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Economic Perspectives
Annual Meeting of the
Rubber Manufacturers Association
November 16, 1978

G. William Miller, Chairman
Board of Governors of the Federal Reserve System

..




Change from previous period,
annuat rate, per cent
15

REAL GNP

1972 Dollars

10

5

__..._I ___ ;
5
H1 03

1974

1975

1976

1977

1978




COMPONENTS OF FINAt SALES

Trough, 197501=100

1972 Dollars

1975

1976

1977

1978

,.




INCOME AND CONSUMPTION

Percentage change

8

Real Consumption
4

~~~~~-'-...Ll..WIJ.U.L~_.__lll.WLLLL._~-'---'w..L.Ll.u..a..__J_.ll.UJ.LLU.L----4

+
Q

Real Disposable Income
4

H1

1974

1975

1976

1977

SAVING RATE

Q3

1978
Per cent

10

6

2

1974

1975

1976

1977

1978

PRIVATE HOUSING STARTS

Annual rate, millions of units

2.5

1.5

0.5

Multi-Family

t970




1972

1974

1976

1978

HOMES SOLD

MHlions of units
-...,

.

5.0

4.0

New and Existing

1974

1975

1976

DEPOSIT GROWTH AT
THRIFT INSTITUTIONS

1977

3.0

1978

1979

-,

Change from previous period, annual rate, per cent

20
15

10

5

1974

1975

1976

1977

1978

OUTSTANDING COMMITMENTS AT
SAVINGS AND LOAN ASSOCIATIONS

1979

Billions of dollars

30

20

1974




1975

1976

1977

1978

1979

NONRESIDENTIAL FlXED INVESTMENT .

Index, trough quarter=100

1972 Dollars

Average of Five
Previous Cycles

120

110

100

NONRESIDENTIAL
CONSTRUCTION

Trough, 191sa1:;:100

1978

1977

1976

1975

1974

PRODUCERS'
DURABLE EQUIPMENT

Trough, 191sa1=100

1972 Dollars

1972 Dollars

f20

100

1974




1975

1976

1977

1978

1.20

100

197 4

1975.

1976

1977

1978




Average Annual Growth of the Capital S.tock *

--

Per cent
~

6

..._

-

5

..._

-

4

-

-

3

-

-

2

-

I
1962-1967

I
1967-1972

0

1972-1977

* Private nonresidential net capital stock measured in constant dollars.

BUSINESS INVENTORIES




Annuatrate, billions of dollars

60

Change In Book Value
40

20

+
0

20

1974

1975

1976

1977

1978
Ratio

1.6

Inventories Relative To Sales
1.5
1.4

1974

1975

1976

1977

1978




. REAL GOVERNMENT PURCHASES
OF GOODS AND SERVICES

Billions of 19'?2 dollars

280

240

200

160

ST ATE AND LOCAL

FEDERAL UNIFIED BUDGET DEFICIT*

Billions of current dollars

+
0

20

40.

80

.

1974

* Flscal. years

t975

1916

1977

1Q78

1919.

..
llll!I CIVILIAN

LABOR FORCE

Change from previous period,
annual rate, millions

mEMPLOYMENT

6

4

2

----lJJ...___ _ _ _ _ __ ,

H1

1974

1975

1976 --

1977

+
0

03

1978

UNEMPLOYMENT RATE

Per cent

8

7

6

5

1974




1975

1976

t977

1978




UNIT COST INDICATORS Nonfarm Business Sector
Percentage change

-

..--

Compensation Per Hour

-

-

10

-

5

+
0

.__

-

I

I

1974

1975

I

I

1976

1977

H1 03

1978

Percentage change

Output Per Hour
10

5

+
0

5

H1 03

1974

1975

1976

1977 .

1978
Percentage change

Unit Labor Costs
15

1()-

5

+
0

H1 03

1974

1975

1976

1977

1978

GNP PRICE INDEXES

Change from previous period ,
annual rate , per cent

10

5

Food
10

5

+
0

Total Less Food

10

5

H1

1974




1975

1976

H2

1977

H1

03

1978

U.S. MERCHANDISE TRADE BALANCE

Annual rates, seasonally adjusted, billions of dollars

50
International Accounts Basis

40
BALANCE EXCLUDING
PETROLEUM IMPORTS

30

20

10

+
0

10

TRADE BALANCE

20

30

40

._______.....________..._________.________
. 1971




. 1972

1973

1974

~

________.________......________..________.50
1975

1976

1977

1978

TRADE-WEIGHTED AVERAGI; EXCHANGE VALUE OF
_ U.S. DOLLAR AGAINST 10 MAJOR CURRENCIES

March 1973:100
90
130

88

120

110

100

. 90

80
1971




1972

1973

1974

1975

1976

1977

1978




FUNDS RAISED BY
NONFINANCIAL SECTORS

l=rrnu.s.

Billions of dollars

Government

DID Private
400

300

200

100

197 4

1975

1976

1977

1978

Short and Long Term Interest Rates

SHORT-TERM INTEREST RATES

Per cent

11

9
4-6 MONTH PRIME
.COMMERCIAL PAPER

7

5

LONG-TERM INTEREST RATES

Per cent
11

HOME MORTGAGE

_,
'

I

,

,,

,.
~

I

,.....

9

"- ..... .,'I

Aaa UTILITY BOND .

I

I

I

~

New Issue

7

I

MUNICIPAL BOND

5

______.._____

1968




~

__._.._____...__.__.._____....__________....,_____..____...,a__

1970

1972

1974

1976

_..__.3

1978

. Short-Term Interest Rates and Inflation

Per cent
14

"

I 'l CONSUMER PRICE INDEX*

''
'
''
''
'

12

1

4-6 MONTH PRIME .
COMMERCIAL PAPE~ RATE
'

>i

'1

I l
I 1
I 1

/1

I 1

1

' ,,

\

,, ,,

10

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t
I' I
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'1
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8

1

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v

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I

l

6

I

" ',, '

4

' 1'
'

\

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\\/I''

rJ

f

2

1968

1970

*Annual rate of change from previous quarter.




1972

1974

1976

1978

Household Borrowing

Annual rate of change, billions of dollars

160

140

120

100

80

60

40

20
INSTALMENT DEBT

+
0

20
1968




1970

1972

1974

1976

1978

Mortgage Rate and Inflation

Per cent

14

" "~,

I v

I
I
I
I

12

l
l
\
1
\
l

I
HOME MORTGAGE INTEREST RATE

CONSUMER PRICE INDEX*

10

I
I

'

' ,,
\

\

\ I \

,, ,,
I \ /I \
I ~
'
t
\ I\
1, I
I '1
\ I \

8

I

t

Average '75-'78
rerage ·ea-'72

\\
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1
1

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6

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r J
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4

,,
f

2

1968

1970

*Annual rate of change from previous quarter.




1972

1974

1976

1978

Total Automobile Credit

VOLUME EXTENDED

Annual rate, billions of dollars
100

90

80
70

60
50

40

Per cent, average rate

14

13

Finance Companies

12

11

Commerical Banks

10

9
1972




1974

1976

1978

Index of GNP and Money Stock M-1

1970 QIV=100

2.2

2.0

1.8

1.4

1.2

1.0

1970




1972

1974

1976

1978

MONEY SUPPLY INDICES-M-1

March 1973=100

200

180

160

140

120

100

1973




1974

1975

1976

1977

1978

BiRions of dollars

315
03 '78-03 '79

365

355

365

355

365

325

355

335

365

325

355
04 '77-04 '78

335
34&

325




335

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Money Stock M-1 and M-1 +

Billions of dollars

600

400

M-1

200

1970




1972

1974

1976

1978

REAL GNP

Per cent change from previous quarter, annual rate

1972 Dollars
10

5
!l!!!!iiiilll!lliiiiiiiiiiiiiiiiiliiiillii

1--~~~~~~~~~~~~~~~~~~~--'I.._~~~~~~~~---;

+
0
5

1974

1975

1976

1977

1978

1979

UNEMPLOYMENT RATE

Per cent

8

111111111111111111111111111111111111111m _

·1974

1975

1976

GNP PRICES

1977

1978

s

1979

Per cent change from previous quarter, annual rate

15
10
lllllllllllll!l!l!ll!lllllllllll!llllllll

5

1974




1975

1976

1977

1978

1979