. Because futures markets play a central role in increasing energy market flexibility, however, a significant limitation on trading would impede, rather than aid, adjustment. Futures markets provide a public forum in which commitments to deliver a standard amount of a commodity at a specified future date and location can be bought and sold. Trading in organized spot and futures markets serves two important functions: price discovery and risk-shifting. Price discovery is achieved by placing accurate information regarding the latest market activity in a centralized public forum. In this respect, commodity markets are no different from stock markets. Risk-shifting, or hedging, is an activity undertaken by firms or individuals with a direct business interest in the production, distribution, or use of the commodity being 98 traded. Producers of a commodity might wish to protect against a price decline by locking in a future commitment to deliver at a known price. Processors desiring to protect against a possible rise in product prices can hedge by buying future delivery commitments at a known price. The prices that balance demand and supply of spot and future delivery commitments reflect current market expectations of nearterm and long-term prices. Chart 3-4 shows that prices of oil for delivery at the end of 1991 have been far less volatile than prices for delivery in the near future. The relationship between spot and futures market prices observed since August 1990 has consistently reflected the expectation that the Gulf crisis would be relatively short-lived. Chart 3-4 Oil Spot Prices and Futures Prices Although the spot price of oil has fluctuated widely, the futures market price of oil to be delivered in December 1991 changed relatively little between June 1990 and January 1991. Dollars per barrel 45 40 Spot Price 35 30 25 December 1991 Futures Price 20 15 10 i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i June July August September October November 1990 December January 1991 Note: West Texas Intermediate Crude. Spot price is nearest month contract. Source: New York Mercantile Exchange. Opportunities for hedging provided by oil futures markets serve the public interest in two main ways. First, hedging allows firms participating at only one stage of the oil business to remain viable in the volatile world oil markets of the late 1980s and early 1990s. Second, hedging has allowed buyers to be more aggressive in taking advantage of spot market opportunities. For example, as oil prices fell sharply in the first half of 1990, oil companies accumulated unusually large private stocks. Their ability to hedge against a con- 99 tinued decline in prices using oil futures markets allowed them to share the risks of holding these large stocks. Speculative trades are transactions not motivated by a direct interest in business activities related to the commodity being traded. A speculator goes "long" by purchasing the rights to future delivery of a commodity in the expectation that its price will rise as the specified delivery date approaches. If prices actually rise, the speculator profits by selling this right; if prices fall, the speculator loses the difference between the price at which he is committed to take delivery and the actual price at the delivery date. A speculator goes "short" by selling a commitment to deliver the commodity at a future date, hoping that prices will fall. "Long" speculators add to the demand for futures, driving up futures prices. "Short" speculators, by selling their promise to deliver in the future, add to the supply, and thus drive futures prices down. Because the underlying motivation for an individual futures market transaction is impossible to determine, the claim that speculation has caused higher oil prices cannot be conclusively supported or refuted. The available evidence, however, suggests that speculation is more likely to have lowered prices than to have raised them in the aftermath of Iraq's invasion of Kuwait (Box 3-2). grated oil companies, trade houses, refiners, marketers, producers, ena-ctsei's, and: ^^^^^^^^^:^^^ &mw®m i$fa%&^r , m oil markets. Because all but the last category of participants may engage fa both risk-shifting and speculative trades, it is inip^Me to mea&ire directly, *.; : - v > According to recent data from the Commodity Futures Trad• ing Commission, large in ml'marb^ g&tii&rd^ outstanding future delivery commitments in August and September - l^)»'VWto^)TO^-' '*1*aA»^%w^/ ^nh^f mi^tJ^^ "Igaytf*^ • of these purely immediate aftermath • markets in the was' therefore 4tf reduce ' : y - ."'.T''"; Following the rules of the New York Mercantile Exchange, as soon as oil futures prices dropped $7.50 the day after Operation Desert Storm began, oil futures trading was automatically suspended for an hour. Under conditions such as these, a trading suspension is appropriate because it gives the marketplace time to absorb unusual bursts in volume or information flows. However, once in- 100 formation has been widely disseminated, there is no economic basis for stopping the market from expressing its evaluation of future conditions. Limits on futures trading that impede risk-shifting transactions would impose a real economic burden, but they would not stop speculation. Closing futures markets would simply shift activity to offshore markets or to private, unreported transactions, thereby obstructing the price discovery process. Ironically, the public at large, having the least access to information, would be most disadvantaged. In a fluid economic situation, ignorance is hardly ever bliss. STRATEGIC OIL RESERVES The strategic oil reserves of the United States and other countries are intended both to deter the use of the "oil weapon" by exporting nations and to cushion the effect of sizable, temporary supply disruptions by augmenting the supply of oil. At the beginning of 1991, 586 million barrels of oil, equal to about 80 days of U.S. imports at 1990 import rates, were held in the U.S. strategic reserve. Policies for the use of strategic reserves should aim to complement the production increases and consumption declines that naturally follow an adverse price shock, not to substitute for them. Similarly, strategic reserves should not be used to respond to oil price movements other than adverse price shocks, since to do so would have the effect of substituting government storage of oil for private storage. The magnitude of energy price movements is one important indicator of the seriousness of a disruption. Prices of petroleum products rose substantially from July to October 1990, but, adjusted for inflation, they remained well below historical peaks. Indeed, the average inflation-adjusted retail price of gasoline in the fourth quarter of 1990 was lower than in most of the 1950s and in the first half of the 1980s. In the present situation, United States policy has emphasized the replacement of embargoed oil with additional production from other sources. Saudi Arabia, Venezuela, the United Arab Emirates, the United States, and other producers have, in recent months, increased production by an amount sufficient to offset fully the loss of supplies from Iraq and Kuwait. These production increases have eliminated the need for continued depletion of existing private and public stocks. Had the price impact of the supply disruption been immediately attenuated through the release of strategic reserves, these production increases might not have occurred. Conservation of existing stocks can be especially attractive in situations where anxieties over the possibility of severe supply disruptions in the near future are a major influence on current prices. 101 Coordination among countries holding strategic reserves is important, since the market for oil is a world market, and a release of reserves by any one country will lower prices for consumers throughout the world. Coordination of releases can allay concerns that some countries will seek to benefit from releases made by others while withholding their own reserves. The International Energy Agency (IEA) is the primary mechanism for coordinating the use of strategic reserves. Such coordination was demonstrated in early January 1991 when IEA member governments agreed to make government-controlled stocks available to the marketplace if hostilities broke out in the Persian Gulf region. This program was begun following the start of Operation Desert Storm. SUMMARY • Price controls and government-directed allocation schemes significantly magnified the adverse effects of prior oil price shocks. Their reintroduction would be an inappropriate response to energy supply disruptions. • Closure of oil futures markets would impede risk-shifting and price discovery in oil markets with few, if any, offsetting benefits. • Strategic oil reserves can cushion the effects of temporary supply disruptions. Releases should be coordinated internationally and with other response measures. LONGER TERM ENERGY POLICIES Primary reliance on markets to determine prices, quantities, and technology choices provides the foundation for sound longer term energy policies, and thus for the Administration's National Energy Strategy (NES). Such policies can sustain economic growth and blunt the effects of any future oil price shocks. However, either for structural reasons or because of government-created barriers, private markets cannot always be expected to work efficiently. In those situations, as the NES recognizes, policy can be applied to promote efficient market operation. For example, reducing the extent to which the United States and its friends and allies obtain energy from insecure sources of supply offers national security and foreign policy benefits to which private market forces are unlikely to give adequate weight. Private markets may also not give adequate weight to environmental considerations. As the NES recognizes, however, policies concerned with energy security or environmental protection must be well-designed to avoid excessive costs and to ensure that economic growth can continue to be fostered through the availability of ample supplies of reasonably priced energy. 102 LONG-TERM TRENDS IN ENERGY PRICES AND USE Longer term energy policies must not be influenced by the widely held misconceptions that energy prices will almost certainly rise and that the United States is a profligate user of energy. The record of the past 40 years shows that the real price of energy has Tio* risen steadily. Rather, the real prices of crude oil, oil products, and electricity have fluctuated significantly, with periods of falling as well as rising prices (Chart 3-5). Chart 3-5 Real Energy Prices Real energy prices do not show a long-term upward trend. 1982 dollars per million Btu equivalent 20 Electricity 15 10 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 Source: Department of Energy. A review of the basic forces that will influence energy markets in the years ahead gives mixed signals regarding future price movements. Some factors point to a tightening market in the medium or long run. Oil analysts project that production in the United States and the Soviet Union, currently the world's largest oil producer, will continue to decline. OPEC, whose member states already account for about one-third of world production and about three-fourths of proven reserves, is expected to supply a rising share of the world's oil. At the same time, world energy demand could begin to grow rapidly if the rates of increase in energy efficiency observed since 1973 are not maintained, or if rapidly grow- 103 ing energy use outside the major industrialized countries becomes a more important factor in the world market. Other factors, however, suggest a future in which real oil prices rise slowly, if at all. In recent years, growth in the world's proven oil reserves has far outstripped growth in oil production. Since 1973, when higher oil prices began to stimulate more exploration, world oil reserves have risen by about 50 percent, while world crude oil production has increased by less than 10 percent. At the 1990 production rate, the world now has about a 45-year supply of proven reserves; at this same production rate, the world had less than a 30-year supply of proven reserves in 1973. Oil-exporting countries with large reserves recognize that high oil prices encourage greater use of other existing forms of energy and accelerate the development of new energy and end-use technologies. Economic and environmental considerations that have increased the use of natural gas as a substitute for oil should also help to keep oil prices low. The uncertain outlook for energy prices increases the value of policies that are flexible enough to serve national interests under a wide variety of energy market conditions. The common belief that the United States is a wasteful energy user is also not supported by the data. International comparisons show that U.S. energy use trends do not differ markedly from those in other countries. Economy-wide energy intensity has declined in other major industrialized countries, as in the United States, since 1973. Moreover, direct comparisons of energy use per unit of output in individual sectors show that energy intensities across countries have increasingly converged. Differences in natural resources, population density, industrial mix, urban layout, commuting distances, and dwelling sizes appear to account for much of the variation in energy use patterns across countries (Box 3-3). ENERGY SECURITY A key goal of longer term energy policy is to reduce the vulnerability of the U.S. economy to energy price shocks and possible supply disruptions. Popular opinion aside, our vulnerability to oil price shocks is not determined primarily by the level of our oil imports. In an increasingly integrated world economy, America's energy security cannot be separated from that of its friends, allies, and trading partners. For one thing, the price of oil bought and sold in the United States is determined on world markets by global supply and demand, not by U.S. production and consumption. In addition, the Nation's ability to export goods and services depends on the health of foreign economies, and exports now account for about one-eighth of GNP. Thus oil price shocks can have substantial indirect effects on the U.S. economy through their impacts on the economies of our major trading partners. For these and other 104 Box 3-3.—International Comparisons of Energy Use Recent data §how that the- avtoage new cat imrcbased in the United States achieve a levelof fuel economy Slightly tetter than the comparable Average level in Japan and idose to that in Germany * However^ in 1988 the United Stated had 673 passenger cars for every thoutand peope^ compared to only 476 ears per thousand people in West Germany and 251 cars per thousand people in Japan* Moreover* in the same year, the average ear trawled more than 10400 mites in the United States, compared with 8,000 in Germany and only 6,500 in Japan* In part, divergent patterns of vehicle ownership and use are attributable to large differences in retail gasoline prices— German and Japanese retell prices were respectively $2,20 and $S4S a gallon in 1988, compared with a U«S. price of $OJ5, Higher foreign prices to a large extent reflect differences in taxes on gasoline: Combined Federal* State, and local taxes of $0,29 a gallon were far below German and Japanese taxes of $1.42 and $L60f respectively. However, comparisons with Canada and Australia, which also have high annual miles of travel per vehicle despite gasoline prices significantly above UJS, levels, suggest that low population density and longer commuting distances are major reasons for our additional travel A greater reliance on automobiles, rather than the energy inefficiency of those automobiles, is therefore the primary reason the United States uses so much oil in its transportation sector. Assuming that the efficiencies of on4he-road fleets equalize as older cars are replaced, differences in transportation fuel use can only be narrowed further using policies that reduce UJS. car travel Energy use in residential heating provides another example of the importance of choosing an appropriate basis for comparisons. Correcting only for climate differences, the United States used more heating energy per dwelling than other industrialized countries in 1987 (although the gap between the United States and other countries narrowed substantially over the last 15 yearsX However, when the greater floor space in a typical American home is taken into account, the United States was among the more efficient users of residential heating energy. reasons, modest changes in U.S. energy production, consumption, or imports are unlikely to have much impact on the Nation's energy security. 105 The maintenance of strategic petroleum reserves and agreement among reserve-holding nations on credible policies for their coordinated use can provide both a deterrent to deliberate supply disruptions and an effective offset to disruptions that may occur. Energy security can also be significantly enhanced by expanding and diversifying the sources of oil and energy supplies available to the United States and its friends and allies. The United States, as a leader in exploration and drilling technology, can play an important role in identifying and developing new reserves. Efforts in this area should focus on natural gas as well as on oil, since gas development that displaces oil consumption can enhance energy security and also provide environmental benefits. The removal of remaining barriers to the development of economically viable domestic oil and gas resources, the increased use of coal, nuclear, and renewable energies, and the exploitation of efficient energy conservation opportunities can also contribute to energy security. Energy diversification efforts will involve some shift toward domestic energy sources. But it must be recognized that opportunities for increasing U.S. petroleum production are limited: By 1990 U.S. production had declined by 22 percent from its peak in 1970. Moreover, a large-scale substitution of high-cost domestic energy for lowcost imported energy could significantly slow economic growth. It simply makes no sense to spend large sums to displace imported energy when supply diversification or strategic reserves can provide comparable energy security benefits at lower cost. Even the total elimination of energy imports would not insulate the economy from oil price shocks. There would be no terms-oftrade effects under such circumstances, but conditions on the world oil market would still be reflected in domestic prices. For example, although the United Kingdom is not a net importer of oil, its producers and consumers faced higher oil prices after Iraq invaded Kuwait. The only way to decouple domestic and world energy prices is to manage trade in energy products. Such a policy would have much higher long-run costs than those imposed by energy price fluctuations. STRENGTHENING MARKET FORCES Federal actions can promote efficiency and competition in energy markets in several ways. The movement toward complete deregulation of wellhead prices for natural gas, pursuant to the Natural Gas Wellhead Decontrol Act of 1989, is contributing substantially to the economy's flexibility. Currently, new gas pipelines require the approval of the Federal Energy Regulatory Commission (FERC), which also regulates rates charged for the transmission of gas. The pipeline approval process should focus on environmental and safety factors rather than on the extraneous considerations 106 that enter into current FERC proceedings. Pipeline rates should be regulated only to prevent monopoly abuses, and regulation should be implemented in a way that fosters economic efficiency. Retail electricity rates are regulated at the State level, and competition has traditionally played a minor role in electricity markets. In recent years, however, State regulators have begun to allow competition for the right to construct new generating facilities. The Federal Public Utility Holding Company Act, which limits an electric utility's participation in competition to build new capacity outside of its service area, should be reformed to increase the role of market forces. Steps should also be taken to ensure that access to the high-voltage transmission network is not controlled in a manner that restricts competition. State regulation of electric utilities has generally had the effect of tying profits to the amount of power sold, thereby discouraging utilities from assisting their customers in pursuing cost-effective conservation opportunities. Some States have adopted integrated resource planning programs that allow utilities to promote, undertake, or subsidize conservation investments on their customers' premises. Such programs can speed the diffusion of efficient new conservation technologies. By helping users reduce their demand for electricity, these programs reduce the need for new generating plants. Utility programs that subsidize conservation investments on customer premises must be carefully designed if they are to be both efficient and equitable. The price of electricity itself already provides customers with an incentive to conserve. They receive a return on their investments in conservation in the form of lower electricity bills. However, in some areas the retail price of power is below the cost of production from new capacity. In such circumstances the conservation incentive provided by electricity prices is generally too low. Therefore, a utility subsidy for customer conservation investments equal to the difference between the price of electricity and the cost of producing it can enhance economic efficiency. But providing a subsidy equal to the full cost of producing electricity from new capacity is both inefficient and inequitable. It is inefficient because conserving consumers are paid both the cost of the power saved (through the subsidy) and its price (through lower electricity bills). As a result, consumers may be induced to make conservation investments that raise, rather than lower, the total utility and consumer cost of balancing demand and supply for electricity. It is inequitable because the utility must recoup the double payment to conserving customers by raising the rates charged to other customers. Adverse environmental impacts are another social cost of power production, and it is sometimes asserted that these impacts merit 107 the provision of additional utility subsidies for customer conservation investments. However, electricity prices already reflect utilities' costs of compliance with environmental regulations. If society's valuation of environmental effects rises, the proper remedy is to tighten environmental regulation. That approach will reduce environmental impacts directly and also increase incentives for conservation by raising electricity prices. Energy Research and Development Market forces also need to be strengthened in the area of research and development. Private firms are likely to underinvest in research that promises widespread benefits if the firm carrying out the research cannot use patents or other means to prevent other firms from capturing most of those benefits. Government's proper role is to support basic, precompetitive research in the energy sector rather than to pick winners and losers. Premature government commitment to a selected technology can foreclose the development of other, more attractive alternatives or of a diversified set of technologies suited to specific applications or regional markets. The lack of a clear yardstick for measuring technological promise or valuing research progress presents a challenge for both the initial allocation of research resources and the assessment of ongoing programs. A policy that supported only technologies whose commercial viability was imminent might produce an impressive batting average without making any real contribution to technological advancement. Yet, there must be some reliance on market signals to avoid permanent commitments to technological dead ends. One promising approach to balancing these two competing concerns is to rely on government-industry consortia in which industry supplies a major share of funding and plays a major role in setting the research agenda. Energy Use Standards Some have suggested that the adoption of stringent energy use standards provides a low-cost approach to reducing energy use. While efficiency standards can play a constructive role in certain circumstances, their significant potential for causing economic harm must be recognized. Unlike regulatory reform, energy use standards generally limit rather than expand flexibility and choice. Moreover, the goal of energy policy is to enhance prospects for economic growth while meeting legitimate energy security and environmental concerns, not to minimize energy use. It is sometimes argued that energy-efficiency standards are justified because consumers do not purchase goods with the lowest combined purchase and energy costs. But, claims that standards are a no-lose proposition often fail to account fully for all product attributes important to consumers. In choosing among various 108 models of cars, for example, consumers value performance features as well as energy efficiency and cost. Indeed, absent such preferences it is difficult to explain the popularity of optional powerful engines that increase the cost of cars while decreasing their energy efficiency. Without evidence that structural or government-created barriers exist and cannot be addressed directly, government regulation of energy efficiency should be viewed with skepticism. SUMMARY • The long-run outlook for energy prices is uncertain. Therefore, long-run policies should be flexible enough to serve national interests under a wide variety of energy market conditions. These considerations support continuation of the Nation's successful policy of market reliance. • Energy security can best be pursued through the accumulation of strategic reserves and diversification of energy supplies. An excessive focus on minimizing energy imports can have significant adverse economic impacts. • Further regulatory reform at the Federal and State level can improve the operation of energy markets. Policy should strive to maximize flexibility and choice and to avoid the introduction of new distortions. CONCLUSION The same policy principles are appropriate for macroeconomic policies and energy market policies. Systematic policies that permit predictable responses to changing short-run conditions, while maintaining a clear and credible focus on long-run objectives, should be pursued. Such policies will position the economy to meet the challenge presented by oil price shocks. Well-designed policies can significantly reduce but not entirely eliminate the unfavorable effects of such shocks. Large and abrupt increases in oil prices can still adversely affect the economy. These oil price shocks present policymakers with the prospect of temporarily higher inflation and slower real growth rates. Experience with the price shocks of the 1970s has led to policies better able to handle an oil price shock. Having produced a low and steady inflation rate and earned the credibility that comes from such performance, the Federal Reserve has preserved the latitude to cushion the impact of oil price shocks without increasing inflation expectations. The removal of price and allocation regulations in energy markets allows market forces to guide products to their most valued uses, while the decrease in the intensity of energy use has made the overall economy less sensitive to oil price shocks. Strategic petroleum reserves in the United States and 109 other countries can now cushion the effect of large temporary supply disruptions by increasing the supply of oil. For these reasons, the U.S. economy is now able to adapt more readily to an oil price shock than it was in the past. 110 CHAPTER 4 Flexibility and Change in the Economy ONE OF THE MOST IMPORTANT strengths of the U.S. economy is its flexibility. Flexibility enhances the ability of a market economy to respond to change and, thereby, enhances the rewards to innovation. Strong demand for an innovative new product both rewards the innovator and is the signal that draws additional resources into production to meet the demand. An innovation that lowers cost drives down price, signaling greater availability to potential consumers and causing them to increase consumption. In this way, the U.S. economy enhances the private and social benefits of desirable changes, such as technological improvements, and thereby encourages such changes. This dynamism has generated the high standard of living that the United States and other freemarket economies enjoy and is one of the major reasons that people all over the globe are now moving to reform their economies to increase their reliance on free markets. Flexibility also reduces the cost of adverse changes, such as a sharp, unexpected increase in the world price of oil. As discussed in the previous chapter, such shocks may increase unemployment temporarily, but a flexible economy adjusts to new circumstances effectively and can return rapidly to full employment. THE PROCESS OF DYNAMIC CHANGE A clear picture of the dynamic nature of the U.S. economy can be produced by a simple visual inspection of a modern home, which may contain a microwave oven, a home computer, a videocassette recorder (VCR), many Pharmaceuticals, nonstick cookware, and numerous other products that did not exist a few decades or even a few years ago. The introduction and diffusion of all of these products required innovation, followed by the dedication of capital, labor, and other resources to new uses. This reallocation of resources occurs without government planning. The government took no action to guarantee that between 1985 and 1990 thousands of video rental stores would open so that the owners of VCRs would have movies to rent. Individual entrepreneurs made the decision to risk their capital and their labor to undertake these new ventures. A comparison of the rate of intro- 111 duction of new products and the growth of new industries in market economies and in nonmarket economies shows that the government is not nearly as good as the market at organizing the reallocation of resources that must accompany innovation. The ease with which resources can be shifted to the production of new goods and services raises the returns to innovation and thus encourages it. The improvement in our lives provided by new products generally is not captured in statistics on real income growth. The increase from one year to the next in the number of cars, computers, video games, VCRs, or other products can be measured. But the qualitative leap in consumer welfare that occurs when a completely new product is introduced is extremely difficult to capture. Thus, conventional measures of economic progress, such as real income growth, will always tend to understate the benefits of the innovation and change that are the hallmarks of a free market economy. Such qualitative changes are very difficult to predict, and government interference in market forces can suppress them without anyone even being aware of the loss. Thus a benefit to the economy of the significant deregulatory initiatives of the last 15 years is the greater potential for innovation that enhanced flexibility provides. Indeed, the U.S. economy is arguably more flexible than other market economies, which tend to be encumbered by greater government involvement in direct production of goods and services and by restrictions on labor market practices. The long-run growth rate of the U.S. economy is dependent on continued efforts both to eliminate government policies that inhibit flexibility and to resist pressures to reimpose unnecessary regulation on the economy. SOURCES OF ECONOMIC CHANGE The forces driving change come from several sources. On the supply side, changes in technology create entirely new products and eliminate the demand for others. For example, the invention of the transistor and the development of the microprocessor made possible desktop computers, VCRs, facsimile machines, compact disk players, and a host of other products that never existed before, while virtually destroying the vacuum tube industry. Innovation also increases productivity and thus lowers the cost of existing goods and services. Population growth, immigration, and other demographic forces are also sources of supply-side change. Throughout its history the United States has absorbed wave after wave of immigrants, integrating them into the economy and thereby increasing production. Recently, the economy has demonstrated its flexibility by accommodating a tremendous increase in the number of women working outside the home. Between 1970 and 1990, the labor force participa- 112 tion of women increased from 43 percent to almost 58 percent, and this huge influx of new workers was not accompanied by a fall in the relative earnings of women workers. In fact, during the latter part of this period the earnings gap between female and male workers narrowed. On the demand side, changes in the demographic composition of the economy and changes in people's tastes and preferences alter the demands for particular goods and services. The increasing fraction of the population that is elderly has greatly increased the demand for health care, for example, and the general movement toward suburban living and longer commutes has increased the demand for petroleum. The international economy is another source of change in both supply and demand conditions. The end of World War II, and the reduced industrial capacity that the war left in other countries, created an enormous opportunity for exports and overseas investment for U.S. firms. More recently, the growth in international travel has created an opportunity for domestic airframe manufacturers; the leading domestic manufacturers now export more than half of their civilian aircraft production. THE CHANGING STRUCTURE OF THE U.S. ECONOMY The broad dimensions of historical change in the U.S. economy are illustrated by Chart 4-1, which shows dramatic reallocations of resources within the U.S. economy over the last 150 years. The growth of manufacturing and service industries and the relative decline of agriculture have required an impressive reallocation of capital, labor, and other resources. Yet government did not have to decide that workers should be moved from farms or factories into banks or hospitals. These movements were brought about by market forces, driven in turn by changing demands, demographics, and the introduction of new technology. Growing Manufacturing Productivity and the Service Sector Recent decades have seen a continuing shift in employment from goods-producing to service-producing industries. The goods-producing sector accounted for 41 percent of nonfarm employment in 1946, 28 percent in 1980, and 23 percent in 1990. A similar shift of employment toward the service sector has taken place in other advanced economies. In 1966, for example, the goods-producing sector accounted for 37 percent of employment in the 24 nations of the Organization for Economic Cooperation and Development, which includes most of the industrialized market economies of the world. By 1988 this figure had fallen to 30 percent. Over the 1980s the service-producing sector of the economy had a net increase of 20 million jobs, which exceeded the 19 million net job increase in the overall economy. The two industries adding the 113 Chart 4-1 Labor Force Shares by Industry U.S. workers have moved out of agriculture, first into manufacturing and then into services. Percent 100 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1989 • Agriculture Q Manufacturing1 Q Transportation and Trade 0 Other Services 1 1ncludes manufacturing, mining, and construction. Sources: Department of Commerce and Department of Labor. most jobs were business services, including advertising and computer and data-processing services, and health services (discussed below). More than 5 million net new jobs, or 27 percent of the net employment gain in the 1980s, were in business or health services. This growth in service-sector employment has absorbed labor resources freed by rising manufacturing productivity, just as the growth in manufacturing employment absorbed resources released by rising productivity in agriculture in earlier decades. Manufacturing productivity increased at an average annual rate of 4.5 percent from 1982 to 1990. This allowed manufacturing to maintain a roughly constant share of real gross national product (GNP), even though only about half of the 3 million manufacturing jobs lost between 1980 and 1982 were regained by 1990. Within these broad sectoral movements, many other changes occurred. During the last 10 years increased demand for convenience was a major force for change. The growth in retail grocery stores during the decade reflected this trend, as the concept of a "super" store with one-stop shopping for groceries, drugs, flowers, hardware, and other products took hold. Eating and drinking establishments enjoyed rapid growth, partially because the increase of two- 114 worker families raised the value of people's time. On the supply side, advances in computer technology led to rapid expansion of such industries as computer and data-processing services, which alone added 499,000 jobs during the last 10 years. Changing lifestyles and family structure have also led to a rapid increase in industries providing care to the old and the young. Industries providing residential, nursing, and personal care, largely for the elderly, and child day-care facilities added 825,000 net new jobs from 1982 to 1990. Flexibility and Change in Labor Markets The constant reallocation of resources from shrinking industries to growing industries means that jobs are constantly being created and lost in the economy. This process of reallocation occurs without necessarily preventing the achievement of full employment. Indeed, the simultaneous creation and destruction of jobs continues whether the overall economy is in an expansionary period or a recession. During the two contractions between January 1980 and November 1982, for example, total employment fell by 2.1 million jobs. However, this net decrease consisted of a loss of 2.8 million manufacturing jobs, partially offset by increased employment outside of manufacturing. Even within manufacturing, jobs were both created and lost. It is estimated that in an average quarter during this period, 6 percent of all manufacturing jobs disappeared, while 5 percent were created. Simultaneous employment gains and losses can be seen at the level of individual establishments. A recent study of data from Wisconsin for the period 1977-82 found that each year 45 percent of all establishments experienced net employment gains, with an average net gain of 30 percent; 47 percent experienced net job losses, with an average net loss of 21 percent; and the remaining 8 percent maintained stable net employment levels. The dynamic nature of the labor market is also evident in unemployment statistics. In November 1988, for example, the jobless rate was 5.3 percent, and 6.5 million workers were unemployed. The following month both of these statistics were essentially unchanged. On the surface this lack of change might seem to indicate a static labor market. Yet, out of the 6.5 million unemployed in November, 3.0 million had left unemployment by December. About half of them had found jobs; the other half had withdrawn from the labor force. In the same month, roughly 1.5 million previously employed workers became unemployed and 1.5 million people entered or reentered the labor force and began looking for work. This continual reallocation of workers requires that labor markets be flexible and that workers be mobile. Studies estimate that the average worker holds more than 10 jobs in a lifetime. Survey data show that every year 10 percent of all workers change occupa- 115 tions. This number does not include the number of people who change jobs but remain in the same occupation. Only 1 out of 10 workers who change occupations does so because of layoffs. Most change occupations to earn higher pay or improve their working conditions. Geographic mobility is an important aspect of labor market flexibility. The movement of workers out of agriculture and into manufacturing and services was accompanied by a major migration from rural to urban areas. Over the last two decades, the percentage of the population residing in the Northeast and Midwest has declined from 51.9 percent to 44.1 percent, reflecting a movement to the relatively fast-growing South and West. The decline in the Northeast population share slowed during the 1980s, as strong growth in financial services, real estate, and other industries produced gains in per capita income in both New England and the mid-Atlantic States. Overall, about 6 percent of the population moves to a different county each year, and about 3 percent moves to a different State. This mobility of people within and between regions is an important reflection of and contributor to the economy's flexibility. PRESERVING THE FLEXIBILITY OF THE ECONOMY The dynamic nature of the U.S. economy and the value of flexibility have important implications for economic policy. The incentives for firms to undertake innovation and investment are greatly affected by the overall macroeconomic environment, by the structure of taxation, and by legal rules governing the protection of intellectual property and product liability. To maintain a flexible and innovative economy, macroeconomic policy should seek to foster growth and predictability through credible and systematic monetary and fiscal policy. The tax structure should not erect barriers to saving, investment, or innovation. Product liability rules should protect consumers from product-related harm in ways that do not unduly discourage the introduction of new products. (These issues are discussed in more detail in Chapter 4 of the 1990 Economic Report.) The Benefits of Economic Deregulation Reduction in market flexibility is an important and often overlooked effect of regulation. When the Federal Government regulated airline routes and fares, one effect was that fares were generally too high. But another effect, which was not visible until the regulations were removed, was that regulation prevented airlines from developing efficient route networks. After deregulation the airlines evolved "hub-and-spoke" systems to channel passengers into airports where they could be connected more efficiently to their ultimate destinations. As a result, airlines operate more efficiently, 116 and most travelers today have a greater range of flight choices at lower real prices. Similarly, telecommunications regulation had, and continues to have, adverse effects on innovation by restricting which firms may enter particular segments of the industry. It is not coincidental or surprising that the adverse effects of regulation are often not perceived until after the regulation is removed. By its very nature, stifled change is difficult to detect. If unexploited technology is observed "sitting on the shelf," then one can investigate whether regulation is preventing its adoption. But it is impossible to know to what extent regulation, by preventing change, stifles the incentive even to develop new ways of doing things. It is therefore also impossible to know the extent of the lost opportunities. There are inherent institutional reasons why government regulation tends to inhibit change. Regulation is a legal institution, and legal processes rely heavily on precedent. This reliance creates a bias in favor of the old and against the new. In addition, regulators face an extremely difficult problem: They are trying to make rules that constrain firms to act differently than they otherwise would. Regulators must do this knowing that the firms will always have better information about their costs, customers, and technology. Accomplishing the regulators' goals in a static world in which technology and institutions do not change would be hard enough, but it is harder still in a world of constant change in which the regulators will always lag behind the firms in understanding what is going on. For this reason, regulators have an incentive to prevent regulated markets from changing too rapidly. These institutional biases against change inherent in government regulation do not mean that regulation is never desirable. Unregulated markets that generate serious pollution problems, have serious failures in the availability of information, or are inevitably served only by monopoly firms do not perform well. Regulation based on careful balancing of benefits and costs can sometimes improve performance in these markets. Such regulation will, however, almost always impose some reduced flexibility. In balancing the costs and benefits of government regulation, these costs of reduced flexibility should not be forgotten, even though they are subtle and difficult to quantify. Government interference can also adversely affect the flexibility of labor markets. As discussed below, some States have responded to concerns about our educational system by increasing certification requirements for teachers. Unnecessary certification requirements create an artificial barrier that prevents qualified teachers from moving from one State to another or moving into teaching from other professions. In the long run, this barrier will increase the cost and decrease the effectiveness of education. 117 Adapting to Changes in Technology and Institutions Failure to adapt longstanding government policies to a changing economy can be extremely costly. Regulation of railroads began in the 1890s, when they had a monopoly on the transportation of many goods. In the late 1970s, long after railroads had lost much of their business to trucks, regulation still treated them as monopolies, and partial regulation continues today. The decline of railroads when trucking developed was perhaps inevitable, but it was surely hastened by a regulatory regime that greatly limited the railroads' ability to compete. Similarly, regulation and other government policies in the banking and financial services sector have for decades failed to adapt to changing technology and market conditions, and reform is badly needed (Chapter 5). Just as government regulation inhibits change in the affected markets, regulation is itself resistant to change. Once any regulatory regime is established, a constituency that benefits from it is created. No matter how out of date or counterproductive the regulatory regime becomes, that constituency is likely to resist efforts to change or end it. Therefore, it is to be expected that regulatory institutions will not adapt themselves well to changing circumstances, a tendency that should be considered when evaluating the long-run net benefits of deregulation. Lowering International Barriers to Trade and Investment In addition to being a driving force for change, free international trade can facilitate domestic adjustment to change. U.S. agricultural exports absorbed some of the increased output made possible by growth in agricultural productivity and thus cushioned the fall of agricultural employment. Further reductions in barriers to international agricultural trade would yield even greater benefits from high U.S. agricultural productivity. The United States currently has a low rate of domestic saving by historical and international standards. The free flow of foreign capital into the United States has maintained domestic nonresidential investment (and ultimately productivity growth) at a level above that which domestic saving would support. Thus international trade and investment flows provide an additional channel of flexibility to the economy. Administration efforts to reduce international barriers will further improve this flexibility (Chapter 7). Cushioning the Effects of Change Despite its benefits, economic change can impose short-term costs. Workers with obsolete skills and firms facing declining demand or using outmoded technologies face declining incomes. It is good social and economic policy to cushion such blows and to facilitate the retraining or retooling necessary to move such re- 118 sources into other uses. But the government should not try to prevent change itself in order to mitigate its consequences. Such efforts are ultimately futile; they only serve to squander a portion of the beneficial effects of change and, cumulatively, to reduce the economy's flexibility. This mistake is apparent in the farm policies of the United States, and, to an even greater extent, in those of Europe and Japan. Rapidly rising agricultural productivity, combined with relatively slow growth in the demand for food and other agricultural products, required that resources move out of the agricultural sector. The market signal for this needed reallocation is that farm incomes do not rise as fast as incomes in other sectors. Many aspects of farm policy have, however, attempted to squelch this signal by maintaining some farm prices and farm incomes at artificially high levels. Though farm policy has not ultimately succeeded in preventing a dramatic movement of labor out of agriculture, it has significantly reduced the benefits of agricultural productivity growth. If government policies that interfere with efficient allocation of agricultural resources were eliminated both in the United States and abroad, all nations would benefit from a more efficient worldwide agricultural sector. Sometimes the economy must respond to changes that are inherently adverse. But if the initial shock is unavoidable, the government only makes things worse by preventing the economy from adapting to it. A good example of this policy mistake is the energy policy of the 1970s. When the Organization of Petroleum Exporting Countries raised the world price of oil in 1973, and when the Iranian revolution and Iran-Iraq war raised it again in 1979, the result was unquestionably damaging to the U.S. economy (Chapter 3). The urge to try to soften this blow by regulating the price of oil is understandable, but the result was the creation of artificial shortages and a delay in the adoption of energy-conserving technologies. Integration with the world economy also generates the need for adjustments in labor markets. Increasing imports can lead to reduced employment in domestic industries, generating demands for government protection from the forces of change. Such protection can come in many forms, but the two most widespread are subsidies and trade barriers. The U.S. textile, machine tool, auto, and other industries have received trade protection at various times. Many European nations give enormous subsidies to their steel and shipbuilding sectors. Subsidies and trade protection for declining industries are often a source of trade disputes among nations, but the strongest argument against protectionist policies is that they prevent the efficient movement of resources among sectors, both within and across nations. The last decade has seen increasing awareness in many advanced economies that such policies are counterproduc- 119 tive. In Sweden, for example, subsidies to declining industries equaled 43 percent of manufacturing profits in 1977-78, but such subsidies have since been cut dramatically. The economy as a whole benefits greatly if workers from industries subject to effective foreign competition are allowed to move to other sectors, but these moves are often painful for the workers involved. The decline of particular industries also creates problems for particular localities or regions that are heavily dependent on them. Existing policies appropriately seek to mitigate these human costs and to facilitate retraining and reemployment, not to prevent labor market adjustments. The unemployment insurance system provides up to 26 weeks of income protection, and in some cases unemployed workers are eligible for extended benefits. A wide array of State and community-based programs for workers are provided through the Job Training Partnership Act. Such programs provide educational instruction, job training, counseling, and other support services. These programs can be designed to enhance flexibility. For example, the transferability of unemployment benefits across States allows displaced workers to move to another State where opportunities may be better, without immediately losing benefits. Some States have experimented with combinations of job search assistance, job training, and the provision of a lump sum benefit either at the time of reemployment or to finance the startup of enterprises. Ultimately, the most important thing that the government can do for workers in declining industries is to provide an environment conducive to the creation of new jobs elsewhere in the economy. Thus, these workers, too, are dependent upon government policy that fosters growth and maintains market flexibility. SUMMARY • The ability of the U.S. economy to change and evolve is one of its greatest strengths. • Flexibility encourages innovation and increases its benefits, and raises living standards. • Government policies can maximize the flexibility of the economy by forgoing unnecessary regulation, avoiding attempts to stymie the inevitable rise and fall of particular economic sectors, and removing barriers to innovation. 120 EDUCATION REFORM FOR AN ADAPTABLE WORK FORCE A key determinant of the flexibility of the economy is the quality of its work force. Education raises skill levels that increase job performance and productivity. Well-educated workers have the basic skills necessary to adapt to the changing demands of a dynamic economy and are able to compete with their peers in other nations. Unfortunately, primary and secondary education in this country does an inadequate job of producing such workers. Parental involvement and student dedication—especially to homework—is essential to the success of any school system. But greater parental and student effort alone cannot ensure success. Comprehensive reform of American elementary and secondary education is necessary. The educational system should encourage innovation and promote excellence among teachers and students. It should strive to earn the same high reputation as the U.S. postsecondary educational system, in which there is significant diversity and choice. It should provide the foundation that enables workers to adapt and respond to changing workplace technologies and economic conditions. And it should provide all high school graduates with the backgrounds necessary for advanced study or entering the work force. Many school districts have outstanding educational systems and achieve these goals. And in every school district in the Nation there are talented and dedicated teachers and administrators as well as concerned parents who work hard to improve the educational system. Success requires a commitment to excellence from school administrators, teachers, and parents as well as from students themselves. However, despite some successes, too many State and local educational systems are notably inflexible and resistant to meaningful and effective change. Because they need not compete for students and are not held accountable for the quality of the education they provide, many State and local education agencies in this country have become entrenched bureaucracies. As a result, U.S. students often receive unacceptably poor educations. Parents often find they have little power to ensure that their children receive a sound education, and many choose to send their children to private schools. The primary fiscal responsibility for public education lies with State and local governments, which determine the institutional framework for the operation of the educational system. Local school boards and State education agencies determine who may teach, what schools students attend, how long students are in class, and even the general instructional methods that are adopted. The 121 Federal Government has traditionally provided only a small fraction of total support for education at the elementary and secondary levels; in 1988 it provided only 6.3 percent of the funds spent on education for kindergarten through grade 12. As well-intentioned as school boards and education agencies may be, a system that is not required to compete for its students and is not judged by their performance is hard pressed to avoid the mediocrity and resist the insularity that comes with being the only "free" game in town. As a result, although the United States spends more money per pupil than almost any other country in the world (in 1989 U.S. per pupil expenditures were $5,172), the return on this substantial investment is unacceptably low. THE CURRENT STATE OF EDUCATION Evidence of the inadequacy of education in the United States can be found in the workplace and in the schools themselves. Evidence from the Workplace Today's high school graduate is often ill-prepared for the world of work. The 1990 National Assessment of Educational Progress, which reported the results of a nationwide test of students conducted between 1986 and 1988, found that only 6 percent of 17-year old students demonstrate the capacity to solve multistep problems and use basic algebra; only 8 percent have the ability to draw conclusions and infer relationships using scientific knowledge; and only 5 percent can synthesize and learn from specialized reading materials. Firms are finding it increasingly necessary to develop remedial training programs in reading and mathematical skills; they spend an estimated $20 billion annually on such programs. Even institutions of higher learning are adapting their course offerings to reflect the poor preparation of many freshmen; the fraction of colleges offering remedial instruction has increased from 79 percent to more than 90 percent since 1980. A second-rate educational system cannot support a first-rate, world-class economy. Workers unable to read and grasp complex concepts in mathematics and science cannot hope to adapt to changing technologies in the workplace. Poor training in mathematics and science at the elementary and secondary levels also contributes to declining trends in college enrollment in these areas. This pattern threatens the creative foundation needed to discover and introduce advances in technology. Previous Reform Efforts In 1983 a commission appointed by the Secretary of Education issued the report A Nation at Risk, which painted a bleak portrait of the quality of education in elementary and secondary schools in 122 the United States. The report struck a responsive chord. Reacting to its recommendations and challenges, State and local educational systems embarked on plans to introduce fundamental changes. It is nearly a decade later, and not much of consequence has changed. To be sure, many bills were introduced in State legislatures in response to the report, and many were passed. Forty-five States increased graduation requirements for core courses in subject areas such as mathematics, sciences, humanities, and social sciences. Many States also made teacher certification requirements much stricter and, in an effort to attract higher quality teachers, increased salary levels significantly. Teachers' salaries in public elementary and secondary schools increased by 18 percent in real terms between 1980 and 1990. Expenditures per pupil have also increased 28 percent in real terms since 1982. Despite the efforts in the 1980s, there has been no noticeable change in the performance of the Nation's schools. Though students are taking more mathematics, science, and reading courses, test results show that no performance improvements have been made in these subject areas since the appearance of A Nation at Risk. The percentage of students graduating from high school remains unacceptably low, falling from 73 to 72 percent since the report's release. International Comparisons U.S. high school students consistently perform far below their foreign counterparts, especially in their knowledge of mathematics and science. In an assessment of learning in six major developed countries in 1988, U.S. students ranked last in mathematics and second to last in science. Even the best U.S. students do not compare favorably with foreign students. The International Assessment of Educational Progress found that a very select group of collegebound American students scored far below a less select group of Canadian students on a standardized test, and no better than an even broader group of Hungarian students. Other indicators are also very telling. U.S. students spend an average of only 3V2 hours a week on homework. That compares poorly with the 24 hours a week on average that high school seniors spend watching television. Studies show that European students spend far less time watching television and more time studying. Finally, American students spend much less time in school than their foreign counterparts. Even though the American system of education is highly decentralized, the 180-day school calendar is nearly national in scope. School calendars ranged from 226 to 240 days in pre-unification West Germany. In Japan, schools are open 243 days on average. Some argue against lengthening the school year on the ground that it is the quality, not the quantity, of in- 123 struction that is at issue. Certainly, merely lengthening the school year is not the panacea for the ailing U.S. school system, but it is an issue deserving study and consideration by the States. Evidence suggests that in countries with longer school years, more material is covered and at a much less hurried pace than in American classrooms. Thus even in U.S. school systems that attain high standards of excellence, the quantity of educational material provided to students is not competitive by world standards. TOWARD AN EFFECTIVE EDUCATIONAL SYSTEM The Administration is fully committed to promoting excellence in the U.S. educational system and has undertaken significant initiatives to this end. In September 1989, the President convened a summit of cabinet officials and U.S. Governors to discuss the state of American education. Only the third such summit in American history, it was the first ever on education. As a result of this historic meeting, the President and the Governors agreed upon six clearly defined goals for the American educational system to reach by the year 2000: • All children in America will start school ready to learn; • The percentage of students graduating from high school will increase to at least 90 percent; • Students will leave grades 4, 8, and 12 having demonstrated competency in challenging subject matter, including English, mathematics, science, history, and geography; and every school in America will ensure that all students learn to use their minds well, so they may be prepared for responsible citizenship, further learning, and productive employment in our modern economy; • U.S. students will be first in the world in science and mathematics achievement; • Every adult American will be literate and possess the knowledge and skills necessary to compete in a global economy and exercise the rights and responsibilities of citizenship; and • Every school in America will be free of drugs and violence and offer a disciplined environment conducive to learning. The President outlined these goals in his 1990 State of the Union Address. In July 1990, the President issued The National Education Goals: A Report to the Nation's Governors^ and the President and the Governors established a National Education Goals Panel that also includes participation of the congressional leadership. The panel will recommend a measurement and assessment system that will provide the Nation with information on the progress being made in reaching these goals. To help ensure that all American children start school ready to learn, the Administration has significantly expanded the Head 124 Start program. And to ensure that the national education goals are achieved, the Administration will propose a new Educational Excellence Act. Initiatives in this important proposal would stimulate fundamental reform through promoting educational choice and alternative certification for teachers and principals, promote local control and innovation by providing increased flexibility in funding in exchange for greater accountability, reward schools that demonstrate improved achievement among students, and provide incentives for innovative approaches to mathematics and science education. Programs of Choice The U.S. public educational system must be opened to the invigorating and challenging forces of market competition by enabling teachers, parents, and students to choose their schools. Over time, the schools that survive will be the most innovative and effective institutions, those capable of responding to the changing educational needs of society. Schools that must compete for students will work harder to deliver quality education. A school choice program can become the catalyst for greater diversity and help eliminate mediocrity in the educational system. An important step in this direction is the magnet school concept in which schools specialize in particular subject areas or interests—such as science, mathematics, or the performing arts—and students and their parents choose which school to attend. The Administration has advocated adoption of choice programs in as many jurisdictions as possible across the country. There is no one "preferred" approach to educational choice. A statewide choice plan exists in Minnesota, while a choice demonstration plan including both public and private schools has been launched in Milwaukee, Wisconsin. In 1990 seven States adopted plans allowing various forms of choice. Before 1990 five other States had enacted interdistrict choice plans. The Administration's new Center for Choice in Education has been established to provide information and assistance to anyone interested in learning about or implementing educational choice. A key to the success of a choice-based program is granting individual public schools the freedom to innovate. Schools must be freed from the grip of bureaucracies distant from the classroom. One popular version of this self-run school approach is to leave the governance of each school to a team composed of the principal, teachers, and parents. Such an arrangement creates a personal stake in the success of the school, rather than reliance on a central bureaucracy. It also provides parents and teachers an effective voice in determining how a school should change to attract students in an open-choice educational system. 125 Accountability Unless teachers, school administrators, and elected or appointed officials are held accountable for the quality of the education they provide, the success of open-choice programs and self-run schools will be limited. Merely adopting new approaches does not ensure success. Schools and teachers must be held accountable for what their students learn. To this end, State and local education agencies must work together to develop and publish objective measures of the output of the educational system. Meaningful performance measures are necessary for the success of school choice programs, allowing parents and students to leave choice programs that are failing. Such performance measures include basic competency tests for graduation from high school; annual tests to determine student progress; changes in high school drop-out rates; and high school transcripts that provide meaningful information on course content and student skills to parents, employers, and colleges. At the Federal level, the Department of Education is charged by law to "collect, collate, and from time to time, report full and complete statistics on the condition of education in the United States." The National Center for Educational Statistics (NCES) has developed a series of national measures of the output of the educational system. The NCES publishes an annual digest of education statistics and periodically publishes the National Assessment of Educational Progress. The NCES publishes an annual selection of indicators on the condition of education in the United States. The 1990 report confirms the dismal state of public education in this country. Each of these reports provides an ongoing basis for parents to test the success of education reform; they are important tools for increasing accountability. Alternative Teacher Certification Programs Each State sets up standards that determine who can teach in public elementary or secondary school systems. Differences in certification requirements across States produce substantial limitations on teachers' job market options. Although many States have formal reciprocity agreements, teachers still encounter significant barriers when they try to cross a State line. Until recently, for example, to win a permanent teaching position in a Rhode Island school system, a person qualified to teach in Massachusetts was required to have a master's degree and 6 years of teaching experience, three of them in Rhode Island. This particular limitation is being eased somewhat, since the six New England States along with New York have agreed to accept the teaching credentials of applicants from other States in the region, providing they complete extra education requirements within 2 years. 126 Eliminating unnecessary barriers to entry into the teaching profession within each State is at least as important as eliminating the barriers between States. Most States currently require that an individual either graduate from a 4-year college as an education major or take a certain number of education courses before being allowed to teach. Talented individuals who decide to switch careers and become teachers find they have to complete either a traditional teacher preparation program or, under fairly recent reforms in some States, complete a graduate degree program in education. While these requirements discourage many talented professionals seeking a career change from entering the teaching profession, they do not ensure that the school system is getting high-quality teachers. In fact, the poor academic performance of teachers in the subject areas they teach led many States to impose minimum grade requirements for education majors. The solution to the problem of attracting talented teachers, however, is not to regulate the industry further but to open it up to the competitive process and to reduce certification requirements in ways that do not threaten but instead encourage excellence in teaching. Currently, 28 States have implemented some form of alternative teacher certification program. Mainly small pilot programs, these are based on the general principle that an individual with a bachelor's degree in a specific field of study can be a successful teacher, given some minimum level of training in education (Box 4-1). The minimum varies across States, but all programs reflect the belief that the minimum needed to guarantee quality is far less than that currently required by traditional certification routes. It is important to recognize that removing unnecessary barriers to teaching does not threaten the stature of the profession. First, one already well-defined qualification for entry into the teaching profession, the acquisition of a 4-year college degree, will not change. Second, what helps promote respect for the teaching profession is effective teaching, not unnecessary certification requirements. The experience in Texas and in numerous other programs suggests that lowering the barriers to entering the teaching profession can improve the quality of primary and secondary education. SUMMARY • Public schools in the United States are failing to prepare students for either the world of work or higher education. This failure threatens the ability of the United States to maintain its leadership in the world economy. • Competition and accountability are essential if schools are to innovate and improve the quality of education. 127 Alternative certification programs can enhance the quality of education by removing unnecessary barriers to entry into the teaching profession. Box 4-1*—Texas Alternative Certification Program Starting with one school district in 1985, the Texas State school system has taken a national lead in introducing alterna* tive teacher certification programs. The program is currently operating in nearly 20 percent of the State's school systems, and the number of teachers certified by the alternative route has grown from 276 in the first year to 1,241 in 1990. In a typical program, a candidate with a bachelor's degree takes 1 to 3 education courses, learning basic classroom management, along with disciplinary and evaluation skills. The candidate is then assigned to Ms or her own classroom for the year, receiv* ing a first-year teacher's salary and a year of experience on the career ladder. Throughout the internship year, the candidate works closely with a mentor, often meeting on a daily basis for support and problem-solving. In addition, interns take other education courses throughout the year. The alternative programs have been very successful in attracting highly qualified, diverse interns. In 1990f 30 percent of the interns were men and 52 percent were minorities, compared with traditional education programs, where 23 percent of the enrollees are men and 12 percent are minorities. Interns are older than the traditional education major: 90 percent are over 24, and 50 percent are over 30 years of age. Evaluations of the program thus far suggest it is working very well. On State certification exams, interns do as well as or better than teachers who follow the traditional route* Studies show that teachers qualified by the alternative route are comparable in quality to teachers qualified through the traditional route. AGRICULTURE: TECHNOLOGICAL SUCCESS AND THE NEED FOR MORE FLEXIBLE POLICIES The agricultural sector illustrates dramatically both the tremendous dynamism of the U.S. economy and the costs of government policy that tries to inhibit change. Technological progress and the increased integration of world markets have transformed the U.S. farm sector, leading to growing production of wheat, corn, meats, and other products using a fraction of the labor force previously devoted to agriculture. At the same time, a complex structure of Fed- 128 eral farm policies has evolved that often inhibits the efficient use of agricultural resources. These programs impose significant costs on taxpayers, consumers, and the economy as a whole, thereby lessening the potential benefits of agricultural progress. TECHNOLOGICAL CHANGE AND PRODUCTIVITY GROWTH Technological innovation has been a driving force behind dramatic changes in both agricultural production and agriculture's role in the economy. Many important technological changes in agriculture occurred in response to market signals. The initial great surges in farm mechanization, for example, came in response to the farm labor shortages associated with the Civil War. The widespread adoption of mechanization allowed fewer workers to cultivate more land and facilitated agriculture's westward expansion. The advent of tractors around the close of World War I not only increased each worker's productivity, but also freed land from the production of food for draft animals. The demands on farm output associated with World War II, coupled with increasingly limited opportunities to bring more land into production, provided the impetus for a new wave of technological innovations that increased the productivity of each unit of land and livestock. Following World War II, farmers increased crop yields greatly through the adoption of chemical fertilizers and pesticides, irrigation, and improved seed varieties such as hybrid corn. Corn yields per acre, for example, more than tripled from 1945 to 1990. Improved livestock breeds, artificial insemination, and greater feeding efficiency enhanced the productivity of the livestock sector as well. The average dairy cow produced almost three times as much milk in 1989 as in 1945. In response to changing technology, the use of agricultural labor in 1989 was about one-fifth of what it had been a half century before, while the use of chemical inputs increased 16 times. Agricultural productivity per unit of all production inputs increased about two and one-half times between the 1930s and 1980s. Government has had a long and important role in supporting and disseminating agricultural research, but innovations also come to the farm sector because private entrepreneurs are able to profit from them. What are the major implications of these dramatic changes in productivity? First, employment in farming fell rapidly as fewer and fewer farm workers were required to meet the food demands of the nonfarm sector. While this decrease means that farming has become much less representative of the American lifestyle—less than 3 percent of the American labor force is employed on the farm today, compared with 21 percent in 1930—it also means that labor was freed from agriculture to contribute to the growth of other 129 sectors. Industries that emerged to support a more modern agriculture, such as financial institutions, farm equipment and fertilizer manufacturing and distribution, and food processing, were important new sources of employment. Second, agricultural supply expanded faster than agricultural demand. Accordingly, real farm prices have trended downward in the United States since the Civil War. The decline in agricultural prices contributed to the fact that American consumers now spend only about 16 percent of their disposable income on food—near the lowest in the world—and are among the best-nourished people in the world. CONSUMER DEMAND AND INTERNATIONAL TRADE In addition to technology, other factors have been important sources of agricultural change. Changing consumer tastes and preferences have affected the relative profitability of alternative crops and products and reshaped the composition of agricultural production. The health-motivated interest in low-fat foods, for example, has contributed to the rapid growth in the production of poultry meat since 1980, while the output of other livestock products has been roughly constant. Product Changes Within Agriculture Consumer demand sometimes shifts in response to exposure to new agricultural products through international trade. Kiwi fruit, for example, entered the U.S. market relatively recently from New Zealand. Rapid consumer acceptance created the incentives for the development of a domestic industry, and U.S. kiwi production grew from an estimated 5,000 tons in 1980 to 40,000 tons in 1989. Another demand-side factor with potentially large effects on the agricultural sector is the growing consumer concern with food safety and the environmental effects of chemical-intensive farm production techniques. Some trends in frontier research in biotechnology could help farmers respond to these consumer concerns. Bioengineered crop varieties that are resistant to diseases and pests are now emerging as proven technologies. Their adoption could ultimately reduce the intensity with which chemical inputs are used and again change the nature of agricultural production and the surrounding infrastructure. Interaction with World Markets One of the great benefits of productivity growth in U.S. agriculture has been the expansion of the supply of food and other agricultural products to countries all over the globe. Expanded trade, along with the direct transfer of agricultural technology to producers in other countries, has improved diets and living standards around the world. And, as U.S. agriculture has become more important to 130 the world, trade has become more important to the economic performance of U.S. agriculture. Agricultural exports increased sharply in the 1970s; during that decade the value of exports increased from about 12 percent to more than 25 percent of farm cash receipts. In the 1980s, total exports as a percent of production fell somewhat, but remained very high for key commodities. Depending on the year, anywhere from 40 percent to 80 percent of U.S. wheat production, for example, and 30 percent to 50 percent of soybeans were consumed in other countries. The importance of exports to U.S. farm income—combined with adverse world market conditions and rising international tensions over agricultural trade barriers in the mid-1980s—encouraged the United States to put agriculture at the top of its list of priorities for the Uruguay Round of General Agreement on Tariffs and Trade negotiations (Chapter 7). A successful conclusion to these trade talks, aimed at lowering barriers to agricultural trade worldwide, would help open foreign markets further to U.S. farm products. In return, U.S. barriers to imports would come down as well, bringing the benefits of increased competition in agricultural products to the U.S. marketplace. TOWARD A MARKET-ORIENTED FARM POLICY The long-term decline in U.S. farm prices has been one of the great benefits of increasing productivity in agriculture. Farmers, though, fearing that lower prices would mean lower incomes, have sought and secured a significant degree of government assistance in keeping the prices they receive from falling. Government agricultural policy, which partly insulates farmers from market forces, operates at the expense of consumers and taxpayers. The sharp escalation of farm program costs in the mid-1980s, together with some of the adverse effects of inflexible farm programs, highlighted the need for policy reforms. The Costs of Failing to Accommodate Market Forces Government farm programs consist principally of two types of subsidies: direct payments, financed by taxpayers; and programs that hold farm prices above free-market levels, paid for by consumers at the grocery store. At their peak in 1986, Federal subsidies of both types to U.S. producers of wheat, rice, feed grains, sugar, milk, and beef were valued at almost $27 billion—that is an average of $12,000 for each U.S. farm, although many farms receive no subsidies. One recent study estimated that economy-wide income would have been roughly $9 billion higher in 1987 in the absence of these subsidies. In other words, the benefits to consumers and taxpayers of al 131 lowing the market to allocate agricultural resources would have outweighed the loss of farm subsidies to producers by $9 billion. It is also instructive to examine some of the problems caused by specific policy measures designed to counteract market signals. A key component of U.S. agricultural policy is the provision of price floors for major commodities. Prices of wheat, feed grains, soybeans, rice, and cotton are held above the floor by allowing farmers, or sometimes other farm product suppliers, to pledge their crops as collateral to the government in exchange for a loan. Pledged crops are valued at the legislated support price. By putting their crop "under loan" when the market price is below the support price, suppliers remove some portion of the current crop from the market, which helps pull the market price back up toward the support price. Should the market price rise above the support price, crops under loan may be redeemed from the government and offered to the market. If not redeemed by loan repayment, the government acquires the crop collateral and the crop is said to have been "forfeited." The prices of sugar, milk, and several other commodities are also maintained above legislated price floors. A combination of government purchases of dairy products—including cheese, butter, and nonfat dry milk—and restrictions on the quantities of these products that can be imported is used to support milk prices to dairy farmers, for instance. (The sugar support system is discussed in Chapter 7.) Under each of these programs, farmers are guaranteed at least the support price—regardless of supply and demand conditions. A system of Federal regulations called "marketing orders" sets minimum prices for about 80 percent of fluid milk sales; 45 other marketing orders place restrictions on the quality or the quantity sold of various fruits, vegetables, nuts, and specialty crops. Milk orders reduce competition, and studies have shown that they raise retail milk prices. Orders that merely enforce minimum grade, size, and maturity standards can also interfere with competition, and can affect consumer choices and prices by removing some product from the market. The kiwi fruit order, for example, which began in 1984, after U.S. kiwi production had begun to expand, puts size and grade requirements on kiwis grown in California. The 1990 farm legislation extends the same requirements to kiwi imports. These requirements may well inhibit competition in a market that did not even exist until imports created it. Over time, policymakers have learned that when support prices for export crops are set too high, U.S. commodities accumulate in government warehouses, while other countries benefit from the absence of U.S. competition. Foreign farmers expand production and their share of the export market at the expense of the United 132 States. The high wheat support prices set in the 1981 farm legislation have often been cited as one reason for the sharp drop in U.S. wheat exports and the large buildup in government-held stocks during the early to mid-1980s. Support prices for wheat and other exported commodities were lowered in 1985 legislation, but policymakers have not had this same incentive to lower the price floors for commodities subject to competition from imports, such as dairy products and sugar. "Deficiency" payments are another major component of farm programs. They are paid to qualifying wheat, feed grains, rice, and cotton producers and are based on a "target" price, which is set higher than the support price for these crops. Each qualifying farmer receives a check from the government in an amount equal to the difference between the legislated target price and the market price or support price, whichever is higher, multiplied by qualifying production. These deficiency payments are made in proportion to a farmer's crop acreage. As a result, the distribution of deficiency payments is dramatically skewed toward large, often wealthy farmers. In 1988, for example, more than 40 percent of direct payments, which include deficiency payments and a smaller amount of some other payment types, went to fewer than 4 percent of all farms. These farms averaged almost $62,000 in payments, almost $100,000 in net cash farm incomes, and more than $800,000 in net farm worth. Furthermore, the incentive to overproduce provided by a target price set well above the market price requires offsetting measures to control program costs, such as requiring farmers to take land out of production. Farmers thus have been required over the years to cede some of their production decisions to the government. 1990 Farm Legislation In recent decades, farm legislation has been written often, but each law has retained the general structure of the original 1930s legislation. The 1985 legislation introduced important market-oriented reforms, such as more flexible approaches to determining support prices for exported commodities. Support prices for most program commodities began to be based on a 5-year moving average of market prices, rather than being set independently of price trends. U.S. farm exports performed considerably better after this change. The most significant change of the 1990 farm legislation, the Food, Agriculture, Conservation, and Trade Act of 1990, in conjunction with the Budget Reconciliation Act, is the "triple-base"provision, which extends increased planting flexibility to farm program participants while reducing the acreage qualifying for deficiency payments. This planting flexibility provision (explained in Box 4-2) makes market prices more important to production decisions. It 133 will thus help reverse the longstanding tendency of farmers to overproduce crops whose target prices are set above market prices. Two particularly important outcomes are likely. First, the production of existing and potentially profitable alternative crops that do not qualify for deficiency payments, such as soybeans and other oilseeds, can now expand. Second, environmentally sound crop-rotation practices might be encouraged in some agricultural regions where substitute crops are available or are likely to be introduced. Box *-l—How the *frfple-Basef* Provision Works Every .y0$r the government assigns farmers an "acreage base*- and a "payment yield" for each program crop, such as com, historically planted on the farm* Under the 1985 farm bill/a farmer could receive deficiency payments for producing corn o#ly if some portion of the corn acreage base was put into a conserving use and not planted to com* Deficiency payments ware not made on this idled, or conserved, acreage, and the feimer could incur penalties for planting certain crops, such as soybtaiis, on it - , ; The 1090 f»m legislation added to the /ieficiency payment acres and conservation acres a third mteg&ty$w£ does not qualify for d&fwiemcy payments, but th&t m&y te f^m^A to any zmpmmpt fruits and vegetable®. The Wlltet tidM> thirdcatego* ry~the flexible acres—at 15 i^itjenfcof tfeta^te^^. By disallowing deficiency payments on this IS percent, the flexibility provision reduces government outlay Farmers can, however, offset some of the lost subsidy by planting crops with the greatest market returns on the triple-base acreage. Therefore* the provision makes market signals ipgtore important to farm production decisions. The flexibility provisions of the 1990 legislation also create considerable taxpayer savings, as farm subsidies are eliminated on 15 percent of the farm program acreage base. This change is projected to save about $7 billion over 5 years and is an important component of the overall deficit reduction package. However, while reducing deficiency payments and increasing the importance of market prices in farm production decisions, the 1990 farm legislation retains high and rigid price supports for dairy products and sugar and continues extensive government management of some markets, such as peanuts. While the Administration applauds the move toward increased flexibility that the 1990 farm legislation represents, continued efforts to reduce distortions created by farm policy are desirable. 134 SUMMARY • A series of technological revolutions has dramatically increased the productivity of agriculture, freeing labor from agriculture, lowering the cost of farm products, and enhancing the prosperity of the economy. • Productivity growth also facilitated a tremendous increase in agricultural exports, linking the future of U.S. agriculture to the openness and growth of world agricultural markets. • U.S. agricultural policy, as evidenced by 1990 farm legislation, is gradually being changed so that agriculture is more able to respond to market signals, but further reforms are necessary to reduce the distortions created by farm policy and the burden of farm support on consumers and taxpayers. HEALTH CARE: DYNAMIC TECHNOLOGY AND CHANGING DEMOGRAPHICS Health care has been one of the fastest growing and most innovative sectors of the U.S. economy during the last three decades. Although many factors have contributed to the rapid pace of change, the fundamental driving forces have been technological advances and shifts in the demographic makeup of the population. These forces, along with the lack of market incentives for cost-conscious behavior, have resulted in escalating costs and much concern about lack of access to health care for many Americans—particularly the 33 million people who lack health insurance coverage. While government programs finance care for many of the poor and elderly, increasing government involvement in the health care financing system has aggravated the problems of cost and access. RECENT TRENDS The most dramatic illustration of the growing importance of the health sector is its rising share of GNP. In 1960, health care accounted for 5.3 percent of GNP; its share rose to 11.6 percent in 1989. To put those numbers in perspective, total health care spending in 1989 was twice as large as Federal spending on defense, and more than six times larger than the value of U.S. farm output. The growing share of health care in the U.S. GNP can be traced to developments on both the supply and demand sides of the health care market. On the supply side, technological advances have made possible a vast array of medical treatments unheard of even a decade ago. Developments in diagnostic equipment and pharmaceuticals, for example, have promoted earlier and more successful treatment of many diseases. Much of this technology, however, is costly. Therefore, while technological advance has undoubtedly im 135 proved the quality of treatment received, it has simultaneously made that treatment more expensive. On the demand side, economic growth favors health care expenditures. As incomes rise, people tend to attach more importance to trying to live longer and healthier lives. Most advanced economies have experienced increases in the share of resources devoted to health over time. In addition to technological advances and economic growth, health costs have increased because of the aging of the population. Older individuals incur more health expenditures, on average, than the young or middle-aged. The percentage of Americans aged 65 and older rose from 9.2 percent in 1960 to a projected 12.6 percent in 1990, representing an increase of 14.9 million older Americans. During this period, life expectancy rose by more than 5 years and infant mortality rates declined by 63 percent. These statistics indicate that increases in the amount of resources devoted to health are not necessarily bad, since to a large extent they represent an investment in health, the changing preferences of a wealthier society, and the extra cost of a longer lived population. Table 4-1 shows that the aging of the population will continue to exert a large influence on the health care system for several decades. Even without above-average increases in medical prices, the rise in the elderly population means that the United States will pay much more for health care in the coming decades unless dramatic developments occur that reduce costs. TABLE 4-1.— Aging of the U.S. Population, 1960-2040 Population (millions of persons) July Total Age 65 and over Age 65 and over as percent of total population I960 180.7 16.7 9.2 1980 227.8 25.7 11.3 2000 » 268.3 34.9 13.0 2020 * 294.4 52.1 17.7 20401 301.8 68.1 22.6 1 Middle series projection, January 1989. Note.—Includes Armed Forces overseas. Source: Department of Commerce, Bureau of the Census. PERCEIVED PROBLEMS OF THE EXISTING SYSTEM Despite the beneficial effects of much spending on health care, there is a general perception that the U.S. health care system should perform better than it does. Costs are seen to be out of control, and millions of households do not have health insurance and are perceived to have inadequate access to care. 136 Rising Government Health Care Costs Health care costs paid by Federal, State, and local governments have exploded. The combined total spent by all levels of government on health care rose from $28.1 billion in 1960 (in 1989 dollars) to $253.3 billion in 1989 and is expected to continue to rise. These escalating costs place great stress on the ability of governments to fund current and future liabilities in health care. Medicare, the principal program for providing medical care to the elderly and disabled, illustrates the changes in government spending on health. Medicare expenditures were $17.6 billion (in 1989 dollars) in 1967, the first full year of the program, and 19.5 million people were enrolled. By 1989 the Federal Government was spending $100 billion on medicare, and 33.6 million elderly and disabled Americans were enrolled. The enormous increase in outlays for medicare can be traced to the increase in the number of people covered by the program, general increases in medical care expenses, and the increased share of program costs borne by the Federal Government. For example, the Federal Government originally shared equally with enrollees the cost of covered physician services, but in recent years beneficiaries have paid only 25 percent of the cost. Even when all benefits and patient payments are included, the Federal Government pays out $3 for every $1 spent by medicare patients. Medicaid, the program that funds health care for some of the poor, illustrates the effect of changing demographics on both the type of care received and increasing government costs. Started in 1965, medicaid was initially designed as a joint Federal/State program to provide health care for women and children receiving welfare payments and the disabled. Medicaid eligibility has expanded in recent years, but even today it is not designed to provide medical care for all poor Americans. Total medicaid expenditures in 1967 were only $7.6 billion (in 1989 dollars). In 1989, the Federal Government financed 57 percent of a total medicaid bill of $59.3 billion. The most significant trend in recent years has been the increase in medicaid spending on nursing-home care for the elderly. Spending on long-term care for the elderly accounted for about 25 percent of all medicaid spending in 1989. As the number of elderly citizens continues to rise, the costs of long-term care will also increase. Health Care Price Inflation Rapid increases in the real price of health care have contributed to the overall rise in health care spending. From 1980 to 1989 the price index for medical care rose by 99 percent, twice as fast as the average for all goods and services, though difficulties in measuring 137 the inflation rate in technologically dynamic sectors suggest that the real difference in inflation rates was probably somewhat less. Those rapid price increases, combined with growth in the volume of services demanded, raised total health care expenses. The health care sector has responded to cost escalation in several innovative ways. One of the most significant changes is the growth in health maintenance organizations (HMOs) and preferred provider organizations (PPOs). HMOs charge a fixed annual fee for medical services, rather than a separate fee for each service provided. In a PPO, a group of providers negotiates prices and patient volume with a large health care purchaser, such as an insurance company or employer. Through their greater potential for supplying cost-effective care, HMOs and PPOs provide competitive alternatives to traditional fee-for-service insurance policies. The rapid growth of HMOs and PPOs illustrates both the important role of competition and the ability of the health care sector to respond innovatively to the challenge of cost escalation. The Medically Uninsured One of the most critical deficiencies of the U.S. health care delivery system is the large number of people who lack health insurance. Although estimates vary, recent calculations place the number of uninsured Americans at around 33 million. Because the very poor are usually covered by government programs such as medicaid, many of the uninsured are employed workers or children and spouses of workers. They may lack insurance coverage because their employers cannot afford to offer it, they cannot afford to purchase it on their own, and they do not qualify for government-subsidized programs. Many of the uninsured are not poor; 39 percent of uninsured Americans have incomes more than twice the official poverty level. Many young, healthy workers prefer not to purchase insurance when given a choice, since the cost of a policy outweighs its perceived benefits. To a great extent, the lack of access to health care or affordable insurance is due to the increase in health care costs during the last few decades. Two policies enacted in 1990 will help to protect families particularly at risk from lack of insurance. Low and moderate income families will receive a tax credit covering part of the cost of purchasing medical insurance covering the whole family rather than just obtaining single coverage for the worker. In addition, medicaid coverage was extended to all pregnant women and children up to age 6 in families with incomes below 133 percent of the poverty line. The Administration's new infant mortality initiative and its proposed expansion of the Special Supplemental Food Program for Women, Infants, and Children, along with a variety of initiatives 138 emphasizing preventive care, will further enhance the health of low-income families. WHY HEALTH CARE MARKETS PERFORM POORLY Why is the health care sector able to perform so well in meeting certain demands yet unable to control costs or provide adequate services to all who need them? The institutional structure of the U.S. health care delivery system and the poor incentives for cost control it provides are at least partially to blame. Health Insurance and "Third-Party Payments" The most important institutional feature of the existing system is the prevalence of Federal or private insurance policies. People purchase insurance because they want to be protected from the costs of accidents, fire, or, in the case of health insurance, disease and sickness. But one consequence of insurance coverage is that those who are protected from harm by an insurance policy have less reason to take actions to reduce the probability that any harm will occur. When harm does occur, consumers covered by insurance face diminished incentives to minimize the cost of care, since someone else pays the bills. The effect of insurance generally to diminish the incentive to minimize cost is called moral hazard (Box 4-3). In the context of health care, insurance provides an incentive to increase the quantity of services consumed, since the patient does not pay the full cost of additional services. Federal and private insurance distorts consumer incentives to a large and increasing extent. In 1970, patients paid 41 percent of the costs of their care out-of-pocket. By 1989, that percentage had fallen to 24 percent. Increasingly, health care expenses are paid by third-party payers, primarily the government and insurance companies. Although ultimately the cost of care must be paid by recipients (in the case of private insurers) or taxpayers (in the case of Federal insurance), consumers of medical treatment who have insurance do not generally need to be concerned at the margin about either the cost of the services they receive or even whether those services are necessary or cost-effective. Consequently, unlike most markets for goods and services, medical care does not have built-in incentives to equate costs and benefits at the margin. Health insurance differs from fire or auto insurance in the extent to which its structure creates incentive problems. Until recently, health insurance has tended to cover more and more of the care received by patients. For example, many policies have small deductibles, so that patients do not have to pay for even routine care, such as a physical exam or treatment for a sore throat. This type of "first-dollar coverage," as it is called, is analogous to homeowners' insurance that would pay not only for the damage caused 139 Box 4-&—Incentives in the Market for Health Insurance One of the most important issues that arise in examining the mounting cost of health care in the United States is the extent to which the widespread use of insurance distorts incentives to make cost-effective choices. In health care and other markets, insurance coverage reduces the incentive to balance costs and benefits at the margin because the consumer does not pay the full cost of the treatment. This phenomenon, called moral hazard, is common to all insurance markets* Using health care as an example, consider the situation confronting an insured consumer who visits a physician. If the insurance policy pays 80 percent of the cost of treatment, the price to the consumer of care costing $100 is only $20. Therefore, the consumer would purchase the treatment even though he may value it at less than $100, Alternatively, if the consumer could prevent the need for treatment by spending $40, he may not do so because his cost would exceed his savings of $20, even though the true savings is $100* Thus, insurance coverage creates a gap between the price paid by the consumer and the cost of providing care, so that the choice made is inefficient* The health sector has responded to the moral hazard problem in several ways. The most direct response is to place restrictions on the care that is reimbursed by increasing the deductible. Larger deductibles force the consumer to pay the full price of treatment for relatively low-cost care, at least until the deductible is reached. That is an effective way to encourage the consumer to make cost-conscious choices and thus reduce the overall cost of health care for the average consumer. A second approach to reducing moral hazard is to encourage the physician to make efficient choices. That is one goal of health maintenance organizations and other capitated systems in which care providers are paid a fixed amount per policy, regardless of the amount of care provided. The physician, therefore, has no incentive to provide excessive care. In fact, providers in capitated systems may face incentives to save money by providing less than the needed amount of care. In HMOs, however, care decisions are most often made by salaried physicians who do not have a direct economic stake in the amount of care provided, Professional standards and concern for the reputations of individual capitated systems further enhance the physician's incentives to balance the costs and benefits of treatments. 140 by a house fire, but also for a burnt pan caused by leaving the stove on too long. The analogy in auto insurance would be a policy that paid not only for damages resulting from moving accidents, but also for paint chipped when a car is scraped in a parking lot by another car's opening door. The cost of such policies would be much higher than typical home or auto policies. Government Regulation Government regulations, especially those that require insurers to provide specific benefits, have a large effect on the cost of health insurance. Health insurance policies are regulated by the States, and every State requires that insurance companies doing business in their State include certain benefits. That means that it is illegal for an insurance company to offer a bare-bones, low-cost insurance policy to consumers who only want to insure against catastrophic accidents or illnesses. The States instead require that virtually all consumers purchase coverage for a package of treatments that varies from State to State. The required benefits can include maternity care, alcoholism and drug abuse treatment, mental health care, chiropractors, and assorted other treatments, regardless of the consumer's willingness to pay for such coverage. These requirements raise the cost of health insurance and make it too expensive for many individuals and firms. As a result, many individuals who would willingly purchase low-cost insurance against catastrophic illness are not allowed to do so. A recent study estimated that as many as one-fourth of the uninsured, or more than 9 million people, lack health insurance because of the high cost of policies due to State regulations. Another effect of government involvement in financing health costs occurs through the means-testing of the medicaid program. To target benefits at the poor, income limitations are set to restrict eligibility. If earnings exceed the maximum allowed, all benefits are taken away. (Medicaid availability is also affected by participation in other means-tested programs, particularly aid to families with dependent children.) For low-income families, this loss of medicaid eligibility can create a large penalty for employment, since medical benefits potentially worth thousands of dollars, as well as peace of mind, can be lost if replacement health insurance is unavailable. Employer-Based Insurance and Tax-Free Health Benefits One fundamental characteristic of the U.S. private health insurance system is that it is predominantly employer-based; that is, most Americans with health insurance obtain it through their employer. Providing insurance through employment is a natural mechanism for achieving the risk-sharing benefits of insurance. 141 Economies in administrative, sales, and purchase costs also enhance the desirability of employer-based group insurance. By covering everyone in a large group, insurers avoid the problem of "adverse selection," which occurs because those most likely to need expensive care, such as the chronically ill, are also the most likely to seek insurance. However, these advantages pertain primarily to large employers. Small firms are less likely to offer insurance if they have employees particularly likely to need care, and the economies in administrative expenses are much reduced for small groups. Firms with fewer than 50 workers incur administrative costs of about 25 to 40 percent of total claims, versus only 5.5 percent for firms with 10,000 or more employees. Typically, health insurance is not only organized in the workplace, it is largely paid for by employers, although much of the cost may be shifted back to workers in the form of wages lower than they would otherwise earn. On average, employers pay about 90 percent of the premium for single workers and 75 percent of the cost of family coverage. This practice makes sense for firms and workers because the cost of employer-provided health insurance is tax-deductible for firms, and workers do not pay income or payroll tax on these benefits. The tax treatment of employer-provided insurance means that taxpayers subsidize the provision of health insurance to workers. As a result, incentives are not only distorted by the existence of insurance, but individuals are also induced to carry more insurance than they would if they faced its true cost. Thus employees tend to demand both more health insurance and more health care than they would if they had to pay the full price. The increased demand for health care drives up the average price, if there is no offsetting rise in the supply of care made available. The financing and regulation of the health care sector thus combine to reduce significantly the flexibility of health care markets. Fundamentally, consumers do not have adequate incentives to avoid services that are too expensive, and providers who are not cost-efficient are not disciplined by the market. Without these incentives, markets cannot function well. Health care reform, designed to control the rate of cost increase and improve health care access, must confront the problem of creating appropriate incentives for health care consumers and providers. SUMMARY • The health care sector grew rapidly during the last three decades due to advances in technology, the aging of the U.S. population, and increased government financing of health care expenses. 142 • Many of the inefficiencies in health care are attributable to the dilution of market incentives and the reduction in market flexibility created by third-party payments and governmentmandated benefits. • Health care policy reform will not be successful unless it improves the incentives for health care consumers and providers to balance costs and benefits. TELECOMMUNICATIONS: TECHNOLOGICAL AND REGULATORY INNOVATION The telecommunications industry, like the health care industry, has been undergoing particularly rapid change. As few as a dozen years ago, it consisted almost entirely of regulated service providers and dominant equipment providers with substantial market power; today, much of the regulation has been removed and competition is vigorous in many of its component markets. Deregulation is a natural experiment that demonstrates the benefits of increased flexibility and the hidden costs of regulation. Because the crucial local telephone exchange segment of the industry will remain regulated for the foreseeable future, careful thinking is required to design its regulation to minimize those hidden costs. LESSONS FROM DEREGULATION Deregulation of telecommunications began with Federal Communications Commission (FCC) and judicial decisions of the 1950s, 1960s, and 1970s. It continued with the breakup of American Telephone and Telegraph (AT&T) in the early 1980s, the passage of The Cable Communications Policy Act of 1984 (the 1984 Cable Act), and further deregulatory decisions in the 1980s. These policy changes helped transform the telecommunications industry from a structure dominated by regulated monopolies into one in which several deregulated competitive sectors coexist with a remaining regulated monopoly component. Both the difficulty of bringing about this transition and the benefits that it has generated provide lessons about government regulation and market flexibility. Adapting to Changing Circumstances The early history of the telecommunications sector was characterized by extensive competition. In the period following the expiration of Alexander Graham Bell's original patents in 1893 and 1894, many new firms entered the telephone business, eroding the monopoly held by AT&T, which had evolved from Bell's original company. By 1907, 49 percent of installed telephones were controlled by non-Bell companies, and most Bell operating subsidiaries faced some direct competition. 143 AT&T then adopted an explicit strategy of reducing competition through mergers and acquisitions and willingly accepting regulation, both to exclude competitors legally and also to blunt public criticism of monopoly. By 1932 Bell's market share had returned to 79 percent, and direct competition had been virtually eliminated. With the passage of The Communications Act of 1934, the regulated monopoly structure of the telephone system was completed. In 1970 AT&T controlled 95 percent of local and long-distance telephone revenues, and its Western Electric manufacturing subsidiary provided almost all of Bell's equipment needs. Changing technology eventually made this monopoly regime unsustainable. As early as the 1950s, other companies sought permission to sell types of telephone equipment that AT&T did not produce. The development of economical microwave transmission technology made competition for long-distance telephone service feasible, and the FCC permitted a competitor to enter this market in a limited way in 1969. The completely regulated monopoly structure of the telecommunications industry might have made sense in 1930, but by the 1970s it clearly was incompatible with the new state of technology. Competition, not regulated monopoly, emerged as the appropriate policy for the equipment and long-distance components of the telephone industry. The history of the cable television segment of the industry offers the same lesson. In the 1960s, cable TV provided television to remote areas that could not receive standard broadcast signals. Cable TV operators clearly had a monopoly over an important segment of the entertainment market in these areas, and the widespread practice by State and local governments of regulating cable TV rates developed in this era. Later, cable evolved in many areas into an alternative to "over-the-air" TV, and it also faced increasing competition in the broader entertainment market from direct satellite broadcasts and widely available videocassette rentals. Regulation of cable TV rates persisted, however, until the 1984 Cable Act deregulated them except in areas with limited broadcast competition. Again, policy had to change to recognize the change in the underlying industry conditions. Thus, in telephone equipment, cable TV, and long-distance telephone service, a regulatory regime appropriate to a technology at one stage gave way, slowly and reluctantly, to new policy appropriate to new technological realities. Of course, the evolution of telecommunications regulation is not over. Today, local telephone service remains largely a regulated monopoly, because it does not make economic sense for more than one company in an area to build a complete system of copper wires, fiber optic cables, and switches connecting all customers. That too could change if, for example, radio technology developed that was competitive with the wired 144 system for nonmobile communications. More likely, technological developments that cannot yet be anticipated will change the nature of the industry in ways that will make the current regulatory structure obsolete. Unanticipated Benefits of Deregulation Deregulation and the ensuing competition in the markets for telecommunications equipment and long-distance service facilitated development of products and services that did not exist before. The development of the facsimile (fax) machine in different versions offered by many different companies could not have occurred if telephone equipment had remained regulated. In addition to the fax, an enormous variety of portable telephones, answering machines, and computers with built-in communication abilities have all emerged in the deregulated equipment market. New services have also been introduced, based both on new technologies and new arrangements that were either not permitted or not conceived of under regulation. Today, cellular technology has taken mobile telephones from the realm of spy-movies and given them to 4.4 million subscribers. Long-distance competition has reduced the cost and expanded the range of "800" and "900" number services available to businesses, thereby increasing the flexibility with which they reach their customers and suppliers. Combined with deregulation of the surface freight industry, the fax machine, electronic data interchange, and other new communications technologies are changing the way firms organize the distribution networks that connect their factories, stores, and customers. Some of these changes were anticipated when deregulation was contemplated, but most were not. MAINTAINING A DYNAMIC INDUSTRY The policy framework that will ultimately replace the old framework of near-total regulation is still emerging. Ahead are a number of policy choices that offer opportunities to increase the benefits of deregulation. The principle of designing government policy to foster flexibility is crucial in order to ensure that the United States has the most effective telecommunications infrastructure possible. Maximizing the Scope for Competition In several markets in the telecommunications sector, current policy inhibits competition. Cable TV operators are subject to competition from other media, but in most cases State or local governments grant a franchise to a single cable operator in a given area, preventing operators from competing with each other for customers. Local telephone companies are also prohibited by law from acting as cable operators. These restrictions reduce the power of 145 competition to discipline cable prices and services and give cable operators inadequate incentives to adopt the latest technology. The FCC and many States also continue to regulate AT&T's longdistance rates, despite the presence of competition in these markets. This vestige of an earlier era now serves primarily to inhibit competition. Another area in which government policy could further recognize the potential for competition is in the management of the electromagnetic spectrum. The spectrum consists of the range of frequencies in which radio-based technologies such as broadcast television and radio, cellular telephone, and microwave transmissions operate. The range of frequencies with desirable technical properties is limited and therefore is a scarce resource that must be allocated efficiently. The FCC allocates particular "bands" of frequency to specific uses and then assigns the right to operate in these bands to specific private parties. Assignment and allocation of spectrum bands require administrative hearings that can be very cumbersome and time-consuming. As a result, competition among technologies and among different firms seeking to operate a given technology is greatly reduced. Without the force of competition, spectrum bands are not necessarily used in ways that generate the greatest social value. The invention of new technologies is stifled because of the inability to get access to the spectrum, and there is an inadequate incentive to refine existing technologies to conserve the amount of spectrum used. If instead of assigning spectrum rights administratively, the Federal Government auctioned them to the highest bidder and permitted their sale and reassignment, the flexibility of the telecommunications sector would be greatly increased. In particular, when portions of the spectrum previously reserved for government use are made available to the private sector, they should be auctioned off without restrictions on resale. The resulting competition would likely lower prices and increase the diversity of available service offerings for over-the-air communications and broadcast media generally. The government also limits competition by restricting the entry of the regulated local telephone companies into unregulated businesses. Under the terms of the consent decree governing the breakup of AT&T, local operating companies are not allowed to manufacture telephone equipment, offer various information services, or provide most long-distance service. It might appear that keeping these particular firms out of these businesses would not have serious costs so long as other firms are free to enter. The government, however, has no way to determine who the most qualified or most advanced potential competitor 146 might be. Further, there are reasons to believe that the local telephone companies might have much to offer these other markets. Experience developed in the construction or operation of the hardware and software for the telephone system itself could be very valuable in developing information services for sale to customers. These and other potential "economies of scope" between the local exchange and other markets are limited or lost when the telephone companies are barred from related businesses. The lesson from easing previous restrictions is that increased competition produces additional benefits that cannot be foreseen today. These restrictions reflect a concern that local telephone companies would have unfair advantages in competing against others in markets that are somehow connected to the local exchange. For example, the local telephone companies might try to hide some of the costs of their competitive activities within the regulated local exchange sector, thereby transferring the costs to the local ratepayers. They might also exploit their knowledge of the technical details of the local network, or even design the configuration of the network in ways that favor their product offerings in the related competitive businesses. These are real concerns that must be addressed. If the local telephone companies are permitted to compete, regulators will need to scrutinize their activities to prevent ratepayers from subsidizing the competitive businesses and to ensure that the regulated firms do not unfairly exploit their monopoly position. Monitoring of regulated firms competing in unregulated markets will be imperfect, and it will not be a costless process. But regulators have developed better monitoring tools than they previously had, and the alternative is the extreme option of banning firms from participating in related businesses without even attempting to make competition work. The principle that the government should not decide what activities within an industry particular firms may perform also applies to the development, ownership, and syndication of programming for broadcast and cable television. Government restrictions on ownership, carriage, or syndication of programming inhibit competition, reduce efficiency, and are generally an ineffective means of addressing any problems of market power that may exist in these markets. Regulatory Approaches that Encourage Innovation Traditionally, monopolies are regulated by what is called cost-ofservice regulation. Regulators determine the total costs incurred by the monopolist in providing the regulated services and then set prices designed to recover those costs, including a competitive rate of return on the capital invested in the regulated company. This method is intended to ensure that the company will not lose 147 money, but also that it will not be able to charge prices in excess of its costs. The fundamental problem with this approach is that a firm subject to cost-of-service regulation has limited incentives to reduce its costs or improve its services. A reduction in costs will eventually be translated into a reduction in allowed revenues, leaving the firm no better off. If improved products lead to a rise in profits, prices will eventually be reduced by regulation to bring revenues and costs back into line. Again, the benefit to the firm has been reduced. A firm presented with these incentives will not seek change and innovation as aggressively as one that is able to retain the profit from doing so. Recently, economists and regulators have become interested in developing forms of regulation that would prevent abuses of monopoly power while preserving incentives for innovation. These approaches are often referred to loosely as "incentive regulation." All forms of incentive regulation are designed to preserve the overall or long-run relationship between prices and costs but to sever or limit that relationship in the short run or for specific investments. In other words, if a firm reduces its costs or improves its products, it would be permitted to keep some of the profit that the innovation generates. The key to maintaining the incentive to innovate is to tie the regulated firm's price level to some overall or general indicator of costs, rather than to actual costs incurred. For example, prices could be allowed to rise each year by the rate of inflation, minus a fixed percentage reflecting expected productivity improvements. Alternatively, the firm's prices could be tied to a general index of costs in the industry. In these ways, regulators could achieve a better balance between the desire to prevent monopoly profits from being earned and the goal of maintaining incentives for efficiency and innovation. SUMMARY • Telecommunications is a dynamic sector in which regulation must continually evolve to reflect changing conditions. • Deregulation has permitted innovation that could not have occurred under the previous regulatory regime. • To promote the continued dynamism of the industry, public policy should seek to maximize the scope of competition and avoid preventing particular firms from competing in particular sectors. • Incentive regulation is an attractive policy innovation that has the potential to reduce the adverse effects of continued regulation on technological innovation. 148 DEFENSE INDUSTRIES: ADJUSTING TO THE END OF THE COLD WAR With the end of the cold war, U.S. defense expenditures are scheduled to be reduced by substantial amounts in the next decade. Although the current situation in the Persian Gulf creates some uncertainty about the immediate future, the scheduled reductions would continue the recent trend that saw defense spending fall in real terms starting in 1987. One obvious impact of these spending decreases will be a substantial reduction in the size of the defense sector, creating a challenge and opportunity for markets to adapt. HISTORICAL EXPERIENCE The historical experience with fluctuations in defense expenditures shows that the U.S. economy has little difficulty responding to shifts in defense spending. As shown in Chart 4-2, government expenditures on defense have varied considerably since the late 1930s. Industry responded quickly when defense needs increased, most notably during wartime but also in more recent years. Defense purchases of durable goods, for example, increased more than 50 percent from 1980 to 1984. Declines in spending also provided opportunities for demonstrating the economy's flexibility. Even during the period of greatest reduction, when defense spending fell from 41 percent of GNP in 1944 to 4 percent in 1947, the economy adjusted quickly. Although total output fell in 1946 and 1947 because of the dramatic decline in government spending, consumption and private fixed investment rose as the United States made the transition to a peacetime economy. A similar temporary decrease in real GNP occurred at the end of the Korean war. As defense spending dropped from 13.2 percent of GNP in 1953 to 11.2 percent in 1954, the economy fell into a recession that lasted 10 months. In 1955, output grew 5.6 percent even though defense spending continued falling to 9.6 percent of GNP. As shown in Chart 4-2, defense spending as a percentage of GNP was lower during the Vietnam war than during previous conflicts. Given this smaller role, it is not surprising that the declines in defense spending as the war ended in the early 1970s had virtually no impact on growth. This historical experience suggests that future defense cuts will not adversely affect the economy as a whole, since the relative importance of defense in the U.S. economy has been declining since the early 1950s, and even the increases of the early 1980s made only a small, temporary bump in the downward trend. The relatively small role played by the defense sector in the U.S. economy helps to ensure that the transition to lower spending levels will be man 149 Chart 4-2 Defense Purchases as a Percent of GNP, 1939-1996 Projected declines in defense purchases are small by historical standards. Percent 45 40 35 30 25 20 15 Projected 10 5 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 Calendar Year Sources: Department of Commerce and Council of Economic Advisers. ageable and that resources will be able to move to alternative uses with little impediment. Under current budget plans, defense spending in 1996 will be lower by 1.7 percentage points of GNP than in 1990. Since the economy successfully adapted to more rapid reductions following World War II and the Korean war, there is little reason to think that the present changes will be troublesome. The precise magnitudes of the spending cuts are uncertain, and some of the decreases could be delayed, or even reversed, by changes in the world situation or an extended deployment in the Persian Gulf. THE PROBLEM AND POTENTIAL OF DEFENSE CONVERSION The key problem with the transition of the defense sector to lower spending levels is that the impact is not broad-based but tends to affect drastically firms in only a few industries. The resources of these firms, both the physical capital and the skilled labor, are somewhat specialized for military production and so are reduced in value when defense cuts occur. The communities in which these firms are located will also be adversely affected as em- 150 ployment is reduced. Although these disruptions may require some difficult adjustments, defense cuts are an opportunity to allow market forces to redirect resources toward other productive uses. Government policy should seek to ensure that the transition occurs as smoothly as possible. In that way, the harm to communities will be minimized, and unemployment effects will be reduced. One possible additional concern with cuts in defense spending is their potential effect on the defense industrial base and U.S. technological superiority. In managing the proposed spending cuts, the ability of the United States to continue to produce the equipment needed to fight future conflicts should be maintained. Furthermore, the advantage the United States has in defense technology should be protected through continued investment in research, although some of the priorities may be shifted. The defense technology base can also be protected by relaxing procurement regulations, particularly those that restrict the transfer of defense technology to civilian uses. Facilitating the Redeployment of Resources The Federal Government has programs in place that address the problems facing workers and communities affected by defense reductions. It is important to recall that even in times of expanding budgets, some firms and workers lose contracts, as purchases shift to different products or services. Therefore, the problems caused by expected defense cutbacks can be viewed as a somewhat larger version of the typical shifts in demand that occur in a dynamic economic environment. The true "peace dividend" is not the amount of money saved in the Federal defense budget, but rather the real resources that are made available as defense spending declines. The economy will benefit from the end of the cold war only if these resources are allowed to shift to new, high-value uses. The reduction in overall government spending will also reduce interest rates and stimulate investment throughout the economy. Sectoral shifts take place continuously in the U.S. economy, so it is useful to ask whether anything about the defense industry merits special treatment. Because defense spending is exclusively a government endeavor, some have argued that the government has a special obligation to protect those who are affected by declines in Federal defense spending. This argument suggests that government contracts are an entitlement and that any reduction in spending should be offset by compensation. Similar arguments have been made to support policies targeted toward assisting workers adversely affected by other changes in Federal policy. It would be unwise to accord special treatment to workers or firms directly affected by changes in Federal spending. In addition to the practical difficulties of determining fairly who is actually affected, such an approach effectively divides the work force into two 151 groups, one that receives both Federal support and funding and special privileges when that support is reduced, and all other workers. To the extent that such a policy gave defense workers special benefits, it would be extremely unfair to workers in other sectors. This approach would also make it difficult and costly for the Federal Government to change spending patterns in response to changes in society's needs and priorities. The existing rigidity in government spending patterns already makes it difficult to eliminate programs and policies that have outlived their usefulness. For several reasons, defense firms sometimes cannot easily transfer their engineering and production capacity to civilian uses. Although many products have both military and civilian uses, many others have characteristics unique to the military. For those firms producing products limited to military uses, the transition to civilian production means dealing with an entirely different set of products. The emphasis in military procurement on producing a limited number of high-performance items with the latest technological advancements, such as fighter aircraft, does not typically encourage the development of organizational skills needed to produce highquality but not necessarily state-of-the-art products for civilian buyers at lower cost. Conversion to civilian production means responding to different customers, with goals and constraints often much different from those of the government. Selling to civilian markets differs markedly from competing with only a few other firms for government contracts in a highly politicized environment. Although the effects of defense spending cuts are likely to be felt in most sectors of the economy, a few industries will be most affected. Producers of aircraft, radio and TV communication equipment, missiles and space vehicles, and ships are expected to incur some of the largest employment losses. Job changes will probably be more evenly distributed among States because of the wide geographic dispersion of defense production. Many of these forecasts are tentative, however, because of uncertainty about the eventual magnitude of the cuts and which individual spending programs will be reduced or eliminated. The most appropriate policy for dealing with the problems of defense cutbacks is to cushion the effect of change by providing the same assistance to affected defense workers that is available to all workers displaced by economic changes. Many such programs are available to workers who lose their jobs because of spending cuts. The Job Training Partnership Act provides training opportunities for those workers whose skills are no longer in demand, and the Employment and Training Administration of the Department of Labor also has numerous programs for addressing the needs of displaced workers. In addition, the President's Economic Adjustment Committee, chaired by the Secretary of Defense and composed of 18 152 Federal departments and agencies, is explicitly charged with providing financial assistance and other support to communities affected by defense spending reductions. These existing programs should be sufficient to ease the transition for workers displaced by defense spending cuts of the size now likely to occur. Effect of Reduced Recruiting on Civilian Labor Markets Changes in the Nation's defense budget are also likely to reduce the military's need for manpower. During the 1980s the four military services recruited and trained nearly 3.1 million young men and women, or about 300,000 people each year. This number is expected to decline substantially in the decade ahead. Although the size of the reduction is difficult to forecast with certainty, the services could reduce their annual recruiting by about 100,000 inductees below the average of the 1980s. This number can certainly be absorbed easily in an economy that produced a net employment increase of 19 million jobs during the 1980s and will reduce the impact of the lower rates of labor force growth expected during the next decade. It is not widely known that the military services are one of the largest single providers of vocational training in the United States. Each year, trained veterans return to civilian life with skills that are highly valued by civilian employers. In the short term, the economy will benefit from the release from military service of a large number of well-trained veterans. Over the long term, the military services will continue to provide training and employment for hundreds of thousands of young people. SUMMARY • Proposed cuts in defense spending over the next few years start from a much smaller share of GNP and are modest in size relative to the demobilizations after World War II, the Korean war, and the Vietnam war. • The economy will adjust smoothly to reductions in defense spending, but some workers and firms will need to adapt to new circumstances. • Programs are in place to help workers and communities adjust to reductions in defense employment. CONCLUSION The ability of the U.S. economy both to generate and to accommodate change is remarkable; the economy's flexibility is one of its major assets. The high U.S. standard of living is due in large part to a flexible economy that encourages innovators to invest in finding new ways to do things and allows entrepreneurs to marshal the resources necessary to bring new products and processes to market. 153 The government affects the flexibility of the economy in many ways. Flexibility is enhanced by creating an environment conducive to investment and innovation, by minimizing regulatory interference in markets, by lowering barriers to international trade and investment, and by providing a competitive and accountable educational system. The evolution of the agriculture, health care, and telecommunications sectors illustrates the potential for innovation but also demonstrates the harm of government policies that reduce flexibility. Reduced military spending will provide another opportunity to benefit from the economy's ability to redirect resources to new uses. Change generally creates both winners and losers, and the U.S. political system always allows the losers to argue for protection from the impersonal forces of the market. The true long-run costs of accommodating such demands for interference with market forces is almost always underestimated because the value of the opportunities lost when the economy's ability to change and adapt is reduced can never be fully known. If it is decided that victims of change must be helped, the assistance should not inhibit the economy's natural evolution. Doing so would reduce the economy's flexibility and thus throw away a significant portion of the possible benefits of change. 154 CHAPTER 5 Innovation and Reform in the Financial Sector THE U.S. FINANCIAL SECTOR plays an integral role in ensuring a growing, healthy, and flexible economy. The institutions that make up the sector—banks, savings institutions, finance companies, securities firms, insurance companies, investment funds, and others—serve as intermediaries between savers and investors. These institutions also provide transaction services, help reduce risks, and efficiently allocate capital to productive activities that generate economic growth. The roles played by particular financial institutions and markets have changed substantially in recent decades, and the markets for financial services have become more global. But, apart from piecemeal reform, the regulatory structure governing the financial sector dates from the 1930s. The Administration believes that the Federal deposit insurance system and the regulation of many financial institutions must be reformed and modernized, and it has recently advanced a comprehensive proposal to this end, which is discussed in this chapter. Today, nearly all economic activity depends on services provided by the financial sector. Every retail transaction involving the use of a check or credit card initiates a process that can require the transmission of information and funds across the country, sometimes in seconds. Most businesses usually require daily services from financial institutions. American banks, savings and loans (S&Ls), and credit unions currently hold more than $3.5 trillion in deposits and, along with other financial intermediaries, extend hundreds of billions of dollars of new credit every year (Table 5-1). Americans invest in well-diversified portfolios of securities through mutual funds and save for their retirement through pension funds. Through the financial markets Americans invest in securities issued by companies seeking the capital needed to finance productive activities. Investment banks underwrite new issues of securities, thus reducing the risks faced by the issuing companies. By facilitating trade among investors, securities exchanges and securities firms enhance the liquidity of financial markets and thus allow capital to flow to productive uses. On a typical day the ownership of billions of dollars worth of common stock in companies 155 TABLE 5-1.—Credit Provided by Private Financial Intermediaries [Billions of dollars] 1984-86 Commercial Banks 561 . 1987-89 469 350 166 Insurance Companies 296 385 Pension Funds 136 171 Finance Companies 143 118 Mutual Funds 303 141 Other 111 152 Savings Institutions .... Note.—Credit flows are 3-year totals. Source: Board of Governors of the Federal Reserve System. changes hands through U.S. stock exchanges. An even larger dollar volume of trade takes place through brokers and dealers in the money market. Insurance companies pool the risks of their customers and thus allow individuals and businesses to insure against fire and other casualties. By purchasing life insurance individuals can provide enhanced financial security for their loved ones. Over 150 million Americans currently have life insurance, with face values representing aggregate coverage in excess of $8 trillion. The various institutions in this sector have evolved as the need for their services has developed and as technological advances and innovations have allowed them to provide more sophisticated products and better service. Innovations, such as the automated teller machine and telephone banking, have changed the way business is transacted. Computer technology has increased the speed and reduced the cost of information processing. Entrepreneurs, supported by advances in financial economics, have produced a wide array of new financial products. Investors can purchase mutual funds whose values track market indexes. Firms exchange fixed and variable interest payments on debt in swap transactions. Money market mutual funds provide savers a means of investing in a diversified portfolio of short-term debt instruments. With this rapid innovation, the sector has also experienced considerable stress. In part, the stress has been the result of increasing competition. Here, as elsewhere, competition is a positive force and should produce stronger, more efficient institutions, which in turn provide better services to consumers and businesses. Some of the stress, however, is due to the outmoded government regulatory environment within which financial institutions operate. As the financial sector has evolved technologically and as its competitive arena has expanded from the United States to the entire world, existing regulation has, at times, unnecessarily constrained its effi 156 cient operation. Comprehensive regulatory reform throughout the entire financial sector is, accordingly, a high priority. Those who invest the capital needed for growth must have confidence in these financial institutions. Such confidence is warranted only if the financial sector is sound and vital. In the past, when confidence in the financial sector has faltered, so has the economy. The President has long been committed to ensuring the integrity of the financial sector. As Vice President, he chaired the Task Group on Regulation of Financial Services, which in 1984 outlined the essential ingredients for comprehensive reform of the Federal financial regulatory system. Immediately upon taking office, the President responded to the problems of the savings and loan industry. Enactment of the Administration's recent comprehensive reform proposals will significantly revise the Federal Government's role as insurer of deposits and regulator of the financial sector. These proposed reforms are based on four principles. First, a safety net for small savers should be maintained. Second, the safety net should be designed to reward those financial institutions that manage their affairs prudently and to ensure that poorly managed institutions bear the cost of their mistakes. Third, regulations should be flexible and allow financial institutions to respond to changes in global markets. Fourth, rules should be applied consistently across all institutions engaged in the same activities. DEVELOPMENT OF FINANCIAL INSTITUTIONS IN THE UNITED STATES Financial institutions have always played a key role in economic growth, entrepreneurial activity, and industrial expansion in the United States. Before the Revolutionary War, colonists depended primarily on English financial institutions, although there were a few exceptions. Benjamin Franklin, for example, founded the first successful fire insurance company in America in 1752. After the war, an American financial sector quickly developed. The first commercial bank opened in 1781, followed by the first securities exchange, which would later become the New York Stock Exchange, in 1792, the first life insurance company in 1812, and the first building and loan association in 1831. The U.S. financial sector has usually been both healthy and efficient. Major changes in regulatory or other policies have generally been made only in response to distress in the financial sector and have accordingly been infrequent. Thus, a policy-oriented review will tend to focus on periods of financial distress. 157 BANKS AND SAVINGS AND LOANS With the exception of the First and Second Banks of the United States, each of which existed for 20 years, all banks formed before 1863 were chartered by the States. Americans generally distrusted large and powerful banks, and rural communities distrusted urban banks. That led State legislatures to pass laws strictly limiting the ability of their banks to branch—a limitation that persists today in some States. The development of a large number of geographically constrained banks made the U.S. banking system unique. Other countries generally have a limited number of banks, many with branches throughout the country. About 12,000 commercial banks currently operate in the United States, compared with about 150 in Japan, 550 in the United Kingdom, 65 in Canada, and 900 in Germany. The large number of banks in the United States does not necessarily imply a more competitive banking system. Banks' activities are limited to particular geographic areas, and the number of bank charters is limited, so that bank charters may convey some local monopoly power. The National Bank Act of 1863 instituted federally chartered banks. National banks were not allowed to branch until 1918, and then only by absorbing other banks. Provisions of the McFadden Act of 1927 and the Glass-Steagall Act of 1933 allowed national banks to follow the branching regulations of the State in which they operated but restricted banks from branching across State lines. The Bank Holding Company Act of 1956 restricted interstate banking by prohibiting bank holding companies from acquiring banks in a second State unless the State expressly authorized the acquisition by statute. Before the mid-1800s banks showed little interest in providing financial services to households, instead focusing almost exclusively on the needs of commercial and industrial customers. In the 1830s building and loan associations began to meet household demands for financial services. Establishing a practice followed later by S&Ls, savings banks, and credit unions, these early thrifts typically accepted small deposits from individuals and pooled them to provide a source of housing and consumer finance. Early thrifts were chartered, regulated, and supervised by the State within which they operated. Depositor Runs and Panics Banking is conducted on a fractional reserve basis; that is, banks and thrifts accept deposits and make investments and loans, retaining reserves equal only to a fraction of their total deposits. Although depository institutions hold some securities, many of their assets are the loans they have made. Some of these loans, such as 158 home mortgages, are relatively easy to value and consequently can be purchased and sold in secondary markets. Others, such as unsecured commercial loans, are generally illiquid because they are not easily valued by potential buyers, who are unfamiliar with the borrowers and their businesses. This information problem also makes it difficult to establish the overall value of an institution. The lack of liquidity of many loans combined with fractional reserve banking creates the possibility of depositor runs on even solvent institutions. If depositors lose confidence in an institution— whether justified or not—and want to withdraw more cash than the institution holds in reserve, the bank or thrift just cannot deliver. Aware of these risks, depositors are likely to withdraw their funds when they think other depositors are losing confidence. Such behavior produces depositor runs—sudden, massive withdrawals. To cover withdrawal demands, the institution may be forced to sell its outstanding loans, and because purchasers may place a lower value on those loans than the institution, owners of the otherwise solvent institution can lose their investment in the institution. Throughout the 19th century and into the early 20th century, depositor runs plagued banks. Often runs were isolated, affecting only a single institution or a group of institutions. In some cases, however, depositor runs spread throughout the system, causing panics that had profound consequences for the economy. As deposit balances shrank, the money supply fell, and banks had to curtail lending. Firms that could not borrow the funds they needed to operate had to shut down and lay off workers. The banking panics of 1893 and 1907 are two examples. In 1893 the money supply fell 6 percent, real gross national product (GNP) fell 3 percent, and the civilian unemployment rate rose significantly. In 1907 the money supply fell 5 percent, real GNP fell more than 8 percent, and the unemployment rate tripled. Although other factors were also involved, these banking panics are generally acknowledged to have generated .or contributed significantly to the economic downturns that ensued. Lender of Last Resort In response to the demonstrated danger of banking panics, the Federal Reserve System was created in 1913. Its primary objective was to use its powers to create currency and bank reserves to make the supply of currency responsive to economic activity and to prevent or deal with banking panics. The Federal Reserve served as a lender of last resort. A bank facing a depositor run would meet withdrawal demands by borrowing currency from the Federal Reserve. However, the Federal Reserve's ability to deal with panics was limited. It could only lend to banks that were members of the Federal Reserve System, and it required eligible loans and securities as collateral when it lent. 159 THE GREAT DEPRESSION AND BANKING REFORM The 1920s were prosperous years for most Americans, as the rewards of past industrial investments fueled rapid growth in living standards. At the same time, banking grew increasingly competitive. Between 1921 and 1929, 5,712 banks failed—nearly 20 percent of the more than 29,000 banks that existed at the end of 1920. Urban banks consolidated in an attempt to attain sufficient size to meet the demands of their rapidly expanding commercial customers. Banks began to offer new services to keep customers, and distinctions between banking and securities firms blurred. When the "Roaring Twenties" ended with the stock market crash of 1929, many banks lost funds directly through their stock holdings and perhaps indirectly through losses on loans to stock market investors. As the developing recession deepened, depositors lost confidence and a severe banking panic ensued. Instead of responding to the panic by easing constraints on money growth and thus minimizing the impact of the panic, the Federal Reserve allowed the money supply to fall. That contributed to a severe contraction in bank lending, which in turn reduced economic activity and led to further loan losses for banks. This downward spiral resulted in the wholesale collapse of the financial system and the beginning of the Great Depression. During the 4 years 1930-33, 9,096 banks failed—36 percent of the banks that had existed at the beginning of 1930. Total deposits in commercial banks fell 39 percent. Real GNP declined 30 percent from 1929 to the low point of the Depression. From 1929 to 1933 the unemployment rate soared from 3 percent to nearly 25 percent. The Federal Government responded to the collapse of the banking system by enacting the Banking Acts of 1933 and 1935. These laws established the Federal Deposit Insurance Corporation (FDIC) to prevent depositor runs by insuring bank deposits. They also reduced competition among banks by prohibiting the payment of interest on demand deposits and by placing a ceiling on the interest rate that could be paid on time deposits. Finally, they prohibited banks from participating in much of the securities industry. Continued constraints on entry into banking further limited competition. These banking laws stabilized the banking industry; there has not been a system-wide panic since their passage. Deposit insurance worked because the FDIC had no discretion. If a bank failed, the FDIC paid off its insured depositors, no questions asked. With this guarantee, insured depositors had no reason to initiate a depositor run. The rate of bank failures also dropped dramatically. Only 537 banks failed between 1934 and 1954—less than one-half the number of failures in any single year during the 1930-33 period. Although the reforms helped to stabilize the economy, they clearly entailed significant costs. Depositors no longer received interest on 160 their checking accounts, were limited in the interest they could receive on their savings accounts, and, because competition was reduced, paid more for services received from securities firms. Along with thousands of banks, more than 1,700 S&Ls failed during the Great Depression. Individuals withdrew their savings as they lost confidence in S&Ls or to deal with their own financial problems. S&Ls also had to contend with defaults on many of their home mortgages. To restore confidence in S&Ls, the Federal Government in 1932 established the Federal Home Loan Banks, which served as lenders to S&Ls and hence enhanced their liquidity. Moreover, just as the FDIC was established to insure deposits at commercial banks, the Federal Savings and Loan Insurance Corporation (FSLIC) was established in 1934 to insure deposits at S&Ls. The Federal Housing Administration (FHA) was also established to insure lenders against the risk of default on mortgage loans. Long-term, fixed-rate mortgages, which were to play a key role in the later S&L crisis, first appeared during the Depression, following the introduction of FHA mortgage insurance. Two features of the banking reforms of the 1930s would contribute to problems many years later. The deposit interest rate ceiling would contribute to disruptive "credit crunches" in the 1960s and 1970s. As market interest rates rose above the deposit interest rate ceilings, funds flowed out of banks and thrifts, causing liquidity crises for the institutions and disrupting credit flows to business and mortgage lending. Moreover, the price of deposit insurance did not reflect risk. Both features would contribute to the S&L crisis 50 years later. The regulatory response to the Great Depression also addressed problems in the financial markets. The Securities Act of 1933 was intended to protect investors who purchased newly issued securities. The Securities Exchange Act of 1934 was designed to protect investors that bought and sold existing securities against fraud and market manipulation. SUMMARY • Consumers and businesses rely on the financial sector for a wide variety of services, which enhance living standards and the Nation's economic vitality. • Federal and State laws greatly constrained banks from operating in more than one State and from branching within States. Although some of these restrictions have been lifted, many are still in place. • Federal banking regulations adopted to deal with the collapse of the banking system during the Great Depression have succeeded in eliminating the threat of bank runs and panics. But 161 the laws also reduced competition among financial institutions and contributed to today's problems in the industry. THE 1970s: INFLATION, HIGH INTEREST RATES, AND NEW COMPETITION For nearly 30 years after the Great Depression, the financial sector experienced an era of relative profitability and little stress. That began to change in the late 1960s and early 1970s with increases in the level and volatility of the rate of inflation, the advent of the electronic age and new competition, and the increasing internationalization of the world's economies. The average annual rate of inflation rose from less than 2 percent in 1950-65, to about 4.5 percent in 1966-73, to nearly 9.5 percent in 1974-81; in that last period the rate was also very volatile, ranging from about 6 percent to almost 14 percent. As the level and volatility of inflation increased, so did the level and volatility of interest rates. Faced with higher levels of inflation, lenders demanded higher interest rates, since the dollars with which they would be repaid in the future would be able to purchase less than the dollars they were lending. These higher, more volatile interest rates increased the general level of risk for all commercial and financial companies, but the S&L industry was particularly hard hit. RISE OF MONEY MARKET FUNDS Financial markets and institutions developed an array of new instruments to help businesses and individuals deal with the uncertainties of high and volatile interests rates. Adjustable-rate mortgages gave borrowers the option of paying lower average rates if they were willing to bear the risk that interest rates might increase. (See Box 5-1 for discussion of inflation-proof bonds and mortgages.) Interest rate swap contracts allowed a borrower to obtain a fixed rate loan indirectly by first borrowing from a bank at a variable rate and then "swapping" its variable interest rate payments with a borrower that had borrowed at a fixed interest rate. Securities exchanges issued bond futures contracts, which effectively allowed market participants to borrow or lend at specified interest rates at a future date. Inflation and high interest rates also led to the development of a major new form of competition to banks and thrifts—the money market mutual fund. When interest rates rose in the 1970s, interest rate ceilings on bank and savings and loan deposits were significantly below the market interest rates being paid on short-term lowrisk debt instruments. Investors looking for interest rates higher than banks and thrifts could pay turned quickly to the new money market mutual funds, which invested primarily in instruments 162 Box 5-L~Inflation-Proof Bonds and Mortgages Bonds and mortgages typically specify constant payments over their entire maturity. Their interest rates are set high enough to compensate lenders for the expected inflationinduced erosion of the purchasing power of future payments* Inflation-proof assets are fundamentally different; They preserve the purchasing power of interest payments and principal by changing them proportionately with a measure of the overall price level such as the consumer price index. Because inflation-proof assets eliminate the financial risks of unanticipated inflation and the need to compensate lenders for that risk, their guaranteed real, or inflation-adjusted, interest rates are lower than those on typical assets, Compared to payments on a 30-year, 10*percentr fixed-interest-rate mortgage, payments on a 4-percetrt, real interest-rate, inflation-proof mortgage would start more than one-third lower. Payments would rise at the same rate as the average price of the items in household budgets and move similarly to the rent would-be homeowners pay, (Adjustable-rate mortgages help reduce borrowing costs by shifting interest rate risk to borrowers, but their payment levels are not designed to track income and price levels*} To the extent that a borrower's real income falls over time, payments on an inflation-proof mortgage would become more burdensome. Inflation-proof bonds and mortgages are not common. These debt instruments have generally developed only in countries where inflation has been relatively high and variable* One reason is that when inflation is expected to be relatively low and stable, the cost of introducing these instruments may appear to outweigh the benefits they offer. In that case, borrowers and lenders seem to prefer the certainty of constant payments. Recent clarifications of the regulatory and income tax status of inflation-proof bonds and mortgages have removed important obstacles to their use in the United States. such as short-term government (Treasury bills) and corporate (commercial paper) debt securities. Low information processing costs made it profitable for money market funds to deal with even small investors. By bringing borrowers and lenders together, albeit with help from the marketplace, these funds played a role similar to the intermediary role banks and thrifts traditionally played. The success of money market funds increased the demand for commercial paper by providing small investors with low-cost, indi- 163 rect means of accessing that market. Assisted by improved technology that reduced the cost of conveying information to financial markets, corporations, particularly large ones, began to bypass banks and borrow directly in financial markets by issuing commercial paper. Nonbank finance companies began to increase their lending activities at about the same time. Thus, banks were being bypassed on both the borrowing and the lending side of the business. Charts 5-1 and 5-2 illustrate these phenomena. Chart 5-1 shows the growth of money market funds relative to total commercial bank deposits. Chart 5-2 shows the increasing competition for business lending among banks, finance companies, and the commercial paper market. The opportunity to invest savings conveniently and at low cost through mutual funds represented a substantial increase in competition for savings that had traditionally been deposited in banks and thrifts. In addition, increased information processing capabilities as well as greater sophistication on the part of business managers led to a revolution in cash management techniques, which reduced idle cash balances in business accounts. These competitive pressures resulted in the phasing out of interest rate ceilings on bank and thrift deposits by 1986. As banks and thrifts began to offer higher interest rates on deposits, the growth of money market funds slowed, but they remained strong competitors. It is important to realize that while banks and thrifts struggled to meet new competition, consumers of financial services benefited from the increased competition. Savers were able to earn higher rates of interest, both from money market funds and, once deposit interest rate ceilings were eliminated, from banks and thrifts. Borrowers also benefited from the development of alternative sources of funds and increasing competition among lenders. INTERNATIONALIZATION At the same time that the financial sector has experienced dramatic change on the domestic front, it has also faced new challenges internationally. Many financial institutions now operate in a global marketplace and face worldwide competition. Industrial firms increasingly need assistance with international financial transactions from their bankers, which requires banks to have a greater presence throughout the world. In addition, U.S. banks are facing greater competition from foreign banks at home, while only a few U.S. banks are significantly increasing their business overseas. Chart 5-3 illustrates the rapid growth in the total assets of U.S. offices of foreign banks. Foreign banks and the U.S. chartered banks they own have been particularly successful in penetrating the business lending market. Their share of U.S. business loans rose from 10.4 percent in 1975 to 28.5 164 Chart 5-1 Deposits and Money Market Funds Money market funds, which compete with bank deposits, have grown significantly since their introduction. Billions of 1982 dollars 2000 1500 - 1000 500 1973 1975 1977 1979 1981 1983 1985 1987 1989 Note: Bank deposits are the sum of money stock measures of demand deposits, other checkable deposits at commercial banks, and time and savings accounts at commercial banks less deposits held by money market funds. GNP implicit price deflator is used to deflate nominal figures. Sources: Board of Governors of the Federal Reserve System and Department of Commerce. Chart 5-2 Composition of Loans to Businesses Loans by finance companies and nonfinancial commercial paper have become a significant source of commercial credit. Billions of 1982 dollars 1000 800 - Finance Company Loans to Business 600 400 - Commercial & Industrial Bank Loans 200 - 1973 1975 1977 1979 1981 1983 1985 1987 Note: GNP implicit price deflator is used to deflate nominal figures. Sources: Board of Governors of the Federal Reserve System and Department of Commerce. 165 1989 percent in June 1989. At the end of 1989 the foreign share of U.S. banking assets was 20.4 percent. Chart 5-3 Assets at U.S. Offices of Foreign Banks Foreign bank assets in the United States have increased rapidly since the late 1970s. Billions of dollars 800 700 - 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 Source: Board of Governors of the Federal Reserve System. Different countries impose different rules and regulations on their banks that affect their ability to compete with banks from other countries. In an effort to make capital requirements—the minimum amount of owner's equity required as a percentage of total bank assets—more consistent worldwide, the central bank governors of 11 industrial nations endorsed the Basle framework for measuring capital adequacy and achieving minimal levels of capital based on credit risk. The minimum capital standards associated with the Basle framework are being phased in over a 2-year period that began December 31, 1990, and will require some U.S. banks either to shrink in size or to raise additional capital during that period. These new capital standards focus on credit risk, but need to be realigned to reflect other risks that banks may bear such as foreign exchange risk, interest rate risk, and equity position risk. Bank lending practices could continue to be distorted until capital standards are balanced to reflect these other risks. Such reorientation of the Basle framework to more accurately reflect the different types of risk is currently under active consideration. 166 SUMMARY • Higher and more volatile rates of inflation in the 1970s led to higher and more volatile interest rates and increased stress in the financial sector. • Money market mutual funds began to compete with banks and thrifts for the savings of Americans. Initially, banks and thrifts were constrained in their ability to compete by deposit interest rate ceilings, and these money market funds grew rapidly. • The Basle framework established international capital standards based solely on credit risk. The Administration encourages efforts to realign these standards to more accurately reflect the different types of risk. THE S&L CRISIS The increase in interest rates in the late 1970s and early 1980s had a profound effect on the savings and loan industry. The rate increase was, as we have seen, a major factor in the emergence of money market mutual funds as major competitors to S&Ls for the funds of savers. But higher interest rates had an additional effect on S&Ls: They produced large and widespread losses on mortgage portfolios. These interest rate increases and resulting losses proved to have far-reaching consequences. About half of all S&Ls in business in 1970 no longer existed in 1989; more than 2,700 had merged, gone out of business, or been placed under the control of government regulators. By the end of 1986 the Federal Savings and Loan Insurance Corporation itself was deemed insolvent. While the ultimate cost of the S&L crisis will reflect many factors, the Administration estimates that, including costs incurred prior to 1989, the resolution of the crisis will cost between $130 billion and $176 billion. The crisis has also led to fundamental changes in the way that S&Ls operate and in the regulations that guide them. VULNERABILITY TO INTEREST RATE INCREASES For decades S&L assets consisted predominantly of fixed-rate mortgages that typically covered a term of 20 to 30 years. At the end of 1980, for example, FSLIC-insured institutions held more than three-fourths of their assets in residential mortgages and in mortgage-backed securities, which are bonds whose values parallel those of mortgages. Although the assets of S&Ls consisted largely of fixed-rate mortgages, their deposit liabilities were primarily short-term. When interest rates rose on other assets that households might hold, such as Treasury bills, deposit interest rates had to be increased compa- 167 rably to enable S&Ls to retain the deposits that provided their funding. The costs to S&Ls increased, even though revenues from outstanding mortgages remained fixed. This fundamental mismatch of short-term, and thus adjustable-rate, deposit liabilities and long-term, fixed-rate mortgage assets left S&Ls vulnerable to interest rate increases. In the two decades following World War II, interest rates changed only modestly and relatively gradually. The rates S&Ls earned on outstanding mortgages tended to be above the interest rates they paid on deposits and similar to prevailing mortgage interest rates. In such circumstances, the mismatch between shortterm deposits and long-term, fixed-rate mortgages causes few problems. Net Worth Imperiled Serious troubles for the S&Ls began in the second half of the 1960s. As the economy prospered and inflation began to increase, interest rates on newly issued mortgages began to rise considerably above those on the mortgages S&Ls already held (Chart 5-4). Longterm interest rates then rose to much higher levels in the late 1970s and early 1980s, as inflation rose to historically high rates and monetary policy was tightened to subdue that inflation. Mortgages originated in prior years and still held by S&Ls now provided less interest income than newly issued mortgages. As Chart 5-4 indicates, in 1980, for example, thrifts earned an average yield of 9XA percent on outstanding mortgages, while the prevailing rate on newly issued mortgages was about 12 % percent. Since the market value, or price, of a fixed-rate asset falls as the interest rate rises, the sharp increase in mortgage interest rates slashed the value of the outstanding mortgages held by S&Ls. A 3 ^-percentage point increase in mortgage rates would suggest a fall in the market, or economic, value of a typical outstanding mortgage of about 20 percent. A typical S&L might hold 80 percent of its assets in mortgages. Thus, if the value of assets other than mortgages remained unchanged, a 31A point increase in mortgage interest rates would imply a fall of about 16 percent in the total value of the S&L's assets. For an S&L that initially had capital equal in value to 4 percent of assets, such an increase in interest rates would result in the value of the S&L's liabilities exceeding the value of its assets by 12 percent as long as the value of the deposits and other liabilities remained constant. If the S&L owners were required to make good on all of their liabilities, the increase in interest rates would have reduced the value of their capital from 4 percent to negative 12 percent of the original value of assets. Regulators require S&Ls and other institutions with insured deposits to have net worth, or capital, that meets or exceeds a specified percentage of their liabilities, which has often been in the 168 Chart 5-4 New Mortgage Interest Rates and Thrift Portfolio Yields In the late 1970s and early 1980s, interest rates on new mortgages rose well above the average yield on mortgages in thrift institutions portfolios, thereby sharply reducing the value of these portfolios. Percent per annum 16 14 , "~ Contract Interest Rate On Newly Originated Mortgages 12 10 Mortgage Portfolio Average Yield I I l I 1965 I I I I 1970 I I I I 1975 I I I I 1980 I I I I 1985 Source: Department of the Treasury. range of 5 percent. The book-value measure regulators use to value assets, liabilities, and therefore the owner's stake in the institution, or net worth, is imperfect for several reasons. It relies mainly on historical costs to value assets and liabilities and often does not capture changes in their economic value. Moreover, it typically measures only the value of tangible assets. Thus, the value of the institution's charter (right to operate) and customer relationships (goodwill) may not be captured. An institution is economically solvent when its economic net worth or capital, the amount by which the market value of its assets (both tangible and intangible) exceeds the market value of its liabilities, is positive. Thus, a decline in the market value of assets larger than its economic capital pushes an institution into economic insolvency. The enormous capital losses implied by the interest rate increases shown in Chart 5-4 and approximated above were almost certainly large enough to push a substantial portion of the S&L industry into economic insolvency, even allowing for the value of unmeasured intangible assets. The book-value method did not reflect the fall in the value of mortgages held by S&Ls. In fact, because mortgages could be carried at book value, regardless of 169 their market value, this decline in value would not be immediately signaled by book-value accounting. Book-value accounting would reflect the economic losses associated with the fall in the value of mortgages gradually as interest expense on short-term liabilities increased relative to interest income on long-term assets. Transactions with little economic significance can also be undertaken to affect the value of capital, as calculated under book-value accounting. When interest rates fall, the market values of assets such as fixed-rate mortgages rise relative to their book values. Financial institutions can sell these assets in the secondary market to realize those higher market values and thereby bolster their measured capital. On the other hand, when increases in interest rates or default risks lower the market values of assets below their book values, institutions can retain those assets on their books at book value. Troubled institutions seeking to raise the accounting value of their capital can issue new debt, the market value of which at issuance is also book value. The funds raised can then be used to buy back a larger book-value amount of the institution's previously outstanding debt, since the market value of that debt is below its book value due to the institution's troubled condition. That "refinancing" makes the accounting value of capital rise, since the book value of liabilities falls. The decline in interest rates after 1982 could not (and did not) restore the industry's health. Just as the rise in interest rates on new mortgages above rates on existing fixed-rate mortgages provided homeowners with an incentive to keep their mortgages longer, the decline in mortgage rates provided an incentive for homeowners to refinance by taking out new, lower interest rate mortgages and paying off their outstanding mortgages. In 1986, for example, nearly half of the mortgages originated by thrift institutions were refinancings. By 1989 the fraction of mortgage debtors who had refinanced was more than double its 1977 level. Such refinancings reduced the costs to borrowers but also reduced the income of lenders. Thus, S&Ls did not gain as much when interest rates fell as they lost when interest rates rose. Deposit Rate Deregulation and Lending Liberalization As noted earlier, the elimination of interest rate ceilings allowed S&Ls to pay higher interest rates on deposits and thus slowed the flow of funds out of the thrifts. To reduce the thrifts' problems associated with being heavily concentrated in long-term, fixed-rate mortgages, the Congress relaxed restrictions on the ability of federally chartered S&Ls to engage in consumer, business, and commercial real estate lending. Adjustable-rate home mortgages were also permitted. State-chartered S&Ls in some States were given greater freedom by their regulators to operate in nontraditional spheres. 170 These changes were designed to enhance the industry's health by permitting S&Ls to compete more effectively for deposits, to diversify across a broader set of assets, and to reduce their exposure to interest rate risk. Though these changes were generally beneficial to S&Ls, subsequent events showed the danger of giving new, unfamiliar powers to weak or insolvent institutions. Many blamed this deregulation and liberalization for causing the S&L crisis that emerged in the late 1980s. However, S&Ls had suffered substantial economic losses before much of the significant deregulation of deposit interest rates and the loosening of lending restrictions in the 1980s. Many of the S&Ls that later failed were already economically insolvent before this deregulation and liberalization. In fact, the deregulation and loosening arose largely in response to the severe problems S&Ls were having. As discussed later, insolvent firms had especially great incentives to pursue the risky ventures newly open to them. Failing to provide appropriate supervision in the light of the S&Ls' enhanced opportunities to make risky investments proved to be a costly mistake. INSOLVENCY AND CLOSURE The combination of high interest rates and loss of deposits to money market funds created liquidity problems for many S&Ls, which found it increasingly difficult to meet withdrawal demands. These thrifts could have raised funds by selling existing mortgages; however, accounting principles would have required the thrifts to recognize the loss taken on mortgages sold. Doing so would have forced economically insolvent institutions into actual insolvency (based on book-value measures of capital). Thus, if an S&L did not sell its mortgages, it would have to be closed for not meeting depositor withdrawal demands. If it did sell its mortgages and recognize its economic losses, it would have to be closed for not meeting its capital requirements. Rather than force the closure of a substantial portion of the S&L industry, the Congress authorized various actions by regulatory agencies to assist troubled institutions, and the Federal Home Loan Bank Board—the chief regulator of S&Ls—changed the regulatory accounting procedures used to measure capital. However, by allowing S&Ls to amortize their mortgage losses over several years, instead of recognizing those losses immediately, regulators did not eliminate the problem but merely postponed it. One study claims almost half of the insolvent thrift institutions at the end of 1988 had already been insolvent, under the accounting measures that regulators had abandoned, for 4 years or more. Another reaction to the inadequate levels of capital was also controversial. Given the increased risk of insolvency, the Federal Home Loan Bank Board would have been justified in setting higher 171 minimum capital ratios. Higher ratios would have protected the deposit insurance fund and the public against the increased interest rate risk. Instead, the bank board lowered the minimum capital ratios required. In early 1980, minimum capital requirements were more than 5 percent of liabilities. They were lowered in late 1980 and again in 1982 to 3 percent of liabilities. A number of regulations were also adopted that further reduced the stringency of capital requirements. Even when the regulatory accounting measures did indicate that minimum capital standards were being violated, closure did not always occur. The Federal Home Loan Bank Board ran into resistance when S&L lobbying diluted and delayed legislation providing funds for FSLIC to close insolvent thrifts. In addition, budgetary stringency did not provide sufficient examination and supervision staff and resources to keep pace with the unfolding crisis. In 1986 the Chairman of the Bank Board testified to the Congress that lack of funds prevented his agency from dealing with almost 100 problem S&Ls. Incentives of Undercapitalized Institutions The price that banks and thrifts pay for deposit insurance— unlike the premiums paid for other types of insurance—does not take into account the financial position or financial health of the individual institution that holds the insured deposits. The premium does not vary with the riskiness of the assets held by the institution and is the same whether the institution is financially sound or near collapse. Such fixed-price insurance gives bank and thrift owners an incentive to take risks, since neither depositors nor the deposit insurer needs to be compensated for risk. So long as an institution is well-capitalized, its owners are unlikely to take imprudent risks since their own funds are at stake. That changes as an institution becomes undercapitalized. No longer having significant (or perhaps any) equity, owners have little to lose. If the S&L becomes insolvent, the owners will eventually be forced to surrender ownership, and any remaining assets of the S&L will be used to pay off depositors. In such cases, some owners might decide that risky investments are worth a gamble, for if the investments are profitable enough to return the institution to economic health, the owners retain the net worth of the S&L. If the investment fails, the deposit insurer will repay any losses on insured deposits. The closer an institution comes to insolvency, the more rewards become one-sided: Heads, the S&L owners win; tails, the deposit insurer loses. Many economically insolvent institutions expanded at phenomenal rates, doubling or tripling their assets every year, in attempts to regain solvency. The worse off the thrift, the higher the rate of return that is needed to return to economic health. That was a 172 principal attraction of investing in risky ventures: the greater the possibility of high rewards, the greater the possibility of recovery. In fact, it was inadequately capitalized S&Ls that ventured most heavily into higher risk investments. Undertaking such a strategy required that funds be raised to invest. Federally guaranteed deposit insurance enabled undercapitalized, but still operating S&Ls to retain and attract the funds required to invest in high risk ventures at nearly default-free interest rates. Whether economically solvent or not, insured institutions could attract virtually unlimited funds by offering sufficiently high interest rates on their federally insured deposit accounts. The safety of the deposits was altered neither by undercapitalization nor by the riskiness of the investments they funded. Estimates of the Cost Some gained and some lost from the S&L crisis, but the cost to the public as a whole was large. The inflation-induced rise in interest rates that reduced the value of the S&Ls' mortgages bestowed gains of equal value on their borrowers by reducing the real value of mortgage payments. Depositors also benefited as the level of deposit rates at all institutions were bid up by the attempts of insolvent thrifts to garner more funds. If some investors acquired insolvent institutions from the government for "below-market" prices, then wealth was also transferred from the public to those investors. And, unfortunately, there is the reality of ill-gotten gains. By the end of 1990, the Department of Justice had obtained nearly 400 convictions in major fraud cases in connection with the S&L crisis. The cost to the public of resolving the crisis will be spread over several years. Who bears that burden depends on how the Federal spending and tax programs are changed to absorb those costs. The Administration cost estimate of $130 billion to $176 billion (including pre-1989 costs) is considerably below the $300 billion to $500 billion estimates that others have reported. The huge difference is entirely illusory, for these two estimates refer to different calculations of the same cost to the public. The former estimates how much it would cost to resolve the S&L crisis completely now. The latter estimates are obtained by adding up all the future repayments required on the bonds that must be issued to fund the current cost. Such an estimate would be akin to claiming that a 10percent, 30-year, $100,000 home mortgage costs $315,925, which in fact is the undiscounted sum of the repayments required by that mortgage. RESOLVING THE S&L CRISIS The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)—originally proposed by the President— 173 sought to minimize present costs of past difficulties and to prevent future crises. Though it did not finish the task of financial reform and rebuilding, FIRREA achieved a number of important objectives. It preserved the integrity of the deposit insurance system by ensuring that depositors lost none of their federally insured funds; set limits on the activities of inadequately capitalized institutions; established and provided for funding the Resolution Trust Corporation so that it could quickly begin to reorganize economically insolvent institutions; and established the Office of Thrift Supervision within the Department of the Treasury to replace the Federal Home Loan Bank Board as the chief regulator of S&Ls. It established the Savings Association Insurance Fund within the FDIC to replace the insolvent FSLIC. In addition, the law strengthened criminal and civil sanctions for illegal activities involving financial institutions. Perhaps most importantly, FIRREA raised the minimum capital requirements for federally insured savings institutions, so that S&Ls will have to meet capital requirements no less stringent than those for national banks. Capital at these levels will provide a legitimate and substantial buffer between thrifts and the deposit insurance fund. Further, in December 1990, the Office of Thrift Supervision proposed that the capital requirement for a thrift reflect its exposure to interest rate risk. If implemented, that requirement would give thrifts an incentive to reduce their interest rate risk exposure. SUMMARY • S&Ls have faced problems since interest rates began to rise in the mid-1960s. Contrary to what is often asserted, their problems did not originate with deposit-rate deregulation or liberalized lending restrictions. • Meeting the more stringent capital requirements called for in FIRREA will provide the deposit insurance fund and the public with a buffer against future difficulties. REFORM IN THE FINANCIAL SECTOR The financial sector provides services that are essential for economic growth, and thus it is important for this sector to operate effectively. Reform required to ensure that the financial system functions smoothly and efficiently is well under way. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 was only the first step in this program. The Federal Credit Reform Act of 1990, enacted as part of the Omnibus Budget Reconciliation Act of 1990, will help the government make better use of the resources it puts into its Federal credit programs, while comprehensive re- 174 forms recently proposed by the Administration, if enacted, will substantially alter the role the Federal Government plays as regulator of depository institutions and insurer of their deposits. CONTEXT FOR DEPOSITORY INSTITUTION REFORM Since the insurance program and many of the rules regulating banks and thrifts were drawn up during the Great Depression, dramatic developments have changed the financial sector. Many of the conditions that created the problems of the 1930s no longer exist today. More efficient means of addressing those that still remain may now be available. Moreover, any regulatory reform should allow the market to play its role in efficiently allocating resources. The goal of reforming banks and thrifts should be to ensure that the financial system is efficient, competitive, and free from the danger of disruptive panics. The reforms of the 1930s succeeded in eliminating panics, but the constraints those reforms created and under which banks and thrifts still operate hinder their efficiency and competitiveness in today's environment. As a general rule, government intervention in the private sector may be appropriate when the market fails, that is, when competitive private markets do not exist or cannot function well. A market failure alone, however, does not necessarily justify government action. Regulation should also pass cost-benefit tests, and be carefully designed to provide strong incentives for efficiency. Otherwise, the cure may end up being worse than the corresponding disease. Reform of depository institutions must be considered in the proper context. The right to operate a depository institution comes with both benefits and costs. It is important to think about these costs and benefits both within the competitive framework of banking and in the broader context of the entire financial sector. Relative to nonbanking firms, banks and thrifts have certain advantages: access to Federal deposit insurance, to the payments system that provides rapid check clearing, and to borrowing from the Federal Reserve. However, they are also required by the Federal Reserve to hold reserves that do not pay interest and are constrained in their activities by laws and regulation. If banks and thrifts faced no competition from outside banking, vigorous competition within banking would result in any net benefit or cost being transferred to the consumers of financial services. Thus, a net benefit would accrue only to individual institutions with local monopoly power associated with a bank or thrift charter. However, banks and thrifts also compete with other members of the financial sector, which requires that a delicate balance be maintained as the financial sector evolves. If the benefits and costs associated with the right to operate a depository institution result 175 in a net benefit relative to nonbanking firms, depository institutions will have an advantage relative to those firms, making it difficult for the nonbanking firms to compete. However, if the result is a net cost relative to nonbanking firms, depository institutions will have difficulty competing. The banking reforms of the 1930s may have initially tipped the scales in favor of depository institutions. They faced little competition for savings or intermediated lending from other institutions. Moreover, limitations on competition and restrictions on entry generally made banks and thrifts profitable, but these limitations also allowed inefficient institutions to survive. They were less profitable than efficient providers of banking services, but facing limited competition, they could still continue to operate. The proof is in the numbers. In any competitive industry one would normally expect to see new firms entering the industry and inefficient firms failing. In banking, the failure rate was remarkably low for many years. Between 1945 and 1975 the annual failure rate of commercial and industrial enterprises was more than 11 times higher than the failure rate for commercial banks. The low failure rate in banking is consistent with low levels of competition and the survival of inefficient institutions. The evolution of the financial sector and reductions in impediments to competition in banking have greatly reduced, if not eliminated, any advantage banking institutions may have had in the past. In an increasingly competitive environment, inefficient banks and thrifts will not survive. Many will be absorbed by better-managed institutions. Others will fail. Thus, it should not be surprising to see an increase in the rate of consolidation and even failures as competition increases. Consolidation of banking or the potential failure of inefficient depository institutions should not be used as a justification to avoid comprehensive reform. Faced with continued competition from nonbank financial institutions, an inefficient banking system will be neither safe nor sound in the long run. ISSUES IN DEPOSIT INSURANCE REFORM President Franklin Roosevelt was one of many who initially opposed the creation of a Federal deposit insurance system for fear that it would encourage excessively risky bank operations. "The minute the Government starts to do that the Government runs into a probable loss . . . , " Roosevelt said. "We do not wish to make the United States Government liable for the mistakes and errors of individual banks, and put a premium on unsound banking in the future/1 Roosevelt's fears were unfounded in the years following enactment of the insurance program. With only limited competition, banks and thrifts had little reason to pursue excessively risky 176 strategies. Limited competition increased profitability and the value of holding a bank or thrift charter. Excessively risky strategies put this value at risk and, therefore, were not generally pursued. As competition increased, however, profit opportunities for banks and thrifts eroded and the value of their charters decreased, causing a gradual decline of the economic capital in depository institutions. High interest rates accelerated the decline of economic capital among S&Ls. For banks, the erosion of economic capital has been more gradual and less severe. In fact, most banks have substantial tangible capital and remain well-capitalized. Nonetheless, losses in economic capital, due to the deterioration of charter value, combined with deposit insurance premiums that are insensitive to risk-taking, have given weak banks increased incentives to take undue risks. With less to lose, they are willing to take greater risks. In most industries, incentives to take excessive risks are kept in check by the market. The cost of capital for firms pursuing risky strategies increases. This mechanism operates weakly in banking since banks are largely financed through insured deposits. The government guarantee virtually eliminates any concern insured depositors might have about the actual operations of a bank or thrift. Thus, these investors in a bank or thrift offer no discipline to the managers. This lack of market discipline not only makes it easier for poorly managed institutions to operate, it also makes business difficult for prudent managers who compete with poorly managed institutions for both loans and deposits. Pros and Cons of a Federal Role in Deposit Insurance Deposit insurance is generally recognized as having been quite successful in eliminating banking panics and the credit contractions and recessions associated with such panics. However, some have argued that the current problems in the banking and thrift industries reflect a fundamental danger in having the Federal Government extend a broad blanket of protection over deposits—a danger that can only be eliminated by curtailing the government's role. These observers contend that well-organized political pressures to forbear in closing insolvent institutions, to extend the insurance guarantee to uninsured depositors, and to underprice coverage all undermine regulatory supervision. In the long run, they argue, the nature of our political process and its incentives for government policymakers are inconsistent with a sound insurance operation. In this view, the recently exposed flaws in Federal deposit insurance policies are no accident. They reflect a basic bias in the political process. 177 Another argument made against Federal deposit insurance is that government regulation and supervision are inherently less effective than market forces in balancing risk with depositor protection. Although regulators may be competent, dedicated, and wellintentioned, their incentives to monitor banking institutions carefully are unlikely to match the incentives for monitoring that the private sector is able to generate. Moreover, private market participants are unlikely to be subject to political pressure that may result in costly delays or inaction. Supporters of continued Federal involvement in deposit insurance argue that because the potential liabilities are so large, only Federal insurance is credible. Depositors, they say, simply will not be so certain that the private market will be able to guarantee their deposits, and that uncertainty can lead to the kind of bank panics that the Federal deposit insurance system has so successfully eliminated. It is also argued that a private deposit insurance system would not appropriately assess the risks to check clearing and interbank fund transfer systems and to the overall economy that might be associated with the forced closure of very large institutions. These analysts also argue that the lack of market discipline inherent in deposit insurance can be adequately controlled while retaining the Federal guarantee. They believe that the deficiencies in the current system can be corrected by improving oversight and supervision, by offsetting incentives to take undue risks with stronger penalties for excessive risk-taking, by requiring banks and thrifts to hold more capital, and by intervening sooner to minimize losses at failing institutions. Many other nations also have deposit insurance systems, but there are significant differences in form, and some systems are even administered by the private sector (Box 5-2). Because many of the systems are relatively new and have not faced a severe test, it is difficult to compare the efficacy of alternative systems. Should Some Banks Be Considered Too Big to Fail? Some observers argue that the Nation's largest banks are too big to fail. A run by uninsured depositors on the largest banks would have consequences for the overall economy so severe that they outweigh all other considerations, they argue. The principal concerns are systemic problems associated with the payments system and the possibility that such a run on a large institution may lead to runs by uninsured depositors on other large institutions. Hence, if one of the largest banks were to become insolvent, these observers would advocate protecting both insured and uninsured depositors, while the owners would lose their investment in and control over the bank. 178 Box 5^2--^Alteiiative National Deposit Insurance Systems At least ! ^| 24 members of the Organization for Eco8 |p nomic Development have national deposit insurance sj^^^i||lfew of them work exactly like the Federal Deposit Ins^ij^^^^l^ioration in the United States, There are broad rotes of the systems, who administers them, the;;^i|^^ coverage, and 'membership and :; : : : fanding^in^i^^?fS^ ' - ' ' •• Deposit ipystems are administered in three differ* ent ways/ the FDIC* are officially sponsored and administered l^li^^^rnment. Generally, other governmentsponsored £&t$jjg^ systems do some regulation, but they 4o iof tove the extensive supervisory and examination roleslif Ifie RDIC* There is wide variation in the degree of autonomy lasurance agencies have from the central bank and , t^eaipry tor finance ministry. Privately administered insurance ;ar& about as common as government^sponsored systeittft-A, few countries maintain systems that are jointly managed fe^^fip^blic and private sectors. The majoriip of national deposit insurance systems have some fixed eefliifr;:tif coverage for deposits* Most systems have a lower the United States. Some nations, such as the United use a system in which only a fraction of systems implicitly provide coverage deposits is for u by encouraging mergers between healthy systems are funded in one of two National ways: premiums before any losses are incurred, or assessment of members when a loss is incurred, The example of the first method; member banks trlbute a certain percentage of deposits to an each year. The United States has the highest major industrial country that charges premiums, makes use of risk-based premiums, de* signed to in the financial health of institutions. Some raeeive' additional financing from central banks, |a^ammesf or both, and most have arrange* ments with governments to borrow funds when needed. Others argue that no bank should be considered too big to fail. They contend that such a policy weakens the market discipline applied by uninsured depositors and other creditors and thus encourages undue risk-taking by the biggest institutions. This argument implies that the total cost of "bailing out" a large institution on 179 the brink of failure is hard to measure, since in addition to the immediate cost of the bailout, one must also consider the increase in the potential cost of future bailouts that become more likely as a result of the initial bailout. Opponents of a too-big-to-fail policy also argue that a policy of effectively extending insurance coverage to uninsured depositors of large institutions gives these institutions an unfair advantage over smaller institutions. The too-big-to-fail dilemma comes down to a conflict between principle and practicality. If the cost of bailing out an insolvent institution is clearly exceeded by the likely costs to the overall economy of allowing it to fail, then even if one agrees in principle that no institution should be considered too big to fail, it would be impractical to allow the failure. The key to resolving this conflict is to minimize the costs of such failures. Potential costs associated with systemic risks to the payments system have been greatly reduced by recent improvements in the public and private payment systems. Contagious uninsured depositor runs are less likely if uninsured depositors have confidence in other large banks. Banking reform that provides for the accurate measurement of capital and prompt corrective action before institutions are on the brink of failure should significantly reduce the possibility that the public would lose confidence in several large institutions at the same time. DEPOSIT INSURANCE REFORM: INDUCING MARKETBASED INCENTIVES Under the current system of deposit insurance, incentives on the part of poorly capitalized banks and thrifts to take undue risks must be constrained by regulation. In essence, examiners must question the decisions made by management. Prudent management from the bank or thrift owners' perspective differs from prudent management from the regulators' perspective. Regulators want to hold down costs to the insurance fund by minimizing the likelihood that the institution will fail. Institution owners want to maximize the value of their wealth. For weak institutions, particularly those on the verge of failure, these divergent goals lead to clear conflict between regulators and management and require the imposition of tight and detailed regulatory constraints. The managers are trying to get funds out of the institutions and to the owners, while regulators want to keep funds in the institution to reduce the cost of failure to the insurance fund. Managers inevitably have superior information, and regulators thus face a task that is both difficult and critical. The level of regulation and pressure on regulators might be reduced if the incentives of owners and the deposit insurer were more closely aligned. Before considering possible means to this end, it is important to emphasize that a reduction in the regulation of 180 depository institutions does not imply a reduction in their supervision. The distinction needs to be clear. Regulations specify what types of activities institutions can and cannot engage in. Supervision entails observing what an institution does, but intervening only when the actions taken expose the institution to undue risks that could threaten the solvency of the institution. Thus, a healthy, well-capitalized institution might be allowed great flexibility but would still be carefully supervised. In fact, reduced regulation might on balance entail more, not less, supervision. Limiting the Scope of Deposit Insurance Insured depositors have little incentive to monitor the managers of depository institutions. However, uninsured depositors and nondeposit debtors of a bank or thrift do have incentives to monitor managers, since their claims on an institution are at risk if the institution fails. The ability and incentive to withdraw funds as riskiness increases serves, in turn, to discipline managers. Thus, one way to increase market discipline is to limit the scope of deposit insurance and thereby force banks and thrifts to rely more heavily on uninsured sources of funds. Limiting the amount of deposits insured would also limit any potential liability of taxpayers if an institution fails. Currently, deposit insurance covers up to $100,000 per depositor at each institution. By using trust arrangements, joint accounts, and a variety of other arrangements, however, a depositor can easily insure many times this limit at a single institution. In addition, a depositor can have insured accounts at any number of different institutions. Thus, depositors can have considerably more than $100,000 protected by the deposit insurance safety net. Several ways of limiting insurance coverage have been suggested. First, the amount of coverage that a depositor can obtain at any one institution could be limited more effectively. This approach is broadly consistent with the notion that deposit insurance should protect only small depositors. It is also likely to reduce the aggregate amount of insured deposits and thus reduce potential taxpayer liability for failures and increase the use of noninsured sources of funds by banks and thrifts. Uninsured depositors or debtholders would exert beneficial discipline on management. An expanded version of this approach would limit the coverage that a depositor can obtain system-wide. This approach, however, would present some administrative problems since information on total deposits held by an individual in all insured institutions is not readily available. Second, institutions could be prohibited from offering interest rates on insured deposits that are significantly higher than market rates on comparable claims such as U.S. Treasury bills. Such a system would not constrain the use of insured deposits by well-cap- 181 italized institutions, but it would help prevent weak institutions from gambling for resurrection by using funds obtained by offering above-market rates on insured deposits. Compared with the first approach, this approach would probably result in less reduction in the aggregate amount of insured deposits, so potential taxpayer liability for failures would be higher, and banks and thrifts would rely less on uninsured sources of funds. A third approach would effectively require institutions to designate particular assets as collateral for insured deposits. Well-capitalized institutions might be allowed to use almost any type of asset as collateral. Poorly capitalized institutions would be required to use only relatively safe and easily marketed assets as collateral. Such a system would not restrict well-capitalized institutions- but would constrain the types of risks poorly capitalized institutions could take using insured deposits. It is important that any limitations on the scope of deposit insurance be implemented gradually. Such limitations may reduce the aggregate amount of deposits and thus the funds available for lending by banks and thrifts. Also, to the extent insured deposits are replaced by uninsured deposits, runs by uninsured depositors may become more likely. Historical experience with rapid reductions in deposits during the "credit crunches" of the 1960s and 1970s and during banking panics that took place before the introduction of Federal deposit insurance shows that rapid contractions in the aggregate amount of deposits can have severe implications for the economy. Although alternative sources of funds for borrowers exist, these sources cannot be expected to grow at the rate that would be required to supplant such a sudden, sharp reduction in lending. If banks and thrifts are given time to develop sources of funding other than insured deposits, they may continue to compete effectively with a less comprehensive safety net. If that is the case, then reducing the scope of deposit insurance coverage may have little effect on aggregate bank and thrift lending. Thus, any such reform must be very careful to provide for a gradual phase-in. Prompt Closure A second way to tap the forces of market discipline is to close institutions promptly when their capital levels fall to zero. That, however, is easier said than done. Even though prompt closure may be a goal, inaccuracies in the measurement of capital will ultimately make it nearly impossible to know when an institution's capital reaches exactly zero. Moreover, since capital measurement is not an exact science, banks and thrifts are very likely to challenge closure decisions involving measured capital levels that are close to zero. The process of prompt closure is more likely to succeed to the extent capital measurement is accurate. 182 The more extensive use of subordinated debt by banks and thrifts would also facilitate prompt closure of insolvent institutions. In the event of bankruptcy, claims of subordinated debtholders are honored only after those of uninsured depositors, general creditors, and the deposit insurer. If an institution with subordinated debt were to fail, the deposit insurer would pay off insured depositors or transfer them to another institution, along with cash or assets to compensate the receiving institution for its new deposit liabilities. The proceeds from the sale of the remaining assets would then be used to pay off the general creditors, the uninsured depositors, and the deposit insurer. After they were all paid, anything left would go to the holders of subordinated debt. Well-managed and well-capitalized banks and thrifts would be able to issue subordinated debt on reasonable terms, but institutions that followed risky or careless strategies would only be able to issue such bonds at very high rates of interest. Thus, the cost of these funds would be responsive to how well a bank or thrift was being managed. Since they would suffer losses before the deposit insurer, subordinated debtholders would exert discipline on management that would be consistent with the protection of the deposit insurance fund. Moreover, they would provide a countervailing force to offset political pressure on regulators to forbear. In essence, holders of subordinated debt would represent a market force that would help ensure safety and soundness in the banking system by rewarding good management and penalizing poor management. Private Reinsurance of Deposits A third way to induce market discipline is to set up a system in which the private sector would reinsure a fraction of deposits. The Administration has recommended that the FDIC adopt a demonstration project to determine the feasibility of privately reinsuring deposits. Such a system would introduce private monitoring of risks and market incentives into both the determination of deposit insurance premiums and closure decisions. Under such an arrangement private insurers would bid for the right to cover a pro rata fraction (perhaps 5 or 10 percent) of depositor losses for a given institution, and the government insurance fund would cover the remainder. The percentage of private deposit insurance could vary inversely with institution size, so that the amount of deposits privately insured in any one institution would be of sufficient size to warrant careful monitoring by the private insurer but not so large as to limit severely the pool of firms that could provide insurance. The government fund would set its premium for each institution after considering the premium rate charged by the private insurer and thereby benefit from the pricing analysis performed by the private market. The terms of the private insurance contract would 183 allow readjustment of insurance premiums if the riskiness of the insured institution changed. When a private insurer altered its premium, the Federal insurer could follow. To reduce the cost of providing insurance, private reinsurers presumably would share information obtained in supervisory examinations. Private reinsurance of deposits might be one way to capture many of the benefits claimed for private insurance. Independent sources of private capital would be at risk, and thus market forces would be involved in both monitoring bank and thrift performance and setting premiums. Of course, if private insurers are to have the appropriate incentives in assessing the risks inherent in insuring deposits, they must expect to bear the full cost of any mistakes they might make in assessing the financial condition of the institutions they reinsure. Thus, private deposit insurers would have to be required to be very well-capitalized. Private insurers would also have incentives to develop accounting and control systems that would minimize the cost of deposit insurance. Market signals of growing problems at an institution also could be used to trigger government interventions up to and including closure. A considerable benefit from this system would be the interaction between the private and public sector insurers. This interaction may facilitate the evolution of banking. As the private insurers gain experience in assessing and monitoring the risks faced by depository institutions, they, in conjunction with the government insurer, might propose innovative new insurance products. These products might trade off premium rates with restrictions on banking activities, closure policies, or asset portfolio choices. For example, an insured institution might commit to avoid certain risky practices in exchange for lower insurance premium rates. Instead of expending energy trying to circumvent regulations, part of the private sector would have the incentive to try to design efficient regulatory schemes. REMOVING REGULATORY OBSTACLES The high levels of inflation and resulting high interest rates that were the primary cause of the S&L crisis did not have a similar effect on banks. Because the loans they made were usually shortterm and had adjustable interest rates, banks were not very exposed to interest rate risk and thus were not hurt significantly when rates rose. The recent downturn in the economy and, in particular, real estate has taken its toll on banks and has resulted in some failures. Moreover, the rate of bank failures rose throughout the preceding economic expansion. Given increased competition in banking, a rise in the failure rate is not surprising. But continued 184 stress within the system indicates that it is time for a reevaluation of existing regulation of depository institutions. Safety and Soundness Through Interstate Banking One of the most obvious ways to increase the safety and soundness of banks and thrifts is to allow them to spread their risks by diversifying their loan portfolios. However, laws and regulations restricting interstate banking and branching inhibit this diversification. The rationale behind restrictions on interstate banking is similar to the rationale against branch banking within States. Rural communities have traditionally opposed branching because they feared that urban branch banks would funnel deposits from rural into urban areas, leaving rural areas with no sources of loans. Likewise, States did not want national banks to ship deposits to neighboring States. Restrictions on branching and interstate banking, however, have not kept deposits from flowing across community and even State borders. Although smaller community banks and thrifts do lend locally, on average they find that they take in more deposits than they can lend profitably. Instead of making unprofitable loans locally, these institutions lend some funds to larger institutions, which in turn use these funds to finance loans elsewhere. Regardless of branching restrictions, banks and thrifts only make loans that appear to be profitable. Likewise, large institutions do not forgo profitable lending opportunities just because they are in small communities. Geographic restrictions not only have failed to serve their intended purpose, but they have occasionally hurt the local communities they were meant to protect. When local economies are hit by periodic economic downturns, local banks and thrifts suffer loan losses, which reduce their capital and consequently require them to contract their lending. If local banks or thrifts are the only sources for loans, even for borrowers who are still in good financial condition, this contraction in lending might exacerbate the local economic downturn. On the other hand, a well-diversified bank or thrift could easily absorb loan losses in a single community and thus continue to be able to lend to creditworthy borrowers there. Many of these geographic restrictions are gradually being eroded. At the end of 1990, all but four of the States allowed bank holding companies of other (but not necessarily all) States to acquire banks in their State. Most of these laws extend such opportunities after a specified date to banks from any State that offers reciprocal treatment. Important limitations on interstate branching still exist, however. Although a holding company may own banks in several States, each bank must be separately organized and capitalized. This limitation creates redundant costs and reduces the benefits of geographic diversification. To the extent that interstate 185 branching restrictions still prevent banks and thrifts from diversifying efficiently, they are obstacles to the efficiency, profitability, safety, and soundness of the financial sector. Accordingly, the Administration will propose legislation to allow interstate banking and branching. Improving Efficiency in Financial Services It is impossible in the United States for consumers to obtain a full range of financial services from any single institution. Continuing Federal constraints bar depository institutions from offering certain financial services and prohibit nonbank financial service companies from offering deposit and checking services. A company that wants to raise money may go to its banker for a loan but has to go to an investment bank for help in issuing new equity. Other industrialized countries have financial systems that are more integrated than that of the United States. Germany, for example, has more than 300 "universal" banks, which are allowed to offer a full range of banking and financial services. These institutions may accept deposits, make consumer and commercial loans, underwrite and trade securities, and provide investment counseling. The United Kingdom also has a universal banking system. Many British banks form subsidiaries for certain activities, but bank solvency is usually assessed on a consolidated basis. In contrast to the U.S. banking system, British and German banks are not required to use a holding company structure or "firewalls" between departments performing diverse functions. Under the Second Banking Directive of the European Community (EC), EC banks will be able to operate throughout the Community after 1992, which is expected to spread the practice of universal banking throughout Europe. The Administration believes that to remain competitive in the world market for financial services, U.S. financial firms must be able to affiliate in financial service holding companies and be allowed to offer a full menu of financial services. Potential synergistic relations among affiliates that might lead to more efficient delivery of financial services by eliminating redundant costs should not be constrained. However, different financial affiliates in the same holding company should be separately capitalized, and their financial ties should be sufficiently segregated so that any problems that might arise in one affiliate do not spill over into the others. In particular, depository affiliates must be structured so that depositors and the deposit insurance fund are insulated from risks taken by other affiliates of the holding company. In constructing such legal firewalls, it is important that the synergistic benefits of offering full product lines are not lost in the process. Commercial firms offer a potentially large source of new capital and innovative ideas to a restructured financial services industry. 186 Commercial firms are already allowed to affiliate with savings and loans. It has been argued that potential synergies and efficiencies can be gained from combining commercial firms with other financial institutions. For example, banking relies heavily on information processing. Competitive banks and thrifts in the future will inevitably depend on advanced information processing technology. The affiliation of depository institutions with firms with expertise in information processing would likely lead to improvements in the information processing technology upon which banks rely. More advanced automated teller machines, increased use of optical scanners in check processing, and closer monitoring of information related to outstanding loans are just a few of many potential advances. Historically, commercial affiliation with banks has been resisted for two primary reasons: fear that economic power would become too concentrated, and concern that financial problems in the commercial firm could jeopardize the safety and soundness of the bank. These concerns have been heightened by the recognition that banking regulators could not be expected to monitor effectively the activities of commercial firms. While these concerns are legitimate, a total prohibition of affiliation between commercial firms and banks is not warranted. The Administration proposes to allow commercial firms to affiliate with banks. Concerns regarding commercial affiliation would be addressed by constructing legal firewalls and by monitoring and regulating the transactions between the commercial firm and the bank. In particular, the bank 'and the commercial company would be barred from engaging in financial dealings that could be construed as indirectly providing the commercial company benefits arising from the bank's access to Federal deposit insurance. FEDERAL CREDIT PROGRAMS The Federal Government is the country's largest supplier or guarantor of credit. By 1990 it had $210 billion in outstanding direct loans, $630 billion in outstanding guarantees of loans made by private lenders, and $855 billion in outstanding loans or guarantees made by government-sponsored enterprises (GSEs), privately funded businesses that make or repackage and sell loans in specific markets. Measured in net terms (loans minus repayments), Federal loans and guarantees accounted for 20 percent of all funds raised in the United States in fiscal 1990. The bulk of Federal credit supports housing, while smaller amounts are directed toward agriculture, business, and education. The vehicles for providing Federal credit have changed substantially in the last decade. Federal loan guarantees and GSE credit market activities increased over the 1980s while direct Federal 187 lending fell substantially. As recently as 1985, $52.8 billion in new direct loans were made; by the end of 1990 the volume of direct loans had declined 68 percent. The Need for Federal Credit Reform Important reforms in the Federal Government's direct role in credit markets occurred in 1990. Before the reforms, the deficit or surplus figures in the Federal budget never recorded the true costs of Federal credit programs. Because credit budgeting was based on cash flows, a direct loan was treated just like an expenditure even though a loan that did not default, unlike an expenditure, would be repaid in subsequent years. These repayments were then recorded as collections when they were received. Loan guarantees, an alternative way to provide credit assistance, did not appear to cost the government anything at the time the guarantee was made. Since no initial outlays were associated with a guarantee, it was not reflected in the budget unless the borrower defaulted, and then only in the year of the default. This treatment of credit programs in budget accounting, along with increasing pressure to reduce the Federal deficit, partially explains the shift in emphasis from direct to guaranteed loans since the mid-1980s. As long ago as 1967, the President's Commission on Budget Concepts recognized that the budget did not adequately measure the costs of Federal credit activity. The Commission recommended that the budget include only the subsidy cost of direct loans, rather than their disbursements and subsequent repayments. Thus, if the full costs of a loan, including expected default and administrative costs as well as the government's interest costs, were expected to be completely repaid, the loan would be recorded as an expenditure of zero. However, because it was believed that financial techniques were not able to measure subsidies accurately, this recommendation was never fully implemented, and was soon abandoned entire- ly. Because the budget has not explicitly reflected the subsidies associated with loan programs at the time credit is extended, few attempts have been made to compare the costs and benefits of Federal credit programs with each other or with other programs. There are some warning signs, however, that these programs may have problems. In 1988 the government added a significant amount of capital to and restructured the bankrupt Farm Credit System. Student loan defaults reached 15.6 percent in fiscal 1988, and Veterans Administration loan defaults have more than tripled from fiscal 1981 to fiscal 1988. In 1989 the General Accounting Office (GAO) reported that Federal Housing Administration losses were five times higher than their fiscal 1988 financial statements had estimated. 188 Previous Federal accounting and administrative practices may have hindered effective oversight of credit programs. Some agencies rolled over their debt, paying off delinquent loans by issuing new loans. Other loans were kept on the books long after the borrower had defaulted. Some Federal lenders were audited only infrequently. Until a recent GAO audit, for example, FHA books had not had a complete, outside audit for 14 years. The Federal Credit Reform Act of 1990 The Federal Credit Reform Act of 1990, which the Administration strongly supported, is intended to measure more accurately the costs of Federal credit programs, make the budgetary treatment of credit programs equivalent to that of other Federal spending, match benefits to the needs of borrowers, and improve resource allocation among credit programs and between credit and other spending programs. Under the new law, subsidy costs are separated from the unsubsidized cash flows of Federal credit programs and, for the first time, the subsidies, and only the subsidies, are included in the budget. Beginning in 1992 the government will maintain three types of accounts for each Federal credit program: liquidating, program, and financing accounts. The liquidating account will display cash flows for loans obligated or guarantees committed before fiscal 1992 and thus will not be subject to reformed budgetary treatment. The program account will display the subsidy costs and administrative expenses of new loans and guarantees, and the nonbudgetary financing account will record the cash flows associated with this new credit. Separate financing accounts will be maintained for direct loans and loan guarantees. The costs of new loans and guarantees measured in the program accounts will be included in the budget. The Credit Reform Act will place the costs of credit programs on equal footing with direct expenditures. That will help policymakers make the best use of Federal resources. In addition, this reform will help Federal agencies operate credit programs on a more fiscally prudent basis. Reforms of Government-Sponsored Enterprises Other new legislation, passed in 1990, began the process of reforming GSEs. The activities of GSEs are often closely related to other Federal credit programs. For example, a large GSE, the Student Loan Marketing Association, or "Sallie Mae/' purchases federally guaranteed student loans from private lenders and sells new securities based on these loans. By converting private contracts into securities available to the general public and by providing subsidies, GSEs increase the amount of capital available to finance investment in the relevant markets, particularly housing and education, though they also presumably displace some private financing 189 that would otherwise be available. In some cases, GSEs have also played an important role in bringing new financial instruments to the market. GSEs benefit from their special relationship with the government. Although debt securities of the GSEs and their securitized loans receive no explicit government guarantee, their Federal charter and other privileges lead to a perception that the government would come to their rescue in time of trouble. The government has not discouraged this perception and has reinforced it by its response to the financial troubles of the Farm Credit System. This implicit guarantee allows GSEs to borrow at low interest rates, near those of Treasury securities. In addition, some GSEs are exempt from the Federal corporate income tax, most are exempt from State and local income taxes, and most do not have to register with the Securities and Exchange Commission. There are certain parallels between GSEs and the thrift industry. At the end of 1990, GSE liabilities were roughly the same size as savings and loan deposits. GSEs and thrifts benefit from implicit or explicit government guarantees of their liabilities, which allow them to borrow substantial amounts with only a very small base of equity. GSEs have some of the lowest capital ratios of any domestic financial intermediaries. Like thrifts, GSEs are legally required to serve the credit needs of particular markets, and they are unable to diversify their investments among different sectors of the economy. Despite these similarities, GSEs thus far have shown few signs of trouble, perhaps because most were not as exposed as S&Ls were to losses caused by increases in interest rates. Nevertheless, the Administration, recognizing that GSEs have the potential for problems, has taken several steps to ensure that they remain financially sound. In May 1990 the Department of the Treasury proposed four principles to govern GSEs: They should maintain adequate capital; they should be sound enough to achieve the equivalent of an AAA bond rating in the absence of any implicit guarantee; the government should eliminate any potential conflicts of interest in GSE regulation; and GSEs should disclose the economic value of their relationship to the Federal Government. The Budget Enforcement Act of 1990 takes additional steps to ensure the financial soundness of GSEs. The Treasury Department is required to submit a study, along with proposed legislation, by April 30, 1991. This study will provide an objective assessment of the financial soundness of GSEs, the adequacy of the existing regulatory structure, the financial exposure of the Federal Government, and the effects of GSEs on Treasury borrowing. The Congressional Budget Office (CBO) is also required to present a report by the same date. The CBO study will focus on many of the same issues 190 and report on alternative regulatory and oversight mechanisms for GSEs. By September 15, 1991, the committees of jurisdiction must report legislation in the House of Representatives to ensure the financial soundness of GSEs and to minimize the possibility that a GSE might require future government assistance. The Senate will then do the same. Finally, the President's annual budget message must include an analysis of the financial condition of GSEs and the financial risks to the government posed by GSEs. SUMMARY • Legislative reform that recognizes the rapidly changing nature of the financial sector is essential to ensure a sound and safe financial system. • Comprehensive reform of financial institutions is needed to increase the flexibility and competitiveness of the financial system. • A financial sector that is inefficient and inflexible cannot meet the overall needs of the economy. Financial institutions must be free to exploit synergies and economies of scale and scope where they exist. • Regulatory reform should be adaptable to future changes in the economic environment. Market forces should be harnessed to help ensure the safety and soundness of the financial system. • The November 1990 budget law substantially reforms the budgeting for Federal credit programs, altering the treatment of direct and guaranteed loans and taking steps to reduce the potential risks to taxpayers from GSEs. CONCLUSION The financial sector is faced with a number of challenges that have arisen in recent years as the economic environment has changed. The unexpectedly high inflation in the 1970s and the resulting rise in interest rates represented a significant shock to the financial system; together these factors were the primary underlying cause of the S&L crisis. Reform of the S&L industry has been initiated with the FIRREA law. The recent budget agreement included important provisions to ensure that Federal credit programs use their resources more efficiently. The Treasury Department is preparing a proposal to ensure that GSEs remain financially sound. The financial sector has made essential contributions to economic growth and development throughout the history of the Nation. To allow the sector to continue to thrive and to play a vital role in future economic growth, significant reform of the regulatory struc- 191 ture governing the financial sector is necessary. The Department of the Treasury's recently released study of Federal deposit insurance and regulatory reform discusses these issues in detail. The Administration's legislative proposals reflect the findings of that study and the policy principles outlined in this report and discussed in this chapter. Comprehensive reform requires the reform of deposit insurance and the removal of regulatory obstacles that hamper the flexibility, efficiency, profitability, and safety of banks and thrifts. Deposit insurance should be structured to increase market discipline, which leads to prudent management of banks and thrifts. The Administration proposes to remove obstacles to interstate banking and branching that effectively make banks and thrifts less safe by constraining their ability to diversify their loan portfolios and sources of deposits. Constraints on combinations of various types of financial service firms hamper efficiency by necessitating parallel facilities that create redundant costs. These constraints reduce the flexibility and competitiveness of U.S. institutions in the global arena and should also be eliminated. 192 CHAPTER 6 Economies in Transition Around the World THE REMARKABLE WORLDWIDE MOVEMENT toward reliance on competitive market forces continued during 1990. Fundamental reforms were put in place in several Eastern European countries. Dramatic economic and philosophical transformations were also under way in many nations in the Western Hemisphere. Many countries were embracing democracy, discarding their centrally controlled or state-dominated economies, and moving toward systems in which private ownership of property predominates and most resources are allocated through markets. The pace of change has been great, but events in 1990 also demonstrated that the task of transforming failed economies is formidable. This chapter focuses on the transformation process as it is unfolding in Eastern Europe and Latin America. The transitions under way in Eastern Europe reflect the failure of command systems to provide either political freedom or a decent standard of living. The massive historical experiment conducted throughout the 20th century that contrasted market-oriented and centrally planned economies has ended with the economic failure of communism. A little over three decades ago Nikita Khrushchev, then Premier of the Soviet Union, boasted "We will bury you/' in reference to the alleged superior economic performance of the Soviet Union. Today, although accurate comparisons are difficult, recent estimates of per capita gross national product (GNP) in the Soviet Union have been as low as $1,780, less than one-tenth of per capita GNP in the United States. The contrast between the two systems in Germany is even more stark. Starting from the same point at the end of World War II and sharing a common culture, East and West Germany went two different ways. West Germany achieved one of the highest standards of living in the world, while East Germany became an industrial wasteland with rundown, outmoded factories and a poisoned environment. Renewed respect for democracy and market forces is also sweeping the Western Hemisphere. A "quiet revolution" in the way that Latin American policymakers seek solutions to their countries' complex problems has taken hold. Almost every country in the region has begun to move away from policies, pursued for decades, 193 that discouraged trade and gave government an extensive role in the economy. Instead they are turning toward economies less controlled by government and more reliant on market forces. The President has recognized the tremendous opportunity presented by these changes with his Enterprise for the Americas Initiative, which is aimed at expanding trade, investment, and growth in the hemisphere, as well as with his commitment to conclude a freetrade agreement with Mexico. Change also has become apparent in other regions. Nations as diverse as New Zealand, Benin, and Mongolia engaged in debates about far-reaching market-oriented reforms. Several African countries have adopted programs that encourage private markets and reduce government management of the economy. A push for privatization in the mid-to-late 1980s reversed the trend toward increased state control of the economy in Western Europe, with the United Kingdom and France leading the way. The success of the newly industrializing economies of Asia—Hong Kong, Singapore, South Korea, and Taiwan—has offered strong evidence of the gains from outward-looking policies that reward entrepreneurship. These worldwide changes promise to settle intellectual debates that have persisted for decades. During the 1960s and 1970s the "convergence hypothesis" held that the capitalist and communist systems would eventually evolve toward each other, with the final result a hybrid of the two systems. In Latin America, it was argued that policies that insulated the economy from world markets and expanded the role of government would promote quick industrialization. It is now unmistakably clear that these hypotheses have been rejected. The developed market economies are clearly not evolving toward socialism, and the leaders in Eastern Europe and Latin America are not trying to find a hybrid "third way." These leaders instead push for market-oriented economies with individual choice and private property rights as the foundations of progress and prosperity. It is impossible to predict the speed or even the eventual outcome of the reforms now under way. The collapse of communist and military dictatorships presents enormous opportunities to improve living standards for hundreds of millions of people, but those opportunities come with no guarantees of quick success. As command systems collapse, they must be replaced with systems that provide appropriate incentives to producers and consumers. Fundamental reform needs time to work, and dislocations are inevitable. Economic change can be difficult even in well-developed market economies, as was discussed in Chapter 4. Change is even more difficult when it is dramatic and revolutionary. In emerging democracies, economic transformation must make its way within the context of policy debates that accompany the expansion of political 194 freedom. These debates may slow the reform effort at times, or even create backlash against the reforming government, but they impart legitimacy to the new economic system. If governments are to build and sustain popular support for market-oriented reform, there must be widespread understanding of how much there is to gain and realistic expectations about the difficulty of the task ahead. In the longer run, history strongly suggests that decentralization of economic power in a free-market economy will support both prosperity and democracy. FORCES FOR CHANGE The pressure for market-oriented change was reflected clearly in developments in Eastern Europe and Latin America during 1989 and 1990. In Eastern Europe, 1989 closed with Poland and Yugoslavia planning ambitious adjustment programs that were put in place in early 1990 and that quickly reduced high inflation rates, stabilized foreign exchange rates, and eliminated shortages. East and West Germany were unified on October 3, 1990, less than a year after the fall of the Berlin Wall in November 1989. By the end of 1990, both Czechoslovakia and Hungary had announced plans to accelerate their reform efforts. In Latin America, Chile's new democratic government took office in March 1990 committed to continuing the country's program of economic reform. Mexico's current government accelerated reforms that were begun in the mid-1980s, while Argentina, Peru, Venezuela, and a number of other countries initiated significant market-oriented reforms. The fall of the Berlin Wall and the events that followed raised hopes and expectations around the world. More than anything else, the undying and universal desire for political freedom motivates the tremendous upheaval in Eastern Europe and the ongoing struggle for democracy in Latin America. But the denial of economic freedom also crystallized discontent. The yearning for economic freedom has been evident in the vibrant underground economies of South America, where enormous amounts of effort are devoted to avoiding onerous regulations and licensing requirements. The simple freedom to make choices in everyday life has a value beyond its positive effects on living standards. THE FAILURE OF ECONOMIC POLICIES A fundamental motivation for change in Eastern Europe and Latin America was the failure of their economies to perform adequately. The economic policies followed in these countries failed because they were unable to provide adequate incentives for producers to supply efficiently the goods and services that consumers wanted to buy. In a well-functioning market economy, producers must 195 make goods that consumers want; otherwise, their products go unsold and their businesses fail. Producers also have an incentive to produce those goods efficiently—that is, at the lowest possible cost for a given quality—because they can keep the savings gained by reducing costs. If demand increases, prices rise, encouraging producers to produce more and consumers to consume less. If demand falls, the process happens in reverse. In smoothly functioning markets the price moves to equate, at the margin, the value consumers place on the goods they purchase with the value of the resources used to produce them. This process, repeated for countless goods and services, ensures that the economy's scarce resources are used efficiently to satisfy consumer needs and desires. Interference in the operation of the market breaks this crucial link between producer cost and consumer value. In Eastern Europe and Latin America, widespread use of price controls, reliance on inefficient public enterprises, extensive barriers to competition with the rest of the world, and government regulation of production and investment have all obstructed the normal operation of markets. The lack of enforceable property rights, whether through legal restrictions in Eastern Europe or through inadequate protection in Latin America, severely limited incentives for entrepreneurs. In Eastern Europe, production levels were, until recently, decreed by central plans. Consequently, there was no reason to expect that the output produced met the wants or needs of the population. Surpluses and shortages occurred regularly, but managers had little incentive to adjust their production as long as quotas were met. Government investment choices caused chronic underproduction of consumer goods, leading to widespread rationing and long lines at shops. Incentives to innovate were almost completely absent, except in the defense sector. But the command economies proved unable to transfer their high levels of defense technology into improvements for consumers. Production and investment controls were less extensive in Latin America than in communist regimes, but government intrusion into economic decisions was still pervasive. As in Eastern Europe, inefficient public monopolies were common, and public funds were channeled into favored industries regardless of the economic consequences. High tariffs and nontariff barriers protected inefficient enterprises. The proliferation of government-owned firms combined the natural inefficiency of monopoly with the waste and misallocation too frequently found in public enterprises. Price controls and subsidies have been common in both regions. Where prices were set administratively, they were usually poor guides to the efficient allocation of resources. Price controls on agricultural products have kept food prices down but reduced output. Subsidies in Latin America and Eastern Europe have distorted pro- 196 duction and consumption decisions, leading to shortages and bottlenecks. The prevalence of inefficient public enterprises and unsuccessful attempts to limit subsidies and other expenditures have contributed to large fiscal and external trade imbalances for many Latin American and Eastern European nations. Many of these countries lack a broad-based, efficient tax collection system and face limits on the public's willingness to hold government debt. Borrowing abroad has proven to be no answer: In the absence of sound policies, large external debts can result in capital flight and discourage foreign investment where it is desperately needed. Large deficits, therefore, lead to pressures for excessive money creation, eventually causing rampant inflation in most countries. Some economies in both regions were also weakened by the burden of high military spending. Although estimates are imprecise, perhaps as much as a fifth of the Soviet Union's output may have been allocated to the defense sector in recent years. This massive effort, moreover, was ultimately ineffective, as free world governments matched or exceeded Soviet capabilities throughout the 1980s. REPERCUSSIONS OF ECONOMIC POLICY FAILURES The impact of these policies on living standards was devastating. Per capita income in Poland is now estimated by the World Bank to be about $1,860, compared with an average of $17,470 in the major industrial countries. In Argentina and Peru, real per capita incomes in 1988 were virtually unchanged from 1965 levels. Mexican real per capita income grew during most of that period, but nonetheless declined after the 1982 debt crisis. Meanwhile, the newly industrializing economies of Asia followed an export-oriented strategy, and real per capita income grew at an average rate of nearly 7 percent a year between 1965 and 1988. Although some of these Asian governments directed private activity using taxes, subsidies, and other means, such interference was far less extensive than in many other developing countries, private entrepreneurship was encouraged, and world prices generally guided decisionmaking. Over time, the weaknesses of the political and economic systems of Eastern Europe and Latin America and the contrasting success of market-oriented economies became readily apparent. Once momentum for fundamental change began to build, ideas flowed easily across national borders. The information technology revolution allowed ideas to spread more quickly than ever (for example, most East Germans could receive West German television before the Berlin Wall fell) and created pressure for change that overwhelmed the communist governments of Eastern Europe. 197 EARLY ATTEMPTS AT REFORM As the economic problems in Latin America and Eastern Europe worsened, piecemeal reforms were attempted, but these efforts were doomed to failure. Many Eastern European countries experimented with reforms that coupled economic decentralization with partial price decontrol. The premise was that, with reduced central control, state-owned firms would be run as if they were operating in well-functioning markets. Although aggregate planning goals were still announced, individual enterprises could set their own planning targets and were made responsible for output decisions and trade in raw materials and other inputs. In addition, the system of price controls was made more flexible, and some smallscale private enterprise was allowed. These early reforms went furthest in Hungary during the 1980s, where they helped create a sector of small-scale private businesses. They were also attempted to varying degrees in Yugoslavia beginning in the 1950s, in Czechoslovakia during 1966-68, and in the Soviet Union beginning in 1987. The People's Republic of China initiated a more comprehensive reshaping of its economy beginning in 1978, which also incorporated decentralization, relaxation of price controls, development of a small private sector, significant tax reforms, and the partial reopening of the economy to international trade (Box 6-1). Early reform efforts by Latin American countries typically followed their debt crises of the early 1980s. These reforms concentrated on restoring the confidence of domestic and foreign investors by reducing inflation and the fiscal deficit and improving the trade balance. Argentina and Brazil, for example, both confronted extremely burdensome external debts, recessions, and high inflation rates. In response they adjusted their currency exchange rates to make their goods more competitive in world markets and initiated various plans to curb the escalation of wages and prices. In both Eastern Europe and Latin America, these early efforts failed to produce the desired results, in large part because they did not adequately restore or put in place the foundations of well-functioning market economies. Private property rights were generally absent in Eastern Europe, severely limiting profit incentives and discouraging entrepreneurship, and state-owned monopolies were retained. In Latin America efforts to reduce trade imbalances were not coupled with policies to remove barriers to competition in domestic markets, to break up state-owned monopolies, or to improve efficiency by privatizing public enterprises. Fiscal deficits continued to run out of control and to generate inflation because enterprises owned and managed by the government had no incentives to control costs, and there was capital flight from many countries. 198 Bex 6~L—Economic Reform in China, 1978-90 The People's Republic of China initiated a comprehensive reshaping of its economy beginning in 1978, Reforms began in the agricultural sector and were later extended to the industrial sector. Direct planning controls were relaxed, economic decisionmaking was decentralized, more private activity was permitted, and more prices were allowed to be set in markets. In addition, there was a move to open the Chinese economy to world markets. The practice of ordering all firms to remit most of their profits to the state was gradually replaced with a broad-based system of taxes on profit. Low marginal tax rates were used to encourage investment and provide incentives for management and workers to take efficiency4mproving measures, Chinese reform produced important successes. Agricultural output grew at an annual rate of 8 percent from 1979 to 1984 before slowing, compared with an annual growth rate of 2 percent from 1958 to 1978. The share of state enterprises in total production fell from 81 percent to 60 percent between 1979 and 1987, reflecting the greater dynamism and growth of private enterprises. The share of goods subject to mandatory planning and state-fixed prices fell from two-thirds to one-third by 1987. Remaining price controls, however, reduced the impact of the reforms by distorting the input and production decisions of firms. In some cases, local authorities hindered the implementation of reforms. Furthermore, the tragic events in Tiananmen Square in June 1989 and the ensuing political crackdown led to a slowdown in the pace of reform. In some areas, central control was reasserted and the reforms rolled back. SUMMARY • The trend toward market-based economies stems in part from clear, historical evidence that government-dominated economies simply do not work well. Even where markets exist, extensive government interference discourages private initiative and can cripple the economy. • Early attempts at economic reform focused either on decentralizing economic decisionmaking or on macroeconomic stabilization; they foundered largely because they did not include the positive incentives that come from private ownership and competition. 199 PRINCIPLES FOR ECONOMIC REFORM There is no established policy package for reform—no universal blueprint exists—so each country must design its own transition to a healthy market economy. A growing consensus has emerged, however, on a number of principles necessary for successful reform: establishing sound fiscal and monetary policies, removing domestic price controls, opening the economy to international market forces, creating property rights and private property, promoting domestic competition, and reforming and limiting the role of government. No modern economy has completed a successful reform implementing all these principles at once. It has been difficult enough for countries to succeed in implementing one or two of them when others were already in place. Latin American countries began their transitions with more of the elements of a market economy than the countries of Eastern Europe. In both regions, the pace of events has raised expectations that the transformation can occur quickly and easily, but the sheer magnitude of the task indicates that perseverance and patience are required. MACROECONOMIC REFORMS Three of these principles—establishing sound fiscal and monetary policies, removing domestic price controls, and opening the economy to international market forces—are often described as macroeconomic reforms because they apply to the entire economy. They are central to creating the conditions for economic stability. They are also essential to successful structural reform in both Eastern Europe and Latin America. In Poland and Yugoslavia, macroeconomic reform has succeeded quite rapidly in reducing inflation to lower levels. But implementing these macroeconomic principles is not, by itself, adequate to produce a healthy market economy. Indeed, without structural reform to introduce a competitive private sector into the economy, macroeconomic reforms will not succeed in restoring sustained growth. Macroeconomic reforms can produce rapid output growth when the basic structure of a market economy is in place. That is what happened when the West German economy was rebuilt after World War II (Box 6-2). The West German program coupled price decontrol and monetary reform. It succeeded almost immediately in increasing economic activity, leading the way to the postwar German "economic miracle/' Establishing Sound Monetary and Fiscal Policies Any successful reform effort must involve sound monetary and fiscal policies. Otherwise, producers and consumers lack a firm basis for planning—there is no hope of fostering long-term invest- 200 Erhard Reforms he German economy lay in mm 0f*iM;hird its 1936 level belli?p^uction and trade patterns, increased by capital forawtion i^pfcion was aggravated pricing controls, and uncertainty taefc crowds traveled to the from farmers; an extensive black replaced currency in many Host currency and tank ac~ 100 to 64, but debts were In addition, price controls were monetaiy pslw w^ adopted, were prodded for in* ^^TI^-^^^-T-. ^-*^rrc,^- -. them Ludwig Erhard. astaWMi^ sound and stable macroeconomic conditions. Consumer prices increased 20 of 1948, but inflation annual rate of just over 1 percent ifeat had b^n hoarded or sold only to'tfe;:!*^ generaEy available* Keal industrial production increased 40 percent in the second half of "IMS ^^^^'^m^^^ tl percent annually between 1949 aiii ;:^M^^ also grew rapidly, But the reform was not painless: unemployment rose from 3 percent in the first half of 1948 to more than 10 percent in the rrfbtm could not have produced such ixnpres* sive results if West Germany after the war had not had key It had the legal framework necestotact businesses, and highly fiscal pdid^ in place since 1946 helped set the stage for the reforms to sue* ceed. In addition, the Marshall Plan and private aid from " abroad were critical during the initial reconstruction phase, By - the early 1950s, however, foreign aid had diminished; robust economic growth worldwide and the Korean war stimulated demand for German exports and fueled economic growth. 201 ment and economic restructuring in the extremely uncertain climate created by high and volatile inflation. One lesson from countries that have successfully ended hyperinflation, including West Germany after the war, is that strong fiscal discipline is critical to ensure price stability. Otherwise, fiscal deficits arise that increase the pressure to print money. Fiscal success, of course, requires tight controls on government spending and credit policies. In particular, the government must limit the subsidies it gives to consumers and to loss-making state enterprises. State enterprises must face so-called "hard budget constraints"; the government must not cover the losses they may incur. Fiscal discipline will then allow the implementation of a monetary policy aimed at preventing excessive money creation and providing a steady supply of credit to the economy. Achieving price stability requires establishing effective mechanisms for controlling the growth of money and credit. As a first step, this requires central banking reform, particularly in Eastern European countries. It is widely agreed that the central bank should have a high degree of independence from the central government, so that it can resist political pressures to finance government spending with money creation and can pursue the objective of price stability. Independence could prove particularly important during the transition period, when uncertainty and inflation pressures may require a strong anti-inflation stance, with tough limits on money growth. In addition, controlling the growth of money and credit requires a sound banking system, as discussed below. Central banks play an important role in monitoring the banking system and in serving as lenders of last resort. Establishing and controlling the total supply of credit to the banking sector will help to ensure that state enterprises face a hard budget constraint. Adequate supervisory capabilities also must be developed early. The collapse of the Chilean financial system in the late 1970s, for example, had its origins in inadequate supervision of external borrowing and domestic lending by Chilean banks. The tax system should be designed to raise revenues so that the printing press is not used to finance necessary government spending. Such a tax system should limit distortions to prices and economic incentives. Establishing a broad tax base allows marginal tax rates to be reduced. Tax revenue in Latin America is often generated from only a few sources, such as tariffs, and can be highly distortionary. An exception is Colombia, which has one of the most advanced income tax systems in the developing world, with a broadbased value-added tax and sophisticated adjustments for the effects of inflation. Other countries, such as Bolivia, Chile, and Jamaica, 202 are now experimenting with broad-based income taxes, value-added taxes, or excise taxes. In Eastern Europe, fundamental administrative mechanisms for collecting taxes are largely absent or primitive. The old regime received revenue through its ownership of enterprises and was able to transfer funds through simple accounting entries. As economic decisionmaking was decentralized and private firms increased in importance, government revenues deteriorated. Tax and collection systems will need to be established that can generate reliable sources of revenue for the government as the old sources of funding diminish. In economies that have suppressed inflation and allocated goods through rationing, the stock of domestic monetary assets outstanding is often unsustainably large. Where such a "monetary overhang" is present, macroeconomic stabilization requires that it be reduced. If consumers and producers hold large cash balances, decontrolling prices could lead to an inflationary surge in demand. The government could reduce the monetary overhang by selling real assets, such as housing, or financial assets, such as government bonds. This approach is not confiscatory, may help establish the government's credibility, and creates markets. The privatization of real assets is a high priority, but it may be difficult to sell these assets quickly, as discussed below. The sale of government bonds at market interest rates helps to establish a bond market, which in turn gives the monetary authorities an instrument to control the money supply. Bonds must be serviced, and so using bond issues to resolve the monetary overhang could worsen the fiscal deficit. During the transition, bond issues may need to pay high real interest rates, which would lead to higher interest payments on national debt. That in turn could cause lenders to be concerned about the government's ability to service its debt. If a government chooses to sell bonds to deal with the monetary overhang, it is critical to adopt monetary and fiscal polices that are both credible and strong. Because buyers must be assured that government bonds will be serviced in full, governments should consider using whatever assets they have to support these bonds. Countries could use their available resources—such as copper, gold, or future oil revenues—to back bonds wholly or in part. Such bonds would be tradable, and legal mechanisms would be developed to assure the public that the assets would be available to service the debt. Currency reform is an alternative approach to reducing the monetary overhang; this was the approach postwar Germany used successfully. In a currency reform the central government replaces existing monetary assets with new assets, usually of lesser value. A confiscatory currency reform is a tax on holders of currency and 203 other financial assets. Such a tax will provide few benefits unless it is part of a comprehensive economic reform package. Repeated currency reforms can disrupt economic activity, reduce the government's credibility, and contribute to a loss of confidence and capital night. Removing Domestic Price Controls In economies with extensive price controls, prices bear no relationship to economic value, defined either by domestic costs or by international prices. By comparison, in market economies production and investment decisions are decentralized, and flexible market prices guide economic activity. However, concerns about sharp price increases, particularly for staples such as bread, lead some to suggest delaying price reform, at least until after measures have been taken to deal with the monetary overhang. The problem with delaying price reform is that output will decline as the command system is dismantled unless the old system is quickly replaced with an incentive system based on accurate prices to encourage efficient production. Economies in transition thus need early and comprehensive price decontrol. Wages are a key price that must be liberalized. In a well-functioning market economy, wages are free to adjust so that valuable skills are rewarded and workers are encouraged to shift to occupations and regions where they are most productive. Until enterprises are operating under market incentives, however, they have little reason to set wages appropriately or to restrain their costs. Consequently, to avoid a wage-price spiral during the transition period, temporary and limited restrictions on wage increases in state enterprises may be desirable. Once firms face market constraints, all wage limitations should be eliminated to allow wages to move to their appropriate levels. Financial markets also should be liberalized so that savers receive an adequate return and investors face correct incentives when making investment choices. As a first step, at least, interest rates should be positive after adjusting for expected inflation. Government intervention in financial markets, particularly in Latin America, often led to negative real interest rates and was a major contributor to poor investment decisions and capital flight. Opening the Economy to International Market Forces Another key principle of macroeconomic reform is to open the economy to international market forces by establishing currency convertibility and liberalizing trade. Currency convertibility has more than one definition, but here it refers to the ability to trade the country's currency, at market exchange rates, for foreign currency (and goods) either at home or abroad. To say that a currency is convertible does not mean that trade is free. Western industrial 204 countries with convertible currencies retain tariffs and other barriers to trade. Thus, the benefits to a reform program from convertibility of the currency should be thought of as part of the larger process of eliminating restrictions on international transactions. The transformation to a market economy cannot be successful unless a country's currency is a credible medium of exchange and convertible within its borders. In the Soviet Union today, certain cities and republics restrict ruble purchases by nonresidents and erect trade barriers against each other. Certain deposit accounts are not convertible for currency. The January 1991 Soviet currency reform further reduced confidence in the ruble. These costly distortions are reflections of the fundamental failure of existing economic policies. Convertibility for international trade and other current account transactions, along with other measures to liberalize trade, is a critical early reform. It increases the range of goods that can be purchased by consumers and producers. It may also expand domestic production by increasing the availability of imported inputs and capital goods. Further, convertibility moves domestic prices toward market-determined world prices, guiding domestic enterprises toward efficient production and investment decisions. Opening the economy to international market forces also helps create a competitive environment in two important ways. First, it helps expose firms to the discipline of the international market. That is particularly important in smaller countries where the efficient operating scale of firms in some industries is large relative to the size of the domestic market. Without foreign competition, state enterprises in these countries may face little domestic competition at the start of a reform effort, allowing them to remain viable by raising prices at the expense of consumers. External convertibility and trade liberalization therefore are also pro-competitive policies that can enhance productivity. Second, opening the economy to international forces allows new domestic firms to overcome domestic barriers to competition. For example, reducing tariffs on vehicle imports allows small-scale private transporters to compete by importing trucks from abroad. A potential problem with early convertibility is that firms likely to be viable in the long run might experience severe financial difficulties during the transition from controlled to world prices. The balance of payments also could deteriorate until the supply side of the economy responds to the new market incentives and exports rise. Both of these problems could be addressed by converting existing trade barriers into temporary tariffs—sometimes called the tariffication approach. This approach has several advantages: It replaces a potentially complex array of existing trade distortions with a single gap between domestic and world prices, makes the 205 degree of protection more transparent, and sets the stage for eventual tariff reduction. With the support of the World Bank, a number of Latin American countries have made important progress in opening trade as part of their reform efforts. Bolivia and Mexico, in particular, replaced quotas and nontariff barriers with reduced, uniform tariffs. In a number of countries, more competitive exchange rates and the elimination of export barriers contributed to a significant increase in nontraditional exports. Argentina and Peru have eased exchange restrictions that had led to black markets for foreign exchange in recent years. Many economists support focusing initially on convertibility for trade and other current account transactions while temporarily delaying convertibility for international capital flows. They argue that remaining market distortions or a lack of confidence in the economic future of the country could lead to capital flight. But capital account convertibility must not be delayed too long. External convertibility on capital transactions may be important in providing venture and working capital to private firms during the transition. It also facilitates the import of foreign know-how. One historically important example in which the import of foreign technology was the centerpiece of a reform effort followed the Meiji restoration in Japan in 1868. Spurred by a desire to emulate the economic success of the West, Japan within a remarkably short period of time overhauled its central government, changed what was being taught in its schools, and shifted the energies of its people toward commerce. The linchpins of the Japanese transition were the concentration on importing foreign technology and technical assistance, the development of a transportation infrastructure conducive to commerce and trade, and the privatization of government production facilities. Entire factories were imported, along with technical advisers who operated the machinery until Japanese workers and managers were capable of doing it on their own. Full convertibility for international capital flows may be delayed without obstructing the reform process when other measures to attract foreign investment are in place. Hungary adopted a foreign investment law that guarantees repatriation of profits. As a result, it seems to have taken the lead in Eastern Europe in attracting foreign capital. As discussed further below, the creation of Enterprise Funds for Hungary, Poland, and Czechoslovakia reflects the Administration's emphasis on ensuring that adequate financing is provided to newly emerging private sectors. When a reforming government decides to make its currency convertible for some set of international transactions, it must also choose between fixing the exchange rate or allowing it to move freely to its new equilibrium level. Authorities may choose to fix 206 the exchange rate as part of a comprehensive stabilization package. If backed up by a credible noninflationary monetary policy, a fixed exchange rate may help reduce inflation expectations and thereby ease the transition to price stability. Choosing an appropriate level for the fixed rate is not easy, however. The higher the fixed value of domestic currency relative to foreign currency, the cheaper are foreign goods relative to domestic goods. Thus, while a high exchange rate reduces initial pressure on inflation by holding down the prices of imported goods, a low exchange rate enhances the competitiveness of domestic firms in world markets and reduces the likelihood of large trade deficits. Letting the exchange rate move freely to a new equilibrium allows the market to balance these opposing forces. STRUCTURAL REFORMS In addition to the principles discussed above, comprehensive reform requires structural measures. Private property and privatization should be institutionalized, domestic competition must be promoted, and the role of government must be reformed and limited. Most reforming countries of Eastern Europe have been slow to adopt these principles, which are central to the development of markets. Latin America already has private property rights and private firms, but many nations in the region could benefit greatly by promoting domestic competition, accelerating privatization, and continuing to redefine the role of the public sector. Property Rights and Private Property A successful transition to a market economy requires that private property rights be firmly established and that a legal system be developed to define and protect these rights. In addition, productive assets must be put into private hands through the process of privatization. Otherwise, producers have no incentive to respond to prices and to take risks, and the reform effort will fail to generate increased supplies of products consumers want to buy. Private property and property rights are most notably absent in the command economies of Eastern Europe and the Soviet Union, where economic activity was based on the idea that almost all property belonged to the state. Although small-scale entrepreneurial activity was tolerated in some Eastern European countries in recent years, most control over the allocation of resources remained in the hands of the government. The public debate about private property in the Soviet Union has also been a political debate about commitment to change following 70 years of indoctrination about the evils of profit and capitalist enterprise. During Lenin's New Economic Policy of the 1920s, reforms encouraged private producers, especially farmers, to expand production. Many farmers successfully raised output and prospered, only to have that 207 very success considered criminal during the Stalinist purges and collectivization drives of the late 1920s and 1930s. As a result, the most successful farmers and entrepreneurs were punished by expropriation of their property, exile to labor camps, and, in many cases, execution. In Latin America, the institution of property rights has long been established but has not always been well respected. Government nationalization of industries, sometimes through expropriation, is one aspect of a legacy of not respecting property rights. More recently, inefficient and slow legal systems have discouraged private entrepreneurship. Privatization of state enterprises is an urgent, albeit complex, task. The task is more difficult by several orders of magnitude than the privatizations that have occurred in developed market economies over the last 10 years. In Eastern Europe, for example, the government owns most of the land, buildings, and machinery. There are enormous benefits to transferring ownership to the private sector even though local citizens generally have little savings to invest, financial markets are not sufficiently developed to provide credit, and the widespread sale of domestic equity to foreigners raises political concerns. An added consideration is the widespread belief that those who profited under the old regime—and who, therefore, are among the few who can afford to make large equity investments—do not deserve to benefit from those activities. Privatization requires expertise in accounting, financial markets, and the law. In most cases, the books of large government enterprises bear no relation to economic reality. That may make it easier for insiders to purchase these firms at very favorable prices and realize large gains. Concerns about such "sweetheart deals" have slowed privatization in both Eastern Europe and Latin America. Perhaps not surprisingly, in Eastern Europe the "spontaneous" or decentralized privatization of small enterprises and the development of new private firms has far outpaced government efforts to privatize large-scale enterprises. In nearly all Latin American countries the process of privatization has recently accelerated. A number of countries have privatized enterprises as part of debt-for-equity programs. In 1990 Argentina and Mexico completed privatization of a number of large state firms and announced others, and other countries such as Chile and Costa Rica also stepped up their privatization efforts. Throughout the region, however, some of the largest enterprises remain in government hands and will be difficult to privatize or restructure, partly because of resistance from labor unions. One question is the order in which to privatize enterprises. The Polish reform plan up to this point has been based on the "conventional" view that companies with positive net worth should be pri- 208 vatized first. Enterprises that are money losers, have high debt burdens, or are expected to need significant internal restructuring before they become viable are to be privatized later after the restructuring takes hold. By contrast, the reform plan in Yugoslavia is focused on privatizing loss-making industries first, presumably because this approach would reduce the subsidies the government must pay. There are several possible methods of privatizing enterprises that can be used in conjunction with each other. Enterprises can be sold to workers or to the highest bidder, or deals can be individually negotiated and then presented to the government for approval. Another method is to distribute vouchers to the general public that allow citizens to purchase portions of firms at favorable rates, either directly or through investing in holding companies that accept management responsibility. The favorable equity implications of widespread domestic ownership has inspired Czechoslovakia to consider this latter approach. Poland is favoring a "menu" approach: In some cases, a combination of methods could be used in a single privatization, while in other cases the enterprise may choose among the legally allowed options. A crucial element of the reform agenda must be the creation of a private housing market In much of Eastern Europe the decay of the housing stock and a desperate lack of available housing creates real impediments to the free movement of workers. In many instances, workers cannot move to areas where there are jobs, because there is no housing for them and their families. Creation of a private housing market could be an important first step toward both improving labor mobility and raising living standards. Housing should be privatized, and builders and investors allowed to purchase land for construction. Property also must be transferable so that existing and new housing can be efficiently allocated. Promoting Domestic Competition Another principle for a successful transition involves a range of measures to create not only private, but also competitive industries. Desocializing without also demonopolizing confers little benefit. Actions to promote competitive domestic market structures include restructuring existing firms, facilitating the entry or establishment of new firms, and putting in place an antitrust policy to promote competitive domestic markets. In addition, as noted above, competition can also come from abroad. Competition is generally enhanced if existing state-owned enterprises are split into smaller, viable firms before privatization. Unrelated or unprofitable activities can be jettisoned, and monopolies can be split into separate, competing firms. The restructuring of viable firms may also involve adoption of new technologies and the reallocation of labor and capital to new uses. Accounting and finan- 209 cial techniques must be brought to bear to ensure that firms are operating on a sound financial basis. Private sector activity can also be encouraged by the sale of assets of state enterprises to the private sector. Consider the challenge of creating transportation industries, such as trucking. In most command economies, firms produce many of their own inputs including transportation services. Thus, most trucks are owned by large state enterprises that have little incentive to compete with each other. If a state enterprise is divided into several viable firms and its trucks are sold outright, their purchase by entrepreneurs could aid the development of a private distribution system. Barriers to the creation of new firms must be removed. In Eastern Europe there has been rapid growth of new firms over the past year but the public sector continues to dominate. These new firms are usually small and often are at a disadvantage in competing with the state enterprises for inputs and credit, but they have proved very successful where the efficient scale of firms is small or where entrepreneurship is important. Policies to protect competition also are required. While it is natural and desirable to want to sweep away many regulations as vestiges of the government-dominated systems that reforming countries have rejected, laws are needed to ensure that creation of a private sector does not merely replace a public monopoly with a private one. A basic antitrust law aimed at preventing cartel behavior by firms producing the same product and mergers that create monopoly is essential. During the transition, basic banking and credit market functions must be developed quickly. In command economies, banks mainly serve a bookkeeping role, allocating credit as directed by the central government plan. Retail banking as understood in market economies barely exists. The use of checking accounts is limited, and check clearing can take weeks. An important early role for the central banks of Eastern Europe can be to help create and then monitor a payments system. The economies of Eastern Europe also will need a competitive banking system that provides access to credit for new and restructured firms. Well-developed financial markets serve other roles as well. They allow risks to be shifted to those who are most willing to bear them. They allow firms to diversify and hedge and to mobilize private savings. Yet, many of the existing banks have distorted balance sheets from years of financing state enterprises without concern for creditworthiness. Reform requires a tremendous amount of expertise; systems and methods of credit evaluation and ways to manage risk must be introduced. Technical assistance from abroad will be useful in creating efficient banks. 210 Reforming and Limiting the Role of Government A successful transition to a market economy in Eastern Europe requires a complete overhaul in the role of the government, to reorient it toward the tasks appropriate to a market economy. In Latin America, reduced government involvement in the economy would free resources for private use, allowing the private sector to grow and prosper, reward investors, and raise funds for investment. Some tasks, such as putting a sensible tax system in place, as discussed earlier, are formidable. Important new functions for reforming governments range from collection of meaningful economic data to environmental regulation. The government must also develop a social safety net. As economic restructuring takes place, many workers will lose their jobs because inefficient enterprises are likely to be shut down or to fail to become viable under private management. Although these dislocations are a prerequisite for building a more productive economy, the hardships that fall on workers and their families can and should be cushioned. Unemployment compensation and worker retraining are effective approaches to dealing with these problems, and they can also help to minimize worker resistance to reforms. Many features of a well-designed, targeted social safety net, such as unemployment insurance, are also important to encourage workers to incur risks and change jobs in response to labor market signals. Labor mobility is critical if contraction of the state sector is to free workers for private sector activities. Governments should facilitate the establishment of a sound education system that can produce a work force able to build and operate a modern market economy. One advantage held by some of the Eastern European countries, such as Hungary and Poland, is the relatively high level of education of their workers. With educated, well-trained labor forces, one of the essential requirements for a growth economy is in place. Sound training in business and economics is also required. It is important that the policymakers and populace understand the economic rationale for market-based reform, for without popular support, reform programs will not succeed. SUMMARY • Certain fundamental principles—formulating sound monetary and fiscal policies, removing domestic price controls, opening the economy to international market forces, ensuring property rights and private property, creating competition, and reforming and limiting the role of government—are essential for a successful transition to a healthy market economy. 211 • Numerous countries have attempted the difficult task of implementing one or more of these principles. But no modern economy has implemented all principles at one time. • Latin America starts with more of the elements of a market economy in place than does Eastern Europe. In both regions, however, healthy market economies require both macroeconomic and structural reforms. • Macroeconomic reforms provide a stable economic backdrop for the planning decisions of investors and entrepreneurs. Such reforms allow prices, wages, and interest rates to respond to domestic and world market forces, which helps to assure that the economy's resources are allocated productively and in accordance with peoples' wants. • It is essential that economic reform elicit competitive, privatesector activity. Structural reforms contribute by firmly establishing private property rights, putting productive assets into private hands, and promoting competitive behavior through, for example, antitrust laws. IMPLEMENTING ECONOMIC REFORMS The preceding discussion of economic principles to guide the transition to a market-oriented economy highlights the complexity and difficulty of the reform effort. What methods should be chosen? Which principles should be emphasized first? How rapidly should the reforms be implemented? These choices are difficult enough from a technical viewpoint. They are made even more difficult by the need of new democratic governments to build popular support for reform. The temptation to underestimate the difficulty of the task ahead must be resisted. The legacy of state control will take time to overcome. Even successful reform will require a difficult transition period, as workers and other resources are reallocated to productive uses based on market-determined prices. In Eastern Europe, in particular, after 40 or more years of job security, unemployment, even if modest by Western standards, may be quite frightening. If unrealistic expectations are generated by the promised benefits of market reform, support for the necessary changes could collapse. It is important to realize, however, that the welfare of citizens in the Eastern European economies can be dramatically improved, even if output declines for a period of time. Under the old regime, these economies often reported rapid output growth, but output was frequently mismeasured through the use of nonmarket prices that overstated the value of shoddy goods. More important, higher production did not necessarily improve living standards because the goods produced were not the ones that consumers wanted. If these 212 countries have early success at producing the goods and services that individuals really want, actual well-being would no doubt rise far more than official statistics would show. THE NEED FOR COMPREHENSIVE REFORM The linkages and complementarity among many of the reform principles suggest that ideally they should be implemented simultaneously. Administratively, however, it is infeasible to do everything at once. Some changes are also clearly preconditions for others. For example, a legal infrastructure supporting both private ownership and the transfer of property rights is absolutely necessary to the process of privatization and the stimulation of private investment. The most important characteristic of a successful reform program is that it be comprehensive and rapidly implemented. A command economy cannot be meshed with a market economy. Consequently, implementing half of a reform program achieves much less than half of the benefit of comprehensive reform. Half measures lead instead to confusion and falling output because productive individual incentives have not yet replaced the command system. Since a slow pace of reform will only prolong the pain of the transition and aggravate the inevitable disruptions, the reforms should be implemented as rapidly as possible. There is general agreement that reforming countries must address first any existing problems of high inflation and severe balance of payments deficits. Without initial measures to reduce the uncertainty of the investment and production climate, attempts at privatization and price reform are unlikely to elicit the desired increases in private-sector investment and output. In short, the ability of the government to articulate and carry out a credible macroeconomic program provides an essential backdrop for private sector activity. Enterprise restructuring and privatization must, however, follow soon after. Reforms such as privatization, price reform, and trade liberalization clearly go hand in hand. Privatization of monopolistic state enterprises, for example, could simply result in private monopolies that produce less and at higher prices than firms in a competitive setting, unless such entities are first dismantled or exposed to foreign competition. Trade liberalization and domestic price reform are closely related because world prices are usually the best guide to most internal price relationships. Domestic price reforms go hand in hand with privatization because managers cannot be expected to make sound investment, production, or employment decisions without rational price guides. In fact, it may not be possible to judge accurately the viability of many state enterprises until they have operated under market conditions with accurate price signals. Financial market reforms must also be under way and pri- 213 vate sector financial institutions in place with a functioning payments system before investment decisions can be effectively transferred from government to private control. EXAMPLE: REFORMING POLISH AGRICULTURE The challenge of restructuring the Polish agricultural-food system illustrates the need for comprehensive reform. This sector begins with a solid base on which to build: Despite earlier collectivization efforts, privately owned farms accounted for 70-80 percent of land in agriculture and a similar percentage of output even before reforms began. Production is already diversified, and considerable export potential exists, but numerous structural impediments associated with the centrally planned economy must be removed to improve the sector's performance. First, although most farms are considered "private," the lack of a well-functioning land-transfer system still hinders the consolidation of these small, uneconomic units (on average about 12.5 acres) into more efficient operations. Until recently, most land was transferred to the State Land Fund for reallocation, with political factors dictating who was allowed to purchase it. Second, the lack of competition in the sectors providing agricultural production infrastructure, such as the farm input and processing sectors means that the incentives for efficient farm production decisions are missing. The input sector remains state-controlled: continuing inefficiencies and monopoly activity keep farm input prices excessively high, supplies for private farms inadequate, and input quality very poor. Until recently, farm inputs were provided only to farms that agreed to sell their output to state enterprises. That made it very difficult for a private marketing system to develop, even after private activity was authorized in the procurement sector and output prices were deregulated. Food processing facilities are outmoded due to the lack of competition. Many facilities operate far below capacity and without concern for either the quality of the commodities processed or the foods produced. State slaughter facilities, for example, purchase pigs only according to weight—without taking into account fat content or other quality factors of potential concern to consumers. This system induces farmers to fatten pigs excessively and gives consumers meat containing large amounts of waste. Third, inadequate capital markets and domination of foreign trade by state enterprises hinder the growth of private sector activity throughout the food distribution system. Modernizing existing plants requires capital and, therefore, capital markets and banks that lend long-term investment capital. Private enterprises must also have access to modern production inputs at reasonable prices. For example, setting up private meat shops was hindered by the 214 lack of refrigerators, which only state retailers could import! Until access to international markets is achieved and transportation networks are demonopolized, private distribution, processing, and retail ventures can only expand slowly. Fourth, freer trade of farm products is necessary to remove distortions in farm prices and to induce increases in farm output. Access to foreign markets for Poland's potential farm exports is as important as access to imported farm inputs, such as fertilizer. Lifting wheat export restrictions, for example, could help bring artificially depressed farm prices in line with higher world prices, encouraging increases in output and contributing much-needed foreign exchange. This extended discussion of reform in Polish agriculture shows that private ownership of farms is only one step toward a wellfunctioning farm economy. For private farmers to take advantage of new opportunities, many other changes also need to be introduced. These include providing full property rights in land, competition in the distribution system, and access to international markets for both inputs and outputs. SUMMARY • Reforms must be comprehensive if they are to succeed. Rapid implementation is the best way to limit the inevitable disruption associated with reform. • The success of reforms is best measured by their ability to encourage production of goods consumers want, not solely by changes in measured output. • It is generally accepted that macroeconomic stabilization should be the initial priority for reforming countries with high inflation and severe external imbalances, but rapid structural reform must begin simultaneously or follow soon after. • The difficulty of making a successful transformation is often underestimated. Realistic expectations about the benefits and costs of reform can sustain support for the adjustment effort. EASTERN EUROPE AND THE SOVIET UNION The degree to which the former command economies have implemented the basic reforms needed to effect a successful transition to a market economy varies significantly. This section summarizes the recent developments in several Eastern European countries where the reform process is well established and in the Soviet Union. Poland, Yugoslavia, and the former East Germany began their reform efforts in early 1990. Czechoslovakia and Hungary moved to accelerate their reform plans during the year. Bulgaria and Romania have not yet proceeded very far on the path toward 215 economic reform and have faced considerable political uncertainty and disruption. In Bulgaria a political impasse delayed the adoption of a comprehensive reform program. Although reform was debated in Romania, and some privatization occurred, lack of public support during 1990 stalled progress toward implementing price reform and other essential elements of a comprehensive reform program. In the Soviet Union, hopes that comprehensive economic reform would be implemented quickly were dashed in late 1990 and early 1991 by an abrupt shift in government policy. It is too soon to judge the full economic impact of reform programs. Even under ideal conditions, transition to healthy market economies will take time. Moreover, several external shocks affected the economies of Eastern Europe in 1990. It will take time for these countries to realize the benefits of the reforms taken to date. POLAND, YUGOSLAVIA, AND EAST GERMANY Although Poland, Yugoslavia, and East Germany took different paths, these countries had in common in 1990 programs focusing on macroeconomic reforms as the first step. Poland's program was the most ambitious and comprehensive. Enacted in January 1990, Poland's program emphasized quick measures to stabilize the economy, including price reform, steps to close the budget deficit, restraint of monetary growth, and establishment of a convertible currency at a fixed rate. The fiscal balance moved from a deficit of about 8 percent of GNP in 1989 to a surplus in 1990. The inflation rate dropped sharply but then settled at a higher than desirable level of about 5 percent a month. Authorities were able to stabilize the foreign exchange value of Polish currency and to maintain current account convertibility, while rebuilding the stock of foreign exchange reserves as exports to the West surged and imports fell. Activity in the newly emerging private sector appears to have increased significantly in 1990. However, reflecting a decline of about 25 percent in the sales of the socialized industrial sector, real GNP is reported to have fallen 12 percent in 1990. Measured unemployment had moved from negligible levels before the reform to above 8 percent. The Polish program involves putting in place a far-reaching set of provisions to establish competitive industries and independent financial institutions. The privatization of existing enterprises moved slowly until late in the year, when the government completed its first large privatization and began the process of privatizing a number of other large companies, using a "menu" of different techniques. Finally, almost all price controls were removed, though wage flexibility was still limited by the central government through tax policy. 216 In 1990 the government of Yugoslavia embarked on a comprehensive program to stop soaring inflation. In its initial phase, the program devalued and fixed the nominal exchange rate of Yugoslavia's currency. Wages were temporarily frozen, while most prices were allowed to adjust freely, and import barriers were lowered. The 1990 program built on earlier structural and institutional reforms to recapitalize the banking system and restructure lossmaking state enterprises. The initial results of the stabilization program were quite positive. Monthly retail price inflation fell from 64 percent in December 1989 to near zero in the second quarter of 1990, and the decline in real output was less than that experienced by Poland. By midyear, however, fiscal problems began to appear, reflecting inadequate controls over public sector spending. Monetary policy was eased under pressure from illiquid enterprises and workers' demands for faster wage growth. Inflation jumped up to the range of 8 to 10 percent a month. In January 1991 there were worrisome developments in the stance of monetary policy that cast further doubt on inflation prospects. Even more discouraging were the escalation of ethnic rivalry and signs of political disintegration, which threaten the chances of implementing a coherent program. In the former East Germany, unification caused far-reaching changes in the economy. Adopting the currency and many legal and economic institutions of the former West Germany through unification has reduced many uncertainties that have plagued transitions in other countries. Nonetheless, output in the third quarter of 1990 was 30 percent below its level a year earlier, although not all the decline was due to the reforms. Unemployment rose to about 7 percent of the work force, and roughly 20 percent of the population was underemployed. Real wages rose, perhaps reflecting the need to dissuade workers from emigrating to the former West Germany, and labor productivity declined. Competitive problems for firms with outmoded equipment and products and substandard product quality, hidden prior to unification, are now a concern. On the other hand, the flow of investment from the western portion of Germany is expected to grow, supporting a rebound in growth in the medium term. HUNGARY AND CZECHOSLOVAKIA Reform proceeded less rapidly in Hungary and Czechoslovakia. Entering 1990 the problems of inflation and declining output were not as severe in these countries as in Poland and Yugoslavia. Thus, macroeconomic reform may not have appeared critical. However, as 1990 proceeded, the pressures for reform grew. 217 Many of Hungary's subsidies were removed, although those for a few key goods, including some food and energy products, remained. The external trade performance of the economy was good, with a hard currency trade surplus of near $1 billion in 1990, despite poor agricultural performance due to drought and the impact of the Persian Gulf crisis. However, inflation remained high at over 30 percent a year, and the size of the fiscal deficit is troubling. Official unemployment stood at 1.7 percent at year-end. Industrial production was down about 10 percent in 1990, but production by small firms boomed. The privatization program began to take hold in 1990 with the process of privatization under way for 20 large state enterprises. A second group of 20 firms to be privatized was to be announced in early 1991. Sales of small enterprises to individuals were brisk, and the government planned to privatize 16,000 small firms in the next 2 years. As 1991 began, Hungary was taking steps to implement a 3-year reform program, including an expansion of external convertibility for international trade transactions. After a year of focusing on political and legislative reform, the Czechoslovakian Government implemented a comprehensive economic reform effort in January 1991. The program decontrolled about 85 percent of all prices, established partial convertibility for the international trade of goods, and tightened fiscal policy. Small business privatization through auction began in January, but legislation to allow privatization of large state enterprises had not yet been passed. Over the 12 months to September 1990, output fell about 3.5 percent, and unemployment remained below 1 percent. THE SOVIET UNION In late 1990 and early 1991 economic reform efforts in the Soviet Union appeared to come to a halt. The government's decision to devalue large denomination ruble notes, announced in January 1991, caused disenchantment and created uncertainty about future economic prospects. The threatened increase of KGB involvement in economic affairs is likely to stifle private incentives and entrepreneurship. These developments have dimmed hopes for market reform and further damaged an economy that had already deteriorated sharply in 1990. Official statistics estimated the decline in output for 1990 at about 2 percent, but the actual decline in living standards appeared to be much worse. Most of the reduction in output was in manufacturing, construction, and transportation. The problems in transportation reflected the critical nature of Soviet distribution problems; the collapse of the distribution system could lead to widespread food shortages in 1991 despite record harvests. The balance of payments on international transactions was expected to be in deficit by $14 billion in 1990. Arrears on loans 218 from abroad may have exceeded $5 billion, and the fiscal deficit, which reached 8 percent of GNP in 1990, could rise further in 1991. The Soviet Union remains an important trading partner of Eastern Europe. Therefore, the prospects of the region depend importantly on the health of the Soviet economy. But the recent retreat of economic reform in the Soviet Union raises concerns that its economy will continue to deteriorate and slow progress throughout Eastern Europe. Reforms initiated in 1987 began to dismantle the command system but did not replace it with market mechanisms or incentives. Fundamental change must occur if the Soviet Union is to reverse the deterioration in living standards. CHALLENGES IN 1990 AND 1991 Several economic shocks complicated the reform efforts of the region in late 1990 and continued into 1991. Together they represent a formidable challenge to the region's democratically elected leaders. The End of the East Bloc Trading Regime The shift toward convertible currency trade at market prices within Eastern Europe and the Soviet Union in January 1991 presents a difficult challenge for the region. From 1949 until the end of 1990, trade between the countries of Eastern Europe and the Soviet Union was conducted essentially through bilateral barter arrangements governed by the Council for Mutual Economic Assistance (CMEA). The unit of account was the "transferable ruble," which could not be exchanged for any other currency. Trade was thus conducted at nonmarket prices, and trade surpluses were merely reflected in accumulation of transferable ruble balances. Over time, the effect was to reinforce central planning and make the Eastern Europeans and the Soviet Union more dependent on each other. Although the nonconvertible currency system of CMEA was wasteful and inefficient, it is widely agreed that on average it benefited the Eastern European countries with respect to the Soviet Union over the past decade. Essentially, Eastern Europe received oil and natural gas from the Soviet Union at below world market prices. The effect of CMEA's end will vary across countries. Hungary has already had some success reorienting its trade toward the West, for instance, while Bulgaria, with fully 50 percent of its trade with the Soviet Union, faces a more difficult challenge. Moreover, the former East Germany has sharply reduced its demand for Eastern European products, and concerns about the economic and political stability of the Soviet Union make the trade outlook even more uncertain. Eastern European countries are negotiating bilateral agreements governing trade among themselves and with the Soviet Union in 1991. 219 Other Shocks The increase in the price of oil following Iraq's invasion of Kuwait in August was a significant shock to the economies of Eastern Europe. The task of estimating the impact of oil price shocks and designing policy options is difficult for developed market economies, let alone the economies of Eastern Europe. (Chapter 3 of this report discusses oil price shocks and economic policy.) Because these are economies in transition, the market mechanism— even in the countries where reform has gone furthest—does not work as quickly, smoothly, or efficiently as it does in industrial economies to adjust demand to the higher price of energy. Although the price of oil has fallen since October 1990 and especially since the start of Operation Desert Storm in January 1991, future oil prices remain uncertain. In addition to the oil price effects, Soviet shipments of oil to Eastern Europe fell approximately 20 percent in 1990 because of Soviet production declines. Several Eastern European countries also were to receive oil from Iraq as debt payment. The international embargo on Iraq meant that this oil had to be replaced by purchases at world market prices. Some countries also lost substantial construction contracts and worker remittances from the Mideast. Another adverse shock in 1990 was a drought that affected Southeastern Europe. Bulgaria, Hungary, and Romania were the most severely affected. The costs of the drought included the loss of crops and reduced livestock populations, as lack of feed grains forced many farms to send their animals to slaughter sooner than planned. Implications for the Transition Taken together, these shocks represent a formidable challenge to Eastern European governments. If sound policies are maintained and oil prices stabilize in a range not far from that prevailing prior to the 1990 Iraq invasion of Kuwait, these challenges should be manageable. However, these are pressing concerns, and they can create pressure to ease up on adjustment efforts. Delaying reform, however, would only aggravate the economic costs of these shocks and risk a return to the piecemeal reforms that were so unsuccessful in the mid-1980s. Countries that can build a consensus to accelerate reforms have much to gain. SUMMARY • Poland, Yugoslavia, and East Germany, starting from different circumstances, are all undergoing rapid transformations to a market economy. Although the output and unemployment costs of the transition have been greater than initially expect- 220 ed, the measures taken are the basis for a significant improvement in living standards in the medium term. • Hungary and Czechoslovakia in 1990 adopted more gradual programs, but by the end of the year both had plans to accelerate their reform efforts. • The apparent abrupt halt to reform efforts in the Soviet Union aggravated an economic situation that had deteriorated badly during 1990. • Recent adverse economic developments complicate the efforts of Eastern European countries to make successful transitions to market economies. The challenge facing these countries is to maintain and intensify their reform effort, with the support of the Western industrial countries, despite the uncertainties they face in 1991. REFORM IN THE AMERICAS Major steps have been taken by governments throughout Latin America toward open, market-oriented economies and away from outmoded statist institutions. Prospects are now better than ever before for the integration of the economies of North and South America through broadly expanded trade and investment linkages. RECENT HISTORY OF LATIN AMERICAN REFORMS Most recent Latin American reform efforts are rooted in the adverse economic environment of the early 1980s and the failure of policies pursued for decades. By 1990, it was widely accepted that a new approach to solving the economic problems of the region was essential. Almost every country in Latin America now recognizes the need to move away from inward-looking policies, such as efforts to substitute domestic production for imports, toward trade-opening policies designed to strengthen competitiveness in world markets. The role of the public sector and of cumbersome state-owned enterprises is being widely reassessed, and deregulation and privatization have appeared on policy agendas throughout the region. As in Eastern Europe, correcting price distortions, reforming public expenditure and taxation policies, and improving the performance of financial markets are now important components of many of these countries' market-oriented strategies. Much-needed and welcome political transformations are accompanying the trends in economic policy. Argentina in 1983, Uruguay in 1984, Brazil and Guatemala in 1985, Panama in 1989, and Chile and Nicaragua in 1990 are among the countries abandoning authoritarian regimes to join the ranks of Latin American democracies. Chile's new democratic government is effectively demonstrat- 221 ing that an open and democratic political system can reinforce the benefits of an expanding market economy. The 1990s should be a decade of great opportunity for the region. With sustained world growth and expanded trade opportunities being sought through the Uruguay Round of multilateral trade negotiations and other Western Hemisphere pro-trade initiatives (discussed in Chapter 7), the restructured economies of Latin America have great potential to prosper. Perhaps most encouraging for the other countries of the region are the recent performances of Mexico and Chile, two countries at the forefront of the Latin American reform movement. MEXICO Mexico provides one of the best modern examples of a country engaged in economic restructuring. The difficult movement toward a more market-oriented, open economy has been under way for a number of years. The reform process recently has been accelerated by the current President of Mexico, and the benefits of market-oriented reforms are now being realized. The roots of the reform effort are different than in Eastern Europe, but Mexico did share some of the characteristics of the command economies. Public sector expenditures represented nearly 50 percent of GNP in 1982, for example, and the inefficiencies of the 1,150 state-owned enterprises, accounting for 25 percent of GNP in 1983, stifled economic performance. Mexico also maintained a restrictive import policy with extensive government control over trade and a highly overvalued exchange rate. Mexico's debt crisis—precipitated in 1982 when oil prices fell, interest rates rose, and holdings of foreign exchange dwindled—necessitated the imposition of stringent macroeconomic stabilization measures. To restore external balance and stem the outflow of private capital, the exchange rate was adjusted to reflect market forces, and domestic spending was reduced. External equilibrium was attained initially at the expense of price stability, real wages, growth, and employment. But the success of the effort facilitated the restructuring of Mexico's external debt service, which allowed attention to turn to curbing inflation and reviving economic activity. Mexico's economic restructuring has focused on reducing the public sector's role, increasing external competitiveness, improving public finances, and modernizing the financial system. More than 750 state-owned enterprises have been privatized, merged, or liquidated, and subsidies to the remaining entities have been reduced. These actions brought greater economic and financial efficiency to the state-owned sector and helped reduce public sector expenditures below 40 percent of gross domestic product in 1989. Fiscal 222 and financial system reforms have also been important. Tax policy reforms closed corporate tax loopholes and improved the tax collection system, banking activities were progressively exposed to market forces, and the goal of returning banks to private ownership was recently announced. A major initiative to reduce trade barriers has promoted the efficiency and modernization of domestic industries and successfully contained inflationary pressures. The opening-up process was enhanced when Mexico reversed a longstanding antitrade policy by joining the General Agreement on Tariffs and Trade (GATT) in 1986. Extensive import-licensing requirements were largely replaced with tariffs, which were then lowered significantly. After many difficult years recent economic performance has been fairly good. GNP grew about 3 percent in 1989, and is thought to have grown faster in 1990. Inflation last year increased somewhat from its 1989 level, which had been the lowest rate in 10 years. The increase in economic activity is fueled by new dynamism of the private sector, which has been both reflected in and fueled by strong growth in private investment and private capital inflows from abroad. After declining by a third between 1981 and 1983, real private fixed investment grew at an average annual rate of 5.6 percent between 1983 and 1989. Mexico must still meet the challenge of sustaining economic growth—a necessity if widespread poverty is ultimately to be alleviated. The Mexican Government's commitment to market-oriented reforms is strong, although big hurdles are still ahead. The process of privatization, for example, has only recently been extended to the largest, most complex state-owned enterprises, such as the telephone system. The strong interest of the United States in Mexico's success is illustrated in the President's commitment to negotiating a free-trade agreement with Mexico (discussed in Chapter 7). The Administration strongly backed Mexico's commercial bank debt-reduction agreement completed in March 1990. This agreement contributed to a significant reduction in debt and debt service, and increased confidence in the economic policies of the Mexican Government. CHILE Chile is unusual in Latin America in that its current reform efforts build on the dramatic economic restructuring in favor of private enterprise and markets that took place in the mid-1970s. After the overthrow of the socialist government in 1973, the country switched from extensive state intervention in most economic activities to a system based on private initiative. Price controls were removed, trade barriers were reduced, financial sector liberalization was undertaken, and many state enterprises and financial institu- 223 tions were privatized. However, Chile's transition to a market economy and the presence of an authoritarian government represented a contradiction that could not endure. With the return to power of a democratic government in March 1990, Chile's strong free enterprise system is matched by a freely elected democratic government for the first time in nearly 20 years. Like other countries of Latin America, Chile suffered an economic crisis in the early 1980s. The country was battered by many of the same external factors that hurt its neighbors and developing countries all over the world, including a deterioration in its terms of trade (as the price of oil rose and the price of copper, Chile's chief export, fell), a rise in international interest rates, and a recession in the international economy. A heavy international borrower both before and after these factors came into play, Chile's debtservicing difficulties became unmanageable as interest rates rose and foreign exchange earnings fell. Faulty macroeconomic policies included inflationary levels of debt-financed domestic spending and an overvalued exchange rate that encouraged imports and discouraged exports. These policies heightened the debt crisis and deepened the economic recession. Poor supervision of the banking system also contributed to the bankruptcy of many enterprises and a financial crisis. As elsewhere, emergency stabilization measures were the first stage of economic reform. To redress the severe external and internal imbalances, the overvaluation of the exchange rate was ended with a sharp devaluation, and automatic wage indexation was suspended. Emergency measures included large public employment programs, debt rescheduling, and guarantees that private debt would be repaid. For a few years the government focused on cushioning the effects of the recession, discouraging capital flight, and improving the trade balance. In 1985 the government moved to supplement emergency measures with a more comprehensive reform program aimed at improving several fundamental structural problems: the lack of export diversity, the low level of savings and investment, and a precarious financial system. The plan involved reducing import tariffs and strengthening export incentives; improving public finances through the sale of state enterprises, tax policy reform, and conservative public spending policies; and creating a more favorable climate for private savings and investment through tax, pension, and housing policy reforms. Bank supervision was strengthened, and banking reform began in the mid-1980s. As a continuation of banking and financial policy reform, the central bank was given greater autonomy in 1989. Between 1984 and 1989 the Chilean economy emerged from the recession and grew at an average rate of 6.3 percent a year. Unem- 224 ployment declined, real wages increased, inflation dropped, and exports other than copper, such as fruit, forestry, and fishery products, performed very well. Private savings improved significantly, too, rising from about 2.2 percent of GNP in 1984 to 9.6 percent in 1989. Although stronger world copper prices since 1987 helped buoy economic performance, much credit goes to the successful implementation of the reform program. The new democratically elected government remains strongly committed to an open market economy with a low level of state involvement. It is also directing new attention to social programs to alleviate poverty. In carrying out its constitutional mandate, the government faces the challenge of meeting its social priorities while maintaining the strict fiscal policies that have helped reduce external debt. This Administration's strong commitment to improving trade and investment relations between the United States and Chile can help sustain Chile's efforts and contribute to their success. SUMMARY • Governments throughout Latin America are rejecting earlier models of economic development, which stressed inward-looking policies and extensive state ownership, for a market-based approach that emphasizes openness and private enterprise. • Some of this reorientation stems from the debt crisis of the early 1980s, which prompted stringent stabilization measures and revealed the underlying weaknesses of the structures of these economies. • Many Latin American countries have embarked on sweeping reform programs. Mexico and Chile are strong examples, and efforts are also being made in Argentina, Peru, Venezuela, and elsewhere. THE ROLE OF THE UNITED STATES In both Eastern Europe and Latin America, the Administration has provided strong support for the transitions to democratic societies and free-market economies. First and foremost, this effort involves continued leadership through promoting our democratic ideals, building support among other industrial countries for the reforms, and making clear that markets offer the best hope for sustained growth in living standards. This leadership is backed up by humanitarian, technical, and financial assistance and endorsement of measures to open markets and expand trade. The Administration has assisted Bulgaria, Hungary, Poland, the Soviet Union, and other countries in coping with severe shortages of necessities, such as food and medicine. 225 The U.S. Government's economic technical assistance is designed to support strong and comprehensive reform programs including social safety nets. The Administration also has encouraged democratic institution building in Eastern Europe. That assistance has supported an independent press and electronic media, the democratic political process, and the rule of law (for example, helping to draft legislation and support for an independent judiciary). It has also supported social and cultural pluralism through educational programs and cultural exchanges. The public discussion of how to help reforming countries has been focused excessively on the need for financial assistance, which is only one part of the answer. Absent sound reform policies, this money would most likely be wasted. Assistance should be designed to mesh with and encourage the reform effort so that it is used to accelerate rather than delay necessary reforms. While assistance must be responsive to short-term needs, it is important to develop long-term assistance priorities that reinforce the fundamental reforms needed to establish long-term, sustainable growth. U.S. SUPPORT FOR EASTERN EUROPE In Eastern Europe the Administration is committed to encouraging the rapid transition of centralized command economies to free market systems. A vital component of this commitment is economic technical assistance. The U.S. technical assistance effort offers a range of options that countries in transition can choose from, depending on their needs. This range includes providing management training and market economics education, giving technical assistance on energy issues, and helping to set up banking systems. The U.S. Government, for example, has helped to establish a regional environmental center in Budapest and has provided assistance to reduce pollution in Krakow, one of Eastern Europe's most polluted cities. Much of the assistance is directed to the private sector rather than the government. Legislation in 1989 provided assistance to Hungary and Poland. In 1990, Congress approved legislation expanding the U.S. assistance effort to $439 million in fiscal 1991 and extending funds to other economies in transition in Eastern Europe. Polish Stabilization Fund A key element of U.S. Government support for Poland was a U.S. contribution to a $1 billion stabilization fund in January 1990. The U.S. Government provided a $200 million grant to the fund, with other governments contributing primarily in the form of loans or lines of credit. The fund was designed to provide credibility to the Polish reform plan by supporting the Polish Government in its effort to stabilize the exchange rate. Reducing inflation was a cornerstone of the 226 Polish program, which included measures to open the economy to foreign competition, fix the exchange rate to the U.S. dollar, and make the Polish currency convertible. Given the uncertainties associated with this initial attempt to transform a centrally planned economy into a market system and the importance of adhering to a fixed exchange rate to break inflationary expectations, the fund appears to have bolstered confidence that the reform measures could and would be sustained. The fund was renewed for 1991. Some people have questioned whether the stabilization fund represents an efficient use of official assistance, noting that Poland has not drawn upon the resources of the fund. The fact that the fund did not need to be used, however, suggests that it provided confidence and support for the Polish program. Assistance to New Private Enterprises Another element of the U.S. Government assistance effort is creation of Enterprise Funds. Funds were established in 1990 for Hungary and Poland, and in November 1990 the President announced that a fund would also be created for Czechoslovakia. These funds promote development of the private sector by providing grants and loans to entrepreneurs, making equity investments, and supporting technical assistance. They are thus an important source of venture capital to new firms. Trade Measures for Eastern Europe To promote market reforms and ensure that these countries face open markets, the Administration has concluded business and investment agreements with Poland and Czechoslovakia and granted most-favored-nation (MFN) status to Czechoslovakia in 1990. In January 1991, the President requested MFN status for Bulgaria. (MFN status had already been given to Hungary, Poland, and Yugoslavia.) MFN status ensures that the United States will provide tariff treatment as liberal as that provided to other trade partners, except those with which it has a free-trade agreement. The Administration is also negotiating bilateral investment treaties and is working to relax existing trade restrictions with a number of countries in the region. Expanded trade opportunities are critical to creating a supportive external environment for reforms. Therefore, the United States and other countries should examine ways to expand trade opportunities for Eastern Europe. U.S. SUPPORT FOR LATIN AMERICA The U.S. Government has long been active in providing technical assistance and supporting market-oriented reforms in Latin America. In June 1990 the President unveiled his Enterprise for the Americas Initiative (EAI) to expand free trade throughout the hemisphere and lay the foundation for long-term growth in Latin 227 America and the Caribbean. The initiative consists of three parts: trade, investment, and debt. Chapter 7 discusses the trade elements of the initiative. On the investment side, the President proposed that the Inter-American Development Bank provide loans in support of reform of the investment regime. The President has requested that the Congress authorize a 5-year grant of $500 million to provide further support for investment reform, particularly privatization. These efforts are aimed at developing the private sector and improving the environment for private foreign investment. In that sense, the initiative parallels the goals of the Enterprise Funds for Eastern Europe. Latin America would also benefit through the EAI from reduction of the substantial debt owed to the U.S. Government. For some loans, the stock of debt would be significantly reduced, and interest payments on the amounts that remained could be paid in local currency and used by the country in support of environmental projects. Other loans could be sold to investors making equity investments in the economy. The reduction in debt and debt-service payments would be contingent on these countries pursuing economic reforms including an open investment regime. The debt reduction supported by the EAI complements continuing U.S. initiatives to reduce the burden of the region's commercial bank debt. The EAI has been extremely well received throughout the region, where leaders have acclaimed the initiative as the most important opportunity in hemispheric relations in years. Persistent efforts both in the United States and in each Latin American and Caribbean country to follow through on the vision of the initiative will be required to bring about real results. The EAI is a significant addition to the Administration's ongoing technical and financial assistance programs in the region. Other Administration initiatives, such as the Andean Trade Preference Initiative and the proposal for a U.S.-Mexico free-trade agreement, supplement the EAI and are described in Chapter 7. WORKING WITH MULTILATERAL INSTITUTIONS AND OTHER GOVERNMENTS In his speech to the annual meetings of the World Bank and IMF in September 1990, the President stressed the central role the multilateral institutions can play in helping economic reform in the 1990s. Both institutions have long been involved in support of economic reform in Latin America and Africa, and both are expanding their efforts in Eastern Europe. In 1990 the IMF supported the reform programs of Hungary, Poland, and Yugoslavia. Bulgaria and Czechoslovakia joined the World Bank and the IMF in September 1990. (Czechoslovakia had been an original member of these institutions before withdrawing in 1954.) In January 1991 Czechoslo- 228 vakia embarked on an IMF program, and new programs for Hungary and Poland are expected to follow soon (Box 6-3). In addition, at the initiative of the United States, the IMF has modified its policies so that it can help Eastern European and other member countries cope with higher import costs and other adverse trade effects stemming from the Persian Gulf crisis. The Administration also participated in the quick establishment of the European Bank for Reconstruction and Development and encouraged the World Bank to expand its policy-oriented lending program in support of critical structural reforms. Through policy advice and lending, the international financial institutions will take a leading role and advance the interest of the United States and other countries as well. At the Houston Economic Summit in July 1990, the President, on behalf of the heads of state of the seven leading industrial nations, requested that the IMF lead a number of international institutions in a study of the Soviet economy. That study, presented to the President in December 1990, provides a comprehensive analysis of the Soviet economy. The report recommends that dramatic marketoriented reform proceed quickly and concludes that, when reform begins, technical assistance, not large-scale financial aid, is essential to successful reform. The effectiveness of the U.S. Government assistance effort is enhanced by effective cooperation and coordination with other governments. The stabilization fund for Poland is just one example. Another is the effort, now under way, to work with Poland's other official creditors to reduce Poland's stock of official debt. U.S. efforts to create a stable, growth-oriented global economy after World War II paved the way for others to join the ranks of global economic powers. These countries now can share the responsibilities of supporting this effort for the economies in transition. The President was instrumental in establishing a group of 24 Western governments (called the G-24) to coordinate assistance for Eastern Europe on a case-by-case basis in support of IMF-led adjustment efforts. The G-24 has already coordinated about $20 billion in grants, credits, guarantees, and technical assistance for Eastern Europe. THE ROLE OF THE U.S. PRIVATE SECTOR The private sector can contribute to reform in emerging market economies through several different avenues. The President announced on May 12, 1990, the creation of the Citizens Democracy Corps to channel voluntary assistance to Central and Eastern Europe. The President has appointed the steering commission, and it is beginning its work. Other organizations involve retired executives and financial sector experts. For example, the International Executive Service Corp organized a number of technical assistance 229 Box 6-3.— The Bole of the IMF in Economic Eeform The International Monetary Fund, an organization of 154 member countries, provides technical assistance, policy advice, and financial support to countries undertaking extensive structural and maeroeconoinic reforms, IMF financial support is planned in conjunction with the government officials of the country itself and requires strict adherence to an agreed schedule of policy adjustments and quantitative performance targets* Disbursement of support funds is conditional on meeting these targets. Types of Support. Standby arrangements are loans that focus on fiscal, monetary, and exchange-rate policies aimed at overcoming short-term balance of payments difficulties. Repayment is to be made in 3% to 5 years. Extended arrangements are loans that support medium-term (3 to 4 years) programs of macroeconomic and structural reforms* Eepayment is to be made in 4 % to 10 years. Structural adjustment facility and enhanced structural adjustment facility arrangements provide resources to support medium-term (3 years) structural reform programs in low-income countries, The Compensatory and Contingency Financing Facility* This facility provides IMF loans for the following purposes. The compensatory element provides resources to members to cover temporary export shortfalls or excessive import costs of certain foodstuffs due to price fluctuations beyond their control. The contingency element provides protection to members with IMF programs against potential future adverse external shocks beyond their control that could otherwise jeopardize their economic performance under their IMF programs. In 1990, at the initiative of the United States, the facility was modified to allow financing for higher oil import costs and certain other losses due to the Gulf crisis. What is conditionality? To ensure that nations with IMF financial support make consistent and substantial progress in attaining program goals, the IMF and the member country agree in advance to quarterly or semiannual target levels for a number of policy variables, such as domestic credit creation, international reserves, and government budget deficits. A country's drawings on IMF resources are conditional on attaining these intermediate targets. If these targets are not met, the IMF usually requires corrective policy actions before additional drawings may be made, 230 missions in 1990. Volunteers, including nonprofit organizations and universities, have already made a substantial contribution. Ultimately, governments cannot and should not be the main source of financing to the private sector in these countries. Private firms here and in other countries also play a critical role in supporting the transition. Eastern European countries are blessed with able, well-trained work forces but lack entrepreneurs and capital. Meanwhile, direct investment and other forms of long-term capital inflows will be the key to a successful transformation in Latin America. Over time, the number of attractive business and investment opportunities will grow as these countries move toward free markets. SUMMARY • Financial assistance alone will not resolve the difficult challenges facing the countries of Eastern Europe, the Soviet Union, and the developing countries of Latin America. • The U.S. effort has focused on technical assistance aimed at making the transition a sustained success over the long term. CONCLUSION The worldwide movement toward market reliance and political freedom continues to gather momentum. Nations in Eastern Europe are dismantling their command systems and endeavoring to replace them with thriving private sectors. This task will be long and difficult, and both governments and their citizens must understand that decades of neglect and state control cannot be overcome without a painful transition period. Given sufficient time to work, comprehensive reform will improve living standards dramatically as producers begin to make efficiently the goods that consumers want to buy. The Latin American countries do not operate under as high a degree of state control as did the communist countries of Eastern Europe, but they also need to undo the extensive damage caused by failed economic policies. In both regions, the normal operation of markets was obstructed through widespread government interference and reliance on inefficient public enterprises. Successful economic reform requires the rapid and comprehensive implementation of several critical policy principles. Establishing sound monetary and fiscal policies, decontrolling domestic prices, and opening the economy to international market forces will set the foundation for economic stability. These principles must be accompanied by a set of structural reform efforts that promote efficiency and provide production incentives. The structural reforms require establishing private property rights and privatiza- 231 tion of public enterprises, promoting domestic competition, and reducing and reforming the role of government. The convincing lesson from earlier piecemeal reform efforts in both Eastern Europe and Latin America is that only comprehensive reform programs can hope to create dynamic, growing economies. Implementing only part of the needed reforms is likely to yield little benefit. Without comprehensive reforms, output may decline substantially because individual incentives to produce are absent, and living standards cannot be increased. The reforms should also be implemented as quickly as politically and socially possible, since delays only prolong the pain and disruption of the transition period. Reform efforts under way throughout the world present an enormous opportunity to improve living standards of hundreds of millions of people. Financial and technical assistance from the United States and other developed economies, combined with perseverance and patience in the countries in transition, can ensure that these nations make the most of their great new opportunities. 232 CHAPTER 7 Trade Liberalization and Economic Growth THE GLOBAL TRADING SYSTEM has been a driving force of economic growth and prosperity, with world trade increasing more than one and a half times as fast as world income since the early 1960s. The fraction of U.S. production sold abroad has more than doubled since then, and exports now account for about one-eighth of gross national product (GNP). As the world's largest economy, the United States has greatly benefited from the rapid growth of trade. By promoting innovation, flexibility, and competition, the expansion of trade and the globalization of markets and firms have stimulated economic growth and improved living standards. Many natural economic forces—such as the declines in transportation and communication costs—have contributed to the growth of trade, but trade liberalization through substantial reductions of tariff barriers has also been a significant factor. Seven rounds of multilateral trade negotiations, conducted under the auspices of the General Agreement on Tariffs and Trade (GATT), have helped reduce average tariffs in industrial countries on manufactured goods from over 40 percent in 1947 to about 5 percent today. GATT has also promoted trade by establishing internationally accepted rules of fair play that have prevented and resolved numerous commercial conflicts between nations. A number of recent bilateral and regional economic policy initiatives have also helped to lower barriers to trade. In the Western Hemisphere, for instance, implementation of the U.S.-Canada FreeTrade Agreement has reduced many trade and investment barriers. Further market opening would come from a U.S.-Mexico freetrade agreement as well as from the hemisphere-wide system of free trade envisioned in the Enterprise for the Americas Initiative. The current round of GATT negotiations, known as the Uruguay Round, is aimed at further lowering trade barriers and at preventing increased protectionism and government management of trade. An important goal of the United States and other countries in the Uruguay Round is to modernize and improve the rules embodied in the articles of the General Agreement on Tariffs and Trade. This includes extending rules to areas either previously uncovered or for which coverage is neither systematic nor explicit, such as services, 233 intellectual property rights, and foreign investment; deepening and broadening coverage of agriculture and textiles; applying rules more thoroughly to developing countries; strengthening the dispute settlement procedures; and updating unfair trade rules to reflect modern business practices. Another goal is to cut tariffs worldwide and eliminate them altogether in several large manufacturing sectors. Unfortunately, the negotiations were suspended in December 1990 due to an impasse in the part of the talks dealing with agriculture. Successful completion of the Uruguay Round is important. In recent years, the world has experienced a rise in nontariff barriers, managed trade arrangements, and other protectionist measures that have hindered the expansion of trade and offset marketopening initiatives. The opening of markets around the world that would come from the success of the current GATT negotiations could greatly increase U.S. and world GNP. By contrast, a breakdown of the multilateral trading system could increase protectionist pressures to erect trade and investment barriers. Just as market opening stimulated economic growth, increased protection can reduce long-run growth and prosperity. In addition, an escalating cycle of import protection that led to a severe and sudden rise in trade barriers could contribute to a short-run economic downturn; the ensuing declines in income and employment might, in turn, increase pressures for protection. The last great cycle of antitrade policies contributed significantly to the Great Depression of the 1930s. Today's trading environment is vastly more complicated than it was in previous eras. New, complex products and services now permeate the world marketplace; trade barriers are more intricate; and companies are increasingly globalized. Through foreign direct investment and other international linkages, such as joint ventures and production-sharing arrangements, multinational companies have dispersed their production, research, and marketing facilities throughout the world. The result has been greater integration of the world's markets and firms. Today, companies compete worldwide not only through exports, but also through the location of facilities. Globalized companies are also playing an increasing role in world trade; for example, two-thirds of U.S. exports are traded by multinational corporations, with about two-fifths of these exports traded "internally" between the parents of multinationals and their affiliates located abroad. International trade and foreign direct investment are now inextricably entwined. 234 THE GAINS FROM FREE TRADE AND LOSSES FROM PROTECTIONISM Trade—whether between individuals within a town, between towns within a country, or between countries—is a natural economic process. The tendency for individuals to engage in trade stems from the fundamental fact that voluntary trade benefits all participants. Even within a town, the exchange of goods and services permits greater efficiency and prosperity for all residents because it allows individuals to specialize in what they do relatively well. Clearly, it would be an inefficient use of a town's resources if all its citizens grew all of their own food, made all of their own clothes, and built their own shelters. With a division of labor and trade among individuals, the town will produce more goods using its available resources. Countries, like individuals, are not all equally proficient at producing all goods. Just as specialization and trade among individuals in a town make everyone better off, international trade increases the prosperity of all nations by allowing countries to concentrate on what they do well and to trade for goods that they are relatively less efficient at producing. Technology, for example, enables U.S. companies to develop and manufacture many advanced goods more cheaply than companies from developing countries— even though American wages are many times higher than developing country wages. For less technologically advanced goods, the United States may also enjoy higher labor productivity. This productivity advantage, however, may not be enough to overcome the wage difference. As a result, firms from developing countries may be able to produce such goods at a lower cost. If market forces are allowed to act freely, countries will make the products they are relatively cost efficient at producing and will trade for other products. Since this international division of labor is cost effective, all goods will be cheaper; consequently, all nations will benefit. Trade barriers restrict the market forces that lead to this efficient international division of labor. Removing trade barriers increases the well-being of all nations by allowing a more efficient international allocation of resources. EFFICIENCY, PRODUCTIVITY, AND GROWTH In 1817 when David Ricardo first argued that trade benefits all nations, an efficient international allocation of resources was relatively simple. Countries made certain products and traded for others. Today, trade is much more complex. Firms increasingly engage in international joint ventures, technology-sharing arrangements, and long-term supply contracts, as well as direct investments in foreign companies and facilities. Through these interna- 235 tional linkages, firms achieve greater productivity and risk-sharing in research and development, marketing, and manufacturing. Thus, by improving the efficiency and flexibility of the allocation of resources, the globalization of firms and increased competition among them boost the prosperity of all nations. Open markets and multinational firms increase efficiency by allowing companies to take advantage of national differences in productivity and resource costs. But they also promote efficiency even more directly. The development, production, and marketing of some products and services require large up-front investments. Unrestricted international trade and investment permit firms to attain the most efficient scale of operation, thereby increasing productivity and lowering average costs. The realization of these economies of scale is generally good for business and benefits consumers by increasing their choice of products and raising the purchasing power of their incomes. These beneficial effects, usually called the efficiency gains from trade, are permanent, although this fact is not universally understood. For instance, it has been claimed that the economic cost of a major rise in trade barriers worldwide would be no greater than that of a mild recession. This claim, however, misses the point that recessions typically last for less than a year, while protectionist trade barriers impose costs that would lower incomes around the world for decades. Thus, even if the costs of a mild recession and an increase in protection were comparable on an annual basis, a major rise in trade barriers would have a much greater total cost. Globalization and the Flexibility of the Economy In today's rapidly changing world marketplace, flexibility is important: An efficient allocation of resources this year may not be efficient next year. The globalization of markets and companies increases the ability of the U.S. economy to respond to changes in technology and the state of the world economy. Access to foreign markets, technologies, and capital allows resources to move more quickly from one sector to another when patterns of international competitiveness shift. It also permits U.S. companies to respond more rapidly and effectively to changes in technology, products, and markets. The globalization of production networks also implies that reducing trade barriers in a particular foreign market may well lead to outcomes other than increased exports from the United States. These alternative outcomes include increased exports by companies that are affiliated with U.S. multinationals but located abroad; increased exports by foreign multinationals located overseas; and the establishment by U.S. companies of new facilities in the foreign market through direct investment. 236 Pro-competitive Effects of Trade Competition helps push companies to produce efficiently goods that consumers want and to charge competitive prices. If a domestic manufacturer tried to charge too much for its products, for example, consumers would buy from the competition. Trade barriers, which tend to restrict import competition, reduce these beneficial effects. Import competition promotes cost efficiency, quality awareness, and competitive pricing by domestic firms. As discussed below, added competition can also encourage the rate of innovation. Investment Effects of Removing Trade Barriers Freeing up international trade and investment promotes a more efficient use of resources. These efficiency gains, however, reflect only part of the benefits from an open trading system. To the extent that capital becomes more efficient and profitable, investing in new capital becomes more attractive. Market-opening initiatives can improve the investment climate, thereby promoting investment and spurring growth. An example can be seen quite clearly in the investment-led growth that Spain experienced after it joined the European Community (EC) in 1986. Membership in the EC committed Spain to removing all barriers to the movement of goods, people, and capital between Spain and the other EC nations. During the following 2 years, Spanish investment grew at an annual rate of 14 percent—almost three times the rate of growth of Spanish income. In contrast, investment in Spain grew more slowly than income during the first half of the 1980s. While the lowering of trade barriers was not the only factor stimulating Spanish investment, the induced capital formation magnified the efficiency gains from liberalization by providing additional productive resources. Long-Term Growth Effects of Trade Long-term growth has many sources. Growth of the labor force, for instance, provides more workers every year and thus the possibility of more output every year. Another source of long-term growth is improved technology and the rise in output per worker— that is, in labor productivity—that accompanies it. The effectiveness with which capital and labor are combined to create output is constrained by technical and managerial know-how. Advances in such know-how are primarily produced by profit-motivated firms. To develop new products or improve manufacturing efficiency for existing products, a firm must invest in knowledge creation. The return on such investments is the profit that flows from the temporary advantage that the innovation gives the firm over its competitors. From an economy-wide perspective, these profit-motivated innovations allow more output to be produced from the economy's re- 237 sources. The resulting productivity growth boosts the growth of living standards. International trade can promote long-term growth by encouraging technological innovation. By permitting innovators to sell to a larger market, trade may increase the profitability of innovation. That, in turn, spurs innovation and growth of productivity and incomes. For instance, access to foreign markets may allow firms to spread research and development costs over more sales, thereby increasing the profitability of innovation. However, this pro-innovation effect of a larger market may be partly offset by the fact that there may be more competing innovators and innovations in a larger market. Depending on the circumstances, trade may stimulate innovation and productivity growth by confronting firms with a stark choice between innovating and going out of business. The globalization of firms and markets also spurs technological progress through the international exchange of technical knowledge. Domestic companies, for example, often use imported components in making final goods. Foreign innovations that improve the quality or lower the price of such components improve the quality and lower the price of the final goods. A closely related pro-growth effect is the way in which international trade and investment may help alleviate duplication of research effort, thereby permitting more efficient use of the world's research resources. The notion that international trade increases economic growth is centuries old and widely accepted today. Quantitative estimates of the impact of market opening on growth are more difficult to obtain than its efficiency effects, however, because economists have begun only recently to develop analytic frameworks that can capture the links between trade, innovation, and growth. Typically, estimates of the gains from market opening incorporate only the efficiency effects. However, in assessing the quantitative impact of market-opening initiatives such as the Uruguay Round, it is important to include the innovation and growth effects as well, since they are potentially quite large (Box 7-1 and Chart 7-1). IMPORT PROTECTION AND MANAGED TRADE Just as opening markets is beneficial, policies that protect markets from international competition reduce efficiency and impede growth. Import protection policies take many forms: Tariffs reduce import competition by taxing imports, import quotas restrict the quantity of imports directly, and voluntary restraint agreements (VRAs) reduce imports by inducing foreign producers to decrease their exports. Policies that manage international market forces or alter market outcomes, such as government management of market shares, prices, or the composition of imports or exports, are examples of managed trade. 238 Box 7-1*—The Income Effects of a Successful Uruguay Successful eoiripi^tioii of the Uruguay Round would raise U.S. income sig^Ac^tly; Tlie substantial reduction of tariff and nontariff trad^lbarriers resulting from a successful conclusion of the round would.'"'boost U.3. income by enhancing the efficiency of the U*S. economy. Additionally, a more open world trading and investment system would promote growth by encouraging innovation and investment. Chart 7-1 shows projected growth paths with and without successful completion of the Uruguay BotmcL Taking growth and efficiency effects together, it is estimate! that the level of U.S. GNP would be 3 percent higher in the year 2000 than it would be without the reduction of trade barriers that is likely to result from successful completion of the Uruguay Round. Of course, U.S. income would be higher even during ihe years preceding 2000. Adding up the annual gains over the next 10 years yields an impressive $1.1 trillion, Chart 7-1 Estimated increase in U.S. GNP from a Successful Uruguay Round Reduced trade barriers resulting from a successful Uruguay Round would boost U.S. income substantially. Trillions of 1989 dollars 7.5 U.S. GNP with Reduced Trade Barriers 7.0 j = $1.1 Trillion, Estimated Gain in income over 10 Years 6.5 U.S. GNP at Trend Growth 6.0 5.5 i 5.0 1990 1991 1992 1993 1994 1995 1996 1997 Sources: Office of the U.S. Trade Representative and Council of Economic Advisers. 239 1998 1999 2000 Protectionist policies in general, and managed trade in particular, dampen U.S. productivity and growth for many reasons. When governments interfere with market forces, the allocation of resources reflects political interests and power, which do not usually produce an allocation of resources that maximizes economic efficiency or average living standards. Moreover, such allocations typically involve a delicate political balancing, which makes it difficult to react flexibly to changes in the international economy or shifts in competitiveness. Also, governments rarely have the necessary information, background, or general understanding of commercial realities to make good business decisions. Finally, detailed government intervention may diminish competition, which is essential to the proper functioning of the free-market system. When governments determine market shares, sales, or prices, they lessen the pressure on firms to produce efficiently and price competitively. Indeed, managed trade often results in market cartels. The Costs of Protection The cost of import restrictions drives home the importance of open markets. Import restrictions of all kinds tend to reduce import competition, thereby raising the prices of both imports and those domestic products that compete with them. Higher prices benefit domestic producers of the goods but harm consumers who buy them. In this sense, import restrictions are like a sales tax on imports that is used to finance a production subsidy to the protected domestic industry. In the clothing and textile sector, for example, trade is managed in great detail by a worldwide web of thousands of bilateral quotas involving more than 50 countries. The quotas and their associated growth rates are renegotiated under an international agreement known as the Multi-Fiber Arrangement. Every few years since 1974, the Multi-Fiber Arrangement itself has been renegotiated. Additional quotas are intermittently placed on new fabrics and new suppliers when their exports rise enough to disrupt domestic production. In the United States, imports of textiles and clothing are restricted by hundreds of these bilateral quotas, as well as by relatively high tariffs. U.S. producers benefit from the higher prices on each item they sell, while U.S. buyers lose because they must pay higher prices on each item they buy, whether imported or domestic. It has been estimated that protection in this sector cost American consumers about $11 billion in 1987, while U.S. producers gained slightly more than $4 billion. This pattern of gains and losses is similar for import restrictions on other products. Between 1981 and 1985, for example, the number of imported Japanese automobiles was restricted by a voluntary restraint agreement. One study estimates that this VRA cost U.S. consumers $5.8 billion in 1984, while U.S. automakers 240 gained only $2.6 billion. The imports of machine tools are currently restricted by VRAs. The consumer cost of VRAs on machine tools was $48 million in 1988, while the gain to U.S. machine tool manufacturers was only $11 million. Since consumers of machine tools are typically U.S. manufacturers themselves, the VRAs have an additional effect. By raising the cost of important inputs, the VRAs may reduce the competitiveness of other U.S. manufacturing firms. Sugar provides another complex example of import protection. The U.S. Department of Agriculture (USDA) must by law enforce a price floor of 18 cents per pound of sugar. Moreover, the USDA must maintain that price with no cost to the government. The problem is that the world price of sugar is far below 18 cents, and it fluctuates. If sugar imports were not managed, almost all U.S. consumers would buy less costly imported sugar, driving the U.S. market price below 18 cents. Since the USDA stands ready to buy unlimited quantities from U.S. producers at 18 cents, it would be forced to purchase the entire U.S. sugar output every year. That, of course, would violate current law. The solution implemented by USDA is to manage a set of trade restrictions that reduces sugar imports enough to ensure that U.S. demand meets supply above 18 cents a pound. Moreover, since market conditions change in the United States and the rest of the world, government officials must adjust these import restrictions to keep the market price near 18 cents a pound. It has been estimated that import restrictions on sugar cost American consumers $1.9 billion in 1987, while producers benefited by only $1 billion. The Myth that Protection Saves Jobs Although it is commonly asserted that protection saves jobs, this assertion is misleading. Protection does not save jobs in the long run for the economy as a whole, it merely keeps jobs in the protected sectors. Removing protection can, however, lead to short-run unemployment as displaced workers look for new jobs. The studies of voluntary restraint agreements mentioned above also calculated the consumer cost of the relevant protectionist policies relative to the number of jobs "saved." What these calculations actually show is the consumer cost of keeping one person employed in the protected sector instead of some other sector. To take one example, the consumer cost per job "saved" by the machine tool VRAs was estimated to be $120,000 a year. Political Economy of Protectionist Policies The discussion of protection leads to the issue of why some sectors are protected, while others, indeed most, are allowed to adjust to import competition. More generally, it raises the question: // consumers always lose more than producers gain, why do the United States and other countries have import restrictions? 241 The answer is that the cost to consumers is spread over many millions of people, while the gain to producers is divided among many fewer people. As a result, producers often find it worthwhile to pay the cost of organizing and influencing their governments. Since the per consumer cost of import restrictions is typically low, consumers generally do not find it worthwhile to pay the cost of participating in such efforts. Fairness in Trade To many, the economic effects of trade barriers are only part of the story. To them it is simply unfair that some governments discriminate against foreign products through the use of tariffs or other barriers to trade. Overly bureaucratic procedures that impede imports, unilateral decisions that imports do not mesh with certain tastes or standards, and seemingly arbitrary health standards provide examples of governmental discrimination against foreign products that go against many peoples' notion of fair play. The concept of fairness in trade is embodied in the principles of GATT. A basic GATT precept, for example, is the most-favorednation (MFN) rule. Under MFN, countries that are members of GATT must treat all other members equally in their application of trade measures. Most countries, including the United States, prefer to reduce trade barriers in concert with other nations, in part because resistance to lowering protection is likely to be mitigated if it can be done on a more equal, or fairer, basis. The exchange-of-concessions approach to trade negotiations endorsed by GATT (discussed below) embodies this notion of fairness. Another concept related to fairness is that of "national treatment," that is, the idea that the products of domestic and foreign firms should receive equal treatment with respect to domestic taxes and regulations. In the process of assessing and mediating many international disputes over alleged unfair trade barriers, GATT typically applies the national treatment rule by determining if the products of foreign firms are being treated differently from those of local firms. SUMMARY • Markets and companies are increasingly global in scope. The resulting increase in trade and investment benefits the United States and the world as a whole by allowing resources to be more productively and flexibly utilized. • Opening markets to international trade pushes companies to produce efficiently goods that consumers want and to charge competitive prices. Open markets also improve efficiency by allowing companies to operate at the most efficient scale of operation. 242 • Reducing barriers to international trade and investment can improve the investment climate and increase the rate of innovation, thereby increasing the rate of growth of living standards. * Managed trade and protectionist policies are harmful because they reduce the efficiency and flexibility of the economy and hinder economic growth. GLOBAL TRADE AND THE URUGUAY ROUND GATT has contributed significantly to the rapid growth of world trade. By facilitating the reduction of trade barriers through multilateral trade negotiations, GATT has stimulated trade growth directly. Trade has also been fostered more indirectly by the strengthening and continued acceptance of GATT's rules governing international commerce. Just as domestic business laws are essential to the smooth functioning of commercial relationships within a country, GATT is important in facilitating trade among countries. Today, the GATT system is facing many challenges. The original agreement was written primarily to deal with trade in manufactured goods among developed countries, yet today only about threefifths of world export earnings come from manufactures. Services account for about one-fifth of world export earnings, agriculture accounts for about one-tenth, and oil and minerals account for the rest. Moreover, in recent years many developing countries have become important participants in the trading system, yet they are not fully subject to GATT rules. Foreign direct investment by corporations is also an increasingly important aspect of the world trading system, yet GATT rules do not explicitly address such investment. The nature of today's trade barriers poses new challenges to the GATT system. Since tariff barriers are quite low on average—at least in developed nations—continued market opening requires that nontariff barriers be reduced. While tariffs are easy to quantify and relatively easy to negotiate, many of the nontariff barriers to trade discussed in the Uruguay Round, such as government subsidies and import quotas, have proved more difficult to negotiate and reduce. Additionally, in the past decade the number of managed trade arrangements has increased. Agriculture, automobiles, consumer electronics, semiconductors, steel, textiles, and other sectors have been subjected to governmental management of exports, market shares, and prices in various parts of the world. Finally, in today's highly interdependent world, what appear to be domestic policies may have international trade implications. In fact, a number of recent trade disputes have their roots in national poli- 243 cies that are not related to international trade in an obvious way (Box 7-2). banned all ii||p>rte of growth promotants following a Cfemmunity-wide ban on nontherapeutic hormones used in The Umted States believed the di^ iiot based on sdeiitifite evidence Mid that it constituted an unjustifiable restriction on trade. Bilateral consultations were eventually able to resolve a number of points of contention, but not the underlying issue of how to deal with food standards that are not based on scientific evidence* The government of Thailand instituted a ban on cigarette advertising in addition to a bsn on imported cigarettes and other restrictive practices. In response to a complaint from the United States, GATT found the import ban illegal but ruled that Thailand can prohibit tobacco advertising for health reasons. In accordance with a U.S, law prohibiting residues in foods of chemicals not registered with the Environmen* tal Protection Agency, the United States recently imposed a temporary ban on EC wine imports containing a fungicide caEed procymidone until the health risk can be adequately determined. The EC and the United States are engaged in consultations on the temporary import ban. A possible EC ban on certain furs caught in countries that permit the use of steel leghold traps would restrict U.S. fur trade. There is widespread support in the United States as well as in Europe for the development of more humane traps. However, the U.S. Government opposes the imposition of an arbitrary deadline to meet standards that have not yet been developed and argues that trapping serves the desirable environmental goal of managing the population of fur-bearing animals. PROCESS AND TIMING OF THE NEGOTIATIONS The Uruguay Round negotiations are an ambitious attempt to open markets as well as to meet the challenges posed by the greatly increased complexity of trade, trade barriers, and the firms in- 244 volved in trade. Successful completion of the Uruguay Round would encourage growth and raise living standards in the United States and around the world. Success would also help defuse trade tensions and conflicts that might otherwise escalate. The use of costly agricultural export subsidies, for example, might increase if the Uruguay Round fails. Moreover, complaints from U.S. industries about unfair trade practices might rise, possibly increasing the use of retaliatory actions under U.S. trade law. For these reasons, the Administration has encouraged all nations to make the commitments necessary to bring the Uruguay Round to a successful conclusion. The Uruguay Round talks were scheduled for completion in early December 1990 at a meeting in Brussels. Due to an impasse in the part of the talks dealing with agriculture, the Brussels meeting broke down, and the Uruguay Round talks were suspended with no formal agreements in any of the many areas of negotiation. The impasse occurred when countries could not agree on a basis for detailed negotiations concerning agricultural export subsidies, domestic farm policies that affect trade, and agricultural import barriers. Trade negotiations are based on what is referred to as an "exchange of concessions." That is, negotiators talk about mutual policy reforms as if they were exchanging concessions, even though the reforms would benefit countries on all sides of the bargaining table. For instance, as discussed above, U.S. import restrictions on clothing cost American consumers billions of dollars a year. Yet, developing countries ask the United States to make concessions on clothing—that is, to open further the U.S. market to clothing imports—before they will make market-opening concessions that are likely to save their consumers billions. The word "concession" is used because domestic producers who compete with imports tend to resist such market opening. This exchange-of-concessions approach has been quite successful in previous GATT rounds, primarily because it allows governments to counter national groups opposed to opening the domestic market with the political influence of domestic exporters who seek market openings in other countries. AREAS OF NEGOTIATION The Uruguay Round talks have addressed three goals: reducing barriers to trade, extending GATT rules to new sectors, and improving GATT rules by strengthening and updating them to match modern commercial realities. In pursuit of these goals, the negotiations have proceeded on a wide range of areas, several of which are discussed below. Tariff Reduction and Elimination A very important part of the negotiations is the reduction of tariffs. Participants in the Uruguay Round have already agreed to 245 reduce the average of their tariff rates by about one-third. They have not, however, agreed upon the specific products on which tariffs will be cut. A vast number of products may be affected. The United States, for instance, has requested foreign tariff cuts on thousands of specific products and has offered to cut U.S. tariffs on thousands of products. The United States has also put forth a novel tariff-cutting proposal called the Zero for Zero Initiative. Under this initiative the United States offers to cut U.S. tariffs to zero in particular sectors—such as steel, electronics, construction equipment, and pharmaceuticals—if other countries agree to cut their tariffs to zero in the same sectors. When fully implemented, the initiative would result in free-trade sectors (FTSs) involving thousands of products made in scores of countries, thereby improving export opportunities for a large number of companies. The volume of U.S. exports that would be covered by the proposed FTSs is larger than the volume of U.S. exports to Canada, the Nation's largest trading partner. Agriculture The strongest advocates of reducing protection of agriculture in the Uruguay Round have been the United States and a coalition of 14 food exporting nations known as the Cairns Group, which includes Australia, Canada, and New Zealand, as well as Argentina and several other developing nations. Indeed, the importance of an agriculture agreement to some nations has had broad implications for the entire Uruguay Round. Key trading countries from the developing world, including Brazil, Indonesia, Malaysia, Thailand, and several others, have expressed a reluctance to forge agreements unless agricultural reform is also negotiated and other issues of great interest to them are addressed. The Cairns Group has threatened to reject agreements on all other issues unless comprehensive agricultural policy reform is achieved. Agricultural trade makes up about one-tenth of world trade, yet it has never been seriously subject to GATT discipline. Indeed, virtually every government intervenes in its agricultural sector. Particularly in industrial economies, agricultural policies often promote producers' interests through trade barriers or subsidization. The EC maintains high domestic food prices with a maze of import barriers and export subsidies that largely insulates its 8 million farmers from world market forces. Japan and South Korea maintain even higher barriers against most food imports. Canada, the United States, and many other nations also protect their agricultural sectors to some degree in a variety of ways. The EC provides a prime example of government protection of agriculture. The EC was once a major food importer. Now government-controlled prices are set so high that European farmers produce much more than European consumers wish to buy. To dis- 246 pose of these surpluses, the EC must subsidize exporters to buy EC products at the high internal prices and sell them on the world market at much lower prices. Other countries may have to match the EC's subsidized export prices if they are to compete in the world market. The net result of these and other similar practices is that world prices of many agricultural products are significantly depressed and resources are inefficiently allocated. In 1987, the first full year of the Uruguay Round negotiations, the EC spent about $10 billion on export subsidies and the United States spent about $1 billion (Box 7-3). An agreement to reduce agricultural trade barriers and subsidies would bring significant efficiency gains to the global economy. By allowing market forces to determine agricultural production and prices, such reductions would increase the amount of trade in most agricultural commodities and, according to one study, would add $35 billion annually, in real terms, to the combined income of developed market economies. The largest efficiency gains would accrue to the economies of the EC, the United States, and Japan. In Europe manufacturing output and total employment would increase, while in Japan land and food prices would fall. Despite these beneficial effects, Europe and Japan have strongly resisted reform, partly because of the high levels of protection that existing barriers give to their politically powerful farm groups. The United States, which exported about $40 billion worth of agricultural products in 1990, has a large stake in achieving comprehensive agricultural policy reform. It has been estimated that the net effect of global agricultural protection lowers the U.S. agricultural trade balance by $3 billion. While U.S. exports are a key concern, the U.S. interest in an agriculture agreement has other dimensions too. For example, reducing domestic farm subsidies could help reduce the U.S. budget deficit. Resistance to reducing domestic farm programs unilaterally is strong, however, partly because the programs help offset the price-reducing effects of other countries' farm subsidies. The United States could increase the efficiency of its economy by unilaterally reducing the degree of protection in agriculture. Indeed, as described in Chapter 4, the United States has already taken important steps toward farm policy reform. However, if the United States reformed its agricultural policies in concert with others, U.S. farmers would face more open export markets and more favorable market prices. One study estimates that world market prices would have been roughly 20 percent higher in 198687 in the absence of subsidies and trade barriers worldwide. Textiles Trade in textiles and clothing accounts for about one-tenth of all manufactured exports. This trade is particularly important to de- 247 Box 7-3.—Export Subsidies: Who Gains and Who Loses? If the Uruguay Round fails, an increase in the subsidization of agricultural exports, especially by the European Community (EC) and the United States, is a distinct possibility. Indeed, the Congress has already authorized an additional $1 billion for U,S. export assistance, to be used to offset EC subsidies, should the round fail. Who gains and who loses when a country imposes export subsidies? Its domestic farmers gain, since they secure higher prices and greater exports. Its taxpayers lose, since they pay for the subsidies. Its consumers can also lose because the subsidies typically raise domestic food prices. That is because export subsidies encourage farmers to sell more to foreign markets, making less available at home. Adding up the gains and losses to farmers, taxpayers, and consumers, the subsidizing country as a whole is usually worse off. Other nations that export agricultural products may have to counter with expensive export subsidies of their own or risk being squeezed out of world markets. Consumers in countries that import the subsidized exports may welcome the lower food prices that result, but farmers in those countries would be harmed. Many food importers are developing countries with relatively large shares of their populations working on farms. By depressing food prices in importing countries, subsidized exports can create an artificial disincentive to agricultural investment. Despite their high domestic costs, countries may be willing to bear the burden of export subsidies in the short run. If U.S. subsidies, for example, counter EC subsidies effectively by displacing EC sales in export markets, the European Community may agree to reduce its subsidies and return trade to a freer basis. The risk of this strategy is that a "subsidy war** may occur, which can send food prices in international markets down and taxpayer costs at home up. veloping nations, since it accounts for almost a quarter of their manufactured exports. The continued existence and increasing restrictiveness of the global management of textile trade has eroded the confidence of many developing nations in the GATT system. One of the goals of the United States and other nations in the Uruguay Round is to phase out the policies that currently control textile and clothing trade. The negotiations are aimed at establishing a mechanism to return trade in this sector to the regular rules of GATT over a certain period of time. The transition mechanism 248 being considered in the negotiations would use the basic structure of the Multi-Fiber Arrangement for those textile and apparel products currently under quota. During the transition the growth rates of these quotas would be increased, and certain products would be progressively integrated into GATT. Furthermore, a special procedure would allow new quotas to be placed on uncovered products and suppliers to keep these imports from disrupting domestic production. If the Uruguay Round talks succeed in phasing out textile and clothing protection, U.S. consumers would save billions of dollars annually. Services In 1989 American companies exported over $100 billion of services, making the United States the world's largest exporter of services. International trade in services, such as insurance, banking, and tourism, accounts for about one-fifth of world export earnings. One important aim of the Uruguay Round is to include in the GATT system a multilateral agreement on principles and rules for trade in services, as well as to eliminate progressively impediments to trade in services. The talks have focused on obtaining a services agreement consisting of three parts: a broad framework agreement—called the General Agreement on Trade in Services—that would lay out principles and rules governing services trade; a set of annexes that would discuss particular service sectors in detail; and a list of commitments by countries to open their services markets to foreign firms. Negotiations in this area are so new that even the definition of trade in services had to be addressed. The proposed agreement defines services trade as the supply of a service by a firm from one country to a consumer from another country. This definition covers cases in which the firm is located in the consumer's market (such as in banking), the consumer travels to another country to purchase services (such as in tourism), or the firm and consumer are located in different countries (such as telecommunications). The proposed agreement also had to define what constitutes a barrier to trade in services. The proposed definition states that countries should not discriminate among foreign service companies and should treat foreign service firms no less favorably than domestic firms. Any deviation from this standard would constitute a trade barrier. An example of a barrier to trade in services under this definition would be a law that makes it difficult for an insurance firm from one country to set up in another country. One other important principle that would be established by the proposed trade-inservices agreement involves "transparency." This principle would require countries to publish all laws and regulations that affect trade in services. 249 Intellectual Property Rights In 1989 U.S. export earnings from royalties and licensing fees amounted to $12 billion. In the United States and most other industrialized nations, the rights of knowledge creators to earn profits on their creations are protected by laws that make it illegal to pirate patents, software, books, records or tapes, or to sell counterfeit goods. In many countries, particularly in the developing world, laws to protect these rights, known as intellectual property rights, do not exist or are not well enforced. As a result, piracy and counterfeiting of trademark goods and services are widespread. The U.S. International Trade Commission estimated that U.S. industry loses many billions of dollars a year to piracy and counterfeiting. The aim of the United States in the Uruguay Round has been to negotiate a set of international rules governing trade-related intellectual property rights and to erect an effective system to ensure that obligations under GATT and other agreements to protect these rights are enforced. Investment The globalization of modern companies means that barriers to foreign investment act as barriers to trade. Because companies investing in foreign countries tend to import many of the inputs they use in production and to export a significant portion of their output, restrictions on investment directly affect the flow of trade. The Uruguay Round has included negotiations on new rules that would restrict the use of investment policies that inhibit or distort trade. There is no generally accepted definition of what constitutes such a trade-related investment measure (TRIM). Examples include government requirements that foreign multinational corporations use specific amounts of locally produced goods in their products, that foreign corporations export a certain share of their output, and that foreign investors may only use a limited amount of the foreign exchange they earn to purchase inputs. Current GATT rules indirectly cover a few of these measures, but the rules are neither comprehensive nor clear, and their application to developing countries has never been tested. The U.S. position, shared by most industrialized countries, is that GATT should prohibit TRIMs that inherently restrict or distort trade, establish a test to discipline those nonprohibited TRIMs that can have adverse trade effects, and develop a timeline to phase out existing prohibited TRIMs. The negotiations have been hindered, however, by deep differences of opinion between developed and developing countries. Many developing countries, which are largely host countries for foreign direct investment, insist that control of 250 such investment through TRIMs is crucial to achieving their development objectives. In the long run, given the increasing overlap between investment and trade activity, it is desirable to have strong GATT rules covering all aspects of foreign investment—not merely trade-related foreign investment—analogous to those that cover trade. Even if the Uruguay Round adopts rules regarding trade-related investment measures, nothing comparable to GATT's rules on goods trade would exist for investment. Establishing common, multilateral rules for investment throughout the world is a high priority for the United States because differences in foreign investment policies across countries reduce the benefits that stem from the global production networks of multinational corporations. Dispute Settlement An effective and reliable dispute settlement mechanism is an important component of the GATT system. One of the most significant ways in which the Uruguay Round may strengthen the rulesbased international trading system is by improving the GATT mechanism that is used to settle many trade disputes among nations. The current procedure establishes a panel of experts that decides the merits of the dispute and announces its findings. While this system has performed reasonably well in many cases, in recent years some nations have complained that the process is too slow and unreliable. These shortcomings reduce the credibility of the multilateral dispute settlement procedure and erode confidence in the GATT system as a whole. Procedural changes that have resulted from the ongoing negotiations have already improved the process. The final goal is a dispute settlement procedure that is swift, reliable, and effective. Safeguards GATT recognizes that countries may need to impose new import restrictions to allow import-sensitive industries time to adjust to shifts in competitiveness. Temporary import restrictions for this purpose, so-called safeguard measures, can be imposed if increased imports cause, or threaten to cause, serious injury to an industry. As a general principle, GATT indicates that import restrictions should be tariffs, rather than quotas or other quantity restrictions, and that these measures should be applied equally to all trading partners. GATT also allows all countries affected by the safeguard measures to retaliate or request compensation from the country that imposes them. These conditions have discouraged the use of GATT's safeguard provisions. As a consequence, countries often rely on bilateral arrangements, such as voluntary export agreements, to limit imports. The EC is by far the leading user of these arrangements, but the 251 United States, Japan, Canada, Sweden, Switzerland, Norway, and Finland have also used them. These arrangements are not subject to GATT rules of any kind. Their use allows political pressures, rather than market forces, to influence trade flows. These arrangements also tend to favor old suppliers over new suppliers, and to exclude third countries (which may be indirectly affected) from discussion of the design, implementation, and removal of the restrictions. Uruguay Round negotiators are seeking new rules to clarify the conditions under which safeguard measures may be taken and to discourage the use of voluntary export agreements. Antidumping The term "dumping" can describe selling a product at lower prices in some countries than in others or selling a product below cost. GATT allows a country whose industries are injured by the dumping of imports to impose a special tariff called an antidumping duty. In the Uruguay Round the United States and other nations seek to update GATTs antidumping rules to match modern commercial realities and to standardize and clarify procedures for investigations of alleged dumping. SUMMARY • The United States and other nations are endeavoring to strengthen, extend, and modernize GATTs rules governing international trade, as well as to reduce trade barriers worldwide. • Long-run U.S. goals of multilateral trade liberalization are embodied in the positions taken by the United States in the Uruguay Round. These include extending GATT discipline to trade in agriculture, textiles, services, and intellectual property; ensuring that developing countries take on the full obligations of GATT; establishing explicit international rules for foreign investment; and making the GATT dispute settlement mechanism swift, fair, and effective. • Successful completion of the Uruguay Round is important to the future growth and prosperity of the United States and the world. U.S. PRO-TRADE INITIATIVES IN THE AMERICAS AND ELSEWHERE The primary thrust of U.S. trade policy is to use multilateral discussions and fora such as GATT and the Organization for Economic Cooperation and Development to promote free, rules-based trade. Indeed, the multilateral Uruguay Round negotiations are the President's top trade priority. The Administration, however, has made 252 substantial progress toward promoting trade via other channels. This progress is evident in a number of regional and bilateral protrade initiatives, as well as in the avoidance of increased protection and a reduction of the overall level of tension in our trade relationships. U.S.-MEXICO FREE-TRADE AREA In June 1990 the Presidents of the United States and Mexico strongly endorsed the goal of a comprehensive free-trade agreement between the United States and Mexico (Box 7-4 and Chart 72). Such an agreement would progressively eliminate impediments to trade in goods and services and to investment, as well as protect intellectual property rights. The United States already has freetrade agreements with Canada (signed in 1988) and Israel (signed in 1985). In addition, the United States, Mexico, and Canada have been consulting on the possibility of a trilateral negotiation. Mexico has reduced its trade barriers as part of its across-theboard market reform effort (described in Chapter 6). Since 1985 Mexico has reduced by roughly 70 percent the product coverage of a form of import restriction known as import licensing. Mexico has also lowered its tariffs from an average of roughly 30 percent in 1985 to about 10 percent in 1989. However, this 10-percent average is still much higher than the 4-percent average tariff that the United States has on imports from Mexico. A free-trade agreement would eventually bring both numbers to zero on U.S.-Mexico trade and would eliminate many nontariff measures. A free-trade agreement would boost the international competitiveness of both U.S. and Mexican firms. To reduce costs, companies often allocate phases of a manufacturing process among a number of nations. A free-trade agreement with Mexico would further encourage this natural international division of labor. By lowering the overall costs of U.S. manufacturing firms, a free-trade agreement would make U.S. firms more competitive against imports in the United States and against other countries' exports in the world market. This gain in manufacturing competitiveness encourages productivity and higher wages. The proposed free-trade agreement would similarly boost the competitiveness of Mexican firms. Additionally, the two-way reduction in trade barriers would benefit Mexico by supporting its market reforms and encouraging economic growth. INITIATIVES FOR THE AMERICAS In June 1990 the President unveiled his Enterprise for the Americas Initiative, which will, among other things, pave the way to free trade throughout the Western Hemisphere. The proposed legislation addresses three issues: trade, investment, and debt. Chapter 6 253 Box 7-C—The Composition of U»S*-Mexieo Trade Mexico is the third largest trading partner of the United States, after Canada and Japan. About 6 percent of UJSl exports went to Mexico in 1989, while about 5 percent of U.S, imports came from Mexico* The composition of trade with Mexico is quite similar to the U,S,~Canada trade pattern, as can be seen in Chart 7-2, Most U.S.-Mexico trade is two-way trade in manufactured goods, A closer look at the manufactures category reveals that much of this trade is two-way trade in similar products. The four largest U.S. exports to Mexico in 1989 were auto parts, processed food, electronic components, and electrical switchgear. The four largest imports from Mexico were autos and auto parts, electrical distributing equipment, telecommunications equipment, and electrical switchgear. Trade between the United States and Mexico in the manufacturing sector is almost balanced, due largely to Mexico's maquiladom program, Maquiladoras are export-oriented plants, most often located close to the U*S,~Mexico border, that are exempt from paying import duties on raw materials and parts that are used in making final products. In 1988 about 45 percent of UJS. mer* ehandfee imports from Mexico originated in the maguiladoras* Chart 7-2 U.S. Trade with Mexico and Canada, 1989 Two-way trade in manufactured goods dominates U.S. bilateral trade with both Mexico and Canada. U.S. - Canada Trade U.S. - Mexico Trade Imports from Mexico Exports to Mexico Imports from Canada 19.6 ] 20.5 Exports to Canada 68.3 | 72.2 Manufactures • • • • • • Agriculture Services 1.7 Other 80 40 0 40 Billions of Dollars 80 80 Source: Department of Commerce. 254 40 0 40 Billions of Dollars 80 discusses the investment and debt aspects of the Enterprise for the Americas Initiative. On the trade side, the Enterprise for the Americas Initiative would establish a process that would eventually lead to a hemisphere-wide system of free trade. As a first step in this direction, the United States would sign bilateral framework agreements with any interested country or group of countries in the region. These agreements facilitate discussion of means to eliminate impediments to trade and investment. The United States has entered into these agreements with Bolivia, Colombia, Chile, Ecuador, Honduras, and Costa Rica. Negotiations have begun bilaterally with Venezuela, Peru, and Nicaragua, as well as with Argentina, Brazil, Uruguay, and Paraguay as a group. Framework agreements are also a possibility in the near future with El Salvador, Guatemala, Panama, Jamaica, and several other Caribbean countries. The next step is to negotiate free-trade agreements with individual countries and groups of countries. Chile, which has a history of open markets, has expressed strong interest in pursuing a freetrade agreement with the United States. In October 1990 the President sent the Andean Trade Preference Act to the Congress. This proposal would eliminate U.S. import duties on many products imported from Bolivia, Colombia, Ecuador, and Peru. A major goal of this unilateral market-opening initiative is to help these countries battle the production, processing, and shipment of illegal drugs by offering them opportunities to expand production and trade of products that are legal. Passage of this legislation early in 1991 is an important priority for the President. It will help in the fight against drugs and also help promote trade and prosperity in the hemisphere. STRUCTURAL IMPEDIMENTS INITIATIVE One of the most significant developments in U.S. international economic policy in recent years is the U.S.-Japan Structural Impediments Initiative. This initiative is a new, cooperative approach to opening markets. Instead of focusing on specific sectoral trade barriers, the initiative is aimed at identifying and removing more basic impediments to trade, market competition, and balance of payments adjustment. The initiative produced a joint report in June 1990. On the Japanese side, the joint report focused on a number of areas, including the aggregate saving and investment balance; laws regarding land use; the structure of the Japanese distribution system, which restricts the establishment and operation of large retail stores in Japan; the organizational behavior of Japanese conglomerates known as keiretsu; enforcement of Japan's antimonopoly laws; improved financial disclosure by Japanese firms; and improved procedures for awarding patents. In the joint report, the United States recognized that priority issues for U.S. policy in- 255 elude reducing the Federal budget deficit, stimulating private saving, and improving education and training of U.S. workers. SUMMARY • In addition to pursuing market opening through multilateral fora, the United States has undertaken several regional and bilateral pro-trade initiatives such as the proposed U.S.-Mexico free-trade agreement, the Enterprise for the Americas Initiative, and the Structural Impediments Initiative. • The proposed U.S.-Mexico free-trade agreement would boost the international competitiveness of both U.S. and Mexican firms, as well as increase efficiency, flexibility, and growth in both economies. • The ultimate goal of the trade liberalization components of the Enterprise for the Americas Initiative is a hemispheric system of free trade. MULTINATIONAL CORPORATIONS AND THE TRADE-INVESTMENT LINKAGE The 1990s are likely to be marked by the increased globalization of companies, a trend that began in the early post-World War II years and continued throughout the 1980s. The greater global integration of the operations of multinational corporations is the result of increasing foreign direct investment—defined as the development of a new business or acquisition of an established business in a foreign market. It complements the globalization of markets engendered by the expansion of trade. Indeed, the globalization of companies results in a close connection between trade and investment. This connection can be seen quite clearly in the remarkable extent to which border-spanning companies are involved in trade. About 25 percent of all U.S. exports and 15 percent of all U.S. imports, for example, are actually transfers between parents of multinational corporations and their affiliates abroad; that is, the goods are transferred within the same company, even though they cross international boundaries. The internationalization of operations underlying such "intrafirm" trade often means that a new product marketed globally is the fruit of research and development performed in one country, engineering carried out in a second, and production performed in a third. The globalization of companies is a two-way street; many countries in which U.S. multinationals are most active are also the ones that are the most active investors in the United States (Box 7-5 and Chart 7-3). The global nature of companies has so progressed that sometimes it is difficult to decide which firms are foreign. 256 Honda, for example, sells more cars in the United States than it does in Japan. In fact, some Hondas sold in Japan are actually made in Ohio. Whirlpool, while headquartered in Michigan, employs about 39,000 people, most of whom are non-American, in 45 different countries. Box 7-5*—Fdreigii Blreet Investment: Wh0 Invests and Where? For most of the period immediately following World War H, only companies based in the United States and in a few other countries developed or acquired businesses in other countries. Such foreign direct investment was mostly in one direction* Countries that did the investing were rarely the recipients of foreign direct investment. Today* the United States not only continues to be the leading source of foreign direct investment, with $873,4 billion held abroad in 1989, but, as Chart 7-3 shows, it is also the largest recipient of foreign direct investment* Chart 7-3 World Stocks of Foreign Direct Investment, 1988 Many countries that provide large amounts of foreign direct investment are also large recipients. Indeed, the United States is both the largest source and the largest recipient. Recipients Sources Other LDCs Developed 2.8% 7.4% Japan 9.8% Other Developed Other Europe 24.3% 14.4% Japan Germany 0.9% Germany Other Europe 19.8% 9.1% Note: Data are based on world stocks of direct investment. Source: Department of Commerce. 257 6.8% Statistics on foreign direct investment reflect historical purchase prices, not current market values. Thus, comparisons of stocks of foreign direct investment can be quite misleading. For instance, the reported stock of foreign direct investment in the United States reached $400.8 billion at the end of 1989 and exceeded the reported stock of U.S. direct investment abroad by $27.4 billion. But much of U.S. direct investment abroad was made in the 1950s and 1960s, while the bulk of foreign direct investment in the United States was made more recently. Because prices have risen considerably since the 1960s, it is likely that the current value of U.S. holdings abroad exceeds the current value of foreign direct investment in the United States. THE BENEFITS OF FOREIGN DIRECT INVESTMENT Foreign direct investment in the United States is a sign of strength in the economy, not of weakness. It is also a sign of the increasing internationalization of the economy through which U.S. firms will be strengthened and made more competitive. This investment and the global orientation of companies benefit the United States. The unhindered flow of foreign direct investment leads to additional productive resources in the United States and facilitates the realization of cost-efficient scales of business by consolidating under one corporate roof separate, but related, operations. These boost the productivity and international competitiveness of the United States, create jobs, and promote innovation and productivity. The inflow of foreign capital helps to sustain U.S. investment, despite the current low U.S. national saving rate, and thus contributes to economic growth. When U.S. multinationals first set up in Europe during the 1950s and 1960s, many Europeans feared that Europe was being bought out by Americans and that their economies were being Americanized. In retrospect, these concerns were unfounded. U.S. direct investment has benefited the European economies. The recent increase in foreign direct investment in the United States will similarly benefit the U.S. economy. U.S. direct investment abroad also benefits the United States. Extensive production networks of U.S. multinational corporations confer several advantages. One is the ability of such companies to compete more effectively in foreign markets by locating production facilities there, rather than by exporting to those markets. Profits generated by such activities can flow back to the United States, and U.S. affiliates abroad often create demand for exports of U.S. production inputs, services, and technology. Foreign direct investment also provides insurance against the risk of new "host" country restrictions on trade. Finally, U.S. direct investment abroad 258 contributes to the economic health of our trading partners, which, in turn, fosters greater U.S. economic growth. U.S. multinational corporations—from computer and electronics companies to pharmaceutical companies—are often at the cutting edge of technology creation. Moreover, they perform the vast majority of their research and development activities in the United States. U.S. multinationals are also major employers of American workers. The ratio of manufacturing jobs to service and wholesaling jobs was about one-fifth higher in U.S. multinationals' parent operations than in their foreign operations in 1988. In general, U.S. multinational corporations today orient their operations toward the U.S. market. Indeed, according to the most recent figures, about three-fourths of total worldwide assets of U.S. multinationals are located in the United States. This share has increased from a decade earlier despite the growth of U.S. direct investment abroad. It has been claimed that overseas production by U.S. multinational corporations displaces U.S. exports and, in effect, American jobs. A related concern is that U.S. multinationals produce goods abroad and import them into the United States, rather than producing them domestically. Underlying these claims is the mistaken presumption that if U.S. direct investment abroad did not take place, production would have been maintained at home and U.S. exports to foreign markets would have continued. In most cases, if U.S. multinationals did not establish affiliates abroad to produce for the local market, they would be too distant to have an effective presence in that market. In addition, companies from other countries would either establish such facilities or increase exports to that market. In effect, it is not really possible to sustain exports to such markets in the long run. On a net basis, it is highly doubtful that U.S. direct investment abroad reduces U.S. exports or displaces U.S. jobs. Indeed, U.S. direct investment abroad stimulates U.S. companies to be more competitive internationally, which can generate U.S. exports and jobs. Equally important, U.S. direct investment abroad allows U.S. firms to allocate their resources more efficiently, thus creating healthier domestic operations, which, in turn, tend to create jobs. Another issue raised about multinational corporations is that the exports and imports they trade internally do not adjust as completely in the short run to exchange-rate changes as do goods that are traded between unrelated firms. Because of the long-run cost efficiencies associated with maintaining extensive global production networks and because some percentage of a multinational's plant and equipment may not be completely salvageable if facilities are moved, some intrafirm trade flows may well not adjust rapidly to shifts in exchange rates. 259 Of course, like all trade flows, intrafirm exports and imports do adjust to changes in exchange rates over time. Even in the absence of multinational enterprise, however, the open market for many of the types of products traded internally by multinationals is likely to be dominated by long-term contracts. That is because international business investments typically are economically risky and involve large commitments of capital and highly specialized assets. Thus, any apparent temporary rigidities in multinational corporate trade behavior reflect the fact that these firms have established efficient configurations of operations in the global marketplace. Nonetheless, relatively slow responses of internal exports and imports of multinational corporations to changes in exchange rates may subject U.S. economic policymakers to significant pressure to place restrictions on the way these firms build and maintain their networks of operations. Imposing such investment-restricting measures will result not only in corporate efficiency losses, and thus potentially lower employment and a decline in profits, but also in a decrease in U.S. competitiveness. Foreign multinationals operating in the United States act in ways that are similar to U.S. multinationals in America. Table 7-1 shows that in terms of paying their employees and the value added per employee, these two types of multinationals are roughly the same. TABLE l-l.—Parents of U.S. Multinational Corporations vs. U.S. Affiliates of Foreign Multinational Corporations: U.S. Operations in 1988 [Dollars] Parents of U.S. multinationals U.S. affiliates of foreign multinationals Average compensation per employee 33154 30517 Gross product per employee1 54229 47117 U.S. intrafirm exports per employee 4491 6,637 U.S. intrafirm imports per employee 3,777 31,045 1 Data are for 1987. Sources: Department of Commerce and Council of Economic Advisers. In the area of intrafirm trade, however, there are pronounced differences. U.S. affiliates of foreign multinationals export and import more per employee than U.S. multinationals operating in America. While the difference in export behavior is appreciable— exports per employee are 48 percent higher for U.S. affiliates of foreign multinationals than for parents of U.S. multinationals—the more than eightfold difference in import behavior is particularly striking. The difference in import behavior is explained in part by the fact that a significant number of the U.S. affiliates of foreign multinationals act primarily as wholesale marketing offices for their parent companies. The higher import propensity is also a nat- 260 ural outcome of the relative newness of foreign multinationals in the United States. When U.S. multinationals first set up in Europe during the 1950s and 1960s, they also tended to import more than local companies. Judging from history, it seems likely that foreign multinationals operating in America will tend to become more "local" with time. As Table 7-2 shows, the importance of imports in the input purchases of U.S. affiliates of foreign multinationals has been decreasing. Correspondingly, foreign multinationals are increasing the extent of vertical integration in their American operations, producing in the United States more of the inputs they use. Moreover, the local content of products made in the United States by foreign multinationals is quite high and has been rising. TABLE 1-2—Parents of U.S. Multinational Corporations and U.S. Affiliates of Foreign Multinational Corporations: Input Supply Choices, 1977 vs. 1987 [Percent] 1977 1987 Vertical integration (ratio of gross product to sales) Parents of U S multinationals. U.S. Affiliates of foreign multinationals 37 18 37 ?1 Import propensity in input purchases (ratio of imports to total purchase of inputs) Parents of u S. multinationals U S Affiliates of foreign multinationals 9 27 8 24 Local content (ratio of local inputs to sales) Parents of U.S. multinationals U.S Affiliates of foreign multinationals 95 79 W 81 Sources: Department of Commerce and Council of Economic Advisers. Although foreign direct investment in the United States has increased greatly in recent years, the involvement of foreign firms in America is low by international standards. Indeed, foreign multinationals account for only about 4 percent of U.S. jobs and business output. Moreover, the recent rise in foreign direct investment is not unique to the United States but part of the worldwide trend toward the international integration of markets and companies. Another visible manifestation of this trend is the rise in joint ventures, technology- and production-sharing arrangements, and other forms of international alliances. Such partnerships are found in many industries, such as medical equipment and computer chips. U.S. FOREIGN DIRECT INVESTMENT POLICY The complex linkages between trade flows and production operations of multinational corporations underscore the importance of not creating barriers to the free flow of foreign direct investment into the United States. Such barriers would subvert the natural forces of the global marketplace and reduce efficiency and growth. The benefits engendered by the global production and trade networks of modern multinational corporations point to the undesirability of devising policies aimed at restricting foreign investment. 261 Questions raised about what differentiates a "domestic" firm from a "foreign" firm, while conceptually interesting and important, distract from policy questions about how to maintain the strength and flexibility of the U.S. economy. The Administration supports maintaining an open foreign investment policy, with limited exceptions related to national security. This policy produces the greatest possible national benefits from all investments made in the U.S. economy. The United States has long recognized that unhindered international investment is beneficial to all nations, that it is a "positive sum game." The growing importance of foreign direct investment in the United States has raised concerns about the adequacy and quality of the Federal Government's statistics on foreign direct investment in the United States. The Foreign Direct Investment and International Financial Data Improvements Act, signed by the President in 1990, significantly upgrades government information on this score. Among other things, the new legislation provides for greater coordination among Federal statistical agencies in the collection, sharing, and assessment of data on foreign direct investment in the United States; permits analysis of such data at a more disaggregated level than was previously feasible; and requires the Secretary of Commerce to report annually on the role and significance of foreign direct investment in the United States. These improvements will be accomplished with no additional reporting requirements on businesses and by preserving the principle of nondisclosure of confidential information. SUMMARY • The 1990s are likely to be marked by greater global integration of the operations of multinational corporations as a result of increasing foreign direct investment. Concomitantly, the flow of international trade carried out by multinational corporations, especially intrafirm trade, is growing. • Foreign direct investment in the United States benefits the Nation by providing additional productive resources, thus helping to create jobs and increase productivity. U.S. direct investment abroad benefits the United States by enhancing the competitiveness of U.S. companies, by generating exports, and by contributing to the economic health of our trading partners. • U.S. affiliates of foreign multinational corporations operate very similarly to U.S.-based multinationals, except that they tend to export and import more. However, this pattern is typical of businesses of such young vintage, and over time this difference is expected to diminish. • Maintaining an open U.S. and multilateral foreign investment policy, one that results in the greatest possible benefits of in- 262 vestment without regard to the nationality of investors, remains an important U.S. economic policy objective. CONCLUSION International trade and investment have promoted growth and prosperity not only in the United States, but throughout the world. Although largely the product of natural economic forces, trade growth has also been encouraged by the reduction of trade barriers brought about by multilateral, bilateral, and regional market-opening initiatives. Multilateral market-opening talks organized by GATT have been instrumental in reducing trade barriers. Markets in the Western Hemisphere have also been opened by the U.S.Canada Free-Trade Agreement, and will be opened further if the proposed U.S.-Mexico free-trade agreement and the hemispherewide free-trade system envisioned in the President's Enterprise for the Americas Initiative are realized. In the Uruguay Round, the United States and other countries are seeking to extend, modernize, and reinforce GATT rules, and to reduce trade barriers further. Successful completion of the round and the continued openness of markets worldwide are important. A failure of the Uruguay Round might encourage protectionist pressures that could lead to rising trade barriers around the world. Just as falling trade and investment barriers stimulated growth in trade and incomes, a retreat away from open markets could decrease growth and prosperity. Indeed, if the resulting closing of markets were abrupt and severe enough, it could contribute to a worldwide recession. The expansion of trade is complemented by the greater globalization of corporations. Indeed, imports and exports between the parents of multinational corporations and their affiliates abroad now account for a significant portion of international trade flows. As a result, today's highly integrated world marketplace is one in which the benefits of trade are generated worldwide by rapid diffusion of new technologies, lower production costs, and greater product choice for consumers. The presence in the U.S. economy of multinational corporations—both U.S.-owned and foreign-owned—is in the Nation's interest. An important U.S. economic policy objective is to maintain open markets for both trade and foreign investment. 263 Appendix A REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE COUNCIL OF ECONOMIC ADVISERS DURING 1990 LETTER OF TRANSMITTAL COUNCIL OF ECONOMIC ADVISERS Washington, D.C., December 31, 1990 MR. PRESIDENT: The Council of Economic Advisers submits this report on its activities during the calendar year 1990 in accordance with the requirements of the Congress, as set forth in section 10(d) of the Employment Act of 1946 as amended by the Full Employment and Balanced Growth Act of 1978. Sincerely, Michael J. Boskin, Chairman Richard L. Schmalensee, Member John B. Taylor, Member 267 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 Ackley John P Lewis Otto Eckstein Arthur M Okun James S Duesenberry Merton J Peck Warren L Smith Paul W McCracken Hendrik S Houthakker Herbert Stein Ezra Solomon Marina v.N. Whitman Gary L Seevers William J Fellner Alan Greenspan Paul W MacAvoy Burton G Malkiel Charles L Schultze William D Nordhaus Lyle E. Gramley George C Eads Stephen M Goldfeld Murray L Weidenbaum William A. Niskanen Jerry L Jordan Martin Feldstein William Poole Beryl W. Sprinkel Thomas Gale Moore Michael L Mussa Michael J. Boskin John B. Taylor Richard L Schmalensee Oath of office date Position 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, 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 February 2 1989 June 9 1989 October 3 1989 Chairman Vice Chairman Acting Chairman Chairman Vice Chairman Member Member Chairman Member . ... Member Member Chairman Member Member Member Member Chairman Member Member Member Chairman Member Member Chairman Member Member Member Chairman Member Member Chairman Member Member Member Member Chairman Member Member Chairman Member Member .. Member Member Chairman Member Member Chairman Member Chairman Member Chairman .. .. Member Member 268 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 January 20, 1989. May 1, 1989 September 19 1988. Report to the President on the Activities of the Council of Economic Advisers During 1990 The mission of the President's Council of Economic Advisers, which was established by the Employment Act of 1946, is to provide the President with the best possible economic advice, to develop and recommend economic policies to the President, and to appraise programs and activities of the Federal Government as they pertain to the health of the Nation's economy. In addition to the Council's role in directly advising the President, the Council is represented, usually by the Chairman, at Cabinet meetings, meetings of the Economic Policy Council, the Domestic Policy Council, and the Council on Competitiveness, and at National Security Council meetings on issues of economic importance. Michael J. Boskin, Richard L. Schmalensee, and John B. Taylor, who comprised the Council at the end of 1989, continued to serve as Council Members in 1990, with Dr. Boskin continuing to serve as Chairman. Dr. Boskin is on a leave of absence from Stanford University, where he is the Burnet C. and Mildred Finley Wohlford Professor of Economics. Dr. Schmalensee is on a leave of absence from the Massachusetts Institute of Technology, where he is the Gordon Y Billard Professor of Economics and Management. Dr. Taylor is on a leave of absence from Stanford University, where he is Professor of Economics. As it did in 1989, the Council continued to stress the importance of maximizing sustainable economic growth to raise American living standards, setting ambitious but realistic long-term economic goals, and removing barriers to market forces. In its interactions with various outside groups—the Congress, the business community, international organizations, the press—as well as within the Administration, the Council continued to emphasize the Administration's fiscal, monetary, regulatory, and trade policy principles. This year's Report follows last year's Report in outlining these principles and showing how they are essential for maintaining strong economic growth and improved standards of living. MACROECONOMIC POLICIES The Council closely followed macroeconomic developments throughout the year, and emphasized the importance of credible, systematic fiscal and monetary policies as a key to mitigating the recession and ultimately sustaining maximum economic 269 growth.The Council briefed the President and participated in regular discussions on macroeconomic policy issues with the Department of the Treasury, the Office of Management and Budget (OMB), and other members of the President's economic team. The Council also regularly exchanged information and met with the Federal Reserve Board on monetary policy issues and the economic outlook. The Council and the other members of the "Troika"—Treasury and OMB—continued to produce the Administration's economic forecasts and projections. Usually two official forecasts are published each year: one at the start of the year, which is used as part of the President's budget, and one as part of the Mid-Session Review in July. The Troika's forecasting group is chaired by the Council. Dr. Boskin and Dr. Taylor testified on the forecasts before the Joint Economic Committee. In preparing its forecasts, the Troika continued the practice, initiated in 1989, of developing and publishing alternative sets of economic assumptions to indicate that the forecasts and resulting budget calculations have a considerable degree of uncertainty. The Council continued to work to improve the general understanding of economics and the quality of economic information through a comprehensive series of memoranda and briefing papers on economic events for the President and the White House Senior Staff, regular briefings for the White House press on major economic news, and meetings with outside economists, forecasters, financial analysts, and business people. The Chairman and the other Council Members appeared before numerous other organizations to explain the Administration's economic achievements, principles, policies, and outlook. Dr. Boskin continued to chair the Working Group on the Quality of Economic Statistics. Based on the report of the working group, the President approved a list of 25 recommendations for improving economic statistics. During 1990 the Council worked closely with the major Federal statistical agencies to implement these recommendations. The Council was one of the leading participants in the formulation of the Administration's saving and investment policies through various Cabinet and sub-Cabinet working groups. In testimony to the Congress and in talks to business and other groups, the Chairman and Council Members stressed the importance of raising national saving—by lowering the Federal budget deficit and removing barriers to private saving—to reduce the cost of capital to American firms, stimulate investment, foster research and development, and improve U.S. competitiveness, productivity growth, and standards of living. The Chairman and Council Members also 270 worked through various fora to educate the public and the Congress on the economic benefits of a lower capital gains tax rate. The Council was also active on a range of budget issues in 1990. As a member of the President's budget review group, the Chairman testified before a number of congressional committees on the economic assumptions used in the budget and on the importance to the economy of lowering the Federal budget deficit, altering the composition of spending more toward investment and research and development (R&D), and maintaining and improving the structure of incentives to work, save, invest, and innovate in the tax system. INTERNATIONAL ECONOMIC POLICIES International economic issues again occupied a substantial part of the Council's time during 1990. The Chairman and Council Members stressed the benefits of free trade and open markets for goods, services, and investment and the risk to world economic growth posed by rising protectionism. The Council participated in formulating Administration policy on the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), the proposed U.S.-Mexico free-trade agreement, the Enterprise for the Americas Initiative, and many other issues. The Council also participated in formulating Administration positions on legislation in the international area. The Council's involvement in forging the Administration's economic policy responses to the Iraqi invasion of Kuwait included participating in interagency studies on the economic effects of the oil shock and the Iraqi embargo on Eastern Europe and the "frontline" states, as well as consideration of Strategic Petroleum Reserve drawdown policy. During 1990 the Council's involvement in economic reform in Eastern Europe and the Soviet Union increased. Dr. Boskin was one of the three coordinators of U.S. Assistance to Eastern Europe, after serving as one of the leaders of the President's Mission to Poland when economic reforms were put in place in December 1989. The Chairman traveled to the Soviet Union, where he met with a broad range of high-level Soviet economic policymakers and advisers. He also chaired a working group on Soviet economic reform. Dr. Taylor followed up a trip to Poland in 1989 with two additional trips to Eastern Europe in 1990 to meet with and advise senior government officials in several newly democratic countries. Dr. Schmalensee also traveled to several countries in Eastern Europe as part of a Coordinators' Mission to discuss assistance needs with senior government officials. All three held numerous discussions in Washington with officials from Soviet and Eastern European governments. 271 Dr. Boskin traveled to Paris as part of the U.S. delegation to the Organization for Economic Cooperation and Development (OECD) Ministerial Meeting. He also chaired meetings of the OECD Economic Policy Committee. Dr. Taylor headed the U.S. delegation to the Economic and Development Review Committee at the OECD to assess U.S. economic policy. He was also a member of the U.S. delegation to the OECD Working Party 3 on macroeconomic policy coordination. Dr. Schmalensee headed the U.S. delegation to the OECD Working Party 1 meetings on microeconomic and structural issues and participated in an OECD meeting on integrating economic and environmental issues in preparation for the 1991 OECD Environment Ministerial Meeting. Dr. Taylor was a member of the U.S. negotiating team for the Structural Impediments Initiative with Japan, attending talks in Tokyo, Bern, Honolulu, Boston, and Washington. He testified before the Trade Subcommittee of the Senate Finance Committee and the International Economic Policy and Trade Subcommittee of the House Foreign Affairs Committee on U.S. trade policy. As part of the Uruguay Round, he co-chaired the GATT market access negotiations and was a Senior Adviser with the U.S. delegation during the week of talks in Brussels. Dr. Schmalensee traveled to Japan to meet with government officials and business leaders for discussions on a variety of economic issues. The Council provided the President and the White House Senior Staff with regular briefings and analytical materials on international developments, and participated in preparations for the Economic Summit in Houston. The Council also participated in discussions on a wide range of issues—including developing country debt, economic reform in Eastern Europe, and macroeconomic policy coordination—with other members of the Administration, the Federal Reserve, the World Bank, the International Monetary Fund, and representatives of other countries. The Council Members and the Council Senior Staff conducted numerous briefings on the U.S. economy for visiting officials and scholars. MICROECONOMIC POLICIES The Administration considered and proposed action this year on a wide range of microeconomic issues. In its work in this area, the Council repeatedly stressed that government regulation must pass careful cost-benefit tests and that where regulation is appropriate, it should be formulated to allow workers and firms maximum flexibility and to provide incentives to meet social goals in the least costly manner. The Council worked with other agencies to ensure that the newly enacted Clean Air Act to the maximum extent possible both balanced costs and benefits in protecting the environ- 272 ment and minimized the costs of regulation. The Council was also instrumental in ensuring that the Immigration Act, the Americans with Disabilities Act, and the Food, Agriculture, Conservation, and Trade Act were designed to achieve reforms in a more cost-effective manner. The Council emphasized these principles of promoting flexibility, enhancing incentives, balancing costs and benefits, and placing maximum reliance on the private sector in a wide range of policy areas, including the forthcoming National Energy Strategy, global climate change, cable television, telecommunications, antitrust, product liability, medical malpractice, and the regulatory oversight process led by OMB and the Council on Competitiveness. Dr. Schmalensee dealt with a wide range of environmental issues as a member of the Environmental Policy Review Group. He served on the Clean Air Strategy Group and participated in negotiations with the Senate leadership on the Clean Air Act. He was a member of the Global Change Strategy Group and the Task Force on Economic Costs. Dr. Schmalensee testified on energy and environmental matters before the Senate Committee on Energy and Natural Resources and its Subcommittee on Energy Research and Development. He served as Co-Chairman (with the Secretary of Energy) at a Department of Energy hearing on energy pricing in the forthcoming National Energy Strategy. Dr. Boskin co-chaired the White House Conference on Science and Economics Research Related to Global Change, and Dr. Schmalensee was a member of the U.S. delegation to the conference. The Council also participated in various interagency working groups to develop policies to aid the disadvantaged without destroying incentives and job opportunities. Dr. Schmalensee was a member of the Low Income Opportunity Board and the Economic Empowerment Task Force. PUBLIC INFORMATION The Chairman and Council Members regularly testify before the Congress, make public speeches, and hold briefings for the press. In addition, the Council produces two publications a year for the public. The Economic Report of the President is the principal medium through which the Council informs the public of its work and its views. It is an important vehicle for presenting the Administration's domestic and international economic policies. Annual distribution of the Report in recent years has averaged about 45,000 copies. The Council 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. 273 THE COUNCIL AND THE STAFF The Chairman is responsible for communicating the Council's views on economic developments to the President through personal discussions and written reports. The Chairman also represents the Council at daily White House Senior Staff meetings; at budget review group meetings with the President; and at many other formal and informal meetings with the President and White House Senior Staff, as well as with other senior government officials. The Chairman guides the work of the Council and exercises ultimate responsibility for directing the work of the professional staff. Members of the Council are responsible for the full range of issues within the Council's purview and for the direct supervision of the work of the professional staff. Members represent the Council at a wide variety of interagency and international meetings and assume major responsibility for selecting issues for Council attention. The small size of the Council permits the Chairman and the Members to work as a team on most policy issues. There is, however, an informal division of subject matter. Dr. Schmalensee is primarily responsible for microeconomic and sectoral analysis, including analyses of regulatory issues and foreign economies undergoing market restructuring. Dr. Taylor is primarily responsible for international trade, financial markets, and macroeconomic analysis, including economic projections. PROFESSIONAL STAFF The Council's advice to the President depends on the analytical and empirical studies of its professional staff. The Council has benefited from an exceptionally capable staff during 1990. The professional staff currently consists of a Special Assistant to the Chairman and Senior Staff Economist, a Staff Assistant to the Chairman, a Senior Statistician, 11 Senior Staff Economists, 6 Junior Staff Economists, and a Research Assistant. The professional staff and their respective areas of concentration at the end of 1990 were: 274 Special Assistant to the Chairman and Senior Staff Economist Harry G. Broadman International Trade and Investment, R&D, and Regulation Staff Assistant to the Chairman Stefanie J. Reiser Senior Staff Economists Richard E. Baldwin Nicole S. Ballenger Howard K. Gruenspecht Michael W. Horrigan Charles J. Jacklin Adam B. Jaffe Robert B. Kahn Peter F. Kostiuk Ralph M. Monaco John Karl Scholz James A. Wilcox International Trade Agriculture and International Trade Environment and Regulation Labor Markets and Quality of Statistics Financial Markets and Banking Regulation, Energy, and R&D International Finance, Eastern Europe, and the Soviet Union Labor Markets, Energy, and Health Macroeconomics and Forecasting Public Finance Monetary Policy and Macroeconomics Senior Statistician Catherine H. Furlong Junior Staff Economists Mark A. Condon Erik D. Craft Alison F. Del Rossi Brian J. Hall Arik M. Levinson Naomi S. Smith International Trade and Macroeconomics Banking, Public Finance, and Regulation Labor Markets, Environment, and Regulation Monetary Policy, Public Finance, and Macroeconomics Public Finance and Energy International Trade and Finance, Eastern Europe, and the Soviet Union Research Assistant Derek H. Utter Forecasting, Macroeconomics, and Energy 275 Philip J. Deutch (Stanford University) served as an intern during the fall of 1990. Andrew T. Levin (University of California, San Diego) served as a consultant during the fall of 1990. James G. Sununu (Stanford University) served as a Research Assistant during the summer of 1990. Omar N. Toulan, who served as a Research Assistant through the spring of 1990, accepted a position with McKinsey & Company, Inc. Mrs. Furlong is assisted in the operation of the Statistical Office by Natalie V. Rentfro, Linda A. Reilly, and Margaret L. Snyder. The Statistical Office maintains and updates the Council's statistical information system and is responsible for overseeing the publication of the Economic Indicators and the statistical appendix to the Economic Report of the President, as well as for the verification of statistics in memoranda, testimony, and speeches. Martha V. Gottron provided editorial assistance in the preparation of the 1991 Report. SUPPORTING STAFF The Administrative Office, which provides general support for the Council's activities, consists of Elizabeth A. Kaminski, Administrative Officer, and Catherine Fibich, Administrative Assistant. The Secretaries for the Council during 1990 were Alice H. Williams and Sandra F. Daigle (Secretaries to the Chairman), Lisa D. Branch (Secretary to Dr. Taylor), and Francine P. Obermiller (Secretary to Dr. Schmalensee). The Secretaries for the Council's staff were Mary E. Jones, Rosalind V. Rasin, Mary A. Thomas, and Janet J. Twyman. Lissa J. Rideout and David J. Kogut served as Student Assistants during the summer and winter of 1990. Dorothy Bagovich, Statistical Assistant, and Rebecca J. Hopkins, Student Assistant, assisted in the preparation of the 1991 Report. DEPARTURES J. Steven Landefeld, who served as Special Assistant to the Chairman, resigned in the summer of 1990 to accept a position with the Department of Commerce. Margot E. Machol, who served as Staff Assistant to the Chairman in the summer and fall of 1990, became a Member of the National Commission for Employment Policy. The Council's Senior Staff Economists, in most cases, are on leave of absence from faculty positions at academic institutions or from other government agencies or research institutions. Their tenure with the Council is usually limited to one or two years. Most of the Senior Staff Economists who resigned during 1990 returned to their previous affiliations. They are John M. Antle (Montana State University), Randi M. Boorstein (International Trade 276 Commission), Susan M. Collins (Harvard University), Brian F. Madigan (Board of Governors of the Federal Reserve System), Marc S. Robinson (General Motors), and William L. Wascher (Board of Governors of the Federal Reserve System). Others went on to new positions. They are Jeremy C. Stein (Massachusetts Institute of Technology), Rebecca M. Blank (Northwestern University), Douglas J. Holtz-Eakin (Syracuse University), and Peter M. Taylor (Senate Budget Committee). Staff Economists usually have just completed their dissertations and spend one year at the Council as additional preparation for their professional careers. Staff Economists in 1990 were S. Lael Brainard (Massachusetts Institute of Technology) and Barbara A. Claffey (Department of Agriculture). Junior Staff Economists generally are graduate students who spend one year with the Council and then return to school to complete their dissertations. Those who returned to their graduate studies in 1990 are: Janice C. Eberly (Massachusetts Institute of Technology), Elizabeth T. Powers (The Brookings Institution and the University of Pennsylvania), and David E. Weinstein (University of Michigan). Beth Anne Wilson, who served as a Research Assistant in 1990, began graduate studies at the Massachusetts Institute of Technology. Suzanne M. Tudor, Secretary to Dr. Taylor, resigned in 1990. 277 Appendix B STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION CONTENTS NATIONAL INCOME OR EXPENDITURE: B-l. B-2. B-3. B-4. B-5. B-6. B-7. B-8. B-9. B-10. B-ll. B-12. B-13. B-14. B-15. B-16. B-17. B-18. B-19. B-20. B-21. B-22. B-23. B-24. B-25. B-26. B-27. B-28. B-29. B-30. Gross national product, 1929-90 Gross national product in 1982 dollars, 1929-90 Implicit price deflators for gross national product, 1929-90 Fixed-weighted price indexes for gross national product, 1982 weights, 1959-90 Changes in gross national product, personal consumption expenditures, and related price measures, 1933-90 Gross national product by major type of product, 1929-90 Gross national product by major type of product in 1982 dollars, 1929-90 Gross national product by sector, 1929-90 Gross national product by sector in 1982 dollars, 1929-90 Gross national product by industry, 1947-88 Gross national product by industry in 1982 dollars, 1947-88 Gross domestic product of nonfinancial corporate business, 194090 Output, costs, and profits of nonfinancial corporate business, 1948-90 Personal consumption expenditures, 1940-90 Personal consumption expenditures in 1982 dollars, 1940-90 Gross and net private domestic investment, 1929-90 Gross and net private domestic investment in 1982 dollars, 192990 Inventories and final sales of business, 1946-90 Inventories and final sales of business in 1982 dollars, 1947-90 Foreign transactions in the national income and product accounts, 1929-90 Exports and imports of goods and services in 1982 dollars, 192990 Relation of gross national product, net national product, and national income, 1929-90 Relation of national income and personal income, 1929-90 National income by type of income, 1929-90 Sources of personal income, 1929-90 Disposition of personal income, 1929-90 Total and per capita disposable personal income and personal consumption expenditures in current and 1982 dollars, 1929-90 Gross saving and investment, 1929-90 Saving by individuals, 1946-90 Number and median income (in 1989 dollars) of families and persons, and poverty status, by race, 1970-89 281 286 288 290 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 314 316 317 318 319 320 POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY: 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, 1929-90 Population and the labor force, 1929-90 Civilian employment and unemployment by sex and age, 1947-90 Civilian employment by demographic characteristic, 1954-90 Unemployment by demographic characteristic, 1954-90 Labor force participation rate and employment/population ratio, 1948-90 Civilian labor force participation rate by demographic characteristic, 1954-90 Civilian employment/population ratio by demographic characteristic, 1954-90 Unemployment rate, 1948-90 Civilian unemployment rate by demographic characteristic, 1948-90 Unemployment by duration and reason, 1947-90 Unemployment insurance programs, selected data, 1955-90 Employees on nonagricultural payrolls, by major industry, 194690 Average weekly hours and hourly and weekly earnings in private nonagricultural industries, 1947-90 Employment cost index, private industry, 1975-90 Productivity and related data, business sector, 1947-90 Changes in productivity and related data, business sector, 194890 321 322 324 325 326 327 328 329 330 331 332 333 334 336 337 338 339 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, 1939-90.. Industrial production indexes, market groupings, 1947-90 Industrial production indexes, selected manufactures, 1947-90 Capacity utilization rates, 1948-90 New construction activity, 1929-90 New housing units started and authorized, 1959-90 Business expenditures for new plant and equipment, 1947-91 Manufacturing and trade sales and inventories, 1948-90 Manufacturers' shipments and inventories, 1947-90 Manufacturers' new and unfilled orders, 1947-90 340 341 342 343 344 346 347 348 349 350 Consumer price indexes, major expenditure classes, 1946-90 Consumer price indexes, selected expenditure classes, 1946-90 Consumer price indexes, commodities, services, and special groups, 1946-90 Changes in special consumer price indexes, 1958-90 Changes in consumer price indexes, commodities and services, 1929-90 Producer price indexes by stage of processing, 1947-90 Producer price indexes by stage of processing, special groups, 1974-90 Producer price indexes for major commodity groups, 1947-90 Changes in producer price indexes for finished goods, 1955-90 351 352 PRICES: B-58. B-59. B-60. B-61. B-62. B-63. B-64. B-65. B-66. 282 354 355 356 357 359 360 362 MONEY STOCK, CREDIT, AND FINANCE: 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, 1959-90 Components of money stock measures and liquid assets, 1959-90.. Aggregate reserves of depository institutions and monetary base, 1959-90 Commercial bank loans and securities, 1972-90 Bond yields and interest rates, 1929-90 Total funds raised in credit markets by nonfinancial sectors, 1981-90 Mortgage debt outstanding by type of property and of financing, 1939-90 Mortgage debt outstanding by holder, 1939-90 Consumer credit outstanding, 1950-90 363 364 366 367 368 370 372 373 374 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, 1929-92 Federal receipts, outlays, and debt, fiscal years 1981-92 Relation of Federal Government receipts and expenditures in the national income and product accounts to the budget, fiscal years 1990-92 Federal and State and local government receipts and expenditures, national income and product accounts, 1929-90 Federal and State and local government receipts and expenditures, national income and product accounts, by major type, 1940-90 Federal Government receipts and expenditures, national income and product accounts, 1969-92 State and local government receipts and expenditures, national income and product accounts, 1946-90 State and local government revenues and expenditures, selected fiscal years, 1927-89 Interest-bearing public debt securities by kind of obligation, 1967-90 Maturity distribution and average length of marketable interestbearing public debt securities held by private investors, 196790 Estimated ownership of public debt securities by private investors, 1976-90 375 376 378 379 380 381 382 383 384 385 386 CORPORATE PROFITS AND FINANCE: B-87. B-88. B-89. B-90. B-91. B-92. B-93. B-94. Corporate profits with inventory valuation and capital consumption adjustments, 1929-90 Corporate profits by industry, 1929-90 Corporate profits of manufacturing industries, 1929-90 Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-90 Relation of profits after taxes to stockholders' equity and to sales, all manufacturing corporations, 1947-90 Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-90 Common stock prices and yields, 1949-90 Business formation and business failures, 1946-90 283 387 388 389 390 391 392 393 394 AGRICULTURE: B-95. B-96. B-97. B-98. B-99. B-100. Farm income, 1929-90 Farm output and productivity indexes, 1947-90 Farm input use, selected inputs, 1947-89 Indexes of prices received and prices paid by farmers, 1948-90 U.S. exports and imports of agricultural commodities, 1940-90 Balance sheet of the farm sector, 1939-90 395 396 397 398 399 400 INTERNATIONAL STATISTICS: B-101. International investment position of the United States at yearend, 1982-89 B-102. U.S. international transactions, 1946-90 B-103. U.S. merchandise exports and imports by principal end-use category, 1965-90 B-104. U.S. merchandise exports and imports by area, 1981-90 B-105. U.S. merchandise exports, imports, and trade balance, 1970-90 B-106. International reserves, selected years, 1952-90 B-107. Industrial production and consumer prices, major industrial countries, 1962-90 B-108. Civilian unemployment rate, and hourly compensation, major industrial countries, 1962-90 B-109. Foreign exchange rates, 1967-90 B-110. Growth rates in real gross national product, 1961-90 284 401 402 404 405 406 407 408 409 410 411 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 from January 1990 through February 4,1991. 285 NATIONAL INCOME OR EXPENDITURE TABLE B-l.—Gross national product, 1929-90 [Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates] Gross private domestic investment Personal consumption expenditures Fixed investment Year or quarter 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 1988 1989 1990 p 1982- IV 1983: IV 1984- IV 1985: IV 1986- IV 1987: IV 1988: 1 || III IV 1989: 1 || III IV 1990: 1 || III IV ". Gross national product 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 4,014.9 4,231.6 4,515.6 4,873.7 5,200.8 5,463.0 3,212.5 3,545.8 3,851.8 4,107.9 4,297.3 4,647.6 4,735.8 4,831.4 4,917.9 5,009.8 5,101.3 5,174.0 5,238.6 5,289.3 5,375.4 5,443.3 5,514.6 5,518.9 Total 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 2,629.0 2,797.4 3,009.4 3,238.2 3,450.1 3,658.1 2,117.0 2,315.8 2,493.4 2,700.4 2,868.5 3,079.1 3,147.7 3,204.3 3,268.2 3,332.6 3,371.7 3,425.9 3,484.3 3,518.5 3,588.1 3,622.7 3,693.4 3,728.1 NonDurable durable Services goods goods 9.2 3.5 6.7 7.8 9.7 6.9 6.5 6.7 8.0 15.8 20.4 22.9 25.0 30.8 29.9 29.3 32.7 32.1 38.9 38.2 39.7 37.2 42.8 43.5 41.9 47.0 51.8 56.8 63.5 68.5 70.6 81.0 86.2 85.7 97.6 111.2 124.7 123.8 135.4 161.5 184.5 205.6 219.0 219.3 239.9 252.7 289.1 335.5 372.2 406.0 423.4 457.5 474.6 481.6 263.8 310.0 346.7 373.2 422.0 427.4 448.9 453.7 454.2 473.1 466.4 473.6 487.1 471.2 492.1 478.4 482.3 473.5 37.7 22.3 35.1 37.0 42.9 50.8 58.6 64.3 71.9 82.7 90.9 96.6 94.9 98.2 109.2 114.7 117.8 119.7 124.7 130.8 137.1 141.7 148.5 153.2 157.4 163.8 169.4 179.7 191.9 208.5 216.9 235.0 252.2 270.3 283.3 305.1 339.6 380.9 416.2 452.0 490.4 541.8 613.2 681.4 740.6 771.0 816.7 867.3 911.2 942.0 1,001.3 1,060.0 1,130.0 1,194.2 786.6 837.9 879.6 932.7 952.1 1,019.9 1,029.8 1,049.1 1,073.2 1,088.0 1,106.7 1,127.1 1,137.3 1,148.8 1,174.7 1,179.0 1205.0 1,218.3 30.4 20.1 25.2 26.2 28.3 31.0 34.3 37.2 39.7 45.4 50.6 55.5 58.4 63.2 69.0 75.1 82.1 88.0 94.3 101.6 108.5 115.7 125.0 134.0 141.8 151.1 160.6 172.8 185.4 200.3 216.0 236.4 259.4 284.0 310.7 341.3 373.0 411.9 461.2 515.9 582.3 656.1 734.6 831.9 934.7 1,027.0 1,128.7 1,227.6 1,345.6 1,449.5 1,584.7 1,720.7 1,845.5 1,982.3 1,066.5 1,167.9 1,267.1 1,394.5 1,494.4 1,631.8 1,668.9 1,701.5 1,740.7 1,771.5 1,798.6 1,825.1 1,859.8 1,898.5 1,921.3 1,965.3 2,006.2 2,036.3 286 Nonresidential Total 16.7 1.6 9.5 13.4 18.3 10.3 6.2 7.7 11.3 31.5 35.0 47.1 36.5 55.1 60.5 53.5 54.9 54.1 69.7 72.7 71.1 63.6 80.2 78.2 77.1 87.6 93.1 99.6 116.2 128.6 125.7 137.0 153.2 148.8 172.5 202.0 238.8 240.8 219.6 277.7 344.1 416.8 454.8 437.0 515.5 447.3 502.3 664.8 643.1 659.4 699.5 747.1 771.2 745.0 409.6 579.8 661.8 654.1 648.8 741.4 729.2 746.0 765.6 747.5 769.7 776.7 775.8 762.7 747.2 759.0 759.7 714.0 Total 14.9 3.1 9.1 11.2 13.8 8.5 6.9 8.7 12.3 25.1 35.5 42.4 39.5 48.3 50.2 50.5 54.5 55.7 64.0 68.0 69.7 65.1 74.4 75.1 74.7 81.5 87.3 94.2 106.2 114.4 115.4 129.1 143.4 145.7 164.7 191.5 219.2 225.4 225.2 261.7 322.8 388.2 441.9 445.3 491.5 471.8 509.4 597.1 631.8 652.5 671.2 720.8 742.9 747.2 469.5 548.8 616.8 646.8 660.9 685.7 700.8 723.8 727.4 731.3 743.1 744.0 746.9 737.7 758.9 745.6 750.7 733.6 Total 11.0 2.5 6.1 7.7 9.7 6.3 5.4 7.4 10.6 17.3 23.5 26.8 24.9 27.8 31.8 31.9 35.1 34.7 39.0 44.5 47.5 42.4 46.3 48.8 48.3 52.5 55.2 61.4 73.1 83.5 84.4 91.4 102.3 105.2 109.6 123.0 145.9 160.6 162.9 180.0 214.2 259.0 302.8 322.8 369.2 366.7 356.9 416.0 442.9 435.2 444.9 488.4 511.9 524.3 354.9 383.9 435.0 451.3 435.8 457.5 473.1 491.3 493.8 495.3 506.5 511.4 518.1 511.8 523.1 516.5 532.8 525.0 Structures 5.5 1.1 2.2 2.6 3.3 2.2 1.8 2.4 3.3 7.4 8.1 9.5 9.2 10.0 11.9 12.2 13.6 13.9 15.2 18.2 18.9 17.5 18.0 19.2 19.4 20.5 20.8 22.7 27.4 30.5 30.7 32.9 37.1 39.2 40.9 44.5 51.4 57.0 56.3 60.1 66.7 81.0 99.5 113.9 138.5 143.3 124.0 141.1 153.2 139.0 133.7 139.9 146.2 147.2 137.6 127.4 146.6 155.9 133.7 137.2 135.5 140.8 142.2 141.2 146.5 144.2 147.0 147.1 148.8 147.2 149.8 142.8 Producers' Residurable dential 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 94.5 103.6 106.6 119.9 147.4 178.0 203.3 208.9 230.7 223.4 232.8 274.9 289.7 296.2 311.2 348.4 365.7 377.2 217.3 256.5 288.4 295.5 302.2 320.4 337.6 350.5 351.6 354.0 360.0 367.2 371.0 364.7 374.3 369.3 383.0 382.2 4.0 .6 3.0 3.5 4.1 2.2 1.4 1.4 1.7 7.8 12.1 15.6 14.6 20.5 18.4 18.6 19.4 21.1 25.0 23.5 22.2 22.7 28.1 26.3 26.4 29.0 32.1 32.8 33.1 30.9 31.1 37.7 41.2 40.5 55.1 68.6 73.3 64.8 62.3 81.7 108.6 129.2 139.1 122.5 122.3 105.1 152.5 181.1 188.8 217.3 226.3 232.5 231.0 222.9 114.7 164.9 181.8 195.5 225.1 228.1 227.7 232.6 233.6 236.0 236.6 232.7 228.9 225.9 235.9 229.1 217.9 208.6 Change in business inventories 1.7 -1.6 2.2 4.5 1.8 -~LO -1.0 6.4 ~4J -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 11.3 6.9 28.3 26.2 28.3 -2.2 -59.9 31.0 45.0 7.2 -12.2 55.7 28.3 22.2 38.2 16.2 26.6 32.7 28.9 25.0 -11.8 13.4 9.0 -19.5 TABLE B-l.—Gross national product, 1929-90—Continued [Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates] Net exports of goods and services Year or quarter 1929 1933 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 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 1988 1989 1990 ' 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: 1 II Ill IV 1989: 1 II Ill IV 1990: 1 II Ill IV " Government purchases of goods and services Federal Net exports Exports Imports 1.1 .4 1.2 1.8 1.5 .2 -1.9 -1.7 7.8 11.9 7.0 6.5 2.2 4.5 3.2 1.3 2.6 3.0 5.3 7.3 3.3 1.5 5.9 7.2 6.9 8.2 10.9 9.7 7.5 7.4 5.5 5.6 8.5 6.3 3.2 16.8 16.3 31.1 18.8 1.9 4.1 18.8 32.1 33.9 26.3 -6.1 -58.9 -78.0 -97.4 -114.7 -74.1 -46.1 -38.0 14.1 -25.8 -67.9 -103.2 -108.9 -115.0 -82.0 -74.3 -69.6 -70.3 -48.5 -51.3 -49.3 -35.3 -30.0 -24.9 -41.3 -55.9 7.1 2.4 4.6 5.4 6.1 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 31.1 33.1 35.7 40.5 42.9 46.6 49.5 54.8 60.4 68.9 72.4 81.4 114.1 151.5 161.3 177.7 191.6 227.5 291.2 351.0 382.8 361.9 352.5 383.5 370.9 396.5 449.6 552.0 626.2 670.4 335.9 364.7 385.7 369.2 402.4 485.8 525.7 540.4 558.7 583.1 609.7 628.8 623.7 642.8 661.3 659.7 672.7 687.7 5.9 2.1 3.4 3.7 4.7 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 42.1 49.3 54.7 60.5 66.1 78.2 97.3 135.2 130.3 158.9 189.7 223.4 272.5 318.9 348.9 335.6 358.7 442.4 448.9 493.8 564.3 626.1 672.3 708.4 321.9 390.5 453.6 472.4 511.3 600.7 607.8 614.7 628.3 653.5 658.2 680.0 673.0 678.1 691.3 684.6 714.1 743.7 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 97.9 100.6 108.4 118.2 123.8 130.0 138.6 158.6 179.7 197.7 207.3 218.2 232.4 250.0 266.5 299.1 335.0 356.9 387.3 425.2 467.8 530.3 588.1 641.7 675.0 735.9 820.8 872.2 921.4 962.5 1,025.6 1,098.0 671.8 676.1 764.5 856.7 888.9 942.0 940.9 955.4 953.8 1,000.0 1,008.5 1,022.7 1,027.8 1,043.3 1,070.1 1,086.4 1,102.8 1,132.7 Total 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 99.8 105.8 106.4 116.2 129.2 136.3 151.1 161.8 178.0 208.1 242.2 272.7 283.5 310.5 355.2 366.5 381.3 380.3 400.0 424.2 293.2 276.1 326.0 376.6 368.8 388.2 374.8 377.7 367.4 401.1 398.3 402.5 399.2 399.9 410.6 421.9 425.8 438.5 Nation- Nonal dedefense fense 1.3 2.3 13.8 49.4 79.8 87.5 73.7 16.4 10.0 11.3 13.9 14.3 33.8 46.2 49.0 41.6 39.0 40.7 44.6 46.3 46.4 45.3 47.9 52.1 51.5 50.4 51.0 62.0 73.4 79.1 78.9 76.8 74.1 77.4 77.5 82.6 89.6 93.4 100.9 108.9 121.9 142.7 167.5 193.8 214.4 234.3 259.1 277.8 294.6 297.2 301.1 314.0 205.4 221.5 244.1 268.6 280.7 296.0 296.6 297.1 295.5 299.6 298.2 300.6 306.3 299.2 307.2 309.6 312.6 326.5 3.9 3.9 3.2 2.6 1.6 2.0 1.1 2.8 3.6 6.0 7.2 4.7 4.8 6.5 8.9 6.8 6.0 5.7 5.9 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 39.6 42.9 50.3 52.9 56.1 65.4 74.8 78.9 69.1 76.2 96.0 88.7 86.7 83.1 98.9 110.2 87.7 54.6 81.9 108.0 88.1 92.2 78.3 80.6 71.9 101.6 100.1 101.9 93.0 100.7 103.4 112.3 113.2 112.0 State and local 7.4 6.1 8.3 8.1 8.0 7.8 7.5 7.6 8.2 9.9 12.8 15.3 18.0 19.8 21.8 23.1 24.8 27.7 30.3 33.3 36.9 40.8 43.3 46.1 50.2 53.5 58.1 63.5 69.9 78.2 87.0 97.6 107.2 119.4 132.5 144.2 160.1 182.9 205.9 220.6 236.2 263.4 289.9 322.2 345.9 369.0 391.5 425.3 465.6 505.7 540.2 582.3 625.6 673.8 378.7 400.0 438.5 480.1 520.1 553.9 566.1 577.7 586.4 598.9 610.2 620.2 628.6 643.4 659.6 664.6 677.0 694.2 Final sales 102.2 57.6 90.9 98.3 121.0 157.2 193.4 212.3 214.4 206.0 235.7 256.9 263.4 281.4 323.2 348.6 371.1 374.1 400.2 423.6 449.6 458.3 490.0 512.3 531.4 568.5 601.1 644.4 695.2 757.8 806.1 884.8 954.1 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 4,003.6 4,224.8 4,487.3 4,847.5 5,172.5 5,465.3 3,272.4 3,514.8 3,806.8 4,100.7 4,309.4 4,591.9 4,707.4 4,809.2 4,879.7 4,993.6 5,074.7 5,141.3 5,209.7 5,264.3 5,387.2 5,429.9 5,505.6 5,538.4 Gross domestic purchases 1 102.8 55.7 90.1 98.7 124.1 158.8 194.6 213.0 213.9 204.5 223.3 254.7 253.8 286.0 329.0 348.4 370.3 370.0 402.9 422.9 443.7 453.5 494.3 509.4 526.6 567.7 598.7 638.9 695.4 764.5 809.0 887.2 958.3 1,007.0 1,096.4 1,209.6 1,342.5 1,456.5 1,567.4 1,764.0 1,988.6 2,245.6 2,489.4 2,699.8 3,018.7 3,139.7 3,411.8 3,831.1 4,092.8 4,329.0 4,630.3 4,947.8 5,246.9 5,501.1 3,198.5 3,571.6 3,919.7 4,211.2 4,406.2 4,762.6 4,817.8 4,905.7 4,987.5 5,080.1 5,149.8 5,225.3 5,287.9 5,324.6 5,405.3 5,468.2 5,555.9 5,574.8 1 Gross national product (GNP) less exports of goods and services plus imports of goods and services. Source: Department of Commerce, Bureau of Economic Analysis. 287 Percent change from preceding period Gross national product -4.2 7.0 10.0 25.0 26.6 21.2 9.7 .9 -.5 10.8 11.2 10.7 15.7 5.5 5.7 .2 9.0 5.5 5.3 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 6.4 5.4 6.7 7.9 6.7 5.0 4.2 12.4 4.7 6.2 4.2 8.7 7.8 8.3 7.4 7.7 7.5 5.8 5.1 3.9 6.7 5.1 5.3 .3 Final sales -5.5 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 5.8 6.1 1.9 6.9 4.6 3.7 7.0 5.7 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 8.1 5.5 6.2 8.0 6.7 5.7 11.0 7.8 7.0 5.5 4.7 4.5 10.4 8.9 6.0 9.7 6.7 5.4 5.4 4.3 9.7 3.2 5.7 2.4 Gross domestic .P«r- l chases f -4.2 7.3 9.5 25.7 28.0 22.6 9.5 .4 -4.4 9.2 14.0 12.7 15.0 5.9 6.3 l!9 5.0 4.9 2.2 9.0 3.1 3.4 7.8 5.5 6.7 8.8 9.9 5.8 9.7 8.0 5.1 8.9 10.3 11.0 8.5 7.6 12.5 12.7 12.9 10.9 8.5 11.8 4.0 8.7 12.3 6.8 5.8 7.0 6.9 6.0 4.8 4.3 13.1 5.5 8.3 4.9 8.1 4.7 7.5 6.8 7.6 5.6 6.0 4.9 2.8 6.2 4.7 6.6 1.4 TABLE B-2.—Gross national product in 1982 dollars, 1929-90 [Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates] Personal consumption expenditures 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 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 1988 1989 1990 * 1982- IV 1983: IV 1984: IV 1985: IV 1986- IV 1987: IV 1988: 1 II Ill IV 1989: 1 II Ill IV 1990: 1 II Ill IV * Gross national product 709.6 498.5 716.6 772.9 909.4 1,080.3 1,276.2 1,380.6 1,354.8 1,096.9 1,066.7 1,108.7 1,109.0 1,203.7 1,328.2 1,380.0 1,435.3 1,416.2 1,494.9 1,525.6 1,551.1 1,539.2 1,629.1 1,665.3 1,708.7 1,799.4 1,873.3 1,973.3 2,087.6 2,208.3 2,271.4 2,365.6 2,423.3 2,416.2 2,484.8 2,608.5 ! 2,744.1 2,729.3 2,695.0 2,826.7 2,958.6 3,115.2 3,192.4 3,187.1 3,248.8 3,166.0 3,279.1 3,501.4 3,618.7 3,717.9 3,845.3 4,016.9 4,117.7 4,155.8 3,159.3 3,365.1 3,535.2 3,662.4 3,733.6 3,920.7 3,970.2 4,005.8 4,032.1 4,059.3 4,095.7 4,112.2 4,129.7 4,133.2 4,150.6 4,155.1 4,170.0 4,147.6 Change in busiProResiness ducers' dential invendurable tories equipment Nonresidential Total 471.4 378.7 480.5 502.6 531.1 527.6 539.9 557.1 592.7 655.0 666.6 681.8 695.4 733.2 748.7 771.4 802.5 822.7 873.8 899.8 919.7 932.9 979.4 1,005.1 1,025.2 1,069.0 1,108.4 1,170.6 1,236.4 1,298.9 1,337.7 1,405.9 1,456.7 1,492.0 1,538.8 1,621.9 1,689.6 1,674.0 1,711.9 1,803.9 1,883.8 1,961.0 2,004.4 2,000.4 2,024.2 2,050.7 2,146.0 2,249.3 2,354.8 2,446.4 2,515.8 2,606.5 2,656.8 2,682,2 2,078.7 2,191.9 2,281.1 2,386.9 2478 ,7. 2,534.2 2,576.8 2,594.1 2,616.4 2,638.8 2,636.7 2,645.3 2,675.3 2,669.9 2,677.3 2,678.8 2,696.8 2,675.8 NonDurable durable Services goods goods 40.3 20.7 35.7 40.6 46.2 31.3 28.1 26.3 28.7 47.8 56.5 61.7 67.8 80.7 74.7 73.0 80.2 81.5 96.9 92.8 92.4 86.9 96.9 98.0 93.6 103.0 111.8 120.8 134.6 144.4 146.2 161.6 167.8 162.5 178.3 200.4 220.3 204.9 205.6 232.3 253.9 267.4 266.5 245.9 250.8 252.7 283.1 323.1 355.1 384.4 391.4 418.2 428.0 428.4 262.0 300.5 333.1 356.4 397.5 392.6 412.4 416.2 415.1 429.0 422.4 428.2 438.1 423.1 437.6 426.8 429.5 419.9 211.4 181.8 248.0 259.4 275.6 279.1 284.7 297.9 323.5 344.2 337.4 338.7 342.3 352.8 362.9 376.6 388.2 393.8 413.2 426.9 434.7 439.9 455.8 463.3 470.1 484.2 494.3 517.5 543.2 569.3 579.2 602.4 617.2 632.5 640.3 665.5 683.2 666.1 676.5 708.8 731.4 753.7 766.6 762.6 764.4 771.0 800.2 825.9 847.4 878.1 892.7 909.4 919.9 911.5 778.6 812.7 831.2 858.3 883.5 895.2 900.9 905.3 914.4 917.1 918.5 914.6 923.4 923.0 915.6 911.2 916.4 902.8 Total 219.7 176.2 196.7 202.7 209.3 217.2 227.2 232.9 240.5 262.9 272.6 281.4 285.3 299.8 311.1 321.9 334.1 347.4 363.6 380.1 392.6 406.1 426.7 443.9 461.4 481.8 502.3 532.3 558.5 585.3 612.3 641.8 671.7 697.0 720.2 756.0 786.1 803.1 829.8 862.8 898.5 939.8 971.2 991.9 1,009.0 1,027.0 1,062.7 1,100.3 1,152.3 1,183.8 1,231.6 1,278.9 1,309.0 1,342.2 1,038.1 1,078.6 1,116.8 1,172.2 1,196.8 1,246.4 1,263.5 1,272.6 1,286.8 1,292.8 1,295.8 1,302.5 1,313.8 1,323.8 1,324.2 i.340.8 1,350.8 1,353.1 See next page for continuation of table. 288 Total Total 139.2 22.7 86.0 111.8 138.8 76.7 50.4 56.4 76.5 178.1 177.9 208.2 168.8 234.9 235.2 211.8 216.6 212.6 259.8 257.8 243.4 221.4 270.3 260.5 259.1 288.6 307.1 325.9 367.0 390.5 374.4 391.8 410.3 381.5 419.3 465.4 520.8 481.3 383.3 453.5 521.3 576.9 575.2 509.3 545.5 447.3 504.0 658.4 637.0 639.6 669.0 705.7 716.9 690.3 408.8 577.2 655.7 648.0 615.2 706.6 698.4 705.1 723.0 696.2 717.0 719.1 722.3 709.1 700.7 700.7 697.0 662.8 128.4 33.5 82.1 97.4 111.1 64.7 49.7 61.6 84.9 150.2 178.9 196.0 178.4 210.8 204.3 201.8 213.8 217.3 243.5 244.9 240.4 224.8 253.8 252.7 251.8 272.4 290.5 310.2 341.8 353.7 345.6 370.7 385.1 373.3 399.7 443.7 480.8 448.0 396.1 431.4 492.2 540.2 560.2 516.2 521.7 471.8 510.4 596.1 627.9 634.1 646.2 682.1 693.1 691.4 468.1 550.3 614.0 640.4 636.0 658.1 667.4 688.3 690.4 682.2 690.9 693.6 697.7 690.2 702.9 691.2 692.3 679.1 93.0 25.8 53.2 65.0 76.6 47.4 39.4 52.6 74.2 105.5 121.7 127.4 114.8 124.0 131.7 130.6 140.1 137.5 151.0 160.4 161.1 143.9 153.6 159.4 158.2 170.2 176.6 194.9 227.6 250.4 245.0 254.5 269.7 264.0 258.4 277.0 317.3 317.8 281.2 290.6 324.0 362.1 389.4 379.2 395.2 366.7 361.2 425.2 453.5 438.4 449.8 487.2 506.1 513.9 352.3 390.4 444 4. 460.9 435.7 462.3 475.0 492.6 494.6 486.6 497.1 505.5 513.3 508.4 514.6 508.4 519.3 513.2 Structures 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 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 87.9 101.8 108.0 105.4 108.0 112.9 111.1 107.3 109.5 117.7 115.2 102.8 104.4 108.3 119.3 130.6 136.2 148.8 143.3 127.2 143.8 149.5 130.1 122.8 122.4 122.4 121.0 138.3 131.6 147.1 149.9 123.4 124.4 121.0 123.9 123.8 121.0 123.2 120.6 122.7 123.1 123.8 120.9 122.4 117.0 38.4 11.5 28.0 36.5 43.2 26.5 23.8 32.1 47.2 54.7 74.2 76.9 65.5 71.2 75.2 73.3 77.7 72.7 81.7 84.9 85.9 73.3 81.7 83.3 80.5 88.9 95.1 107.0 125.8 142.4 139.6 146.5 156.8 152.9 151.0 167.5 199.6 202.7 178.4 186.2 215.7 242.8 258.8 243.0 246.4 223.4 233.9 281.4 304.0 308.3 327.0 364.8 383.7 392.9 214.1 258.8 297.3 311.1 312.3 337.9 353.9 368.8 370.8 365.6 374.0 384.9 390.6 385.4 390.8 387.5 397.0 396.3 35.4 7.7 28.9 32.5 34.4 17.3 10.4 9.0 10.7 44.7 57.2 68.6 63.6 86.7 72.6 71.2 73.8 79.8 92.4 84.4 79.3 81.0 100.2 93.3 93.6 102.2 113.9 115.3 114.2 103.2 100.6 116.2 115.4 109.3 141.3 166.6 163.4 130.2 114.9 140.8 168.1 178.0 170.8 137.0 126.5 105.1 149.3 170.9 174.4 195.7 196.4 194.9 187.0 177.5 115.8 159.9 169.6 179.4 200.3 195.8 192.4 195.6 195.8 195.6 193.8 188.1 184.4 181.8 188.3 182.8 173.0 165.9 10.8 -10.7 3.9 14.4 27.8 12.0 .7 -5.2 -8.4 27.9 -1.0 12.3 -9.7 24.2 30.8 10.0 2.8 -4.8 16.3 12.9 3.0 34 16.5 7.7 7.3 16.2 16.6 15.7 25.2 36.9 28.8 21.0 25.1 8.2 19.6 21.8 40.0 33.3 -12.8 22.1 29.1 36.8 15.0 -6.9 23.9 -24.5 -6.4 62.3 9.1 5.6 22.8 23.6 23.8 -1.1 593 27.0 41.7 7.7 208 48.4 31.0 16.9 32.6 14.0 26.1 25.5 24.6 18.9 -2.2 9.5 4.7 -16.3 TABLE B-2.—Gross national product in 1982 dollars, 1929-90—Continued [Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates] Net exports of goods and services Year or quarter Federal Net exports Exports Imports Total 4.7 1929 14 1933 1939 6.1 1940 8.2 1941 3.9 -7.7 1942 1943 -23.0 1944 -23.8 1945 -18.9 1946 27.0 1947 42.4 1948 19.2 1949 18.8 4.7 1950 1951 14.6 1952 6.9 1953 -2.7 2.5 1954 1955 .0 1956 ,. 4.3 1957 7.0 103 1958 1959 -18.2 1960 -4.0 1961 -2.7 1962 -7.5 1963 -1.9 1964 5.9 1965 -2.7 1966 137 1967 -16.9 1968 297 1969 -34.9 1970 -30.0 1971 -39.8 1972 -49.4 1973 -31,5 1974 .8 1975 18.9 1976 -11.0 1977 -35.5 1978 -26.8 1979 3.6 1980 57.0 49.4 1981 1982 26.3 1983 -19.9 1984 -84.0 1985 -104.3 1986 -129.7 1987 -118.5 1988 -75.9 1989 -54.1 1990 ". -37.5 1982: IV 11.7 1983: IV -46.2 1984: IV -94.8 1985: IV -125.3 1986: IV -135.4 1987: IV -111.3 1988:1 -77.3 II . -72.2 Ill -78.5 IV -75.7 1989:1 -51.1 II -53.3 Ill -64.1 IV -47.9 1990-1 .. -35.4 II -44.6 Ill -46.5 IV" -23.6 42.1 22.7 36.2 40.0 42.0 29.1 25.1 27.3 35.2 69.0 82.3 66.2 65.0 59.2 72.0 70.1 66.9 70.0 76.9 87.9 94.9 82.4 83.7 98.4 100.7 106.9 114.7 128.8 132.0 138.4 143.6 155.7 165.0 178.3 179.2 195.2 242.3 269.1 259.7 274.4 281.6 312.6 356.8 388.9 392.7 361.9 348.1 371.8 367.2 397.1 451.8 534.7 593.3 630.3 336.0 355.5 376.6 367.4 406.5 487.0 521.7 527.3 534.3 555.3 576.1 593.2 592.5 611.6 628.1 620.1 630.5 642.4 37.4 24.2 30.1 31.7 38.2 36.9 48.0 51.1 54.1 42.0 39.9 47.1 46.2 54.6 57.4 63.3 69.7 67.5 76.9 83.6 87.9 92.8 101.9 102.4 103.3 114.4 116.6 122.8 134.7 152.1 160.5 185.3 199.9 208.3 218.9 244.6 273.8 268.4 240.8 285.4 317.1 339.4 353.2 332.0 343.4 335.6 368.1 455.8 471.4 526.9 570.3 610.6 647.4 667.8 324.3 401.6 471.4 492.6 541.9 598.3 599.0 599.5 612.8 631.0 627.3 646.5 656.6 659.4 663.5 664.7 677.0 666.0 94.2 98.5 144.1 150.2 235.6 483.7 708.9 790.8 704.5 236.9 179.8 199.5 226.0 230.8 329.7 389.9 419.0 378.4 361.3 363.7 381.1 395.3 397.7 403.7 427.1 449.4 459.8 470.8 487.0 532.6 576.2 597.6 591.2 572.6 566.5 570.7 565.3 573.2 580.9 580.3 589.1 604.1 609.1 620.5 629.7 641.7 649.0 677.7 731.2 761.6 779.1 780.5 798.1 820.8 660.1 642.2 693.2 752.7 776.0 791.3 772.4 778.7 771.2 799.9 793.2 801.0 796.2 802.2 807.9 820.2 822.7 832.5 Total 18.3 27.0 53.8 63.6 153.0 407.1 638.1 722.5 634.0 159.3 91.9 106.1 119.5 116.7 214.4 272.7 295.9 245.0 217.9 215.4 224.1 224.9 221.5 220.6 232.9 249.3 247.8 244.2 244.4 273.8 304.4 309.6 295.6 268.3 250.6 246.0 230.0 226.4 226.3 224.2 231.8 233.7 236.2 246.9 259.6 272.7 275.1 290.8 326.0 334.1 339.6 328.1 334.9 344.0 289.5 266.0 300.5 340.6 342.4 347.7 324.5 327.3 318.4 342.3 334.2 339.9 333.0 332.7 333.0 345.9 346.0 351.1 Nation- Nonal dedefense fense 185.3 171.0 163.3 161.1 157.5 159.2 160.7 164.3 171.2 180.3 193.8 206.9 218.5 237.2 252.1 265.1 260.7 256.3 259.1 201.4 211.6 225.3 241.4 255.8 266.0 262.2 261.3 258.0 261.1 253.7 255.7 260.2 255.5 254.4 256.5 258.2 267.4 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 88.8 82.0 74.5 67.5 78.7 84.9 88.2 54.4 75.2 99.2 86.6 81.7 62.3 66.0 60.4 81.2 80.4 84.2 72.8 77.2 78.6 89.4 87.8 83.6 State and local 75.9 71.5 90.3 86.6 82.6 76.7 70.8 68.3 70.5 77.6 87.9 93.4 106.5 114.2 115.4 117.3 123.1 133.4 143.4 148.3 157.0 170.4 176.2 183.1 194.2 200.1 212.0 226.6 242.5 258.8 271.8 288.0 295.6 304.3 315.9 324.7 335.3 346.8 354.6 356.0 357.2 370.4 373.0 373.6 370.1 369.0 373.9 387.0 405.2 427.5 439.5 452.4 463.2 476.8 370.6 376.2 392.7 412.1 433.6 443.6 447.9 451.4 452.7 457.5 459.0 461.1 463.2 469.5 475.0 474.3 476.7 481.4 1 GNP less exports of goods and services plus imports of goods and services. Source: Department of Commerce, Bureau of Economic Analysis. Percent change from preceding period Government purchases of goods and services 289 Final sales 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 3,609.6 3,712.4 3,822.5 3,993.2 4,094.0 4,156.9 3,218.6 3,338.1 3,493.5 3,654.7 3,754.4 3,872.3 3,939.2 3,988.9 3,999.5 4,045.2 4,069.6 4,086.6 4,105.1 4,114.4 4,152.8 4,145.6 4,165.3 4,163.9 Gross domestic purchases 1 Gross national product 704.9 21 499.9 710.5 7.9 764.6 7.8 905.5 17.7 1,088.0 18.8 1,299.2 18.1 1,404.3 8.2 1,373.7 -1.9 1,069.9 -19.0 1,024.3 -2.8 1,089.5 3.9 1,090.2 .0 1,199.0 8.5 10.3 1,313.6 1,373.1 3.9 4.0 1,438.0 1,413.7 13 1,494.9 5.6 1,521.3 2.1 1.7 1,544.2 1,549.6 -.8 1,647.3 5.8 2.2 1,669.3 2.6 1,711.3 1,807.0 5.3 4.1 1,875.3 1,967.3 5.3 2,090.3 5.8 2,222.1 5.8 2.9 2,288.3 4.1 2,395.3 2.4 2,458.1 2,446.2 -.3 2,524.6 2.8 5.0 2,658.0 2,775.7 5.2 2,728.5 -.5 -1.3 2,676.1 2,837.7 4.9 2,994.1 4.7 3,142.0 5.3 2.5 3,188.8 -.2 3,130.1 3,199.4 1.9 3,139.7 -2.5 3,299.1 3.6 3,585.4 6.8 3.4 3,723.0 2.7 3,847.6 3.4 3,963.8 4.5 4,092.8 2.5 4,171.8 4,193.3 .9 .6 3,147.6 3,411.3 7.3 1.7 3,630.0 3,787.6 3.0 3,869.0 2.3 4,032.0 6.6 4,047.6 5.1 3.6 4,077.9 2.7 4,110.6 2.7 4,134.9 4,146.8 3.6 4,165.4 1.6 1.7 4,193.9 .3 4,181.1 1.7 4,185.9 .4 4,199.7 1.4 4,216.5 4,171.1 -2.1 Final sales 31 6.3 6.4 16.2 21.2 19.4 8.6 -1.6 216 -.1 2.7 2.0 5.4 10.0 5.6 4.6 -.8 4.1 2.3 2.3 -.4 4.5 2.8 2.6 4.8 4.1 5.4 5.4 5.3 3.3 4.5 2.3 .4 2.4 4.9 4.5 A 3.6 4.5 5.1 3.2 .5 1.0 -1.1 3.0 4.7 5.0 2.8 3.0 4.5 2.5 1.5 7.1 3.8 4.0 1.6 3.9 2.3 7.1 5.1 1.1 4.6 2.4 1.7 1.8 .9 3.8 -.7 1.9 Gross domestic purchases 1 19 7.9 7.6 18.4 20.1 19.4 8.1 -2.2 -22.1 -4.3 6.4 .1 10.0 9.6 4.5 4.7 -1.7 5.7 1.8 1.5 .4 6.3 1.3 2.5 5.6 3.8 4.9 6.3 6.3 3.0 4.7 2.6 -.5 3.2 5.3 4.4 17 -1.9 6.0 5.5 4.9 1.5 -1.8 2.2 -1.9 5.1 8.7 3.8 3.3 3.0 3.3 1.9 .5 .6 8.6 2.7 4.8 1.5 5.1 1.6 3.0 3.2 2.4 1.2 1.8 2.8 -1.2 .5 1.3 1.6 -4.2 TABLE B-3.—Implicit price deflators for gross national product, 7929-90 [Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted] Gross private domestic investment1 Personal consumption expenditures 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 1980 1981 1982 1983 1984 1985 1986 1987. 1988 1989 1990 ' 1982- IV 1983: IV 1984: IV 1985: IV 1986: IV 1987- IV 1988: 1 || III IV 1989:1 II. Ill IV 1990:1 II Ill IV " Gross national product 14.6 11.2 12.7 13.0 13.8 14.7 15.1 15.3 15.7 19.4 22.1 23.6 23.5 23.9 25.1 25.5 25.9 26.3 27.2 28.1 29.1 29.7 30.4 30.9 31.2 31.9 32.4 32.9 33.8 35.0 35.9 37.7 39.8 42.0 44.4 46.5 49.5 54.0 59.3 63.1 67.3 72.2 78.6 85.7 94.0 100.0 103.9 107.7 110.9 113.8 117.4 121.3 126.3 131.5 101.7 105.4 109.0 112.2 115.1 118.5 119.3 120.6 122.0 123.4 124.6 125.8 126.8 128.0 129.5 131.0 132.2 133.1 Nonresidential Total 16.4 12.1 13.9 14.1 15.2 16.8 18.4 19.4 20.2 22.0 24.3 25.7 25.6 26.2 27.8 28.4 29.0 29.1 29.5 30.1 31.0 31.6 32.3 32.9 33.3 33.9 34.4 35.0 35.6 36.7 37.6 39.3 41.0 42.9 44.9 46.7 49.6 54.8 59.2 62.6 66.7 71.6 78.2 86.6 94.6 100.0 104.1 108.1 111.6 114.3 119.6 124.2 129.9 136.4 101.8 105.7 109.3 113.1 115.8 121.5 122.2 123.5 124.9 126.3 127.9 129.5 130.2 131.8 134.0 135.2 137.0 139.3 Durable goods 22.9 16.8 18.7 19.2 20.9 22.0 23.3 25.4 27.7 33.0 36.1 37.1 36.9 38.1 40.0 40.1 40.8 39.4 40.1 41.2 42.9 42.8 44.2 44.4 44.8 45.7 46.3 47.0 47.1 47.5 48.3 50.1 51.4 52.7 54.7 55.5 56.6 60.4 65.9 69.5 72.7 76.9 82.1 89.2 95.7 100.0 102.1 103.8 104.8 105.6 108.2 109.4 110.9 112.4 100.7 103.1 104.1 104.7 106.2 108.9 108.9 109.0 109.4 110.3 110.4 110.6 111.2 111.4 112.5 112.1 112.3 112.7 Nondurable Services goods 17.8 12.2 14.2 14.3 15.5 18.2 20.6 21.6 22.2 24.0 26.9 28.5 27.7 27.8 30.1 30.5 30.4 30.4 30.2 30.6 31.5 32.2 32.6 33.1 33.5 33.8 34.3 34.7 35.3 36.6 37.5 39.0 40.9 42.7 44.2 45.8 49.7 57.2 61.5 63.8 67.1 71.9 80.0 89.4 96.9 100.0 102.1 105.0 107.5 107.3 112.2 116.6 122.8 131.0 101.0 103.1 105.8 108.7 107.8 113.9 114.3 115.9 117.4 118.6 120.5 123.2 123.2 124.5 128.3 129.4 131.5 134.9 13.8 11.4 12.8 12.9 13.5 14.3 15.1 16.0 16.5 17.3 18.6 19.7 20.5 21.1 22.2 23.3 24.6 25.3 25.9 26.7 27.6 28.5 29.3 30.2 30.7 31.4 32.0 32.5 33.2 34.2 35.3 36.8 38.6 40.7 43.1 45.1 47.4 51.3 55.6 59.8 64.8 69.8 75.6 83.9 92.6 100.0 106.2 111.6 116.8 122.4 128.7 134.5 141.0 147.7 102.7 108.3 113.5 119.0 124.9 130.9 132.1 133.7 135.3 137.0 138.8 140.1 141.6 143.4 145.1 146.6 148.5 150.5 Total Total 11.6 9.4 11.1 11.5 12.4 13.2 13.8 14.2 14.5 16.7 19.8 21.7 22.2 22.9 24.6 25.0 25.5 25.6 26.3 27.8 29.0 28.9 29.3 29.7 29.7 29.9 30.1 30.4 31.1 32.4 33.4 34.8 37.2 39.0 41.2 43.2 45.6 50.3 56.9 60.7 65.6 71.9 78.9 86.3 94.2 100.0 99.8 100.2 100.6 102.9 103.9 105.7 107.2 108.1 100.3 99.7 100.5 101.0 103.9 104.2 105.0 105.2 105.4 107.2 107.6 107.3 107.1 106.9 108.0 107.9 108.4 108.0 11.8 9.8 11.5 11.9 12.7 13.3 13.8 14.0 14.3 16.4 19.3 21.0 21.7 22.4 24.2 24.4 25.1 25.2 25.8 27.7 29.5 29.5 30.2 30.6 30.5 30.9 31.3 31.5 32.1 33.3 34.4 35.9 37.9 39.9 42.4 44.4 46.0 50.5 57.9 61.9 66.1 71.5 77.8 85.1 93.4 100.0 98.8 97.9 97.7 99.3 98.9 100.2 101.2 102.0 100.7 98.3 97.9 97.9 100.0 99.0 99.6 99.7 99.8 101.8 101.9 101.2 100.9 100.7 101.6 101.6 102.6 102.3 Structures 10.0 7.6 8.8 9.0 9.7 10.7 11.4 11.6 12.3 14.5 17.1 18.9 18.6 18.8 21.1 21.3 21.8 21.4 21.8 24.1 25.2 24.8 25.0 25.2 25.0 25.2 25.5 25.9 26.9 28.2 29.1 30.4 32.9 35.2 38.1 40.6 43.7 49.5 54.7 57.6 61.6 67.9 76.2 83.6 93.1 100.0 97.5 98.2 102.5 106.9 108.9 114.3 119.5 121.6 99.5 96.8 99.6 104.0 108.3 110.2 111.9 113.7 114.8 116.7 118.9 119.5 119.8 119.5 120.2 121.8 122.4 122.1 Producers' durable equipment 14.3 12.5 13.9 14.2 14.9 15.3 15.4 15.6 15.4 18.2 20.7 22.5 24.0 25.0 26.4 26.9 27.7 28.6 29.3 31.0 33.3 34.0 34.7 35.6 35.9 36.1 36.2 36.2 36.4 37.2 38.4 39.9 41.5 43.2 45.5 46.8 47.3 51.1 59.7 64.4 68.3 73.3 78.6 86.0 93.7 100.0 99.5 97.7 95.3 96.1 95.2 95.5 95.3 96.0 101.5 99.1 97.0 95.0 96.8 94.8 95.4 95.0 94.8 96.8 96.3 95.4 95.0 94.6 95.8 95.3 96.5 96.4 Residential 11.2 8.1 10.5 10.9 11.9 12.8 13.8 14.9 15.8 17.5 21.1 22.8 23.0 23.7 25.4 26.1 26.3 26.4 27.0 27.9 28.0 28.0 28.0 28.2 28.2 28.3 28.2 28.5 29.0 29.9 30.9 32.5 35.6 37.0 39.0 41.2 44.8 49.8 54.2 58.0 64.6 72.6 81.4 89.4 96.6 100.0 102.2 106.0 108.3 111.1 115.2 119.3 123.5 125.6 99.1 103.1 107.2 109.0 112.4 116.5 118.4 118.9 119.3 120.6 122.1 123.7 124.2 124.3 125.3 125.3 126.0 125.7 1 Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports of goods and services. 290 TABLE B-3.—Implicit price deflators for gross national product, 1929-90—Continued [Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted] Exports and imports of goods and servicesl Year or quarter Exports 1929 1933 .. .. 1939 1940 .. 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 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 1988 1989 . . . 1990 p 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: 1 .. II Ill IV 1989: 1 || III IV 1990: 1 II... Ill IV f 2 3 16.8 10.7 12.7 13.6 14.6 17.2 18.5 20.2 21.1 22.0 24.6 26.5 25.2 24.4 27.4 27.4 27.0 26.9 27.5 28.6 29.7 29.6 29.9 30.4 30.9 31.0 31.1 31.4 32.5 33.7 34.5 35.2 36.6 38.7 40.4 41.7 47.1 56.3 62.1 64.8 68.0 72.8 81.6 90.2 97.5 100.0 101.3 103.2 101.0 99.8 99.5 103.2 105.5 106.4 100.0 102.6 102.4 100.5 99.0 99.7 100.8 102.5 104.6 105.0 105.8 106.0 105.3 105.1 105.3 106.4 106.7 107.1 Imports 15.9 8.6 11.3 11.6 12.3 13.1 13.6 14.1 14.6 17.4 20.9 22.4 21.2 22.5 26.7 25.3 24.1 24.1 23.5 23.8 23.8 22.7 23.1 23.4 23.1 22.9 23.6 24.1 24.7 25.7 26.2 26.6 27.4 29.0 30.2 32.0 35.5 50.4 54.1 55.7 59.8 65.8 77.1 96.0 101.6 100.0 97.4 97.1 95.2 93.7 99.0 102.5 103.8 106.1 99.3 97.2 96.2 95.9 94.4 100.4 101.5 102.5 102.5 103.6 104.9 105.2 102.5 102.8 104.2 103.0 105.5 111.7 Government purchases of goods and services Federal Total 9.4 8.4 9.4 9.5 10.6 12.4 12.5 12.3 11.8 12.3 14.7 16.3 17.3 16.8 18.3 19.4 19.8 20.1 20.8 21.9 22.9 24.1 24.6 24.9 25.4 26.3 26.9 27.6 28.5 29.8 31.2 33.1 35.1 38.1 41.0 43.8 47.1 52.2 57.7 61.5 65.8 70.4 76.8 85.5 93.4 100.0 104.0 108.6 112.3 114.5 118.3 123.3 128.5 133.8 101.8 105.3 110.3 113.8 114.5 119.1 121.8 122.7 123.7 125.0 127.1 127.7 129.1 130.1 132.5 132.5 134.0 136.1 Total 8.1 8.0 9.7 9.7 11.1 12.8 12.8 12.4 11.8 12.0 14.8 16.3 17.6 16.3 18.0 19.3 19.6 19.7 20.6 21.5 22.5 24.2 24.6 24.7 25.0 25.9 26.5 27.2 28.1 29.4 30.5 32.3 33.8 36.8 39.8 43.0 46.2 51.3 57.1 60.8 65.2 69.2 75.4 84.3 93.3 100.0 103.1 106.8 109.0 109.7 112.3 115.9 119.4 123.3 101.3 103.8 108.5 110.6 107.7 111.7 115.5 115.4 115.4 117.2 119.2 118.4 119.9 120.2 123.3 122.0 123.0 124.9 National Nondefense defense 41.8 45.3 50.6 55.6 59.3 63.4 67.8 74.2 83.4 92.9 100.0 103.6 107.2 109.2 110.2 111.1 114.0 117.5 121.2 102.0 104.7 108.3 111.3 109.7 111.3 113.1 113.7 114.5 114.7 117.5 117.6 117.7 117.1 120.8 120.7 121.1 122.1 GNP less exports of goods and services plus imports of goods and services. Quarterly changes are at annual rates. Source: Department of Commerce, Bureau of Economic Analysis. 291 46.8 48.9 53.3 60.6 64.3 69.1 72.4 78.0 86.4 94.3 100.0 101.4 105.5 108.2 108.1 116.3 123.2 125.8 129.9 99.5 100.3 108.9 108.8 101.7 112.8 125.7 122.0 119.1 125.1 124.4 121.0 127.8 130.4 131.5 125.6 128.9 133.9 State and local 9.7 8.6 9.2 9.3 9.7 10.2 10.6 11.2 11.6 12.8 14.5 16.3 16.9 17.3 18.9 19.7 20.2 20.7 21.2 22.4 23.5 24.0 24.6 25.2 25.9 26.7 27.4 28.0 28.8 30.2 32.0 33.9 36.3 39.2 41.9 44.4 47.8 52.8 58.1 62.0 66.1 71.1 77.7 86.2 93.4 100.0 104.7 109.9 114.9 118.3 122.9 128.7 135.1 141.3 102.2 106.3 111.7 116.5 120.0 124.9 126.4 128.0 129.5 130.9 132.9 134.5 135.7 137.1 138.9 140.1 142.0 144.2 Final sales 14.6 11.3 12.8 13.0 13.7 14.7 15.2 15.3 15.7 19.3 22.1 23.4 23.5 23.9 24.9 25.4 25.9 26.3 27.1 28.0 29.0 29.7 30.4 30.9 31.2 31.9 32.4 32.9 33.7 34.9 35.9 37.7 39.8 42.0 44.4 46.5 49.5 54.1 59.2 63.0 67.2 72.1 78.5 85.8 93.9 100.0 103.9 107.7 110.9 113.8 117.4 121.4 126.3 131.5 101.7 105.3 109.0 112.2 114.8 118.6 119.5 120.6 122.0 123.4 124.7 125.8 126.9 127.9 129.7 131.0 132.2 133.0 Gross domestic purchases a 14.6 11.1 12.7 12.9 13.7 14.6 15.0 15.2 15.6 19.1 21.8 23.4 23.3 23.9 25.0 25.4 25.8 26.2 27.0 27.8 28.7 29.3 30.0 30.5 30.8 31.4 31.9 32.5 33.3 34.4 35.4 37.0 39.0 41.2 43.4 45.5 48.4 53.4 58.6 62.2 66.4 71.5 78.1 86.3 94.4 100.0 103.4 106.9 109.9 112.5 116.8 120.9 125.8 131.2 101.6 104.7 108.0 111.2 113.9 118.1 119.0 120.3 121.3 122.9 124.2 125.4 126.1 127.3 129.1 130.2 131.8 133.7 Percent change from preced- "31' implicit price deflator8 "-22 -.8 2.0 6.2 6.6 2.6 1.4 2.9 22.9 13.9 7.0 -.5 2.0 4.8 1.5 1.6 1.6 3.2 3.4 3.6 2.1 2.4 1.6 1.0 2.2 1.6 1.5 2.7 3.6 2.6 5.0 5.6 5.5 5.7 4.7 6.5 9.1 9.8 6.4 6.7 7.3 8.9 9.0 9.7 6.4 3.9 3.7 3.0 2.6 3.2 3.3 4.1 4.1 3.6 4.7 3.0 3.3 1.8 1.7 2.7 4.4 4.7 4.7 3.9 3.9 3.2 3.8 4.8 4.7 3.7 2.8 TABLE B-4.—Fixed-weighted price indexes for gross national product, 1982 weights, 1959-90 [Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted] Gross private domestic investment1 Year or quarter 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 1988 1989 1990 " 1982: IV 1983- IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: 1 II Ill IV 1989: 1 II... Ill IV 1990: 1 II III... IV » Personal Gross connational sumption product expenditures 37.6 38.1 38.4 38.7 39.1 39.6 40.1 41.1 42.1 43.7 45.6 47.2 48.8 50.3 53.1 57.2 61.8 65.1 68.4 72.7 78.8 86.1 94.1 100.0 104.1 108.3 111.9 114.9 118.9 123.9 129.5 135.3 101.7 105.7 109.6 113.2 116.1 120.5 121.6 123.0 124.7 126.1 127.6 129.0 130.0 131.2 133.3 134.6 136.0 137.4 35.2 35.7 36.1 36.4 36.8 37.2 37.7 38.5 39.5 41.0 42.8 44.7 46.6 48.3 51.0 55.8 60.1 63.5 67.5 72.2 78.6 86.8 94.6 100.0 104.2 108.4 112.2 115.3 120.6 125.6 131.6 138.4 101.8 105.8 109.7 113.8 116.7 122.6 123.3 124.8 126.3 127.9 129.5 131.3 132.1 133.7 136.1 137.1 139.1 141.4 Rxed investment Total 58.0 58.1 58.0 58.0 58.0 58.2 58.5 59.3 60.2 61.4 63.2 61.5 60.6 59.8 61.8 64.4 69.0 71.4 72.6 74.5 80.3 86.9 94.5 100.0 100.4 101.5 103.3 105.7 107.4 111.2 115.0 118.1 100.2 100.5 102.3 104.2 106.4 108.2 109.7 110.9 111.6 112.7 113.9 114.8 115.3 116.1 117.3 117.6 118.4 119.2 Nonresi- Residen- Exports Imports dential tial 65.9 66.1 66.0 66.1 66.2 66.4 66.7 67.4 68.4 69.5 71.0 68.4 66.6 65.0 66.6 68.5 73.1 75.2 74.9 75.0 80.1 86.1 93.9 100.0 99.9 100.2 101.9 104.2 105.2 109.0 112.6 116.0 100.5 99.6 100.9 102.8 104.8 105.9 107.4 108.6 109.4 110.6 111.7 112.3 112.9 113.8 115.0 115.5 116.2 117.3 30.2 30.3 30.2 29.9 29.5 29.6 30.0 30.8 31.6 33.1 36.0 37.4 39.5 41.6 45.1 50.1 54.6 58.4 64.8 72.5 81.2 89.4 96.6 100.0 102.2 106.0 108.3 110.9 115.0 119.1 123.3 125.5 99.1 103.3 107.2 109.0 112.1 116.3 118.0 118.7 119.1 120.4 121.8 123.5 123.9 124.1 125.1 125.2 126.0 125.8 Government purchases of goods and services Exports and imports of goods and services1 32.8 33.5 34.0 34.1 34.4 34.8 35.9 37.1 38.2 39.3 40.9 43.3 45.3 46.5 50.8 59.8 65.4 67.4 70.3 74.5 82.9 90.5 97.7 100.0 101.6 104.3 103.7 103.6 105.7 111.3 114.4 117.2 100.0 103.2 104.0 103.4 103.5 106.7 108.4 110.3 112.9 113.5 113.9 114.5 114.5 114.4 115.9 116.7 117.6 118.2 27.0 27.3 27.0 26.7 27.1 27.7 28.1 29.1 29.5 30.1 31.2 33.4 35.6 37.8 42.4 54.5 59.7 61.3 66.1 71.3 80.9 96.3 101.5 100.0 97.7 97.5 95.7 94.0 100.6 105.8 109.5 114.1 99.3 97.6 96.8 96.8 94.7 102.9 104.1 105.9 106.1 107.2 109.1 110.5 108.8 109.9 112.3 110.0 113.6 120.9 Federal Total 25.8 26.4 27.0 27.8 28.5 29.3 30.0 31.3 32.7 34.5 36.6 39.6 42.3 45.2 48.8 53.5 58.6 62.2 66.0 70.9 77.3 86.3 94.1 100.0 104.5 109.2 113.2 115.5 119.3 124.7 130.6 136.5 102.0 106.0 110.7 114.4 116.6 120.9 122.6 124.1 125.5 126.7 129.1 130.2 131.0 132.1 134.4 135.5 137.0 139.1 Total 26.9 27.3 27.8 28.4 29.3 30.1 30.8 32.0 32.8 34.5 36.4 39.5 42.4 46.0 50.1 54.8 59.4 62.4 65.8 70.6 76.8 86.4 94.9 100.0 104.1 108.0 110.4 110.6 112.9 117.4 122.4 127.3 101.7 105.4 109.0 111.0 110.7 113.8 115.8 116.9 118.2 118.8 121.9 122.2 122.5 123.0 125.8 126.5 127.5 129.3 National Nondefense defense 44.3 47.4 51.4 56.5 59.7 63.5 68.6 75.1 84.7 93.8 100.0 103.7 107.6 110.5 111.1 113.5 117.4 121.8 127.1 101.8 104.7 109.0 111.4 111.6 114.3 116.1 117.2 117.8 118.4 121.3 121.8 121.8 122.3 125.6 126.0 127.2 129.6 50.5 56.9 63.3 66.6 69.0 71.5 75.5 81.0 90.6 97.4 100.0 105.1 108.9 110.0 109.4 111.6 117.6 123.9 127.6 101.4 107.0 109.1 110.1 108.7 112.8 114.9 116.2 119.2 120.0 123.2 123.4 124.1 124.9 126.6 127.6 128.0 128.5 State and local 24.9 25.7 26.4 27.3 27.9 28.5 29.3 30.6 32.5 34.4 36.7 39.6 42.2 44.6 47.8 52.6 57.9 62.0 66.2 71.2 77.7 86.2 93.5 100.0 104.8 110.1 115.3 119.2 124.0 130.1 136.7 143.3 102.2 106.4 111.9 117.0 121.0 126.0 127.7 129.4 131.0 132.5 134.5 136.1 137.3 138.9 140.8 142.1 144.0 146.3 Percent change from preceding period, GNP fixedweighted price index 2 1.4 .7 .8 1.0 1.2 1.4 2.5 2.6 3.7 4.4 3.6 3.5 2.9 5.5 7.8 8.0 5.3 5.1 6.2 8.5 9.3 9.3 6.2 4.1 4.0 3.4 2.7 3.5 4.2 4.5 4.5 4.0 4.0 3.2 3.3 3.1 3.7 3.9 4.7 5.5 4.4 4.9 4.6 3.1 3.8 6.6 3.9 4.2 4.1 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. 292 TABLE B-5.—Changes in gross national product, personal consumption expenditures, and related price measures, 1933-90 [Percent change from preceding period; quarterly data at seasonally adjusted annual rates] Personal consumption expenditures 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 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. 1988 1989 1990 *. 1986: I II Ill IV 1987:1 || III IV 1988:1 II.. . Ill IV . 1989- 1 || HI IV.. .. 1990:1 II.. .. Ill IV Current dollars -4.2 7.0 10.0 25.0 26.6 21.2 9.7 .9 io'.s 11.2 -.5 10.7 15.7 5.5 5.7 . ... 9'.0 5.5 5.3 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 6.4 5.4 6.7 7.9 6.7 5.0 7.3 1.3 5.7 4.2 9.1 7.5 7.4 8.7 7.8 8.3 7.4 7.7 7.5 5.8 5.1 3.9 6.7 5.1 5.3 Constant (1982) dollars -2.1 7.9 7.8 17.7 18.8 18.1 8.2 -1.9 -19.0 -2.8 3.9 .0 8.5 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 5.3 5.8 5.8 2.9 4.1 2.4 3 2.8 5.0 5.2 -l!3 4.9 4.7 5.3 2.5 -.2 1.9 -2.5 3.6 6.8 3.4 2.7 3.4 4.5 2.5 .9 6.6 18 .8 2.3 5.2 4.2 4.1 6.6 5.1 3.6 2.7 2.7 3.6 1.6 1.7 1.7 .4 1.4 -2.1 Implicit price deflator Chain price index Fixedweighted price index Constant (1982) dollars Implicit price deflator Chain price index weights) -2.2 -.8 2.0 6.2 6.6 2.6 1.4 2.9 22.9 13.9 7.0 2.0 4.8 1.5 1.6 1.6 3.2 3.4 3.6 2.1 2.4 1.6 1.0 2.2 1.6 1.5 2.7 3.6 2.6 5.0 5.6 5.5 5.7 4.7 6.5 9.1 9.8 6.4 6.7 7.3 8.9 9.0 9.7 6.4 3.9 3.7 3.0 2.6 3.2 3.3 4.1 4.1 .7 2.9 5.0 1.8 3.5 3.1 3.5 1.7 2.7 4.4 4.7 4.7 3.9 3.9 3.2 3.8 4.8 4.7 3.7 2.8 1.5 1.0 1.2 1.3 1.5 1.8 3.0 2.8 4.3 5.0 5.2 4.8 4.2 5.9 8.9 9.2 5.9 6.1 7.2 8.7 9.0 9.4 6.3 4.1 3.9 3.3 2.5 3.3 3.7 4.3 4.2 1.7 1.7 3.1 2.7 4.3 3.1 3.3 3.1 3.3 4.2 4.8 4.4 4.7 4.4 3.1 3.7 6.1 4.1 3.7 3.0 Source: Department of Commerce, Bureau of Economic Analysis. (1982 Current dollars 293 1.4 .7 .8 1.0 1.2 1.4 2.5 2.6 3.7 4.4 3.6 3.5 2.9 5.5 7.8 8.0 5.3 5.1 6.2 8.5 9.3 9.3 6.2 4.1 4.0 3.4 2.7 3.5 4.2 4.5 4.5 2.2 2.1 2.9 3.1 4.4 3.5 3.5 3.7 3.9 4.7 5.5 4.4 4.9 4.6 3.1 3.8 6.6 3.9 4.2 4.1 -5.7 4.6 6.0 13.8 9.7 12.2 8.8 10.5 20.4 12.5 8.0 1.9 7.7 8.3 5.3 6.2 3.1 7.5 4.9 5.4 3.3 7.4 4.6 3.1 6.1 5.5 7.2 7.7 8.3 5.5 9.7 8.2 7.0 8.1 9.5 10.5 9.5 10.5 11.5 11.3 11.6 11.6 10.6 10.5 7.1 9.0 8.8 8.2 6.4 7.6 7.6 6.5 6.0 5.1 4.0 9.8 6.2 7.3 9.6 8.9 3.7 9.2 7.4 8.2 8.1 4.8 6.6 7.0 4.0 8.2 3.9 8.0 3.8 -1.6 5.1 4.6 5.7 ~2i3 3.2 6.4 10.5 1.8 2.3 2.0 5.4 2.1 3.0 4.0 2.5 6.2 3.0 2.2 1.4 5.0 2.6 2.0 4.3 3.7 5.6 5.6 5.1 3.0 5.1 3.6 2.4 3.1 5.4 4.2 9 2.3 5.4 4.4 4.1 2.2 -.2 1.2 1.3 4.6 4.8 4.7 3.9 2.8 3.6 1.9 1.0 4.1 3.6 5.4 2.2 .7 4.5 4.3 -.4 6.9 2.7 3.5 3.5 3 1.3 4.6 -.8 1.1 .2 2.7 -3.1 -4.2 -.5 1.3 7.7 10.4 9.6 5.4 3.9 8.9 10.6 5.6 -.1 2.2 6.1 2.2 2.1 .6 1.3 1.9 3.2 1.8 2.2 1.9 1.2 1.8 1.5 1.7 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 3.2 2.4 4.6 3.8 4.6 5.0 1.1 .4 4.3 3.9 6.4 4.8 4.4 4.1 2.3 4.3 4.6 4.6 5.2 5.1 2.2 5.0 6.8 3.6 5.4 6.9 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 3.5 2.7 4.6 4.0 4.7 4.9 1.6 .6 4.4 3.9 6.2 4.9 4.3 4.0 2.5 4.7 4.8 4.8 5.0 5.3 2.6 4.9 6.8 3.4 5.2 6.5 Fixedweighted price index (1982 weights) 1.5 .9 .9 1.1 1.2 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 3.5 2.7 4.6 4.1 4.8 5.2 1.6 .5 4.2 3.9 6.3 5.1 4.3 4.3 2.6 4.8 5.1 4.9 5.0 5.7 2.7 4.7 7.4 3.1 5.7 7.1 TABLE B-6.—Gross national product by major type of product, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Goods 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 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 1988 1989. 1990 " 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988:1 II Ill IV 1989:1 II Ill IV 1990:1 II Ill IV '. Gross national product 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 4,014.9 4,231.6 4,515.6 4,873.7 5,200.8 5,463.0 3,212.5 3,545.8 3,851.8 4,107.9 4,297.3 4,647.6 4,735.8 4,831.4 4,917.9 5,009.8 5,101.3 5,174.0 5,238.6 5,289.3 5,375.4 5,443.3 5,514.6 5,518.9 Final sales 102.2 57.6 90.9 98.3 121.0 157.2 193.4 212.3 214.4 206.0 235.7 256.9 263.4 281.4 323.2 348.6 371.1 374.1 400.2 423.6 449.6 458.3 490.0 512.3 531.4 568.5 601.1 644.4 695.2 757.8 806.1 884.8 954.1 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 4,003.6 4,224.8 4,487.3 4,847.5 5,172.5 5,465.3 3,272.4 3,514.8 3,806.8 4,100.7 4,309.4 4,591.9 4,707.4 4,809.2 4,879.7 4,993.6 5,074.7 5,141.3 5,209.7 5,264.3 5,387.2 5,429.9 5,505.6 5,538.4 Inventory change 1.7 -1.6 .4 2.2 4.5 1.8 -.6 -1.0 -1.0 6.4 47 31 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 56 16.0 21.3 28.6 13.0 -8.3 24.0 -24.5 -7.1 67.7 11.3 6.9 28.3 26.2 28.3 -2.2 -59.9 31.0 45.0 7.2 -12.2 55.7 28.3 22.2 38.2 16.2 26.6 32.7 28.9 25.0 -11.8 13.4 9.0 -19.5 Total Total 56.1 27.0 49.0 56.0 72.5 93.7 120.4 132.3 128.9 125.3 139.8 154.4 147.7 162.4 189.9 195.5 204.6 198.0 216.3 225.4 234.7 230.5 250.8 257.2 260.4 281.5 293.2 313.5 342.9 380.1 395.1 427.4 456.6 467.8 493.0 537.4 616.4 663.1 714.7 798.9 882.0 991.4 1,099.1 1,174.9 1,322.9 1,319.1 1,396.1 1,581.4 1,641.2 1,686.7 1,788.4 1,935.1 2,072.7 2,144.4 1,309.8 1,473.7 1,599.9 1,657.4 1,694.5 1,850.8 1,875.4 1,918.5 1,952.8 1,993.8 2,035.1 2,079.4 2,090.2 2,085.9 2,111.0 2,146.6 2,170.4 2,149.4 Durable goods Final Inven- Final Inventory tory sales change sales change 54.4 28.6 48.6 53.8 68.0 91.9 121.0 133.3 129.9 118.9 140.3 149.7 150.8 155.6 179.6 192.4 204.2 199.6 210.6 220.7 233.3 232.0 245.1 254.1 258.0 275.4 287.4 308.1 333.0 365.9 384.9 419.5 446.8 464.7 485.2 526.9 596.8 647.7 720.3 782.9 860.7 962.8 1,086.1 1,183.2 1,298.9 1,343.7 1,403.2 1,513.7 1,629.9 1,679.8 1,760.1 1,908.9 2,044,4 2,146.6 1,369.7 1,442.7 1,554.9 1,650.2 1,706.6 1,795.1 1,847.1 1,896.3 1,914.6 1,977.7 2,008.5 2,046.8 2,061.3 2,060.9 2,122.8 2,133.1 2,161.4 2,168.9 1.7 -1.6 2.2 4.5 1.8 -.6 -1.0 -1.0 6.4 _5 47 -3.1 6.8 10.2 3.1 .4 -1.6 5.7 4.6 1.4 -1.5 5.8 3.1 2.4 6.1 5.8 5.4 9.9 14.2 10.3 7.9 9.8 3.1 7.8 10.5 19.6 15.4 -5.6 16.0 21.3 28.6 13.0 -8.3 24.0 -24.5 -7.1 67.7 11.3 6.9 28.3 26.2 28.3 -2.2 -59.9 31.0 45.0 7.2 -12.2 55.7 28.3 22.2 38.2 16.2 26.6 32./ 28.9 25.0 -11.8 13.4 9.0 -19.5 16.1 5.4 12.4 15.4 23.8 34.5 54.2 58.5 50.1 31.8 44.4 48.0 50.0 56.2 66.4 72.6 78.0 74.1 81.7 86.2 91.7 84.8 91.1 93.8 93.1 103.4 110.0 119.6 132.4 147.9 154.5 169.1 180.1 182.1 189.4 209.7 241.9 257.2 288.2 323.6 369.4 416.9 473.1 499.4 541.1 542.9 575.3 641.3 700.1 723.0 757.5 840.3 894.7 938.2 551.8 611.9 667.6 697.9 740.7 771.1 818.3 841.9 839.7 861.3 873.1 896.2 915.4 894.2 941.4 930.1 943.4 937.9 Source: Department of Commerce, Bureau of Economic Analysis. 294 1.4 ~!3 1.2 3.1 1.0 .0 -.6 -1.3 5.3 1.4 1.0 -1.8 3.6 6.1 1.2 1.5 -2.5 3.4 2.1 -2^8 3.1 1.6 3.4 2.7 4.0 6.7 10.2 5.5 4.7 6.4 ~2.S 7.2 15.0 11.2 70 10.3 9.7 20.1 10.3 -2.9 6.8 -16.8 -1.0 40.2 6.5 1.2 23.0 19.9 11.9 -5.5 -42.7 16.7 33.0 8.6 -9.6 43.3 8.9 9.9 32.8 27.8 19.4 8.4 6.6 13.2 -21.6 .0 9.8 -10.4 Nondurable goods Final sales 38.3 23.2 36.2 38.4 44.2 57.4 66.8 74.8 79.8 87.1 95.9 101.7 100.9 99.4 113.2 119.8 126.2 125.5 128.9 134.5 141.6 147.2 154.0 160.3 164.8 172.0 177.4 188.5 200.6 218.1 230.4 250.4 266.7 282.6 295.8 317.2 354.9 390.4 432.2 459.3 491.3 545.9 613.0 683.8 757.8 800.8 827.9 872.4 929.8 956.8 1,002.6 1,068.6 1,149.6 1,208.3 817.9 830.9 887.3 952.3 965.9 1,024.0 1,028.8 1,054.3 1,074.8 1,116.4 1,135.5 1,150.5 1,145.9 1,166.7 1,181.4 1,203.0 1,218.0 1,231.0 Inventory change 0.3 -1.1 .1 1.0 1.4 .7 -.6 -.3 .2 1.1 -1.9 3.7 -1.3 3.2 4.2 1.9 -1.1 .9 2.3 2.5 .9 1.3 2.6 1.4 2.5 2.7 3.1 1.4 3.2 4.0 4.8 3.2 3.4 3.2 4.9 3.3 4.6 4.3 1.3 5.7 11.6 8.6 2.7 -5.4 17.2 -7.7 -6.1 27.5 4.9 5.7 5.4 6.4 16.4 3.3 -17.2 14.3 12.0 -1.4 -2.6 12.4 19.4 12.3 5.4 -11.6 7.1 24.3 22.2 11.9 9.8 13.4 -.8 -9.1 Services Structures 35.9 25.9 34.5 35.8 40.9 50.9 63.2 72.4 77.3 70.5 72.7 78.0 83.0 89.0 104.4 115.2 123.4 128.5 138.5 148.9 161.6 170.9 183.5 197.4 210.9 226.4 242.2 261.1 280.5 307.2 334.9 368.0 402.3 441.1 484.9 533.2 586.6 650.6 725.2 803.5 895.9 1,003.0 1,121.9 1,265.0 1,415.4 1,547.5 1,682.5 1,813.9 1,968.3 2,119.3 2,292.4 2,488.6 2,671.2 2,860.5 1,598.9 1,730.1 1,866.5 2,035.7 2,174.2 2,354.9 2,421.2 2,461.5 2,512.3 2,559.4 2,604.8 2,639.2 2,693.3 2,747.5 2,791.3 2,834.2 2,889.6 2,926.8 11.9 3.1 7.8 8.6 12.1 14.4 9.2 6.6 7.2 16.6 22.8 29.2 29.6 36.9 39.1 40.9 43.6 46.0 51.1 53.9 54.8 55.5 61.5 60.7 62.5 66.7 71.5 75.2 81.7 84.6 86.4 97.2 105.1 106.5 124.8 142.1 156.3 159.1 158.5 180.4 212.6 255.3 287.1 292.0 314.4 299.4 327.1 377.0 405.4 425.6 434.8 450.0 456.9 458.2 303.9 342.0 385.4 414.8 428.6 441.9 439.2 451.4 452.8 456.5 461.4 455.3 455.0 455.9 473.0 462.5 454.6 442.7 Auto output ;= 7.2 8.8 11.9 15.4 13.3 12.0 16.1 14.7 21.2 16.9 19.4 14.5 19.4 21.3 17.8 22.4 25.1 25.9 31.1 30.2 27.8 35.0 34.7 28.5 38.9 41.4 46.0 38.8 40.3 55.2 64.3 68.3 66.9 60.1 69.4 66.5 88.6 105.1 116.5 120.6 119.3 127.6 131.3 127.8 64.5 102.1 111.5 115.5 122.5 120.9 118.1 132.1 126.1 134.0 133.7 130.7 132.5 128.2 120.3 128.9 141.3 120.8 TABLE B-7.—Gross national product by major type of product in 1982 dollars, 1929-90 [Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates] Goods 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 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 1988. 1989 1990 " 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988:1 II Ill IV 1989:1 II Ill IV 1990:1 II Ill IV *. Gross national product Final sales 709.6 498.5 716.6 772.9 909.4 1,080.3 1,276.2 1,380.6 1,354.S 1,096.9 1,066.7 1,108.7 1,109.0 1,203.7 1,328.2 1,380.0 1,435.3 1,416.2 1,494.9 1,525.6 1,551.1 1,539.2 1,629.1 1,665.3 1,708.7 1,799.4 1,873.3 1,973.3 2,087.6 2,208.3 2,271.4 2,365.6 2,423.3 2,416.2 2,484.8 2,608.5 2,744.1 2,729.3 2,695.0 2,826.7 2,958.6 3,115.2 3,192.4 3,187.1 3,248.8 3,166.0 3,279.1 3,501.4 3,618.7 3,717.9 3,845.3 4,016.9 4,117.7 4,155.8 3,159.3 3,365.1 3,535.2 3,662.4 3,733.6 3,920.7 3,970.2 4,005.8 4,032.1 4,059.3 4,095.7 4,112.2 4,129.7 4,133.2 4,150.6 4,155.1 4,170.0 4,147.6 698.7 509.2 712.7 758.5 881.6 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 3,609.6 3,712.4 3,822.5 3,993.2 4,094.0 4,156.9 3,218.6 3,338.1 3,493.5 3,654.7 3,754.4 3,872.3 3,939.2 3,988.9 3,999.5 4,045.2 4,069.6 4,086.6 4,105.1 4,114.4 4,152.8 4,145.6 4,165.3 4,163.9 Inventory change 10.8 107 3.9 14.4 27.8 12.0 .7 -5.2 -8.4 27.9 -1.0 12.3 -9.7 24.2 30.8 10.0 2.8 -4.8 16.3 12.9 3.0 -3.4 16.5 7.7 7.3 16.2 16.6 15.7 25.2 36.9 28.8 21.0 25.1 8.2 19.6 21.8 40.0 33.3 -12.8 22.1 29.1 36.8 15.0 -6.9 23.9 -24.5 -6.4 62.3 9.1 5.6 22.8 23.6 23.8 -1.1 -59.3 27.0 41.7 7.7 -20.8 48.4 31.0 16.9 32.6 14.0 26.1 25.5 24.6 18.9 -2.2 9.5 4.7 -16.3 Durable goods Nondurable goods Total Total 308.1 210.0 331.7 370.3 431.9 504.1 608.6 664.6 639.1 521.0 517.1 531.7 517.9 561.4 623.0 641.3 676.6 643.5 683.9 697.1 699.3 674.2 716.6 726.8 730.2 773.5 797.5 845.2 904.0 974.7 993.1 1,024.8 1,048.5 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 1,344.2 1,386.0 1,319.1 1,367.0 1,509.2 1,553.6 1,592.6 1,663.4 1,765.2 1,829.5 1,830.3 1,297.9 1,423.8 1,520.2 1,564.7 1,595.7 1,716.4 1,742.0 1,761.4 1,770.8 1,786.8 1,819.7 1,838.5 1,836.5 1,823.1 1,825.4 1,831.3 1,839.7 1,824.9 Final Inven- Final Inventory tory sales change sales change 297.3 220.7 327.8 355.9 404.2 492.1 607.9 669.8 647.5 493.1 518.1 519.4 527.6 537.2 592.2 631.3 673.8 648.2 667.6 684.1 696.3 677.6 700.1 719.1 723.0 757.3 780.8 829.5 878.8 937.8 964.3 1,003.7 1,023.3 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 1,351.1 1,362.2 1,343.7 1,373.4 1,446.9 1,544.5 1,587.1 1,640.6 1,741.6 1,805.7 1,831.4 1,357.1 1,396.8 1,478.5 1,557.0 1,616.5 1,667.9 1,711.0 1,744.5 1,738.1 1,772.7 1,793.7 1,813.0 1,811.9 1,804.3 1,827.6 1,821.8 1,835.0 1,841.2 10.8 -10.7 3.9 14.4 27.8 12.0 .7 -5.2 -8.4 27.9 -1.0 12.3 -9.7 24.2 30.8 10.0 2.8 -4.8 16.3 12.9 3.0 -3.4 16.5 7.7 7.3 16.2 16.6 15.7 25.2 36.9 28.8 21.0 25.1 8.2 19.6 21.8 40.0 33.3 -12.8 22.1 29.1 36.8 15.0 -6.9 23.9 -24.5 -6.4 62.3 9.1 5.6 22.8 23.6 23.8 -1.1 -59.3 27.0 41.7 7.7 -20.8 48.4 31.0 16.9 32.6 14.0 26.1 25.5 24.6 18.9 -2.2 9.5 4.7 -16.3 Source: Department of Commerce, Bureau of Economic Analysis. 295 85.8 34.9 74.8 91.9 122.9 163.3 254.4 292.4 263.1 129.6 164.7 166.5 166.8 180.0 208.8 229.8 245.4 230.6 245.2 248.3 251.3 229.1 236.8 242.2 239.2 260.2 273.4 295.4 322.2 354.2 363.6 378.5 389.7 381.7 375.5 409.4 474.9 476.0 471.1 490.9 534.0 572.5 604.6 584.0 578.5 542.9 566.3 623.5 686.1 718.6 765.0 856.7 897.7 928.7 543.8 598.0 647.8 687.7 738.6 784.6 836.1 861.0 856.1 873.5 880.8 901.6 914.1 894.2 932.1 919.5 932.9 930.6 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 11.2 17.4 26.3 14.4 11.8 15.2 "?!l 15.4 30.8 20.0 -11.4 15.9 14.2 27.5 13.3 -3.2 6.9 -16.8 -1.2 38.2 5.6 .9 20.7 17.8 9.8 47 -42.4 16.1 31.1 7.3 -9.0 39.0 8.9 8.8 29.5 24.1 16.5 7.2 5.4 10.2 -17.7 -.3 8.3 -9.0 Final sales 211.5 185.7 253.1 264.0 281.2 328.8 353.5 377.4 384.4 363.5 353.4 353.0 360.8 357.1 383.4 401.5 428.4 417.7 422.3 435.8 445.0 448.6 463.4 476.9 483.7 497.1 507.4 534.1 556.5 583.6 600.7 625.3 633.6 640.1 642.4 662.7 660.1 649.9 666.7 681.7 693.1 719.9 735.1 767.1 783.7 800.8 807.0 823.3 858.4 868.5 875.5 884.9 908.0 902.7 813.4 798.8 830.7 869.4 877.9 883.3 874.8 883.6 882.0 899.3 912.9 911.4 897.7 910.1 895.5 902.4 902.1 910.6 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 10.6 14.4 9.3 9.9 8.8 12.5 6.4 9.2 13.3 -1.4 6.3 14.9 9.3 1.7 -3.7 16.9 -7.7 -5.2 24.2 3.5 4.7 2.2 5.8 13.9 3.6 -16.9 10.9 10.6 .4 -11.8 9.4 22.1 8.1 3.2 -10.1 9.6 18.4 19.2 8.6 15.5 9.8 -3.6 -7.3 Services Structures Auto output 290.0 111.4 36.5 252.1 306.4 78.5 84.5 318.1 367.1 110.3 460.4 115.8 • • •68.7 598.9 665.0 50.9 662.3 53.5 472.0 104.0 24.1 431.0 118.6 27.6 438.1 138.9 35.5 450.1 141.0 470.4 171.9 44.9 38.3 537.7 167.5 34.9 567.3 171.4 44.8 577.6 181.2 579.5 193.2 43.3 58.2 601.0 210.0 45.8 619.7 208.9 48.3 645.4 206.5 37.4 654.7 210.3 45.7 681.5 231.0 49.6 709.9 228.5 41.1 743.0 235.4 49.8 777.0 248.9 54.6 811.5 264.4 55.3 852.8 275.3 66.9 891.6 292.0 64.8 942.7 291.0 58.3 990.6 287.6 70.5 1,032.0 308.8 67.6 1,066.9 307.9 53.1 1,092.4 293.8 69.8 1,126.1 321.2 73.9 1,169.4 345.4 82.0 1,218.7 350.4 65.4 1,256.4 313.7 1,286.4 283.6 61.8 80.1 1,324.4 307.6 88.7 1,368.7 333.7 87.3 1,426.9 359.1 80.2 1,478.6 359.2 67.1 1,511.1 331.8 73.3 1,533.4 329.4 66.5 1,547.5 299.4 85.9 1,585.5 326.6 98.5 1,625.2 367.1 1,684.3 380.8 106.5 1,738.9 386.4 106.4 1,798.1 383.8 102.3 109.9 1,870.5 381.1 1,915.6 372.7 110.4 1,958.0 367.5 105.6 63.3 1,555.5 305.9 96.4 1,600.7 340.6 1,644.7 370.3 104.2 1,712.5 385.2 104.8 1,753.1 384.8 106.7 1,818.8 385.6 104.1 1,850.9 377.3 100.9 1,860.3 384.1 113.9 1,878.9 382.4 108.5 1,891.9 380.6 116.2 1,896.6 379.4 113.5 110.3 1,902.5 371.1 1,923.5 369.8 111.4 1,939.7 370.4 106.3 99.0 1,943.7 381.5 107.3 1,952.5 371.2 117.2 1,967.3 363.1 99.1 1,968.6 354.1 TABLE B-8.—Gross national product by sector, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Gross domestic product Year or quarter 1929 1933 1939 1940 1941 1942 1943 1944 1945 1946 . 1947 1948 1949 1950 1951 1952 1953 1954... 1955 1956 1957 1958 1959 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 1988 1989 1990 " 1982: IV 1983- IV 1984- IV 1985- IV 1986: IV 1987- IV 1988: 1 || III IV 1989: 1 || III IV 1990: 1 || III IV P Gross national product 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 4,014.9 4,231.6 4,515.6 4,873.7 5,200.8 5,463.0 3,212.5 3,545.8 3,851.8 4,107.9 4,297.3 4,647.6 4,735.8 4,831.4 4,917.9 5,009.8 5,101.3 5,174.0 5,238.6 5,289.3 5,375.4 5,443.3 5,514.6 5,518.9 Businessl Total 103.2 55.7 90.9 100.1 125.0 158.5 192.3 210.9 213.0 211.6 234.1 260.1 259.0 286.7 331.4 349.4 369.5 370.3 403.3 425.2 447.7 453.9 492.7 511.8 530.0 570.1 602.0 644.4 699.3 766.3 810.4 885.9 957.1 1,008.2 1,093.4 1,201.6 1,343.1 1,453.3 1,580.9 1,761.7 1,965.1 2,219.1 2,464.4 2,684.4 3,000.5 3,114.8 3,355.9 3,724.8 3,974.1 4,197.2 4,486.7 4,840.2 5,163.2 5,424.4 3,163.8 3,494.6 3,805.9 4,065.9 4,267.9 4,617.4 4,699.0 4,801.3 4,886.5 4,974.0 5,063.5 5,141.4 5,201.4 5,246.5 5,333.8 5,411.7 5,471.7 5,480.6 Total1 96.0 49.3 81.0 89.8 113.0 140.4 163.4 174.9 173.5 184.8 211.3 236.4 232.9 259.0 296.7 310.7 329.3 329.1 359.4 378.1 397.3 399.5 435.5 449.9 463.9 499.1 526.0 562.1 610.7 666.7 699.7 762.0 820.1 856.3 927.4 1,020.0 1,145.0 1,237.5 1,341.2 1,500.7 1,682.1 1,908.4 2,125.3 2,306.8 2,582.8 2,658.2 2,866.6 3,201.5 3,412.8 3,599.9 3,844.9 4,147.8 4,418.1 4,620.3 2,693.6 2,994.8 3,270.6 3,490.7 3,655.6 3,958.3 4,023.7 4,115.0 4,188.0 4,264.4 4,336.7 4,402.8 4,449.8 4,483.1 4,551.8 4,613.5 4,659.6 4,656.2 Nonfarm l Farm 84.8 43.6 73.0 82.0 103.4 128.0 149.8 156.9 153.5 165.2 189.3 214.4 213.3 238.3 271.1 286.7 306.3 306.7 338.8 361.4 380.1 378.9 417.9 432.5 445.0 478.6 506.2 544.3 590.0 641.7 677.8 740.4 798.8 831.2 897.5 988.8 1,098.3 1,190.0 1,288.4 1,448.7 1,631.7 1,850.0 2,054.5 2,236.4 2,498.9 2,581.3 2,802.1 3,118.5 3,342.2 3,525.9 3,776.7 4,095.3 4,346.6 4,530.2 2,607.7 2,932.7 3,198.7 3,422.4 3,587.1 3,895.0 3,965.1 4,056.1 4,131.9 4,228.2 4,272.7 4,334.7 4,379.4 4,399.5 4,455.8 4,522.1 4,571.4 4,571.4 1 2 Includes compensation of employees in government enterprises. Compensation of government employees. Source: Department of Commerce, Bureau of Economic Analysis. 296 9.7 4.6 6.3 6.4 8.9 13.0 15.3 15.3 16.0 18.8 20.2 23.3 18.8 20.0 22.9 22.2 20.3 19.7 18.8 18.6 18.4 20.7 19.0 20.2 20.2 20.4 20.5 19.3 21.9 22.8 22.2 22.7 25.2 26.3 28.1 32.8 51.0 49.2 50.3 48.5 50.4 60.3 71.8 65.5 79.8 77.0 59.3 77.6 75.4 75.8 78.8 80.7 88.6 93.2 79.0 59.6 74.0 76.2 78.1 82.1 83.3 82.7 90.0 66.7 92.6 88.4 86.7 86.7 95.3 94.6 93.1 89.7 Households Statisand tical instidiscrep- tutions ancy 1.5 1.2 1.7 1.4 .7 -.7 -1.7 2.7 4.0 .7 1.8 -1.3 .8 .8 2.7 1.8 2.6 2.7 1.8 -1.9 12 -.1 15 -2.8 -1.2 .0 6 -1.4 12 2.1 -1.1 -3.9 -1.1 1.8 -1.6 43 -1.7 2.5 3.6 .0 -1.9 -1.0 4.9 4.1 ~5.2 5.4 -4.8 -1.8 -10.6 -28.2 -17.0 -3.1 6.8 2.5 21 -7.9 -9.6 -18.8 -24.7 -23.9 -33.9 -30.5 -28.6 -20.3 -16.2 30 .7 -3.2 -4.9 49 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 10.6 11.5 12.4 13.9 14.5 15.6 16.7 17.9 19.3 21.3 23.4 26.1 29.5 32.4 35.6 39.0 43.0 47.2 52.0 57.1 62.4 70.2 78.6 89.3 101.0 112.7 122.9 132.7 142.3 153.5 169.9 187.3 203.6 224.8 116.9 126.6 136.1 146.6 157.9 177.1 180.9 185.1 190.0 193.3 196.6 200.8 206.5 210.3 215.0 221.4 229.3 233.5 Government2 Total 4.4 4.7 7.6 7.8 9.5 15.2 25.6 32.3 35.3 22.4 17.6 18.1 20.1 21.2 27.7 31.5 32.4 33.0 34.8 37.2 39.8 42.9 44.8 48.1 51.6 55.4 59.3 64.4 69.3 78.4 87.4 97.8 107.5 119.5 130.3 142.6 155.0 168.7 187.7 203.8 220.5 240.5 260.4 288.3 316.7 343.9 366.4 390.6 419.0 443.8 471.9 505.1 541.6 579.4 353.4 373.1 399.1 428.6 454.4 482.0 494.4 501.2 508.6 516.4 530.3 537.8 545.1 553.0 567.0 576.7 582.8 590.9 Federal 0.9 1.2 3.5 3.5 5.1 10.7 21.0 27.3 30.0 16.2 10.3 9.6 10.7 11.1 16.6 19.3 19.1 18.3 19.0 19.6 20.2 21.3 21.7 22.6 23.6 25.2 26.5 28.5 30.0 34.3 37.8 41.9 44.9 48.4 51.1 54.9 57.1 61.1 66.5 70.9 75.5 81.7 86.9 96.1 107.4 117.0 124.7 132.1 140.2 143.5 150.8 159.3 168.6 178.5 120.7 126.0 134.0 142.4 144.6 152.7 158.1 158.9 159.7 160.7 167.5 168.2 168.7 169.7 176.6 179.2 178.3 179.7 State and Rest of the world local 3.5 3.5 4.2 4.3 4.4 4.5 4.7 4.9 5.4 6.2 7.3 8.5 9.4 10.1 11.2 12.3 13.3 14.7 15.8 17.6 19.6 21.6 23.1 25.5 27.9 30.2 32.9 35.9 39.3 44.1 49.5 55.9 62.6 71.1 79.3 87.7 97.9 107.6 121.1 132.9 145.0 158.9 173.5 192.2 209.3 226.9 241.7 258.5 278.8 300.3 321.1 345.8 373.0 400.9 232.6 247.2 265.1 286.2 309.8 329.3 336.3 342.4 348.9 355.7 362.8 369.6 376.4 383.3 390.4 397.5 404.5 411.2 0.8 'A A .5 .5 .4 .5 .4 L2 1.5 1.4 1.5 2.0 2.2 2.1 2.2 2.6 3.0 3.4 2.9 3.1 3.5 3.8 4.5 4.9 5.4 5.8 5.6 6.0 6.8 6.8 7.3 9.3 11.2 16.2 19.5 17.5 21.1 25.4 30.5 43.8 47.6 52.1 51.2 49.9 47.4 40.7 34.4 29.0 33.5 37.6 38.6 48.7 51.3 46.0 42.0 29.4 30.2 36.8 30.1 31.4 35.7 37.8 32.6 37.2 42.8 41.6 31.6 42.9 38.3 TABLE B-9.—Gross national product by sector in 1982 dollars, 1929-90 [Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates] Gross domestic product Year or quarter 1929 1933 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 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 1988 1989 1990 " 1982- IV 1983: IV 1984- IV . 1985: IV 1986- IV 1987: IV 1988- 1 II Ill IV 1989- 1 . ... II Ill IV 1990: 1 II . Ill IV f Gross national product 709.6 498.5 716.6 772.9 909.4 1,080.3 1,276.2 1,380.6 1,354.8 1,096.9 1,066.7 1,108.7 1,109.0 1,203.7 1,328.2 1,380.0 1,435.3 1,416.2 1,494.9 1,525.6 1,551.1 1,539.2 1,629.1 1,665.3 1,708.7 1,799.4 1,873.3 1,973.3 2,087.6 2,208.3 2,271.4 2,365.6 2,423.3 2,416.2 2,484.8 2,608.5 2,744.1 2,729.3 2,695.0 2,826.7 2,958.6 3,115.2 3,192.4 3,187.1 3,248.8 3,166.0 3,279.1 3,501.4 3,618.7 3,717.9 3,845.3 4,016.9 4,117.7 4,155.8 3,159.3 3,365.1 3,535.2 3,662.4 3,733.6 3,920.7 3,970.2 4,005.8 4,032.1 4,059.3 4,095.7 4,112.2 4,129.7 4,133.2 4,150.6 4,155.1 4,170.0 4,147.6 Business * Total 704.6 496.1 713.5 770.3 906.0 1,077.1 1,273.4 1,377.7 1,352.6 1,093.3 1,061.6 1,102.5 1,103.4 1,197.4 1,320.3 1,371.7 1,427.4 1,407.8 1,485.5 1,515.0 1,539=7 1,529.7 1,619.1 1,654.1 1,696.6 1,785.6 1,858.5 1,957.1 2,070.6 2,192.5 2,255.0 2,347.9 2,406.2 2,399.1 2,464.1 2,584.9 2,711.8 2,693.5 2,665.7 2,793.7 2,921.2 3,073.0 3,136.6 3,131.7X 3,193.6 3,114.8 3,231.2 3,457.5 3,581.9 3,687.4 3,820.0 3,988.6 4,087.6 4,126.2 3,111.3 3,316.6 3,493.1 3,624.7 3,707.7 3,894.6 3,938.7 3,980.1 4,005.7 4,029.7 4,064.8 4,085.8 4,100.1 4,099.5 4,118.2 4,130.6 4,137.5 4,118.6 Total 1 611.6 404.9 586.8 635.5 738.7 832.9 891.6 934.3 914.3 866.3 886.1 925.4 916.7 1,002.8 1,080.5 1,114.7 1,170.0 1,154.6 1,229.7 1,254.1 1,274.0 1,260.4 1,345.8 1,369.7 1,403.2 1,480.9 1,546.7 1,635.2 1,737.4 1,837.1 1,880.9 1,961.1 2,009.8 2,004.4 2,068.0 2,186.6 2,309.1 2,283.9 2,249.6 2,374.8 2,497.2 2,639.2 2,696.4 2,683.2 2,739.8 2,658.2 2,770.1 2,990.1 3,103.3 3,198.2 3,320.1 3,473.9 3,557.9 3,581.9 2,654.1 2,853.2 3,022.2 3,141.7 3,215.1 3,389.1 3,429.4 3,467.6 3,488.7 3,509.7 3,541.5 3,557.9 3,567.9 3,564.4 3,580.0 3,587.2 3,590.8 3,569.9 Nonfarm J Farm 547.8 338.7 518.3 571.2 675.8 774.4 841.6 862.5 839.3 809.0 828.6 875.1 858.5 941.4 1,014.9 1,050.9 1,101.3 1,084.2 1,161.5 1,199.6 1,219.0 1,199.7 1,291.6 1,317.2 1,346.7 1,421.1 1,488.7 1,581.6 1,681.8 1,776.5 1,824.2 1,908.3 1,962.1 1,946.4 2,001.4 2,128.0 2,256.6 2,226.5 2,180.6 2,306.6 2,434.9 2,581.0 2,633.2 2,613.1 2,659.6 2,581.3 2,703.7 2,916.6 3,028.1 3,115.7 3,245.4 3,422.2 3,492.9 3,504.4 2,567.1 2,795.3 2,953.0 3,066.2 3,137.2 3,318.8 3,365.1 3,408.8 3,442.4 3,472.4 3,484.1 3,496.4 3,503.5 3,487.5 3,500.3 3,510.3 3,514.3 3,492.7 1 2 Includes compensation of employees in government enterprises. Compensation of government employees. Source: Department of Commerce, Bureau of Economic Analysis. 297 54.1 56.6 56.4 54.6 58.1 62.4 59.2 57.2 53.7 54.0 49.9 55.2 55.0 58.3 56.0 57.2 59.3 60.9 62.0 60.7 58.8 61.2 58.8 61.1 60.2 59.8 59.8 57.7 59.0 54.7 57.7 55.7 57.2 60.7 62.3 62.0 61.1 60.7 64.8 62.5 62.2 61.0 64.6 64.2 75.7 77.0 61.3 68.5 79.4 84.1 83.8 75.3 78.8 79.9 80.3 55.6 71.1 82.5 86.4 86.4 85.4 78.9 74.5 62.3 80.8 77.9 77.4 79.3 79.1 79.4 80.2 80.9 Statistical discrepancy 9.7 9.6 12.1 9.7 4.8 -4.0 -9.2 14.6 21.3 3.3 7.6 -4.9 3.2 3.1 9.7 6.5 9.4 9.5 6.2 6.2 -3.8 -4.6 -8.7 -3.7 .1 -1.8 -4.1 34 5.9 10 -2.8 95 -2.7 4.2 -3.4 -8.6 -3.3 4.2 5.6 -2.B 14 5.9 4.4 -.1 5.0 5.0 -4.3 16 -9.1 -23.6 -13.8 24 6.7 2.3 19 -7.1 -8.5 -16.1 211 -20.1 282 -25.1 -23.3 -16.4 -13.0 -2.4 .6 -2.5 -3.7 37 Households and institutions 34.4 27.1 33.3 35.8 35.8 36.9 34.3 34.3 34.4 35.4 37.9 41.2 42.4 45.0 46.1 46.2 47.7 48.4 53.2 56.1 57.7 60.7 62.7 67.4 68.0 70.7 72.5 74.6 77.4 80.4 83.1 85.6 88.2 87.0 88.8 91.2 93.4 93.9 96.4 97.0 98.0 101.0 103.7 107.3 109.9 112.7 114.9 117.6 121.3 125.7 129.5 137.5 146.2 154.6 113.8 115.8 119.0 123.2 126.3 132.1 134.2 136.3 139.0 140.4 142.3 145.2 148.0 149.2 150.8 153.6 156.7 157.2 Government2 Total 58.6 64.0 93.4 99.0 131.5 207.4 347.6 409.1 403.8 191.6 137.7 135.8 144.2 149.6 193.7 210.7 209.7 204.8 202.6 204.8 208.0 208.6 210.6 217.1 225.4 233.9 239.2 247.3 255.8 275.0 291.0 301.2 308.2 307.7 307.4 307.1 309.3 315.7 319.6 321.9 326.0 332.8 336.5 341.2 343.9 343.9 346.3 349.8 357.4 363.5 370.4 377.2 383.5 389.7 343.5 347.5 351.9 359.9 366.3 373.4 375.1 376.2 378.0 379.6 381.1 382.7 384.2 385.9 387.4 389.9 390.0 391.5 Federal 13.2 16.2 38.9 44.1 76.2 152.9 294.6 357.5 350.7 135.0 76.7 73.2 77.1 80.3 122.8 137.5 133.2 125.0 119.2 116.1 114.5 109.5 107.5 108.9 111.5 116.7 116.1 116.8 117.3 128.1 138.5 140.7 141.0 133.2 125.5 118.3 113.6 113.5 112.8 112.7 112.7 113.9 113.0 114.4 115.8 117.0 119.0 120.5 122.3 122.6 124.3 126.1 126.5 127.6 117.6 119.4 121.2 122.5 123.2 125.5 126.0 125.8 126.2 126.4 126.2 126.4 126.5 126.8 127.0 128.2 127.4 127.8 State and local 45.3 47.9 54.6 55.0 55.3 54.4 52.9 51.7 53.2 56.6 61.0 62.6 67.1 69.3 71.0 73.3 76.5 79.8 83.4 88.7 93.5 99.2 103.1 108.2 113.9 117.3 123.1 130.5 138.5 146.9 152.4 160.5 167.2 174.5 181.9 188.8 195.7 202.1 206.8 209.2 213.3 219.0 223.5 226.8 228.1 226.9 227.3 229.3 235.0 240.8 246.1 251.1 257.0 262.1 225.9 228.1 230.7 237.4 243.1 247.9 249.1 250.4 251.8 253.3 254.9 256.3 257.7 259.2 260.4 261.7 262.7 263.6 Rest of the world 4.9 2.4 3.1 2.6 3.4 3.1 2.7 2.9 2.3 3.6 5.1 6.2 5.6 6.2 7.9 8.3 7.9 8.4 9.4 10.7 11.5 9.5 10.0 11.1 12.1 13.9 14.9 16.1 17.0 15.9 16.3 17.7 17.0 17.1 20.7 23.7 32.2 35.9 29.3 33.0 37.4 42.1 55.7 55.5 55.2 51.2 47.9 43.9 36.9 30.5 25.3 28.3 30.2 29.6 48.0 48.5 42.1 37.6 25.9 26.2 31.5 25.7 26.4 29.5 30.9 26.4 29.6 33.7 32.4 24.5 32.6 29.0 TABLE B-10.—Gross national product by industry, 1947-88 [Billions of dollars] Gross domestic product FiGovern- StaTrans- Whole- nance, ment Rest tis- of the portation sale insur- Servand and and ance, ices govern- tical world Dura- Nondisment ble durable public retail and enter- crepgoods goods utilities trade real ancy estate prises Manufacturing Year Gross Agrinational culture, Conproduct forestry, Mining strucand tion Total fisheries 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 1.8 20.8 -1.3 23.2 .8 1.2 1.5 1.4 9.3 10.2 10.2 10.7 11.0 13.2 84.0 15.6 99.0 16.9 103.3 17.5 112.5 17.7 106.7 45.9 55.5 59.0 66.1 61.0 38.1 43.4 44.3 46.4 45.7 26.6 30.2 32.2 34.2 33.8 51.5 56.8 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 .8 2.7 1.8 2.6 2.7 1.5 2.0 2.2 2.1 2.2 20.0 19.8 19.6 22.1 20.4 12.5 13.6 13.7 12.6 12.5 19.1 21.3 22.2 21.8 23.7 121.3 127.2 131.8 124.3 141.8 70.8 73.9 78.0 70.0 81.6 50.4 53.3 53.9 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 19 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 12 57.6 62.1 .0 6 67.0 72.5 -1.4 3.5 3.8 4.5 4.9 5.4 1965 1966 1967 1968 1969 705.1 772.0 816.4 892.7 963.9 24.2 25.3 24.9 25.7 28.6 14.0 14.6 15.2 16.2 17.1 34.7 37.9 39.7 43.5 48.7 198.4 217.4 222.9 243.6 257.1 118.4 130.8 133.7 146.1 154.2 80.0 86.6 89.2 97.5 102.9 62.6 67.4 70.7 76.4 82.6 115.0 124.1 132.9 146.8 159.2 98.9 74.6 106.9 82.5 115.6 90.6 125.1 99.1 136.3 110.5 5.8 5.6 6.0 6.8 6.8 1970 1971 1972 1973 1974 1,015.5 1,102.7 1,212.8 1,359.3 1,472.8 29.9 32.2 37.4 56.2 55.0 18.7 18.8 20.2 23.4 36.9 51.4 56.5 63.0 70.4 74.5 252.3 265.7 292.5 326.4 338.5 145.9 153.8 172.6 195.4 201.7 106.3 111.9 119.9 131.0 136.7 88.4 97.1 108.0 118.7 129.1 168.7 183.7 202.6 225.6 246.0 145.8 161.4 174.8 190.5 206.7 120.2 130.2 144.6 163.2 179.4 78.2 -1.2 88.1 2.1 98.4 -.4 110.5 -1.1 121.0 -3.9 11 134.0 145.9 1.8 160.1 -1.6 173.1 -4.3 17 189.0 7.3 9.3 11.2 16.2 19.5 1975 . . . . 1976 1977 1978 1979 1,598.4 1,782.8 1,990.5 2,249.7 2,508.2 56.3 55.7 58.9 70.1 83.1 41.3 76.5 357.3 46.0 86.2 409.3 50.2 97.9 465.3 56.5 115.6 518.8 72.7 131.4 561.8 206.3 239.7 277.7 217.4 345.2 151.0 169.7 187.7 201.4 216.5 141.7 160.4 178.9 201.0 216.1 273.7 299.7 332.8 373.4 415.8 221.7 246.1 280.3 326.3 363.3 199.8 224.9 253.4 289.1 328.7 210.1 2.5 229.7 3.6 247.4 .0 270.3 -1.9 292.4 10 17.5 21.1 25.4 30.5 43.8 1980 1981 1982 1983 1984 2,732.0 3,052.6 3,166.0 3,405.7 3,772.2 77.2 92.0 89.6 74.3 92.9 107.3 143.7 132.1 118.4 119.4 137.7 138.4 140.9 149.6 171.5 581.0 643.1 634.6 683.2 771.9 351.8 385.8 362.5 385.6 451.1 229.2 257.3 272.1 297.6 320.8 240.8 269.6 288.4 320.0 354.4 438.9 483.1 506.5 542.9 613.9 400.6 449.3 475.1 536.4 572.8 374.0 422.6 463.6 515.5 580.2 322.1 354.7 383.9 410.5 442.5 4.9 4.1 1 5.2 5.4 47.6 52.1 51.2 49.9 47.4 1985 1986 1987 1988 4,014.9 4,231.6 4,524.3 4,880.6 92.0 93.6 98.3 99.8 114.2 74.3 77.0 80.4 186.6 203.8 216.9 232.6 789.5 832.4 872.1 948.6 458.8 478.1 495.4 530.3 330.8 354.3 376.6 418.3 374.1 394.9 415.9 441.4 658.2 682.5 724.8 780.8 639.5 696.3 764.9 830.3 648.1 717.6 792.7 872.5 476.7 48 503.5 18 535.9 -4.7 570.6 -9.6 40.7 34.4 30.5 33.3 1947 1948 1949 235.2 261.6 260.4 20.8 24.0 19.5 6.8 9.4 8.1 1950 1951 1952 1953 1954 288.3 333.4 351.6 371.6 372.5 20.8 23.9 23.2 21.4 20.8 1955 1956 1957 1958 . 1959 405.9 428.2 451.0 456.8 495.8 1960 1961 1962 1963 1964 9.1 11.5 11.5 Note.—The industry classification is on an establishment basis and is based on the 1972 Standard Industrial Classification. Data in this table reflect the annual revisions of the national income and product accounts (NIPA) published in July 1989. Later this year, estimates will be published for 1987-89 consistent with the NIPA revisions of July 1990. Source: Department of Commerce, Bureau of Economic Analysis. 298 TABLE B-ll.—Gross national product by industry in 1982 dollars, 1947-88 [Billions of 1982 dollars] Gross domestic product FiGovern- StaTransRest ment por- Whole- nance, Gross tisof the tation sale insur- Servand Connational culture, forest- Mining struc2 and ance, ices govern- tical Resid- world Dura- Nonand product ry, and disment crep- ual tion Total ble durable public retail and fisherenter- ancy 1 goods goods util- trade real ies estate prises ities Manufacturing Year 76.7 226.1 138.1 90.0 238.5 145.0 89.4 226.3 133.2 7.6 -13.6 156.2 155.5 -4.9 -7.5 3.2 -4.2 164.0 5.1 6.2 5.6 133.8 136.9 139.4 142.7 145.9 169.2 214.0 231.9 230.9 225.4 6.2 7.9 8.3 7.9 8.4 160.2 168.8 178.3 184.5 195.9 153.0 161.1 168.6 174.3 183.5 6.2 -6.6 223.4 225.6 -6.2 -11.1 229.2 -3.8 -14.7 -8.1 230.1 232.8 -"ie -11.0 9.4 10.7 11.5 9.5 10.0 245.4 247.8 263.9 273.9 290.7 206.5 215.0 226.5 235.9 245.8 190.2 197.7 •207.7 217.4 230.7 240.3 249.2 258.4 264.5 274.0 -8.7 -3.7 .1 -1.8 -4.1 11.1 12.1 13.9 14.9 16.1 161.5 174.2 178.1 189.5 200.3 309.8 326.5 335.4 354.8 361.7 259.8 271.1 282.4 296.0 314.0 240.4 253.9 265.2 274.7 287.8 284.3 305.5 322.3 332.6 340.2 -3.4 -14.0 5.9 -14.5 -1.0 -2.8 ~2.B -9.5 -2.7 17.0 15.9 16.3 17.7 17.0 203.9 209.8 223.8 243.0 248.8 367.6 385.7 414.8 437.0 426.2 320.7 335.9 350.9 367.7 381.6 295.7 302.4 320.0 340.2 347.5 339.6 340.0 340.5 343.4 350.6 -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 35.9 125.6 149.4 547.5 325.2 124.4 158.1 600.6 357.4 2222 246.4 433.1 387.6 352.4 243.2 257.1 454.4 403.1 367.7 355.0 357.7 4.2 -8.7 5.6 -6.6 29.3 33.0 145.5 157.1 664.8 403.3 148.3 166.9 694.7 423.3 142.2 167.4 712.2 433.1 261.5 271.2 433.7 417.9 399.6 271.4 284.0 466.6 442.8 421.5 279.0 291.3 488.0 461.1 436.9 .1 -4.9 363.0 6.3 371.6 -2.8 376.5 -1.4 -14.5 37.4 42.1 55.7 76.4 87.4 89.6 76.7 84.2 143.5 145.7 132.1 129.9 137.9 153.3 150.3 140.9 146.1 159.4 673.9 678.6 634.6 674.2 752.4 408.5 408.6 362.5 383.8 448.6 265.5 269.9 272.1 290.4 303.8 294.0 293.9 288.4 307.7 326.0 481.8 499.1 506.5 530.0 588.9 468.9 476.1 475.1 492.9 509.8 450.9 463.0 463.6 480.4 509.7 382.8 385.4 383.9 387.3 391.9 5.9 .0 4.4 9.9 -.1 .0 .9 5.0 5.0 -7.8 55.5 55.2 51.2 47.9 43.9 95.8 103.6 104.4 94.5 139.0 128.3 125.5 127.3 166.3 174.6 175.4 176.9 779.2 803.2 849.7 927.5 471.5 482.7 517.4 583.2 307.7 320.5 332.2 344.3 331.4 342.4 373.6 392.0 621.5 662.2 659.4 693.9 528.3 535.6 564.7 583.7 538.6 565.8 591.4 613.9 400.5 407.9 414.8 422.2 -14.4 -34.5 -27.4 -27.7 36J 30.5 26.6 28.1 88.0 100.0 157.8 103.0 124.7 93.5 98.7 161.9 107.7 128.9 93.1 90.7 166.1 112.2 129.0 1947 1948 1949 1,066.7 1,108.7 1,109.0 55.6 61.3 61.0 67.6 72.4 65.7 1950 1951 1952 1953 1954 1,203.7 1,328.2 1,380.0 1,435.3 1,416.2 64.3 62.6 64.2 66.3 68.2 72.8 80.8 81.5 84.3 83.3 100.0 110.9 115.9 119.9 124.8 257.7 288.4 298.2 319.9 296.6 156.7 181.4 190.6 208.4 185.8 101.0 107.0 107.6 111.5 110.8 95.3 104.9 104.5 106.7 104.1 182.1 183.7 189.5 195.6 197.1 119.7 126.4 134.7 142.2 149.5 1955 1956 1957 1958 1959 1,494.9 1,525.6 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 94.1 133.3 142.7 142.4 147.5 160.4 327.7 330.6 332.5 303.5 338.0 208.5 207.3 208.7 180.1 203.0 119.2 123.3 123.8 123.4 135.0 112.3 117.7 119.9 116.1 123.5 215.0 221.5 225.1 225.0 240.7 1960 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 98.1 102.2 105.7 163.1 165.1 172.5 177.5 185.9 338.7 339.4 368.3 397.4 425.4 202.4 199.9 220.5 238.9 259.3 136.3 139.5 147.8 158.5 166.2 127.8 130.0 136.3 143.8 150.4 1965 1966 1967 1968 1969 2,087.6 2,208.3 2,271.4 2,365.6 2,423.3 66.7 62.4 65.5 63.6 65.3 109.4 115.0 120.2 124.7 128.9 193.7 194.4 190.7 190.2 183.6 462.5 497.9 496.6 522.0 536.7 286.9 312.3 311.9 326.2 334.1 175.6 185.6 184.7 195.8 202.6 1970 1971 1972 1973 1974 2,416.2 2,484.8 2,608.5 2,744.1 2,729.3 68.8 70.6 70.9 70.3 69.7 134.5 132.4 134.4 133.4 130.3 168.0 162.7 166.7 170.4 162.3 506.8 515.5 561.2 621.3 591.6 304.8 305.5 336.5 377.0 363.5 202.0 210.0 224.8 244.3 228.1 1975 1976 2,695.0 2,826.7 73.1 71.5 1977« 1978 1979 2,958.6 ; 73.3 3,115.2 73.0 3,192.4 77.0 1980 1981 1982 1983 1984 3,187.1 3,248.8 3,166.0 3,279.1 3,501.4 1985 1986 1987 1988 3,618.7 3,717.9 3,853.7 4,024.4 3.1 9.7 6.5 9.4 9.5 -4.3 -1.6 -4.1 -8.0 -.6 2.0 5.3 9.4 3.5 -11.6 -6.9 -13.3 -19.7 -12.6 1 Equals the statistical discrepancy in current dollars divided by the implicit price deflator for gross domestic business product. 2 Equals GNP in constant dollars measured as the sum of expenditures less the statistical discrepancy in constant dollars less GNP in constant dollars measured as the sum of gross product originating by industry. 3 Data for gross domestic product by industry beginning 1977 are based on a revised methodology and are not comparable with data for earlier years. For details, see Survey of Current Business, January 1991. Note.—The industry classification is on an establishment basis and is based on the 1972 Standard Industrial Classification. Data in this table reflect the annual revisions of the national income and product accounts (NIPA) published in July 1989. Later this year, estimates will be published for 1987-89 consistent with the NIPA revisions of July 1990. Source: Department of Commerce, Bureau of Economic Analysis. 299 TABLE B-12.—Gross domestic product of nonfinancial corporate business, 1940-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Year or quarter 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 1988 1989 1990 " 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988- 1 II Ill IV 1989: I II Ill IV 1990: 1 II Ill IV " Gross domestic product of noninancial corporate business 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 2,267.1 2,367.1 2,524.8 2,720.7 2,854.5 2,954.6 1,779.4 2,012.5 2,201.8 2,309.4 2,408.7 2,597.4 2,645.1 2,700.5 2,739.9 2,797.3 2,812.8 2,847.5 2,879.1 2,878.5 2,907.5 2,960.0 2,979.1 Capital consumption allowances with capital Total consumption adjustment 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 92.5 103.0 115.1 130.8 150.7 172.5 200.2 223.0 229.8 240.1 252.6 267.4 281.9 297.6 317.8 331.6 229.7 232.2 245.0 257.4 273.6 286.5 291.4 295.2 299.0 304.9 309.4 313.0 322.3 326.4 326.1 329.1 333.4 337.9 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 1,143.3 1,266.7 1,368.2 1,538.1 1,559.3 1,684.4 1,906.6 2,014.5 2,099.7 2,243.0 2,423.1 2,536.7 2,623.0 1,549.7 1,780.3 1,956.7 2,051.9 2,135.2 2,310.9 2,353.7 2,405.3 2,440.9 2,492.4 2,503.4 2,534.6 2,556.7 2,552.2 2,581.3 2,630.9 2,645.7 Net domestic product Domestic income Indirect business tax, etc.1 5.5 6.4 6.8 7.3 8.1 8.9 10.1 11.9 13.2 13.9 15.3 16.5 18.0 19.2 18.6 20.6 22.4 23.7 24.1 26.2 28.5 29.8 32.2 34.2 36.8 39.4 40.7 43.3 49.9 54.9 59.0 64.7 69.4 76.5 81.5 88.3 95.4 104.4 114.1 122.1 138.5 165.9 166.9 182.9 204.2 218.4 230.2 240.2 257.5 272.9 289.8 169.7 189.6 210.6 221.5 232.7 245.8 250.9 255.1 260.8 263.3 266.2 271.1 277.4 277.1 283.9 284.2 293.6 297.4 Corporate profits with inventory valuation and capital consumption adjustments Total 40.2 54.1 70.5 85.7 88.3 80.6 82.3 100.3 115.2 110.1 126.2 146.0 151.1 161.5 158.1 180.0 191.1 198.2 190.7 216.7 223.9 229.4 252.0 268.7 291.2 321.7 355.0 371.5 408.1 441.6 451.2 485.3 541.9 610.8 654.5 700.7 797.1 906.5 1,029.2 1,144.7 1,229.7 1,372.3 1,392.4 1,501.5 1,702.5 1,796.1 1,869.5 2,002.8 2,165.6 2,263.8 2,333.2 1,379.9 1,590.7 1,746.1 1,830.4 1,902.5 2,065.1 2,102.9 2,150.2 2,180.1 2,229.1 2,237.2 2,263.5 2,279.4 2,275.1 2,297.4 2,346.8 2,352.1 ComProfits pensation of Profits after tax employ- Total Profits Profits ees before tax Divi- Undistax iability Total dends tributed profits 31.2 39.8 51.0 62.2 65.1 61.9 67.2 79.1 87.7 85.2 94.7 110.2 118.2 128.6 126.4 138.4 151.3 159.0 155.8 171.5 181.2 185.3 200.1 211.1 226.7 246.5 274.0 292.3 323.2 358.8 378.7 402.0 447.1 505.9 556.8 580.4 656.3 741.0 847.4 962.0 1,051.1 1,160.5 1,203.9 1,266.1 1,399.8 1,489.8 1,567.1 1,663.6 1,801.6 1,902.3 1,983.3 1,206.5 1,319.7 1,436.8 1,524.0 1,597.9 1,716.1 1,744.8 1,786.2 1,822.0 1,853.4 1,879.3 1,895.3 1,910.0 1,924.4 1,946.2 1,982.1 2,004.7 2,000.4 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 59.3 69.1 73.7 70.5 74.8 69.6 55.4 65.2 75.7 82.4 69.4 91.6 113.3 134.9 146.0 139.1 123.1 144.2 111.9 165.6 222.4 225.3 214.0 246.0 266.0 241.0 221.4 100.1 199.5 222.1 226.3 211.7 255.6 263.1 268.1 259.6 273.0 247.3 248.6 244.4 223.8 224.5 235.8 218.8 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 96.9 107.2 109.2 138.3 160.5 182.1 195.8 181.8 181.5 129.7 159.3 196.0 170.2 156.4 217.2 251.1 241.5 232.8 116.3 183.2 181.9 174.2 172.9 227.5 238.2 254.1 251.8 260.3 260.4 246.4 233.0 226.0 227.9 232.2 239.1 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 75.4 93.3 102.2 101.4 97.6 41.0 70.6 66.4 71.6 84.4 98.5 97.4 104.4 101.3 105.5 107.7 101.6 99.6 96.6 95.3 97.5 100.3 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 99.9 122.5 100.4 81.0 123.9 148.9 140.1 135.2 75.4 112.7 115.5 102.6 88.5 129.0 140.8 149.7 150.4 154.8 152.7 144.9 133.4 129.3 132.6 134.7 138.8 1 Indirect business tax and nontax liability plus business transfer payments less subsidies. Source: Department of Commerce, Bureau of Economic Analysis. 300 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 72.2 74.4 81.8 80.8 104.8 115.3 62.2 68.8 68.6 72.3 75.2 88.0 72.8 77.3 90.4 82.8 107.3 101.3 106.6 104.1 118.5 112.3 115.5 114.9 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 28.2 6.6 42.1 68.1 35.2 19.8 13.2 43.9 46.9 30.3 13.3 41.0 68.0 72.4 60.0 72.0 45.3 43.6 26.8 25.2 14.1 22.4 23.3 Inventory valuation adjustment -.2 -2.5 -1.2 -.8 -.3 -.6 -5.3 -5.9 22 1.9 -5.0 12 1.0 -1.0 -~L7 -2.7 -1.5 -'.3 -.2 .3 .0 .1 -L2 -2.1 -1.6 -3.7 -5.9 6.6 -4.6 -6.6 -20.0 -39.5 -11.0 -14.9 -16.6 -25.3 -43.2 431 -24.2 -10.4 -10.9 -5.8 -1.7 6.7 -19.4 -27.0 -21.7 -13.2 -13.4 -8.1 -1.6 -6.6 -8.0 -21.1 -21.8 -30.3 -33.3 -22.5 -43.0 -23.1 -6.1 -14.5 -11.4 -19^8 -21.2 Capital Net con- intersump- est tion adjustment -1.0 -1.0 -.7 -.4 .3 .5 -2.3 -2.8 -3.0 -2.9 -2.9 -3.2 -3.0 -2.4 -1.6 -.3 -1.1 -1.2 -1.2 -.8 -.2 .3 3.1 3.9 4.4 5.2 5.5 5.5 5.3 5.9 5.0 4.2 5.5 5.6 1.7 -6.6 -10.2 -9.0 -10.9 -13.5 -15.5 131 -7.5 17.1 32.1 56.7 50.9 48.2 41.8 21.2 1.8 -2.8 24.4 41.8 58.7 46.8 49.1 46.7 44.3 41.1 35.1 29.9 25.3 17.5 12.3 8.1 4.1 -.6 -4.3 1.4 1.3 1.3 1.1 1.0 1.0 .7 .8 .9 1.0 .9 1.1 1.2 1.3 1.6 1.6 1.8 2.2 2.7 3.1 3.5 4.0 4.5 4.8 5.3 6.1 7.4 8.8 10.1 13.2 17.1 18.1 19.2 22.5 28.3 28.7 27.5 30.6 35.9 43.5 55.5 67.5 76.6 69.8 80.3 81.1 88.4 93.2 98.0 120.5 128.5 73.4 71.5 87.2 80.1 93.0 93.4 94.9 95.9 98.5 102.7 110.5 119.6 125.0 126.9 126.6 128.9 128.6 129.8 TABLE B-13.—Output, costs, and profits of nonfinancial corporate business, 1948-90 [Quarterly data at seasonally adjusted annual rates] Year or quarter Gross domestic product of nonfinancial corporate business (billions of dollars) Current dollars 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 ... 1988 1989 1990 ". 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: I .. II III IV 1989:1 || III IV 1990:1 | | Ill 1982 dollars 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 2,267.1 2,367.1 2,524.8 2,720.7 2,854.5 2,954.6 1,779.4 2,012.5 2,201.8 2,309.4 2,408.7 2,597.4 2,645.1 2,700.5 2,739.9 2,797.3 2,812.8 2,847.5 2,879.1 2,878.5 2,907.5 2,960.0 2,979.1 538.9 515.7 570.4 622.4 637.3 668.4 650.8 719.3 747.0 758.1 725.2 798.5 820.8 839.1 904.8 964.4 1,029.0 1,111.7 1,189.5 1,217.0 1,286.5 1,339.6 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 1,807.9 1,837.2 1,782.2 1,886.0 2,036.5 2,117.4 2,173.9 2,290.2 2,403.7 2,431.2 2,429.5 1,760.2 1,940.5 2,069.5 2,137.7 2,198.5 2,339.4 2,373.9 2,398.9 2,413.2 2,428.6 2,427.8 2,431.3 2,443.9 2,421.8 2,423.1 2,440.1 2,435.1 Current-dollar cost and profit per unit of output (dollars) 1 Total cost and profit 2 0.258 .262 .269 .283 .289 .294 .297 .304 .313 .322 .328 .335 .338 .340 .344 .343 .348 .353 .362 .372 .388 .405 .423 .445 .460 .480 .530 .592 .629 .668 .712 .770 .852 .946 1.000 1.026 1.054 1.071 1.089 1.102 1.132 1.174 1.216 1.011 1.037 1.064 1.080 1.096 1.110 1.114 1.126 1.135 1.152 1.159 1.171 1.178 1.189 1.200 1.213 1.223 Capital consumption allowances with capital consumption adjustment Indirect business tax, etc.3 0.019 0.025 .022 .027 .021 .027 .022 .026 .023 .028 .024 .029 .026 .029 .025 .029 .027 .030 .029 .031 .032 .033 .030 .033 .031 .035 .031 .035 .030 .036 .029 .035 .029 .036 .028 .035 .034 .029 .031 .036 .032 .039 .034 .041 .038 .045 .040 .048 .041 .048 .042 .049 .050 .053 .062 .059 .065 .060 .068 .062 .064 .073 .082 .066 .077 .095 .109 .090 .125 .094 .123 .098 .118 .100 .119 .103 .123 .106 .123 .105 .124 .107 .131 .112 .137 .119 .131 .096 .120 .098 .118 .102 .120 .104 .124 .106 .122 .105 .123 .106 .123 .106 .124 .108 .126 .108 .127 .110 .129 .111 .132 .113 .135 .114 .135 .117 .135 .116 .137 .121 Compensation of employees 0.163 .165 .166 .177 .185 .192 .194 .192 .203 .210 .215 .215 .221 .221 .221 .219 .220 .222 .230 .240 .251 .268 .286 .295 .306 .322 .363 .390 .414 .439 .473 .523 .581 .632 .676 .679 .687 .704 .721 .726 .750 .782 .816 .685 .680 .694 .713 .727 .734 .735 .745 .755 .763 .774 .780 .782 .795 .803 .812 .823 1 Output 2 Corporate profits with inventory valuation and capital consumption adjustments Total 0.049 .046 .054 .056 .050 .047 .046 .056 .051 .049 .044 .053 .048 .048 .052 .055 .058 .062 .062 .058 .058 .052 .042 .048 .052 .053 .045 .062 .072 .080 .082 .076 .068 .078 .063 .089 .109 .106 .098 .107 .111 .099 .091 .057 .103 .107 .106 .096 .109 .111 .112 .108 .112 .102 .102 .100 .092 .093 .097 .090 Profits tax liability 0.022 .018 .030 .034 .028 .028 .024 .028 .027 .025 .022 .026 .023 .023 .023 .024 .023 .024 .025 .023 .026 .025 .021 .022 .023 .026 .028 .028 .033 .036 .037 .038 .037 .035 .026 .032 .036 .033 .035 .041 .043 .042 .040 .023 .036 .032 .033 .038 .042 .041 .044 .042 .043 .044 .042 .041 .040 .039 .040 .041 Profits after tax 4 0.027 .028 .024 .022 .022 .020 .022 .028 .024 .024 .022 .027 .024 .025 .029 .031 .034 .038 .037 .035 .032 .027 .021 .026 .029 .027 .018 .034 .038 .044 .044 .038 .031 .044 .037 .057 .073 .073 .064 .067 .068 .057 .051 .034 .066 .075 .072 .058 .067 .070 .068 .066 .069 .058 .060 .059 .052 .053 .057 .049 Net interest 0.002 .002 .002 .002 .002 .002 .002 .002 .002 .003 .004 .004 .004 .005 .005 .005 .005 .005 .006 .007 .008 .010 .013 .013 .013 .014 .018 .019 .017 .018 .020 .024 .031 .037 .043 .037 .039 .038 .041 .041 .041 .050 .053 .042 .037 .042 .037 .042 .040 .040 .040 .041 .042 .046 .049 .051 .052 .052 .053 .053 Output Compenper hour sation of all per hour of all employemployees (1982 dollars) collars) 12.771 13.248 13.422 13.837 14.349 14.966 15.519 15.863 16.116 16.307 16.753 16.777 16.828 17.296 17.662 18.101 17.620 18.035 18.372 18.700 18.831 18.697 18.591 18.703 18.774 19.284 19.744 20.057 20.522 21.014 21.306 20.955 2.743 2.845 2.962 3.056 3.174 3.275 3.419 3.517 3.712 3.916 4.209 4.494 4.808 5.110 5.404 5.834 6.398 7.034 7.615 8.215 8.916 9.774 10.809 11.815 12.682 13.085 13.571 14.112 14.793 15.265 15.874 16.396 18.793 19.442 19.792 20.129 20.662 21.139 21.333 21.323 21.283 21.208 21.016 20.961 20.989 20.743 20.663 20.760 20.707 12.881 13.221 13.741 14.350 15.017 15.507 15.585 15.781 15.972 16.088 16.268 16.339 16.404 16.483 16.597 16.863 17.048 is measured by gross domestic product of nonfinancial corporate business in 1982 dollars. This is equal to the deflator for gross domestic product of nonfinancial corporate business with the decimal point shifted two places to the left. 3 Indirect business tax and nontax liability plus business transfer payments less subsidies. 4 With inventory valuation and capital consumption adjustments. Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics). 301 TABLE B-14.—Personal consumption expenditures, 1940-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Year or quarter 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 1988 1989 1990 p 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988:1 II Ill IV 1989:1 II Ill IV 1990:1 II Ill IV ». 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 2,629.0 2,797.4 3,009.4 3,238.2 3,450.1 3,658.1 2,117.0 2,315.8 2,493.4 2,700.4 2,868.5 3,079.1 3,147.7 3,204.3 3,268.2 3,332.6 3,371.7 3,425.9 3,484.3 3,518.5 3,588.1 3,622.7 3,693.4 3,728.1 7.8 9.7 6.9 6.5 6.7 8.0 15.8 20.4 22.9 25.0 30.8 29.9 29.3 32.7 32.1 38.9 38.2 39.7 37.2 42.8 43.5 41.9 47.0 51.8 56.8 63.5 68.5 70.6 81.0 86.2 85.7 97.6 111.2 124.7 123.8 135.4 161.5 184.5 205.6 219.0 219.3 239.9 252.7 289.1 335.5 372.2 406.0 423.4 457.5 474.6 481.6 263.8 310.0 346.7 373.2 422.0 427.4 448.9 453.7 454.2 473.1 466.4 473.6 487.1 471.2 492.1 478.4 482.3 473.5 2.8 3.5 .7 .8 .8 1.0 4.1 6.6 8.0 10.6 13.7 12.2 11.3 13.9 13.0 17.8 15.8 17.3 14.8 18.9 19.7 17.8 21.5 24.4 26.0 29.9 30.3 30.0 36.1 38.4 35.9 44.9 51.5 56.7 50.3 55.8 72.7 85.4 95.1 96.9 90.3 100.5 108.9 130.4 157.4 179.1 196.2 197.9 212.2 215.5 213.2 115.7 144.4 162.3 173.8 201.1 198.9 212.2 211.0 207.8 217.8 211.3 216.2 226.9 207.5 221.1 212.4 214.7 204.7 3.8 4.8 4.6 3.9 3.8 4.5 8.4 10.6 11.5 11.3 13.7 14.1 14.0 14.7 14.8 16.4 17.3 17.2 16.9 18.1 18.0 18.3 19.3 20.7 23.2 25.1 28.2 30.0 32.9 34.7 35.7 37.8 42.4 47.9 51.5 54.5 60.2 67.1 73.9 82.1 86.2 92.7 95.7 107.1 118.8 129.9 139.7 148.8 161.8 171.4 176.8 99.1 112.4 122.7 134.7 143.8 151.1 156.2 161.2 163.0 166.8 170.2 170.7 171.5 173.0 178.9 176.8 176.4 175.1 37.0 42.9 50.8 58.6 64.3 71.9 82.7 90.9 96.6 94.9 98.2 109.2 114.7 117.8 119.7 124.7 130.8 137.1 141.7 148.5 153.2 157.4 163.8 169.4 179.7 191.9 208.5 216.9 235.0 252.2 270.3 283.3 305.1 339.6 380.9 416.2 452.0 490.4 541.8 613.2 681.4 740.6 771.0 816.7 867.3 911.2 942.0 1,001.3 1,060.0 1,130.0 1,194.2 786.6 837.9 879.6 932.7 952.1 1,019.9 1,029.8 1,049.1 1,073.2 1,088.0 1,106.7 1,127.1 1,137.3 1,148.8 1,174.7 1,179.0 1,205.0 1,218.3 Food Cloth- Gasoline ing and and shoes oil 20.2 23.4 28.4 33.2 36.7 40.6 47.4 52.3 54.2 52.5 53.9 60.7 64.1 65.4 66.8 68.6 71.4 75.1 77.9 80.7 82.7 84.8 87.1 89.5 94.6 101.0 109.0 112.3 121.6 130.5 142.1 147.5 158.5 176.1 198.2 218.7 236.2 255.9 282.2 317.3 349.1 376.5 398.8 421.9 448.5 471.6 500.0 530.7 562.6 595.3 624.9 407.0 430.8 456.1 482.5 511.9 539.0 545.7 557.4 570.4 577.1 588.8 592.5 597.6 602.2 616.4 623.3 629.8 629.9 2.3 7.5 2.6 8.8 2.1 11.0 1.3 13.4 1.4 14.6 1.8 16.5 3.4 18.2 4.0 18.8 4.8 20.1 5.3 19.3 5.5 19.6 6.1 21.3 6.8 22.0 7.4 22.2 7.8 22.3 8.6 23.3 9.4 24.4 24.5 10.2 24.9 10.6 26.4 11.3 27.0 12.0 27.6 12.0 29.0 12.6 29.8 13.0 32.4 13.6 34.1 14.8 37.4 16.0 39.2 17.1 43.2 18.6 46.5 20.5 47.8 21.9 51.7 23.2 56.4 24.4 62.5 28.1 66.0 36.1 70.8 39.7 76.6 43.0 84.1 46.9 94.8 51.3 102.2 66.1 109.0 83.7 119.9 92.7 124.4 89.1 135.1 90.2 146.7 90.0 156.4 90.6 166.8 73.5 178.4 75.3 191.1 77.3 204.6 83.8 213.3 93.7 126.5 89.8 141.1 91.9 149.8 89.0 160.6 91.0 168.7 66.0 182.2 77.3 184.2 75.6 187.8 76.6 193.6 78.4 198.6 78.5 199.3 79.0 203.4 88.2 206.9 84.5 208.7 83.5 212.9 87.1 212.6 84.5 215.8 94.0 212.0 109.1 1 2 Includes other items not shown separately. Includes imputed rental value of owner-occupied housing. Source: Department of Commerce, Bureau of Economic Analysis. Services Nondurable goods Durable goods Personal FurniconMotor ture sumption vehi- and expendi- Total » cles house- Total » and hold tures parts equipment 302 Fuel oil and coal 1.5 1.7 1.9 2.0 2.0 2.2 2.5 3.0 3.4 3.1 3.4 3.5 3.5 3.4 3.5 3.8 3.9 4.1 4.2 4.0 3.8 3.8 3.8 4.0 4.1 4.4 4.7 4.8 4.7 4.6 4.4 4.6 5.1 6.3 7.8 8.4 10.1 11.1 12.0 15.8 18.0 19.4 18.6 17.5 17.8 18.5 16.6 17.2 17.2 17.7 18.6 18.2 18.1 16.8 19.7 16.0 17.6 17.7 17.1 17.2 16.9 16.1 17.0 17.4 20.1 17.7 17.4 19.6 19.5 Household operation Total l Housing* Trans- MediElec- porta- cal tricity tion care Total » and gas 26.2 28.3 31.0 34.3 37.2 39.7 45.4 50.6 55.5 58.4 63.2 69.0 75.1 82.1 88.0 94.3 101.6 108.5 115.7 125.0 134.0 141.8 151.1 160.6 172.8 185.4 200.3 216.0 236.4 259.4 284.0 310.7 341.3 373.0 411.9 461.2 515.9 582.3 656.1 734.6 831.9 934.7 1,027.0 1,128.7 1,227.6 1,345.6 1,449.5 1,584.7 1,720.7 1,845.5 1,982.3 1,066.5 1,167.9 1,267.1 1,394.5 1,494.4 1,631.8 1,668.9 1,701.5 1,740.7 1,771.5 1,798.6 1,825.1 1,859.8 1,898.5 1,921.3 1,965.3 2,006.2 2,036.3 9.7 10.4 11.2 11.8 12.3 12.8 14.2 16.0 17.9 19.6 21.7 24.3 27.0 29.9 32.3 34.4 36.7 39.3 42.0 45.0 48.2 51.2 54.7 58.0 61.4 65.4 69.5 74.1 79.7 86.8 94.0 102.7 112.1 123.1 135.1 148.4 163.5 182.4 205.2 231.1 261.5 295.6 321.1 344.1 371.3 403.0 434.2 468.9 502.3 533.9 569.5 330.3 353.8 382.2 416.2 446.1 483.4 491.9 497.8 505.9 513.8 520.3 527.8 538.2 549.5 556.3 563.6 575.8 582.1 2.1 2.2 1.5 4.0 2.4 1.5 2.4 4.3 2.7 2.7 1.6 4.8 3.4 1.7 5.2 2.9 3.7 1.8 5.9 3.3 6.4 4.0 1.9 3.6 5.0 2.1 6.8 4.6 2.3 5.6 5.3 7.5 5.8 8.1 2.6 6.3 5.9 2.9 8.5 6.5 6.2 9.5 3.3 6.9 3.7 10.4 7.4 6.8 4.1 11.2 7.3 8.3 4.5 9.3 8.0 12.1 8.2 10.2 5.0 12.7 8.5 10.8 5.5 14.2 15.4 8.9 11.7 6.1 9.4 12.8 6.5 16.3 9.7 14.0 7.1 17.4 7.6 10.5 15.3 18.7 8.3 11.2 16.4 20.3 8.8 11.7 17.5 21.2 9.4 12.2 19.4 22.4 9.9 12.7 21.0 23.6 25.0 10.4 13.4 24.1 26.5 10.9 14.5 25.9 28.2 11.5 15.9 28.3 30.1 12.2 17.3 31.1 32.3 13.0 18.9 35.7 35.0 14.0 20.9 40.9 37.7 15.2 23.7 46.1 40.9 16.6 27.1 51.8 45.2 18.4 29.8 57.8 49.6 20.0 31.2 64.4 55.4 23.5 33.3 72.4 63.5 28.5 35.7 84.2 72.3 32.5 41.3 95.9 81.7 37.6 49.2 111.5 90.9 42.1 53.5 125.1 100.3 46.8 59.0 141.4 113.9 56.4 64.5 164.2 127.5 63.5 68.3 193.5 143.4 72.8 69.7 217.8 156.0 80.0 74.8 238.3 166.9 84.8 82.0 265.3 175.3 88.9 89.8 291.5 179.6 87.3 96.6 318.4 185.9 88.6 106.5 357.3 197.4 93.6 118.0 398.4 206.3 97.7 126.4 434.3 210.6 95.6 136.7 483.4 148.0 74.8 71.1 226.9 161.4 84.1 77.6 246.9 169.3 86.3 84.5 275.3 179.0 90.2 92.1 304.3 180.9 87.0 99.8 330.9 187.8 88.8 111.1 370.7 192.6 92.0 112.7 381.2 195.3 92.5 117.6 392.4 200.3 94.7 120.1 405.6 201.5 95.2 121.6 414.6 202.8 95.6 124.3 422.4 202.6 95.1 125.2 428.7 205.7 97.2 127.4 435.6 214.2 103.0 128.8 450.6 205.2 92.5 132.3 462.6 211.9 97.5 135.2 475.8 212.7 96.4 137.4 491.5 212.6 96.1 142.1 503.8 TABLE B-15.—Personal consumption expenditures in 1982 dollars, 1940-90 [Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates] Nondurable goods Durable goods Personal Year or quarter conMotor vehisumption expendi- Total1 cles tures and parts Furniture and house- Total1 hold equipment 1940 502.6 40.6 18.6 17.6 1941 531.1 46.2 20.6 20.4 1942 527.6 31.3 8.4 17.4 1943 7.7 14.0 539.9 28.1 1944 7.1 12.4 557.1 26.3 1945 592.7 28.7 7.4 13.7 1946 655.0 47.8 15.2 22.9 1947 666.6 56.5 21.8 25.7 1948 681.8 61.7 25.5 27.1 1949 . 695.4 67.8 32.7 26.4 1950 733.2 80.7 41.3 30.1 1951 ... . 748.7 74.7 36.3 28.9 771.4 73.0 34.1 28.9 1952 1953 802.5 80.2 39.9 29.9 1954 822.7 81.5 40.6 30.1 1955 . 873.8 96.9 51.5 33.7 1956 899.8 92.8 45.3 34.9 1957 919.7 92.4 45.8 33.7 1958 932.9 86.9 40.8 33.2 1959 979.4 96.9 47.4 35.5 1960 1,005.1 98.0 49.2 34.9 1961 1,025.2 93.6 44.6 35.3 1962 1,069.0 103.0 51.0 37.4 1963 1,108.4 111.8 56.4 39.9 1964 1,170.6 120.8 59.0 44.7 1965 1,236.4 134.6 67.5 48.5 1966 1,298.9 144.4 68.5 53.8 1967 1,337.7 146.2 67.4 55.8 1968 1,405.9 161.6 77.3 59.2 1969 1,456.7 167.8 80.4 60.9 1970 1,492.0 162.5 73.5 61.1 1971 1,538.8 178.3 86.4 63.5 1972 1,621.9 200.4 98.3 70.2 1973 1,689.6 220.3 106.7 77.9 1974 1,674.0 204.9 90.3 78.2 1975 1,711.9 205.6 91.1 75.9 1976 1,803.9 232.3 109.6 80.6 1977 1,883.9 253.9 121.2 87.3 1978 1,961.0 267.4 125.9 92.3 1979 .. 2,004.4 266.5 119.4 97.1 1980 2,000.4 245.9 103.8 95.4 1981 2,024.2 250.8 106.3 96.5 1982 2,050.7 252.7 108.9 95.7 1983 2,146.0 283.1 126.8 106.1 1984 2,249.3 323.1 148.0 118.4 1985 2,354.8 355.1 164.4 131.0 1986 2,446.4 384.4 176.2 142.9 1987 2,515.8 391.4 171.1 151.6 1988 2,606.5 418.2 182.1 165.0 1989 2,656.8 428.0 181.4 175.0 1990 ". 2,682.2 428.4 177.8 179.8 1982: IV 2,078.7 262.0 115.0 98.4 1983: IV 2,191.9 300.5 138.1 111.1 1984: IV 2,281.1 333.1 151.6 122.7 1985: IV 2,386.9 356.4 158.9 136.6 1986: IV 2,477.8 397.5 178.4 147.7 1987: IV 2,534.2 392.6 170.3 154.2 1988:1 2,576.8 412.4 182.7 159.8 II 2,594.1 416.2 182.0 164.4 Ill 2,616.4 415.1 178.2 166.2 IV 2,638.8 429.0 185.5 169.7 1989:1 2,636.7 422.4 178.6 173.7 II 2,645.3 428.2 181.8 175.5 Ill 2,675.3 438.1 191.1 175.0 IV 2,669.9 423.1 174.1 175.7 1990:1 2,677.3 437.6 183.9 181.4 II 2,678.8 426.8 177.8 180.0 Ill 2,696.8 429.5 179.6 179.7 IV 2,675.8 419.9 170.0 178.1 259.4 275.6 279.1 284.7 297.9 323.5 344.2 337.4 338.7 342.3 352.8 362.9 376.6 388.2 393.8 413.2 426.9 434.7 439.9 455.8 463.3 470.1 484.2 494.3 517.5 543.2 569.3 579.2 602.4 617.2 632.5 640.3 665.5 683.2 666.1 676.5 708.8 731.4 753.7 766.6 762.6 764.4 771.0 800.2 825.9 847.4 878.1 892.7 909.4 919.9 911.5 778.6 812.7 831.2 858.3 883.5 895.2 900.9 905.3 914.4 917.1 918.5 914.6 923.4 923.0 915.6 911.2 916.4 902.8 Food Cloth- Gasoline S! and shoes oil Fuel oil and coal Total * Housing* 150.6 158.3 161.8 166.3 178.5 193.0 202.2 193.9 191.5 193.6 196.6 202.5 209.8 217.7 222.0 231.3 238.8 243.5 243.5 252.1 255.5 259.7 263.7 266.5 277.2 290.4 299.4 304.0 317.0 324.3 334.5 335.9 344.2 340.8 336.6 346.4 363.6 377.1 379.6 387.5 394.9 392.5 398.8 414.0 422.8 435.5 447.1 454.0 462.2 462.9 457.5 404.6 418.2 426.2 441.0 448.7 455.8 458.4 462.2 464.0 464.2 466.4 461.9 463.0 460.3 457.4 459.3 459.4 454.0 36.3 17.2 38.9 19.2 40.3 14.5 43.0 9.2 41.7 9.5 43.4 12.5 44.7 22.7 42.5 24.1 42.7 25.7 43.0 27.9 44.3 29.0 43.7 31.5 45.8 34.1 46.2 36.0 46.2 37.1 48.6 40.3 49.7 42.8 49.3 44.4 49.9 46.5 52.3 48.9 52.7 50.7 53.7 51.0 56.0 53.2 56.9 54.7 61.5 57.4 64.0 60.2 68.3 63.9 68.8 66.0 71.7 70.6 73.0 75.2 72.0 79.9 75.3 83.6 80.3 87.0 86.0 91.7 84.9 87.2 88.1 89.8 92.2 93.4 97.4 96.4 107.1 100.9 112.1 97.1 114.8 88.4 122.2 87.8 124.4 89.1 132.6 93.2 142.2 94.5 147.2 94.4 157.4 97.5 160.7 95.8 165.0 97.4 172.7 96.7 172.7 94.7 126.2 89.7 137.4 94.4 143.5 94.7 149.9 94.5 158.0 97.7 161.2 95.2 162.2 96.2 161.7 97.5 167.6 97.2 168.5 98.4 168.2 97.9 170.8 95.7 176.6 95.5 175.1 97.5 174.2 96.2 171.3 93.9 174.4 94.4 171.0 94.3 23.8 24.6 25.3 25.7 25.5 27.2 29.2 30.8 31.0 27.3 29.4 29.3 28.5 27.6 28.1 29.9 29.9 29.7 30.8 29.4 28.5 26.7 26.7 28.0 29.5 31.0 31.8 31.8 30.1 28.6 26.7 25.9 28.6 30.9 24.3 24.2 27.0 26.1 26.9 26.2 21.6 19.2 18.6 18.6 18.5 19.6 22.0 22.4 22.4 21.9 19.2 17.6 19.4 18.0 20.5 23.3 22.2 22.9 21.9 22.3 22.6 20.8 21.4 21.8 23.8 18.6 20.4 21.0 16.8 202.7 209.3 217.2 227.2 232.9 240.5 262.9 272.6 281.4 285.3 299.8 311.1 321.9 334.1 347.4 363.6 380.1 392.6 406.1 426.7 443.9 461.4 481.8 502.3 532.3 558.5 585.3 612.3 641.8 671.7 697.0 720.2 756.0 786.1 803.1 829.8 862.8 898.5 939.8 971.2 991.9 1,009.0 1,027.0 1,062.7 1,100.3 1,152.3 1,183.8 1,231.6 1,278.9 1,309.0 1,342.2 1,038.1 1,078.6 1,116.8 1,172.2 1,196.8 1,246.4 1,263.5 1,272.6 1,286.8 1,292.8 1,295.8 1,302.5 1,313.8 1,323.8 1,324.2 1,340.8 1,350.8 1,353.1 1 2 Includes other items not shown separately. Includes imputed rental value of owner-occupied housing. Source: Department of Commerce, Bureau of Economic Analysis. Services Household operation 303 53.6 56.0 58.1 59.8 61.9 62.6 67.2 72.8 76.5 80.9 86.1 91.9 97.5 102.5 107.1 112.1 117.1 122.6 127.7 133.6 139.8 145.7 153.0 159.4 166.1 174.4 181.7 189.3 197.9 207.6 216.1 224.5 235.5 246.5 258.6 265.7 273.2 279.6 292.8 304.1 312.5 318.9 321.1 325.4 333.0 341.7 348.2 358.2 366.0 372.1 377.1 322.1 328.2 335.8 344.4 351.0 361.5 363.8 365.5 366.8 367.8 369.1 371.1 373.0 375.2 376.3 376.9 377.2 378.1 ElecTotal » tricity and gas 32.4 32.0 33.4 31.2 31.5 32.4 35.1 37.6 39.0 40.1 43.8 46.2 47.0 48.9 50.5 55.5 59.3 61.2 63.3 65.7 68.7 70.9 74.4 77.0 80.5 83.9 87.7 91.9 95.1 99.3 102.2 103.6 108.6 112.6 112.8 117.5 122.3 128.2 134.0 138.3 142.6 142.0 143.4 146.2 148.8 151.6 151.9 156.8 164.1 167.6 167.1 143.1 149.4 148.9 153.9 153.3 157.9 162.0 162.7 166.4 165.2 165.2 164.7 167.7 172.7 162.8 168.5 170.1 167.1 7.1 7.3 7.9 8.2 8.6 9.2 10.3 11.7 12.8 13.7 15.6 17.6 19.0 20.4 22.4 24.2 26.4 28.0 29.5 31.2 32.9 34.6 37.1 38.8 40.8 42.7 44.9 47.4 49.7 52.4 54.4 55.8 58.5 59.8 60.2 63.3 65.5 68.1 70.7 71.1 73.1 72.0 72.8 74.2 75.4 77.5 76.5 78.9 82.8 84.1 80.8 71.6 76.9 75.7 79.1 77.6 79.2 82.1 82.2 84.1 82.9 82.7 81.9 84.3 87.7 77.7 82.4 82.7 80.2 Transportation 17.7 19.7 21.9 26.9 29.2 31.0 35.9 35.3 35.1 33.2 32.4 33.2 33.4 34.2 33.3 34.2 35.6 36.2 35.4 36.8 37.9 38.2 39.6 41.2 43.4 45.5 48.3 51.4 54.7 58.1 59.8 62.1 66.0 67.8 68.4 69.4 72.6 77.8 80.2 82.9 77.4 73.3 69.7 71.4 75.9 82.1 86.2 89.5 94.3 96.9 100.3 69.1 72.6 78.0 83.8 87.4 90.5 92.4 94.0 95.0 95.8 95.5 96.2 97.5 98.4 98.8 99.7 100.9 102.0 Medi- cal care 21.6 22.4 23.7 24.1 25.9 26.5 31.1 33.8 36.7 37.8 40.1 42.0 44.2 46.6 49.5 51.0 53.9 56.8 60.5 64.0 66.5 69.1 74.3 79.1 88.0 91.4 95.2 98.3 105.2 113.6 120.4 128.2 136.0 145.4 151.3 159.9 167.8 177.8 184.8 192.2 200.6 212.0 217.8 222.3 232.0 240.9 251.5 266.9 279.3 286.1 301.7 220.7 224.6 235.7 245.2 256.5 271.8 274.9 277.3 281.3 283.6 284.6 284.7 285.7 289.3 294.7 299.3 304.6 308.1 TABLE B-16.—Gross and net private domestic investment, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Gross private domestic 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 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 1988 1989 1990". 1982- IV 1983: IV 1984: IV 1985: IV 1986: IV 1987- IV 1988-1 II III.. IV 1989:1 || III IV 1990:1 II Ill IV P ... . 16.7 1.6 9.5 13.4 18.3 10.3 6.2 7.7 11.3 31.5 35.0 47.1 36.5 55.1 60.5 53.5 54.9 54.1 69.7 72.7 71.1 63.6 80.2 78.2 77.1 87.6 93.1 99.6 116.2 128.6 125.7 137.0 153.2 148.8 172.5 202.0 238.8 240.8 219.6 277.7 344.1 416.8 454.8 437.0 515.5 447.3 502.3 664.8 643.1 659.4 699.5 747.1 771.2 745.0 409.6 579.8 661.8 654.1 648.8 741.4 729.2 746.0 765.6 747.5 769.7 776.7 775.8 762.7 747.2 759.0 759.7 714.0 LessCapital consumption allowances with capital consumption adjustment 9.9 7.6 9.0 9.4 10.3 11.3 11.6 12.0 12.4 14.2 17.6 20.4 22.0 23.6 27.2 29.2 30.9 32.5 34.4 38.1 41.1 42.8 44.6 46.4 47.8 49.4 51.4 53.9 57.4 62.1 67.4 73.9 81.4 88.8 97.5 107.9 118.1 137.5 161.8 179.2 201.5 229.9 265.8 303.8 347.8 383.2 396.6 415.5 437.2 460.1 487.0 514.3 554.4 575.7 393.2 400.8 423.5 446.9 470.8 496.7 504.8 510.5 516.3 525.7 534.7 543.0 567.5 572.5 567.0 571.1 579.3 585.2 Equals: Net private domestic investment Net fixed investment Nonresidential Total 6.7 61 .5 4.1 8.0 10 -5.3 42 -1.1 17.3 17.5 26.7 14.5 31.5 33.3 24.4 24.0 21.6 35.3 34.6 29.9 20.8 35.5 31.8 29.4 38.2 41.8 45.7 58.8 66.5 58.3 63.1 71.8 60.0 74.9 94.1 120.7 103.4 57.8 98.4 142.5 186.9 189.1 133.1 167.7 64.1 105.7 249.4 205.9 199.3 212.6 232.7 216.8 169.3 16.4 179.0 238.3 207.1 178.0 244.7 224.4 235.5 249.3 221.8 235.0 233.7 208.3 190.2 180.2 187.9 180.4 128.8 Total 5.0 -4.5 .1 1.9 3.5 -2.7 -4.7 -3.2 ioig 17.9 22.0 17.6 24.6 23.1 21.3 23.6 23.3 29.6 29.9 28.5 22.3 29.8 28.7 27.0 32.1 35.9 40.3 48.9 52.3 48.0 55.2 62.0 56.9 67.2 83.6 101.1 87.9 63.4 82.4 121.3 158.3 176.1 141.5 143.7 88.7 112.8 181.7 194.5 192.4 184.3 206.5 188.5 171.5 76.3 148.0 193.3 199.9 190.2 189.0 196.1 213.3 211.1 205.6 208.4 201.0 179.4 165.2 192.0 174.5 171.4 148.4 Source-. Department of Commerce, Bureau of Economic Analysis. 304 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 11.9 10.2 13.2 15.6 15.9 9.6 12.1 13.4 11.9 14.9 16.0 20.3 29.3 35.8 32.3 34.2 39.8 36.8 34.5 40.5 56.2 55.8 37.5 40.9 58.6 82.2 98.9 88.9 98.6 65.5 45.8 91.1 102.1 75.3 65.8 88.6 84.0 Structures 1.8 -1.7 -1.1 -.8 -.3 -1.7 -2.4 -1.9 -1.0 2.4 1.9 2.5 2.2 2.8 3.9 3.8 4.8 5.0 5.9 7.9 7.9 6.3 6.4 7.3 7.3 8.0 7.9 9.4 13.2 15.2 14.4 15.1 17.4 17.4 16.8 17.4 21.7 22.0 15.6 16.0 17.6 25.0 34.5 39.4 51.7 45.9 25.9 39.3 45.8 27.5 16.8 18.1 16.8 Producers' durable equipment 1.4 -1.8 .4 1.5 2.3 -.5 -.7 .5 2.8 4.5 8.7 9.3 6.5 7.5 7.7 6.4 7.1 5.2 7.3 7.7 8.1 3.2 5.7 6.1 4.6 6.9 8.1 10.9 16.1 20.7 18.0 19.0 22.4 19.4 17.7 23.1 34.4 33.7 21.9 24.8 41.0 57.2 64.5 49.5 46.9 19.6 19.9 51.8 56.3 47.8 49.0 70.4 67.2 Residential 1.7 -1.0 .8 1.2 1.5 -.6 -1.6 -1.9 -1.8 4.0 7.3 10.2 8.9 14.4 11.5 11.2 11.7 13.0 16.4 14.4 12.6 12.7 17.7 15.4 15.1 17.2 19.9 20.0 19.6 16.5 15.7 21.0 22.2 20.1 32.7 43.1 45.0 32.2 25.9 41.6 62.6 76.1 77.2 52.6 45.0 23.2 67.0 90.6 92.4 117.1 118.4 118.0 104.5 Change in business inventories 1.7 -1.6 .42 2.2 4.5 1.8 -.6 -1.0 10 6.4 5 4.7 31 6.8 10.2 3.1 -L6 5.7 4.6 1.4 15 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 83 24.0 -24.5 -7.1 67.7 11.3 6.9 28.3 26.2 28.3 -2.2 599 31.0 45.0 7.2 -12.2 55.7 28.3 22.2 38.2 16.2 26.6 32.7 28.9 25.0 -11.8 13.4 9.0 -19.5 TABLE B-17.—Gross and net private domestic investment in 1982 dollars, 1929-90 [Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates] Year or quarter Less: Capital consumption Gross allowprivate ances domestic with investcapital ment consumption adjustment 1929 1933 1939 1940 1941 1942 1943 1944 1945 . 1946 1947 1948 1949 ... 1950 1951 . 1952 1953 . 1954 1955 .. . 1956 1957 1958 1959 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 ., 1988 1989 1990 "... 1982: IV 1983- IV 1984: IV 1985- IV 1986: IV 1987- IV .. 1988:1 II Ill IV 1989- 1 II Ill IV 1990:1 II Ill IV P.... 139.2 22.7 86.0 111.8 138.8 76.7 50.4 56.4 76.5 178.1 177.9 208.2 168.8 234.9 235.2 211.8 216.6 212.6 259.8 257.8 243.4 221.4 270.3 260.5 259.1 288.6 307.1 325.9 367.0 390.5 374.4 391.8 410.3 381.5 419.3 465.4 520.8 481.3 383.3 453.5 521.3 576.9 575.2 509.3 545.5 447.3 504.0 658.4 637.0 639.6 669.0 705.7 716.9 690.3 408.8 577.2 655.7 648.0 615.2 706.6 698.4 705.1 723.0 696.2 717.0 719.1 722.3 709.1 700.7 700.7 697.0 662.8 86.8 86.5 84.4 84.9 86.3 86.9 85.7 84.8 85.4 88.0 91.8 96.8 101.7 106.5 111.8 117.0 122.1 127.4 132.6 138.3 143.5 147.7 151.9 156.3 160.6 165.1 170.3 176.3 183.7 192.2 201.1 209.8 219.8 229.8 239.5 253.4 263.6 276.1 287.0 297.3 309.6 323.7 341.3 356.1 369.7 383.2 394.4 407.2 426.7 443.4 460.8 479.7 506.0 519.7 390.0 397.9 413.5 435.3 450.0 467.6 472.4 477.3 482.1 486.9 491.8 496.9 515.6 519.8 512.5 516.5 522.5 527.2 Equals: Net private domestic investment Net fixed investment Presidential Total 52.4 -63.8 1.6 26.9 52.5 -10.2 -35.3 -28.4 -8.9 90.1 86.1 111.4 67.1 128.4 123.3 94.8 94.4 85.2 127.2 119.5 99.9 73.7 118.4 104.1 98.4 123.5 136.8 149.6 183.4 198.3 173.4 181.9 190.5 151.8 179.8 212.1 257.1 205.3 96.3 156.2 211.7 253.3 234.0 153.2 175.8 64.1 109.6 251.2 210.3 196.2 208.2 226.0 210.8 170.6 18.8 179.3 242.2 212.7 165.2 239.0 226.0 227.8 240.9 209.3 225.2 222.2 206.7 189.3 188.2 184.2 174.5 135.7 Total 41.6 -53.0 -2.3 12.5 24.7 -22.1 -36.0 -23.3 -.5 62.2 87.1 99.1 76.7 104.2 92.5 84.8 91.7 90.0 110.9 106.5 96.9 77.1 101.9 96.4 91.2 107.3 120.1 133.9 158.1 161.4 144.6 160.9 165.3 143.6 160.2 190.3 217.1 172.0 109.1 134.1 182.6 216.5 218.9 160.1 152.0 88.7 116.0 188.9 201.2 190.7 185.4 202.4 187.1 171.7 78.0 152.3 200.5 205.0 186.0 190.6 195.0 210.9 208.3 195.3 199.1 196.7 182.1 170.4 190.4 174.7 169.8 151.9 Source: Department of Commerce, Bureau of Economic Analysis. 305 Total 26.2 -40.2 -10.1 1.5 12.0 -17.5 -24.4 10.5 10.5 39.5 52.6 54.3 37.9 43.3 46.9 41.7 47.0 40.4 49.9 54.9 51.7 31.5 38.5 41.4 37.3 46.4 49.2 63.3 90.4 106.3 93.6 96.1 103.1 89.3 76.1 85.3 116.5 106.9 60.8 61.8 85.2 111.6 124.3 101.3 105.5 65.5 50.4 103.3 116.1 85.6 82.4 103.8 102.1 Structures 16.8 -24.3 -12.0 -8.5 -3.5 -15.9 -20.7 15.2 -8.3 15.4 11.7 14.3 12.7 15.7 18.8 18.8 22.9 24.4 27.7 32.5 30.7 24.8 25.0 27.9 28.1 30.3 29.1 34.0 46.2 50.4 45.9 46.7 49.7 46.1 40.4 39.8 46.8 42.5 27.9 27.3 28.7 37.2 44.8 47.2 56.0 45.9 26.2 39.8 41.9 20.0 11.4 10.2 8.1 Producers' durable equipment 9.4 -16.0 1.9 10.0 15.6 -1.6 -3.8 4.7 18.8 24.1 40.9 40.0 25.2 27.6 28.1 22.9 24.1 16.0 22.2 22.4 20.9 6.6 13.6 13.6 9.3 16.0 20.1 29.2 44.2 55.8 47.7 49.3 53.4 43.3 35.7 45.5 69.8 64.4 32.9 34.6 56.5 74.3 79.5 54.1 49.4 19.6 24.1 63.5 74.2 65.6 71.1 93.6 94.0 Residential 15.4 -12.8 7.8 11.1 12.7 -4.6 -11.5 -12.8 -11.0 22.7 34.5 44.8 38.9 60.9 45.6 43.2 44.7 49.6 60.9 51.6 45.2 45.6 63.4 55.0 53.8 61.0 70.9 70.6 67.7 55.1 50.9 64.8 62.2 54.2 84.1 105.0 100.6 65.1 48.3 72.2 97.4 104.9 94.6 58.7 46.5 23.2 65.6 85.6 85.1 105.1 103.0 98.6 84.9 Change in business inventories 10.8 -10.7 3.9 14.4 27.8 12.0 -5l2 -8.4 27.9 -1.0 12.3 -9.7 24.2 30.8 10.0 2.8 -4.8 16.3 12.9 3.0 -3.4 16.5 7.7 7.3 16.2 16.6 15.7 25.2 36.9 28.8 21.0 25.1 8.2 19.6 21.8 40.0 33.3 12.8 22.1 29.1 36.8 15.0 -6.9 23.9 -24.5 -6.4 62.3 9.1 5.6 22.8 23.6 23.8 -1.1 59.3 27.0 41.7 7.7 -20.8 48.4 31.0 16.9 32.6 14.0 26.1 25.5 24.6 18.9 -2.2 9.5 4.7 -16.3 TABLE B-18.—Inventories and final sales of business, 1946-90 [Billions of dollars, except as noted; seasonally adjusted] Inventories1 Inventory-final sales ratio Nonfarm 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 1988 1989 1990" 1988: 1 II Ill ... IV 1989:1 II Ill IV 1990:1. ... II III.. IV Total2 71.0 80.3 85.6 77.5 96.7 109.4 108.6 109.6 107.3 114.6 123.4 127.0 126.2 131.7 135.5 137.2 143.8 149.6 155.3 169.1 185.2 197.4 211.8 232.4 240.3 257.8 285.6 352.6 423.3 428.8 463.3 505.7 588.2 674.8 739.3 789.0 771.5 787.2 858.2 863.5 853.3 918.9 996.5 1,050.8 1,063.7 933.9 956.4 978.4 996.5 1,018.1 1,028.1 1,036.5 1,050.8 1,049.4 1,049.3 1,070.1 1,063.7 Farm 19.6 21.0 19.3 16.7 22.5 24.9 23.3 22.0 21.2 19.9 19.9 21.2 22.6 22.1 23.3 23.8 25.2 25.7 24.5 28.0 27.4 27.9 29.1 31.8 31.1 35.4 44.3 65.5 62.4 64.3 60.2 59.3 73.7 80.7 84.5 81.6 79.2 79.4 80.9 71.5 66.3 65.5 71.4 77.9 76.7 66.4 70.4 73.3 71.4 74.5 74.9 74.5 77.9 79.4 79.1 77.3 76.7 Total2 51.4 59.3 66.3 60.8 74.2 84.5 85.3 87.6 86.1 94.7 103.5 105.8 103.7 109.6 112.2 113.4 118.6 123.8 130.9 141.0 157.8 169.5 182.6 200.6 209.2 222.4 241.3 287.1 360.9 364.5 403.1 464 4. 514.5 594.1 654.8 707.4 692.2 707.8 777.3 792.1 787.0 853.4 925.1 972.9 969 8. 867.5 886.0 905.1 925.1 943.6 953.2 962.0 972.9 970.0 970.2 992.8 986.9 Manu- Wholesale facturing trade 24.6 29.0 32.2 28.6 34.9 43.1 44.0 46.0 43.9 48.3 54.0 54.3 52.7 55.2 56.2 57.2 60.3 62.2 65.9 70.7 80.9 87.5 94.0 103.4 105.8 107.3 113.6 136.1 177.0 177.8 194.9 210.6 238.4 281.1 310.7 330.2 316.1 315.9 343.4 333.5 321.1 343.8 370.2 382.7 383.8 349.5 356.6 362.5 370.2 377.2 379.3 383.1 382.7 382.5 377.8 390.2 383.8 1 10.4 11.1 12.5 12.5 14.7 15.6 15.6 15.8 16.1 17.6 18.9 19.2 19.3 21.0 21.3 21.8 22.4 23.9 25.2 26.9 30.3 32.7 34.6 37.9 41.7 45.2 50.0 59.4 75.6 76.2 86.1 96.2 113.8 133.7 154.8 164.7 162.2 163.8 177.5 181.0 184.1 199.1 217.9 226.6 234.1 205.4 210.0 215.3 217.9 219.7 222.5 223.8 226.6 227.3 228.2 233.2 234.1 Final sales3 Retail trade 12.8 14.5 16.6 15.4 19.2 19.7 19.4 20.0 20.2 22.8 23.7 25.0 25.1 26.2 27.5 27.0 28.3 29.6 31.0 33.7 36.2 36.9 40.7 44.5 45.8 52.3 57.7 66.4 74.6 74.7 82.7 93.3 107.8 117.0 122.7 134.0 134.7 148.2 166.7 180.9 185.5 208.2 222,3 238.0 236.3 207.9 212.2 217.1 222.3 228.5 231.1 232.0 238.0 231.6 234.5 237.0 236.3 Other 3.2 4.1 4.5 3.9 4.9 5.5 5.6 5.2 5.3 5.4 6.2 6.6 6.6 7.2 7.2 7.4 7.5 8.0 8.8 9.8 10.4 12.4 13.3 14.9 16.0 17.6 19.9 25.2 33.7 35.8 39.4 46.3 54.5 62.3 66.7 78.5 79.2 79.9 89.6 96.6 96.3 102.3 114.7 125.6 132.6 104.6 107.1 110.2 114.7 118.2 120.3 123.1 125.6 128.6 129.6 132.5 132.6 Total 15.8 18.4 19.8 19.7 21.8 24.9 26.4 27.5 28.0 30.2 31.9 33.3 34.3 36.2 37.5 39.5 41.8 44.5 47.1 52.1 55.3 58.8 64.8 68.8 72.4 78.9 87.7 96.8 104.6 117.1 128.5 143.9 165.1 183.2 201.1 217.8 229.5 247.0 268.8 290.3 305.6 325.2 354.0 371.5 389.6 332.9 341.1 345.8 354.0 359.2 364.2 368.4 371.5 380.3 383.3 387.5 389.6 4.48 4.36 4.33 3.94 4.44 4.40 4.11 3.98 3.84 3.80 3.87 3.82 3.68 3.64 3.61 3.47 3.44 3.36 3.30 3.24 3.35 3.36 3.27 3.38 3.32 3.27 3.26 3.64 4.05 3.66 3.60 3.51 3.56 3.68 3.68 3.62 3.36 3.19 3.19 2.97 2.79 2.83 2.81 2.83 2.73 2.80 2.80 2.83 2.81 2.83 2.82 2.81 2.83 2.76 2.74 2.76 2.73 Nonfarm4 3.24 3.22 3.35 3.09 3.41 3.40 3.23 3.18 3.08 3.14 3.24 3.18 3.02 3.03 2.99 2.87 2.84 2.78 2.78 2.70 2.85 2.88 2.82 2.91 2.89 2.82 2.75 2.97 3.45 3.11 3.14 3.10 3.12 3.24 3.26 3.25 3.02 2.87 2.89 2.73 2.57 2.62 2.61 2.62 2.53 2.61 2.60 2.62 2.61 2.63 2.62 2.61 2.62 2.55 2.53 2.56 2.53 Inventories at end of quarter. Quarter-to-quarter change calculated from this table is not the current-dollar change in business inventories (CBI) component of GNP. The former is the difference between two inventory stocks, each valued at their respective end-ofquarter prices. The latter is the change in the physical volume of inventories valued at average prices of the quarter. In addition, changes calculated from this table are at quarterly rates, whereas CBI is stated at annual rates. 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 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. 306 TABLE B-19.—Inventories and final sales of business in 1982 dollars, 1947-90 [Billions of 1982 dollars, except as noted; seasonally adjusted] Inventories1 Nonfarm Quarter Total * Fourth quarter: 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 1988 1989 . .. 1990 * 1988- 1 II Ill IV 1989: 1 II Ill IV 1990- 1 II Ill IV " .. 251.3 263.5 253.9 278.1 308.9 318.9 321.6 316.9 333.2 346.1 349.1 345.7 362.2 370.0 377.2 393.4 410.1 425.8 451.0 487.9 516.6 537.7 562.8 571.1 590.7 612.4 652.5 657 8. 673.0 695.1 724.2 761.0 776.0 769.1 793.0 768.4 762.0 824.2 833.3 838.9 861.7 854 8. 909.1 908.1 869.5 873.7 881.9 885.4 891.9 898.3 944 0. 909.1 986 0. 911.0 912.1 908.1 Farm 43.3 45.4 4. 44 47.7 51.5 54.6 54.3 55.9 56.0 53.7 54.9 57.3 58.1 59.4 6. 08 63.5 65.8 64.0 66.3 66.1 67.7 68.2 69.0 69.8 73.4 75.9 81.4 81.3 82.6 79.1 77.2 77.8 82.4 77.8 82.6 81.2 74.9 79.4 75.2 72.8 6. 69 63.9 69.0 70.9 67.4 66.8 67.2 63.9 6. 64 67.4 68.1 6. 90 70.5 70.0 7. 00 70.9 Total2 208.0 218.1 209.5 204 3. 257.4 264.3 267.4 209 6. 277.1 292.4 294.2 284 8. 304.2 310.5 316.5 329.9 342 4. 361.8 384.7 421.7 490 4. 494 6. 493.8 501.2 517.3 536.6 571.0 645 0. 590.3 616.1 670 4. 683.2 693.6 691.4 710.3 687.2 687.2 748 4. 758.2 766.1 749 9. 821.4 802 4. 837.2 802.1 869 0. 814.6 821.4 825.5 809 3. 836.3 802 4. 838.1 841.0 822 4. 837.2 Manu- Wholesale facturing trade 105.1 108.6 102.9 109.8 133.2 139.0 142.7 135.0 142.5 153.2 152.1 146.8 153.5 154.7 158.8 167.2 172.6 180.9 191.6 213.6 229.2 239.0 248.5 248.3 246.1 251.7 267.9 285 8. 281.9 294.0 301.9 314.1 324.7 326.8 330.3 315.2 309.3 330.0 320.6 315.5 322.7 329.8 333.6 331.2 325.4 326.2 327.3 329.8 330.3 332.1 335.0 333.6 334.0 333.4 334.3 331.2 39.9 42.7 42.8 47.6 49.0 50.0 50.4 51.1 54.8 56.6 56.0 56.0 60.7 61.8 63.1 65.0 68.9 72.6 76.5 85.1 90.7 93.5 98.9 105.8 110.7 114.0 118.4 128.4 124.0 131.2 140.5 151.6 156.1 161.6 165.0 161.5 157.9 171.0 174.3 180.6 185.8 192.4 193.7 195.5 190.2 190.6 192.7 192.4 191.1 192.7 193.2 193.7 194.2 194.9 195.3 195.5 Retail trade 39.6 43.7 42.8 49.5 49.6 49.6 50.8 51.2 57.1 57.8 59.8 59.4 61.9 65.2 64.2 67.5 70.3 73.4 79.2 84.3 84.2 90.5 96.4 96.6 107.2 114.0 122.1 121.1 115.9 122.3 130.9 139.1 136.7 130.4 135.5 132.9 142.4 157.8 169.1 171.2 186.4 192.4 199.3 193.4 185.0 187.0 189.6 192.4 195.4 196.3 196.2 199.3 192.9 194.8 195.0 193.4 Final sales3 Total Other 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 28.8 30.3 30.1 32.4 34.9 37.4 38.7 45.0 46.5 50.0 50.5 53.2 56.9 62.6 66.4 68.6 68.5 73.7 78.4 76.1 72.7 79.5 77.6 77.5 86.0 94.1 98.8 99.9 106.8 113.6 117.1 101.5 103.1 105.0 106.8 108.8 109.7 111.9 113.6 117.0 117.9 117.6 117.1 Inventory-final sales ratio 74.8 77.1 77.3 82.6 90.4 93.9 98.0 97.7 102.5 104.7 105.9 107.7 111.4 114.1 118.7 123.4 130.4 136.3 147.7 150.2 156.4 163.7 165.4 166.8 172.6 185.4 188.9 184.3 191.5 199.3 209.0 221.5 225.6 225.3 224.6 226.1 235.5 248.4 261.2 269.7 278.4 291.3 295.5 298.9 283.2 287.6 288.0 291.3 293.0 294.4 295.3 295.5 298.5 298.1 298.8 298.9 3.36 3.42 3.28 3.37 3.42 3.40 3.28 3.24 3.25 3.31 3.30 3.21 3.25 3.24 3.18 3.19 3.14 3.12 3.05 3.25 3.30 3.28 3.40 3.42 3.42 3.30 3.45 3.72 3.51 3.49 3.47 3.44 3.44 3.41 3.53 3.40 3.24 3.32 3.19 3.11 3.10 3.04 3.08 3.04 3.07 3.04 3.06 3.04 3.04 3.05 3.06 3.08 3.04 3.06 3.05 3.04 Nonfarm4 2.78 2.83 2.71 2.79 2.85 2.81 2.73 2.67 2.70 ' 2.79 2.78 2.68 2.73 2.72 2.67 2.67 2.64 2.65 2.60 2.81 2.87 2.87 2.98 3.00 3.00 2.89 3.02 3.28 3.08 3.09 3.10 3.08 3.08 3.07 3.16 3.04 2.92 3.00 2.90 2.84 2.86 2.82 2.84 2.80 2.83 2.81 2.83 2.82 2.82 2.82 2.83 2.84 2.81 2.82 2.82 2.80 1 Inventories at end of quarter. Quarter-to-quarter changes calculated from this table are at quarterly rates, whereas the constantdollar change in business inventories component of GNP is stated at annual rates. 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. 307 TABLE B-20.—Foreign transactions in the national income and product accounts, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Receipts from foreigners Year or quarter Exports of goods and services 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 1988 1989 1990" 1982: IV 1983- IV 1984: IV 1985: IV 1986: IV 1987: IV 1988:1 || III IV 1989-1 II Ill IV 1990: 1 . || III IV 7.1 2.4 4.6 5.4 6.1 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 31.1 33.1 35.7 40.5 42.9 46.6 49.5 54.8 60.4 69.8 73.1 82.1 114.1 149.5 161.3 177.7 191.6 227.5 292.4 352.1 383.9 361.9 352.5 383.5 370.9 396.5 449.6 552.0 626.2 670.4 335.9 364.7 385.7 369.2 402.4 485.8 525.7 540.4 558.7 583.1 609.7 628.8 623.7 642.8 661.3 659.7 672.7 687.7 Merchandise 7.1 2.4 4.6 5.4 6.1 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 31.1 33.1 35.7 40.5 42.9 46.6 49.5 54.8 60.4 68.9 72.4 81.4 114.1 151.5 161.3 177.7 191.6 227.5 291.2 351.0 382.8 361.9 352.5 383.5 370.9 396.5 449.6 552.0 626.2 670.4 335.9 364.7 385.7 369.2 402.4 485.8 525.7 540.4 558.7 583.1 609.7 628.8 623.7 642.8 661.3 659.7 672.7 687.7 5.3 1.7 3.3 4.1 4.5 3.4 2.9 3.6 5.4 11.8 16.1 13.3 12.2 10.2 14.2 13.4 12.4 12.9 14.4 17.6 19.6 16.4 16.5 20.5 20.9 21.7 23.3 26.7 27.8 30.7 32.2 35.3 38.3 44.5 45.6 51.7 73.9 101.0 109.6 117.5 123.1 144.7 183.3 225.1 238.3 214.0 206.1 224.1 220.8 224.4 256.0 324.2 369.9 397.9 196.3 215.6 228.0 217.7 230.4 281.3 306.7 319.2 327.9 342.8 360.6 373.2 367.3 378.7 394.2 395.0 393.5 408.8 Services ss received by the United States (net) 1.7 l!3 1.3 1.6 1.6 1.7 1.9 2.1 3.4 4.2 4.3 4.1 4.3 5.5 5.8 5.7 5.9 6.7 7.6 8.7 8.0 8.5 9.4 10.1 11.4 12.3 13.8 15.1 15.8 17.3 19.5 22.1 24.4 26.8 29.6 40.2 50.5 51.7 60.2 68.6 82.8 107.9 125.9 144.5 148.0 146.4 159.4 150.1 172.0 193.6 227.8 256.3 272.5 139.6 149.1 157.7 151.5 172.0 204.4 219.1 221.2 230.7 240.3 249.1 255.5 256.5 264.1 267.1 264.7 279.3 279.0 Payments to foreigners 0.9 .7 .7 0 20 0 0 0 0 1.1 1.2 1.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Imports of goods and services Total Total 7.1 2.4 4.6 5.4 6.1 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 31.1 33.1 35.7 40.5 42.9 46.6 49.5 54.8 60.4 69.8 73.1 82.1 114.1 149.5 161.3 177.7 191.6 227.5 292.4 352.1 383.9 361.9 352.5 383.5 370.9 396.5 449.6 552.0 626.2 670.4 335.9 364.7 385.7 369.2 402.4 485.8 525.7 540.4 558.7 583.1 609.7 628.8 623.7 642.8 661.3 659.7 672.7 687.7 Merchandise Services 5.9 2.1 3.4 3.7 4.7 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 42.1 49.3 54.7 60.5 66.1 78.2 97.3 135.2 130.3 158.9 189.7 223.4 272.5 318.9 348.9 335.6 358.7 442.4 448.9 493.8 564.3 626.1 672.3 708.4 321.9 390.5 453.6 472.4 511.3 600.7 607.8 614.7 628.3 653.5 658.2 680.0 673.0 678.1 691.3 684.6 714.1 743.7 4.5 1.5 2.4 2.7 3.4 2.7 3.4 3.8 3.9 5.1 6.0 7.6 6.9 9.1 11.2 10.8 11.0 10.4 11.5 12.8 13.3 13.0 15.3 15.2 15.1 16.9 17.7 19.4 22.2 26.3 27.8 33.9 36.8 40.9 46.6 56.9 71.8 104.5 99.0 124.3 151.9 176.5 211.9 247.5 266.5 249.5 271.3 334.3 340.9 367.8 412.6 450.1 480.9 505.4 239.9 298.3 342.7 361.4 381.8 437.3 439.7 442.2 450.4 468.2 470.3 482.1 483.2 488.0 497.8 484.1 508.1 531.8 1.5 .6 1.0 1.0 1.3 2.1 3.1 3.4 4.0 2.3 2.4 3.0 2.9 3.2 4.1 5.2 5.8 5.9 6.6 7.1 7.6 8.1 8.2 8.8 8.8 9.3 9.7 10.2 11.0 12.7 14.4 15.4 17.9 19.6 19.5 21.3 25.5 30.7 31.3 34.6 37.9 46.9 60.5 71.4 82.4 86.1 87.3 108.2 108.0 126.1 151.8 175.9 191.4 203.0 82.0 92.2 110.9 111.0 129.5 163.4 168.0 172.6 177.9 185.3 187.9 198.0 189.8 190.1 193.5 200.5 206.0 211.9 Source: Department of Commerce, Bureau of Economic Analysis. 308 Transfer payments (net) Total 0.4 .2 .2 .2 !2 .2 '.8 2.9 2.6 4.5 5.6 4.0 3.5 2.5 2.5 2.3 2.5 2.4 2.3 2.3 2.3 2.4 2.7 2.8 2.9 3.0 3.0 3.1 3.3 3.2 3.2 3.5 3.9 4.1 4.1 4.6 4.9 5.4 5.1 5.6 6.2 7.7 7.5 9.0 9.5 12.3 15.1 15.9 14.6 15.0 14.8 13.4 10.6 13.4 17.0 16.9 16.6 18.9 13.8 12.3 13.9 20.0 14.3 12.1 14.2 18.5 14.0 19.4 18.3 2.1 Interest paid by From governFrom govern- ment to persons ment foreigners (net) (net) 0.3 .2 .2 .2 .1 !4 .5 .7 .7 .7 .5 .4 .4 .4 .5 .5 .4 .5 .5 .4 .4 .4 !5 .6 .7 .7 .7 .9 .9 1.0 1.2 1.2 1.1 1.3 1.0 1.0 1.0 .9 .9 1.0 1.1 1.0 1.3 1.0 1.5 1.7 1.9 2.2 1.9 1.4 .9 1.1 1.2 1.6 1.4 2.1 2.1 2.1 1.8 1.6 1.9 1.7 1.6 1.2 1.2 .9 .4 1.3 1.1 0.0 .0 .0 .0 .0 .1 -!l 2.3 2.0 3.9 5.1 3.6 3.1 2.1 2.0 1.8 2.1 1.9 1.8 1.8 1.9 1.9 2.2 2.3 2.3 2.3 2.3 2.4 2.4 2.3 2.2 2.3 2.7 2.9 2.9 3.6 4.0 4.4 4.2 4.7 5.2 6.5 6.5 7.8 8.5 10.7 13.4 13.9 12.4 13.1 13.4 12.5 9.5 12.2 15.5 15.5 14.5 16.8 11.7 10.5 12.3 18.1 12.6 10.5 13.0 17.3 13.1 18.9 17.0 1.0 0.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .1 .1 .1 !2 .1 .3 .3 '.3 .4 .5 .5 .5 .6 .7 .8 1.0 1.8 2.7 3.8 4.3 4.5 4.5 5.5 8.7 11.1 12.6 16.9 18.3 17.8 19.8 21.3 22.6 25.3 30.2 36.0 38.7 18.9 18.3 21.2 21.5 22.9 25.8 27.7 29.5 31.3 32.2 34.8 35.7 36.2 37.1 37.6 38.7 39.0 39.3 Net ment 0.8 .2 1.0 1.5 1.3 -.1 -2.1 -2.0 -1.3 4.9 9.3 2.4 .9 -1.8 .9 .6 -1.3 .2 .4 2.8 4.8 .9 12 3.2 4.2 3.8 4.9 7.5 6.2 3.8 3.5 1.6 1.7 4.8 1.3 -2.9 8.8 5.4 21.6 9.0 -8.7 -10.1 2.6 13.0 10.6 -1.0 335 909 -114.4 -135.8 -154.6 -119.2 -96.8 -90.1 -15.4 -57.4 -106.1 -141.6 -148.5 -159.7 -123.5 -116.1 -114.8 -122.5 -97.6 -99.1 -99.7 -90.9 -81.6 -82.9 987 -97.3 TABLE B-21.—Exports and imports of goods and services in 1982 dollars, 1929-90 [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 1988 1989 1990 '. 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988:1 II Ill IV 1989:1 II Ill IV 1990:1 II Ill IV... Total 42.1 22.7 36.2 40.0 42.0 29.1 25.1 27.3 35.2 69.0 82.3 66.2 65.0 59.2 72.0 70.1 66.9 70.0 76.9 87.9 94.9 82.4 83.7 98.4 100.7 106.9 114.7 128.8 132.0 138.4 143.6 155.7 165.0 178.3 179.2 195.2 242.3 269.1 259.7 274.4 281.6 312.6 356.8 388.9 392.7 361.9 348.1 371.8 367.2 397.1 451.8 534.7 593.3 630.3 336.0 355.5 376.6 367.4 406.5 487.0 521.7 527.3 534.3 555.3 576.1 593.2 592.5 611.6 628.1 620.1 630.5 642.4 Imports of goods and services Merchandise Merchandise Total 29.7 15.9 26.5 30.5 31.7 19.5 15.2 16.4 24.0 54.1 65.5 49.1 48.4 42.2 51.1 49.0 46.4 48.8 53.2 61.8 66.6 56.6 56.1 68.8 69.1 72.2 77.6 87.7 88.2 94.0 96.5 104.9 110.0 120.6 119.3 131.3 160.6 175.8 171.5 177.5 178.1 196.2 218.2 241.8 238.5 214.0 207.6 223.8 231.6 245.9 286.5 347.3 390.8 424.4 199.1 214.4 231.9 231.9 257.2 314.0 338.1 344.4 345.6 361.2 376.9 390.7 390.3 405.2 422.4 418.4 421.0 435.8 Durable goods 12.3 4.5 13.3 18.9 20.2 13.4 10.5 11.0 12.6 23.1 34.4 24.5 24.1 21.0 23.8 25.3 25.8 26.9 30.3 34.4 37.2 31.0 30.5 37.9 38.0 39.8 42.1 48.2 50.0 53.6 58.8 64.8 69.5 74.3 72.9 80.0 99.3 113.9 112.1 112.9 111.2 121.9 136.6 150.0 143.8 121.9 119.6 132.3 143.7 157.6 186.2 236.1 268.9 296.3 110.8 126.3 138.2 143.8 163.8 208.7 227.1 232.9 234.6 249.7 257.9 267.6 271.0 279.0 292.8 293.4 296.3 302.7 Services Nondurable goods 17.5 11.4 13.1 11.6 11.6 6.1 4.8 5.4 11.3 31.0 31.1 24.6 24.2 21.3 27.3 23.7 20.6 21.9 22.9 27.4 29.4 25.6 25.6 30.9 31.1 32.4 35.5 39.5 38.2 40.4 37.7 40.1 40.5 46.3 46.4 51.3 61.3 62.0 59.5 64.7 66.9 74.3 81.6 91.9 94.6 92.1 88.0 91.5 87.9 88.3 100.3 111.2 121.9 128.1 88.3 88.1 93.7 88.2 93.3 105.3 111.0 111.4 110.9 111.5 119.0 123.1 119.3 126.2 129.6 125.0 124.6 133.1 Total 12.3 6.8 9.8 9.4 10.3 9.6 9.8 10.9 11.2 14.9 16.9 17.1 16.7 17.0 20.9 21.2 20.5 21.2 23.7 26.1 28.3 25.8 27.6 29.6 31.6 34.7 37.1 41.1 43.8 44.4 47.1 50.8 55.0 57.6 59.9 64.0 81.7 93.3 88.2 96.8 103.6 116.4 138.6 147.1 154.3 148.0 140.5 148.0 135.6 151.2 165.2 187.4 202.6 205.9 136.9 141.1 144.7 135.4 149.3 173.0 183.6 183.0 188.8 194.1 199.2 202.5 202.2 206.4 205.7 201.7 209.5 206.6 Factor inOther come * 7.6 3.7 5.2 4.6 5.2 4.8 4.6 4.9 4.8 5.6 7.2 8.5 8.2 9.1 10.9 11.3 11.0 11.6 13.0 14.1 14.8 13.2 14.0 15.7 16.9 18.5 20.0 21.8 23.2 22.8 23.8 26.3 29.0 29.6 30.5 33.9 46.2 53.5 45.6 49.7 53.5 63.2 86.6 91.4 96.3 91.6 85.0 92.6 80.0 75.6 81.1 96.3 105.1 100.9 83.0 88.2 89.5 79.5 71.6 87.7 94.1 92.5 96.2 102.4 104.3 107.1 103.6 105.4 101.9 97.4 103.2 101.3 4.8 3.1 4.5 4.8 5.1 4.9 5.2 6.0 6.5 9.4 9.7 8.6 8.5 7.9 10.0 9.9 9.5 9.6 10.7 12.0 13.5 12.6 13.5 13.9 14.7 16.2 17.2 19.3 20.6 21.6 23.3 24.5 26.0 28.0 29.4 30.1 35.4 39.8 42.6 47.1 50.1 53.2 52.0 55.7 57.9 56.3 55.5 55.4 55.6 75.6 84.2 91.1 97.5 105.0 53.8 52.9 55.2 55.9 77.7 85.3 89.6 90.5 92.6 91.7 94.9 95.4 98.5 101.0 103.9 104.3 106.4 105.3 Total 37.4 24.2 30.1 31.7 38.2 36.9 48.0 51.1 54.1 42.0 39.9 47.1 46.2 54.6 57.4 63.3 69.7 67.5 76.9 83.6 87.9 92.8 101.9 102.4 103.3 114.4 116.6 122.8 134.7 152.1 160.5 185.3 199.9 208.3 218.9 244.6 273.8 268.4 240.8 285.4 317.1 339.4 353.2 332.0 343.4 335.6 368.1 455.8 471.4 526.9 570.3 610.6 647.4 667.8 324.3 401.6 471.4 492.6 541.9 598.3 599.0 599.5 612.8 631.0 627.3 646.5 656.6 659.4 663.5 664.7 677.0 666.0 Total 29.3 19.2 24.0 25.6 29.4 21.0 25.0 26.5 26.0 30.0 29.3 33.9 33.3 40.9 40.4 41.9 44.6 42.1 48.3 53.6 56.1 58.1 68.0 67.5 69.0 78.9 81.2 86.3 97.0 109.1 113.0 135.7 144.6 150.9 166.2 190.7 218.2 211.8 187.9 229.3 259.4 274.1 277.9 253.6 258.7 249.5 282.2 351.1 367.9 413.7 440.9 469.4 499.3 518.5 242.7 311.6 364.2 387.8 428.7 461.2 460.6 459.8 471.3 486.0 480.6 492.4 509.8 514.3 517.8 515.2 526.5 514.5 1 Factor income exports less factor income imports equals rest-of-the-world product. Source: Department of Commerce, Bureau of Economic Analysis. 309 Durable goods 7.4 4.0 6.9 8.8 11.0 6.7 6.5 6.7 6.9 7.8 7.8 9.4 8.9 11.5 11.5 13.0 13.7 11.9 14.7 16.8 17.1 16.9 22.8 21.7 21.1 24.8 26.2 29.0 35.6 44.0 48.0 61.7 65.6 66.8 74.4 84.4 88.9 89.2 72.4 88.5 99.3 113.7 115.7 116.1 126.1 125.3 150.4 201.6 218.7 242.6 262.1 282.3 302.9 313.8 117.1 172.5 211.4 226.8 250.0 277.5 276.2 276.9 283.7 292.2 292.7 299.0 307.7 312.4 308.5 310.2 317.5 318.9 Services Nondurable goods 22.0 15.2 17.0 16.8 18.4 14.3 18.5 19.7 19.1 22.2 21.5 24.5 24.4 29.5 28.9 28.9 30.9 30.3 33.5 36.8 39.0 41.3 45.3 45.8 47.9 54.0 55.0 57.4 61.4 65.2 65.0 74.0 79.0 84.1 91.8 106.4 129.4 122.5 115.5 140.8 160.1 160.4 162.2 137.5 132.6 124.2 131.9 149.5 149.3 171.1 178.8 187.2 196.4 204.7 125.6 139.1 152.8 161.0 178.8 183.7 184.4 182.9 187.6 193.8 187.9 193.4 202.2 201.9 209.3 205.0 209.0 195.6 Total 8.0 4.9 6.1 6.2 8.8 15.8 23.0 24.6 28.2 12.0 10.6 13.1 13.0 13.6 17.1 21.4 25.1 25.4 28.6 30.0 31.8 34.6 33.8 34.9 34.3 35.5 35.4 36.5 37.7 43.0 47.5 49.6 55.2 57.4 52.7 53.9 55.6 56.6 52.9 56.1 57.7 65.3 75.3 78.4 84.7 86.1 85.8 104.7 103.5 113.2 129.4 141.2 148.2 149.3 81.6 90.1 107.2 104.8 113.2 137.1 138.4 139.7 141.5 145.0 146.7 154.1 146.7 145.1 145.6 149.4 150.5 151.5 Factor inOther come * 2.6 1.3 2.2 2.0 1.9 1.7 1.9 2.1 2.5 1.9 2.1 2.3 2.6 2.8 3.1 2.9 3.1 3.3 3.6 3.4 3.4 3.7 4.0 4.6 4.8 4.6 5.1 5.6 6.2 7.0 7.5 8.6 12.0 12.5 9.8 10.2 13.9 17.7 16.3 16.7 16.1 21.1 30.8 35.9 41.1 40.5 37.1 48.7 43.1 45.1 55.8 68.0 74.9 71.3 35.1 39.7 47.4 41.9 45.7 61.5 62.5 66.8 69.8 72.9 73.4 80.7 74.0 71.6 69.5 72.9 70.6 72.4 5.4 3.6 4.0 4.1 6.9 14.2 21.2 22.5 25.7 10.1 8.5 10.8 10.4 10.8 14.0 18.4 21.9 22.1 25.0 26.6 28.4 30.9 29.8 30.3 29.6 30.9 30.3 30.9 31.6 36.0 40.0 41.0 43.2 45.0 42.9 43.7 41.7 38.9 36.6 39.3 41.6 44.2 44.5 42.4 43.6 45.7 48.7 56.0 60.4 68.1 73.6 73.2 73.2 77.9 46.5 50.3 59.8 62.9 67.4 75.6 75.9 72.9 71.8 72.1 73.3 73.3 72.8 73.5 76.1 76.5 79.9 79.1 TABLE B-22.—Relation of gross national product, net national product, and national income, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Gross national product Year or quarter 1929 1933 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949. 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969. 1970 1971 1972 1973 1974 1975 1976 1977.. 1978 1979 1980 1981 1982 1983 1984.. 1985 1986 1987 1988 1989 1990 * 1982- IV 1983: IV 1984: IV 1985: IV 1986: IV 1987- IV 1988: 1 . . . . . . || III IV 1989: 1 II Ill IV 1990- 1 II Ill IV 1039 56.0 91.3 100.4 125.5 159.0 192.7 211.4 213.4 212.4 235.2 2616 260.4 2883 333.4 3516 371.6 3725 405.9 4282 451.0 4568 495.8 5153 533.8 5746 606.9 649.8 7051 7720 8164 892.7 9639 1,015.5 1,102.7 12128 13593 14728 1,598.4 17828 19905 22497 2,508.2 27320 30526 3,166.0 34057 3'772 2 40149 42316 45156 4 873.7 52008 54630 32125 35458 3,851.8 41079 42973 46476 47358 48314 4'917'9 50098 51013 51740 52386 S'289'3 53754 5'443'3 55146 55189 9.9 7.6 9.0 9.4 10.3 11.3 11.6 12.0 12.4 14.2 17.6 20.4 22.0 236 27.2 29.2 30.9 32.5 34.4 381 41.1 42.8 44.6 464 47.8 49.4 51.4 53.9 574 62.1 674 73.9 814 88.8 97.5 1079 1181 1375 161.8 1792 2015 2299 265.8 3038 3478 383.2 396.6 4155 4372 4601 4870 514.3 5544 5757 3932 4008 423.5 4469 4708 4967 5048 5105 5163 5257 5347 5430 5675 5725 5670 5711 5793 5852 Equals: Net national product 94.0 48.4 82.3 91.1 115.3 147.7 181.1 199.4 201.0 198.2 217.6 241.2 238.4 264.6 306.2 322.5 340.7 340.0 371.5 390.1 409.9 414.0 451.2 468.9 486.1 525.2 555.5 595.9 647.7 709.9 749.0 818.7 882.5 926.6 1,005.1 1104.8 1 241.2 1*335 4 1*,436.6 1 603.6 17890 2*019 8 2,242.4 24281 2*7048 2,782.8 3009.1 3356.8 3*577 6 3 771.5 40286 4 359.4 46464 4 887.4 28193 3 145.0 3,428.3 3 661.0 38265 41509 42310 43209 4 401.6 4*4840 45666 4*631 1 4671 1 4*716 8 48084 4*872'2 49353 4*933 7 Source-. Department of Commerce, Bureau of Economic Analysis. Plus: Less: Less: consumption allowances with capital consumption adjustment 310 CiihciHioc Indirect business tax and nontax liability Business transfer payments Statistical discrepancy 7.1 7.1 9.4 0.6 1.5 1.2 1.7 1.4 .7 10.1 11.3 11.8 12.8 14.2 15.5 17.1 18.4 20.1 21.3 23.4 25.3 27.7 29.7 29.6 32.2 35.0 37.4 38.6 41.7 45.3 48.0 51.5 54.6 58.7 62.5 65.2 70.1 78.7 86.3 94.0 103.4 111.1 120.8 1290 140.0 151.7 165.7 1781 189.4 213.3 2515 258.8 282.6 313.9 333.6 348.9 3678 388.7 414.0 440.4 2645 294.1 322.7 338.3 353.1 3753 380.2 3853 391.6 3976 403.5 4111 4199 4215 4317 4330 4449 4519 .5 .4 .5 .5 .5 .5 .5 .5 .6 .8 .8 .9 1.0 1.2 1.1 1.2 1.4 1.5 1.6 1.8 2.0 2.0 2.1 2.4 2.7 2.8 3.0 3.1 3.4 3.9 4.1 4.4 4.9 5.5 5.8 7.4 7.9 8.6 9.3 10.3 12.1 12.4 14.3 16.0 18.7 22.0 24.6 28.5 30.3 32.4 35.0 152 16.5 20.0 23.0 25.5 296 -1.7 2.7 4.0 1.8 1.3 .8 .8 2.7 1.8 2.6 2.7 1.8 -1.9 -1.2 _ i -1.5 2.8 -1.2 .0 -.6 -1.4 -1.2 2.1 .4 -1.1 3.9 -1.1 1.8 -1.6 4.3 -1.7 2.5 3.6 .0 -1.9 -1.0 4.9 4.1 -.1 5.2 5.4 -4.8 1.8 -10.6 -28.2 -17.0 3.1 6.8 2.5 327 188 162 7 341 34.7 354 360 -.3 .0 .7 .7 1.1 .1 .4 1.7 1.8 1.1 1.7 1.6 2.5 1.6 1.4 1.9 2.9 2.6 3.7 3.5 1.2 2.4 1.0 3.0 3.9 3.5 5.7 6.7 8.7 14.1 9.9 7.2 12.8 17.4 16.2 6.3 2.5 15.4 19.6 -9.6 -3.0 308 .1 -.1 -.3 8.4 5.3 33.4 30.4 .0 .4 .4 .1 .1 .1 .6 .7 .9 -.2 -.1 15.6 26.7 18.7 19.5 7.9 31.4 32.1 301 -0.2 -2.1 -24.7 -239 -33.9 -30.5 -28.6 -20.3 29.8 less current surplus of government enterprises -3.2 -4.9 8.8 17.9 17.0 8.5 -2.6 2.2 8.4 3.6 -7.5 5.3 Equals: National income 84.7 39.4 71.2 79.6 102.8 136.2 169.7 182.6 181.6 180.7 196.6 221.5 215.2 239.8 277.3 291.6 306.6 306.3 336.3 356.3 372.8 375.0 409.2 424.9 439.0 473.3 500.3 537.6 585.2 642.0 677.7 739.1 798.1 832.6 898.1 994.1 1,122.7 1,203.5 1,289.1 1,441.4 1,617.8 1,838.2 2,047.3 2,203.5 2,443.5 2,518.4 2,719.5 3,028.6 3,234.0 3,412.6 3,660.3 3,984.9 4,223.3 4,417.5 2,548.2 2,851.5 3,096.1 3,312.8 3,473.1 3,791.5 3,864.3 3,948.9 4,022.3 4,104.1 4,177.3 4,216.8 4,232.1 4,267.1 4,350.3 4,411.3 4,452.4 TABLE B-23.—Relation of national income and personal income, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Year or quarter National income and capital "ET adjust- Equals: Plu S: LeSS: Corporate profits with inventory valuation GovernWage ment Contribu- accruals transfer Personal Personal Business tions for Net transfer less social disburse- payments interest dividend payments interest income income to insurance ments persons Personal income ments 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 1988 1989 1990 " 1982- IV 1983: IV 1984- IV 1985: IV 1986- IV 1987: IV 1988- 1 II Ill IV 1989- 1 II Ill IV 1990: 1 II. Ill IV ". 847 39.4 712 79.6 1028 136.2 1697 1826 1816 180.7 1966 221.5 215.2 239.8 2773 291.6 3066 306.3 3363 356.3 3728 375.0 4092 424.9 4390 4733 5003 5376 5852 6420 677.7 7391 798.1 8326 898.1 9941 1 1227 12035 12891 14414 16178 18382 2047.3 22035 24435 25184 2 719.5 30286 32340 34126 36603 39849 42233 44175 25482 28515 30961 3 312.8 34731 3,791.5 38643 3,948.9 40223 4,104.1 41773 4 216.8 42321 4,267.1 43503 44113 44524 96 -1.5 5.5 8.8 143 19.7 240 242 19.7 17.2 22.9 30.3 28.0 34.9 399 37.5 377 36.6 471 45.7 453 40.3 514 49.5 503 583 636 707 813 866 841 907 874 747 871 1007 1133 1017 1176 1452 1748 1972 2001 1772 1880 1500 213*7 2669 2823 2821 3083 3376 3116 2971 1461 2485 2669 2914 2752 3231 3305 335.8 3344 349.6 3273 3214 3067 2909 2968 3066 3007 47 4.1 36 3.3 33 3.1 27 23 22 1.8 23 2.4 26 3.0 35 3.9 44 5.2 58 65 78 9.5 102 113 129 146 163 182 209 243 274 298 346 412 463 510 596 755 838 888 1053 1263 158*3 2009 2481 2723 2810 3048 3190 3255 3286 3718 4451 4671 2669 2902 313 1 3227 3240 3382 3514 3619 3798 3941 4192 4434 4562 4617 4636 4662 4683 4702 0.3 2.2 2.4 2.8 3.5 4.6 52 6.3 7.7 6.7 6.0 6.6 7.4 8.8 9.3 9.6 10.6 12.0 13.5 155 15.9 188 21.9 229 254 285 301 316 406 455 504 57.9 622 68.9 790 976 1105 1185 1345 1498 1717 1978 2165 2512 2696 291.0 3249 3541 3792 4001 4426 4768 5069 2730 2992 3315 3621 3877 408.7 4316 438.8 4460 453.8 4691 474.6 4791 484.2 4989 5039 5113 5136 Source: Department of Commerce, Bureau of Economic Analysis. 311 0.0 .0 .0 .0 .0 .0 .2 2 .0 .0 0 .0 .0 .0 1 .0 _l .0 0 .0 o .0 0 .0 0 o o o o o o o o o 6 0 1 5 1 1 1 3 _2 o 1 o _4 2 2 o o 0 o o o o 6 0 o -.2 o .0 o .0 o 0 o 0 0 o o o 0.9 1.5 2.5 2.7 2.6 2.7 2.5 31 5.6 10.8 11.2 10.6 11.7 14.4 11.6 12.2 13.1 15.3 164 17.5 203 24.7 25.7 27.5 315 326 345 360 391 436 523 606 67.5 818 97.0 1084 1241 1474 1857 2028 2175 2348 2628 3126 3557 3962 4266 4379 4678 4968 5213 5574 6045 6595 4202 4290 4430 474.5 5057 527.7 5492 554.4 5599 566.1 5881 5981 6091 622.5 6468 6520 6610 6783 6.9 5.5 5.3 5.3 5.3 5.2 5.1 5.2 5.8 6.6 7.5 8.0 8.7 9.6 10.4 11.2 12.4 13.7 14.9 16.6 18.7 20.3 22.3 24.9 26.3 289 32.2 355 39.6 442 48.2 53.2 60.9 693 74.7 80.8 933 111.9 1225 134.1 1554 1825 221.5 2719 3354 3697 393.1 444.7 4780 4932 5013 547.9 6432 680.9 3662 411.6 4644 485.9 4927 516.3 5235 536.3 5562 575.6 6104 642.1 6552 664.9 6705 6780 6853 690.1 5.8 2.0 3.8 4.0 4.4 4.3 4.4 46 4.6 5.6 6.3 7.0 7.2 8.8 8.5 8.5 8.8 9.1 10.3 11.1 11.5 11.3 12.2 12.9 13.3 144 15.5 173 19.1 194 20.2 219 22.4 222 22.6 24.1 266 28.9 287 33.8 382 430 48.1 529 613 639 68.7 75.5 787 858 918 102.2 1144 123.8 654 71.0 768 79.0 877 95.5 979 100.2 1038 107.1 1106 113.2 1157 118.2 120.5 122.9 1249 126.7 0.6 .7 .5 .4 .5 .5 .5 .5 .6 .7 .8 .8 .9 1.0 1.2 1.1 1.2 1.4 1.5 1.6 1.8 2.0 2.0 2.1 2.4 2.7 2.8 3.0 3.1 3.4 3.9 4.1 4.4 4.9 5.5 5.8 7.4 7.9 8.6 93 10.3 12.1 12.4 143 16.0 18.7 22.0 246 285 30.3 32.4 35.0 15.2 16.5 20.0 23.0 25.5 29.6 298 30.1 30.4 30.8 31.4 32.1 32.7 33.4 34.1 34.7 354 36.0 84.3 46.3 72.1 77.6 95.2 122.4 150.7 164.5 170.0 177.6 190.2 209.2 206.4 228.1 256.5 273.8 290.5 293.0 314.2 337.2 356.3 367.1 390.7 409.4 426.0 453.2 476.3 510.2 552.0 600.8 644.5 707.2 772.9 831.8 894.0 981.6 1,101.7 1,210.1 1,313.4 1,451.4 1,607.5 1,812.4 2,034.0 2,258.5 2,520.9 2,670.8 2,838.6 3,108.7 3,325.3 3,526.2 3,766.4 4,070.8 4,384.3 4,645.6 2,729.2 2,941.8 3,188.3 3,399.1 3,597.8 3,890.9 3,951.3 4,033.4 4,112.3 4,186.2 4,302.2 4,362.9 4,402.8 4,469.2 4,562.8 4,622.2 4,678.5 4,719.0 TABLE B-24.—National income by type of income, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Proprietors' income with inventory valuation and capital consumption adjustments Compensation of employees Year or quarter 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 1988. 1989 1990 p 1982: IV. 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: 1... II Ill IV 1989:1 II Ill IV. 1990: 1 II... Ill IV P National income 1 84.7 39.4 71.2 79.6 102.8 136.2 169.7 182.6 181.6 180.7 196.6 221.5 215.2 239.8 277.3 291.6 -306.6 306.3 336.3 356.3 -372.8 375.0 409.2 -424.9 439.0 473.3 500.3 537.6 585.2 642.0 677.7 739.1 ^-798.1 832.6 898.1 994.1 -1,122.7 1,203.5 1,289.1 1,441.4 1,617.8 1,838.2 "-2,047.3 2,203.5 2,443.5 2,518.4 2,719.5 3,028.6 3,234.0 3,412.6 3,660.3 3,984.9 4,223.3 4,417.5 2,548.2 2,851.5 3,096.1 3,312.8 3,473.1 3,791.5 3,864.3 3,948.9 4,022.3 4,104.1 4,177.3 4,216.8 4,232.1 4,267.1 4,350.3 4,411.3 4,452.4 Total 51.1 29.6 48.2 52.2 64.8 85.3 109.6 121.3 123.3 119.6 130.1 142.1 142.0 155.4 181.6 196.3 210.4 209.4 225.9 244.7 257.8 259.8 281.2 296.7 305.6 327.4 345.5 371.0 399.8 443.0 475.5 524.7 578.4 618.3 659.4 726.2 812.8 891.3 948.7 1,057.9 1,176.6 1,329.2 1,491.4 1,638.2 1,807.4 1,907.0 2,020.7 2,213.9 2,367.5 2,511.4 2,686.4 2,905.1 3,079.0 3,244.2 1,931.1 2,092.7 2,272.7 2,426.7 2,571.2 2,770.3 2,820.0 2,879.0 2,934.6 2,986.7 3,029.7 3,062.6 3,095.2 3,128.6 3,180.4 3,232.5 3,276.9 3,286.9 Wages and salaries 50.5 29.0 46.0 49.9 62.1 82.1 105.8 116.7 117.5 112.0 123.1 135.5 134.7 147.2 171.6 185.6 199.0 197.2 212.1 229.0 239.9 241.3 259.8 272.8 280.5 299.3 314.8 337.7 363.7 400.3 428.9 471.9 518.3 551.5 584.5 638.7 708.6 772.2 814.7 899.6 994.0 1,119.6 1,251.9 1,372.0 1,510.4 1,586.1 1,676.2 1,838.8 1,975.2 2,094.8 2,249.7 2,431.1 2,573.2 2,705.3 1,603.7 1,739.4 1,891.1 2,027.4 2,143.1 2,323.6 2,359.3 2,409.9 2,456.1 2,499.0 2,533.7 2,560.0 2,586.6 2,612.7 2,651.6 2,696.3 2,734.2 2,739.1 Supplements to wages and salaries2 0.7 .6 2.2 2.3 2.8 3.2 3.8 4.5 5.8 7.6 7.0 6.5 7.3 8.2 10.0 10.7 11.5 12.1 13.8 15.7 17.8 18.5 21.4 23.8 25.1 28.1 30.7 33.2 36.1 42.7 46.6 52.8 60.1 66.8 74.9 87.6 104.2 119.1 134.0 158.3 182.6 209.7 239.5 266.3 297.1 320.9 344.5 375.1 392.4 416.6 436.6 474.0 505.8 538.9 327.4 353.4 381.7 399.3 428.1 446.7 460.7 469.1 478.5 487.7 496.0 502.6 508.6 515.9 528.8 536.1 542.7 547.8 Nonfarm Farm Total 14.4 5.4 11.4 12.6 17.1 23.9 28.8 30.0 31.5 36.3 35.5 40.4 35.9 38.8 44.0 44.4 43.4 43.5 45.4 46.9 48.8 51.5 51.7 52.1 54.3 56.6 57.7 60.5 65.1 69.6 71.1 75.4 79.3 80.2 86.8 98.3 119.0 118.8 125.4 137.7 152.9 176.2 191.9 180.7 186.8 175.5 190.9 234.5 255.9 282.0 323.4 354.2 379.3 402.4 188.3 207.8 237.8 264.2 289.2 345.2 346.3 356.8 356.5 357.0 387.8 379.6 368.1 381.7 404.0 401.7 397.9 406.1 Total 6.1 2.5 4.4 4.4 6.4 10.1 12.0 11.9 12.4 14.8 15.1 17.5 12.8 13.6 16.0 15.0 13.0 12.4 11.3 11.1 11.0 13.1 10.8 11.6 12.0 12.1 11.9 10.7 13.0 14.0 12.7 12.8 14.6 14.7 15.5 19.4 33.7 27.5 25.4 20.6 20.5 27.0 31.7 20.5 30.7 24.6 12.4 30.5 30.2 34.7 42.8 43.7 48.6 49.9 28.5 19.3 28.1 29.2 37.2 52.3 47.1 48.8 43.4 35.5 59.6 50.5 38.7 45.7 57.4 51.0 42.4 48.9 Proprietors' income3 6.3 2.5 4.5 4.5 6.5 10.3 12.2 12.2 12.6 15.2 15.6 18.2 13.5 14.3 16.8 15.9 13.9 13.2 12.1 12.0 11.9 14.0 11.7 12.4 12.8 12.9 12.6 11.4 13.7 14.8 13.6 13.7 15.8 16.0 16.8 21.1 35.6 30.1 29.0 24.6 25.1 32.4 38.0 28.1 39.4 33.9 21.8 39.6 38.9 43.1 50.8 51.2 56.3 57.5 38.0 28.5 37.5 37.8 45.3 60.2 54.9 56.4 50.7 42.9 67.1 58.1 46.7 53.4 65.1 58.5 49.9 56.4 Capital consumption adjustment -0.2 .0 -.1 -.1 -.2 -.2 -'.3 -.4 -.5 -J -.7 -.8 -.9 _9 -'.8 8 -.9 -.9 -.9 -.9 -.8 -.8 -.8 -.7 -.7 -.7 -.8 -.8 -.9 -1.1 -1.3 -1.3 -1.7 -1.9 -2.6 -3.6 -4.0 -4.6 -5.3 -6.3 -7.6 -8.7 -9.3 -9.4 -9.2 -8.7 -8.4 -8.0 -7.5 77 -7.6 -9.4 -9.3 -9.3 -8.6 -8.1 -7.9 -7.8 -7.6 74 -7.4 -7.5 -7.6 -8.0 -7.7 -7.7 76 -7.6 -7.5 Total 8.3 2.9 7.1 8.2 10.8 13.8 16.8 18.1 19.1 21.5 20.4 22.9 23.1 25.2 28.0 29.4 30.4 31.1 34.0 35.8 37.8 38.5 40.9 40.5 42.3 44.4 45.7 49.8 52.1 55.5 58.4 62.6 64.7 65.4 71.4 79.0 85.3 91.3 100.0 117.1 132.4 149.2 160.1 160.1 156.1 150.9 178.4 204.0 225.6 247.2 280.6 310.5 330.7 352.5 159.8 188.6 209.7 235.0 252.0 293.0 299.2 308.1 313.2 321.5 328.2 329.1 329.5 336.0 346.6 350.8 355.6 357.2 Proprietors' income 8.8 3.9 7.6 8.6 11.7 14.4 17.1 18.3 19.3 23.3 21.8 23.1 22.2 25.7 27.7 28.5 29.8 30.4 33.5 35.4 37.2 37.7 40.1 39.7 41.7 43.8 45.1 49.1 51.8 55.5 58.4 63.1 65.1 66.0 72.3 79.6 87.2 95.3 102.2 119.6 135.1 152.8 164.0 164.3 155.2 148.5 167.3 182.4 194.6 210.0 247.1 274.7 298.9 323.9 156.9 172.7 182.5 201.1 215.5 260.4 264.5 271.8 276.5 286.0 293.8 296.1 298.9 306.7 317.1 320.7 329.3 328.4 Inven- Capital tory convalua- sumption tion adjust- adjustment ment 0.1 -.5 -.2 .0 -.6 -.4 -.2 -.1 -.1 -1.7 15 -.4 .5 -1.1 .2 .0 -.2 -!3 -.1 .0 .0 .0 .0 .0 _i -2 -'.2 -.5 -!e 1 -2.0 -3.8 12 -1.3 -1.3 -2.3 -2.9 -2.9 -1.4 -.5 -.8 -.4 -.2 -.2 -1.0 -1.4 -1.0 -1.3 6 -.7 .3 -.3 3 -2.4 15 -1.3 13 -1.5 -.9 -.5 -1.3 -1.1 -.9 -.2 35 -.7 -0.6 ~'.A -.3 -.3 -.3 -.2 -.1 -.1 -.1 .1 .2 .5 .6 .6 .7 .7 .8 .7 .9 .9 .9 .9 .8 .6 .6 .7 .7 .4 .3 .2 -.1 .1 .0 -.3 '.1 -To 13 -1.4 -1.4 -1.0 12 2.3 2.9 12.0 22.0 31.2 37.4 34.5 37.2 32.8 30.0 3.5 16.5 26.9 34.2 36.8 35.0 36.3 37.6 38.0 37.1 35.3 33.6 31.9 30.4 30.3 30.2 29.8 29.5 1 National income is the total net income earned in production. It differs from gross national product mainly in that it excludes depreciation charges and other allowances for business and institutional consumption of durable capital goods and indirect business taxes. See Table B-22. 312 TABLE B-24.—National income by type of income, 1929-90—Continued [Billions of dollars; quarterly data at seasonally adjusted annual rates] Rental income of persons with capital consumption adjustment Year or quarter Total 1929 .... 1933 1939 .... 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 ... 1955 1956 1957 t.~. 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 1988 1989 1990 P 1982: IV 1983- IV 1984: IV 1985: IV 1986- IV 1987: IV 1988- 1 II Ill IV 1989- 1 II III IV 1990- 1 II Ill IV ". 4.9 2.0 2.6 2.7 3.2 4.1 4.6 4.8 5.0 5.8 5.8 6.4 6.7 7.7 8.3 9.4 10.7 11.6 12.0 12.4 13.1 13.9 14.6 15.3 15.8 16.5 17.1 17.3 18.1 18.6 19.6 18.4 18.4 18.2 18.6 17.9 18.0 16.1 13.5 11.9 8.2 9.3 5.6 6.6 13.3 13.6 13.2 8.5 9.2 11.6 13.7 16.3 8.2 6.7 15.8 12.4 5.6 7.8 13.5 14.6 16.1 15.3 17.0 16.8 13.3 9.7 5.8 4.1 5.5 4.3 8.4 8.5 Rental Capital conincome sumption of adjustpersons ment 5.6 2.1 3.2 3.3 4.0 5.1 5.7 6.1 6.5 7.5 8.2 9.1 9.4 10.5 11.5 12.7 13.9 14.9 15.3 15.9 16.5 17.3 18.0 18.7 19.1 19.8 20.3 20.5 21.3 22.2 23.5 22.9 24.2 24.6 25.9 26.5 28.1 28.9 28.6 28.9 28.8 34.2 35.7 41.4 52.2 54.4 55.0 51.9 54.2 56.5 61.6 66.1 64.1 61.4 56.5 54.3 49.6 54.5 59.1 64.3 66.2 65.1 66.4 66.6 64.3 62.3 66.6 63.0 60.2 58.8 63.5 63.2 Corporate profits with inventory valuation and capital consumption adjustments Profits with inventory valuation adjustment and without capital consumption adjustment Profits Total Total -0.7 -.1 9.6 -1.5 5.5 -.6 -.8 -.9 -1.1 -1.3 -1.5 -1.7 -2.4 -2.7 -2.7 -2.8 -3.2 -3.3 -3.3 -3.2 -3.3 -3.5 -3.5 -3.4 -3.4 -3.4 -3.3 -3.3 -3.2 -3.2 -3.3 -3.6 -3.9 -4.5 -5.8 -6.4 -7.4 -8.6 -10.1 -12.7 -15.0 -17.0 206 -24i9 -30.1 -34.8 389 -40.8 -41.8 -43.3 -45.0 -45.0 -47.9 -49.8 -55.8 -54.8 -40.7 -41.9 -44.0 -46.7 -45.6 -49.6 -50.0 -49.7 -49.5 -49.8 -51.0 -52.6 -60.8 -58.9 -54.6 -54.5 -55.1 -54.7 8.8 14.3 19.7 24.0 24.2 19.7 17.2 22.9 30.3 28.0 34.9 39.9 37.5 37.7 36.6 47.1 45.7 45.3 40.3 51.4 49.5 50.3 58.3 63.6 70.7 81.3 86.6 84.1 90.7 87.4 74.7 87.1 100.7 113.3 101.7 117.6 145.2 174.8 197.2 200.1 177.2 188.0 150.0 213.7 266.9 282.3 282.1 308.3 337.6 311.6 297.1 146.1 248.5 266.9 291.4 275.2 323.1 330.5 335.8 334.4 349.6 327.3 321.4 306.7 290.9 296.8 306.6 300.7 10.5 -1.2 6.5 9.8 15.4 20.5 24.5 24.0 19.3 19.6 25.9 33.4 31.1 37.9 43.3 40.6 40.2 38.4 47.5 46.9 46.6 41.6 52.3 49.8 50.1 55.2 59.8 66.2 76.2 81.2 78.6 85.4 81.4 69.5 82.7 94.9 107.1 99.4 123.9 155.3 183.8 208.2 214.1 194.0 202.3 159.2 196.7 234.2 222.6 228.3 255.9 289.8 286.1 292.1 150.7 223.4 224.6 228.4 226.1 268.6 278.0 285.3 287.1 308.7 292.1 291.5 285.3 275.3 285.5 298.8 298.7 Profits after tax Profits Profits tax before Divi- Undistax liability Total dends tributed profits 10.0 1.0 7.2 10.0 17.9 21.7 25.3 24.2 19.8 24.8 31.8 35.6 29.2 42.9 44.5 39.6 41.2 38.7 49.2 49.6 48.1 41.9 52.6 49.9 49.8 55.1 59.8 66.7 77.4 83.3 80.1 89.1 87.2 76.0 87.3 101.5 127.2 138.9 134.8 170.3 200.4 233.5 257.2 237.1 226.5 169.6 207.6 240.0 224.3 221.6 275.3 316.7 307.7 305.4 164.1 231.5 226.1 235.0 234.1 289.7 299.8 315.6 320.4 331.1 335.1 314.6 291.4 289.8 296.9 299.3 318.5 2 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 41.9 49.3 51.8 50.9 64.2 73.0 83.5 88.0 84.8 81.1 63.1 77.2 93.9 96.4 106.3 126.9 136.2 135.1 134.1 59.8 88.1 87.0 99.8 113.1 132.1 128.2 136.7 137.9 142.1 148.3 140.8 127.8 123.5 129.9 133.1 139.1 8.6 .4 5.7 7.2 10.3 10.3 11.2 11.3 9.1 15.7 20.5 23.2 19.0 25.0 21.9 20.2 20.9 21.1 27.2 27.6 26.7 22.9 28.9 27.2 27.1 31.2 33.5 38.7 46.5 49.6 47.5 49.7 47.5 41.7 49.6 59.6 77.9 87.1 83.9 106.0 127.4 150.0 169.2 152.3 145.4 106.5 130.4 146.1 127.8 115.3 148.4 180.5 172.6 171.3 104.3 143.4 139.2 135.2 121.0 157.6 171.6 178.9 182.5 189.1 186.7 173.8 163.6 166.3 167.1 166.1 179.4 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 12.9 13.3 14.4 15.5 17.3 19.1 19.4 20.2 22.0 22.5 22.5 22.9 24.4 27.0 29.7 29.6 34.6 39.5 44.7 50.1 54.7 63.6 66.9 71.5 79.0 83.3 91.3 98.2 110.0 123.5 133.9 68.5 73.9 80.8 84.0 93.6 102.2 105.0 107.9 111.8 115.3 119.1 122.1 125.0 127.7 130.3 133.0 135.1 1372 2.8 -1.6 2.0 3.2 5.8 6.0 6.7 6.7 4.5 10.2 14.2 16.2 11.8 16.2 13.4 11.8 12.1 11.9 16.9 16.6 15.2 11.6 16.7 14.3 13.7 16.8 18.0 21.4 27.4 30.2 27.3 27.7 25.0 19.2 26.6 35.2 50.8 57.3 54.3 71.4 87.9 105.2 119.1 97.6 81.8 39.6 58.9 67.0 44.6 24.0 50.2 70.5 49.1 37.4 35.8 69.5 58.4 51.2 27.4 55.4 66.6 71.0 70.8 73.8 67.6 51.7 38.6 38.6 36.8 33.2 44.3 Capital Net conInventory sumption interest adjustvaluation ment adjustment 0.5 -2.1 -.7 -.2 -2.5 -1.2 -.8 -.3 -.6 -5.3 -5.9 -2.2 1.9 -5.0 -1.2 1.0 -1.0 -7.7 -2.7 -1.5 -.3 3 -.2 !o .1 -.5 -1.2 -2.1 -1.6 -3.7 -5.9 -6.6 -4.6 -6.6 -20.0 -39.5 -11.0 -14.9 166 -25.3 -43.2 -43.1 -24.2 -10.4 -10.9 -5.8 -1.7 6.7 -19.4 -27.0 21 7 -13.2 -13.4 -8.1 -1.6 -6.6 -8.0 -21.1 218 -30.3 -33.3 -22.5 430 -23.1 -6.1 -14.5 -11.4 -19.B -21.2 Consists mainly of employer contributions for social insurance and to private pension, health, and welfare funds. With inventory valuation adjustment. Source: Department of Commerce, Bureau of Economic Analysis. 313 09 -l!o -1.1 -1.1 -.8 ~!2 .4 -2.4 -2.9 -3.2 -3.0 -3.0 -3.4 -3.2 -2.5 -1.8 -.4 -1.2 -1.3 -1.3 -.8 -.3 3.1 3.8 4.5 5.2 5.4 5.5 5.3 6.1 5.2 4.3 5.8 6.2 2.3 -6.2 -10.1 90 -10.9 -14.0 -16.8 -14.4 -9.2 17.0 32.7 59.7 53.8 52.4 47.8 25.5 4.9 -4.5 25.1 42.3 63.0 49.1 54.5 52.5 50.5 47.3 40.9 35.2 29.9 21.4 15.6 11.3 7.7 2.0 -1.4 4.7 4.1 3.6 3.3 3.3 3.1 2.7 2.3 2.2 1.8 2.3 2.4 2.6 3.0 3.5 3.9 4.4 5.2 5.8 6.5 7.8 9.5 10.2 11.3 12.9 14.6 16.3 18.2 20.9 24.3 27.4 29.8 34.6 41.2 46.3 51.0 59.6 75.5 83.8 88.8 105.3 126.3 158.3 200.9 248.1 272.3 281.0 304.8 319.0 325.5 328.6 371.8 445.1 467.1 266.9 290.2 313.1 322.7 324.0 338.2 351.4 361.9 379.8 394.1 419.2 443.4 456.2 461.7 463.6 466.2 468.3 470.2 TABLE B-25.—Sources of personal income, 1929^90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Wage and salary disbursementsl Year or quarter Personal income Commodityproducing industries Total Total 1929 1933 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 . 1951 1952 . .. . 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 p 1982- IV 1983: IV 1984: IV 1985- IV 1986: IV 1987- IV 1988: 1 .. II III.. . IV 1989:1 ... || III IV 1990:1 || III IV P 84.3 46.3 72.1 77.6 95.2 122.4 150.7 164.5 170.0 177.6 190.2 209.2 206.4 228.1 256.5 273.8 290.5 293.0 314.2 337.2 356.3 367.1 390.7 409.4 426.0 453.2 476.3 510.2 552.0 600.8 644.5 707.2 772.9 831.8 894.0 981.6 1,101.7 1,210.1 1,313.4 1,451.4 1,607.5 1,812.4 2,034.0 2,258.5 2,520.9 2,670.8 2,838.6 3,108.7 3,325.3 3,526.2 3,766.4 4,070.8 4,384.3 4,645.6 2,729.2 2,941.8 3,188.3 3,399.1 3,597.8 3,890.9 3,951.3 4,033,4 4,112.3 4,186.2 4,302.2 4,362.9 4,402.8 4,469.2 4,562.8 4,622.2 4,678.5 4,719.0 50.5 29.0 46.0 49.9 62.1 82.1 105.6 116.9 117.5 112.0 123.1 135.5 134.8 147.2 171.5 185.6 199.0 197.2 212.1 229.0 239.9 241.3 259.8 272.8 280.5 299.3 314.8 337.7 363.7 400.3 428.9 471.9 518.3 551.5 583.9 638.7 708.7 772.6 814.6 899.5 993.9 1,119.3 1,252.1 1,372.0 1,510.3 1,586.1 1,676.6 1,838.6 1,975.4 2,094.8 2,249.7 2,431.1 2,573.2 2,705.3 1,603.6 1,739.4 1,890.5 2,027.4 2,143.1 2,323.8 2,359.3 2,409.9 2,456,1 2,499.0 2,533.7 2,560.0 2,586.6 2,612.7 2,651.6 2,696.3 2,734.2 2,739.1 21.5 9.8 17.4 19.7 27.5 39.1 49.0 50.4 45.9 46.0 54.2 61.1 57.8 64.8 76.4 82.1 89.8 85.8 93.3 100.8 104.4 100.3 109.9 113.4 114.0 122.2 127.4 136.0 146.6 161.6 169.0 184.1 200.4 203.7 209.1 228.2 255.9 276.5 277.1 309.7 346.1 392.3 441.4 470.7 512.2 511.7 523.1 577.6 608.9 625.6 649.9 696.4 720.6 729.2 501.8 545.4 591.6 619.2 632.3 666.7 679.6 691.8 701.8 712.3 719.2 719.3 722.3 721.4 724.6 731.1 735.3 725.6 GovernOther Distrib- Service ment and labor utive indus- govern- income l indus- tries ment Manutries enterfacturing prises 16.1 7.8 13.6 15.6 21.7 30.9 40.9 42.9 38.2 36.5 42.5 47.1 44.6 50.3 59.4 64.2 71.3 67.6 73.9 79.5 82.5 78.7 86.9 89.8 89.9 96.8 100.7 107.3 115.7 128.2 134.3 146.0 157.7 158.4 160.5 175.6 196.6 211.8 211.6 238.0 266.7 300.1 334.8 355.6 386.7 384.0 397.4 439.1 460.9 473.2 490.3 524.0 541.8 546.7 377.4 415.5 449.5 468.3 477.7 502.1 512.0 519.7 527.5 536.8 541.8 541.4 543.2 540.9 541.2 548.1 551.8 545.6 15.6 8.8 13.3 14.2 16.3 18.0 20.1 22.7 24.8 31.0 35.2 37.5 37.7 39.9 44.4 47.0 49.9 50.3 53.6 58.0 60.7 61.1 65.1 68.6 69.6 73.3 76.8 82.0 87.9 95.1 101.6 110.8 121.7 131.2 140.4 153.3 170.3 186.8 198.1 219.5 242.7 274.6 307.8 335.5 366.8 384.2 404.2 442.8 473.2 498.8 531.8 572.0 604.7 637.1 389.3 420.8 455.1 484.6 509.7 545.3 554.6 567.9 578.6 586.7 594.6 602.6 607.1 614.6 627.0 637.3 642.7 641.5 8.4 5.2 7.1 7.5 8.1 9.0 9.9 10.9 11.9 14.3 16.1 17.9 18.5 19.9 21.6 23.2 25.0 26.2 28.7 31.5 33.8 35.9 38.8 41.7 44.4 47.6 50.7 54.9 59.4 65.3 72.0 80.4 90.6 99.4 107.9 119.7 133.9 148.6 163.4 181.6 202.8 232.9 266.8 305.6 346.9 384.4 425.1 472.1 521.3 576.7 648.5 716.2 771.4 831.0 398.5 443.2 489.6 543.4 599.3 682.6 687.9 707.1 726.0 743.8 753.2 764.9 777.4 790.0 802.9 822.2 844.9 853.9 5.0 5.2 8.2 8.5 10.2 16.0 26.6 33.0 34.9 20.7 17.5 19.0 20.8 22.6 29.2 33.3 34.4 34.9 36.6 38.8 41.0 44.1 46.0 49.2 52.4 56.3 60.0 64.9 69.9 78.3 86.4 96.6 105.5 117.1 126.5 137.4 148.7 160.9 176.0 188.6 202.3 219.4 236.1 260.2 284.4 305.9 324.3 346.1 372.0 393.7 419.4 446.6 476.6 508.0 314.0 330.0 354.3 380.3 401.9 429.2 437.2 443.2 449.7 456.3 466.6 473.2 479.9 486.7 497.1 505.7 511.3 518.1 0.5 .4 .6 .6 !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 10.6 11.2 11.8 13.0 14.0 15.7 17.8 19.9 21.7 25.2 28.5 32.5 36.7 43.0 49.2 56.5 65.9 79.3 94.1 107.7 122.7 138.4 150.3 163.6 173.6 182.9 187.6 199.3 209.4 225.5 241.9 258.1 168.0 177.8 185.4 189.7 205.0 214.4 218.6 222.8 228.0 232.7 236.5 239.9 243.5 247.5 252.8 256.4 260.0 263.2 Proprietors' income with inventory valuation and capital consumption adjustments Farm 6.1 2.5 4.4 4.4 6.4 10.1 12.0 11.9 12.4 14.8 15.1 17.5 12.8 13.6 16.0 15.0 13.0 12.4 11.3 11.1 11.0 13.1 10.8 11.6 12.0 12.1 11.9 10.7 13.0 14.0 12.7 12.8 14.6 14.7 15.5 19.4 33.7 27.5 25.4 20.6 20.5 27.0 31.7 20.5 30.7 24.6 12.4 30.5 30.2 34.7 42.8 43.7 48.6 49.9 28.5 19.3 28.1 29.2 37.2 52.3 47.1 48.8 43.4 35.5 59.6 50.5 38.7 45.7 57.4 51.0 42.4 48.9 Nonfarm 8.3 2.9 7.1 8.2 10.8 13.8 16.8 18.1 19.1 21.5 20.4 22.9 23.1 25.2 28.0 29.4 30.4 31.1 34.0 35.8 37.8 38.5 40.9 40.5 42.3 44.4 45.7 49.8 52.1 55.5 58.4 62.6 64.7 65.4 71.4 79.0 85.3 91.3 100.0 117.1 132.4 149.2 160.1 160.1 156.1 150.9 178.4 204.0 225.6 247.2 280.6 310.5 330.7 352.5 159.8 188.6 209.7 235.0 252.0 293.0 299.2 308.1 313.2 321.5 328.2 329.1 329.5 336.0 346.6 350.8 355.6 357.2 1 The total of wage and salary disbursements and other labor income differs from compensation of employees in Table B-24 in that it excludes employer contributions for social insurance and the excess of wage accruals over wage disbursements. 314 TABLE B-25.—Sources of personal income, 1929-90—Continued [Billions of dollars; quarterly data at seasonally adjusted annual rates] Transfer payments Rental income of persons Personal Personal with Year or quarter capital dividend interest con- income income sumption 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 1969 1970 1971 1972 1973 1974 1975. 1976 1977 1978 1979 1980 1981... 1982 1983 1984 1985... 1986 1987 1988 1989... 1990 " 1982: IV 1983: IV 1984: IV 1985: IV 1986- IV 1987: IV 1988- 1 III IV 1989: I II Ill IV 1990: 1 || ni ' ;..";.; IV 4.9 2.0 2.6 2.7 3.2 4.1 4.6 4.8 5.0 5.8 5.8 6.4 6.7 7.7 8.3 9.4 10.7 11.6 12.0 12.4 13.1 13.9 14.6 15.3 15.8 16.5 17.1 17.3 18.1 18.6 19.6 18.4 18.4 18.2 18.6 17.9 18.0 16.1 13.5 11.9 8.2 9.3 5.6 6.6 13.3 13.6 13.2 8.5 9.2 11.6 13.7 16.3 8.2 6.7 15.8 12.4 5.6 7.8 13.5 14.6 16.1 15.3 17.0 16.8 13.3 9.7 5.8 4.1 5.5 4.3 8.4 8.5 5.8 2.0 3.8 4.0 4.4 4.3 4.4 4.6 4.6 5.6 6.3 7.0 7.2 8.8 8.5 8.5 8.8 9.1 10.3 11.1 11.5 11.3 12.2 12.9 13.3 14.4 15.5 17.3 19.1 19.4 20.2 21.9 22.4 22.2 22.6 24.1 26.6 28.9 28.7 33.8 38.2 43.0 48.1 52.9 61.3 63.9 68.7 75.5 78.7 85.8 91.8 102.2 114.4 123.8 65.4 71.0 76.8 79.0 87.7 95.5 97.9 100.2 103.8 107.1 110.6 113.2 115.7 118.2 120.5 122.9 124.9 126.7 6.9 5.5 5.3 5.3 5.3 5.2 5.1 5.2 5.8 6.6 7.5 8.0 8.7 9.6 10.4 11.2 12.4 13.7 14.9 16.6 18.7 20.3 22.3 24.9 26.3 28.9 32.2 35.5 39.6 44.2 48.2 53.2 60.9 69.3 74.7 80.8 93.3 111.9 122.5 134.1 155.4 182.5 221.5 271.9 335.4 369.7 393.1 444.7 478.0 493.2 501.3 547.9 643.2 680.9 366.2 411.6 464.4 485.9 492.7 516.3 523.5 536.3 556.2 575.6 610.4 642.1 655.2 664.9 670.5 678.0 685.3 690.1 Total 1.5 2.1 3.0 3.1 3.1 3.1 3.0 3.6 6.2 11.3 11.7 11.3 12.5 15.2 12.6 13.3 14.3 16.3 17.7 18.9 21.8 26.3 27.4 29.5 33.5 34.7 36.9 38.7 41.9 46.6 55.5 64.0 71.4 85.9 101.5 113.3 129.6 153.2 193.1 210.7 226.1 244.0 273.1 324.7 368.1 410.6 442.6 456.6 489.8 521.5 549.9 587.7 636.9 694.6 435.4 445.5 463.0 497.5 531.2 557.4 579.0 584.5 590.2 596.9 619.5 630.2 641.8 655.9 680.9 686.7 696.4 714.3 Old-age, Governsurvivors, Government ment disability, unememployand ployment Veterans ees health insur- benefits retireinsurment ance ance benefits benefits benefits 0.0 .0 !l '.2 .3 .4 .5 .6 LO 1.9 2.2 3.0 3.6 4.9 5.7 7.3 8.5 10.2 11.1 12.6 14.3 15.2 16.0 18.1 20.8 25.5 30.2 32.9 38.5 44.5 49.6 60.4 70.1 81.4 92.9 104.9 116.2 131.8 154.2 182.0 204.5 221.7 235.7 253.4 269.2 282.9 300.5 325.3 350.7 216.6 227.0 241.7 257.0 273.3 285.8 297.8 299.0 301.3 303.9 316.7 321.9 328.3 334.1 347.2 347.6 351.1 356.8 0.4 .5 .4 .4 .1 .1 .4 1.1 .8 .9 1.9 1.5 .9 1.1 1.0 2.2 1.5 1.5 1.9 4.1 2.8 3.0 4.3 3.1 3.0 2.7 2.3 1.9 2.2 2.1 2.2 4.0 5.8 5.7 4.4 6.8 17.6 15.8 12.7 9.7 9.8 16.1 15.9 25.2 26.3 15.8 15.7 16.3 14.5 13.4 14.7 18.1 31.8 20.0 15.6 15.2 16.7 13.4 13.9 13.5 13.4 13.0 13.9 14.3 14.9 15.5 16.3 17.3 18.2 20.7 0.6 .6 .5 .5 .5 0.1 '.5 1.0 3.0 7.0 7.0 5.9 5.3 7.7 4.6 4.3 4.1 4.2 4.4 4.4 4.5 4.7 4.6 4.6 5.0 4.7 4.8 4.7 4.9 4.9 5.6 5.9 6.7 7.7 8.8 9.7 10.4 11.8 14.5 14.4 13.8 13.9 14.4 15.0 16.1 16.4 16.6 16.4 16.7 16.7 16.6 16.9 17.3 17.9 16.6 16.5 16.3 16.5 16.4 16.6 16.9 16.9 16.9 16.8 17.4 17.3 17.3 17.3 17.9 17.9 17.9 18.0 Aid to families with depend- Other ent children (AFDC) 'A '.3 .3 .3 .3 .5 .7 .7 .7 .9 1.0 1.1 1.2 1.4 1.5 1.7 1.9 2.2 2.5 2.8 3.1 3.4 3.7 4.2 4.7 5.2 6.1 6.9 7.6 8.7 10.2 11.8 13.8 16.0 19.0 22.7 26.1 29.0 32.7 36.9 43.0 49.4 54.6 58.7 61.4 66.8 70.9 76.2 84.0 90.1 96.9 56.1 60.2 58.5 67.9 72.6 78.1 82.0 84.1 84.3 85.6 88.6 89.5 90.4 92.0 96.1 96.0 96.9 98.4 0.3 .4 .5 .6 .6 Is .6 .6 .6 .7 .8 .9 1.0 1.1 1.3 1.4 1.5 1.7 1.9 2.3 2.8 3.5 4.8 6.2 6.9 7.2 7.9 9.2 10.1 10.6 10.7 11.0 12.4 13.0 13.3 14.2 14.8 15.4 16.4 16.7 17.3 18.0 19.7 13.6 14.5 14.8 15.8 16.7 16.7 17.0 17.1 17.3 17.6 17.6 17.7 18.0 18.5 19.1 19.6 19.9 20.3 0.8 1.4 1.7 1.7 1.8 1.8 1.8 2.0 2.0 2.1 2.5 2.9 3.3 3.5 3.6 3.9 4.2 4.2 4.5 4.8 5.2 5.7 6.2 6.7 7.1 7.6 8.3 9.1 9.8 11.2 13.0 15.3 17.3 20.7 24.5 27.6 31.2 37.5 47.6 51.5 55.1 60.9 69.1 84.0 91.8 96.5 105.1 112.6 121.9 131.9 143.0 155.6 171.6 191.3 100.6 107.3 116.1 125.0 135.4 146.8 151.4 153.9 157.0 160.1 165.4 169.5 172.8 178.6 184.2 188.2 192.4 200.1 Less: Personal contribu- Nonfarm personal tions for income2 social insurance 0.1 !e .7 .8 1.2 1.8 2.2 2.3 2.0 2.1 2.2 2.2 2.9 3.4 3.8 4.0 4.6 5.2 5.8 6.7 6.9 7.9 9.3 9.7 10.3 11.8 12.6 13.3 17.8 20.6 22.9 26.2 27.9 30.7 34.5 42.6 47.9 50.4 55.5 61.2 69.8 81.0 88.6 104.5 112.3 120.1 132.7 149.3 161.9 172.9 194.1 212.8 226.2 113.5 123.6 135.2 152.6 164.6 176.3 189.4 192.5 195.5 198.9 209.6 212.0 214.0 215.8 222.9 224.1 228.6 229.0 159.9 172.0 188.3 190.6 211.2 237.1 255.4 274.2 277.5 299.6 322.8 341.9 350.4 376.2 393.9 409.9 436.7 460.0 494.9 534.0 581.5 626.3 688.7 752.1 810.4 871.8 955.0 1,059.7 1,172.6 1,276.9 1,417.9 1,572.6 1,769.3 1,983.2 2,215.8 2,465.6 2,618.7 2,799.0 3,052.1 3,271.3 3,469.4 3,702.2 4,006.0 4,314.6 4,574.4 2,672.8 2,895.6 3,134.7 3,346.9 3,538.9 3,817.3 3,883.0 3,963.5 4,047.9 4,129.7 4,221.6 4,291.4 4,343.1 4,402.4 4,484.3 4,549.9 4,614.7 4,648.6 2 Personal income exclusive of the farm component of wages and salaries, other labor income, proprietors' income, and 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. 315 TABLE B-26.—Disposition of personal income, 1929-90 [Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates] Percent of disposable Less: Personal outlays 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 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 1988 1989 1990 " 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: 1 II. Ill IV 1989: 1 II Ill IV 1990- 1 . II Ill IV* !!!".!!!!" Personal income Less: Personal tax and nontax personal payments income 84.3 46.3 72.1 77.6 95.2 122.4 150.7 164.5 170.0 177.6 190.2 209.2 206.4 228.1 256.5 273.8 290.5 293.0 314.2 337.2 356.3 367.1 390.7 409.4 426.0 453.2 476.3 510.2 552.0 600.8 644.5 707.2 772.9 831.8 894.0 981.6 1,101.7 1,210.1 1,313.4 1,451.4 1,607.5 1,812.4 2,034.0 2,258.5 2,520.9 2,670.8 2,838.6 3,108.7 3,325.3 3,526.2 3,766.4 4,070.8 4,384.3 4,645.6 2,729.2 2,941.8 3,188.3 3,399.1 3,597.8 3,890.9 3,951.3 4,033.4 4,112.3 4,186.2 4,302.2 4,362.9 4,402.8 4,469.2 4,562.8 4,622.2 4,678.5 4,719.0 2.6 1.4 2.4 2.6 3.3 5.9 17.8 18.9 20.8 18.7 21.4 21.0 18.5 20.6 28.9 34.0 35.5 32.5 35.4 39.7 42.4 42.2 46.1 50.5 52.2 57.0 60.5 58.8 65.2 74.9 82.4 97.7 116.3 116.2 117.3 142.0 152.0 171.8 170.6 198.7 228.1 261.1 304.7 340.5 393.3 409.3 410.5 440.2 486.6 512.9 571.6 591.6 658.8 699.8 411.1 413.9 459.7 499.6 534.4 588.6 572.7 594.0 592.2 607.3 640.5 665.5 659.5 669.6 675.1 696.5 709.5 718.1 81.7 44.9 69.7 75.0 91.9 116.4 132.9 145.6 149.2 158.9 168.8 188.1 187.9 207.5 227.6 239.8 255.1 260.5 278.8 297.5 313.9 324.9 344.6 358.9 373.8 396.2 415.8 451.4 486.8 525.9 562.1 609.6 656.7 715.6 776.8 839.6 949.8 1,038.4 1,142.8 1,252.6 1,379.3 1,551.2 1,729.3 1,918.0 2,127.6 2,261.4 2,428.1 2,668.6 2,838.7 3,013.3 3,194.7 3,479.2 3,725.5 3,945.8 2,318.1 2,527.9 2,728.6 2,899.5 3,063.4 3,302.3 3,378.6 3,439.4 3,520.1 3,578.9 3,661.7 3,697.3 3,743.4 3,799.6 3,887.7 3,925.7 3,969.1 4,000.9 Total Personal consumption expenditures Interest paid by consumers to business 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 2,629.0 2,797.4 3,009.4 3,238.2 3,450.1 3,658.1 2,117.0 2,315.8 2,493.4 2,700.4 2,868.5 3,079.1 3,147.7 3,204.3 3,268.2 3,332.6 3,371.7 3,425.9 3,484.3 3,518.5 3,588.1 3,622.7 3,693.4 3,728.1 1.5 .5 79.2 46.5 67.9 72.0 81.9 89.5 100.2 109.0 120.5 145.3 163.6 177.0 180.6 194.8 211.0 222.4 236.7 244.1 262.8 276.2 291.2 300.6 322.8 338.1 348.9 370.2 391.2 419.9 452.5 489.9 516.9 567.1 614.5 657.9 710.5 778.2 860.8 941.7 1,038.2 1,156.9 1,288.6 1,441.1 1,611.3 1,781.1 1,968.1 2,107.5 2,297.4 2,504.5 2,713.3 2,888.5 3,102.2 3,333.6 3,553.7 3,766.8 2,174.9 2,382.5 2,571.3 2,787.7 2,961.4 3,172.6 3,242.2 3,298.6 3,363.2 3,430.4 3,472.0 3,528.5 3,588.8 3,625.5 3,696.4 3,730.6 3,802.6 3,837.4 Source: Department of Commerce, Bureau of Economic Analysis. 316 !9 !s .5 J 1.0 1.4 1.7 2.3 2.5 2.9 3.6 3.8 4.4 5.1 5.5 5.6 6.1 7.0 7.3 7.8 8.8 9.9 11.1 12.0 12.5 13.8 15.6 16.7 17.7 19.5 22.3 24.1 24.4 26.6 30.5 36.7 43.5 47.4 52.0 55.5 61.9 72.5 82.6 89.1 90.7 93.6 102.2 107.8 56.8 65.5 76.3 85.9 90.9 91.3 92.4 92.6 93.4 95.9 98.6 101.0 103.4 105.7 107.4 107.5 107.9 108.3 Personal transfer Equals: pay- Personal ments saving to foreigners (net) 0.3 !2 .2 !l !4 .5 .7 .7 .7 .5 .4 .4 .4 .5 !4 .5 !4 .4 .4 .5 !6 .7 .7 '.9 .9 1.0 1.2 1.2 1.1 1.3 1.0 1.0 1.0 .9 .9 1.0 1.1 1.0 1.3 1.0 1.5 1.7 1.9 2.2 1.9 1.4 .9 1.1 1.2 1.6 1.4 2.1 2.1 2.1 1.8 1.6 1.9 1.7 1.6 1.2 1.2 .9 .4 1.3 1.1 2.6 -1.6 1.8 3.0 10.0 27.0 32.7 36.5 28.7 13.6 5.2 11.1 7.4 12.6 16.6 17.4 18.4 16.4 16.0 21.3 22.7 24.3 21.8 20.8 24.9 25.9 24.6 31.5 34.3 36.0 45.1 42.5 42.2 57.7 66.3 61.4 89.0 96.7 104.6 95.8 90.7 110.2 118.1 136.9 159.4 153.9 130.6 164.1 125.4 124.9 92.5 145.6 171.8 179.1 143.1 145.4 157.3 111.7 102.0 129.7 136.4 140.7 156.9 148.5 189.8 168.9 154.5 174.1 191.3 195.1 166.5 163.5 Personal outlays Total 96.8 103.6 97.4 96.0 89.1 76.8 75.4 74.9 80.8 91.4 96.9 94.1 96.1 93.9 92.7 92.7 92.8 93.7 94.2 92.8 92.8 92.5 93.7 94.2 93.4 93.5 94.1 93.0 93.0 93.2 92.0 93.0 93.6 91.9 91.5 92.7 90.6 90.7 90.8 92.4 93.4 92.9 93.2 92.9 92.5 93.2 94.6 93.9 95.6 95.9 97.1 95.8 95.4 95.5 93.8 94.2 94.2 96.1 96.7 96.1 96.0 95.9 95.5 95.9 94.8 95.4 95.9 95.4 95.1 95.0 95.8 95.9 Personal consump- Personal saving tion expenditures 94.5 102.1 96.2 94.7 87.9 76.1 74.8 74.4 80.2 90.6 95.9 93.0 94.9 92.6 91.4 91.4 91.2 92.0 92.5 90.9 90.9 90.7 91.8 92.1 91.3 91.4 91.8 90.7 90.5 90.8 89.6 90.6 91.0 89.4 89.0 90.2 88.2 88.3 88.6 90.2 91.1 90.5 90.6 90.3 90.0 90.7 92.0 91.1 92.6 92.8 94.2 93.1 92.6 92.7 91.3 91.6 91.4 93.1 93.6 93.2 93.2 93.2 92.8 93.1 92.1 92.7 93.1 92.6 92.3 92.3 93.1 93.2 3.2 -3.6 2.6 4.0 10.9 23.2 24.6 25.1 19.2 8.6 3.1 5.9 3.9 6.1 7.3 7.3 7.2 6.3 5.8 7.2 7.2 7.5 6.3 5.8 6.6 6.5 5.9 7.0 7.0 6.8 8.0 7.0 6.4 8.1 8.5 7.3 9.4 9.3 9.2 7.6 6.6 7.1 6.8 7.1 7.5 6.8 5.4 6.1 4.4 4.1 2.9 4.2 4.6 4.5 6.2 5.8 5.8 3.9 3.3 3.9 4.0 4.1 4.5 4.1 5.2 4.6 4.1 4.6 4.9 5.0 4.2 4.1 TABLE B-27.—Total and per capita disposable personal income and personal consumption expenditures in current and 1982 dollars, 1929-90 [Quarterly data at seasonally adjusted annual rates, except as noted] 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 1988 1989 1990 " 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: I II Ill IV 1989: 1 II III IV 1990: 1 II.. Ill IV Disposable personal income Total (billions of Per capita dollars) (dollars) Current 1982 Current 1982 dollars dollars dollars dollars Personal consumption expenditures Per capita Total (billions of (dollars) dollars) Current 1982 1982 Current dollars dollars dollars dollars 81.7 44.9 69.7 75.0 91.9 116.4 132.9 145.6 149.2 158.9 168.8 188.1 187.9 207.5 227.6 239.8 255.1 260.5 278.8 297.5 313.9 324.9 344.6 358.9 373.8 396.2 415.8 451.4 486.8 525.9 562.1 609.6 656.7 715.6 776.8 839.6 949.8 1,038.4 1,142.8 1,252.6 1,379.3 1,551.2 1,729.3 1,918.0 2,127.6 2,261.4 2,428.1 2,668.6 2,838.7 3,013.3 3,194.7 3,479.2 3,725.5 3,945.8 2,318.1 2,527.9 2,728.6 2,899.5 3,063.4 3,302.3 3,378.6 3,439.4 3,520.1 3,578.9 3,661.7 3,697.3 3,743.4 3,799.6 3,887.7 3,925.7 3,969.1 4,000.9 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 2,629.0 2,797.4 3,009.4 3,238.2 3,450.1 3,658.1 2,117.0 2,315.8 2,493.4 2,700.4 2,868.5 3,079.1 3,147.7 3,204.3 3,268.2 3,332.6 3,371.7 3,425.9 3,484.3 3,518.5 3,588.1 3,622.7 3,693.4 3,728.1 486 9. 370.8 499.5 530.7 604.1 693.0 721.4 749.3 739.5 723.3 694.8 733.1 733.2 791.8 819.0 844.3 880.0 894.0 944.5 989.4 1,012.1 1,028.8 1,067.2 1,091.1 1,123.2 1,170.2 1,207.3 1,291.0 1,365.7 1,431.3 1,493.2 1,551.3 1,599.8 1,668.1 1,728.4 1,797.4 1,916.3 1,896.6 1,931.7 2,001.0 2,066.6 2,167.4 2,212.6 2,214.3 2,248.6 2,261.5 2,331.9 2,469.8 2,542.8 2,635.3 2,670.7 2,800.5 2,869.0 2,893.3 2,276.1 2,392.7 2,496.3 2,562.8 2,646.2 2,717.9 2,765.9 2,784.4 2,818.0 2,833.9 2,863.5 2,854.9 2,874.3 2,883.2 2,900.9 2,902.8 2,898.0 2,871.6 671 357 532 568 689 863 972 1,052 1,066 1,124 1,171 1,283 1,260 1,368 1,475 1,528 1,599 1,604 1,687 1,769 1,833 1,865 1,946 1,986 2,034 2,123 2,197 2,352 2,505 2,675 2,828 3,037 3,239 3,489 3,740 4,000 4,481 4,855 5,291 5,744 6,262 6,968 7,682 8,421 9,243 9,724 10,340 11,257 11,861 12,469 13,094 14,123 14,973 15,695 9,929 10,725 11,467 12,068 12,629 13,483 13,765 13,982 14,271 14,470 14,773 14,883 15.026 15,210 15,527 15,639 15,765 15,847 4,091 2,950 3,812 4,017 4,528 5,138 5,276 5,414 5,285 5,115 4,820 5,000 4,915 5,220 5,308 5,379 5,515 5,505 5,714 5,881 5,909 5,908 6,027 6,036 6,113 6,271 6,378 6,727 7,027 7,280 7,513 7,728 7,891 8,134 8,322 8,562 9,042 8,867 8,944 9,175 9,381 9,735 9,8299,722 9,769 9,725 9,930 10,419 10,625 10,905 10,946 11,368 11,531 11,508 9,749 10,151 10,491 10,667 10,909 11,097 11,268 11,320 11,424 11,458 11,553 11,492 11,538 11,541 11,586 11,564 11,511 11,374 1 471.4 378.7 480.5 502.6 531.1 527.6 539.9 557.1 592.7 655.0 666.6 681.8 695.4 733.2 748.7 771.4 802.5 822.7 873.8 899.8 919.7 932.9 979.4 1,005.1 1,025.2 1,069.0 1,108.4 1,170.6 1,236.4 1,298.9 1,337.7 1,405.9 1,456.7 1,492.0 1,538.8 1,621.9 1,689.6 1,674.0 1,711.9 1,803.9 1,883.8 1,961.0 2,004.4 2,000.4 2,024.2 2,050.7 2,146.0 2,249.3 2,354.8 2,446.4 2,515.8 2,606.5 2,656.8 2,682.2 2,078.7 2,191.9 2,281.1 2,386.9 2,477.8 2,534.2 2,576.8 2,594.1 2,616.4 2,638.8 2,636.7 2,645.3 2,675.3 2,669.9 2,677.3 2,678.8 2,696.8 2,675.8 634 365 511 538 606 657 727 782 855 1,018 1,123 1,193 1,195 1,267 1,349 1,396 1,458 1,477 1,560 1,608 1,666 1,692 1,786 1,829 1,857 1,940 2,017 2,133 2,268 2,428 2,534 2,752 2,949 3,121 3,330 3,609 3,950 4,285 4,689 5,178 5,707 6,304 6,960 7,607 8,320 8,818 9,516 10,253 10,985 11,576 12,334 13,144 13,866 14,550 9,068 9,825 10,479 11,240 11,825 12,572 12,824 13,027 13,249 13,474 13,603 13,790 13,986 14,084 14,330 14,432 14,670 14,767 3,868 3,013 3,667 3,804 3,981 3,912 3,949 4,026 4,236 4,632 4,625 4,650 4,661 4,834 4,853 4,915 5,029 5,066 5,287 5,349 5,370 5,357 5,531 5,561 5,579 5,729 5,855 6,099 6,362 6,607 6,730 7,003 7,185 7,275 7,409 7,726 7,972 7,826 7,926 8,272 8,551 8,808 8,904 8,783 8,794 8,818 9,139 9,489 9,840 10,123 10,311 10,580 10,678 10,668 8,904 9,299 9,587 9,935 10,214 10,347 10,498 10,546 10,607 10,669 10,638 10,648 10,739 10,687 10,693 10,671 10,711 10,599 Population (thousands) ' 121,878 125,690 131,028 132,122 133,402 134,860 136,739 138,397 139,928 141,389 144,126 146,631 149,188 151,684 154,287 156,954 159,565 162,391 165,275 168,221 171,274 174,141 177,073 180,760 183,742 186,590 189,300 191,927 194,347 196,599 198,752 200,745 202,736 205,089 207,692 209,924 211,939 213,898 215,981 218,086 220,289 222,629 225,106 227,754 230,182 232,549 234,829 237,051 239,322 241,660 243,982 246,358 248,810 251,413 233,466 235,707 237,946 240,257 242,579 244,925 245,453 245.981 246,667 247,329 247,863 248,431 249,127 249,818 250,392 251,026 251,767 252,467 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). 317 TABLE B-28.—Gross saving and investment, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Gross saving Gross investment Governmer t surplus or deficit Capital 1 \ no tional income and grants ( ). na received Gross prod uct accounts by the busiUnited State ness Total Federal States savand (net)* ing i local Gross private saving 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 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 1988 ... 1989 1990".. 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: 1 II Ill IV 1989: 1 II Ill IV 1990:1 II III IV* Total 15.9 .6 8.9 13.6 18.8 10.9 5.8 3.0 5.9 35.7 42.5 50.8 36.5 52.5 58.7 52.3 51.0 51.6 68.4 77.3 77.1 64.5 80.5 84.2 82.6 91.4 98.7 108.5 123.5 130.3 129.5 139.7 158.8 154.7 171.9 200.7 251.9 247.9 238.7 283.0 335.4 408.6 458.4 445.0 522.0 446.4 463.6 568.5 533.5 525.3 555.5 656.1 691.5 657.9 387.4 519.9 557.8 520.3 510.0 600.5 630.4 653.8 684.7 655.4 700.6 697.9 692.4 674.8 664.8 679.3 665.9 Total Personal saving 14.9 1.9 11.1 14.3 22.6 42.3 50.0 54.9 45.4 30.3 28.1 42.4 39.9 44.5 52.6 56.1 58.0 58.8 65.2 72.1 76.1 77.1 82.1 81.1 86.8 95.2 97.9 110.8 123.0 131.6 143.8 145.7 148.9 164.5 190.6 203.4 244.0 254.3 303.6 321.4 354.5 409.0 445.8 478.4 550.5 557.1 592.2 673.5 665.3 669.5 662.6 751.3 779.3 783.9 554.2 632.8 679.9 666.3 641.2 715.2 738.5 742.4 758.0 766.4 784.4 770.3 776.0 786.4 795.0 806.7 772.2 2.6 -1.6 1.8 3.0 10.0 27.0 32.7 36.5 28.7 13.6 5.2 11.1 7.4 12.6 16.6 17.4 18.4 16.4 16.0 21.3 22.7 24.3 21.8 20.8 24.9 25.9 24.6 31.5 34.3 36.0 45.1 42.5 42.2 57.7 66.3 61.4 89.0 96.7 104.6 95.8 90.7 110.2 118.1 136.9 159.4 153.9 130.6 164.1 125.4 124.9 92.5 145.6 171.8 179.1 143.1 145.4 157.3 111.7 102.0 129.7 136.4 140.7 156.9 148.5 189.8 168.9 154.5 174.1 191.3 195.1 166.5 163.5 12.3 3.6 9.3 11.3 12.6 15.3 17.3 18.4 16.8 16.7 23.0 31.3 32.5 31.8 36.0 38.7 39.6 42.3 49.2 50.8 53.5 52.9 60.3 60.3 62.0 69.3 73.3 79.3 88.7 95.6 98.6 103.3 106.7 106.7 124.3 142.0 155.0 157.6 198.9 225.6 263.8 298.9 327.7 341.5 391.1 403.2 461.6 509.5 539.9 544.6 570.2 605.7 607.5 604.8 411.1 487.3 522.6 554.5 539.2 585.5 602.1 601.6 601.1 617.9 594.6 601.5 621.4 612.3 603.7 611.6 605.8 1.0 -1.4 2.2 -.7 -3.8 -31.4 442 -51.8 -39.5 5.4 14.4 8.4 -3.4 8.0 6.1 -3.8 -7.0 -7.1 3.1 5.2 .9 -12.6 -1.6 3.1 -4.3 38 -2.3 1.2 -1.3 -2.2 -1.3 -5.1 -33.1 -46.6 -54.5 -42.1 3.5 13.4 8.3 -2.6 9.2 6.5 -3.7 -7.1 -6.0 4.4 6.1 2.3 -10.3 -I.}3.0 -3.9 -4.2 .3 -3.3 -i!s 13 -14.2 -13.2 -6.0 -6.0 8.4 9.9 -12.4 -10.6 -22.0 -19.5 34 -16.8 -5.6 7.9 -11.6 -4.3 -69.4 -64.9 -38.4 -53.5 -46.0 -19.1 -.4 -29.3 11.5 -16.1 -34.5 -61.3 -29.7 -63.8 -110.8 -145.9 -128.6 -176.0 -105.0 -169.6 -131.8 -196.9 -144.1 -206.9 -107.1 -158.2 -95.3 -141.7 -87.8 -134.3 -126.0 -161.3 -166.8 -202.6 -112.9 -169.2 -122.1 -187.5 -145.9 -212.2 1313 -189.0 -114.7 -161.7 -108.2 -153.7 -88.6 -136.9 -73.3 -120.1 -111.0 -156.3 -83.7 -132.6 -72.4 -122.7 -83.6 -131.7 -111.6 -150.1 -130.2 -168.3 -127.3 -166.0 -106.4 -145.7 -0.2 -.1 .0 .6 1.3 1.8 2.4 2.7 2.6 1.9 1.0 ~\2 -A .0 -U -1.3 -.9 -1.4 -2.4 -.4 .1 -.4 '.5 1.0 .0 -U L5 1.8 2.6 13.5 13.5 7.2 4.5 15.2 26.9 28.9 27.6 26.8 34.1 35.1 47.5 64.6 65.1 62.8 51.0 46.5 46.4 35.4 35.8 56.4 65.4 66.3 57.8 46.9 45.5 48.3 46.8 45.2 48.9 50.3 48.1 38.5 38.1 38.6 39.3 0.9 .7 .7 0 4 -2.0 0 0 0 0 1.1 1.2 1.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 17.4 1.7 10.6 15.0 19.5 10.2 4.1 5.8 10.0 36.4 44.3 49.6 37.3 53.2 61.4 54.2 53.6 54.3 70.2 75.4 75.9 64.5 79.0 81.4 81.3 91.5 98.1 107.1 122.3 132.4 129.2 138.6 154.9 153.6 173.7 199.1 247.6 246.2 241.2 286.6 335.3 406.7 457.4 450.0 526.1 446.3 468.8 573.9 528.7 523.6 544.9 627.8 674.4 654.8 394.2 522.4 555.7 512.4 500.3 581.7 605.7 629.9 650.8 624.9 672.1 677.6 676.1 671.8 665.6 676.1 661.0 616.7 StatisGross tical private Net domes- foreign discrepancy tic investinvest- ment » ment 16.7 1.6 9.5 13.4 18.3 10.3 6.2 7.7 11.3 31.5 35.0 47.1 36.5 55.1 60.5 53.5 54.9 54.1 69.7 72.7 71.1 63.6 80.2 78.2 77.1 87.6 93.1 99.6 116.2 128.6 125.7 137.0 153.2 148.8 172.5 202.0 238.8 240.8 219.6 277.7 344.1 416.8 454.8 437.0 515.5 447.3 502.3 664.8 643.1 659.4 699.5 747.1 771.2 745.0 409.6 579.8 661.8 654.1 648.8 741.4 729.2 746.0 765.6 747.5 769.7 776.7 775.8 762.7 747.2 759.0 759.7 714.0 0.8 .2 1.0 1.5 1.3 -.1 -2.1 -2.0 -1.3 4.9 9.3 2.4 .9 -1.8 .9 .6 -1.3 .2 .4 2.8 4.8 .9 -1.2 3.2 4.2 3.8 4.9 7.5 6.2 3.8 3.5 1.6 1.7 4.8 1.3 -2.9 8.8 5.4 21.6 9.0 -8.7 -10.1 2.6 13.0 10.6 -1.0 -33.5 -90.9 -114.4 -135.8 -154.6 -119.2 -96.8 -90.1 -15.4 -57.4 -106.1 -141.6 -148.5 -159.7 -123.5 -116.1 -114.8 -122.5 -97.6 -99.1 -99.7 -90.9 -81.6 -82.9 -98.7 -97.3 1.5 1.2 1.7 1.4 .7 -.7 -1.7 2.7 4.0 i!s -1.3 .8 .8 2.7 1.8 2.6 2.7 1.8 -1.9 -1.2 -l!s -2.8 -1.2 .0 -.6 -1.4 -1.2 2.1 -.4 -1.1 -3.9 -1.1 1.8 -1.6 -4.3 -1.7 2.5 3.6 .0 -1.9 -1.0 4.9 4.1 ~5.2 5.4 -4.8 -1.8 -10.6 -28.2 -17.0 -3.1 6.8 2.5 -2.1 -7.9 -9.6 -18.8 -24.7 -23.9 -33.9 -30.5 -28.6 -20.3 -16.2 -3.0 -12 -4.9 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 Consists mainly of allocations of special drawing rights (SDRs). 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 Consists of a U.S. payment to India under the Agricultural Trade Development and Assistance Act. This payment is included in capital grants received by the United States, net. Source: Department of Commerce, Bureau of Economic Analysis. 318 TABLE B-29-—Saving by individuals, 1946-901 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Net investment in Less: Net increase in debt tangible assets 7 Increase in financial assets Securities Year or quarter Total Insur- Other Non- MortCheck- Time ance able Money Con- cor- gage and depos- savings market Govern- Corpo- Other and finan- Owner- sumer porate debt Con- Other Total its and pension cial occu- dura- busi- on sumer debt 89 ment rate fund asnoncurren- depos- shares securi- equi- securi- re- 5 sets8 2 its 3 bles ness farm credit ties4 serves asties cy ties sets8 homes .,£ 1946 1947 1948 1949 24.9 19.5 25.0 20.7 19.5 12.5 8.9 8.8 5.6 .0 -2.9 -2.0 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 31.8 35.0 35.9 34.3 27.4 36.1 38.5 38.0 35.1 36.8 14.9 18.9 28.7 24.7 21.2 28.6 31.8 28.8 32.5 34.5 2.7 4.6 1.6 .9 2.1 1.2 1.9 -.4 3.7 .9 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 37.4 36.9 43.2 46.7 56.6 65.7 76.5 79.0 79.5 73.9 32.7 35.5 39.7 45.4 54.9 58.7 60.9 70.1 71.6 67.0 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 89.6 99.6 118.9 157.4 120.0 159.1 '.'.'. 164.0 190.3 198.8 204.3 1980... 1981 1982 1983 1984 1985 1986 1987 1988 1989 -1.5 .5 1.0 .5 6.3 3.5 2.3 2.6 1.2 1.1 1.0 .7 -0.8 -.7 .1 -.2 5.1 5.4 5.3 5.6 3.7 2.6 2.1 1.6 3.8 7.0 9.5 8.7 6.7 9.4 10.2 10.9 2.0 1.3 6.9 2.0 4.0 4.9 4.8 4.4 2.9 3.5 3.1 3.1 0.2 2.4 2.6 2.3 -.7 .3 .0 6.1 6.3 7.7 7.9 7.8 8.5 9.5 9.5 10.4 11.9 2.9 1.6 2.8 2.4 2.0 1.7 3.4 1.9 4.3 1.9 12.1 12.1 11.7 12.7 13.1 17.3 16.2 13.8 12.8 17.0 14.9 11.4 8.7 10.3 7.0 12.7 8.8 7.9 3.7 7.7 7.2 4.4 1.9 .8 1.7 2.9 1.0 2.1 2.9 4.3 7.1 6.6 6.4 7.6 9.0 12.3 11.0 8.8 9.6 12.9 4.6 1.4 5.2 4.1 1.4 7.0 3.6 2.6 11.5 12.1 13.0 13.9 16.4 17.0 19.3 18.8 19.9 21.8 3.7 4.3 2.5 2.1 3.1 3.1 4.1 6.7 5.7 3.9 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 11.9 15.1 20.2 23.2 21.3 26.9 26.2 3.2 4.9 7.0 9.2 8.8 12.4 9.9 10.7 10.0 13.3 24.2 3.9 6.2 28.0 48.5 9.2 8.4 39.9 43.7 9.3 71.9 10.1 56.6 16.6 78.6 25.4 95.0 34.9 101.8 38.8 14.6 22.3 29.2 33.1 27.9 27.5 41.9 61.0 77.8 86.7 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 7.5 2.7 15.2 18.9 12.4 7> 5.7 3.8 3.5 2.5 5.3 6.1 4.6 3.2 6.9 6.1 11.4 4.0 2.2 12.3 5.9 13.9 8.5 16.6 17.4 9.5 17.1 10.1 13.4 5.9 5.1 12.9 17.2 10.8 18.3 10.1 6.1 7.0 6.4 10.1 11.1 13.7 12.5 17.6 18.1 21.5 4.6 14.1 19.0 23.0 9.0 8.0 22.9 36.7 45.1 40.5 20.6 33.2 48.4 30.0 56.2 33.9 45.9 64.4 87.9 118.2 31.9 -6.2 37.4 19.5 37.2 -4.0 62.7 -11.6 98.8 14.4 1.0 117.6 125.4 3.2 118.0 -17.8 133.8 -26.8 133.9 -40.9 2.6 96.4 73.8 16.9 52.9 16.4 120.4 48.9 136.7 81.7 157.0 82.5 216.8 58.0 234.0 33.5 230.9 50.2 219.8 39.1 110.2 100.8 115.4 129.8 163.0 198.0 120.2 104.9 112.8 97.5 131.6 -19.8 132.2 -22.2 128.4 -20.9 143.0 -44.6 194.3 287.3 231.7 210.5 57.1 50.3 42.3 51.2 126.4 97.6 137.3 89.8 279.5 -165.5 21.9 134.6 -37.3 10.8 240.6 -82.4 20.1 39.5 -66.8 -44.2 185.9 64.6 159.3 132.1 -21.6 135.4 74.2 160.0 135.0 -34.9 109.7 39.7 164.0 144.3 -51.1 267.9 67.3 164.4 124.1 -56.2 225.2 211.8 224.3 217.9 38.2 36.9 37.1 44.1 126.4 95.9 80.2 87.3 255.9 -57.2 62.8 52.9 222.5 -43.8 262.5 -39.8 -46.1 194.6 43.8 168.9 140.8 -38.3 238.3 14.6 268.9 43.7 163.1 122.8 -54.8 226.0 9.8 213.5 44.6 155.7 122.1 -62.2 208.0 27.7 127.2 54.3 99.6 2.4 4.8 7.8 8.2 9.2 8.6 9.4 11.9 13.9 "•'"•""•"• 11.0 .9 -.6 7.4 3.7 L8 1.5 1.0 6i4 4.6 3.7 -2.6 8.4 U 2.0 1.5 1.8 .6 .9 -1.0 -1.2 4.2 5.2 7.6 2.4 9.9 11.2 -2.4 12.2 18.3 26.1 26.2 26.3 27.9 19.1 35.4 30.9 8.9 2.1 .8 1.1 -.8 3.9 3.9 13.7 -2.5 2.3 27.0 .0 1.1 -1.4 -1.6 -.3 -1.6 80.7 105.5 134.6 148.4 147.1 176.4 206.1 253.4 285.7 326.9 8.7 12.2 13.4 13.1 6.3 6.0 15.6 19.7 22.0 35.8 43.5 67.7 74.0 63.5 56.2 77.6 107.1 106.6 99.6 74.4 -5.7 -11.0 -.7 -4.3 -8.8 -4.3 -2.1 -6.2 203.3 246.8 258.5 322.2 381.8 344.2 405.5 346.4 443.4 444.9 320.2 321.7 374.4 494.0 554.4 566.0 557.3 484.5 578.9 546.4 9.2 36.2 24.1 32.9 21.4 32.5 97.4 7.3 9.7 24.3 124.9 72.0 119.7 201.8 229.6 133.0 114.8 108.4 167.3 117.0 33.8 -11.2 -14.9 24.5 90.7 42.6 -37.7 -9.0 70.0 -15.8 -25.8 32.8 -31.1 100.9 -3.0 4.5 -.6 44.0 123.5 -57.9 54.9 8.7 120.9 -37.7 15.0 67.2 39.6 -34.5 33.4 28.1 131.7 -34.1 23.5 186.5 -118.1 36.6 2.2 81.2 173.5 -88.0 118.5 117.9 148.0 159.2 157.7 186.7 169.7 163.9 206.3 174.7 35.4 8.8 21.3 28.9 36.6 67.0 88.2 45.9 67.1 61.4 66.6 59.7 35.6 76.2 95.4 97.1 114.6 134.0 151.4 161.9 1988:1 II III.... IV.... 430.8 409.7 544.6 388.4 549.9 39.0 585.0 -4.3 694.2 -18.8 486.5 22.9 187.3 170.1 198.0 113.7 54.7 -25.7 1.6 63.6 137.8 -77.8 -40.2 163.5 -128.2 118.8 281.5 -76.7 54.1 163.3 -189.8 13.7 186.7 203.3 179.2 256.0 62.4 87.5 75.4 43.1 146.9 150.0 154.2 154.9 1989:1 II III,.. IV.... 416.6 476.2 498.4 388.2 536.6 16.3 560.7 -25.0 582.8 13.0 505.3 93.0 98.9 152.5 131.1 85.4 35.0 115.4 111.1 63.2 1990:1 566.6 503.5 452.1 675.2 562.6 571.9 9.8 99.2 22.0 -10.9 60.7 -43.0 66.3 7.3 119.5 HI"!!! 2.4 1.3 .0 l!o 30.6 -Is 1.0 1.1 .8 1.0 2.3 -A 1.3 .3 .8 2.4 5.2 7.8 10.0 -l!s -6.2 -2.2 1&6 17.8 17.6 8.6 13.4 -7.3 32.1 -12.5 66.0 -25.5 6.9 6.7 -1.0 9.1 13.5 -2.1 2.2 17.2 8.7 4.8 1 Saving 2 13.5 26.2 38.8 44.2 34.6 38.8 60.8 91.5 109.4 117.1 by households, personal trust funds, nonprofit institutions, farms, and other noncorporate business. Consists of U.S. savings bonds, other U.S. Treasury securities, U.S. Government agency securities and sponsored agency securities, mortgage pool securities, and State and local obligations. 3 Includes mutual fund shares. 4 Corporate and foreign bonds and open-market paper. 5 Private life insurance reserves, private insured and noninsured pension reserves, and government insurance and pension reserves. 6 Consists of security credit, mortgages, accident and health insurance reserves, and nonlife insurance claims for households and of consumer credit, equity in sponsored agencies, and nonlife insurance claims for noncorporate business. 7 Purchases of physical assets less depreciation. 8 Includes data for corporate farms. 9 Other debt consists of security credit, U.S. Government and policy loans, and noncorporate business debt. Source: Board of Governors of the Federal Reserve System. 319 TABLE B-30.—Number and median income (in 1989 dollars) of families and persons, and poverty status, by race, 1970-89 Familiesl Persons below poverty level Below poverty level Year Num. ber (mil- lions) All RACES 1970 1971 1972 1973 s 1974 1975 1976 1977 1978 1979* 1980 . . .. 1981 1982 19838 1984 . 1985 1986s 1987 1988 1989 WHITE 1970 1971 1972 1973 s 1974 .. .. 1975 ".!.".'" !.".'.. 1976 . . . 1977 19784 1979 1"." .!.! 1980 1981 1982 s 1983 . 1984 1985 1986s 1987 1988 1989 BLACK 1970 1971 1972 1973 s 1974 1975 1976 1977 1978 1979* . 1980 1981 1982 1983 1984 1985 1986 s 1987 1988 1989 Median income Female householder Total Number (mil* Rate lions) Number (millions) Rate Median income of persons 152years old and over with income Females Males Num. YearYearber round All All round (mil- Rate persons full-time persons full-time lions) workers workers 52.2 $31,534 53.3 31490 54.4 32,976 55.1 33,656 55.7 32,451 56.2 31,620 56.7 32,597 57.2 32,758 57.8 33,548 59.6 33,454 60.3 31,637 61.0 30,540 61.4 30,111 62.0 30,719 62.7 31,547 63.6 31,962 64.5 33,328 65.2 33,805 65.8 33,742 66.1 34,213 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 7.0 6.9 6.8 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 10.7 10.4 10.3 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 3.7 3.6 3.5 32.5 33.9 32.7 32.2 32.1 32.5 33.0 31.7 31.4 30.4 32.7 34.6 36.3 36.0 34.5 34.0 34.6 34.2 33.4 32.2 25.4 25.6 24.5 23.0 23.4 25.9 25.0 24.7 24.5 26.1 29.3 31.8 34.4 35.3 33.7 33.1 32.4 32.2 31.7 31.5 12.6 $21,316 $29,351 12.5 21,135 29,488 11.9 22,100 31,261 11.1 22,499 32,028 11.2 21,259 30,590 12.3 20,405 29,811 11.8 20,542 30,202 11.6 20,714 30,836 11.4 20,797 30,547 11.7 20,118 29,854 13.0 18,856 28,853 14.0 18,379 28,227 15.0 17,925 27,826 15.2 18,253 28,020 14.4 18,618 28,648 14.0 18,797 28,809 13.6 19,363 29,2% 13.4 19,414 29,124 13.0 19,819 28,659 12.8 19,893 28,605 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 56.1 56.5 56.5 32,713 32,675 34,260 35,175 33,724 32,885 33,859 34,253 34,933 34,910 32,962 32,080 31,614 32,167 33,042 33,595 34,857 35,350 35,549 35,975 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 4.6 4.5 4.4 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 8.1 7.9 7.8 1.1 1.2 1.1 1.2 1.3 1.4 1.4 1.4 1.3 1.4 1.6 1.8 1.8 1.9 1.9 2.0 2.0 2.0 1.9 1.9 25.0 26.5 24.3 24.5 24.8 25.9 25.2 24.0 23.5 22.3 25.7 27.4 27.9 28.3 27.1 27.4 28.2 26.9 26.5 25.4 17.5 17.8 16.2 15.1 15.7 17.8 16.7 16.4 16.3 17.2 19.7 21.6 23.5 24.0 23.0 22.9 22.2 21.2 20.7 20.8 9.9 9.9 9.0 8.4 8.6 9.7 9.1 8.9 8.7 9.0 10.2 11.1 12.0 12.1 11.5 11.4 11.0 10.4 10.1 10.0 22,406 22,158 23,180 23,607 22,270 21,435 21,655 21,696 21,782 21,017 20,057 19,502 18,951 19,203 19,653 19,179 20,433 20,636 20,921 20,863 30,191 30,317 32,388 32,955 31,186 30,500 31,102 31,467 31,114 30,716 29,676 28,890 28,568 28,768 29,629 29,609 30,114 29,803 29,624 29,846 7,242 7,495 7,760 7,884 7,840 7,883 7,858 8,187 7,830 7,503 7,445 7,529 7,667 8,114 8,293 8,478 8,780 9,286 9,542 9,812 17,692 17,657 18,309 18,427 18,198 17,832 18,253 18,150 18,509 18,144 17,611 17,277 17,793 18,279 18,588 18,994 19,348 19,527 19,730 19,873 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 7.2 7.4 7.5 20,067 19,718 20,362 20,301 20,137 20,234 20,141 19,568 20,690 19,768 19,073 18,097 17,473 18,128 18,416 19,344 19,917 20,091 20,260 20,209 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 2.1 2.1 2.1 29.5 28.8 29.0 28.1 26.9 27.1 27.9 28.2 27.5 27.8 28.9 30.8 33.0 32.3 30.9 28.7 28.0 29.4 28.2 27.8 .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 1.6 1.6 1.5 54.3 53.5 53.3 52.7 52.2 50.1 52.2 51.0 50.6 49.4 49.4 52.9 56.2 53.7 51.7 50.5 50.1 51.1 49.0 46.5 7.5 7.4 7.7 7.4 7.2 7.5 7.6 7.7 7.6 8.1 8.6 9.2 9.7 9.9 9.5 8.9 9.0 9.5 9.4 9.3 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 32.4 31.3 30.7 13,285 13,214 14,040 14,280 13,798 12,815 13,039 12,875 13,049 13,010 12,052 11,597 11,357 11,230 11,276 12,409 12,244 12,242 12,624 12,609 20,565 20,731 21,872 22,211 22,343 22,698 22,276 21,694 23,830 22,137 20,880 20,440 20,290 20,430 20,221 20,710 21,232 21,309 21,714 20,706 6,593 6,567 7250 7,116 7,078 7,161 7,405 7,070 7,050 6,829 6,892 6,688 6,763 6,933 7,356 7,234 7,429 7,585 7,703 7,875 14,496 15,590 15,663 15,626 16,794 17,037 17,066 16,963 17,155 16,626 16,425 15,603 15,903 16,185 16,751 16,814 16,930 17,441 17,680 17,908 $7,149 $17,386 7,373 17^55 17,956 7,710 7,890 18,120 7,752 18,044 7,802 17,791 7,793 18,114 8,064 18,035 7,737 18,336 7,433 17,987 7,404 17,443 7,445 16,993 7,565 17,557 7,974 18,037 18,405 8,197 8,317 18,729 19,056 8,610 9,054 19,172 9,312 19,439 9,624 19,643 '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. * 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 and age of family householder, and farm-nonfarm residence. Minor revisions implemented in 1981 eliminated variations in the poverty thresholds based on two of these variables, farmnonfarm residence and sex of householder. The poverty thresholds are updated every year to reflect changes in the consumer price index. For further details, see "Current Population Reports," Series P-60, No. 168. Source: Department of Commerce, Bureau of the Census. 320 POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY TABLE B-31.—Population by age groups, 1929-90 [Thousands of persons] Age (years) July 1 Total Under 5 1929 121,767 5-15 16-19 20-24 25-44 45-64 65 and over 11,734 26,800 9,127 10,694 35,862 21,076 6,474 26,897 9,302 11,152 37,319 22,933 7,363 1933 125,579 10,612 1939 130,880 10,418 25,179 9,822 11,519 39,354 25,823 8,764 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 1940 1941 1942 1943 1944 132,122 133 402 134,860 136 739 138,397 10,579 10,850 11,301 12016 12,524 24,811 24,516 24,231 24,093 23,949 1945 1946 1947 1948 1949 139,928 141 389 144,126 146 631 149,188 12,979 13244 14,406 14919 15,607 23,907 24103 24,468 25209 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 154878 157 553 160,184 163 026 16,410 17333 17312 17,638 18057 26,721 27279 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 18566 19,003 19494 19,887 20175 32,682 33,994 35272 36,445 37368 8,744 8,916 9195 9,543 10215 10,714 10,616 10,603 10,756 10969 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 20341 20522 20469 20342 20,165 38494 39765 41205 41626 42,297 10683 11025 11 180 12'007 12,736 11 134 11,483 11959 12,714 13,269 47,140 47,084 47013 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 19824 19208 18563 17,913 17376 42938 43,702 44244 44,622 44840 13516 14,311 14200 14,452 14800 13746 14,050 15248 15,786 16480 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 213854 17 166 17244 17,101 16851 16487 44816 44591 44,203 43582 42989 15289 15,688 16,039 16446 16769 17202 18159 18,153 18521 18*975 48,473 48,936 50,482 51749 53051 41,999 42,482 42,898 43,235 43,522 20,107 20,561 21,020 21,525 22,061 1975 1976 1977 1978 1979 215 973 218 035 220 239 222,585 225 055 16121 15617 15564 15735 16063 42508 42099 41298 40,428 39552 17017 17194 17276 17,288 17242 19527 19986 20499 20,946 21297 54,302 55,852 57561 59,400 61,379 43,801 4,0 408 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 16458 16,931 17,298 17651 17830 38844 38,190 37,877 37668 37657 17160 16,771 16,255 15704 15141 21584 21,821 21,807 21,700 21536 63494 65,619 67,856 69,971 72049 44,515 44,569 44,602 44,680 44,818 25,704 26,235 26,825 27,426 27,971 1985 1986 1987 1988 1989 239 279 241 625 243 942 246,307 248 762 18004 18154 18267 18,432 18752 37691 37706 37'687 38,007 38440 14819 14802 14*958 14,894 14569 21214 20608 19982 19,371 18886 74,077 76124 77897 79,224 80633 44,934 45058 45,310 4,0 604 46,498 28,540 29,174 29,841 30,374 30,984 1990 251,394 Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950. Population estimates in this series do not reflect the results of the 1990 census; according to the census, the total population on April 1, 1990 was 249,632,692. Source: Department of Commerce, Bureau of the Census. 321 TABLE B-32.—Population and the labor force, 1929-90 [Monthly data seasonally adjusted, except as noted] Year or month Labor EmployCivilian force ment noninsti- Resi- includ- includdent tutional Armed popula- Forces * resirfent resirfent tion1 Armed Armed Forces Forces Civilian labor force Unemployment rate Employment Total Total Agricultural Nonagricultural Unemployment All Civilian work- workers2 ers8 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 employment/ population ratio8 Percent Thousands of persons 14 years of age and over 1929 1933 1939 1940 1941 1942 1943 1944 1945 1946 .. 1947 Civilian labor force participation rate4 37,180 1,550 28,670 12,830 36,140 9,480 37,980 8,120 41,250 5,560 44,500 2,660 45,390 1,070 45,010 670 44,240 1,040 46,930 2,270 49,557 2,356 32 24.9 17.2 14.6 9.9 4.7 1.9 1.2 1.9 3.9 3.9 49,148 2,311 50,714 2,276 49,993 3,637 51,758 3,288 53,235 2,055 53,749 1,883 54,919 1,834 53,904 3,532 55,722 2,852 57,514 2,750 58,123 2,859 57,450 4,602 59,065 3,740 60,318 3,852 60,546 4,714 61,759 3,911 63,076 4,070 64,782 3,786 66,726 3,366 68,915 2,875 70,527 2,975 72,103 2,817 74,296 2,832 75,215 4,093 75,972 5,016 78,669 4,882 81,594 4,365 83,279 5,156 82,438 7,929 85,421 7,406 88,734 6,991 92,661 6,202 95,477 6,137 95,938 7,637 97,030 8,273 96,125 10,678 97,450 10,717 101,685 8,539 103,971 8,312 106,434 8,237 109,232 7,425 111,800 6,701 114,142 6,528 114,728 6,874 105,600 7,795 105,397 8,402 105,637 8,383 105,799 8,364 105,939 8,439 106,383 ,8,508 106,669 8,319 106,933 8,135 106,914 8,310 107,145 8,243 107,255 8,159 107,580 7,883 3.9 3.8 5.9 5.3 3.3 3.0 2.9 5.5 4.4 4.1 4.3 6.8 5.5 5.5 6.7 5.5 5.7 5.2 4.5 3.8 3.8 3.6 3.5 4.9 5.9 5.6 4.9 5.6 8.5 7.7 7.1 6.1 5.8 7.1 7.6 9.7 9.6 7.5 7.2 7.0 6.2 5.5 5.3 5.5 6.7 7.2 7.2 7.1 7.2 7.2 7.0 6.9 7.0 7.0 6.9 6.6 55.7 47.6 56.0 50.4 57.2 54.5 58.7 57.6 58.6 57.9 57.2 55.8 56.8 56.1 53.6 54.5 58.3 58.8 58.9 59.2 59.2 59.0 58.9 58.8 59.3 60.0 59.6 59.5 59.3 59.4 59.3 58.8 58.7 58.7 58.9 59.2 59.6 59.6 60.1 60.4 60.2 60.4 60.8 61.3 61.2 61.6 62.3 63.2 63.7 63.8 63.9 64.0 64.0 64.4 64.8 65.3 65.6 65.9 66.5 66.4 64.9 65.0 65.1 65.1 65.2 65.4 65.4 65.3 65.4 65.4 65.4 65.3 56.0 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 55.4 55.5 55.4 55.7 56.2 56.9 57.3 57.5 58.0 57.4 56.6 57.0 57.8 57.8 56.1 56.8 57.9 59.3 59.9 59.2 59.0 57.8 57.9 59.5 60.1 60.7 61.5 62.3 63.0 62.7 60.6 60.3 60.5 60.5 60.5 60.7 60.8 60.8 60.8 60.9 60.9 61.0 Thousands of persons 16 years of age and over 1947 1948 1949 1950 1951 1952 1953 • 1954 1955 1956 1957 1958 1959 I9606 1961 6 1962 1963 1964 1965 1966 1967 1968 1969 1970 19716 1972 6 1973 1974 1975 1976 1977 19788 1979 1980 1981 1982 1983 1984 1985 19866 1987 1988 .. 1989 1990 1986: Jan Feb Mar fci June July Aug Sept Oct Nov Dec 101,827 103,068 103,994 104,995 104,621 105,231 107,056 108,321 109,683 110,954 112,265 113,727 115,329 117,245 118,771 120,153 122,416 124,485 126,513 128,058 129,874 132,028 134,335 137,085 140,216 144,126 147,096 150,120 153,153 156,150 159,033 161,910 164,863 167,745 170,130 172,271 174,215 176,383 178,206 180,587 182,753 184,613 186,393 188,049 179,670 179,821 179,985 180,148 180,311 180,503 180,682 180,828 180,997 181,186 181,363 181,547 1,169 2,143 2,386 2,231 2,142 2,064 1,965 1,948 1,847 1,788 1,861 1,900 2,061 2,006 2,018 1,946 2,122 2,218 2,253 2,238 2,118 1,973 1,813 1,774 1,721 1,678 1,668 1,656 1,631 1,597 1,604 1,645 1,668 1,676 1,697 1,706 1,706 1,737 1,709 1,688 1,637 1,691 1,691 1,693 1,695 1,687 1,680 1,672 1,697 1,716 1,749 1,751 1,750 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 97,826 100,665 103,882 106,559 108,544 110,315 111,872 113,226 115,241 117,167 119,540 121,602 123,378 125,557 126,424 118,373 118,573 118,913 119,011 119,215 119,764 119,801 119,847 120,111 120,265 120,385 120,361 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 97,679 100,421 100,907 102,042 101,194 102,510 106,702 108,856 111,303 114,177 116,677 119,030 119,550 110,578 110,171 110,530 110,647 110,776 111,256 111,482 111,712 111,801 112,022 112,226 112,478 59,350 60,621 61,286 62,208 62,017 62,138 63,015 63,643 65,023 66,552 66,929 67,639 68,369 69,628 70,459 70,614 71,833 73,091 74,455 75,770 77,347 78,737 80,734 82,771 84,382 87,034 89,429 91,949 93,775 96,158 9,0 909 102,251 104,962 106,940 108,670 110,204 111,550 113,544 115,461 117,834 119,865 121,669 123,869 124,787 116,682 116,882 117,220 117,316 117,528 118,084 118,129 118,150 118,395 118,516 118,634 118,611 57,038 58,343 57,651 58,918 59,961 60,250 61,179 60,109 62,170 63,799 64,071 63,036 64,630 65,778 65,746 66,702 67,762 69,305 71,088 72,895 74,372 75,920 77,902 78,678 79,367 82,153 85,064 86,794 85,846 88,752 92,017 96,048 98,824 99,303 100,397 99,526 100,834 105,005 107,150 109,597 112,440 114,968 117,342 117,914 108,887 108,480 108,837 108,952 109,089 109,576 109,810 110,015 110,085 110,273 110,475 110,728 322 7,890 7,629 7,658 7,160 6,726 6,500 6,260 6,205 6,450 6,283 5,947 5,586 5,565 5,458 5,200 4,944 4,687 4,523 4,361 3,979 3,844 3,817 3,606 3,463 3,394 3,484 3,470 3,515 3,408 3,331 3,283 3,387 3,347 3,364 3,368 3,401 3,383 3,321 3,179 3,163 3,208 3,169 3,199 3,186 3,287 3,083 3,200 3,153 3,150 3,193 3,141 3,082 3,171 3,128 3,220 3,148 5.2 3.2 2.9 2.8 5.4 4.3 4.0 4.2 6.6 5.3 5.4 6.5 5.4 5.5 5.0 4.4 3.7 3.7 3.5 3.4 4.8 5.8 5.5 4.8 5.5 8.3 7.6 6.9 6.0 5.8 7.0 7.5 9.5 9.5 7.4 7.1 6.9 6.1 5.4 5.2 5.4 6.6 7.1 7.0 7.0 7.1 7.1 6.9 6.8 6.9 6.9 6.8 6.5 TABLE B-32.—Population and the labor force, 1929-90—Continued [Monthly data seasonally adjusted, except as noted] Year or month Labor EmployCivilian force ment noninsti- Resi- includ- including dent tutional Armed resident popula- Forcesl resident Armed tion1 Armed Forces Forces Unemployment rate Civilian labor force Employment Total Total Agricultural Nonculfural UnemPloyment Civilian labor Civil- force All ian parwork- work- ticiers2 ers8 pation rate4 Percent Thousands of persons 16 years of age and over 1987: Jan Feb Mar Apr May June July AUB . .. Sept Oct Nov Dec 1988: Jan Feb Mar Apr . .. "ay :... June Aug Sept Oct Nov Dec. . 1989: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar fci June July Aug Sept Oct Nov Dec 181,827 181,998 182,179 182,344 182,533 182,703 182,885 183,002 183,161 183,311 183,470 183,620 183,822 183,969 184,111 184,232 184,374 184,562 184,729 184,830 184,962 185,114 185,244 185,402 185,644 185,777 185,897 186,024 186,181 186,329 186,483 186,598 186,726 186,871 187,017 187,165 187,293 187,412 187,529 187,669 187,828 187,977 188,136 188,261 188,401 188,525 188,697 188,866 1,748 1,740 1,736 1,735 1,726 1,718 1,720 1,736 1,743 1,741 1,755 1,750 1,749 1,736 1,736 1,732 1,714 1,685 1,673 1,692 1,704 1,687 1,705 1,696 1,696 1,684 1,684 1,684 1,673 1,666 1,666 1,688 1,702 1,709 1,704 1,700 1,697 1,678 1,669 1,657 1,639 1,630 1,627 1,640 1,601 1,570 1,615 1,617 120,588 120,854 121,021 121,069 121,720 121,335 121,618 122,041 121,758 122,259 122,304 122,514 122,724 122,894 122,677 122,985 122,783 123,189 123,348 123,769 123,695 123,889 124,250 124,342 125,047 124,831 124,938 125,238 125,157 125,728 125,659 125,757 125,698 125,915 126,252 126,242 126,186 126,331 126,467 126,438 126,578 126,427 126,336 126,345 126,571 126,445 126,338 126,791 112,716 112,996 113,146 113,525 114,140 113,927 114,316 114,768 114,662 115,052 115,295 115,607 115,796 115,984 115,774 116,385 115,971 116,597 116,685 116,923 117,098 117,358 117,768 117,877 118,404 118,484 118,686 118,773 118,738 119,066 119,079 119,253 119,119 119,328 119,624 119,657 119,642 119,752 119,904 119,747 119,916 119,867 119,509 119,330 119,484 119,303 119,001 119,191 118,840 119,114 119,285 119,334 119,994 119,617 119,898 120,305 120,015 120,518 120,549 120,764 120,975 121,158 120,941 121,253 121,069 121,504 121,675 122,077 121,991 122,202 122,545 122,646 123,351 123,147 123,254 123,554 123,484 124,062 123,993 124,069 123,996 124,206 124,548 124,542 124,489 124,653 124,798 124,781 124,939 124,797 124,709 124,705 124,970 124,875 124,723 125,174 110,968 111,256 111,410 111,790 112,414 112,209 112,596 113,032 112,919 113,311 113,540 113,857 114,047 114,248 114,038 114,653 114,257 114,912 115,012 115,231 115,394 115,671 116,063 116,181 116,708 116,800 117,002 117,089 117,065 117,400 117,413 117,565 117,417 117,619 117,920 117,957 117,945 118,074 118,235 118,090 118,277 118,237 117,882 117,690 117,883 117,733 117,386 117,574 1 Not seasonally adjusted. 2 Unemployed as percent of labor force including resident Armed Forces. 3 Unemployed as percent of civilian labor force. 4 Civilian labor force as percent of civilian noninstitutional population. 5 Civilian employment as percent of civilian noninstitutional population. 6 3,143 3,204 3,212 3,242 3,346 3,216 3,236 3,116 3,189 3,221 3,150 3,206 3,245 3,203 3,166 3,218 3,121 3,114 3,061 3,125 3,168 3,226 3,252 3,186 3,286 3,232 3,186 3,146 3,124 3,083 3,225 3,285 3,231 3,204 3,158 3,183 3,145 3,119 3,197 3,140 3,286 3,279 3,108 3,152 3,194 3,175 3,185 3,253 Civilian employment/ population ratio5 107,825 108,052 108,198 108,543 109,068 108,993 109,360 109,916 109,730 110,090 110,390 110,651 110,802 111,045 110,872 111,435 111,136 111,798 111,951 112,106 112,226 112,445 112,811 112,995 113,422 113,568 113,816 113,943 113,941 114,317 114,188 114,280 114,186 114,415 114,762 114,774 114,800 114,955 115,038 114,950 114,991 114,958 114,774 114,538 114,689 114,558 114,201 114,321 7,872 7,858 7,875 7,544 7,580 7,408 7,302 7,273 7,096 7,207 7,009 6,907 6,928 6,910 6,903 6,600 6,812 6,592 6,663 6,846 6,597 6,531 6,482 6,465 6,643 6,347 6,252 6,465 6,419 6,662 6,580 6,504 6,579 6,587 6,628 6,585 6,544 6,579 6,563 6,691 6,662 6,560 6,827 7,015 7,087 7,142 7,337 7,600 6.5 6.5 6.5 6.2 6.2 6.1 6.0 6.0 5.8 5.9 5.7 5.6 5.6 5.6 5.6 5.4 5.5 5.4 5.4 5.5 5.3 5.3 5.2 5.2 5.3 5.1 5.0 5.2 5.1 5.3 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.3 5.3 5.2 5.4 5.6 5.6 5.6 5.8 6.0 6.6 6.6 6.6 6.3 6.3 6.2 6.1 6.0 5.9 6.0 5.8 5.7 5.7 5.7 5.7 5.4 5.6 5.4 5.5 5.6 5.4 5.3 5.3 5.3 5.4 5.2 5.1 5.2 5.2 5.4 5.3 5.2 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.4 5.3 5.3 5.5 5.6 5.7 5.7 5.9 6.1 65.4 65.4 65.5 65.4 65.7 65.5 65.6 65.7 65.5 65.7 65.7 65.8 65.8 65.9 65.7 65.8 65.7 65.8 65.9 66.0 66.0 66.0 66.2 66.2 66.4 66.3 66.3 66.4 66.3 66.6 66.5 66.5 66.4 66.5 66.6 66.5 66.5 66.5 66.5 66.5 66.5 66.4 66.3 66.2 66.3 66.2 66.1 66.3 61.0 61.1 61.2 61.3 61.6 61.4 61.6 61.8 61.7 61.8 61.9 62.0 62.0 62.1 61.9 62.2 62.0 62.3 62.3 62.3 62.4 62.5 62.7 62.7 62.9 62.9 62.9 62.9 62.9 63.0 63.0 63.0 62.9 62.9 63.1 63.0 63.0 63.0 63.0 62.9 63.0 62.9 62.7 62.5 62.6 62.4 62.2 62.3 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 nonagricultural employment. Beginning 1962, introduction of 1960 census data reduced population by about 50,000 and labor force and employment by 200,000. , , 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 labo force and to employment. o labor 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 and 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 B-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. 323 TABLE B-33.—Civilian employment and unemployment by sex and age, 1947-90 [Thousands of persons 16 years of age and over; monthly data seasonally adjusted] Civilian employment Year or month Total Total 1947 1948 1949 1950 1951 1952 x 1953 1954 1955 1956 1957 1958 1959 I9601 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 x 1987 1988 1989 1990 1989: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar fc= June July Aug Sept Oct Nov Dec 57,038 58,343 57,651 58,918 59,961 60,250 61,179 60,109 62,170 63,799 64,071 63,036 64,630 65,778 65,746 66,702 67,762 69,305 71,088 72,895 74,372 75,920 77,902 78,678 79,367 82,153 85,064 86,794 85,846 88,752 92,017 96,048 98,824 99,303 100,397 99,526 100,834 105,005 107,150 109,597 112,440 114,968 117,342 117,914 116,708 116,800 117,002 117,089 117,065 117,400 117,413 117,565 117,417 117,619 117,920 117,957 117,945 118,074 118,235 118,090 118,277 118,237 117,882 117,690 117,883 117,733 117,386 117,574 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 43,904 43,656 44,177 44,657 45,474 46,340 46,919 47,479 48,114 48,818 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 63,273 64,315 64,435 63,798 63,998 64,235 64,213 64,192 64,549 64,483 64,456 64,136 64,506 64,479 64,605 64,490 64,580 64,607 64,536 64,589 6,9 449 64,266 64,188 64,412 64,408 64,337 64,327 16-19 years 2,218 2,344 2,124 2,186 2,156 2,107 2!l36 1,985 2,095 2,164 2,115 2,012 2,198 2,361 2,315 2,362 2,406 2,587 2,918 3,253 3,186 3,255 3,430 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 3,322 3,328 3,323 3,381 3,492 3,477 3,237 3,355 3,432 3,481 3,475 3,421 3,518 3,553 3,566 3,426 3,492 3,444 3,456 3,431 3,420 3,405 3,384 3,313 3,205 3,104 3,014 3,164 3,163 3,120 3,139 Unemployment Females Males 20 years and over Total 38,776 16,045 39,382 16,617 38,803 16,723 39,394 17,340 39,626 18,181 39,578 18,568 40,296 18,749 39,634 18,490 40,526 19,551 41,216 20,419 41,239 20,714 40,411 20,613 41,267 21,164 41,543 21,874 41,342 22,090 41,815 22,525 42,251 23,105 42,886 23,831 43,422 24,748 43,668 25,976 44,294 26,893 4 , 5 27,807 489 45,388 29,084 45,581 29,688 45,912 29,976 47,130 31,257 48,310 32,715 48,922 33,769 48,018 33,989 49,190 35,615 50,555 37,289 52,143 39,569 53,308 41,217 53,101 42,117 53,582 43,000 52,891 43,256 53,487 4 , 4 407 55,769 45,915 56,562 47,259 57,569 48,706 58,726 50,334 59,781 51,696 60,837 53,027 61,198 53,479 60,443 52,910 60,566 52,802 60,754 52,767 60,738 52,876 60,771 52,873 61,031 52,851 60,930 52,930 60,890 53,109 60,710 53,281 61,014 53,113 61,035 53,441 61,149 53,352 61,059 53,455 61,160 53,494 61,202 53,628 61,152 53,554 61,276' 53,688 61,294 53,738 61,162 53,616 61,174 53,502 61,248 53,471 61,245 53,325 61,217 53,049 61,188 53,247 16-19 years 1,691 1,682 1,588 1,517 1,611 1,612 1,584 1,490 1,547 1,654 1,663 1,570 1,640 1,768 1,793 1,833 1,849 1,929 2,118 2,468 2,496 2,526 2,687 2,735 2,730 2,980 3,231 3,345 3,263 3,389 3,514 3,734 3,783 3,625 3,411 3,170 3,043 3,122 3,105 3,149 3,260 3,313 3,282 3,024 3,364 3,300 3,274 3,308 3,301 3,261 3,189 3,291 3,269 3,277 3,319 3,220 3,190 3,154 3,260 3,130 3,075 3,063 2,979 2,853 2,967 2,902 2,853 2,858 1 See footnote 6, Table B-32. Note.-See Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 324 Males Females 20 years and over Total 20 20 Total 16-19 years Total 16-19 years years and years and over over 14,354 14,936 15,137 15,824 16,570 16,958 17,164 17,000 18,002 18,767 19,052 19,043 19,524 20,105 20,296 20,693 21,257 21,903 22,630 23,510 24,397 25,281 26,397 26,952 27,246 28,276 29,484 30,424 30,726 32,226 33,775 35,836 37,434 38,492 39,590 40,086 41,004 42,793 44,154 45,556 47,074 48,383 49,745 50,455 49,546 49,502 49,493 49,568 49,572 49,590 49,741 49,818 50,012 49,836 50,122 50,132 50,265 50,340 50,368 50,424 50,613 50,675 50,637 50,649 50,504 50,423 50,196 50,389 2,311 2,276 3,637 3,288 2,055 1,883 1,834 3,532 2,852 2,750 2,859 4,602 3,740 3,852 4,714 3,911 4,070 3,786 3,366 2,875 2,975 2,817 2,832 4,093 5,016 4,882 4,365 5,156 7,929 7,406 6,991 6,202 6,137 7,637 8,273 10,678 10,717 8,539 8,312 8,237 7,425 6,701 6,528 6,874 6,643 6,347 6,252 6,465 6,419 6,662 6,580 6,504 6,579 6,587 6,628 6,585 6,544 6,579 6,563 6,691 6,662 6,560 6,827 7,015 7,087 7442 7,337 7,600 1,692 270 1,422 619 1,559 256 1,305 717 2,572 353 2,219 1,065 2,239 318 1,922 1,049 834 1,221 191 1,029 1,185 205 980 698 1,202 184 1,019 632 2,344 310 2,035 1,188 1,854 274 1,580 998 1,711 269 1,442 1,039 1,841 300 1,541 1,018 3,098 416 2,681 1,504 2,420 398 2,022 1,320 2,486 426 2,060 1,366 2,997 479 2,518 1J17 2,423 408 2,016 1,488 2,472 501 1,971 1,598 2,205 487 1,718 1,581 1,914 479 1,435 1,452 1,551 432 1,120 1,324 448 1,060 1,468 1,508 1,419 426 993 1,397 1,403 440 963 1,429 2,238 599 1,638 1,855 2,789 693 2,097 2,227 2,659 711 1,948 2,222 2,275 653 1,624 2,089 2,714 757 1,957 2,441 4,442 966 3,476 3,486 4,036 939 3,098 3,369 3,667 874 2,794 3,324 3,142 813 2,328 3,061 3,120 811 2,308 3,018 4,267 913 3,353 3,370 4,577 962 3,615 3,696 6,179 1,090 5,089 4,499 6,260 1,003 5,257 4,457 4,744 812 3,932 3,794 4,521 806 3,715 3,791 4,530 779 3,751 3,707 732 3,369 3,324 4,101 3,655 667 2,987 3,046 3,525 658 2,867 3,003 3,799 629 3,170 3,075 3,647 762 2,885 2,996 3,535 686 2,849 2,812 3,330 615 2,715 2,922 3,507 647 2,860 2,958 667 2,746 3,006 3,413 3,496 678 2,818 3,166 3,409 580 2,829 3,171 3!485 625 2,860 3,019 3,659 635 3,024 2,920 3,574 660 2,914 3,013 3,614 681 2,933 3,014 3,555 651 2,904 3,030 3,595 623 2,972 2,949 3,562 611 2,951 3,017 3,563 611 2,952 3,000 3,662 626 3,036 3,029 3,668 631 3,037 2,994 3,645 597 3,048 2,915 3,795 626 3,169 3,032 3,889 644 3,245 3,126 637 3,324 3,126 3,961 3,982 633 3,349 3,160 644 3,465 3,228 4,109 4,277 662 3,615 3,323 144 153 223 195 145 140 123 191 176 209 197 262 256 286 349 313 383 385 395 405 391 412 413 506 568 598 583 665 802 780 789 769 743 755 800 886 825 687 661 675 616 558 536 519 544 492 501 515 514 602 582 545 554 518 528 533 511 535 531 510 532 483 514 520 501 536 528 530 475 564 841 854 689 559 510 997 823 832 821 1,242 1,063 1,080 1,368 1,175 1,216 1,195 1,056 921 1,078 985 1,015 1,349 1,658 1,625 1,507 1,777 2,684 2,588 2,535 2,292 2,276 2,615 2,895 3,613 3,632 3,107 3,129 3,032 2,709 2,487 2,467 2,555 2,452 2,320 2,421 2,443 2,492 2,564 2,589 2,474 2,366 2,495 2>86 2,497 2,438 2,482 2,469 2,519 2,462 2,432 2,518 2,606 2,625 2,624 2,700 2,793 TABLE B-34.—Civilian employment by demographic characteristic, 1954-90 [Thousands of persons 16 years of age and over; monthly data seasonally adjusted] Black and other Wh te Year or month Total civilian workers Males Females Both sexes 16-19 37,846 38,719 39,368 39349 38,591 39,494 39,755 39588 40,016 40,428 41115 41,844 42331 42833 43,411 44048 16,111 17,114 17901 18116 18,022 18512 3,078 3,225 3389 3374 3,216 3475 6,152 6,341 6,534 6604 6,423 6623 3,773 3,904 4,013 4006 3,833 3971 19095 19325 19,682 20194 20807 21,602 22690 23528 24,339 25470 3700 3693 3,774 3,851 4076 4,562 5176 5114 5,195 5508 44178 44595 45,944 47,085 47674 46,697 47,775 49150 50,544 51452 26039 26283 27,426 28,623 29511 29714 31,078 32550 34392 35807 5571 5670 6,173 6,623 6796 6,487 6,724 7068 7367 7356 6928 6833 7,003 7,140 7383 7,643 7877 8011 8,169 8384 8464 8488 8,783 9,356 9610 9435 9,899 10317 11112 11565 51,127 51315 50287 50,621 52462 53046 53785 54647 55550 56352 36587 37394 37615 38272 39659 40690 41876 43142 44262 45232 7021 6588 5984 5799 5836 5768 5792 5898 6030 5946 11588 11688 ll'624 11941 12885 13414 13937 14652 15156 15757 1954 1955 1956 1957 1958 1959 60,109 62,170 63799 64071 63,036 64630 53,957 55,833 57269 57465 56,613 58006 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 65778 65746 66,702 67762 69305 71,088 72895 74372 75,920 77902 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 78678 79367 82,153 85,064 86794 85846 88,752 92017 96,048 98824 58850 58913 59,698 60,622 61922 63,446 65021 66361 67750 69518 70217 70878 73,370 75,708 77 184 76411 78,853 81700 84,936 87259 1980 1981.... 1982 1983 1984 1985 1986 1987 1988 1989 99,303 100 397 99526 100,834 105 005 107 150 109 597 112440 114968 117 342 87715 88709 87903 88893 92120 93736 95660 97789 99812 101 584 1990 117914 102 087 116,708 101,193 116,800 101,202 117,002 101,394 117,089 101,480 117,065 101,374 117,400 101,595 117,413 101,486 117,565 101,689 117,417 101,522 117,619 101,852 117,920 102,060 117,957 102,108 117,945 102,112 118,074 102,145 118,235 102,208 118,090 102,088 118,277 102,293 118,237 102,332 117,882 102,189 117,690 101,996 117,883 102,192 117,733 102,017 117,386 101,648 117,574 101,843 1989: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 56432 45654 56,015 45,178 56,117 45,085 56,364 45,030 56,338 45,142 56,253 45,121 56,494 45,101 56,429 45,057 56,457 45,232 56,127 45,395 56,516 45,336 56,507 45,553 56,596 45,512 56,578 45,534 56,554 45,591 56,564 45,644 56,444 45,644 56,496 45,797 56,457 45,875 56,337 45,852 56,278 45,718 56,461 45,731 56,410 45,607 56,332 45,316 56,282 45,561 Total FeMales males 15,502 15,560 15,588 15,614 15,670 15,757 15,924 15,907 15,883 15,805 15,894 15,889 15,841 15,912 15,995 15,998 15,963 15,870 15,677 15,702 15,674 15,755 15,771 15,774 Note.-See footnote 6 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 325 Total FeMales males Both sexes 16-19 396 418 430 407 365 362 4,149 4068 4,160 4,229 4359 4,496 4588 4646 4,702 4770 2,379 2,437 2,521 2598 2,590 2652 2,779 2765 2,843 2,911 3024 3,147 3289 3365 3,467 3614 4813 4796 4,952 5,265 5352 5,161 5,363 5579 5936 6156 3650 3692 3,832 4,092 4258 4,275 4,536 4739 5,177 5409 574 538 573 647 652 615 611 619 703 727 7,802 8,128 8203 7894 8,227 8540 9102 9359 4,368 4,527 4527 4,275 4,404 4565 4,796 4,923 3,433 3,601 3677 3,618 3,823 3975 4,307 4436 509 570 554 507 508 508 571 579 6059 6083 5983 6166 6629 6845 7 107 7459 7722 7963 5529 5606 5641 5775 6256 6569 6830 7 192 7434 7795 689 637 565 543 607 666 681 742 774 813 9313 9355 9189 9375 10119 10501 10814 11309 11658 11953 4,798 4794 4637 4,753 5124 5270 5428 5661 5824 5928 4,515 4561 4552 4,622 4995 5231 5386 5648 5834 6025 547 505 428 416 474 532 536 587 601 625 743 11966 5915 6051 573 5,885 5,896 5,926 5,835 5,883 5,969 6,013 5,949 5,915 5,925 5,932 5,930 5,855 5,925 5,942 5,948 5,948 5,957 5,978 5,984 5,982 5,988 6,040 5,982 6,068 6,056 6,052 6,018 6,049 6,026 6,125 6,101 6,150 6,150 6,180 6,087 583 628 592 591 612 630 5,887 5,848 5,888 5,922 5,930 5,926 5,997 5,990 5,981 5,991 5,967 5,910 528 511 556 550 542 504 5518 15827 8003 7825 5,980 5,919 5,976 5,983 5,939 5,972 5,865 6,040 5,902 5,944 5,946 5,795 5,788 5,765 5,801 5,682 5,614 5,521 5,394 5,201 5,416 5,370 5,316 5,345 Black Both sexes 16-19 7,814 7,865 7,889 7,861 7,895 8,017 8,073 8,034 7,986 7,993 8,015 8,027 7,932 8,012 8,053 8,075 8,051 8,009 7,946 7,918 7,927 8,003 8,037 8,067 430 414 420 404 440 474 545 568 584 609 7,688 7,695 7,699 7,753 7,775 7,740 7,851 7,873 7,897 7,812 7,879 7,862 7,909 7,900 7,942 7,923 7,912 7,861 757 809 755 783 775 800 856 797 824 813 766 742 11,863 11,880 11,908 11,823 11,923 11,951 12,081 12,005 11,967 11,943 11,981 11,956 11,980 12,026 12,092 12,098 12,128 12,044 7,731 7,784 7,747 7,752 7,734 7,707 687 675 704 696 688 662 11,884 11,838 11,869 11,913 11,897 11,836 878 829 785 832 856 879 703 645 581 623 642 675 671 608 629 627 587 559 TABLE B-35.—Unemployment by demographic characteristic, 1954-90 [Thousands of persons 16 years of age and over; monthly data seasonally adjusted] Year or month 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 1988 1989 1990 1989: Jan Feb Mar &::: ::: June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar fc June July Aug Sept Oct Nov Dec All civilian workers 3,532 2,852 2,750 2,859 4,602 3,740 3,852 4,714 3,911 4,070 3,786 3,366 2,875 2,975 2,817 2,832 4,093 5,016 4,882 4,365 5,156 7,929 7,406 6,991 6,202 6,137 7,637 8,273 10,678 10,717 8,539 8,312 8,237 7,425 6,701 6,528 6,874 6,643 6,347 6,252 6,465 6,419 6,662 6,580 6,504 6,579 6,587 6,628 6,585 6,544 6,579 6,563 6,691 6,662 6,560 6,827 7,015 7,087 7,142 7,337 7,600 Black and other White Total Males 2,859 2,252 2,159 2,289 3,680 2,946 3,065 3,743 3,052 3,208 2,999 2,691 2,255 2,338 2,226 2,260 3,339 4,085 3,906 3,442 4,097 6,421 5,914 5,441 4,698 4,664 5,884 6,343 8,241 8,128 6,372 6,191 6,140 5,501 4,944 4,770 5,091 4,892 4,562 4,543 4,723 4,677 4,826 4,860 4,787 4,810 4,792 4,855 4,857 4,840 4,945 4,895 5,002 4,930 4,852 5,007 5,170 5,199 5,260 5,400 5,674 1,913 1,478 1,366 1,477 2,489 1,903 1,988 2,398 1,915 1,976 1,779 1,556 1,241 1,208 1,142 1,137 1,857 2,309 2,173 1,836 2,169 3,627 3,258 2,883 2,411 2,405 3,345 3,580 4,846 4,859 3,600 3,426 3,433 3,132 2,766 2,636 2,866 2,763 2,613 2,494 2,583 2,509 2,598 2,582 2,596 2,777 2,658 2,708 2,667 2,690 2,722 2,712 2,795 2,755 2,719 2,827 2,925 2,937 2,989 3,093 3,298 Females 946 774 793 812 1,191 1,043 1,077 1,345 1,137 1,232 1,220 1,135 1,014 1,130 1,084 1,123 1,482 1,777 1,733 1,606 1,927 2,794 2,656 2,558 2,287 2,260 2,540 2,762 3,395 3,270 2,772 2,765 2,708 2,369 2,177 2,135 2,225 2,129 1,949 2,049 2,140 2,168 2,228 2,278 2,191 2,033 2,134 2,147 2,190 2,150 2,223 2,183 2,207 2,175 2,133 2,180 2,245 2,262 2,271 2,307 2,376 Total FeMales males Both sexes 16-19 423 373 382 401 541 525 575 669 580 708 708 705 651 635 644 660 871 1,011 1,021 955 1,104 1,413 1,364 1,284 1,189 1,193 1,291 1,374 1,534 1,387 1,116 1,074 1,070 995 910 863 856 970 834 812 843 862 908 855 865 816 841 875 868 849 861 866 859 876 791 854 865 872 866 847 870 673 601 591 570 923 793 788 971 861 863 787 678 622 638 590 571 754 930 977 924 1,058 1,507 1,492 1,550 1,505 1,473 1,752 1,930 2,437 2,588 2,167 2,121 2,097 1,924 1,757 1,757 1,783 1,796 1,808 1,719 1,702 1,704 1,828 1,704 1,696 1,780 1,786 1,780 1,760 1,753 1,650 1,684 1,650 1,680 1,690 1,802 1,825 1,894 1,866 1,947 1,964 431 376 345 364 610 517 498 599 509 496 426 360 310 300 277 267 380 481 486 440 544 815 779 784 731 714 922 997 1,334 1,401 1,144 1,095 1,097 969 888 889 933 924 925 867 908 862 879 818 869 881 910 912 915 949 842 880 853 860 901 953 948 1,017 978 1,026 1,015 242 225 246 206 313 276 290 372 352 367 361 318 312 338 313 304 374 450 491 484 514 692 713 766 774 759 830 933 1,104 1,187 1,022 1,026 999 955 869 868 850 872 883 852 794 842 949 886 827 899 876 868 845 804 808 804 797 820 789 849 877 877 888 921 949 79 77 95 96 138 128 138 159 142 176 165 171 186 203 194 193 235 249 288 280 318 355 355 379 394 362 377 388 443 441 384 394 383 353 316 331 292 344 334 314 312 316 368 299 312 382 335 337 314 288 275 287 271 282 284 284 305 275 301 327 322 Note.-See footnote 6 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. Black Both sexes 16-19 326 FeMales males Both sexes 16-19 906 448 458 846 395 451 965 494 470 629 1,369 741 1,334 698 637 698 695 1,393 641 690 1,330 636 683 1,319 815 738 1,553 1,731 891 840 2,142 1,167 975 2,272 1,213 1,059 1,914 1,003 911 1,864 951 913 1,840 946 894 1,684 826 858 771 776 1,547 1,544 773 772 1,527 793 734 791 797 1,588 1,584 811 773 1,487 744 743 1,487 788 699 769 749 1,518 1,632 783 849 707 789 1,496 1,496 759 737 764 791 1,555 778 779 1,557 1,584 792 792 1,544 802 742 1,537 825 712 1,438 722 716 742 706 1,448 1,436 735 701 1,442 730 712 1,444 756 688 807 715 1,522 813 750 1,563 1,607 860 747 1,580 835 745 855 798 1,653 1,650 845 805 279 262 297 330 330 354 360 333 343 357 396 392 353 357 347 312 288 300 258 308 304 281 294 297 341 272 277 340 305 297 280 254 247 256 240 250 254 250 272 234 259 295 284 Total TABLE B-36.—Labor force participation rate and employment/population ratio, 1948-90 [Percent; monthly data seasonally adjusted] Employment/population ratio Labor force participation rate Civilian2 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 Total* 59.7 60.1 60.0 59.7 59.6 60.0 60.7 60.3 60.1 59.9 60.0 60.0 ! 59.5 59.3 59.4 59.5 '.'. 59.8 60.2 60.3 60.8 61.0 60.7 60.9 61.3 61.7 61.6 62.0 62.6 1978..!!!!!!!!!!"!!! 63.5 1979 64.0 1980 64.1 1981 64.2 1982 ".".'....".. 64.3 1983 64.4 1984 64.7 1985 65.1 65.6 1986 1987 65.9 1988 66.2 1989 !'.'....'.'..'. 66.8 1990 66.6 1989: Jan 66.7 Feb 66.6 Mar 66.6 66.7 66.6 June 66.9 July 66.8 Aug 66.8 Sept 66.7 Oct 66.8 Nov 66.9 Dec 66.8 1990: Jan 66.8 Feb 66.8 Mar 66.8 66.8 66.8 June 66.7 66.6 July Aug 66.5 Sept 66.6 Oct 66.5 Nov 66.4 Dec 66.6 jfc &::::::: 1 FeTotal Mates males 58.8 58.9 59.2 59.2 59.0 58.9 58.8 59.3 60.0 59.6 59.5 59.3 59.4 59.3 58.8 58.7 58.7 58.9 59.2 59.6 59.6 60.1 60.4 60.2 60.4 60.8 61.3 61.2 61.6 62.3 63.2 63.7 63.8 63.9 64.0 64.0 64.4 64.8 65.3 65.6 65.9 66.5 66.4 66.4 66.3 66.3 66.4 66.3 66.6 66.5 66.5 66.4 66.5 66.6 66.5 66.5 66.5 66.5 66.5 66.5 66.4 66.3 66.2 66.3 66.2 66.1 66.3 86.6 86.4 86.4 86.3 86.3 86.0 85.5 85.4 85.5 84.8 84.2 83.7 83.3 82.9 82.0 81.4 81.0 80.7 80.4 80.4 80.1 79.8 79.7 79.1 78.9 78.8 78.7 77.9 77.5 77.7 77.9 77.8 77.4 77.0 76.6 76.4 76.4 76.3 76.3 76.2 76.2 76.4 76.1 76.3 76.3 76.3 76.5 76.3 76.7 76.4 76.5 76.2 76.5 76.4 76.5 76.3 76.3 76.3 76.2 76.2 76.0 75.9 75.8 76.1 76.1 76.1 76,2 32.7 33.1 33.9 34.6 34.7 34.4 34.6 35.7 36.9 36.9 37.1 37.1 37.7 38.1 37.9 38.3 38.7 39.3 40.3 41.1 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 56.6 57.4 57.5 57.5 57.1 57.2 57.3 57.3 57.4 57.4 57.4 57.5 57.3 57.6 57.5 57.5 57.6 57.7 57.6 57.7 57.6 57.6 57.5 57.4 57.3 57.0 57.3 Both sexes 16-19 years 52.5 52.2 51.8 52.2 51.3 50.2 48.3 48.9 50.9 49.6 47.4 46.7 47.5 46.9 46.1 45.2 44.5 45.7 48.2 48.4 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 55.3 55.9 53.7 55.7 55.1 55.0 55.6 55.6 56.7 55.7 56.7 55.7 56.3 56.6 55.9 55.3 55.1 56.1 55.2 54.6 53.2 52.5 51.3 53.1 53.0 52.4 52.8 Civilian « Black White and Black other 58.2 58.7 59.4 59.1 58.9 58.7 58.8 58.8 58.3 58.2 58.2 58.4 58.7 59.2 59.3 59.9 60.2 60.1 60.4 60.8 61.4 61.5 61.8 62.5 63.3 63.9 64.1 64.3 64.3 64.3 64.6 65.0 65.5 65.8 66.2 66.7 66.8 66.8 66.5 66.6 66.8 66.6 66.8 66.7 66.8 66.6 66.8 66.9 66.9 66.9 66.9 66.9 66.9 66.9 66.8 66.8 66.7 66.9 66.7 66.6 66.8 64.0 64.2 64.9 64.4 64.8 64.3 64.5 64.1 63.2 63.0 63.1 62.9 63.0 62.8 62.2 62.1 61.8 60.9 60.2 ""J&9 60.5 60.2 60.3 59.8 59.6 58.8 59.8 59.0 60.4 59.8 62.2 61.5 62.2 61.4 61.7 61.0 61.3 60.8 61.6 61.0 62.1 61.5 62.6 62.2 63.3 62.9 63.7 63.3 64.3 63.8 64.0 63.8 64.7 64.2 63.7 63.3 64.6 64.4 64.7 64.4 64.4 64.0 64.3 63.5 64.4 64.0 65.1 64.6 65.1 64.5 64.9 64.1 65.0 64.1 64.6 64.0 64.8 64.2 64.6 63.8 64.3 63.9 64.1 63.5 64.4 63.8 64.2 63.8 64.0 63.8 63.6 63.4 63.2 62.9 63.2 62.8 63.3 63.1 63.4 63.1 63.6 63.3 63.5 62.9 ;E Total* 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 58.0 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 62.6 63.3 63.0 63.2 63.2 63.3 63.3 63.2 63.3 63.3 63.3 63.2 63.3 63.4 63.4 63.3 63.3 63.4 63.2 63.3 63.2 63.0 62.8 62.9 62.8 62.5 62.6 Total 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 55.4 55.5 55.4 55.7 56.2 56.9 57.3 57.5 58.0 57.4 56.6 57.0 57.8 57.8 56.1 56.8 57.9 59.3 59.9 59.2 59.0 57.8 57.9 59.5 60.1 60.7 61.5 62.3 63.0 62.7 62.9 62.9 62.9 62.9 62.9 63.0 63.0 63.0 62.9 62.9 63.1 63.0 63.0 63.0 63.0 62.9 63.0 62.9 62.7 62.5 62.6 62.4 62.2 62.3 Mates 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 72.0 72.5 71.9 72.2 72.4 72.6 72.5 72.4 72.7 72.6 72.5 72.1 72.5 72.4 72.5 72.3 72.3 72.3 72.2 72.1 72.0 71.6 71.5 71.7 71.7 71.5 71.4 Females 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 53.4 54.3 54.3 54.4 54.3 54.2 54.3 54.2 54.2 54.2 54.3 54.6 54.3 54.6 54.4 54.5 54.5 54.6 54.5 54.6 54.6 54.5 54.3 54.2 54.1 53.7 53.9 Both sexes 16-19 years 47.7 45.2 45.5 47.9 46.9 46.4 42.3 43.5 45.3 43.9 39.9 39.9 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 46.8 47.5 45.4 46.6 46.9 47.2 47.5 47.3 47.7 47.5 48.4 47.3 48.0 48.0 47.5 47.2 46.9 47.9 47.0 46.2 45.4 44.2 42.8 44.8 44.4 43.8 44.0 White 55.2 56.5 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 63.1 63.8 63.6 63.7 63.7 63.8 63.8 63.7 63.8 63.7 63.8 63.6 63.8 63.9 63.9 63.8 63.8 63.8 63.7 63.8 63.8 63.7 63.5 63.6 63.5 63.2 63.3 Black and other Black 58.0 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 54.5 54.3 53.5 51.4 50.1 52.0 50.8 52.5 51.4 54.7 53.6 55.2 53.8 53.6 52.3 52.6 51.3 50.9 49.4 51.0 49.5 53.6 52.3 54.7 53.4 55.4 54.1 56.8 55.6 57.4 56.3 58.2 56.9 57.3 56.2 57.9 56.8 58.0 56.8 58.0 56.9 58.0 56.4 58.1 56.8 58.3 56.9 58.3 57.4 58.6 57.0 58.4 56.8 58.0 56.6 58.3 56.7 58.1 56.5 57.9 56.6 58.1 56.8 58.3 57.0 58.2 57.0 57.9 57.0 57.5 56.6 56.7 55.7 56.7 55.5 56.5 55.6 56.7 55.7 56.6 55.5 56.5 55.2 Labor force including resident Armed Forces as percent of noninstitutional population including resident Armed Forces. * Civilian lahnr fnrr» a« narront nf riuilian nnninotitiitinnal n/miilotinn in nrnnn cnaoifia/4 population including resident Armed Forces. Civilian employment as percent of civilian noninstitutional population in group specified. Note.—Data relate to persons 16 years of age and over. See footnote 6 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 4 327 TABLE B-37.—Civilian labor force participation rate by demographic characteristic, 1954-90 [Percent;1 monthly data seasonally adjusted] Black and other or black White Year or month All civilian work- Total Total ers Males 16-19 years Males Females 20 years Total and over 20 16-19 years Total Total and years over Females 20 years Total and over 16-19 years 20 16-19 years years and over Black and other 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 58.8 59.3 60.0 59.6 59.5 59.3 59.4 59.3 58.8 58.7 58.7 58.9 59.2 59.6 59.6 60.1 60.4 60.2 60.4 58.2 58.7 59.4 59.1 58.9 58.7 58.8 58.8 58.3 58.2 58.2 58.4 58.7 59.2 59.3 59.9 60.2 60.1 60.4 85.6 85.4 85.6 84.8 84.3 83.8 83.4 83.0 82.1 81.5 81.1 80.8 80.6 80.6 80.4 80.2 80.0 79.6 79.6 57.6 58.6 60.4 59.2 56.5 55.9 55.9 54.5 53.8 53.1 52.7 54.1 55.9 56.3 55.9 56.8 57.5 57.9 60.1 87.8 87.5 87.6 86.9 86.6 86.3 86.0 85.7 84.9 84.4 84.2 83.9 83.6 83.5 83.2 83.0 82.8 82.3 82.0 33.3 34.5 35.7 35.7 35.8 36.0 36.5 36.9 36.7 37.2 37.5 38.1 39.2 40.1 40.7 41.8 42.6 42.6 43.2 40.6 40.7 43.1 42.2 40.1 39.6 40.3 40.6 39.8 38.7 37.8 39.2 42.6 42.5 43.0 44.6 45.6 45.4 48.1 32.7 34.0 35.1 35.2 35.5 35.6 36.2 36.6 36.5 37.0 37.5 38.0 38.8 39.8 40.4 41.5 42.2 42.3 42.7 64.0 64.2 64.9 64.4 64.8 64.3 64.5 64.1 63.2 63.0 63.1 62.9 63.0 62.8 62.2 62.1 61.8 60.9 60.2 85.2 85.1 85.1 84.2 84.1 83.4 83.0 82.2 80.8 80.2 80.1 79.6 79.0 78.5 77.7 76.9 76.5 74.9 73.9 61.2 60.8 61.5 58.8 57.3 55.5 57.6 55.8 53.5 51.5 49.9 51.3 51.4 51.1 49.7 49.6 47.4 44.7 46.0 87.1 87.8 87.8 87.0 87.1 86.7 86.2 85.5 84.2 83.9 84.1 83.7 83.3 82.9 82.2 81.4 81.4 80.0 78.6 1972 1973 1974 1975 1976 1977 . . 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1989: Jan Feb Mar 60.4 60.8 61.3 61.2 61.6 62.3 63.2 63.7 63.8 63.9 64.0 64.0 64.4 64.8 65.3 65.6 65.9 66.5 66.4 66.4 66.3 66.3 66.4 66.3 66.6 66.5 66.5 66.4 66.5 66.6 66.5 66.5 66.5 66.5 66.5 66.5 66.4 66.3 66.2 66.3 66.2 66.1 66.3 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 66.2 66.7 66.8 66.8 66.5 66.6 66.8 66.6 66.8 66.7 66.8 66.6 66.8 66.9 66.9 66.9 66.9 66.9 66.9 66.9 66.8 66.8 66.7 66.9 66.7 66.6 66.8 79.6 79.4 79.4 78.7 78.4 78.5 78.6 78.6 78.2 77.9 77.4 77.1 77.1 77.0 76.9 76.8 76.9 77.1 76.9 77.1 77.0 77.1 77.2 76.9 77.3 77.1 77.2 76.9 77.2 77.2 77.2 77.2 77.1 77.1 77.0 76.9 76.8 76.7 76.7 76.9 76.9 76.9 77.0 60.1 62.0 62.9 61.9 62.3 64.0 65.0 64.8 63.7 62.4 60.0 59.4 59.0 59.7 59.3 59.0 60.0 61.0 59.4 60.9 59.6 60.6 60.7 60.7 61.2 60.8 62.3 60.2 61.5 61.4 60.5 60.9 60.6 60.6 60.9 60.1 58.6 58.3 56.7 59.0 59.2 58.8 59.4 82.0 81.6 81.4 80.7 80.3 80.2 80.1 80.1 79.8 79.5 79.2 78.9 78.7 78.5 78.5 78.4 78.3 78.5 78.3 78.5 78.5 78.5 78.6 78.3 78.6 78.5 78.4 78.3 78.5 78.5 78.6 78.5 78.4 78.4 78.3 78.3 78.2 78.2 78.3 78.3 78.3 78.3 78.3 43.2 44.1 45.2 45.9 46.9 48.0 49.4 50.5 51.2 51.9 52.4 52.7 53.3 54.1 55.0 55.7 56.4 57.2 57.5 57.2 56.9 56.9 57.1 57.1 57.1 57.1 57.2 57.2 57.2 57.4 57.4 57.4 57.5 57.5 57.5 57.6 57.6 57.6 57.5 57.5 57.4 57.0 57.4 48.1 50.1 51.7 51.5 52.8 54.5 56.7 57.4 56.2 55.4 55.0 54.5 55.4 55.2 56.3 56.5 57.2 57.1 55.4 58.1 56.2 56.1 57.0 56.8 57.8 55.7 57.8 57.0 57.3 58.4 56.9 56.5 57.0 58.1 56.3 56.3 55.0 54.6 53.1 55.2 54.5 53.8 54.5 42.7 43.5 44.4 45.3 46.2 47.3 48.7 49.8 50.6 51.5 52.2 52.5 53.1 54.0 54.9 55.6 56.3 57.2 57.6 57.2 56.9 57.0 57.1 57.1 57.1 57.2 57.1 57.2 57.2 57.4 57.4 57.4 57.5 57.5 57.6 57.7 57.8 57.8 57.8 57.7 57.6 57.2 57.6 59.9 60.2 59.8 58.8 59.0 59.8 61.5 61.4 61.0 60.8 61.0 61.5 62.2 62.9 63.3 63.8 63.8 64.2 63.3 64.4 64.4 64.0 63.5 64.0 64.6 64.5 64.1 64.1 64.0 64.2 63.8 63.9 63.5 63.8 63.8 63.8 63.4 62.9 62.8 63.1 63.1 63.3 62.9 73.6 73.4 72.9 70.9 70.0 70.6 71.5 71.3 70.3 70.0 70.1 70.6 70.8 70.8 71.2 71.1 71.0 71.0 70.1 71.2 71.5 71.0 70.4 70.6 71.6 71.1 70.9 70.6 70.7 70.8 70.8 70.3 69.9 70.2 70.1 69.9 70.2 69.9 69.5 70.3 70.4 70.5 70.3 46.3 45.7 46.7 42.6 41.3 43.2 44.9 43.6 43.2 41.6 39.8 39.9 41.7 44.6 43.7 43.6 43.8 44.6 40.6 43.5 46.5 42.5 41.3 41.0 50.4 47.8 46.3 40.7 44.6 45.7 47.1 45.0 41.2 43.6 42.3 40.5 39.2 38.0 37.9 40.2 39.7 40.5 38.9 78.5 78.4 77.6 76.0 75.4 75.6 76.2 76.3 75.1 74.5 74.7 75.2 74.8 74.4 74.8 74.7 74.6 74.4 73.8 74.8 74.7 74.7 74.1 74.4 74.3 74.1 74.1 74.5 74.1 74.1 73.8 73.5 73.6 73.5 73.6 73.6 74.1 73.9 73.4 74.1 74.1 74.3 74.1 46.1 46.1 47.3 47.1 48.0 47.7 48.2 48.3 48.0 48.1 48.6 48.6 49.4 49.5 49.3 49.8 49.5 49.2 48.8 31.0 32.7 36.3 33.2 31.9 28.2 32.9 32.8 33.1 32.6 31.7 29.5 33.5 35.2 34.8 34.6 34.1 31.2 32.3 47.7 47.5 48.4 48.6 49.8 49.8 49.9 50.1 49.6 49.9 50.7 51.1 51.6 51.6 51.4 52.0 51.8 51.8 51.2 48.7 49.3 49.0 48.8 49.8 50.8 53.1 53.1 53.1 53.5 53.7 54.2 55.2 56.5 56.9 58.0 58.0 58.7 57.8 58.9 58.7 58.3 57.9 58.7 59.0 59.2 58.5 58.9 58.4 58.8 58.0 58.6 58.4 58.7 58.6 58.9 57.8 57.2 57.3 57.2 57.2 57.4 56.9 32.2 34.2 33.4 34.2 32.9 32.9 37.3 36.8 34.9 34.0 33.5 33.0 35.0 37.9 39.1 39.6 37.9 40.4 36.7 38.5 39.3 37.9 40.2 42.6 39.0 42.0 38.6 43.1 40.6 40.9 41.2 40.3 36.9 38.7 38.3 37.3 36.6 34.7 35.3 33.9 36.3 37.2 35.0 51.2 51.6 51.4 51.1 52.5 53.6 55.5 55.4 55.6 56.0 56.2 56.8 57.6 58.6 58.9 60.0 60.1 60.6 60.0 61.0 60.7 60.5 59.8 60.4 61.1 61.0 60.6 60.5 60.3 60.6 59.8 60.5 60.6 60.7 60.6 61.1 59.9 59.5 59.6 59.5 59.3 59.4 59.0 Black fi= June July AUB sept:.:::::::: Oct Nov Dec 1990: Jan Feb Mar fci 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 6 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 328 TABLE B-38.—Civilian employment/population ratio by demographic characteristic, 1954-90 [Percent;1 monthly data seasonally adjusted] White Year or month All civilian work- Total ers Black and other or black Males Total Females 20 16-19 years years and over Total Females Males 20 16-19 years Total Total years and over 20 16-19 years Total years and over 20 16-19 years years and over Black and other 1954 1955 1956 1957 1958 1959 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 55.5 56.7 57.5 57.1 55.4 56.0 56.1 55.4 55.5 55.4 55.7 56.2 56.9 57.3 57.5 58.0 57.4 56.6 57.0 55.2 56.5 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 81.5 82.2 82.7 81.8 79.2 79.9 79.4 78.2 78.4 77.7 77.8 77.9 78.3 78.4 78.3 78.2 76.8 75.7 76.0 49.9 52.0 54.1 52.4 47.6 48.1 48.1 45.9 46.4 44.7 45.0 47.1 50.1 50.2 50.3 51.1 49.6 49.2 51.5 84.0 84.7 85.0 84.1 81.8 82.8 82.4 81.4 81.5 81.1 81.3 81.5 81.7 81.7 81.6 81.4 80.1 79.0 79.0 31.4 33.0 34.2 34.2 33.6 34.0 34.6 34.5 34.7 35.0 35.5 36.2 37.5 38.3 38.9 40.1 40.3 39.9 40.7 36.4 37.0 38.9 38.2 35.0 34.8 35.1 34.6 34.8 32.9 32.2 33.7 37.5 37.7 37.8 39.5 39.5 38.6 41.3 31.1 32.7 33.8 33.9 33.5 34.0 34.5 34.5 34.7 35.2 35.8 36.5 37.5 38.3 39.1 40.1 40.4 40.1 40.6 58.0 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 76.5 77.6 78.4 77.2 72.5 73.8 74.1 71.7 72.0 71.8 72.9 73.7 74.0 73.8 73.3 72.8 70.9 68.1 67.3 52.4 52.7 52.2 48.0 42.0 41.4 43.8 41.0 41.7 37.4 37.8 39.4 40.5 38.8 38.7 39.0 35.5 31.8 32.4 79.2 80.4 81.3 80.5 76.0 77.6 77.9 75.5 75.7 76.2 77.7 78.7 79.2 79.4 78.9 78.4 76.8 74.2 73.2 41.9 42.2 43.0 43.7 42.8 43.2 43.6 42.6 42.7 42.7 43.4 44.1 45.1 45.0 45.2 45.9 44.9 43.9 43.3 24.7 26.4 28.0 26.5 22.8 20.3 24.8 23.2 23.1 21.3 21.8 20.2 23.1 24.8 24.7 25.1 22.4 20.2 19.9 43.7 43.9 44.7 45.5 45.0 45.7 45.8 44.8 44.9 45.2 46.1 47.3 48.2 47.9 48.2 48.9 48.2 47.3 46.7 43.0 43.8 43.5 41.6 42.8 43.3 45.8 46.0 45.7 45.1 44.2 44.1 46.7 48.1 48.8 50.3 51.2 52.0 51.6 52.0 51.9 51.9 51.9 52.2 51.7 52.4 52.2 52.1 51.7 51.9 51.7 52.5 52.3 52.6 52.6 52.8 51.9 51.1 51.0 50.8 50.9 50.6 50.0 19.2 22.0 20.9 20.2 19.2 18.5 22.1 22.4 21.0 19.7 17.7 17.0 20.1 23.1 23.8 25.8 25.8 27.1 25.7 25.6 26.6 24.5 28.1 29.9 24.0 28.2 26.6 26.3 27.0 28.1 29.0 29.9 26.4 28.1 28.2 26.8 26.7 23.9 23.7 24.5 24.4 23.2 22.6 46.5 47.2 46.9 44.9 46.4 47.0 49.3 49.3 49.1 48.5 47.5 47.4 49.8 50.9 51.6 53.0 53.9 54.6 54.2 54.7 54.6 54.8 54.4 54.6 54.6 54.9 54.9 54.8 54.3 54.4 54.0 54.9 54.9 55.2 55.1 55.4 54.5 53.9 53.7 53.5 53.5 53.3 52.8 Black 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988. 1989 1990 1989: Jan Feb Mar &::::::::: June July Aug Sept Oct Nov Dec 1990: Jan Feb .... Mar fe= June July Aug Sept Oct Nov Dec 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 62.3 63.0 62.7 62.9 62.9 62.9 62.9 62.9 63.0 63.0 63.0 62.9 62.9 63.1 63.0 63.0 63.0 63.0 62.9 63.0 62.9 62.7 62.5 62.6 62.4 62.2 62.3 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 63.1 63.8 63.6 63.7 63.7 63.8 63.8 63.7 63.8 63.7 63.8 63.6 63.8 63.9 63.9 63.8 63.8 63.8 63.7 63.8 63.8 63.7 63.5 63.6 63.5 63.2 63.3 76.0 76.5 75.9 73.0 73.4 74.1 75.0 75.1 73.4 72.8 70.6 70.4 72.1 72.3 72.3 72.7 73.2 73.7 73.2 73.5 73.6 73.9 73.8 73.6 73.9 73.8 73.8 73.3 73.8 73.7 73.8 73.7 73.6 73.6 73.4 73.4 73.3 73.1 72.9 73.1 73.0 72.9 72.7 51.5 54.3 54.4 50.6 51.5 54.4 56.3 55.7 53.4 51.3 47.0 47.4 49.1 49.9 49.6 49.9 51.7 52.6 51.0 51.0 51.2 52.6 52.7 52.2 52.7 53.1 54.2 52.3 53.0 52.8 52.1 52.9 52.7 52.5 52.4 51.6 50.8 49.6 48.0 50.2 50.5 50.1 50.6 79.0 79.2 78.6 75.7 76.0 76.5 77.2 77.3 75.6 75.1 73.0 72.6 74.3 74.3 74.3 74.7 75.1 75.4 75.0 75.4 75.4 75.6 75.6 75.4 75.6 75.5 75.4 75.0 75.4 75.4 75.5 75.3 75.3 75.2 75.0 75.1 75.0 74.9 74.9 74.9 74.8 74.6 74.4 40.7 41.8 42.4 42.0 43.2 44.5 46.3 47.5 47.8 48.3 48.1 48.5 49.8 50.7 51.7 52.8 53.8 54.6 54.8 54.7 54.5 54.4 54.5 54.5 54.4 54.4 54.5 54.7 54.6 54.8 54.8 54.8 54.8 54.9 54.8 55.0 55.1 55.0 54.8 54.8 54.6 54.3 54.5 41.3 43.6 44.3 42.5 44.2 45.9 48.5 49.4 47.9 46.2 44.6 44.5 47.0 47.1 47.9 49.0 50.2 50.5 48.5 51.3 50.3 50.2 50.5 50.4 50.6 48.5 50.8 50.7 51.0 51.6 50.0 49.5 49.6 50.8 49.3 49.1 48.6 47.8 46.2 48.3 47.4 47.1 47.5 40.6 41.6 42.2 41.9 43.1 44.4 46.1 47.3 47.8 48.5 48.4 48.9 50.0 51.0 52.0 53.1 54.0 54.9 55.2 54.9 54.8 54.8 54.8 54.8 54.7 54.8 54.8 55.0 54.9 55.1 55.1 55.2 55.2 55.2 55.2 55.4 55.5 55.5 55.4 55.3 55.1 54.8 55.0 53.7 54.5 53.5 50.1 50.8 51.4 53.6 53.8 52.3 51.3 49.4 49.5 52.3 53.4 54.1 55.6 56.3 56.9 56.2 56.8 56.8 56.9 56.4 56.8 56.9 57.4 57.0 56.8 56.6 56.7 56.5 56.6 56.8 57.0 57.0 57.0 56.6 55.7 55.5 55.6 55.7 55.5 55.2 66.8 67.5 65.8 60.6 60.6 61.4 63.3 63.4 60.4 59.1 56.0 56.3 59.2 60.0 60.6 62.0 62.7 62.8 61.8 62.8 62.8 63.1 62.0 62.4 63.3 63.6 62.9 62.5 62.5 62.5 62.4 61.6 62.3 62.4 62.4 62.3 62.3 61.5 61.0 61.4 61.7 61.6 61.5 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 6 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 329 31.6 32.8 31.4 26.3 25.8 26.4 28.5 28.7 27.0 24.6 20.3 20.4 23.9 26.3 26.5 28.5 29.4 30.4 27.6 28.0 31.2 30.1 26.2 26.3 34.0 36.6 32.8 26.6 30.2 31.1 33.3 31.9 29.2 30.3 30.0 27.8 25.4 25.4 24.0 27.6 27.3 27.1 24.7 73.0 73.7 71.9 66.5 66.8 67.5 69.1 69.1 65.8 64.5 61.4 61.6 64.1 64.6 65.1 66.4 67.1 67.0 66.1 67.3 66.9 67.3 66.6 67.1 67.0 67.1 66.8 67.2 66.7 66.5 66.1 65.4 66.6 66.4 66.5 66.6 66.9 65.9 65.6 65.5 65.9 66.0 66.0 TABLE ^-^.—Unemployment rate, 1948-90 [Percent; monthly data seasonally adjusted] Year or month Unemployment rate, all work1 ers 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 1988 .. 1989 1990 1989: Jan Feb Mar fez June.... July Aug Sept.... Oct Nov Dec 1990: Jan Feb Mar May"!!!! June.... July Aug Sept.... Oct Nov Dec 5.2 3.2 2.9 2.8 5.4 4.3 4.0 4.2 6.6 5.3 5.4 6.5 5.4 5.5 5.0 4.4 3.7 3.7 3.5 3.4 4.8 5.8 5.5 4.8 5.5 8.3 7.6 6.9 6.0 5.8 7.0 7.5 9.5 9.5 7.4 7.1 6.9 6.1 5.4 5.2 5.4 5.3 5.1 5.0 5.2 5.1 5.3 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.3 5.3 5.2 5.4 5.6 5.6 5.6 5.8 6.0 Unemployment rate, civilian workers 2 All civilian work- Total ers 3.8 5.9 5.3 3.3 3.0 2.9 5.5 4.4 4.1 4.3 6.8 5.5 5.5 6.7 5.5 5.7 5.2 4.5 3.8 3.8 3.6 3.5 4.9 5.9 5.6 4.9 5.6 8.5 7.7 7.1 6.1 5.8 7.1 7.6 9.7 9.6 7.5 7.2 7.0 6.2 5.5 5.3 5.5 5.4 5.2 5.1 5.2 5.2 5.4 5.3 5.2 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.4 5.3 5.3 5.5 5.6 5.7 5.7 5.9 6.1 3.6 5.9 5.1 2.8 2.8 2.8 5.3 4.2 3.8 4.1 6.8 5.2 5.4 6.4 5.2 5.2 4.6 4.0 3.2 3.1 2.9 2.8 4.4 5.3 5.0 4.2 4.9 7.9 7.1 6.3 5.3 5.1 6.9 7.4 9.9 9.9 7.4 7.0 6.9 6.2 5.5 5.2 5.6 5.4 5.2 4.9 5.2 5.0 5.1 5.0 5.1 5.4 5.2 5.3 5.2 5.3 5.2 5.2 5.4 5.4 5.3 5.6 5.7 5.8 5.8 6.0 6.2 Males Females 20 16- years 19 and Total years over 9.8 14.3 12.7 8.1 8.9 7.9 13.5 11.6 11.1 12.4 17.1 15.3 15.3 17.1 14.7 17.2 15.8 14.1 11.7 12.3 11.6 11.4 15.0 16.6 15.9 13.9 15.6 20.1 19.2 17.3 15.8 15.9 18.3 20.1 24.4 23.3 19.6 19.5 19.0 17.8 16.0 15.9 16.3 18.5 16.7 15.0 15.7 16.3 16.2 14.0 14.9 15.6 15.9 16.5 15.9 15.4 15.2 15.2 15.6 16.0 15.7 16.8 17.6 16.8 16.7 17.1 17.4 3.2 5.4 4.7 2.5 2.4 2.5 4.9 3.8 3.4 3.6 6.2 4.7 4.7 5.7 4.6 4.5 3.9 3.2 2.5 2.3 2.2 2.1 3.5 4.4 4.0 3.3 3.8 6.8 5.9 5.2 4.3 4.2 5.9 6.3 8.8 8.9 6.6 6.2 6.1 5.4 4.8 4.5 4.9 4.6 4.5 4.3 4.5 4.3 4.4 4.4 4.5 4.7 4.6 4.6 4.5 4.6 4.6 4.6 4.7 4.7 4.7 4.9 5.0 5.1 5.2 5.4 5.6 4.1 6.0 5.7 4.4 3.6 3.3 6.0 4.9 4.8 4.7 6.8 5.9 5.9 7.2 6.2 6.5 6.2 5.5 4.8 5.2 4.8 4.7 5.9 6.9 6.6 6.0 6.7 9.3 8.6 8.2 7.2 6.8 7.4 7.9 9.4 9.2 7.6 7.4 7.1 6.2 5.6 5.4 5.4 5.4 5.1 5.2 5.3 5.4 5.7 5.7 5.4 5.2 5.4 5.3 5.4 5.2 5.3 5.3 5.4 5.3 5.1 5.4 5.5 5.5 5.6 5.7 5.9 20 16- years 19 and years over 8.3 12.3 11.4 8.3 8.0 7.2 11.4 10.2 11.2 10.6 14.3 13.5 13.9 16.3 14.6 17.2 16.6 15.7 14.1 13.5 14.0 13.3 15.6 17.2 16.7 15.3 16.6 19.7 18.7 18.3 17.1 16.4 17.2 19.0 21.9 21.3 18.0 17.6 17.6 15.9 14.4 14.0 14.7 13.9 13.0 13.3 13.5 13.5 15.6 15.4 14.2 14.5 13.6 13.7 14.2 13.8 14.5 14.0 14.0 14.7 13.6 14.7 15.4 14.4 15.6 15.6 15.6 3.6 5.3 5.1 4.0 3.2 2.9 5.5 4.4 4.2 4.1 6.1 5.2 5.1 6.3 5.4 5.4 5.2 4.5 3.8 4.2 3.8 3.7 4.8 5.7 5.4 4.9 5.5 8.0 7.4 7.0 6.0 5.7 6.4 6.8 8.3 8.1 6.8 6.6 6.2 5.4 4.9 4.7 4.8 4.7 4.5 4.7 4.7 4.8 4.9 4.9 4.7 4.5 4.8 4.7 4.7 4.6 4.7 4.7 4.8 4.6 4.6 4.7 4.9 4.9 4.9 5.1 5.3 1 Unemployed 2 Unemployed 3 as percent of labor force including resident Armed Forces. 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 6 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 330 Both sexes 1619 years 9.2 13.4 12.2 8.2 8.5 7.6 12.6 11.0 11.1 11.6 15.9 14.6 14.7 16.8 14.7 17.2 16.2 14.8 12.8 12.9 12.7 12.2 15.3 16.9 16.2 14.5 16.0 19.9 19.0 17.8 16.4 16.1 17.8 19.6 23.2 22.4 18.9 18.6 18.3 16.9 15.3 15.0 15.5 16.3 14.9 14.2 14.6 14.9 15.9 14.7 14.6 15.1 14.8 15.2 15.1 14.6 14.8 14.6 14.8 15.4 14.7 15.8 16.6 15.7 16.2 16.4 16.6 Black White and Black other 3.5 5.6 4.9 3.1 2.8 2.7 5.0 3.9 3.6 3.8 6.1 4.8 5.0 6.0 4.9 5.0 4.6 4.1 3.4 3.4 3.2 3.1 4.5 5.4 5.1 4.3 5.0 7.8 7.0 6.2 5.2 5.1 6.3 6.7 8.6 8.4 6.5 6.2 6.0 5.3 4.7 4.5 4.7 4.6 4.3 4.3 4.4 4.4 4.5 4.6 4.5 4.5 4.5 4.5 4.5 4.5 4.6 4.6 4.7 4.6 4.5 4.7 4.8 4.8 4.9 5.0 5.3 5.9 8.9 9.0 5.3 5.4 4.5 9.9 8.7 8.3 7.9 12.6 10.7 10.2 12.4 10.9 10.8 9.6 8.1 7.3 7.4 6.7 6.4 8.2 9.9 10.0 '"10.4"' 9.4 9.0 9.9 10.5 13.8 14.8 13.1 14.0 13.1 14.0 11.9 12.8 12.3 11.3 13.1 14.3 14.2 15.6 17.3 18.9 17.8 19.5 14.4 15.9 13.7 15.1 13.1 14.5 11.6 13.0 10.4 11.7 11.4 10.0 11.3 10.1 10.4 11.8 10.4 11.8 9.9 11.1 9.8 11.2 9.8 11.3 10.4 12.0 9.7 11.0 9.6 11.1 10.1 11.5 10.2 11.5 11.7 10.1 11.4 10.0 11.4 10.0 9.4 10.7 9.5 10.7 9.3 10.6 9.5 10.6 9.6 10.7 10.3 11.4 10.4 11.7 11.9 10.8 11.7 10.6 12.2 11.0 11.1 12.2 Experienced wage and salary workers 43 6.8 6.0 3.7 34 3.2 62 4.8 44 4.6 7.3 5.7 5.7 6.8 5.6 5.6 5.0 4.3 3.5 3.6 3.4 3.3 4.8 5.7 5.3 4.5 5.3 8.2 7.3 6.6 5.6 5.5 6.9 7.3 9.3 9.2 7.1 6.8 6.6 5.8 5.2 5.0 5.3 5.1 4.9 4.8 5.0 5.0 5.1 5.1 5.0 5.0 5.0 5.1 5.0 5.0 5.0 5.1 5.1 5.1 5.1 5.2 5.3 5.4 5.4 5.7 5.8 Married men, spouse present 8 Women who maintain families 3.5 4.6 1.5 14 1.7 40 2.6 23 2.8 5.1 3.6 3.7 4.6 3.6 3.4 2.8 2.4 1.9 1.8 1.6 1.5 2.6 3.2 2.8 2.3 2.7 5.1 4.2 3.6 2.8 2.8 4.2 4.3 6.5 6.5 4.6 4.3 4.4 3.9 3.3 3.0 3.4 3.1 3.1 2.9 3.1 2.9 2.9 3.0 3.1 3.3 3.0 3.0 3.1 3.4 3.1 3.2 3.2 3.3 3.2 3.3 3.5 3.5 3.5 3.7 3.8 4.9 4.4 4.4 5.4 7.3 7.2 7.1 7.0 10.0 10.1 9.4 8.5 8.3 9.2 10.4 11.7 12.2 10.3 10.4 9.8 9.2 8.1 8.1 8.2 8.1 8.1 7.9 8.0 8.3 8.0 8.3 8.0 7.5 7.7 8.2 7.9 7.6 7.6 8.3 7.8 7.5 8.0 8.3 8.4 8.7 8.5 8.7 8.7 TABLE B-40.—Civilian unemployment rate by demographic characteristic, 1948-90 [Percent; * monthly data seasonally adjusted] Year or month White Black and other or black All Females Females Males Males civilian 20 20 20 20 Total work- Total ers Total 16-19 Total 16-19 years Total 16-19 years Total 16-19 years years and years years and years and over over over ovef W Black and other 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 . .. 3.8 5.9 5.3 3.3 3.0 2.9 5.5 4.4 4.1 4.3 6.8 5.5 5.5 6.7 5.5 5.7 5.2 4.5 3.8 3.8 3.6 3.5 4.9 5.9 5.6 3.5 5.6 4.9 3.1 2.8 2.7 5.0 3.9 3.6 3.8 6.1 4.8 5.0 6.0 4.9 5.0 4.6 4.1 3.4 3.4 3.2 3.1 4.5 5.4 5.1 3.4 5.6 4.7 2.6 2.5 2.5 4.8 3.7 3.4 3.6 6.1 4.6 4.8 5.7 4.6 4.7 4.1 3.6 2.8 2.7 2.6 2.5 4.0 4.9 4.5 13.4 11.3 10.5 11.5 15.7 14.0 14.0 15.7 13.7 15.9 14.7 12.9 10.5 10.7 10.1 10.0 13.7 15.1 14.2 4.4 3.3 3.0 3.2 5.5 4.1 4.2 5.1 4.0 3.9 3.4 2.9 2.2 2.1 2.0 1.9 3.2 4.0 3.6 38 5.7 5.3 42 3.3 31 5.5 4.3 4.2 4.3 6.2 5.3 5.3 6.5 5.5 5.8 5.5 5.0 4.3 4.6 4.3 4.2 5.4 6.3 5.9 10.4 9.1 9.7 9.5 12.7 12.0 12.7 14.8 12.8 15.1 14.9 14.0 12.1 11.5 12.1 11.5 13.4 15.1 14.2 5.9 8.9 9.0 5.3 5.4 4.5 5.1 9.9 3.9 8.7 3.7 8.3 3.8 7.9 5.6 12.6 4.7 10.7 4.6 10.2 5.7 12.4 4.7 10.9 4.8 10.8 4.6 9.6 4.0 8.1 3.3 7.3 3.8 7.4 3.4 6.7 3.4 6.4 4.4 8.2 5.3 9.9 4.9 10.0 5.8 9.6 9.4 4.9 5.2 4.8 10.3 8.8 7.9 8.3 13.7 11.5 10.7 12.8 10.9 10.5 8.9 7.4 6.3 6.0 5.6 5.3 7.3 9.1 8.9 14.4 13.4 15.0 18.4 26.8 25.2 24.0 26.8 22.0 27.3 24.3 23.3 21.3 23.9 22.1 21.4 25.0 28.8 29.7 61 7.9 8.4 61 5.7 41 9.9 9.2 8.4 8.5 7.4 8.9 7.6 7.3 12.7 10.8 10.5 9.4 9.6 9.4 11.7 11.9 10.0 11.0 9.2 11.2 7.7 10.7 6.0 9.2 4.9 8.7 4.3 9.1 3.9 8.3 3.7 7.8 5.6 9.3 7.3 10.9 6.9 11.4 20.6 19.2 22.8 20.2 28.4 27.7 24.8 29.2 30.2 34.7 31.6 31.7 31.3 29.6 28.7 27.6 34.5 35.4 38.4 8.4 7.7 7.8 6.4 9.5 8.3 8.3 10.6 9.6 9.4 9.0 7.5 6.6 7.1 6.3 5.8 6.9 8.7 8.8 Black 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 . 1988 1989 1990 1989: Jan Feb Mar Apr May June: :..:::::::: July Aug Sept Oct Nov Dec 1990: Jan Feb . . Mar Apr May June July Aug Sept Oct Nov Dec 5.6 4.9 5.6 8.5 7.7 7.1 6.1 5.8 7.1 7.6 9.7 9.6 7.5 7.2 7.0 6.2 5.5 5.3 5.5 5.4 5.2 5.1 5.2 5.2 5.4 5.3 5.2 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.4 5.3 5.3 5.5 5.6 5.7 5.7 5.9 6.1 5.1 4.3 5.0 7.8 7.0 6.2 5.2 5.1 6.3 6.7 8.6 8.4 6.5 6.2 6.0 5.3 4.7 4.5 4.7 4.6 4.3 4.3 4.4 4.4 4.5 4.6 4.5 4.5 4.5 4.5 4.5 4.5 4.6 4.6 4.7 4.6 4.5 4.7 4.8 4.8 4.9 5.0 5.3 4.5 3.8 4.4 7.2 6.4 5.5 4.6 4.5 6.1 6.5 8.8 8.8 6.4 6.1 6.0 5.4 4.7 4.5 4.8 4.7 4.4 4.2 4.4 4.3 4.4 4.4 4.4 4.7 4.5 4.6 4.5 4.5 4.6 4.6 4.7 4.6 4.6 4.8 4.9 4.9 5.0 5.2 5.5 14.2 12.3 13.5 18.3 17.3 15.0 13.5 13.9 16.2 17.9 21.7 20.2 16.8 16.5 16.3 15.5 13.9 13.7 14.2 16.2 14.1 13.2 13.2 14.1 13.9 12.7 12.9 13.1 13.7 14.0 13.9 13.2 13.1 13.3 13.8 14.1 13.4 14.9 15.4 15.0 14.7 14.9 14.9 3.6 3.0 3.5 6.2 5.4 4.7 3.7 3.6 5.3 5.6 7.8 7.9 5.7 5.4 5.3 4.8 4.1 3.9 4.3 4.0 3.8 3.7 3.8 3.6 3.8 3.8 3.8 4.2 3.9 4.0 3.9 4.0 4.1 4.0 4.2 4.1 4.1 4.2 4.4 4.4 4.5 4.6 5.0 5.9 5.3 6.1 8.6 7.9 7.3 6.2 5.9 6.5 6.9 8.3 7.9 6.5 6.4 6.1 5.2 4.7 4.5 4.6 4.5 4.1 4.4 4.5 4.6 4.7 4.8 4.6 4.3 4.5 4.5 4.6 4.5 4.6 4.6 4.6 4.5 4.4 4.5 4.7 4.7 4.7 4.8 5.0 14.2 13.0 14.5 17.4 16.4 15.9 14.4 14.0 14.8 16.6 19.0 18.3 15.2 14.8 14.9 13.4 12.3 11.5 12.6 11.6 10.5 10.6 11.4 11.2 12.5 12.8 12.1 11.1 11.0 11.6 12.1 12.3 12.9 12.6 12.3 12.9 11.6 12.4 13.1 12.6 13.0 12.5 13.0 1 Unemployed as percent of civilian labor force in group specified. Note.-See Note, Table B-39. Source: Department of Labor, Bureau of Labor Statistics. 331 4.9 4.3 5.1 7.5 6.8 6.2 5.2 5.0 5.6 5.9 7.3 6.9 5.8 5.7 5.4 4.6 4.1 4.0 4.1 4.0 3.7 3.9 4.0 4.1 4.1 4.2 4.1 3.8 4.0 4.0 4.0 4.0 4.1 4.0 4.1 4.0 4.0 4.0 4.1 4.2 4.2 4.3 4.4 10.4 9.4 10.5 14.8 14.0 14.0 12.8 12.3 14.3 15.6 18.9 19.5 15.9 15.1 14.5 13.0 11.7 11.4 11.3 11.8 11.8 11.1 11.2 11.3 12.0 11.0 11.1 11.5 11.5 11.7 11.4 11.4 10.7 10.7 10.6 10.6 10.7 11.4 11.7 11.9 11.7 12.2 12.2 9.3 8.0 9.8 14.8 13.7 13.3 11.8 11.4 14.5 15.7 20.1 20.3 16.4 15.3 14.8 12.7 11.7 11.5 11.8 11.8 12.1 11.2 11.9 11.6 11.6 10.5 11.3 11.4 11.6 11.8 11.9 12.4 10.9 11.1 11.0 10.9 11.3 12.1 12.2 12.7 12.4 12.6 12.5 31.7 27.8 33.1 38.1 37.5 39.2 36.7 34.2 37.5 40.7 48.9 48.8 42.7 41.0 39.3 34.4 32.7 31.9 32.1 35.6 32.9 29.2 36.4 35.8 32.5 23.4 29.2 34.7 32.3 32.0 29.2 29.1 29.2 30.5 28.9 31.6 35.2 33.1 36.7 31.4 31.3 33.2 36.4 7.0 6.0 7.4 12.5 11.4 10.7 9.3 9.3 12.4 13.5 17.8 18.1 14.3 13.2 12.9 11.1 10.1 10.0 10.4 10.1 10.4 9.8 10.1 9.9 9.8 9.5 9.9 9.8 10.0 10.2 10.5 11.0 9.5 9.7 9.7 9.5 9.7 10.7 10.6 11.5 11.1 11.2 10.9 11.8 11.1 11.3 14.8 14.3 14.9 13.8 13.3 14.0 15.6 17.6 18.6 15.4 14.9 14.2 13.2 11.7 11.4 10.8 11.8 11.4 11.0 10.5 11.0 12.4 11.5 10.8 11.6 11.5 11.6 11.0 10.4 10.5 10.3 10.2 10.3 10.2 10.7 11.1 11.1 11.1 11.8 12.0 9.0 40.5 36.1 8.6 8.8 37.4 41.0 12.2 41.6 11.7 43.4 12.3 40.8 11.2 39.1 10.9 39.8 11.9 42.2 13.4 47.1 15.4 48.2 16.5 42.6 13.5 39.2 13.1 39.2 12.4 34.9 11.6 32.0 10.4 9.8 33.0 9.6 30.0 33.4 10.3 32.3 10.0 9.4 35.4 9.1 30.0 9.6 29.8 38.4 10.7 32.9 10.0 31.1 9.5 9.5 39.0 9.9 33.5 31.2 10.2 9.6 29.5 9.4 25.7 9.4 28.5 27.3 9.2 9.2 26.4 9.2 28.1 9.1 27.1 31.1 9.4 32.7 9.8 27.6 10.2 9.7 32.7 37.5 10.2 35.6 10.6 TABLE B-41.—Unemployment by duration and reason, 1947-90 [Thousands of persons, except as noted; monthly data seasonally adjusted1] Reason for unemployment Duration of unemployment Unemployment Year or month 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 2 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986.. 1987 1988 1989 1990 1989- Jan Feb .. Mar Apr .. May Aug Sept :::..: ::::.. June .... July Oct Nov Dec 1990- Jan Feb .... Mar Apr May . June July Aug"::::: Oct Nov Dec sept : 2,311 2,276 3,637 3,288 2,055 1,883 1,834 3,532 2,852 2,750 2,859 4,602 3,740 3,852 4,714 3,911 4,070 3,786 3,366 2,875 2,975 2,817 2,832 4,093 5,016 4,882 4,365 5,156 7,929 7,406 6,991 6,202 6,137 7,637 8,273 10,678 10,717 8,539 8,312 8,237 7,425 6,701 6,528 6,874 6,643 6,347 6,252 6,465 6,419 6,662 6,580 6,504 6,579 6,587 6,628 6,585 6,544 6,579 6,563 6,691 6,662 6,560 6,827 7,015 7,087 7,142 7,337 7,600 Less than 5 weeks 1,210 1,300 1,756 1,450 1,177 1,135 1,142 1,605 1,335 1,412 1,408 1,753 1,585 1,719 1,806 1,663 1,751 1,697 1,628 1,573 1,634 1,594 1,629 2,139 2,245 2,242 2,224 2,604 2,940 2,844 2,919 2,865 2,950 3,295 3,449 3,883 3,570 3,350 3,498 3,448 3,246 3,084 3,174 3,169 3,151 3,213 3,060 3,075 3,110 3,331 3,181 3,075 3,198 3,187 3,208 3,219 3,131 3,157 3,183 3,185 3,078 3,100 3,142 3,275 3,087 3,139 3,277 3,280 5-14 weeks 704 669 1,194 1,055 574 516 482 1,116 815 805 891 1,396 1,114 1,176 1,376 1,134 1,231 1,117 983 779 893 810 827 1,290 1,585 1,472 1,314 1,597 2,484 2,196 2,132 1,923 1,946 2,470 2,539 3,311 2,937 2,451 2,509 2,557 2,196 2,007 1,978 2,201 1,998 1,887 1,869 1,990 1,961 2,038 1,974 2,024 2,023 1,993 2,022 1,961 2,010 2,070 2,074 2,146 2,194 2,085 2,166 2,077 2,452 2,391 2,334 2,518 27 weeks and over 15-26 weeks 234 193 428 425 166 148 132 495 366 301 321 785 469 503 728 534 535 491 404 287 271 256 242 428 668 601 483 574 1,303 1,018 913 766 706 1,052 1,122 1,708 1,652 1,104 1,025 1,045 943 801 730 809 742 664 696 705 720 694 824 738 755 730 745 721 754 737 732 742 776 777 807 822 861 893 938 940 164 116 256 357 137 84 78 317 336 232 239 667 571 454 804 585 553 482 351 239 177 156 133 235 519 566 343 381 1,203 1,348 1,028 648 535 820 1,162 1,776 2,559 1,634 1,280 1,187 1,040 809 646 695 729 638 669 715 633 623 627 570 590 647 641 627 642 637 638 675 628 659 701 746 744 698 789 799 1 Because 2 (mean) Median duraJob duration losers tion (weeks) (weeks) 8.6 10.0 12.1 9.7 8.4 8.0 11.8 13.0 11.3 10.5 13.9 14.4 12.8 15.6 14.7 14.0 13.3 11.8 10.4 8.7 8.4 7.8 8.6 11.3 12.0 10.0 9.8 14.2 15.8 14.3 11.9 10.8 11.9 13.7 15.6 20.0 18.2 15.6 15.0 14.5 13.5 11.9 12.1 12.5 12.3 12.3 12.6 11.9 11.2 11.9 11.4 11.5 11.8 11.6 11.5 11.9 11.7 11.9 12.1 11.6 12.0 12.1 12.3 12.4 12.0 12.4 12.4 4.5 4.4 4.9 6.3 6.2 5.2 5.2 8.4 8.2 7.0 5.9 5.4 6.5 6.9 8.7 10.1 7.9 6.8 6.9 6.5 5.9 4.8 5.4 5.6 5.3 5.5 5.5 5.3 5.5 5.5 5.0 5.0 4.9 4.8 4.9 5.0 5.2 5.0 5.0 5.3 5.2 5.2 5.3 6.1 5.9 5.9 5.9 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 3,092 2,983 3,322 3,038 2,874 2,876 2,930 2,797 2,854 2,954 2,984 2,935 3,000 3,053 3,063 3,116 3,095 3,073 3,145 3,173 3,203 3,145 3,388 3,519 3,563 3,756 3,797 Job leavers 438 431 436 550 590 641 683 768 827 903 909 874 880 891 923 840 830 823 877 1,015 965 983 1,024 1,014 969 984 906 973 1,110 1,024 1,011 1,033 1,047 999 1,044 1,036 1,015 1,012 1,019 1,159 1,017 999 1,020 989 954 981 996 1,024 Reentrants 945 909 965 1,228 1,472 1,456 1,340 1,463 1,892 1,928 1,963 1,857 1,806 1,927 2,102 2,384 2,412 2,184 2,256 2,160 1,974 1,809 1,843 1,883 1,864 1,770 1,766 1,896 1,859 2,047 1,869 1,753 1,891 1,883 1,842 1,824 1,775 1,815 1,850 1,794 1,828 1,839 1,920 1,872 1,952 1,911 1,926 2,128 entrants 396 407 413 504 630 677 649 681 823 895 953 885 817 872 981 1,185 1,216 1,110 1,039 1,029 920 816 677 654 774 752 718 710 691 738 713 637 652 673 691 680 647 672 651 637 677 549 677 669 663 684 655 662 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.—Data relate to persons 16 years of age and over. See footnote 6 and Note, Table B-32. Source: Department of Labor, Bureau of Labor Statistics. 332 TABLE B-42.—Unemployment insurance programs, selected data, 1955-90 State programs All programs Year or month Covered employment 1 Insured Total unemploy- benefits Insured paid ment unem(weekly (millions ployment of 24 average)" dollars) Thousands 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 1988 1989 p 1990 40,018 42,751 43,436 44,411 45,728 46,334 46,266 47,776 48,434 49,637 51,580 54,739 56,342 57,977 59,999 59,526 59,375 66,458 69,897 72,451 71,037 73,459 76,419 88,804 92,062 92,659 93,300 91,628 91,898 96,474 99,186 101,099 98,757 101,987 8 103,537 1989: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1990- Jan Feb Mar Apr May June' July Aug : : : :.: : : : : Sept Oct.. :::: : : : Nov Dec » 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 2,401 2,248 2,324 2,715 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 15,056.3 16,292.5 14,501.0 13,280.0 14,498.4 2,684 2,695 2,571 2,225 1,958 1,935 2,169 2,009 1,862 1,910 2,141 2,509 3,064 2,998 2,846 2,531 2,270 2,212 2,442 2,295 2,193 2,294 2,722 1,450.5 1,370.9 1,563.1 1,190.0 1,165.1 1,102.1 1,086.8 1,228.4 983.3 1,071.9 1,174.2 1,278.1 1,883.2 1,673.1 1,755.1 1,536.3 1,498.7 1,293.5 1,426.5 1,463.8 1,207.6 1,439.9 1,440.8 1,607.0 Initial claims Exhaustions8 Weekly average; thousands 1,265 226 227 1,215 1,446 270 2,510 369 1,684 277 331 1,908 2,290 350 302 1,783 7 7 1,806 298 1,605 268 232 1,328 1,061 203 226 1,205 1,111 201 1,101 200 1,805 296 2,150 295 261 1,848 247 1,632 2,262 363 3,986 478 2,991 386 2,655 375 2,359 346 2,434 388 3,350 488 3,047 460 4,061 583 3,396 438 377 2,476 396 2,611 2,650 378 2,332 328 2,081 310 330 2,158 387 2,514 ** 2,071 293 305 2,091 318 2,120 308 2,106 2,068 316 331 2,133 334 2,194 323 2,169 2,208 331 2,295 366 2,305 348 367 2,373 2,367 359 357 2,334 347 2,349 2,381 360 2,400 351 357 2,442 354 2,470 371 2,492 2,602 393 2,748 431 2,908 460 467 3,002 25 20 23 50 33 31 46 32 30 26 21 15 17 16 16 25 39 35 29 37 81 63 55 39 39 59 57 80 80 50 50 52 46 38 37 44 38 38 38 42 38 37 38 38 35 34 36 37 44 42 43 47 45 44 47 44 42 43 42 45 Benefits paid Insured unemployment as Total percent (millions of covered employ- dollars) 4 (dollars) 6 ment 3.5 3.2 3.6 6.4 4.4 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 2.8 2.4 2.1 2.1 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 14,130.8 15,329.3 13,606.8 12,564.7 13,752.3 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 98.95 106.70 119.37 123.59 123.47 128.23 135.72 139.90 144.97 151.63 161.13 2.1 2.1 2.1 2.1 2.0 2.1 2.2 2.1 2.2 2.2 2.2 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.4 2.4 2.5 2.6 2.8 2.9 1,413.2 1,336.2 1,522.1 1,162.4 1,137.6 1,076.2 1,061.9 1,198.2 957.8 1.044.8 1,144.1 1,248.3 1,843.6 1,636.7 1,716.1 1,502.5 1,466.7 1,265.4 1,397.3 1,431.5 1,178.4 1,402.4 1,482.5 1,567.5 148.39 150.37 150.92 150.21 151.28 151.27 150.68 150.50 152.51 155.90 154.71 155.78 158.53 160.44 159.60 162.02 162.02 161.91 159.93 160.53 162.23 164.01 160.84 162.88 ** "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). "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. 5 Individuals receiving final payments in benefit year. 6 For total unemployment only. 7 Programs include Puerto Rican sugarcane workers for initial claims and insured unemployment beginning Julv 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. 333 TABLE B-43.—Employees on nonagricultural payrolls, by major industry, 1946-90 [Thousands of persons; monthly data seasonally adjusted] 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 1988 1989 1990 ' 1989- Jan Feb Mar Apr May June July Sept Oct.. . Nov Dec. .. 1990: Jan Feb Mar Apr May Total ... . . . .. Aug..::::."".:; : June July Aug Sept :..::.::: ::.:::. :.."ri:.zz :..z'::..: Oct Nov. ... Dec*. 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 99,525 102,200 105,536 108,413 110,323 107,430 107,648 107,811 107,988 108,135 108,364 108,490 108,628 108,868 108,980 109,245 109,383 109,654 109,958 110,122 110,177 110,617 110,829 110,740 110,613 110,612 110,432 110,165 110,017 See next page for continuation of table. 334 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 24,558 24,708 25,173 25,326 25,002 25,399 25,357 25,331 25,361 25,363 25,335 25,328 25,356 25,304 25,283 25,280 25,218 25,188 25,339 25,259 25,180 25,191 25,162 25,105 25,013 24,931 24,777 24,511 24,426 M Goods-producing industries Manufacturing Construction Total Durable Nonduragoods ble goods 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 1,128 952 966 927 777 717 713 700 735 692 688 691 695 697 692 682 706 709 710 716 718 723 727 729 734 738 744 745 735 736 733 738 740 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 4,816 4,967 5,110 5,200 5,204 5,170 5,166 5,137 5,177 5,187 5,190 5,207 5,220 5,225 5,239 5,258 5,216 5,294 5,368 5,313 5,256 5,286 5,270 5,229 5,194 5,176 5,093 5,029 4,987 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 18,965 19,024 19.350 19,426 19,063 19,537 19,503 19,503 19,489 19,479 19,453 19,439 19,430 19,370 19,334 19,306 19,284 19,171 19,244 19,217 19,190 19,167 19,148 19,131 19,084 19,019 18,951 18,744 18,699 7,785 8,358 8,298 7,462 8,066 9,059 9,320 10,080 9,101 9,511 9,802 9,825 8,801 9,342 9,429 9,041 9,450 9,586 9,785 10,374 11,250 11,408 11,594 11,862 11,176 10,604 11,022 11,863 11,897 10,662 11,051 11,570 12,245 12,730 12,159 12,082 11,014 10,707 11,479 11,464 11,203 11,167 11,381 11,422 11,122 11,533 11,497 11,487 11,481 11,471 11,444 11,427 11,416 11,369 11,337 11,314 11,296 11,192 11,278 11,261 11,229 11,217 11,201 11,179 11,129 11,068 11,026 10,865 10,832 6,918 7,187 7,285 6,979 7,175 7,334 7,313 7,468 7,213 7,370 7,442 7,351 7,144 7,333 7,367 7,285 7,403 7,410 7,489 7,688 7,963 8,039 8,187 8,304 8,190 8,019 8,129 8,291 8,181 7,661 7,946 8,112 8,259 8,310 8,127 8,089 7,767 7,726 7,899 7>96 7,761 7,858 7,969 8,004 7,941 8,004 8,006 8,016 8,008 8,008 8,009 8,012 8,014 8,001 7,997 7,992 7,988 7,979 7,966 7,956 7,961 7,950 7,947 7,952 7,955 7,951 7,925 7,879 7,867 TABLE B-43.—Employees on nonagricultural payrolls, by major industry, 1946-90—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 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 1988 1989 1990 " 1989: Jan Feb Mar Apr May June July Aug Sept . Oct Nov Dec 1990- Jan Feb Mar Apr May June July . . Aug:: : : : : : : : : : : : : : ":": ;:: Sept 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 74,967 77,492 80,363 83,087 85,320 82,031 82,291 82,480 82,627 82,772 83,029 83,162 83,272 83,564 83,697 83,965 84,165 84,466 84,619 84,863 84,997 85,426 85,667 85,635 85,600 85,681 85,655 85,654 85,591 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 5,255 5,372 5,527 5,648 5,839 5,605 5,620 5,604 5,621 5,641 5,656 5,671 5,561 5,656 5,671 5,693 5,776 5,790 5,804 5,808 5,809 5,833 5,846 5,841 5,846 5,870 5,870 5,866 5,881 Wholesale trade 2,298 2,478 2,612 2,610 2,643 2,735 2,821 2,862 2,875 2,934 3,027 3,037 2,989 3,092 3,153 3,142 3,207 3,258 3,347 3,477 3,608 3,700 3,791 3,919 4,006 4,014 4,127 4,291 4,447 4,430 4,562 4,723 4,985 5,221 5,292 5,376 5,296 5,286 5,574 5,736 5,774 5,865 6,055 6,271 6,361 6,184 6,211 6,231 6,242 6,254 6,267 6,277 6,294 6,303 6,313 6,335 6,344 6,356 6,357 6,361 6,363 6,369 6,383 6,374 6,376 6,370 6,355 6,343 6,328 Retail trade 6,077 6,477 6,659 6,654 6,743 7,007 7,184 7,385 7,360 7,601 7,831 7,848 7,761 8,035 8,238 8,195 8,359 8,520 8,812 9,239 9,637 9,906 10,308 10,785 11,034 11,338 11,822 12,315 12,539 12,630 13,193 13,792 14,556 14,972 15,018 15,172 15,161 15,595 16,526 17,336 17,909 18,462 19,077 19,580 19,789 19,447 19,476 19,519 19,506 19,533 19,556 19,577 19,620 19,634 19,665 19,714 19,710 19,807 19,758 19,764 19,778 19,795 19,822 19,851 19,846 19,844 19,792 19,739 19,683 Government Finance, insurance, and real estate Services 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 2,628 2,688 2,754 2,830 2,911 2,977 3,058 3,185 3,337 3^12 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 6,283 6,547 6,649 6,724 6,832 6,673 6,684 6,686 6,691 6,703 6,715 6,724 6,740 6,753 6,756 6,774 6,785 6,794 6,817 6,821 6,823 6,838 6,844 6,842 6,852 6,851 6,843 6,833 6,831 4,697 5,025 5,181 5,239 5,356 5,547 5,699 5,835 5,969 6,240 6,497 6,708 6,765 7,087 7,378 7,619 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 15,302 16,252 17,112 17,890 18,619 19,036 19,694 20,797 21,999 23,053 24,235 25,669 27,096 28,208 26,533 26,669 26,790 26,893 26,919 27,073 27,127 27,226 27,335 27,408 27,548 27,623 27,721 27,842 27,950 27,969 28,094 28,225 28,287 28,387 28,440 28,475 28,548 28,556 Total 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 16,693 17,010 17,386 17,769 18,291 17,589 17,631 17,650 17,674 17,722 17,762 17,786 17,831 17,883 17,884 17,901 17,927 17,998 18,041 18,159 18,255 18,497 18,547 18,440 18,293 18,306 18,320 18,325 18,312 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 2,348 2,378 2,564 2,719 2,737 2,758 2,731 2,696 2,684 2,663 2,724 2,748 2,733 2,727 2,753 2,773 2,866 2,772 2,739 2,774 2,807 2,875 2,899 2,943 2,971 2,988 3,086 2,980 2,983 2,987 2,983 2,997 2,997 2,996 2,996 2,992 2,986 2,982 2,977 3,000 3,005 3,089 3,151 3,346 3,338 3,164 3,045 2,999 2,983 2,961 2,948 State and local 3,341 3,582 3,787 3,948 4,098 4,087 4,188 4,340 4,563 4727 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 13,794 14,067 14,415 14,781 15,206 14,609 14,648 14,663 14,691 14,725 14,765 14,790 14,835 14,891 14,898 14,919 14,950 14,998 15,036 15,070 15,104 15,151 15,209 15,276 15,248 15,307 15,337 15,364 15,364 Note.— Data in Tables B-43 and B-44 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 (Tables B-32 through B-41) which include proprietors, self-employed persons, domestic servants, ; , , 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. 335 TABLE B-44.—Average weekly hours and hourly and weekly earnings in private nonagricultural industries, 1947-90 [For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted] Average weekly hours ManufacturYear or month Average hourly earnings Total private l Average weekly earnings Total private > ing Total priCurrent vate 1 Total Over- dollars time 1982 dollars 2 Manufacturing Current dollars 1982 dol-2 lars Confactoring struction (current (current dollars) dollars) Retail trade (current dollars) Percent change from a year earlier, total private 3 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 1988 1989 !.. 1990 ' 1989: Jan.... Feb.... Mar.... fc June... July.... Aug.... Sept... Oct... Nov... Dec.... 1990: Jan... Feb... Mar... fc: June.. July... Aug... Sept.. Oct... Nov... Dec" 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 34.7 34.6 34.5 34.7 34.6 34.6 34.7 34.5 34.5 34.6 34.5 34.6 34.6 34.5 34.4 34.4 34.6 34.6 34.5 34.5 34.7 34.5 34.5 34.7 34.2 34.4 34.6 40.4 $1.131 $4.875 1.225 40.0 4.900 1.275 5.141 39.1 1.335 5.340 40.5 1.45 40.6 5.39 40.7 1.52 5.51 40.5 1.61 5.79 39.6 1.65 5.91 1.71 40.7 ...„..„. 6.15 40.4 1.80 6.38 6.47 39.8 2.3 1.89 39.2 2.0 1.95 6.50 2.7 2.02 40.3 6.69 39.7 2.5 2.09 6.79 2.14 39.8 2.4 6.88 40.4 2.8 2.22 7.07 2.8 40.5 2.28 7.17 40.7 3.1 2.36 7.33 3.6 2.46 41.2 7.52 41.4 3.9 2.56 7.62 3.4 40.6 2.68 7.72 40.7 3.6 2.85 7.89 3.6 40.6 3.04 7.98 3.0 39.8 3.23 8.03 39.9 2.9 3.45 8.21 40.5 3.5 3.70 8.53 40.7 3.8 3.94 8.55 40.0 3.3 4.24 8.28 39.5 2.6 4.53 8.12 3.1 40.1 4.86 8.24 40.3 3.5 5.25 8.36 40.4 3.6 5.69 8.40 3.3 40.2 6.16 8.17 39.7 2.8 6.66 7.78 39.8 2.8 7.25 7.69 38.9 2.3 7.68 7.68 40.1 3.0 8.02 7.79 3.4 40.7 8.32 7.80 40.5 3.3 8.57 7.77 40.7 3.4 8.76 7.81 3.7 41.0 8.98 7.73 41.1 3.9 9.28 7.69 7.64 41.0 3.8 9.66 3.6 10.03 7.54 40.8 41.1 3.8 9.49 7.67 41.1 4.0 9.51 7.65 3.9 41.0 9.54 7.63 41.1 3.9 9.60 7.63 3.8 41.0 9.60 7.59 3.8 41.0 9.63 7.60 7.64 41.0 3.8 9.70 3.8 41.0 7.64 9.70 3.8 7.64 40.9 9.73 3.7 40.8 9.78 7.65 3.7 40.7 9.78 7.62 3.7 40.6 9.83 7.63 40.7 3.6 9.82 7.54 3.6 40.8 9.88 7.55 3.7 40.8 9.93 7.56 40.7 3.5 7.57 9.96 40.9 3.8 9.98 7.58 3.8 10.03 41.0 7.58 3.7 10.07 40.9 7.58 3.8 10.09 7.54 41.0 3.7 10.13 41.0 7.50 40.7 3.6 10.12 7.45 3.5 10.14 7.44 40.5 40.7 3.6 10.19 7.46 $1.216 1.327 1.376 1.439 1.56 1.64 1.74 1.78 1.85 1.95 2.04 2.10 2.19 2.26 2.32 2.39 2.45 2.53 2.61 2.71 2.82 3.01 3.19 3.35 3.57 3.82 4.09 4.42 4.83 5.22 5.68 6.17 6.70 7.27 7.99 8.49 8.83 9.19 9.54 9.73 9.91 10.19 10.49 10.84 10.36 10.39 10.40 10.42 10.43 10.47 10.50 10.53 10.55 10.57 10.58 10.62 10.57 10.67 10.73 10.75 10.81 10.86 10.89 10.90 10.93 10.97 10.97 11.01 $45.58 $196.47 49.00 196.00 50.24 202.58 53.13 212.52 57.86 215.09 60.65 219.75 63.76 229.35 64.52 231.25 67.72 243.60 70.74 250.85 73.33 251.13 75.08 250.27 78.78 260.86 80.67 261.92 82.60 265.59 85.91 273.60 278.18 88.46 91.33 283.63 95.45 291.90 98.82 294.11 101.84 293.49 107.73 298.42 114.61 300.81 119.83 298.08 127.31 303.12 136.90 315.44 315.38 145.39 302.27 154.76 163.53 293.06 175.45 297.37 189.00 300.96 203.70 300.89 219.91 291.66 274.65 235.10 255.20 270.63 267.26 267.26 280.70 272.52 292.86 274.73 299.09 271.16 304.85 271.94 312.50 269.16 322.02 266.79 334.24 264.22 346.04 259.98 329.30 265.99 329.05 264.72 264.06 330.08 333.12 264.59 262.03 331.20 332.24 262.23 264.27 335.62 263.71 334.65 336.66 264.25 338.39 264.57 337.41 262.99 338.15 262.54 337.81 259.45 341.85 261.35 343.58 261.48 261.31 343.62 344.31 261.63 348.04 262.87 347.42 261.61 348.11 259.98 351.51 260.38 254.67 346.10 348.82 256.11 352.57 258.10 1 Also includes other private industry groups shown 2 Current dollars divided by the consumer price 3 $49.13 53.08 53.80 58.28 63.34 66.75 70.47 70.49 75.30 78.78 81.19 82.32 88.26 89.72 92.34 96.56 99.23 102.97 107.53 112.19 114.49 122.51 129.51 133.33 142.44 154.71 166.46 176.80 190.79 209.32 228.90 249.27 269.34 288.62 318.00 330.26 354.08 374.03 386.37 396.01 406.31 418.81 430.09 442.27 425.80 427.03 426.40 428.26 427.63 429.27 430.50 431.73 431.50 431.26 430.61 431.17 430.20 435.34 437.78 437.53 442.13 445.26 445.40 446.90 448.13 446.48 444.29 448.11 $58.83 65.23 67.56 69.68 76.96 82.86 86.41 88.54 90.90 96.38 100.27 103.78 108.41 112.67 118.08 122.47 127.19 132.06 138.38 146.26 154.95 164.49 181.54 195.45 211.67 221.19 235.89 249.25 266.08 283.73 295.65 318.69 342.99 367.78 399.26 426.82 442.97 458.51 464.46 466.75 480.44 495.73 512.41 524.49 498.17 499.66 506.90 510.89 504.38 505.50 516.26 516.26 515.28 519.90 524.54 516.00 523.03 527.48 523.18 508.03 520.98 531.35 516.00 526.40 530.69 511.34 530.92 536.43 $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 64.81 66.65 68.50 70.86 74.93 78.67 82.31 87.51 92.03 96.45 102.55 108.63 114.56 121.54 130.14 138.83 147.24 157.99 163.83 171.13 174.47 174.81 175.80 178.80 183.62 188.72 195.26 187.46 186.12 187.34 188.50 187.56 188.14 189.37 189.58 189.87 190.74 190.37 191.23 192.38 193.34 195.17 195.46 196.04 196.62 196.23 195.73 197.39 194.26 197.17 196.60 7.5 2.5 5.8 8.9 4.8 5.1 1.2 5.0 4.5 3.7 2.4 4.9 2.4 2.4 4.0 3.0 3.2 4.5 3.5 3.1 5.8 6.4 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 3.0 3.8 3.5 4.2 3.5 4.3 4.3 3.2 3.3 4.0 4.1 4.0 3.6 3.5 3.5 2.7 3.9 3.7 2.8 4.0 4.5 3.4 3.8 4.3 2.1 3.1 4.0 1982 dol- lars 2 -0.2 3.4 4.9 1.2 2.2 4.4 .8 5.3 3.0 .1 7.2 .4 1.4 3.0 1.7 2.0 2.9 .8 ~U .8 -.9 1.7 4.1 -.0 -4.2 -3.0 1.5 1.2 -.0 -3.1 -5.8 -1.5 -1.2 2.0 .8 -1.3 .3 -1.0 -.9 -1.0 -1.6 -.2 -1.1 -.7 -.9 -2.1 -1.8 -1.0 -.5 -.3 -.8 -1.0 -1.0 -2.4 -1.2 -1.5 -1.6 -.1 -.0 -1.0 -1.7 -1.6 -3.8 -3.0 -2.0 in Table B-43. index for urban wage earners and clerical workers on a 1982=100 base. Monthly percent changes are based on data not seasonally adjusted. Note.-See Note, Table B-43. Source: Department of Labor, Bureau of Labor Statistics. 336 TABLE B-45.—Employment cost index, private industry, 1975-90 Total private •x "ST Year and month Total salaries December: 1975 1976 1977 1978 . 1979 1980 1981 1982 Benefits > :::::::::: si 64.8 98.8 100.0 101.3 102.4 103.8 105.1 106.2 107.2 99.1 100.0 101.1 102.2 103.3 104.4 105.4 106.2 98.1 99.8 101.5 103.1 105.1 106.7 108.4 109.9 December* 1976...'. 1977. IZZ 1978 1979 1980 9.6 1981 9.9 1982 6.5 1983 5.7 1984. 4.9 1985 3.9 1986 3.2 1987 3.3 1988. . 4.8 1989 4.8 4.6 1990 .ZZ 1989: Mar 4.6 June 4.5 Sept 4.8 Dec 4.8 1990: Mar 5.2 June 5.2 Sept 4.9 Dec 4.6 7.2 6.9 7.6 8.7 9.1 8.8 6.3 4.9 4.2 4.1 3.2 3.3 4.1 4.1 4.0 4.2 4.1 4.3 4.1 4.2 4.5 4.2 4.0 11.7 12.1 7.2 7.4 6.5 3.5 3.4 3.4 6.9 6.1 6.6 5.4 5.6 6.0 6.1 7.2 6.9 6.8 6.6 1989: Mar June Sept Dec 1990: Mar June Sept Dec 1.1 .9 1.1 1.1 1.1 1.1 1.0 .8 1.0 1.7 1.7 1.6 1.9 1.5 1.6 1.4 Total Wages Bene- Total Wages BeneTotal Wages Beneand and 1 compen1 1 °X sala- fits sate sala- fits °X sala- fits ries ries ries index, June 1989=100; not seasonally adjusted * Benefits Total sa5on~ salaries C 1983. .: : : 1984 1985 1986 1987 1988 1989. . ::::. 1990 1989: Mar June Sept Dec 1990: Mar June Sept Dec 1989: Mar June Sept Dec 1990: Mar June St: 1.0 1.2 1.3 1.1 1.4 1.3 1.0 .9 ""512 59.4 66.6 71.4 76.7 81.7 84.6 87.5 90.5 96.7 102.6 109.4 98.4 100.0 101.4 102.6 105.5 106.9 108.3 109.4 1 :::::: 58i5 64.2 70.4 75.1 79.6 83.4 87.0 89.7 92.9 97.5 102.3 106.9 98.8 100.0 101.3 102.3 103.8 105.1 106.2 106.9 45.7 48.9 52.1 55.9 60.8 66.2 72.1 76.8 81.0 84.2 88.0 90.6 93.7 97.8 102.2 106.1 99.1 100.0 101.4 102.2 103.2 104.5 105.4 106.1 98.8 99.9 101.2 102.5 103.8 105.0 106.1 107.2 99.2 100.0 101.2 102.3 103.3 104.5 105.2 106.2 97.9 99.9 101.4 103.1 105.1 106.8 108.2 109.7 7.5 7.7 8.3 8.3 9.9 9.4 10.8 9.9 8.6 12.7 6.1 5.7 7.3 4.9 4.0 7.0 4.7 3.8 6.3 3.3 3.5 3.0 3.2 3.2 3.0 3.1 3.1 2.9 4.4 3.2 7.0 4.3 3.9 5.4 4.8 3.7 7.1 3.6 3.1 4.6 3.6 3.2 4.5 4.1 3.6 5.2 4.3 3.9 5.4 7.1 5.1 4.0 5.2 4.2 7.2 5.0 4.1 7.1 7.1 3.7 4.8 Percent change from 7.3 6.9 6.6 •""••••••' ZZI 7.8 •"""••••• •"•••••••••" 8.4 7.2 8.4 8.9 9.7 9.7 9.8 9.4 10.5 8.8 12.5 9.7 8.7 12.7 9.8 9.8 8.9 11.5 6.7 7.3 6.6 6.1 5.6 6.8 6.9 6.0 6.5 5.7 5.1 4.3 7.0 8.0 6.7 4.8 5.2 4.4 5.1 4.4 6.9 4.3 2.8 4.5 4.8 4.0 3.3 3.6 3.1 3.1 3.0 3.3 3.3 2.9 3.8 3.6 3.4 2.6 3.4 3.7 3.0 3.9 5.0 7.6 5.1 4.7 4.5 3.0 6.5 4.9 5.9 5.1 4.5 6.8 4.5 3.9 4.5 7.0 6.2 4.0 4.6 5.1 4.2 5.0 5.3 5.1 6.2 3.8 3.1 5.4 4.8 5.2 3.3 5.4 4.7 6.6 4.0 5.0 6.1 6.8 5.3 4.9 4.3 3.7 4.9 5.9 5.1 4.5 6.8 4.5 3.9 5.1 4.3 6.8 5.1 4.2 7.2 5.2 5.1 5.2 6.6 5.3 4.5 6.9 4.6 4.8 4.5 6.7 6.4 5.2 4.8 4.2 4.5 7.0 6.2 5.1 4.2 4.0 4.6 3 months earlier, seasonally adjusted 7.0 6.5 7.3 8.8 8.9 8.9 6.5 5.5 4.0 4.5 3.0 3.4 4.4 4.5 3.8 4.9 4.4 4.6 4.5 4.1 4.5 3.9 3.8 12.6 11.8 6.8 7.9 6.4 4.1 3.7 4.0 6.4 6.2 6.3 5.4 5.8 6.2 6.2 7.3 6.9 6.7 6.3 0.8 1.1 1.2 1.1 1.5 1.3 1.0 .9 1.2 1.1 1.4 1.2 1.3 1.3 1.0 .9 :::::::: 71.2 75.8 80.1 84.0 87.3 90.1 93.1 97.6 102.3 107.0 98.8 100.0 101.2 102.3 103.9 105.2 106.2 107.0 45.9 49.2 52.6 56.6 61.5 67.1 73.0 77.6 81.4 84.8 88.3 91.1 94.1 98.0 102.0 106.1 99.0 100.0 101.2 102.0 103.2 104.5 105.4 106.1 Nonmanufacturing Manufacturing Service-producing Goods-producing 45.1 46.9 48.2 50.4 54.3 = 51.4 55.1 58.8 57J 60.0 ""5L9 63.7 ""Sis 63.3 65.3 58.4 69.7 60.5 69.5 71.1 65.1 75.7 68.2 74.1 75.9 69.6 80.0 73.2 78.9 80.2 75.2 83.2 78.3 82.9 83.7 80.4 86.4 83.2 86.6 87.7 83.6 89.4 85.7 89.3 90.3 86.8 92.3 88.3 92.6 93.4 90.2 95.2 90.9 97.3 97.8 96.1 98.2 97.3 102.3 102.2 102.6 102.0 102.6 105.8 109.9 107.0 106.3 109.0 98.8 99.1 98.2 99.1 98.7 100.0 100.0 100.0 100.0 100.0 101.0 101.5 101.3 101.4 101.4 102.0 102.6 102.3 102.2 102.6 103.1 105.7 103.8 103.3 105.3 104.2 107.2 105.2 104.6 106.6 105.1 108.7 106.2 105.7 107.9 105.8 109.9 107.0 106.3 109.0 Index, June 1989=100; seasonally :::::: ::: ::: 607 66.7 73.3 77.8 81.6 85.4 88.2 91.0 93.8 97.9 102.1 107.0 98.9 100.0 101.1 102.1 103.9 105.2 106.2 107.0 98.9 99.1 98.4 100.0 100.0 99.8 101.2 101.0 101.6 102.3 102.0 103.0 103.8 103.1 105.3 105.1 104.2 107.0 106.2 105.1 108.8 107.2 105.8 110.4 Percent change from 60l 66.0 72.5 76.9 80.8 85.0 87.8 90.7 93.4 97.6 102.0 107.2 98.9 100.0 101.1 102.0 104.0 105.3 106.4 107.2 adjusted 46.3 49.7 53.6 58.1 ....„...„. 63.0 68.9 59.9 74.9 67.5 79.1 72.4 82.5 77.5 86.1 82.7 89.2 85.0 92.1 87.5 95.2 89.8 98.1 96.6 1019 102.3 106.2 109.5 99.0 98.8 100.0 100.0 100.9 101.6 101.9 102.3 103.3 105.5 104.5 106.9 105.4 108.4 106.2 109.5 :::::::::z:=: 98.7 99.0 98.2 98.8 99.1 97.9 99.9 100.0 99.9 99.9 100.0 99.8 101.3 101.2 101.4 101.2 100.9 101.7 102.5 102.3 103.0 102.3 101.9 103.0 103.8 103.4 105.0 103.8 103.3 104.9 105.1 104.6 106.5 105.2 104.5 106.7 106.2 105.5 108.0 106.5 105.4 108.5 107.2 106.4 109.5 107.5 106.2 110.2 12 months earlier, not seasonally adjusted z:z:zzi 0.9 .9 1.0 1.0 1.1 1.1 .9 .7 0.7 1.4 1.8 1.4 2.2 1.6 1.7 1.5 1 1.2 .9 1.2 1.1 1.1 1.2 .9 .9 1.5 2.0 1.5 1.6 1.9 1.4 1.4 1.4 0.9 1.2 1.3 1.1 1.5 1.3 1.2 .9 0.9 1.0 .9 1.0 1.4 1.2 .9 .8 1.0 1.6 1.9 1.3 1.8 1.7 1.7 1.6 1.1 1.1 1.3 1.3 1.3 1.2 1.0 1.0 1.3 1.2 1.1 1.0 1.2 i!o "'Mis 59.1 66.1 70.6 76.2 81.1 84.4 87.5 91.0 96.8 102.8 109.3 98.2 100.0 101.4 102.8 105.4 106.9 108.2 109.3 0.8 2.0 1.5 1.7 1.9 1.6 1.3 1.4 Employer costs for employee benefits. Note.—The employment cost index is a measure of the change in the cost of labor, free from the influence of employment shifts among occupations and industries. Data exclude farm and household workers. Through December 1981, percent changes are based on unrounded data; thereafter changes are based on indexes as published. Source: Department of Labor, Bureau of Labor Statistics. 337 TABLE B-46.—Productivity and related data, business sector, 1947-90 [1982=100; quarterly data seasonally adjusted] 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 1987 1988 1989 1990:' 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988:1 II Ill IV 1989:1 II Ill IV 1990:1 II Ill IV... Output per hour of all persons Output Business sector Nonfarm business sector Business sector 43.6 45.8 46.3 50.2 52.2 53.9 559 56.8 585 59.3 609 62.7 64.8 65.9 68.2 70.7 73.5 76.8 79.1 81.4 83.8 86.3 86.5 87.3 90.1 92.8 95.0 93.2 95.1 97.9 99.7 100.6 99.5 99.2 100.7 100.0 102.3 104.9 107.1 109.5 110.7 113.2 112.6 111.9 100.6 103.2 105.3 108.0 109.4 112.0 113.2 112.9 113.6 113.1 113.0 113.0 112.6 111.9 111.7 111.9 112.1 112.0 50.7 52.6 53.5 56.9 58.6 60.0 613 62.2 640 64.4 656 67.1 69.3 70.0 72.3 74.6 77.3 80.4 82.4 84.3 86.4 89.0 88.7 89.1 91.8 94.6 96.6 94.8 96.5 99.1 100.9 101.8 100.2 99.9 100.9 100.0 102.9 105.1 106.5 108.7 109.8 112.5 111.7 110.8 100.4 103.8 105.4 107.1 108.4 110.9 112.2 112.0 112.8 112.9 112.1 112.0 111.7 111.0 110.7 110.7 110.9 110.9 34.3 36.3 35.5 38.9 41.6 42.9 449 441 471 48.5 490 48.1 51.6 52.5 53.5 56.3 58.9 62.4 66.4 69.8 71.7 74.8 76.8 76.1 78.2 83.1 88.1 86.5 84.7 89.6 94.8 100.3 102.3 101.1 103.2 100.0 104.2 113.0 117.7 121.3 126.4 1330 135.8 136.1 99.5 107.6 114.5 119.3 122.2 129.4 131.2 132.6 133.8 134.5 135.6 135.9 136.1 135.5 136.0 136.4 136.5 135.7 1 Nonfarm business sector Hours of 2 2*1 persons Business sector 78.7 33.6 35.5 793 34.7 76.7 38.0 77.5 40.9 79.6 42.3 79.7 442 803 433 777 464 805 47.9 81.7 485 805 47.5 76.7 51.2 79.7 52.0 79.7 53.1 78.5 56.0 79.7 58.6 80.1 62.3 81.4 66.3 83.9 70.0 85.8 71.8 85.5 86.7 75.1 77.1 88.8 76.3 87.2 78.4 86.8 83.4 89.6 88.5 92.8 86.9 92.9 84.9 89.1 90.0 91.6 95.3 95.1 99.7 101.0 102.9 102.8 101.7 101.9 103.4 102.5 100.0 100.0 105.0 101.8 113.7 107.6 118.1 109.9 121.6 110.8 126.8 114.1 1340 1175 136.7 120.5 137.0 121.6 99.3 98.9 108.7 104.3 115.1 108.7 119.6 110.5 122.4 111.7 129.7 115.6 131.6 115.8 133.4 117.5 134.8 117.8 136.0 118.8 136.4 120.0 136.8 120.2 137.1 120.9 136.3 121.0 136.8 121.7 137.2 121.9 137.4 121.8 136.4 121.1 Nonfarm business sector 66.2 67.4 64.8 66.8 69.8 70.5 722 69.7 725 74.3 739 70.8 73.8 74.3 73.4 75.0 75.8 77.5 80.4 83.1 83.1 84.4 86.9 85.6 85.4 88.2 91.6 91.7 88.0 90.8 94.5 99.3 102.6 101.8 102.5 100.0 102.0 108.1 110.9 111.9 115.5 1191 122.3 123.6 98.9 104.7 109.2 111.7 112.9 117.0 117.3 119.1 119.5 120.5 121.7 122.2 122.7 122.8 123.7 123.9 123.9 123.0 Compensation per hour3 Business sector 10.4 11.3 11.5 12.4 13.6 14.5 154 159 163 17.4 186 19.5 20.3 21.2 22.0 23.0 23.9 25.2 26.1 28.0 29.6 32.0 34.3 36.9 39.3 41.8 45.4 49.9 54.8 59.7 64.5 70.1 77.0 85.1 93.0 100.0 103.8 108.0 112.8 118.7 123.1 1286 132.9 137.7 102.1 105.3 109.5 115.2 120.8 125.5 126.3 127.9 129.7 130.8 131.8 132.7 133.1 133.8 135.3 137.0 138.6 139.8 Nonfarm business sector Real compensation per hour* Unit labor costs Business sector Nonfarm business sector Business sector Nonfarm business 49.3 49.5 51.7 54.1 54.6 56.5 594 60.8 633 66.2 677 68.5 70.8 72.7 74.4 76.6 78.3 80.9 82.3 84.8 87.0 90.1 91.3 92.5 94.3 97.3 99.2 98.2 98.9 101.5 102.9 103.9 102.2 99.6 98.8 100.0 100.7 100.4 100.9 104.1 104.0 1043 102.7 100.8 100.6 100.4 100.4 101.5 105.1 104.4 104.1 104.3 104.4 104.2 103.7 102.6 102.3 101.9 100.9 101.2 100.8 100.1 24.0 24.7 24.9 24.7 26.0 26.8 276 281 279 29.4 305 31.0 31.3 32.2 32.3 32.6 32.5 32.8 33.1 34.4 35.3 37.1 39.7 42.3 43.6 45.0 47.8 53.5 57.6 61.0 64.7 69.7 77.4 85.8 92.4 100.0 101.4 102.9 105.4 108.4 111.2 1137 117.9 123.0 101.5 102.0 104.0 106.7 110.4 112.1 111.5 113.3 114.2 115.6 116.7 117.4 118.2 119.5 121.1 122.5 123.6 124.8 22.5 235 23.8 23.8 25.1 25.9 268 27.3 274 29.0 301 30.6 30.8 31.8 31.9 32.1 32.1 32.3 32.6 33.8 34.9 36.5 39.1 41.7 43.2 44.6 47.3 53.0 57.1 60.4 64.1 69.0 76.7 85.2 92.3 100.0 101.0 102.8 105.6 108.8 111.6 1137 118.1 123.2 101.7 101.3 104.0 107.1 111.0 112.6 111.9 113.5 114.2 115.2 116.9 117.5 118.3 119.7 121.3 122.7 123.9 125.0 45.2 11.4 12.4 45.4 12.7 46.7 49.5 13.5 14.7 50.5 15.5 52.6 164 558 170 57.2 176 589 61.9 18.6 197 639 20.5 64.9 21.4 67.3 22.3 69.1 23.0 71.0 24.0 73.6 24.8 75.4 26.0 78.3 80.1 26.9 83.4 28.5 85.5 30.1 88.7 32.5 34.7 90.3 37.2 91.8 93.5 39.6 42.2 96.4 98.6 45.7 50.2 97.6 98.3 55.1 59.9 101.3 64.6 102.7 70.2 103.7 76.9 102.3 99.7 85.1 93.1 98.8 100.0 100.0 104.0 100.6 108.1 100.4 112.5 101.2 118.2 104.5 122.4 104.5 1278 1049 131.9 103.4 136.5 101.7 102.1 100.6 105.2 100.5 109.6 100.4 114.6 102.0 120.3 105.5 124.8 105.0 125.5 104.7 127.1 104.9 128.8 105.1 130.0 104.9 131.0 104.3 131.6 103.5 132.1 103.1 132.9 102.6 134.2 101.7 135.8 102.1 137.4 101.7 138.7 100.9 Implicit price deflator6 Business sector 24.0 257 25.5 25.9 27.6 27.9 281 2&5 292 30.1 312 31.7 32.3 32.8 32.9 33.6 33.9 34.2 35.0 36.2 37.1 38.8 40.8 42.7 44.8 46.6 49.6 54.3 59.9 63.4 67.5 72.5 79.0 86.2 94.4 100.0 103.3 106.8 109.5 111.8 114.8 1182 122.8 127.5 101.4 104.8 107.9 110.5 112.8 115.7 116.2 117.5 118.9 120.3 121.2 122.5 123.3 124.3 125.8 127.2 128.2 128.8 Nonfarm business sector 22.8 244 24.7 25.2 26.6 27.1 276 28'0 289 29.8 309 31.3 32.1 32.5 32.7 33.3 337 34.1 34.8 35.8 36.9 38.6 40.5 42.5 44.6 46.3 48.4 53.4 59.2 629 67io 71.7 78.1 85.7 94.0 100.0 103.5 106.6 109.8 112.3 115.3 118.4 123.0 127.7 101.5 104.7 107.9 111.0 113.4 116.2 116.6 117.8 118.8 120.5 121.4 122.7 123.5 124.7 125.8 127.3 128.4 129.2 1 Output refers to gross domestic product originating in the sector in 1982 dollars. 8 Hours at work of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily on establishment data. 3 Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an estimate of wages, salaries, and supplemental payments for the self-employed. 4 Hourly compensation divided by the consumer price index for all urban consumers. 6 Current dollar gross domestic product divided by constant dollar gross domestic product. Source: Department of Labor, Bureau of Labor Statistics. 338 TABLE B-47.—Changes in productivity and related data, business sector, 1948-90 [Percent change from preceding period; quarterly data at seasonally adjusted annual rates] Year or quarter 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 1988 1989 1990 P. 1988:1 II III IV 1989:1 II Ill IV 1990:1 II Ill IV ' . . .. Output per hour of all persons Business sector 5.1 1.0 8.5 4.1 3.2 3.8 1.5 3.1 1.4 2.7 2.9 3.3 1.7 3.6 3.6 4.0 4.4 3.0 2.9 2.9 3.0 .3 .9 3.2 3.0 2.3 -1.9 2.1 2.9 1.9 .9 -1.1 -.2 1.5 -.7 2.3 2.5 2.0 2.3 1.1 2.2 -.6 4.6 -1.1 2.5 -1.6 -.5 .1 -1.6 -2.3 -.9 .6 .9 -.5 Nonfarm business sector Output1 Business sector Nonfarm business sector 5.9 3.8 1.6 -2.3 6.5 9.5 7.1 3.0 2.3 3.2 2.2 4.6 5.6 -2.3 9.7 7.7 3.2 4.6 -2.0 7.1 3.1 1.3 -2.0 7.7 1.7 20 5.5 4.7 6.3 6.4 5.6 2.5 4.7 2.7 -1.1 2.7 6.4 6.2 -1.8 -2.3 6.0 5.9 6.0 1.9 -1.2 1.7 -3.3 5.0 8.3 3.9 3.0 4.2 57 2.0 .2 5.9 5.6 4.1 3.6 1.2 1.3 .6 -2.1 1.4 1.2 .4 -2.7 1.4 3.0 .6 1.9 2.3 3.2 1.1 3.2 3.3 3.6 3.9 2.6 2.2 2.5 2.9 -.3 .5 3.0 3.0 2.2 -1.9 1.9 2.7 1.7 .9 -1.5 -.3 1.0 -.9 2.9 2.1 1.3 2.0 1.0 25 -.7 -.8 4.7 -.5 2.8 .2 -2.7 -.3 -1.0 -2.5 -1.3 .3 .6 .1 -1.8 6.9 2.8 1.1 -1.8 7.3 1.8 1.9 5.2 4.6 6.0 6.3 5.2 2.7 4.4 2.7 -.9 2.7 6.3 6.0 -1.8 -2.1 5.8 5.8 5.8 2.0 -1.1 2.1 -3.1 4.2 8.4 4.2 3.1 4.1 53 2.1 .3 5.7 4.6 3.5 2.0 3.5 .9 .6 -1.8 1.4 1.2 .5 -2.5 Hours of 1 all persons Business sector 0.8 -3.3 1.0 2.8 .0 .8 -3.3 3.7 1.5 -1.5 -4.6 3.8 .1 -1.6 1.6 .5 1.5 3.1 2.2 -.3 1.4 2.4 -1.8 -.4 3.2 3.6 .1 -4.1 2.8 3.8 4.8 3.1 -.9 .6 -2.5 1.8 5.7 2.1 .8 3.0 30 2.6 .9 1.0 5.8 1.0 3.6 4.0 .8 2.2 .4 2.3 .5 -.4 -2.1 Nonfarm business sector 1.8 -3.8 3.0 4.6 1.0 2.4 -3.4 4.0 2.5 -.6 -4.2 4.3 .6 -1.1 2.1 1.1 2.3 3.7 3.3 -.0 1.7 2.9 -1.5 -.3 3.3 3.9 .1 -4.1 3.2 4.1 5.0 3.4 -.8 .7 -2.4 2.0 6.0 2.5 .9 3.2 31 27 1.1 1.1 6.1 1.3 3.4 4.0 1.6 1.6 .5 2.8 .9 -.2 -2.7 Compensation per hour8 Real compensation per hour4 Business sector Business sector 8.5 1.7 7.4 9.9 6.3 6.8 3.2 2.5 6.7 6.6 4.6 4.4 4.3 3.9 4.7 3.8 5.3 3.9 7.1 5.7 8.2 7.3 7.5 6.4 6.4 8.7 9.9 9.9 9.0 8.0 8.6 9.8 10.6 9.3 7.5 3.8 4.1 4.4 5.2 3.7 45 3.3 3.6 2.5 5.3 5.6 3.4 3.3 2.6 1.1 2.2 4.5 5.4 4.6 3.4 1 Nonfarm business sector 0.4 8.5 2.9 3.0 6.1 6.1 8.7 1.8 4.3 5.6 6.0 5.8 2.4 3.2 2.9 3.6 6.1 5.1 3.2 5.8 1.7 4.0 4.1 3.7 4.4 2.6 2.9 3.3 4.1 3.5 2.4 3.5 3.9 4.6 2.2 3.4 4.1 6.0 2.5 5.8 3.8 7.9 1.7 6.8 1.7 7.2 1.9 6.4 3.1 6.5 2.3 8.3 9.9 -1.1 .7 9.8 3.1 8.6 1.4 7.9 1.0 8.7 9.6 -1.4 10.6 -2.5 9.4 -1.0 7.4 1.3 .6 4.0 3.9 -.2 4.1 .8 3.2 5.1 .1 3.6 4 44 3.2 -1.5 3.5 -1.7 2.4 -.9 .8 5.1 .6 5.3 3.8 -.9 3.3 -2.0 1.7 -3.2 1.6 -1.7 2.3 -1.8 3.9 -3.3 5.0 1.6 4.7 -1.9 3.8 -3.1 Nonfarm business sector Unit labor costs Business sector 0.4 3.3 4.3 .7 4.8 -1.0 .8 5.5 3.6 3.0 5.0 3.0 1.7 2.5 4.0 -.5 4.6 5.3 2.4 3.8 1.1 1.6 3.4 1.0 2.6 2.6 2.3 .3 3.1 1.0 2.2 -.2 3.3 .8 8 1.7 3.1 4.0 2.6 2.6 3.6 5.1 1.3 6.9 1.4 6.5 2.0 3.1 3.2 3.2 2.0 6.2 -1.0 12.0 .7 7.7 2.7 5.9 6.0 1.4 1.0 7.7 -1.6 11.1 10.9 -2.5 7.7 -.8 8.3 1.2 1.4 .7 -.4 1.5 .5 2.3 3.2 2.8 2.6 "'3 22 -1.5 3.8 4.3 -1.8 -1.0 -2.0 .7 6.5 .4 3.1 5.0 -.5 3.8 -2.0 -4.1 2.5 2.8 -1.2 4.6 -1.6 5.4 -3.8 4.7 1.2 3.7 -1.8 -2.7 3.9 Nonfarm business sector 4.6 1.3 -.3 5.5 3.3 3.5 1.8 .6 5.5 3.8 1.7 .9 3.3 .1 .8 -.1 .7 .8 3.7 3.2 4.8 7.1 6.7 3.4 3.3 6.0 12.1 7.8 5.7 6.1 7.7 11.2 11.0 8.3 8.4 1.0 1.8 2.8 3.0 2.5 19 3.9 4.3 -2.2 5.7 2.5 3.6 6.1 2.0 2.6 5.0 5.3 4.7 4.1 3.7 Implicit price deflator" Business sector 7.2 -.6 1.5 6.3 1.3 .7 1.2 2.6 3.2 3.5 1.6 2.0 1.4 .5 1.9 .9 1.0 2.3 3.3 2.5 4.6 5.1 4.7 4.9 4.0 6.4 9.6 10.3 5.9 6.4 7.3 9.0 9.0 9.6 5.9 3.3 3.3 2.5 2.1 2.7 30 3.9 3.8 1.7 4.8 4.7 4.9 3.1 4.3 2.5 3.5 4.6 4.6 3.2 2.0 Nonfarm sector 7.2 1.3 1.8 5.6 2.0 1.8 1.5 3.2 3.3 3.6 1.2 2.5 1.4 .6 2.0 .9 1.2 2.0 3.1 2.9 4.6 5.0 4.9 5.0 3.6 4.8 10.2 10.8 6.3 6.6 7.0 8.9 9.7 9.7 6.3 3.5 3.0 3.0 2.3 2.7 27 3.9 3.8 1.4 4.1 3.4 5.9 2.8 4.4 2.6 3.9 3.8 4.8 3.6 2.4 Output refers to gross domestic product originating in the sector in 1982 dollars. * Hours at work of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily on establishment data. 8 Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an estimate of wages, salaries, and supplemental payments for the self-employed. 4 Hourly compensation divided by the consumer price index for all urban consumers. 8 Current dollar gross domestic product divided by constant dollar gross domestic product. Note.— Percent changes are based on original data and therefore may differ slightly from percent changes based on indexes in Table B-46. Source: Department of Labor, Bureau of Labor Statistics. 339 PRODUCTION AND BUSINESS ACTIVITY TABLE B-48.—Industrial production indexes, major industry divisions, 1939-90 [1987=100; monthly data seasonally adjusted] Total industrial production Year or month 1989 proportion 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990" 1989: Jan .. Feb Mar... Apr May.. June : : : : : : : : : : : July.... Sept Nov Dec 1990: Jan Feb Mar Apr May June July Aug Sept " ::: ' r. : z zzzzzz zzz : r Oct Nov" Dec". Source: Board of Governors of the Federal Reserve System. 340 100.0 12.5 14.4 18.2 20.9 25.3 27.3 23.4 20.2 22.7 23.6 22.3 25.8 28.0 29.1 31.6 29.9 33.7 35.1 35.6 33.3 37.3 38.1 38.4 41.6 44.0 47.0 51.7 56.3 57.5 60.7 63.5 61.4 62.2 68.3 73.8 72.7 66.3 72.4 78.2 82.6 85.7 84.1 85.7 81.9 84.9 92.8 94.4 95.3 100.0 105.4 108.1 109.1 107.7 107.6 107.7 108.6 108.3 108.4 107.8 108.2 108.2 107.7 108.1 108.6 107.5 108.5 108.9 108.8 109.4 110.1 110.4 110.5 110.6 109.8 107.8 107.1 Manufacturing Total 85.1 11.6 13.6 17.4 20.3 25.3 27.3 22.9 19.0 21.2 22.0 20.8 24.2 26.1 27.2 29.6 27.7 31.3 32.5 32.9 30.6 34.5 35.2 35.3 38.4 40.7 43.5 48.2 52.6 53.6 56.6 59.1 56.4 57.3 63.3 68.9 67.9 61.1 67.4 73.3 77.8 80.9 78.8 80.3 76.6 80.9 89.3 91.6 94.3 100.0 105.8 108.9 109.8 108.9 108.3 108.7 109.4 109.2 109.3 108.6 109.1 109.1 108.4 108.9 108.8 108.1 109.6 109.8 109.5 110.3 110.8 111.1 111.1 111.2 110.5 108.5 107.5 Durable 48.5 9.4 12.5 16.6 21.1 28.7 31.7 24.0 16.7 19.9 20.8 18.9 23.0 25.9 27.5 31.1 27.4 31.3 32.4 32.6 28.5 32.8 33.3 32.7 36.3 38.7 41.4 47.1 52.3 52.9 55.5 57.7 53.3 53.1 59.3 66.2 64.8 56.7 62.6 68.7 73.9 78.3 75.7 77.4 72.7 76.8 88.4 91.8 93.9 100.0 107.6 110.9 111.6 111.1 110.5 110.9 111.6 111.4 111.8 110.6 111.3 111.5 109.4 110.1 110.4 108.6 110.7 111.9 111.1 112.6 113.4 113.4 113.5 113.8 112.4 109.6 107.9 Nondurable 36.6 14.3 15.1 18.2 18.9 20.3 21.1 21.1 21.7 22.6 23.4 23.0 25.6 26.4 26.9 28.0 28.2 31.3 32.9 33.5 33.7 37.1 38.0 39.1 41.5 43.8 46.6 49.8 52.9 54.6 58.1 61.1 61.1 63.6 69.3 72.7 72.3 67.7 74.6 80.1 83.5 84.6 83.1 84.5 82.5 87.0 90.8 91.5 94.9 100.0 103.6 106.4 107.7 106.2 105.6 105.9 106.5 106.4 106.2 106.1 106.2 106.0 107.2 107.3 106.7 107.5 108.3 107.2 107.5 107.4 107.6 108.1 108.1 108.0 108.2 107.1 106.9 Mining 7.4 38.2 42.4 45.0 46.4 47.5 50.9 49.9 49.0 55.5 58.3 51.7 57.7 63.4 62.8 64.5 63.2 70.5 74.2 74.3 68.1 71.3 72.7 73.1 75.2 78.2 81.4 84.4 88.9 90.6 94.1 97.8 100.4 97.8 99.9 100.8 100.3 98.0 98.9 101.5 104.6 106.6 110.0 114.3 109.3 104.8 111.9 109.0 101.0 100.0 101.8 100.5 102.4 100.8 98.9 98.3 101.7 101.1 100.4 100.0 100.7 101.6 100.7 101.2 100.1 101.7 101.0 101.1 102.9 102.2 102.2 104.0 102.4 103.9 102.4 102.1 102.8 Utilities 7.6 6.2 6.9 7.7 8.7 9.6 10.2 10.4 10.8 11.7 13.0 13.9 15.8 18.1 19.6 21.3 22.9 25.6 28.1 30.0 31.4 34.5 36.9 39.0 41.9 44.8 48.7 51.7 55.6 58.4 63.1 68.7 72.9 76.4 81.3 84.5 83.5 84.3 87.6 89.9 92.7 95.3 95.9 94.3 91.8 93.6 97.0 99.5 96.3 100.0 104.4 107.1 107.6 102.8 105.8 107.2 106.4 106.3 106.3 106.6 106.2 105.9 107.4 108.3 116.1 106.8 104.0 106.2 106.7 107.1 109.7 109.7 111.4 110.3 109.0 105.1 107.1 TABLE B-49.—Industrial production indexes, market groupings, 1947-90 [1987=100; monthly data seasonally adjusted] Year or month Total industrial production Total 1989 pnportion 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 1988 1989 1990" 1989: Jan Feb Mar Apr &:::::: :::::: July Aug sept"..:.:::::::::: Oct Nov Dec 1990: Jan Feb Mar t June July Aug Sept Oct Nov" Dec" 100.0 22.7 23.6 22.3 25.8 28.0 29.1 31.6 29.9 33.7 35.1 35.6 33.3 37.3 38.1 38.4 41.6 44.0 47.0 51.7 56.3 57.5 60.7 63.5 61.4 62.2 68.3 73.8 72.7 66.3 72.4 78.2 82.6 85.7 84.1 85.7 81.9 84.9 92.8 94.4 95.3 100.0 105.4 108.1 109.1 107.7 107.6 107.7 108.6 108.3 108.4 107.8 108.2 108.2 107.7 108.1 108.6 107.5 108.5 108.9 108.8 109.4 110.1 110.4 110.5 110.6 109.8 107.8 107.1 46.5 20.8 21.5 20.9 23.5 25.4 27.3 29.1 27.6 29.8 31.6 32.5 31.0 34.0 35.1 35.4 38.4 40.6 42.9 47.1 51.6 53.7 56.3 58.1 56.0 56.5 61.3 65.9 65.7 61.8 66.2 71.6 76.1 79.0 80.0 82.1 80.8 83.0 91.0 94.2 95.7 100.0 105.6 109.1 110.9 108.0 108.1 108.7 109.5 109.6 109.8 108.7 109.1 109.6 108.5 109.4 110.3 108.5 109.7 110.7 110.4 111.2 111.7 111.7 111.9 112.6 112.1 109.9 109.6 Materials Final products InterConsumer goods Equipment mediate Dura- Non- EnerAuto- Other NonDe- prodmotive dura- durable Total » Busi- fense ucts Total ble durable gy Total prod- ble ness and goods ucts goods space 25.7 25.4 26.2 26.1 29.7 29.4 30.1 31.9 31.7 35.4 36.7 37.6 37.2 40.9 42.4 43.3 46.2 48.8 51.5 55.5 58.4 59.8 63.4 65.8 65.0 68.8 74.3 77.6 75.2 72.3 79.4 85.1 88.4 87.3 85.3 85.8 84.5 88.8 92.8 93.7 96.8 100.0 104.0 106.7 107.3 106.2 106.3 106.9 107.0 106.8 106.3 105.2 105.6 106.3 107.3 107.4 108.3 106.0 107.0 107.5 107.2 107.4 107.8 107.5 107.8 108.7 108.4 106.1 106.1 2.4 21.7 22.6 22.5 28.3 25.0 22.5 28.4 26.5 35.2 28.9 30.3 24.1 30.2 34.6 31.6 38.3 41.9 43.9 54.1 53.9 47.4 56.4 56.7 47.7 60.8 65.6 72.4 62.6 59.0 73.2 84.0 86.3 78.5 59.5 59.2 57.5 71.9 86.6 92.7 95.2 100.0 105.9 106.9 102.3 112.5 111.3 110.4 110.2 109.2 106.7 101.1 103.2 104.9 102.9 102.4 104.5 85.2 99.3 109.3 102.4 107.0 112.2 106.7 104.6 111.8 106.9 93.7 87.4 3.1 22.8 23.8 22.0 30.4 26.2 26.2 29.6 27.3 32.2 33.9 33.2 31.3 36.0 36.2 37.3 40.5 43.7 47.7 54.1 59.6 60.4 64.7 69.0 66.9 70.8 81.0 85.7 79.3 69.8 78.2 87.4 91.2 89.8 85.1 86.3 78.1 86.2 94.6 90.6 93.9 100.0 104.1 108.7 109.5 107.5 107.7 108.0 110.0 109.3 109.8 109.2 107.9 109.8 109.8 108.4 108.6 110.6 111.6 112.0 111.2 111.1 112.0 109.5 109.6 109.3 106.9 104.4 104.3 20.1 27.0 27.7 27.9 30.3 31.3 32.6 33.5 33.9 36.5 38.8 40.1 41.3 44.1 45.5 47.0 49.2 51.4 54.0 56.3 59.0 62.0 64.5 66.7 67.8 69.7 74.2 76.5 76.5 74.9 80.4 84.4 87.8 87.7 89.1 89.6 89.7 91.9 93.4 94.4 97.6 100.0 103.7 106.4 107.6 105.3 105.6 106.3 106.2 106.2 105.8 105.1 105.6 106.0 107.4 107.8 108.7 107.8 107.2 106.6 107.1 106.9 106.6 107.3 107.9 108.2 108.8 107.8 108.6 20.8 15.0 15.8 14.1 15.3 21.2 25.5 27.6 24.2 24.7 27.1 28.2 25.2 27.7 28.5 28.1 31.3 33.1 35.0 39.6 46.1 49.0 50.4 51.8 48.1 45.0 49.3 55.0 56.8 52.0 53.8 58.8 64.2 71.0 74.6 78.2 77.0 76.8 89.2 94.8 94.5 100.0 107.6 112.3 115.5 110.3 110.4 110.9 112.6 113.1 114.3 113.2 113.6 113.8 110.1 112.0 112.9 111.8 113.3 114.9 114.7 116.2 116.8 117.2 117.2 117.8 117.0 114.8 114.2 15.3 4.8 14.7 7.5 15.3 8.8 13.4 9.2 14.3 10.8 17.5 26.5 19.8 37.2 20.6 44.6 18.1 39.3 19.6 35.9 22.7 35.1 23.6 36.7 19.9 36.8 22.4 38.8 23.0 39.9 22.3 40.6 24.3 46.9 25.5 50.6 28.5 49.0 32.6 54.3 37.8 63.7 38.6 72.7 40.3 72.9 42.9 69.4 41.3 58.7 39.3 52.8 44.8 51.3 52.4 50.1 54.7 49.4 48.8 48.5 50.6 49.2 56.7 49.2 63.1 49.5 71.5 51.5 73.5 57.4 76.1 58.5 72.9 65.7 71.9 71.8 85.4 78.9 91.1 89.4 93.2 96.0 100.0 100.0 111.8 98.0 119.1 97.4 123.0 97.4 116.6 96.9 117.1 96.6 117.9 96.1 119.6 97.1 120.2 97.6 121.4 98.3 119.9 98.7 120.4 98.9 120.7 98.9 116.0 96.6 118.7 96.7 119.9 96.6 118.0 97.5 120.1 97.6 122.2 97.5 121.6 97.3 123.5 97.6 124.4 97.6 125.0 97.8 125.4 97.7 126.4 97.3 125.3 97.3 122.5 96.4 121.4 96.9 14.6 22.4 23.6 22.4 26.1 27.4 27.2 29.1 29.0 32.9 34.4 34.4 33.6 37.1 37.4 38.1 40.4 42.7 45.5 48.4 51.4 53.5 56.6 59.6 58.7 60.5 67.6 71.9 69.4 62.6 69.0 74.9 79.1 81.2 77.0 77.0 75.1 80.3 86.2 88.3 92.0 100.0 104.4 106.8 107.6 107.0 106.5 107.2 107.2 106.6 106.7 106.7 106.4 106.3 106.9 107.3 107.9 108.0 108.4 108.2 108.0 108.3 108.3 108.4 107.9 107.4 106.8 105.8 105.1 38.9 25.1 26.2 23.9 28.6 31.6 32.1 35.6 32.9 38.9 39.9 39.9 35.9 41.4 42.0 42.0 45.8 48.7 52.6 58.7 63.9 63.3 67.5 71.5 69.0 70.0 77.2 84.5 82.8 72.6 81.2 87.3 91.8 95.4 91.3 92.8 85.1 88.3 96.6 96.6 95.9 100.0 105.6 107.4 107.7 107.6 107.3 106.9 108.0 107.3 107.6 107.3 107.8 107.4 107.1 107.0 106.9 106.2 107.1 107.1 107.3 107.7 108.8 109.6 109.7 109.4 108.2 106.0 104.9 20.0 21.5 22.1 19.8 24.9 28.3 28.9 33.8 29.2 35.7 35.8 35.8 30.1 35.9 36.3 35.5 39.4 42.1 45.9 52.6 57.9 55.9 59.2 62.3 56.5 56.8 64.2 73.3 71.2 59.3 68.4 75.3 81.4 85.3 79.3 82.1 73.4 79.2 92.1 92.9 93.7 100.0 109.0 111.6 111.7 112.6 112.1 111.1 112.3 111.5 112.1 111.5 112.0 112.0 110.8 110.8 110.4 109.4 110.8 110.9 110.9 112.5 113.8 114.0 114.9 114.1 112.4 109.7 107.2 8.8 10.2 25.2 28.9 30.2 30.1 29.9 34.2 34.8 36.2 39.2 41.6 45.2 49.6 53.6 54.5 59.9 64.9 65.2 68.0 74.9 80.4 8C.8 71.9 81.4 86.7 89.7 92.9 88.7 90.5 82.1 89.2 93.0 91.7 94.4 100.0 103.0 105.3 105.9 105-3 104.3 104.9 106.0 105.4 105.5 106.7 105.7 104.2 106.1 104.9 104.3 105.4 105.8 105.2 106.1 105.2 106.1 107.8 106.8 106.9 106.2 105.0 104.4 52.7 59.3 62.7 63.4 58.8 62.3 63.1 63.6 65.8 69.7 72.5 75.8 80.6 83.4 87.2 91.7 96.2 97.1 100.8 101.5 98.8 96.7 99.0 101.1 102.2 105.0 106.2 104.3 100.7 98.9 103.8 103.4 99.4 100.0 101.8 101.4 101.9 100.6 101.3 100.8 101.9 101.2 101.0 100.1 101.7 101.6 101.3 101.9 102.7 101.2 101.7 102.0 101.8 101.1 102.1 103.3 103.0 103.0 102.2 100.2 101.3 1 Two components—oil and gas well drilling and manufactured homes—are included in total equipment, but not in detail shown. Source: Board of Governors of the Federal Reserve System. 341 TABLE B-50.—Industrial production indexes, selected manufactures, 1947-90 [1987=100; monthly data seasonally adjusted] Durable manufactures Year or month Primary metals Total 3.4 1989 proportion 1947 ^ 70.2 1948 '.'..'. 73.0 1949 61.4 1950 77.3 1951 84.1 1952 ".'.'.'. 76.8 1953 87.0 70.4 1954 1955 91.5 1956 90.9 1957 87.1 69.0 1958 1959 .. 80.7 80.4 I960 1961 78.9 1962 84.6 1963 91.2 1964 102.9 1965 113.2 1966 120.2 1967 111.1 1968 115.1 123.8 1969 115.2 1970 .. . 1971 109.2 122.4 1972 1973 138.9 1974 134.5 1975 107.2 1976 119.9 1977 121.5 1978 130.7 1979 133.0 1980 110.8 1981 117.5 1982 83.2 1983 91.0 1984 102.4 1985 101.8 1986 93.8 1987 100.0 1988 110.3 1989 109.2 1990 " 108.2 1989: Jan 114.7 Feb 112.0 Mar 108.8 Apr 112.7 May 107.0 June 108.7 108.8 July Aug 111.7 Sept 109.9 Oct 108.6 Nov 104.8 Dec 102.6 1990: Jan 105.0 Feb 107.9 Mar... 105.4 Apr 106.4 May 106.2 June 109.5 July 110.3 Aug 114.6 Sept 111.6 Oct 108.3 Nov" 108.6 Dec" 102.5 Nondurable manufactures Transportation equipment Iron and steel NonFabriElectricated eleccal metal trical machinprod- machinery ucts ery Total 2.0 102.1 106.8 91.2 112.4 125.7 110.6 127.5 99.1 131.8 129.3 124.6 93.9 108.1 109.9 104.9 109.3 119.1 135.5 148.7 153.1 141.5 146.1 159.2 148.2 135.5 150.6 171.5 166.1 133.5 147.1 145.1 155.3 156.5 126.0 135.1 86.2 96.1 105.9 104.5 90.8 100.0 113.8 109.3 109.6 118.9 114.7 109.3 115.4 104.8 107.1 107.5 109.8 109.7 109.2 104.1 100.3 104.6 110.6 106.1 106.7 105.5 110.3 110.6 118.3 113.9 109.8 112.5 103.1 5.3 37.5 38.2 34.4 42.2 45.1 44.0 49.6 44.7 51.0 51.8 53.1 47.6 53.4 53.4 52.1 56.7 58.5 62.1 68.3 73.1 76.5 80.6 81.9 75.9 75.6 82.9 92.1 88.4 76.7 84.9 92.7 96.2 99.5 92.5 91.1 83.2 85.5 93.3 94.5 93.8 100.0 106.2 107.2 105.9 109.0 107.7 107.4 106.9 107.9 108.3 107.6 106.5 106.0 105.9 106.9 106.3 105.1 105.6 105.5 105.0 107.1 106.7 107.7 107.9 106.8 105.9 103.9 102.7 9.6 12.0 12.1 10.3 11.6 14.7 16.0 16.7 14.2 15.6 17.9 17.9 15.0 17.5 17.6 17.1 19.2 20.5 23.3 26.2 30.5 31.1 31.3 33.9 32.8 30.5 35.4 41.4 44.1 38.1 40.0 45.1 50.2 56.9 60.6 65.9 63.9 64.3 80.8 86.8 90.4 100.0 113.8 121.8 126.8 119.5 120.5 121.9 121.6 121.8 123.4 121.6 121.8 123.4 119.0 122.9 123.8 123.7 124.2 125.2 125.7 126.9 127.5 128.3 128.8 128.5 127.8 125.7 123.9 9.7 19.6 21.4 21.5 25.7 28.7 33.3 41.8 36.4 41.9 40.6 43.5 34.3 38.9 40.3 37.8 43.7 48.0 49.2 58.5 62.7 61.3 66.6 66.1 55.5 60.1 64.1 73.0 66.4 59.7 68.0 73.7 79.5 81.0 72.3 68.7 64.8 72.7 83.1 91.8 96.9 100.0 105.0 107.2 105.4 108.1 108.3 108.7 109.4 109.6 109.0 106.6 107.8 108.0 102.1 102.8 104.4 94.7 103.5 107.9 105.1 109.0 111.0 109.3 107.9 111.1 109.1 99.9 95.7 8.7 8.5 8.8 8.3 11.3 11.4 13.0 14.9 13.3 15.3 16.5 16.4 15.0 18.2 19.8 21.0 24.1 24.8 26.2 31.3 37.5 37.7 39.8 42.3 40.5 40.7 46.5 53.0 52.4 45.1 50.7 58.4 64.0 71.3 73.3 75.4 75.9 80.3 94.1 93.1 94.3 100.0 106.5 109.5 111.6 108.3 108.4 109.2 110.1 108.8 109.1 108.6 110.6 110.8 110.2 110.1 110.1 110.1 111.0 112.3 111.3 112.4 112.8 112.2 112.5 112.5 110.8 110.6 110.9 Source: Board of Governors of the Federal Reserve System. 342 Motor vehicles and parts 4.5 27.3 29.6 30.4 39.0 35.8 30.7 38.7 33.3 44.6 36.2 38.0 28.0 36.4 41.1 36.0 43.9 48.6 49.9 63.7 62.6 55.1 66.0 66.3 53.3 66.9 73.0 85.0 73.4 62.2 81.9 94.7 99.2 91.0 67.0 64.4 58.8 74.5 90.6 99.0 98.5 100.0 105.5 104.9 96.8 111.4 110.6 108.9 108.6 107.8 105.0 99.6 102.7 103.2 99.7 99.0 98.7 76.8 94.1 103.5 95.8 104.0 108.0 102.7 101.0 107.5 103.7 85.9 77.6 Lumber Apparel Textile Printing Chemicals and mill and prod- prod- publish- and Foods products products ucts ing ucts 1.9 38.8 40.4 35.7 43.4 43.2 42.7 45.1 44.8 50.1 49.5 45.4 46.1 52.3 49.3 51.6 54.4 56.9 61.1 63.5 65.9 65.3 67.2 67.1 66.7 68.5 78.4 78.7 71.4 66.5 75.6 82.3 83.6 82.4 76.9 74.7 67.3 79.9 86.0 88.0 95.1 100.0 104.6 103.0 101.7 105.6 99.9 100.8 102.7 102.3 103.5 102.8 102.4 102.6 103.2 104.8 106.4 106.0 104.3 105.0 103.3 101.7 102.0 103.6 100.5 100.3 97.5 96.0 96.0 2.3 43.1 45.0 44.5 47.9 47.0 49.5 50.1 49.5 54.7 56.0 55.8 54.3 59.7 60.9 61.3 63.8 66.4 68.7 72.6 74.5 74.1 76.0 78.4 75.3 76.2 80.9 81.5 77.9 71.1 83.9 91.6 93.9 89.0 89.2 91.0 90.1 93.8 95.7 92.6 96.3 100.0 102.2 104.3 98.9 103.6 104.2 104.4 105.1 104.9 105.2 104.4 104.7 104.5 103.9 103.7 102.6 102.4 102.1 99.8 98.7 99.2 99.3 99.2 98.8 98.4 97.2 95.9 95.8 1.7 35.2 37.7 34.8 39.6 39.2 38.9 39.9 37.3 42.5 43.7 41.6 41.1 46.4 45.6 46.9 50.1 51.9 56.0 61.0 64.7 64.8 72.3 76.0 74.4 78.5 86.0 89.6 81.5 77.7 86.3 91.6 92.0 95.0 92.1 89.4 83.0 93.2 93.7 89.7 93.9 100.0 99.8 101.9 100.8 102.2 100.8 101.7 104.1 103.2 102.4 104.2 101.5 101.5 101.9 99.3 99.8 100.6 103.0 99.8 100.9 102.7 103.6 102.9 100.4 100.7 100.1 97.3 96.4 6.4 22.1 23.2 23.8 24.9 25.4 25.3 26.5 27.6 30.3 32.3 33.4 32.6 34.8 36.2 36.4 37.7 39.7 42.1 44.8 48.3 50.9 51.7 54.2 52.7 53.2 56.7 58.3 57.4 53.7 58.7 64.3 68.1 69.9 70.3 72.1 75.2 79.0 84.5 87.6 90.7 100.0 103.6 108.5 111.9 107.6 108.2 108.9 108.6 108.4 108.6 106.6 107.8 109.4 109.3 109.6 109.6 110.7 112.1 111.4 112.0 112.8 112.0 111.4 110.9 111.6 112.6 112.5 112.5 8.6 8.7 9.4 9.3 11.6 13.1 13.7 14.8 15.0 17.6 18.9 19.9 20.6 24.0 24.9 26.1 29.0 31.7 34.8 38.7 42.2 44.2 49.6 53.7 55.9 59.5 66.9 73.1 75.8 69.1 77.3 83.3 88.0 91.3 87.8 89.2 81.8 87.5 91.4 91.4 94.6 100.0 105.4 108.5 110.1 108.0 107.7 107.5 107.5 108.4 109.1 109.7 109.6 107.5 109.4 109.8 107.6 109.9 110.5 109.5 110.3 109.2 110.3 110.4 111.1 110.9 110.6 109.2 108.8 8.6 33.1 32.8 33.1 34.3 35.0 35.7 36.4 37.2 39.3 41.5 42.2 43.2 45.4 46.6 47.9 49.5 51.2 53.6 54.8 56.9 59.4 61.0 63.0 64.0 66.0 69.5 70.9 71.9 71.4 75.5 79.0 81.8 82.6 84.6 86.5 87.7 90.1 92.1 94.9 97.4 100.0 102.8 105.5 107.6 105.1 104.0 104.5 106.2 105.5 104.2 104.0 104.8 105.4 106.8 107.4 108.0 106.8 107.4 107.1 107.0 106.8 106.1 107.1 107.7 107.6 108.5 109.2 109.9 TABLE B-51.—Capacity utilization rates, 1948-90 [Percent; monthly data seasonally adjusted] Manufacturing Year or month Total industry Total Durable goods 93.4 94.1 95.8 95.4 93.9 94.6 92.9 86.8 84.0 84.8 84.6 84.8 85.9 85.5 82.8 79.5 80.3 82.5 83.5 80.2 82.5 84.2 85.4 85.1 839 833 83.4 83.8 834 836 867 859 86.0 86.2 859 855 89.0 876 87.3 87.8 87.0 870 83.4 831 83.4 83.6 83.4 83.2 85.5 84.0 83.6 86.6 86.3 85.8 82.2 84.6 85.6 84.9 84.8 84.8 836 838 836 829 830 828 825 828 828 81 1 814 814 85.2 851 847 854 852 845 87.2 869 861 866 861 852 82.2 82.4 82.5 814 81.7 81.8 85.6 86.4 87.2 86.5 87.1 86.3 85.0 84.7 84.3 85.5 86.2 92.3 827 83.2 834 83.1 834 83.7 820 830 829 825 828 830 799 813 819 812 821 82.4 849 85.3 842 84.2 839 83.8 857 86.1 85.2 85.0 84.9 85.5 80.5 81.7 82.0 81.5 82.0 81.9 87.8 87.3 87.5 89.2 88.7 88.8 84.8 82.5 84.2 84.5 84.7 86.8 83.8 836 835 82.7 810 804 83.0 828 827 819 802 793 82.2 821 820 80.8 787 773 84.0 83.7 835 83.4 823 820 86.0 85.9 849 83.9 82.3 809 81.7 81.4 817 81.1 79.3 786 90.5 89.2 90.6 89.4 89.2 89.9 86.6 87.9 87.0 85.8 82.7 84.2 1989: Jan Feb Mar Apr May June. July Aug Sept Oct Nov Dec 848 846 84.5 85.0 846 846 851 844 84.5 848 845 844 839 840 839 833 835 837 1990- Jan... Feb Mar Apr May . June octl:::::::::::::::::::::";:: Nov . p Dec" Source: Board of Governors of the Federal Reserve System. Utilities 81.2 83.5 86.6 88.9 87.4 90.4 92.5 92.5 89.9 90.0 90.9 91.3 91.9 94.0 94.6 86.5 79.9 84.4 82.9 78.2 80.0 84.6 85.9 89.0 87.1 868 86.3 76.7 743 809 87.5 827 702 754 803 835 849 786 766 690 705 783 778 761 786 825 828 810 July Aug Sept Mining 86.3 866 86.6 82.9 828 866 87.5 840 764 818 85.2 862 85.1 814 810 780 81 1 831 819 830 854 860 855 838 864 868 869 808 792 843 88.4 842 746 793 833 855 862 821 809 750 758 811 803 792 814 840 842 829 1990P Advanced processing 80.0 73.2 79.8 83.4 859 89.3 80.0 84.2 84.4 83.1 74.9 81.1 80.5 77.2 81.6 83.4 84.6 88.8 91.1 88.0 87.4 86.5 79.1 77.4 82.5 86.5 82.8 73.5 778 81.9 84.3 84.8 813 79.1 746 74.9 803 79.4 782 79.9 82.3 82.7 811 . 1975 1976 1977 1978 .. 1979 1980 1981 1982 1983 1984 .. 1985 1986 .. 1987 1988 1989 Primary processing 87.3 76.2 88.5 90.2 849 89.4 80.6 92.0 89.4 84.7 75.4 83.0 798 77.9 815 83.8 87.8 91.0 914 85.4 863 86.9 80.4 793 86.4 91.5 86.0 72.9 801 84.0 863 86.4 780 780 690 74.8 804 798 808 84.9 878 87.0 847 82.5 742 82.8 858 854 893 80.1 87.0 861 83.6 750 81.6 801 773 814 835 85.6 89.5 911 872 872 868 79.7 782 837 88.1 838 732 785 828 851 854 802 788 728 749 804 795 790 814 839 839 822 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 Non- durable goods 343 TABLE B-52.—New construction activity, 1929-90 [Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates] Private construction Public construction Tntal Year or month new construction Residential1 buildings Total Total8 Nonresidential buildings and other construction * New housing units Total Commercial * Indus- Other4 trial Total Federal State and local8 3.0 .3 2.3 4.7 .8 1.7 1.1 .1 .3 0.9 .2 2.6 .5 1.2 2.5 1.6 3.8 0.2 '.B 2.3 1.1 3.1 3.0 3.5 1.7 .9 2.6 3.0 1.4 .7 .6 2.1 2.7 1.7 1.1 1.4 .3 .4 .2 .0 .4 .8 .3 .2 1.3 1.5 1.2 .9 1.1 3.6 5.8 10.7 6.3 3.1 1.2 3.8 9.3 5.6 2.5 2.4 2.0 1.3 .7 .6 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 20.0 26.1 26.7 16.7 21.4 20.5 9.9 13.1 12.4 7.8 10.5 10.0 6.9 8.2 8.0 1.0 1.4 1.2 1.7 1.4 1.0 4.2 5.5 5.9 3.3 4.7 6.3 .8 1.2 1.5 2.5 3.5 4.8 1950 1951 1952 1953 1954 33.6 35.4 36.8 39.1 41.4 26.7 26.2 26.0 27.9 29.7 18.1 15.9 15.8 16.6 18.2 15.6 13.2 12.9 13.4 14.9 8.6 10.3 10.2 11.3 11.5 1.4 1.5 1.1 1.8 2.2 1.1 2.1 2.3 2.2 2.0 6.1 6.7 6.8 7.3 7.2 6.9 9.3 10.8 11.2 11.7 1.6 3.0 4.2 4.1 3.4 5.2 6.3 6.6 7.1 8.3 1955 1956 1957 1958 1959 46.5 47.6 49.1 50.0 55.4 34.8 34.9 35.1 34.6 39.3 21.9 20.2 19.0 19.8 24.3 18.2 16.1 14.7 15.4 19.2 12.9 14.7 16.1 14.8 15.1 3.2 3.6 3.6 3.6 3.9 2.4 3.1 3.6 2.4 2.1 7.3 8.0 9.0 8.8 9.0 11.7 12.7 14.1 15.5 16.1 2.8 2.7 3.0 3.4 3.7 8.9 10.0 11.1 12.1 12.3 I960 1961 .... 1962 1963 54.7 56.4 60.2 64.8 38.9 39.3 42.3 45.5 23.0 23.1 25.2 27.9 17.3 17.1 19.4 21.7 15.9 16.2 17.2 17.6 4.2 4.7 5.1 5.0 2.9 2.8 2.8 2.9 8.9 8.7 9.2 9.7 15.9 17.1 17.9 19.4 3.6 3.9 3.9 4.0 12.2 13.3 14.0 15.4 1964 72.1 51.9 30.5 24.1 21.4 6.8 3.6 11.0 20.2 3.7 16.5 1965 1966 1967 .... 1968 1969 78.0 81.2 83.0 92.4 99.8 56.1 57.4 57.6 65.0 72.0 30.2 28.6 28.7 34.2 37.2 23.8 21.8 21.5 26.7 29.2 25.8 28.8 28.8 30.8 34.8 8.1 8.1 8.0 9.0 10.7 5.1 6.6 6.0 6.0 6.8 12.6 14.1 14.9 15.9 17.3 21.9 23.8 25.4 27.4 27.8 3.9 3.8 3.3 3.2 3.2 18.0 20.0 22.1 24.2 24.6 1970 ... . 1971 1972 1973 1974 100.7 117.3 133.2 146.6 147.0 72.8 87.6 103.2 114.3 108.9 35.9 48.5 60.7 65.1 56.0 27.1 38.7 50.1 54.6 43.4 36.9 39.1 42.5 49.2 52.9 11.1 13.0 15.4 17.7 17.6 6.5 5.4 4.7 6.2 7.9 19.3 20.7 22.4 25.3 27.5 27.9 29.7 30.0 32.3 38.1 3.1 3.8 4.2 4.7 5.1 24.8 25.9 25.8 27.6 33.0 1975 .. 1976 1977 1978 1979 145.5 165.6 191.2 227.9 256.9 102.2 121.6 148.1 177.8 200.3 51.6 68.3 92.0 109.8 116.4 36.3 50.8 72.2 85.6 89.3 50.6 53.4 56.1 67.9 83.8 13.9 13.7 15.7 19.7 27.1 8.0 7.2 7.7 11.0 15.0 28.7 32.5 32.7 37.2 41.8 43.3 44.0 43.1 50.1 56.6 6.1 6.8 7.1 8.1 8.6 37.2 37.2 36.0 42.0 48.1 1980 1981 1982 1983 1984 256.5 267.7 255.7 290.9 340.7 192.8 203.0 192.6 227.5 270.5 100.4 99.2 84.7 125.5 153.8 69.6 69.4 57.0 94.6 113.8 92.4 103.7 108.0 102.0 116.6 32.9 38.0 41.4 41.0 54.9 13.8 17.0 17.3 12.9 13.7 45.7 48.7 49.2 48.1 48.0 63.6 64.7 63.1 63.5 70.2 9.6 10.4 10.0 10.6 11.2 54.0 54.3 53.1 52.9 59.0 1985 1986 1987 1988 1989 368.7 398.2 410.2 422.1 432.1 290.9 313.6 319.6 327.1 333.5 158.5 187.1 194.7 198.1 196.6 114.7 133.2 139.9 138.9 139.2 132.4 126.5 125.0 129.0 137.0 66.9 64.2 62.8 64.9 67.0 15.8 13.7 13.7 14.9 18.5 49.7 48.5 48.5 49.2 51.5 77.8 84.6 90.6 95.0 98.6 12.0 12.4 14.1 12.3 12.3 65.8 72.2 76.5 82.7 86.3 1990". 434.9 325.1 187.4 129.8 137.7 63.1 20.6 54.0 109.8 14.0 95.9 1929 1933 1939 . 10.8 2.9 8.2 8.3 1.2 4.4 1940 1941 1942 1943 1944 8.7 12.0 14.1 8.3 5.3 5.1 6.2 3.4 2.0 2.2 1945 1946 5.8 14.3 New series 1947 1948 1949 3.6 2.7 SBC next page fof continuation of table. 344 TABLE &-52.—New construction activity, 1929-90—Continued [Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates] Private construction Total Year or month new construction Residential buildings1 Total New Total2 1989: Jan Feb Mar Apr Hay..:.":.. .:: ":: : :": June July Aug ""::: Sept Oct.. :::::.. ::::::.. : Nov Dec 1990: Jan Feb Mar Apr Hay..: .: : .: ".:. June Aug::::::::::::: : : :.: : : sept . Oct July Nov" Dec" 438.7 432.6 432.7 431.5 431.6 434.7 340.9 335.6 339.8 335.8 333.8 333.8 429.0 433.9 433.4 429.3 433.4 432.0 333.3 335.0 446.0 455.6 457.3 444.7 443.8 338.1 343.1 441.1 347.4 338.8 334.0 329.6 437.0 436.3 423.9 423.3 331.3 323.5 317.5 311.4 417.1 415.1 332.1 332.1 329.8 325.0 303.2 300.0 housing units 203.2 144.4 144.9 143.2 143.1 140.7 139.6 139.6 138.2 135.8 134.8 135.2 135.3 140.0 144.6 145.3 140.0 136.6 130.5 129.2 127.0 123.3 121.4 117.3 114.2 201.0 202.4 202.3 199.4 197.1 196.8 195.6 193.0 192.1 190.9 189.6 200.1 203.0 206.9 200.2 196.1 189.5 187.1 184.4 179.7 176.8 171.5 167.5 Public construction Nonresidential buildings and other construction l Total Commer- 8 cial Indus- Other* trial 137.7 134.5 137.3 133.5 134.4 136.8 136.5 139.4 139.1 140.0 139.0 135.4 68.4 66.9 69.0 64.6 65.3 67.0 66.7 67.9 67.3 69.5 67.7 64.5 137.9 140.1 140.5 138.5 137.9 140.1 65.3 67.1 66.1 64.5 63.7 65.4 17.6 16.4 17.1 18.4 17.9 18.8 18.5 19.4 20.0 19.2 19.1 18.9 19.7 21.1 21.1 21.0 20.8 20.4 144.2 139.1 137.8 134.6 131.8 132.4 65.8 63.9 62.2 60.0 57.2 57.8 23.6 20.2 19.9 19.6 19.5 20.9 51.7 51.2 51.3 50.5 51.2 51.0 51.3 52.1 51.9 51.4 52.2 52.0 52.9 51.9 53.3 53.0 53.4 54.3 54.7 55.0 55.8 55.0 55.0 53.7 Total 97.7 97.0 93.0 95.7 100.9 97.8 95.7 99.0 101.3 97.1 103.5 107.0 107.9 112.5 109.9 106.0 109.8 111.5 105.7 112.8 106.4 111.9 113.9 115.2 Federal State and locals 9.9 11.1 12.5 10.7 14.7 13.7 11.7 13.0 14.9 10.3 12.2 12.9 87.8 85.9 80.4 85.0 86.2 84.1 84.0 86.0 86.5 86.9 91.4 94.1 13.6 14.0 15.6 16.2 15.7 16.7 94.3 98.4 94.3 89.8 94.1 94.8 92.2 99.3 94.1 100.0 101.2 102.4 13.5 13.5 12.3 12.0 12.7 12.8 1 Beginning 1960, farm residential buildings included in residential buildings; prior to I960, included in nonresidential buildings and other construction. 2 Includes residential improvements, not shown separately. Prior to 1964, also includes nonhousekeeping units (hotels, motels, etc.). 'Office buildings, warehouses, stores, restaurants, garages, etc., and, beginning 1964, hotels and motels; prior to 1964 hotels and motels are included in total resioWial. . • • . . . « * • . «Religious, educational, hospital and institutional, miscellaneous nonresidential, farm (see also footnote 1), public utilities, telecommunications, and all other private. »Includes Federal grants-in-aid for State and local projects. Source: Department of Commerce, Bureau of the Census. 345 TABLE B-53.—New bousing units started and authorized, 1959-90 [Thousands of units] New private housing units authorized 2 New housing units started Private and public1 Year or month Private (farm and nonfarm) 1 Total (farm and Nonfarm nonfarm) Type of structure Total lunit 2to4 units Type of structure Total 5 units or more lunit 2 to 4 units 5 units or more 1959 .. . 1,55 3.7 1.53 1.3 1,517.0 1,234.0 28 3.0 1,208.3 938.3 77.1 192.9 I960 1961 1962 1963 1964 1,296.1 1,36 5.0 1,492.5 1,63 4.9 1,56 1.0 1,274.0 1.336.8 1.46 8.7 1.614.8 1.53 4.0 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 25 7.4 33 3.7 47 1.5 59 ).8 108.4 450.0 998.0 1,064.2 1,186.6 1334.7 1,285.8 746.1 722.8 716.2 750.2 720.1 64.6 67.6 87.1 118.9 100.8 187.4 273.8 383.3 465.6 464.9 1965 1966 1967 1968 1969 1,50 9.7 1,19 5.8 1,32 1.9 1,545.4 1,499.5 1.487.5 1,17 2.8 1,298.8 1,52 1.4 1,4823 1,472.8 1.164.9 1,291.6 1.507.6 1.466.8 963.7 778.6 843.9 899.4 810.6 86.6 61.1 71.6 80.9 85.0 422.5 325.1 376.1 527.3 571.2 1,239.8 971.9 1,141.0 1353.4 1323.7 709.9 563.2 650.6 694.7 625.9 84.8 61.0 73.0 84.3 85.2 445.1 347.7 417.5 574.4 612.7 1970 1971 1972 1973 1974 1,469.0 2,<M 4.5 2,37 8.5 2,057.5 1,352.5 1.433.6 2,052.2 2.356.6 2,045.3 1337.7 812.9 1,151.0 1,309.2 1,132.0 888.1 84.8 120.3 141.3 118.3 68.1 535.9 780.9 906.2 795.0 381.6 1,351.5 1,924.6 2,218.9 1,819.5 1,074.4 646.8 906.1 1,033.1 882.1 643.8 88.1 616.7 132.9 885.7 148.6 1,037.2 117.0 820.5 64.3 366.2 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984. . . 1985 1986 1987 1988 1989 1,17 1.4 1,547.6 2,00 1.7 2,036.1 1J60.0 1,31 2.6 1,1C 0.3 1,072.1 1.71 2.5 1,755.8 1,74 5.0 1,80 7.1 2.7 1.160.4 1,537.5 1.987.1 2,020.3 1,745.1 1.292.2 1,084.2 1.0622 1.703.0 1.74S.5 1,741.8 1.805.4 1.620.5 1.488.1 1376.1 892.2 1,162.4 1,450.9 1,433.3 1,194.1 852.2 705.4 662.6 1,067.6 1,084.2 1,072.4 1.179.4 1,146.4 1,081.3 1,003.3 64.0 85.9 121.7 125.0 122.0 109.5 91.1 80.0 113.5 121.4 93.4 84.0 65.3 58.8 55.2 204.3 289.2 414.4 462.0 429.0 330.5 287.7 319.6 522.0 544.0 576.1 542.0 408.7 348.0 317.6 939.2 1,296.2 1,690.0 1,800.5 1,551.8 1,190.6 985.5 1,000.5 1,605.2 1,681.8 1,733.3 1,769.4 1,534.8 1,455.6 1,338.4 675.5 893.6 1,126.1 1,182.6 981.5 710.4 564.3 546.4 901.5 922.4 956.6 1,077.6 1,024.4 993.8 931.7 63.9 93.1 121.3 130.6 125.4 114.5 101.8 88.3 133.6 142.6 120.1 108.4 89.3 75.7 67.0 199.8 309.5 442.7 487.3 444.8 365.7 319.4 365.8 570.1 616.8 656.6 583.5 421.1 386.1 339.8 1.192.8 894.5 37.0 261.3 1,104.4 798.9 53.4 252.2 1990 ' '1 ! { ) { ) Seasonally adjusted annual rates 1989: Jan Feb Mar Apr May \ June:: : : : : : : : : : : : : July AuJ sept: : : : : : : : : : : : : Oc? Nov . Dec 1990: Jan Feb Mar Apr May June July Aug . Sept Oct .. Nov Dec".. 1 1,659 1.454 1.405 1341 1308 1,414 1,188 1,026 979 1,028 977 971 66 60 51 62 43 55 405 368 375 251 288 388 1,455 1,388 1,256 1,355 1352 1,323 1,026 966 884 937 900 877 69 84 66 68 70 63 360 338 306 350 382 383 1,424 1325 l2b 1,423 1347 1.273 1,568 M88 1307 1,216 1,206 1,189 1.029 987 969 1,023 1,010 931 1.099 1,154 996 898 897 889 58 54 56 60 47 53 53 42 35 53 36 42 337 284 238 340 290 289 416 292 276 265 273 258 1,281 1,334 1,310 1,362 1364 1,416 1,739 1,297 1,232 1,108 1,065 1,108 910 933 946 959 984 984 985 974 912 813 802 796 68 70 63 61 62 65 91 67 57 57 51 48 303 331 301 342 318 367 663 256 263 238 212 264 1,153 1,131 1.106 1,026 1,127 987 875 836 859 839 768 755 29 30 34 22 44 19 249 265 213 165 315 213 1,082 1,050 992 920 906 844 780 762 737 708 671 645 58 56 49 43 42 43 244 232 206 169 193 156 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 tinder Section 803 of the National Housing Act, are included in publicly owned starts and excluded from total private starts. 2 1984; in 16,000 places for 1978-83; in Authorized by issuance of local building permit in 17.000 permit-issuing places bee and in 10,000 places prior to 1963. 14,000 places for 1972-77; in 13.000 places for 1967-71; in 12,000 places for l\ •Not available separately beginning January 1970. 4 Series discontinued December 1988. Source: Department of Commerce, Bureau of the Census. 346 TABLE B-54.—Business expenditures for new plant and equipment, 1947-91 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Industries surveyed quarterly Nonmanufacturing Manufacturing Year or quarter 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 1988 . .. . 1989 1990* 1991 * 1989: 1 II III IV 1990: | II HI IV* 1991: 14 II* All industries Total 20.11 22.78 20.28 21.56 26.81 28.16 29.96 28.86 30.94 37.90 40.54 33.84 35.88 39.44 38.34 40.86 43.67 51.26 59.52 70.40 72.75 76.42 85.74 91.91 92.91 103.40 120.03 139.67 142.42 158.44 184.82 216.81 255.26 286.40 324.73 326.19 321.16 373.83 410.12 399.36 410.52 455.49 507.40 533.91 546.67 487.43 502.05 514.95 519.58 532.45 535.49 534.86 532.84 557.92 561.85 8.73 9.25 7.32 7.73 11.07 12.12 12.43 12.00 12.50 16.33 17.50 12.98 13.76 16.36 15.53 16.03 17.27 21.23 25.41 31.37 32.25 32.34 36.27 36.99 33.60 35.42 42.35 52.48 53.66 58.53 67.48 78.13 95.13 112.60 128.68 123.97 117.35 139.61 152.88 137.95 141.06 163.45 183.80 192.29 193.58 172.73 180.91 185.99 191.88 191.36 195.16 194.48 188.16 191.08 198.76 Total nonComfarm Dura- NonMin- Trans- Public mercial busible durable Total » ing porta- utili- and tion ties other ness2 goods goods 3.39 3.54 2.67 3.22 5.12 5.75 5.71 5.49 5.87 8.19 8.59 6.21 6.72 8.28 7.43 7.81 8.64 10.98 13.49 17.23 17.83 17.93 19.97 19.80 16.78 18.22 22.63 26.77 25.37 27.50 32.77 39.02 47.72 54.82 58.93 54.58 51.61 64.57 70.87 65.68 68.03 77.04 82.56 83.70 83.01 80.20 82.44 83.60 83.41 86.35 84.34 82.67 81.42 82.79 85.09 5.34 5.71 4.64 4.51 5.95 6.37 6.72 6.51 6.62 8.15 8.91 6.77 7.04 8.08 8.10 8.22 8.63 10.25 11.92 14.15 14.42 14.40 16.31 17.19 16.82 17.20 19.72 25.71 28.28 31.03 34.71 39.10 47.41 57.77 69.75 69.39 65.74 75.04 82.01 72.28 73.03 86.41 101.24 108.60 110.57 92.53 98.47 102.40 108.47 105.02 110.82 111.81 106.74 108.28 113.67 11.38 13.53 12.96 13.83 15.74 16.04 17.53 16.85 18.44 21.57 23.04 20.86 22.12 23.08 22.80 24.83 26.40 30.04 34.12 39.03 40.50 44.08 49.47 54.92 59.31 67.98 77.67 87.19 88.76 99.91 117.34 138.69 160.13 173.80 196.06 202.22 203.82 234.22 257.24 261.40 294 6.6 292.04 323.60 341.62 353.09 314.70 321.14 328.96 327.70 341.09 340.33 340.39 344.67 366.84 363.09 0.69 .93 .88 .84 1.11 1.21 1.25 1.29 1.31 1.64 1.69 1.43 1.35 1.29 1.26 1.41 1.26 1.33 1.36 1.42 1.38 1.44 1.77 2.02 2.67 2.88 3.30 4.58 6.12 7.63 9.81 10.55 11.05 12.71 15.81 14.11 10.64 11.86 12.00 8.15 8.28 9.29 9.21 9.81 9.38 8.94 9.24 9.24 9.38 9.58 9.84 9.98 9.84 10.24 9.78 2.69 3.17 2.80 2.87 3.60 3.56 3.58 2.91 3.10 3.56 3.84 2.72 3.47 3.54 3.14 3.59 3.64 4.71 5.66 6.68 6.57 6.91 7.23 7.17 6.42 7.14 8.00 9.16 9.95 11.10 12.20 12.07 13.91 13.56 12.67 11.75 10.81 13.44 14.57 15.05 15.07 16.63 18.84 21.46 23.79 17.84 18.42 21.03 18.25 22.13 21.86 21.41 20.42 23.75 23.99 1.64 2.67 3.28 3.42 3.75 3.96 4.61 4.23 4.26 4.78 5.95 5.74 5.46 5.40 5.20 5.12 5.33 5.80 6.49 7.82 9.33 10.52 11.70 13.03 14.70 16.26 17.99 19.96 20.23 22.90 27.83 32.10 37.53 41.32 47.17 53.58 52.95 57.53 59.58 56.61 56.26 60.37 66.28 66.97 67.88 66.09 68.09 65.19 65.82 65.72 64.27 67.48 70.40 71.76 70.21 6.38 6.77 6.01 6.70 7.29 7.31 8.09 8.42 9.77 11.59 11.56 10.97 11.84 12.86 13.21 14.71 16.17 18.20 20.60 23.11 23.22 25.22 28.77 32.71 35.52 41.69 48.39 53.49 52.47 58.29 67.51 83.96 97.64 106.21 120.41 122.79 129.41 151.39 171.09 181.59 189.84 205.76 229.28 243.39 252.04 221.82 225.39 233.50 234.25 243.66 244.37 241.51 244.02 261.08 259.12 22.27 25.97 24.03 25.81 31.38 32.16 34.20 33.62 37.08 45.25 48.62 42.55 45.17 48.99 48.14 51.61 53.59 62.02 70.79 82.62 83.82 88.92 100.02 106.15 109.18 120.91 139.26 159.83 162.60 179.91 208.15 244.40 285.24 318.08 358.77 363.08 359.73 418.38 454.93 447.11 461.51 508.22 563.93 Addenda Nonmanufacturing ManufacSur- Surtur- Total veyed veyed ing quar- annuterly ally8 8.73 13.54 9.25 16.73 7.32 16.72 7.73 18.08 11.07 20.31 12.12 20.04 12.43 21.77 12.00 21.62 12.50 24.58 16.33 28.91 17.50 31.11 12.98 29.57 13.76 31.41 16.36 32.63 15.53 32.60 16.03 35.58 17.27 36.33 21.23 40.80 25.41 45.39 31.37 51.25 32.25 51.57 32.34 56.58 36.27 63.74 36.99 69.16 33.60 75.58 35.42 85.49 42.35 96.91 52.48 107.35 53.66 108.95 58.53 121.38 67.48 140.67 78.13 166.27 95.13 190.11 112.60 205.48 128.68 230.09 123.97 239.11 117.35 242.38 139.61 278.77 152.88 302.05 137.95 309.16 141.06 320.45 163.45 344.77 183.80 380.13 192.29 193.58 172.73 180.91 185.99 191.88 191.36 195.16 "•"•"•••'" 194.48 188.16 191.08 198.76 11.38 13.53 12.96 13.83 15.74 16.04 17.53 16.85 18.44 21.57 23.04 20.86 22.12 23.08 22.80 24.83 26.40 30.04 34.12 39.03 40.50 44.08 49.47 54.92 59.31 67.98 77.67 87.19 88.76 99.91 117.34 138.69 160.13 173.80 196.06 202.22 203.82 234.22 257.24 261.40 269.46 292.04 323.60 341.62 353.09 314.70 321.14 328.96 327.70 341.09 340.33 340.39 344.67 366.84 363.09 2.16 3.19 3.76 4.25 4.57 4.00 4.23 4.76 6.14 7.35 8.08 8.72 9.29 9.55 9.80 10.75 9.93 10.76 11.27 12.22 11.07 12.50 14.27 14.24 16.26 17.51 19.24 20.16 20.19 21.47 23.33 27.58 29.98 31.68 34.04 36.89 38.56 44.55 44.81 47.75 50.99 52.73 56.53 :::":: 1 Excludes forestry, fisheries, and agricultural services; professional services; social services and membership organizations; and real estate, which, effective with the April-May 1984 survey, are no longer surveyed quarterly. See last column ("nonmanufacturing surveyed annually") for data for these industries. 2 "All industries" plus the part of nonmanufacturing that is surveyed annually. 3 Consists of forestry, fisheries, and agricultural services; professional services; social services and membership organizations,- and * Planned capital expenditures as reported by business in October and November 1990, corrected for biases. Source: Department of Commerce, Bureau of the Census. 347 TABLE B-55.—Manufacturing and trade sales and inventories, 1948-90 [Amounts in millions of dollars; monthly data seasonally adjusted] 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 1987 1988 1989 1989: Jan Feb Mar ft June Julv Aug Sept Oct Nov Dec 1990: Jan Feb Mar Apr SfaV:::.:::.::: June July Aug Sept. Nov " oct :..: 1 Retail trade Merchant wholesalers Manufacturing Total manufacturing and trade 1 8 1 Inven- Ratio* Sales1 Inven- Ratio* InvenInventones'* tories* Ratio Sales tories* Sales1 tories* Ratio' Safes 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 98,607 105,585 108,100 116,769 130,931 153,762 177,946 182,402 204,381 229,773 260,592 298,144 327,874 356,700 348,754 369,136 408,578 419,283 425,371 451,933 490,309 521,934 516,956 512,331 512,810 523,494 523,520 520,510 516,154 531,579 527,785 526,075 528,186 526,435 528,549 535,996 538,984 533,603 538,946 542,441 540,368 551,473 547,215 551,570 544,939 52,507 4,9 947 59.822 70,242 72377 76,122 73,175 79,516 87,304 89,052 87,132 92,166 94,756 95,628 101.091 105.515 111,534 1097 2.4 136.838 144.866 155.770 169.419 177.492 187,724 201,865 233.175 285,884 288,414 318,647 351.164 399,220 451,166 508,327 545,613 574,516 591,265 646,072 657,753 657,482 704,515 754,267 795,415 761,320 765,010 767,304 772,908 779,084 782,637 788,618 791,363 789,416 794,019 797.611 795,415 797.202 794,016 7369 9.6 796,050 800399 7649 9.6 802,151 807,491 8088 1.4 814322 816320 1.42 1.53 1.36 1.55 1.58 1.58 16 .0 1.47 1.55 1.59 1.61 1.54 1.56 1.56 1.54 1.53 1.51 1.51 1.57 1.60 1.58 16 .0 1.64 1.61 1.54 1.52 1.61 1.58 1.56 1.53 1.53 1.51 1.55 1.49 1.67 1.56 1.53 1.56 1.55 1.51 1.49 1.50 1.47 1.49 1.50 1.48 1.49 1.50 1.53 1.49 1.50 1.51 1.51 1.51 1.51 1.48 1.47 1.49 1.49 1.47 1.48 1.46 1.48 1.48 1.50 17316 16.126 18.634 21.714 22.529 2.4 483 23355 2.8 640 27,740 28,736 27,247 30,286 3.7 089 30923 33357 35.058 37.331 40^95 4.7 480 4.8 647 50,228 53,501 52,805 55.906 63.027 72.931 84,790 86,589 9.9 877 113,202 126.905 143.936 154,391 168,129 163350 171.242 187,869 190.016 188360 199,170 217,632 231,780 231,485 228,353 228,048 234,042 233.071 231,236 225,922 238,150 233,562 231.995 232.826 231,003 226,704 234,472 237.299 234,259 238,863 239,460 237334 245,646 243,291 246,995 241,332 28,543 26321 31,078 39306 41,136 43,948 41,612 45,069 50,642 51,871 50,280 52,982 53,823 54,919 58,214 60,081 63,440 68,225 78,000 84,662 90,617 98,202 101,652 102,658 108,240 124,630 157,793 159,932 175,195 189,214 210,509 241,100 264,281 282,645 311,827 312,647 334,767 327,496 316,182 331,132 354,163 371,082 357,458 359,056 361,130 363,458 365,055 366,492 370,803 371,489 370,890 371,712 372,813 371,082 374,126 373,169 371,746 372,300 372,384 370,693 373,285 374,298 376,981 377,451 378,199 1.57 1.75 1.48 1.66 1.78 1.76 1.81 1.62 1.73 1.80 1.85 1.75 1.74 1.78 1.75 1.71 1.70 1.66 1.74 1.82 1.80 1.84 1.93 1.84 1.72 1.71 1.86 1.85 1.77 1.67 1.66 1.68 1.71 1.65 1.95 1.80 1.74 1.74 1.70 1.62 1.58 1.58 1.54 1.57 1.58 1.55 1.57 1.58 1.64 1.56 1.59 1.60 1.60 1.61 1.65 1.59 1.57 1.59 1.56 1.55 1.57 1.52 1.55 1.53 1.57 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 13382 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 96,290 100,324 113,393 114,626 116,151 124,254 135,176 145,683 143,378 142,799 143,548 145,708 145,823 145,064 145,062 146,698 147,066 148,784 148,893 149,584 151,968 151,620 152,383 151,458 152,302 153,549 152,333 155,586 152,365 152,824 151,972 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 99,262 122,979 130,275 128,196 130,906 143,557 148,484 154,713 165,271 180,313 188,819 181,869 181,935 181,615 182,832 184,224 185,146 186.024 185,944 185,003 187,945 188,904 188,819 189,375 188,847 189,361 190,903 193,201 191,259 192,466 193,002 193,314 194,505 196,091 1.13 1.19 1.07 1.16 1.12 1.17 1.18 1.13 1.19 1.23 1.24 1.21 1.21 1.21 1.18 1.20 1.17 1.17 1.22 1.28 1.26 1.27 1.34 1.34 1.31 1.19 1.19 1.22 1.26 1.29 1.30 1.25 1.31 1.25 1.35 1.27 1.22 1.28 1.31 1.28 1.30 1.27 1.27 1.27 1.27 1.25 1.26 1.28 1.28 1.27 1.26 1.26 1.27 1.26 1.25 1.25 1.24 1.26 1.27 1.25 1.26 1.24 1.27 1.27 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 67,018 74,737 79,779 86,558 89,114 97,570 107,316 114,642 120,860 128,509 137,500 144,471 142,093 141,179 141,214 143,744 144,626 144,210 145,170 146,731 147,157 145,296 146,467 145,848 149,877 149,904 149,302 147,886 147,781 149,432 150,201 150,241 151,559 151,751 151,635 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 89,149 102,306 110,804 121,067 132,693 134,493 147,712 167,748 181,773 186,587 208,112 219,791 235,514 221,993 224,019 224,559 226,618 229,805 230,999 231,791 233,930 233,523 234,362 235,894 235,514 233,701 232,000 232,562 232,847 234,814 234,517 236,400 240,191 240,553 242,366 242,030 1.39 1.41 1.38 1.64 1.52 1.53 1.51 1.43 1.47 1.44 1.44 1.41 1.47 1.44 1.42 1.43 1.42 1.45 1.50 1.42 1.42 1.44 1.40 1.44 1.43 1.48 1.57 1.46 1.45 1.48 1.53 1.48 1.52 1.48 1.49 1.44 1.49 1.52 1.56 1.55 1.55 1.59 1.56 1.59 1.59 1.58 1.59 1.60 1.60 1.59 1.59 1.61 1.61 1.61 1.56 1.55 1.56 1.57 1.59 1.57 1.57 1.60 1.59 1.60 1.60 Monthly average for year and total for month. retail trade are not comparable with earlier periods. 3 Inventory/sales ratio. Annual data are: beginning 1981, monthly average sales for the year; and for earlier years, sales for month. Note.—Earlier data are not strictly comparable with data retail trade. Source: Department of Commerce, Bureau of the Census. „ of monthly ratios; for 1958-80, ratio of December inventories to averages. Monthly data are ratio of inventories at end of month to 1958 for manufacturing and beginning 1967 for wholesale and 348 TABLE B-56.—Manufacturers' shipments and inventories, 1947-90 [Millions of dollars; monthly data seasonally adjusted] Shipments1 Year or month Total 1947 15,513 17,316 1948 .. .. 16,126 1949 18,634 1950 21,714 1951 22,529 1952 . 24,843 1953! 23,355 1954 26,480 1955 27,740 1956 28,736 1957 27,247 1958 30,286 1959 30,879 1960 30,923 1961 33,357 1962 35,058 1963 1964 37,331 1965 40,995 44,870 1966 46,487 1967 1968 50,228 53,501 1969 1970 52,805 1971 . 55,906 63,027 1972 1973 72,931 1974 84,790 86,589 1975 98,797 1976 1977 113,202 126,905 1978 143,936 1979 154,391 1980 . 168,129 1981 1982 .. . 163,350 171,242 1983 1984 187,869 1985 190,016 1986 188,360 1987 199,170 1988 217,632 1989 231,780 1989: Jan 231,485 Feb 228,353 Mar 228,048 234,042 Jay"" ! 233,071 June... 231,236 July.... 225,922 Aug.... 238,150 Sept... 233,562 Oct 231,995 Nov 232,826 Dec 231,003 1990: Jan 226,704 Feb 234,472 Mar 237,299 234,259 Jay'"".' 238,863 June.... 239,460 July 237,834 Aug 245,646 Sept.... 243,291 Oct 246,995 Nov "... 241,332 Dura- Nonble durable goods goods indus- industries tries 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 99,019 99,989 105,291 115,684 122,668 123,578 120,924 120,432 123,331 122,962 121,720 117,114 128,347 124,393 121,840 123,209 121,998 116,716 123,224 125,089 122,031 126,507 127,283 125,090 128,619 124,315 126,196 121,487 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 90,996 88,371 93,879 101,948 109,112 107,907 107,429 107,616 110,711 110,109 109,516 108,808 109,803 109,169 110,155 109,617 109,005 109,988 111,248 112,210 112,228 112,356 112,177 112,744 117,027 118,976 120,799 119,845 Total 25,897 28,543 26,321 31,078 39,306 41,136 43,948 41,612 45,069 50,642 51,871 50,280 52,982 53,823 54,919 58,214 60,081 63,440 68,225 78,000 84,662 90,617 98,202 101,652 102,658 108,240 124,630 157,793 159,932 175,195 189,214 210,509 241,100 264,281 282,645 311,827 312,647 334,767 327,496 316,182 331,132 354,163 371,082 357,458 359,056 361,130 363,458 365,055 366,492 370,803 371,489 370,890 371,712 372,813 371,082 374,126 373,169 371,746 372,300 372,384 370,693 373,285 374,298 376,981 377,451 378,199 Inventories2 Durable goods industries Nondurable goods industries MateMateWork Work Finished rials Finished in rials in Total and proc- goods Total and proc- goods supplies ess supplies ess 13,061 14,662 13,060 15,539 20,991 23,731 25,878 23,710 26,405 30,447 31,728 30,282 32,099 32,399 32,563 34,647 35,889 38,528 42,286 49,950 55,005 58,876 64,738 66,781 66,289 70,250 81,399 101,741 102,871 112,584 121,601 137,891 160,533 174,620 186,347 200,825 200,406 218,771 214,066 208,313 216,598 233,666 246,222 236,810 238,165 239,330 240,486 241,689 242,295 245,813 246,378 245,621 246,427 247,610 246,222 248,273 247,095 245,435 246,609 246,530 244,902 246,456 246,653 246,926 246,818 247,785 8,966 7,894 9,194 10,417 10,608 10,043 10,783 10,361 10,290 10,824 11,080 11,981 13,341 15,503 16,455 17,376 18,693 19,182 19,759 20,860 26,029 35,151 33,920 37,548 40,251 45,252 52,687 55,121 57,927 58,960 60,203 64,881 62,229 60,218 61,255 65,252 67,375 66,273 66,852 67,278 66,887 66,748 66,681 67,565 67,746 67,611 68,010 68,058 67,375 68,092 67,402 66,744 66,689 66,814 66,424 66,924 66,444 66,564 67,001 67,375 1 Monthly 2 10,720 6,206 6,040 9,721 10,756 6,348 12,317 7,565 12,837 8,125 12,392 7,847 13,070 8,246 12,783 9,255 13,204 9,069 14,156 9,667 14,874 9,935 16,192 10,355 18,077 10,868 21,939 12,508 25,004 13,546 27,335 14,165 30,408 15,637 29,848 17,751 28,650 17,880 30,788 18,602 35,546 19,824 42,603 23,987 43,369 25,582 46,344 28,692 50,620 30,730 58,634 34,005 69,254 38,592 76,997 42,502 81,105 47,315 87,223 54,642 87,643 52,560 97,750 56,140 97,253 54,584 94,466 53,629 99,952 55,391 108,392 60,022 117,303 61,544 109,309 61,228 110,118 61,195 111,555 60,497 113,381 60,218 114,291 60,650 114,668 60,946 116,487 61,761 116,560 62,072 115,477 62,533 115,756 62,661 117,051 62,501 117,303 61,544 118,854 61,327 117,691 62,002 116,921 61,770 117,810 62,110 117,482 62,234 116,326 62,152 117,202 62,330 117,530 62,679 117,924 62,438 117,414 62,403 117,743 62,667 12,836 13,881 13,261 15,539 18,315 17,405 18,070 17,902 18,664 20,195 20,143 19,998 20,883 21,424 22,356 23,567 24,192 24,912 25,939 28,050 29,657 31,741 33,464 34,871 36,369 37,990 43,231 56,052 57,061 62,611 67,613 72,618 80,567 89,661 96,298 111,002 112,241 115,996 113,430 107,869 114,534 120,497 124,860 120,648 120,891 121,800 122,972 123,366 124,197 124,990 125,111 125,269 125,285 125,203 124,860 125,853 126,074 126,311 125,691 125,854 125,791 126,829 127,645 130,055 130,633 130,414 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. 349 8,317 8,167 8,556 8,971 8,775 8,669 9,083 9,088 9,502 9,819 9,984 10,134 10,453 11,159 11,714 12,290 12,725 13,150 13,683 14,676 18,132 23,700 23,542 25,832 27,398 29,317 32,451 36,206 37,758 43,915 44,643 44,917 42,964 41,540 44,354 47,294 46,789 46,963 46,900 46,858 46,780 46,679 46,773 46,891 47,073 46,643 46,769 47,069 46,789 46,721 46,743 47,063 46,876 46,738 46,622 47,036 47,357 47,694 48,102 48,334 2,472 2,440 2,571 2,721 2,864 2,832 2,947 2,950 3,109 3,298 3,407 3,517 3,811 4,207 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 18,585 18,842 18,978 18,926 17,360 18,752 19,291 20,925 19,532 19,522 20,075 20,493 20,290 20,524 20,837 20,919 20,985 21,405 21,146 20,925 20,993 20,897 20,880 20,760 20,905 20,588 20,706 21,148 21,700 21,730 21,468 7,409 7,415 7,666 8,622 8,624 8,497 8,853 9,386 9,745 10,450 10,801 11,261 11,675 12,684 13,522 14,603 15,617 16,447 17,021 17,332 18,392 24,177 24,682 26,846 29,212 31,394 34,375 37,723 42,466 48,502 48,756 52,101 51,540 48,969 51,428 53,912 57,146 54,153 54,469 54,867 55,699 56,397 56,900 57,262 57,119 57,641 57,111 56,988 57,146 58,139 58,434 58,368 58,055 58,211 58,581 59,087 59,140 60,661 60,801 60,612 TABLE B-57.—Manufacturers' new and unfilled orders, 1947-90 [Amounts in millions of dollars; monthly data seasonally adjusted] 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 1988 1989 1989: Jan Feb Mar May June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar June July Aug Sept Oct Nov "..... Total 15,256 17,693 15,614 20,110 23,907 23,204 23,586 22,335 27,465 28,368 27,559 27,191 30,731 30,240 31,106 33,432 35,536 38,339 42,111 46,402 47,056 50,687 53,950 52,038 55,984 64,173 76,056 87,245 85,220 99,532 115,103 131,650 147,574 156,318 167,883 162,273 174,122 189,791 190,918 188,663 201,966 221,627 235,614 236,075 231,306 233,011 239,907 233,753 235,157 230,447 236,793 234,354 234,067 239,710 240,752 227,572 231,759 241,071 236,026 241,102 236,578 240,238 244,355 243,903 250,117 236,114 New orders1 Durable goods industries NonCapital durable goods goods indus- industries Total tries, nondefense 6,388 8,126 6,633 10,165 12,841 12,061 12,147 10,768 14,996 15,365 14,111 13,397 16,010 15,308 15,761 17,370 18,721 20,633 23,288 26,176 25,825 28,116 29,871 27,388 29,998 35,069 42,726 46,836 42,099 51,404 61,128 72,416 79,586 79,482 83,657 78,338 87,600 98,581 99,843 100,166 107,770 119,634 126,557 128,479 124,107 125,377 129,372 123,524 125,137 122,031 126,766 125,227 124,262 130,175 131,719 117,909 120,782 128,872 123,609 128,737 124,692 128,094 126,979 124,972 129,458 116,427 8,868 9,566 8,981 9,945 11,066 11,143 11,439 11,566 12,469 13,003 13,448 13,795 14,721 14,932 15,345 16,062 16,815 17,706 18,824 20,225 ....... 21,231 22,571 7,660 24,080 24,650 6,738 7,444 25,986 8,622 29,104 10,971 33,330 12,673 40,409 11,011 43,122 12,791 48,129 15,242 53,975 59,234 19,420 23,221 67,987 23,242 76,836 24,012 84,226 21,661 83,935 86,522 22,098 26,243 91,209 27,067 91,075 88,497 26,551 29,707 94,197 35,028 101,993 38,821 109,057 40,352 107,596 37,189 107,199 38,137 107,634 40,389 110,535 37,290 110,229 39,146 110,020 41,445 108,416 37,130 110,027 35,341 109,127 35,975 109,805 38,901 109,535 44,389 109,033 38,347 109,663 36,094 110,977 40,889 112,199 36,573 112,417 35,928 112,365 36,192 111,886 39,840 112,144 35,871 117,376 38,293 118,931 41,633 120,659 35,812 119,687 Unfilled orders * Total 34,473 30,736 24,045 41,456 67,266 75,857 61,178 48,266 60,004 67,375 53,183 46,806 52,242 44,666 47,016 48,124 54,019 66,347 79,685 97,991 104,548 109,923 115,424 106,156 107,145 121,060 158,885 188,468 172,037 180,564 204,946 262,415 306,540 329,884 327,356 314,270 349,419 372,586 383,181 387,065 421,243 468,860 514,499 473,450 476,403 481,366 487,231 487,913 491,834 496,359 495,002 495,794 497,866 504,750 514,499 515,367 512,654 516,426 518,193 520,432 517,550 519,954 518,663 519,275 522,397 517,179 1 Monthly average for 2 Seasonally adjusted, 3 Unfilled orders—shipments ratio3 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 43,991 48,878 42,097 43,979 45,509 50,956 63,152 75,906 94,160 100,578 105,947 111,253 101,565 102,118 114,724 151,506 182,926 164,139 172,274 196,244 251,525 294,272 317,677 315,529 303,187 335,367 358,899 388,427 370,700 400,720 447,868 494,196 452,769 455,952 460,897 466,938 467,500 470,917 475,834 474,253 475,087 477,509 484,475 494,196 495,389 492,947 496,730 498,308 500,538 497,947 500,951 499,311 499,968 503,230 498,170 5,894 4,117 4,423 6,021 3,872 3,177 2,541 3,016 3,763 3,495 2,831 2,815 3,364 2,569 3,037 2,615 3,063 3,195 3,779 3,831 3,970 3,976 4,171 4,591 5,027 6,336 7,379 5,542 7,898 8,290 8,702 10,890 12,268 12,207 11,827 11,083 14,052 13,687 14,754 16,365 20,523 20,992 20,303 20,681 20,451 20,469 20,293 20,413 20,917 20,525 20,749 20,707 20,357 20,275 20,303 19,978 19,707 19,696 19,885 19,894 19,603 19,003 19,352 19,307 19,167 19,009 Total 3.42 3.63 3.87 3.35 3.05 2.98 2.75 2.61 2.66 2.78 3.08 3.31 3.79 3.70 3.85 3.75 3.65 3.38 3.31 3.86 4.13 3.76 3.30 3.29 3.62 3.93 3.88 3.87 3.88 3.59 3.64 3.72 3.63 3.65 3.66 3.99 3.71 3.78 3.83 3.79 3.80 3.84 3.95 3.74 3.79 3.87 3.91 3.99 4.06 3.90 3.90 3.96 3.90 3.85 3.91 3.83 3.91 3.91 3.95 NonDurable durable goods goods industries industries 4.12 4.27 4.55 4.00 3.64 3.50 3.33 3.10 3.20 3.35 3.69 3.93 4.53 4.40 4.65 4.50 4.39 4.06 3.90 4.56 4.96 4.52 3.94 3.90 4.25 4.66 4.62 4.67 4.78 4.34 4.41 4.51 4.43 4.41 4.43 4.81 4.51 4.61 4.65 4.61 4.62 4.66 4.83 4.52 4.59 4.71 4.76 .4.81 4.97 4.77 4.77 4.87 4.76 4.68 4.78 4.66 4.80 4.77 4.85 0.96 1.12 1.04 .85 .86 .94 .72 .79 .68 .73 .72 .80 .76 .73 .69 .69 .77 .77 .88 .93 .64 .84 .76 .72 .83 .83 .76 .69 .63 .70 .65 .69 .71 .83 .78 .77 .77 .75 .77 .74 .75 .77 .76 .76 .76 .74 .74 .77 .73 .70 .70 .70 .70 .70 .67 .68 .68 .68 .67 year and total for month. 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. 350 PRICES TABLE B-58.—Consumer price indexes, major expenditure classes, 1946-90 [1982-84=100] Food and beverages Year or month All items 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 1988 1989 1990 1989: Jan Feb Mar fc: June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar fc June July Aug Sept Nov Dec oct :: 195 22.3 24.1 23.8 24.1 26.0 26.5 26.7 26.9 26.8 27.2 28.1 28.9 29.1 29.6 29.9 30.2 30.6 31.0 31.5 32.4 33.4 34.8 36.7 38.8 40.5 41.8 44.4 49.3 53.8 56.9 60.6 65.2 72.6 82.4 90.9 96.5 99.6 103.9 107.6 109.6 113.6 118.3 124.0 130.7 121.1 121.6 122.3 123.1 123.8 124.1 124.4 124.6 125.0 125.6 125.9 126.1 127.4 128.0 128.7 128.9 129.2 129.9 130.4 131.6 132.7 133.5 133.8 133.8 Total » 35.0 36.2 38.1 40.1 41.4 43.1 48.8 55.5 60.2 62.1 65.8 72.2 79.9 86.7 93.5 97.3 99.5 103.2 105.6 109.1 113.5 118.2 124.9 132.1 122.0 122.7 123.3 124.0 124.7 124.9 125.4 125.6 125.9 126.3 126.7 127.2 130.0 130.9 131.2 131.0 131.1 131.7 132.4 132.7 133.0 133.4 133.7 133.9 Housing Food 19.8 24.1 26.1 25.0 25.4 28.2 28.7 28.3 28.2 27.8 28.0 28.9 30.2 29.7 30.0 30.4 30.6 311 31.5 322 33.8 34.1 35.3 37.1 39.2 40.4 42.1 48.2 55.1 59.8 61.6 65.5 72.0 79.9 86.8 93.6 97.4 99.4 103.2 105.6 109.0 113.5 118.2 125.1 132.4 122.2 122.9 123.5 124.2 124.9 125.0 125.5 125.8 126.1 126.5 126.9 127.4 130.4 131.3 131.5 131.3 131.3 132.0 132.7 132.9 133.2 133.6 134.0 134.2 1 Includes alcoholic beverages, not 2 See table B-59 for components. 8 HouseOther hold Apparel TransEnterFuel and furnish- and portation Medical tainment goods care and Total Shelter other 2 ings upkeep services utilities and operation 363' 32.0 34.0 36.4 38.0 39.4 41.2 45.8 50.7 53.8 57.4 62.4 70.1 81.1 90.4 96.9 99.5 103.6 107.7 110.9 114.2 118.5 123.0 128.5 120.7 121.1 121.5 121.6 122.1 122.9 123.9 124.2 124.3 124.4 124.5 124.9 125.9 126.1 126.8 126.8 127.1 128.3 129.2 130.2 130.5 130.6 130.4 130.5 22.0 22.5 22.7 23.1 24.0 24.5 24.7 25.2 25.4 25.8 26.1 26.5 27.0 27.8 28.8 30.1 32.6 35.5 37.0 38.7 40.5 44.4 48.8 51.5 54.9 60.5 68.9 81.0 90.5 96.9 99.1 104.0 109.8 115.8 121.3 127.1 132.8 140.0 129.8 130.3 131.2 131.2 131.8 132.3 133.6 134.1 134.1 134.8 135.2 135.6 136.3 136.6 137.8 138.0 138.3 139.5 141.1 142.4 142.3 142.4 142.4 142.7 22.5 22.6 23.0 23.6 24.3 24.8 25.4 26.0 26.3 26.3 26.6 26.6 26.6 26.7 27.1 27.4 28.0 29.1 31.1 32.5 34.3 40.7 45.4 49.4 54.7 58.5 64.8 75.4 86.4 94.9 100.2 104.8 106.5 104.1 103.0 104.4 107.8 111.6 106.0 105.9 105.9 106.2 107.0 109.2 109.7 109.7 109.7 108.0 107.5 108.4 110.8 110.2 109.9 109.4 109.9 112.2 111.3 112.7 114.0 113.4 112.9 112.7 42.0 43.6 45.2 46.8 48.6 49.7 51.1 56.8 63.4 67.3 70.4 74.7 79.9 86.3 93.0 98.0 100.2 101.9 103.8 105.2 107.1 109.4 111.2 113.3 110.9 110.9 110.5 110.7 110.8 111.1 111.4 111.4 111.7 111.9 111.9 111.7 112.1 112.8 112.8 112.8 113.2 113.1 113.6 113.3 113.8 114.2 113.8 113.7 34.4 39.9 42.5 40.8 40.3 43.9 43.5 43.1 43.1 42.9 43.7 44.5 44.6 45.0 45.7 46.1 46.3 46.9 47.3 47.8 49.0 51.0 53.7 56.8 59.2 61.1 62.3 64.6 69.4 72.5 75.2 78.6 81.4 84.9 90.9 95.3 97.8 100.2 102.1 105.0 105.9 110.6 115.4 118.6 124.1 115.3 115.3 119.3 120.9 120.4 117.8 115.0 115.0 120.0 122.7 122.1 119.2 116.7 120.4 125.4 126.7 125.5 123.3 120.8 122.2 126.8 128.4 127.5 125.3 16.7 18.5 20.6 22.1 22.7 24.1 25.7 26.5 26.1 25.8 26.2 27.7 28.6 29.8 29.8 30.1 30.8 30.9 31.4 31.9 32.3 33.3 34.3 35.7 37.5 39.5 39.9 41.2 45.8 50.1 55.1 59.0 61.7 70.5 83.1 93.2 97.0 99.3 103.7 106.4 102.3 105.4 108.7 114.1 120.5 111.1 111.6 111.9 114.6 116.0 115.9 115.4 114.3 113.7 114.5 115.0 115.2 117.2 117.1 116.8 117.3 117.7 118.2 118.4 120.6 123.0 125.8 126.9 127.2 12.5 13.5 14.4 14.8 15.1 15.9 16.7 17.3 17.8 18.2 18.9 19.7 20.6 21.5 22.3 22.9 23.5 24.1 24.6 25.2 26.3 28.2 29.9 31.9 34.0 36.1 37.3 38.8 42.4 47.5 52.0 57.0 61.8 67.5 74.9 82.9 92.5 100.6 106.8 113.5 122.0 130.1 138.6 149.3 162.8 143.8 145.2 146.1 146.8 147.5 148.5 149.7 150.7 151.7 152.7 153.9 154.4 155.9 157.5 158.7 159.8 160.8 161.9 163.5 165.0 165.8 167.1 168.4 169.2 40.7 43.0 45.2 47.5 50.0 51.5 52.9 56.9 62.0 65.1 68.3 71.9 76.7 83.6 90.1 96.0 100.1 103.8 107.9 111.6 115.3 120.3 126.5 132.4 123.8 124.3 124.7 125.4 125.5 126.2 126.9 127.3 127.8 128.4 128.6 129.1 129.9 130.4 130.9 131.4 131.7 131.9 132.7 133.0 134.1 134.3 134.4 134.6 35.1 36.9 38.7 40.9 42.9 44.7 46.4 49.8 53.9 57.0 60.4 64.3 68.9 75.2 82.6 91.1 101.1 107.9 114.5 121.4 128.5 137.0 147.7 159.0 143.4 144.1 144.4 144.7 145.4 146.3 147.3 148.7 151.2 151.8 151.9 152.9 154.0 154.7 155.2 155.8 156.6 157.8 159.2 160.4 162.6 163.2 163.6 164.5 Energy3 21.5 21.5 21.9 22.4 22.5 22.6 22.6 22.5 22.9 23.3 23.8 24.2 24.8 25.5 26.5 27.2 29.4 38.1 42.1 45.1 49.4 52.5 65.7 86.0 97.7 99.2 99.9 100.9 101.6 88.2 88.6 89.3 94.3 102.1 89.0 89.3 89.8 94.9 97.4 99.0 98.5 97.0 95.9 94.6 93.2 93.2 97.6 96.4 95.5 95.7 96.7 99.5 98.9 103.6 108.8 111.4 110.9 110.1 shown separately. See tables B-60 for definition and B-59 for components. 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. OP1 ool TABLE B-59.—Consumer price indexes, selected expenditure classes, 1946-90 [1982-84=100, except as noted] Shelter Food and beverages 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 1988 1989 1990 1989: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar fcn June July Aug Sept Oct Nov Dec Total » 35.0 36.2 38.1 40.1 41.4 43.1 48.8 55.5 60.2 62.1 65.8 72.2 79.9 86.7 93.5 97.3 99.5 103.2 105.6 109.1 113.5 118.2 124.9 132.1 122.0 122.7 123.3 124.0 124.7 124.9 125.4 125.6 125.9 126.3 126.7 127.2 130.0 130.9 131.2 131.0 131.1 131.7 132.4 132.7 133.0 133.4 133.7 133.9 At Away Total Total 2 Total home from home 19.8 24.1 26.1 25.0 25.4 28.2 28.7 28.3 28.2 27.8 28.0 28.9 30.2 29.7 30.0 30.4 30.6 31.1 31.5 32.2 33.8 34.1 35.3 37.1 39.2 40.4 42.1 48.2 55.1 59.8 61.6 65.5 72.0 79.9 86.8 93.6 97.4 99.4 103.2 105.6 109.0 113.5 118.2 125.1 132.4 122.2 122.9 123.5 124.2 124.9 125.0 125.5 125.8 126.1 126.5 126.9 127.4 130.4 131.3 131.5 131.3 131.3 132.0 132.7 132.9 133.2 133.6 134.0 134.2 25.8 28.0 26.9 27.3 30.3 30.8 30.3 30.1 29.5 29.6 30.6 32.0 31.2 31.5 31.8 32.0 32.4 32.7 33.5 35.2 35.1 36.3 38.0 39.9 40.9 42.7 49.7 57.1 61.8 63.1 66.8 73.8 81.8 88.4 94.8 98.1 99.1 102.8 104.3 107.3 111.9 116.6 124.2 132.3 121.2 122.0 122.7 123.5 124.4 124.3 124.8 124.9 125.0 125.4 125.8 126.5 131.0 132.1 131.9 131.1 130.9 131.7 132.5 132.7 132.9 133.4 133.8 133.8 Household fuels 21.5 21.9 22.1 22.6 23.4 24.1 24.8 25.4 26.0 26.7 27.3 27.8 28.4 29.7 31.3 32.9 34.9 37.5 39.4 41.0 44.2 49.8 54.5 58.2 62.6 68.3 75.9 83.4 90.9 95.8 100.0 104.2 108.3 112.5 117.0 121.8 127.4 133.4 124.7 125.2 125.7 126.2 126.7 127.1 127.8 128.1 128.8 129.1 129.5 129.8 130.3 131.0 131.8 132.5 133.0 133.4 133.9 134.3 134.6 135.0 135.4 135.7 22.0 22.5 22.7 23.1 24.0 24.5 24.7 25.2 25.4 25.8 26.1 26.5 27.0 27.8 28.8 30.1 32.6 35.5 37.0 38.7 40.5 44.4 48.8 51.5 54.9 60.5 68.9 81.0 90.5 96.9 99.1 '"iosio 104.0 108.6 109.8 115.4 115.8 121.9 121.3 128.1 127.1 133.6 132.8 138.9 140.0 146.7 129.8 135.2 130.3 136.3 131.2 138.6 131.2 137.9 131.8 137.8 132.3 138.7 133.6 141.5 134.1 141.5 134.1 139.4 134.8 140.0 135.2 140.1 135.6 140.1 136.3 142.0 136.6 143.5 137.8 144.8 138.0 144.7 138.3 144.4 139.5 145.3 141.1 148.7 142.4 150.7 142.3 148.9 142.4 148.9 142.4 149.0 142.7 149.5 zri Fuel oil Other Home and Gas Home- mainteutilities other and Rent, owners' nance Total 2 house- (Piped) public Total hold and resi- costs and elec- services repairs dential fuel tricity commodities 250 25.8 275 28.7 29.7 30.9 322 33.9 351 35.6 36.3 37.0 37.6 38.2 38.7 39.2 39.7 40.1 40.5 40.9 41.5 42.2 43.3 44.7 465 48.7 50.4 •••"•'""••' 52.5 55.2 58.0 61.1 64.8 69.3 74.3 80.9 87.9 94.6 100.1 ""i'02!5 105.3 107.3 111.8 113.1 118.3 119.4 123.1 124.8 127.8 131.1 132.8 137.3 138.4 144.6 130.5 134.4 130.9 134.7 131.1 135.0 131.4 135.4 131.7 136.2 132.3 136.5 133.0 137.3 133.5 138.1 133.9 138.9 134.7 139.7 135.2 140.3 135.5 140.9 135.8 141.1 136.0 141.0 136.5 142.2 137.0 142.5 137.3 143.1 137.9 144.4 138.7 145.4 139.4 146.5 140.0 147.0 140.5 147.2 140.7 147.3 141.1 147.5 EE 1 2 Includes alcoholic beverages, not shown separately. December 1982=100. Fuel and other utilities Renters' costs Food 352 20.5 20.9 21.4 22.3 23.2 23.6 24.0 24.4 24.8 25.0 25.3 25.8 26.3 27.5 28.9 30.6 33.2 35.8 38.6 40.6 43.6 49.5 54.1 57.6 62.0 67.2 74.0 82.4 90.7 96.4 99.9 103.7 106.5 107.9 111.8 114.7 118.0 122.2 116.1 117.1 117.1 117.3 117.4 118.3 118.4 118.5 118.6 118.6 119.3 119.5 120.4 120.8 121.2 121.2 122.2 121.8 122.1 121.2 124.6 123.4 123.9 123.8 22.5 22.6 23.0 23.6 24.3 24.8 25.4 26.0 26.3 26.3 26.6 26.6 26.6 26.7 27.1 ""2L4 27.4 21.7 28.0 22.1 29.1 23.1 31.1 24.7 32.5 25.7 34.3 27.5 40.7 34.4 45.4 39.4 49.4 43.3 54.7 49.0 58.5 53.0 64.8 61.3 75.4 74.8 86.4 87.2 94.9 95.6 100.2 100.5 104.8 104.0 106.5 104.5 104.1 99.2 103.0 97.3 104.4 98.0 107.8 100.9 111.6 104.5 106.0 98.7 105.9 98.6 105.9 98.5 106.2 98.8 107.0 99.6 109.2 103.2 109.7 103.7 109.7 103.7 109.7 103.5 108.0 101.0 107.5 99.9 108.4 101.2 110.8 104.5 110.2 103.1 109.9 102.3 109.4 101.2 109.9 101.9 112.2 105.4 111.3 104.5 112.7 105.6 114.0 107.6 113.4 106.4 112.9 105.4 112.7 105.6 7.9 9.0 10.6 10.9 11.3 11.8 12.1 12.6 12.6 12.7 13.3 14.0 13.7 13.9 13.8 14.1 14.2 14.4 14.4 14.6 15.0 15.5 16.0 16.3 17.0 18.2 18.3 21.1 33.2 36.4 38.8 43.9 46.2 62.4 86.1 104.6 103.4 97.2 99.4 95.9 77.6 77.9 78.1 81.7 99.3 80.5 81.4 81.5 82.5 81.5 80.2 79.7 78.9 79.3 82.0 83.9 88.7 113.1 95.4 91.5 89.6 88.0 84.9 82.7 91.8 104.4 118.5 117.0 114.1 18.3 18.2 18.7 19.2 19.2 19.3 19.5 19.9 20.2 20.7 20.9 21.1 21.9 22.4 23.3 23.5 23.5 23.5 23.5 23.5 23.6 23.7 23.9 24.3 25.4 27.1 28.5 29.9 34.5 40.1 44.7 50.5 55.0 61.0 71.4 81.9 93.2 101.5 105.4 107.1 105.7 103.8 104.6 107.5 109.3 105.1 104.9 104.8 105.0 106.1 110.5 111.1 111.3 111.0 107.6 106.1 107.0 107.5 108.3 107.9 106.8 107.8 112.4 111.7 111.6 112.4 109.0 108.0 108.6 46"6 47.1 48.4 50.0 53.4 56.2 57.8 60.7 63.9 67.7 70.8 73.7 74.3 77.0 84.3 93.3 99.5 107.2 112.1 117.9 120.1 122.9 127.1 131.7 125.9 126.0 125.9 126.2 127.0 127.1 127.7 127.8 128.1 127.6 127.9 128.2 129.3 130.0 130.7 130.9 131.2 131.8 130.8 132.8 132.9 133.4 133.7 132.7 TABLE B-59.—Consumer price indexes, selected expenditure classes, 1946-90—Continued [1982-84=100, except as noted] Transportation Medical care Private transportation 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 1988 1989 1990 1989- Jan Feb Mar.... Apr May June July Aug.... Sept Oct Nov Dec 1990: Jan Feb Mar Apr May.--'™ June July Aug... sept Oct Total :.: : : : Nov Dec 16.7 18.5 20.6 22.1 22.7 24.1 25.7 26.5 26.1 25.8 26.2 27.7 28.6 29.8 29.8 30.1 30.8 30.9 31.4 31.9 32.3 33.3 34.3 35.7 37.5 39.5 39.9 41.2 45.8 50.1 55.1 59.0 61.7 70.5 83.1 93.2 97.0 99.3 103.7 106.4 102.3 105.4 108.7 114.1 120.5 111.1 111.6 111.9 114.6 116.0 115.9 115.4 114.3 113.7 114.5 115.0 115.2 117.2 117.1 116.8 117.3 117.7 118.2 118.4 120.6 123.0 125.8 126.9 127.2 Total 8 18.3 20.8 23.0 24.4 24.5 25.6 27.3 27.8 27.1 26.7 27.1 28.6 29.5 30.8 30.6 30.8 31.4 31.6 32.0 32.5 32.9 33.8 34.8 36.0 37.5 39.4 39.7 41.0 46.2 50.6 55.6 59.7 62.5 71.7 84.2 93.8 97.1 99.3 103.6 106.2 101.2 104.2 107.6 112.9 118.8 109.8 110.3 110.7 113.6 115.0 114.9 114.3 113.1 112.4 113.3 113.7 113.9 115.9 115.6 115.1 115.5 115.9 116.4 116.6 119.0 121.4 124.2 125.1 125.1 New cars 34.1 37.3 40.8 41.1 43.1 46.8 47.2 46.5 44.8 46.1 48.5 50.0 52.2 51.5 51.5 51.3 51.0 50.9 49.7 48.8 49.3 50.7 51.5 53.0 55.2 54.7 54.8 57.9 62.9 66.9 70.4 75.8 81.8 88.4 93.7 97.4 99.9 102.8 106.1 110.6 114.6 116.9 119.2 121.0 119.5 119.6 119.6 119.4 119.5 119.1 118.6 117.7 117.0 118.6 120.5 121.8 122.3 121.9 121.3 120.7 120.7 120.3 119.8 119.5 119.0 120.5 122.1 123.5 Motor fuel* Used cars 26.7 22.7 21.5 20.7 23.2 24.0 26.8 25.0 26.0 28.4 28.7 30.0 29.8 29.0 29.9 & 31.2 33.0 33.1 35.2 36.7 43.8 50.3 54.7 55.8 60.2 62.3 76.9 88.8 98.7 112.5 113.7 108.8 113.1 118.0 120.4 117.6 120.5 120.5 120.5 120.7 121.0 121.3 121.1 120.3 119.8 119.7 120.1 119.7 118.9 117.4 116.6 116.2 116.9 117.6 118.2 118.3 118.3 118.1 117.2 117.1 14.5 16.4 18.6 19.1 19.0 19.5 20.0 21.2 21.8 22.1 22.8 23.8 23.4 23.7 24.4 24.1 24.3 24.2 24.1 25.1 25.6 26.4 26.8 27.6 27.9 28.1 28.4 31.2 42.2 45.1 47.0 49.7 51.8 70.1 97.4 108.5 102.8 99.4 97.9 98.7 77.1 80.2 80.9 88.5 101.2 79.6 80.3 81.5 92.1 96.6 96.0 94.4 91.0 88.8 88.9 87.2 85.8 91.4 90.6 89.3 91.2 92.5 94.6 94.3 103.2 112.0 118.9 119.0 117.1 3 4 5 Automobile maintenance and repairs Other 15.8 17.1 18.1 18.6 18.9 20.4 20.8 22.0 22.7 23.2 24.2 •"••""'•"" 25.0 25.4 26.0 26.5 27.1 27.5 27.8 28.2 28.7 29.2 30.4 37.9 39.2 32.1 34.1 41.6 45.2 36.6 48.6 39.3 41.1 48.9 48.4 43.2 50.2 47.6 53.5 53.7 61.8 57.6 67.2 61.9 69.9 67.0 75.2 73.7 84.3 81.5 91.4 89.2 97.7 96.0 98.8 100.3 103.8 103.5 106.8 109.0 110.3 115.1 114.8 120.8 119.7 127.9 135.8 124.9 130.1 142.5 122.4 133.5 123.3 134.3 123.5 134.5 134.7 123.8 135.6 124.3 135.9 124.5 135.6 124.8 135.7 125.4 135.7 126.2 137.1 126.7 126.7 138.2 139.0 126.9 127.3 140.3 140.8 127.6 140.7 128.8 129.4 140.8 129.4 140.8 129.6 141.0 142.1 130.2 142.4 130.4 131.5 143.0 132.1 144.8 132.5 146.2 146.7 132.5 Public transportation 9.4 9.9 11.2 12.4 13.4 14.8 15.8 16.8 18.0 18.5 19.2 19.9 20.9 21.5 22.2 23.2 24.0 24.3 24.7 25.2 26.1 27.4 28.7 30.9 35.2 37.8 39.3 39.7 40.6 43.5 47.8 50.0 51.5 54.9 69.0 85.6 94.9 99.5 105.7 110.5 117.0 121.1 123.3 129.5 142.6 127.5 128.1 128.2 128.4 128.9 129.6 129.7 130.1 130.1 130.6 131.3 131.7 134.2 136.7 139.1 140.3 140.9 141.5 141.6 141.9 144.0 146.0 150.3 154.4 Total 12.5 13.5 14.4 14.8 15.1 15.9 16.7 17.3 17.8 18.2 18.9 19.7 20.6 21.5 22.3 22.9 23.5 24.1 24.6 25.2 26.3 28.2 29.9 31.9 34.0 36.1 37.3 38.8 42.4 47.5 52.0 57.0 61.8 67.5 74.9 82.9 92.5 100.6 106.8 113.5 122.0 130.1 138.6 149.3 162.8 143.8 145.2 146.1 146.8 147.5 148.5 149.7 150.7 151.7 152.7 153.9 154.4 155.9 157.5 158.7 159.8 160.8 161.9 163.5 165.0 165.8 167.1 168.4 169.2 Medical care commodities Medical care services 34.2 36.7 38.6 39.2 39.7 40.8 41.2 41.5 42.0 42.5 43.4 44.6 46.1 46.8 46.9 46.3 45.6 45.2 45.1 45.0 45.1 44.9 45.0 45.4 46.5 47.3 47.4 47.5 49.2 53.3 56.5 60.2 64.4 69.0 75.4 83.7 92.3 100.2 107.5 115.2 122.8 131.0 139.9 150.8 163.4 145.0 145.8 147.2 148.4 150.0 151.0 151.4 152.1 153.3 154.1 155.3 156.0 156.9 158.6 159.9 161.3 162.2 163.3 164.1 164.8 166.0 166.8 167.8 169.1 10.4 11.3 12.1 12.5 12.8 13.4 14.3 14.8 15.3 15.7 16.3 17.0 17.9 18.7 19.5 20.2 20.9 21.5 22.0 22.7 23.9 26.0 27.9 30.2 32.3 34.7 35.9 37.5 41.4 46.6 51.3 56.4 61.2 67.2 74.8 82.8 92.6 100.7 106.7 113.2 121.9 130.0 138.3 148.9 162.7 143.5 145.1 145.9 146.4 146.9 147.9 149.3 150.4 151.3 152.3 153.6 154.1 155.7 157.2 158.5 159.4 160.5 161.5 163.4 165.0 165.8 167.2 168.6 169.3 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. 353 TABLE B-60.—Consumer price indexes, commodities, services, and special groups, 1946-90 [1982-84=100] Commodities 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 1988 1989 1990 1989: Jan Feb Mar.... fc JuneJuly.... Aug.... Sept... Oct Nov.... Dec.... 1990: Jan.... Feb.... Mar... MayJune.. July... Aug... Sept.. Oct.... Nov... Dec... All items 19.5 22.3 24.1 23.8 24.1 26.0 26.5 26.7 26.9 26.8 27.2 28.1 28.9 29.1 29.6 29.9 30.2 30.6 31.0 31.5 32.4 33.4 34.8 36.7 38.8 40.5 41.8 44.4 49.3 53.8 56.9 60.6 65.2 72.6 82.4 90.9 96.5 99.6 103.9 107.6 109.6 113.6 118.3 124.0 130.7 121.1 121.6 122.3 123.1 123.8 124.1 124.4 124.6 125.0 125.6 125.9 126.1 127.4 128.0 128.7 128.9 129.2 129.9 130.4 131.6 132.7 133.5 133.8 133.8 All com* modities 22.9 27.6 29.6 28.8 29.0 31.6 32.0 31.9 31.6 31.3 31.6 32.6 33.3 33.3 33.6 33.8 34.1 34.4 34.8 35.2 36.1 36.8 38.1 39.9 41.7 43.2 44.5 47.8 53.5 58.2 60.7 64.2 68.8 76.6 86.0 93.2 97.0 99.8 103.2 105.4 104.4 107.7 111.5 116.7 122.8 113.9 114.3 115.2 116.7 117.5 117.2 117.0 116.7 117.3 118.1 118.3 118.2 119.9 120.6 121.1 121.4 121.4 121.6 121.6 122.8 124.6 126.1 126.3 126.0 Food 19.8 24.1 26.1 25.0 25.4 28.2 28.7 28.3 28.2 27.8 28.0 28.9 30.2 29.7 30.0 30.4 30.6 31.1 31.5 32.2 33.8 34.1 35.3 37.1 39.2 40.4 42.1 48.2 55.1 59.8 61.6 65.5 72.0 79.9 86.8 93.6 97.4 99.4 103.2 105.6 109.0 113.5 118.2 125.1 132.4 122.2 122.9 123.5 124.2 124.9 125.0 125.5 125.8 126.1 126.5 126.9 127.4 130.4 131.3 131.5 131.3 131.3 132.0 132.7 132.9 133.2 133.6 134.0 134.2 All 26.3 29.7 31.9 31.5 31.4 33.8 34.1 34.2 33.8 33.6 33.9 34.9 35.3 35.8 36.0 36.1 36.3 36.6 36.9 37.2 37.7 38.6 40.0 41.7 43.4 45.1 46.1 47.7 52.8 57.6 60.5 63.8 67.5 75.3 85.7 93.1 96.9 100.0 103.1 105.2 101.7 104.3 107.7 112.0 117.4 109.2 109.5 110.5 112.5 113.2 112.8 112.1 111.6 112.4 113.4 113.4 113.0 114.1 114.6 115.4 115.9 115.9 115.8 115.5 117.2 119.8 121.8 121.8 121.4 Special indexes Services Commodities less food All NonDurable durable services 29.2 31.7 34.0 34.5 34.9 37.5 38.0 37.7 36.8 36.1 36.1 37.2 37.8 38.4 38.1 38.1 38.5 38.6 39.0 38.8 38.9 39.4 40.7 42.2 44.1 46.0 46.9 48.1 51.5 57.4 60.9 64.4 68.6 75.4 83.0 89.6 95.1 99.8 105.1 106.8 106.6 108.2 110.4 112.2 113.4 112.5 112.4 111.9 111.8 111.9 112.1 111.9 111.4 111.3 112.1 113.0 113.5 113.8 113.7 113.4 113.1 113.2 112.9 113.0 112.9 112.8 113.6 114.1 114.5 23.6 27.1 29.2 28.7 28.6 30.8 31.0 31.2 31.4 31.4 32.0 32.9 33.1 33.5 34.1 34.3 34.5 34.8 35.1 35.6 36.4 37.6 39.1 40.9 42.5 44.0 45.0 46.9 52.9 57.0 59.5 62.5 65.5 74.6 88.4 96.7 98.3 100.0 101.7 104.1 98.5 101.8 105.8 111.7 119.9 107.1 107.6 109.4 112.8 113.9 113.1 112.2 111.5 112.9 114.1 113.6 112.6 114.2 115.0 116.5 117.4 117.5 117.6 117.0 119.9 124.1 126.8 126.6 125.7 14.1 14.7 15.6 16.4 16.9 17.8 18.6 19.4 20.0 20.4 20.9 21.8 22.6 23.3 24.1 24.5 25.0 25.5 26.0 26.6 27.6 28.8 30.3 32.4 35.0 37.0 38.4 40.1 43.8 48.0 52.0 56.0 60.8 67.5 77.9 88.1 96.0 99.4 104.6 109.9 115.4 120.2 125.7 131.9 139.2 128.9 129.4 130.0 130.2 130.8 131.6 132.5 133.1 133.4 133.7 134.1 134.6 135.4 136.0 136.9 137.1 137.6 138.8 139.9 140.9 141.4 141.7 142.0 142.3 Medical care services 10.4 11.3 12.1 12.5 12.8 13.4 14.3 14.8 15.3 15.7 16.3 17.0 17.9 18.7 19.5 20.2 20.9 21.5 22.0 22.7 23.9 26.0 27.9 30.2 32.3 34.7 35.9 37.5 41.4 46.6 51.3 56.4 61.2 67.2 74.8 82.8 92.6 100.7 106.7 113.2 121.9 130.0 138.3 148.9 162.7 143.5 145.1 145.9 146.4 146.9 147.9 149.3 150.4 151.3 152.3 153.6 154.1 155.7 157.2 158.5 159.4 160.5 161.5 163.4 165.0 165.8 167.2 168.6 169.3 Services less medical care 22.8 23.6 24.2 25.0 25.4 25.9 26.3 26.8 27.4 28.3 29.3 30.8 32.9 35.6 37.5 38.9 40.6 44.3 48.3 52.2 55.9 60.7 67.5 78.2 88.7 96.4 99.2 104.4 109.6 114.6 119.1 124.3 130.1 136.8 127.3 127.8 128.3 128.5 129.1 129.9 130.8 131.3 131.6 131.8 132.1 132.6 133.4 133.9 134.7 134.9 135.3 136.5 137.5 138.5 139.0 139.1 139.4 139.7 All items less food 198 21.7 233 23.5 23.8 25.3 25.9 26.4 26.6 266 271 28.0 28.6 29.2 29.7 30.0 30.3 30.7 31.1 31.6 32.3 33.4 34.9 36.8 39.0 40.8 42.0 43.7 48.0 52.5 56.0 59.6 63.9 71.2 81.5 90.4 96.3 99.7 104.0 108.0 109.8 113.6 118.3 123.7 130.3 120.8 121.3 122.0 122.9 123.5 123.9 124.2 124.3 124.8 125.4 125.6 125.8 126.7 127.3 128.1 128.4 128.7 129.4 130.0 131.3 132.6 133.5 133.7 133.7 All items less energy 28.9 29.7 29.9 30.4 30.7 31.1 31.5 32.0 32.5 33.5 34.4 35.9 38.0 40.3 42.0 43.4 46.1 50.6 55.1 58.2 61.9 66.7 73.4 81.9 90.1 96.1 99.6 104.3 108.4 112.6 117.2 122.3 128.1 134.7 125.5 126.0 126.7 127.1 127.6 127.7 128.2 128.5 129.1 129.9 130.4 130.6 131.5 132.3 133.3 133.5 133.7 134.2 134.8 135.6 136.3 136.9 137.2 137.4 All items less food and energy Energy 1 28.9 29.6 30.2 30.6 31.0 31.4 31.8 32.3 32.7 33.5 34.7 36.3 38.4 40.8 42.7 44.0 45.6 49.4 53.9 57.4 61.0 65.5 71.9 80.8 89.2 95.8 99.6 104.6 109.1 113.5 118.2 123.4 129.0 135.5 126.4 126.9 127.6 128.0 128.3 128.5 129.0 129.3 130.0 130.9 131.3 131.5 132.0 132.8 133.9 134.2 134.4 134.8 135.5 136.4 137.2 137.8 138.2 138.3 21.5 21.5 21.9 22.4 22.5 22.6 22.6 22.5 22.9 23.3 23.8 24.2 24.8 25.5 26.5 27.2 29.4 38.1 42.1 45.1 49.4 52.5 65.7 86.0 97.7 99.2 99.9 100.9 101.6 88.2 88.6 89.3 94.3 102.1 89.0 89.3 89.8 94.9 97.4 99.0 98.5 97.0 95.9 94.6 93.2 93.2 97.6 96.4 95.5 95.7 96.7 99.5 98.9 103.6 108.8 111.4 110.9 110.1 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. 354 TABLE B-61.—Changes in special consumer price indexes, 1958-90 [Percent change] 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 1988 1989 1990 Dec. to Dec.1 Dec. to Dec.1 Year to year 1.8 1.7 1.4 .7 1.3 1.6 1.0 1.9 3.5 3.0 4.7 6.2 5.6 3.3 3.4 8.7 12.3 6.9 4.9 6.7 9.0 13.3 12.5 8.9 3.8 3.8 3.9 3.8 1.1 4.4 4.4 4.6 6.1 All items less energy All items less food All items 2.8 .7 1.7 1.0 1.0 1.3 1.3 1.6 2.9 3.1 4.2 5.5 5.7 4.4 3.2 6.2 11.0 9.1 5.8 6.5 7.6 11.3 13.5 10.3 6.2 3.2 4.3 3.6 1.9 3.6 4.1 4.8 5.4 Dec. to Dec.1 Year to year 1.8 2.1 1.0 1.3 1.0 1.6 1.0 1.6 3.5 3.3 5.0 5.6 6.6 3.0 2.9 5.6 12.2 7.3 6.1 6.4 8.3 14.0 13.0 9.8 4.1 4.1 3.9 4.1 4^ 4.2 4.5 6.3 2.1 2.1 1.7 1.0 1.0 1.3 1.3 1.6 2.2 3.4 4.5 5.4 6.0 4.6 2.9 4.0 9.8 9.4 6.7 6.4 7.2 11.4 14.5 10.9 6.5 3.5 4.3 3.8 1.7 3.5 4.1 4.6 5.3 Dec. to Dec.1 Year to year 2.1 1.3 1.3 L3 1.9 1.3 1.9 3.4 3.2 4.9 6.5 5.4 3.4 3.5 8.2 11.7 6.6 4.8 6.7 9.1 11.1 11.7 8.5 4.2 4.5 4.4 4.0 3.8 4.1 4.7 4.6 5.2 All items less food, shelter, and energy All items less food and energy 1.7 2.0 1.0 1.3 1.3 1.6 1.2 1.5 3.3 3.8 5.1 6.2 6.6 3.1 3.0 4.7 11.1 6.7 6.1 6.5 8.5 11.3 12.2 9.5 4.5 4.8 4.7 4.3 3.8 4.2 4.7 4.4 5.2 2.8 1.7 1.0 1.3 1.3 1.6 1.6 3.1 2.7 4.4 5.8 6.1 4.2 3.3 6.2 9.8 8.9 5.6 6.4 7.8 10.0 11.6 10.0 6.7 3.6 4.7 3.9 3.9 4.1 4.4 4.7 5.2 Dec. to Dec.1 Year to year 2.4 2.0 1.3 1.3 1.3 1.3 1.6 1.2 2.4 3.6 4.6 5.8 6.3 4.7 3.0 3.6 8.3 9.1 6.5 6.3 7.4 9.8 12.4 10.4 7.4 4.0 5.0 4.3 4.0 4.1 4.4 4.5 5.0 4.6 5.1 5.8 3.1 2.7 3.5 11.3 6.4 6.9 5.3 6.4 7.3 9.8 9.4 6.1 5.0 4.3 3.7 3.3 3.8 4.7 4.1 5.2 Year to year 4.7 4.7 5.2 4.9 2.4 2.9 7.7 8.9 7.1 6.0 5.6 6.9 8.8 9.6 7.7 5.2 5.0 3.8 3.4 3.8 4.2 4.4 4.9 Change from preceding period Seasonally adjusted Unadjusted 1989: Jan Feb Mar Apr May June July Auc .... Sept oct':::::::::::::::: Nov Dec 1990- Jan Feb Mar Apr Nfay He':::::::::::::::: July Aug :::::::::::;" Sept oct!::::::::::::::: Nov .. . Dec 0.5 .4 .6 '.8 .2 .2 .2 .3 '.2 .2 1.0 .5 '.2 .2 .5 .4 .9 .8 .6 o' 0.6 .4 .5 .7 .4 .2 .3 0 .2 :s .4 1.1 '.5 .2 .2 .5 .4 .8 .8 .6 '.3 Seasonally adjusted Unadjusted 0.3 .4 .6 .7 .5 .2 .1 '.5 .2 .2 .7 '.6 .2 .5 .5 1.0 1.0 .7 .1 0 Seasonally adjusted Unadjusted 0.6 .3 .5 'A .2 .3 ~'.2 .5 .3 1.0 .5 '.2 '.5 .5 .8 .8 .7 .3 .4 0.6 '.B .3 .4 .1 .4 :.6 5 .4 .2 .7 .6 .8 :i .4 .4 .6 .5 .4 .2 .1 0.6 .3 :.4s .3 .4 .2 .3 .5 .4 .4 .8 .6 .5 .2 .1 .6 .5 .4 .4 .3 A Unadjusted Seasonally adjusted Unadjusted 0.3 .4 .6 0.6 .3 .5 0.3 '.5 '.2 .2 A .2 .5 .7 'A '.2 0 0 .2 .9 .7 .4 0 .3 .8 .8 .3 A .6 .5 o' '.2 A .6 .8 .2 .1 .3 .5 .7 .6 .4 .3 .1 .3 .4 .2 .3 .5 .4 .3 .6 .5 .7 .2 :.4s .2 .5 1.0 .7 .3 .1 Seasonally adjusted 0.6 .4 .3 .3 .4 .2 .2 .1 .4 .4 .4 .3 .5 .8 .5 .3 '.2 .5 .4 .4 .4 .3 .4 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. 355 TABLE B-62.—Changes in consumer price indexes, commodities and services, 1929-90 [Percent change] Food Total Year Dec. to Dec.1 1929 0.6 1933 .. .8 0 1939 .7 1940 1941 9.9 1942 9.0 3.0 1943 1944 2.3 2.2 1945 18.1 1946 8.8 1947 1948 3.0 -2.1 1949 5.9 1950 6.0 1951 1952 .8 1953 -J 1954 .4 1955 3.0 1956 1957 2.9 1.8 1958 1.7 1959 1.4 1960 .7 1961 1962 1.3 1963 1.6 1964 1.0 1965 1.9 1966 3.5 1967 3.0 4.7 1968 6.2 1969 1970 5.6 1971 3.3 3.4 1972 8.7 1973 1974 12.3 1975 6.9 1976 4.9 6.7 1977 1978 9.0 1979 13.3 1980 12.5 1981 8.9 1982 3.8 1983 3.8 1984 3.9 1985 3.8 1.1 1986 1987 4.4 4.4 1988 1989 4.6 1990 6.1 Year to year 0 -51 -1.4 .7 5.0 10.9 6.1 1.7 2.3 8.3 14.4 8.1 -1.2 1.3 7.9 1.9 .8 .7 -.4 1.5 3.3 2.8 .7 1.7 1.0 1.0 1.3 1.3 1.6 2.9 3.1 4.2 5.5 5.7 4.4 3.2 6.2 11.0 9.1 5.8 6.5 7.6 11.3 13.5 10.3 6.2 3.2 4.3 3.6 1.9 3.6 4.1 4.8 5.4 Dec. to Dec.1 -0.7 1.4 13.3 12.9 4.2 2.0 2.9 24.8 10.3 1.7 -4.1 7.8 5.9 -.9 -~L6 ~2.B 2.8 1.2 .6 1.2 0 .9 1.5 .9 1.4 2.5 2.5 4.0 5.4 3.9 2.8 3.4 10.4 12.8 6.2 3.3 6.1 8.8 13.0 11.0 6.0 3.6 2.9 2.7 2.5 -2.0 4.6 3.8 4.1 6.6 Dec. to Dec.1 Year to year -2.0 .7 6.7 14.5 9.3 1.0 3.0 10.6 20.5 7.2 -2.7 .7 9.0 1.3 -.3 -.9 -.9 1.0 3.2 2.1 0 .9 .6 .9 .9 1.2 1.1 2.6 1.9 3.5 4.7 4.5 3.6 3.0 7.4 11.9 8.8 4.3 5.8 7.2 11.3 12.3 8.4 4.1 2.9 3.4 2.1 -.9 3.2 3.5 4.7 5.2 2.5 6.9 -2.5 2.5 15.7 17.9 3.0 0 3.5 31.3 11.3 -.8 -3.9 9.8 7.1 -1.0 -1.1 -1.8 -.7 2.9 2.8 2.4 -1.0 3.1 -.7 1.3 2.0 1.3 3.5 4.0 1.2 4.4 7.0 2.3 4.3 4.6 20.3 12.0 6.6 .5 8.1 11.8 10.2 10.2 4.3 3.1 2.7 3.8 2.6 3.8 3.5 5.2 5.6 5.3 1.2 -2.8 -2.5 1.7 9.2 17.6 11.0 -1.2 2.4 14.5 21.7 8.3 -4.2 1.6 11.0 1.8 -1.4 -.4 -1.4 .7 3.2 4.5 -1.7 1.0 1.3 L6 1.3 2.2 5.0 .9 3.5 5.1 5.7 3.1 4.2 14.5 14.3 8.5 3.0 6.3 9.9 11.0 8.6 7.8 4.1 2.1 3.8 2.3 3.2 4.1 4.1 5.8 5.8 Dec. to Dec.1 0.5 10J 6.3 5.5 4.7 3.3 12.7 9.2 5.2 -4.6 5.5 4.9 -.6 -L5 0 2.7 2.0 .8 1.4 -.3 .8 .6 1.4 .3 .8 1.9 3.1 3.6 4.7 4.7 2.2 2.6 4.9 13.2 6.1 5.1 4.8 7.7 14.3 11.5 6.7 3.8 3.1 2.1 2.4 -5.3 5.1 3.2 3.3 7.4 1 Changes from 2 Year to year -1.6 .5 5.4 10.8 4.6 5.3 4.2 6.0 12.9 7.4 -1.3 -.3 7.6 .9 .3 -1.2 -.6 .9 2.9 1.1 1.4 .6 .3 .6 .8 .8 .8 1.3 2.4 3.6 4.3 4.1 3.9 2.2 3.5 10.7 9.1 5.0 5.5 5.8 11.6 13.8 8.6 4.1 3.2 3.1 2.0 -3.3 2.6 3.3 4.0 4.8 Medical care services Total Commodities less food Year to year Energy2 Services Commodities All items Dec. to Dec.1 Year to year 0 0 .8 2.4 2.3 2.3 2.2 .7 3.6 5.6 5.9 3.7 3.6 5.2 4.4 4.2 2.0 2.0 3.4 4.2 2.7 3.9 2.5 2.1 1.6 2.4 1.6 2.7 4.8 4.3 5.8 7.7 8.1 4.1 3.4 6.2 11.4 8.2 7.2 8.0 9.3 13.6 14.2 13.0 4.3 4.8 5.4 5.1 4.5 4.3 4.8 5.1 5.7 .8 .8 3.1 2.3 2.2 1.5 1.4 4.3 6.1 5.1 3.0 5.3 4.5 4.3 3.1 2.0 2.5 4.3 3.7 3.1 3.4 1.7 2.0 2.0 2.0 2.3 3.8 4.3 5.2 6.9 8.0 5.7 3.8 4.4 9.2 9.6 8.3 7.7 8.6 11.0 15.4 13.1 9.0 3.5 5.2 5.1 5.0 4.2 4.6 4.9 5.5 Dec. to Dec.1 1.2 0 1.2 3.5 5.6 3.2 3.1 9.0 6.4 6.9 1.6 4.0 5.3 5.8 3.4 2.6 3.2 3.8 4.8 4.6 4.9 3.7 3.5 2.9 2.8 2.3 3.6 8.3 8.0 7.1 7.3 8.1 5.4 3.7 6.0 13.2 10.3 10.8 9.0 9.3 10.5 10.1 12.6 11.2 6.2 5.8 6.8 7.9 5.6 6.9 8.6 9.9 Year to year 1.2 0 0 3.5 4.5 4.3 3.1 5.1 8.7 7.1 3.3 2.4 4.7 6.7 3.5 3.4 2.6 3.8 4.3 5.3 4.5 4.3 3.6 3.5 2.9 2.3 3.2 5.3 8.8 7.3 8.2 7.0 7.4 3.5 4.5 10.4 12.6 10.1 9.9 8.5 9.8 11.3 10.7 11.8 8.7 6.0 6.1 7.7 6.6 6.4 7.7 9.3 Dec. to Dec.1 Year to year 0 -0.9 4.7 1.9 2.3 1.3 .4 -1.3 .4 2.2 0 -.9 -.4 0 1.8 1.8 1.7 1.7 1.7 2.1 1.7 1.7 2.5 2.9 2.8 4.8 3.9 3.1 2.6 2.6 8.1 17.0 29.6 21.6 10.5 11.4 7.1 7.1 9.5 7.2 6.3 7.9 25.1 37.5 30.9 18.0 13.6 11.9 1.5 1.3 .7 -.5 1.0 .2 .7 1.8 -19.7 -13.2 8.2 '.B 5.6 5.1 8.3 18.1 December to December are based on unadjusted indexes. 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. 356 TABLE B-63.—Producer price indexes by stage of processing, 1947-90 [1982=100] Finished goods Rnished goods excluding consumer foods Consumer foods Year or month Total finished goods 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 1988 1989 1990 1 1989- Jan Feb Mar Apr R/Tay ... June July Aug Sept Oct Nov Dec 1990- Jan Feb Mar Apr Hay June'":::::"::::::::"::::" July l Aug Sept Oct..:::::.:.::::::::::::::::: Nov Dec 26.4 28.5 27.7 28.2 30.8 30.6 30.3 30.4 30.5 31.3 32.5 33.2 33.1 33.4 33.4 33.5 33.4 33.5 34.1 35.2 35.6 36.6 38.0 39.3 40.5 41.8 45.6 52.6 58.2 60.8 64.7 69.8 77.6 88.0 96.1 100.0 101.6 103.7 104.7 103.2 105.4 108.0 113.6 119.2 111.1 111.7 112.1 113.0 114.2 114.3 114.1 113.4 113.6 114.9 114.9 115.4 117.6 117.4 117.2 117.2 117.7 117.8 118.2 119.3 120.3 122.3 122.9 121.9 Total 31.9 34.9 32.1 32.7 36.7 36.4 34.5 34.2 33.4 33.3 34.4 36.5 34.8 35.5 35.4 35.7 35.3 35.4 36.8 39.2 38.5 40.0 42.4 43.8 44.5 46.9 56.5 64.4 69.8 69.6 73.3 79.9 87.3 92.4 97.8 100.0 101.0 105.4 104.6 107.3 109.5 112.6 118.7 124.4 116.7 117.2 118.3 117.7 119.1 118.6 119.0 118.7 118.5 119.5 120.1 121.1 123.9 124.6 124.4 123.2 124.5 124.2 124.9 124.9 124.1 124.6 125.1 124.1 Crude 39.3 42.4 40.1 36.5 41.9 44.6 41.6 37.5 39.1 39.1 38.5 41.0 37.3 39.8 38.0 38.4 37.8 38.9 39.0 41.5 39.6 42.5 45.9 46.0 45.8 48.0 63.6 71.6 71.7 76.7 79.5 85.8 92.3 93.9 104.4 100.0 102.4 111.4 102.9 105.6 107.1 109.8 119.6 123.2 119.6 123.8 128.3 119.6 128.9 119.0 119.0 113.0 109.0 120.8 115.3 119.2 148.8 152.7 138.6 118.7 112.9 108.6 113.4 112.1 109.8 116.0 127.7 119.6 Processed 31.1 34.0 31.1 32.4 36.2 35.4 33.6 34.0 32.7 32.7 34.1 36.1 34.7 35.2 35.3 35.6 35.2 35.2 36.8 39.2 38.8 40.0 42.3 43.9 44.7 47.2 55.8 63.9 70.3 69.0 72.7 79.4 86.8 92.3 97.2 100.0 100.9 104.9 104.8 107.4 109.6 112.7 118.6 124.4 116.4 116.7 117.5 117.5 118.3 118.5 119.0 119.0 119.1 119.3 120.4 121.2 122.0 122.5 123.3 123.5 125.3 125.3 125.7 125.8 125.1 125.2 124.9 124.4 See next page for continuation of table. 357 Consumer goods Total 35.0 35.9 36.9 38.2 39.6 40.4 42.0 48.8 54.7 58.1 62.2 66.7 74.6 86.7 95.6 100.0 101.8 103.2 104.6 101.9 104.0 106.5 111.8 117.4 109.2 109.9 110.0 111.4 112.6 112.8 112.4 111.7 112.0 113.3 113.1 113.5 115.5 115.1 114.8 115.2 115.5 115.7 116.0 117.4 119.1 121.5 122.1 121.1 Total 27.4 29.2 28.6 29.0 31.1 30.7 31.0 31.1 31.3 32.1 32.9 32.9 33.3 33.5 33.4 33.4 33.4 33.3 33.6 34.1 34.7 35.5 36.3 37.4 38.7 39.4 41.2 48.2 53.2 56.5 60.6 64.9 73.5 87.1 96.1 100.0 101.2 102.2 103.3 98.5 100.7 103.1 108.9 115.2 105.8 106.6 106.8 108.8 110.3 110.4 109.8 108.5 109.1 110.3 109.9 110.4 113.2 112.4 111.8 112.2 112.7 112.9 113.2 115.1 117.7 120.6 121.3 119.8 NonDurable durable 32.9 35.2 36.1 36.5 38.9 39.2 39.5 39.8 40.2 41.6 42.8 43.4 43.9 43.8 43.6 43.4 43.1 43.3 43.2 43.4 44.1 45.1 45.9 47.2 48.9 50.0 50.9 55.5 61.0 63.7 67.4 73.6 80.8 91.0 96.4 100.0 102.8 104.5 106.5 108.9 111.5 113.8 117.6 120.4 116.6 117.0 116.6 116.4 117.1 117.5 116.9 117.0 116.7 120.0 119.6 119.7 119.1 119.4 119.2 119.3 119.4 120.3 120.4 119.9 119.9 122.6 122.8 122.8 24.2 25.7 24.7 25.1 27.0 26.3 26.6 26.7 26.8 27.3 27.9 27.8 28.2 28.4 28.4 28.4 28.5 28.4 28.8 29.3 30.0 30.6 31.5 32.5 33.5 34.1 36.1 44.0 48.9 52.4 56.8 60.0 69.3 85.1 95.8 100.0 100.5 101.1 101.7 93.3 94.9 97.3 103.8 111.5 100.0 100.9 101.3 104.2 106.0 106.0 105.3 103.5 104.5 104.8 104.3 105.0 109.2 107.9 107.1 107.7 108.3 108.3 108.6 111.5 115.1 118.0 119.0 116.8 Capital equipment 19.8 21.6 22.7 23.2 25.5 25.9 26.3 26.7 27.4 29.5 31.3 32.1 32.7 32.8 32.9 33.0 33.1 33.4 33.8 34.6 35.8 37.0 38.3 40.1 41.7 42.8 44.2 50.5 58.2 62.1 66.1 71.3 77.5 85.8 94.6 100.0 102.8 105.2 107.5 109.7 111.7 114.3 118.8 122.9 117.1 117.5 117.5 117.6 118.3 118.8 118.7 119.0 118.9 120.5 120.8 120.8 121.2 121.6 121.9 122.2 122.2 122.5 122.8 123.1 122.9 124.5 124.7 124.9 Total finished consumer goods 28.6 30.8 29.4 29.9 32.7 32.3 31.7 31.7 31.5 32.0 32.9 33.6 33.3 33.6 33.6 33.7 33.5 33.6 34.2 35.4 35.6 36.5 37.9 39.1 40.2 41.5 46.0 53.1 58.2 60.4 64.3 69.4 77.5 88.6 96.6 100.0 101.3 103.3 103.8 101.4 103.6 106.2 112.1 118.2 109.4 110.1 110.6 111.8 113.2 113.1 112.8 111.9 112.2 113.3 113.2 113.9 116.7 116.4 115.9 115.8 116.5 116.6 117.0 118.3 119.8 121.9 122.6 121.2 TABLE B-63.—Producer price indexes by stage of processing, 1947-90—Continued [1982=100] Intermediate materials, supplies, and components Year or month 1947 1948 1949 1950 1951 Total 23.3 25.2 24.2 253 28.4 27.5 27.7 1953 1954 27.9 28.4 1955 1956 29.6 1957 30.3 30.4 1958 1959 308 1960 30.8 1961 30.6 1962 30.6 1963 .. . 30.7 1964 30.8 1965 31.2 32.0 1967 32.2 1968 33.0 1969 34.1 35.4 1970 1971 36.8 1972 38.2 1973 '. 42.4 1974 52.5 58.0 1976 60.9 1977 64.9 1978 69.5 1979 78.4 1980 90.3 98.6 1982 100.0 1983 100.6 1984 103.1 1985 102.7 1986 99.1 1987 101.5 107.1 1988 1989 112.0 1990 » 114.5 1989: Jan 110.6 Feb 111.0 Mar 111.5 112.4 112.7 112.7 June 112.5 112.0 112.4 112.3 Nov 112.0 Dec 111.9 113.4 1990: Jan Feb 112.5 112.4 Mar . 112.8 113.1 June 113.1 113.1 114.4 116.3 117.8 117.8 Nov 116.7 Dec 1952 Foods and Other feeds* :::::: : 1966.:.: : :.: 1975..: :: : 1981..: : : : fci SEE fc: Aug*::::::: »- ""41.8" 41.5 42.9 45.6 46.7 49.5 70.3 83.6 81.6 77.4 79.6 84.8 94.5 105.5 104.6 100.0 103.6 105.7 97.3 96.2 99.2 109.5 113.8 113.4 115.6 114.0 115.2 113.7 114.2 112.9 114.5 113.1 113.7 112.3 113.2 113.0 113.2 111.0 111.4 112.5 115.9 115.5 116.0 114.9 113.9 113.0 111.3 111.6 22.2 24.1 23.5 24.6 27.6 26.7 27.0 27.2 28.0 29.3 30.1 30.1 30.5 30.7 30.3 30.2 30.1 30.3 30.7 31.3 31.7 32.5 33.6 34.8 36.2 37.7 40.6 50.5 56.6 60.0 64.1 68.6 77.4 89.4 98.2 100.0 100.5 103.0 103.0 99.3 101.7 106.9 111.9 114.5 110.4 110.8 111.4 112.3 112.6 112.7 112.4 112.0 112.3 112.4 111.9 111.9 113.4 112.5 112.5 112.8 112.9 113.0 113.0 114.4 116.4 118.1 118.2 117.0 Materials and components For manufacturing 24.9 26.8 25.7 26.9 30.5 29.3 29.7 29.8 30.5 32.0 32.7 32.8 33.3 33.3 32.9 32.7 32.7 33.1 33.6 34.3 34.5 35.3 36.5 38.0 38.9 40.4 44.1 56.0 61.7 64.0 67.4 72.0 80.9 91.7 98.7 100.0 101.2 104.1 103.3 102.2 105.3 113.2 118.1 118.7 118.0 118.3 118.7 118.9 118.9 118.4 118.1 117.7 117.7 117.9 117.7 117.4 117.6 117.5 117.9 118.2 118.4 118.3 118.5 118.7 119.3 120.0 120.1 119.8 For construction Crude materials for further processing Processed fuels Conand tainers Supplies Total lubricants 22.5 14.4 24.9 16.4 24.9 14.9 26.2 15.2 28.7 15.9 28.5 15.7 29.0 15.8 29.1 15.8 15.8 30.3 31.8 16.3 32.0 17.2 32.0 16.2 16.2 32.9 32.7 16.6 32.2 16.8 16.7 32.1 32.2 16.6 16.2 32.5 32.8 16.5 16.8 33.6 16.9 34.0 35.7 16.5 37.7 16.6 38.3 17.7 40.8 19.5 43.0 20.1 46.5 22.2 55.0 33.6 60.1 39.4 64.1 42.3 69.3 47.7 76.5 49.9 84.2 61.6 91.3 85.0 97.9 100.6 100.0 100.0 95.4 102.8 95.7 105.6 107.3 92.8 108.1 72.7 109.8 73.3 116.1 71.2 121.3 76.4 122.9 85.8 119.4 71.6 119.9 72.1 73.2 120.5 121.1 76.7 121.5 78.1 121.5 79.3 121.6 78.7 77.3 121.6 78.7 121.9 122.3 77.8 122.1 76.3 121.7 77.3 121.8 84.2 121.9 79.4 122.5 77.8 123.0 78.0 78.4 123.2 122.8 79.4 78.7 123.0 85.7 123.0 123.2 94.0 123.5 100.4 123.4 99.9 123.5 94.0 23.4 24.4 24.5 25.2 29.6 28.0 28.0 28.5 28.9 31.0 32.4 33.2 33.0 33.4 33.2 33.6 33.2 32.9 33.5 34.5 35.0 35.9 37.2 39.0 40.8 42.7 45.2 53.3 60.0 63.1 65.9 71.0 79.4 89.1 96.7 100.0 100.4 105.9 109.0 110.3 114.5 120.1 125.4 127.7 123.1 123.9 124.4 125.1 125.3 125.6 126.0 126.0 126.1 126.3 126.8 126.7 127.3 127.4 127.4 127.8 127.7 127.6 127.5 127.5 127.6 127.7 128.2 128.3 28.5 29.8 28.0 29.0 32.6 32.6 31.0 31.7 31.2 32.0 32.3 33.1 33.5 33.3 33.7 34.5 35.0 34.7 35.0 36.5 36.8 37.1 37.8 39.7 40.8 42.5 51.7 56.8 61.8 65.8 69.3 72.9 80.2 89.9 96.9 100.0 101.8 104.1 104.4 105.6 107.7 113.7 118.1 119.4 117.2 117.4 118.0 118.0 118.2 118.1 118.5 118.3 118.5 118.3 118.3 118.3 118.8 118.5 118.7 118.9 119.4 119.2 119.5 119.4 119.7 120.0 120.1 120.3 31.7 34.7 30.1 32.7 37.6 34.5 31.9 31.6 30.4 30.6 31.2 31.9 31.1 30.4 30.2 30.5 29.9 29.6 31.1 33.1 31.3 31.8 33.9 35.2 36.0 39.9 54.5 61.4 61.6 63.4 65.5 73.4 85.9 95.3 103.0 100.0 101.3 103.5 95.8 87.7 93.7 96.0 103.1 108.9 101.4 101.2 103.2 104.4 106.1 104.1 103.9 101.1 102.3 102.1 102.6 104.2 106.5 106.8 105.6 103.0 104.7 101.2 101.4 110.2 115.1 124.6 116.8 110.5 Foodstuffs and feedstuffs 45.1 48.8 40.5 43.4 50.2 47.3 42.3 42.3 38.4 37.6 39.2 41.6 38.8 38.4 37.9 38.6 37.5 36.6 39.2 42.7 40.3 40.9 44.1 45.2 46.1 51.5 72.6 76.4 77.4 76.8 77.5 87.3 100.0 104.6 103.9 100.0 101.8 104.7 94.8 93.2 96.2 106.1 111.2 113.2 112.5 111.0 113.7 111.6 114.9 111.7 110.1 110.0 108.9 107.9 109.9 112.6 113.5 113.9 115.3 115.1 117.0 115.6 115.4 113.2 110.8 110.9 108.6 108.5 Other Total Fuel Other 21.1 21.6 22.5 23.8 24.7 27.0 34.3 44.1 43.7 48.2 51.7 57.5 69.6 84.6 101.8 100.0 100.7 102.2 96.9 81.6 87.9 85.5 93.4 101.3 90.0 90.7 92.2 95.3 96.0 94.7 95.4 91.1 93.6 94.0 93.5 94.3 97.5 97.6 94.9 91.0 92.5 88.0 88.3 103.4 112.4 127.2 116.5 106.7 7.5 8.9 8.8 8.8 9.0 9.0 9.3 8.9 8.9 9.5 10.1 10.2 10.4 10.5 10.5 10.4 10.5 10.5 10.6 10.9 11.3 11.5 12.0 13.8 15.7 16.8 18.6 24.8 30.6 34.5 42.0 48.2 57.3 69.4 84.8 100.0 105.1 105.1 102.7 92.2 84.1 82.1 85.3 84.6 85.6 86.7 83.8 84.8 86.3 86.1 86.6 83.6 85.7 84.1 84.9 85.5 86.8 87.3 86.0 84.7 84.8 83.0 86.8 80.4 81.6 81.6 84.2 88.3 24.0 26.7 24.3 27.8 32.0 27.8 26.6 26.1 27.5 28.6 28.2 27.1 28.1 26.9 27.2 27.1 26.7 27.2 27.7 28.3 26.5 27.1 28.4 29.1 29.4 32.3 42.9 54.5 50.0 54.9 56.3 61.9 75.5 91.8 109.8 100.0 98.8 101.0 94.3 76.0 88.5 85.9 95.8 107.3 90.9 91.3 94.6 98.7 99.0 97.3 98.1 93.3 95.8 97.1 96.0 97.0 101.0 100.8 97.6 92.7 94.6 89.0 87.8 112.0 124.3 145.2 128.9 113.3 1 Data have been revised through August 1990 to reflect the availability of late reports and corrections by respondents. All data are subject to revision 4 months after original publication. 2 Intermediate materials for food manufacturing and feeds. Source: Department of Labor, Bureau of Labor Statistics. 358 TABLE B-64.—Producer price indexes by stage of processing, special groups, 1974-90 [1982=100] Finished goods Excluding foods and energy Year or month Total Foods Ener- gy Total % 2* Intermediate materials, supplies, and components Consumer goods exclud- Crude materials for further processing Total Foods and feeds1 Energy Other Total Foodstuffs and feedstuffs Energy Other 27.8 83.3 foods and energy 1974 52.6 64.4 26.2 53.6 50.5 55.5 52.5 83.6 33.1 54.0 61.4 76.4 1975 1976 1977 1978 1979 58.2 60.8 64.7 69.8 77.6 69.8 69.6 73.3 79.9 87.3 30.7 34.3 39.7 42.3 57.1 59.7 63.1 66.9 71.9 78.3 58.2 62.1 66.1 71.3 77.5 60.6 63.7 67.3 72.2 78.8 58.0 60.9 64.9 69.5 78.4 81.6 77.4 79.6 84.8 94.5 38.7 41.5 46.8 49.1 61.1 60.2 63.8 67.6 72.5 80.7 61.6 63.4 65.5 73.4 85.9 77.4 76.8 77.5 87.3 100.0 33.3 69.3 35.3 80.2 40.4 79.8 45.2 87.8 54.9 106.2 1980 1981 1982 1983 1984 88.0 96.1 100.0 101.6 103.7 92.4 97.8 100.0 101.0 105.4 85.2 101.5 100.0 95.2 91.2 87.1 85.8 94.6 94.6 100.0 100.0 103.0 102.8 105.5 105.2 87.8 94.6 100.0 103.1 105.7 90.3 98.6 100.0 100.6 103.1 105.5 104.6 100.0 103.6 105.7 84.9 100.5 100.0 95.3 95.5 90.3 97.7 100.0 101.6 104.7 95.3 103.0 100.0 101.3 103.5 104.6 103.9 100.0 101.8 104.7 73.1 97.7 100.0 98.7 98.0 113.1 111.7 100.0 105.3 111.7 1985 1986 1987 1988 1989 104.7 103.2 105.4 108.0 113.6 104.6 107.3 109.5 112.6 118.7 87.6 63.0 61.8 59.8 65.7 108.1 107.5 110.6 109.7 113.3 111.7 117.0 114.3 122.1 118.8 108.4 111.1 114.2 118.5 124.0 102.7 99.1 101.5 107.1 112.0 97.3 96.2 99.2 109.5 113.8 92.6 72.6 73.0 70.9 76.1 105.2 104.9 107.8 115.2 120.2 95.8 94.8 87.7 93.2 93.7 96.2 96.0 106.1 103.1 111.2 93.3 71.8 75.0 67.7 75.9 104.9 103.1 115.7 133.0 137.9 1990 2 119.2 124.4 74.9 126.6 122.9 128.8 114.5 113.4 85.4 120.9 108.9 113.2 85.7 136.4 1989: Jan Feb Mar Apr... May June 111.1 111.7 112.1 113.0 114.2 114.3 116.7 117.2 118.3 117.7 119.1 118.6 60.8 61.8 62.3 68.4 71.8 70.2 120.1 120.7 120.7 120.8 121.4 122.1 117.1 117.5 117.5 117.6 118.3 118.8 121.9 122.6 122.6 122.7 123.3 124.1 110.6 111.0 111.5 112.4 112.7 112.7 115.6 114.0 115.2 113.7 114.2 112.9 71.2 71.8 72.9 76.4 77.7 78.9 119.6 119.9 120.3 120.7 120.8 120.5 101.4 101.2 103.2 104.4 106.1 104.1 112.5 111.0 113.7 111.6 114.9 111.7 71.2 72.0 73.5 77.3 78.3 77.5 140.3 140.3 141.3 141.2 140.3 137.9 July Aug Sept Oct Nov Dec 114.1 113.4 113.6 114.9 114.9 115.4 119.0 118.7 118.5 119.5 120.1 121.1 68.4 63.6 65.9 65.8 64.6 64.8 122.1 122.4 122.3 123.9 124.0 124.4 118.7 119.0 118.9 120.5 120.8 120.8 124.1 124.5 124.2 126.0 125.9 126.5 112.5 112.0 112.4 112.3 112.0 111.9 114.5 113.1 113.7 112.3 113.2 113.0 78.3 76.9 78.3 77.5 76.0 76.9 120.2 120.0 120.1 120.3 120.0 119.7 103.9 101.1 102.3 102.1 102.6 104.2 110.1 110.0 108.9 107.9 109.9 112.6 78.9 73.5 76.1 76.6 76.9 78.5 135.5 136.6 137.7 137.6 134.3 132.0 1990: Jan Feb Mar SfaV June 117.6 117.4 117.2 117.2 117.7 117.8 1239 124.6 124.4 123.2 124.5 124.2 72.7 69.2 67.0 68.0 68.5 67.6 124.8 1252 125.4 1256 125.9 126.4 121.2 121.6 121.9 122.2 122.2 122.5 127.0 127.4 127.5 127.7 128.1 128.8 113.4 112.5 112.4 112.8 113.1 113.1 113.2 111.0 111.4 112.5 115.9 115.5 83.7 79.0 77.4 77.7 78.0 79.0 120.0 120.0 120.3 120.6 120.7 120.5 106.5 106.8 105.6 103.0 104.7 101.2 113.5 113.9 115.3 115.1 117.0 115.6 82.3 82.6 78.6 73.1 74.5 69.4 132.1 131.3 134.2 137.8 138.8 137.8 July Aug * Sept Oct Nov Dec 118.2 119.3 120.3 122.3 122.9 121.9 124.9 124.9 124.1 124.6 125.1 124.1 68.1 74.2 82.0 88.1 89.4 84.1 126.7 126.7 126.8 128.1 1285 1288 122.8 123.1 122.9 124.5 124.7 124.9 129.0 128.9 129.0 130.3 130.8 131.1 113.1 114.4 116.3 117.8 117.8 116.7 116.0 114.9 113.9 113.0 111.3 111.6 78.4 85.3 93.5 99.9 99.6 93.7 120.6 120.8 121.4 122.1 122.2 122.0 101.4 110.2 115.1 124.6 116.8 110.5 115.4 113.2 110.8 110.9 108.6 108.5 69.7 87.2 97.9 116.2 104.2 93.1 138.2 140.4 140.6 137.9 134.8 132.5 1 Intermediate materials for food manufacturing and feeds. * Data have been revised through August 1990 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. 359 TABLE B-65.—Producer price indexes for major commodity groups, 1947-90 [1982=100] Farm products and processed foods and feeds Year or month Total 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975.... 1976 1977. . 1978 1979.... 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 2 1989: Jan Feb Mar Apr May I::. : : : : : : : : : : June July Aug sept:::""""::::::::::::: Oct Nov Dec 1990: Jan Feb Mar Apr May June July z Aug. Sept Oct Nov Dec 1 ::::::::::":::" 37.9 40.8 36.0 37.7 43.0 41.3 38.6 38.5 36.6 36.4 37.7 39.4 37.6 37.7 37.7 38.1 37.7 37.5 39.0 41.6 40.2 41.1 43.4 44.9 45.8 49.2 63.9 71.3 74.0 73.6 75.9 83.0 92.3 98.3 101.1 100.0 102.0 105.5 100.7 101.2 103.7 110.0 115.4 118.6 115.0 114.6 116.1 115.0 116.8 115.4 115.5 115.0 114.5 114.5 115.5 116.6 118.3 118.4 118.9 118.5 120.1 119.6 120.0 119.1 117.9 118.1 117.4 117.0 Farm products 45.1 48.5 41.9 44.0 51.2 48.4 43.8 43.2 40.5 40.0 41.1 42.9 40.2 40.1 39.7 40.4 39.6 39.0 40.7 43.7 41.3 42.3 45.0 45.8 46.6 51.6 72.7 77.4 77.0 78.8 79.4 87.7 99.6 102.9 105.2 100.0 102.4 105.5 95.1 92.9 95.5 104.9 110.9 112.2 112.0 110.8 113.8 111.0 115.1 111.8 110.5 109.3 108.0 107.8 109.0 111.5 114.9 115.7 115.3 113.3 113.7 113.6 113.8 111.4 109.0 109.8 108.3 107.6 Processed foods and feeds 33.0 35.3 32.1 33.2 36.9 36.4 34.8 35.4 33.8 33.8 34.8 36.5 35.6 35.6 36.2 36.5 36.8 36.7 38.0 40.2 39.8 40.6 42.7 44.6 45.5 48.0 58.9 68.0 72.6 70.8 74.0 80.6 88.5 95.9 98.9 100.0 101.8 105.4 103.5 105.4 107.9 112.7 117.8 121.9 116.6 116.6 117.5 117.2 117.9 117.4 118.1 117.9 117.9 117.9 118.9 119.3 120.2 120.0 120.9 121.2 123.5 122.8 123.2 123.0 122.4 122.2 121.9 121.7 Industrial commodities Total 22.7 24.6 24.1 25.0 27.6 26.9 27.2 27.2 27.8 29.1 29.9 30.0 30.5 30.5 30.4 30.4 30.3 30.5 30.9 31.5 32.0 32.8 33.9 35.2 36.5 37.8 40.3 49.2 54.9 58.4 62.5 67.0 75.7 88.0 97.4 100.0 101.1 103.3 103.7 100.0 102.6 106.3 111.6 115.8 109.6 110.1 110.5 111.8 112.4 112.4 112.2 111.4 111.9 112.4 112.1 112.3 114.1 113.6 113.2 113.2 113.5 113.2 113.4 115.9 118.3 121.3 120.6 118.9 Textile products and apparel Hides, skins, leather, and related products Fuels and related products, and power l Chemicals and allied products l 50.6 52.8 48.3 50.2 56.0 50.5 49.3 48.2 48.2 48.2 48.3 47.4 48.1 48.6 47.8 48.2 48.2 48.5 48.8 48.9 48.9 50.7 51.8 52.4 53.3 55.5 60.5 68.0 67.4 72.4 75.3 78.1 82.5 89.7 97.6 100.0 100.3 102.7 102.9 103.2 105.1 109.2 112.3 114.9 111.0 111.3 111.2 111.6 111.8 112.2 112.6 112.9 113.0 113.3 113.5 113.6 114.6 114.6 114.7 114.9 114.8 115.0 115.1 115.1 115.0 115.0 115.1 115.1 31.7 32.1 30.4 32.9 37.7 30.5 31.0 29.5 29.4 31.2 31.2 31.6 35.9 34.6 34.9 35.3 34.3 34.4 35.9 39.4 38.1 39.3 41.5 42.0 43.4 50.0 54.5 55.2 56.5 63.9 68.3 76.1 96.1 94.7 99.3 100.0 103.2 109.0 108.9 113.0 120.4 131.4 136.3 141.7 131.2 133.2 136.8 136.1 134.8 135.2 136.9 137.2 138.0 138.2 138.0 139.5 138.9 141.7 141.6 142.9 143.7 143.0 142.8 142.2 141.6 140.8 140.5 140.6 11.1 13.1 12.4 12.6 13.0 13.0 13.4 13.2 13.2 13.6 14.3 13.7 13.7 13.9 14.0 14.0 13.9 13.5 13.8 14.1 14.4 14.3 14.6 15.3 16.6 17.1 19.4 30.1 35.4 38.3 43.6 46.5 58.9 82.8 100.2 100.0 95.9 94.8 91.4 69.8 70.2 66.7 72.9 82.2 68.1 68.9 69.9 74.2 76.0 75.8 75.5 72.0 73.9 73.7 72.8 73.7 79.8 77.0 74.6 73.4 74.1 72.8 72.7 82.4 91.0 100.7 97.4 90.2 32.1 32.8 30.0 30.4 34.8 33.0 33.4 33.8 33.7 33.9 34.6 34.9 34.8 34.8 34.5 33.9 33.5 33.6 33.9 34.0 34.2 34.1 34.2 35.0 35.6 35.6 37.6 50.2 62.0 64.0 65.9 68.0 76.0 89.0 98.4 100.0 100.3 102.9 103.7 102.6 106.4 116.3 123.0 123.6 123.7 124.3 124.5 124.9 124.9 124.1 123.1 121.9 121.4 121.4 121.0 121.0 121.2 121.7 121.8 121.9 122.3 122.2 122.4 122.5 124.8 126.6 127.9 127.8 Prices for some items in this grouping are lagged and refer to 1 month earlier than the index month. 360 TABLE B-65.—Producer price indexes for major commodity groups, 1947-90—Continued [1982=100]. Industrial commodities—Continued Pulp, NonRubber Lumber Metals Machinery Furniture paper, metallic and and and and and and metal equipment household mineral plastic wood allied products products products products durables products Year or month Transportation equipment Total Motor vehicles and Miscellaneous products ment 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 1988 1989 1990 2 1989: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar... Apr. May June July 2 Aug. .. Sept Oct Nov Dec .: : . .. 29.2 30.2 29.2 35.6 43.7 39.6 36.9 37.5 42.4 43.0 42.8 42.8 42.6 42.7 41.1 39.9 40.1 39.6 39.7 40.5 41.4 42.8 43.6 44.9 45.2 45.3 46.6 56.4 62.2 66.0 69.4 72.4 80.5 90.1 96.4 100.0 100.8 102.3 101.9 101.9 103.0 109.3 112.6 113.6 111.9 112.2 112.7 113.0 113.0 112.8 112.8 112.6 112.7 112.5 112.5 112.9 113.2 112.9 113.3 113.3 113.5 113.2 113.1 113.2 113.5 114.1 114.7 115.2 25.8 29.5 27.3 31.4 34.1 33.2 33.1 32.5 34.1 34.6 32.8 32.5 34.7 33.5 32.0 32.2 32.8 33.5 33.7 35.2 35.1 39.8 44.0 39.9 44.7 50.7 62.2 64.5 62.1 72.2 83.0 96.9 105.5 101.5 102.8 100.0 107.9 108.0 106.6 107.2 112.8 118.9 126.7 129.7 120.1 122.0 123.2 125.2 126.5 127.4 128.9 129.0 129.0 130.9 130.0 128.5 129.0 129.7 130.5 132.4 132.0 130.7 131.3 130.2 129.5 127.8 126.7 126.7 25.1 26.2 25.1 25.7 30.5 29.7 29.6 29.6 30.4 32.4 33.0 33.4 33.7 34.0 33.0 33.4 33.1 33.0 33.3 34.2 34.6 35.0 36.0 37.5 38.1 39.3 42.3 52.5 59.0 62.1 64.6 67.7 75.9 86.3 94.8 100.0 103.3 110.3 113.3 116.1 121.8 130.4 137.8 141.3 135.1 136.3 136.9 137.4 137.8 137.9 138.0 138.4 138.6 139.1 139.3 139.2 140.3 140.5 140.7 140.9 141.1 141.0 141.1 141.1 141.5 142.0 142.4 142.4 18.2 20.7 20.9 22.0 24.5 24.5 25.3 25.5 27.2 29.6 30.2 30.0 30.6 30.6 30.5 30.2 30.3 31.1 32.0 32.8 33.2 34.0 36.0 38.7 39.4 40.9 44.0 57.0 61.5 65.0 69.3 75.3 86.0 95.0 99.6 100.0 101.8 104.8 104.4 103.2 107.1 118.7 124.1 123.0 125.3 125.1 125.6 125.6 125.2 124.0 123.0 123.0 123.7 123.9 122.8 121.7 121.7 120.9 122.0 122.9 123.1 122.6 122.9 124.2 124.6 124.7 123.5 122.3 19.3 20.9 21.9 22.6 25.3 25.3 25.9 26.3 27.2 29.3 31.4 32.1 32.8 33.0 33.0 33.0 33.1 33.3 33.7 34.7 35.9 37.0 38.2 40.0 41.4 42.3 43.7 50.0 57.9 61.3 65.2 70.3 76.7 86.0 94.4 100.0 102.7 105.1 107.2 108.8 110.4 113.2 117.4 120.7 115.6 116.0 116.3 116.5 116.9 117.3 117.8 118.0 118.2 118.5 118.7 118.9 119.6 119.7 120.0 120.2 120.4 120.5 120.8 120.9 121.0 121.3 121.6 121.8 37.2 39.4 40.1 40.9 44.4 43.5 44.4 44.9 45.1 46.3 47.5 47.9 48.0 47.8 47.5 47.2 46.9 47.1 46.8 47.4 48.3 49.7 50.7 51.9 53.1 53.8 55.7 61.8 67.5 70.3 73.2 77.5 82.8 90.7 95.9 100.0 103.4 105.7 107.1 108.2 109.9 113.1 116.9 119.1 115.0 115.3 115.7 116.2 116.5 117.0 117.5 117.9 117.9 117.7 117.8 117.9 118.4 118.7 118.7 119.0 119.0 119.2 119.1 119.2 119.4 119.6 119.6 119.7 20.7 22.4 23.0 23.5 25.0 25.0 26.0 26.6 27.3 28.5 29.6 29.9 30.3 30.4 30.5 30.5 30.3 30.4 30.4 30.7 31.2 32.4 33.6 35.3 38.2 39.4 40.7 47.8 54.4 58.2 62.6 69.6 77.6 88.4 96.7 100.0 101.6 105.4 108.6 110.0 110.0 111.2 112.6 114.7 111.8 111.8 112.0 112.6 112.7 112.8 112.8 112.8 112.9 113.0 113.1 113.2 113.8 113.9 114.2 114.3 114.5 114.6 114.6 114.7 115.0 115.3 115.9 115.9 40.4 41.9 44.2 45.5 46.1 50.3 56.7 60.5 64.6 69.5 75.3 82.9 94.3 100.0 102.8 105.2 107.9 110.5 112.5 114.3 117.7 121.5 116.8 117.1 116.8 116.4 117.2 117.6 116.9 117.1 116.6 120.0 120.0 119.8 119.7 120.2 120.3 120.5 120.4 121.0 121.2 121.1 120.9 124.0 124.2 124.4 25.5 28.2 30.1 30.0 31.6 33.4 33.3 33.4 34.3 36.3 37.9 39.0 39.9 39.3 39.2 39.2 38.9 39.1 39.2 39.2 39.8 40.9 41.7 43.3 45.7 47.0 47.4 51.4 57.6 61.2 65.2 70.0 75.8 83.1 94.6 100.0 102.2 104.1 106.4 109.1 111.7 113.1 116.2 118.2 116.2 116.5 115.5 114.8 115.6 115.9 114.5 114.5 113.8 119.6 118.8 118.6 117.2 117.3 117.0 116.9 116.6 117.6 117.8 117.2 116.6 121.4 121.5 121.4 26.6 27.7 28.2 28.6 30.3 30.2 31.0 31.3 31.3 31.7 32.6 33.3 33.4 33.6 33.7 33.9 34.2 34.4 34.7 35.3 36.2 37.0 38.1 39.8 40.8 41.5 43.3 48.1 53.4 55.6 59.4 66.7 75.5 93.6 96.1 100.0 104.8 107.0 109.4 111.6 114.9 120.2 126.5 134.2 124.0 124.2 124.5 124.6 125.2 126.7 127.2 127.4 127.6 128.2 128.4 130.0 131.2 131.9 132.0 132.3 133.2 134.4 134.6 134.9 135.1 135.9 137.0 138.4 2 Data have been revised through August 1990 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. 361 TABLE B-66.—Changes in producer price indexes for finished goods, 1955-90 [Percent change] 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 .. 1988 1989 1990 2 Finished consumer foods Finished energy goods Finished goods excluding consumer foods Finished goods excluding foods and energy Capital Consumer Total equipment goods 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 1.0 4.2 3.4 .3 1.8 -.6 .3 .6 3.3 2.0 1.7 3.1 4.9 2.1 3.3 3.9 11.7 18.3 6.6 3.8 6.7 9.3 12.8 11.8 7.1 3.6 .6 1.7 1.8 -2.3 2.2 4.0 4.9 5.6 0.3 2.6 3.8 2.2 3 .9 0 .3 3 .3 1.8 3.2 1.1 2.8 3.8 3.4 3.1 3.2 9.1 15.4 10.6 4.5 6.4 7.9 11.2 13.4 9.2 4.1 1.6 2.1 1.0 -1.4 2.1 2.5 5.2 4.9 -3.0 3.7 5.1 .6 37 5.3 19 .6 14 .6 9.1 1.3 4^6 8.1 -2.3 5.8 7.9 22.7 12.8 5.6 -2.5 6.9 11.7 7.4 7.5 1.5 2.0 2.3 3.5 .6 2.8 ~5J 5.2 2.5 23 -.3 3.3 6.1 4.7 2.0 1.6 2.5 1.5 .'9 .3 -.3 0 0 ~.8 -1.1 4.0 6.5 18 3.9 6.0 3.3 1.6 5.4 20.5 14.0 8.4 ~5l3 9.0 9.3 5.8 5.8 2.2 1.0 4.4 8 2.6 2.1 2.8 5.4 4.8 2"5 3.3 4.3 2.0 2.3 6.6 21.1 7.2 6.2 6.8 8.3 14.8 13.4 8.7 4.2 0 1.1 2.2 -4.0 3.2 3.2 4.8 6.7 2"6 2.8 3.5 3.7 2.0 4.0 16.2 12.1 6.2 7.1 7.2 11.8 16.2 10.3 4.6 1.8 1.4 1.4 -2.6 2.1 2.4 5.0 5.0 .9 1.8 2.0 2.0 2.8 3.8 2.1 2.1 7.5 20.3 6.8 6.0 6.7 8.5 17.6 14.1 8.6 4.2 -.9 .8 2.1 66 4.1 3.1 5.3 8.5 0.6 2.6 2.5 0 1.2 .6 ~o' 0 .9 1.5 1.8 2.3 2.3 3.0 3.5 1.8 4.6 17.0 10.4 6.2 7.3 7.1 13.3 18.5 10.3 4.1 1.2 1.0 1.1 -4.6 2.2 2.4 5.6 5.8 5.6 8.1 4.6 1.2 .9 .3 0 .3 .6 .9 1.5 3.8 3.1 3.0 4.8 4.8 2.4 2.1 5.1 22.7 8.1 6.5 7.2 8.0 8.8 11.4 9.2 3.9 2.0 1.8 2.7 2.1 1.3 3.6 3.8 3.4 2.6 7.7 6.1 2.6 1.9 .3 .3 '.3 .9 1.2 2.4 3.5 3.4 3.5 4.7 4.0 2.6 3.3 14.3 16.3 15.2 17.2 11.7 11.6 6.7 15.7 6.4 12.0 8.5 7.9 6.5 8.7 58.1 35.0 27.9 10.7 49.2 14.1 19.1 10.3 5.7 -1.5 -9.2 -4.8 2.8 2.3 -4.2 -4.2 -.2 -3.9 2.2 2.0 -38.1 -28.1 11.2 -1.9 1.8 2.3 -3.6 -3.2 9.5 3.9 9.9 29.8 3.5 14.0 17.7 6.0 5.7 6.2 8.4 9.4 10.8 7.7 4.9 1.9 2.0 2.7 2.7 2.1 4.3 4.2 3.5 11.4 11.4 5.7 6.0 7.5 8.9 11.2 8.6 5.7 3.0 2.4 2.5 2.3 2.4 3.3 4.4 3.7 Percent change from preceding month Unadjusted Season- % Unadjusted justed 1989: Jan Feb Mar &:::::: June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar J£y~. June July 2 Aug Sept Oct Nov Dec 1.0 .5 .4 .8 1.1 .1 -.2 -.6 ill 0 .4 1.9 -.2 -.2 0 .4 .1 .3 .9 .8 1.7 -'.B 1.1 .6 .4 .6 .'l -.4 -.3 Is .1 .6 1.9 0 -.2 -.2 .1 .2 .1 1.1 1.6 1.1 .5 -.6 Season- S Unadjusted justed 1.4 .9 -.5 1.2 -.4 .3 -.3 -.2 .8 '.8 2.3 .6 -.2 -1.0 1.1 -.2 .6 0 -.6 .4 .4 -.8 1.3 .8 .6 -.5 -!e Season- » justed 0.8 .6 l'.3 1.1 0.9 .7 .4 .9 .9 .3 -.5 -.5 1.2 .2 .3 -.3 1.4 .8 -.4 -.6 2.3 1.8 1.9 -13 ~0 0 .1 -!9 .3 .3 .6 -.8 .9 .8 -.9 Unadjusted L2 -.2 !s .2 .3 1.2 1.4 2.0 .5 -.8 -2 L3 2.3 1.2 .4 -.5 Season- S Unadjusted L9 1.4 .1 -.5 -1.2 .6 1.1 -.4 .5 2.5 -.7 -.5 .4 .4 .2 L7 2.3 2.5 .6 -1.2 1 Changes from 2 1.1 .8 .4 1.6 .9 .2 _9 -.9 1.4 .4 -.4 .6 2.7 -.6 -.3 -.1 0.6 .3 0 .1 .6 .4 -.1 .3 '.3 .2 .2 .2 -.2 1.3 .2 .2 ~\A 3.3 1.8 -i!o S Unadjusted justed justed 1.0 .8 Season- 0.5 .4 .2 ~!e .6 ~L3 .2 0 .3 .3 .7 -.1 .3 .2 .2 '.2 'A o' .1 .1 .4 .3 .3 .6 -.2 .2 .4 2.7 1.6 .8 9.8 5.0 -2.2 -2.6 -7.0 3.6 -.2 -1.8 .3 12.2 -4.8 -3.2 1.5 .7 -1.3 .7 9.0 10.5 7.4 1.5 -5.9 Seasonally adjusted 3.9 2.1 1.3 7.5 2.5 -2.3 -3.3 -6.9 6.6 -2l9 1.4 13.7 -4.5 -2.7 Unadjusted S justed 0.6 o' .1 .6 0 .2 -.1 1.3 .1 .3 .3 -~i!s -1.6 0 8.7 14.1 8.0 .1 -4.8 Season- 0 '.2 .2 .2 .4 .2 .1 1.0 \2 0.5 .6 .2 '.6 .7 -.2 .5 .4 .2 '.4 .2 .3 .4 .1 .3 .6 0 '.B 0 .5 .3 December to December are based on unadjusted indexes. Data have been revised through August 1990 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. 362 MONEY STOCK, CREDIT, AND FINANCE TABLE B-67.—Money stock, liquid assets, and debt measures, 1959-90 [Averages of daily figures; billions of dollars, seasonally adjusted] Ml Year and month M2 M3 L Debt1 Sum of currency, demand deposits, travelers checks, and other checkable deposits Ml plus overnight RPsand Eurodollars, MMMF balances (general purpose and broker/ dealer), MMDAs, and savings and smalltime deposits M2 plus large time deposits, term RPs, term Eurodollars, and institutiononly MMMF balances M3 plus other liquid assets Debt of domestic nonfinancial sectors (monthly average) (oSs) December: 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 1988.... 1989 1990 1989: Jan Feb Mar.... Apr May June:: : : : : : : : : : : : : : July... Aug Sept Oct Nov.. . Dec 1990: Jan Feb Mar Apr May June July Aug Sept oct : : : : :.: : : Nov Dec 140.0 140.7 145.2 147.9 153.4 160.4 167.9 172.1 183.3 197.5 204.0 214.5 228.4 249.3 262.9 274.4 287.6 306.4 331.3 358.5 382.9 408.9 436.5 474.5 521.2 552.1 620.1 724.7 750.4 787.5 794.8 825.5 785.8 786.7 785.5 782.1 776.2 773.7 779.1 780.4 782.9 788.1 789.4 794.8 794.8 801.4 804.8 807.3 805.4 809.4 809.0 815.9 822.2 820.1 822.6 825.5 297.8 312.4 335.5 362.7 393.3 424.8 459.4 480.0 524.4 566.4 589.6 628.1 712.7 805.2 861.0 908.6 1,023.3 1,163.7 1,286.7 1,389.0 1,497.1 1,629.9 1,793.5 1,953.1 2,186.5 2,371.6 2,570.6 2,814.2 2,913.2 3,072.4 3,221.6 3,323.3 3,073.4 3,078.0 3,086.9 3,089.4 3,085.3 3,101.6 3,127.0 3,146.9 3,163.6 3,181.9 3,201.2 3,221.6 3,231.0 3,255.7 3,271.0 3,278.1 3,272.6 3,280.8 3,285.4 3,302.9 3,317.2 3,318.9 3,317.7 3.323.3 299.8 315.3 341.1 371.5 406.1 442.5 482.3 505.1 557.1 606.3 615.1 677.4 776.2 886.0 985.0 1,070.4 1,172.3 1,311.8 1,472.6 1,646.6 1,803.2 1,987.5 2,234.2 2,441.9 2,693.4 2,982.8 3,202.1 3,494.5 3,678.7 3,918.3 4,044.3 4,094.0 3,925.9 3,936.7 3,956.5 3,965.0 3,965.6 3,984.9 4,007.6 4,013.0 4,013.5 4,018.1 4,031.0 4,044.3 4,048.5 4,064.3 4,069.0 4,073.6 4,066.6 4,071.3 4,075.2 4,091.3 4,094.1 4,092.6 4,092.0 4,094.0 1 388.7 403.7 430.8 466.1 503.8 540.4 584.5 614.8 666.6 729.0 763.6 816.3 903.0 1,023.0 1,142.6 1,250.3 1,367.0 1,516.6 1,705.3 1,910.7 2,116.2 2,324.2 2,596.8 2,851.6 3,154.7 3,524.1 3,829.5 4,135.5 4,338.7 4,676.1 4,881.2 704.7 739.5 781.8 833.9 888.9 952.0 1,020.3 1,087.8 1,163.3 1,256.7 1,347.0 1,437.1 1,568.6 1,723.8 1,912.1 2,083.6 2,264.3 2,503.0 2,815.8 3,188.5 3,568.5 3,904.1 4,292.1 4,685.9 5,212.6 5,961.9 6,773.5 7,636.2 8,345.1 9,107.6 9,790.4 4,683.3 4,702.0 4,735.9 4,762.0 4,761.9 4,784.4 4,810.5 4,825.2 4,831.8 4,841.7 4,858.1 4,881.2 4,882.5 4,890.4 4,906.6 4,916.8 4,888.0 4.907.1 4,916.0 4,927.3 4,952.4 4,948.0 4,956.8 9,150.3 9,209.8 9,279.9 9,342.9 9,403.6 9,457.9 9,506.9 9,570.7 9,629.1 9,689.0 9,751.7 9,790.4 9,831.3 9,889.9 9,959.1 10,015.9 10,059.9 10,117.8 10,183.5 10,256.6 10,313.6 10,355.3 10,414.5 Percent change from year or 6 months earlier2 Ml M2 M3 0.5 3.2 1.9 3.7 4.6 4.7 2.5 6.5 7.7 3.3 5.1 6.5 9.2 5.5 4.4 4.8 6.5 8.1 8.2 6.8 6.8 6.7 8.7 9.8 5.9 12.3 16.9 3.5 4.9 .9 3.9 .6 .6 .2 -.8 25 -3.5 -1.7 -1.6 4.9 7.4 8.1 8.4 8.0 8.1 4.5 9.2 8.0 4.1 6.5 13.5 13.0 6.9 5.5 12.6 13.7 10.6 8.0 7.8 8.9 10.0 8.9 12.0 8.5 8.4 9.5 3.5 5.5 4.9 3.2 2.7 2.7 3.0 2.7 1.4 1.9 3.5 4.5 5.0 6.0 7.5 7.7 6.7 6.9 6.8 6.0 4.5 3.7 3.4 2.9 2.8 2.5 2.8 2.6 5.2 8.2 8.9 9.3 9.0 9.0 4.7 10.3 8.8 1.5 10.1 14.6 14.1 11.2 8.7 9.5 11.9 12.3 11.8 9.5 10.2 12.4 9.3 10.3 10.7 7.4 9.1 5.3 6.5 3.2 1.2 4.1 4.1 4.6 4.2 3.2 3.4 4.2 3.9 2.9 2.7 3.3 3.0 2.0 2.6 2.8 2.8 1.8 1.3 1.3 1.3 1.2 .9 1.2 1.1 1.5 3.4 5.5 4.0 5.4 5.6 4.9 4.1 3.7 3.6 3.6 4.3 3.2 4.3 4.0 Debt 7.5 4.9 5.7 6.7 6.6 7.1 7.2 6.6 6.9 8.0 7.2 6.7 9.2 9.9 10.9 9.0 8.7 10.5 12.5 13.2 11.9 9.4 9.9 9.2 11.2 14.4 13.6 12.7 9.3 9.1 7.5 8.3 8.0 8.0 8.1 7.8 7.7 7.8 7.8 7.5 7.4 7.4 7.0 6.8 6.7 6.9 6.7 6.3 6.7 7.2 7.4 7.1 6.8 7.0 Consists of outstanding credit market debt of the U.S. Government, State and local governments, 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 a simple annual rate. Note.—See Federal Reserve Bulletin, May 1990, for revisions made to the series in February 1990. See Table B-68 for components. Source: Board of Governors of the Federal Reserve System. 363 TABLE B-68.—Components of money stock measures and liquid assets, 1959-90 [Averages of daily figures; billions of dollars, seasonally adjusted, except as noted] Year and month December: 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 1988 1989 1990 1989- Jan Feb . Mar Apr May June July Aug Sept Oct Nov Dec 1990- Jan Feb Mar . Apr May . June July Aug Sept Oct Nov Dec Currency 28.8 28.7 29.3 30.3 32.2 33.9 36.0 38.0 40.0 43.0 45.7 48.6 52.0 56.2 60.8 67.0 72.8 79.5 87.4 96.0 104.8 115.3 122.6 132.5 146.2 156.0 167.8 180.6 196.7 211.8 221.9 245.9 213.2 214.1 215.3 215.7 216.6 217.2 217.8 218.6 219.3 220.0 220.4 221.9 224.6 226.6 228.4 230.1 231.6 233.4 235.4 238.4 241.6 244.0 244.7 245.9 Travelers checks 0.4 .4 .4 .4 .5 !6 .6 .7 .8 .8 1.0 1.1 1.3 1.5 1.8 2.3 2.8 3.1 3.5 3.8 4.2 4.4 4.3 4.9 5.2 5.9 6.5 7.0 7.5 7.4 8.4 7.6 7.5 7.3 7.3 7.3 7.2 7.2 7.2 7.2 7.3 7.4 7.4 7.5 7.6 7.6 7.6 7.7 7.7 7.7 8.0 8.3 8.4 8.4 8.4 Demand deposits 110.8 111.6 115.5 117.1 120.6 125.8 131.3 133.4 142.5 153.6 157.3 164.7 175.1 191.6 200.3 205.1 211.6 221.6 236.7 250.5 257.5 261.4 231.4 234.1 238.5 243.9 266.8 302.1 287.0 287.0 279.7 277.5 284.5 284.9 283.9 281.3 279.6 276.3 279.6 278.5 278.1 280.0 278.8 279.7 277.3 280.2 279.3 277.8 274.5 274.5 274.7 277.9 279.7 276.8 277.2 277.5 Overnight Money market mutual repurfund (MMMF) balances chase agreements Other checkable (RPs) General Institudeposits net, plus purpose (dCDs) overnight tion and Eurodol- broker/ only1 1 lars dealer NSA 0.0 .0 .0 .0 .1 .1 .1 .1 .1 .1 .2 .1 .2 .2 4 .9 2.7 4.2 8.4 16.8 28.0 78.2 103.6 131.6 146.9 179.6 235.5 259.7 281.3 285.7 293.8 280.6 280.2 279.1 277.9 272.8 273.0 274.5 276.0 278.4 280.8 282.8 285.7 285.4 287.0 289.5 291.8 291.5 293.8 291.2 291.6 292.7 290.9 292.3 293.8 1 Data for 1974 through 1982 are not seasonally adjusted. See next page for continuation of table. 364 0.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 2.2 1.3 2.3 2.8 5.3 5.7 5.9 10.7 14.9 20.7 21.7 28.8 36.6 39.9 55.6 60.6 73.5 82.3 83.2 83.3 77.4 73.7 86.5 83.3 82.0 78.5 77.8 79.6 81.0 78.4 75.1 75.7 75.4 77.4 81.6 82.4 81.9 79.3 83.2 82.3 84.1 82.7 81.5 83.7 77.6 73.7 0.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 1.7 2.7 2.4 2.4 6.4 33.4 61.6 150.6 185.2 138.8 168.2 177.2 208.7 222.0 240.9 312.4 344.5 243.9 247.2 253.4 257.8 261.2 268.3 277.7 287.8 295.9 302.7 309.0 312.4 318.6 325.3 325.9 325.8 320.5 322.1 325.3 333.3 337.9 340.6 340.3 344.5 0.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .2 .4 .6 .9 3.1 9.5 15.2 38.0 51.1 42.8 62.1 63.9 83.8 89.0 87.1 102.3 126.5 87.1 86.9 86.3 88.3 92.1 96.3 99.0 101.4 101.6 101.1 101.1 102.3 103.2 103.7 105.4 106.8 107.3 107.3 108.9 114.0 116.1 119.8 120.1 126.5 Money market deposit accounts (MMDAs) 0.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 43.2 379.2 416.8 513.0 571.0 523.8 500.3 483.7 505.6 492.6 485.6 479.9 473.2 463.1 460.9 463.9 468.2 471.9 475.3 480.8 483.7 485.0 489.4 494.9 498.8 500.0 501.2 502.5 505.6 507.2 506.5 507.0 505.6 Savings deposits 146.4 159.1 175.5 194.8 214.4 235.2 256.9 253.1 263.7 268.9 263.7 261.0 292.2 321.4 326.7 338.5 388.8 453.0 492.1 481.8 423.7 400.1 343.8 356.7 305.4 285.1 301.2 370.1 414.9 427.8 409.0 412.9 424.2 421.0 417.9 412.0 405.4 403.4 403.3 404.0 405.5 406.1 407.9 409.0 410.2 413.6 414.6 415.8 415.0 415.8 416.4 416.3 415.9 414.7 413.8 412.9 TABLE B-68.—Components of money stock measures and liquid assets, 1959-90—Continued [Averages of daily figures; billions of dollars, seasonally adjusted, except as noted] Year and month Small Large denomidenomination nation time time deposits8 deposits2 Term repurchase agreements May June ::::: : : :. :::::: July Aug::::::: Sept Oct.::::::::::::::: ::: r Nov Dec 1990: Jan Feb Mar Apr RlTay June July Aug Sept Oct Nov Dec 11.4 12.5 148 20.1 255 29.2 345 55.0 778 100.5 1204 1511 189.7 231.6 265.8 287.9 337.9 3907 445.4 5210 634.3 7286 8232 8510 7840 8868 8840 856.2 9178 1,031.0 11423 1 1588 10427 1,0542 10664 1084.1 1 1030 11140 1 1224 l'l30'0 1 1326 l'l35 9 1 1385 1,142.3 11430 l'l42 6 1 1464 l',148.3 11504 1 1490 11497 1*151*5 1 1529 11556 1*1560 l'l588 1.2 2.0 3.9 7.0 10.8 15.2 21.2 23.1 30.9 37.4 204 45.3 57.7 73.3 111.1 144.8 129.7 118.1 145.2 1957 223.2 2604 303.0 3272 327.6 4174 4370 439.8 4888 541.1 558.3 4998 5467 553.3 5601 568.3 5731 5749 5747 5705 5656 5627 5610 558.3 5545 5501 5441 538.3 5354 5329 5306 5244 5172 511 1 5066 4998 Savings bonds (RPs) NSA December: 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 1988 1989 1990 1989- Jan Feb Mar Apr Term Eurodollars 0.0 .0 .0 .0 .0 .0 .0 .0 0 .0 27 1.6 2.7 3.5 6.7 7.8 8.1 13.9 18.9 262 29.1 335 35.3 334 499 576 624 80.5 1061 121.7 969 862 1230 1267 1289 1263 1275 128*4 1241 1176 1139 1096 1089 969 936 969 952 948 958 987 969 983 945 913 914 862 Shortterm Treasury securities Bankers acceptances cial paper NSA 0.7 .8 1.5 1.6 1.9 2.4 1.8 2.2 2.2 2.9 2.7 2.2 2.7 3.6 5.5 8.1 9.8 14.8 20.2 31.8 44.7 503 67.5 817 91.5 829 76.5 83.8 91.0 106.0 81.1 727 1006 100.1 1057 100.2 972 93.4 918 898 855 801 793 81.1 739 684 666 655 672 644 652 684 695 71 1 726 727 46.1 45.7 46.5 46.9 48.1 49.0 49.6 50.2 51.2 51.8 51.7 52.0 54.3 57.6 60.4 63.3 67.2 71.8 76.4 80.3 79.6 72.3 67.8 68.0 71.1 74.2 79.5 91.8 100.6 109.3 117.5 38.6 36.7 37.0 39.8 40.7 38.5 40.7 43.2 38.7 46.1 59.5 48.8 36.0 40.7 49.3 52.8 68.4 69.8 78.1 81.1 107.8 133.5 149.4 183.6 211.9 260.9 298.3 280.8 254.2 272.0 330.3 0.6 .9 1.1 1.1 1.2 1.3 1.6 1.8 1.8 2.3 3.3 3.5 3.8 3.5 5.0 12.6 10.7 10.8 14.1 22.0 27.2 32.1 40.0 44.5 45.0 45.5 42.1 37.2 44.8 40.6 41.2 3.6 5.1 5.2 6.8 7.7 9.1 10.2 14.4 17.8 22.5 34.0 34.5 32.7 35.2 42.8 51.2 48.5 52.5 64.1 80.7 98.3 98.8 105.3 113.7 133.2 160.8 207.5 231.1 260.4 335.6 347.9 109.8 110.7 1115 112.2 1128 113.6 1143 115.0 1157 116.2 1168 117.5 117.7 118.2 1191 119.9 120.7 1215 1224 123.2 123.8 1245 1252 271.4 270.5 278.3 285.1 293.5 295.2 2972 300.2 311.3 317.4 3186 330.3 332.3 324.9 3389 330.1 315.8 330.3 3368 335.4 344.5 342.0 347.9 40.6 40.6 41.4 41.5 41.2 41.2 41.9 42.6 41.0 40.0 405 41.2 40.7 38.3 37.0 35.8 35.3 34.6 32.9 32.3 31.8 32.4 34.0 335.7 343.6 348.3 358.2 348.8 349.4 349.5 354.3 350.3 350.0 351.3 347.9 343.3 344.7 342.7 357.5 349.6 349.4 348.7 345.1 358.2 356.5 357.7 2 Small denomination and large denomination deposits are those issued in amounts of less than $100,000 and more than $100,000, respectively. Note.-NSA indicates data are not seasonally adjusted. See also Table B-67. Source: Board of Governors of the Federal Reserve System. 365 TABLE B-69.—Aggregate reserves of depository institutions and monetary base, 7959-90 [Averages of daily figures 1 ; millions of dollars; seasonally adjusted, except as noted] Year and month December: 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 1988. .. 1989 1990 1989: Jan Feb Mar Apr. .. . May June July Aug Oct Nov. . . Dec 1990: Jan Feb Mar Apr May June July Sept Oct Nov Dec sept.:...:::..:::::::::::::::::::::::::"::::":: Aug:::::::::::::::::::::::":::":: : Adjusted for changes in reserve requirements2 Reserves of depository institutions NonborMonetary rowed Nonborplus Total base Required rowed extended credit 14,668 14,833 15,308 15,595 15,925 16,449 17,039 17,043 18,553 19,506 19,812 20,785 22,128 24,357 25,448 26,783 26,934 27,522 28,646 30,033 31,406 33,401 35,315 37,388 39,184 42,235 48,373 58,023 58,593 60,593 60,033 60,528 60,363 60,367 59,929 59,374 58,831 58,597 58,867 58,906 59,289 59,640 59,646 60,033 59,896 60,215 60,297 60,275 59,783 59,732 59,322 59,746 60,082 59,609 59,763 60,528 13,727 14,759 15,175 15,334 15,592 16,185 16,596 16,511 18,325 18,761 18,693 20,453 22,002 23,307 24,150 26,055 26,804 27,469 28,077 29,165 29,934 31,711 34,679 36,754 38,410 39,049 47,055 57,197 57,815 58,877 59,767 60,202 58,701 58,880 58,117 57,084 57,111 57,107 58,173 58,231 58,596 59,085 59,297 59,767 59,456 58,768 58,173 58,647 58,448 58,850 58,565 58,819 59,457 59,199 59,532 60,202 13,727 14,759 15,175 15,334 15,592 16,185 16,596 16,511 18,325 18,761 18,693 20,453 22,002 23,307 24,150 26,202 26,816 27,249 28,077 29,165 29,934 31,714 34,827 36,940 38,412 41,653 47,554 57,499 58,298 60,121 59,787 60,225 59,747 59,930 59,451 58,791 58,308 58,024 58,279 58,272 58,618 59,106 59,318 59,787 59,482 59,302 60,123 60,051 59,324 59,196 58,845 58,947 59,464 59,217 59,557 60,225 1 Data 2 14,162 14,089 14,724 15,023 15,435 16,043 16,616 16,704 18,178 19,081 19,526 20,536 21,946 24,073 25,144 26,524 26,668 27,249 28,456 29,801 30,965 32,887 34,996 36,888 38,623 41,380 47,336 56,653 57,546 59,545 59,110 58,861 59,214 59,229 59,023 58,575 57,796 57,692 57,901 58,021 58,351 58,620 58,701 59,110 58,880 59,227 59,436 59,379 58,820 58,958 58,460 58,879 59,173 58,763 58,816 58,861 44,380 44,330 45,400 46,665 48,943 51,335 54,052 56,135 59,651 63,781 66,944 71,032 75,818 82,524 89,119 96,409 102,556 110,160 119,356 130,031 141,068 152,525 160,936 172,947 188,275 201,673 219,350 241,427 258,055 275,238 284,946 309,493 276,563 277,300 278,177 278,198 278,526 279,020 279,957 280,756 281,806 282,786 283,222 284,946 287,509 289,714 291,820 293,540 294,401 296,276 297,860 301,121 304,780 306,545 307,678 309,493 Borrowings of depository institutions from the Federal Reserve, NSA Total 941 74 133 260 332 264 444 532 228 746 1,119 332 126 1,050 1,298 727 130 53 569 868 1,473 1,690 636 634 774 3,186 1,318 827 777 1,716 265 326 1,662 1,487 1,813 2,289 1,720 1,490 694 675 693 555 349 265 440 1,448 2,124 1,628 1,335 881 757 927 624 410 230 326 Seasonal 41 32 14 13 55 135 82 116 54 33 96 113 56 38 93 130 84 76 76 97 139 213 345 431 497 490 452 330 134 84 47 51 78 122 244 311 389 430 418 335 162 76 Extended credit 147 12 3 148 186 2 2,604 499 303 483 1,244 20 23 1,046 1,050 1,334 1,707 1,197 917 106 41 22 21 21 20 26 535 1,950 1,403 875 346 280 127 6 18 24 23 are prorated averages of biweekly (maintenance period) averages of daily figures. 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. 366 TABLE B-70.—Commercial bank loans and securities, 1972-90 [Monthly average; billions of dollars, seasonally adjusted x ] Year and month December: 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 * 1989: Jan Feb Mar Apr May June July AUK sept:.::::::.::.: Oct Nov Dec 1990: Jan Feb Mar May June July Auc Sept Oct. . : : : : : . Nov Dec P. Total loans and securities * Loans and leases U.S. State NonGovern- Other Comand Forbank ment securimercial Real Individ- Secu- finan2 politi- eign securi- ties Total and estate ual rity cial cultural cal banks ties indussubdiinstitrial visions tutions Foreign official institutions 1.6 2.1 2.2 2.4 2.8 2.7 4.9 6.9 11.5 7.2 5.9 9.4 7.9 6.0 5.9 5.3 5.0 3.6 3.1 1.4 2.1 3.2 4.0 5.1 5.7 7.4 9.3 10.9 12.7 13.3 13.7 16.0 19.0 22.4 24.6 29.2 31.8 32.7 10.1 10.3 11.6 10.9 12.2 13.3 18.2 18.2 21.5 23.1 26.9 31.8 31.0 35.9 39.6 40.7 46.3 46.5 46.9 Lease financing Other receivables 572.5 647.9 713.9 745.3 804.9 891.9 1,014.4 1,136.1 1,238.9 1,307.3 1,400.5 1,552.3 1,722.5 1,910.1 2,094.2 2,239.5 2,422.1 2,588.8 2,719.8 89.0 88.2 86.3 116.7 136.3 136.6 137.6 144.3 170.6 179.3 201.7 259.2 260.2 270.6 309.3 334.4 361.5 396.1 447.7 93.4 99.4 107.5 111.2 113.5 122.7 129.2 141.9 154.4 160.5 164.8 169.2 141.1 179.3 194.2 193.8 192.2 180.8 175.4 390.1 460.3 520.0 517.4 555.1 632.6 747.5 849.9 913.9 967.5 1,034.0 1,123.9 1,321.3 1,460.3 1,590.6 1,711.2 1,868.4 2,011.9 2,096.7 137.1 165.0 196.7 189.3 190.9 211.0 246.2 291.3 325.7 355.4 392.5 414.2 473.3 500.5 537.5 567.9 607.0 641.6 654.5 98.1 117.3 130.1 134.4 148.8 175.2 210.5 241.9 262.6 284.1 299.9 330.9 376.4 426.0 494.4 587.4 671.9 761.1 829.2 86.3 98.6 102.4 104.9 116.3 138.3 164.7 184.5 179.2 182.5 188.2 212.9 253.8 294.7 315.3 328.4 354.9 375.8 381.9 15.6 12.9 12.7 13.5 17.7 21.0 19.7 18.7 17.9 21.4 25.3 28.0 34.3 43.0 40.6 35.1 40.4 38.8 41.3 21.7 28.5 34.5 28.9 26.4 25.8 26.2 29.3 29.3 29.9 31.2 30.4 31.3 32.4 35.0 31.9 30.1 33.0 35.8 14.3 17.2 18.3 20.1 23.2 25.8 28.2 31.1 31.6 33.1 36.2 39.2 40.1 36.1 31.5 29.4 29.8 30.7 29.9 0.0 .0 .0 .0 46.1 56.8 58.5 52.6 45.6 40.1 33.9 3.9 6.2 8.3 9.0 11.7 13.7 21.5 18.6 23.8 18.1 14.6 13.4 11.2 9.8 9.9 7.9 8.1 8.9 7.6 2,418.6 2,445.4 2,462.2 2,468.6 2,482.4 2,495.2 2,513.7 2,531.7 2,546.2 2,570.5 2,585.8 2,588.8 361.9 362.7 368.7 370.3 372.7 373.7 374.3 376.2 379.3 390.9 396.0 396.1 190.7 190.1 189.6 188.4 188.0 187.5 186.6 184.2 183.6 181.4 179.9 180.8 1,866.0 1,892.5 1,903.8 1,909.8 1,921.7 1,934.0 1,952.8 1,971.4 1,983.3 1,998.2 2,009.9 2,011.9 606.0 617.3 619.2 621.6 626.7 627.0 631.6 636.1 638.2 642.0 645.0 641.6 676.5 684.0 690.3 698.9 705.7 712.6 721.0 730.0 739.1 746.7 754.0 761.1 356.6 357.9 359.5 361.7 364.0 364.5 366.0 367.9 370.8 372.4 374.4 375.8 40.4 45.0 43.7 39.9 38.4 40.5 40.0 38.9 39.5 40.7 40.9 38.8 30.2 30.6 30.2 29.6 29.3 30.6 31.3 31.4 31.7 33.2 33.9 33.0 30.1 43.3 30.0 43.4 29.7 43.4 29.7 43.3 29.9 43.1 30.0 42.8 30.3 42.5 30.4 42.2 30.4 41.7 30.5 41.3 30.5 40.8 30.7 40.1 7.8 8.0 7.5 7.3 8.0 7.9 8.0 8.4 8.1 9.1 8.3 8.9 5.0 4.9 4.9 4.9 4.7 4.4 4.3 4.2 4.2 3.8 3.7 3.6 29.4 29.7 30.0 30.0 30.2 30.2 30.7 31.1 31.4 31.9 31.9 31.8 40.9 41.6 45.6 42.9 41.8 43.5 47.0 50.6 48.0 46.6 46.4 46.5 2,594.4 2,614.3 2,635.6 2,646.7 2,653.8 2,669.4 2,684.7 2,707.8 2,708.5 2,710.9 2,714.2 2,719.8 404.7 414.5 422.3 427.3 430.6 438.5 440.6 441.3 447.1 451.6 452.0 447.7 180.4 180.5 180.1 180.0 178.3 177.9 177.8 179.2 179.4 176.9 175.2 175.4 2,009.3 2,019.4 2,033.2 2,039.4 2,045.0 2,053.0 2,066.4 2,087.3 2,082.0 2,082.5 2,087.0 2,096.7 637.9 638.8 644.4 649.0 648.6 651.6 651.7 653.1 651.6 649.5 652.4 654.5 765.9 774.7 781.8 786.9 794.6 800.1 808.0 811.9 814.7 820.7 824.1 829.2 378.3 379.5 379.9 378.8 379.8 378.4 378.3 380.1 381.1 381.2 380.3 381.9 39.3 40.0 37.1 36.1 34.8 35.3 38.8 46.0 43.1 41.4 39.9 41.3 32.5 32.9 33.8 33.9 33.9 34.4 34.8 35.7 36.1 36.1 35.5 35.8 30.9 30.8 30.6 30.4 30.0 29.5 29.3 29.2 29.1 29.2 29.5 29.9 38.6 38.9 38.4 38.2 37.9 37.4 36.5 35.9 35.2 34.6 34.4 33.9 8.1 7.8 8.4 8.8 8.7 7.4 7.0 8.0 7.9 8.9 8.2 7.6 3.2 3.1 3.0 3.2 3.2 3.2 3.2 3.2 3.2 3.1 3.1 3.1 32.1 32.1 32.4 32.4 32.7 32.4 32.8 32.9 32.9 33.3 33.0 32.7 42.5 40.7 43.3 41.8 40.7 43.3 46.0 51.4 47.1 44.5 46.6 46.9 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. 2 Excludes loans to commercial banks in the United States. Note.—Data are not strictly comparable because of breaks in the series. Source: Board of Governors of the Federal Reserve System. 367 TABLE B-71.—Bond yields and interest rates, 1929-90 [Percent per annum] U.S. Treasury securities Year and mAnth Bills (new issues) 1 3-month 1929 1933 1939 1940. 1941 1942 . . 1943 1944 1945 1946 1947 1948 1949 1950 1951 .. 1952 1953 1954 1955 1956 1957 1958 1959 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 1988 1989 1990 1985: Jan Feb Mar June July Aug Sept Oct Nov Dec 0.515 023 014 .103 326 .373 .375 .375 375 594 1040 1102 1.218 1552 1.766 1.931 .953 1.753 2.658 3.267 1.839 3.405 2.928 2.378 2.778 3.157 3.549 3.954 4.881 4.321 5.339 6.677 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 6.69 8.12 7.51 7.76 8.22 8.57 8.00 7.56 7.01 7.05 7.18 7.08 7.17 7.20 7.07 6-month Cons tant matur ties2 3- year 10- year Corporate bonds (Moody's) Aaa Baa Highgrade NewCommunici- home mercial pal bonds mort- paper, 6 (Standmonths4 Prime rate charged by banks* ard & Poor's) 1832 3.247 2.605 2.908 3.253 3.686 4.055 5.082 4.630 5.470 6.853 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 6.92 8.04 7.47 2.47 1.63 2.47 3.19 3.98 2.84 4.46 3.98 3.54 3.47 3.67 4.03 4.22 5.23 5.03 5.68 7.02 7.29 5.65 5.72 6.95 7.82 7.49 6.77 6.69 8.29 9.71 11.55 14.44 12.92 10.45 11.89 9.64 7.06 7.68 8.26 8.55 8.26 2.85 2.40 2.82 3.18 3.65 3.32 4.33 4.12 3.88 3.95 4.00 4.19 4.28 4.92 5.07 5.65 6.67 7.35 6.16 6.21 6.84 7.56 7.99 7.61 7.42 8.41 9.44 11.46 13.91 13.00 11.10 12.44 10.62 7.68 8.39 8.85 8.49 8.55 4.73 4.49 3.01 2.84 2.77 2.83 2.73 2.72 2.62 2.53 2.61 2.82 2.66 2.62 2.86 2.96 3.20 2.90 3.06 3.36 3.89 3.79 4.38 4.41 4.35 4.33 4.26 4.40 4.49 5.13 5.51 6.18 7.03 8.04 7.39 7.21 7.44 8.57 8.83 8.43 8.02 8.73 9.63 11.94 14.17 13.79 12.04 12.71 11.37 9.02 9.38 9.71 9.26 9.32 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 5.90 7.76 4.96 4.75 4.33 4.28 3.91 3.61 3.29 3.05 3.24 3.47 3.42 3.24 3.41 3.52 3.74 3.51 3.53 3.88 4.71 4.73 5.05 5.19 5.08 5.02 4.86 4.83 4.87 5.67 6.23 6.94 7.81 9.11 8.56 8.16 8.24 9.50 10.61 9.75 8.97 9.49 10.69 13.67 16.04 16.11 13.55 14.19 12.72 10.39 10.58 10.83 10.18 10.36 4.27 4.71 2.76 2.50 2.10 2.36 2.06 1.86 1.67 1.64 2.01 2.40 2.21 1.98 2.00 2.19 2.72 2.37 2.53 2.93 3.60 3.56 3.95 3.73 3.46 3.18 3.23 3.22 3.27 3.82 3.98 4.51 5.81 6.51 5.70 5.27 5.18 6.09 6.89 6.49 5.56 5.90 6.39 8.51 11.23 11.57 9.47 10.15 9.18 7.38 7.73 7.76 7.24 7.25 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 1 Rate on new issues within period; bank-discount basis. 2 3 Yields on the more actively traded issues adjusted to constant Discount rate, Federal Federal funds Reserve rate6 Bank of New York 8 5.16 2.56 1.00 1.00 1.00 £89 5.83 5.81 6.25 6.46 6.97 7.81 8.45 7.74 7.60 7.96 8.92 9.00 9.00 9.02 9.56 10.78 12.66 14.70 15.14 12.57 12.38 11.55 10.17 9.31 9.19 10.13 10.05 5.85 1.73 .59 .56 .53 .66 .69 .73 .75 .81 1.03 1.44 1.49 1.45 2.16 2.33 2.52 1.58 2.18 3.31 3.81 2.46 3.97 3.85 2.97 3.26 3.55 3.97 4.38 5.55 5.10 5.90 7.83 7.71 5.11 4.73 8.15 9.84 6.32 5.34 5.61 7.99 10.91 12.29 14.76 11.89 8.89 10.16 8.01 6.39 6.85 7.68 8.80 7.95 5.50-6.00 1.50-4.00 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50-1.75 1.75-2.00 2.00 2.07 2.56 3.00 3.17 3.05 3.16 3.77 4.20 3.83 4.48 4.82 4.50 4.50 4.50 4.50 4.54 5.63 5.61 6.30 7.96 7.91 5.72 5.25 8.03 10.81 7.86 6.84 6.83 9.06 12.67 15.27 18.87 14.86 10.79 12.04 9.93 8.33 8.21 9.32 10.87 10.01 High-low 1.00 1.34 1.50 1.59 1.75 1.75 1.99 1.60 1.89 2.77 3.12 2.15 3.36 3.53 3.00 3.00 3.23 3.55 4.04 4.50 4.19 5.16 5.87 5.95 4.88 4.50 6.44 7.83 6.25 5.50 5.46 7.46 10.28 11.77 13.42 11.02 8.50 8.80 7.69 6.33 5.66 6.20 6.93 6.98 High-low 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 8.00- 8.00 8.00- 8.00 8.00- 8.00 8.00- 8.00 8.00- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.50 n.oo n.oo n.oo n.oo n.oo :: :: 1.78 2.73 3.11 1.57 3.30 3.22 1.96 2.68 3.18 3.50 4.07 5.11 4.22 5.66 8.20 7.18 4.66 4.43 8.73 10.50 5.82 5.04 5.54 7.93 11.19 13.36 16.38 12.26 9.09 10.23 8.10 6.81 6.66 7.57 9.21 8.10 8.35 8.50 8.58 8.27 7.97 7.53 7.88 7.90 7.92 7.99 8.05 8.27 maturities by the Treasury Department. Effective rate (in the primary market) on conventional mortgages, reflecting fees and charges as well as contract rate and assuming, on the average, repayment at end of 10 years. Rates beginning January 1973 not strictly comparable with prior rates. Since November 1989 this series has been published by the Federal Housing Finance Board; it was formerly published by the Department of the Treasury, Office of Thrift Supervision and by the Federal Home Loan Bank Board. See next page for continuation of table. 368 TABLE B-71.—Bond yields and interest rates, 1929-90—Continued [Percent per annum] U.S. Treasury securities Year and month Bills (new issues)1 3-month 6-month Constant maturities2 3year 10- year Corporate bonds (Moody's) Aaa Baa Highgrade Newmunici- home Compal mercial bonds mort- paper, 6 (Stand- yields3 months4 ard & Poor's) Prime rate charged 5by banks Discount rate, Federal Federal funds 8 Reserve Bank of 8 rate New York High-low 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 1988: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1989: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec High-low 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 9.50- 9.50 9.50- 9.50 9.50- 9.00 9.00- 8.50 8.50- 8.50 8.50- 8.50 8.50- 8.00 8.00- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.50 7.50- 7.00 7.00- 6.50 6.50- 6.50 6.50- 6.50 6.50- 6.00 6.00- 5.50 5.50- 5.50 5.50- 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 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 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 5.90 5.69 5.69 5.92 6.27 6.50 6.73 7.02 7.23 7.34 7.68 8.09 6.31 5.96 5.91 6.21 6.53 6.76 6.97 7.36 7.43 7.50 7.76 8.24 7.87 7.38 7.50 7.83 8.24 8.22 8.44 8.77 8.57 8.43 8.72 9.11 8.67 8.21 8.37 8.72 9.09 8.92 9.06 9.26 8.98 8.80 8.96 9.11 9.88 9.40 9.39 9.67 9.90 9.86 9.96 10.11 9.82 9.51 9.45 9.57 11.07 10.62 10.57 10.90 11.04 11.00 11.11 11.21 10.90 10.41 10.48 10.65 7.81 7.55 7.80 7.91 8.01 7.86 7.87 7.86 7.71 7.54 7.58 7.66 9.10 9.12 9.15 9.13 8.95 9.26 9.17 9.06 9.26 9.10 9.43 9.39 6.92 6.58 6.64 6.92 7.31 7.53 7.90 8.36 8.23 8.24 8.55 8.97 8.75- 8.75 8.75- 8.50 8.50- 8.50 8.50- 8.50 9.00- 8.50 9.00- 9.00 9.50- 9.00 10.00- 9.50 10.00-10.00 10.00-10.00 10.50-10.00 10.50-10.50 6.00- 6.00 6.00- 6.00 6.00- 6.00 6.00- 6.00 6.00- 6.00 6.00- 6.00 6.00- 6.00 6.50- 6.00 6.50- 6.50 6.50- 6.50 6.50- 6.50 6.50- 6.50 6.83 6.58 6.58 6.87 7.09 7.51 7.75 8.01 8.19 8.30 8.35 8.76 8.29 8.48 8.83 8.70 8.40 8.22 7.92 7.91 7.72 7.63 7.65 7.64 8.38 8.49 8.87 8.73 8.39 8.00 7.63 7.72 7.74 7.61 7.46 7.45 9.20 9.32 9.61 9.40 8.98 8.37 7.83 8.13 8.26 8.02 7.80 7.77 9.09 9.17 9.36 9.18 8.86 8.28 8.02 8.11 8.19 8.01 7.87 7.84 9.62 9.64 9.80 9.79 9.57 9.10 8.93 8.96 9.01 8.92 8.89 8.86 10.65 10.61 10.67 10.61 10.46 10.03 9.87 9.88 9.91 9.81 9.81 9.82 7.41 7.47 7.61 7.49 7.25 6.97 6.97 7.08 7.27 7.22 7.13 7.01 9.52 9.82 9.99 10.17 10.18 10.42 10.48 10.22 10.24 10.11 10.09 10.07 9.02 9.35 9.97 9.78 9.29 8.80 8.35 8.32 8.50 8.24 8.00 7.93 10.50-10.50 11.50-10.50 11.50-11.50 11.50-11.50 11.50-11.50 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 6.50- 6.50 7.00- 6.50 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 9.12 9.36 9.85 9.84 9.81 9.53 9.24 8.99 9.02 8.84 8.55 8.45 7.64 7.76 7.87 7.78 7.78 7.74 7.66 7.44 7.38 7.19 7.07 6.81 7.52 7.72 7.83 7.82 7.82 7.64 7.57 7.36 7.33 7.20 7.04 6.76 8.13 8.39 8.63 8.78 8.69 8.40 8.26 8.22 8.27 8.07 7.74 7.47 8.21 8.47 8.59 8.79 8.76 8.48 8.47 8.75 8.89 8.72 8.39 8.08 8.99 9.22 9.37 9.46 9.47 9.26 9.24 9.41 9.56 9.53 9.30 9.05 9.94 10.14 10.21 10.30 10.41 10.22 10.20 10.41 10.64 10.74 10.62 10.43 7.13 7.21 7.29 7.36 7.34 7.22 7.15 7.31 7.40 7.40 7.10 7.04 9.91 9.88 10.03 10.17 10.28 10.13 10.08 10.11 9.90 9.98 9.90 9.76 7.96 8.04 8.23 8.29 8.23 8.06 7.90 7.77 7.83 7.81 7.74 7.49 10.50-10.00 10.00-10.00 10.00-10.00 10.00-10.00 10.00-10.00 10.00-10.00 10.00-10.00 10.00-10.00 10.00-10.00 10.00-10.00 10.00-10.00 10.00-10.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 7.00 7.00- 6.50 8.23 8.24 8.28 8.26 8.18 8.29 8.15 8.13 8.20 8.11 7.81 7.31 4 6 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 period. 6 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 the7 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 Housing Finance Board, Moody's Investors Service, and Standard & Poor's Corporation. 369 TABLE B-72.—Total funds raised in credit markets by nonfinancial sectors, 1981-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Item 1981 1982 1983 1984 1985 1986 1987 1988 1989 Net credit market borrowing by nonfinancial sectors 398.4 538.1 752.3 848.1 836.9 687.0 760.8 678.2 87.4 161.3 186.6 198.8 223.6 215.0 144.9 157.5 151.6 87.8 -.5 162.1 -.9 186.7 -.1 199.0 -.2 223.7 214.7 -.1 .4 143.4 1.5 140.0 17.4 150.0 1.6 296.2 237.1 351.5 553.5 624.5 621.9 542.1 603.3 526.6 165.7 157.2 247.1 319.9 451.2 465.8 453.2 459.2 379.8 33.7 22.8 109.2 50.4 18.7 88.2 43.3 16.0 187.9 51.0 46.1 222.8 135.4 73.5 242.2 22.7 126.8 316.3 49.3 79.4 324.5 49.8 102.9 306.5 30.4 73.7 275.7 72.4 4.8 22.2 9.7 53.4 5.4 25.2 4.1 120.4 14.1 51.0 2.4 136.7 25.2 62.2 -1.2 156.8 29.8 62.2 -6.6 218.7 33.5 73.6 -9.5 234.9 24.4 71.6 -6.4 231.0 16.7 60.8 -2.1 218.0 16.4 42.7 -1.5 Other debt instruments 130.5 79.9 104.4 233.6 173.3 156.1 88.9 144.1 146.8 Consumer credit Bank loans n e e Open-market paper Other 16.9 50.5 14.7 48.5 16.4 53.9 -6.1 15.8 48.9 25.0 3U 81.7 68.0 21.7 62.2 82.5 40.6 14.6 35.6 58.0 66.9 -9.3 40.5 33.5 10.0 2.3 43.2 50.2 39.8 11.9 42.2 39.1 39.9 20.4 47.4 296.2 237.1 351.5 553.5 624.5 621.9 542.1 603.3 526.6 17.1 114.3 164.8 27.7 84.3 125.1 23.6 185.6 142.3 28.1 231.8 293.6 90.9 284.5 249.1 36.2 293.0 292.7 48.8 302.2 191.0 45.6 314.9 242.8 29.6 285.0 211.9 16.3 44.4 104.1 6.7 71.8 46.6 3.9 81.9 56.5 -.4 123.2 170.8 -14.5 -16.3 99.2 129.3 134.3 209.7 10.6 77.9 123.7 7.5 65.7 184.6 1.6 50.8 159.5 23.5 16.0 17.3 8.4 1.2 9.7 4.5 6.3 10.9 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 66 6.2 5.0 3.8 -2.8 6.2 -6.0 3.1 -1.0 11.5 -3.9 7.4 -3.6 2.1 -1.4 6.9 -1.8 8.7 -7.5 13.3 -7.5 407.1 414.4 555.4 760.6 849.3 846.6 691.5 767.1 689.1 Total net borrowing by domestic nonfinancial sectors... 383.6 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 and other loans Total domestic plus foreign 5.3 Direct and indirect supply of funds to credit markets 383.6 Private domestic nonfinancial sectors Deposits and currency Checkable deposits and currency Time and savings deposits Money market fund shares Security repurchase agreements Foreign deposits Credit market instruments 398.4 538.1 752.3 848.1 836.9 687.0 760.8 678.2 289.4 303.5 383.5 487.7 493.3 419.0 393.9 474.5 437.2 218.0 205.6 237.9 324.5 222.8 297.5 179.3 232.8 241.3 29.2 84.2 102.2 4.2 -1.7 43.5 26.6 134.8 207.1 33.5 -39.0 11.1 23.1 3.1 37.2 233.6 49.0 9.8 -5.1 53.7 145.9 7.2 17.7 -1.7 110.8 117.4 43.2 20.2 5.9 27.6 18.2 113.2 163.2 20.2 28.9 32.9 21.6 -2.5 -11.2 13.2 123.6 85.2 14.9 4.4 145.6 163.2 270.5 121.5 214.6 241.7 195.9 38.2 66.7 82.0 110.7 106.4 106.9 62.2 12.9 97.8 43.7 62.7 9.3 97.6 9.9 72.1 18.6 1.7 119.9 166.9 9.8 -13.1 7.3 -5.8 135.4 177.6 7.5 47.4 -46.4 3.4 140.5 88.1 71.4 2.9 At banks Credit market instruments U.S. Government and related loans, net U.S. Government cash balances Private insurance and pension reserves Other sources 97.9 -8.6 -22.6 25.5 32.3 23.7 14.6 23.7 8.8 57.9 19.7 62.3 10.2 -1.1 83.4 -1.2 8.3 6.1 114.7 -25.5 9.0 -5.5 115.0 -2.3 16.5 4.0 124.0 53.4 37.0 10.3 131.7 93.8 See next page tor caititwtiai of We. 370 TABLE B-72.—Total funds raised in credit markets by nonfinancial sectors, 1981-90—Continued [Billions of dollars; quarterly data at seasonally adjusted annual rates] 1988 1990 1989 Item 1 II III IV 1 II III IV 1 II III Net credit market borrowing by nonfinancial sectors Total net borrowing by domestic nonfinancial 756.8 U S Government Treasury issues Agency issues and mortgages Private domestic nonfinancial sectors Debt capital instruments Tax-exempt obligations Corporate bonds Mortgages Home mortgages Multi-family residential Commercial Farm !.!..." Other debt instruments Consumer credit Bank loans n e e Open-market paper 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 and other loans Total domestic plus foreign 812.8 778.7 694.9 746.9 666.8 678.8 620.2 762.1 624.6 708.6 175.9 131.2 178.0 144.8 147.3 100.1 173.9 185.0 247.6 228.7 286.7 176.4 123.5 7.7 157.1 20.9 103.2 41.6 148.5 -1.2 95.0 5.1 166.8 7.1 189.6 -4.6 218.1 29.6 223.4 5.4 288.0 -1.3 580.9 681.6 600.7 550.1 599.6 566.7 504.9 435.2 514.5 395.8 422.0 395.5 539.2 463.1 439.0 412.8 390.1 369.2 347.0 366.2 331.4 294.0 40.2 100.8 254.5 51.1 123.9 364.3 51.3 99.8 312.1 56.8 87.1 295.1 39.7 58.2 314.9 28.7 86.5 275.0 34.1 62.7 272.4 19.1 87.4 240.5 13.0 44.6 308.6 21.9 66.9 242.7 25.9 38.1 230.0 193.2 14.7 49.6 -3.0 287.3 14.9 64.8 -2.7 231.5 18.1 65.0 -2.5 212.0 19.2 63.9 .0 225.5 23.1 68.6 -2.3 211.3 21.4 41.5 .9 221.0 11.8 40.9 -1.3 214.3 9.5 19.9 -3.2 237.3 21.9 50.7 -1.4 225.4 -4.3 24.6 -3.0 207.9 .0 23.0 -.9 185.4 142.4 137.6 111.1 186.8 176.5 135.6 88.2 148.3 64.4 128.0 42.3 10.2 13.2 71.8 51.2 22.2 39.0 -1.3 38.2 55.9 32.3 60.4 36.9 45.1 39.5 55.0 37.1 50.8 16.9 30.9 44.1 7.7 -6.9 43.3 14.6 19.6 69.7 44.4 9.8 6.5 -6.0 54.1 27.7 10.5 17.5 72.2 57.1 64.4 -5.7 69.5 50.3 62.4 1.1 28.6 580.9 681.6 600.7 550.1 599.6 566.7 504.9 435.2 514.5 395.8 422.0 34.6 292.0 254.3 50.2 362.7 268.7 44.6 316.5 239.6 53.0 288.5 208.6 40.1 293.4 266.1 33.3 264.0 269.4 28.6 290.8 185.4 16.5 291.8 126.9 9.0 300.0 205.4 14.9 270.2 110.7 20.5 283.4 118.1 -9.3 64.7 198.9 -5.2 67.3 206.6 10 -14.5 73.4 57.3 167.2 165.8 4.7 71.0 190.3 -5.0 56.9 217.4 21 40.2 147.3 8.9 35.0 83.1 4.3 38.4 162.8 -6.1 25.5 91.3 3.9 24.3 89.9 7.1 3.8 16.9 -3.5 -6.9 30.4 41.1 26.3 13.4 .2 3.1 -9.6 3.6 5.0 -3.1 6.2 11.2 -2.9 -11.2 5.7 2.5 3.2 -3.8 14.3 16.9 -6.3 -19.4 11.5 -3.2 -6.6 -8.7 8.1 3.7 20.7 -2.1 1.0 28.3 -4.3 67 22.2 -16.5 -8.6 27.0 -2.1 23.0 -6.9 1.6 2.7 27.3 -5.3 763.8 816.6 704.8 750.1 659.9 709.2 637.1 665.7 734.9 4.5 783.2 9.9 3.2 758.6 Direct and indirect supply of funds to credit markets Total funds supplied to domestic nonfinancial sectors 756.8 812.8 778.7 694.9 746.9 666.8 678.8 620.2 762.1 624.6 708.6 Private domestic nonfinancial sectors 435.0 541.2 609.3 312.5 502.0 488.3 530.7 227.7 538.1 324.4 364.9 306.9 220.6 250.3 153.3 182.2 290.6 261.8 230.6 141.6 41.2 117.3 Deposits and currency Checkable deposits and currency Time and savings deposits Money market fund shares Security repurchase agreements . Foreign deposits Credit market instruments Foreign funds At banks Credit market instruments U.S. Government and related loans, net U.S. Government cash balances Private insurance and pension reserves Other sources 33.9 31.9 195.3 155.2 54.8 -32.2 29.6 45.1 -6.7 20.5 15.0 20.7 75.9 -28.9 17.0 27.8 -15.1 95.7 89.9 99.2 160.1 139.3 208.9 93.5 72.8 65.6 39.4 119.2 116.7 -2.5 60.9 13.7 -19.2 -34.8 35.4 29.8 33.8 22.9 12.4 -1.3 10.4 -28.6 23.5 -6.9 -51.8 128.1 320.6 359.0 159.3 319.7 131.9 155.3 6.3 134.3 102.6 -40.3 -38.1 169.9 73.7 -33.7 81.5 40.0 -16.0 -13.1 56.5 -31.1 183.3 178.3 -33.9 -17.7 35.3 -14.1 -35.4 -4.9 99.0 116.7 396.5 283.3 247.6 23.6 68.1 76.6 203.5 30.4 -20.6 44.2 132.4 45.3 22.8 11.6 65.0 125.6 77.9 268.9 162.8 -2.8 23.4 11.4 38.3 -1.1 -101.5 -69.3 -13.7 4.6 -27.8 16.2 5.0 11.9 -15.4 3.4 .5 -12.6 13.9 -19.9 82.6 193.9 120.3 179.5 142.0 133.1 215.7 162.3 123.2 36.0 -29.4 183.7 -14.6 6 2 183.2 -8.2 22.0 59.6 Source: Board of Governors of the Federal Reserve System. 197.7 18.7 45.0 2.1 -39.9 5.8 120.9 14.6 -15.7 .0 7.0 371 TABLE B-73.—Mortgage debt outstanding by type of property and of financing, 1939-90 [Billions of dollars] Nonfarm properties End of year or quarter All properties Farm properties Nonfarm properties by type of mortgage Conventional 2 Government underwritten Total Multi- Coml-to4- family mercial family properhouses ties "sr 1- to 4-family houses Total » Total VA FHA guarinsured anteed Total l-to4family houses 1939 35.5 6.6 5.6 7.0 1.8 1.8 1.8 27.1 14.5 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 28.9 30.0 31.2 30.8 29.9 29.7 30.8 36.9 43.9 50.9 57.1 16.3 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 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 £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 15.1 15.4 14.5 13.7 13.7 14.3 16.9 18.9 20.8 22.6 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 26.3 28.9 33.2 38.0 43.6 49.3 55.1 60.4 67.6 77.0 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 207.5 228.0 251.4 278.5 305.9 333.3 356.5 381.2 411.1 441.6 12.8 13.9 15.2 16.8 18.9 21.2 23.1 25.1 27.5 29.4 194.7 214.1 236.2 261.7 287.0 312.1 333.4 356.1 383.5 412.2 141.9 154.6 169.3 186.4 203.4 220.5 232.9 247.3 264.8 283.2 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 85.5 95.5 107.1 120.5 134.1 147.4 156.9 167.4 180.4 193.0 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 473.7 524.2 597.4 672.6 732.5 791.9 878.6 1,010.3 1,163.0 1,328.4 30.5 32.4 35.4 39.8 44.9 49.9 55.4 63.9 72.8 86.8 443.2 491.8 562.0 632.8 687.5 742.0 823.2 946.4 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 81.0 333.9 37.3 371.1 39.5 44.7 430.9 497.7 50.0 56.2 547.3 595.0 61.6 669.0 67.0 784.6 73.6 913.9 82.0 92.0 1,042.7 200.2 220.7 253.5 291.7 319.4 354.3 412.8 501.0 600.2 697.6 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1,460.4 1,566.7 1,637.9 1,825.4 2,051.4 2,303.3 2,618.3 2,978.4 3,264.2 3,538.3 97.5 107.2 111.3 113.7 112.4 105.9 95.8 88.9 86.8 85.3 1,362.9 1,459.5 1,526.6 1,711.7 1,939.0 2,197.4 2,522.5 2,889.5 3,177.3 3,453.0 965.1 1,039.8 1,080.0 1,198.5 1,334.3 1,501.4 1,719.7 1,959.0 2,186.3 2,404.3 142.3 142.1 145.7 160.7 185.4 214.5 247.8 273.4 289.1 304.1 255.5 277.5 300.9 352.4 419.3 481.5 555.0 657.2 702.0 744.6 225.1 238.9 248.9 279.8 294.8 328.3 370.5 431.4 459.7 486.8 195.2 207.6 217.9 248.8 265.9 288.8 328.6 387.9 414.2 440.1 93.6 101.3 108.0 127.4 136.7 153.0 185.5 235.5 258.8 282.8 101.6 106.2 109.9 121.4 129.1 135.8 143.1 152.4 155.4 157.3 1,137.8 1,220.6 1,277.8 1,431.9 1,644.2 1,869.1 2,152.0 2,458.1 2,717.7 2,966.1 769.9 832.2 862.2 949.6 1,068.5 1,212.6 1,391.0 1,571.0 1,772.1 1,964.2 1988- 1 II Ill IV 3,030.8 3,105.9 3,183.8 3,264.2 88.0 87.8 87.1 86.8 2,942.8 3,018.1 3,096.7 3,177.3 1,998.5 2,065.7 2,128.6 2,186.3 277.3 281.2 283.8 289.1 667.1 671.2 684.2 702.0 438.9 443.1 450.9 459.7 395.2 399.0 406.5 414.2 241.7 245.3 252.0 258.8 153.6 153.7 154.5 155.4 2,503.9 2,575.0 2,645.8 2,717.7 1,603.2 1,666.7 1,722.1 1,772.1 1989- 1 || Ill IV 3,326.9 3,401.1 3,472.5 3,538.3 86.0 86.8 86.3 85.3 3,240.9 3,314.3 3,386.2 3,453.0 2,228.9 2,287.6 2,347.6 2,404.3 293.2 298.3 301.2 304.1 718.8 728.3 737.5 744.6 466.0 472.5 478.3 486.8 420.8 426.9 432.9 440.1 264.7 270.3 276.3 282.8 156.1 156.6 156.6 157.3 2,774.9 2,841.8 2,907.9 2,966.1 1,808.1 1,860.8 1,914.7 1,964.2 1990: 1 || Ill 3,599.9 3,666.7 3,726.1 84.7 84.5 84.2 3,515.2 3,582.2 3,641.9 2,450.0 2,512.8 2,569.3 308.9 307.7 307.6 756.3 761.7 764.9 495.1 502.3 448.2 455.0 289.8 296.2 158.4 3,020.1 2,001.8 158.8 3,079.8 2,057.8 1 Includes 2 FHA insured multifamily properties, not shown separately. Derived figures. Total includes multifamily and commercial properties, not shown separately. Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations. 372 TABLE B-74.—Mortgage debt outstanding by holder, 7939-90 [Billions of dollars] Other holders Major financial institutions End of year or quarter 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 1988 1989 1988- 1 II Ill IV 1989: 1 || Ill IV 1990: 1 II Ill . . .. . Total 35.5 36.5 37.6 36.7 35.3 34.7 35.5 41.8 48.9 56.2 62.7 72.8 82.3 91.4 101.3 113.7 129.9 144.5 156.5 171.8 190.8 207.5 228.0 251.4 278.5 305.9 333.3 356.5 381.2 411.1 441.6 473.7 524.2 597.4 672.6 732.5 791.9 878.6 1,010.3 1,163.0 1,328.4 1,460.4 1,566.7 1,637.9 1,825.4 2,051.4 2,303.3 2,618.3 2,978.4 3,264.2 3,538.3 3,030.8 3,105.9 3,183.8 3,264.2 3,326.9 3,401.1 3,472.5 3,538.3 3,599.9 3,666.7 3,726.1 Total 18.6 19.5 20.7 20.7 20.2 20.2 21.0 26.0 31.8 37.8 42.9 51.7 59.5 66.9 75.1 85.7 99.3 111.2 119.7 131.5 145.5 157.6 172.6 192.5 217.1 241.0 264.6 280.8 298.8 319.9 339.1 355.9 394.2 450.0 505.4 542.6 581.2 647.5 745.2 848.2 938.2 996.8 1,040.5 1,021.3 1,108.2 1,245.9 1,361.5 1,474.3 1,665.3 1,826.5 1,918.9 1,697.2 1,734.6 1,785.3 1,826.5 1,858.6 1,891.3 1,914.1 1,918.9 1,924.6 1,925.1 1,917.4 Savings institutions 1 8.6 9.0 9.4 9.2 9.0 9.1 9.6 11.5 13.8 16.1 18.3 21.9 25.5 29.8 34.9 41.1 48.9 55.5 61.2 68.9 78.1 87.0 98.0 111.1 127.2 141.9 154.9 161.8 172.3 184.3 196.4 208.3 236.2 273.7 305.0 324.2 355.8 404.6 469.4 528.0 574.6 603.1 618.5 578.1 626.7 709.7 760.5 778.0 860.5 924.6 910.3 876.5 884.0 908.9 924.6 934.4 938.7 932.4 910.3 891.9 860.5 835.2 Commercial banks 2 4.3 4.6 4.9 4.7 4.5 4.4 4.8 7.2 9.4 10.9 11.6 13.7 14.7 15.9 16.9 18.6 21.0 22.7 23.3 25.5 28.1 28.8 30.4 34.5 39.4 44.0 49.7 54.4 59.0 65.7 70.7 73.3 82.5 99.3 119.1 132.1 136.2 151.3 179.0 214.0 245.2 262.7 284.2 301.3 330.5 379.5 429.2 502.5 592.4 669.2 763.4 605.9 629.7 650.8 669.2 689.7 715.5 742.4 763.4 783.4 811.2 826.7 Life insurance companies 5.7 6.0 6.4 6.7 6.7 6.7 6.6 7.2 8.7 10.8 12.9 16.1 19.3 21.3 23.3 26.0 29.4 33.0 35.2 37.1 39.2 41.8 44.2 46.9 50.5 55.2 60.0 64.6 67.5 70.0 72.0 74.4 75.5 76.9 81.4 86.2 89.2 91.6 96.8 106.2 118.4 131.1 137.7 142.0 151.0 156.7 171.8 193.8 212.4 232.6 245.3 214.8 220.9 225.6 232.6 234.5 237.0 239.3 245.3 249.3 253.3 255.5 Federal and related agencies' 5.0 4.9 4.7 4.3 3.6 3.0 2.4 2.0 1.8 1.8 2.3 2.8 3.5 4.1 4.6 4.8 5.3 6.2 7.7 8.0 10.2 11.5 12.2 12.6 11.8 12.2 13.5 17.5 20.9 25.1 31.1 38.3 46.4 54.6 64.8 82.2 101.1 116.7 140.5 170.6 216.0 256.8 289.4 355.4 433.4 491.1 582.0 735.4 863.1 945.9 1,079.0 875.8 895.8 919.2 945.9 970.4 996.5 1,032.8 1,079.0 1,121.3 1,172.6 1,224.3 Individuals and others4 11.9 12.0 12.2 11.7 11.5 11.5 12.1 13.8 15.3 16.6 17.5 18.4 19.3 20.4 21.7 23.2 25.3 27.1 29.1 32.3 35.1 38.4 43.1 46.3 49.5 52.7 55.2 58.2 61.4 66.1 71.4 79.4 83.6 92.8 102.4 107.7 109.6 114.4 124.6 144.3 174.3 206.8 236.8 261.2 283.7 314.5 359.8 408.6 450.0 491.8 540.3 457.8 475.5 479.3 491.8 497.9 513.2 525.6 540.3 553.9 569.1 584.4 1 Includes savings banks and savings and loan associations. Data reported by Federal Savings and Loan Insurance Corporation-insured institutions include loans in process for 1987 and exclude loans in process beginning 1988. 2 Includes loans held by nondeposit trust companies, but not by bank trust departments. "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 Public 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." 4 Includes private mortgage pools. Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations. 373 TABLE B-75.—Consumer credit outstanding, 1950-90 [Amount outstanding (end of month); millions of dollars, seasonally adjusted] Total credit December: 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 19878 1988 1989 1989: Jan6 Feb Mar Apr May June July Auc. . Sept Nov Dec 1990: Jan Feb Mar Oct..:::::::::::: fi= June July Aug Sept Oct Nov * 23,295 24,624 29766 33,769 35,027 41,885 45503 48,132 48356 55878 60035 62,340 68231 76,606 85989 95,948 101,839 106 716 117,231 126 928 131,600 147,058 166,009 190,601 199,365 204,963 228,162 263,808 308,272 347,507 350,269 366,869 383,132 431,170 511 315 592,129 649112 681 892 731,521 777,975 744,101 743,973 750,002 753,425 756,583 759,083 762,227 765,122 768,185 771,094 775,030 777,975 779,346 779,972 782,675 781,257 783,857 785,517 788,189 790,680 791,574 792,151 794,493 Total 15,166 15,859 20121 23,870 24470 29,809 32660 34,914 34736 40421 44335 45,438 50375 57,056 64674 72814 78,162 81783 90,112 99381 103,905 116,434 131,258 152,910 162,203 167,043 187,782 221,475 261,976 296,483 298,154 311,259 325,805 368,966 442602 518'252 573 017 610468 664,701 716,624 682,611 682,510 6&8.105 691,432 695,627 697,262 700 000 703,518 705,703 710 133 713 903 716,624 717,829 717 869 720,445 720,835 724,485 724,601 729,329 732,385 735,222 736,595 738,316 Automobile Ir stallment credit Revolving2 Mobile home3 6,035 5981 7651 9,702 9755 13,485 14499 15,493 14267 16641 18108 17,656 20001 22,891 25865 29378 31,024 31136 34,352 36946 36,348 40,522 47,835 53,740 54,241 56,989 66,821 80,948 98,739 112475 111 991 119,008 125 945 143,560 173564 210'l87 247 428 265*851 284,556 290,770 288,717 287,927 289,891 290,013 290,954 290,583 289 882 289,961 288,839 290 210 290 972 290,770 290,904 289 629 290,932 288,936 288,931 287,168 286,791 285,283 285,261 284,402 283,989 2,622 3563 4,900 8,252 9,391 11,318 13,232 14,507 16,595 36,689 45,202 53,357 55,111 61,070 66,454 79,088 100 280 121,816 135 851 153 078 174,057 197,110 174,745 175,608 179,239 181,098 182,847 184,239 186284 189,185 190,378 191,734 194 679 197,110 199,146 199 927 202,263 203,965 207,153 208,362 212,138 214,492 216,804 218,381 219,416 2,433 7,171 9,468 13,505 14,582 15,388 15,738 16,362 16,921 18,207 18,736 20,058 22,604 23,562 25861 26,850 27096 25,920 25,201 22,343 25,115 24,954 23,403 23,407 23,505 23,309 23,240 22,734 22,661 22,621 22,197 22,343 22,604 22,633 22,708 22,702 22,815 22,733 22,795 22,976 22,672 22,491 22,516 Other 9,131 9878 12470 14,168 14715 16,324 18161 19,421 20,469 23780 26227 27,782 30374 34,165 38809 43436 47,138 50647 53,738 58 872 60,224 60,489 64,564 74,347 80,148 80,159 88,628 87,476 101,114 112,444 112,317 111,124 110,802 122,756 142 897 159,400 162642 165,620 180,887 206,401 194,033 194,022 195,572 196,914 198,320 199,130 200,594 201,638 203,825 205,568 206,055 206,401 205,175 205,680 204,543 205,232 205,585 206,338 207,605 209,635 210,484 211,320 212,395 Noninstallment credit* 8,129 8,765 9645 9,899 10557 12,076 12843 13,218 13620 15457 15700 16,902 17856 19,550 21315 23,134 23,677 24,933 27,119 27,547 27,695 30,624 34,751 37,691 37,162 37,920 40,380 42,333 46,296 51,024 52,115 55,610 57,327 62,204 68,713 73,877 76,095 71,424 66,820 61,351 61,490 61,463 61,897 61,993 60,956 61,821 62,227 61,604 62,482 60,961 61,127 61,351 61,517 62,103 62,230 60,422 59,372 60,916 58,860 58,295 56,352 55,556 56,177 1 Installment credit covers most short- and intermediate-term credit extended to individuals through regular business channels, usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be repaid (or with the option of repayment) in two or more installments. Credit secured by real estate is generally excluded. 2 Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. 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 1977, 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 8a regular basis. Data are shown here as a general indication of trends. Data newly available in January 1989 result in breaks in many series between December 1988 and subsequent months. Source: Board of Governors of the Federal Reserve System. 374 GOVERNMENT FINANCE TABLE B-76.—Federal receipts, outlays, surplus or deficit, and debt, selected fiscal years, 1929-92 [Billions of dollars; fiscal years] Fiscal year or period Off-budget On-budget Total Held by the public 169 *22.5 48.2 41.4 88.4 '.8 1.0 1.2 1.2 1.0 1.2 1.2 1.3 50.7 57.5 79.2 142.6 204.1 260.1 271.0 257.1 252.0 252.6 42.8 48.2 67.8 1278 184.8 235.2 241.9 224.3 216.3 214.3 95.8 113.0 142.2 175.8 202.0 212.4 212.9 223.6 247.8 263.9 .5 1.3 1.7 2.3 2.9 4.0 5.0 6.0 7.5 9.0 1.6 1.8 1.9 1.8 1.7 1.1 1.5 .8 .5 -.7 256.9 255.3 259.1 266.0 270.8 274.4 272.7 272.3 279.7 287.5 219.0 214.3 214.8 218.4 224.5 226.6 222.2 219.3 226.3 234.7 266.8 315.0 342.4 365.6 369.5 386.4 418.1 440.5 450.2 481.5 10.6 12.1 12.3 14.2 16.4 16.7 19.1 24.4 24.9 29.0 10.9 11.7 13.5 15.0 15.7 16.5 19.7 20.4 22.3 25.2 -.2 .4 -1.3 -.8 .6 .2 -.6 4.0 2.6 3.7 290.5 292.6 302.9 310.3 316.1 322.3 328.5 340.4 368.7 365.8 236.8 238.4 248.0 254.0 256.8 260.8 263.7 266.6 289.5 278.1 506.7 518.2 557.7 587.8 629.2 672.6 739.0 794.6 849.4 929.5 -8.7 -26.1 -26.4 -15.4 -8.0 -55.3 -70.5 33.5 35.8 39.9 46.1 53.9 62.5 66.4 27.6 32.8 36.9 45.6 52.1 60.4 69.6 5.9 3.0 3.1 .5 1.8 2.0 -3.2 380.9 408.2 435.9 466.3 483.9 541.9 629.0 283.2 303.0 322.4 340.9 343.7 394.7 477.4 990.2 1,055.9 1,153.1 1,281.4 1,416.5 1,522.5 1,698.2 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 -3.9 -4.3 -2.0 643.6 706.4 776.6 828.9 495.5 549.1 607.1 639.8 448.7 1,933.0 2,171.8 2,447.8 476.6 543.0 594.3 661.2 686.0 769.5 806.8 810.0 861.4 933.2 -72.7 -73.9 -120.0 -208.0 -185.6 -221.6 -237.9 -169.3 -193.9 -206.1 113.2 130.2 143.5 147.3 166.1 186.2 200.2 213.4 241.5 263.7 114.3 135.2 151.4 147.1 165.8 176.8 183.5 193.8 202.7 210.9 -1.1 -5.0 -7.9 .2 BA 16.7 19.6 38.8 52.8 908.5 994.3 1,136.8 1,371.2 1,564.1 1,817.0 2,120.1 2,345.6 2,600.8 2,867.5 709.3 784.8 919.2 1,131.0 1,300.0 1,499.4 1,736.2 1,888.1 2,050.3 2,190.3 2,670.6 2,986.4 3,139.1 3,321.9 3,687.7 3,952.4 4,180.8 4,424.7 4,780.4 5,131.3 749.7 1,026.6 793.2 1,171.7 849.8 1,194.2 -277.0 -378.5 -344.4 281.7 298.3 315.3 225.1 237.9 251.7 56.6 60.4 63.6 3,206.3 3,617.8 4,021.1 2,410.4 2,717.6 2,995.4 5,405.6 5,615.8 5,985.5 Surplus or deficit (-) Receipts Outlays 1929 1933 1939 3.9 2.0 6.3 3.1 4.6 9.1 0.7 -2.6 -2.8 5.8 9.2 -3.4 0.5 -0.0 0.5 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 6.5 8.7 14.6 24.0 43.7 45.2 39.3 38.5 41.6 39.4 9.5 13.7 35.1 78.6 91.3 92.7 55.2 34.5 29.8 38.8 -2.9 -4.9 -20.5 -54.6 -47.6 -47.6 -15.9 4.0 11.8 .6 6.0 8.0 13.7 22.9 42.5 43.8 38.1 37.1 39.9 37.7 9.5 13.6 35.1 78.5 91.2 92.6 55.0 34.2 29.4 38.4 -3.5 -5.6 -21.3 -55.6 -48.7 -48.7 -17.0 2.9 10.5 .6 .7 .9 1.1 1.3 1.3 1.2 1.5 1.6 1.7 -.0 .0 .1 .1 .1 .1 .2 .3 .4 .4 .6 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 39.4 51.6 66.2 69.6 69.7 65.5 74.6 80.0 79.6 79.2 42.6 45.5 67.7 76.1 70.9 68.4 70.6 76.6 82.4 92.1 -3.1 6.1 -1.5 -6.5 -1.2 -3.0 3.9 3.4 -2.8 -12.8 37.3 48.5 62.6 65.5 65.1 60.4 68.2 73.2 71.6 71.0 42.0 44.2 66.0 73.8 67.9 64.5 65.7 70.6 74.9 83.1 -4.7 4.3 -3.4 -8.3 -2.8 -4.1 2.5 2.6 -3.3 -12.1 2.1 3.1 3.6 4.1 4.6 5.1 6.4 6.8 8.0 8.3 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 92.5 94.4 99.7 106.6 112.6 116.8 130.8 148.8 153.0 186.9 92.2 97.7 106.8 111.3 118.5 118.2 134.5 157.5 178.1 183.6 .3 -3.3 -7.1 -4.8 -5.9 -1.4 -3.7 -8.6 -25.2 3.2 81.9 82.3 87.4 92.4 96.2 100.1 111.7 124.4 128.1 157.9 81.3 86.0 93.3 96.4 102.8 101.7 114.8 137.0 155.8 158.4 .5 -3.8 -5.9 -4.0 -6.5 -1.6 -3.1 -12.6 -27.7 -.5 1970 1971 1972 1973 1974.. 1975 1976 Transition quarter ... 1977 1978 1979 '..". 192.8 187.1 207.3 230.8 263.2 279.1 298.1 195.6 210.2 230.7 245.7 269.4 332.3 371.8 -2.8 -23.0 -23.4 -14.9 -6.1 -53.2 -73.7 159.3 151.3 167.4 184.7 209.3 216.6 231.7 168.0 177.3 193.8 200.1 217.3 271.9 302.2 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 1980 1981 1982 '.'.'.'." 1983 1984 1985.. 1986 1987 1988 1989 517.1 590.9 599.3 678.2 617.8 745.7 600.6 808.3 666.5 851.8 734.1 946.3 769.1 990.3 854.1 1,003.8 909.0 1,064.1 990.7 1,144.1 -73.8 -78.9 -127.9 -207.8 -185.3 -212.3 -221.2 -149.7 -155.1 -153.4 403.9 469.1 474.3 453.2 500.4 547.9 568.9 640.7 667.5 727.0 1,031.3 1,251.7 1,091.4 1,409.6 1,165.0 1,445.9 -220.4 -318.1 -280.9 1990 2 1991 1992 * Gross Federal debt (end of period) Addendum: Gross national product Surplus or deficit (-) Surplus or deficit (-) Receipts Outlays Receipts Outlays Total 1 1 Not strictly 2 comparable with later data. 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 1992" for additional information. Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and Budget. 375 TABLE B-77 .—Federal receipts, outlays, and debt, fiscal years 1981-92 [Millions of dollars; fiscal years] Act jal 1981 1982 1983 1984 1985 1986 599 272 678,209 617 766 745,706 600 562 808,327 666 457 851 781 734057 946 316 769091 990,258 -78,936 -127,940 -207,764 -185324 -212,260 -221,167 469,097 543013 474,299 594 302 453,242 661 219 500,382 685 968 547,886 769509 568,862 806760 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 ( ) 73916 -120003 207 977 185 586 -221 623 237 898 130 176 135 196 143,467 151404 147 320 147 108 166 075 165 813 186 171 176 807 200,228 183 498 5020 7937 212 262 9363 16731 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 gift taxes Customs duties and fees Miscellaneous receipts: Deposits of earnings by Federal Reserve System All other OUTLAYS: ON-BUDGET AND OFF-BUDGET National defense International affairs General science, space, and technology Energy Natural resources and environment Agriculture Commerce and housing credit On-budget Off-budget 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. Net interest On-budget Off-budget Allowances Undistributed offsetting receipts On-budget Off-budget 994 298 1 136 798 1 371 164 1 564 110 1 816 974 2 120,082 209507 784,791 217 560 919,238 240 114 1,131,049 264159 1,299,951 317 612 1,499,362 383,919 1,736,163 124,466 660,325 134,497 784,741 155,527 975,522 155,122 1,144,829 169,806 1,329,556 190,855 1,545,308 599 272 617 766 600 562 666,457 734,057 769,091 285 917 61,137 182 720 297744 49,207 201 498 288 938 37,022 208,994 298 415 56,893 239,376 334,531 61,331 265,163 348,959 63,143 283,901 52545 130 176 58,031 143 467 61,674 147 320 73,301 166 075 78,992 186 171 83,673 200,228 40839 6787 8083 36311 7,991 8854 35300 6,053 8655 37361 6,010 11370 35992 6,422 12079 32,919 6,958 13,327 12834 '956 15186 14492 1 108 15,684 1347 17,059 1480 18,374 1,510 678,209 745,706 808,327 851,781 946,316 990,258 157 513 13,104 6469 15166 13568 11,323 8206 185309 12,300 7,200 13,527 12998 15,944 6,256 209 903 11,848 7^35 9,353 12672 22,901 6,681 227 413 15,876 8,317 7,086 12593 13,613 6,917 252,748 16,176 8,627 5,685 13,357 25,565 4,229 273,375 14,152 8,976 4,735 13,639 31,449 4,890 8206 6256 6681 6917 4,229 4,890 23379 10,568 20625 8,347 21334 7,560 23669 7,673 25,838 7,680 28,117 7,233 33709 26866 39149 99723 139584 27029 27,445 46567 107,717 155964 26606 28,641 52588 122,598 170 724 27579 30,417 57540 112,668 178 223 29,342 33,542 65,822 128,200 188,623 30,585 35,936 70,164 119,796 198,757 975 670 844 138 914 155 120 19,993 150 731 7,056 171 167 5,189 183,434 8,072 190,684 22991 4,769 11429 68,734 23958 4,712 10914 84,995 24846 5,105 11235 89,774 25614 5,663 11,817 111,058 26,292 6,270 11,588 129,430 26,356 6,572 12,564 135,969 71,022 2288 87,065 2071 91,619 -i;845 114,368 -3,310 133,548 -4,118 140,298 -4,329 28041 26099 -33,976 -31,957 -32,698 -33,007 26611 -1,430 24453 -1,646 -32,198 -1,778 -29,913 -2,044 -30,189 2,509 -30,150 -2,857 376 TABLE B-77.—Federal receipts, outlays, and debt, fiscal years 1981-92—Continued [Millions of dollars; fiscal years] Description Actual 1987 1988 Estimates 1989 1990 1991 1992 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 ( ) 854,143 1,003,830 908,954 1,064,051 990,691 1,144,069 1,031,308 1,251,703 1,091,440 1,409,563 1,165,029 1,445,902 -149,687 -155,097 -153,378 -220,396 -318,123 -280,874 640,741 809,998 667,463 861,360 727,026 933,158 749,652 1,026,638 793,153 1,171,658 849,775 1,194,205 -169,257 -193,897 -206,132 -276,986 -378,505 -344,430 213,402 193,832 241,491 202,691 263,666 210,911 281,656 225,065 298,287 237,905 315,254 251,697 19,570 38,800 52,754 56,590 60,382 63,557 2,345,578 2,600,760 2,867,538 3,206,336 3,617,837 4,021,124 457,444 1,888,134 550,507 2,050,252 677,214 2,190,324 795,906 2,410,431 900,214 2,717,623 1,025,731 2,995,393 212,040 1,676,094 229,218 1,821,034 220,088 1,970,236 234,410 2,176,021 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 gift taxes Customs duties and fees Miscellaneous receipts: Deposits of earnings by Federal Reserve System All other OUTLAYS: ON-BUDGET AND OFF-BUDGET National defense International affairs General science, space, and technology Energy Natural resources and environment Agriculture Commerce and housing credit On-budget Off-budget 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 Net interest On-budget Off-budget Allowances Undistributed offsetting receipts On-budget Off-budget 854,143 908,954 990,691 1,031,308 1,091,440 1,165,029 392,557 83,926 303,318 401,181 94,508 334,335 445,690 103,291 359,416 466,884 93,507 380,047 492,635 95,866 401,955 529,518 101,913 429,363 89,916 213,402 92,845 241,491 95,751 263,666 98,392 281,656 103,668 298,287 114,109 315,254 32,457 7,493 15,085 35,227 7,594 16,198 34,386 8,745 16,334 35,345 11,500 16,707 44,810 12,241 17,698 47,768 13,265 19,295 16,817 2,490 17,163 2,747 19,604 3,225 24,319 2,997 23,384 2,852 20,741 3,166 1,003,830 1,064,051 1,144,069 1,251,703 1,409,563 1,445,902 281,999 11,649 9,216 4,115 13,363 26,606 6,182 290,361 10,471 10,841 2,297 14,606 17,210 18,815 303,559 9,573 12,838 3,702 16,182 16,919 29,211 299,331 13,764 14,444 2,358 17,067 11,958 67,147 298,910 16,953 15,781 2,617 18,821 15,857 119,506 295,245 17,814 17,452 3,710 19,545 15,261 92,788 6,182 18,815 29,520 27,272 5,294 27,608 5,362 119,447 59 31,469 7,710 93,912 26,222 5,051 65,522 1,626 29,485 8,498 29,724 39,967 75,120 123,250 207,353 4,930 202,422 26,782 7,553 7,565 138,570 143,860 -5,290 31,938 44,487 78,878 129,332 219,341 4,852 214,489 29,428 9i236 9,464 151,748 159,164 -7,416 36,674 48,390 84,964 136,031 232,542 5,069 227,473 30,066 9,474 9,017 169,166 180,561 -11,395 38,497 57,716 98,102 147,277 248,623 3,625 244,998 29,112 9,995 10,724 184,221 200,212 -15,991 42,800 71,188 104,433 173,189 268,965 5,127 263,837 31,483 12,567 11,169 197,038 217,202 -20,164 -36,455 -33,155 -3,300 -36,967 -32,585 -4,382 -37,212 -32,354 4858 -36,615 -31,048 -5,567 8,200 -39,093 -33,266 -5,827 45,530 81,260 113,720 184,839 288,632 5,847 282,785 33,001 14,486 13,183 206,343 230,076 -23,733 4,708 -40,780 -34,549 -6,231 -310 1124 32,707 6,457 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 1992" for additional information. Sources: Department of the Treasury and Office of Management and Budget. 377 TABLE B-78.—Relation of Federal Government receipts and expenditures in the national income and product accounts to the budget, fiscal years 1990-92 [Billions of dollars; fiscal years] Estimate Receipts and expenditures 1990 1991 RECEIPTS Total on-budget and off-budget receipts 1,031.3 Government contributions for employee retirement (grossing) Other netting and grossing :.„ .?. Timing adjustments Geographic exclusions 44.5 19.1 2.0 -2.0 1992 1,091.4 1,165.0 48.4 20.5 -9.8 -2.2 52.0 21.6 -2i3 Federal sector, national income and product accounts, receipts 1,094.9 1,148.4 1,237.2 EXPENDITURES Total on-budget and off-budget outlays 1,251.7 1,409.6 1,445.9 44.5 19.1 -7.2 48.4 20.5 -8.5 -110.2 -.9 -6.2 -!4 -~6i8 1.1 -.7 52.0 21.6 -10.6 -83.8 -.4 .2 -7.1 .5 1,253.2 1,352.1 Government contributions for employee retirement (grossing) Other netting and grossing Lending transactions Deposit insurance and other financial transactions Defense timing adjustments Geographic exclusions Bonuses on Outer Continental Shelf land leases Other Federal sector, national income and product accounts, expenditures -57.1 5.3 2.8 1,419.0 Note.-See Note, Table B-76. For further details, see Survey of Current Business, February 1991. Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and Budget. 378 TABLE B-79.—Federal and State and local government receipts and expenditures, national income and product accounts, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Year or quarter Expenditures nkL income Receipts and Expenditures product accounts 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. 1988 1989 1990 P 1982- IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: 1... II III. IV 1989: 1 II Ill IV 1990: 1 II Ill IV P 11.3 9.4 15.4 17.8 25.0 32.7 49.2 51.2 53.4 52.6 57.8 59.6 56.6 69.4 85.6 90.5 95.0 90.4 101.6 110.2 116.7 115.7 130.3 140.4 145.9 157.9 169.8 175.6 190.2 214.4 230.8 266.2 300.1 306.8 327.3 374.0 419.6 463.1 480.0 549.1 616.6 694.4 779.8 855.1 977.2 1,000.8 1,061.3 1,172.9 1,270.8 1,347.4 1,466.4 1,559.0 1,684.6 1,781.2 1,008.4 1,095.3 1,200.8 1,299.9 1,388.4 1,504.6 1,512.7 1,554.8 1,567.7 1,600.7 1,661.4 1,691.9 1,686.2 1,698.8 1,735.6 1,766.5 1,804.8 10.3 10.7 17.6 18.5 28.8 64.1 93.4 103.1 92.9 47.2 43.4 51.1 60.0 61.4 79.5 94.3 102.0 97.5 98.5 105.0 115.8 128.3 131.9 137.3 150.1 161.6 169.1 177.8 189.6 215.6 245.0 272.2 290.2 317.4 346.8 377.3 411.7 467.4 544.9 587.5 635.7 694.8 768.3 889.6 1,006.9 1,111.6 1,189.9 1,277.9 1,402.6 1,491.5 1,573.5 1,654.2 1,772.4 1,907.1 1,175.3 1,208.2 1,322.9 1,445.8 1,519.6 1,619.3 1,620.9 1,643.4 1,641.0 1,711.8 1,745.1 1,764.3 1,769.9 1,810.4 1,865.8 1,893.9 1,911.2 1,957.7 1.0 -1.4 -2.2 -lis -31.4 -44.2 -51.8 -39.5 5.4 14.4 8.4 -3.4 8.0 6.1 -3.8 -7.0 -7.1 3.1 5.2 .9 -12.6 -1.6 3.1 -4.3 -3.8 -2'.3 .5 -1.3 -14.2 -6.0 9.9 -10.6 -19.5 -3.4 7.9 -4.3 -64.9 -38.4 -19.1 ii!s -34.5 297 -110.8 -128.6 -105.0 -131.8 -144.1 -107.1 -95.3 -87.8 -126.0 -166.8 -112.9 -122.1 -145.9 -131.3 -114.7 -108.2 -88.6 -73.3 -111.0 -83.7 -72.4 -83.6 -111.6 -130.2 -127.3 -106.4 Surplus or deficit Surplus or deficit Surplus or deficit Receipts State and local government Federal Government Total government 3.8 2.7 6.8 8.7 15.5 23.0 39.3 41.1 42.7 40.7 44.1 43.9 39.4 50.4 64.6 67.7 70.4 64.2 73.1 78.5 82.5 79.3 90.6 96.9 99.0 107.2 115.6 116.2 125.8 143.5 152.6 176.9 199.7 195.4 202.7 232.2 263.7 293.9 294.9 340.1 384.1 441.4 505.0 553.8 639.5 635.3 659.9 726.0 788.7 827.9 913.8 972.4 1,052.9 1,111.7 633.1 675.5 742.7 805.3 853.8 940.0 943.0 972.5 976.7 997.5 1,045.4 1,062.2 1,048.1 1,055.7 1,080.6 1,105.8 1,125.9 2.7 4.0 9.0 10.0 20.5 56.1 85.9 95.6 84.7 37.2 30.8 35.5 42.0 41.2 58.1 71.4 77.6 70.3 68.6 72.5 80.2 89.6 91.7 93.9 102.9 111.4 115.3 119.5 125.3 145.3 165.8 182.9 191.3 207.8 224.8 249.0 269.3 305.5 364.2 393.7 430.1 470.7 521.1 615.1 703.3 781.2 835.9 895.6 985.6 1,034.8 1,071.9 1,114.2 1,187.2 1,273.0 835.7 844.7 930.2 1,017.5 1,042.8 1,101.7 1,096.7 1,109.4 1,096.8 1,153.8 1,178.0 1,184.9 1,179.8 1,205.8 1,248.8 1,271.7 1,271.6 1,300.0 national income and product accounts 1.2 -1.3 -2.2 -1.3 -5.1 -33.1 -46.6 -54.5 -42.1 3.5 13.4 8.3 -2.6 9.2 6.5 -3.7 -7.1 -6.0 4.4 6.1 2.3 -10.3 -1.1 3.0 -3.9 -4.2 .3 -3.3 .5 -1.8 -13.2 -6.0 8.4 -12.4 -22.0 -16.8 -5.6 -11.6 -69.4 -53.5 -46.0 -29.3 -16.1 -61.3 -63.8 -145.9 -176.0 -169.6 -196.9 -206.9 -158.2 -141.7 -134.3 -161.3 -202.6 -169.2 -187.5 -212.2 -189.0 -161.7 -153.7 -136.9 -120,1 -156.3 -132.6 -122.7 -131.7 -150.1 -168.3 -166.0 -145.7 Receipts 7.6 7.2 9.6 10.0 10.4 10.6 10.9 11.1 11.6 13.0 15.4 17.7 19.5 21.3 23.4 25.4 27.4 29.0 31.7 35.0 38.5 42.0 46.6 50.0 54.1 58.6 63.4 69.8 75.5 85.2 94.1 107.9 120.8 135.8 153.6 179.3 196.4 213.1 239.6 270.1 300.1 330.3 355.3 390.0 425.6 449.4 487.7 540.5 581.8 626.3 655.2 697.6 749.9 800.1 459.8 505.8 554.5 598.0 637.6 667.3 678.9 693.9 702.2 715.5 732.6 746.7 755.7 764.6 783.6 792.2 808.6 Expenditures 7.8 7.2 9.6 9.3 9.1 8.8 8.4 8.5 9.0 11.1 14.4 17.6 20.2 22.5 23.9 25.5 27.3 30.2 32.9 35.9 39.8 44.4 47.0 49.9 54.5 58.2 62.9 68.8 75.5 84.7 95.2 107.8 119.3 134.0 151.0 165.8 182.9 205.9 235.2 254.9 273.2 301.3 327.7 363.2 391.4 414.3 440.2 475.9 516.7 563.5 604.1 651.1 703.5 764.7 424.1 449.5 489.1 531.8 579.8 620.3 633.4 645.6 655.4 670.2 683.7 696.5 707.6 726.1 745.5 753.6 769.4 790.3 national income and product accounts -0.2 -.1 .0 .6 1.3 1.8 2.4 2.7 2.6 1.9 1.0 .1 -1.2 -!o .1 -1.1 -1.3 -.9 -1.4 -2.4 -.4 .1 -.4 .5 i!o -.0 .5 -1.1 1.5 1.8 2.6 13.5 13.5 7.2 4.5 15.2 26.9 28.9 27.6 26.8 34.1 35.1 47.5 64.6 65.1 62.8 51.0 46.5 46.4 35.4 35.8 56.4 65.4 66.3 57.8 46.9 45.5 48.3 46.8 45.2 48.9 50.3 48.1 38.5 38.1 38.6 39.3 Note.— Federal grants-in-aid to State and local governments are reflected in Federal expenditures and State and local receipts. Total government receiipts and expenditures have been adjusted to eliminate this duplication. Source: Department of Commerce, Bureau of Economic Analysis. 379 TABLE B-80.—Federal and State and local government receipts and expenditures, national income and product accounts, by major type, 1940-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Receipts Year or quarter Total Personal tax and nontax receipts Corporate profits tax accruals Expenditures Indirect business tax and nontax accruals Net interest paid ContriPurbutions chases Transfor Total1 of goods fer social and payinsurserv- ments ance ices Total Less: InterInter- est reest ceived paid by government 2 Less: Dividends received by government 2 14.2 2.7 1.2 2.6 2.8 10.1 2.4 18.5 3.3 7.6 11.3 2.8 28.8 25.0 2.6 1.2 5.9 11.4 11.8 3.5 64.1 59.9 2.7 1.4 17.8 14.1 12.8 4.6 93.4 88.9 2.4 1.9 18.9 12.9 14.2 5.2 103.1 97.1 3.0 2.4 20.8 10.7 15.5 6.3 92.9 83.0 6.0 3.2 18.7 9.1 17.1 7.7 47.2 29.1 13.1 4.1 21.4 11.3 18.4 6.7 43.4 26.4 13.1 4.2 21.0 12.4 20.1 6.0 51.1 32.6 14.5 4.2 18.5 10.2 21.3 6.6 60.0 39.0 16.9 4.3 20.6 17.9 23.4 7.4 61.4 38.8 18.0 4.4 28.9 22.6 25.3 8.8 79.5 60.4 14.8 4.5 34.0 19.4 27.7 9.3 94.3 75.8 14.3 4.5 35.5 20.3 29.7 9.6 102.0 82.8 15.1 4.6 32.5 17.6 29.6 10.6 97.5 76.0 17.1 4.7 35.4 22.0 32.2 12.0 98.5 75.3 18.5 4.7 39.7 22.0 35.0 13.5 105.0 79.7 19.4 5.2 42.4 21.4 37.4 15.5 115.8 87.3 22.2 5.6 42.2 19.0 38.6 15.9 128.3 95.4 26.5 5.4 46.1 23.6 41.7 18.8 131.9 97.9 27.6 6.3 50.5 22.7 45.3 21.9 137.3 100.6 29.4 6.9 10.1 3.3 52.2 22.8 48.0 22.9 150.1 108.4 33.7 6.4 9.9 3.5 57.0 24.0 51.5 25.4 161.6 118.2 34.8 6.9 10.8 3.9 60.5 26.2 54.6 28.5 169.1 123.8 36.8 7.4 11.6 4.2 58.8 28.0 58.7 30.1 177.8 130.0 38.3 7.9 12.5 4.6 65.2 30.9 62.5 31.6 189.6 138.6 41.3 8.1 13.2 5.1 74.9 33.7 65.2 40.6 215.6 158.6 46.0 8.5 14.5 6.0 82.4 32.7 70.1 45.5 245.0 179.7 54.7 8.9 15.7 6.8 97.7 39.4 78.7 50.4 272.2 197.7 62.9 10.3 18.1 7.7 116.3 39.7 86.3 57.9 290.2 207.3 69.7 11.5 19.8 8.3 116.2 34.4 94.0 62.2 317.4 218.2 84.1 12.4 22.3 9.9 117.3 37.7 103.4 68.9 346.8 232.4 99.8 12.5 23.1 10.6 142.0 41.9 111.1 79.0 377.3 250.0 111.3 12.9 24.8 11.9 152.0 49.3 120.8 97.6 411.7 266.5 127.0 15.2 29.6 14.3 171.8 51.8 129.0 110.5 467.4 299.1 150.9 16.5 33.6 17.1 170.6 50.9 140.0 118.5 544.9 335.0 189.6 18.8 37.7 18.9 198.7 64.2 151.7 134.5 587.5 356.9 207.2 23.2 43.6 20.4 228.1 73.0 165.7 149.8 635.7 387.3 221.6 25.1 47.9 22.8 261.1 83.5 178.1 171.7 694.8 425.2 239.5 28.2 56.5 28.3 304.7 88.0 189.4 197.8 768.3 467.8 268.0 30.8 68.2 37.5 340.5 84.8 213.3 216.5 889.6 530.3 319.2 36.3 83.2 46.9 393.3 81.1 251.5 251.2 1,006.9 588.1 362.2 52.2 109.1 56.9 409.3 63.1 258.8 269.6 1,111.6 641.7 404.0 60.1 128.3 68.1 410.5 77.2 282.6 291.0 1,189.9 675.0 435.1 68.1 145.1 77.1 440.2 93.9 313.9 324.9 1,277.9 735.9 448.7 87.2 173.5 86.3 486.6 96.4 333.6 354.1 1,402.6 820.8 481.2 97.7 194.2 96.5 512.9 106.3 348.9 379.2 1,491.5 872.2 510.8 101.2 206.1 104.9 571.6 126.9 367.8 400.1 1,573.5 921.4 533.8 107.3 214.6 107.3 591.6 136.2 388.7 442.6 1,654.2 962.5 570.5 112.7 229.0 116.3 658.8 135.1 414.0 476.8 1,772.4 1,025.6 617.8 131.8 250.7 118.9 699.8 134.1 440.4 506.9 1,907.1 1,098.0 672.1 144.7 269.3 124.5 411.1 59.8 264.5 273.0 1,175.3 671.8 429.7 61.4 133.2 71.8 413.9 88.1 294.1 299.2 1,208.2 676.1 441.1 74.2 154.7 80.5 459.7 87.0 322.7 331.5 1,322.9 764.5 458.5 96.1 185.3 89.2 499.6 99.8 338.3 362.1 1,445.8 856.7 490.0 98.8 199.5 100.7 534.4 113.1 353.1 387.7 1,519.6 888.9 520.2 100.8 207.0 106.2 588.6 132.1 375.3 408.7 1,619.3 942.0 544.5 112.5 221.2 108.8 572.7 128.2 380.2 431.6 1,620.9 940.9 560.8 107.5 224.9 117.4 II.... 594.0 136.7 385.3 438.8 1,643.4 955.4 564.9 111.3 225.5 114.3 Ill 592.2 137.9 391.6 446.0 1,641.0 953.8 572.1 114.3 230.2 116.0 IV 607.3 142.1 397.6 453.8 1,711.8 1,000.0 584.2 117.8 235.4 117.6 1989:1 640.5 148.3 403.5 469.1 1,745.1 1,008.5 600.7 127.4 244.4 117.0 II . 665.5 140.8 411.1 474.6 1,764.3 1,022.7 608.6 133.4 250.4 117.0 Ill 659.5 127.8 419.9 479.1 1,769.9 1,027.8 622.1 131.8 252.7 121.0 IV 669.6 123.5 421.5 484.2 1,810.4 1,043.3 639.9 134.5 255.3 120.7 1990:1 675.1 129.9 431.7 498.9 1,865.8 1,070.1 659.9 137.1 260.1 123.0 II 696.5 133.1 433.0 503.9 1,893.9 1,086.4 670.9 142.9 265.5 122.6 Ill 709.5 139.1 444.9 511.3 1,911.2 1,102.8 678.1 148.0 274.0 125.9 718.1 IV. 451.9 513.6 1,957.7 1,132.7 679.3 150.9 277.5 126.6 1 Includes an item for the difference between wage accruals and disbursements, not shown separately. 2 Prior to 1968, dividends received is included in interest received. Source: Department of Commerce, Bureau of Economic Analysis. 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 1988 1989 1990 " 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988: 1 17.8 25.0 32.7 49.2 51.2 53.4 52.6 57.8 59.6 56.6 69.4 85.6 90.5 95.0 90.4 101.6 110.2 116.7 115.7 130.3 140.4 145.9 157.9 169.8 175.6 190.2 214.4 230.8 266.2 300.1 306.8 327.3 374.0 419.6 463.1 480.0 549.1 616.6 694.4 779.8 855.1 977.2 1,000.8 1,061.3 1,172.9 1,270.8 1,347.4 1,466.4 1,559.0 1,684.6 1,781.2 1,008.4 1,095.3 1,200.8 1,299.9 1,388.4 1,504.6 1,512.7 1,554.8 1,567.7 1,600.7 1,661.4 1,691.9 1,686.2 1,698.8 1,735.6 1,766.5 1,804.8 380 0.1 .2 .2 .3 .3 19 .9 .9 1.3 1.7 2.0 1.9 2.3 2.9 2.8 3.5 4.5 5.5 6.4 7.8 9.1 10.1 3.1 2.9 4.0 4.9 5.9 6.7 7.1 7.7 8.0 8.2 8.5 8.9 9.3 9.5 9.7 10.0 10.2 10.5 Subsidies less current surplus of government enterprises 0.4 .1 .1 .1 .6 .7 .9 2 -.1 -.3 .1 -.1 -.3 -.5 -.3 .0 .7 .7 1.1 .1 .4 1.7 1.8 1.1 1.7 1.6 2.5 1.6 1.4 1.9 2.9 2.6 3.7 3.5 1.2 2.4 1.0 3.0 3.9 3.5 5.7 6.7 8.7 14.1 9.9 7.2 12.8 17.4 16.2 6.3 2.5 15.4 19.6 8.4 5.3 15.6 26.7 18.7 19.5 8.8 17.9 17.0 8.5 -2.6 2.2 8.4 3.6 -7.5 5.3 Surplus Addendum: deficit Grants(-), in-aid national income State and and local prod- governuct ac- ments counts 07 -3.8 -31.4 -44.2 518 -39.5 5.4 14.4 8.4 -3.4 8.0 6.1 38 -7.0 -7.1 3.1 5.2 .9 -12.6 -1.6 3.1 -4.3 -3.8 .7 -2.3 .5 -1.3 -14.2 -6.0 9.9 -10.6 -19.5 -3.4 7.9 -4.3 -64.9 -38.4 -19.1 -.4 11.5 -34.5 -29.7 -110.8 -128.6 -105.0 -131.8 -144.1 -107.1 -95.3 -87.8 -126.0 -166.8 -112.9 -122.1 -145.9 -131.3 -114.7 -108.2 -88.6 -73.3 -111.0 -83.7 -72.4 -83.6 -111.6 -130.2 -127.3 -106.4 0.9 .8 .9 .9 .9 .9 1.1 1.7 2.0 2.2 2.3 2.5 2.6 2.8 2.9 3.1 3.3 4.2 5.6 6.8 6.5 7.2 8.0 9.1 10.4 11.1 14.4 15.9 18.6 20.3 24.4 29.0 37.5 40.6 43.9 54.6 61.1 67.5 77.3 80.5 88.7 87.9 83.9 86.2 93.6 99.7 106.8 102.6 111.1 118.2 130.6 84.5 86.0 96.3 103.5 103.0 102.7 109.2 111.6 111.2 112.2 116.7 117.0 117.6 121.5 128.5 131.5 129.8 132.6 TABLE B-81.—Federal Government receipts and expenditures, national income and product accounts, 1969-92 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Expenditures Receipts Purchases of goods and services Year or quarter Total Indirect ContriPersonal Corpo- business butions rate 1 tax and profits tax and for social Total Nanontax tax receipts accruals nontax insurTotal tional ance defense Transfer payments Grantsin-aid to State and To To for- local per- eign- govers ern- sons ments Subsidies less Net current inter- surplus est of 192.5 198.0 196.2 1972 217.9 1973 245.3 277.2 1974 1975 290.5 1976 322.6 374.7 1977 1978 424.3 1979 491.2 538.6 1980 1981 623.8 1982 643.3 1983 645.7 1984 711.9 1985 776.8 815.2 1986 1987.!....!! !. 899.4 957.6 1988 1989 !....!!. 1,041.9 1990 1,094.9 1991 » 1,148.4 1992 • 1,237.2 Calendar: 1969 199.7 1970 195.4 1971 202.7 1972 232.2 1973 263.7 1974.!....!!..!!!!. 293.9 1975 . 294.9 1976 !!. 340.1 1977 ... . 384.1 1978 441.4 1979 505.0 1980 553.8 1981 639.5 1982 635.3 1983 659.9 1984 726.0 788.7 1985 1986 827.9 1987 913.8 1988 972.4 1989 1,052.9 1990" 1,111.7 1982: IV 633.1 1983: IV 675.5 1984: IV 742.7 1985: IV 805.3 1986: IV 853.8 1987: IV 940.0 1988: 1 943.0 II 972.5 Ill 976.7 IV 997.5 1989: 1 1,045.4 II 1,062.2 Ill 1,048.1 IV 1,055.7 1990: 1 1,080.6 | | 1,105.8 Ill 1,125.9 IV. 90.2 94.0 87.9 100.5 107.5 122.7 127.5 137.1 165.9 186.5 222.9 250.7 289.6 310.0 292.5 302.5 340.4 357.0 400.8 411.3 457.6 483.0 503.2 543.7 36.8 32.9 31.9 34.2 40.9 43.4 42.1 52.1 59.0 67.8 75.7 70.2 69.4 52.1 55.7 75.3 74.6 81.1 99.1 108.1 113.8 113.6 113.4 120.0 18.6 19.1 20.0 19.8 20.6 21.3 22.1 24.2 24.5 27.1 29.0 35.3 53.4 50.0 50.2 54.9 55.9 509 53.5 55.6 57.8 58.8 70.4 74.8 46.9 52.0 56.5 63.4 76.3 89.8 98.8 109.1 125.4 142.9 163.6 182.3 211.4 231.1 247.3 279.2 305.8 326.1 345.9 382.6 412.6 439.6 461.5 498.6 187.3 198.7 216.8 237.1 260.4 283.9 335.7 378.9 419.6 459.9 506.4 589.0 682.4 755.9 832.4 873.0 962.3 1,028.0 1,060.0 1,101.8 1,172.2 1,253.2 1,352.1 1,419.0 100.3 99.8 98.3 104.4 105.3 109.3 123.9 132.2 146.8 158.6 173.1 199.9 231.8 264.4 287.4 297.2 341.5 368.6 375.4 377.8 399.0 416.1 449.9 438.9 78.5 78.2 75.7 76.2 77.1 78.8 86.3 91.5 99.2 106.3 117.7 137.2 160.7 187.3 210.4 228.5 252.7 275.4 290.0 296.3 301.3 309.1 327.6 308.3 48.9 55.3 68.1 76.5 87.6 102.3 131.9 154.3 167.1 179.3 198.5 235.4 274.6 305.6 339.8 342.2 360.6 380.4 399.3 420.5 448.5 488.2 535.0 573.5 2.3 2.2 2.5 3.0 2.8 3.2 3.7 3.7 4.1 4.4 5.1 5.8 6.7 7.2 7.7 9.9 13.4 14.3 11.8 12.8 13.5 16.5 1.4 17.4 19.2 12.0 22.6 13.5 26.8 14.1 32.6 14.0 40.4 15.7 41.6 19.6 48.4 21.7 57.5 25.1 66.3 28.5 74.7 33.5 79.1 40.7 86.7 50.8 90.1 66.7 83.4 82.2 85.7 90.6 90.7 109.7 97.8 128.3 107.4 134.6 103.1 139.3 108.3 148.8 115.8 167.7 128.3 182.1 148.1 199.1 209.3 160.2 4.7 5.5 7.0 6.5 9.1 7.7 5.9 6.2 6.9 9.7 9.9 10.4 12.5 13.0 20.9 23.3 20.7 228 31.1 33.6 27.7 22.0 18.6 19.7 95.1 92.6 90.3 108.2 114.7 131.3 125.9 147.3 169.8 194.9 231.0 257.9 298.9 304.5 294.5 310.3 346.4 361.4 405.8 415.1 464.0 493.2 303.0 291.9 326.0 355.3 376.2 419.2 402.4 418.8 414.4 424.8 453.1 470.9 462.2 469.6 473.6 492.1 500.0 507.1 36.1 30.6 33.5 36.6 43.3 45.1 43.6 54.6 61.6 71.4 74.4 70.3 65.7 49.0 61.3 75.2 76.3 83.8 103.2 110.5 110.4 110.1 46.4 70.2 69.7 78.8 88.9 107.4 104.0 110.8 111.9 115.4 120.7 115.0 104.7 10t.3 106.5 109.2 114.2 18.9 19.2 20.3 19.9 21.1 21.6 23.8 23.3 25.0 28.0 29.3 38.8 56.2 48.1 51.6 55.7 55.1 50.5 54.0 57.0 58.4 61.7 47.6 53.6 56.2 53.5 50.8 55.1 56.2 56.3 57.6 57.8 57.6 58.0 59.3 58.7 60.6 60.5 61.0 64.9 49.6 52.9 58.7 67.5 84.6 95.9 101.6 115.0 127.7 147.0 170.3 186.8 218.8 233.7 252.5 284.7 310.9 332.1 350.8 389.8 420.1 446.7 236.1 259.8 290.7 317.7 337.9 358.4 380.4 386.6 392.8 399.6 413.9 418.4 421.9 426.1 439.9 444.0 450.6 452.2 191.3 207.8 224.8 249.0 269.3 305.5 364.2 393.7 430.1 470.7 521.1 615.1 703.3 781.2 835.9 895.6 985.6 1,034.8 1,071.9 1,114.2 1,187.2 1,273.0 835.7 844.7 930.2 1,017.5 1,042.8 1,101.7 1,096.7 1,109.4 1,096.8 1,153.8 1,178.0 1,184.9 1,179.8 1,205.8 1,248.8 1,271.7 1,271.6 1,300.0 100.0 98.8 99.8 105.8 106.4 116.2 129.2 136.3 151.1 161.8 178.0 208.1 242.2 272.7 283.5 310.5 355.2 366.5 381.3 380.3 400.0 424.2 293.2 276.1 326.0 376.6 368.8 388.2 374.8 377.7 367.4 401.1 398.3 402.5 399.2 399.9 410.6 421.9 425.8 438.5 78.9 76.8 74.1 77.4 77.5 82.6 89.6 93.4 100.9 108.9 121.9 142.7 167.5 193.8 214.4 234.3 259.1 277.8 294.6 297.2 301.1 314.0 205.4 221.5 244.1 268.6 280.7 296.0 296.6 297.1 295.5 299.6 298.2 300.6 306.3 299.2 307.2 309.6 312.6 326.5 50.8 61.6 73.0 80.9 93.7 115.0 146.8 159.3 170.1 182.4 205.6 247.0 282.1 316.3 340.1 344.2 366.7 386.0 401.6 425.7 458.6 496.6 337.9 340.3 346.6 370.3 391.3 404.6 422.7 424.5 426.7 429.1 448.1 454.2 461.5 470.5 490.3 491.4 496.1 508.7 2.2 2.3 2.7 2.9 2.9 3.6 4.0 4.4 4.2 4.7 5.2 6.5 6.5 7.8 8.5 10.7 13.4 13.9 12.4 13.1 13.4 12.5 9.5 12.2 15.5 15.5 14.5 16.8 11.7 10.5 12.3 18.1 12.6 10.5 13.0 17.3 13.1 18.9 17.0 1.0 20.3 24.4 29.0 37.5 40.6 43.9 54.6 61.1 67.5 77.3 80.5 88.7 87.9 83.9 86.2 93.6 99.7 106.8 102.6 111.1 118.2 130.6 84.5 86.0 96.3 103.5 103.0 102.7 109.2 111.6 111.2 112.2 116.7 117.0 117.6 121.5 128.5 131.5 129.8 132.6 12.7 14.1 13.8 14.4 18.0 20.7 23.0 26.8 29.1 35.2 42.5 53.3 72.4 84.6 94.3 115.6 130.1 135.6 142.3 151.3 172.0 186.3 87.2 101.0 125.3 132.7 136.0 147.6 143.9 149.4 153.9 157.9 167.4 173.4 172.1 175.2 178.1 184.3 189.8 193.1 5.2 6.5 6.3 7.9 7.8 5.6 6.9 5.8 8.2 9.5 9.2 11.5 12.3 16.0 22.9 21.2 20.3 26.0 31.8 32.7 25.0 22.8 23.4 29.1 21.0 19.0 29.2 41.5 34.5 35.7 25.3 35.3 35.0 27.3 16.5 21.3 28.3 23.8 13.1 26.1 1 Includes 8 or deficit ( ). national income and paid govern- product ment accounts enterprises Fiscal: » 1969 1970 1971 Surplus 5.2 -20.5 -19.2 -15.2 -6.8 -45.3 -56.3 -44.8 -35.6 -15.2 -50.4 -58.5 -112.6 -186.7 -161.0 -185.5 -212.8 -160.7 -144.1 -130.3 -158.2 -203.6 -181.8 8.4 -12.4 -22.0 -16.8 -5.6 -11.6 -69.4 -53.5 -46.0 -29.3 -16.1 -61.3 -63.8 -145.9 -176.0 -169.6 -196.9 -206.9 -158.2 -141.7 -134.3 -161.3 -202.6 -169.2 -187.5 -212.2 -189.0 -161.7 -153.7 -136.9 -120.1 -156.3 -132.6 -122.7 -131.7 -150.1 -168.3 -166.0 -145.7 an item for the difference between wage accruals and disbursements, not shown separately. 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, 19" y 1, 1976 through September 30, 1976 is 'a separate ' fiscal period ' ' " ' ' known as the transition quarter. 3 Estimates. Sources: Department of Commerce (Bureau of Economic Analysis) and Office of Management and Budget. 381 TABLE B-82.—State and local government receipts and expenditures, national income and product accounts, 1946-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Expenditures Receipts Year or quarter 1946 1947 1948 1949 1950 1951 1952 . 1953 i 1954. 1955 1 1956 1957 '.'. 1958 1959 "I::.: 1960 1961 1962 1963 1964 I???;::::: :r:::::::: 1966 1967 1968 1969 1970 1971 .... 1973 1974 1975 1976 1977 1978 1979 1980 1982 1983 .. 1984 1985 1986 1987 1988 1989 1990 P 1982: IV. 1983: IV 1984: IV. 1985: IV 1986: IV 1987: IV 1988: 1.. II III IV 1989-1 1972 : : 1981 ::::::::: ii.::.::::::::.:::::: in IV 1990: 1 HI IV * Total 13.0 15.4 17.7 19.5 21.3 23.4 25.4 27.4 29.0 31.7 35.0 38.5 42.0 46.6 50.0 54.1 58.6 63.4 69.8 75.5 85.2 94.1 107.9 120.8 135.8 153.6 179.3 196.4 213.1 239.6 270.1 300.1 330.3 355.3 390.0 425.6 449.4 487.7 540.5 581.8 626.3 655.2 697.6 749.9 800.1 459.8 505.8 554.5 598.0 637.6 667.3 678.9 693.9 702.2 715.5 732.6 746.7 755.7 764.6 783.6 792.2 808.6 Indirect Personal Corpo- business Contribu- Federal rate tax and profits tax and tions for grants-innontax aid tax nontax social receipts accruals accruals insurance 1.5 1.7 2.1 2.4 2.5 2.8 3.0 3.2 3.5 3.9 4.5 5.0 5.4 6.2 6.8 7.5 8.4 9.0 10.2 11.3 13.2 15.0 18.0 21.1 23.6 27.0 33.8 37.3 40.5 44.7 51.5 58.3 66.2 73.7 82.6 94.5 104.9 116.1 129.8 140.2 151.5 165.8 176.5 194.8 206.6 108.1 122.0 133.6 144.3 158.2 169.4 170.3 175.2 177.8 182.6 187.3 194.6 197.2 200.0 201.5 204.4 209.4 211.1 0.5 .6 :& :.8 g .8 .8 1.0 1.0 1.0 1.0 1.2 1.2 1.3 1.5 1.7 1.8 2.0 2.2 2.6 3.3 3.6 3.7 4.3 5.3 6.0 6.7 7.3 9.6 11.4 12.1 13.6 14.5 15.4 14.0 15.9 18.7 20.2 22.5 23.7 25.7 24.7 24.0 13.4 17.9 17.3 21.0 24.2 24.7 24.1 25.9 26.0 26.7 27.6 25.8 23.1 22.1 23.3 23.9 24.9 9.3 10.7 12.2 13.3 14.6 15.9 17.4 18.8 19.9 .21.6 23.8 25.7 27.2 29.3 32.0 34.4 37.0 39.4 42.6 46.1 49.7 53.9 60.8 67.4 74.8 83.1 91.2 99.6 107.4 116.2 128.4 140.7 150.0 160.1 174.5 195.3 210.8 231.0 258.2 278.5 298.5 313.8 331.7 355.6 378.7 216.9 240.5 266.5 284.8 302.3 320.2 324.0 328.9 334.0 339.8 345.8 353.1 360.6 362.8 371.2 372.5 383.9 387.0 0.6 .8 .9 1.1 1.4 1.6 1.7 2.0 2.1 2.3 2.6 2.8 3.1 3.4 3.7 3.9 4.2 4.7 5.0 5.7 6.7 7.2 8.3 9.2 10.2 11.5 13.0 14.6 16.8 19.5 22.1 24.7 27.4 29.7 32.5 35.8 38.5 40.2 43.2 47.1 49.3 52.7 56.7 60.2 36.9 39.4 40.7 44.4 49.8 50.3 51.2 52.2 53.2 54.2 55.2 56.2 57.1 58.1 59.0 59.9 60.7 61.4 1.1 1.7 2.0 2.2 2.3 2.5 2.6 2.8 2.9 3.1 3.3 4.2 5.6 6.8 6.5 7.2 8.0 9.1 10.4 11.1 14.4 15.9 18.6 20.3 24.4 29.0 37.5 40.6 43.9 54.6 61.1 67.5 77.3 80.5 88.7 87.9 83.9 86.2 93.6 99.7 106.8 102.6 111.1 118.2 130.6 84.5 86.0 96.3 103.5 103.0 102.7 109.2 111.6 111.2 112.2 116.7 117.0 117.6 121.5 128.5 131.5 129.8 132.6 Total1 11.1 14.4 17.6 20.2 22.5 23.9 25.5 27.3 30.2 32.9 35.9 39.8 44.4 47.0 49.9 54.5 58.2 62.9 68.8 75.5 84.7 95.2 107.8 119.3 134.0 151.0 165.8 182.9 205.9 235.2 254.9 273.2 301.3 327.7 363.2 391.4 414.3 440.2 475.9 516.7 563.5 604.1 651.1 703.5 764.7 424.1 449.5 489.1 531.8 579.8 620.3 633.4 645.6 655.4 670.2 683.7 696.5 707.6 726.1 745.5 753.6 769.4 790.3 Subsi- Surplus dies deficit Trans- Net less Purfer chases pay- interest current national surplus income of ments of 8 and to divia°nT per- dends govern- product services sons received ment accounts enterprises S 9.9 12.8 15.3 18.0 19.8 21.8 23.1 24.8 27.7 30.3 33.3 36.9 40.8 43.3 46.1 50.2 53.5 58.1 63.5 69.9 78.2 87.0 97.6 107.2 119.4 132.5 144.2 160.1 182.9 205.9 220.6 236.2 263.4 289.9 322.2 345.9 369.0 391.5 425.3 465.6 505.7 540.2 582.3 625.6 673.8 378.7 400.0 438.5 480.1 520.1 553.9 566.1 577.7 586.4 598.9 610.2 620.2 628.6 643.4 659.6 664.6 677.0 694.2 1.7 2.3 3.0 3.0 3.6 3.1 3.5 3.6 3.8 4.0 4.2 4.6 5.1 5.6 5.9 6.5 7.0 7.5 8.2 8.8 10.1 12.1 14.5 16.7 20.1 24.0 27.5 30.4 32.3 38.9 43.6 47.4 52.4 57.2 65.7 73.6 79.9 86.5 93.7 101.1 110.9 119.7 131.6 145.9 162.9 82.3 88.7 96.4 104.2 114.4 123.1 126.5 129.9 133.2 137.0 140.1 143.9 147.7 152.0 156.5 160.6 164.9 169.6 1 Includes an item for the difference between wage accruals and disbursements, not shown separately. Source: Department of Commerce, Bureau of Economic Analysis. 382 0.2 :i :.0 o .0 : -3 -.6 -.9 -1.1 -1.3 -2.0 -1.6 -1.8 -3.3 -5.0 -5.1 -4.5 -5.3 -8.7 13.8 -18.9 -22.4 -27.4 -29.0 -31.9 -37.0 -39.9 -41.3 463 -49.3 -51.7 -28.9 -29.7 -33.2 -38.8 -41.1 -41.9 -43.5 -45.8 -47.7 -48.2 -48.5 -48.9 -49.6 -50.2 -50.7 -51.4 -52.0 -52.7 -0.7 -.8 1:9 -.9 -1.0 -1.1 -1.2 -1.3 -1.5 -1.6 1.7 -1.7 -2.0 -2.2 -2.3 -2.5 -2.8 -2.8 -3.0 -3.0 -3.1 -3.2 -3.3 -3.6 -3.7 -4.2 -4.3 -4.4 -4.5 -4.8 -5.1 -5.6 -5.7 -5.8 -5.6 -7.3 -8.8 -11.3 -13.1 -13.2 -14.4 -16.5 -18.8 -20.3 -8.0 T-9.4 -12.6 -13.7 -13.6 -14.8 -15.7 -16.2 -16.5 -17.4 -18.0 -18.8 -19.1 -19.2 -19.8 -20.1 -20.6 -20.8 1.9 1.0 .1 -1.2 -.4 .0 -ri -1.3 -.9 -1.4 -2.4 .4 .1 -.4 '.5 1.0 .0 -U .1 1.5 1.8 2.6 13.5 13.5 7.2 4.5 15.2 26.9 28.9 27.6 26.8 34.1 35.1 47.5 64.6 65.1 62.8 51.0 46.5 46.4 35.4 35.8 56.4 65.4 66.3 57.8 46.9 45.5 48.3 46.8 45.2 48.9 50.3 48.1 38.5 38.1 38.6 39.3 TABLE B-83.—State and local government revenues and expenditures, selected fiscal years, 1927-89 [Millions of dollars] General revenues by source2 Fiscal year1 Total 1927 1932 .. 1934 1936 1938 1940 1942 1944 14.. 96.. 1948 1950 1952 1953 1954 1955 1956 1957 1958 1959 I960 1961 1962 1963 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 . 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 Sales Indiand Property gross vidual taxes receipts income tavoc laXcS taxes 7,271 7,267 7,678 8,395 9,228 9,609 10,418 10,908 12,356 17,250 20,911 25,181 27,307 29,012 31,073 34,667 38,164 41,219 45,306 50,505 54,037 58252 62,890 62,269 68,443 74,000 83,036 91,197 101,264 114,550 130,756 144,927 167,541 190,222 207,670 228,171 256,176 285,157 315,960 343,279 382,322 423,404 457,654 486,753 542,730 598,121 641,486 686,860 726,762 785,844 4,730 4,487 4,076 4,093 4,440 4,430 4,537 4,604 4,986 6,126 7,349 8,652 9,375 9,967 10,735 11,749 12,864 14,047 14,983 16,405 18,002 19054 20i089 19,833 21,241 22,583 24,670 26,047 27,747 30,673 34,054 37,852 42,877 45,283 47,705 51,491 57,001 62,527 66,422 64,944 68,499 74,969 82,067 89,105 96,457 103,757 111,709 121,203 132,212 142,525 470 752 1,008 1,484 1,794 1,982 2,351 2,289 2,986 4,442 5,154 6,357 6,927 7,276 7,643 8,691 9,467 9,829 10,437 11,849 12,463 13494 14,456 14,446 15,762 17,118 19,085 20,530 22,911 26,519 30,322 33,233 37,518 42,047 46,098 49,815 54,547 60,641 67,596 74,247 79,927 85,971 93,613 100,247 114,097 126,376 135,005 144,091 156,452 166,016 70 74 80 153 218 224 276 342 422 543 788 998 1,065 1,127 1,237 1,538 1,754 1,759 1,994 2463 2,613 3037 3i269 3,267 3,791 4,090 4,760 5,825 7,308 8,908 10,812 11,900 15,227 17,994 19,491 21,454 24,575 29,246 33,176 36,932 42,080 46,426 50,738 55,129 64,529 70,361 74,365 83,935 88,350 97,807 General expenditures by function2 Corpo- Revenue ration from All 3 net Federal income Govern- other taxes ment Total 116 232 1,016 948 800 945 858 954 855 1,861 2,486 2,566 2,870 2,966 3,131 3,335 3,843 4,865 6,377 6,974 7,131 7,871 B.722 8,663 10,002 11,029 13,214 15,370 17,181 19,153 21,857 26,146 31,342 39,264 41,820 47,034 55,589 62,444 69,592 75,164 83,029 90,294 87,282 90,007 96,935 106,158 113,099 114,857 117,602 125,824 7,210 7,765 7,181 7,644 8,757 9,229 9,190 8,863 11,028 17,684 22,787 26,098 27,910 30,701 33,724 36,711 40,375 44,851 48,887 51876 56,201 60206 64J816 63,977 69,302 74,678 82,843 93,350 102,411 116,728 131,332 150,674 168,549 181,357 198,959 230,721 256,731 274,215 296,984 327,517 369,086 407,449 436,733 466,516 505,008 553,899 605,623 657,134 704,921 762,311 92 79 49 113 165 156 272 451 447 592 593 846 817 778 744 890 984 1,018 1,001 1,180 1,266 1308 ilsos 1,505 1,695 1,929 2,038 2,227 2,518 3,180 3,738 3,424 4,416 5,425 6,015 6,642 7,273 9,174 10,738 12,128 13,321 14,143 15,028 14,258 17,141 19,152 19,994 22,425 23,663 25,922 1 Fiscal 8 1,793 1,643 1,449 1,604 1,811 1,872 2,123 2,269 2,661 3,685 4,541 5,763 6,252 6,897 7,584 8,465 9,252 9,699 10,516 11634 12,563 13,489 H850 14,556 15,951 17,250 19,269 21,197 23,598 26,118 29,971 32,374 36,162 40,210 46,541 51,735 57,191 61,124 68,436 79,864 95,466 111,599 128,926 138,008 153,570 172,317 187,314 200,350 208,482 227,751 Education Highways Public welfare All other4 151 3,015 2,235 1,809 1,741 444 2,311 3,269 2,952 1,831 1,509 889 827 2,177 1,425 3,215 3,547 2,491 1,069 1,650 3,862 2,638 1,573 1,156 1,225 3,889 2,586 1,490 3,737 2,793 1,200 1,133 4,591 3,356 1,672 1,409 5,379 3,036 2,099 7,170 8,867 7,177 3,803 2,940 8,318 4,650 2,788 10,342 10,619 9,390 4,987 2,914 10,557 5,527 3,060 11,557 12,197 11,907 6,452 3,168 13,399 13,220 6,953 3,139 3,485 14,940 14,134 7,816 16,547 15,919 8,567 3,818 17,876 17,283 9,592 4,136 18719 9,428 4,404 19,325 20,574 9,844 4,720 21,063 22216 10357 5084 22549 24,423 23>76 1U36 5,481 23,729 11,150 5,420 23,678 26,286 11,664 5,766 25,586 27,579 28,563 12,221 6,315 33,287 12,770 6,757 30,029 33,281 37,919 13,932 8,218 41,158 14,481 9,857 36,915 47,238 15,417 12,110 41,963 52,718 16,427 14,679 47,508 59,413 18,095 18,226 54,940 65,814 19,021 21,117 62,597 69,714 18,615 23,582 69,446 75,833 19,946 25,085 78,096 87,858 22,528 28,155 92,180 97,216 23,907 32,604 103,004 102,780 23,058 35,906 112,472 110,758 24,609 39,140 122,477 119,448 28,440 41,898 137,731 133,211 33,311 47,288 155,277 145,784 34,603 54,105 172,957 154,282 34,520 57,996 189,935 163,876 36,655 60,906 205,079 176,108 39,419 66,414 223,068 192,686 44,989 71,479 244,745 210,819 49,368 75,868 269,568 226,619 52,355 82,650 295,510 242,683 55,621 89,090 317,528 263,898 58,093 97,879 342,441 years not the same for all governments. See Note. Excludes revenues or expenditures of publicly owned utilities and liquor stores, and of insurance-trust activities. Intergovernmental receipts and payments between State and local governments are also excluded. 3 Includes other taxes and charges and miscellaneous revenues. 4 Includes expenditures for libraries, hospitals, health, employment security administration, veterans' services, air transportation, water transport and terminals, parking facilities, and transit subsidies, police protection, fire protection, correction, protective inspection and regulation, sewerage, natural resources, parks and recreation, housing and community development, solid waste management, financial administration, judicial and legal, general public buildings, other governmental administration, interest on general debt, and general expenditures, n.e.c. Note.-Data for fiscal years listed from 1962-63 to 1988-89 are the aggregations of data for government fiscal years that ended in the 12-month period from July 1 to June 30 of those years. Data for 1963 and earlier years include data for government fiscal years ending during that particular calendar year. Data are not available for intervening years. Source: Department of Commerce, Bureau of the Census. 383 TABLE B-84.—Interest-bearing public debt securities by kind of obligation, 7967-90 [Millions of dollars] Marketable End of year or month Fiscal year: 1967 1968 1969 1970... 1971 1972 1973 1974 Total interesthaarina Dearing public debt securities1 322 286 344,401 351,729 369,026 396,289 425,360 456,353 473,238 532 122 1975 1976 619,254 1977 697,629 1978 . . . 766,971 819,007 1979 ! 1980 906,402 1981 996,495 1982 1,140,883 1983 1,375,751 1984 1,559,570 1985 1,821,010 1986 2,122,684 1987 2,347,750 2,599,877 1988 1989 2,836,309 1990 3,210,943 1989- Jan. 2,695,333 'Feb !'.. 2,720,246 ... Mar .. 2,738,291 2,742,447 2,775,002 June 2,797,407 July 2,798,019 Aug 2,834,002 Sept 2,836,309 Oct 2,898,834 Nov . 2,921,176 Dec '. 2,931,786 1990: Jan 2,971,841 Feb 2,991,017 Mar !!. 3,029,537 ... Apr 3,058,404 May 3,092,558 June ! 3,121,498 July 3,166,272 Aug 3,209,186 Sept 3,210,943 Oct 3,272,492 Nov 3,328,193 Dec 3,362,026 fc :::: Total » 4 210 672 226,592 226,107 232,599 245,473 257,202 262,971 266,575 315606 392,581 443,508 485,155 506,693 594,506 683,209 824,422 1,024,000 1,176,556 1,360,179 1 1 1,564,329 1 1,675,980 1,802,905 » 1,892,763 1 2,092,759 * 1,846,222 1 1 1,859,948 1 1,871,730 1,858,091 * 1,878,407 1 1,877,295 1 1 1,873,160 1 1,905,187 1,892,763 » 1,939,579 1 1 1,958,274 1,945,409 1 1 1,974,637 1 1,990,999 1 1,995,299 1 2,001,494 1 2,024,738 2,028,041 1 1 2,068,322 2,114,041 * 2,092,759 1 1 2,139,486 1 2,183,585 2,195,800 Treasury bills Treasury Treasury notes bonds 58535 49108 97418 64,440 71,073 91,079 68,356 78,946 78,805 76,154 93,489 62,956 86,677 104,807 53,989 94,648 113,419 49,135 100,061 117,840 45,071 105,019 128,419 33,137 128569 150257 36779 161,198 191,758 39,626 156,091 241,692 45,724 160,936 267,865 56,355 161,378 274,242 71,073 199,832 310,903 83,772 223,388 363,643 96,178 277,900 442,890 103,631 340,733 557,525 125,742 356,798 661,687 158,070 384,220 776,449 199,510 410,730 896,884 241,716 378,263 1,005,127 277,590 398,451 1,089,578 299,875 406,597 1,133,193 337,974 482,454 1,218,081 377,224 416,263 1,106,254 308,860 416,170 1,110,476 318,457 417,020 1,121,422 318,443 410,513 1,114,299 318,435 406,482 1,129,025 328,055 397,069 1,137,180 328,046 391,454 1,138,664 328,042 409,287 1,142,915 337,985 406,597 1,133,193 337,974 428,022 1,158,590 337,967 433,718 1,161,337 348,219 430,648 1,151,548 348,213 435,337 1,176,097 348,203 437,755 1,180,381 357,862 453,077 1,169,364 357,858 433,089 1,195,550 357,855 439,922 1,203,012 366,804 453,505 1,192,739 366,797 464,851 1,221,694 366,776 493,789 1,228,021 377,230 482,454 1,218,081 377,224 500,649 1,246,618 377,220 528,765 1,251,647 388,174 527,415 1,265,215 388,170 Total 111 614 117,808 125,623 136,426 150,816 168,158 193,382 206,663 216 516 226,673 254,121 281,816 312,314 311,896 313,286 316,461 351,751 383,015 460,831 558,355 671,769 796,972 943,546 1,118,184 849,111 860,299 866,561 884,357 896,596 920,112 924,859 928,815 943,546 959,254 962,902 986,377 997,204 1,000,019 1,034,238 1,056,910 1,067,820 1,093,457 1,097,950 1,095,146 1,118,184 1,133,006 1,144,608 1,166,226 Nonmarketable Foreign govern- Governii <j U.O. ment savings ment account and bonds series public series* 51213 51,712 51,711 51,281 53,003 55,921 59,418 61,921 65482 69733 75,411 79,798 80,440 72,727 68,017 67,274 70,024 72,832 77,011 85,551 97,004 106,176 114,025 122,152 108,694 109,504 110,364 110,931 111,630 112,284 112,676 113,349 114,025 114,561 115,316 115,692 116,169 116,265 117,979 118,645 119,455 120,058 120,760 121,371 122,152 122,828 123,630 124,118 1514 3>41 4,070 4755 9,270 18,985 28,524 25,011 23216 21,500 21,799 21,680 28,115 25,158 20,499 14,641 11,450 8,806 6,638 4,128 4,350 6,320 6,818 36,041 6,889 6,818 6,666 6,516 6,236 6,152 6,207 6,112 6,818 6,765 6,547 6,786 6,997 6,398 37,062 37,102 36,814 36,382 36,284 36,046 36,041 35,845 37,143 43,455 56155 59,526 66,790 76,323 82,784 89,598 101,738 115,442 124 173 130,557 140,113 153,271 176,360 189,848 201,052 210,462 234,684 259,534 313,928 365,872 440,658 536,455 663,677 779,412 582,245 590,025 594,662 611,624 622,746 645,236 649,841 650,585 663,677 671,540 673,261 695,649 701,834 704,621 705,145 722,887 733,612 758,697 759,702 756,055 779,412 789,922 799,190 813,842 Other8 2731 2,828 3,051 4,068 5,759 3,654 3,701 4,289 3644 4i883 16,797 27,067 27,400 24,164 23,718 24,085 35,593 41,843 63,255 102,804 129,758 148,023 159,025 180,581 151,283 153,952 154,868 155,286 155,984 156,440 156,135 158,769 159,025 166,389 167,778 168,250 172,205 172,735 174,052 178,275 177,938 178,321 181,203 181,672 180,581 184,411 184,644 184,811 _ „__„ in millions of dollars: 15,000 in September 1986-September 1987; 14,845 in October 1987-May 1988: 15,000 in June-September 1088; 14,845 in October 1988-May 1989; 15,000 in June-December 1989; and 15,000 in January-December 1990. * Nonmarketable certificates of indebtedness, notes, bonds, and bills in the Treasury foreign series of dollar-denominated and foreigncurrency denominated issues. 8 Includes depository bonds, retirement plan bonds, Rural Electrification Administration bonds, State and local bonds, and special issues held only by U.S. Government agencies and trust funds and the Federal home loan banks. 4 Includes $5,610 million in certificates not shown separately. Note.-Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal year is on an October 1-September 30 basis. Source: Department of the Treasury. 384 TABLE B-85.—Maturity distribution and average length of marketable interest-bearing public debt securities held by private investors, 1967-90 End of year or month Amount outstanding, privately held Maturity class Average length Within lyear Ito5 years 5 to 10 years 10 to 20 years 20 years and over Millions of dollars Years Months Fiscal year: 1967 1968 1969 150,321 159,671 156,008 56,561 66,746 69,311 53,584 52,295 50,182 21,057 21,850 18,078 6,153 6,110 6,097 12,968 12,670 12,337 5 4 4 1 5 2 1970 1971 1972 1973 1974 157,910 161,863 165,978 167,869 164,862 76,443 74,803 79,509 84,041 87,150 57,035 58,557 57,157 54,139 50,103 8,286 14,503 16,033 16,385 14,197 7,876 6,357 6,358 8,741 9,930 8,272 7,645 6,922 4,564 3,481 3 3 3 3 2 8 6 3 1 11 1975 1976 1977 1978 1979 210,382 279,782 326,674 356,501 380,530 115,677 151,723 161,329 163,819 181,883 65,852 89,151 113,319 132,993 127,574 15,385 24,169 33,067 33,500 32,279 8,857 8,087 8,428 11,383 18,489 4,611 6,652 10,531 14,805 20,304 2 2 2 3 3 8 7 11 3 7 1980 1981 1982 1983 1984 463,717 549,863 682,043 862,631 1,017,488 220,084 256,187 314,436 379,579 437,941 156,244 182,237 221,783 294,955 332,808 38,809 48,743 75,749 99,174 130,417 25,901 32,569 33,017 40,826 49,664 22,679 30,127 37,058 48,097 66,658 3 4 3 4 4 9 0 11 1 6 1985 1986 1987 1988 1989 1,185,675 1,354,275 1,445,366 1,555,208 1,654,660 472,661 506,903 483,582 524,201 546,751 402,766 467,348 526,746 552,993 578,333 159,383 189,995 209,160 232,453 247,428 62,853 70,664 72,862 74,186 80,616 88,012 119,365 153,016 171,375 201,532 4 5 5 5 6 11 3 9 9 0 1990 1,841,903 626,297 630,144 267,573 82,713 235,176 6 1 1989: Jan Feb Mar Apr May June July 1,594,936 1,612,096 1,624,734 1,596,007 1,636,513 1,627,010 538,115 543,397 545,238 533,604 541,600 523,893 571,029 574,598 576,867 563,966 586,581 586,945 231,204 230,003 238,531 235,318 235,937 243,777 77,820 77,820 77,820 77,540 80,616 80,616 176,768 186,278 186,278 185,579 191,779 191,779 5 5 5 5 6 6 9 11 10 10 0 0 :..:..:: 1,635,962 :. 1,669,257 1,654,660 1,702,889 1,716,630 1,700,367 530,571 552,478 546,751 572,032 576,994 571,619 588,828 595,471 578,333 600,397 604,131 585,902 244,168 239,160 247,428 248,311 243,296 251,333 80,616 80,616 80,616 80,617 83,791 83,749 191,779 201,532 201,532 201,532 208,418 207,764 5 6 6 5 6 6 1,737,737 1,753,579 1,760,337 1,758,737 1,778,984 1,780,188 585,754 587,028 605,415 580,464 586,720 596,897 607,706 617,778 598,143 620,335 631,287 613,441 252,068 248,620 256,703 257,785 250,813 259,688 83,792 83,423 83,402 83,423 85,246 85,246 208,417 216,730 216,674 216,730 224,918 224,916 5 6 6 6 6 6 11 0 0 10 0 0 11 1 0 0 2 1 1,817,691 1,859,288 1,841,903 1,880,412 1,920,292 1,925,391 607,047 636,667 626,297 639,338 663,157 666,891 639,408 647,175 630,144 653,904 666,527 660,908 261,075 258,038 267,573 269,281 262,195 270,082 85,246 82,587 82,713 82,713 86,476 86,105 224,916 234,821 235,176 235,176 241,937 241,405 6 6 6 5 6 5 Aug sept Oct Nov Dec 1990: Jan Feb Mar Apr May.. .. June. July Aug Sept Oct .. . Nov Dec 0 0 1 11 0 11 Note.—All issues classified to final maturity. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal year is on an October 1-September 30 basis. Source: Department of the Treasury. 385 TABLE B-86.—Estimated ownership of public debt securities by private investors, 1976-90 [Par values;'billions of dollars] Held by private investors Nonbank investors End of month 1976: Total Commercial banks2 Individuals3 Total Total Savings bonds4 Other securities Insurance companies Money market funds Corporatons* State and local governments" international7 tf Other investors8 June 376.4 409.5 91.4 103.5 285.0 306.0 96.1 101.6 69.6 72.0 26.5 29.6 14.4 16.2 0.8 1.1 23.3 23.5 34.2 40.9 69.8 78.1 46.4 44.6 June 421.0 461.3 102.7 98.9 318.3 362.4 104.9 107.8 74.4 76.7 30.5 31.1 18.1 19.9 .8 .9 22.1 18.2 50.3 58.1 87.9 109.6 34.2 47.9 June 477.8 508.6 97.8 95.0 380.0 413.6 109.0 114.0 79.1 80.7 29.9 33.3 19.7 20.0 1.3 1.5 17.3 17.3 70.0 76.1 119.5 133.1 43.2 51.6 June 516.6 540.5 86.1 88.1 430.5 452.4 115.5 118.0 80.6 79.9 34.9 38.1 20.9 21.4 3.8 5.6 18.6 17.0 78.7 81.7 114.9 119.0 78.1 89.7 558.2 616.4 97.4 112.1 460.8 504.3 116.5 117.1 73.4 72.5 43.1 44.6 22.3 24.0 5.3 3.5 14.0 19.3 83.3 87.9 118.2 129.7 101.2 122.8 651.2 694.5 119.7 111.4 531.5 583.1 107.4 110.8 69.2 68.1 38.2 42.7 26.4 29.0 9.0 21.5 19.9 17.9 94.2 96.8 136.6 136.6 138.0 170.5 740.9 848.4 116.1 131.4 624.8 717.0 114.1 116.5 67.4 68.3 46.7 48.2 35.8 44.1 22.4 42.6 17.6 24.5 103.3 115.0 137.2 149.5 194.4 224.8 948.6 1,022.6 171.6 188.8 777.0 833.8 121.3 133.4 69.7 71.5 51.6 61.9 54.0 65.3 28.3 22.8 32.8 39.7 127.4 149.0 160.1 166.3 253.1 257.3 1,102.2 1,212.5 185.4 186.0 916.8 1,026.5 142.2 143.8 72.9 74.5 69.3 69.3 64.2 64.5 14.9 25.9 45.3 50.1 162.9 173.0 171.6 205.9 315.7 363.3 1,254.1 1,292.0 1,338.2 1,417.2 197.8 201.6 203.6 198.2 1,056.3 1,090.4 1,134.6 1,219.0 145.1 148.7 151.4 154.8 75.4 76.7 78.2 79.8 69.7 72.0 73.2 75.0 66.5 69.1 71.4 78.5 26.7 24.8 22.7 25.1 50.8 54.9 59.0 59.0 177.0 190.3 203.0 226.7 199.6 213.8 222.9 224.8 390.6 388.8 404.2 450.1 1,473.1 1,502.7 1,553.3 1,602.0 201.7 200.6 200.9 203.5 1,271.4 1,302.1 1,352.4 1,398.5 157.8 159.5 158.0 162.7 81.4 83.8 87.1 92.3 76.4 75.7 70.9 70.4 84.0 88.6 96.4 105.6 29.9 22.8 24.9 28.6 59.6 61.2 65.7 68.8 225.6 227.1 251.2 262.8 232.6 250.9 265.5 263.4 481.9 492.0 490.7 506.6 June Sept 1,641.4 1,658.1 1,680.7 1,731.4 199.9 199.4 205.2 201.5 1,441.5 1,458.7 1,475.5 1,529.9 163.0 165.6 167.7 172.4 94.7 96.8 98.5 101.1 68.3 68.8 69.2 71.3 107.8 104.0 104.6 104.9 18.8 20.6 15.5 14.6 73.5 79.7 81.8 84.6 264.6 268.7 273.0 284.6 272.8 281.1 279.5 299.7 541.0 539.0 553.4 569.1 June Sept 1,779.6 1,786.7 1,821.2 1,858.5 203.3 198.3 199.2 193.8 1,576.3 1,588.4 1,622.0 1,664.7 178.1 182.0 186.8 190.4 104.0 106.2 107.8 109.6 74.1 75.8 79.0 80.8 103.6 103.8 105.1 107.3 15.2 13.4 11.1 11.8 86.3 87.6 85.9 86.0 291.4 297.2 305.7 313.6 332.5 345.4 345.9 362.2 569.2 559.0 581.5 593.4 1,903.4 1,909.1 1,958.3 2,015.8 200.7 186.6 174.8 174.8 1,702.7 1,722.5 1,783.5 1,841.0 204.2 211.7 213.5 216.5 112.2 114.0 115.7 117.7 92.0 97.7 97.8 98.8 120.4 121.7 124.1 130.1 13.0 11.3 12.9 14.9 89.4 91.0 90.9 93.4 326.0 332.0 338.0 338.7 376.6 369.1 394.9 392.9 573.1 585.7 609.2 654.5 2,115.1 2,141.8 2,207.3 189.2 188.2 188.0 1,925.9 1,953.6 2,019.3 222.1 234.0 238.5 119.9 121.9 123.9 102.2 112.1 114.6 133.8 137.0 138.9 31.3 28.1 33.6 93.8 95.8 99.1 348.7 345.7 344.0 386.3 392.3 404.8 709.9 720.7 760.4 Dec 1977: Dec 1978: Dec 1979: Dec 1980: June Dec 1981: June Dec 1982: June Dec 1983: June Dec 1984: June Dec 1985: Mar June Sept fee 1986: Mar June Sept Dec.: : : : : : : :. . 1987: Mar Deb 1988: Mar Deb 1989: Mar June Sept Dec.: : : : : : : : : 1990: Mar June Sept 1 U.S. savings bonds, series A-F and J, are include value, * Includes domestically chartered banks>t:/>.iL. brandies and agencies of fttreign banks, New York investment companies majority owned by foreign banks, U.S. «h«. and3 Edge Act corporations owned by domestically chartered and foreign banks. Includes partnerships and personal trust accounts. * Includes U.S. savings notes. Sales began May 1,1967, and were discontinued June 30,1970. 6 Exclusive of banks and insurance companies. 8 Includes State and local pension funds. 7 Consists of the investment of foreign balances and international accounts in the United States. 8 Includes savings and loan associations, credit unions, nonprofit institutions, mutual savings banks, corporate pension trust funds, dealers and brokers, certain Government deposit accounts, and Government-sponsored agencies. Source: Department of the Treasury. • IW< C/4»« A«t «A«Ulr<ltUW<. /IU.UUI h» /t»~,W 386 CORPORATE PROFITS AND FINANCE TABLE B-87.—Corporate profits with inventory valuation and capital consumption adjustments, 1929-90 [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 1988 1989 1990*. 1982: IV 1983: IV. 1984: IV 1985: IV 1986: IV 1987: IV 1988:1 II III.. IV 1989:1 II III IV 1990-1 II HI IV? Corporate profits after tax with inventory valuation and capital consumption adjustments Corporate prof its with inventory valuation and capital consumption adjustments Corporate profits tax liability 9.6 -1.5 5.5 8.8 14.3 19.7 24.0 24.2 19.7 17.2 22.9 30.3 28.0 34.9 39.9 37.5 37.7 36.6 47.1 45.7 45.3 40.3 51.4 49.5 50.3 58.3 63.6 70.7 81.3 86.6 84.1 90.7 87.4 74.7 87.1 100.7 113.3 101.7 117.6 145.2 174.8 197.2 200.1 177.2 188.0 150.0 213.7 266.9 282.3 282.1 308.3 337.6 311.6 297.1 146.1 248.5 266.9 291.4 275.2 323.1 330.5 335.8 334.4 349.6 327.3 321.4 306.7 290.9 296.8 306.6 300.7 1.4 .5 1.4 2.8 7.6 11.4 14.1 12.9 10.7 9.1 11.3 12.4 10.2 17.9 22.6 19.4 20.3 17.6 22.0 22.0 21.4 19.0 23.6 22.7 22.8 24.0 26.2 28.0 30.9 33.7 32.7 39.4 39.7 34.4 37.7 41.9 49.3 51.8 50.9 64.2 73.0 83.5 88.0 84.8 81.1 63.1 77.2 93.9 96.4 106.3 126.9 136.2 135.1 134.1 59.8 88.1 87.0 99.8 113.1 132.1 128.2 136.7 137.9 142.1 148.3 140.8 127.8 123.5 129.9 133.1 139.1 Source: Department of Commerce, Bureau of Economic Analysis. 387 Total 8.2 -2.1 4.0 5.9 6.7 8.3 9.9 11.2 9.0 8.0 11.7 17.8 17.8 17.0 17.3 18.1 17.4 19.0 25.1 23.8 23.8 21.4 27.8 26.8 27.6 34.3 37.4 42.7 50.4 52.9 51.4 51.4 47.7 40.3 49.3 58.8 64.1 49.9 66.7 81.0 101.8 113.7 112.1 92.4 106.8 86.9 136.5 173.0 185.9 175.8 181.4 201.4 176.5 163.0 86.3 160.4 179.9 191.5 162.1 191.0 202.3 199.1 196.5 207.5 179.0 180.6 178.9 167.5 167.0 173.4 161.6 Dividends Undistributed profits with inventory valuation and capital consumption adjustments 5.8 2.0 3.8 4.0 4.4 4.3 4.4 4.6 4.6 5.6 6.3 7.0 7.2 8.8 8.5 8.5 8.8 9.1 10.3 11.1 11.5 11.3 12.2 12.9 13.3 14.4 15.5 17.3 19.1 19.4 20.2 22.0 22.5 22.5 22.9 24.4 27.0 29.7 29.6 34.6 39.5 44.7 50.1 54.7 63.6 66.9 71.5 79.0 83.3 91.3 98.2 110.0 123.5 133.9 68.5 73.9 80.8 84.0 93.6 102.2 105.0 107.9 111.8 115.3 119.1 122.1 125.0 127.7 130.3 133.0 135.1 137.2 2.4 -4.1 .3 1.9 2.3 4.0 5.5 6.6 4.4 2.5 5.4 10.8 10.6 8.2 8.8 9.6 8.6 9.8 14.8 12.7 12.3 10.1 15.6 13.9 14.2 19.9 21.9 25.3 31.3 33.5 31.2 29.4 25.2 17.9 26.4 34.4 37.0 20.2 37.1 46.4 62.3 69.0 62.0 37.7 43.2 20.0 65.0 94.0 102.6 84.5 83.2 91.4 53.0 29.1 17.9 86.5 99.1 107.6 68.5 88.8 97.3 91.2 84.8 92.2 59.9 58.5 53.9 39.8 36.7 40.5 26.5 TABLE B-88.—Corporate profits by industry, 7929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Corporate profits with inventory valuation adjustment and without capital consumption adjustment Domestic industries Financiall 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 1988 1989 1990 p 1982: IV 1983: IV 1984: IV 1985: IV 1986: IV 1987: IV 1988:1 II Ill IV 1989: 1 | | Ill IV 1990: 1 II HI Total ". '. 10.5 -1.2 6.5 9.8 15.4 20.5 24.5 24.0 19.3 19.6 25.9 33.4 31.1 37.9 43.3 40.6 40.2 38.4 47.5 46.9 46.6 41.6 52.3 49.8 50.1 55.2 59.8 66.2 76.2 81.2 78.6 85.4 81.4 69.5 82.7 94.9 107.1 99.4 123.9 155.3 183.8 208.2 214.1 194.0 202.3 159.2 196.7 234.2 222.6 228.3 255.9 289.8 286.1 292.1 150.7 223.4 224.6 228.4 226.1 268.6 278.0 285.3 287.1 308.7 292.1 291.5 285.3 275.3 285.5 298.8 298.7 Total 10.2 -1.2 6.1 9.6 15.0 20.1 24.1 23.5 18.9 18.9 24.9 32.2 29.9 36.7 41.5 38.7 38.4 36.4 45.1 44.1 43.5 39.1 49.6 46.7 46.8 51.5 55.8 61.8 71.5 76.7 73.9 79.9 74.8 62.6 75.1 85.5 92.6 82.4 109.5 139.3 165.5 186.0 180.4 159.6 173.8 131.2 166.6 203.3 191.4 195.2 218.4 246.5 235.2 238.1 121.6 190.7 193.9 193.6 193.4 226.2 235.7 244.9 243.5 261.9 241.5 244.9 236.0 218.4 232.6 249.9 241.1 Total 1.3 .8 1.0 1.1 1.2 1.3 1.6 1.7 2.1 1.7 2.6 3.1 3.1 3.6 4.0 4.5 4.6 4.8 5.0 5.2 5.7 6.8 7.2 7.0 7.3 6.8 6.9 7.5 8.5 9.0 10.4 11.2 12.2 14.1 15.4 15.8 14.7 11.2 15.9 21.6 29.1 27.8 21.0 16.5 11.8 18.1 13.0 22.8 32.0 20.7 22.4 15.4 18.6 18.7 15.5 13.6 26.0 28.6 19.8 19.2 21.1 25.0 24.1 24.0 21.6 9.2 6.9 16.1 18.2 21.7 Federal Reserve banks 0.0 .0 .0 .0 .0 .0 .0 .1 .1 .1 .1 .2 .2 .2 .3 .4 .4 .3 .3 £ .6 1.0 .8 .9 1.0 1.1 1.4 1.7 2.0 2.5 3.1 3.6 3.3 3.4 4.5 5.7 5.7 6.0 6.2 7.7 9.6 11.9 14.5 15.4 14.8 16.7 16.8 16.0 16.2 18.1 20.7 21.9 14.8 15.4 17.4 16.3 15.6 16.6 17.4 17.3 18.2 19.3 20.2 21.1 20.5 20.8 20.8 21.1 22.6 Nonfinancial Other 1.3 '.B .9 1.0 1.2 1.3 1.6 1.6 2.0 1.6 2.3 2.9 3.0 3.3 3.7 4.1 4.3 4.5 4.5 4.6 5.1 6.0 6.2 6.3 6.4 5.8 5.8 6.2 6.8 7.0 7.9 8.1 8.6 10.7 12.0 11.2 8.9 5.5 9.9 15.4 21.4 18.2 9.0 1.9 -3.6 3.3 -3.7 6.1 16.0 4.4 4.3 -5.2 -3.3 3.9 -is 9.7 12.9 3.2 1.8 3.8 6.8 4.8 3.8 .5 -11.3 -13.9 -4.7 -2.9 Total 8.9 -1.5 5.3 8.6 14.0 18.9 22.8 21.9 17.3 16.8 23.2 29.6 26.8 33.5 37.9 34.7 33.9 31.8 40.3 39.1 38.3 33.5 42.9 39.5 39.8 44.2 49.0 54.9 64.0 68.2 64.9 69.5 63.7 50.4 61.0 70.2 76.8 67.8 98.3 123.4 143.9 156.8 152.6 138.6 157.3 119.4 148.5 190.3 168.6 163.2 197.8 224.1 219.8 219.6 102.9 175.2 180.3 167.6 164.8 206.4 216.4 223.8 218.5 237.8 217.4 223.4 226.9 211.5 216.5 231.7 219.3 TransManu- portation Wholesale fac- 2 and public and retail turing trade utilities 5.2 -.4 3.3 5.5 9.5 11.8 13.8 13.2 9.7 9.0 13.6 17.6 16.2 20.9 24.6 21.7 22.0 19.9 26.0 24.7 24.0 19.4 26.4 23.6 23.3 26.0 29.3 32.3 39.3 41.9 38.6 41.4 36.7 26.7 34.3 40.8 46.2 39.8 53.6 70.9 80.6 88.7 87.5 77.1 88.5 58.0 70.1 88.8 79.7 59.5 86.7 106.5 96.1 91.8 46.8 88.6 79.8 83.8 64.8 98.2 103.2 106.8 103.3 112.6 102.0 98.9 99.9 83.7 90.1 100.8 91.2 1.8 .0 1.0 1.3 2.0 3.4 4.4 3.9 2.7 1.8 2.2 3.0 3.0 4.0 4.6 4.9 5.0 4.7 5.6 5.9 5.8 5.9 7.0 7.4 7.8 8.4 9.3 10.0 11.0 11.8 10.7 10.8 10.3 8.2 8.5 9.0 8.5 6.7 10.3 14.8 17.9 20.9 15.2 17.6 19.5 19.3 28.5 38.5 33.0 36.3 40.6 44.1 43.6 42.0 16.3 31.3 38.1 30.6 35.3 40.8 40.1 44.2 45.1 47.2 45.0 46.2 42.9 40.2 41.5 41.9 42.8 Other 1.0 0.9 ~> 1.2 1.4 2.2 3.0 3.2 3.3 3.8 4.6 5.5 4.5 5.0 5.0 4.8 3.8 3.8 5.0 4.5 4.4 4.6 5.9 4.9 5.0 5.8 5.9 7.5 8.1 8.2 9.1 10.4 10.5 9.6 11.7 13.4 13.9 12.9 22.2 23.0 27.5 27.3 28.7 21.6 32.5 34.6 38.9 51.2 44.1 44.1 37.9 37.1 38.7 40.3 33.6 43.1 51.8 38.5 41.0 37.8 38.2 35.0 33.0 42.3 33.7 37.6 41.4 41.9 39.2 44.4 39.5 ~!3 .6 1.1 1.5 1.6 1.6 1.5 2.1 2.9 3.6 3.1 3.6 3.7 3.3 3.1 3.4 3.6 4.1 4.0 3.6 3.6 3.6 3.7 3.9 4.4 5.1 5.6 6.3 6.5 6.9 6.1 5.9 6.5 6.9 8.2 8.3 12.2 14.7 17.8 20.0 21.1 22.4 16.8 7.5 10.9 11.8 11.8 23.4 32.6 36.4 41.4 45.5 6.2 12.2 10.5 14.6 23.8 29.6 35.0 37.8 37.0 35.7 36.8 40.7 42.7 45.7 45.7 44.6 45.9 Rest of the world 0.2 .0 .3 .3 .4 .4 .4 .4 .3 LO 1.3 1.1 1.3 1.7 1.9 1.8 2.0 2.4 2.8 3.1 2.5 2.7 3.1 3.3 3.7 4.0 4.4 4.6 4.4 4.7 5.5 6.5 6.9 7.6 9.3 14.5 17.0 14.4 16.0 18.3 22.2 33.7 34.4 28.5 28.0 30.2 30.9 31.2 33.1 37.5 43.3 50.9 54.0 29.1 32.7 30.6 34.8 32.6 42.4 42.4 40.4 43.7 46.8 50.6 46.6 49.3 56.9 52.9 48.9 57.6 1 Consists of the following industries: Banking; credit agencies other than banks; security and commodity brokers, dealers, and services; insurance carriers; regulated investment companies; small business investment companies; and real estate investment trusts. * See Table B-89 for industry detail. Note.-The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning 1948, and on the 1942 SIC prior to 1948. DigitizedSource: Department of Commerce, Bureau of Economic Analysis. for FRASER 388 TABLE B-89.—Corporate profits of manufacturing industries, 7929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Corporate profits with inventory valuation adjustment and without capital consumption adjustment 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 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 1988 1989 1990 > 1982: IV 1983: IV 1984: IV 1985- IV 1986: iv....!.!!!!!!..!!! 1987: IV 1988:1 | | Ill IV 1989:1 II Ill IV 1990:1 || Ill Total manufacturing Total 5.2 4 3.3 5.5 9.5 11.8 13.8 13.2 9.7 9.0 13.6 17.6 16.2 20.9 24.6 21.7 22.0 19.9 26.0 24.7 24.0 19.4 26.4 23.6 23.3 26.0 29.3 32.3 39.3 41.9 38.6 41.4 36.7 26.7 34.3 40.8 46.2 39.8 53.6 70.9 80.6 88.7 87.5 77.1 88.5 58.0 70.1 88.8 79.7 59.5 86.7 106.5 96.1 91.8 46.8 88.6 79.8 83.8 64.8 98.2 103.2 106.8 103.3 112.6 102.0 98.9 99.9 83.7 90.1 100.8 91.2 2.6 4 1.7 3.1 6.4 7.2 8.1 7.4 4.5 2.4 5.8 7.5 8.1 12.0 13.2 11.7 11.9 10.5 14.3 12.8 13.3 9.3 13.7 11.6 11.4 14.0 16.3 17.9 23.0 23.8 21.0 22.2 19.0 10.2 16.4 22.5 24.7 14.6 19.8 31.3 38.6 44.6 37.3 21.3 21.0 2.1 17.2 38.1 28.5 30.8 41.0 42.8 37.1 33.5 -6.6 29.4 36.6 28.0 33.4 33.3 36.2 46.5 43.1 45.5 40.9 39.6 37.4 30.2 37.4 39.5 30.2 Pri- mary metal industries 1.6 1.5 2.3 3.1 1.9 2.5 1.7 2.9 3.0 3.0 1.9 2.3 2.0 1.6 1.6 2.0 2.5 3.1 3.6 2.7 1.9 1.4 .8 L6 2.3 4.9 2.7 2.0 1.3 3.5 3.6 2.5 3.1 -4.9 -4.9 -.6 -1.4 2.6 2.8 6.3 6.2 4.3 -5.1 -4.4 -.8 -1.2 3.7 2.7 4.2 6.8 6.8 7.6 6.6 7.0 7.0 4.3 4.9 5.4 3.6 Durable goods Fabri- Machin- Electric and cated ery, elecmetal except tronic prod- electriucts cal fir 0.8 1.1 1.3 1.0 1.0 .9 1.1 1.1 1.1 .9 1.1 .8 1.0 1.1 1.3 U 2.0 2.4 2.4 2.3 2.0 1.1 1.5 2.1 2.6 1.6 3.1 3.9 4.4 4.9 5.2 4.3 4.4 2.4 3.0 4.7 4.6 4.8 5.1 6.3 6.7 5.5 .9 4.4 5.6 4.0 4.4 6.3 7.4 6.7 4.7 6.5 7.8 7.2 7.2 4.6 6.4 6.0 4.8 1.2 1.3 1.6 2.3 2.3 1.9 1.7 1.7 2.1 2.0 1.4 2.1 1.8 1.9 2.3 2.5 3.3 3.9 4.5 4.1 4.1 3.7 3.0 2.9 4.3 4.7 3.1 4.8 6.7 8.9 9.6 9.1 7.7 8.6 4.1 3.1 6.2 3.2 3.0 6.3 7.0 4.7 6.9 1.3 4.7 5.5 4.0 2.2 5.5 7.5 9.3 7.5 3.9 3.3 5.0 5.0 5.7 7.3 7.9 6.3 Nondurable goods Motor vehicles equipment 0.7 .8 1.2 1.3 1.5 1.4 1.2 1.1 1.2 1.5 1.3 1.7 1.3 1.3 1.5 1.6 1.7 2.7 3.0 2.9 2.8 2.3 1.2 1.9 2.8 3.0 1.4 2.1 3.1 2.4 2.4 2.6 2.1 4.1 2.2 2.6 .9 3.0 3.0 2.5 4.0 4.9 4.7 6.2 5.1 3.9 5.5 4.8 1.2 5.1 5.9 5.8 2!4 3.7 5.8 6.7 5.2 4.7 4.1 1.7 3.7 5.5 3.6 2.9 6.2 6.7 7.4 7.3 .1 6.2 5.5 2.5 3.2 2.5 3.1 6.6 8.5 8.4 7.2 7.6 6.0 8.9 8.6 7.8 6.6 2!o 7.2 9.4 8.9 4.7 -2.5 -!s 5.1 9.0 7.2 4.1 2.8 1.5 -1.9 60 -2.7 8.7 8.8 7.8 3.8 -.3 -1.3 -.4 3.1 4.8 2.3 -1.4 -2.7 -5.8 -7.2 -4.3 -5.4 Other 1.8 1.7 2.6 2.8 2.6 2.6 2.9 3.5 3.2 3.1 2.9 3.5 2.7 3.1 3.5 4.0 4.4 5.1 5.2 4.9 5.7 4.9 2.9 4.3 5.8 6.2 4.0 4.8 7.9 8.8 10.9 9.5 4.5 .7 ~7.2 13.3 11.3 13.3 17.8 14.9 13.9 15.6 -1.2 9.9 12.0 10.9 16.1 16.5 15.4 17.5 12.5 14.2 13.7 14.2 15.1 12.6 17.4 16.7 14.3 Food Chemi- Petrocals leum and and and Total kindred allied coal prod- prod- products ucts ucts 2.6 .0 1.7 2.4 31 4.6 57 5.9 5.2 66 7.8 10.0 8.1 8.9 11.4 9.9 10.1 9.4 11.8 11.9 10.7 10.0 12.7 12.0 11.9 12.0 13.1 14.4 16.3 18.1 17.6 19.1 17.7 16.5 17.9 18.3 21.6 25.2 33.8 39.6 42.0 44.0 50.2 55.8 67.5 55.9 53.0 50.7 51.2 28.7 45.7 63.7 59.0 58.3 53.5 59.2 43.2 55.8 31.4 64.9 67.0 60.3 60.2 67.2 61.0 59.2 62.4 53.5 52.7 61.3 60.9 1.9 1.6 1.6 1.4 1.7 1.8 1.6 2.2 1.8 1.8 2.1 2.4 2.2 2.3 2.3 2.7 2.7 2.8 3.2 3.2 3.2 3.0 3.2 3.5 2.9 2.5 2.5 8.8 7.1 6.9 6.2 5.8 6.1 8.7 7.0 7.2 6.7 8.3 7.8 11.1 14.5 14.0 14.3 7.1 8.0 5.9 8.5 8.7 14.1 14.2 14.5 13.9 15.5 16.4 14.0 13.3 12.4 10.9 15.3 15.7 2.8 1.7 1.9 1.8 2.3 2.3 2.7 2.8 2.3 2.3 2.2 2.8 2.7 2.2 3.0 3.0 3.3 2.8 2.6 2.8 2.1 2.5 2.5 3.5 2.5 3.1 2.2 3.2 2.2 3.2 2.1 3.6 2.4 4.0 2.9 4.6 3.2 4.9 4.3 3.9 3.7 5.2 4.6 3.3 3.5 3.9 3.6 4.5 3.0 5.2 5.2 6.0 5.1 10.7 9.5 6.4 8.2 13.1 7.8 12.9 8.2 14.7 7.2 22.5 5.4 31.4 8.2 36.5 5.2 29.1 6.7 21.4 8.0 17.2 6.2 17.5 7.6 -7.6 15.6 -2.6 4.4 21.9 21.7 2.9 21.9 3.2 25.9 7.8 25.3 7.1 12.9 3.6 25.5 9.1 -11.3 7.7 19.8 5.8 21.8 21.2 1.3 4.9 19.2 5.7 25.3 22.0 -1.0 22.8 -1.6 3.9 21.6 20.1 1.0 21.9 3.7 22.7 3.7 22.1 Other 3.7 2.8 2.7 4.4 3.6 3.3 2.9 3.6 4.1 3.6 3.3 4.3 4.2 4.1 4.3 4.6 5.3 6.0 6.8 6.3 7.0 6.9 5.9 6.4 7.2 7.9 7.0 9.1 11.2 14.4 14.9 14.7 12.9 14.1 14.5 17.7 18.8 19.2 20.9 21.6 22.9 23.1 19.2 17.3 18.1 17.3 18.2 24.9 23.3 25.2 23.4 22.2 20.7 23.7 24.1 23.6 21.1 18.9 19.6 19.4 Note.—The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning 1948, and on the 1942 SIC prior to 1948. Source: Department of Commerce, Bureau of Economic Analysis. 389 TABLE B-90.—Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-90 [Billions of dollars] Profits Year or quarter Sales (net) Before After income income taxes1 taxes 181.9 245.0 250.2 265.9 248.5 278.4 307.3 320.0 305.3 338.0 345.7 356.4 389.4 412.7 443.1 492.2 554.2 575.4 1967 1968 !.!!!!! 631.9 1969 694.6 708.8 1970 1971 751.1 1972 . 849.5 1973 1,017.2 1973: IV 275.1 New series: 236.6 1973: IV 1974 1,060.6 1975 .. 1,065.2 1,203.2 1976 1977 1,328.1 1,496.4 1978 1979 1,741.8 1980 1,912.8 2,144.7 1981 1982 2,039.4 1983 2,114.3 1984 2,335.0 23.2 27.4 22.9 24.4 20.9 28.6 29.8 28.2 22.7 29.7 27.5 27.5 31.9 34.9 39.6 46.5 51.8 47.8 55.4 58.1 48.1 52.9 63.2 81.4 21.4 12.9 11.9 10.7 11.3 11.2 15.1 16.2 15.4 12.7 16.3 15.2 15.3 17.7 19.5 23.2 27.5 30.9 29.0 32.1 33.2 28.6 31.0 36.5 48.1 13.0 20.6 92.1 79.9 104.9 115.1 132.5 154.2 145.8 158.6 108.2 133.1 165.6 13.2 58.7 49.1 64.5 70.4 81.1 98.7 92.6 101.3 70.9 85.8 107.6 2,331.4 1985 1986 '.'. 2,220.9 1987 2,378.2 1988 2,596.2 1989 2,745.1 1988: 1 614.2 II . 655.5 646.3 Ill IV 680.2 1989:1 666.0 707.5 in"!!!!!"!! 681.3 IV 690.3 1990: 1 667.4 704.1 in".!!!!!!!!! 702.0 137.0 129.3 173.0 216.1 188.8 51.2 58.6 54.0 52.2 53.3 53.3 46.7 35.4 39.8 49.9 41.7 87.6 83.1 115.6 154.6 136.3 37.1 41.6 38.5 37.4 37.9 36.6 33.4 28.4 27.9 35.1 29.3 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 : Stockholders' equity2 Nondurable goods industries Durable goods industries All manufacturing corporations Profits Sales (net) Before After income income taxes1 taxes Stockholders' equity8 Profits Sales (net) Before After income income taxes1 taxes Stockholders' equity2 86.8 116.8 122.0 137.9 122.8 142.1 159.5 166.0 148.6 169.4 173.9 175.2 195.3 209.0 226.3 257.0 291.7 300.6 335.5 366.5 363.1 381.8 435.8 527.3 140.1 12.9 15.4 12.9 14.0 11.4 16.5 16.5 15.8 11.4 15.8 14.0 13.6 16.8 18.5 21.2 26.2 29.2 25.7 30.6 31.5 23.0 26.5 33.6 43.6 10.8 6.7 6.1 5.5 5.8 5.6 8.1 8.3 7.9 5.8 8.1 7.0 6.9 8.6 9.5 11.6 14.5 16.4 14.6 16.5 16.9 12.9 14.5 18.4 24.8 6.3 39.9 47.2 49.8 52.4 54.9 58.8 65.2 70.5 72.8 77.9 82.3 84.9 89.1 93.3 98.5 105.4 115.2 125.0 135.6 147.6 155.1 160.4 171.4 188.7 194.7 95.1 128.1 128.0 128.0 125.7 136.3 147.8 154.1 156.7 168.5 171.8 181.2 194.1 203.6 216.8 235.2 262.4 274.8 296.4 328.1 345.7 369.3 413.7 489.9 135.0 10.3 12.1 10.0 10.4 9.6 12.1 13.2 12.4 11.3 13.9 13.5 13.9 15.1 16.4 18.3 20.3 22.6 22.0 24.8 26.6 25.2 26.5 29.6 37.8 10.6 6.1 5.7 5.2 5.5 5.6 7.0 7.8 7.5 6.9 8.3 8.2 8.5 9.2 10.0 11.6 13.0 14.6 14.4 15.5 16.4 15.7 16.5 18.0 23.3 6.7 43.5 51.1 53.9 55.7 58.2 61.3 66.4 70.6 74.6 79.2 83.1 87.7 92.3 96.3 101.3 106.3 115.1 122.6 130.3 142.3 151.7 160.5 172.0 185.4 191.7 122.7 368.0 395.0 529.0 423.4 521.1 462.7 589.6 496.7 657.3 540.5 760.7 600.5 865.7 668.1 889.1 743.4 979.5 770.2 913.1 973.5 812.8 864.2 1,107.6 10.1 41.1 35.3 50.7 57.9 69.6 72.4 57.4 67.2 34.7 48.7 75.5 6.2 24.7 21.4 30.8 34.8 41.8 45.2 35.6 41.6 21.7 30.0 48.9 185.8 196.0 208.1 224.3 239.9 262.6 292.5 317.7 350.4 355.5 372.4 395.6 113.9 531.6 544.1 613.7 670.8 735.7 876.1 1,023.7 1,165.2 1,126.4 1,140.8 1,227.5 10.5 51.0 44.6 54.3 57.2 62.9 81.8 88.4 91.3 73.6 84.4 90.0 7.0 34.1 27.7 33.7 35.5 39.3 53.5 56.9 59.6 49.3 55.8 58.8 182.1 199.0 215.3 238.4 256.8 277.9 308.0 350.4 393.0 414.7 440.4 468.5 61.5 52.1 78.0 91.7 75.2 21.3 26.5 22.0 21.9 22.0 23.7 18.9 10.7 16.2 21.9 12.7 38.6 32.6 53.0 67.1 55.7 15.5 19.5 15.9 16.3 15.9 16.7 13.8 9.3 11.7 15.7 9.3 420.9 436.3 444.3 468.7 501.2 458.6 466.8 470.1 479.1 495.8 500.2 502.6 506.2 504.9 515.8 518.0 1,188.8 1,095.4 1,200.3 1,311.5 1,388.5 313.4 329.2 329.6 339.4 334.3 354.7 348.9 350.5 343.3 350.8 365.0 75.6 77.2 95.1 124.4 113.5 29.9 32.1 32.0 30.4 31.4 29.6 27.8 24.7 23.6 28.0 28.9 49.1 50.5 62.6 87.5 80.6 21.6 22.2 22.7 21.1 21.9 19.9 19.6 19.2 16.2 19.5 20.0 445.3 438.4 456.6 488.9 497.7 477.2 485.2 492.5 500.8 492.8 491.6 498.8 507.6 516.8 520.4 532.1 83.3 98.3 103.7 108.2 113.1 120.1 131.6 141.1 147.4 157.1 165.4 172.6 181.4 189.7 199.8 211.7 230.3 247.6 265.9 289.9 306.8 320.8 343.4 374.1 386.4 866.2 874.7 900.9 957.6 998.9 935.8 952.0 962.6 979.9 988.6 991.8 1,001.4 1,013.7 1,021.7 1,036.2 1,050.1 1,142.6 1,125.5 1,178.0 1,284.7 1,356.6 300.8 326.3 316.7 340.9 331.7 352.8 332.3 339.8 324.1 353.2 337.0 1 In the old series, "income taxes" refers to Federal income taxes only, as State and local income taxes had already been deducted. In 2 new series, no income taxes have been deducted. the Annual data are average equity for the year (using four end-of-quarter figures). Note.—Data are not necessarily comparable from one period tu another due to changes in accounting procedures, industry classifications, sampling procedures, etc. For explanatory notes concerning compilation of the series, see "Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations, Department of Commerce, Bureau of the Census. Source: Department of Commerce, Bureau of the Census. 390 TABLE B-91.—Relation of profits after taxes to stockholders' equity and to sales, all corporations, 1947-90 Ratio of profits after income taxes (annual rate) to stockholders' equity— percent1 Year or quarter 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 1973: IV New series: 1973: IV 1974 1975 1976 . . 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1988: 1 II Ill IV 1989: 1 II Ill IV 1990: 1 II... Ill manufacturing Profits after income taxes per dollar of sales—cents All manufacturing corporations Durable goods industries Nondurable goods industries All manufacturing corporations Durable goods industries Nondurable goods industries 15.6 16.0 11.6 15.4 12.1 10.3 10.5 9.9 12.6 12.3 10.9 8.6 10.4 9.2 8.9 9.8 10.3 11.6 13.0 13.4 11.7 12.1 11.5 9.3 9.7 10.6 12.8 13.4 14.4 15.7 12.1 16.9 13.0 11.1 11.1 10.3 13.8 12.8 11.3 8.0 10.4 8.5 8.1 9.6 10.1 11.7 13.8 14.2 11.7 12.2 11.4 8.3 9.0 10.8 13.1 12.9 16.6 16.2 11.2 14.1 11.2 9.7 9.9 9.6 11.4 11.8 10.6 9.2 10.4 9.8 9.6 9.9 10.4 11.5 12.2 12.7 11.8 11.9 11.5 10.3 10.3 10.5 12.6 14.0 6.7 7.0 5.8 7.1 4.9 4.3 4.3 4.5 5.4 5.3 4.8 4.2 4.8 4.4 4.3 4.5 4.7 5.2 5.6 5.6 5.0 5.1 4.8 4.0 4.1 4.3 4.7 4.7 6.7 7.1 6.4 7.7 5.3 4.5 4.2 4.6 5.7 5.2 4.8 3.9 4.8 4.0 3.9 4.4 4.5 5.1 5.7 5.6 4.8 4.9 4.6 3.5 3.8 4.2 4.7 4.5 6.7 6.8 5.4 6.5 4.5 4.1 4.3 4.4 5.1 5.3 4.9 4.4 4.9 4.8 4.7 4.7 4.9 5.4 5.5 5.6 5.3 5.2 5.0 4.5 4.5 4.4 4.8 5.0 14.3 14.9 11.6 13.9 14.2 15.0 16.4 13.9 13.6 9.2 10.6 12.5 10.1 9.5 12.8 16.1 13.6 15.8 17.5 16.0 15.3 15.3 14.8 13.4 11.2 10.9 13.6 11.2 13.3 12.6 10.3 13.7 14.5 16.0 15.4 11.2 11.9 6.1 8.1 12.4 9.2 7.5 11.9 14.3 11.1 13.5 16.7 13.5 13.6 12.9 13.4 11.0 7.3 9.3 12.1 7.2 15.3 17.1 12.9 14.2 13.8 14.2 17.4 16.3 15.2 11.9 12.7 12.5 11.0 11.5 13.7 17.9 16.2 18.1 18.3 18.4 16.9 17.8 16.2 15.7 15.1 12.6 15.0 15.0 5.6 5.5 4.6 5.4 5.3 5.4 5.7 4.8 4.7 3.5 4.1 4.6 3.8 3.7 4.9 6.0 5.0 6.0 6.3 6.0 5.5 5.7 5.2 4.9 4.1 4.2 5.0 4.2 5.0 4.7 4.1 5.2 5.3 5.5 5.2 4.0 4.2 2.4 3.1 4.4 3.4 2.9 4.5 5.2 4.1 5.1 6.0 5.0 4.8 4.8 4.7 4.2 2.7 3.6 4.4 2.8 6.1 6.4 5.1 5.5 5.3 5.3 6.1 5.6 5.1 4.4 4.9 4.8 4.1 4.6 5.2 6.7 5.8 6.9 6.7 6.9 6.2 6.6 5.6 5.6 5.5 4.7 5.6 5.5 1 Annual ratios based on average equity for the year (using four end-of-quarter figures). Quarterly ratios based on equity at end of quarter only. Note.—Based on data in millions of dollars. See Note, Table B-90. Source: Department of Commerce, Bureau of the Census. 391 TABLE B-92.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Sources Uses External Internal Year or quarter Total U.S. undisTotal tributed nrnfitc proms Inventory valuation and capital consumption adjustments Credit market funds Discrepancy Capital Increase (sources in Securi- Loans Total less financial uses) ties and Other » assets Total and shortmort- term gages paper Capital con- Foreign sumption earn- Total allow- ings' ances » 3.6 3.5 3.6 5.4 5.7 3.0 6.7 .7 2.5 4.9 -1.9 -2.6 17.4 26.4 25.7 18.4 18.8 18.1 20.7 14.9 -1.4 8.4 5.0 3.5 1.7 1.0 3.9 2.0 4.2 6.4 8.1 6.2 6.7 6.6 7.4 10.1 10.5 8.3 3.9 16.0 4.4 5.3 1.1 -1.4 -.4 .4 -.5 -.9 3.7 13.2 2.4 5.3 1.9 -.5 -.1 1.2 8.0 4.0 40.4 37.9 30.1 28.3 28.1 48.9 41.0 39.9 38.6 52.1 24.0 30.5 25.6 26.0 23.2 32.4 37.1 35.7 27.8 37.9 16.4 7.4 4.6 2.3 4.9 16.5 4.0 4.2 10.8 14.2 2.2 -1.0 .1 .2 1.7 4.4 4.1 3.6 3.6 4.5 11.3 12.0 13.0 11.9 13.8 18.9 24.7 27.3 27.5 32.4 7.4 10.5 9.0 8.1 7.8 7.0 14.3 19.2 15.0 14.6 3.9 1.5 3.9 3.8 6.0 11.9 10.4 8.2 12.6 17.8 1.0 41.5 6.9 50.8 4.5 55.9 9.6 60.5 8.1 64.6 14.7 83.3 11.0 92.3 3.4 88.0 20.7 107.7 18.4 116.4 37.6 36.5 43.5 44.8 49.7 61.4 75.6 71.6 77.0 84.7 3.9 14.2 12.5 15.7 14.9 21.8 16.7 16.4 30.8 31.7 6.7 5.0 4.7 8.1 9.6 9.4 6.7 6.9 6.3 -.4 34.2 37.4 42.4 76.3 54.9 23.1 50.7 69.4 70.9 60.3 26.3 7.8 32.8 4.6 26.4 16.0 44.4 31.9 21.4 33.5 39.4 -16.3 42.4 8.3 44.6 24.8 37.6 33.2 9.0 51.3 99.6 123.1 146.4 191.3 191.4 151.0 208.8 241.8 325.3 368.7 80.9 86.4 96.3 120.5 138.9 109.9 155.4 179.3 217.7 238.9 18.7 2.1 36.7 4.3 50.1 6.8 70.7 23.8 52.5 -12.7 41.1 4.0 53.5 3.0 62.6 16.2 107.7 -13.7 129.8 -45.4 18.7 14.0 15.5 18.4 19.2 18.9 15.5 22.9 14.5 31.6 121.0 68.6 28.0 40.6 52.5 342.1 136.7 90.6 23.4 67.2 46.0 383.3 58.9 48.5 -6.2 54.7 10.4 303.1 131.7 76.5 41.0 35.5 55.2 392.6 155.5 91.9 -13.7 105.5 63.6 474.9 103.9 49.8 -6.3 56.0 54.1 425.1 179.8 124.7 60.5 64.2 55.1 481.2 121.3 48.2 18.5 29.7 73.0 466.6 156.8 55.1 -15.4 70.5 101.6 494.6 132.7 35.4 -45.0 80.4 97.3 488.5 243.7 286.3 256.1 270.5 369.7 341.2 330.4 354.1 378.3 382.2 98.4 -21.3 97.0 -7.5 47.0 -2.3 122.1 24.3 105.2 16.5 83.9 30.6 150.8 43.0 27.1 112.5 116.3 53.5 106.2 24.2 289.0 292.9 296.7 302.5 9.0 10.6 25.2 13.4 189.2 97.9 5.3 181.6 67.1 -3.7 156.0 84.2 30.3 100.2 -28.7 -93.4 92.7 91.3 504.2 70.8 114.6 505.2 53.9 71.8 499.6 64.8 128.9 469.6 362.9 379.2 386.7 384.6 141.3 126.0 112.9 85.0 74.7 65.0 44.7 29.6 -15.4 -.2 8.9 -4.8 307.0 310.4 320.0 324.3 42.4 137.5 18.0 -92.5 110.5 119.6 484.2 3.1 115.6 102.7 560.0 25.3 221.5 118.7 29.2 73.7 1.0 -85.2 86.2 72.6 444.4 9.4 94.3 465.3 29.6 98.1 3.8 -5.6 377.4 388.3 385.1 378.2 106.8 171.7 59.3 87.1 33.2 41.2 14.9 7.7 -6.1 .7 -26.1 323.7 325.6 330.9 38.2 127.9 25.4 104.9 36.8 86.6 343.1 377.4 389.0 126.9 119.3 76.6 28.6 -17.0 -18.0 1946.... 1947 1948 1949 19.1 27.5 29.5 20.5 8.5 13.3 19.7 20.0 8.5 12.7 14.0 9.6 -7.6 -8.7 -5.2 -1.0 7.3 9.0 10.4 11.2 0.3 .3 .4 .3 10.6 14.1 9.9 .4 7.1 8.4 7.4 3.0 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 42.6 36.9 30.2 28.6 29.8 53.4 45.1 43.5 42.2 56.6 18.5 20.8 22.5 22.3 24.4 29.9 30.0 32.0 30.7 36.4 14.1 10.8 8.9 9.2 9.0 13.4 12.7 11.5 8.3 12.5 -7.9 -4.4 -2.0 -3.3 -1.9 -2.0 -3.7 -2.7 -1.5 -1.0 12.0 13.8 14.8 15.9 16.8 17.8 20.0 22.0 23.1 24.1 .3 .6 .8 .7 .5 .8 1.0 1.2 .8 .9 24.0 16.2 7.8 6.2 5.4 23.4 15.1 11.5 11.6 20.2 8.1 10.9 9.2 5.8 6.3 10.3 12.6 12.0 10.4 12.2 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 48.2 55.8 60.6 68.5 74.2 92.7 99.0 94.9 114.0 116.0 35.8 36.9 43.2 47.0 52.3 59.1 63.3 64.3 65.8 65.2 9.9 9.5 12.2 13.7 17.7 22.4 24.0 21.2 20.4 17.1 -.4 .6 3.1 3.9 3.9 3.9 3.3 3.9 1.7 .0 25.1 25.9 26.8 28.0 29.4 31.5 34.3 37.6 41.4 45.4 1.2 .9 1.1 1.4 1.3 1.4 1.7 1.6 2.3 2.8 12.4 18.9 17.4 21.6 21.9 33.6 35.7 30.7 48.3 50.8 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 101.7 127.4 153.2 215.0 178.7 155.0 211.8 258.0 311.6 323.3 62.7 74.6 86.2 93.7 89.0 124.2 141.3 164.4 181.9 197.2 11.3 17.2 22.8 35.2 43.3 42.7 57.5 68.7 77.3 86.6 -1.6 -.5 -1.2 -14.7 -38.1 -17.9 -25.4 -26.0 -36.6 -57.2 49.8 54.7 60.0 65.0 76.0 91.3 101.6 113.6 129.5 149.3 3.2 39.0 3.2 52.7 4.6 67.0 8.1 121.3 7.7 89.7 8.1 30.8 7.6 70.5 8.0 93.6 11.7 129.7 18.6 126.1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 320.8 375.8 300.8 417.0 491.4 455.7 524.1 493.7 548.1 512.7 199.8 239.1 241.9 285.2 335.9 351.8 344.3 372.4 391.4 380.0 69.4 64.7 24.1 33.9 53.6 28.9 7.3 42.8 68.8 35.9 -59.2 -38.0 -18.7 5.1 25.1 53.5 56.3 27.1 12.8 -2.9 170.9 198.4 221.0 227.7 238.1 250.5 265.3 279.6 295.3 315.4 | II Ill IV 578.9 570.2 544.3 499.2 389.7 388.6 388.3 399.0 68.7 73.1 60.7 72.7 23.0 12.0 5.7 10.4 1989: I II Ill IV 517.5 601.2 459.2 472.9 379.9 379.7 385.5 374.9 46.0 44.2 27.4 25.8 1990: | II Ill 498.5 370.6 479.7 374.7 447.6 361.0 14.7 23.0 19.4 1988: 1.4 93.8 43.3 23.4 15.9 -26.6 1 Foreign branch 2 Consists of tax 8 92.3 19.9 42.5 4.9 15.3 24.6 45.0 34.8 7.7 19.9 24.2 58.8 65.8 34.2 470.0 61.6 496.7 70.7 465.6 profits, dividends, and subsidiaries' earnings retained abroad. liabilities, trade debt, and direct foreign investment in the United States. Plant and equipment, residential structures, inventory investment, and mineral rights from U.S. Government. Source: Board of Governors of the Federal Reserve System. 392 TABLE B-93.—Common stock prices and yields, 1949-90 Common stock prices1 New York Stock Exchange indexes (Dec. 31, 1965=50)2 Finance Dow Jones industrial average9 44.45 49.82 65.85 70.49 60.00 70.38 78.35 70.12 49.67 47.14 52.94 55.25 56.65 61.42 64.25 73.52 71.99 95.34 89.28 114.21 147.20 146.48 127.26 151.88 133.26 132.26 137.19 137.91 143.26 146.59 154.08 157.78 164.86 165.51 166.55 160.89 155.63 150.11 142.68 143.13 138.57 142.94 147.93 143.11 128.14 118.59 108.01 113.76 122.18 179.48 216.31 257.64 270.76 275.97 333.94 442.72 493.01 475.71 491.66 632.12 618.04 691.55 639.76 714.81 834.05 910.88 873.60 879.12 960 0.0 876.72 753.19 847 8.6 950.71 923.88 759.37 824 0.9 974.92 894.63 820.23 844 4.0 891.41 932.92 884.36 1,190.34 1,178.48 1,328.23 1,792.76 2,275.99 2008 ,6.2 2,508.91 2,678.94 2,234.68 2,304.30 2,283.11 2,348.91 2,439.55 2449 ,9.0 2,554.03 2,691.11 2,693.41 2,692.01 2624 ,4.9 2,728.47 2,679.24 2,614.18 2,700.13 2,708.26 2,793.81 2,894.82 2,934.23 2,681.89 2,550.69 2,460.54 2,518.56 2,610.92 Year or month Composite 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 1988.. 1989 1990 1989: Jan Feb Mar Apr fl/fay.... June.... July Sept Oct Nov. Dec 1990: Jan Feb Mar Apr May Aug I:::.::::::: June :::::::::: Aug :..:.: :: Sept oct :::..::::::;"::: Nov.... July... Dec 9.02 10.87 13.08 13.81 13.67 16.19 2154 2440 23.67 24.56 30.73 30.01 35.37 3349 37.51 4376 47.39 46.15 50.77 55.37 54.67 45.72 54.22 60.29 57.42 43.84 45.73 54.46 53.69 53.70 58.32 68.10 74.02 68.93 92.63 92.46 108.09 136.00 161.70 149.91 180.02 183.46 160.40 165.08 164.60 169.38 175.30 180.76 185.15 192.94 193.02 192.49 188.50 192.67 187.96 182.55 186.26 185.61 191.35 196.68 196.61 181.45 173.22 168.05 172.21 179.57 Industrial 46.18 51.97 58.00 57.44 48.03 57.92 65.73 63.08 48.08 50.52 60.44 57.86 58.23 64.76 78.70 85.44 78.18 107.45 108.01 123.79 155.85 195.31 180.95 216.23 225.78 194.62 200.00 199.20 204.81 211.51 216.75 221.74 231.32 230.86 229.40 224.38 230.12 225.79 220.60 226.14 226.86 234.85 242.42 245.86 226.73 216.81 208.58 212.81 221.88 Transportation 50.26 53.51 50.58 46.96 32.14 44.35 50.17 37.74 31.89 31.10 39.57 41.09 43.50 47.34 60.61 72.61 60.41 89.36 85.63 104.11 119.87 140.39 134.12 175.28 158.62 153.09 162.66 160.14 164.32 168.89 173.47 179.32 197.52 202.02 190.36 174.26 177.25 173.67 166.58 175.08 173.55 173.53 177.37 173.18 147.41 136.95 131.90 132.96 141.31 Utility 4.' 54i 45.43 44.19 42.80 37.24 39.53 38.48 37.69 29.79 31.50 36.97 40.92 39.22 38.20 37.35 38.91 39.75 47.00 46.44 56.75 71.36 74.30 71.77 87.43 90.60 75.87 77.84 77.66 79.69 84.07 87.90 90.40 92.91 93.44 94.67 94.95 99.73 95.69 92.15 93.00 91.92 93.29 93.65 89.85 85.81 83.30 87.27 89.69 91.56 1 Averages of daily closing prices, except New York Stock Exchange data through 8 Includes all the stocks (more than 1,500) listed on the New York Stock Exchange. 3 Includes 30 stocks. 4 Includes 500 stocks. 8 Standard & Poor's series, based on 500 stocks in the composite index. 6 Common stock 8 yields (percent) Standard & Poor's composite Dividend- Earningsprice index price ratio7 ratio" (194143=10)* 15.23 18.40 22.34 24.50 24.73 29.69 40.49 46.62 44.38 46.24 57.38 55.85 66.27 62.38 69.87 81.37 88.17 85.26 91.93 98.70 97.84 83.22 98.29 109.20 107.43 82.85 86.16 102.01 98.20 96.02 103.01 118.78 128.05 119.71 160.41 160.46 186.84 236.34 286.83 265.79 322.84 334.59 285.41 294.01 292.71 302.25 313.93 323.73 331.93 346.61 347.33 347.40 340.22 348.57 339.97 330.45 338.47 338.18 350.25 360.39 360.03 330.75 315.41 307.12 315.29 328.75 6.59 6.57 6.13 5.80 5.80 4.95 4.08 4.09 4.35 3.97 3.23 3.47 2.98 3.37 3.17 3.01 3.00 3.40 3.20 3.07 3.24 3.83 3.14 2.84 3.06 4.47 4.31 3.77 4.62 5.28 5.47 5.26 5.20 5.81 4.40 4.64 4.25 3.49 3.08 3.64 3.45 3.61 3.64 3.59 3.68 3.59 3.52 3.44 3.38 3.28 3.29 3.29 3.39 3.33 3.41 3.54 3.49 3.51 3.44 3.36 3.37 3.65 3.85 4.01 3.91 3.74 15.48 13.99 11.82 9.47 10.26 8.57 7.95 7.55 7.89 6.23 5.78 5.90 4.62 5.82 5.50 5.32 5.59 6.63 5.73 5.67 6.08 6.45 5.41 5.50 7.12 11.59 9.15 8.90 10.79 12.03 13.46 12.66 11.96 11.60 8.03 10.02 8.12 6.09 5.48 8.01 7.41 8.46 7.93 679 6.47 6.37 5.94 7.10 May 1964 are averages of weekly closing prices. Aggregate cash dividends (based on latest known annual rate) divided by aggregate market value based on Wednesday closing prices. Monthly data are averages of weekly figures; annual data are averages of monthly figures. 7 Quarterly data are ratio of earnings (after taxes) for 4 quarters ending with particular quarter to price index for last day of that quarter. Annual data are averages of quarterly ratios. Note.-AII data relate to stocks listed on the New York Stock Exchange. Sources: New York Stock Exchange, Dow Jones & Co., Inc., and Standard & Poor's Corporation. 393 TABLE B-94.—Business formation and business failures, 1946-90 Business failures1 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 1988 1989 1990 " Index of net business formation (1967= 100) 101.1 83.7 87.7 86.7 90.8 89.7 88.8 96.6 94.6 90.3 90.2 97.9 94.5 90.8 92.6 94.4 98.2 99.8 99.3 100.0 108.3 115.8 108.8 111.1 119.3 119.1 113.2 109.9 120.4 130.8 138.1 138.3 129.9 124.8 116.4 117.5 121.3 120.9 120.4 121.2 124.1 124.8 120.7 New business incorporations (number) Business failure rate8 132,916 112,897 96,346 85,640 93,092 83,778 92,946 102,706 117,411 139,915 141,163 137,112 150,781 193,067 182,713 181,535 182,057 186,404 197,724 203,897 200,010 206,569 233,635 274,267 264,209 287,577 316,601 329,358 319,149 326,345 375,766 436,170 478,019 524,565 533,520 581,242 566,942 600,400 634,991 662,047 702,738 685,572 685,095 676,565 5.2 14.3 20.4 34.4 34.3 30.7 28.7 33.2 42.0 41.6 48.0 51.7 55.9 51.8 57.0 64.4 60.8 56.3 53.2 53.3 51.6 49.0 38.6 37.3 43.8 41.7 38.3 36.4 38.4 42.6 34.8 28.4 23.9 27.8 42.1 61.3 89.0 110.0 107.0 115.0 120.0 102.0 98.0 65.0 Number of failures Total Amount of current liabilities (millions of dollars) Liability size class Under $100,000 $100,000 and over Total Liability size class Under $100,000 $100,000 and over 1,129 3,474 5,250 9,246 9,162 8,058 7,611 8,862 11,086 10,969 12,686 13,739 14,964 14,053 15,445 17,075 15,782 14,374 13,501 13,514 13,061 12,364 9,636 9,154 10,748 10,326 9,566 9,345 9,915 11,432 9,628 7,919 6,619 7,564 11,742 16,794 24,908 31,334 52,078 57,253 61,616 61,622 57,097 50,361 60,409 1,003 3,103 4,853 8,708 8,746 7,626 7,081 8,075 10,226 10,113 11,615 12,547 13,499 12,707 13,650 15,006 13,772 12,192 11,346 11,340 10,833 10,144 7,829 7,192 8,019 7,611 7,040 6,627 6,733 7,504 6,176 4,861 3,712 3,930 5,682 8,233 11,509 15,509 19,618 36,551 38,908 39,372 38,300 33,304 40,401 126 371 397 538 416 432 530 787 860 856 1,071 1,192 1,465 1,346 1,795 2,069 2,010 2,182 2,155 2,174 2,228 2,220 1,807 1,962 2,729 2,715 2,526 2,718 3,182 3,928 3,452 3,058 2,907 3,634 6,060 8,561 13,399 15,825 32,460 20,702 22,708 22,250 18,797 17,057 20,008 67.3 204.6 234.6 308.1 248.3 259.5 283.3 394.2 462.6 494 4. 562.7 615.3 728.3 692.8 938.6 1,090.1 1,213.6 1,352.6 1,329.2 1,321.7 1,385.7 1,265.2 941.0 1,142.1 1,887.8 1,916.9 2,000.2 2,298.6 3,053.1 4,380.2 3,011.3 3,095.3 2,656.0 2,667.4 4,635.1 6,955.2 15,610.8 16,072.9 29,268.6 3,0. 6888 44,724.0 36,369.9 39,573.0 42,797.5 65,303.3 15.7 63.7 93.9 161.4 151.2 131.6 131.9 167.5 211.4 206.4 239.8 267.1 297.6 278.9 327.2 370.1 346.5 321.0 313.6 321.7 321.5 297.9 241.1 231.3 269.3 271.3 258.8 235.6 256.9 298.6 257.8 208.3 164.7 179.9 272.5 405.8 541.7 635.1 409.8 790.8 838.3 753.6 686.9 670.6 727.7 51.6 140.9 140.7 146.7 97.1 128.0 151.4 226.6 251.2 243.0 322.9 348.2 430.7 413.9 611.4 720.0 867.1 1,031.6 1,015.6 1,000.0 1,064.1 967.3 699.9 910.8 1,618.4 1,645.6 1,741.5 2,063.0 2763 ,9. 4,081.6 2,753.4 2,887.0 2,491.3 2,487.5 4,362.6 6,549.3 15,069.1 15,437.8 28,858.8 36,018.0 43,885.7 35,616.3 38,886.1 42,126.9 64,575.6 4,663 4,284 4,864 3,966 4,473 4,251 3,746 4,321 3,728 4,289 4.039 3,737 4,644 4,165 4,768 4,709 5,098 5,252 4,713 5,637 4,854 6,074 5,356 5,139 3,052 2,887 3,187 2,588 2,995 2,819 2,486 2,848 2,476 2,824 2,651 2,491 3,032 2756 3,106 3,079 3,443 3,454 3,239 3,825 3,291 4,110 3,609 3,457 1,611 1,397 1,677 1,378 1,478 1,432 1,260 1,473 1,252 1,465 1,388 1,246 1,612 1,409 1,662 1,630 1,655 1,798 1,474 1,812 1,563 1,964 1,747 1,682 2,102.9 2,377.9 6,371.2 6,170.5 1,863.5 6,318.9 3,992.9 3,435.0 1,782.8 2,179.3 1,892.0 4,310.6 6,263.3 7,280.1 3,772.5 6,703.8 4,982.5 10,275.3 3,087.0 6,072.8 4,049.2 4,676.8 4,410.1 3,729.9 61.1 58.8 65.5 51.3 60.1 57.4 48.1 59.5 51.6 54.6 52.0 50.6 56.8 50.2 57.5 58.9 61.4 60.7 55.2 66.3 56.4 73.9 70.3 60.1 2,041.8 2,319.1 6,305.7 6,119.2 1,803.4 6,261.5 3,944.8 3,375.5 1,731.2 2,124.7 1,840.0 4,260.0 6,206.5 7,229.9 3,715.0 6,644.9 4,921.1 10,214.6 3,031.8 6,006.5 3,992.8 4,602.9 4,339.8 3,669.8 Seasonally adjusted 1989: Jan Feb Mr'::::':. a".::::... Apr June July Aug.... Sept Oct . Nov Dec 1990: Jan Feb Mar Apr day::::.:.:.:.:. May':::::::: : June July Aug Sept Oct Nov Dec » 125.5 125.9 126.5 125.8 125.4 125.6 124.6 123.2 123.0 123.4 123.9 124.8 126.3 125.7 125.2 123.3 121.3 121.2 119.7 119.6 118.3 117.8 116.4 113.4 58,253 58,560 57,383 57,631 57,326 56,950 54,948 55,500 55,390 54,651 55,116 56,945 59,310 56,739 56,271 55,000 54,166 54,097 51,440 52,074 52,334 51,824 50,767 1 Commercial and industrial failures only through 1983, excluding failures of banks, railroads, real estate, insurance, holding, and financial companies, steamship lines, travel agencies, etc. Data beginning 1984 are based on expanded coverage and new methodology and are therefore not generally comparable with earlier data. Data for 1990 are subject to revision due to amended court filings. 2 Failure rate per 10,000 listed enterprises. Sources: Department of Commerce (Bureau of Economic Analysis) and The Dun & Bradstreet Corporation. 394 AGRICULTURE TABLE B-95.—Farm income, 1929-90 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Income of farm operators from farming Net farm income Gross farm income Cash marketing receipts Year or quarter Total1 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 1988 1989. 1988:1 .. II III. IV 1989: 1 II Ill IV 1990:1 | | Ill . . . . . 13.8 6.9 10.7 11.3 14.3 19.9 23.3 24.0 25.4 29.6 32.4 36.5 30.8 33.1 38.3 37.8 34.4 34.2 33.5 34.0 34.8 39.0 37.9 38.6 40.5 42.3 43.4 42.3 46.5 50.5 50.5 51.8 56.4 58.8 62.1 71.1 98.9 98.2 100.6 102.9 108.8 128.4 150.7 149.3 166.3 163.5 153.2 170.2 162.9 156.5 169.0 173.8 189.2 170.3 175.7 167.6 181.5 190.8 189.5 185.7 190.9 190.8 192.5 191.8 Total 11.3 5.3 7.9 8.4 11.1 15.6 19.6 20.5 21.7 24.8 29.6 30.2 27.8 28.5 32.9 32.5 31.0 29.8 29.5 30.4 29.7 33.5 33.6 34.0 35.2 36.5 37.5 37.3 39.4 43.4 42.8 44.2 48.2 50.5 52.7 61.1 86.9 92.4 88.9 95.4 96.2 112.4 131.5 139.7 141.6 142.6 136.8 142.8 144.1 135.2 141.7 150.2 159.2 144.4 146.0 154.9 155.4 153.7 157.4 163.9 161.7 157.0 167.4 176.4 Livestock and products 6.2 2.8 4.5 4.9 6.5 9.0 11.5 11.4 12.0 13.8 16.5 17.1 15.4 16.1 19.6 18.2 16.9 16.3 16.0 16.4 17.4 19.2 18.9 19.0 19.5 20.2 20.0 19.9 21.9 25.0 24.4 25.5 28.6 29.5 30.5 35.6 45.8 41.3 43.1 46.3 47.6 59.2 69.2 68.0 69.2 70.3 69.6 72.9 69.8 71.5 76.0 78.8 83.7 78.1 76.8 79.2 81.2 81.6 80.8 83.6 88.9 87.3 87.5 90.2 Crops 5.1 2.5 3.3 3.5 4.6 6.5 8.1 9.2 9.7 11.0 13.1 13.1 12.4 12.4 13.2 14.3 14.1 13.6 13.5 14.0 12.3 14.2 14.7 15.0 15.7 16.3 17.4 17.4 17.5 18.4 18.4 18.7 19.6 21.0 22.3 25.5 41.1 51.1 45.8 49.0 48.6 53.2 62.3 71.7 72.5 72.3 67.2 69.9 74.3 63.7 65.6 71.4 75.4 66.3 69.2 75.7 74.2 72.1 76.5 80.3 72.8 69.7 79.9 86.2 Value of inventory changes2 -0.1 ~!l .3 .4 1.1 4 .4 .0 -1.8 1.7 9 .8 1.2 .9 ^.6 '.2 .6 .8 .0 .4 .3 .6 .6 -.8 1.0 -.1 !l .0 1.4 .9 3.4 -1.6 3.4 -1.5 1.1 1.9 5.0 -6.3 6.5 -1.4 -10.9 6.0 -2.3 -2.4 -2.8 -4.1 4.4 -5.6 -4.9 -3.7 -2.1 3.8 4.9 4.8 4.3 4.8 3.3 2.4 Production expenses 7.7 4.4 6.3 6.9 7.8 10.0 11.6 12.3 13.1 14.5 17.0 18.8 18.0 19.5 22.3 22.8 21.5 21.8 22.2 22.7 23.7 25.8 27.2 27.4 28.6 30.3 31.6 31.8 33.6 36.5 38.2 39.5 42.1 44.5 47.1 51.7 64.6 71.0 75.0 82.7 88.9 103.2 123.3 133.1 139.4 140.0 137.9 143.8 131.9 125.5 127.7 132.1 142.6 126.4 130.5 135.4 135.9 142.5 143.3 143.4 141.1 141.7 143.8 144.7 Current dollars 6.2 2.6 4.4 4.5 6.5 9.9 11.7 11.7 12.3 15.1 15.4 17.7 12.8 13.6 15.9 15.0 13.0 12.4 11.3 11.3 11.1 13.2 10.7 11.2 12.0 12.1 11.8 10.5 12.9 14.0 12.3 12.3 14.3 14.4 15.0 19.5 34.4 27.3 25.5 20.2 19.9 25.2 27.4 16.1 26.9 23.5 15.3 26.3 31.0 31.0 41.3 41.8 46.7 43.9 45.1 32.2 45.5 48.3 46.2 42.4 49.8 49.1 48.7 47.1 1982 dollars « 42.1 22.8 34.8 34.5 47.0 67.0 77.7 76.5 78.4 77.7 69.5 74.8 54.4 57.1 63.5 58.7 50.1 47.0 41.6 40.1 38.1 44.3 35.2 36.3 38.3 37.8 36.3 31.9 38.2 39.9 34.4 32.7 35.9 34.2 33.8 41.8 69.4 50.5 43.1 32.0 29.5 34.9 34.9 18.8 28.6 23.5 14.7 24.5 27.9 27.2 35.1 34.4 37.0 36.9 37.4 26.4 36.9 38.8 36.7 33.4 38.9 37.9 37.2 35.6 ^ash marketing receipts and inventory changes plus Government payments, other farm cash income, and nonmoney income furnished by farms. 2 Physical changes in end-of-period inventory of crop and livestock commodities valued at average prices during the period. 3 Income in current dollars divided by the GNP implicit price deflator (Department of Commerce). Note.—Data include net Commodity Credit Corporation loans and operator households. Source: Department of Agriculture, except as noted. 395 TABLE B-96.—Farm output and productivity indexes, 1947-90 [1977=100] Farm output Productivity indicators Crops8 Year Total 1947 1948 1949 1950 1951 .. . 1952 1953 1954 1955 1956 1957 1958 1959 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1978 1979 1980 1981 1982 1983 1984 1985 1986.... 1987 1989 1990 *.. .. .. . 1977 ::rr :::™ 1988 Livestock 1 .' ."."'""".*; 58 63 62 61 63 66 66 66 69 69 67 73 74 76 76 77 80 79 82 79 83 85 85 84 92 91 93 88 95 97 100 104 111 104 118 116 96 112 118 111 110 102 114 117 Total8 Feed grains 56 64 61 59 60 62 62 61 63 63 62 69 68 72 70 71 74 72 76 73 77 79 80 77 86 87 92 84 93 92 100 102 113 101 117 117 88 111 118 109 108 92 107 112 39 57 50 51 47 50 49 51 54 54 58 64 66 69 62 62 68 59 70 70 79 75 78 71 92 88 91 74 91 96 100 108 116 97 121 122 67 116 134 123 106 73 108 115 Food grains 64 62 53 49 49 63 57 51 48 50 47 69 55 66 60 56 59 65 67 67 76 80 74 69 81 77 86 91 108 107 100 93 108 121 144 138 117 129 121 107 107 98 107 138 Oil crops 22 27 26 26 26 26 26 28 30 34 33 39 36 38 43 44 46 46 53 55 56 64 65 66 68 74 87 71 86 74 100 105 129 99 114 121 91 106 117 110 108 89 106 102 and products2 65 64 67 70 73 74 74 77 79 79 78 79 83 82 86 86 89 91 89 91 94 94 95 99 100 101 99 100 95 99 100 101 104 108 109 107 109 107 110 110 113 116 116 117 Farm output Crop producunit of hour of tion per 5 total farm input work* acre Per 55 60 57 58 60 62 64 65 66 67 67 74 73 76 78 78 82 81 84 83 85 87 88 87 95 94 95 90 99 98 100 101 105 101 116 117 99 117 128 124 124 118 128 Per 18 21 20 22 24 26 28 29 30 31 33 39 39 42 44 46 51 52 56 59 64 68 72 74 85 83 86 81 90 97 100 104 113 109 123 125 99 121 139 139 142 134 148 57 64 60 59 8 8 63 64 65 73 72 77 78 81 83 81 85 83 86 89 91 88 96 99 99 88 96 94 100 105 113 100 115 116 100 112 120 116 123 107 119 1 Farm output measures the annual volume of net farm production available for eventual human use through sales from farms or consumption in farm households. 2 Gross production. » Includes items not included in groups shown. 4 New survey-based labor productivity time series; not comparable with data published in issues of the Economic Report of the President prior to January 1989. 5 Computed from variable weights for individual crops produced each year. Source: Department of Agriculture. 396 TASLE B-97.—Farm input use, selected inputs, 1947-89 Farm population, April1 Year Farm employment (thousands)3 As Num- percent ber of (thou- total sands) popula8 25,829 24,383 24,194 23,048 21,890 21,748 19,874 19,019 19,078 18,712 17,656 17,128 16,592 15,635 14,803 14,313 13,367 12,954 12,363 11,595 10,875 10,454 10,307 9,712 9,425 9,610 9,472 9,264 8,864 8,253 7 6,194 7 6,501 7 6,241 '6,051 '5,790 '5,620 '5,787 5,754 5,355 5,226 4,986 4,951 4,801 Total Family workers Hired workers 10,382 10,363 9,964 9,926 9,546 9,149 8,864 8,651 8,381 7,852 7,600 7,503 7,342 7,057 6,919 6,700 6,518 6,110 5,610 5,214 4,903 4,749 4,596 4,523 4,436 4,373 4,337 4,389 4,342 4,374 4,155 3,957 3,774 3,705 • 3,552 8 3,400 •3,247 8 3,094 2,941 2,749 2,734 2,789 2,863 8,115 8,026 7,712 7,597 7,310 7,005 6,775 6,570 6,345 5,900 5,660 5,521 5,390 5,172 5,029 4,873 4,738 4,506 4,128 3,854 3,650 3,535 3,419 3,348 3,275 3,228 3,169 3,075 3,026 2,997 2,859 2,689 2,501 2,402 8 2,267 8 2,136 8 2,007 8 1,976 1,904 1,768 1,743 1,810 1,936 Crops harvested (millions of acres)4 2,267 2,337 2,252 2,329 2,236 2,144 2,089 2,081 2,036 1,952 1,940 1,982 1,952 1,885 1,890 1,827 1,780 1,604 1,482 1,360 1,253 1,213 1,176 1,175 1,161 1,146 1,168 1,314 1,317 1,377 1,296 1,268 1,273 1,303 8 1,285 8 1,264 8 1,240 8 1,118 1,037 981 992 979 928 Selected indexes of input use (1977=100) Total tion 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 1988 1989 . 17.9 16.6 16.2 15.2 14.2 13.9 12.5 11.7 11.5 11.1 10.3 9.8 9.3 8.7 8.1 7.7 7.1 6.7 6.4 5.9 5.5 5.2 5.1 4.7 4.5 4.6 4.5 4.3 4.1 3.8 '. 28 '. 29 '. 28 '. 27 '. 25 '. 24 '. 25 2.4 2.2 2.2 2.0 2.0 1.9 355 356 360 345 344 349 348 346 340 324 324 324 324 324 302 295 298 298 298 294 306 300 290 293 305 294 321 328 336 337 345 338 348 352 366 362 306 348 342 325 302 298 318 104 104 108 106 106 105 103 102 104 103 100 98 101 99 98 98 98 98 97 96 98 97 % 96 97 97 98 98 97 98 100 102 105 103 102 99 96 96 92 89 89 87 88 Feed, Meseed, chanical and Farm Farm power cultural livereal labor estate and chemimachin- cals* stock purery chases6 297 285 285 265 251 237 220 214 220 212 196 182 183 177 167 163 155 148 144 132 128 124 118 112 108 110 109 109 106 100 100 100 99 96 96 93 97 92 85 80 78 75 76 106 107 108 109 109 108 108 108 108 106 105 104 105 103 103 104 104 104 103 102 104 102 102 105 103 102 100 99 97 98 100 100 103 103 104 102 101 99 97 96 95 94 93 54 62 68 72 77 81 82 82 83 84 83 83 84 83 80 80 79 80 80 82 85 86 86 85 87 86 90 92 96 98 100 104 104 101 98 92 89 86 80 77 73 72 73 15 16 18 19 21 23 24 24 26 27 27 28 32 32 35 38 43 46 49 56 66 69 73 75 81 86 90 92 83 96 100 107 123 123 129 118 102 120 115 109 111 111 122 51 52 56 58 62 63 63 65 66 69 68 73 77 77 81 83 83 85 86 89 92 89 93 96 102 104 107 99 93 101 100 108 115 114 108 107 103 106 102 110 117 110 119 'Farm population as defined by Department of Agriculture and Department of Commerce, i.e., civilian population living on farms in rural areas, regardless of occupation. See also footnote 7. 'Total population of United States including Armed Forces overseas, as of July 1. 8 Includes persons doing farmwork on all farms. These data, published by the Department of Agriculture, differ from those on agricultural employment by the Department of Labor (see Table B-32) because of differences in the method of approach, in concepts of employment, and in time of month for which the data are collected. 4 Acreage harvested plus acreages in fruits, tree nuts, and farm gardens. •Fertilizer, lime, and pesticides. 'Nonfarm constant dollar value of feed, seed, and livestock purchases. 'Based on new definition of a farm. Under old definition of a farm, farm population (in thousands and as percent of total population) for 1977, 1978, 1979, 1980, 1981, 1982, and 1983 is 7,806 and 3.6; 8,005 and 3.6; 7,553 and 3.4; 7,241 and 3.2; 6,942 and 3.0; 6,870 and 3.0; 7,029 and 3.0, respectively. 8 Basis for farm employment series was discontinued for 1981 through 1984. Employment is estimated for these years. Note.-Population includes Alaska and Hawaii beginning 1960. Sources: Department of Agriculture and Department of Commerce (Bureau of the Census). 397 TABLE B-98.—Indexes of prices received and prices paid by farmers, 1948-90 [1977=100] Prices received by farmers 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 1987 1988 1989 1990.. 1989- Jan Feb Mar Apr May'::::...:::::::..::::::::::::::: .... June July Aug Oct Nov Dec 1990: Jan Feb Mar Apr June July Aug Sept Oct . Nov Dec sept.::: : ::.. May'::::....::::::..:::::::::":::: All farm products 63 55 56 66 63 56 54 51 50 51 55 53 52 53 53 53 52 54 58 55 56 59 60 62 69 98 105 101 102 100 115 132 134 139 133 135 142 128 123 127 138 147 150 150 149 150 148 149 147 148 145 144 144 146 149 154 151 150 151 154 152 152 150 148 146 145 143 Crops 59 52 54 61 62 55 56 53 54 52 52 51 51 52 54 55 55 53 55 52 52 50 52 56 60 91 117 105 102 100 105 116 125 134 121 128 138 120 107 106 126 134 128 142 139 138 142 141 137 137 129 127 126 126 127 135 133 129 131 134 130 130 125 123 120 124 121 Livestock and products 65 56 58 70 64 56 52 49 47 51 57 53 53 52 53 51 49 54 60 57 60 67 67 67 77 104 94 98 101 100 124 147 144 143 145 141 146 136 138 146 150 160 171 158 159 161 155 156 157 157 161 160 162 165 169 172 169 171 170 173 173 173 174 173 171 166 166 All commodities, services, interest, taxes, and wage rates * Prices paid by farmers Production items Tractors and Fuels selfFertiland Total* proizer energy pelled machinery Wage rates 39 40 42 44 47 49 51 54 58 68 82 91 100 109 122 136 152 165 174 181 178 174 174 181 193 202 188 55 56 54 57 59 59 59 58 57 58 58 57 57 58 58 57 57 57 56 55 52 48 48 50 52 56 92 120 102 100 100 108 134 144 144 137 143 135 124 118 130 137 131 134 49 49 50 50 51 52 53 54 57 79 88 93 100 105 137 188 213 210 202 201 200 162 161 166 180 204 166 23 22 22 25 26 27 27 27 28 29 30 32 33 33 34 35 36 38 41 44 48 53 57 59 63 69 79 85 93 100 107 117 127 138 144 148 151 153 160 167 172 186 192 186 166 192 141 184 166 192 141 187 189 178 165 199 131 183 179 181 169 199 131 201 193 183 170 201 130 187 193 184 170 201 130 185 192 187 174 208 132 239 14 14 14 16 18 18 18 19 19 21 22 23 24 25 26 27 29 31 33 35 38 40 42 43 47 53 66 75 86 100 109 125 145 158 157 148 146 128 112 103 106 112 116 186 179 Addendum: Average farm real estate value per acre8 186 38 36 37 41 42 40 40 40 40 42 43 43 44 44 45 45 45 47 49 49 51 53 55 58 62 71 81 89 95 100 108 123 138 150 159 161 164 162 159 162 170 178 184 176 43 41 42 47 47 44 44 43 43 44 46 46 46 46 47 47 47 48 50 50 50 52 54 57 61 73 83 91 97 100 108 125 138 148 153 152 155 151 144 148 157 165 171 164 178 1 Includes 2 Includes 3 112 116 items used for family living, not shown separately. other items not shown separately. Average for 48 States. Annual data are for March 1 of each year through 1975, February 1 for 1976-81, April 1 for 1982-85, and February 1 for 1986-89, and January 1 for 1990. Source: Department of Agriculture. 398 TABLE B-99.—U.S. exports and imports of agricultural commodities, 1940-90 [Billions of dollars] 1Tt ports 1jtports Year OilFeed Food seeds Total » grains grains* and t£ \:\ 0.5 .7 12 2.1 2.1 (\ / '| ( 1 2.3 3.1 4.0 3.5 3.6 (*) b.i .1 .4 .7 1.4 1.5 1.1 (*) H 1950 1951 1952 1953 1954 2.9 40 3.4 28 3.1 .2 .3 3 .2 .6 11 1.1 7 .5 .2 .3 1955 1956 1957 1958 1959 32 4.2 45 3.9 40 .3 .4 .3 .6 1.0 10 .8 9 .4 .5 .5 .4 .6 12 14 13 15 17 6 .6 7 .8 10 1940 1941 1942 1943 1944 1945 1946 1947 1948... 1949 ! !.'....! 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 48 50 50 56 63 .6 5 .5 8 8 9 ffl (4) \I 4 b.f .2 .2 Animals 1 Tobacco and Total Cotton S£ Animals and prodtables* ucts 8X: and (| i '| j| .4 .4 .4 .6 .4 .3 .5 .6 .7 .8 (*) b.i .2 .2 .2 .7 1.1 .7 .6 .5 1.1 1.4 1.4 1.5 1.5 .2 .2 4.0 4.0 4.0 3.9 4.1 .2 .5 .4 .5 .2 .2 .2 .8 1.4 1.4 1.4 1.2 1.1 .2 .2 .6 .7 .9 .9 .8 1.0 1.0 1.0 1.0 1.2 .2 8 3.8 3.7 3.9 4.0 4.1 .3 .9 1.2 1.1 1.3 1.4 1.1 1.1 1.0 1.2 .9 .1 1.2 1.2 1.3 1.7 1.6 .3 .2 .3 .5 1.5 1.9 2.9 9.3 11.7 ft (*) 0.2 5 !i 1.3 1.7 1.3 1.5 1.8 .3 .5 .2 .4 .3 .9 .9 .7 .1 !i !9 !3 .4 1.7 2.3 2.8 3.1 2.9 1.0 11 .9 5 .8 .3 .3 .3 2 .4 .5 4.0 5.2 4.5 4.2 4.0 .5 .4 .3 .6 .7 .4 .3 .4 .4 4 .4 4 .5 .6 ft !i .3 1.0 4 10 .9 5 .6 7 AgriCocoa cultural beans trade and balance products 0.1 .2 '.3 0.1 .3 .8 1.2 1.3 0.2 .1 Coffee .6 .6 .6 \i .2 .2 2 .3 .4 .2 .1 .2 .2 .2 .2 -0.8 -1.0 -.1 .6 .5 .8 1.2 .3 -1.1 -1.1 -1.1 -1.3 -.9 -.8 .2 .6 (4) -.1 1.0 1.3 1.2 1.6 2.3 2.1 2.4 1.9 1.3 1.1 6.2 6.9 64 6.3 6.0 1.1 1.3 11 .9 .9 1.4 1.8 15 1.4 1.2 1.2 1.2 13 1.3 1.3 .5 .4 5 .5 .3 .4 .5 5 .5 .6 .8 7 .7 .8 4.1 4.5 45 5.0 5.0 1970 1971 .. 1972 1973 1974 7.3 77 9.4 17.7 219 1.1 10 1.5 3.5 46 1.4 13 18 4.7 54 1.9 22 2.4 4.3 57 .4 6 .5 .9 13 .5 5 .7 .7 8 5.8 5.8 6.5 8.4 102 .5 .6 .8 8 1.6 1.5 1.8 2.6 2.2 1975 1976 1977 1978 1979 219 230 236 29.4 34.7 52 6.0 49 5.9 7.7 62 47 36 5.5 6.3 45 5.1 66 8.2 8.9 10 10 15 1.7 2.2 9 .9 11 1.4 1.2 .9 10 1.1 1.6 18 17 2.4 27 3.0 3.8 93 11.0 134 14.8 16.7 8 .9 12 1.5 1.7 1.8 2.3 23 3.1 3.9 1.7 2.9 4.2 4.0 4.2 .5 .6 1.0 1.4 1.2 12.6 12.0 10.2 14.6 18.0 1980 ... 1981 1982 1983 1984 41.2 433 36.6 36.1 378 9.8 94 6.4 7.3 81 7.9 96 7.9 7.4 75 9.4 96 9.1 8.7 84 2.9 23 2.0 1.8 24 1.3 15 1.5 1.5 15 3.8 42 3.9 3.8 42 17.4 168 15.4 16.6 193 1.6 20 2.3 2.3 31 3.8 35 3.7 3.8 4.1 4.2 2.9 2.9 2.8 3.3 .9 .9 .7 .8 1.1 23.9 26.6 21.2 19.5 18.5 1985 1986 1987 1988 1989 290 262 28.7 371 400 60 31 3.8 59 77 45 38 3.8 59 71 58 65 6.4 7.7 63 16 8 1.6 20 23 15 12 1.1 1.3 13 41 45 5.2 6.4 6.4 200 215 20.4 21.0 21.8 3.5 3.6 3.6 3.8 4.2 4.2 4.5 4.9 5.2 5.1 3.3 4.6 2.9 2.5 2.4 1.4 1.1 1.2 1.0 1.0 9.1 4.7 8.3 16.1 18.2 Jan-Nov: 1989 1990 364 362 69 66 66 45 5.7 5.2 20 25 12 12 5.8 61 20.0 209 3.9 45 4.6 51 2.3 1.8 .9 1.0 16.4 15.3 .4 .5 .5 .2 .2 1 Total includes items not shown separately. * Rice, wheat, and wheat flour. 8 Includes nuts, fruits, and vegetable preparations. * Less than $50 million. Note.-Data derived from official estimates released by the Bureau of the Census, Department of Commerce. Agricultural commodities are defined as (l) nonmarine food products and (2) other products of agriculture which have not passed through complex processes of manufacture. Export value, at U.S. port of exportation, is based on the selling price and includes inland freight, insurance, and other charges to the port. Import value, defined generally as the market value in the foreign country, excludes import duties, ocean freight, and marine insurance. Source: Department of Agriculture. 399 TABLE B-100.—Balance sheet of the farm sector, 1939-90 [Billions of dollars] Claims Assets Financial assets Physical assets Nonreal estate End of year Total assets House- Real estate Livestock > Machinery and Crops 2 motor vehicles Invest- Total Real Nonreal estate hold Purments in claims debt8 estate debt" chased equip- cooper- Other* in- 3 ment atives and puts furnish- Proprietors' equity ings 1939 52.6 33.6 5.1 3.1 2.2 4.2 0.8 3.5 52.6 6.6 3.0 43.0 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 53.7 61.4 72.9 82.9 92.1 102.1 116.1 127.1 132.9 130.3 34.0 36.6 41.5 47.7 52.9 60.5 68.7 73.5 76.0 75.1 5.3 7.1 9.6 9.7 9.0 9.7 11.9 13.3 14.4 12.9 3.3 4.0 4.9 5.4 6.5 5.4 5.3 7.4 10.1 12.2 2.3 3.2 4.3 5.5 6.0 6.0 7.0 8.9 7.4 5.9 4.1 4.8 4.8 4.7 5.2 5.6 7.2 8.1 8.9 8.4 .9 .9 1.0 1.1 1.2 1.4 1.5 1.7 1.9 2.1 3.9 4.7 6.5 8.8 11.3 13.5 14.4 14.3 14.2 13.8 53.7 61.4 72.9 82.9 92.1 102.1 116.1 127.1 132.9 130.3 6.5 6.4 6.0 5.4 4.9 4.8 4.9 5.1 5.3 5.6 3.3 3.5 3.2 2.9 2.7 2.9 3.5 4.1 4.9 5.2 43.8 51.5 63.7 74.5 84.4 94.5 107.7 118.0 122.7 119.6 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 152.9 169.7 166.4 162.4 167.0 172.5 181.7 191.0 206.4 210.3 88.9 98.7 100.0 98.9 102.5 108.2 116.1 122.7 131.5 138.4 17.1 19.5 14.8 11.7 11.2 10.6 11.0 13.9 17.7 15.2 14.1 16.7 17.4 18.4 18.7 19.3 20.2 20.1 21.8 22.7 7.1 8.2 7.9 6.8 7.5 6.5 6.8 6.4 6.9 6.6 9.6 10.0 9.6 9.5 9.7 10.0 9.6 9.6 9.4 9.2 2.3 2.5 2.7 2.9 3.0 3.2 3.5 3.7 3.9 4.2 13.8 14.1 14.1 14.2 14.4 14.6 14.4 14.6 15.1 13.8 152.9 169.7 166.4 162.4 167.0 172.5 181.7 191.0 206.4 210.3 6.1 6.7 7.3 7.8 8.3 9.0 9.9 10.4 11.1 12.1 6.1 7.4 7.7 6.8 7.2 7.9 8.0 8.8 10.1 11.5 140.7 155.6 151.5 147.8 151.5 155.5 163.9 171.8 185.2 186.6 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 210.7 218.8 226.9 235.0 243.6 261.0 274.8 288.2 301.9 312.7 139.7 145.8 151.5 159.7 168.7 180.8 190.7 201.4 211.0 217.1 15.6 16.4 17.3 15.9 14.5 17.6 19.0 18.8 20.2 23.5 22.2 22.5 23.5 23.9 24.8 26.0 27.4 29.8 31.3 32.3 6.7 7.0 7.3 7.9 7.7 8.3 8.9 8.3 8.1 8.4 8.7 8.9 8.8 8.8 8.4 8.4 8.3 8.8 9.4 9.6 4.5 4.8 5.0 5.4 5.6 5.9 6.2 6.4 6.7 6.2 13.3 13.3 13.6 13.5 13.8 14.1 14.2 14.7 15.2 15.6 210.7 218.8 226.9 235.0 243.6 261.0 274.8 288.2 301.9 312.7 12.9 14.0 15.2 16.9 18.9 21.2 23.1 25.2 27.5 29.4 12.0 12.7 14.2 15.6 16.4 18.1 19.8 20.8 20.4 21.2 185.9 192.1 197.5 202.5 208.2 221.7 231.9 242.2 254.0 262.2 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 324.0 350.3 393.3 478.3 512.9 579.2 667.6 736.3 863.3 1,000.1 224.5 240.9 268.7 329.2 369.5 421.0 499.8 556.5 656.0 767.8 23.7 27.3 33.7 42.4 24.6 29.4 29.0 31.9 50.1 61.4 34.4 36.7 39.3 44.2 53.6 63.1 70.1 76.4 76.4 82.9 8.4 10.0 13.0 21.5 23.1 21.2 21.5 21.8 25.0 28.4 10.0 10.8 11.9 12.3 14.0 14.2 15.2 17.2 20.0 21.5 7.0 7.8 8.7 9.8 10.3 12.0 13.3 13.5 16.1 18.1 324.0 16.0 350.3 16.8 393.3 18.0 478.3 19.0 512.9 17.8 18.4 579.2 667.6 18.7 736.3 19.0 863.3 19.7 19.9 1,000.1 30.5 32.4 35.4 39.8 44.9 49.9 55.4 63.9 72.8 86.8 22.3 25.1 28.0 33.1 36.7 41.6 47.8 55.0 63.8 75.7 271.3 292.8 329.9 405.5 431.3 487.7 564.5 617.4 726.7 837.6 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1,088.2 1,088.4 1,049.0 1,056.4 969.2 885.8 841.0 886.8 938.5 972.2 850.1 851.7 812.2 821.8 727.7 650.0 606.0 633.5 665.8 688.1 60.6 53.5 53.0 49.5 49.5 46.3 47.8 58.0 65.5 69.7 86.9 92.5 92.6 92.1 91.1 88.3 86.1 84.5 85.7 88.2 31.9 29.0 26.1 24.0 26.2 22.9 16.7 18.0 23.0 23.5 £6 1.3 2.0 3.3 3.4 2.8 19.4 20.8 23.0 24.4 24.3 27.8 28.7 32.9 37.0 41.3 19.3 20.6 21.2 22.8 24.3 24.3 24.4 25.3 25.1 26.1 20.0 20.3 20.9 21.8 23.4 25.0 29.4 31.4 32.9 32.5 1,088.2 1,088.4 1,049.0 1,056.4 969.2 885.8 841.0 886.8 938.5 972.2 97.5 107.2 111.3 113.7 112.3 105.7 95.9 87.7 83.0 80.5 81.2 88.2 91.8 92.7 92.0 82.2 70.8 66.0 65.6 65.5 909.5 893.0 845.9 850.0 764.8 697.9 674.4 733.1 790.0 826.3 1990 P 1,005.0 710.0 74.0 91.0 23.0 3.0 45.0 26.0 33.0 1,005.0 79.0 65.0 861.0 .. 7 1 Beginning with 1959, horses and mules are excluded. 2 Non-Commodity Credit Corporation (CCC) crops held on farms plus 3 Includes fertilizer, chemicals, fuels, parts, feed, seed, and other supplies. 4 Sum of currency, demand deposits, time deposits, and U.S. savings bonds. 6 Includes CCC storage and drying facilities loans. 8 Does not include CCC crop loans. 7 value above loan rate for crops held under CCC. Beginning 1974, data are for farms included in the new farm definition, that is, places with sales of $1,000 or more annually. Note.—Data include operator households. Beginning 1959, data include Alaska and Hawaii. Source: Department of Agriculture. 400 INTERNATIONAL STATISTICS TABLE B-101.—International investment position of the United States at year-end, 1982-89 [Billions of dollars] Type of investment valuation 1982 1983 1984 1985 1986 1987 1988 1989 U.S. ASSETS ABROAD: U.S. official reserve assets Current Gold Historical Special drawing rights Current Reserve position in the International Monetary Fund Current Foreign currencies Current 34.0 33.7 34.9 43.2 48.5 45.8 47.8 74.6 111 5.3 11.1 11.1 11.1 11.1 11.1 5.0 5.6 7.3 8.4 11.1 10.3 11.1 10.0 7.3 9.6 11.3 11.5 11.9 12.9 11.7 17.3 11.3 13.1 9.0 6.3 6.7 9.7 10.2 17.4 44.6 U.S. Government assets, other than official reserve assets Historical 74.6 79.5 84.9 87.7 89.6 88.6 85.6 84.3 U.S. loans and other long-term assets Historical 72.9 77.8 82.9 85.8 88.7 87.6 84.9 83.8 70.9 76.0 81.1 84.1 87.1 86.0 83.4 82.4 1.8 1.8 1.7 1.6 1.6 1.5 1.5 1.7 1.7 2.0 1.9 .9 .9 .7 .5 207.8 75.3 207.2 83.4 211.5 88.9 230.3 112.2 259.8 131.7 314.3 146.7 333.5 156.8 373.4 189.6 56.7 18.6 57.5 25.9 61.9 27.0 72.9 39.3 81.7 50.0 92.0 54.7 94.0 62.7 98.5 91.1 Repayable in dollars Other Historical Historical U.S. foreign currency holdings and U.S. short-term assets Historical U.S. private assets: Direct investment abroad Foreign securities Bonds Corporate stocks Historical Current Current Current U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns Historical U.S. claims reported by U.S. banks, not included elsewhere.. Historical 1.9 28.6 35.1 30.1 29.0 36.4 31.1 33.9 32.5 404.6 434.5 445.6 447.4 507.3 549.5 608.0 658.0 189.1 194.5 199.7 202.5 241.2 282.9 321.6 337.2 145.1 178.9 220.5 260.9 265.9 173.3 213.7 253.0 256.3 FOREIGN ASSETS IN THE UNITED STATES: Foreign official assets in the United States Current U.S. Government securities U.S. Treasury securities Other Current 132.6 137.0 144.7 Current . Current 124.9 7.7 129.7 138.2 138.4 7.3 6.5 6.6 5.6 6.8 8.0 9.6 13.6 14.2 15.0 15.9 18.0 15.5 14.8 15.1 25.0 17.9 25.5 17.7 26.1 14.0 26.7 14.9 27.9 16.4 31.8 15.0 31.5 14.4 36.5 19.7 1247 25'.8 1371 33.8 1646 62.1 1846 88.0 2204 96.1 271.8 82.6 3289 100.9 400.8 134.8 93.0 113.8 128.5 207.9 310.9 346.2 395.6 489.8 16.7 76.3 17.5 96.4 32.4 96.1 82.3 125.6 141.9 168.9 170.5 175.6 194.6 201.0 229.6 260.2 Other U.S. Government liabilities.. Historical U.S. liabilities reported by U.S. banks, not included elsewhere.. Historical Other foreign official assets Current Other foreign assets in the United States: Direct investment in the United States Historical U.S. Treasury securities Current U.S. securities other than U.S. Treasury securities Current Corporate and other bonds ... Current Corporate stocks Current U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns Historical U.S. liabilities reported by U.S. banks, not included elsewhere.. Historical 27.5 26.9 31.0 29.5 26.9 29.8 36.0 38.9 228.0 278.3 312.2 354.5 451.6 540.7 613.7 674.8 Note.—In June 1990, the Bureau of Economic Analysis suspended showing estimates of the net international investment position and of total U.S. assets abroad and foreign assets in the United States, inasmuch as some components are valued in current-period prices and others are valued in prices of earlier periods. The second column here shows the valuation used for each component; since some components reflect a mix of valuations for their subcomponents, the valuation basis shown reflects that used for the major part of the category. For further details, including plans for developing new estimates, see Survey of Current Business, June 1990. Source: Department of Commerce, Bureau of Economic Analysis. 401 TABLE B-102.—U.S. international transactions, 1946-90 [Millions of dollars; quarterly data seasonally adjusted, except as noted. Credits ( + ), debits (-)] Merchandise 12 Services Imports Net Net travel Other uiner and services, military transac- transpor- nets net tions3 4 tation receipts Year or quarter Exports Net Investment income5 Receipts Payments on U.S. on foreign assets assets3 in abroad U.S. Net Balance on goods, Unilateral Balance on services, transfers, current not 4 and 4 nei account income 1946 1947 1948 1949 11,764 16,097 13,265 12,213 -5,067 -5,973 -7,557 -6,874 6,697 10,124 5,708 5,339 -493 -455 -799 -621 733 946 374 230 310 145 175 208 772 1,102 1,921 1,831 -212 560 -245 857 -437 1,484 -476 1,355 1950 1951 1952 1953 1954 10,203 14,243 13,449 12,412 12,929 -9,081 -11,176 -10,838 -10,975 -10,353 1,122 3,067 2,611 1,437 2,576 -576 -1,270 -2,054 -2,423 -2,460 -120 298 83 -238 -269 242 254 309 307 305 2,068 2,633 2,751 2,736 2,929 -559 -583 -555 -624 -582 1,509 2,050 2,196 2,112 2,347 2,177 4,399 3,145 1,195 2,499 -4,017 -1,840 884 -3,515 614 -2,531 -2,481 -1,286 219 -2,280 1955 1956 1957 1958 1959 14,424 17,556 19,562 16,414 16,458 -11,527 -12,803 -13,291 -12,952 -15,310 2,897 4,753 6,271 3,462 U48 -2,701 -2,788 -2,841 -3,135 -2,805 -297 -361 -189 -633 -821 299 447 482 486 573 3,406 3,837 4,180 3,790 4,132 -676 -735 -796 -825 -1,061 2,730 3,102 3,384 2,965 3,071 2,928 5,153 7,107 3,145 1,166 -2,498 430 -2,423 2,730 4,762 -2,345 784 -2,361 -2,448 -1,282 1960 1961 1962 1963 1964 19,650 -14,758 20,108 -14,537 20,781 -16,260 22,272 -17,048 25,501 -18,700 4,892 -1,057 -964 5,571 -1,131 -978 4,521 -912 -1,152 5,224 -742 -1,309 -794 -1,146 6,801 639 732 912 1,036 1,161 4,616 4,999 5,618 6,157 6,824 -1,238 -1,245 -1,324 -1,560 -1,783 3,379 3,755 4,294 4,596 5,041 6,886 7,949 7,664 8,806 11,063 -4,062 -4,127 -4,277 -4,392 -4,240 2,824 3,822 3,387 4,414 6,823 1965 1966 1967 1968 1969 26,461 29,310 30,666 33,626 36,414 -487 -1,280 4,951 3,817 -1,043 -1,331 3,800 -1,187 -1,750 635 -596 -1,548 607 -718 -1,763 1,480 1,497 1,742 1,759 1,964 7,437 7,528 8,021 9,367 10,913 -2,088 -2,481 -2,747 -3,378 -4,869 5,350 5,047 5,274 5,990 6,044 10,014 7,987 7,878 6,240 6,135 -4,583 -4,955 -5,294 -5,629 -5,735 5,431 3,031 2,583 611 399 1970 1971 1972 1973 1974 42,469 43,319 49,381 71,410 98,306 -641 653 1,072 740 165 -2,038 -2,345 -3,063 -3,158 -3,184 2,330 2,649 2,965 3,406 4,231 11,748 -5,515 12,707 -5,435 14,765 -6,572 21,808 -9,655 27,587 -12,084 6,233 7,272 8,192 12,153 15,503 8,486 5,969 2,749 14,053 11,210 2,331 -6,156 -7,402 -1,433 -8,544 -5,795 7,140 -6,913 8 1,962 -9,249 1975 1976 1977 1978 1979 107,088 114,745 120,816 142,054 184,473 -98,185 -124,228 -151,907 -176,001 -212,009 8,903 1,461 -2,812 931 -2,558 -9,483 -31,091 1,731 -3,565 -33,947 857 -3,573 -27,536 -1,313 -2,935 4,854 5,027 5,680 6,879 7,251 25,351 29,286 32,178 41,824 63,096 -12,564 -13,311 -14,217 -21,680 -32,961 12,787 15,975 17,961 20,144 30,136 25,191 9,894 -9,285 -9,639 5,603 -7,075 18,116 4,207 -5,686 -5,226 -14,511 -5,788 -15,427 -6,593 -991 1980 1981 1982 1983 1984 224,269 237,085 211,198 201,820 219,900 -249,750 -25,481 -1,822 -997 8,912 -265,063 -27,978 -844 144 12,552 -247,642 -36,444 112 -992 12,981 -268,900 -67,080 -163 -4,227 13,859 -332,422 -112,522 -2,147 -9,153 14,042 71,388 84,975 85,346 81,972 92,935 -42,532 -53,626 -57,097 -54,549 -69,542 9,467 28,856 31,349 15,223 3,907 28,250 27,423 -30,188 23,394 -86,385 -8,349 1,119 6,892 -8,331 -9,775 -5,868 -9,956 -40,143 -12,621 -99,006 1985 1986 1987 1988 1989 215,935 223,367 250,266 320,337 360,465 -338,083 -122,148 -368,425 -145,058 -409,766 -159,500 -447,323 -126,986 -475,329 -114,864 16,166 10,969 5,326 1,610 -913 -106,859 -129,384 -147,739 -113,857 -95,314 -15,473 -122,332 -16,009 -145,393 -14,575 -162,314 -15,005 -128,862 -14,720 -110,034 1988: I II Ill IV 1989: I \\'."— Ill IV 1990: | II Ill" -21,510 -25,493 -26,866 -32,991 -35,807 -39,866 2,603 -45,579 -2,260 -55,797 -6,416 -70,499 911 -103,811 -5,505 -4,096 -10,788 -4,907 -8,939 -3,530 -8,298 -5,452 -4,060 -6,320 659 14,008 82,282 -66,115 18,551 80,982 -70,013 18,262 90,536 -85,210 21,032 110,048 -108,438 26,123 127,536 -128,448 7,807 11,617 6,942 6,511 -2,922 -2,625 -4,525 -5,638 4,885 8,992 2,417 873 76,497 79,392 80,511 83,937 -109,988 -110,494 -111,290 -115,551 -33,491 -1,075 -1,776 -31,102 -1,139 -1,062 -30,779 -1,144 -624 -31,614 -2,094 -599 4,736 5,079 5,391 5,829 26,980 -24,580 2,400 26,739 -26,330 409 27,942 -28,083 -141 28,386 -29,445 -1,059 -29,206 -27,815 -27,297 -29,537 -3,476 -3,060 -3,461 -5,008 -32,682 -30,875 -30,758 -34,545 88,267 91,111 89,349 91,738 -116,360 -119,333 -119,152 -120,484 -28,093 -28,222 -29,803 -28,746 -1,763 -1,667 -1,114 -1,776 -57 39 -192 870 5,899 6,164 7,031 7,030 30,872 31,932 32,102 32,629 465 -30,407 -33,889 -1,957 17 -32,085 561 -32,068 -23,549 -25,643 -24,061 -22,061 -3,555 -3,006 -3,530 -4,631 -27,104 -28,649 -27,591 -26,692 96,262 -122,545 -26,283 -1,287 96,758 -119,860 -23,102 -1,382 96,159 -125,911 -29,752 -1,648 1,075 479 350 6,217 6,885 7,115 31,541 -29,546 1,995 -18,283 30,682 -31,681 -999 -18,119 33,082 -30,627 2,455 -21,480 1 Excludes military. 2 Adjusted from Census data for differences in valuation, coverage, and timing. 3 Quarterly data are not seasonally adjusted. 4 Beginning 1960, includes transfers of goods and services under U.S. military 5 -3,385 -21,668 -4,366 -22,485 -4,105 -25,585 grant programs. Fees and royalties from U.S. direct investments abroad or from foreign direct investments in the United States are excluded from investment income and included in other services, net. See next page for continuation of table. 402 TABLE B-102.—U.S. international transactions, 1946-90—Continued [Millions of dollars; quarterly data seasonally adjusted, except as noted] U.S. assets abroad, net [increase/capital outflow (-)] Year or quarter Total 1946 1947 1948. 1949 1950 1951 . . .. 1952 1953. 1954 1955 1956 1957 1958 1959 1960 -4,099 1961 -5,538 1962 -4,174 1963 . . -7,270 1964 ! -9,560 1965 -5,716 1966 -7,321 1967 -9,757 -10,977 1968 1969 -11,585 -9,337 1970 1971 12475 1972 -14,497 1973 -22,874 1974 -34,745 1975 -39,703 1976 -51,269 1977 . . -34,785 1978 -61,130 1979 . . -64,331 1980 -86,118 1981 -110,951 1982 -124,490 1983 -56,100 1984 -31,070 1985 -27,721 1986 -92,030 1987 -62,946 1988 -84,176 1989 -127,061 1988:1 4,569 II -19,856 III -42,383 IV -26,508 1989- 1 -32,859 II -1,381 Ill -44,076 IV -48,745 1990:1 32,877 || -31,721 III " !.. -26,451 ITS. official reserve assets87 623 3,315 1736 -266 1,758 -33 415 1,256 480 182 -869 1165 £292 1,035 2,145 607 1,535 378 171 1,225 570 53 -870 -1,179 2,481 ,349 158 -1,467 -849 -2,558 -375 732 -1,133 -8,155 -5,175 -4,965 -1,196 -3,131 -3,858 312 9,149 -3,912 -25,293 "& -7,380 1,925 -4,000 -12,095 -5,996 -3,202 -3,177 371 1,739 Other U.S. Government assets -1,100 -910 -1,085 -1,662 -1,680 -1,605 -l!543 -2,423 -2,274 -2,200 -1,589 1884 -1J568 -2,644 6 366 -3,474 -4,214 -3,693 -4,660 -3,746 -5,162 -5,097 -6,131 -5,006 -5,489 2821 -2^22 997 2,969 1,185 -1,594 -847 1,957 3,452 962 -303 574 -47 -659 -808 -379 U.S. private assets -5,144 -5,235 -4,623 -5,986 -8,050 -5,336 -6,347 -7,386 -7,833 -8,206 -10,229 -12,940 -12,925 -20,388 -33,643 -35,380 -44,498 -30,717 -57,202 -59,453 -72,802 -100,679 -113,394 -49,898 -22,451 -21,043 -90,321 -73,091 -83,232 -102,953 4,661 -19,048 -36,960 -31,885 -29,821 11,017 -38,654 -45,496 36,713 -31,284 -27,811 Foreign assets in the U.S., net [increase/capital inf low (+)]» Total Foreign official assets Other foreign assets 2,294 2,705 1,911 3,217 3,643 742 3,661 7,379 9,928 12,702 6,359 22,970 21,461 18,388 34,241 15,670 36,518 51,319 64,036 38,752 58,112 83,032 93,746 84,869 102,621 130,012 221,599 218,470 221,442 214,652 26,079 65,270 49,797 80,295 68,402 2,794 74,136 69,320 -32,988 25,496 52,471 1,473 765 1,270 1986 1,660 134 -672 3,451 -774 -1,301 6,908 26,879 10,475 6,026 10,546 7,027 17,693 36,816 33,678 -13,665 15,497 4,960 3,593 5,845 3,140 -1,083 35,588 45,210 39,515 8,823 24,840 5,970 -2,015 10,720 7,797 -4,961 13,003 -7,016 -8,203 5,541 13,642 821 1,939 641 1,231 1,983 607 4,333 3,928 10,703 14,002 -550 -3,909 10,986 12,362 23,696 8,643 18,826 14,503 30,358 52,416 42,615 78,072 90,154 79,023 99,481 131,096 186,011 173,260 181,927 205,829 1,239 59,300 51,812 69,575 60,605 7,755 61,133 76,336 -24,786 19,954 38,829 Allocations of special drawing rights (Sfclte) 867 717 710 1,139 1,152 1,093 Statistical discrepancy Of which: Total (sum of Seasonal the items adjustmen* with sign discrepreversed) ancy -1,019 -989 -1,124 -360 -907 -457 629 -205 438 -1,516 -219 -9,779 -1,879 -2,654 -1,458 5,917 10,544 -2,023 12,521 25,431 25,736 19,934 36,612 11,374 27,456 20,041 15,824 6,790 -8,404 22,443 2,034 -14,539 23,344 -19,242 -8,439 27,236 -2[469 6,117 21,780 28,711 -435 2,970 -2,995 -4,630 4,656 3,093 -1,697 -4,953 3,560 2,804 -988 -5,303 • Includes extraordinary U.S. Government transactions with India. 7 Consists of gold, special drawing rights, foreign currencies, and the U.S. reserve position in the International Monetary Fund (IMF). Note.—See Survey of Current Business, June 1990, for discussion of redefinitions and other adjustments to data, as well as relationship of data shown here with data in the national income and product accounts. Source: Department of Commerce, Bureau of Economic Analysis. 403 TABLE B-103.—U.S. merchandise exports and imports by principal end-use category, 1965-90 [Billions of dollars; quarterly data seasonally adjusted] Imports Exports Nonagrfcultural products Aari Vaar or Tear nr c±'r- quarter Total pr f£ ucts Total Indus- Capital trial supplies Autoand motive Other mate- automotive rials B* 1965 1966 1967 1968 1969 26.5 29.3 30.7 33.6 36.4 6.3 6.9 6.5 6.3 6.1 20.2 22.4 24.2 27.3 30.3 10.4 1970 1971 1972 1973 1974 42.5 43.3 49.4 71.4 98.3 7.4 7.8 9.5 18.0 22.4 35.1 35.5 39.9 53.4 75.9 1975 1976 1977 1978 * 1979 107.1 114.7 120.8 142.1 184.5 22.2 23.4 24.3 29.9 35.6 1980 1981 1982 1983 1984 224.3 237.1 211.2 201.8 219.9 1985 1986 1987 1988 1989 7.6 8.2 8.5 9.6 Total leum and products Total Industrial supplies materials Capital goods except Auto- Other automo- motive tive III IV 1989: | ii .!!!!"!!! HI IV 2.6 2.9 3.0 3.2 3.7 21.5 25.5 26.9 33.0 35.8 2.0 2.1 2.1 2.4 2.6 19.5 23.4 24.8 30.6 33.2 10.2 10.0 12.0 11.7 1.5 2.2 2.5 2.8 3.4 0.9 1.8 2.4 4.0 5.1 12.3 10.9 11.8 16.9 26.2 14.7 15.4 16.9 22.0 30.9 3.9 4.7 5.5 7.0 8.8 4.3 4.5 5.6 7.6 2.9 3.6 4.7 8.4 26.6 36.9 41.9 51.1 62.1 77.2 12.3 13.6 16.0 19.2 27.4 4.0 4.3 5.9 8.3 9.8 5.7 7.6 9.0 10.0 39.9 45.6 55.8 70.5 103.8 10.7 12.4 15.0 16.5 20.2 23.9 27.5 84.8 91.4 96.5 112.2 148.9 26.7 28.3 29.7 34.0 52.1 36.6 39.1 39.8 47.3 60.0 10.8 12.2 13.5 15.7 18.3 10.7 11.7 13.5 15.2 18.5 98.2 124.2 151.9 176.0 212.0 27.0 34.6 45.0 42.6 61.0 71.2 89.7 106.9 133.4 151.1 23.6 29.1 35.0 40.6 47.5 10.2 12.3 14.0 19.4 24.5 12.1 16.8 19.4 25.0 26.5 25.3 31.4 38.6 48.4 52.6 42.2 44.0 37.2 37.1 38.4 182.1 193.0 174.0 164.7 181.5 65.3 63.8 58.0 52.9 56.8 76.3 83.9 76.0 71.3 77.0 17.4 19.7 17.4 18.6 22.6 23.2 25.6 22.5 21.8 25.1 249.8 265.1 247.6 268.9 332.4 79.4 78.6 62.0 55.3 58.0 170.4 186.5 185.6 213.6 274.4 52.9 56.4 48.9 53.9 66.0 31.4 36.9 38.4 43.2 60.5 28.1 30.9 34.0 43.2 56.6 58.0 62.3 64.3 73.3 91.4 29.6 27.4 29.5 38.2 41.5 186.4 196.0 220.7 282.1 319.0 54.8 59.4 63.6 82.6 90.6 79.6 82.9 92.4 119.0 138.0 25.1 25.3 28.1 33.9 34.7 26.8 28.3 36.6 46.6 55.7 338.1 368.4 409.8 447.3 475.3 51.3 34.4 42.9 39.6 50.9 286.8 334.0 366.8 407.7 424.4 62.4 69.9 70.8 83.1 84.1 61.4 72.1 85.1 102.2 113.1 65.1 78.1 85.2 87.9 86.0 97.9 113.9 125.7 134.5 141.3 76.5 79.4 80.5 83.9 || 11.1 12.4 1.9 2.4 2.8 3.5 3.9 215.9 223.4 250.3 320.3 360.5 1988: I 8.9 9.3 67.6 70.1 70.4 74.1 20.2 20.9 20.6 21.0 28.4 29.3 29.5 31.8 8.4 8.4 8.3 8.8 10.6 11.5 12.0 12.5 110.0 110.5 111.3 115.6 10.0 10.3 20.9 21.1 20.1 20.9 24.1 25.4 25.8 26.9 21.6 21.4 21.9 23.0 33.4 32.3 33.5 35.2 77.6 80.4 79.4 81.5 22.2 23.5 22.6 22.2 33.0 34.6 35.3 35.2 9.0 8.6 8.2 8.9 13.5 13.8 13.3 15.2 116.4 119.3 119.2 120.5 10.9 13.5 13.2 13.3 105.5 105.8 106.0 107.2 21.3 21.3 20.6 20.8 27.2 28.5 28.3 29.1 22.8 21.1 21.3 20.7 34.1 34.9 35.7 36.5 85.3 86.4 86.4 23.6 23.2 23.8 38.2 38.6 38.0 8.7 9.6 9.0 14.9 14.9 15.6 122.5 119.9 125.9 15.6 12.2 15.7 107.0 107.7 110.2 20.1 20.6 20.8 28.9 28.9 29.2 21.0 21.2 22.6 37.0 37.0 37.6 10.1 9.8 88.3 91.1 89.3 91.7 10.6 10.7 96.3 96.8 96.2 11.0 10.3 9.9 10.2 8.1 8.9 9.9 1990: i ii HI *. 1 Nonpetroleum products Pafrn. reiro- 9.7 100.0 100.2 9.9 101.4 9.5 106.1 9.1 8.0 9.2 9.9 11.8 13.0 End-use categories beginning 1978 are not strictly comparable with data for earlier periods. See Survey of Current Business, June 1988. Note.—Data are on an international transactions basis and exclude military. In June 1990, end-use categories for merchandise exports were redefined to include reexports; beginning with data for 1978 reexports (exports of foreign merchandise) are now assigned to detailed end-use categories in the same manner as exports of domestic merchandise. Source: Department of Commerce, Bureau of Economic Analysis. 404 TABLE B-104.—U.S. merchandise exports and imports by area, 1981-90 [Billions of dollars] Item 1987 1990 first 3 quarters at annual rate' 1989 1981 1982 1983 1984 Exports . Industrial countries Canada japan . Western Europe Australia, New Zealand, and South Africa Australia Other countries, except Eastern Europe OPEC28 Other Eastern Europe International organizations and unallocated 237.1 141.9 211.2 127.3 201.8 128.4 219.9 141.0 215.9 140.5 223.4 150.3 250.3 165.6 320.3 207.3 360.5 232.8 385.6 251.2 46.0 21.8 65.1 39.2 20.7 59.7 44.5 21.8 55.4 53.0 23.2 56.9 55.4 22.1 56.0 56.5 26.4 60.4 62.0 27.6 68.6 74.3 37.2 86.4 79.7 43.7 98.5 109.2 7.4 9.4 6.8 10.9 11.0 5.3 8.1 8.3 128.7 Imports Industrial countries Canada japan .. . Western Europe Australia, New Zealand, and South Africa Australia Other countries, except Eastern Europe OPEC2.. . . Other8 2651 Eastern Europe International organizations and unallocated Balance (excess of exports +) 1.6 Industrial countries Canada Japan , Western Europe Australia, New Zealand, and South Africa Australia Other countries, except Eastern Europe OPEC28 Other Eastern Europe International organizations and unallocated 7.7 1985 7.8 4.8 1986 7.0 5.1 7.1 5.1 1988 84.0 47.0 4.4 6.6 3.9 90.7 80.1 70.4 74.6 72.0 71.0 82.4 109.1 121.9 211 207 11.4 60.6 10.4 60.6 10.7 71.7 13.8 95.3 12.6 59.5 13.8 60.8 13.1 69.6 15.3 55.2 116.1 4.8 .2 .8 491.1 294.7 9.0 5.1 44 37 30 43 3.3 2.1 2.3 3.8 108.9 5.6 475.3 291.8 .1 .1 .0 .2 1443 2476 144.1 2689 159.9 3324 205.5 338.1 219.1 368.4 245.4 409.8 259.7 .1 447.3 283.4 48.3 48.5 56.0 376 377 428 55.6 70.4 65.7 77.5 69.7 80.8 89.0 73.6 84.6 96.1 89.4 93.5 52.9 67.6 60.2 72.1 84.7 89.8 52.9 102.6 102.3 107.5 5.6 2.5 5.0 2.3 5.4 5.6 2.7 6.2 2.7 5.9 2.6 5.4 2.3 3.0 3.5 6.6 3.8 7.4 4.4 119.2 102.4 107.6 124.7 117.1 121.1 148.2 161.8 181.5 194.2 49.9 69.3 31.5 70.9 25.3 82.3 26.9 97.8 22.7 94.5 18.9 24.4 23.0 30.7 36.4 1.1 1.4 2.2 1.8 123.8 1.9 138.8 2.2 150.8 2.1 157.8 2.2 0 0 364 -16.9 671 -31.5 -11.5 1125 1221 1451 1595 -64.5 -14.6 -78.6 -94.0 -11.6 -105.5 -43.5 -211 -370 -435 -544 -570 -27.5 -127.0 -76.0 -10.4 -52.6 -16.2 -114.9 -59.0 -15.0 -95.0 -13.2 .1 280 -2.4 -2.2 -15.8 12.2 -9.3 17.0 6.8 -.2 -15.2 5.6 -21.4 102.2 2.0 -28.6 -9.7 -49.8 -3.8 92.4 87.5 -8.4 -40.5 1.7 3.4 2.6 2.6 2.1 1.2 1.6 2.2 2.1 1.4 2.4 1.1 2.5 2.0 2.3 3.2 3.3 4.2 4.3 3.6 3.9 -28.5 288 3 29 -22.3 109 114 27 -37.2 100 271 16 -50.1 131 370 21 -45.2 113 339 14 -50.1 85 416 1 -65.8 137 521 3 -52.7 93 434 1.7 -59.5 176 419 3.5 -65.5 -23.8 -41.7 2.7 .1 .0 .1 .0 .2 .1 .2 .8 1 Preliminary; 2 seasonally adjusted. Organization of Petroleum Exporting Countries, consisting of Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. 8 Latin American Republics, other Western Hemisphere, and other countries in Asia and Africa, less members of OPEC. Note.—Data are on an international transactions basis and exclude military. Source: Department of Commerce, Bureau of Economic Analysis. 405 TABLE B-105.—U.S. merchandise exports, imports, and trade balance, 1970-90 [Billions of dollars; monthly data seasonally adjusted] Merchandise exports (f.a.s. value)1 General merchandise imports (customs value)3 Principal end-use commodity category Principal end-use commodity category Year or month Total 2 InFoods, dustrial supbev- pl.es er- and maages terials goods cept automotive Automotive vehicles, parts, and engines . lion ExConConeral In- Cap- Auto- sumsummer- (f.a.s.) Exer chanports er Foods, dus- ital mo- goods less (f.a.s.) goods trial tive dise im- less (nonsup- goods vehi- (nonTotal im2 imfood) Other cles, bev- plies cept parts, food) Other ports (cus- ports exexer- and auto- and cept ma- mocept value)'4 toms ages terivalen- autoautotiuo IIO\ ue; moals gines motive tive F.a.s. value 5 1970 1971 1972 . 1973 1974 Trade balance Customs value 43.2 441 49.9 71.9 994 42.4 3.2 15 -57 2.4 -3.9 0.8 -43 -9.0 -1.3 -11.4 1109 1059 132.5 1604 1860 -31 104 -6.7 272 289 2222 -231 257.0 -19.3 40.0 456 556 695 103.3 -114 3.0 -15.7 372 -40.2 -35.9 -31.4 2734 254.9 269.9 346.4 352.5 382.3 424.4 459.5 493.2 223 -34.6 -27.5 -38.4 -52.4 -64.2 -106.7 -122.4 -117.7 -133.6 -138.3 -155.1 -152.1 -170.3 -118.5 -137.1 -109.4 -129.4 483 589 732 110.9 F.a.s. value 5 1974 1975 1976 1977 1978 1979 1980 994 108.9 116.8 1232 1458 186.4 1981 1982 1983 1984 1985 1986 1987 1988 1989 2387 216.4 205.6 224.0 7 218.8 7 227.2 254.1 322.4 363.8 31.3 30.9 31.5 24.0 22.3 24.3 32.3 37.2 ?8.3 28.4 30.8 30.4 30.7 31.6 29.9 30.2 30.1 31.4 30.6 31.3 3.1 3.1 3.4 3.2 3.2 3.4 3.0 3.0 2.8 3.0 3.2 3.0 7.8 7.8 8.4 8.3 8.7 8.7 8.4 8.5 8.1 8.4 8.3 7.9 10.5 10.5 11.6 11.7 11.4 11.8 11.8 11.7 12.3 12.3 11.1 12.3 ?9 2.9 3.0 3.1 31.4 31.6 33.3 32.1 32.8 34.2 32.1 32.5 32.0 35.0 33.6 3.1 8.6 3.1 8.0 3.2 8.6 3.0 8.4 2.9 8.4 3.4 8.4 2.8 8.1 3.1 8.7 2.7 8.6 2.6 10.0 3.0 9.5 12.0 12.8 12.8 12.4 12.7 13.5 12.8 12.5 12.6 13.2 12.3 25 2.8 3.3 3.0 3.5 3.4 3,0 3.1 1026 985 123.5 1504 1748 2095 244.9 Customs value 1989: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1990: Jan Feb Mar Apr May June July Aug Sept Oct. Nov 61.7 72.7 15.7 56.7 67.2 16.8 61.7 72.0 20.6 58.5 73.9 22 9 57.3 75.8 21.7 66.7 86.2 24.6 85.1 109.2 29.3 99.3 138.8 34.8 2.9 25 ?7 2.6 3.1 3.0 3.1 3.4 3.1 14.3 13.4 13.3 14.? 17.7 23.1 36.4 2610 ?0.7 ?44.0 20.5 258.0 24.0 •330.7 ?73 •3365 35.9 365.4 34.6 406.2 43.4 441.0 17.2 473.2 17.1 1120 35.4 33.3 39.7 18.2 107.0 40.9 40.8 44.9 21.0 123.7 59.8 53.5 60.0 66.8 78.2 85.2 87.7 86.1 68.3 79.4 88.7 95.9 102.9 6.5 6.3 7.8 9.4 10.4 12.1 12.8 13.6 21 9 24.4 24.8 24.8 25.1 113.9 65.1 101.3 71.8 111.0 84.5 118.3 101.4 132.3 113.3 ?7 2.8 3.1 2.9 3.0 3.3 29 3.0 2.9 3.0 3.4 3.4 1.3 1.4 1.3 1.3 1.5 1.5 1,3 1.4 1.4 1.6 1.7 1.6 37.4 38.2 39.9 38.7 40.9 39.5 390 40.5 38.9 41.6 40.5 38.1 22 8,5 9.1 9.5 9.0 9.8 9.7 9.3 9.6 9.4 9.9 10.0 9.4 73 7.6 7.9 7.3 7.3 6.9 6.8 7.? 7.0 7.2 7.0 6.5 7,8 8.4 8.5 8.3 8.7 8.5 8.6 8.8 8.8 9.1 9.0 8.4 .9 1.0 1.1 1.1 1.1 1.1 1.0 1.? 1.2 1.4 1.3 1.2 39.0 -9.1 -10.7 39.7 -9.8 -11.3 41.5 -9.0 -10.7 40.3 -8.3 -9.9 42.6 -10.3 -11.9 41.1 -8.0 -9.6 40.7 -9.1 -10.8 42.3 -10.3 -12.1 40.5 -8.8 -10.4 43.4 -10.2 -12.0 42.3 -9.9 -11.7 39.7 -6.8 -8.4 3.4 3.4 3.4 3.5 3.6 3.9 3.7 3.5 3.5 3.9 3.8 1.8 1.6 1.8 1.7 1.8 1.6 1.8 1.7 1.8 1.8 2.0 41.6 38.7 41,6 39.4 40.5 39.6 41? 42.3 413 46.0 43.3 2 3 12 9 9.8 2.3 11.1 9.1 11.5 9.8 2.3 10.5 9.8 2.3 11.3 9.5 2.1 10.5 9.6 2 i 11.0 10.1 2.1 12.3 9.8 6.4 6.7 7.9 6.9 7.5 7.3 7.5 7.7 7.0 8.0 7.1 8.9 8.3 8.7 8.7 8.7 8.5 9.1 9.1 8.6 9.6 9.1 1.3 1.2 1.3 1.3 1.3 1.4 1.3 1.3 1.6 1.4 1.5 43.4 -10.2 -12.1 -7.1 -8.8 40.4 43.5 -8.4 -10.2 41.1 -7.3 -9.1 42.4 -7.8 -9.6 41.3 -5.3 -7.1 43.1 -9.1 -11.0 -9.7 -11.6 44.2 43.1 -9.3 -11.1 47.9 -11.0 -12.9 -9.7 -11.5 45.2 107 2.1 10.0 2.1 10.7 2.0 11.0 11.8 2.1 11.3 2.1 11.? 2 1 11,6 1.9 10.5 2.1 11.9 11.1 2.0 10.4 9.3 2.2 14.3 10.6 2.1 13.4 10.2 1 Department of Defense shipments of grant-aid military supplies and equipment under the Military Assistance Program are excluded from total exports through 1985 and included beginning 1986. 2 Includes undocumented exports to Canada through 1988. Beginning 1989. undocumented exports to Canada are included in the appropriate end-use category. 3 Total arrivals of imported goods other than intransit shipments. 4 C.i.f. (cost, insurance, and freight) import value at first port of entry into United States. Data for 1967-73 are estimates. 5 F.a.s. (free alongside ship) value basis at U.S. port of exportation for exports and at foreign port of exportation for imports. 8 Total includes revisions not reflected in detail. 7 Total exports are on a revised statistical month basis; end-use categories are on a statistical month basis. Note.—Data are as reported by the Bureau of the Census adjusted to include silver ore and bullion reported separately prior to 1969. Trade in gold is included beginning 1974. Export statistics cover all merchandise shipped from the U.S. customs area, except supplies for the US. Armed Forces. Exports include shipments under Agency for International Development and Food for Peace programs as well as other private relief shipments. Data beginning 1974 include trade of the U.S. Virgin Islands. Source: Department of Commerce, Bureau of the Census. 406 TABLE B-106.—International reserves, selected years, 1952-90 [Millions of SDRs; end of period] 1QR9 1952 1QCO 1962 1O7O 1972 1QO9 1982 1QQ7 1987 IQfiO 1988 19<90 1OQO Nov Dec All countries 49388 62851 147 323 361 452 539809 574 739 622004 653,952 Industrial countries * 39280 53502 113,362 24,714 1944 17,220 2561 1168 2,021 577 33,657 5,778 6441 57,925 2,298 36,471 12,037 10,383 72,727 2,108 57,525 12,781 10,763 64,735 2,303 59,631 12,935 11,156 55,329 183 29,918 3,428 6,053 22,001 59,975 13,060 11,710 56,027 251 12,112 5,572 5,656 16,916 116 1,081 1,753 2,505 3,564 6,049 7,958 7153 4,592 26,161 6,215 8,113 8057 4,801 21,713 7,266 9,250 4925 3;959 21,592 7,328 7,305 7,439 6,991 28,277 7,502 6,849 58,846 2007 46,824 2808 49,527 2,572 258 50,341 2,647 51,067 2,517 218 United States Canada Australia Japan New Zealand Austria Belgium Denmark Finland France 920 1,101 1,133 150 132 686 Germany Greece Iceland Ireland Italy. Netherlands 960 94 8 318 722 953 Norway Portugal Spain . .. Sweden Switzerland United Kingdom 164 603 134 504 Developing countries- Total 2 By area: Africa2 Asia Europe Middle East Western Hemisphere Memo: Oil-exporting countries Non-oil developing countries 2 767 256 237 787 664 4,049 9,224 5,544 4,757 2,111 1,420 17,850 6,958 21,908 43,909 287 32 359 4068 1,943 304 680 1045 802 950 78 221 278 307 2,390 15,108 10,723 3,393 23631 12,818 3,793 28131 13,483 3,100 37884 14,100 4,058 47,416 13,885 3,688 46,565 13,827 1,220 2129 4618 1453 6961 5,201 6,272 1,179 7450 3397 16930 11,904 10,105 3,047 22035 5974 22283 30,070 9,901 4,372 28041 6523 20900 33,438 10,531 8,135 32104 7487 22,027 27,121 10,880 11,053 36,268 13092 20,820 25,716 36,555 33961 147 438 187 320 2919 3,308 9648 9349 1786 3,793 2110 2772 1 183 2616 1805 2282 3962 8129 3345 9436 9089 1699 7949 2030 7319 9956 24005 381 916 133 1,038 5605 4,407 1667 1,956 269 214,014 352489 381104 409,991 437,232 7731 44476 5571 64094 25566 10,819 23,386 25,864 193 635 212 013 216 719 9431 10954 7769 7566 99720 112 162 121,690 123,222 8706 13163 16987 6904 45897 41642 42312 37472 2/233 23*356 25,417 28,085 67163 49146 80275 138174 42993 44363 40071 150642 167649 176649 1 Includes 2 data for Luxembourg. Includes data for Taiwan Province of China. Note.—International reserves is comprised of monetary authorities' holdings of gold (at SDR 35 per ounce), special drawing rights (SDRs), reserve positions in the International Monetary Fund, and foreign exchange. Data exclude U.S.S.R., other Eastern European countries, and Cuba (after 1960). U.S. dollars per SDR (end of period) are: 1952 and 1962-1.00000; 1972-1.08571; 1982-1.10311; 1987-1.41866; 19881.34570; 1989-1.31416; November 1990-1.4268; and December 1990-1.42266. Source: International Monetary Fund, International Financial Statistics. 407 TABLE B-107.—Industrial production and consumer prices, major industrial countries, 1962-90 Year or quarter United States Canada European Community1 Japan France West Germany Italy United Kingdom Industrial production ( 1987 = 100 )2 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 1988 1989 1990 ».. 1989:1 II III IV 1990:1 II III IV P 41.6 44.0 47.0 51.7 56.3 57.5 60.7 63.5 61.4 62.2 68.3 73.8 72.7 66.3 72.4 78.2 82.6 85.7 84.1 85.7 81.9 84.9 92.8 94.4 95.3 100.0 105.4 108.1 109.1 107.7 108.4 108.1 108.1 108.3 109.4 110.5 108.2 36.3 38.7 42.2 45.8 49.1 51.1 54.3 58.1 58.8 62.0 66.7 73.8 76.1 71.6 76.0 79.3 82.1 86.1 83.1 84.8 76.5 81.5 91.4 96.5 95.7 100.0 105.0 105.1 20.0 22.3 25.9 26.9 30.3 36.2 41.7 48.3 55.0 56.5 59.6 67.9 66.4 59.4 66.0 68.6 73.0 78.1 81.7 82.6 82.9 85.5 93.4 96.8 96.6 100.0 109.3 115.7 48.2 50.3 53.9 56.1 58.3 59.3 63.7 69.6 73.1 74.7 78.0 83.7 84.3 78.7 84.5 86.6 95.4 93.1 92.8 91.1 89.9 90.8 92.8 95.9 98.1 100.0 104.4 108.2 46 51 55 56 59 61 62 69 72 77 81 87 90 83 90 92 94 99 99 98 97 97 97 97 98 100 105 109 49.8 51.2 55.7 58.8 59.4 57.6 62.9 70.9 75.5 77.0 79.9 85.0 84.8 79.6 86.8 88.0 90.4 94.7 95.0 93.2 90.3 90.9 93.5 97.7 99.6 100.0 103.9 108.7 41.1 44.7 46.4 48.6 54.3 58.5 61.9 64.2 68.3 68.0 70.8 77.7 81.2 73.7 82.9 83.8 85.4 91.1 96.2 94.7 91.7 88.9 91.8 92.9 96.2 100.0 105.9 109.2 60.0 62.0 67.0 68.9 70.0 70.5 75.9 78.5 78.9 78.5 79.9 87.0 85.4 80.8 83.4 87.6 90.1 93.6 87.4 84.7 86.3 89.5 89.6 94.5 96.8 100.0 103.6 104.0 105.0 105.7 105.2 104.4 102.5 102.6 102.2 115.1 115.4 115.9 116.5 117.5 120.0 123.1 106.5 107.6 108.2 109.5 109.4 109.3 107.2 109.0 109.8 109.8 109.2 109.8 106.6 107.6 109.9 110.5 112.0 112.4 116.3 107.6 107.1 110.0 112.3 109.7 108.4 110.2 104.0 103.3 104.4 104.2 104.2 106.1 103.0 27.4 27.9 28.4 29.1 30.2 31.3 32.5 34.0 35.1 36.1 37.9 40.7 45.2 50.1 53.8 58.1 63.3 69.1 76.1 85.6 94.9 100.4 104.8 108.9 113.4 118.4 123.2 129.3 135.5 126.5 128.7 130.5 131.5 133.3 134.6 136.0 137.9 24.7 26.6 27.7 29.5 31.1 32.2 34.0 35.8 38.5 40.9 42.9 47.9 59.0 66.0 72.1 78.0 81.3 84.3 90.9 95.4 98.0 99.9 102.1 104.2 104.9 105.0 105.7 108.1 19.6 20.3 21.0 21.8 22.6 23.2 24.0 25.0 26.3 28.0 29.8 32.4 37.0 42.4 47.6 53.5 58.6 65.0 74.0 83.1 92.2 100.2 107.5 114.2 118.5 122.5 126.9 133.8 21.0 22.0 22.7 23.3 23.9 24.6 25.7 27.4 28.7 30.3 32.2 34.5 39.3 43.9 48.1 52.7 57.5 63.6 72.2 81.8 91.7 100.3 108.0 114.3 117.2 121.1 124.4 128.9 105.9 108.4 108.6 109.3 109.6 111.1 111.6 131.1 133.2 134.4 136.2 138.0 140.5 142.4 126.8 128.4 129.3 130.3 131.2 132.3 133.7 43.1 44.3 45.4 46.9 48.5 49.3 50.1 51.0 52.9 55.6 58.7 62.8 67.2 71.2 74.2 76.9 79.0 82.3 86.8 92.2 97.0 100.3 102.7 104.8 104.7 104.9 106.3 109.2 112.1 108.2 109.3 109.3 110.0 111.2 111.8 112.3 113.3 12.6 13.6 14.4 15.0 15.4 16.0 16.2 16.6 16.8 17.6 18.7 20.6 24.6 28.8 33.6 40.1 45.1 52.1 63.2 75.4 87.7 100.8 111.5 121.1 128.5 134.4 141.1 150.4 159.6 147.1 149.6 151.1 153.7 156.3 158.1 160.3 163.5 15.8 16.1 16.6 17.4 18.1 18.5 19.4 20.4 21.8 23.8 25.5 27.9 32.3 40.2 46.8 54.2 58.7 66.6 78.5 87.9 95.4 99.8 104.8 111.1 114.9 119.7 125.6 135.4 148.2 130.9 135.0 136.3 139.0 141.4 148.0 150.5 152.8 Consumer prices (1982-84=100) 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 1988 1989 1990 1989:1 II.... Ill IV 1990-1 II . Ill IV 30.2 30.6 31.0 31.5 32.4 33.4 34.8 36.7 38.8 40.5 41.8 44.4 49.3 53.8 56.9 60.6 65.2 72.6 82.4 90.9 96.5 99.6 103.9 107.6 109.6 113.6 118.3 124.0 130.7 121.9 123.7 124.6 125.8 128.3 129.5 131.5 133.7 1 Consists of Belgium-Luxembourg, Denmark, France, Greece, Ireland, Italy, Netherlands, United Kingdom, West Germany, Portugal, and Spain. Industrial production prior to July 1981 excludes data for Greece, which joined the EC in 1981. Data for Portugal and Spain, which became members on January 1,1986 are excluded prior to 1982. 8 All data exclude construction. Quarterly data are seasonally adjusted. Sources: Department of Commerce (International Trade Administration, Trade Information and Analysis, Office of Finance, Industry, and Trade Information) and Department of Labor (Bureau of Labor Statistics). 408 TABLE B-108.—Civilian unemployment rate, and hourly compensation, major industrial countries, 1962-90 [Quarterly data seasonally adjusted] United States Year or quarter Canada Japan France West Germany Italy United Kingdom Civilian unemployment rate (percent)1 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 1988 1989 1990 1989:1 II . Ill IV . . . 1990:1 II Ill IV .... . . .. 5.5 5.7 5.2 4.5 3.8 3.8 3.6 3.5 4.9 5.9 5.6 4.9 5.6 8.5 7.7 7.1 6.1 5.8 7.1 7.6 9.7 9.6 7.5 7.2 7.0 6.2 5.5 5.3 5.5 5.2 5.3 5.3 5.3 5.3 5.3 5.6 5.9 5.5 5.2 4.4 3.6 3.4 3.8 4.5 4.4 5.7 6.2 6.2 5.5 5.3 6.9 7.1 8.1 8.3 7.4 7.5 7.5 11.0 11.8 11.2 10.5 9.5 8.8 7.8 7.5 8.1 7.5 7.6 7.4 7.6 7.6 7.4 8.2 9.1 1.3 1.3 1.2 1.2 1.4 1.3 1.2 1.1 1.2 1.3 1.4 1.3 1.4 1.9 2.0 2.0 2.3 2.1 2.0 2.2 2.4 2.7 2.8 2.6 2.8 2.9 2.5 2.3 2.4 2.3 2.3 2.2 2.1 2.1 2.1 1.4 1.6 1.2 1.6 1.6 2.1 2.7 2.3 2.5 2.8 2.9 2.8 2.9 4.1 4.5 5.1 5.3 6.0 6.4 7.6 8.3 8.5 10.0 10.4 10.6 10.7 10.2 9.6 9.4 9.7 9.6 9.6 9.5 9.4 9.4 9.4 9.5 0.6 .5 :s .3 1.3 1.1 .6 .5 .6 > 1.6 3.4 3.4 3.4 3.3 2.9 2.8 4.0 5.6 «6.9 7.1 7.2 6.6 6.3 6.3 5.7 5.2 5.9 5.7 5.7 5.6 5.4 5.3 5.2 4.8 2.8 2.4 2.7 3.5 3.7 3.4 3.5 3.5 3.2 3.3 3.8 3.7 3.1 3.4 3.9 4.1 4.1 4.4 4.4 4.9 5.4 5.9 5.9 6.0 *7.5 7.9 7.9 7.8 7.0 7.8 8.0 7.8 7.6 7.4 6.8 6.9 6.9 2.7 3.3 2.5 2.1 2.3 3.3 3.2 3.1 3.1 3.9 4.2 3.2 3.1 4.6 5.9 6.4 6.3 5.4 7.0 10.5 11.3 11.8 11.8 11.2 11.2 10.3 8.6 7.0 6.4 7.6 7.2 6.7 6.4 6.3 6.2 6.4 6.8 Manufacturing hourly compensation in U.S. dollars ( 1982 = 100 )3 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 1988 1989 1990 :. 23.9 24.6 25.6 26.2 27.4 28.9 31.0 33.4 35.8 37.9 39.8 42.9 47.7 53.4 57.9 62.9 68.2 74.8 83.7 91.8 100.0 102.6 105.9 111.1 116.2 118.9 122.9 127.7 131.9 20.1 20.7 21.6 22.8 24.7 26.1 28.2 30.4 33.9 37.7 41.3 44.3 52.2 57.3 67.7 69.5 69.8 74.8 83.0 93.1 100.0 106.2 105.9 105.6 107.8 117.6 132.9 149.9 6.0 6.7 7.5 8.4 9.3 10.4 12.2 14.5 17.2 20.6 27.1 37.1 45.2 51.7 55.8 68.1 93.3 94.8 97.5 107.3 100.0 108.0 111.3 115.8 172.1 205.0 236.4 234.4 12.1 13.2 14.3 15.5 16.4 17.6 19.8 20.1 21.2 24.0 28.9 37.8 41.4 57.3 59.3 65.6 81.0 97.3 113.5 102.0 100.0 95.3 90.4 95.4 129.1 156.1 164.1 160.4 10.6 11.3 12.3 13.5 14.6 15.4 16.6 18.5 23.4 27.4 33.0 44.9 52.3 61.1 64.4 76.1 95.1 111.1 120.9 103.6 100.0 99.3 93.0 95.0 133.9 168.7 179.8 175.6 11.2 13.2 14.1 15.1 16.0 17.7 18.9 20.6 25.1 29.4 34.9 41.2 48.1 60.5 59.0 65.7 78.8 97.4 111.1 100.9 100.0 104.3 103.5 107.0 142.7 174.0 182.5 191.8 13.0 13.6 14.4 15.8 17.1 17.3 16.2 17.6 20.4 24.0 28.4 31.7 36.3 45.9 43.1 47.1 60.5 79.7 106.1 105.9 100.0 92.7 87.4 91.0 110.9 131.8 152.0 154.0 'Civilian unemployment rates, approximating U.S. concepts. Quarterly data for France, West Germany, and United Kingdom should be viewed as less precise indicators of unemployment under U.S. concepts than the annual data. Many Italians reported as unemployed did not actively seek work in the past 30 days, and they have been excluded for comparability with U.S. concepts. Inclusion of such persons would about double the unemployment rate for Italy through 1985, and increase it to 11-12 percent for 1986-90. s There are breaks in the series for West Germany (1983) and Italy (1986). Based on the prior series, the rates for West Germany were 7.4 percent in 1983 and the rate for Italy was 6.3 percent in 1986. 9 Hourly compensation in manufacturing, U.S. dollar basis. Data relate to all employed persons (wage and salary earners and the selfemployed) in the United States and Canada, and to all employees (wage and salary earners) in the other countries. For France and United Kingdom, compensation adjusted to include changes in employment taxes that are not compensation to employees, but are labor costs to employers. Source: Department of Labor, Bureau of Labor Statistics. 409 TABLE B-109.—Foreign exchange rates, 1967-90 [Currency units per U.S. dollar, except as noted] Period March 1973 1967 1968 1969 1970 1971 1972 . 1973 1974 . 1975 1976 . 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 .. . 1988 1989... 1990 1989- 1 | | Ill IV 1990- 1 | | Ill IV Belgium (franc) 39.408 49.689 49.936 50.142 49.656 48.598 44.020 38.955 38.959 36.800 38.609 35.849 31.495 29.342 29.238 37.195 45.781 51.123 57.752 59.337 44.664 37.358 36.785 39.409 33.424 38.807 40.468 40.240 38.072 35.294 34.594 32.759 31.023 Netherlands (guilder) March 1973 1967 1968. 1969 1970 1971. 1972 1973 1974 1975 1976 1977 1978 1979. 1980 1981 . . 1982 1983. 1984 1985. 1986 '!..!..!.. ...!..!'!! 1987. .. . 1988 ! !.. ..! 1989 1990 1989- 1 HI IV 1990-1 | | III. IV ! ! ! 2.8714 3.6024 3.6198 3.6240 3.6166 3.4953 3.2098 2.7946 2.6879 2.5293 2.6449 2.4548 2.1643 2.0073 1.9875 2.4999 2.6719 2.8544 3.2085 3.3185 2.4485 2.0264 1.9778 2.1219 1.8215 2.0910 2.1797 2.1681 2.0461 1.9064 1.8875 1.7947 1.6955 Canada (dollar) 0.9967 1.0789 1.0776 1.0769 1.0444 1.0099 .9907 1.0002 .9780 1.0175 .9863 1.0633 1.1405 1.1713 1.1693 1.1990 1.2344 1.2325 1.2952 1.3659 1.3896 1.3259 1.2306 1.1842 1.1668 1.1922 1.1934 1.1823 1.1688 1.1823 1.1707 1.1530 1.1612 Sweden (krona) 4.4294 5.1621 5.1683 5.1701 5.1862 5.1051 4.7571 4.3619 4.4387 4.1531 4.3580 4.4802 4.5207 4.2893 4.2310 5.0660 6.2839 7.6718 8.2708 8.6032 7.1273 6.3469 6.1370 6.4559 5.9231 6.3330 6.5494 6.5415 6.3952 6.1582 6.0867 5.8299 5.6136 France (franc) 4.5156 4.9206 4.9529 5.1999 5.5288 5.5100 5.0444 4.4535 4.8107 4.2877 4.7825 4.9161 4.5091 4.2567 4.2251 5.4397 6.5794 7.6204 8.7356 8.9800 6.9257 6.0122 5.9595 6.3802 5.4467 6.2971 6.5459 6.5018 6.1688 5.7358 5.6406 5.3396 5.0661 Switzerland (franc) 3.2171 4.3283 4.3163 4.3131 4.3106 4.1171 3.8186 3.1688 2.9805 2.5839 2.5002 2.4065 1.7907 1.6644 1.6772 1.9675 2.0327 2.1007 2.3500 2.4552 1.7979 1.4918 1.4643 1.6369 1.3901 1.5838 1.6964 1.6585 1.6065 1.5070 1.4435 1.3356 1.2736 1 8 Cents per unit of foreign currency. Adjusted by changes in consumer prices. Source: Board of Governors of the Federal Reserve System. 410 Germany (mark) 2.8132 3.9865 3.9920 3.9251 3.6465 3.4830 3.1886 2.6715 2.5868 2.4614 2.5185 2.3236 2.0097 1.8343 1.8175 2.2632 2.4281 2.5539 2.8455 2.9420 2.1705 1.7981 1.7570 1.8808 1.6166 1.8524 1.9335 1.9226 1.8125 1.6916 1.6773 1.5926 1.5033 United Kingdom (pound) * 247.24 275.04 239.35 239.01 239.59 244.42 250.34 245.25 234.03 222.17 180.48 174.49 191.84 212.24 232.46 202.43 174.80 151.59 133.68 129.74 146.77 163.98 178.13 163.82 178.41 174.51 162.59 159.75 158.53 165.55 167.50 186.42 194.39 Italy (lira) Japan (yen) 568.17 624.09 623.38 627.32 627.12 618.34 583.70 582.41 650.81 653.10 833.58 882.78 849.13 831.11 856.21 1138.58 1354.00 1519.32 1756.11 1908.88 1491.16 1297.03 1302.39 1372.28 1198.27 1358.39 1408.45 1385.22 1335.69 1254.81 1231.81 1176.03 1129.71 261.90 362.13 360.55 358.36 358.16 347.79 303.13 271.31 291.84 296.78 296.45 268.62 210.39 219.02 226.63 220.63 249.06 237.55 237.46 238.47 168.35 144.60 128.17 138.07 145.00 128.66 138.15 142.29 143.13 148.15 155.38 145.27 130.86 Multilateral trade-weighted value of theU.S. dollar (March 1973=100) Nominal 100.0 120.0 122.1 122.4 121.1 117.8 109.1 99.1 101.4 98.5 105.7 103.4 92.4 88.1 87.4 103.4 116.6 125.3 138.2 143.0 112.2 96.9 92.7 98.6 89.1 96.0 100.5 100.5 97.3 93.2 92.6 87.5 83.0 Real 2 100.0 98.8 99.2 93.9 97.2 93.0 84.2 83.1 84.8 100.9 111.7 117.1 128.5 131.9 103.3 90.6 88.0 94.2 86.4 91.6 96.0 96.2 93.1 89.8 89.0 84.6 80.5 TABLE B-110.—Growth rates in real gross national product, 1961-90 [Percent change] 1961-65 annual average 1966-70 annual average 1971-75 annual average 1976-83 annual average OECD countries2 5.3 4.6 3.0 2.8 4.8 3.4 2.7 3.4 :4.4 3.4 2.8 United States Canada japan 4.6 53 124 3.0 46 110 2.2 52 43 2.5 27 44 6.8 63 51 3.4 47 49 2.7 33 25 3.4 40 46 4.5 44 57 2.5 30 49 .9 11 61 European Community 9 4.9 4.6 2.9 2.3 2.5 2.4 2.7 2.7 3.9 3.5 2.9 5.9 4.7 4.8 3.2 5.4 4.2 6.6 2.5 4.0 2.1 2.4 2.1 2.5 2.4 3.3 1.7 1.3 3.3 3.0 2.1 1.9 1.9 2.6 3.6 2.5 2.3 2.5 3.9 2.2 1.6 3.0 4.7 3.8 3.7 4.2 4.6 3.6 3.9 3.2 2.2 2.5 4.2 2.6 1.6 48 3.9 2 5.0 3.8 83 30 4.9 74 2.0 1.2 67 1.2 3.0 146 .9 .5 127 3.5 2.5 83 1.9 .0 110 2.2 1.5 108 1.4 -.3 39 Area and country Prance West Germany Italy United Kingdom U.S.S.R Eastern Europe China 1984 1985 1986 1987 1988 1989 1990 » -3.0 -4.0 44 ' Estimates. • OECD (Organization for Economic Cooperation and Development) includes Australia, Austria, Belgium, Denmark, Finland. France, West Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, and United Kingdom, not shown separately. 8 Includes Belgium, Denmark, Greece, Ireland, Luxembourg, Netherlands, Portugal, and Spain, not shown separately. Sources: Department of Commerce, International Monetary Fund, Organization for Economic Cooperation and Development, and Council of Economic Advisers. 411