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Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optimal character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. CONFIDENTIAL (FR) September 12, SUMMARY AND OUTLOOK By the Staff Board of Governors of the Federal Reserve System 1979 DOMESTIC NONFINANCIAL DEVELOPMENTS Summary of Recent Developments. The level of aggregate economic activity in the third quarter appears to have remained near that of the second quarter, and inflation has continued at the same rapid pace as earlier this year. However, a very substantial accumulation of inventories occurred in July and other signs of developing weakness in demands have emerged. Employment at nonfarm establishments was virtually unchanged in August after rising only 50,000 in July. Manufacturing jobs declined again, along with construction employment, but this was offset by gains in the service-producing sector. 0.2 hour. In addition, the factory workweek declined In the household survey, total employment fell by 300,000, and the unemployment rate rose from 5.7 percent to 6.0 percent. Industrial production is estimated tentatively to have fallen 1 percent or perhaps somewhat more in August. Declines were widespread by industry, but were particularly sharp at automobile manufacturers. A partial rebound in car assemblies from the very low August level is scheduled for September. In line with the curtailed pace of manufacturing output, the capacity utilization rate is estimated to have declined further, to a level about 2-1/2 points below the March 1979 peak. Consumer spending at retail stores rose 0.7 percent in August, suggesting little, if any, change in real terms. Unit auto sales rebounded from the depressed July pace, as discounts and rebates I-2 succeeded in reducing somewhat the huge stock of large cars in inventory. Total auto sales were at an 11.0 million unit annual rate in August, almost 1 million units from the depressed June-July sales pace. up Spending for major discretionary items--general merchandise, apparel, and furniture and appliances--also rose 0.7 percent in current dollars during August, from an upward revised July level. Total retail sales were revised up in both June and July, resulting in an August total that was 1.2 percent above May (less than the increase in prices). Business outlays for fixed capital equipment rose in July, following strike- and fuel-related disruptions during the second quarter. Shipments of nondefense capital goods increased rapidly and sales of heavy trucks turned up. Nonresidential construction outlays, however, showed little growth in July following strong gains in the spring. Indicators of investment spending continued to suggest a weakening in the months ahead. New orders for nondefense capital goods in nominal terms fell sharply further in July to a level about 10 percent below the first quarter average, and nonresidential construction contracts declined further. The Commerce Department's August survey of intended plant and equipment spending suggests a deceleration of spending in the second half of this year. Although this survey showed a small upward revision of business spending plans for 1979 as a whole, the rise reflected higher reported spending in the second quarter of the year. I-3 The book value of business inventories rose extremely rapidly in July at a record annual rate of $94 billion. Very large increases occurred at wholesalers, retailers and manufacturers; nevertheless, the inventory to sales ratios for all of these moved up only slightly in view of strong increases in sales. At wholesale, increases were especially large in farm product raw materials, reflecting large grain harvests and marketings,and also in the automotive component. At the retail level increases were particularly large for car dealers, but stocks were decreased significantly in August. In addition to excessive car inventories, some degree of overhang remained at general merchandise stores in July. Housing starts fell 7 percent in July, but at a 1.8 million unit annual rate remained relatively high. Multifamily starts weakened, reversing the rise of the two previous months, and single-family starts edged down but still remained within the range experienced since March. Meanwhile mortgage credit has become more expensive and somewhat less readily available. Nevertheless demand remains strong, and sales of both new and existing homes picked up in July. Inflation has continued at double digit rates in recent months, boosted by energy prices. Producer prices of finished goods rose at a 14 percent annual rate in August, about the same pace as in the previous month, but markedly faster than during the second quarter. In that quarter wholesale food prices had declined, while recently the prices of I-4 vegetables, fruits, and grain products have moved up again. Consumer prices advanced at a 12 percent annual rate in July, about the pace experienced since the start of the year. Gasoline and fuel oil prices increased in a 5-6 percent range in July (not annual rate) in the same general area as during the second quarter. Outside the food and energy areas, the pace of inflation has also remained brisk in recent months. Outlook. The staff now estimates that real GNP will rise fractionally in the third quarter, following the 2-1/2 percent annual rate drop that occurred in the second quarter. Final sales appear to be stronger in the third quarter, in large part due to increased consumption expenditures, which were responding to the disappearance of gasoline shortages. As noted earlier, auto sales picked up as the demand for cars was temporarily stimulated by discounts and rebates. Capital spending is similarly showing the effects of a recovery in purchases of motor vehicles. Although inventories rose sharply in July, ongoing curtail- ments in production suggest that stocks in the third quarter as a whole are likely to be accumulated at a somewhat slower pace than the high rate in the previous quarter. The gross business product fixed-weighted price index is estimated to be rising at a 10 percent annual rate in the current quarter, about the same as the first half rise. Federal fiscal policy assumptions remain about unchanged from a month ago, and on the basis of our economic projections the Federal deficit for FY 1980 is projected at $36 billion on a unified basis. I-5 Assumptions for the monetary aggregates include an M1 growth rate, after adjustment for the downward effect of ATS, of somewhat over 6 percent during 1979, followed by a growth rate of 6 percent over the four quarters of 1980. Reflecting the continued recent strength of the monetary aggregates, short-term interest rates consistent with these assumptions are now projected at higher levels than in the last Greenbook. The relative stability of real GNP currently projected for the third quarter of 1979 is projected to be followed by declines in the next three quarters, averaging 1-1/4 percent at an annual rate. Consumption expenditures are likely to deteriorate in the fall in response to continued declines in real income,and business fixed investment is expected to be adjusted downward in view of such weaker demand. Housing starts are also projected to decline from current levels, partly reflecting financial constraints, and the rate of inventory accumulation is expected to slow about in line with final sales. Most of these down- ward adjustments are projected to have run their course by mid-1980, thus setting the stage for a slow-paced recovery. The personal saving rate is projected to remain fairly steady, at a low level of about 5 percent, throughout the projection period. The unemployment rate is still projected to rise to around 8 percent by the end of 1980. Despite the reduction in labor demand, hourly compensation increases during 1980 are likely to be rapid,totaling nearly 10 percent, in lagged response to the preceding inflation. Due I-6 to an expected abatement in the rate of increase of energy prices as well as some recovery in productivity, however, the overall rate of price rise is expected to slow in the latter half of 1980. The gross business product fixed-weighted index is anticipated to increase at an annual rate of about 8-1/2 percent during that period, after remaining in a range of 9-1/2 to 10 percent from early 1979 through the spring of 1980. Detailed data for these projections are shown in the tables that follow. I -7 STAFF GNP PROJECTIONS Percent changes, annual rate Nominal GNP 8/8/79 9/12/79 1976 1/ 1977 T/ 1978 1/ 1979 1980 Real GNP 8/8/79 9/12/79 Gross business product fixed-weight price index 8/8/79 9/12/79 11.3 11.6 11.3 11.6 12.0 12.0 10.5 8.8 10.8 8.5 10.9 14.8 10.9 14.8 3.5 5.6 3.5 5.6 8.8 8.7 8.8 8.7 1979-I 1/ 1979-IT/ 1979-III 1979-IV 10.6 6.3 6.9 8.5 10.6 6.7 9.5 7.3 1.1 -3.3 -1.8 -1.6 1.1 -2.4 .7 -2.7 10.0 10.5 10.2 10.0 10.0 9.8 10.0 9.8 1980-I 1980-II 1980-III 1980-IV 9.4 9.2 10.0 10.4 8.5 8.7 9.4 9.9 -. 2 -.9 -. 4 .9 1.1 9.7 9.5 8.8 8.6 9.7 9.5 8.7 8.5 13.4 13.4 8.0 8.5 9.8 9.1 1978-III 1/ 1978-IV f/ Change: 77-IV to 78-IV 1/ 78-IV to 79-IV 79-IV to 80-IV Memo: Growth Over Annual Policy Period: 78-IV to 79 IV 1/ Actual. .2 1.5 1.5 4.8 -1.4 .7 -1.4 .2 Unemployment rate (percent) 8/8/79 9/12/79 6.0 5.8 6.0 5.8 8.6 -. 8 -. 8 10.2 1.0 1.1 9.1 1.1 1.2 10.2 1.0 1.1 I-8 September 12, 1979 CONFIDENTIAL - FR CLASS II FOMC GROSS NATIONAL PRODUCT AND RELATED ITEMS Expenditures and income (Quarterly figures are seasonally adjusted. figures are billions of current dollars at annual rates.) 1979 1980 Projected I II III IV I II III IV 1808.8 2329.4 2294.7 1828.6 1836.2 2382.7 2356.7 1878.6 1889.4 2425.2 2414.7 1920.8 1922.6 2475.2 2470.7 1967.0 1957.6 2527.2 2527.7 2014.3 1998.3 2584.7 2583.7 2060.4 2042.3 2646.5 2643.5 2106.9 2089.0 Personal consumption expenditures Goods Services 1454.2 784.9 669.3 1475.2 788.9 686.2 1518.3 813.0 705.3 1551.8 828.0723.8 1586.7 843.5 743.2 1623.6 860.5 763.1 1659.8 877.1 782.7 1697.8 894.8 803.0 Gross private domestic investment Residential construction Business fixed investment Change in business inventories Nonfarm 373.8 111.2 243.4 19.1 18.8 395.7 113.5 247.6 34.6 33.8 397.1 116.0 255.1 26.0 26.0 381.3 114.5 256.3 10.5 10.5 375.4 113.0 257.9 4.5 4.5 Net exports of goods and services 1/ Exports 4.0 238.5 234.4 -7.6 -10.8 --1.8 9.4 16.0 18.1 17.9 244.0 251.6 261.1 271.9 271.7 273.5 282.5 273.1 292.7 276.7 299.1 281.0 305.8 287.9 460.1 163.6 296.5 466.1 161.5 304.6 478.1 164.4 313.7 493.9 173.5 320.4 503.7 176.7 327.0 513.4 179.8 333.6 523.3 182.7 340.6 536.6 188.9 347.7 Gross national product in constant (1972) dollars 1430.6 1422.1 1424.7 1415.2 1412.0 1410.7 1414.0 1417.9 "ersonal income Wage and salary disbursements .sposable personal income Saving rate (percent) 1852.6 1189.3 1572.2 5.0 1892.8 1212.1 1602.1 5.4 1946.6 1234.0 1646.0 5.2 1988.3 1252.9 1680.3 5.1 2028.2 1272.9 1713.7 4.8 2074.0 1295.5 1750.8 4.6 2133.6 1323.0 1800.0 5.2 2186.7 1353.5 1841.8 5.2 Gross national product Final purchases Private Excluding net exports 2292.1 2272.9 1812.8 Imports Gov't. purchases of goods and services Federal 2/ State and local 374.2 112.5 262.2 -.5 -. 5 383.5 114.8 267.7 1.0 1.0 394.2 117.6 273.6 3.0 3.0 Corporate profits with I.V.A. and C.C. Adj Corporate profits before tax 178.9 233.3 175.5 226.9 181.2 233.0 178.6 228.4 180.4 227.2 181.6 226.9 182.4 226.4 185.0 228.8 Federal government surplus or deficit (-)(N.I.A. basis) High employment surplus or deficit (-) -11.7 7.9 -7.5 20.2 -17.4 12.1 -28.6 14.4 -28.7 25.5 -29.3 33.2 -36.2 32.2 -35.6 37.9 27.6 2.6 19.9 -6.1 20.2 -6.4 19.9 -7.3 19.9 -7.9 19.6 -8.8 19.1 -9.8 18.9 -10.6 102.5 5.7 102.3 5.7 103.2 6.0 103.9 6.9 104.3 7.4 104.7 7.7 105.0 7.9 87.9 20.9 88.5 20.9 88.8 20.7 88.3 20.3 88.2 20.0 88.2 19.9 88.3 19.8 88.4 19.8 Industrial production (1967=100) Capacity utilization: all mfg. (percent) Materials (percent) 152.2 86.7 88.0 151.8 85.9 87.2 150.5 84.4 87.4 148.1 82.1 84.6 146.8 80.6 82.9 146.2 79.5 81.8 146.6 78.9 81.3 147.2 78.5 81.0 Housing starts, private (million units, A.R.) New autos sales, (millions, A.R.) Domestic models Foreign models 1.62 11.55 9.13 2.42 1.84 10.66 8.00 2.66 1.70 1.50 1.50 1.55 1.55 10.70 8.40 2.30 9.90 7.80 2.10 9.70 7.80 1.90 9.80 7.90 1.90 9.90 8.00 1.90 State and local government surplus or deficit (-) (N.I.A. basis) Excluding social insurance funds Civilian labor force (millions) Unemployment rate (percent) Nonfarm payroll employment (millions) Manufacturing - -- ---- --- 105.4 8.1 I/ Balance of payments data and details underlying these estimates are shown in the International Developments section of this part of the Greenbook. 2/ Components of purchases and total receipts and total expenditures are shown in the Federal Sector Accounts table which follows. I-9 September 12, 1979 CONFIDENTIAL - FR CLASS II FOMC PERCENT CHANGES IN GROSS NATIONAL PRODUCT AND RELATED ITEMS (Annual rates compounded quarterly) 1979 1980 Projected I II IIIII I 1.1 1.1 1.8' .4 -2.4 -4.1 -4.3 -3.1 .7 2.2 2.1 1.3 -2.7 -. 4 -1.2 -2.5 Personal consumption expenditures Goods Services .6 -4.4 7.1 -3.0 -7.6 2.7 1.1 .3 2.0 -1.1 .0 -3.9 2.1 -1.7 2.0 Gross private domestic investment Residential structures Business fixed investment -. 5 -14.3 4.8 8.4 -3.6 -3.4 -6.8 -2.4 3.9 -21.2 -14.5 -6.1 -13.5 -14.5 -5.6 -9.3 -11.5 -1.6 -1.8 7.2 -6.6 -3.4 -11.0 1.2 2.4 .4 3.5 2.8 7.0 .5 .9 1.6 .5 III IV .9 .7 .6 .4. 1.9 .8 .8 .9 .4 .6 -. 9 1.9 -. 4 14 .9 -. 1 1.9 Constant (1972) dollars Gross national product Final purchases Private Excluding net exports Gov't. purchases of goods and services Federal State and local -. 9 .0 -. 2 -1.5 -. 4 .4 .3 -. 4 1.5 -1.4 .3 3.1 1.0 .9 1.0 .5 1.2 -1.6 -1.0 9.5 11.2 11.4 12.1 7.3 10.2 9.3 7.2 8.5 9.6 10.0 7.5 8.7 9.& 10.0 8.6 9.4 9.2 9.5 9.1 5.9 2.1 10.5 12.2 12.8 11.6 9.1 7.6 10.9 9.3 7.7 11.2 9.6 8.3 11.1 9.2 7.9 10.7 9.5 8.3 10.8 3.6 -8.5 12.9 25.7 8.4 7.1 1.4 9.1 12.7 -15.0 -5.1 1.9 -6.0 -5.1 2.5 -1.3 -1.8 6.8 10.3 8.4 8.7 11.6 10.1 9.1 Gov't. purchases of goods and services Federal State and local 5.6 12.1 2.3 5.3 -5.0 11.3 10.7 7.4 12.5 13.9 24.0 8.8 8.2 7.6 8.5 7.9 7.2 8.3 7.9 6.6 8.7 10.6 14.3 8.6 Disposable personal income 13.0 7.8 11.4 8.6 8.2 8.9 11.7 9.6 Personal income Wage and salary disbursements 11.4 12.7 9.0 7.9 11.9 7.4 8.9 6.3 8.3 6.5 9.4 7.3 12.0 8.8 10.3 9.5 -12.2 10.8 -7.4 -10.5 13.6 11.2 -5.6 -7.6 4.1 -2.1 2.7 -. 6 -1.9 -8.0 -. 6 -5.9 -. 2--2.5 2.1 -1.2 .4 Gross national product Final purchases Private. Excluding net exports 10.6 11.0 12.4 10.3 6.7 3.9 3.5 6.2 Personal consumption expenditures Goods Services 11.4 7.9 15.8 Gross private domestic investment Residential structures Business fixed investment Disposable personal income 1.0 Current dollars Corporate profits with IVA & C.C. Adj. Corporate profits before tax 9.9 9.6 9.3 9.5 1.8 -. 8 .4 -1.3 5.8 4.3 .4 4.2 6.1 3.0 .2 1.1 -3.3 Nonfarm business sector Output per hour Compensation per hour Unit labor costs -3.0 10.7 14.1 -4.3 7.8 12.7 .8 8.5 7.6 .7 9.6 8.8 1.4 10.6 9.1 .7 9.6 8.8 1.2 9.7 8.4 1.4 9.4 7.9 GUP implicit deflator 1/ Gross business product fixed-weight price index 2/ 9.3 10.0 9.2 9.8 8.7 10.0 10.3 9.8 9.5 9.7 9.1 9.5 8.4 8.7 8.7 8.5 4.0 -1.0 -3.4 -6.2 -1.5 1.2 1.7 Nonfarm payroll employment Manufacturing Industrial production 1/ 2/ Excluding Federal pay increases, the rates of change are: QI, 9.5 percent; 1980 QIV, 8.1 percent. Uses expenditures in 1972 as weights. -3.5 -1.0 1979 QI, 9.3 percent; 1979 QIV, 9.6 percent; 1980 I - 10 September 12, 1979 GROSS NATIONAL PRODUCT AND RELATED ITEMS (Quarterly figures are seasonally adjusted. Expenditures and income figures are billions of current dollars at annual rates.) CONFIDENTIAL - FR CLASS II FOMC 1978 1977 I II III IV I II III IV Gross national product Final purchases Private Excluding net exports 1820.2 1800.9 1420.9 1430.1 1876.0 1853.6 1462.0 1468.0 1930.5 1902.9 1502.4 1508.7 1971.3 1952.9 1540.1 1558.2 2011.3 1988.5 1569.1 1591.3 2104.2 2078.4 1650.1 1657.7 2159.6 2139.5 1698.6 1705.4 2235.2 2214.5 1760.7 1765.2 Personal consumption expenditures Goods Services 1169.1 642.0 527.1 1190.5 651.2 539.3 1220.6 661.9 558.7 1259.7 685.6 574.1 1287.2 691.2 596.0 1331.2 722.1 609.1 1369.3 740.2 629.1 1415.4 770.2 645.1 Gross private domestic investment Residential construction Business fixed investment Change in business inventories Nonfarm 280.4 81.3 179.8 19.3 20.1 300.0 91.4 186.1 22.5 21.5 315.7 95.0 193.2 27.5 25.6 316.9 99.9 198.6 18.5 15.7 327.0 100.5 203.7 22.8 22.0 352.3 107.7 218.8 25.8 25.3 356.2 110.2 225.9 20.0 18.5 370.5 113.7 236.1 20.6 19.3 Net exports of goods and services 1/ Exports Imports -9.2 170.5 179.8 -6.0 178.6 184.7 -6.3 180.1 186.4 -18.1 174.2 192.3 -22.2 184.4 206.6 -7.6 205.7 213.3 -6.8 213.8 220.6 -4.5 224.9 229.4 Gov't. purchases of goods and services Federal 2/ State and local 380.0 138.2 241.8 391.6 142.6 249.0 400.5 145.6 254.9 412.8 151.2 261.6 419.4 150.9 268.5 428.3 148.2 280.1 440.9 152.3 288.6 453.8 159.0 294.8 Gross national product in constant (1972) dollar 1315.7 1331.2 1353.9 1361.3 1367.8 1395.2 1407.3 1426.6 ersonal income Wage and salary disbursements Disposable personal income Saving rate (percent) 1472.5 945.8 1250.1 4.2 1509.0 971.8 1286.0 5.1 1548.5 995.0 1323.2 5.4 1596.4 1023.4 1361.2 5.1 1634.8 1052.0 1395.0 5.3 1689.3 1090.0 1437.3 5.0 1742.5 1116.8 1476.5 4.8 1803.1 1154.3 1524.8 4.7 137.1 168.4 148.9 176.2 160.8 180.9 153.0 183.0 141.2 177.5 169.4 207.2 175.2 212.0 184.8 227.4 -37.2 -5.5 -40.9 -12.4 -53.6 -29.8 -53.6 -28.3 -49.4 -20.4 -24.6 -4.7 -20.4 -1.0 -16.3 -. 8 State and local government surplus or deficit (-) (N.I.A. basis) Excluding social insurance funds 24.2 5.4 30.1 10.0 28.8 7.4 30.2 7.9 29.6 6.5 22.7 -.9 27.1 3.3 Civilian labor force (millions) Unemployment rate (percent) 97.1 7.2 97.6 6.9 98.5 6.6 99.3 6.2 100.1 6.0 100.8 6.0 101.5 5.8 Nonfarm payroll employment (millions) Manufacturing 82.0 19.6 82.7 19.7 83.5 19.9 84.3 20.1 85.7 20.3 86.1 20.3 87.0 20.6 138.0 82.1 83.2 139.3 82.4 82.8 140.3 82.6 83.0 140.8 82.0 32.6 145.1 83.9 85.0 147.9 85.2 86.4 150.7 86.4 88.2 1.93 11.70 9.34 2.36 2.02 10.92 8.88 2.04 2.09 10.75 8.77 1.98 1.ol 10.40 8.80 2.00 2.10 12.12 10.01 2.11 2.04 11.16 9.19 1.98 2.08 11.07 9.06 2.00 Corporate profits with I.V.A. and C.C. Adj. Corporate profits before tax Federal government surplus or deficit (-) (N.I.A. basis) High employment surplus or deficit (-) Industrial production (1967-100) Capacity utilization: Materials (percent) all mfg. (percent) 134.8 80.7 81.7 Housing starts, private (million units, A.R.) 1.81 11,12 New autos sales, (millions, A.R.) Domestic models 9.28 1.84 Foreign models 11 2/ Balance of payments data and details underlying these estimates are shown in the International Developments section of this part of the Greenbook. Components of purchases and total receipts and total expenditures are shown in the Federal bector Accounts table which follows. I - 11 CONFIDENTIAL - FR CLASS II FOMC September 12, 1979 PERCENT CHANGES IN GROSS NATIONAL PRODUCT AND RELATED ITEMS (Annual rates compounded quarterly) I 1977 II II III I978 IV I II III IV 4.8 4.2 4.0 4.1 7.0 6.0 6.6 5.7 2.23.9 4.4 7.4 1.9 .4 .8 1.0 8.3 8.7 10.7 7.9 3.5 4.6 4.4 44 56 5.7 6.7 6.9 Personal consumption expenditures Goods Services 1.9 1.3 2.6 5.0 3.6 6.8 8.2 10.7 5.3 .8 -4.7 7.9 5.6 9.2 1.4 4.8 4;2 5;3 6.8 9.9 3.2 Gross private domestic investment Residential structures Business fixed investment 19.2 37.6 6.8 15.0 10.2 7.8 -6.9 5.3 2.7 12.3 -4.7 4.6 15.7 11.0 23.2 -5.0 -4.9 3.9 6.6 -1.1 11.3 I Constant (1972) dollars Gross national product Final purchases Private Excluding net export Gov't. purchases of goods and services Federal State and local 4.8 7.9 3.0 4.2 6.2 3.0 1.8 -1.2 .9 -. 1 3.0 -7.4 2.7 -12.3 9.3 5.0 8.2 3.3 1.8 3.2 1.0 Disposable personal income 6.1 6.6 6.8 2.0 4.0 4.1 6.4 12.8 12.2 12.1 11.0 12.1 11.1 11.5 11.6 8.7 10.9 10.4 13.8 8.4 7.5 7.7 8.8 19.8 19.3 22.3 17.8 10.9 12.3 12.3 12.0 14.8 14.8 15.4 14.8 10.5 6.7 15.2 13.5 15.1 11.6 9.0 3.3 16.1 14.4 19.1 9.1 11.9 10.4 13.8 14.2 17.2 10.6 22.7 16.8 16.1 1.6 22.3 11.6 13.3 2.4 10.6 34.8 32.0 33.3 4.5 9.5 13.7 17.1 13.5 19.3 12.9 16.5 10.8 6.5 -. 9 11.1 8.8 -7.0 18.5 12.3 11.7 12.6 12.2 18.7 8.9 Current dollars Gross national product Final purchases Private Excluding net exports Personal consumption expenditures Goods Services 7.5 5.9 9.6 Gross private domestic investment Residential structures Business fixed investment 31.0 59.1 15.0 Gov't. purchases of goods and services Federal State and local 12.8 13.3 12.5 Disposable personal income 12.0 12.1 12.0 10.3 12.7 11.4 13.8 Personal income Wage and salary disbursements 10.3 11.5 10.9 9.9 13.0 11.9 10.0 11.7 14.0 15.3 13.2 10.2 14.7 14.1 Corporate profits with IVA & C.C. Adj. Corporate profits before tax 39.1 19.9 36.0 11.1 -18.0 4.7 -27.5 -11.5 107.2 85.7 14.4 9.6 23.8 32.4 5.6 5.7 3.6 1.5 4.0 3.2 3.8 5.7 6.9 3.1 2.1 -. 2 4.0 6.0 -1.5 6.9 8.5 3.8 8.5 4.5 -. 8 7.9 8.7 -. 2 12.3 12.5 2.4 8.0 5.5 2.9 9.1 6.0 1.3 9.4 8.0 7.7 7.1 4.8 5.2 6.4 6.5 6.3 6.6 10.6 10.5 7.2 8.8 8.7 8.7 9.8 3.8 2.9 1.4 12.8 7.9 7.8 Nonfarm payroll employment Manufacturing Nonfarm business sector Output per hour Compensation per hour Unit labor costs GNP implicit deflator 1/ Gross business product fixed-weight price index 2/ Industrial production 11 1/ Excluding Federal pay increases, rates of change were: 6.3 percent; 1978:QIV, 8.1 percent. Uses expenditures in 1972 as weights. 77 19 :QI, 9.4 8.7 9.8 5.9 percent; 1977:QIV, 5.6 percent; 1978:QI, I- 12 GROSS NATIONAL PRODUCT AND RELATED ITEMS (Expenditures and income figures are billions of current dollars.) CONIDENTIAL - FR CLASS II FOMC 1973 1974 September 12, 1979 Projeted 1975 1976 1977 1978 1899.5 1877.6 1481.4 1491.3 2127.6 2105.2 1669.6 1679.9 2357.3 2558.4 2334.8 2556.4 1860.2 2037.1 1864.3 2021.8 1979 1980 1306.6 1288.6 1019.1 1012.0 1412.9 1404.0 1101.3 1095.3 1528.8 1539.6 1201.2 1180.8 1702.2 1692.1 1330.8 1322.8 Personal consumption expenditures Goods Services 809.9 457.5 352.3 889.6 498.3 391.3 979.1 541.5 437.5 1089.9 601.3 488.5 1210.0 660.1 549.8 1350.8 730.9 619.8 1499.9 803.7 696.2 1642.0 869.0 773.0 Gross private domestic investment Residential construction Business fixed investment Change in business inventories Nonfarm 220.0 66.1 136.0 17.9 14.7 214.6 55.1 150.6 8.9 10.8 190.9 51.5 150.2 -10.7 -14.3 243.0 68.1 164.9 10.0 12.1 303.3 91.9 189.4 21.9 20.7 351.5 108.0 221.1 22.3 21.3 387.0 113.8 250.6. 22.6 22.3 381.8 114.5 265.3 2.0 2.0 Net exports of goods and services 1/ Exports Imports 7.1 101.6 94.4 6.0 137.9 131.9 20.4 147.3 126.9 8.0 163.3 155.4 -9.9 175.9 185.8 -10.3 207.2 217.5 -4.0 253.8 257.9 15.3 295.0 279.7 Gov't. purchases of goods and services Federal 2/ State and local 269.5 102.2 167.3 302.7 111.1 191.5 338.4 123.1 215.4 361.3 129.7 231.6 396.2 144.4 251.8 435.6 152.6 283.0 474.5 165.7 308.8 519.2 182.0 337.2 Gross national product in constant (1972) dollars 1235.0 1217.8 1202.3 1273.0 1340.5 1399.2 1423.2 1413.7 ersonal income Wage and salary disbursements Disposable personal income Saving rate (percent) 1052.4 1154.9 764.6 701.3 901.7 984.6 7.3 7.8 1255.5 805.9 1086.7 7.7 1381.6 890.0 1184.5 5.8 1531.6 984.0 1305.1 5.0 1717.4 1103.3 1458.4 4.9 1920.1 12221 1625.2 5.2 2105.6 1311.2 1776.6 5.0 99.1 115.8 83.6 126.9 95.9 120.4 126.8 156.0 150.0 177.1 167.7 206.0 178.6 230.4 182.4 227.3 -6.7 -1.3 -10.7 14.9 -70.6 -27.4 -53.6 -20.2 -46.3 -19.0 -27.7 -6.7 -16.3 13.7 -32.5 32.2 13.0 4.1 7.6 -2.9 6.2 -6.2 17.9 2.3 26.8 7.3 27.4 4.2 21.9 -4.3 19.4 -9.3 Civilian labor force (millions) Unemployment rate (percent) 88.7 4.9 91.0 5.6 92.6 8.5 94.8 7.7 97.4 7.0 100.4 6.0 103.0 6.1 104.8 7.8 Nonfarm payroll employment (millions) Manufacturing 76.8 20.2 78.3 20.1 76.9 18.3 79.4 19.0 82.3 19.6 85.8 20.3 88.4 20.7 88.3 19.9 129.8 87.6 91.8 129.3 83.8 87.1 117.8 72.9 73.4 130.5 79.5 81.1 138.2 81.9 82.7 146.1 84.4 85.6 150.7 84.8 86.8 146.7 79.4 81.8 2.05 11.42 9.65 1.77 1.34 8.91 7.49 1.42 1.16 8.66 7.08 1.58 1.54 10.12 8.63 1.50 1.99 11.13 9.07 2.06 2.02 11.29 9.27 2.02 1.68 10.70 8.31 2.39 1.52 9.82 7.87 1.95 Gross national product Final purchases Private Excluding net exports Corporate profits with I.V.A. and C.C. Adj. Corporate profits before tax Federal government surplus or deficit (N.I.A. basis) High employment surplus or deficit (-) State and local government surplus or deficit (-) (N.I.A. basis) Excluding social insurance funds Industrial production (1967=100) Capacity utilization: Materials (percent) all manufacturing (percent) Housing starts, private (million units, A.R.) New auto sales, (millions, A.R.) Domestic models Foreign models 1/ 2/ Balance of payments data underlying these estimates are shown in the International Developments section of this part of the Greenbook. Components of purchases and total receipts and total expenditures are shown in the Federal Sector Accounts table which follows. II - 13 September 12, 1979 CONFIDENTIAL - FR CLASS II FOMC PERCENT CHANGES IN GROSS NATIONAL PRODUCT AND RELATED ITEMS 1973 1974 1975 1976 1977 1978 1979 Gross national product Final purchases Private Excluding net exports 5.5 4.9 6.3 5.1 -1.4 -.7 -1.4 -2.3 -1.3 .2 -. 3 -1.0 5.9 4.5 5.6 65 5.3 4.8 5.6 6.2 4.4 4.4 5.0 5.0 1.7 1.8 2.2 1.7 -. 7 .1 -. 1 -. 9 Personal consumption expenditures Goods Services 4.7 5.0 4.4 -.9 -3.4 2.3 1.8 .7 3.2 5.9 6.9 4.8 5.0 5.1 4.9 4.5 4.1 5.1 1.8 .0 4.0 -. 1 -1.9 2.0 Gross private domestic investment Residential structures Business fixed investment 10.0 -3.7 12.2 -11.4 -24.6 -.3 -22.3 -13.9 -13.0 21.6 23.3 4.8 Gov't. purchases of goods and services Federal State and local -.2 -5.4 3.2 2.1 -.8 3.8 1.9 .7 2.6 .2 -. 2 .5 2.0 4.4 .6 6.7 -1.5 2.1 3.7 4.2 11.6 10.9 12.2 11.0 8.1 8.9 8.1 8.2 8.2 9.7 9.1 7.8 11.3 9.9 10.8 11.6 11.0 11.3 12.0 Personal consumption expenditures Goods Services 10.5 11.4 9.3 9.8 8.9 11.1 10.1 8.7 11.8 Gross private domestic investment Residential structures Business fixed investment 16.8 6.6 16.4 -2.5 -16.7 10.8 Gov't. purchases of goods and services Federal State and local 6.5 .1 10.8 Disposable personal income 1980 Constant (1972) dollars Disposable personal income 15.4 20.<7 8.6 7.1 .5 4.2- -5.8 8.4 4.4 -9.5 -9.3 -2.5 1.8 -2.0 4.0 .4 .8 .1 1.1 1.3 1.0 4.6 2.2 -. 2 Current dollars 12.0 10.8 8.5 12.7 12.1 12.7 12.6 10.9 11.4 11.0 9.5 9.5 8.5 11.3 11.0 11.7 11.0 9.8 12.5 11.6 10.7 12.7 11.0 10.0 12.3 9.5 8.1 11.0 -11.0 -6.5 -. 3 27.3 32.3 9.8 24.8 35.0 14.9 15.9 17.5 16.7 10.1 5.4 13.3 -1.3 .6 5.9 12.3 8.7 14.5 11.8 10.7 12.5 6.8 5.4 7.5 9.7 11.3 8.7 9.9 5.7 12.4 8.9 8.6 9.1 9.4 9.8 9.2 12.5 9.2 10.4 9.0 10.2 11.7 11.4 9.3 Personal income Wage and salary disbursements 11.7 10.6 9.7 9.0 8.7 5.4 10.0 10.4 10.9 10.6 12.1 12.1 11.8 10.8 9.7 7.3 Corporate profits with IVA & C.C. Adj. Corporate profits before tax 7.6 20.4 -15.6 9.6 32.2 29.6 18.3 13.5 11.8 16.3 6.5 11.8 2.1 -1.3 Nonfarm payroll employment Manufacturing 4.3 5.2 1.9 -.4 Nonfarm business sector Output per hour Compensation per hour Unit labor costs 1.7 7.8 6.0 -2.9 9.4 12.7 GNP implicit deflator Gross business product fixed-weighted price index 1/ 5.9 5.7 9.7 10.4 Industrial production 8.4 -.4 Gross national product Final purchases Private Excluding net exports 1/ Uses expenditures in 1972 as weights. 14.7 -5.1 3.6 3.A-- 4.3 3.5- 3.1 L.9 -. 1 -4.1 1.9 9.9 7.8 1.8 8.2 6.3 1.1 9.3 8.1 -. 7 v.2 10.0 .7 9.6 8.9 9.6 9.4 6.0 6.2 7.3 7.6 9.0 9.6 9.2 9.5 5.9 5.7 3.1 -2.6 -1.7 -8.7 -8.9 3.2 3.7- September 12, 1979 FEDERAL SECTOR ACCOUNTS (billions of dollars) Fiscal Year 1978* Unified budget receipts Unified budget outlays Surplus(+)/Deficit(-), unified budget Surplus(+)/Deficit(-), off-budget agencies 3/ Combined deficit to be financed FY 1979 e/2/ Admin. F.R. 1/ Board FY 1980 e/2/ Admin. F.R. 1/ Board 1978 CY79e/ F.R. Board I FRB Staff Estimates Calendar quarters; unadjusted data 1978 1979 1980 IV* I* II* III IV I II III .150.5 136.8 135.0 138.6 402.0 450.8 466.5 496.2 466.6 493.0 513.8 542.4 507.6 543.7 416.9 460.6 478.3 504.9 99.5 123.2 102.1 122.6 144.4 123.0 120.6 124.2 111.1 135.1 111.0 133.2 -48.8 -29.7 -26.4 -28.7 -36.1 -43.7 -26.6 -23.7 -20.5 21.4 -3.6 -24.0 -22.2 13.7 -3.6 9/ -11.6'- -11.2 -40.3 -47.3 -9.1 -52.8 -13.9 I -40.5 -0.1 -23.8 -3.0 -23.5 -5.1 16.3 -4.2 -7.8 -1.6 -25.6 -3.4 -25.6 -3.5 10.2 -2.7 -6.3 38.3 0.0 2.0 38.4 7.2 1.8 53.6 -4.0 3.2 31.6 4.3 4.8 15.3 6.1 2.5 10.6 8.6 4.2 -4.6 -9.8 -1.9 12.1 -4.7 0.5 13 .5 10.2 2.0 18.6 4.0 3.0 -0.2 -8.0 -2.0 6.5 1.0 -1.2 -10.3 -59.1 -12.4 -42.1 -12.5 -38.9 Means of financing combined deficits: Net borrowing from public Decrease in cash operating balance Other 4/ 59.1 -3.3 3.2 29.8 7.4 4.9 33.4 0.2 5.3 Cash operating balance, end of period 22.4 15.0 22.2 15.0 15.0 16.3 12.0 16.3 7.7 17.5 22.2 12.0 8.0 16.0 15.0 19.1 n.a. 22.1 n.a. 19.2 22.0 21.9 4.9 6.4 6.0 4.8 4.7 5.5 4.5 4.5 Receipts Expenditures Purchases (total) Defense Non-defense All other expenditures Surplus(+)/Deficit(-) 7/ 414.9 449.5 150.6 97.8 52.8 298.9 -34.6 480.6 496.4 164.5 105.6 58.9 331.9 -15.8 476.7 493.4 162.1 104.8 57.3 331.3 -16.7 525.3 546.9 178.7 116.0 62.7 368.2 -21.6 519.8 549.3 178.2 115.7 62.4 371.1 -29.5 432.1 459.8 152.6 99.0 53.6 307.2 -27.7 489.6 506.3 165.8 107.6 58.1 340.5 -16.7 463.5 479.7 159.0 101.2 57.8 320.7 -16.3 475.0 486.8 163.6 103.4 60.2 323.2 -11.7 485.4 492.8 161.5 106.0 55.5 331.3 -7.4 496.1 514.2 164.4 108.5 55.9 349.8 -18.1 502.0 531.3 173.5 112.6 60.9 357.8 -29.3 512.8 541.5 176.7 114.6 62.1 364.8 -28.7 523.2 552.5 179.8 116.8 63.0 372.7 -29.3 535.7 571.9 182.7 118.9 63.8 389.2 -36.2 High Employment Surplus(+)/ Deficit(-) (NIA basis) 8/ -13.6 n.a. 9.9 n.a. 26.3 -6.7 13.7 -0.8 7.9 20.2 12.1 14.4 25.5 33.2 32.2 Memo: Sponsored agency borrowing 5/ Seasonally adjusted annual rates NIA Budget 6/ *--actual 1/ 2/ 3/ 4/ 3/ 6/ 7/ 8/ 9/ e--estimated r--revised n.a.--not available OMB Mid-Session Review of the 1980 Budget, July 12, 1979. In the First Concurrent Resolution on the Budget Fiscal Year 1980, May 21, 1979, Congress expects FY 1979 receipts of $461.0 billion and outlays of $494.5 billion; and FY 1980 receipts of $509.0 billion and outlays of $532.0 billion. Includes Federal Financing Bank, Postal Service Fund, Rural Electrification and Telephone Revolving Fund, Rural Telephone Bank, and Pension Benefit Guaranty Corporation. Checks issued less checks paid, accrued items and other transactions. Includes Federal Home Loan Banks, FNMA, Federal Land Banks, Federal Intermediate Credit Banks, and Banks for Cooperatives marketable debt on an offerings basis. All NIA data incorporate the Department of Commerce's July 1979 GNP revisions. The fiscal year totals are translations of the OMB Mid-Session Review of the 1980 Budget, July 1979; the translations are based on unadjusted data and do not conform to the average of four seasonally adjusted quarters. The FRB staff eatimates, therefore, have been adjusted in order to make the BEA and staff estimates comparable. FRB staff estimates are consistent with the Council's new potential GNP series as reported in the Economic Report of the President, January 1979. Reflects recent re-estimate by OMB of Federal Financing Bank loan activity. I - 15 DOMESTIC FINANCIAL DEVELOPMENTS Summary. Credit market conditions have continued to tighten since the last FOMC meeting, responding to the further increases in the System's federal funds rate objective and to still strong credit demands, particularly in the business sector. Short-term interest rates generally have increased 100 to 145 basis points, with Treasury bill rates and bank prime rates moving to record high levels and rates on private short-term instruments posting new highs for the current cycle. Bond yields have risen 25 to 35 basis points, but remain below levels attained in the spring. Stock orices have changed little on balance over the intermeeting period, despite some declines most recently. Business demands for funds from external sources have remained relatively strong. Corporate profits have weakened slightly in the current quarter, and the corporate financing gap has continued large. Firms issued a substantial volume of commercial paper again in August and business loans at banks expanded rapidly, though somewhat slower than in July. Borrowing in long-term markets, on the other hand, has remained relatively weak. While public offerings of bonds picked up in August, the average volume for July-August was slightly under that for the first half of this year. Corporate stock offerings in August, however, were the largest in nearly a year, as firms moved to take advantage of the relatively high level of stock prices. Flows of mortgage credit apparently have been well maintained, but supply conditions in this market have tightened further. Deposit flows at S&Ls continued to be relatively sluggish in July and August and remained below the rate of mortgage credit expansion. Thus, S&L reliance on managed I - 16 liabilities to meet commitments has been extended, and the proportion of institutions reporting funds in short supply has moved up again to around 80 percent. higher. Against this background, rates on new mortgages have moved Consumer loan growth moderated in June and July but may have picked up in August with the rebound in auto sales. Treasury borrowing since mid-August has been larger than expected. In addition to anticipated sales of cash management bills, the Treasury has sold $2.5 billion of 4-year 8-month notes, added $200 million to each weekly bill auction and issued about $300 million of nonmarketable debt to foreign official accounts. Thus the Treasury is now expected to end the fiscal year with a cash balance in the $21 billion area, more than $3 billion above the level expected a month ago. State and local govern- ment bond issuance rose in August, in part reflecting a sharp rise in offerings of housing-related revenue bonds. M-1 increased at a 7.4 percent annual rate in August, down significantly from July's rapid pace but in line with the second quarter growth rate. M-2 rose at an 11.3 percent annual rate, only a bit below July's relatively strong advance. Large time deposits included in M-2 and savings deposits increased at somewhat slower rates in August; smalltime deposit expansion, on the other hand, was a bit stronger than in July. Growth in money market mutual funds and other short-term invest- ments has remained quite rapid in recent weeks. Commercial bank credit slowed to a 10 percent annual rate of growth in August (new series), primarily reflecting a marked decline in holdings of Treasury securities and a sharp runoff in security loans. Business loans increased at a less rapid rate than in July but about in line with the strong second quarter pace. I - Outlook. 17 Aggregate credit demands appear likely to remain rela- tively strong in the near term. With many market participants expecting the System to seek a further tightening of money market conditions, however, an unchanged policy might be accompanied by some downward movement of interest rates. Toward year end, more fundamental downward pressures on market rates may begin to develop, as private credit demands ease in association with the economic slowdown. In the public sector, the Treasury has prefinanced part of the large deficit in prospect for the fourth quarter; however, the staff estimates that it will still raise an additional $14 to $15 billion of new money before year end. Between now and the October FOMC meeting, the Treasury is expected to issue about $1.5 billion of 15-year bonds and to continue adding $200 million to each weekly bill auction. State and local government issuance of long-term bonds, although sizable in the near term, may drop during the fall as offerings of mortgage revenue bonds decrease. Credit flows to households are expected to decline a bit further in coming months. With growth in personal income weakening at a time of growing uncertainty about economic prospects, household demands for consumer credit should remain more moderate than in the first half. In addi- tion, growth of residential mortgage credit is likely to taper off, with continued sluggish deposit growth at thrift institutions contributing to supply pressures in this market. Business credit demands may remain strong in the near term, but they should begin to ease during the fall as the expected adjustment of inventories relieves some of the pressure on cash flows. Any slackening I - 18 in the pace of business borrowing is likely to be concentrated in shortand intermediate-term markets, as balance sheet considerations will motivate firms to stress long-term financing. I - 19 INTERNATIONAL DEVELOPMENTS Summary. The trade-weighted average value of the dollar against major foreign currencies has declined slightly since the last greenbook on August 3. In the earlier part of the period stability in the market was supported by indications of firm U.S. monetary policy, . More recently, however, some downward pressure on the dollar has developed, partly reflecting strong demand for the German mark as interest rates in that country rose. The strength of the mark in exchange markets directly affected Germany's partners in the European Monetary System, U.S. authorities bought about $100 million against marks. In the last week of August and the first week and a half of September U.S. intervention to support the dollar took the form of net sales of German marks amounting to nearly $1 billion equivalent. I - 20 The U.S. merchandise trade deficit in July dropped sharply, and probably temporarily, to $17.4 billion at an annual rate (international accounts basis), about half the size of the June deficit and also substantially lower than the first or second quarter averages. Exports in July continued the strong rise of the previous several months. Much of the recent increase in exports was agricultural products, which reached a record $38.7 billion annual rate in July. Poor crops in the U.S.S.R. and Eastern Europe have resulted in increased U.S. shipments of wheat and corn to the U.S.S.R. and have contributed to higher agricultural export prices. U.S. agricultural exports are expected to remain high through next spring. Nonagricultural exports in July continued the steady rise that began early last year; about half of the increase in value this year was attributable to rising prices. Much of the increase came in industrial supplies (particularly nonferrous metals and chemicals), with exports of machinery and civilian aircraft also rising. The value of oil imports rose sharply in July, reaching $61 billion at an annual rate. All of the increase from June was in price; imported oil averaged $19.45 per barrel in July, reflecting about three quarters of the expected final impact of the earlier OPEC price increases. The volume of imported oil declined slightly in July to 8.4 million barrels per day, but U.S. petroleum stocks continued to increase and are now above the level of a year ago. I - 21 Non-oil imports declined sharply in value in July from the June rate and also from the second quarter rate. While non-oil import prices have risen sharply this year -- 9 per cent from 4Q78 to 2Q79 -- volumes have been unchanged. Bank-reported private capital transactions in July registered a net outflow of $1.8 billion, close to the June amount. Net outflows in these two months were in sharp contrast to net inflows totalling $22 billion in the first five months of the year. Some of the recent outflow resulted from a rise in lending to Latin America and Japan. Within the overall figures on banking flows there was a continuation of funding of U.S. head offices from their foreign branche, with the amount raised from branches increasing by $2.6 billion in August. U.S. nonbank deposits in foreign branches continued to grow through July. U.S. bank lending abroad for head offices and branches combined was at a slower rate in the first half of 1979 than during 1978. The increase in claims outstanding on countries other than financial centers was about $3 billion in the first half of the year; claims on non-oil developing countries rose by about $3-1/2 billion, with the largest increases going to Korea, the Philippines and Taiwan, while claims on Eastern Europe and oil producers were reduced. Economic activity in some industrial countries (Japan, Germany and the United Kingdom) was well-sustained in the second quarter, but weakness was evident in France, Italy, and Canada. On balance, GNP I - 22 growth in industrial countries is estimated at about a 3.8 per cent rate in the second quarter, after a first quarter that was weakened in some countries by strikes and weather. Inflation rates in nearly all countries continued to rise in the latest months for which data are available. In some countries, notably Germany, authorities reacted to higher inflation rates by allowing interest rates to rise. Trade and current account balances of major foreign industrial countries moved toward reduced surpluses or increased deficits during the first half of the year. The shift was striking for Japan, where the current account was also turning negative after a surplus of $16.5 billion in 1978, and for Germany,where the current account was about in balance in the first half of 1979 compared with a surplus of $4 billion in the first half of 1973. Outlook. The staff continues to project a U.S. trade deficit of $30 billion for 1979, with a current account deficit of about $5 billion. A reduction of the trade deficit to $17 billion in 1980, and a shift of the current account into a substantial surplus (about $14 billion) is also projected. For the nearer term, some months of much larger trade deficits than was recorded for July are expected. The improvement thereafter reflects primarily the relative weakness of demand in the United States, high agricultural exports, and some remaining effect of the dollar's depreciation since 1977. I - 23 In the framework of the greenbook projections for the year ahead, the staff expects that the weighted-average foreign exchange value of the dollar in the fourth quarter of 1980 will not be significantly different from the average level in July and August of this year. However, some net depreciation against the German mark and Swiss franc is expected. In the short term, developments may generate downward pressure on the dollar, but toward the end of the projection period upward pressure may develop as the move of the U.S. current account into surplus is sustained and evidence of the Federal Reserve's resolve to restrain the growth of the monetary aggregates accumulates. CONFIDENTIAL (FR) CLASS II FOMC Outlook for U.S. Net Exports and Related Items (billions of dollars, seasonally adjusted annual rates) 1978 I P 1978 1979 P 1980 Exports of G&S Imports of G&S -10.3 207.2 217.5 -4.0 253.8 257.9 -15.3 295.0 279.7 Constant 72 $, Net Exports of G&S Imports of G&S 11.0 108.9 97.9 16.4 117.5 101.0 Terms of trade (1972=100) 85.7 2/ 2. U.S. Merchandise Trade Balance 1/ 1. -- _ IV I = September 12, 1979 S1 197 Q _ 9 II 0op inr v1 I II IIIP IV -4.5 224.9 229.4 4.0 238.5 234.4 -7.6 244.0 251.6 -10.8 261.1 271.9 -1.8 271.7 273.5 9.4 282.5 273.1 16.0 292.7 276.7 18.1 299.1 281.0 17.9 305.8 287,9 24.8 121.7 96.8 12.9 113.8 101.0 17.0 117.0 100,0 13.4 116.2 102.8 15.8 118.0 102.2 19.5 118.7 99,2 23.1 120.3 97.2 25.1 121.7 96.6 25.7 122.1 96.4 25.4 122.5 97.1 84.6 84.0 87.0 87.0 85.8 83.2 83.0 83.6 84.0 84.1 84.2 -34.2 -30.0 -17.3 -25.5 -24.4 -30.1 -35.9 -29.6 -20.8 -16.0 -15.6 -16.8 Exports (excl. military) Agricultural Nonagricultural 141.9 29.9 112.0 178.6 34.1 144.5 207.2 38.2 169.0 157.3 31.3 126.0 165.4 30.6 134.8 171.5 30.8 140.7 185.4 37.7 147.7 192.0 37.4 154.6 199.3 38.9 160.4 206.1 39.3 166.8 209.5 37.7 171.8 213,8 36.9 176.9 Imports Petroleum and Products Nonpetroleum 176.1 42.3 133.0 208.6 57.3 151.3 224.5 66.5 158.0 182.7 43.2 139.5 189.8 46.6 143.2 201.6 51.6 150.0 221.3 65.6 155.7 221.6 65.4 156.2 220.1 65.5 154.6 222.1 66.1 156.0 225.1 66.6 158.5 230.6 '67.8 162.8 -13.9 21.6 -5.4 26.0 13.5 29.7 -1.3 26.4 0.6 27,1 -7.6 24.5 P -11.1 25.7 -3.4 26.6 7.4 28.1 14.4 29.5 16.2 30.2 15.8 31.0 3.2 5.0 3.3 10.0 2.4 7.5 4.6 4.2 2.2 8.7 3.8' 10.1 p 3.2 11.9 2.7 9.3 1.8 8.2 1,9 7.8 2,2 7.3 GNP Net Exports Current $, Net 3. U.S. Current Account Balance of which: Net Investment Income 4. Foreign Outlook - Ten Industrial Countries 3/ Real GNP, % change, annual rates Consumer Prices, 4/, % change, annual rates - 1/ International accounts basis. 2/GNP export implicit deflator รท GNP import implicit deflator. 3/ Geometric weights used to aggregate foreign real GNP and consumer prices -- per cent share in ten-country total multilateral trade. Canada (9.1%), Japan (13.6%), United Kingdom (11.9%), Germany (20.8%), France (13.1%), Italy (9.0%), Belgium(6.4%), the Netherlands (8.3%), Switzerland (3.6%), Sweden (4.2%). 4/ Wholesale prices for Japan. p/ Projected. 2,2 6.8
@FedFRASER