Economic Report of the President 1984 - FRASER · 2018-11-06 · Economic Report of the President...

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Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Economic Report

of the President

Transmitted to the Congress

February 1984

TOGETHER WITH

THE ANNUAL REPORTOF THE

COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE

WASHINGTON : 1984

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


C O N T E N T S

PageECONOMIC REPORT OF THE PRESIDENT 1

ANNUAL REPORT OF THE COUNCIL OF ECONOMIC

ADVISERS* 11

CHAPTER 1. T H E STRATEGY OF ECONOMIC POLICY 21

CHAPTER 2. T H E UNITED STATES IN THE WORLD ECONOMY:

CHALLENGES OF RECOVERY 42

CHAPTER 3. INDUSTRIAL POLICY 87

CHAPTER 4. FOOD AND AGRICULTURE 112

CHAPTER 5. FINANCIAL MARKET DEREGULATION 145

CHAPTER 6. REVIEW AND OUTLOOK 175

APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF

THE COUNCIL OF ECONOMIC ADVISERS DURING 1983 205

APPENDIX B. STATISTICAL TABLES RELATING TO INCOME, EM-

PLOYMENT, AND PRODUCTION 213*For a detailed table of contents of the Council's Report, see page 15.

(Ill)


ECONOMIC REPORT

OF THE PRESIDENT


ECONOMIC REPORT OF THE PRESIDENT

To the Congress of the United States:

I have long believed that the vitality of the American economy andthe prosperity of the American people have been diminished by inap-propriate policies of the Federal Government: unnecessary govern-ment regulations that discouraged initiative and wasted scarce capitaland labor; an inefficient and unfair tax system that penalized effort,saving, and investment; excessive government spending that wastedtaxpayers' money, misused our Nation's resources, and createdbudget deficits that reduced capital formation and added to theburden of the national debt; and monetary policies that producedfrequent business cycles and a path of increasing inflation.

I came to Washington to change these policies. The needed re-forms are far from complete, but substantial progress can already beseen: the burden of regulation has been reduced, tax rates have beenlowered and the tax structure improved, government spending on awide range of domestic programs has been curtailed, and a soundmonetary policy has been established.

Although the full favorable effect of those reforms on our Nation'srate of economic growth will take time to develop, some of the bene-fit of our economic policies is already visible in the current recovery.The economy's performance in 1983 was very gratifying to me. The3.2 percent rise in consumer prices between 1982 and 1983 was thelowest rate of inflation since 1967. The recovery produced a sharpdrop in unemployment and a substantial increase in the income ofAmerican families. The number of people at work increased by morethan 4 million and the unemployment rate fell from a high of 10.7percent in December 1982 to 8.2 percent in December 1983. The 6.1percent rise in real gross national product (GNP) last year means thatreal annual income per person in the United States rose $700.

Reducing Unemployment

Despite the substantial reduction in unemployment, the number ofunemployed workers remains unacceptably high. Continued econom-ic recovery will mean millions of additional jobs in the years aheadand further declines in the rate of unemployment. In 1984 alone, theAmerican economy is expected to add more than 3 million additionaljobs. By the end of the decade, we will need 16 million new jobs toabsorb a growing labor force. Only a strong and expanding economy


can provide those jobs while achieving a progressively lower level ofunemployment over the next 6 years.

Although economic growth is by far the most important way toreduce unemployment, special policies to help the structurally unem-ployed and particularly disadvantaged groups can also be helpful. Toassist these individuals in developing job-related skills that will leadto productive careers in the private sector, I proposed the Job Train-ing Partnership Act that I signed into law in 1982. Last year I pro-posed additional measures to increase opportunities for training andretraining. Although the Congress has enacted some of my employ-ment proposals, I am still waiting for congressional action on others.

Of particular concern to me is the unemployment among teen-agers. Such unemployment is not only a problem in itself, but is alsoindicative of lost opportunities to acquire on-the-job training andjob-related skills. It is widely recognized that the minimum wage lawis a substantial barrier to the employment of teenagers, especially mi-nority teenagers. I have proposed that during the summer monthsthe minimum wage for teenagers be reduced to 75 percent of theregular minimum wage. This reform would give many teenagers theopportunity to get a first job and acquire the skills needed to helpthem with subsequent employment and would not hurt adult employ-ment. With an unemployment rate of nearly 50 percent among blackteenagers and with only about 20 percent of black teenagers em-ployed, we must act. The Federal Government must not be thesource of barriers to employment.

Inflation and Monetary Policy

Reducing the rate of inflation was my most immediate economicgoal when I arrived in Washington. In the preceding 24 months, theconsumer price level had increased more than 27 percent. Manypeople feared the U.S. Government had lost its ability to control in-flation. Until inflation was brought under control, a healthy recoverycould not get under way.

The inflation rate has declined dramatically over the past 3 years.Between 1982 and 1983, the consumer price index rose only 3.2 per-cent. Americans can again have confidence in the value of the dollar,and they can save for the future without fearing that the purchasingpower of these savings will be destroyed by inflation. I am firmlycommitted to keeping inflation on a downward path. We must neverrelax in our pursuit of price stability.

The basic requirement for a continued moderation of inflation is asound monetary policy. I continue to support the Federal Reserve inits pursuit of price stability through sound monetary policy. Last yearwas a particularly difficult time for monetary policy because of the


substantial changes in financial regulations. I am pleased that, inspite of these difficulties, the monetary aggregates at the end of theyear were within their target ranges. I expect that in 1984 the Feder-al Reserve will expand the money stock at a moderate rate that isconsistent with both a sustained recovery and continuing progressagainst inflation.

There are those who advocate a fast rate of money growth in anattempt to depress interest rates. Experience shows, however, thatrapid money growth inevitably leads to an increased rate of inflationand higher interest rates. The only monetary policy that can bringinterest rates down, and keep them down, is one that promotes confi-dence that inflation will continue to decline in the years ahead.

The Dollar and the Trade Deficit

The high interest rates in the United States and our low rate ofinflation continue to make dollar securities an appealing investmentfor individuals and businesses around the world. In addition, theUnited States has been an attractive place for stock market invest-ment and for direct business investment. The result has been a con-tinued rise in the dollar's exchange value relative to other currenciesof the world.

The sharp rise in the value of the dollar since 1980 has made itcheaper for Americans to purchase products from overseas, therebyhelping us fight inflation. But the dollar's sharp rise has made it diffi-cult for American businesses and farmers to compete in world mar-kets. The decline in U.S. exports and the substantial rise in our im-ports has resulted in record trade deficits in 1982 and 1983. Thetrade deficit has been temporarily exacerbated by the internationaldebt problems and by the more advanced stage of recovery in theUnited States than in the world at large.

Despite these problems, I remain committed to the principle offree trade as the best way to bring the benefits of competition toAmerican consumers and businesses. It would be totally inappropri-ate to respond by erecting trade barriers or by using taxpayers' dol-lars to subsidize exports. Instead, we must work with the other na-tions of the world to reduce the export subsidies and import barriersthat currently hurt U.S. farmers, businesses, and workers.

I am also firmly opposed to any attempt to depress the dollar's ex-change value by intervention in international currency markets. Pureexchange market intervention cannot offset the fundamental factorsthat determine the dollar's value. Intervention in the foreign ex-change market would be an exercise in futility that would probablyenrich currency speculators at the expense of American taxpayers, Acombination of exchange market intervention and expansionary mon-


etary policy could reduce the dollar's exchange value, but only bycausing an unacceptable increase in the rate of inflation. The dollarmust therefore be allowed to seek its natural value without exchangemarket intervention.

Regulation

One of the four key elements of my program for economic recov-ery is a far-reaching program of regulatory relief. Substantial prog-ress has been made during the last 3 years. The growth of new regu-lations has been reduced by more than a third. The demands on theprivate sector of government paperwork have been reduced by sever-al hundred million hours a year. The Congress approved legislationthat has led to substantial deregulation of financial markets and inter-city bus transportation. The Federal Communications Commission,with our support, has reduced the regulation of broadcasting and ofnew communications technology, and the Interstate Commerce Com-mission and the Civil Aeronautics Board have gone far down thepath of deregulation of competitive transportation markets. Thebenefits of these and other deregulation measures are now increas-ingly apparent to American consumers and businesses.

It is also apparent that substantial further deregulation and regula-tory reform will require changes in the basic regulatory legislation. Iurge the Congress to act on the several measures that I proposed lastyear on natural gas decontrol, financial deregulation, and reform ofprivate pension regulation. I remain confident that there is a basisfor agreement on measures that would reduce the burden of Federalregulations, while protecting our shared values and not jeopardizingsafety.

Tax Reforms

The final installment of the 3-year personal tax cut took effect inJuly, giving a helpful boost to the economic recovery. The incometax rate at each income level has been reduced by about 25 percentsince 1980. In 1984 a median income four-person family will payabout $1,100 less than it would have without these tax reductions.And, beginning in 1985, the tax brackets will be adjusted automati-cally so that inflation will no longer push taxpayers into higher brack-ets and increase the share of their income taken in taxes.

The Economic Recovery Tax Act of 1981 went beyond reducingtax rates to establish important reforms in the structure of the taxsystem. For businesses, the Accelerated Cost Recovery System in-creased the after-tax profitability of investments in plant and equip-ment. The sharp fall in inflation has also increased after-tax profit-


ability. As a result, investment in business equipment has recentlybeen quite strong despite the high real interest rates.

For individuals, the Economic Recovery Tax Act reduced the mar-riage tax penalty, the estate tax burden, and tax discriminationagainst saving. The response to the universal eligibility of IndividualRetirement Accounts (IRAs) has been far greater than was originallyexpected. It is estimated that more than 15 million individuals nowuse IRAs to save for their retirement. Last year, I proposed toexpand the opportunity for all married couples to use IRAs fully byallowing them to contribute up to $2,000 each per year to an IRA evenif only one has wage income.

Further improvement and simplification of our tax system aresorely needed. The burden of taxation depends not only on thequantity of tax revenue that is collected but also on the quality of thetax system. I have asked the Secretary of the Treasury to develop aplan of action with specific recommendations to make our tax systemfairer, simpler, and less of a burden on our Nation's economy. Bybroadening the tax base, personal tax rates could come down, not goup. Our tax system would stimulate greater economic growth andprovide more revenue.

Government Spending

One of my principal goals when I came to Washington was to re-verse the dramatic growth of Federal spending on domestic programsand to shift more resources to our Nation's defense. Although manydoubted this could be done, both goals are being achieved. We mustdo everything that we can to avoid waste in defense as in other areasof government. But we must also be willing to pay the cost of provid-ing the military capability to defend our country and to meet our re-sponsibilities as the leading Nation of the free world. Outlays for de-fense had declined to only 5.2 percent of GNP in 1980, less thanone-fourth of total government outlays. By the current fiscal year, de-fense outlays have increased to 6.7 percent of GNP and 28 percent oftotal outlays. Real defense outlays have grown 39 percent since 1980.Our spending on defense, however, remains a far smaller percentageof our national income than it was in 1960, when defense outlaystook 9.7 percent of GNP.

Real spending has been cut on a wide range of domestic programsand activities. Many wasteful bureaucratic activities have been elimi-nated and the number of nondefense employees on the Federal pay-roll has been reduced by 71,000. We have examined every area ofFederal Government spending, and sought to eliminate unnecessaryand wasteful spending while protecting the benefits needed by thepoor and the aged. As a result, total nondefense spending now takes


a smaller share of our GNP than it did in 1980. Moreover, underpresent law, nondefense spending will continue to take a decliningshare of our GNP in the years ahead.

This reduction has been accomplished without any decrease in ex-isting social security benefits or any change in the medicare benefitsfor the elderly. Spending on all other nondefense activities and pro-grams has actually declined over 12 percent in real terms since 1980.Even with no further reductions in these activities and programs,their share of GNP in 1986 will be nearly back to the level of 1965.

I am committed to continuing the search for ways to reduce gov-ernment spending. The budget that I am submitting to the Congressidentifies significant savings in entitlement programs and reductionsin outlays for other programs that are excessive or that are not theproper responsibility of the Federal Government. The Grace Com-mission has given us some 2500 ways to reduce wasteful spendingthat could save billions of dollars in the years ahead.

Budget Deficits

I have long believed that our Nation's budget must be balanced. Apattern of overspending by the Federal Government has produced adeficit in 22 of the last 23 years. My most serious economic disap-pointment in 1983 was therefore the failure of the Congress to enactthe deficit reduction proposals that I submitted last January in mybudget for fiscal 1984. We would be much closer to a balancedbudget today if the Congress had enacted all of the spending cutsthat I have requested since assuming office, and if the long recessionand the sharp decline in inflation had not substantially reduced realtax revenue. In last year's budget I proposed changes in outlays andrevenues that could put the deficit on a sharply declining path that,by 1988, would have been less than 2 percent of GNP and on its wayto a balance of revenues and outlays.

The unwillingness of the Congress to accept the proposals that Ioffered has made it clear to me that we must wait until after thisyear's election to enact spending reductions coupled with tax simpli-fication that will eventually eliminate our budget deficit. But wecannot delay until 1985 to start reducing the deficits that are threat-ening to prevent a sustained and healthy recovery. I have thereforecalled on the Democratic and Republican leaders in the Congress todesignate representatives to work with the Administration on the de-velopment of a "downpayment" deficit reduction program.

I believe that this bipartisan group could develop a package thatcould be enacted this spring which would reduce the deficit by about$100 billion over the next 3 fiscal years. The package could include anumber of the less contentious spending cuts that are pending before


the Congress plus additional outlay savings based on the proposalsof the Grace Commission. Additional revenue could be provided bymeasures to close certain tax loopholes—measures that the Depart-ment of the Treasury has previously said are worthy of support.

These deficit reductions can increase the public's confidence in oureconomic future and their faith in the ability of the political system todeal satisfactorily with the deficit. The downpayment package can bea first step toward full elimination of the remaining deficits. Evenwith a 3-year $100 billion package, the deficits projected for fiscal1986 and beyond are totally unacceptable to me. They would be aserious threat to our Nation's economic health and a heavy burden tofuture generations. I am committed to finding ways to reduce furtherthe growth of spending and to put the budget on a path that willlead to a balance between outlays and receipts. In 1985 I will submita budget that can achieve this goal. But we must go further and makebasic structural reforms in the budgetary process—including the line-item veto and the balanced budget amendment—that will keepspending under control and prevent deficits in the future.

Looking Ahead

As I look ahead, I am very optimistic about the prospects for theAmerican enonomy. Substantial progress has been made in reform-ing the economic policies that will shape our economic future. If wecontinue to develop and pursue sound policies, our Nation canachieve a long period of strong economic growth with low inflation,and the American people can enjoy unprecedented prosperity andeconomic security.

February 2, 1984


THE ANNUAL REPORTOF THE

COUNCIL OF ECONOMIC ADVISERS


LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERS,

Washington, D.C, January 31, 1984.MR. PRESIDENT:

The Council of Economic Advisers herewith submits its 1984Annual Report in accordance with the provisions of the EmploymentAct of 1946 as amended by the Full Employment and BalancedGrowth Act of 1978.

Sincerely,

Martin FeldsteinCHAIRMAN

William A. Niskanen

William Poole

13


C O N T E N T S

PageCHAPTER 1. THE STRATEGY OF ECONOMIC POLICY 21

Economic Recovery 22Monetary Policy 23Government Spending 26

The Decline of Domestic Spending 28The Change in Tax Structure 32Reducing the Budget Deficit 35

Deficit Projection 35Long-Term Consequences 37Deficits and the Recovery 38Budget Strategy 40

CHAPTER 2. THE UNITED STATES IN THE WORLD ECONOMY:CHALLENGES OF RECOVERY 42

The U.S. Trade Deficit and the Dollar 42Sources of the Trade Deficit 43Sources of the Strong Dollar 50The Capital Account Surplus 55Measures to Reduce the Trade Deficit 57

Developments in Other Industrial Countries 62Europe 62Japan 64

Third World Debt Problem 71The Nature of the Problem 71Origins of the Problem 73Will Debt/Export Ratios Improve? 76Sharing the Burden 78Easing the Debt-Service Burden 83

Conclusion 85CHAPTER 3. INDUSTRIAL POLICY 87

Is the United States Deindustrializing? 88Comparison with Other Nations 90Problems of U.S. Manufacturing 91Implications for U.S. Policy 94

Japanese Industrial Policy 95The Instruments of Japanese Industrial Policy 95Private Investment and Government Subsidies 97

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Page

Has Japanese Industrial Policy Been a Success? 98European Industrial Policies 99

European Industrial Policy Tools 99Lessons from Europe 100

Should the United States Have an Industrial Policy? 102Coordinating Agencies and Tripartite Councils 102Government Development Bank 103Aid for Declining Industries 107

Conclusion 109CHAPTER 4. FOOD AND AGRICULTURE 112

The Food and Agricultural Sector 113Farm Income 113Special Character of Farming 115Five Decades of Change 116Demand for Farm Products 117

The Broader Economic Environment 124International Trading Environment 125Macroeconomic Environment 126

Federal Policies Affecting Agriculture 127Policies that Reduce Production Costs 127Price and Income Support Policies 131Policies that Augment Demand 136Net Effects of Farm Programs 139

Guidelines for Future Farm Policy 142CHAPTER 5. FINANCIAL MARKET DEREGULATION 145

Major Historical Forces Shaping Financial Regulation 146Financial Instability 146Credit Powers of Financial Institutions 147The Forces of Competition 148

Ceilings on Interest Rates 151Deregulation and Monetary Control 153Geographical and Line-of-Business Restrictions on De-

pository Institutions 155Geographical Market Regulation 155Economic Issues in Geographical Market Deregulation 158Line-of-Business Restrictions...., 159Economic Issues in Line-of-Business Deregulation 159

Deposit Insurance Reform 162The Impact of Deposit Insurance 164Proposals for Reform 165Summary 171

Reform of the Regulatory Structure 171Conclusions 174

16Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CHAPTER 6. REVIEW AND OUTLOOK 175

Review of the 1983 Economy 175Personal Income and Consumption 179Residential Investment 181Business Fixed Investment 182Inventory Investment 183The Farm Economy 183The International Sector 185Government Purchases of Goods and Services 186Employment, Unemployment, and Productivity 186Prices, Wages, Compensation, and Profits 189Financial Markets 192

The Outlook for 1984 195The Outlook for 1985-89 196Growth in Real GNP 198Inflation 199Interest Rates 200

The Full Employment and Balanced Growth Act of 1978... 201Economic Goals 201Investment Policy Report 202

APPENDIXES

A. Report to the President on the Activities of the Councilof Economic Advisers During 1983 205

B. Statistical Tables Relating to Income, Employment andProduction 213

List of Tables and ChartsTables

1-1. Budget Outlays and Receipts as Percent of GNP, FiscalYears 1960, 1970, and 1980-89 29

1-2. Cyclical and Structural Components of the Deficit,Fiscal Years 1980-89 36

2-1. U.S. Trade Balance by Country, 1980-83 492-2. Decreases in Expected Inflation Rates and Increases in

Real Interest Rates, 1980 to 1983..... 522-3. Distribution of GNP by Component, 1970-83 552-4. Debt/Export Ratios for Argentina, Brazil, and Mexico

Aggregated, 1974-83 763-1. Size and Share of the Manufacturing Sector, Selected

Years 1950-80 893-2. Shares of Value Added and Employment by Industry

Group, 1960, 1970, and 1980 893-3. Changes in Manufacturing Output and Employment in

Selected Industrial Countries, 1960-80 90


List of Tables and Charts—ContinuedTables page

3-4. Net Exports in Selected High-Technology Industries,1970 and 1980 91

4-1. Farm Income, 1980-83 1144-2. Farm Input Use, 1910-80 1184-3. World Net Imports and Exports of Grain, Selected Peri-

ods, 1934-83 1234-4. Major Federal Farm Programs by Commodity, 1982 1405-1. Number and Assets of Selected Financial Institutions as

of December 31, 1982 1495-2. State Restrictions on Intrastate Branch Banking, Select-

ed Years, 1929-83 1566-1. Growth in Output and Employment Over First Year of

Business Cycle Recoveries 1766-2. Contribution of GNP Components to Total GNP

Growth Over First Year of Business Cycle Recoveries. 1776-3. Real Household Income, Consumption, Saving, and

Residential Investment, 1979-83 1806-4. Labor Market Developments, 1979-83 1886-5. Output, Productivity, Costs, and Prices in the Nonfarm

Business Sector, 1979-83 1896-6. Price Changes, 1979-83 1896-7. Changes in Wages and Compensation, 1979-83 1926-8. Funds Raised in Credit Markets by the Nonfinancial

Sector of the Economy, 1979-83 1936-9. Components of Ml and M2, 1979-83 194

6-10. Economic Outlook for 1984 1976-11. Administration Economic Assumptions, 1984-89 197Charts

1-1. Nondefense Non-Interest Spending Excluding OASDHI 302-1. Balances on Current Account, Trade, and Services as

Percent of GNP... 442-2. Nominal and Real Effective Exchange Rate of the U.S.

Dollar 462-3. Change in U.S. Bilateral Trade Balances from 1981 to

1983 482-4. Bilateral Exchange Rates 672-5. Interest Rates on the Yen 692-6. Sources and Uses of Foreign Exchange: Argentina,

Brazil, and Mexico Aggregated 793-1. Unemployment Rates by State in Fiscal Year 1983 934-1. Farm Productivity, Output, and Input 1184-2. Agricultural Exports as Percent of Farm Cash Receipts .. 122

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Charts Page

4-3. Real Wheat Prices 1345-1. Savings Deposit Inflows versus the Interest Rate Gap 1525-2. Bank Failures 1635-3. Existing Regulation of Banks and Their Holding Com-

panies, December 31, 1983 1726-1. Real Business Inventories/Final Sales Ratio 1846-2. Civilian Unemployment Rate 1876-3. Change in the Consumer Price Index 1906-4. Ml: Actual versus Target Range 1966-5. Real Gross National Product Forecast and Trend - 200

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CHAPTER 1

The Strategy of Economic PolicyTHE ECONOMIC RECOVERY IN 1983 was a very favorable com-

bination of rising output, falling unemployment, and declining infla-tion. These economic improvements and the long-term economicstrategy that the Reagan Administration has been pursuing since1981 are a welcome change for the American economy.

The Administration's redirection of economic policy was a neces-sary antidote to the poor economic performance of the 1970s. Thereal earnings per week of the average employee were actually lowerin 1980 than they had been a decade earlier. The unemployment ratedoubled between the end of the 1960s and the start of the 1980s.The level of consumer prices more than doubled and the rate of in-flation increased from 5.5 percent in 1970 to 12.4 percent in 1980.Net private capital investment declined from 7.1 percent of gross na-tional product (GNP) in the 1960s to 6.4 percent of GNP in the1970s and only 4.1 percent of GNP in 1980.

During these same years, the government expanded and tax bur-dens rose. Federal Government outlays for all nondefense programsrose from 10.3 percent of GNP in 1970 to 15.1 percent in 1980.Total Federal outlays rose from 20.2 percent of GNP to 22.4 percentof GNP despite the sharp fall in the GNP share devoted to defense.

Although Federal tax receipts took one-fifth of GNP in both 1970and 1980, many taxpayers found themselves pushed by inflation intohigher marginal tax brackets despite the absence of any rise in realincome. A two-earner family earning twice the median income faceda marginal tax rate that was 26 percent in 1970 but 43 percent in1980. The number of taxpayers facing marginal tax rates of 50 per-cent or higher rose more than five-fold during the decade. Inflationnot only pushed people into higher tax brackets, but also distortedthe measurement of interest income and capital gains, causing dra-matic increases in the effective tax rates on real income from savings.

Nevertheless, the Federal budget moved from a position of nearbalance in 1970 (a deficit of only 0.3 percent of GNP) to a deficit of2.3 percent of GNP in 1980.

By 1980 there was widespread agreement that the direction of eco-nomic policy had to be changed if economic performance was to im-

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prove. The accelerating growth of the money stock would have to beslowed in order to bring down inflation. The high marginal tax rateswould have to be reduced and the tax structure reformed in order tolower the adverse effects on the incentives to work, save, invest, andtake risks. The share of government domestic spending in GNPwould have to be reduced in order to decrease the distorting effectsof government programs, raise defense outlays, and reduce thebudget deficit.

These aims guided the formation of the Administration's economicpolicy in 1981 and in the years since then. Now, 3 years later, mone-tary policy has been successful in reducing the rate of inflation. Gov-ernment spending on domestic programs has been reduced to asmaller share of national income. Tax rates have been lowered andthe tax system has been improved.

This chapter begins with a brief review of the economic recoveryof 1983; a more complete analysis is presented in Chapter 6. Herethe primary focus is on the strategy of economic policy. Three ele-ments of the Administration's long-term economic strategy will bediscussed: sound monetary policy, reduced government spending ondomestic programs, and a tax structure that is conducive to individu-al initiative and economic growth. The fourth facet of the Adminis-tration's economic strategy, the reduction in regulation, was dis-cussed in detail in the 1983 Economic Report; the deregulation of fi-nancial markets is the subject of Chapter 5 of this year's Report Thefinal section of the present chapter describes the medium-term prob-lem of reducing the projected budget deficits.

ECONOMIC RECOVERY

The inherent vitality of the American economy was amply demon-strated in 1983. In this first full year of economic recovery, real GNProse 6.1 percent and business output climbed 7.0 percent. Industrialproduction rose 16.3 percent in the 13 months following its Novem-ber 1982 low, and the capacity utilization rate in manufacturingbounced back from 68.8 percent to 79.4 percent during this sameperiod.

Civilian employment rose by 4.0 million in 1983 and the civilianunemployment rate declined from 10.7 percent in December 1982 to8.2 percent a year later. Although unemployment remains unaccept-ably high, the progress in raising employment and reducing unem-ployment in virtually every demographic group has been gratifying.Civilian employment rose 4.0 percent between December 1982 andDecember 1983, while employment among blacks rose 5.0 percentand among teenagers rose 1.7 percent. The unemployment rate de-


dined 2.5 percentage points, while the unemployment rate for blacksdeclined 3.1 percentage points and for teenagers declined 4.2 per-centage points. Despite this progress, it is clear that more than cycli-cal recovery will be needed to reduce the very high unemploymentrates among these problem groups. The Administration's employ-ment and training policies and proposals (discussed in detail inChapter 2 of the 1983 Economic Report) offer several ways of helpingthese individuals and others with temporary unemployment problemsto find work.

The sharp increases in output and employment were accompaniedby an inflation rate that was even lower than in the previous year.The GNP implicit price deflator rose only 4.1 percent in 1983 afterrising 4.4 percent in 1982 and more than 8.7 percent in 1981. Theconsumer price index at the end of 1983 stood only 3.8 percentabove the level of a year earlier, after rising 3.9 percent in 1982, 8.9percent in 1981, and more than 12 percent in 1980. And the index ofproducer prices for finished goods rose only 0.6 percent in 1983, thesmallest increase in nearly two decades and far below the 3.7 percentin 1982, 7.1 percent in 1981, and 11.8 percent in 1980.

The decline in price inflation accompanied smaller nominal wageincreases and a slower rise in nominal compensation per hour. The5.6 percent increase in compensation per hour was the slowest risesince 1967. In combination with the substantial cyclical improvementin productivity, the slow rise in compensation raised unit labor costsonly 2.4 percent in 1983, far below the 7.9 percent rise in 1982 andthe lowest since 1965.

Despite the slow rise in nominal compensation per hour, the lowrate of inflation meant that real earnings and incomes increased sig-nificantly. Real average weekly earnings rose 2.5 percent in the 12months to December 1983, after rising 0.5 percent in 1982 and de-clining in each of the 4 preceding years. Real personal income percapita rose 3.0 percent between the final quarter of 1982 and thefinal quarter of 1983 after rising a total of only 1.4 percent in theentire 3-year period between 1979 and 1982.

A significant problem in the otherwise outstanding recovery wasthe sharp decline in net exports. American imports rose while our ex-ports of goods to the rest of the world declined. The U.S. merchan-dise trade deficit—the excess of imports of goods over our exports ofgoods—reached a record of about $65 billion in 1983, nearly twice1982's record level of $36 billion. This trade deficit, and the evenlarger trade deficit projected for 1984, reflects several causes, includ-ing the decline of imports among less developed countries and therelatively advanced stage of the U.S. recovery, but of primary impor-tance is the high real value of the dollar relative to other currencies.

23


(For discussion of the trade deficit and the high dollar, see Chapter2).

MONETARY POLICY

The fundamental guiding principle of the Administration's ap-proach to monetary policy is that the rate of growth of the moneystock should be reduced gradually until the rate is consistent withprice stability. This principle is consistent with the general approachenunciated in recent years by the independent Federal Reserve.

Controlling the growth of the money stock may be viewed as ameans of achieving a desirable path of nominal GNP. Because thegrowth of nominal GNP tends to follow the growth of the moneystock, this strategy of monetary policy can be expected to be consist-ent with a gradual decline in the trend rate of growth of nominalGNP, although the mix of real growth and inflation is subject toother influences. In the remaining years of this decade, this declinein the rate of growth of nominal GNP should be compatible withboth a continuing growth of real GNP and a continuing decline inthe rate of inflation.

Last year's Economic Report discussed the difficulty of applying theprinciple of steady monetary deceleration in a time of rapid institu-tional change. An appropriate monetary policy must balance the prin-ciple of steady monetary deceleration with the need to take accountof changes in asset preferences or institutional arrangements thatcause sustained shifts in the velocity of money, i.e., sustained shifts inthe ratio of nominal GNP to the money stock. There are, however,many uncertainties about the timing, magnitude, and direction of theeffects of such financial changes on velocity.

The year 1983 was a time of significant change in financial regula-tions that substantially altered the nature of the monetary aggregates(Ml, M2, and M3) and the pattern of portfolio demand for monetaryassets. In December 1982 depository institutions were permitted tooffer money market deposit accounts, a form of small-denominationtime deposit with no limit on the permitted interest rate. These de-posits are classified as a part of M2. Beginning in January 1983,Super-NOW accounts—checkable deposits with no ceiling on the in-terest rate—were permitted. These accounts are classified as part ofMl.

The desirability of stable money growth rests on the stability of thedemand for money relative to the stability of other relationships inthe economy, and on the role of stable money growth in reducinginflationary expectations. A change in the available mix of financialassets or in the characteristics of the monetary aggregates may


change the equilibrium ratios of nominal GNP to the monetary ag-gregates. The Federal Reserve can in principle adjust the supply ofmoney to compensate for the shift in demand without altering thedegree of liquidity in the economy or, equivalently, the likely growthof nominal GNP; however, because of the uncertainties mentionedabove in practice it is often difficult to do so. As an example of theseuncertainties, it is not clear at this time the extent to which theincreases in the monetary aggregates in the early part of 1983 reflecteddemand shifts that will produce a sustained shift in the velocity ofmoney.

In 1983 especially, there was no way to know by exactly how muchthe financial deregulation changed the demand for each of the mone-tary aggregates. The Federal Reserve appears to have followed a rel-atively passive strategy during the early months of the year, not put-ting pressure on bank reserves. This policy had the effect of not put-ting much pressure on interest rates. Between December 1982 andMay 1983, the monthly average of the 91-day Treasury bill ratevaried between 7.9 percent and 8.4 percent. After May, however, theFederal Reserve permitted short-term interest rates to increase.

The Federal Reserve's approach to the very difficult task of adjust-ing the monetary policy to the new regulatory environment permittedmajor adjustments to occur in 1983 with minimal disruption in thefinancial markets. Some observers, however, are concerned that therapid expansion of the monetary aggregates in early 1983 may leadto much higher inflation by the end of 1984. Some also fear that theslow growth of Ml in the second half of 1983 may cause outputgrowth to decline sharply, or even turn negative, by the middle of1984. All that can be said with certainty at this time is that monetarypolicy has come through a very difficult year of substantial deregula-tion without destabilizing either real growth or inflation in 1983. Itmay be noted also that on the basis of data currently available, allthree monetary aggregates ended the year 1983 inside the targetranges that the Federal Reserve had established in February for M2and M3 and in July for Ml.

All too often at this stage of an economic recovery, as growthslows from the unsustainable pace of the recovery's first year, politi-cal pressures have built to try to reduce interest rates through raisingmoney growth. The Administration rejects calls to abandon a soundmonetary policy. Interest rates cannot prudently be lowered by creat-ing more money. The Administration recognizes that if the FederalReserve were to try to maintain a strong recovery through excessiveexpansion of money and credit the rate of inflation would inevitablyrise and undercut the prospect for sustained growth of employmentand output.

25


The Administration desires a steady growth of real GNP and agradually declining inflation rate. The monetary policy consistentwith this outcome is expected to be one of gradually declining ratesof growth of the monetary aggregates. Although no regulatorychanges comparable to those of 1982 and 1983 are expected, futureshifts in institutional arrangements could cause changes in velocitythat would require a recalibration of the money growth targets. It isimportant that any such recalibration be made only in response to asignificant and persistent shift in velocity.

GOVERNMENT SPENDING

The second major aspect of the Administration's economic strategyis to reduce the burden of government domestic spending. For thefirst time in a half century, total appropriations for domestic pro-grams began a sustained decline in real terms and total Federalspending on all nondefense programs began to take a declining shareof the Nation's potential output.

In 1929, Federal Government spending was only 3 percent ofGNP. But the Great Depression ushered in a new era for AmericanGovernment. In the half century after 1930, government spendingexploded. By 1960 nondefense spending (excluding interest pay-ments) by the Federal Government was 7.5 percent of GNP. Evenafter adjusting for inflation, the Federal Government spent nearlyfour times as much on nondefense programs in 1980 as it had spentin 1960. Between 1930 and 1980 there was a dramatic increase in therole of the government and of government outlays in American eco-nomic life.

Of course, not all government outlays represent government pur-chases of goods or services. By 1980, 56 percent of Federal Govern-ment expenditures were transfers to individuals or to State and localgovernments. But transfers as well as direct purchases shift the use ofthe economy's resources and require a sacrifice by present or futuretaxpayers.

The speed at which many of the outlays grew was itself unintendedand unanticipated, reflecting the so-called "entitlement" character ofmany of the programs introduced or modified in the 1960s or early1970s. In such programs, the basic legislation does not appropriate afixed amount of money for a particular purpose, but establishes rulesthat define who is eligible for benefits and the nature and amount ofthe benefits for which each person is eligible. Funds must then bemade available for these benefits.

The medicare program is a good example of the unintended andunanticipated growth in outlays. Medicare was introduced in 1966


and immediately experienced costs that were far greater than hadbeen generally anticipated. A decade ago, medicare outlays were lessthan $10 billion; in the current fiscal year, they will exceed $50 bil-lion. Medicare actuaries now project that by 1989 the cost of the pro-gram will exceed $100 billion, or more than 2 percent of GNP. Thedramatic growth of this program reflects greater utilization of healthcare services than had been anticipated and a very much faster rise inthe cost of hospital care than had been forecast. For example, thecost of a day of hospital care, relative to all consumer prices, rose 67percent in the decade before medicare was introduced, but jumpedmore than 100 percent in the decade after medicare began. This veryrapid rise in the real cost of a day of hospital care reflected primarilythe use of more personnel, equipment, and supplies for every pa-tient. The increase in utilization and the rapid rise in cc :s were notaccidents of history but were in large part a direct response to themedicare program itself.

The medicare example is paralleled in a wide variety of other pro-grams in such disparate areas as housing, nutrition, and disability in-surance. Other new programs were enacted and old programs ex-panded without a proper understanding of the future burdens thatthey would impose on the economy. The members of the Congresswho enacted these programs and the analysts who advised them fre-quently underestimated substantially the future costs of the programsthat they were creating. They failed to anticipate that introducingnew programs or liberalizing old program rules would markedlychange economic behavior—that a higher level of retirement benefitswould significantly reduce the average age of retirement, that the in-troduction of medicare and medicaid would contribute to an explo-sive growth of hospital costs, and that the more generous provisionof disability benefits would be followed by a four-fold increase in thenumber of persons collecting disability checks.

In addition to underestimating future program costs, many analystsin the 1960s and early 1970s also overestimated the future growth ofeconomic resources with which to pay for them. The first half of the1960s was a period of unusually rapid economic growth, with realGNP rising at a 4.7 percent annual rate. In the mid-1960s, when theGreat Society programs were launched, and even in the late sixtiesand early seventies, there was a comforting but mistaken assumptionthat continued rapid growth would make it easy to finance an ever-increasing level of government spending. Unfortunately, the real rateof growth fell from the 4.7 percent experienced in the first half ofthe 1960s to 2.8 percent in the years since then. If that earlier rate ofgrowth had continued, real GNP would now be nearly 40 percent

27


higher and, with current tax and expenditure rules, the Federalbudget would now be in substantial surplus.

If the public had foreseen the future costs of the expanded socialprograms or the modest rate of economic growth during the past twodecades, the Congress might not have enacted all of those programsand government would be smaller today. But once those programswere started, it became extremely difficult to stop them or even toreduce the level of benefits,

THE DECLINE OF DOMESTIC SPENDING

Between 1960 and the end of the 1970s, government outlays onnondefense programs nearly doubled as a share of GNP. The govern-ment took a larger and larger share of the typical family's income andused it to finance programs that came to be widely regarded as neithergenerally useful nor directed at the truly needy. Many observersconcluded that many well-intentioned programs were actually oftenexacerbating the very problems that they set out to solve and usuallycreating adverse side effects of their own.

Since 1980 there has been a remarkable revolution in governmentspending. Social security benefits now take a decreasing share ofGNP and all nondefense spending other than social security andmedicare has already declined significantly as a share of GNP. Table1-1 presents Federal Government outlays and receipts as percentagesof GNP in fiscal years 1960, 1970, and 1980 through 1989. Thevalues for 1984 through 1989 reflect current services levels for all do-mestic programs, the Administration's 1984 budget proposal for de-fense, and the economic assumptions with respect to real growth andinterest rates used in the Administration's current budget calcula-tions. (These economic assumptions are discussed in detail in Chap-ter 6.)

Spending on social security benefits (including disability benefits aswell as benefits for retirees and dependents) rose dramatically from2.3 percent of GNP in 1960 to 5.3 percent in 1983. Although socialsecurity benefits will continue to grow in the future because of theincreased number of retirees and rising benefit levels, the social secu-rity share of GNP has begun to decline and will shrink to 4.7 percentof GNP over the next 5 years.

The reduced share of GNP spent on all nondefense programsexcept social security and medicare (line 5 of Table 1-1) has beeneven more dramatic. In 1980 government spending on these activi-ties took 9.3 percent of GNP. In the 1984 fiscal year, that share isdown to 7.5 percent of GNP, a decline of one-fifth.

Between fiscal years 1980 and 1984 real government spending onall nondefense activities except social security and medicare will have


TABLE 1-1.—Budget outlays and receipts as percent ofGNP, fiscal years 1960, 1970, and

1980-89

[Percent; fiscal years]

Item

Actual

1960 1970 1980 1981 1982 1983

Estimates

Current services

1984 1985 1986 1987 19881989

Poti-

Total outlays

National defense

Net interest ,

Other

Non-OASDHI

OASDHI

Social security

Medicare

Total receipts

OASDHI

Other

Deficit

18.5

9.7

1.4

7.5

5.1

2.3

2.3

0

18.6

2.1

16.4

- . 1

20.2

8.4

1.5

10.3

6.5

3.8

3.1

.6

19.9

3.9

16.0

22.4

5.2

2.0

15.1

9.3

5.8

4.6

1.2

20.1

5.3

14.8

2.3

22.8

5.5

2.4

15.0

8.8

6.2

4.8

1.4

20.8

5.6

15.2

2.0

23.8

6.1

2.8

15.0

8.4

6.6

5.1

1.5

20.2

5.8

14.4

3.6

24.7

6.5

2.8

15.4

8.4

6.9

5.3

1.6

18.6

5.7

12.9

6.1

24.0

6.7

3.0

14.3

7.5

6.8

5.0

1.7

18.7

5.9

12.9

5.3

24.3

7.3

3.0

14.0

7.2

6.7

4.9

1.8

19.0

6.1

12.9

5.3

24.1

7.6

3.0

13.4

6.7

6.7

4.8

1.9

19.0

6.1

12.9

5.1

23.8

7.7

3.0

13.1

6.4

6.7

4.8

1.9

19.0

6.2

12.9

4.8

23.4

7.7

2.8

12.9

6.2

6.7

4.7

2.0

19.3

6.5

12.9

4.1

23.0

7.8

2.6

12.6

5.8

6.7

4.7

2.1

19.4

6.6

12.8

3.6

22.1

7.6

2.4

12.1

5.5

6.6

4.6

1.9

19.8

6.7

13.1

2.3

Sources: "Budget of the United States Government, Fiscal Year 1985" and Council of Economic Advisers.

fallen by 12.5 percent. This real 4-year decline, which includes out-lays for everything from entitlement programs to the administrativecosts of running government departments, is absolutely unprecedent-ed. During each of the five 4-year periods between 1960 and 1980,this spending rose between 11 percent and 38 percent even after ad-justing for inflation

The changes that have been enacted since 1980 mean that theshare of GNP spent on all nondefense activities except social securityand medicare will continue to decline in the future even if the Con-gress adopts no further spending cuts. By fiscal 1986 this domesticspending share will be down to 6.7 percent of GNP and thereforeback to the same GNP share that such nondefense spending took inthe late 1960s. This decline as a percent of GNP means that totalspending on these nondefense government activities will average $84billion less a year in the 3 fiscal years from 1984 through 1986 thanit would have if the 9.3 percent GNP share of 1980 had continued.Although future spending could of course be increased by legislativeaction, it is significant that the Congressional Budget Resolution for1984 through 1986 also called for essentially this same decliningshare of GNP.

Moreover, under current law this spending share will continue todecline to only 6.2 percent of GNP by 1988, back to the level of theearly 1960s. And this lower level of outlays means savings that aver-


age $157 billion a year from 1987 through 1989 relative to what wouldhave been spent if the 1980 share of GNP had been maintained.

Chart 1-1 shows the share of potential GNP that nondefensespending excluding social security and medicare would represent atfull employment. The growth in the 1960s and 1970s of these outlayswill have been almost completely reversed by 1989.

Chart 1-1

Nondefense Non-Interest SpendingExcluding OASDHI

Percent of potential GNP

8 -

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

7 -

6 -

5 -

I1960 62 64 66 68 70 72 74 76 78 80 82 84 86 88

Fiscal Ye^rs

Sources: Office of Management and Budget and Council of Economic Advisers.

These projected spending reductions relative to the 1980 GNPshare reflect the current rules of entitlement programs and the as-sumption that the Congress will continue to appropriate funds tomaintain the current level of service for all programs governed byannual appropriations. The President's 1985 budget proposes addi-tional reductions in nondefense spending in each year from 1985through 1989. These spending reductions total an additional $74 bil-lion.

30


Total nondefense government spending as a share of GNP, includ-ing social security and medicare as well as all other domestic pro-grams, is now falling and will, on the basis of current law and thecurrent services levels of annually appropriated programs, declinefrom 15.1 percent of GNP in 1980 to 12.6 percent of GNP in 1989.This decline represents an annual saving of more than $138 billion ayear in 1989.

One implication of the very substantial reduction in nondefensespending is that it permits an increase in defense spending withoutan equal increase in tax revenue. The Administration's budget callsfor a rise in defense spending from 5.2 percent of GNP in 1980 to7.6 percent of GNP in 1989. For comparison, defense spending was8.4 percent of GNP in 1970 and 9.7 percent of GNP in 1960.

Unfortunately, the rapid rise in interest on the national debt willabsorb a substantial share of the budget savings achieved by reduceddomestic spending. The net interest paid by the government will in-crease from 2.0 percent of GNP in 1980 to 2.6 percent in 1989, evenif the rate of interest on Treasury bills declines from the current levelof nearly 9 percent to less than 6 percent by the end of 1989.

Putting these pieces together shows that nondefense spending ex-cluding social security and medicare will decline by 3.5 percent ofGNP between 1980 and 1989 while defense spending will rise by 2.6percent of GNP and the net interest paid by the government will riseby 0.6 percent of GNP. The reduction in domestic outlays financedby general revenues is thus slightly more than sufficient to balancethe increase in defense spending and interest costs, leaving total out-lays excluding social security and medicare virtually unchanged as ashare of GNP.

Despite the dramatic progress in reducing spending on domesticprograms, government outlays are still projected to equal 23 percentof GNP in 1989, about 3 percentage points higher than in 1970 and5 percentage points higher than in 1960. This increase in outlaysdoes not reflect greater defense spending, because the GNP sharesdevoted to defense would actually be lower in 1989 than in either1970 or 1960. The rapid growth of social security and medicare out-lays (from 2.3 percent of GNP in 1960 to 3.8 percent of GNP in 1970and 6.7 percent of GNP in 1989) accounts for nearly all of the in-creases in outlays as a fraction of GNP since 1960 and 1970. The ad-ditional source of increased outlays, the rise in interest payments onthe national debt, will be more than offset by the fall in defensespending as a share of GNP between 1960 and 1989.

These are the fundamental facts that define the budget dilemma.Despite the remarkable reduction in domestic spending on a widerange of activities, the growth of the social security and medicare

31


programs raises the share of Federal Government outlays in nationalincome. With the budget balanced in 1960 and with taxes taking thesame share of GNP in 1984 as in 1960, the growth of spending sincethen implies large budget deficits. Before discussing the problem ofthe budget deficit, this chapter considers the changes in the nature ofthe tax system that have occurred in the past 3 years.

THE CHANGE IN TAX STRUCTURE

The third principal part of the Administration's economic strategyis to reduce the tax burden and restructure the tax system. The Eco-nomic Recovery Tax Act passed in 1981 substantially changed thequantity and quality of taxation. It reduced personal income tax ratesby a cumulative 23 percent over 3 years. Special provisions reducedthe tax on two-earner families, introduced the indexing of tax bracketand personal exemptions, and lowered the effective tax rates onincome from saving and investment. The total Federal taxes paid bya median-income family, including both the personal income tax andthe social security payroll taxes, will be $1,750 lower in 1984 thanthey would have been without the tax cuts. These changes representa reduction of 36 percent in Federal income tax liabilities and of 26percent in total tax liabilities.

The total share of GNP taken by taxes has come down significantly(see Table 1-1, line 9). In fiscal 1980, all Federal taxes took 20.1percent of GNP. In the current fiscal year, this tax share will be 18.7percent of GNP. Continuing economic recovery and the rise in socialsecurity payroll taxes will raise the tax share of GNP to 19.4 percentby 1989, if there are no further legislative changes. Without the 1981changes, the tax share would have risen substantially from the 20.1percent share of 1980.

These tax reductions occurred despite the rise in the social securitypayroll tax. If the social security payroll tax is excluded, the reduc-tion in all other taxes has been even greater, falling from 14.8 per-cent of GNP to 12.9 percent of GNP. This fall is equivalent to a $68billion tax cut in 1984 alone.

The tax changes in the past 3 years have, however, gone farbeyond reducing the amount of taxes and have achieved fundamentalimprovements in the nature of the tax system. The tax burden on theeconomy depends not only on the quantity of taxes but also on thequality. Although most taxes have adverse economic effects, sometaxes are more harmful than others. Taxes are undesirable not onlybecause they take away the fruits of labor, of risk-taking, and ofsaving, but also because they distort economic decisions and therebylead to a wasteful misallocation of resources. Although there is no

32


simple rule for improving the quality of taxes, there are a few usefulprinciples. The most basic principle is to minimize the tax-induceddistortions of economic choices—choices about which goods to buy,how much to work, how hard to save, and how to invest the capitalthat results from savings. A key implication of this principle is thatthe marginal tax rates paid on additional income or profits are moreimportant than the average tax rates. A second implication is thattaxes do more harm when levied on individuals or activities that aremore responsive to tax rules. Taxes that reduce the incentive to saveor that cause a misallocation of capital among different uses are par-ticularly undesirable, because they unnecessarily increase the totaleconomic burden of the tax system and reduce productivity and eco-nomic growth.

The 1981 tax changes improved the quality of the tax system inseveral ways. The top marginal individual income tax rate was re-duced from 70 percent to 50 percent and marginal tax rates at allincome levels were reduced nearly one-fourth. Moreover, the re-duced tax rates for two-earner families focuses tax relief on marriedwomen, a group whose labor supply is known to be particularly sen-sitive to tax rates.

In addition to reducing marginal tax rates, the Economic RecoveryTax Act provided for the indexing of tax brackets, beginning January1985, to prevent inflation from pushing individuals into brackets withhigher marginal tax rates. Without indexing, a decade of 5 percentinflation would more than offset the 23 percent reduction in taxrates.

Perhaps the most fundamental change has been in the taxation ofpersonal saving. The American tax system has long been biasedagainst saving and in favor of current consumption. The tax lawchanges in the Economic Recovery Tax Act represent a major shiftaway from this antisaving bias. The universal extension of eligibilityfor Individual Retirement Accounts (IRAs), the expansion of IRA andKeogh plan limits, the reduced tax rates on investment income,and other specific changes should spur private saving in the yearsahead.

The favorable effect of these tax changes on saving can be expect-ed to occur only gradually. At first, by transferring previously savedfunds from existing accounts, many individuals can deposit the maxi-mum $2,000 a year to an IRA without doing any additional saving.Some individuals may extend this period by borrowing. But, after afew years, most taxpayers will have exhausted all previously accumu-lated funds; they can then make additional IRA contributions only ifthey save more.


The new tax treatment of saving represents something far morebasic than just an increased stimulus to saving. The universal avail-ability of IRAs and the increase in IRA and Keogh limits will allowmost American taxpayers to pay tax only on that part of their incomethat they do not save—that is, only on the part of their income thatthey consume. It is also true that two-thirds of taxpayers do not item-ize deductions and therefore cannot deduct interest expenses. Thus,for most Americans, the income tax system has now been virtuallytransformed into a consumption tax. This is a very fundamentalchange in the character of our tax system.

An indirect but important source of reduction in the effective taxrate on the income from savings has been the fall in the rate of infla-tion. Because our tax law bases tax liability on nominal interestincome and nominal capital gains, a lower rate of inflation implies asubstantial reduction in the effective rate of tax. An individual in the30 percent tax bracket who earns a 15 percent nominal interest ratewhen the inflation rate was 10 percent had an after-tax nominal yieldof 10.5 percent and an after-tax real yield of only 0.5 percent. By con-trast, if the individual earns a nominal 10 percent interest rate whenthe inflation rate is 5 percent, the nominal after-tax yield is 7 percentand the real after-tax yield is 2 percent. The effective tax rate on thesame real interest income falls from 90 percent when inflation is 10percent to 60 percent when inflation is 5 percent. With no inflationand an interest rate of 5 percent, the effective tax rate would fall to30 percent and the real after-tax rate of return would be 3.5 percent,or 7 times as great as it was with a 10 percent inflation rate.

The tax climate for business investment has also been substantiallyimproved in the past 3 years. During the 1970s the rising rate of in-flation combined with the old depreciation rules to raise very sub-stantially the effective rate of tax on the income from investment inbusiness plant and equipment. The 1981 changes in the tax rulesgoverning depreciation, as modified in the Tax Equity and Fiscal Re-sponsibility Act, and the sharp decline in inflation reduced this effec-tive tax rate substantially. The result is higher after-tax rates ofreturn on business investment, and therefore a renewed incentive toinvest in plant and equipment.

The present strength of business investment in the face of veryhigh real rates of interest can be attributed at least in part to thelower effective tax rates on business income and the higher realafter-tax rates of return that result. What matters for investment isnot just the rate of interest or the profitability of investment, but thedifference between the net-of-tax real cost of funds and the after-taxreal profitability of investment.

34


Similarly, the strength of the stock market in the face of very highreal interest rates reflects in part the improved after-tax profitabilitythat investors now expect. Indeed, one way to explain the currentlevel of investment is to note that the change in business tax ruleshas raised the value in equity markets of new physical capital (or,equivalently, reduced the cost of equity capital to finance new invest-ment). This has stimulated business to increase its investment.

The recent reductions in high marginal tax rates and the improvedtax treatment of saving and investment represent major improve-ments over earlier tax rules. Much more can and should be done,however, to reduce the adverse effects of the tax system on individualand business incentives and therefore on the potential income andgrowth of the economy. The President has emphasized his interest infurther improvements of the tax law. The Administration will contin-ue to examine possible directions for tax reform and will propose re-forms aimed at making the tax system simpler, fairer, and more effi-cient.

REDUCING THE BUDGET DEFICIT

Despite the dramatic reduction in the share of national incometaken by government domestic spending and the fundamental im-provement in the character of our tax system, the Nation still facesthe serious potential problem of a long string of huge budget defi-cits. Vigorous economic growth can eliminate the cyclical componentof the deficit. But without legislative action, the structural componentis likely to grow just as fast as the cyclical one shrinks. The Adminis-tration's economic projections imply that the budget deficit willremain roughly $200 billion a year—or about 5 percent of GNP—forthe rest of the decade unless there is legislative action to reducespending or raise revenue. Deficits of that size would represent a se-rious potential threat to the health of the American economy in thesecond half of this decade and in the more distant future.

DEFICIT PROJECTION

The cyclical component of the budget deficit is the part of the defi-cit that occurs because the unemployment rate exceeds the inflationthreshold level of unemployment, i.e., the minimum level of unem-ployment that can be sustained without raising the rate of inflation.This excess unemployment raises the deficit by depressing tax rev-enues and by increasing outlays on unemployment benefits and othercyclically sensitive programs.

The remaining part of the budget deficit, known as the structuralcomponent, is the amount of the deficit that would remain even if

35


the unemployment rate were at the inflation threshold level. The Ad-ministration estimates that the inflation threshold level of unemploy-ment is now 6.5 percent and will decline in the coming years as therelative number of inexperienced workers declines and as the Admin-istration's employment policies are enacted and take effect.

Table 1-2 presents the cyclical and structural components of thebudget deficit for 1980 through 1989. The 1983 deficit of $195 bil-lion was divided about evenly between the cyclical and structuralcomponents. Because of the lower level of unemployment projectedfor 1984, a much larger share of the current year's deficit is structur-al. The projected deficit of $187 billion includes a cyclical compo-nent of $49 billion and a structural component of $138 billion. By1989, the entire projected budget deficit is structural.

TABLE 1-2.—Cyclical and structural components of the deficit, fiscal years 1980-89

[Billions of dollars]

Fiscal year

Actual:

1980

1981 ....

1982

1983 . . . .

Estimates (current services):

1984

1985 .

1986

1987

1988

1989 ,

Total

60

58

111

195

187

208

216

220

203

193

Cyclical

4

19

62

95

49

44

45

34

16

—4

Structural

55

39

48

101

138

163

171

187

187

197

Sources: Budget of the United States Government Fiscal Year 1985 and Council of Economic Advisers.

A rate of economic growth for the next 5 years that is sufficientlygreater than the growth forecast by the Administration and by virtu-ally all private forecasters could in principle eliminate the deficitwithout legislative action. However, a 1 percent increase in the cur-rent level of real GNP would reduce the budget deficit by only about$12 billion. It would require an increase of 40 percent in the project-ed growth rates over the next 6 years to eliminate the budget deficitby the end of the decade without a change in spending or tax rules.It would clearly be unwise to rely on such an unprecedented and im-probably fast rate of growth. A prudent policy at this point mustassume that economic growth alone will not eliminate these deficits.

The economic assumptions that are used to project the budgetoutlays and receipts are based on the premise that there will be a

36


sound monetary policy and that future legislative changes will reducebudget deficits sharply in the years ahead. In the absence of legisla-tive changes to reduce deficits substantially in future years, interestrates will be higher than projected and the real growth rate will prob-ably be lower than projected. The budget calculations assume thatreal GNP grows at an average annual rate of 4.3 percent from 1983to 1989. The calculations also assume that the Treasury bill rate willfall from the current 8.9 percent to 5.0 percent by 1989. These as-sumptions are reasonable if the budget deficit in that year is about1.5 percent of GNP and is moving toward complete balance. But iflegislative changes to reduce outlays and increase receipts are not en-acted and the Treasury bill rate remains at its current level, thehigher interest payments on the national debt will raise the 1989deficit by about $60 billion, bringing the total deficit in that year toapproximately $250 billion. Growth rates of real income slower thanthose assumed in the budget calculations would raise the deficit evenmore.

LONG-TERM CONSEQUENCES

The projected budget deficits would directly and substantially in-crease the future size of the national debt. If legislative action is nottaken, the cumulative budget deficit would be more than $1,100 bil-lion over the next 6 years. The annual interest on this extra debtalone would represent a permanent cost of about $60 billion in 1989,if interest rates fall as assumed, or at least $100 billion a year if theinterest rates remain at their present level. These amounts are equiv-alent to between 10 percent and 17 percent of the personal and cor-porate income tax revenue now projected for 1989.

This growth of the national debt and the interest on the nationaldebt shows that budget deficits do not eliminate the need for spend-ing cuts or tax increases, but just postpone the time when extraspending cuts or larger tax increases must take effect to pay for cur-rent deficits.

The most important long-term economic effect of the prospectivebudget deficits would be to absorb a large fraction of domesticsaving, and thereby reduce the rate of capital formation and slow thepotential long-term growth of the economy. Federal borrowing to fi-nance a budget deficit of 5 percent of GNP would absorb about two-thirds of all the net domestic saving that would otherwise be availa-ble to finance investment in plant and equipment and in housing.

The reduced availability of investable funds means that the realrate of interest must rise until the demand for funds for private in-vestment is reduced to the available supply. Stated more generally,the real net-of-tax cost of capital must increase relative to the real


net-of-tax return on capital until the demand for funds is reduced tothe available supply.

Although the 1981 tax changes and the reduced rate of inflationwill direct a higher share of the remaining capital formation to busi-ness investment and away from owner-occupied housing, the effect ofthe budget deficits nevertheless would be a lower rate of investmentin business plant and equipment as well as in housing.

Each dollar of additional budget deficit does not necessarily reducecapital accumulation by a dollar. The actual impact varies over time,with less crowding out of capital formation likely in the first year ortwo after an increase in the budget deficit than in subsequent years.This is particularly so when, as in recent years, the increase in thebudget deficit occurs when there is substantial excess capacity in theeconomy.

The current situation also shows how the extent of the crowdingout of capital formation in the United States can be temporarily re-duced by an inflow of foreign funds that are attracted to the UnitedStates by the rise in our real interest rate and increased real after-taxreturn on equity investments. This capital inflow usually begins aftera lag, rises to a peak, and eventually shrinks. Even if the budget defi-cit remains at a high level, the inflow of capital from abroad eventu-ally contracts as foreigners become increasingly unwilling to holdeven more U.S. assets in their portfolios.

If the current services budget deficits that are currently projectedwere actually to occur, the likely result would be to reduce net invest-ment in plant and equipment to a substantially lower share of GNPthan prevailed in the 1960s and 1970s. Net private investment hasfallen from 6.7 percent of GNP in the three-decade period through1979 to only 3.2 percent of GNP in the past 3 years. Much of thisdecline is attributable to the stage of the business cycle. The 1983deficit strengthened the recovery and thereby boosted business fixedinvestment, although the government's competition for funds to fi-nance the structural deficit also depressed the level of investmentbelow what it would otherwise have been.

DEFICITS AND THE RECOVERY

The deficits will have effects on the economic recovery as well ason the capital stock and on long-term economic growth. To under-stand the effect of budget deficits on the economic recovery, it is im-portant to distinguish the deficits in the early years of the recoveryfrom the deficits that are projected for subsequent years. Althoughthe projected future deficit would be likely to have serious adverseconsequences on the character and possibly the duration of the re-covery, the near-term deficits probably have a positive impact on the

38


pace of recovery in 1983 and 1984. The tax cuts in 1982 and 1983raised after-tax incomes and therefore contributed to the rise in con-sumer spending that has been responsible for so much of the recov-ery. Similarly, the direct fiscal stimulus of the large 1984 deficit willdo more to raise demand in 1984 than the increased real interestrates that result from the 1984 deficit will do to depress demand.

It is the continuing string of large deficits projected out throughthe end of the decade and beyond that is the serious threat to thehealth of the near-term recovery. The prospect of such prolongeddeficits inevitably raises the real long-term interest rate above what itotherwise would have been, reducing current activity in key interest-sensitive sectors and causing the recovery to be lopsided. The mostconspicuous example of such current crowding out is the sharp de-cline in net exports. High interest rates in the United States attractfunds from the rest of the world, causing the exchange value of thedollar to rise. The strong dollar makes it difficult for U.S. productsto compete in world markets and makes foreign products more at-tractive to American buyers. In addition, the high real interest rate isno doubt also causing the demand for housing, for some consumerdurables, and for some plant and equipment investment to be lowernow than it would otherwise have been. In these ways, the anticipa-tion of future deficits may weaken the pace of recovery now eventhough the current deficit strengthens the pace of the current recov-ery.

If the deficits persist, the crowding out would also persist but thepattern of crowding out would change over time. As the value of thedollar declines, the merchandise trade deficit is likely to shrink, fo-cusing more of the crowding out on the domestic capital market. Thecurrent rise in profits and retained earnings that result from the cy-clical upturn and from the 1981 tax changes temporarily protectsbusiness investment and concentrates more of the domestic crowdingout on residential construction. This too will change with time, plac-ing more of the burden of future crowding out on business invest-ment in plant and equipment.

No one can be sure of exactly how the pattern of crowding outwould evolve through time. It is clear however that the persistence oflarge structural budget deficits would contribute to producing a lop-sided recovery. The recovery would not be shared fully by the exportindustries and by those firms that compete with imports from abroad.Nor would the construction industry and those industries that are di-rectly involved in the production of capital goods and consumer du-rables be likely to keep pace with overall economic activity.

As a result, employment and economic activity would shift fromthese contracting interest-sensitive sectors to the areas of expanding

39


demand in the services and nondurable goods industries and in thedefense-related industries. If this shift of demand proceeds smoothlyenough, the overall recovery would continue at a satisfactory pacewith declining total unemployment. It is quite possible, however, thatthe additional demand would concentrate in sectors that are operat-ing close to capacity while the crowding out withdraws demand fromindustries where a great deal of excess capacity exists. If so, much ofthe additional demand might be absorbed in price increases while thecrowding out adds to unemployment. If this occurs, the resulting re-covery would be slower paced, more fragile, and more inflationarythan a more balanced recovery.

No one can predict in detail the effects of a continuing series ofsuch large deficits. The economy could continue to experience a sat-isfactory overall pace of recovery for several years with decliningrates of unemployment and inflation. But deficits of this magnitudecould lead instead to imbalances within the economy that cause therecovery to lose momentum. There is also the risk that the persistentdeficits could lead to inappropriate economic policies in the future.An overly expansionary monetary policy would cause increased infla-tion while a sudden large fiscal contraction could depress economicactivity. Although no one can be sure just how the economy wouldbehave in the face of such unprecedented deficits, the longer thedeficits are allowed to persist, the greater are the risks to our eco-nomic future.

BUDGET STRATEGY

A major reduction in the structural budget deficit must thereforebe achieved over the next several years. This must be done withoutcausing a contraction of economic activity. Because the direct effectof reducing the budget deficit is to reduce government spending andprivate consumption, there must be an increase in investment andnet exports if real incomes and economic activity are to remain athigh levels.

A reduction in the level of the current or future budget deficitsautomatically stimulates investment and net exports by lowering thereal rate of interest and the exchange value of the dollar. However,experience shows that the rise in investment and in exports followsthe fall in interest rates and the exchange rate only with a substantiallag.

It would be unwise, therefore, to reduce the 1984 deficit by a verysubstantial amount. To reduce the deficit by a significant amountwithout jeopardizing the recovery, the financial markets should begiven adequate advance notice of the intended deficit reduction. The

40


result would be a stronger economy that could absorb the deficit re-duction without a contraction of overall economic activity.

In the fiscal year 1984 budget that was presented to the Congressin January 1983, the Administration proposed a deficit reduction pro-gram that would begin with small reductions in the deficits of 1984and 1985 but then would reduce the 1986 deficit by 41 percent andcut the 1988 deficit by 61 percent to only 1.6 percent of GNP. Unfor-tunately, the Congress failed to adopt those proposals.

The Administration is now taking a two-stage approach to dealingwith the prospective budget deficits. The President has called uponthe leaders of the Congress to establish a bipartisan group to workwith the Administration to develop a "down payment" package thatwill reduce the deficit by about $100 billion over the next 3 fiscalyears. The aim of these negotiations is to achieve a deficit reductionpackage in the next few months. This package would be comprised ofsome of the less contentious spending cuts still pending before theCongress, certain measures to close tax loopholes, and additionaloutlay savings achieved through improvements in management pro-cedures and elimination of unnecessary or inefficient activities.

Such legislation to reduce the deficit by about $100 billion duringthe next 3 fiscal years would make a significant contribution to re-ducing deficits and the future national debt. It could also give in-creased confidence to the financial markets, business investors, andconsumers that the projected deficits can be controlled and eventual-ly eliminated. The result should be a stronger economy in 1984 and1985.

Enacting a "down payment'* package is just a first step in reducingbudget deficits. The President has indicated that he will propose leg-islation in early 1985 that will further reduce deficits and point theway toward budget balance. If these proposals are enacted, the econ-omy can enjoy continuing expansion and a reduced burden of na-tional debt.

41


CHAPTER 2

The United States in the WorldEconomy: Challenges of Recovery

THE INTERNATIONAL ECONOMY is in a much stronger posi-tion today than it was one year ago. In late 1982 the world was stillin a severe recession, and prospects for recovery were uncertain; thethird world debt crisis was a source of deep concern; and economicstagnation had given rise to strong protectionist pressures. In 1983 avigorous recovery, originating in the United States, began to lead theworld out of recession. Many of the high-debt countries made majorstrides toward successful adjustment. Despite increasing protectionistpressures, the open international trading system remained fundamen-tally intact.

But the outlook is not entirely sunny. The recovery is not a cure-allfor the serious strains that remain in the world economy." From theU.S. point of view, the focus of these strains is the emergence ofrecord trade deficits. Closely related to the problem of the trade defi-cits is the problem of the continued high value of the dollar in for-eign exchange markets. There are also other economic troublesaround the globe. Trade relations among the United States, Japan,and the European Community remain a source of friction. Much ofEurope is lagging behind the recovery in North America. The high-debt countries are finding the road back to financial health to beslow and painful.

This chapter takes the U.S. trade balance as a starting point for anexamination of the challenges that still face the world economy. It isorganized in three sections. The first section examines the rise in thetrade deficit and the related problem of the strong dollar. Thesecond section covers developments among industrialized tradingpartners: Japan, Canada, and the European countries. The third sec-tion explores the third world debt problem.

THE U.S. TRADE DEFICIT AND THE DOLLAR

The most dramatic recent development in U.S. international eco-nomic relations is the rising trade deficit and associated capitalinflow. The 1983 deficit in merchandise trade was about $65 billion,

42


approaching twice the previous record, which was set in 1982. A defi-cit in the neighborhood of $110 billion is forecast for 1984, threetimes the 1982 level. The deficits signify loss of income and employ-ment in those U.S. industries that depend on exports or competewith imports. A common reaction is one of concern. It is easy todraw the impression that there is a serious adverse long-run trend inthe competitive standing of the United States in the world economy.The greatest danger is that such ideas will come to be believed, andthat as a result, the Nation will opt for major departures from its tra-ditional economic system.

Understanding the source of the rising trade deficit is an essentialprecondition to making intelligent policy choices. If policy is chartedin an atmosphere of panic, then crucial mistakes will be made. Mis-takes in trade policy, once committed, cannot be easily undone. For-eign trading partners often react to protectionist measures in kind,while, domestically, powerful interest groups coalesce around thenew status quo.

SOURCES OF THE TRADE DEFICIT

Although the 1983 and likely 1984 trade deficits are without prece-dent, they are not difficult to explain. To begin with, the UnitedStates has a normal or "structural" deficit in merchandise trade thatis offset by a surplus in exports of services and therefore need not bea cause for special concern. But it is the recent increase in the tradedeficit that has attracted attention. The increase can be broken downinto three parts. First, the appreciation of the dollar has made it diffi-cult for U.S. firms to compete in world markets. Second, there hasbeen a substantial loss in net exports to debt-troubled countries.Third, the United States is experiencing more rapid growth inincome, and therefore, in imports, than are Europe and Japan. Thesethree factors concern economic perturbations that, though large, arebelieved to be temporary. The structural deficit is normal in that itwould exist even in the absence of the temporary factors.

The Structural Trade Deficit

In the 1970s, the United States ran a merchandise trade deficit thatwas on average equal to 0.5 percent of gross national product (GNP),with a gradual increasing trend, as Chart 2-1 illustrates. This deficitin merchandise does not imply a failure of the Nation to pay its wayin international trade. The United States normally runs a surplus inservices to offset the deficit in merchandise trade. The largest com-ponent of the surplus is the earnings on overseas investments thatAmerican residents have made in the past; these earnings are count-ed as services because they are payments for the use of U.S. capital.But such exports as the services of lawyers, engineers, and computer


programmers, and banks, insurance companies, hospitals, and univer-sities are also an important and growing component of the U.S. bal-ance of payments. The balance in services trade has a gradualupward trend, as Chart 2-1 shows.

Chart 2-1

Balances on Current Account, Trade,and Services as Percent of GNP

Percent of GNP

8-Quarter Moving Average

-1

-2 I i I l I I I l 1 h i i l 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

1970 71 72 73 74 75 76 77 78 79 80 81 82

Note.—-Based on seasonally adjusted data.

Source: Department of Commerce.

Indeed, it is possible that, because of measurement errors, the trueU.S. surplus in services is greater than that recorded. Statistics showthat the sum of the services balance of all countries is a large nega-tive number, on the order of —$80 billion. Because one country's ex-ports are another country's imports, this number should in theory bezero. It must necessarily be that some countries are underreportingtheir services balance. For example, fleets of open registry (i.e., flying"flags of convenience") often do not report their earnings to anycountry. Another example is investment income that is channeledthrough tax havens and is thus unrecorded in the recipient country.Given the importance of the United States in services trade, it is pos-sible that part of the unreported service exports are American.

44


Adding together the balances in merchandise trade, services, andtransfers (such as immigrants' remittances to their countries oforigin) gives the balance on current account. A country's current ac-count balance indicates its changing investment position vis-a-vis itstrading partners. A current account deficit means that foreigners areon net accumulating claims on assets located in the domestic country.Countries with profitable investment opportunities, such as SouthKorea, Taiwan, Singapore, and other rapidly industrializing coun-tries, are normally in this situation, borrowing savings from abroad tofinance their development. A current account surplus means that thedomestic country is on net accumulating claims on assets locatedabroad. Capital-rich countries with high saving rates, such as Japanand West Germany, are normally in this situation, lending their sav-ings to other countries where they can earn a higher rate of return.There is no clear argument as to whether the United States shouldnormally be a net borrower or net lender at this stage in its history.The United States has been a capital-rich country throughout the20th century, and before the 1970s the current account was normallyin surplus. But the U.S. saving rate now appears to be the lowestamong major countries. As it happens, the U.S. current account bal-ance, as shown in Chart 2-1, was on average virtually zero during the1970s.

The point is that a certain amount of the U.S. merchandise tradedeficit is normal: it would be there, offsetting the surplus in services,even if the U.S. current account balance were zero. Judging from thelong-run trends in the merchandise trade deficit and the services sur-plus, this structural trade deficit now appears to be in the range of$20 to $25 billion. Most of the recent trade deficit is thus still to beexplained.Effect of the Strong Dollar

The high value of the dollar in foreign exchange markets is themost important cause of the recent increases in the trade deficit. AsChart 2-2 shows, the dollar has appreciated sharply over the past 3years. As of December 1983, the dollar had risen 52 percent againstan average of 10 trading partners' currencies weighted by theirshares in world trade, relative to the average for 1980. (Weightingcountries by trade with the United States alone, which gives relativelyless weight to Europe and relatively more to Canada and Japan,yields a smaller number.) Exchange rate trends sometimes match in-ternational differences in inflation rates, but that has not been thecase in this episode. Very little of the appreciation of the dollar wasoffset by a more rapid increase in the foreign price level than in theU.S. price level. In other words the dollar appreciated not only innominal terms, but in real terms as well. The real appreciation of the

45


dollar between 1980 and December 1983 came to 45 percent. Thismeans that U.S. firms are now offering their products on world mar-kets at prices that on average have risen significantly relative to thoseof their competitors, when compared in a common currency.

Chart 2-2

March 1973-100

140

Nominal and Real EffectiveExchange Rate of the U.S. Dollar

130 -

120 —

Q llHiiliiiiiliiiiiliiiiiliiuiliniiliiiiiliiiiihniiliuiiliiiiiliMiiliiNilnMilMMihiiiiliiiiilniiiliiiiiliii liiiiihiiin

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Source: Board of Governors of the Federal Reserve System.

The year 1980 does not constitute a proper standard of compari-son because the dollar had depreciated in real terms in the late1970s: in 1980 U.S. firms were offering their products on world mar-kets at prices that on average had fallen relative to those of theircompetitors, when compared in a common currency. If one takes theaverage over the period 1973-79 as the standard of comparison, thenthe real appreciation of the dollar as of December 1983 comes to 33percent.

This real appreciation represents a large loss in competitiveness ofU.S. producers. In response, foreign residents are more likely to buytheir own country's products than to buy the more expensive U.S.exports, and U.S. residents and companies are more likely to buycheaper imports than to spend their money on products made athome.


The effect on the trade balance is complicated by questions oftiming. Although the dollar's rise began in 1980, it was not until1981 that the negative effect on the trade balance began to show up.It was not until late 1982 that the balance on goods and servicesturned to deficit. This pattern is in line with historical experience.The immediate effect of a dollar appreciation is actually to improvethe trade balance, because it takes fewer dollars to buy a given quan-tity of imports. As time passes, more and more customers, both do-mestic and foreign, switch to the less expensive foreign producers. Thereal volume of imports rises and of exports falls, and the trade balanceworsens. The dollar had completed a real appreciation of 27 percentby late 1982, relative to the 1973-79 standard of comparison. If theusual pattern of recent years holds up, the full effect on the tradedeficit will be reached in late 1984. Estimates indicate that every 1percent real appreciation adds about $2 billion to the deficit at thepeak. Thus the 27 percent real appreciation of the dollar translatesinto about $54 billion of the projected deficit in 1984. The continuedappreciation of the dollar through 1983 portends further deteriora-tion of the trade balance in 1985.

Effect of Debt Problems in Latin America

In the last couple of years, a number of highly indebted thirdworld countries have experienced great difficulty meeting their debtobligations. They have had to take strong measures to reduce theirimports and to boost their exports, in order to generate the foreignexchange to pay the interest on the debt. Many of these countries arein Latin America and conduct an especially high proportion of tradewith the United States. Mexico alone accounted for 7.6 percent ofU.S. exports in 1981. Seven of the most indebted Latin Americancountries together accounted for 13.9 percent of U.S. exports. Thereductions in net imports that these countries have been obliged toundertake because of a shortage of foreign exchange are so greatthat the U.S. share looms large in the U.S. trade balance. Exports ofU.S. industries such as farm and construction machinery have beenparticularly hard-hit.

As Table 2-1 shows, the U.S. bilateral trade balance with Mexicoalone, which changed from surplus to deficit in 1982, registered a de-cline of $12 billion between 1981 and 1983. The U.S. loss in net ex-ports to Latin America was about $21 billion. By comparison, theprojected U.S. loss in net exports to Japan from 1981 to 1983 wasonly $4 billion, and to all of Western Europe about $12 billion, asillustrated in Chart 2-3. (The only source of improvement, U.S.trade with the Organization of Petroleum Exporting Countries(OPEC), is registering smaller deficits than in the past as a conse-quence of a decline in the demand for OPEC oil and in the dollar

47


price of oil.) As many of the Latin American debtors still have furthereconomic adjustments to make, the loss in U.S. net exports to thatregion is not expected to diminish much in 1984.

Chart 2-3

Change in U.S. Bilateral Trade BalancesFrom 1981 to 1983

Change in billions of dollars

30

20

10

OPEC

-10

-20

-30

CANADA

JAPAN

WESTERN EUROPE OTHER

LATIN AMERICA

Note.—Based on preliminary data for 1983.


Effect of Relative Cyclical Position of the United States

A country's level of imports varies with its level of income duringthe course of the business cycle. Thus world trade in general con-tracted in the 1980-82 period of recession.

As of late 1982, cyclical factors were a plus for the U.S. trade bal-ance. In the first place, even when business cycles are synchronizedacross countries, the U.S. trade balance historically tends to improvein recessions and worsen in expansions. U.S. imports from othercountries are usually more responsive to U.S. income than othercountries* imports are to their incomes. In the second place, as of1982, the recession had been more severe in the United States thanfor most trading partners. Real GNP had been on average almostconstant in the United States from 1980 to 1982, but had grown at

48


TABLE 2-X.—U.S. trade balance by country, 1980-83

[Balance of payments basis, millions of dollars]

Country 1980

-25,544

-1,277

20,3482,970-24317,621

-10,411

584

5,860629

2,647-7403,324

-37,476

-4,584

1981

-28,067

-2,242

12,235-263-88713,385

-15,802

3,388

7,481-6764,440-1223,839

-28,546

-7,490

1982

-36,389

-9,198

6,7932,352

-2,68811,833

-16,991

2,623

3,389-8633,808429853

10,978

7,908

1983 *

Total..

Canada

Western EuropeUnited Kingdom..GermanyOther

Japan

Other developed countries..

Latin American republics....BrazilMexicoVenezuelaOther

OPEC (non-Latin America)...

Other developing countries2

-63,521

-9,810

98-2,099-4,344

6,541

-19,886

1,585-13,911

-2,491=7,762-2,328-1,330

-7,111

= 15,909

1 Preliminary estimates.2 Residual excluding Eastern Europe and international organizations.Source: Department of Commerce, Bureau of Economic Analysis.

an average annual rate of 1.4 percent in other industrialized coun-tries. As of December 1982, U.S. industrial production was 12 per-cent below its previous peak, but industrial production in the othersix major industrialized countries had fallen only 4 percent over thesame period. Thus, the recent recession tended to reduce U.S. im-ports from the rest of the world more than it reduced the rest of theworld's imports from the United States.

The cyclical position of the United States relative to its tradingpartners began to turn around rapidly in early 1983. In the thirdquarter of 1983 the United States reattained its previous peak in thelevel of economic activity as measured by industrial production; mostof the major industrial countries had not yet done so. For the year,real GNP grew at an annualized rate 3.8 percent faster in the UnitedStates than among a weighted average of trading partners. Thussometime in the middle of the year the two output paths crossed; therelative cyclical position was a positive factor in the trade balance inthe first half of the year and a negative factor in the second half. Theoverall effect in 1983 was probably close to neutral.

With U.S. growth from 1983 to 1984 expected to continue wellabove that of its major trading partners, U.S. imports from othercountries will rise faster than other countries' imports from theUnited States. The relative cyclical position becomes an increasinglynegative factor for future trade balances. Estimates suggest that therelative cyclical position will account for $15 to $20 billion of theprojected worsening in the trade deficit between 1983 and 1984.

49


Each of the three sources of the increase in the trade deficit—theexchange rate, the third world debt problem, and the relative cyclicalposition of the industrialized countries—warrants further analysis. Ineach case, the impact on U.S. trade may be the channel throughwhich the problem is most forcefully brought to the attention of theAmerican citizen; but each topic bears examination for its own sake.The exchange rate and related topics are considered in the remain-der of this section; the cyclical position of other industrialized coun-tries and the third world debt problem are considered in the secondand third sections of the chapter.

SOURCES OF THE STRONG DOLLAR

In the 1950s and 1960s central banks were committed to maintain-ing their countries' exchange rates at fixed levels. This effort becameincreasingly difficult over time, due particularly to divergent inflationrates among countries. By 1971 the dollar had become unsustainablyovervalued in the sense that the supply of dollars greatly exceededthe private demand for dollars. Central banks made up the differ-ence, buying unwanted dollars in exchange for foreign currencies.The effort was abandoned in 1973 and the major currencies movedonto a system of floating, i.e., market-determined, exchange rates.When exchange rates float, there is no such thing as undervaluationor overvaluation, in the sense of excess market supply or demand forcurrencies. The value of the currency is whatever the market dictatesthat it should be.

The Floating Exchange Rate System

It is nearly impossible to imagine the world economy goingthrough the past 10 years in the straightjacket of fixed exchangerates. Given the events of this period, notably the large changes in oilprices and the divergent macroeconomic policies among the industri-alized countries, floating exchange rates have performed well.

Nevertheless, some critics argue that the system is not working asit should. They base their case on the large fluctuations that ex-change rates have exhibited over the past 10 years—short-term vari-ability as well as longer term swings such as the large rise of thedollar from 1980 to 1983. The critics also point to the fact that manyexchange-rate fluctuations cannot readily be explained. Few believethat an early return to fixed exchange rates is possible, but there issentiment in some quarters for government action to try to dampenthe fluctuations.

Transactions costs in financial markets and government-imposedbarriers to the flow of capital across national boundaries are todayvery low among most of the larger industrialized countries. The highinternational mobility of capital means that the foreign exchange

50


market is now dominated by capital transactions, not by trade trans-actions. The foreign exchange market is an asset market, like thestock or bond market; the exchange rate is the price of one currencyin terms of another. It is not surprising that it is difficult to explainall the month-to-month ups and downs of the exchange rate, just asit is difficult to explain all the ups and downs in stock prices or bondprices. But most observers agree that an increase in the demand fordollar assets underlay the 1980-83 appreciation. An increase in thedemand for a currency results in an increase in its price, for the samereason that an increase in the demand for any commodity results inan increase in its price.

Three reasons are often given for the recent increase in demandfor dollar assets. They are (1) reduced expectations of U.S. inflation,(2) increased U.S. real interest rates, and (3) "safe-haven" and otherpossible portfolio shifts. We consider each in turn.

Effect of Reduced Expectations of Inflation

In the long run, the exchange rate tends to follow the differentialtrend in the domestic and foreign price levels. If one country's pricelevel gets too far out of line with prices in other countries, there willeventually be a fall in demand for its goods, which will lead to a realdepreciation of its currency.

Investors in international money markets are fully aware of the re-lationship between the price level and the exchange rate. If marketparticipants think that a currency will be losing value in the futurethrough inflation, then they will seek to avoid losses by immediatelyshifting their holdings out of that currency and into other assets.This attempt to sell the currency will cause its price to decline, evenbefore the anticipated inflation occurs. For example, in the late 1970sthe value of the dollar declined, in large part because of heightenedexpectations of U.S. inflation.

There is no way to know exactly what the market expects the infla-tion rate to be in the future, as opposed to what the inflation rateactually is. Table 2-2 shows three alternative measures of expectedinflation: the actual inflation rate over the preceding year; a weightedaverage of actual inflation over the preceding 3 years (with moreweight on the most recent years); and forecasts of future inflationmade by Data Resources, Inc. Regardless which measure is used,there was a large drop in the expected U.S. inflation rate between1980 and 1983. The market reduced its expectations of U.S. inflationin response to the firm anti-inflation policies of the Administrationand of the Federal Reserve, to the 1980 and 1981-82 recessions, andto the actual decline in the observed inflation rate. As the tableshows, expected inflation also fell in other countries between 1980

51


and 1983, but not as much. The differential between U.S. and for-eign expected inflation declined.

The fall in the expected inflation differential is the first of thethree reasons for the appreciation of the dollar. Investors who hadpreviously shifted out of dollar assets because of fears of inflation,now shifted back. The increase in the demand for dollar assetscaused an increase in the price of dollar assets, i.e., the exchangerate.

TABLE 2-2.—Decreases in expected inflation rates and increases in real interest rates, 1980 to1983

Item

Long-term government bond rate

1-year inflation 2

Real interest rate 1 . .

3-year distributed lag inflation3

Real interest rate 2

DRI 3-year forecasted Inflation *

Real interest rate 3

1980 average

UnitedStates

Tradingpart-ners1

Differ-ence

November 1983

UnitedStates

Tradingpart-ners1

Differ-ence

Percent per annum

11.39

13.54

- 2 . 1 6

11.67

- . 2 8

10.05

1.34

11.34

11.38

- . 0 5

9.35

1.99

8.56

2.77

0.05

2.16

2.11

2.32

- 2 . 2 7

1.49

1.44

11.92

3.19

8.73

4.90

7.02

5.29

6.63

10.29

5.17

5.11

6.46

3.82

5.90

4.39

1.63

- 1 . 9 8

3.61

- 1 . 5 6

3.19

.60

2.23

Change

UnitedStates

Tradingpart-ners1

Differ-ence

Percentage points

0.53

- 1 0 . 3 5

10.88

- 6 . 7 6

7.30

- 4 . 7 6

5.29

- 1 . 0 5

- 6 . 2 1

5.16

- 2 . 8 8

1.84

2.67

1.62

1.58

- 4 . 1 4

5.72

- 3 . 8 8

5.46

- 2 . 0 9

3.67

Canada, France, Germany, Italy, Japan, and United Kingdom. WeUm™ u, *.2 Change in the consumer price index <CPt) over the preceding 12 months.3 Weights beginning with the immediately preceding 12-month change in the CPI are .5, .3, and .2.4 Forecasts of CPI inflation over the subsequent 36 months. 1980 is the average of the four quarters' forecasts.Sources: International Monetary Fund and Data Resources, Inc. (DRI).

Effect of Increased Real Interest Rates

The effect of the decline in expected inflation is only part of thestory. If exchange rate movements were determined solely by infla-tion rates, the decline in expected inflation could explain the nominalappreciation of the dollar, but not the real appreciation of the dollar.The latter is the important concept for the question of the competi-tiveness of U.S. producers in world markets.

A second cause of the appreciation of the dollar between 1980 and1983—and the major cause of its real appreciation—is the increase inthe U.S. real interest rate. The real interest rate is defined as thenominal interest rate corrected for expected inflation. If nominal in-terest rates had come down as quickly as the expected inflation rate,then there would have been no increase in the real interest rate. Butby the three measures in Table 2-2, the U.S. real interest rate rosebetween 1980 and 1983. This is typical of historical experience withmonetary disinflation: it takes time for reduced expectations of infla-


tion to be reflected in reduced nominal interest rates. Real interestrates rose somewhat in other countries too, but not by as much. Thereal interest differential shifted in favor of dollar assets.

Because U.S. assets now pay a higher expected real rate of returnthan foreign assets, they have become more attractive to hold. Theincrease in demand for dollar assets arising from a higher real inter-est differential can explain an increase in the exchange value of thedollar, above and beyond the increase that would be due to a lower expectedinflation differential in the absence of a change in the real interest dif-ferential. It explains why the dollar appreciated not only in nominalterms but in real terms as well.

Large real appreciations of a currency tend to be temporary. In thelong run, the real value of the dollar is widely expected to fall backto a level that allows U.S. firms to compete in world markets on anequal basis. To believe otherwise would be to believe that U.S. pro-ducers can continue to be priced out of world markets, and theUnited States can continue to run 12-digk trade deficits, indefinitely.It is impossible to say when the dollar will come back down. The de-cline could start in 1984 or it could come later. To judge by past ex-perience, even if there were no unforeseen developments, it could beas long as 10 years before the dollar returns to its long-run value.

It is possible to get a rough idea of how much above its long-runreal value the dollar is currently, in the market's view, by looking atthe long-term real interest differential in favor of the dollar. Thelong-term interest rate is the one reported in Table 2-2. The 10-yearreal interest differential is the compensation that investors get forholding assets in a currency that is expected to depreciate, in realterms, over the next 10 years. Taking the present 10-year real inter-est differential to be 3.2 points, the implication is that the market ex-pects the dollar to depreciate, in real terms, at an average rate of 3.2percent a year over the next 10 years, or 32 percent altogether (ig-noring compounding). This arithmetic example would suggest thatthe market regards the dollar as currently being about 32 percentabove its long-run real value.

In 1980 the real interest differential was negative; the market re-garded the dollar as being about 23 percent below its long-run realvalue. Taking the increase in the real interest differential between1980 and 1983 to be 5.4 points, the implication is that this factor byitself is sufficient to explain an increase in the dollar's value over thisperiod of about 54 percent (without any change in its long-run realvalue). One can get different answers by choosing different horizonsor different measures of the rise in the real interest rate. It is possi-ble that none of the three alternative measures of expected inflationin Table 2-2 adequately reflects true expectations over the 10-year

53


horizon that is relevant. Nevertheless, it is evident that the real inter-est differential is capable of explaining the sort of real appreciationthat the dollar has experienced.

Effect of "Safe-Haven" and Other Possible Portfolio Shifts

The third reason that is commonly given for the current strengthof the dollar is the "safe-haven" effect: capital flees social and eco-nomic instability in other countries for the safety of the UnitedStates. There is some danger here of using the term "safe-haven" asa vague label for unexplained shifts in investors' portfolios. But oneconcrete interpretation is that investors have shifted their portfoliosinto dollar assets in response to the increased riskiness of invest-ments in other parts of the world, Latin America in particular.

A decision by Latin Americans to move capital into the UnitedStates generates partly offsetting capital outflows from the UnitedStates to Europe and other countries. But in the eyes of some ob-servers, investments in Europe have also become riskier, as a resultof economic and political developments. Thus, a worldwide portfolioshift into U.S. assets in response to a change in relative risk may ex-plain some part of the dollar appreciation. Other factors that aresometimes mentioned are the more favorable tax treatment for capi-tal investment in the United States and the strength of the U.S. re-covery in 1983.

The Source of High Real Interest Rates

If high real interest rates are the most important explanation forthe high real value of the dollar, what is the explanation for the highreal interest rates? This question is a subject of some controversy.

The real interest rate equilibrates the supply of saving, both pri-vate and public, to the demand for saving, in the form of investment.The real interest rate will rise either if the supply of saving shiftsdown or if investment shifts up. The contribution of the corporateincome tax to the cost of capital facing firms has been reduced underthis Administration. It is hoped that the increased incentive to firmswill stimulate investment in the future. Unfortunately, as the secondcolumn of Table 2-3 shows, investment as a percentage of GNP wasstill lower in 1983 than in 1980, or than the average since 1970.Thus an upward shift of investment cannot be the sole explanationfor the increase in real interest rates. A decrease in the supply ofsaving also must have played a major role. Indeed, there has been adecline in private saving, probably because of the recession, and alarge decline in government saving, i.e., a large increase in the Fed-eral budget deficit.

Although the decline in private and public saving is the mostwidely cited explanation for high real interest rates, other explana-


TABLE 2-3.—Distribution ofGNPby component, 1970-83

[Percent]

Period

1970-79 average

1980

1981

1982

1983 l

Personalconsump-

tionexpendi-

tures

62.4

63.4

62.9

64.8

65.2

Fixedinvestment

15.3

15.6

15.5

14.3

14.4

Governmentpurchasesof goods

and services

21.0

20.4

20.2

21.1

20.9

Net exportsof goods

and services

0.6

.9

.9

.6

- . 3

Inventoryinvestment

0.8

- . 4

.6

- . 8

- . 2

1 Preliminary estimates.Source*. Department of Commerce, Bureau of Economic Analysis.

tions are sometimes given. One is that an increase in uncertainty,usually ascribed to increased variability in the U.S. money supply,makes nominal dollar assets less attractive, so that they must yield ahigher expected real return as a "risk premium" if they are to bewillingly held. This argument could account for why real interestrates are high, but it cannot also be an explanation of the strength ofthe dollar. Any increased uncertainty attaching to dollar assets wouldcause a fall in demand for them and therefore in the price of thedollar, not a rise. Only increased uncertainty in other countries couldinduce the observed portfolio shift. Indeed that was one possible in-terpretation of the safe-haven argument discussed above.

THE CAPITAL ACCOUNT SURPLUS

The U.S. current account deficit in 1983 was nearly three times theprevious record, which was set in 1978. The immediate connotationof the current account deficit, as of the trade deficit, is lost produc-tion in import-competing and export industries. But there is anotherway to look at it. The current account deficit is financed by a capitalinflow from abroad. Foreigners have been investing in the UnitedStates, for example participating in the rising stock market andbuying Treasury bills.

Relation to Crowding Out

This capital inflow has an important implication for the U.S. econ-omy. Under the natural assumption that the capital inflow is notsomehow offset by an equal decrease in domestic saving, it keeps realinterest rates lower than they otherwise would be. As such, it allowsthose components of GNP that are especially sensitive to the real in-terest rate—housing, consumer durables, and business investment inplant and equipment—to be higher than they otherwise would be. Ofcourse, the capital inflow has not been large enough to prevent real

55


interest rates from rising since 1980, as reported in Table 2-2, or in-vestment as a share of GNP from falling, as reported in Table 2-3.

Table 2-3 also shows how two other components of demand, con-sumption and government expenditure, have risen since 1980 as apercentage of GNP. Indeed, it was the increases in these componentsof spending that drove up real interest rates and crowded out invest-ment, as explained in Chapter 1. The important point regardingthe inflow of capital into the United States from abroad is that itdampened the rise in the real interest rate, and thus reduced thedegree of crowding out of investment. This bonus did not come free.The counterpart to the capital inflow is the appreciation of the dollarand the worsening of the trade deficit. In effect, much of the crowd-ing out is now borne by the import-competing and export industries,with the consequence that less of it is borne by the construction, con-sumer durable, and capital goods industries.

In 1984 the U.S. current account deficit is forecasted to be roughly40 percent the size of the Federal Government budget deficit. Thismeans that a capital inflow from abroad is financing the equivalent of40 percent of the budget deficit, and the crowding out of other sec-tors of domestic demand is reduced correspondingly. Internationalcapital flows of this magnitude are consistent with the increasing in-tegration of world capital markets.

Benefits of the Capital Inflow and Dollar Appreciation

Is the inflow of capital and the associated strength of the dollar de-sirable? In one sense it is not; the appreciation of the dollar imposesgreat costs on import-competing and export industries in terms oflost income and employment. But the strong dollar has substantialbenefits too. It keeps down the general price level, both directlythrough lower dollar prices of imports, and indirectly through lowerprices for domestically produced goods that compete with goods pro-duced abroad. The important question for policy is whether the costsof artificially reducing the capital inflow are greater than the costs ofthe existing trade deficit.

In the long run, expansion of potential GNP is limited by such fac-tors as growth of the labor force and of the capital stock. Even in theshort run, monetary policy puts a limit on the expansion of actualdollar GNP, because the Federal Reserve is currently committed to amonetary policy that avoids a resurgence of inflation. It follows thatif the capital inflow were somehow shut off, the dollar allowed to de-preciate, and export and import-competing industries stimulated toincrease production, the gains in those industries would probably beoffset by losses in other industries so as to leave total GNP un-changed. The mechanism whereby this would happen is an increasein the real interest rate; the industries that would lose include con-

56


struction and other interest-sensitive industries, whose customers areprimarily firms undertaking investment.

There are two reasons why the investment sector should not haveits share of the national pie reduced in favor of the export andimport-competing sectors, as it would be if the capital inflow wereshut off. The first is that there is no reason to think that the profit-ability of investment has fallen. Investment determines how big thenational capital stock will be in the future, and thus how big outputcan be. It is true that a capital inflow, which constitutes the sale ofassets to foreigners, represents a loss of future income in the form ofcapital earnings paid overseas. This loss in income is as great as theloss of returns to plant and equipment never built. Indeed if theUnited States continues to run current account deficits at anythinglike the rate forecasted for 1984, sometime in 1985 the Nation willpass from being a net creditor to being a net debtor, for the firsttime in 68 years. But from the viewpoint of maximizing domesticoutput and employment, it is better to have machines working in theUnited States, even if owned by foreigners, than not to have them atall.

The second reason for sharing economic expansion proportionate-ly among sectors, to whatever extent possible, has to do with infla-tion. Expansion is often associated with an increase in inflation.Whether U.S. inflation is reignited depends, among many otherthings, on the distribution of expansion across sectors. It seems pos-sible that industries that sell their goods and services primarily to theconsumer and government sectors will begin to run into capacityconstraints before the rest of the economy. At that point, any furtherincreases in demand in those sectors are more likely to be reflectedin higher prices than in higher production. In the industries that selltheir products to firms undertaking investment, by contrast, there isstill tremendous room for expansion. Some industries, such as non-residential construction, have only begun to share in the recovery.The noninflationary payoff to expansion in these industries is large.But if the country had never had the capital inflow, the interest ratewould be even higher, and production in the interest-sensitive indus-tries would be lower without much gain in reduced inflation. Theexport and import-competing industries would be benefiting from acheaper dollar. But they might now be starting to run into capacityconstraints more quickly, with an adverse effect on the overall infla-tion rate.

MEASURES TO REDUCE THE TRADE DEFICIT

Four kinds of policy measures have at times been proposed to im-prove the trade balance: protectionism to keep out imports, foreign

57


exchange intervention to reduce the value of the dollar, capital con-trols with the same aim, and a change in macroeconomic policy. Eachof these has costs. Of the four, protectionism is the most dangerous.

Protectionism

In a dynamic economy there are always some sectors expandingand others contracting because of technical change, shifting consum-er tastes, and so forth. This is particularly true of an economy ex-posed to the rigors of competition in world markets. Earlier in itshistory, the U.S. economy, with its large domestic market, diversifiedeconomic resources, and geographic remoteness from Europe, wasless dependent on international trade. But as domestic economies ofscale were exhausted, as tariffs were reduced worldwide, and as de-clining transportation costs made geography increasingly irrelevant,international trade became increasingly important. The growth in ex-ports allowed many U.S. sectors to expand rapidly that otherwisemight not have been able to do so. Major examples in recent decadesinclude agriculture, high-technology products, and services. But theincrease in U.S. imports, which sooner or later must accompany anyincrease in exports, meant a loss in demand for other U.S. sectors.Some sectors that had previously had the domestic market to them-selves found that their foreign counterparts could produce qualityproducts at costs far below what they had become accustomed to re-ceiving. Some major examples are the auto and steel industries.

The economic strains associated with long-term structural trendshave always generated political pressure on the government to pro-tect the adversely affected industries. In recent years temporarymacroeconomic factors—the rise in unemployment during the last re-cession and the high value of the dollar—have exacerbated the eco-nomic difficulties of sectors vulnerable to import competition, andhave intensified accordingly the political pressure to protect them. Inaddition, some exporters are finding that the strong dollar, and sub-sidies by some foreign governments, are making it more difficult tocompete in foreign markets. This group traditionally forms a con-stituency for free trade but is now in some cases generating politicalpressures of its own for government action.

The Administration's stated policy is to resist these pressures. Pro-tectionism usually succeeds in increasing the income of the sectorseeking protection. However, it imposes costs on other sectors thatmore than outweigh the benefits for the protected sector. Thesecosts are of three kinds. First are the effects on the purchasing powerof consumers. A tariff or quota on imports cannot succeed in raisingthe prices received by domestic producers without at the same timeraising the prices paid by domestic consumers. Second are the effectson other industries that use the output of the sector in question as an


input into their own productive process. Protection for the steel in-dustry raises costs for the auto industry, protection for sugar growersraises costs for candy manufacturers, and so forth. Third are the ef-fects on export industries. The dollars that foreign countries earn byselling to the U.S. market are useless to them unless, sooner or later,they spend them on U.S. exports. If the United States cuts off im-ports of foreign goods, foreigners will not have the dollars to buyU.S. exports. Usually it is difficult to identify the specific U.S. exportindustry that would benefit from increased trade. When the dollarscome back to the United States, it will not necessarily be in the formof spending by the same foreigners that originally earned them, norin the same year. But in one recent example, the connection is clear:China has indicated that if the United States cuts off imports of tex-tiles from it, China will cease purchases of agricultural products fromthe United States.

The American public retains a broadly based commitment to theideals of free trade. Nearly all political factions support free trade inprinciple. But there is a common fallacy that the arguments for freetrade are theoretical arguments that lose applicability if other coun-tries are not practicing free trade, that market distortions imposed bytrading partner governments automatically warrant retaliation by theU.S. Government.

The desire to retaliate against a foreign government that is, for ex-ample, subsidizing exports, is understandable. Such retaliation hastwo effects, one predictable and one unpredictable. The predictableeffect is to impose immediate costs, on domestic consumers andother domestic producers, that exceed the immediate benefits for theprotected sector. It is irrelevant to this effect why foreign producerswere underselling domestic producers, whether it was because ofgovernment subsidies, the level of the exchange rate, or lower laborcosts. Export subsidies by foreign governments are in essenceincome transfers—i.e., foreign aid—to the importing country.

The unpredictable effect is the reaction of the foreign government.If the foreign government were to respond by removing its subsidiesin exchange for the domestic country removing its measures, thenboth sides would be better off. All too often, however, the foreigngovernment retaliates with more of the same. U.S. measures must bewell targeted and explicitly temporary if they are to have the desiredeffect on foreign governments. There are no winners in a trade war.

The issue of the duration of protectionist measures is an importantone. Frequently, measures that are originally adopted as temporary,such as quotas imposed to protect a domestic industry "just until itcan get back on its feet," turn out later to be very difficult to remove.

59


Often protection encourages the industry to delay making needed ad-justments, rather than to speed them up.

Foreign Exchange Intervention

A second measure that has been proposed to improve the tradebalance is intervention in the foreign exchange market by the mone-tary authorities to force down the value of the dollar and thus to re-store price competitiveness to American industry. At the beginningof August 1983, and later in the year, U.S. authorities did interveneon a small scale, buying marks and yen in exchange for dollars, incooperation with monetary authorities in other countries. The inter-vention did not noticeably depress the value of the dollar, nor was itintended to. It is U.S. policy to intervene only to calm disorderlymarkets.

There are two kinds of foreign exchange intervention, known assterilized and unsterilized. Sterilized foreign exchange interventionoccurs when the central bank, at the same time that it is buying for-eign currencies with domestic currency, sells Treasury securities inthe market in order to take the domestic currency back out of circula-tion. The point of sterilizing the foreign exchange intervention is tokeep the domestic money stock unchanged. This is the type of inter-vention the U.S. monetary authorities undertake when they do inter-vene.

Unsterilized intervention has the effect of increasing the domesticmoney supply. This would have a strong downward effect on thevalue of the domestic currency. But like any other increase in themoney supply, it can be inflationary.

The effect of sterilized intervention is much less clear than theeffect of unsterilized intervention. The 1983 summer interventionamounted to $254 million on the part of U.S. authorities. This wasonly 1 percent of the flow through the U.S. interbank foreign ex-change market on a typical day in 1983. It was even less significantrelative to the trillions of dollars in funds that investors around theworld can commit to the foreign exchange market if they think thatthe exchange value of the dollar has been temporarily pushed belowthe true market level. Investors will move in quickly to exploit thepotential profit opportunity, buying dollars, and thereby returningthe price of the dollar to its previous level. This process ensures that,unless monetary authorities are prepared to intervene on a massivescale, any effects on the exchange rate will be transitory. After theVersailles Summit of 1982, a working group with representatives ofthe seven Summit countries was set up to study exchange market in-tervention. Its report, released in April 1983, concluded in part, thatthere was "broad agreement that sterilized intervention did not gen-erally have a lasting effect.'*


If monetary authorities were prepared to intervene on a sufficientlymassive scale, there could conceivably be some permanent effect onthe exchange rate, even if the intervention were sterilized so as toleave the money supply unchanged. But to the extent that sterilizedpurchases of foreign currency were successful in reducing the valueof the dollar, they would also be successful in raising the U.S. inter-est rate. The reason is that sterilized intervention does not leavemarket participants holding any more dollar currency than before; itleaves them holding more dollar Treasury securities than before. Theinterest rate would have to rise to induce the market to hold a great-er quantity of Treasury securities, just as it does whenever the gov-ernment sells large enough quantities of Treasury securities. The ex-porting and import-competing industries would be happy with thelower value of the dollar. But the capital goods, construction, andother interest-sensitive industries would be unhappy with the higherinterest rate.

Capital Controls

The third kind of measure that has been suggested to reduce theU.S. deficit is the adoption of an international "interest equalizationtax" or other restrictions on the international mobility of funds. Theaim would be to shut off or reduce the inflow of capital and thusreduce the exchange value of the dollar.

The case against restrictions on the international flow of capital isanalogous to the case against restrictions on the international flow ofcommodities, i.e., the case for free trade. Controls on internationalborrowing and lending interfere with the efficient allocation of capi-tal among countries. The Administration is opposed to capital con-trols as a matter of general principle.

What effect would controls on capital inflow in the United Stateshave in the present context? As with exchange market intervention,there are two possibilities. One possibility is that the controls wouldnot even be effective. The experience of the United States in the1960s, and of other countries today, is that there are many ways tocircumvent capital controls. The alternative possibility is that thecontrols would be strong enough to reduce the capital inflow, andthereby reduce the value of the dollar. But if so, the reduced supplyof saving from abroad would also raise the real interest rate and,once again, concentrate all the crowding out in the interest-sensitivesectors.

Macroeconomic Policy

The fourth kind of measure that has been suggested to reduce theU.S. trade deficit is a change in macroeconomic policy.


One possibility is a more expansionary monetary policy. Thiswould clearly reduce the value of the dollar. In the short run, beforeprices throughout the economy had time to adjust, it would reducethe value of the dollar not only in nominal terms, but in real terms aswell. Thus it would succeed in stimulating the demand for U.S. prod-ucts. Unfortunately, a more expansionary monetary policy would alsohave adverse consequences for inflation. In the long run, when priceshave had time to adjust, there would probably be no effect on thereal exchange rate or real output, only an increase in the generalprice level. Because of the inflationary consequences, the Administra-tion does not advocate using expansionary monetary policy to de-press the value of the dollar.

On the other hand, for those who are concerned that monetarypolicy should be tightened, it is worth taking note of the undesirableconsequences for the exchange rate in the short run. The fact thatthe price of the dollar in foreign exchange markets remained highthroughout 1983 is a clear signal that the market had confidence inthe Federal Reserve and that the money growth rate was not exces-sive.

The last possibility is a policy of reducing the budget deficit. Meas-ures to reduce the budget deficit would lower real interest rates andthus allow the investment sector to share more fully in the recoverythat is now taking place primarily in the government and consumersectors. But, further, it would also lower the real value of the dollarand thus allow the exporting and import-competing sectors to sharein the recovery as well. Of course, just as there are costs to the otherproposed measures to improve the trade balance, there are also coststo reducing the budget deficit, whether by reducing government ex-penditure or by raising taxes.

DEVELOPMENTS IN OTHER INDUSTRIAL COUNTRIES

One of the challenges facing the world economy is the uneven geo-graphical distribution of the recovery. Among the industrializedcountries, only in Canada is real growth in 1984 expected to be asstrong as in the United States. The implication for U.S. trade is nega-tive: slower growth among trading partners than in North Americameans slower growth in U.S. exports than in U.S. imports. As Chart2-3 shows, U.S. trade with both Europe and Japan is deteriorating.

EUROPE

The 1983 recovery in the United States and Canada is in the proc-ess of spreading to Europe as well. The United Kingdom and WestGermany seem to have embarked on a path of renewed growth. Ex-

62


pansionary policies in France in 1981 postponed the recession there,but deteriorating inflation and balance of payments situations led tothe adoption of austerity measures. Though the French trade balanceimproved in 1983, worries about inflation remained serious enoughto keep a lid on expectations of future French expansion. In Italy andmost of the smaller European countries there was no significant re-covery for 1983 as a whole, although there were some signs of apickup in economic activity toward the end of the year.

Effects on Europe of U. S, Economic Developments

Inflation has declined in all the larger European countries since1980. This accomplishment has not been easy. The weakness of theircurrencies against the dollar has meant higher prices for oil andother imports in Europe. To limit the damage from both domesticand imported inflation, most European countries have acceptedhigher real interest rates than they would have accepted otherwise.Indeed, this is the mechanism through which recession was transmit-ted to Europe in 1981. Just as capital flowing into the United Stateshas kept real U.S. interest rates lower and U.S. investment higherthan they would otherwise be, so has capital flowing out of some Eu-ropean countries probably kept real European interest rates higherand European investment lower than they would otherwise be. Ineffect, the low U.S. rate of private and public saving is crowding outinvestment not just in the United States, but in the rest of the worldas well.

The counterpart to a capital outflow is a current account surplus.This is the positive side of the ledger from the viewpoint of the Eu-ropean countries. Their depreciated currencies give their exportingand import-competing industries a competitive advantage in worldmarkets. Until now, the Europeans have not on the whole consideredthat they were benefiting from the strength of the dollar and the U.S.trade deficit, despite their sizable share of it illustrated in Chart 2-1.Some have found it politically convenient to focus exclusively on thenegative aspects of the exchange rate movement. The world currentaccount discrepancy may also be part of the explanation: it is as ifeach country thinks it is running a deficit in goods and services, andsomeone else must be running the surplus.

In any case, in 1984 U.S. growth will lead to greater demand forEuropean goods and thus is likely to help pull Europe out of its re-cession. The prospective reversal of the 1980-83 appreciation of thedollar is another development to which the Europeans can look for-ward. If the dollar depreciates, as many expect, the reduction inimport prices will make the task of fighting inflation easier in Europe.Of course, the reversal in the gain in European competitivenesswould also lead to an eventual reversal in the gain in net exports to

63


the United States. But it might allow European monetary authoritiesto bring down interest rates and stimulate domestic demand, at leastin those countries such as West Germany and the United Kingdomthat have relatively strong current account and inflation positions.The weaker-currency countries in Europe would find it difficult toexpand on their own. The French franc, for example, might comeunder renewed pressure within the European Monetary System if aprospective world portfolio shift out of dollars were accompanied bya portfolio shift into marks.

Structural Problems in European Labor Markets

Regardless of what happens in the international financial markets,the problem of 18 million unemployed workers still plagues WesternEurope. Indeed, in 1983 the unemployment rate continued to climbthroughout Europe. In sharp contrast to the United States, WesternEurope employs about the same number of workers, on an absolutebasis, as it did in 1968. The most commonly cited cause of the bleakemployment picture is excessive labor costs. Due to wage contractsindexed to consumer prices, and other less institutionalized socialforces, real wages in Europe never adjusted in the 1970s to reflectthe negative effect of oil shocks on the productivity of labor. Someobservers argue that the greater rigidity of real wages in Europe thanin the United States explains European governments* lack of enthusi-asm for expansionary demand policies, despite low growth. For ex-ample, some European governments have taken steps to reduce gov-ernment expenditure. They have also expressed the wish that theUnited States would reduce its budget deficit. Whether or not it iscorrect that expansion requires real wages to fall, it seems likely thatany expansion of employment in Europe will greatly lag expansion ofoutput. The implications for investment and long-term growth arealso disturbing.

JAPAN

Economic performance in Japan has been impressive by the stand-ards of most countries, even though the 1980-82 world recession wasreflected in Japan as a clear slowdown in real growth. The Japanesetrade account moved into substantial surplus again in 1983, as de-clining oil prices reduced the import bill and recovery in the UnitedStates and some others of Japan's trading partners boosted exports.Domestic demand remained somewhat sluggish.

Trade with the United States and Japanese Commercial Policy

As Table 2-1 shows, the U.S. trade deficit with Japan, known as abilateral trade deficit, is larger than with any other single country.


Trade relations between the two countries are a source of specialconcern, and warrant a careful analysis.

To some extent the bilateral trade imbalance follows naturallyfrom three other facts:

1. Japan usually runs a merchandise trade surplus with the rest ofthe world, as a consequence of its high rate of saving and its deficitin services.

2. The United States usually runs a merchandise trade deficit, as aconsequence of its low rate of saving and its surplus in services.

3. Japan and the United States are the two largest market econo-mies in the world and account for large shares of each other's trade.

There is an important reason why, even if Japan's overall trade bal-ance were zero, it would still run a large bilateral trade surplus withthe United States, and a very large surplus in manufactured goods inparticular. Japan has few natural resources, and is dependent on im-ports for its supply of primary products, especially oil and other min-eral fuels. It must earn the foreign exchange to pay for the oil byexporting other goods. If the United States were willing to sellenough Alaskan oil to Japan, for example, the bilateral trade imbal-ance would be reduced. As it is, Japan buys its oil elsewhere, runninga large bilateral deficit with OPEC countries. And Europe normallyruns a bilateral deficit with the United States. It is as though theUnited States sells to Europe in order to be able to buy from Japan,Japan sells to the United States in order to be able to buy fromOPEC, and so forth around the circle of trading partners.

The important point is that it is neither necessary nor desirablethat any two countries' bilateral trade be in balance, any more than itis necessary or desirable for an auto manufacturer to be in bilateralbalance with its steel supplier, or a household with its plumber. Onelooks at the overall balance of a household, company, or country, notat bilateral balances, to see if it is earning more—from all its tradingpartners together—than it is paying out.

One widely held belief is that Japanese trade policy is respon-sible for the fact that Japan does not buy as much from the UnitedStates as the United States buys from it. Because the Japanesehave accelerated tariff reductions agreed to in the Tokyo Round ofmultilateral trade negotiations, their tariffs are now lower than thoseof the United States and the European Community. But the Japanesemaintain a number of nontariff barriers against imports that are asource of friction with the United States. These include importquotas for some agricultural products, and less tangible barriers toimports of manufactured goods, such as inspection requirements andgovernment purchasing policies. Recent negotiations between thetwo governments in such areas as beef and citrus products, metallur-

65


gical coal and natural gas, cigarettes, and telecommunications equip-ment, have made some progress in reducing these barriers. But fric-tions remain.

Import barriers in every country protect those sectors that wouldnot have the comparative advantage in a fair fight, at the expense ofthose sectors that would. In the Japanese case, it is agriculture that iseasily the least competitive sector and therefore the most protected,with beef and citrus products the most highly visible examples. Japanalready imports a lot of agricultural products; indeed, it is the largestcustomer of U.S. agricultural exports. But, in general, a high ob-served degree of "import penetration*' does not preclude the exist-ence of a high degree of protection. In fact, import penetration isoften the cause and protection the effect, rather than the other wayaround. Many countries invoke national security arguments as a justi-fication for protectionist measures; it should be noted that Japandoes so on behalf of its agricultural sector.

It would be in the Japanese interest to reduce or remove the agri-cultural barriers because they can import these products far morecheaply than it costs to produce them domestically. Japanese liberal-ization would, of course, also be in the interest of U.S. farmers. Itprobably would not be in the interest of the U.S. manufacturingsector, however. In view of Japan's deficits in oil and services, it mustrun surpluses in its trade in other goods. If Japan were to start im-porting more agricultural products, its trade balance would notsimply worsen by the same amount. Rather, the yen would eventuallydepreciate in order to generate the required trade surpluses in othersectors, i.e., manufactures. The point is that Japanese protectionism,like all protectionism, distorts the pattern of trade in such a way as tohurt both countries on net; but it is not a major source of the Japa-nese trade surplus.

The Yen Exchange Rate and Japanese Foreign Exchange Intervention

Another common claim is that an undervalued yen is the source ofthe trade problem. One version of this view is that the Japanese aredeliberately keeping the yen undervalued, presumably either throughforeign exchange intervention or through capital controls. No aspectof this view stands up well to the facts, however.

The value of the yen has indeed fallen in terms of dollars since1980, though this movement was largely reversed in late 1982. As ofDecember 1983, the yen had depreciated 3 percent, relative to the1980 average. This depreciation has not been an offsetting reactionto different rates of inflation. Rather, the opposite is the case: be-cause of superior inflation performance, the gain in Japanese com-petitiveness over this period has been 13 percent, as measured byconsumer prices.

66


However, the dollar has appreciated against all foreign currencies,not just the yen. Chart 2-4 shows the value of the yen, mark, franc,and pound, each in terms of dollars. The mark, franc, and pound areall clearly down in value by more than the yen. In fact, relative to the1973-79 average, the yen has actually risen.in nominal terms by morethan 10 percent against the dollar. It is difficult, given Chart 2-4, tosingle out the yen as the troublemaker.

Chart 2-4

1973-79=100160

Bilateral Exchange Rates

U.S. dollars per unit of foreign currency

60 -

0 11 f 1111111111MIL111M111J111 • 1111111111111111111111 r 111111111111 i 11111111111111111M11111111111111111 i 1111M111111 i L1111111J111

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Source: international Monetary Fund.

The bilateral exchange rate between the yen and the dollar re-mains a source of difficulty for U.S. businessmen who compete withJapan in domestic or foreign markets. Have the Japanese intervenedto keep the yen at a lower level against the dollar than it otherwisewould be? Although the Japanese authorities practice occasional ex-change market intervention, their intervention has, if anything, pre-vented a further decline of the yen relative to the dollar. The Japa-nese monetary authorities have long followed a policy of trying todampen fluctuations in the exchange rate, known as "leaning againstthe wind." In 1977 and 1978 when the dollar was weak against theyen, the Japanese authorities bought dollars to dampen the down-


ward movement of the dollar against their own currency. In theperiod since April 1981, when the dollar has been strong against theyen, the Japanese have sold dollars to dampen the upward movementof the dollar against their own currency. The intervention does notappear to have been effective at moderating the swings in the yen/dollar rate. But it has worked in that direction.

Liberalization of Japanese Capital Markets

The cause of the decline in the exchange value of the yen againstthe dollar since 1980 is the flow of capital out of Japan and into theUnited States. A primary reason for this capital flow is the high realU.S. interest rate. But it has been suggested that Japanese restric-tions on the international flow of capital may also be a factor.

Japan, like the United States and European countries, maintainedinto the 1970s controls on the international flow of capital that hadoriginated under the fixed exchange rate system. After the shift tofloating exchange rates in 1973, the United States, West Germany,and the United Kingdom, one by one removed their capital controls.As recently as 1978, Japan still retained formidable barriers to bothinflow and outflow. For example, foreigners were not allowed to holdmany Japanese securities, such as gensaki, a 3-month repurchaseagreement. Chart 2-5 shows the Tokyo gensaki interest rate and theLondon 3-month Euro-yen interest rate. The fact that the Tokyogensaki rate exceeded the London Euro-yen rate in 1978 is clear evi-dence that capital controls were operating to reduce capital inflowinto Japan. Otherwise foreign residents would not have been willingto hold Euro-yen in London when a higher interest rate was availablein Tokyo. The yen was then at an all-time high against the dollar andthe Japanese were trying to dampen its appreciation by keeping capi-tal from flowing into the country.

When the yen depreciated rapidly in 1979, the Japanese movedquickly to remove controls on capital inflow, making it possible forforeigners to hold Japanese securities. Japan's Foreign Exchange andForeign Trade Control Law of December 1980 established a pre-sumption that international capital flows are permitted. Chart 2-5shows that the de jure liberalization took place de facto as well. Thedifferential between the gensaki and Euro-yen rates dropped sharply.In fact, the differential, though small, became negative in 1979 and1980. This is evidence that Japanese controls on the inflow of capitalwere liberalized more quickly than controls on capital outflow. Ifsome barriers to capital outflow had not remained, Japanese inves-tors would not have been willing to hold assets in Tokyo when ahigher interest rate on comparable yen securities was available inLondon. Thus those capital controls that remained were more a forcekeeping capital inside the country than outside, and thus more a

68


Chart 2-5

Interest Rates on the Yen

Percent per annum16

14 Euro-Yen(London)

1975 1976 1977 1978 1979

Source: Morgan Guaranty Trust Company of New York.

1980 1981 1982 1983

force keeping the yen value up than keeping it down. By 1983 thegensaki-Euro-yen differential was so small as to suggest that Japanesecapital markets for short-term negotiable instruments were as openas, for example, European capital markets.

The governments of both Japan and the United States recognizethat the yen/dollar exchange rate remains a source of concern, par-ticularly insofar as it heightens protectionist pressures in the UnitedStates. One proposal is that the Japanese government take positiveaction to bring about some capital inflow. In 1984 some Japanesegovernment-affiliated agencies plan to issue foreign currency bondsin New York. However, the governments of both countries feel thatmore direct measures, such as reinstatement of some of the controlson capital outflow, even if they were effective, would be counterpro-ductive to the longer term goal of completing the integration ofJapan into world financial markets.

In the past the yen has not occupied a place in world financial ar-rangements that is commensurate with Japan's importance in world


trade. For example, the yen's share in world official holdings of for-eign exchange, though it has risen rapidly, still falls short of, not onlythe dollar's share, but the mark's share as well. Similarly, the per-centage of Japan's exports that are denominated in its own currency,though it has risen rapidly, is still below the corresponding percent-age for other large industrialized countries. At the time of the Presi-dent's trip to Japan in November 1983, the Japanese agreed to pro-mote increased "internationalization" of the yen. This includes suchconcrete measures as relaxing the rules that previously restricted useof the yen forward exchange market to transactions arising from for-eign trade. There is no reason to expect such measures to have a no-ticeable upward effect on the value of the yen in the short run. Nev-ertheless, in the long run an enhanced role for the yen in worldfinancial markets is considered by some to be desirable in that it re-flects Japan's importance in the world economy, and is hoped to con-tribute to some increase in its exchange value against the dollar aswell

A related goal is continued deregulation of domestic Japanese capitalmarkets, which lags behind deregulation in the United States. Herethe major beneficiary of liberalization would be Japanese households,who in the past have not been paid competitive interest rates on theirsavings. But it is also sometimes argued that, if interest rates rose inJapan, there might be a decline in capital outflow from Japan and anappreciation of the yen.

Changes in the Japanese-U.S. Trade Balance

The Japanese government is not using either foreign exchange in-tervention or capital controls to keep the yen "undervalued." Indeed,it would be more accurate to say that the dollar is "overvalued" thanto say that the yen is "undervalued." The other major currencies aredown against the dollar to a greater extent than is the yen. Onewould expect that the U.S. bilateral trade balance with Japan wouldnot have worsened more than the bilateral trade balance with othercountries.

This is indeed the case. As Chart 2-3 and Table 2-1 show, the bi-lateral balance with Japan has worsened. But the deterioration in theU.S. bilateral trade balance with Japan represents less than one-eighth of the total 1981-83 decline in the overall U.S. trade balance.The deterioration in the bilateral balance is less severe, as a propor-tion of U.S. imports from Japan, than the 1981-83 deterioration inthe overall U.S. trade balance. The deterioration in the U.S. bilateraltrade balance with Japan is also far less severe, on either an absoluteor relative basis, than the deterioration in the U.S. bilateral trade bal-ance with Mexico over the same period.

70


This is not to say that U.S. trade with Japan does not remain asource of concern. The point is that the trade balance with Japan hasdeteriorated for the same reasons as the balance with other coun-tries.

THIRD WORLD DEBT PROBLEM

The decline in the U.S. trade balance is good news for many trad-ing partners. In the cases of Canada, Japan, and Europe, it representsa pickup in exports that has helped to pull their economies out ofrecession. But in the cases of the third world countries, particularlythose in Latin America, the changing pattern of trade representssomething quite different. As seen in Chart 2-3, the decline in theU.S. trade balance with Latin America is much greater in magnitudethan the decline in the U.S. trade balance with other parts of theworld. The increase in their trade balances is not good news for theLatin Americans; it is the reverse. It is a symptom of the severe debtproblem that afflicts most of these countries, and many in Asia,Africa, and Eastern Europe as well, and of the wrenching adjustmentsthat they are finding it necessary to undertake.

THE NATURE OF THE PROBLEM

Recent Developments in the Debtor Countries

Although there had been previous isolated cracks in the interna-tional debt terrain, it was not until 1982 that the problem erupted indramatic proportions. In August of that year, Mexico announced thatit was unable to meet its debt obligations to foreign creditors, al-though it was taking steps to rectify the situation. In response, theU.S. Government mounted a rescue operation, involving the creditorbanks, the International Monetary Fund (IMF), and other creditorgovernments. The package included a strict program of adjustmentfor the Mexican economy and a rescheduling of much of the debt.Nervous banks began to cut back lending to other countries that ap-peared to be heavily indebted, with Brazil the most obvious target.As long as the banks had been willing to continue lending, thedebtor countries had had the foreign exchange necessary to continueservicing their accumulated debt, i.e., making scheduled payments ofinterest and amortization of principal. As the banks cut back, thedebtors found debt-service obligations increasingly difficult to meet.One by one, Brazil, Argentina, and many other debtor countriesfound it necessary to seek debt relief from their creditors, while im-plementing programs of economic adjustment monitored by the IMF.

The most important result of these programs of adjustment hasbeen a sharp improvement in trade balances, so that interest pay-

71


merits do not have to be met entirely out of new loans, but can belargely met out of foreign exchange earnings from internationaltrade. In 1983 the adjustment efforts of several of the most troubleddebtors were successful to the point of achieving significant surplusesin their balances of trade. By the end of the year the situation lookedconsiderably brighter, especially in Mexico. If all concerned partiescontinue their efforts, and there are no unforeseen calamities, thesystem can be expected gradually to work its way back to normalcy.

The increases in debtors' trade balances have been achieved large-ly by cutting imports. Cutting imports is the only practical way ofachieving a large increase in the trade balance in a short period oftime. But, past a certain point, it is difficult to sustain. It means thatthe population's standard of living is falling, inventories of raw mate-rials and spare parts have been exhausted, and investment is at astandstill. In some cases, inadequate supplies of imported inputshave forced firms to curtail production, even firms producing forexport markets. Beginning in 1984 further progress will depend mostcritically on expansion of exports, rather than further contraction ofimports. Only then will adjustment be compatible with a world ofeconomic growth.

Liquidity Versus Solvency

Central to an analysis of the current debt problem is the distinc-tion between liquidity and solvency. Because countries do not go outof business* as do firms, the distinction is not absolute but is rather amatter of degree. A country might be defined as insolvent if it islikely to find servicing its debt increasingly difficult over time, andeventually to have to default. A country is merely short of liquidity ifits economy is believed to be fundamentally sound and its debt-serv-icing difficulties are believed to be temporary. In that case, continuedlending to keep the country liquid is justified, so as not to cause un-necessary damage to the local economy, and so as not to risk moredrastic solutions, with their adverse economic and political repercus-sions. In the case of insolvency, however, there would be no point inthe country making it through another year, only to face the samedifficulties next year that much further into debt; more drastic solu-tions would be called for.

Argentina, Brazil, and Mexico are the three debtor countries thathave dominated the discussion, not only because of their size, butalso because of the acuteness of their financial distress. One indica-tion of their difficulties is that in all three cases, debt-service obliga-tions (interest and amortization, including short-term debt, as origi-nally scheduled) exceed 100 percent of exports of goods and serv-ices. This means that even if the countries could somehow cut theirimports to zero, their export earnings would not be sufficient to serv-

72


ice the debt in the absence of continued new lending. But manyhealthy, developing countries borrow abroad to finance their devel-opment, and would be hard put to meet their debt obligations if forsome reason they were suddenly cut off from new lending. Further-more, debt-service numbers are particularly sensitive to yearly fluctu-ations in interest rates. A longer term measure of "how far in overtheir heads" the debtor countries have gotten is the ratio of debt toexports. This ratio is reported in the first row of Table 2-4 for Ar-gentina, Brazil, and Mexico taken together. The ratio increased rap-idly between 1981 and 1982, and now exceeds 300 percent. If thedebt/export ratio were expected to continue to increase in thefuture, the countries could be considered insolvent.

ORIGINS OF THE PROBLEM

The solvency issue is analyzed below. But to evaluate the future, ithelps first to recount the past.

The 1970s: Incurring the Debt

The present pattern of lending to third world countries, with itsheavy concentration on bank lending, is only 10 years old. In theaftermath of the 1973-74 oil price shock, banks "recycled" billions ofdollars of savings that the OPEC countries could not in the short runabsorb. World inflation rates were high and real interest rates verylow—even negative—through the remainder of the decade, signalinga high level of savings in search of investment opportunities. Thefunds went, not to all the third world countries that were having dif-ficulty paying their higher oil bills, but mainly to those judged tohave good prospects for future growth, and thus good prospects forfull repayment of the debt.

This lending seemed sensible at the time. The high world inflationrates and low real interest rates meant it was advantageous for thecountries in question to borrow, and that servicing the debt did notlook difficult. A high level of indebtedness is not necessarily a sourceof concern, as long as the borrowing countries are expected to grow.Corporations whose income is expected to grow in the future oftenhave a high ratio of debt to earnings. Countries do the same. TheUnited States in the 1880s had debt/export ratios as high as those inTable 2-4. Nor were the banks* expectations of high growth rates inthe debtor countries in the 1970s disappointed. The rate of growthof exports from 1975 to 1980 was as great as the rate of growth ofdebt, in Argentina, Brazil, and Mexico taken together. Thus the keymeasure, the debt/export ratio, did not rise during this period.

Prior to 1970, private capital flows to third world countries hadpredominantly taken the form of foreign direct investment, bondsissued for specific projects, and short-term trade credit for specific

73


imports. The pairing of loans to projects has the virtue of ensuringthat the sum of the lending equals the sum of the investment. Thebank lending of the 1970s was more often for general balance of pay-ments financing. There is nothing wrong with this in itself. But it al-lowed total lending to exceed total project investment. The fact thata large number of banks were involved, and that good aggregate sta-tistics on lending did not at first exist, added to the confusion. Thebanks may not have realized the extent of their collective investment.

The debtor countries also made policy mistakes. The mistakes fallinto two broad categories: overexpansion of demand and overvalua-tion of currencies. Both kinds of mistakes led to excessive trade defi-cits and therefore excessive borrowing to finance those deficits. Butbeyond this observation, generalization is difficult. In many countriesthe government sector expanded too quickly, especially in the formof credit to inefficient state enterprises. Often government deficitswere monetized, and the currency was not devalued fast enough tokeep up with inflation; then the loss in competitiveness of export in-dustries led to trade deficits that were financed by borrowing fromabroad. The end result was the same as when the governments fi-nanced their deficits by borrowing from abroad directly. Thoughmuch of the money was used for profitable investment, some went tounwise projects, to consumption, and to capital flight out of thecountries involved.

In some countries, a capital inflow and consequent real apprecia-tion of the currency were the unintended effects of favorable devel-opments. For example, the discovery of oil in Mexico brought aboutan increase in indebtedness—financing the investment necessary todevelop the oil. Furthermore, the monetary inflow added to inflation-ary pressures, and the loss in price competitiveness had an adverseeffect on the exports of other industries, especially the manufacturingsector on which previous hopes for growth had been pinned.

In other countries the simultaneous adoption of an array of mone-tarist and free market policies did not prevent indebtedness. Mone-tary stabilization made the country's assets seem attractive to hold,trade liberalization increased the trade deficit, and removal of capitalcontrols allowed foreign capital to flood in. In several countries, realovervaluation of the currency was an intentional element of the planto reduce inflation quickly. The magnitude and duration of the lossin export competitiveness that followed were not intentional.1980-82: A Change in the International Environment

As of 1980, there was little reason to doubt the ability of most ofthe debtor countries to sustain high rates of growth. If the interna-tional economic environment had remained favorable, it is possiblethat the debtor countries could have gone for years without having to


adjust their policies. But beginning in 1980, they were buffeted byseveral blows not of their own making. First, inflation rates fell andreal interest rates rose in the United States and in other countries.Because the percentage of the debt that was short term had been in-creasing, and most of the rest carried floating interest rates, the risein the market rate of interest showed up quickly in debt-service re-quirements.

Second came the 1980-82 world recession. The export earnings ofthe debtor countries fell sharply. The demand for the primary prod-ucts that many of the countries produce has always been highly sensi-tive to income in the industrialized countries. The years 1981 and1982 saw sharp drops in the prices of these products relative togoods produced in the industrialized countries. In addition, the non-traditional exports that had grown rapidly in the 1960s and 1970swere hurt by the increased application of protectionist measures inthe industrialized countries. Protectionist measures sometimes oper-ated to limit exporters to their past levels of sales, in which case ex-ports from the "new arrivals" in the market were hurt disproportion-ately. In Argentina, Brazil, and Mexico, total export revenue fellabout 8 percent in 1982 in dollar terms.

A third factor that contributed to the debtors' loss in export reve-nue was the large appreciation of the dollar. The strength of thedollar was in particular a source of the fall in primary product priceswhen expressed in dollars, which is the appropriate measure becausemost of the debt is denominated in dollars.

A fourth factor for some countries was the decline in dollar oilprices after 1981 (which in turn derived partly from the other threefactors). The oil price decline of course helped the oil-importingcountries, which are the majority. But it added to the list of problemdebtors a number of oil-exporting countries, OPEC members such asVenezuela and Nigeria, as well as nonmembers such as Mexico.

The loss in export earnings attributable to the world recessionshows up immediately in the denominator of the debt/export ratio.The higher interest payments show up immediately in the current ac-count deficit, which in turn shows up over time as a rise in thenumerator of the debt/export ratio. As seen in Table 2-4, the ratiorose sharply in 1982.

It is worth noting that virtually all the major Latin American coun-tries got into trouble, the oil exporters as well as the oil importers,those that followed monetarist and free market policies as well asthose that increased the money growth rate and expanded the role ofthe government in the economy. This suggests that in retrospect thekey factor, which they all shared, was getting deeply into debt in thefirst place.


TABLE 2-4.—Debt/export ratios for Argentina, Brazil, <

Item

(1) Debt/export ratio

(2) Interest payments .

{3) Trade deficitl

(4) Debt2

(5) Implied interest rate (2)/{4)

(6) Trade deficit/debt (3)/(4)

(7) Current account deficit/debt (5)+ (6)...

(8) Change of exports to next period

1974

2.1

2.7

7.6

43.4

6.2

17.5

23.7

- 2 . 8

1975

2.6

3.4

8.9

52.5

6.5

17.0

23.4

16.6

1976

2.8

4.3

5.0

63.9

6.7

7.8

14.5

22.8

1977

2.7

4.9

0.6

75.7

6.5

0.8

7.3

18.6

2nd Mexico aggregated, 1974-83

1978

2.8

1979

2.7

Billions of dollars

6.6

1.8

95.0

10.3

6.6

118.7

Percent

6.9

1.9

8.8

30.1

8.7

5.6

14.2

34.6

1980

2.4

15.1

10.4

143.2

10.5

7.3

17.8

16.5

1981

2.7

22.6

7.8

185.1

12.2

4.2

16.4

=7.9

1982

3.2

28.4

- 6 . 5

205.3

13.8

- 3 . 2

10.7

4.6

1983

3.2

?67

-?0.3

213.9

12.2

- 9 . 5

2.8

11.5

1 Trade deficit on goods and services excluding interest.2 Gross debt including short-term debt.Sources: International Monetary Fund, Morgan Guaranty Trust Company of New York, and Council of Economic Advisers.

It is, however, true that South Korea and other Asian countriesthat had become as indebted as many of the Latin American coun-tries, as measured by debt/output ratios, encountered less severeproblems in the 1980s. What distinguishes South Korea and otherAsian debtors from most Latin American countries is not the degreeof government intervention in the domestic economy, but the degreeof export-orientation. Exports of goods, services, and private trans-fers are 44 percent of GNP in South Korea, as the result of 20 yearsof vigorous export promotion. By contrast they are 17 percent ofGNP in Mexico, 16 percent in Argentina, and just 8 percent in Brazil.Indeed, of the major Asian debtors, the one to run into the most se-rious problems, the Philippines, also has the lowest ratio of exportsto output. While many other factors are relevant, a debtor countrywith a high ratio of exports to GNP is less likely to get into debt-servicing difficulties than an otherwise similar debtor country.

WILL DEBT/EXPORT RATIOS IMPROVE?

Argentina, Brazil, and Mexico are all expected to receive new loansin 1984. One point of view is that this is throwing good money afterbad, that the loans will never be repaid, that the problem is one ofinsolvency rather than illiquidity. According to this view, the presentcase-by-case approach is unrealistic, and should be replaced by somesort of general write-down of the debt. This view is accompanied bywidely ranging degrees of sympathy for the debtors. Some observerscall for a new agency to buy the written-down debt and extend morefavorable terms to the debtors. Others believe that the countriesshould be left to fend for themselves.


An evaluation of the insolvency versus illiquidity issue is critical.The question is what debt/export ratios are likely to do over thecourse of the next decade. Ever-rising debt/export ratios imply insol-vency. Ratios that decline over time, and eventually reach reasonablelevels, imply that the difficulty is only one of liquidity.

The debt/export ratio will decline if the rate of growth of debt isless than the rate of growth of exports. The growth of the debt canbe identified with the current account deficit. (In the past, current ac-count deficits could also to some extent be financed by foreign directinvestment and temporary drawing-down of international reserves. Inthe long-term future, a successful resolution of the debt problemwould include a revival of foreign direct investment. But, as of 1984,in many countries there is now little likelihood of a continuation ofthese flows.) The current account deficit consists of interest pay-ments plus the deficit in merchandise trade and non-interest servicesand transfers. Rows 5 and 6 in Table 2-4 report interest paymentsand the trade deficit, respectively, each as a percentage of the level ofthe debt. If the expected rate of growth of exports is greater than thesum of these two numbers, i.e., greater than the current account/debt ratio reported in row 7, then the debt/export ratio can be ex-pected to decline over time. This criterion was easily met by the 25percent average annual growth rate in exports that prevailed from1975 to 1980.

The sharp increases in interest rates after 1980 made the criterionmuch more difficult to meet. If the trade balance had remained indeficit or had been zero, the criterion would not now be met. ButArgentina, Brazil, and Mexico succeeded in switching their trade bal-ances from deficit to surplus by 1983. Comparing expected exportgrowth with the average interest rate being paid on the debt (thenumber in row 5, 12.2 percent in 1983) alone would be too strict acriterion. It would not give the countries credit for the adjustmentthey have accomplished. But the total current account deficit/debtratio in row 7 was only 2.8 percent in 1983. This is a more reason-able target against which to compare the rate of exporj growth.

What is export growth expected to be in coming years? Theanswer depends on the growth rate in the industrialized countries,among other factors. Even assuming the industrialized world's realgrowth rate has now returned to that of the late 1970s, there is littlelikelihood of the growth rate of export earnings returning soon tothe 25 percent average annual rate of the earlier period. The quanti-ty of debtor country exports demanded is expected to respond lessfavorably to this recovery than to past recoveries, in part because inrecent years the debtors had come to rely to a greater extent on ex-ports to each other and to OPEC, and strong recovery in the near


term is expected only in the industrialized countries. But, allowingfor some improvement in the dollar prices that the debtor countriesare paid for their products—and the improvement might be largeover the next few years if the dollar depreciates—there does notseem to be much doubt that the rate of growth of export revenuewill exceed 2.8 percent by a comfortable margin in 1984 and into theindefinite future. Thus there is not much doubt that the debt/exportratio will decline. Eventually, as export growth and lender confidenceare restored, the debtors can be expected to return to the trade bal-ance deficits appropriate to developing countries.

SHARING THE BURDEN

Because the debt problem seems to be one of liquidity rather thanone of solvency, i.e., continued lending will permit exports to growmore quickly than the debt burden, it is important to keep the lend-ing going. Chart 2-6 illustrates the amount of foreign exchange avail-able to Argentina, Brazil, and Mexico taken together. In the 1970simports exceeded exports, that is, they ran trade deficits. Because theprospects for future growth looked good, voluntary private lendingwas sufficient to finance both the trade deficit and interest paymentson previously incurred debt. By 1983 interest payments had becomevery large and—because of worsened prospects—banks had becomereluctant to extend enough new lending to cover the interest pay-ments, let alone any trade deficit. It was only as part of a cooperativeeffort among the debtors, banks, industrialized country governments,and the IMF that the debtor countries were able to get through theyear. The next four subsections consider in turn each of the four par-ties to this cooperative effort.

Adjustment by the Debtor Countries

By far the greatest share of the burden was borne by the debtorsthemselves. Between 1981 and 1983 the three Latin American coun-tries taken together succeeded in improving their aggregate tradebalance in goods and services (excluding interest) by $28 billion. Inthe larger debtor countries, most of the change was accomplished bycutting imports sharply, mainly by contracting income and expendi-ture, although partly by devaluation and other methods. From 1981to 1983 imports were slashed about 52 percent in Argentina, 30 per-cent in Brazil, and 66 percent in Mexico. All three countries have hadto suffer severe recessions in order to reduce expenditure on tradedgoods. Real GNP has been falling rapidly. In these and other coun-tries, unemployment is very high, and the standard of living of most ofthe population, including the middle class, has deteriorated sharply.


Chart 2-6

Sources and Uses of Foreign Exchange:Argentina, Brazil, and Mexico Aggregated

Billions of dollars

80

70

60

50

40

30

20

10

Sources Uses

Sources Uses

1976 1982 1983

Notes:Capita! Inflow/Outflow: Nonbank long-term lending from private sources and non-debt-creating

flows {such as foreign direct investment); net (of capital flight).Official: Long-term borrowing from official sources, official transfers, and reserve-related

liabilities (such as loans from the Bank for International Settlements).IMF: Use of Fund credit.Services:' Net payments for services, excluding interest, less private transfers.

Source: International Monetary Fund.

Calls for solutions to the debt problem through adjustment by thedebtor countries must acknowledge the fact that an enormousamount of adjustment is already taking place. Indeed, it was the largeswing in the trade balance from deficit to surplus that allowed thedebt/export ratio to begin falling.

New Bank Lending

As can be seen from Chart 2-6, the increase in the debtor coun-tries* trade balances in 1983 was still not enough to pay for all of theinterest they owed. In other words, most of them ran current accountdeficits. The largest source of financing of the deficits was the banks.New bank lending to Argentina, Brazil, and Mexico in 1983 wasabout $9 billion.

79


The role of the banks has been controversial. One commonly ex-pressed point of view is that the banks made unwise loans, and theynow deserve to suffer the consequences. A related viewpoint is that,regardless of whether in the 1970s one could have foreseen the debtcrisis, a necessary part of the discipline of the marketplace is thetaking of losses when things go wrong, unmitigated by help from na-tional or supranational government institutions. Proponents of thisphilosophy will be skeptical of solvency calculations like those inTable 2-4. They may ask why it is necessary for the IMF, and theUnited States and other governments, to get involved, if the loansare profitable and repayable.

In the current international financial system, an individual bank,particularly one of the many smaller banks, has an incentive to dis-continue new lending to a problem debtor. A new loan adds to theamount of capital the bank has at risk. Yet—if the bank's share issmall relative to the total—a new loan does not visibly add to thedebtor's ability to remain current in its payments on its previously in-curred debts. If all the banks, as part of a package, continue newlending, this does add significantly to the ability of the country toservice its debt on schedule. But an individual bank has no incentiveto take into account that its actions might contribute to the failure ofthe package, and thus precipitate the default that it fears. Left toitself, the bank would be a "free rider," allowing the quality of itsportfolio to benefit from the new loans of others, without putting upany new money itself. This free-rider problem is one justification fora role for the IMF and other public institutions.

The International Monetary FundThe IMF is the third of the four legs, after the debtors and the

banks, on which responsibility for managing the debt problem rests.In 1983 the Administration sought, and eventually won, congression-al approval for the U.S. share of an increase in resources for theIMF.

The IMF lends money to any of its 146 member governments thatare in balance of payments difficulty. No member has ever defaultedon an IMF loan. In the past the two biggest borrowers have been theUnited Kingdom and the United States.

The IMF has increased total lending in the 1981-83 period of fi-nancial distress in the third world and tight liquidity worldwide, as itdid in the aftermath of the 1973 oil shock. However, the magnitudeof the resources supplied by the Fund is often less important than itsrole as a catalyst. In the past this has meant giving a "seal of approv-al" to countries that have agreed to follow particular programs ofneeded policy changes, enabling them to borrow from banks andother sources. In the financial packages of the past 2 years, the Fund

80


has gone a step further. In these cases, as a precondition to the IMFstamp of approval to a particular debtor country and to the availabil-ity of IMF resources, not only must the country agree to a set of poli-cies, but the banks to which the country is indebted also must agreeto extend new loans. In this sense, the IMF is "bailing in" the banks,rather than bailing them out. Chart 2-6 shows that the total amountof Fund lending to Argentina, Brazil, and Mexico in 1983, about $4billion, is less than half the amount of new bank lending, which is inturn less than the reduction of net imports achieved by the threecountries.

In recent years, the Fund, recognizing that many countries' balanceof payments problems require more than short-term stabilizationpolicy and short-term financing, has at times extended financing forlonger term structural adjustment. However, longer-term develop-ment loans remain the special province of the Fund's sister institu-tion, the World Bank. Neither institution offers substantially conces-sional interest rates. Only the World Bank affiliate, the InternationalDevelopment Association (IDA), provides "soft" loans to poor coun-tries. The recipients of IDA loans are not the debtors with which thischapter has been concerned. The debtors were rapidly growingeconomies until recently. Most of the IDA recipients are African andAsian countries that are poor and have always been poor. They donot have big debt problems because banks in the past have not beenwilling to lend to them.

Thus the purpose of the IMF is neither to bail out banks, nor togive foreign aid. The IMF is rather, as the President has described it,"the linchpin of the international financial system."

The Role of National GovernmentsThe fourth leg in the cooperative effort to resolve the debt prob-

lem, after the debtor countries themselves, the banks, and the IMF, isthe governments of the creditor countries. Besides supporting theIMF, there are two ways in which the governments play a crucial rolein the process: direct credit and trade policy.

In a variety of ways, credit is extended directly by governments tothe debtors that are the most afflicted and the most important tothem. First, a crisis sometimes comes up so quickly that an IMF pack-age cannot be assembled in time. Then the Bank for InternationalSettlements (the "central bank for central banks" in Basle, Switzer-land), or monetary authorities in the industrialized countries actingon their own, may extend a short-term "bridge loan," to tide thedebtor over until the longer term financing and adjustment programare in place.

Second, most industrialized countries have government tradecredit agencies that grant short-term trade credit to countries buying

81


their exports. Many U.S. firms that normally export to the debtorcountries, especially Mexico and Brazil, are currently unable to do so,as trade credit from private sources has disappeared. The U.S.Export-Import Bank, as currently constituted, has a mandate to raiseits levels of credit in these circumstances, when reasonable assuranceof repayment exists. Such credit simultaneously increases the abilityof U.S. firms to export, and the ability of the debtor countries toimport. Other wealthy countries* trade credit agencies are grantingcorresponding credits for their own firms' exports to the large debtorcountries.

Third is the Paris Club, a forum where debtor countries can nego-tiate debt-relief terms on credits extended by, or guaranteed by, offi-cial government agencies. Paris Club rescheduling, along with theother forms of direct credit from national governments, is a signifi-cant element in the financing picture for many of the problem debt-ors.

Government financing for Argentina, Mexico, and Brazil, wasabout $3 billion in 1983. This amount, like the IMF lending, is muchsmaller than the shares of the burden borne by the banks and thedebtors themselves, as Chart 2-6 shows.

In the longer run, more important than the role of the nationalgovernments in lending may be their role in trade. Currently, for thedebtor countries to meet their debt obligations, they must necessarilyrun trade surpluses. Up until now they have mainly been cutting im-ports, but in the future they will have to boost exports. Even in theshort run, the promise of future export growth is necessary to keepprivate capital flowing in.

In order for these countries to export, the industrialized countriesmust import from them. Real growth in the industrialized countries isthe most important determinant of imports from the debtor coun-tries. The 1983 U.S.-led worldwide recovery was the best possible de-velopment for the debt problem. While policies that bring down realinterest rates and sustain the recovery are desirable in any case, theirimplications for the debt problem make them doubly desirable.

Trade policy in the industrialized countries is the second most im-portant determinant of imports from the debtor countries. The in-dustrialized countries have a variety of tariff and nontariff barriersagainst imports from these countries. It would be inconsistent for theindustrialized countries to expect the debtors to meet their debt obli-gations, and at the same time expect their trade balance with thedebtors not to turn negative. It is essential to the successful resolu-tion of the current international debt problem that the industrializedcountries not shut out the products that these countries wish to sell.

82


EASING THE DEBT-SERVICE BURDEN

The soundness of the current four-way strategy, and its success todate, do not mean that future crises, even major ones, cannot occur.It would take a major unforeseen event, such as a sudden end to theworld recovery, to change the outcome of the debt/export calcula-tions; but it might take somewhat less than that for the four-way co-operation to fall apart.

The breakdown of the strategy could hypothetically come fromeither of two directions: (1) declaration of default and withdrawal oflending, by nervous banks, or (2) suspension of payments or even re-pudiation of the debt, by suffering debtor countries. Both of theseworst-case scenarios are unlikely. Nevertheless, there is an undesira-ble all-or-nothing element to the present system. From the viewpointof the creditor nations, a default or repudiation means that the valueof the loans drops essentially to zero. From the viewpoint of an indi-vidual debtor country it might mean ostracism from the world systemof trade and finance. Not only would many years pass before thedebtor could resume the long-term borrowing necessary for econom-ic development, but it would be subject to legal entanglements andprobably cut off even from the short-term banking services necessaryto carry on trade. Ways might be found to reinforce the current strat-egy that, although not necessarily altering the distribution of gainsand losses in an average sense, would take some of the instability outof the system.

Credit Terms Versus the Level of Financing

One way to ease the burden on the debtor countries would be toincrease the level of financing, and thus allow them to import more.The obvious drawback to allowing too high a level of financing isthat it leaves the accumulated debt that much higher at the end ofthe year and reduces the pressure on the country to adjust.

There is a more promising alternative to ease the burden of adjust-ment that is being implemented for the case of Mexico in 1984. Thebanks, rather than increasing new lending to Mexico in 1984, are re-ducing it below 1983 levels, but are agreeing to lower the interestrate and loan fees charged. This tradeoff reduces the banks' total ex-posure relative to what it would otherwise be, and at the same timeincreases the probability that they will eventually be repaid in full.Mexico's financial position is improved because, for a given tradesurplus, lower interest payments mean a lower current account deficitand thus a lower level of indebtedness at the end of the year.

Any easing of terms on bank lending must be tied to good per-formance on the part of the debtor. If the criterion for granting re-duced interest rates were the seriousness of the country's difficulties,

83


as measured for example by debt-service figures, then the incentivesfacing the debtor governments would be perverse. Reducing thecosts of economic mismanagement can make it more likely to occur.One possibility is to use as the criterion an improvement in the tradebalance to the point of a substantial surplus in the balance on goodsand (non-interest) services. This would ensure that the benefit is lim-ited to those countries that have serious debt problems and havetaken the necessary steps to adjust.

Expenditure-Reducing Policies Versus Relative Price Policies

The level of financing and the level of interest payments togetherdetermine the trade surplus that a debtor is obliged to run to gener-ate the foreign exchange needed to make interest payments. Theselevels still leave open the question of whether to attain that trade sur-plus through high levels of exports and imports, or low levels of ex-ports and imports. The course up until now has been closer to thelatter: expenditure on imports has been cut, largely through cuts ingovernment expenditure and in national expenditure generally. BothMexico and Brazil appear to have cut imports in 1983 below thelevels that had been agreed upon with the IMF. The price has beenlow levels of output, income, employment, consumption, and invest-ment. Particularly in the cases of the larger countries, where importsare a small share of expenditure, cutting expenditure is an inefficientway of cutting net imports.

The alternative strategy is to slow the rate at which budget-cuttingand other expenditure-reducing policies are implemented, and tosubstitute policies that raise the prices of traded goods relative to theprices of nontraded goods. Such "supply-side" policies would pro-vide the incentives for labor and capital to shift into the productionof the now more profitable traded goods. (In the case of Brazil, forexample, a shift of resources into export production equal to 4 per-cent of gross domestic product would itself be enough to pay all theinterest on the debt.) At the same time, such policies would providethe incentives for consumers to switch expenditure away from tradedgoods. The trade balance, which is the difference between the pro-duction and consumption of traded goods, would increase without adrastic decline in the level of output.

The obvious way to raise the prices of traded goods relative tonontraded goods is to devalue the currency. Devaluations cause im-mediate corresponding increases in the prices of traded goods, atleast in the case of agricultural and mineral products. But there is noreason why devaluations need to be reflected as fully or as quickly inwages and the prices of nontraded goods. It is always easier to pro-vide firms the incentive to export by reducing wages relative to the


prices of traded goods, rather than by reducing wages relative to thegeneral price level.

Three arguments are heard against an approach of substitutingsome increases in the relative prices of traded goods for some de-crease in the level of expenditure. The first is that devaluation is con-tractionary because of its negative effects on real wages, the realmoney supply, and the balance sheet of firms with dollar-denominat-ed liabilities. But this argument applies more strongly to the ap-proach of attaining a given trade surplus through expenditure reduc-tion than to the relative-price approach.

The second argument is that devaluation is a ''beggar-thy-neigh-bor" policy that is unlikely to be effective when other countries aretrying to do the same thing. This argument, however, applies equallyto the alternative expenditure-reduction approach. In other wordsboth the "contractionary'* and "beggar-thy-neighbor" arguments arereally arguments for allowing smaller trade surpluses through in-creased financing; they are not arguments about the best way toattain a given trade surplus.

The third argument is that devaluation would result in a higher in-flation rate than would expenditure reduction. Inflation is undesira-ble, and overexpansionary policies in the past were to some extentresponsible for both the inflation and the debt problem. But it doesnot necessarily follow that there is an ironclad connection betweencontinuous progress on the inflation problem and progress on thedebt problem. The need to generate foreign exchange to meet inter-est obligations and the need to put a limit on the rate of decline ofproduction, consumption, and investment, would seem to be absoluteconstraints. This calls for a judicious mix of policies that reduce ex-penditure and policies that change relative prices.

CONCLUSION

The strong U.S. recovery is creating jobs both at home andabroad. It is helping to pull the other industrialized countries out ofrecession, and is providing markets for the exports of the debtorcountries as well. For the first time since the 1973 oil shock, Canada,Japan, and the European Community are all running current accountsurpluses. Many of the debtors are showing sharply improved inter-national payments positions; a few such as Mexico have even attainedcurrent account surpluses. The United States is acting as an engineof growth in the world economy.

The composition of the recovery remains lopsided as a result ofhigh real interest rates. If real interest rates can be brought down inthe United States, it will alleviate the pressure for capital inflow and


for current account deficits vis-a-vis Japan, Europe, and other tradingpartners. At the same time, lower real interest rates would alleviatethe debt-service burden on the debtor countries, thus reducing thetrade surpluses that they must run and making things easier for allconcerned.

In the meantime, the greatest danger, in the United States as else-where, is that the desire to boost exports and reduce imports will bereflected in protectionist measures. The only sound way to improvethe U.S. trade balance is to adopt macroeconomic policies consistentwith a recovery in which all sectors of the U.S. economy share. Theonly sound way to promote world trade is to adopt policies consist-ent with a recovery in which all members of the world economyshare. In particular, it is essential to the favorable outcome of thedebt problem that the debtor countries be allowed to increase ex-ports to the industrialized countries. The liberal world trading systemcan only lose if its members resort to heightened barriers to the in-ternational flow of goods, services, capital, and labor. All parties canonly gain if the debtor countries are restored to health.


CHAPTER 3

Industrial Policy

SHOULD THE UNITED STATES adopt an industrial policy? Pro-ponents argue that such a strategy is necessary to revitalize our man-ufacturing sector. They claim that U.S. manufacturing has donepoorly compared with the manufacturing sectors of other countries,and that we are losing our international competitiveness. Theseclaims have led to the perception that manufacturing's share of oureconomy is eroding and that we are "deindustrializing."

To reverse this alleged decline, some industrial policy advocatespropose that the government encourage new high-technology indus-tries and help older industries regain their former strength. Theyalso recommend that the government assist declining industries toadjust more smoothly to lower levels of output and employment.Others propose government aid to prevent a decline in selected basicindustries.

Industrial policy solutions seem attractive to observers who thinkthat such policies have contributed to Japan's emergence as a majoreconomic power. Since World War II Japan has had rapid growth inmanufacturing output, productivity, and exports. The main sourcesof this growth have been high rates of saving and investment, the mi-gration of workers from farms to factories, and the adoption ofmodern technology. In addition, the Japanese government has usedan array of tools to encourage certain industries to develop andothers to adjust to decline. Some observers argue that unless theUnited States adopts an industrial policy of its own, Japanese growthwill contribute to U.S. decline.

In this country, industrial policy advocates have advanced severalproposals that would increase the government's role in directing re-sources into or out of specific industries. First, there would be a cen-tral agency to shape the Federal Government's industrial policy.Second, councils including representatives of business, labor, andgovernment would gather information on specific industries andforge a consensus strategy. Third, a Federal development bank wouldinvest money in industries deemed to receive inadequate capital fromprivate financial markets. Fourth, declining industries would receive


government aid and import protection to adjust to new economicconditions.

Some industrial policy advocates claim that the United States al-ready has an industrial policy. They argue that such policies as tradeprotection and subsidies for exports and research and developmentare components of an industrial policy simply because they affect thecomposition of industrial output. The difference between our presentpolicies and what they advocate, they say, is that the former is ad hocindustrial policy while the latter is coherent.

It is true that many Federal policies affect industrial output. Butthe argument about whether they constitute industrial policy, like allarguments about definitions, is pointless. What is relevant is whetherthe proposals of industrial policy advocates are a good idea. Shouldthe U.S. Government have a larger role than it now has in decidingthe composition of U.S. industry?

The answer is "no." An industrial policy would not solve the prob-lems faced by U.S. industry and would instead create new problems.Industrial policy has a mixed record in Japan and has been unsuc-cessful in Europe. Most of the problems of U.S. industries can besolved with prudent monetary and fiscal policies. The best way todeal with the many changes in demand that occur in a dynamic econ-omy is to allow investors and workers to respond to such changes.Because they reap the rewards of their successes and bear the costsof their failures, investors will seek out industries that pay the highestrates of return. Similarly, workers have incentives to work where theycan earn the highest wages. The free movement of capital and laborin response to new profit opportunities and wage differentials in-creases growth. Government allocation of investment that ignoresmarket signals usually stunts growth by diverting labor and capitalfrom more productive uses.

IS THE UNITED STATES DEINDUSTRIALIZING?

Although selected manufacturing industries face serious problems,the United States is definitely not "deindustrializing." Table 3-1shows that the output, employment, and capital stock of U.S. manu-facturing grew from 1950 through 1980. Moreover, manufacturing'sshare of total output and capital stock was roughly constant between1960 and 1980. The manufacturing share of total employment pro-gressively declined, but the decline is a sign of relative productivitygrowth, not a sign of industrial demise. There is no evidence ofeither an absolute or relative long-run decline of U.S. manufacturingoutput.


TABLE 3-1.—Size and share of the manufacturing sector, selected years 1950-80

Year

1950

I960

1970

1980 .

Manufacturing

Output(billionsof 1972dollars)

131.1

171.8

261.2

351.0

Employ-ment

(millions)

15.2

16.8

19.4

20.3

Capitalstock

(billionsof 1972dollars)

106.4

140.4

202.2

287.0

Share of total

OutputEmploy-

mentCapitalstock

Percent

24.5

23.3

24.1

23.8

33.7

31.0

27.3

22.4

28.4

25.8

23.5

23.4

Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).

It is true that the composition of U.S. manufacturing has changedsubstantially over the past two decades. As Table 3-2 shows, between1960 and 1980 U.S. manufacturing shifted away from capital-inten-sive, labor-intensive, and resource-intensive industries toward high-technology-intensive industries. High-technology industries are de-fined as those with a high ratio of research and development spend-ing to value added. (Value added equals industry revenue minus thecost of inputs purchased from other industries.) In high-technologyindustries, value added increased by more than 40 percent, and em-ployment increased by more than 20 percent.

This shift in the composition of manufacturing output and themovement of capital and workers toward other sectors is not a threatto our economy or to our international competitiveness. Although wecommonly call some industries "basic/* the products of these indus-tries are no more important than the products of the agricultural orservice sectors. Nor is our position in world markets endangered ifour exports shift from steel and machinery to engineering services.Using industrial policy to halt the decline of our basic industrieswould not increase growth. It would merely shift investment and em-ployment from one sector to another. Increasing the total level ofsaving and investment is the best way to increase economic growth.

TABLE 3-2.—Shares of value added and employment by industry group, I960, 1970, and 1980

[Percent of manufacturing total]

GroupValue added

1960 1970 1980

Employment

1960 1970 1980

High-technology

Capital-intensive

Labor-intensive

Resource-intensive

33

28

19

20

Source: Robert Z. Lawrence, Brookings Papers on Economic Activity, 1.1983.


COMPARISON WITH OTHER NATIONS

U.S. manufacturing output and employment have generally per-formed well compared with other major industrial nations. Table 3-3presents manufacturing data for France, West Germany, Japan, theUnited Kingdom, and the United States from 1960 to the first oilshock in 1973, and from 1973 to 1980. The data show that the slow-down in the growth of output and employment in manufacturingsince 1973 was not limited to the United States, but also occurred inEurope and Japan. Whatever the causes of this slowdown, it is sharedby our international trading partners, many of whom have industrialpolicies.

TABLE 3-3.—Changes in manufacturing output and employment in selected industrial countries,

1960-80[Average annual percent change]

CountryOutput

1960-1973 1973-1980

Employment

1960-1973 1973-1980

France

Germany

Japan

United Kingdom..

United States

5.0

5.2

12.5

3.0

5.4

1.3

1.0

2.4

-1.8

1.8

0.5

.9

3.4

- . 6

1.4

- 1 . 3

- 1 . 7

- 1 . 5

- 1 . 9

.1

Source: Organization for Economic Cooperation and Development.

The U.S. manufacturing sector grew more rapidly than most Euro-pean manufacturing sectors between 1960 and 1980. Japanese manu-facturing output increased most rapidly during this period, but thedifference between the Japanese and the U.S. growth rates declinedsubstantially after 1973. Between 1973 and 1980, U.S. manufacturingemployment grew slightly, while manufacturing employment fell inFrance, West Germany, Japan, and the United Kingdom.

Some industrial policy advocates also claim that the United Statesis losing its competitive edge in high-technology. Since World WarII, other countries have followed the United States in developing thissector. As the number of producers has increased, the U.S. share ofthis rapidly expanding market has gradually declined. Between 1962and 1980 the U.S. share of industrial countries' high-technology ex-ports fell from 30.3 percent to 23.9 percent. During the same period,the Japanese share rose from 4.1 percent to 12.3 percent and theGerman share stayed constant at about 18 percent.

However, the United States is still the leading exporter of high-technology products. In 1980 the United States exported $7.6 billionof high-technology goods, compared to $7.5 billion for West Ger-many, $4.8 billion for Japan, $3.7 billion for the United Kingdom


and $3.2 billion for France. In that year we were the leading export-ers of office machines and automatic data processing equipment, andprofessional and scientific instruments. As Table 3-4 shows, from1970 to 1980 the real value of net exports in many high-technologyindustries increased more in the United States than in Japan, WestGermany, France, and the United Kingdom.

TABLE 3-4.—Net exports in selected high-technology industries, 1970 and 1980

[Millions of 1980 dollars]

Country

France .

Germany

Japan

United Kingdom

United States

Medicinal andpharmaceutical

products

1970

148.5

546.1

- 2 5 9 . 8

439.6

575.0

1980

796 3

981.4

-779 .5

1,217.1

1,216.9

Artificial resinsand plasticmaterials

1970

- 6 2 2

1,573.5

1,092.0

243.3

1,635.5

1980

33.2

2,590.0

1,315.1

261.3

3,171.1

Electricalmachinery

1970

272.5

2,914.2

3,638.1

1,076.3

1,378.8

1980

664.0

4,480.1

7,230.1

655.0

169.8

Professional,scientific, and

controllinginstruments

1970

- 7 2 . 9

1,094.9

907.6

304.9

966.0

1980

- 5 6 . 0

1,573.0

562.5

476.5

3,712.7

Sources: Organization for Economic Cooperation and Development and Council of Economic Advisers.

PROBLEMS OF U.S. MANUFACTURING

Although U.S. manufacturing in general is not in a long-term de-cline, it has experienced serious short-term difficulties. In addition,certain industries have serious long-term problems.

Macroeconomic Problems

In the short run, U.S. manufacturing, like other cyclically sensitiveindustries such as housing, declined during the recent recession.Manufacturing employment fell from its peak of 20.4 million in July1981 to 18.2 million in November 1982. Manufacturing output de-clined by 12.5 percent over the same period. However, employmenthas risen sharply since then, and stood at 19.3 million by the, end of1983, while output rose 17.8 percent between November 1982 andDecember 1983. As the recovery continues, manufacturing employ-ment and output will also continue to grow. In any event, monetaryand fiscal policies are the appropriate tools for avoiding cyclicalproblems. Industrial policy cannot hope to eliminate the effects ofthe business cycle on manufacturing.

A second short-run problem is the high value of the dollar relativeto other currencies. The dollar appreciated 45 percent between 1980and December 1983, after taking inflation into account. This increasein the dollar's exchange value has put U.S. producers at a seriouscompetitive disadvantage in world markets. However, the problem isnot limited to manufacturing, but extends to agriculture and such

91


services as construction, engineering, and tourism. As Chapter 2 ex-plains, the solution once again lies with fiscal and monetary policies.

Problems of Basic Industries

Unfortunately, industries such as autos and steel, which have beenhurt by the recession and the rise in the dollar, also face longer runproblems. Foreign competition increased in both of these industriesduring the 1970s. The two oil shocks increased the U.S. demand forsmall cars, much of which was met by imports. Competition from im-ported steel increased as shipping costs fell and as foreign steel pro-ducers cut their prices in response to excess worldwide capacity.

During this period, management decisions may have worsened thecompetitive positions of these industries. U.S. auto firms let qualitycontrol slip, and they did not respond quickly to the shift in demandtoward smaller cars. Some observers claim that steel firms were slowto adopt new technologies. In addition, labor costs increased morerapidly in autos and steel than in other manufacturing industries. In1970 hourly compensation for auto and steel workers was about 30percent higher than the average compensation in manufacturing. By1981 the difference had grown to 70 percent for steel workers and50 percent for auto workers. Since then, workers in both industrieshave made significant wage and benefit concessions, which may or maynot be temporary.

These industries are now going through significant adjustments. Ifforeign firms continue to produce goods at lower costs than U.S.firms, then domestic output and employment in the affected industrieswill fall. The only ways to reduce the cost differentials are to increaseproductivity or to reduce or even reverse the growth in real wages.Otherwise, preserving output and employment would require a con-tinuing subsidy from consumers or taxpayers to workers and stock-holders in these industries.

Regional Problems

Employment declines in manufacturing have created serious prob-lems because of the regional concentration of job losses. In the late1970s manufacturing employment grew by about 1 percent a year forthe country as a whole but fell in the Middle Atlantic and GreatLakes States. The recent recession exacerbated these regional dis-parities. Chart 3-1 shows the uneven distribution of unemploymentin fiscal 1983. Many of the States with high unemployment dependheavily on basic manufacturing industries for jobs.

These State unemployment rates hide a wide diversity of economichealth within a State; real trouble spots are much smaller areas. InOhio, for example, the unemployment rate in Columbus was half ofYoungstown's in fiscal 1983. In Indiana, the unemployment rate inLafayette was half the rate of Gary's.


Chart 3-,iUnemployment Rates by State

in Fiscal Year 1983

Percent

HH 10t.4to17.8

8.6 to 10^3

[ | 5.7 to 8L5

Source: Department of Labor.

These small pockets of real distress persist in spite of job opportu-nities elsewhere because of the reluctance among some workers tomove. Many unemployed workers do move, and broad regional pop-ulation changes reflect these movements. One detailed study of twodepressed areas found that among people who changed jobs, one-third found new jobs outside the region. However, many unemployedworkers in depressed areas do not move. Some are tied to their com-munities by financial and family commitments—working spouses,homes that are hard to sell, and children in school. Unemploymentbenefits and the hope of returning to a high-wage job near homereduce the incentives for unemployed workers to move in order tofind new jobs.

But unwillingness to move is not sufficient to cause lengthy unem-ployment—workers who are unwilling to move can still find work iftheir local economies are healthy. As one study shows, in regionswith healthy local economies unemployed workers from declining in-dustries are not out of work any longer than unemployed workersfrom other sectors. Geographic immobility together with depressed

93


local economies is the source of the special distress associated withthe decline in specific manufacturing industries.

For people in these depressed local areas, the shift in manufacturingemployment has been difficult. But the total amount of long-termunemployment caused by shifts in the manufacturing sector is relative-ly small. Workers from declining industries who suffer long-termunemployment are only about 2 percent of the unemployed. Other,larger groups appear to have bigger labor market problems.

Since hardships caused by economic adjustment are often regionalproblems, programs to ease adjustment should be targeted regional-ly. Otherwise, those in need do not get enough aid or budget costsof the program become too large. But the prospects for regionallyspecific programs are dim. Federal programs to extend unemploy-ment benefits illustrate this problem. The original intent of the Fed-eral program was to channel benefits to States with the highest un-employment rates. Under the current Federal Supplemental Compen-sation program, all States get benefits regardless of their unemploy-ment rate. Complicated clauses in the law reduce the decline in bene-fits when State unemployment rates fall.

The general history of regionally targeted programs is a steady ex-pansion of eligibility rules until all States get some portion of theprogram. The prospects for a good Federal adjustment program maybe limited by the same problems that would plague industrial policyinitiatives in general—possibly deserving groups would be crowdedout by their less deserving but politically powerful competitors.

IMPLICATIONS FOR U.S. POLICY

There is no evidence of a general deindustrialization of the U.S.economy. Over the long term, U.S. manufacturing has accounted forapproximately 24 percent of real output. Although manufacturing'sshare of total employment has declined, the number of workers em-ployed in manufacturing rose by nearly 5 million between 1950 and1980, and productivity growth was higher than in the rest of theeconomy. Nevertheless, the combination of a recession at home anda strong dollar abroad caused manufacturing output and employmentto suffer. However, manufacturing output is currently rising almostthree times as fast as the rest of the economy.

This suggests that the most important contribution of Federalpolicy to the strength of American manufacturing would be monetaryand fiscal policies that are consistent with long-term economicgrowth and a sustainable trade balance. Such policies would not re-solve all the problems of the few industries in long-term trouble. But

94


they would probably resolve most of the concerns that have led tothe calls for industrial policy.

JAPANESE INDUSTRIAL POLICY

Proponents of an industrial policy often use Japan as a model forthe United States. First, Japan has enjoyed rapid economic growthsince World War II. Second, many Japanese products compete suc-cessfully in export markets. Although Japan has had great economicsuccess, it is not clear that industrial policy contributed on net to thissuccess. Other features of the Japanese economy, such as the highsaving rate and the transfer of labor from agriculture to industry,were undoubtedly more important. Net saving in Japan over the pastthree decades has been over one-fifth of Japan's net domestic prod-uct. By contrast, net saving in the United States has averaged lessthan one-tenth of net domestic product.

THE INSTRUMENTS OF JAPANESE INDUSTRIAL POLICY

The first step in formulating an industrial policy for an emergingor declining sector of the Japanese economy is gathering informationand creating a consensus. To gather the information about potentialgrowth industries and the best way of developing them, the Japanesegovernment meets with outside experts and convenes councils of in-formed individuals from banks, trading firms, producing and con-suming firms, universities, and trade unions as well as relevant gov-ernment agencies.

The final product of the council process is either a general"vision" urging private firms to develop a sector, or a specific plan toproduce certain goods by some future date. The detailed plans, how-ever, are simply targets that the government officials and privateexperts believe are both possible and desirable to meet. Japan'seconomy is not centrally planned, nor is there much governmentownership of manufacturing firms. Although the government mayprovide incentives to encourage the development of certain indus-tries, it does not force individual firms to comply with its targets.

The incentives provided by the Japanese government have includ-ed tariffs or import quotas, special tax treatment, research subsidies,subsidized loans, antitrust immunity, and administrative guidance.During the early postwar period of reconstruction Japan had steepbarriers against all imports. Japan began to relax these barriers over20 years ago. Since the mid-1970s, Japan's tariffs on manufacturedgoods have been similar to those of the other major industrial na-tions, and today they are among the lowest of all major industrial na-tions, including the United States. However, Japanese tariffs are

95


markedly higher than average on some manufactured goods in whichJapanese producers are relatively uncompetitive.

Significant nontariff barriers continue to protect parts of Japan'smanufacturing sector. Standards and certification requirementsimpede imports of automobiles and many other consumer durables.Government procurement restrictions protect Japanese electronicsand computer industries. These restrictions have recently been re-laxed somewhat but they remain significant obstacles to trade.

Special tax treatment, subsidized loans, and loan guarantees havebeen used to stimulate emerging industries, and to ease the adjust-ment of declining sectors. Until recently, firms purchasing numerical-ly controlled machine tools were eligible for depreciation schedulesmore generous than those available for other equipment. Today,computer software producers and investments in robotics receivespecial tax benefits. Subsidized loans and loan guarantees also havehelped to develop the steel, computer, shipbuilding, and semicon-ductor industries, and have assisted firms in the aluminum and petro-chemical industries in reducing capacity and employment.

The Japanese government has also encouraged the development ofcertain industries by providing subsidies for applied research. Thework subsidized with tax dollars is usually only part of larger jointresearch projects financed mainly by private firms. Japanese firmshave used joint research successfully in developing several importantproducts, including the 64K RAM chip.

Finally, firms in industries with temporary or permanent declinesin demand are sometimes allowed to form cartels to restrict output inorder to raise or maintain prices. Cartels have been formed duringcyclical downturns in some segments of the aluminum, paper, andsteel industries, and have also been used to maintain prices andreduce capacity in declining industries, including synthetic fiber, am-monia, and urea. In these cases, the government has allowed firms tocooperate in restricting output in exchange for promises by firms toscrap excess capacity. Higher prices have often meant lower domesticconsumption, reduced exports, and either increases in imports or in-creased trade barriers.

This list of industrial policy tools may understate the role of theJapanese government in the development of specific industries. Var-ious government agencies review conditions in industries within theirjurisdiction in consultations with outside experts. If they see prob-lems or opportunities, these agencies look for solutions and then tryto persuade the private sector to follow their advice. The advice maybe accompanied by promises of loans, research subsidies, or othergovernment aid. The total effect of the advice and the aid on private

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investment decisions may be greater than the actual amounts of aidwould suggest.

PRIVATE INVESTMENT AND GOVERNMENT SUBSIDIES

These industrial policy tools—import barriers, special tax treat-ment, research subsidies, subsidized loans, and antitrust immunity—may have been important in stimulating the growth of Japanese in-dustries such as steel, shipbuilding, machine tools, and computers.However, government financial aid to many of these industries—in-cluding steel and computers—is only a small fraction of the invest-ments made by the private sector.

Subsidized lending by the Japan Development Bank, for instance,averaged only 1.4 percent of total bank lending to the steel industrybetween 1961 and 1970, and only 3.8 percent between 1971 and1980. Japan Development Bank loans to the electrical machinerysector, which includes computers and semiconducters, were only 0.6and 0.8 percent of total bank lending to those industries during thesame periods. Although they may have been instrumental in encour-aging private banks to invest in favored sectors, government loanswere not a large factor in the growth of these industries.

Furthermore, Japanese subsidies to encourage the development ofcertain manufacturing industries have been only a small fraction oftotal government subsidies to specific sectors. As seems to be thecase for all developed countries, by far the largest subsidies and thehighest trade barriers go to agriculture. Energy projects designed todecrease Japanese reliance on imported oil, subsidies to small busi-nesses, and Japan's government rail system also claim a large shareof subsidies. Subsidies to emerging manufacturing industries aresmall by comparison with subsidies to these other sectors.

The sectoral distribution of the Japan Development Bank lendingprogram reflects these priorities. In 1981 about 37 percent of thetotal loans of $4.9 billion was earmarked for energy projects. Thenext largest shares went to urban and regional development, oceanshipping, and "quality of life" projects such as pollution control.About 9 percent or $441 million was allocated to the development oftechnology, which encompasses the computer, electronics, and semi-conductor industries. For comparison, plant and equipment invest-ment in Japan in 1981 was about $180 billion, and electronic com-puter production was $6.7 billion.

Total spending for research and development in Japan as a percentof GNP exceeds that of France, but is less than that of Germany andthe United States. Furthermore, in contrast to these countries, theJapanese government accounts for a small share of Japan's total re-search and development expenditures, and provides less than 2 per-

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cent of the funding for all research and development undertaken bythe business sector.

Government research and development funds in the late 1970shave been estimated to account for 6.7 percent of total research anddevelopment in the computer and semiconductor industries, versus18 percent in agriculture and 28 percent of transportation researchand development. The Ministry of International Trade and Industry(MITI), Japan's most important industrial policy agency, controlledabout 12 percent of public research and development funds in 1983,or about $708 million, and allocated about one-half of these funds toenergy-related research and development. About $350 million wentto manufacturing industries.

Finally, Japanese government spending goes primarily to socialwelfare, aid for local governments, and public works rather than todevelop emerging industries. In spite of its unique industrial policyprocess, Japan allocates government support to many of the samesectors that are favored in other advanced market economies, includ-ing the United States.

HAS JAPANESE INDUSTRIAL POLICY BEEN A SUCCESS?

Japanese industrial policy has had both successes and failures.Some targeted industries, including semiconductor and machinetools, are almost certainly stronger than they would have been with-out government support and can be claimed as successes for Japa-nese industrial policy. Other industries, such as shipbuilding andsteel, probably grew more quickly because of government aid, butundoubtedly would have developed without any government inter-vention. However, the Japanese government has also picked losers.Aluminum smelting and petrochemicals were favored industries 15years ago, but the public and private investments have paid off verypoorly and now their capacity is being reduced. There are also sever-al examples of successful industries that did not receive governmentassistance, including motorcycles and consumer electronics. Never-theless, these industries have dominated world trade in the productsthey produce.

The Japanese automobile industry also received protection fromimports. But the auto industry followed a course very different fromthat suggested by MITI. In 1961 MITI tried to force the industry'smany firms to merge into a few. In 1965 MITI exhorted the industryto develop a prototype "people's" model of its product so MITIcould designate the winning firm as the single producer. In bothcases, the industry rebuffed MITI. Moreover, although import pro-tection helped the Japanese auto industry develop, protection givento other industries hurt the auto industry by raising the price of

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inputs such as steel. Furthermore, the auto industry has not receivedspecial tax treatment or subsidized loans for over 20 years. Thereforethe success of Japan's auto industry cannot be attributed to industrialpolicy.

Furthermore, Japanese industrial policy did not create additionalinvestment. It simply directed the existing pool of savings from oneindustry to another. It is possible that the industries that lost fundsas a result of government industrial policy would have been at leastas successful as the industries that received the government's bless-ing.

In conclusion, Japanese industrial policies have undoubtedly influ-enced Japan's industrial structure. However, the government and itscouncils of experts have a mixed record of success. They have indeedpicked some industries that turned out to be winners in part becauseof their efforts, but they also picked industries that ended up losers.They failed to pick some big winners and they also picked industriesthat would have become winners without any help. The net effect ofthese policies on economic growth is not clear.

EUROPEAN INDUSTRIAL POLICIES

European economies have grown rapidly since World War II, pri-marily because of high rates of saving and investment, increases ineducation, and migration from agriculture to other sectors. However,many European policies that aid specific industries have been costlyfailures. Large scale efforts by European governments to promotehigh-technology industries have rarely produced commercially suc-cessful products. And attempts to ease the adjustment of decliningindustries have generally produced little reduction in excess capacitydespite enormous government subsidies.

EUROPEAN INDUSTRIAL POLICY TOOLS

The tools used to implement industrial policies differ considerablyamong European countries. In France, the country with the mostelaborate industrial policy, state efforts to develop the economy canbe traced at least as far back as the time of Louis XIV. Since WorldWar II, a series of 5-year "indicative" plans has set comprehensivetargets for the French economy, often with specific sectors selectedfor special support. Although these targets have been voluntary, theyhave been designed as a framework for French economic growth.

The government owns a large portion of France's manufacturingand financial sectors, and thus is able to allocate resources directlyinto targeted industries, projects, or companies. Most of the capitalfor several emerging industries, including civil aircraft and comput-

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ers, has come from the government. France has also used researchand development subsidies and government procurement to encour-age high-technology industries. In addition, the French governmentowns, subsidizes, and protects certain declining industries, includingsteel. Other declining industries, such as textiles and shipbuilding,receive subsidies and trade protection but are privately owned.

Britain does not have comprehensive economic plans or govern-ment ownership of banks and insurance companies, but governmentequity involvement in heavy and high-technology industries iscommon. Steel, autos, and semiconductors have received state equitysupport. In addition, many declining industries have received tradeprotection, manpower training grants, and financial subsidies.

As members of the European Community (EC), all the major in-dustrial countries of Europe have common external trade barriers,most notably in steel and textiles. But West Germany, with its rela-tively efficient steel industry, has been less energetic than France orBritain in lobbying for barriers to protect declining industries. TheWest German government has provided substantial subsidies for re-search and development, but its subsidies for declining industries arelow by European standards. There is little public ownership of manu-facturing firms, but an important share of West Germany's bankingsystem is state owned.

LESSONS FROM EUROPE

In spite of massive aid to favored European industries such as air-craft, computers, and semiconductors, most of the firms in these in-dustries are not commercially successful. The explanation for thisrecord may stem from the competing goals that governments gener-ally pursue.

The Concorde is probably the most famous product of Europeanindustrial policy. Built by a British-French joint venture and flownonly by their national airlines, the Concorde had cost French taxpay-ers $4.4 billion by 1979. At no time have revenues covered the costsof operating the Concorde, much less the capital costs of the firms thatbuilt it. Work on the Concorde helped develop France's aerospaceindustry and may have achieved certain political and social objectives.But, these benefits aside, the Concorde project is a clear reminder ofthe costs of government encouragement of emerging industries.

The Airbus is another large scale project that has so far been acommercial failure. Produced by a firm owned mostly by a consor-tium of European governments, the Airbus has been a profitable in-vestment for the airlines that bought it, but a costly burden for thesponsoring governments. The Airbus still requires production subsi-

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dies despite the sale of about 350 planes. Bolstered by governmentguarantees, Airbus did not follow the usual commercial practice ofcollecting purchase agreements before beginning production. As aresult, early production levels were too low to benefit from scaleeconomies.

The French government also decided to develop an internationallycompetitive computer industry in the mid-1960s. Today, neither ofFrance's two recently nationalized computer companies is profitable,in spite of over $1 billion in direct subsidies, support through gov-ernment procurement programs, and research and development sub-sidies. Many analysts conclude that the French government pursuedan unrealistic goal of self sufficiency and ignored its competitors'comparative advantage and market share. Business decisions weremade by the government and did not always reflect commercial reali-ties.

Britain's computer and semiconductor industries seem similarlyunable to overcome the competitive advantage of foreign producersin the British market, despite aid programs that include equity fi-nancing, loan guarantees, and government procurement policies.Neither the government-owned semiconductor firm nor the comput-er firm most heavily supported by the government is profitable.Once again, the appeal of technological independence outweighedeconomic considerations.

Aid to declining industries also reflects the sometimes competinggoals of government intervention. Efforts to ease the adjustment ofdeclining industries apparently slow that adjustment process, at enor-mous cost to European taxpayers. It appears to be difficult for gov-ernments to encourage an industry to decline sufficiently after givingit subsidies. Government assistance to the steel, shipbuilding, andtextile industries has been designed to protect employment whileencouraging restructuring. Despite massive infusions of aid and tradeprotection over a long period, there is still much excess capacity in thesteel and shipbuilding industries.

Since the establishment of the European Coal and Steel Communi-ty in 1951, steel has been the most closely regulated and protectedindustrial sector in Europe. After years of import protection, subsi-dies, and output controls designed to raise prices, many Europeansteel producers continue to sustain large losses. Although steel em-ployment in the United Kingdom fell by almost 60 percent between1974 and 1982, and has also declined in other EC countries, substan-tial restructuring remains to be done.

Restructuring of the European textile industry has also not beengenerally successful according to most analysts. Even when progresshas been made in reducing excess capacity and modernizing equip-

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ment, trade barriers have remained in place. Indeed, from bilateralquotas on cotton in the early 1960s to the current form of the Multi-fiber Arrangement, protection from imports has increased in scopeand intensity.

European governments may be learning from their failures. Thecurrent French policy in electronics seems to be more competitivelyoriented than earlier policies, and since 1981 the British governmenthas cut subsidies to declining industries. However, the French com-mitment to early development of a new commercial airplane suggestsa continued belief that government can outguess the market.

SHOULD THE UNITED STATES HAVE AN INDUSTRIALPOLICY?

The perception that the United States is deindustrializing hasspurred interest in industrial policy in this country. But we are notdeindustrializing. Moreover, Japan's record with industrial policy ismixed, and industrial policy in Europe has generally failed. Industry-specific measures are not well suited to deal with the special prob-lems of some U.S. industries and workers. Unemployment problems indeclining industries are best solved with programs that focus aid onindividuals rather than on entire industries. Allocating resources todifferent industries is best done by the market. Profit opportunitiesand wage differentials give investors and workers powerful incentivesto seek out industries where their capital and labor are most valuedand most productive.

Nevertheless, some people argue that industrial policy could pro-mote growth and smooth adjustment. Many claim that governmentnow fails to take account of the effects on industries of its variouspolicies, and that better coordination within the government wouldimprove the situation. Others claim that investors are reluctant to fi-nance emerging industries because the time horizons of private in-vestors are too short. These advocates therefore propose governmentaid to help emerging industries. Still others argue that governmentaid is needed for industries with learning curves, high value-addedindustries, linkage industries, and industries that compete with prod-ucts subsidized by foreign governments. Finally, some industrialpolicy advocates argue that special aid should be given to decliningindustries to help them adjust.COORDINATING AGENCIES AND TRIPARTITE COUNCILS

Industrial policy advocates argue that current Federal Governmentprograms often conflict with each other. Creating a new agency andestablishing tripartite councils of business, labor, and government,

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they say, would bring these conflicts to the attention of governmentofficials who would then make more judicious tradeoffs among com-peting goals.

Different government programs sometimes do have conflicting ef-fects on an industry. Unintended consequences are inevitable in acomplex economy where each policy affects a large number of sec-tors. More important, many policies have conflicting effects becausegovernments have competing goals. Reducing air pollution, for ex-ample, raises the cost of producing steel and conflicts with the goalof a more competitive steel industry.

There is little reason to believe that introducing another agencywould improve coordination. Government agencies and forums al-ready exist to coordinate policies, and many government depart-ments already have advisory committees to provide information onprivate sector views. Additional tripartite councils and a new agencywould not necessarily be able to obtain better information than whatis already available.

Tripartite councils are proposed to promote a consensus on policydecisions. This would strengthen the current tendency of govern-ment policy to take inadequate account of the interests of consumersand taxpayers, who have very weak incentives to organize on any par-ticular issue. Business and labor groups are already heavily represent-ed in Washington. An additional agency with stronger representationof business and labor interests would make the policy debate evenmore one-sided.

GOVERNMENT DEVELOPMENT BANK

Many industrial policy proponents propose a government develop-ment bank to augment private investment in certain industries. Someproposals include other types of aid, such as research and develop-ment subsidies to specific industries. These proponents claim thatgovernment support is necessary because the market does not investenough in several types of industries—emerging industries, industrieswith learning curves, high value-added industries, basic or "linkage"industries, and industries that have been targeted by foreign govern-ments. To supplement private capital, the proposed bank would lendadditional money to industries in these categories.

Emerging Industries

Government investment in emerging industries is said to be desir-able because private investors are too risk averse or have time hori-zons that are too short. Therefore they invest too little in risky ven-tures with long-delayed payoffs.

Investors may appear shortsighted or risk averse when they cannotcapture all the returns from their investments. For example, patent

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and copyright protection for computer software and integrated cir-cuits is probably inadequate and may have deterred investors fromtaking risks and investing their time and money in these areas. Moregenerally, research and development gains are often spread amongmany firms, not just the firm that incurs the costs.

The solution to these problems is not government investment inspecific firms, but policy changes that improve incentives for all firmsto invest in research and development. The Administration supportsthe provision of copyright-like protection for integrated circuit de-signs, and in 1981 supported enactment of a temporary tax credit forresearch and development expenditures.

The proposal to target emerging industries suggests that govern-ment can obtain better information than the private sector. It is diffi-cult to understand how government officials, together with privatebusiness and labor leaders, will be able to gather more accurate in-formation and use the information more wisely than the privatesector. The United States has numerous investors willing to financenew ventures through equity or bank loans. Private investment ana-lysts spend a great deal of time and effort evaluating new technol-ogies and advising private investors on the most promising firms. In-formation on emerging industries is also exchanged by job shiftingamong scientists and engineers who are close to the development ofnew technologies. Ties between industry and the academic communi-ty also contribute to the spread of new ideas. In the United Statesthe private sector already has information at least as good as the pro-posed government councils and banks could expect to gather.

In any event, a government agency is more likely to be shortsight-ed and risk averse than private investors. Since politicians face fre-quent elections, they often have very short time horizons. A govern-ment agency is also more likely to make decisions based on theshared expectations that are the conventional wisdom of the time;these processes tend to neglect or reject the idiosyncratic informationthat is the basis for decisions by the most successful private entrepre-neurs.

Finally, government officials will often make investments based onpolitics rather than economics. One country tries to develop a com-puter industry before it has sufficient technical workers. Other coun-tries invest in highly visible but wasteful energy projects that privatefirms think are likely to fail.Learning Curves

In some high-technology industries, production costs drop signifi-cantly as firms gain experience. Some proponents of industrial policysay that the government should subsidize these industries or protectthem from foreign competition to allow them to move down a

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"learning curve." This would presumably speed up the drop in costsand increase their ability to compete in international markets.

Learning curves may exist for individual firms, for entire industrieswithin a country, or for an industry in the world as a whole. If thelearning curve is at the level of the firm, the U.S. market is likely tobe far larger than the cumulative production required to advance anindividual firm along its learning curve. Moreover, choosing a singlefirm to subsidize and protect in the beginning stages of a new tech-nological development would be very risky. In every new industrythere are false starts. Having government and private experts deter-mine the best approach to a technical problem early in the processwill generally produce a worse result than letting different firms com-pete to see whose idea is best.

If the learning curve is for the entire world, then the optimal strat-egy may be to let other countries go first and enter the industry onlyafter initial research and development costs have been borne by for-eigners. The Japanese have profited enormously by adopting U.S.technology.

While there may be special cases in which learning curves justifyimport protection, identifying them in practice would be very difficult.Because of this difficulty, many firms and industries would incorrectlyclaim that their learning curves justify import protection or subsidies.A similar problem arises in the Federal procurement process. Firmssometimes claim to have steep learning curves in order to justifybecoming the only supplier to the government. Often, actual learningcurves are flatter than predicted.

In short, knowing that a theoretical case exists may be of littlepractical importance. The end result of protecting or subsidizing ahigh-technology industry could be a domestic industry unable tocompete in international markets. The trade protection granted tosuch industries could force U.S. buyers to pay higher prices anderode their competitive position in other markets.Industries With High Value Added

Some proponents of industrial policy advocate redirecting invest-ment to industries with high value added per worker. Value added isthe revenue earned above that needed to purchase inputs from otherindustries. Value added is therefore the return to labor, capital, andknow-how.

Total value added or, equivalently, real income in the economy israised when a dollar of investment is moved from a use where itsproductivity is low to a use where productivity is higher. There is noreason, however, to believe that a dollar of investment in an industrywith high value added per worker will be more productive than adollar of investment in a low value added industry. What matters is

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not the average productivity of labor or capital in that industry butthe return on one more unit of capital. When markets work properly,investment is distributed among industries until the rate of return onadditional investment is the same in all industries. In this situation,shifting investment from one industry to another will not raise totalreal income or value added.

The same is true of reallocating labor among industries. Althoughthe average productivity and value added per worker differ among in-dustries, a well-functioning labor market assures that employees willend up in industries where their contribution to output is highest. Ifthis were not so, the employee would have an incentive to shift jobs inpursuit of a position with a higher wage.

The best way to promote high value-added industries is to expandthe total capital stock of the economy. Investors will naturally seek toput that capital to its most productive use. If our tax laws distort therelative payoffs from investing in different uses, then it is the tax lawsthat need to be changed. Incentives to save and invest, such as Indi-vidual Retirement Accounts and accelerated cost recovery, are morelikely to expand and modernize the Nation's capital stock, and there-by promote economic growth, than a government bank that merelyreallocates a fixed amount of savings from one industry to another.

Linkage Industries

Some industrial policy proponents advocate government aid to"linkage" industries, that is, manufacturing industries whose outputis a vital input into other industries' products. Steel and semiconduc-tors are often cited as examples of "linkage" industries. However, ifsuch an industry is vital, then the industries that rely on it willdemand its output. The profit motive will ensure that this demandwill be filled. If the demand can be met more cheaply by producersabroad, then it makes good economic sense for the firms that use theinput to buy it abroad. The more uses the input has, the more im-portant it is for the U.S. economy that the companies obtain this vitalinput at the lowest possible cost. Otherwise, the competitive positionof the U.S. companies that use the input would be threatened.

Proponents of aid to linkage industries may have another idea inmind. They might be saying that producers of a particular good needto have producers of inputs nearby so that they can coordinate theirplans. There do appear to be examples of industries that grew be-cause they were near producers of vital inputs and therefore able tocoordinate plans. Some observers have attributed part of the successof the U.S. personal computer industry to its location in the SiliconValley, near the semiconductor industry. But if the advantages of lo-cating nearby outweigh the disadvantages, companies will do so. Justas steel plants located close to coal mines earlier in this century, so

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computer producers have located near semiconductor firms in theSilicon Valley. No government direction is needed.

Industries Targeted by Foreign Governments

Some industrial policy proponents also argue that the UnitedStates should subsidize industries targeted by foreign governments.If we do not, they claim, our industrial structure will be determinedby other countries. A foreign subsidy that reduces the price of U.S.products clearly distorts the market, but a policy of countersubsidyby the United States would further depress prices and the return oncapital. A general policy of countersubsidy would lead to increasingmisallocation of capital and labor and lower economic growth.

Our present trade laws authorize countervailing duties on subsi-dized foreign products sold in the United States. In addition, selec-tive subsidy of export financing may deter foreign export subsidies.The Export-Import Bank of the United States provides loans, loanguarantees, and export credit insurance for U.S. exports to counterforeign export subsidies. The Administration has been successful inthe past 2 years in sharply reducing the export credit subsidies ofother countries.

Some observers think that certain foreign industrial policies are re-sponses to what they perceive as a U.S. industrial policy. They pointto the stimulus provided by defense spending to our computer, air-craft, and nuclear reactor industries, and observe that our space pro-gram has made the United States the world leader in commercialtelecommunications satellites. It is certainly true that the billions ofdollars spent by the United States since World War II to developnew weapons and explore space have given a fortunate boost tosome high-technology industries. However, the primary purpose ofthis spending has been to protect the United States and its allies andto pursue space science. If the main reason for this spending hadbeen to develop commercial computer, civil aircraft, or satellite in-dustries, our defense and space programs would certainly not havebeen the least expensive way of doing so.

AID FOR DECLINING INDUSTRIES

Most industrial policy proponents recommend government actionto slow or reverse declines in "basic" industries. In addition to loansand special tax treatment, many proposals include government-spon-sored restructuring plans that would spread adjustment burdensamong labor, management, shareholders, suppliers, and creditors. Indeclining industries that face competition from imports, industrycommitments to restructure would be extracted in exchange for tradeprotection, while expanded compensation and retraining programswould be used to help workers whose jobs are lost.

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A basic problem with such proposals is that they would divert re-sources from emerging industries and from healthy established firms.Workers, stockholders, and suppliers in declining industries wouldexert political pressure to gain government aid. Experience here andabroad strongly suggests that resisting the pressure from decliningindustries would be difficult.

Aid to Firms

Proponents of aid to declining industries often cite Chrysler as anexample of a company that has survived because of a governmentloan guarantee tied to a restructuring plan. But the Chrysler caseshould not be used as a model for several reasons. First, Chryslermight have survived even if it had gone bankrupt. The concessionsextracted from workers, suppliers, and creditors in return for theloan guarantee might well have been made as part of an ordinarybankruptcy proceeding. Second, even if government aid were re-quired to keep Chrysler in business, the auto industry and the econo-my as a whole may have derived little benefit from the guarantee.Many of the autos produced and jobs saved at Chrysler were at theexpense of other U.S. automakers and their employees. Similarly, theloans that went to Chrysler would have gone to other sectors, possi-bly including emerging industries.

Third, loan guarantees to Chrysler may have been successful be-cause such guarantees to failing companies are now the exception,not the rule. If loan guarantees became standard practice in such sit-uations, workers, management, creditors, and suppliers might be lesswilling to make sacrifices. They might come to expect governmentaid whatever they did. Establishing a loan guarantee program wouldcertainly encourage many other firms to apply for aid, and could leadto even more costly Federal commitments to firms that did not pullthrough after the first round of aid. This has been the common Eu-ropean experience, and it could well happen here.

Import Protection and Restructuring

Some observers suggest that trade protection be granted to indus-tries hurt by imports in exchange for commitments to restructure andadjust. Without such commitments, trade protection reduces thepressure on firms and workers to make painful changes. Under exist-ing trade law, import protection is granted with no guarantees thatthe workers and firms who benefit from the import protection willmake the necessary investments or take other measures to becomemore competitive. The result is higher prices for consumers, often withlittle long-term improvement in the industry. The protected industryseldom becomes competitive and usually continues to pressure gov-ernment for more protection.

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Strictly enforced agreements, it is argued, could encourage workersand firms to use the financial benefits of temporary protection eitherto become more competitive or to scale down production. The cur-rent practice of granting import protection often has the oppositeeffect. It forces consumers to pay higher prices without requiring theindustry to undergo difficult adjustments.

The main objection to this proposal is that once the presumption ofaid is established, it is difficult to extract concessions from an industry.How often will government officials in this country be able to tellworkers that they must accept lower pay, suppliers that they must cuttheir prices, and banks that they must write off loans in order to obtainimport protection? Political pressure as well as economic consider-ations would undoubtedly influence the process.

In addition, an agreement to grant trade restraint in exchange forrestructuring by an entire industry would be more difficult to enforcethan a loan agreement with one firm. Should the governmentexpect efficient firms as well as inefficient firms to make the samesacrifice? How would conflict between different segments of an in-dustry be resolved? How would the agreement be enforced if somefirms complied and others did not?

Aid to Workers

Industrial policy proponents who want to aid declining industriesare motivated in part by concern for the workers in these industries.They often argue that manufacturing provides "good" jobs thatcannot be replaced by jobs in other sectors of the economy. In fact,basic manufacturing jobs are no more important for the economy asa whole than jobs in, say, the service sector. The real difference be-tween manufacturing jobs and service sector jobs is that the formeroften pay more than the latter because of differences in worker skills,or in some cases, because of the monopoly power of the manufactur-ing firm or of its union.

CONCLUSION

Many people advocate industrial policy as a way of stemming thealleged long-term decline in the U.S. manufacturing sector. But therehas been no such long-term decline. Manufacturing's share of nation-al output in 1980 was virtually the same as its share in 1950. More-over, since 1973 the U.S. manufacturing sector has grown more rap-idly than the manufacturing sectors of many of the major Europeanindustrial nations. And while our growth of manufacturing since 1973has been less than Japan's, the difference in the U.S. and Japanesegrowth rates is less than half of what it was between 1960 and 1973.

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While there was a short-run decline in U.S. manufacturing due tothe recent recession, this was to be expected. Manufacturing is cycli-cally very sensitive, and our experience in the most recent recessionwas similar to our experience in earlier postwar recessions. Since therecovery began in the last quarter of 1982, manufacturing output hasincreased at almost three times the rate of total output. The answerto the short-run problems of most of our manufacturing industries iseconomic recovery.

A few industries, however, may be in long-term decline, in part be-cause they face foreign competition. The problems of these indus-tries stem partly from past mistakes by management, partly fromwage increases that exceeded productivity gains, and partly from fac-tors outside the industries' control. If these industries do not contin-ue to make significant adjustments, either they will suffer additionaldeclines in output and employment, or they will require permanenttrade protection or subsidies at substantial cost to American consum-ers and taxpayers.

Using industrial policy to solve the problems of these few indus-tries would be mistaken for two main reasons. First, industrial policy,in the form of either subsidies or trade protection in return for in-dustry restructuring, would slow adjustment. Once the governmenthelped these industries, it would find it very difficult to cut off oreven phase out the aid, as various European governments' experi-ences with declining industries have shown.

Second, if the goal of industrial policy is to help the long-term un-employed, then helping declining industries is not an effective way ofdoing so. In healthy local economies, unemployed workers from de-clining industries find jobs as quickly as unemployed workers fromother industries. Depressed local economies, not declining industries,are the real problem. The solution to the problem of the unem-ployed from declining industries is to enable them to find new jobsand to focus aid on those workers who are hurt by industrial change,as the Job Training and Partnership Act of 1982 is intended to do.

While some people advocate industrial policy to stem the allegeddecline in U.S. manufacturing, others see it as a way of nurturingemerging industries, or industrial "winners." Some of these advo-cates argue that entrepreneurs in the United States have too muchdifficulty getting "patient" capital, that is, capital whose owners orlenders are willing to invest in a risky idea and to wait a few years fortheir returns. These advocates therefore want the government to givesubsidies or subsidized loans to entrepreneurs with new ideas.

But to the extent the United States underinvests in new ideas, it isbecause the investors cannot capture the returns from such invest-ments. The straightforward solution to this problem, if it is general,

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is to increase tax incentives to research and development, as this Ad-ministration did with the 1981 Economic Recovery Tax Act. If theproblem is specific to a few industries, the solution is to strengthenpatent and copyright protection.

Moreover, even if there were too little "patient" capital, there is noreason to think that government finance would improve the alloca-tion of capital. Government officials simply do not have the right in-centives to make wise choices about which industries or companies toinvest in. Governments often invest in projects with high politicalvalue but little economic value, or in safe projects favored by theconventional wisdom of the time. Neither way of choosing is likely topick the potentially winning industries that lack capital and both kindsof investments siphon off capital that could have gone to the realwinners.

To foster more rapid economic growth, the primary focus of gov-ernment policy should be to strengthen the natural forces of the pri-vate economy by reducing the burdens and disincentives imposed byexisting government laws. The most important goal of these changesshould be to increase the rate of capital formation. A higher rate ofcapital formation fosters growth directly and permits a more rapid in-troduction of new technologies. The lower cost of capital and thefaster technological advance also enhance the competitiveness ofAmerican industrial products in world markets.

To increase the rate of capital formation, the tax laws were re-formed in 1981 in ways that reduced the burden of taxation on per-sonal saving and on business investment in plant and equipment.The sharp decline in the rate of inflation since 1980 has also raisedreal after-tax rates of return and thereby increased the incentives tosave and invest. As we look to the future, it is important to raise theNation's rate of saving by reducing the government budget deficits.We must also seek new ways to revise the tax laws in order to reducethe disincentives that still restrict the rate of capital formation.

Our market economy and its system of rewards for superior per-formance have made the American economy the most productive andinnovative in the world. An industrial policy that increases govern-ment planning, government subsidies and international protectionismwould only be a burden on our economic life and a threat to ourlong-term economic prosperity.

I l l


CHAPTER 4

Food and AgricultureAMERICAN AGRICULTURE is one of the most successful exam-

ples of agricultural development in the world. The industry is veryproductive: only 3.1 percent of the civilian labor force producesenough to feed the entire domestic population at low cost and stillexport enough to earn almost 20 percent of the total export revenueof the United States. Although farmers in most countries earn muchlower incomes than nonfarm workers, the average disposable incomeof the U.S. farm population over the past decade has averaged closeto that of workers in the rest of the economy. Average wealth perfarmer is much higher than of people employed in the rest of theeconomy, and half of American farmers have no debt.

Despite these successes, all is not well with American agriculture.Farm export earnings and asset values have declined for the past 2years. Recent entrants and farmers who have recently expanded theirbusinesses have experienced cash flow difficulties. Although the farmbankruptcy rate is well below that for nonfarm businesses, thenumber of farm bankruptcies has substantially increased. The frac-tion of the farm population with incomes below the poverty level isstill almost double that for the nonfarm population.

In fiscal 1983, Federal Government outlays for farm price andincome support programs totaled $18.9 billion, an increase of $12.3billion in 2 years. To this must be added another $9.4 billion worthof payment-in-kind (PIK) commodities committed in 1983 to com-pensate farmers for reducing their crop acreage in order to reduceinventories These programs cost taxpayers almost $12,000 per farm.While Federal expenditures have been curtailed in many domesticprogram areas, the cost of farm programs has exploded.

Farm programs affect not only the taxpayer but also the consumer.Some farm policies clearly benefit the consumer. In particular, feder-ally sponsored research has lowered food costs by generating asteady increase in agricultural productivity. Other policies artificiallyraise food prices through price supports and restrictive marketingand trade practices. This reduces consumers' purchasing power.

The present Federal farm programs were designed to address theproblems of farming as it existed in the 1930s, but American agricul-

112


ture has changed dramatically since then. Farming has become amuch more specialized, capital-intensive, and high-technology busi-ness. Many people justify farm income and price support programson the basis of low farm incomes. But average farm family incomesof the commercial producers, to whom most benefits of the Federalprograms go, are above income levels in the rest of the economy.Net farm incomes, however, vary substantially from year to year.

Exports now account for one-quarter of all farm sales. Yet presentprice support programs, along with the strong dollar, make U.S. agri-cultural products less competitive on world markets. If we value theforeign exchange earnings generated by farm exports and the marketthis provides for a quarter of the Nation's farm sales, our farmprice and income support policies must become more market orient-ed than they are now.

THE FOOD AND AGRICULTURAL SECTOR

In 1982 the farm sector employed 3.1 percent of the U.S. civilianlabor force and generated 2.4 percent of national income. In 1930,for comparison, 22 percent of the labor force was employed in farm-ing and produced 9 percent of national income. With this shift havecome increases in employment and income in industries producinggoods and services purchased by farmers and processing farm prod-ucts. Farmers now spend almost half of their gross income on inputs,such as seed, feed, pesticides, fuel, and fertilizers, 58 percent ofwhich is produced in the nonfarm sector. After the products leavethe farm, for every dollar's worth of sales destined for domestic con-sumption, processing, packaging, transportation, and other servicesadd another $2 before it reaches the retail purchaser.

FARM INCOME

In 1983 farm cash receipts from product sales totaled about $144billion (Table 4-1). This includes the net purchases by the govern-ment to support the prices farmers received for grains, cotton, tobac-co, and milk. For example, to support the price of milk the govern-ment purchased $2.7 billion worth of dairy products. American farm-ers also received direct government payments in cash and in kind to-taling about $9 billion. These total less than the fiscal 1983 budgetauthority for price and income support programs because part ofthose outlays occurred in the fourth quarter of 1982 and becausefarmers will take delivery of over half of their PIK commodities in1984. The PIK program was designed to reduce the stocks that hadaccumulated following 2 years of bumper crops and weak demand,

113


particularly from exports. The acreage cutbacks, plus the severedrought of 1983, reduced grain and cotton inventories by $9 billion.

Gross income of the farm sector totaled $159 billion. Productionexpenses, which dropped substantially from 1982 because of reducedplantings, came to $136 billion. This left net farm income of $23 bil-lion, up marginally from 1982. Net cash income, which excludes non-money income, the value of inventory change, depreciation, and per-quisites to hired labor, reached a record high of $43 billion in 1983.In addition, farmers earned $41 billion of income from nonfarm

sources.TABLE 4-1.—Farm income, 1980-83


Item

Gross farm income

Cash receiptsNet CCC loans ..Direct Government payments2

Other cash income3.... .... .Nonmoney income4

Value of inventory changes

Production expenses5

Net farm income

Addenda:Net cash incomefl

Off-farm income.Change in loans outstanding7

Capital expenditures

1980

150.1

140.00.51.31.6

121- 5 . 3

128.6

21.5

38,137 715.218.0

1981

167.1

140.32.01.92.0

13.37.6

137.0

30.1

34.739.915.516.8

1982

162.2

135.59.13.52.1

139- 1 . 9

140.1

22.1

36.3394

6.813.9

1983*

158.6

144.42.09.11.9

14.08.8

136.0

22.6

43.440.8

3.814.1

1 Preliminary.2 Cash Government payments, except 1983, which includes $4.2 billion of payment-in-kind (PIK) commodities.3 Custom work, machine hire, and farm recreational activities.4 Value of home consumption of farm products and imputed value of dwelling.5 Cash expenses plus depreciation and perquisites to farm labor, but excluding expenses associated with farm dwellings.6 Excludes nonmoney income, value of inventory change, depreciation, and perquisites to hired labor. Includes net Commodity

Credit Corporation (CCC) loans.7 Excludes CCC loans.Source: Department of Agriculture.

As officially defined, a farm is a place that sells at least $1,000worth of agricultural products per year. So defined, there are 2.4 mil-lion farms, which in 1982 had an average net income from farming of$9,188 and an average income from nonfarm sources of $16,430, fora total $25,618. The average family income for the whole populationthat year was $27,391.

More than one-third of the 2.4 million farms sell less than $5,000worth of products per year, and 71 percent sell less than $40,000.These smaller farms are not generally full-time commercial oper-ations, produce only a small share of national farm production, and,on average, have negative net income from farming.

The 29 percent of the farms with annual sales of more than$40,000 generate 87 percent of total farm receipts. In 1982 these690,000 commercial farms had average annual gross receipts ofabout $190,000 and net farm income of about $36,000. Their net

114


farm income, however, varies substantially from year to year. Thesefarms have average assets of about $1 million and average equity ofabout $800,000. This group received 78 percent of all direct govern-ment payments under farm programs in 1982. This accounted for 11percent of their net farm income. These averages mask considerablediversity. For example, the largest 1 percent of all farms, which haveannual sales of over $500,000, produce 30 percent of all farm sales.

SPECIAL CHARACTER OF FARMING

The commercial farm, like the small manufacturer, is a businessthat buys raw materials, transforms them through a capital-intensiveprocess, and sells the finished products.

How then does a modern commercial farm differ from a smallmanufacturing company? Its most distinguishing characteristic is abiological production process that involves lags arising from growthcycles. This severely constrains the speed with which farmers can re-spond to changing market conditions. In addition, the volume offarm production is less predictable than in the nonfarm economy be-cause of the random effects of weather, disease, insects, and genetics.These supply conditions contribute to substantial year-to-year vari-ability in farm incomes. Since the annual output of major field cropsis harvested within a few weeks in the autumn, this requires storagecapacity for most of a year's output.

Agriculture and manufacturing also differ in the role played byland. Because crop production and livestock grazing are land based,they have to be dispersed over a wide geographic expanse fromwhich the marketing system must assemble the production. The geo-graphic differences in climate and soil limit what products can beproduced in each location.

Land has characteristics that distinguish it from other inputs. Asthe demand for land increases, users must bid against a relativelyfixed supply. They bid on the basis of expected future returns to theuse of that land. The price of farm land increases in response to ex-pectations of higher returns—whether from strong demand for whatit can grow, from inflationary expectations, or from artificial price en-hancement associated with government policy. Appreciation of landprices tends to increase the wealth of its owners, and often repre-sents a significant fraction of an owner-operator's total returns. Italso raises the entry cost for new farmers. Physical capital, being re-producible, tends not to appreciate over time in this manner, butrather to depreciate.

A third way in which farms differ from manufacturing plants is inthe proportions in which they use labor and capital. Most farms arefamily owned and operated, with little hired labor. (Only 0.2 percent

115


are owned by nonfamily corporations.) In 1979 American agricultureused $43,000 of physical capital stock (machinery and buildings) perworker, compared with $21,500 for the economy as a whole. Farmingused three times as much physical capital per unit of production(GNP basis) as the average for the total U.S. economy. In both agri-culture and the rest of the economy, this capital stock tends to bequite specialized, although machinery used to produce field crops hasmultiple uses.

FIVE DECADES OF CHANGE

In the 20th century the structure of U.S. agriculture and the well-being of farmers have undergone profound change. Farm productionhas tripled, while employment in agriculture has fallen by 80 percent(Table 4-2). The increase in labor productivity and, in turn, farmfamily income was achieved by improving technology and by increas-ing the land and capital used per worker. As a result, employment infarming fell substantially.

In the 1930s disposable farm family income per capita was lessthan 40 percent of that in the rest of the economy. Over the pastdecade, however, farm family income has averaged 88 percent of thatin the rest of the economy and exceeded that in the nonfarm sectorin 1973. This income differential was the driving force behind thestructural change in agriculture. As the proportion of the labor forceemployed in agriculture fell and the proportion employed in higherproductivity nonfarm employment rose, migration contributed to na-tional economic growth.

The rate of migration from farming to the rest of the economy wasstrongly motivated by the income differential. As the differential nar-rowed in the 1970s, the rate of migration slowed. The rate has alsobeen sensitive to the nonfarm unemployment rate—slowing when theperceived chances of getting a nonfarm job were low and accelerat-ing when the unemployment rate fell.

Rural industrialization has increased the number of off-farm jobs inrural America. Most farmers who did not acquire more land and capi-tal have become part-time farmers; almost two-thirds of all farmfamily income now comes from nonfarm sources. This additionalfarm family income has reduced significantly the farm-nonfarmincome differential.

The number of farms and the farm labor force peaked during the1930s. Employment in farming went into a pronounced decline afterWorld War II, when a major technological revolution occurred in ag-riculture. The replacement of draft animals by the tractor, which hadbegun in the 1930s, was virtually completed by 1960. This released

116


about one-fifth of our cropland, which had been used to grow feedfor draft animals.

The increased mechanization of farming permitted the amount ofland cultivated per farm worker to increase five-fold from 1930 to1980. The amount of capital used per worker increased more than 15times in this period. As Chart 4-1 shows, total farm production grew140 percent, but total input use rose only 5 percent. Total productiv-ity (production per unit of total inputs) more than doubled becauseof adoption of agricultural research results such as hybrid seeds andimproved livestock feeding. Table 4-2 illustrates that use of both ag-ricultural chemicals and feed grew very rapidly in the postwar period.Agricultural production now relies heavily on the nonfarm sector formachinery, fuel, fertilizer, and other chemicals. These, not more landor labor, produced the growth in farm production. These changeshave also greatly increased the capital investment necessary to enterfarming; they have also generated new requirements for operatingcredit during the growing cycle.

Education has been an important stimulus to growth in the econo-my as a whole and agriculture in particular. Rural education facilitat-ed the move from farm to off-farm jobs. As the rate of technologicalchange accelerated, rural education also helped farmers to adopt newtechnology and adjust to technological change.

The farm sector has undergone a major shift in what it produces.Total farm production is now split about equally between crops andlivestock, as it was early in the century. The composition of each,however, has changed in response to changes in demand and in tech-nology. In value terms, the largest increases have been in beef cattleand oilseeds production and to a lesser extent in feed grains andpoultry. The proportions of cotton, hogs, eggs, sheep, lambs, andwool in farm output have fallen.

The two largest components of farm cash receipts today are beefcattle and dairy products, making up 21 and 13 percent, respectively,of the total. These are followed by corn and soybeans with 9 percenteach, and hogs and wheat with 7 percent each. Cotton, chickens,greenhouse products, eggs, and tobacco each contribute about 3 per-cent of the total.DEMAND FOR FARM PRODUCTS

Changes in demand have been an important factor underlying thechanges in the product mix of the farm sector. In 1982 the totalvalue of farm marketings was $144.6 billion, with $70.2 billion fromlivestock production and $74.4 billion from crops. The largestmarket for crops is domestic human consumption, which absorbed 43percent of the value of crop sales. The second largest component of

117


Chart 4-1

Farm Productivity, Output, and Input

40 -

20 -

1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980

Source: Department of Agriculture.

TABLE 4-2.—Farm input use, 1910-80

[Index, 1910=100]

100

106

102

91

68

45

28

?0

Real estate

100

105

104

106

108

102

104

101

Mechanicalpower andmachinery

100

159

200

212

424

488

506

618

Agriculturalchemicals

100

167

200

300

633

1067

2500

4000

Feed and seed

100

135

159

229

341

453

565

635

1910

1920

1930

1940

1950

1960

1970

1980


118


demand is exports (31 percent) followed by livestock feeding (16 per-cent). The remaining 10 percent goes to industrial use and seed.Within the crop sector there is great variation among these propor-tions. For example, most fruit and vegetable output goes for humanconsumption, while virtually all of the tobacco and cotton is for do-mestic industrial use or exports. Most of the livestock productiongoes to feed the domestic population, while by-products such ashides and animal fats go to industry or exports.

Domestic Consumption

In 1982 Americans spent $350 billion for food (excluding alcoholicbeverages), of which $255 billion was for consumption at home and$95 billion for eating away from home. On the average this repre-sents 16 percent of their disposable personal income, although thepoor spend a larger percentage of their income on food than do themore affluent. Of the total retail expenditures for domestically pro-duced food, consumers spent 29 percent for meats, 21 percent forfruits and vegetables, 15 percent for dairy products, 10 percent forbakery products, 7 percent for poultry and eggs, and the remaining18 percent for miscellaneous food items.

Eighty-five percent of retail food expenditure originates from do-mestic farm production, and 15 percent is from imported foods.About one-third of our agricultural imports are products that wecannot produce in a temperate climate, in particular, coffee, tea,cocoa, spices, and bananas. Other imported goods that are produceddomestically, although perhaps less efficiently, include sugar, dairyproducts, grass-fed beef, and some fruits, vegetables, edible oils, andbeverages. In 1982, agricultural imports totaled $16.9 billion, makingthe United States the world's third largest agricultural importer, afterthe European Community (EC) and the U.S.S.R.

Food consumption per capita appears to have reached saturationlevels in the United States, with most growth in aggregate consump-tion now coming from population growth. Total consumption (byweight) per person of foods other than beverages (coffee, tea, andsoft drinks) has changed little since 1910. However, there have beenmajor changes in what products are consumed. In the 20th century,direct consumption of grain products has fallen by more than half,while use of fats and oils more than doubled. Consumption of meat,poultry, fish, and sweeteners has risen sharply; consumption of dairyproducts and eggs first rose and then fell. Nonalcoholic beverageconsumption has almost doubled since 1910.

Aggregate food purchases tend to be less sensitive to changes inprice and in family income than are purchases of manufacturedgoods. However, within their food budgets, consumers select fromamong many choices in food items. Purchases of meats and of miscel-laneous foods are quite sensitive to changes in family income, while

119


consumption of fruits and vegetables and particularly of cereals andbakery products are quite insensitive. Consumption of the moreincome-sensitive products, such as meats, tends to be more cyclical.

As family income increases, people tend to purchase relativelymore services in the food they buy, including eating out more often.The share of the retail food dollar received by the farmer, therefore,has declined to about 28 percent. Labor, packaging, and transportaccount for much of the additional cost after products leave the farm.As a result, retail prices, particularly of bakery and cereal products,tend to adjust much less than proportionately to changes in farmprices.

Livestock consume about 16 percent of U.S. crop sales. This in-cludes corn and other grains, protein meal, by-products from millinggrains, and forage. This understates the feed use of farm output,however. For example, 35-40 percent of corn production is fed tolivestock on the same farm where it is produced. The demand forfeed is derived from consumers' demand for livestock and poultryproducts. Forces that alter the demand for meat, in particularincome, are reflected in the demand for livestock feeds. Therefore,feed demand tends to have a stronger cyclical response to the levelof economic activity than does consumer demand for cereal products.

Livestock feed demand for crop output also tends to be more re-sponsive to price changes than does consumer demand for the finalproducts. An increase in feed prices that turns the profit margin onlivestock feeding negative can trigger a substantial slaughter of live-stock. In the short run, consumers benefit from cheaper meat at thesupermarket. However, to rebuild their herds, farmers must laterwithhold animals from slaughter for breeding. This rebuilding takestime, during which meat supplies are reduced and retail prices tendto be higher than normal. The use of crops in livestock feeding, then,varies cyclically with herd size. In a sense, the livestock herd func-tions as a buffer stock of grains. In times of crop shortfall, high grainprices trigger a herd liquidation, thereby freeing up grain for moredirect human consumption or exports.

The smallest component of domestic crop demand is industrialuses. Tobacco and fibers, such as cotton and wool, are industrial rawmaterials. There are also industrial uses of cereals, such as in alcoholand starch production. Many livestock by-products, such as hides andanimal fats, are also industrial raw materials. Part of this industrialdemand is satisfied by imports, including rubber, wool, and otherfibers. Because there are many synthetic substitutes, industrialdemand for farm products tends to be quite sensitive to price changes.

120


Farm Exports

The United States supplies almost 20 percent of world agriculturaltrade and is the world's largest agricultural exporter. In recent yearswe have supplied half of the world soybean and product shipments,55 percent of the coarse grain, 40 to 45 percent of the wheat, 30 per-cent of the cotton, and 25 percent of the rice that move in worldtrade.

In fiscal 1983 agricultural exports of $34.8 billion representedabout one-quarter of U.S. farm sales revenue and the output of about35 percent of the harvested cropland. Half of U.S. farm exports arefor direct food use—wheat, rice, fruits, vegetables, and meats—whilemore than a third go for feed and other farm uses; the remainder areraw materials used in industrial processes, such as textile, cigarette,and shoe production. In 1983 we exported three-fifths of our wheat,two-fifths of our rice, soybeans, and cotton, one-third of our tobacco,and one-fourth of our corn and sorghum. In contrast, only 2 percentof U.S. meat production and 5 percent of fruit and vegetable outputare exported.

During the 1970s the value of U.S. farm exports increased morethan five-fold, and the percentage of farm receipts coming from ex-ports increased from less than 15 percent to almost 30 percent. Thisgrowth in farm exports represented a major internationalization ofAmerican agriculture. Chart 4-2 provides a historical perspective toillustrate that after several decades of reduced importance, U.S. farmexports recovered in 1980 the share they represented in farm mar-ketings 60 years earlier. U.S. farm exports were relatively strongduring World War I and its aftermath. As European agriculture re-covered after the war, grain exports fell and U.S. agriculture wentinto depression in 1921. World trade in farm products shrank furtheras protectionism grew during the 1920s and the Great Depression.U.S. farm exports fell from 22 percent of farm sales revenue in 1922to 6 percent in 1940. Because U.S. agriculture had a larger exportexposure than the manufacturing sector, the collapse of world tradetended to have a relatively greater effect on farm than nonfarm in-comes during the Depression.

In the 1920s and 1930s more than half of farm exports were indus-trial raw materials, mainly cotton, tobacco, hides, and tallow. SinceWorld War II, food, rather than industrial raw materials, has domi-nated our farm exports. In the 1960s, as economic growth occurred,consumption of livestock products grew in the industrialized coun-tries and in some developing countries. This was reinforced by amajor technological change in livestock feeding practices, which dra-matically increased demand for feed grains and high protein feeds.The widespread adoption of hybrid seed by U.S. corn growers after

121


Chart 4-2

Percent

35

Agricultural Exports as Percent ofFarm Cash Receipts

10

1111111111111111111111 n 1111111111 M 111111111 n 1111 n 11111 1111 II

1910 1920 1930


1940 1950 1960 1970 1980

World War II, which substantially increased the profitability and useof fertilizer, greatly expanded corn output and depressed its price.Corn Belt and Mississippi Delta farmers discovered that the soybean,a novelty crop before World War II, did well in their regions. Withthe postwar productivity growth, production capacity grew faster thandomestic consumption, expanding U.S. agriculture's export potential.Corn and soybean products, in particular, became high-growth ex-ports.

During the 1970s the volume of world agricultural trade grew 45percent, while global farm production grew only 24 percent. In the1960s and 1970s, world trade in feed grains, soybeans, high proteinfeeds, and vegetable oils grew fastest. Sugar, food grains, tropical

122


beverages, and cotton experienced low rates of growth, and meat wasintermediate. Trade in other fibers declined.

The pattern of world grain trade shifted dramatically in the past 50years. The United States substantially increased its share of a rapidlygrowing market. As Table 4-3 illustrates, as recently as the 1930sAsia, the U.S.S.R., Eastern Europe, North Africa, and the Middle Eastwere net exporters of grains. All have become significant net import-ers. From the mid-1950s to the late 1970s, world grain trade grewfrom about 30 million to 130 million tons per year. The largest in-crease in exports was from North America.

TABLE 4-3.— World net imports and exports of grain, selected periods, 1934-83

[Millions of metric tons: annual averages]

Developed countries:

United StatesCanada ....South Africa ...OceaniaWestern EuropeJapan

Centrally planned countries:

USSR and Eastern EuropeChina

Developing countries:

Latin AmericaNorth Africa and Middle EastAsia ...

1934-38

0.54.8.3

28- 2 3 8

- 1 . 9

4.7- 1 0

9.01.02.4

Net imports ( -

1948-52

14.06.6.0

3.7- 2 2 . 6

- 2 . 3

2.7- . 4

2.1- . 1

- 3 . 3

1960-62*

32.89.72.16.6

- 2 5 . 6- 5 . 3

.5- 3 . 6

1.5- 4 . 6- 5 . 6

) or net exports

1969-71 *

39.814.82.5

10.6- 2 1 . 4- 1 4 . 4

- 3 . 6- 3 . 1

5.3- 9 . 2

- 1 1 . 0

1979-811

106.418.66.2

14.2- 1 1 . 1- 2 3 . 2

- 3 9 . 3- 1 1 . 4

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

1982-831

99.025.8

.512.0

- 4 . 5- 2 3 . 7

- 4 4 . 6- 1 4 . 7

.2- 2 7 . 8- 1 4 . 1

1 Marketing years.Note: Grain includes wheat, milled rice, corn, rye, barley, oats, sorghum, and millet.Source: Department of Agriculture.

The growth in world cereals imports in the last decade has beenfueled mainly by growth in per capita income, with growth in popula-tion being a significant but less important factor. The growth in im-ports occurred mainly in the centrally planned economies, themiddle-income developing countries, Japan, and the oil-exportingcountries. The U.S.S.R. and Eastern Europe alone accounted for 40percent of the increase. These, like Japan and the middle-income de-veloping countries, experienced rapid growth in incomes and in meatconsumption but they lacked a comparative advantage to increasefeed production. This effect is reinforced in the centrally plannedeconomies by their policy of subsidizing food so that consumers payless than the world price for meat and other livestock products.A small fraction of the growth in grain trade over the last decade hasgone to meet food needs of low-income countries. These economiesdo not have the foreign exchange to pay for cereals imports, andtheir food aid imports have risen.

123


Since the global recession began in 1981, growth in world tradehas slowed. This, together with record world production and thirdworld debt problems, has reduced the volume of agricultural trade.The appreciation of the dollar has raised the cost of U.S. exports rel-ative to other suppliers. Federal agricultural policies have also drivenup the price of U.S. exports. This and the strength of the dollar con-tributed to a fall in the U.S. market share in world agricultural tradeas well as the value of its exports.

The growth of exports in the last decade has radically changed thestructure of demand for U.S. farm output. From World War II untilabout 1973, when exports were relatively unimportant, overalldemand was quite insensitive to price. However, because there areother exporters and because most countries import farm productsonly after consuming their own domestic production, export demandtends to be more responsive to price and income changes. Thismeans, for example, that when supply grows faster than demand, themarket price may fall less than proportionately, and total farm reve-nue may increase.

Growth in exports has also introduced greater instability in themarkets for American farm products. Exports are affected by weath-er, trade policy, exchange rates, population, and income in the restof the world. All but population tend to be unpredictable and, there-fore, generate shocks to the U.S. farm sector through the variabilitythey cause in export demand.

In the 19th century, a country's competitive position in agriculturewas strongly influenced by its endowment of fertile land and favora-ble climatic conditions. Today our fertile, abundantly rain-fed landbase, while still important, accounts for only part of the competitive-ness of U.S. agriculture. Other countries less well endowed with fer-tile land have followed the U.S. pattern of agricultural developmentby shifting to a more capital-intensive, science-based agriculture. Arelative scarcity of land is no longer as severe a constraint on agricul-tural growth as formerly. If U.S. agriculture is going to maintain itscompetitive position, productivity growth must be sustained.

THE BROADER ECONOMIC ENVIRONMENT

American farmers responded strongly to the agricultural exportboom of the mid-1970s. They substantially expanded their capacityby bringing previously retired land back into production and bybuying more and larger machinery and equipment. The price of landwas bid up to unprecedented levels. The boom attracted new en-trants and encouraged many farmers to mortgage their present farmsto buy more land. When the global recession hit in 1981 and the


dollar appreciated substantially in foreign exchange markets, U.S.farm exports and, in turn, prices and incomes, fell. This left U.S. ag-riculture with excess capacity relative to current demand. Manyrecent entrants and farmers who expanded in the 1970s sufferedsevere cash flow problems. These farmers have experienced capitallosses as land prices have declined from their 1981 peak.

INTERNATIONAL TRADING ENVIRONMENT

The current world trading environment is characterized by weakdemand and keen export competition. In the early 1980s the globalrecession, third world debt, and the strong U.S. dollar have reducedexport demand.

Farm exports are not expected to grow as fast in the 1980s as theydid in the 1970s. A decline in the value of the dollar would help allexport sectors. However, in the past decade other major exportershave made large capital investments in agriculture and in marketingfacilities to expand export capacity. They can be expected to competeaggressively for our share of the growth in world farm trade evenwhen the dollar returns to a lower exchange rate.

Japan, Europe, and the U.S.S.R. are expected to continue to belarge importers of U.S. agricultural products, although furthergrowth is likely to be slow. The EC will probably continue to be aprotectionist, slow-growth market even for those farm products thatit imports. Eastern Europe, which was a rapid growth market in the1970s, is experiencing such severe foreign debt problems that theoutlook for rapid expansion in imports of farm products in the nextfew years is not bright.

The newly industrializing countries, particularly of East Asia, alsoexpanded their imports rapidly in the 1970s. Resumption of thisgrowth will depend upon their ability to generate foreign exchangeearnings from exports. This will depend in part on the trade barrierserected against their exports by the developed countries. While thelow-income countries are likely to need significant amounts of agri-cultural imports to feed their rapidly growing populations, their lim-ited foreign exchange earnings will severely constrain their effectivedemand in the world market.

U.S. agriculture has a large interest in economic development ofthe low-income countries and in growth in world trade. Until thedebt problems and foreign exchange earnings of Eastern Europe andthe low- and middle-income developing countries improve signifi-cantly, the prospects for much growth in farm product imports bythese countries are limited.

Competition is keen among exporters for the available markets inthe current situation of depressed world farm trade. This has been


reinforced by the increases in agricultural protectionism and in pred-atory export practices. In particular, the U.S. Government has pro-tested to the EC that its use of agricultural export subsidies to erodeU.S. markets is a form of unfair competition. The internal price sup-ports generally exceed world market prices by a substantial margin,yet the EC has chosen not to build up large stocks of grains. Insteadthe EC subsidizes farm exports in order to sell the surplus on theworld market. Unlike the United States, the EC has not until recentlyrequired acreage or marketing reductions for farmers to qualify forprice supports. The EC recognizes the problems with its agriculturalpolicy, which now absorbs two-thirds of the total EC budget and im-poses substantial additional costs on its consumers. The EC, like theUnited States, now has excess capacity induced in part by high pricesupports and is exploring means of reforming its farm policy toreduce the cost to taxpayers. It is unclear how the necessary adjust-ment will occur in the EC, but the United States has emphasized thatother countries cannot be expected to bear the major burden of Eu-ropean adjustments.

MACROECONOMIC ENVIRONMENT

Modern American agriculture's relative capital intensity, relianceon purchased intermediate inputs, and export earnings integrate ittightly into the rest of the U.S. economy. Cyclical changes in the levelof economic activity now have larger effects on agriculture than for-merly. The agricultural sector, like other trading sectors of the U.S.economy, is strongly affected by interest rates and the value of thedollar. The agricultural sector therefore has a strong interest in re-ducing the Federal deficit to which recent farm programs have con-tributed significantly. Macroeconomic policy may have as great an ab-solute effect on agriculture today as do the direct effects of farmpolicy.

Prices of agricultural commodities tend to adjust to changes in therate of money growth more quickly than do many other prices. Thisis true in part because contracts for raw materials tend to be writtenfor shorter durations than for other goods and services. In addition,because of biological lags, agricultural supply tends to be very unre-sponsive to price changes in the short run. There are large differ-ences among commodities in the degree to which demand respondsto changes in consumer incomes. While demand for farm productstends to be less responsive than demand for many other goods, therenevertheless is a positive response to income changes. Therefore, ag-ricultural prices tend to increase relative to other prices during theearly phase of a monetary expansion and fall in relative terms at thestart of periods of monetary stringency.


Because contemporary agricultural production requires a largercapital investment and uses more purchased inputs, a modern farm-er's requirements for both mortgage credit and short-term operatingcredit are larger than in recent decades. Interest rates, therefore,have a greater effect on the cash operating costs of the modernfarmer. Moreover, because one could earn interest on the capital in-vested in commodity inventories, the expected increase in agricultur-al commodity prices during the year must be at least as large as theforgone interest earnings if inventories are to be held.

Although the increasing overvaluation of the dollar impeded farmexports in the 1960s, depreciation of the dollar in the 1970s encour-aged larger exports. The move from fixed to floating exchange rates,however, subjected all traded goods sectors to a new source of short-run instability. Because the present strong dollar has made importscheaper to Americans and U.S. exports more expensive to foreigners,all traded goods sectors, including agriculture, have suffered reduc-tions in demand and lower incomes. Agriculture, which earns around25 percent of its gross revenue from exports, has a larger export ex-posure than most sectors of the American economy. Therefore it hasbeen buffeted relatively more by the shifts in export demand thathave accompanied the floating dollar over the last decade.

FEDERAL POLICIES AFFECTING AGRICULTURE

The development of U.S. agriculture and the well-being of Ameri-can farmers have been strongly influenced by Federal policies sincethe Civil War, but particularly since 1933. During the Civil War anumber of policy measures were taken to stimulate farm production.This helped satisfy the growing export market for grains. When theexport market shrank in the 1920s and 1930s* farm prices and landvalues fell; bankruptcies became common. Several measures weretaken in 1933 to support farm prices and incomes and save farmersfrom bankruptcy. When these, together with rapid technologicalchange, caused production to grow faster than demand, another setof policies was implemented to expand demand. All three types ofpolicies exist today in forms not greatly different from their originalstructure, despite the fact that conditions have changed markedly inthe past 50 years.

POLICIES THAT REDUCE PRODUCTION COSTS

In the 19th century the construction of canals and later the trans-continental railroad opened up the fertile interior of the country tourban markets in the United States and Europe. Subsidized loansfrom the Rural Electrification Administration in the 20th century

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helped extend electric and telephone service to remote rural areas atlow cost. Because farm production is so geographically dispersed,these policies not only stimulated its expansion, but also lowered itscost. Federal regulation of transport and communication until recent-ly kept rates to remote rural communities at or below cost. The im-plicit subsidies paid by high-density routes in other parts of the coun-try, however, have been reduced recently by deregulation.

The Homestead Act, passed in 1862, provided a means of distrib-uting public land in the unsettled regions of the Midwest and GreatPlains free to settlers who would cultivate it for 5 years. The MorrillAct, also passed in 1862, established a land-grant college of agricul-tural and mechanic arts in every State. At first these were teachinginstitutions, but they later took on important agricultural researchand extension roles as well. The Hatch Act of 1887 provided annualFederal support for agricultural research in each State, and theSmith-Lever Act of 1914 created the cooperative agricultural exten-sion service. This land-grant system has developed and diffusedhigher productivity technologies adapted to the conditions of eachState.

Research Policy

Since passage of the Hatch Act, a substantial portion of the cost ofagricultural research in the United States has been directly borne bythe Federal Government, especially in the biological area. The pri-vate sector has developed more of the mechanical and chemical tech-nologies. Government support for agricultural research was appropri-ate because it was difficult to protect biological research results, suchas wheat breeding. A private firm carrying on such research wouldnot be able to control the dissemination of the results to captureenough of the payoff to recoup its investment costs. The research re-sults have been an important source of growth in agricultural pro-duction and exports. The annual rate of return to taxpayers from in-vesting in agricultural research has been about 50 percent.

Farm Credit and Crop Insurance

Historically, the rural banking system was weakly integrated intothe national financial markets. Between 1916 and 1933, an independ-ent, federally funded farm credit system was established. Althoughnow autonomous from the Federal Government, the close associationof the system to the Federal Government means that it can borrowfrom the national financial markets at close to the same rate as theFederal Government. Because the Federal rate is always less than theprime rate, this provides to farmers an interest rate advantage overwhat they could get at commercial banks. The system, which is coop-eratively owned by its member borrowers, holds about one-third of


all credit outstanding to farmers. The Commodity Credit Corpora-tion of the Department of Agriculture also provides shorter-termcredit at favorable interest rates to farmers who participate in pricesupport programs.

The lending activities of the Farmers Home Administration, an-other agency of the Department of Agriculture, tend to involve agreater subsidy element and to incur a larger Federal budget cost.The Farmers Home Administration makes real estate loans and otherloans to farm borrowers who cannot obtain credit from commercialsources. The borrowers are mainly new entrants, small farmers, andfarmers who have lost their creditworthiness. Loans to these borrow-ers often result in higher risks and therefore larger losses than wouldbe acceptable to private lenders.

The Farmers Home Administration also has made emergency loansat well under market interest rates in areas hit by natural disasters.This program has been criticized for making subsidized credit availa-ble to farmers who already had access to credit from commercialsources. Despite very generous repayment terms, this program hasnot been noted for restoring financially troubled farms to profitabil-ity. During the 1970s the government also made direct payments tofarmers who suffered financial losses due to natural disasters. Byshifting part of the risk of failure to the Federal Government, theseprograms have encouraged larger crop production in areas of thecountry where the risk of crop failure is greatest.

The direct disaster payment program is being phased out as aresult of the 1981 farm bill. It is being replaced by Farmers HomeAdministration lending and by a new and expanded Federal Crop In-surance program. Participation rates in the former crop insuranceprogram were low, in part because the premiums did not adequatelyreflect individual differences in risk or in individual farmers' re-sources and management skills. The program was redesigned to en-courage more commercial producers to participate than under theprevious program, and the government now subsidizes up to 30 per-cent of the cost of crop insurance to farmers.

Together, emergency loans, disaster relief, and subsidized crop in-surance tend to induce excessive crop production in areas of thecountry that are subject to a wide range of weather-related yield vari-ation. The programs do this by raising farmers' expected returnsfrom crop production in such areas by shifting part of the risk of fail-ure to the Federal Government.Income Tax Policy

Several features of the income tax law, some of them unique tofarming, may encourage greater investment in productive capacityand expanded production. First, most farms use cash accounting

129


rather than accrual accounting. Farmers enjoy some flexibility in re-ducing taxable income by paying for purchased materials in high rev-enue years and by delaying sales into years of lower revenue. Second,under current tax laws, depreciation schedules for many capital assetsare considerably shorter than the economic life of the assets. Reduc-ing near-term taxable income in effect gives the farmer interest-freefunds during part of the productive life of an asset. Third, use of theinvestment tax credit lowers the effective cost of capital items. Final-ly, sales of breeding animals and dairy cattle held longer than 1 yearare treated as capital gains rather than ordinary income. This cansubstantially reduce the tax on such receipts for higher-income tax-payers, especially those with high off-farm income.

Tax policy does not affect the profitability of all types of farmsequally. The tax laws encourage the substitution of capital for labor.Larger farms, which generate higher incomes, appear to gain propor-tionately greater benefits than smaller farms. People in higher mar-ginal tax brackets can benefit more from the tax provisions. This cre-ates an incentive for higher-income people to invest in farming. Inpractice, losses from farm operations reduce taxes on other incomeby more than the total Federal tax revenue from farm profits, imply-ing that total farm income for tax purposes is negative.

Input Subsidies

Some Federal policies raise agricultural output by stimulating theuneconomic use of certain inputs. For example, the governmentoften sets the price of water artificially low by granting public subsi-dies to construct and maintain irrigation projects. These low pricesgive farmers an incentive to use water in arid regions on crops thatrequire a great deal of water. If the price of water were set higher,farmers would tend to grow less water-intensive products, leavingproduction of crops that use more water to humid regions. Withoutthese public subsidies, some products now produced in arid regionscould not compete with the same goods from more humid regions ofthe country.

There are other input subsidies for U.S. agriculture. For example,in the name of conservation, the government has shared the cost ofterracing and contouring the land, applying lime, and otherwise im-proving the soil. The United States' relatively low energy prices havealso encouraged mechanization and energy-intensive practices, suchas irrigation and grain drying.

Farm Labor Policy

Farm labor policy mainly affects the labor-intensive agricultural ac-tivities, principally fruit, vegetable, and sugar production. The exten-sion of minimum wage legislation to agricultural labor in 1966 pro-

130


vided an incentive for farmers to accelerate the pace of mechaniza-tion. Only about 1 percent of farm workers belong to labor unions,which formed in the farm sector in the 1960s, compared with 20 per-cent of all American workers.

The farm labor market has been greatly affected by the entrance offoreign workers into the United States. Until 1965, about 100,000workers per year, mostly from Mexico, were authorized to enter tem-porarily under the Bracero program. Since the passage of the Immi-grant Nationality Act in 1952, migrant workers have been given tem-porary immigrant status, under Section H2, if they do not competewith American workers. In recent years, Section H2 has covered onlyabout 20,000 workers, mostly for sugar and apple harvesting.

PRICE AND INCOME SUPPORT POLICIES

The policies of the 19th century increased supply and helped thefarm sector satisfy the growing domestic and export demand. Thedrop in export demand in the 1920s sent the farm sector into de-pression, and the effect was reinforced in the 1930s when protection-ism increased and demand fell further. Farm prices and cash flow fellso low that many farmers could not make their loan payments; fore-closures became widespread. The Federal Government then turnedto policies to support farm prices and to restrict the supply of agri-cultural products.

Origins of Price Supports

Although the depression in agriculture continued through the1920s, it was viewed as a transitory problem resulting from excess ca-pacity relative to demand. The Congress appropriated $500 millionfor the Federal Farm Board, created in 1929, to purchase cotton andwheat in order to bid up prices and thereby increase farm incomes.The Board was expected to resell these products when the marketstrengthened. The Board exhausted its capital stock in 3 years withno perceptible effect on prices.

After the Board's failure to support farm prices, the AgriculturalAdjustment Act of 1933 created the Commodity Credit Corporation(CCC). The CCC was permitted to borrow funds directly from theU.S. Treasury to carry out its price support programs. These pro-grams were viewed as a temporary expedient when they were initiat-ed in 1933, but our present price support instruments are remarkablysimilar to those put in place 50 years ago.

The CCC employs two measures for supporting farm prices—direct commodity purchases and nonrecourse loans. Under theformer, the CCC stands ready to acquire any quantity of a supportedcommodity offered in the market at a guaranteed minimum price, thesupport price. This technique is still used today to support the price

131


of milk. (Because of the perishability of fluid milk, the CCC supportsits price by purchasing butter, cheese, and nonfat dry milk.) By au-thority of Section 32 of the Agricultural Adjustment Act of 1933, asamended in 1935, the Agricultural Marketing Service, an agency ofthe Department of Agriculture, purchases commodities whose pricesare depressed. Chicken, pork, fruits, and vegetables are periodicallypurchased, although no formal support price is involved.

The CCC's other instrument is the nonrecourse loan. Under thisprogram the CCC offers loans to farmers with their crops pledged ascollateral. The size of the loan equals the support price (the "loanrate") times the quantity of the farmer's crop put under loan. Mostloans are made for less than 1 year. If the market price rises suffi-ciently during the period of the loan, the farmer may pay off the loanplus interest and reacquire control of his crop. If the market price isnot sufficiently above the loan rate when the loan comes due, thefarmer can then freely default. The CCC accepts the commodity aspayment in full and cancels the loan and interest. Loan rates wereoriginally established to support the prices of wheat, corn and cotton.Rice, peanuts, and tobacco were soon added to the program.

In principle, both types of price support operations can be viewedas involving buffer stocks. A price support puts a floor under themarket price in periods of slack demand, thereby protecting farmers'incomes. If the market price rises to a sufficiently high level, the CCCcan sell the commodity back into the market at a profit, helpingthereby to defray its cost of operation. It has to pay interest to theU.S. Treasury on its operating capital. A buffer stock is designed toprotect farmers against abnormally low prices and consumers againstunusually high prices. In practice, however, the support prices andloan rates have often been set above the long-run market-clearinglevel taking into account both domestic and international demand.

Although the loan rate has often been set above the market-clear-ing price for some commodities, farmers often argue that govern-ment stocks "hang over the market" and depress the price. Theytherefore lobby to ensure that government stocks are released in amanner that does not depress the price.Rise of Restrictions on Input Use and Marketing

As government stocks of commodities accumulated under pricesupport operations, it quickly became apparent that the programswere treating a symptom, not the root, of the problem—the excesscapacity of the farm sector relative to market size at current prices.Three approaches have been used to address that—acreage allot-ments, marketing restrictions, and voluntary land retirement.

Acreage allotments are quantitative restrictions on the acreage afarmer may plant to a given crop. Although these have been used on

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wheat, rice, cotton, tobacco, and peanuts, only the last two remain ineffect. In practice, farmers tend to retire their least productive landfirst. They also raise crop yields on the acreage planted by usingmore fertilizer and other inputs per acre. Production, therefore, fallsby proportionately much less than the reduction in land area. Mar-keting quotas have also been imposed, at times in conjunction withacreage allotments, such as with tobacco. Quotas based on historicalsales freeze the structure of the industry. Later entrants are forced tobuy or lease marketing rights from present quota holders.

While marketing restrictions were authorized in the AgriculturalAdjustment Act of 1933, another variant was authorized when the actwas amended in 1935. This 1935 act authorized the creation of mar-keting orders to regulate the sale of milk and various fruits, vegeta-bles, and specialty crops. Once an order is approved by two-thirds ofall producers, all regulated processors or handlers must comply withthe regulations. While some marketing orders are only concernedwith grading and packaging standards, or collective support for re-search or advertising, others regulate the flow of products to marketand enforce price discrimination.

Allotments cause all producers to cut back jointly on marketing,just as if they had formed a cartel with the government agreeing topolice the members. Examples include the marketing orders forbrewers hops and spearmint oil. These are now being phased out.

Other marketing orders permit price discrimination among marketswith different demand characteristics. A higher price is charged inmarkets for certain fresh fruits and fluid milk, where demand is lessresponsive to price, and a lower price is charged for identical fruitused in canning or for milk that goes into butter, cheese, or othermanufactured dairy products. This raises producers' total revenue atthe expense of consumers. There is nothing unique about the com-modities regulated by such marketing orders that requires volume-control on sales of fresh produce. For example, sales of Californiaand Arizona oranges and lemons, tart cherries and walnuts are con-trolled, while Florida citrus, sweet cherries and pecans are not.

While World War II and the Korean war provided a period of highprices for U.S. agriculture, the lower farm prices and incomes whichfollowed brought renewed attempts to restrict acreage or marketings.A voluntary land retirement program known as the Soil Bank was es-tablished in 1956, in which the government paid farmers to take landout of production. By the late 1960s, farmers had retired more than60 million acres under this program.

Nevertheless, with rapid productivity increases, surpluses contin-ued to mount despite the downward drift of real support pricesthrough the 1960s. Chart 4-3 illustrates this trend for wheat. The in-


creasing overvaluation of the dollar in the late 1960s made this pricereduction less pronounced when viewed from the perspective of im-porting countries. Despite their downward drift, the support pricesappear to have exceeded market-clearing levels in most yearsthrough 1972, when the dollar was devalued and farm exports andprices increased dramatically. The effect of the dollar devaluationwas reinforced by simultaneous crop failures in many parts of theworld, the ready availability of credit, and a change in Soviet agricul-tural import policy that led to a large grain purchase from the UnitedStates.

Chart 4-3

1977 dollars per bushel

5.50

5.00

4.50 -

4.00 -

3.50 -

Real Wheat Prices

3.00 -

2.50 -

2.00 -

1.50 -

1951 1955 1960


1965 1970 1975 1980

The Last Decade

As farm exports expanded, government programs were adjusted toallow farmers to bring most of the retired land back into production.In 1973 farm incomes exceeded those in the rest of the economy for

134


the only time in history. The excess capacity of the 1950s and 1960sdisappeared, and farmers quickly expanded their production capacityto satisfy the export demand.

The moves toward an increasingly market-oriented farm policy,begun in the late 1960s, culminated in the Agriculture and ConsumerProtection Act of 1973. Recognizing that loan rates, by interferingwith market prices, may limit our ability to compete in world mar-kets, the 1973 act attempted to divorce the policy objective of farmincome support from price supports. The act retained loan rates as aform of minimum price insurance, but established a system of targetprices and deficiency payments to provide farm income insurance.Participating farmers can make production decisions based on thetarget price, but unlike loan rates, the entire crop is sold on themarket for whatever it will bring. The difference between the targetprice and the average market price (or the loan rate, whichever ishigher) in the first 5 months of the marketing year is paid to thefarmer in the form of a deficiency payment per unit of production.By this means, the government avoids accumulating stocks unless themarket price falls to the loan rate.

One disadvantage of target prices and deficiency payments is theirlarge potential cost to the government, particularly if there is a widespread between the target price and loan rate. To overcome the costdisadvantage and the tendency for target prices to encourage largerproduction, the program often requires a farmer to reduce the acre-age planted as a condition for participating in the benefits of the pro-gram. The forgone production on this acreage is, in effect, the pre-mium paid for the price insurance provided by the loan rate and theincome insurance provided by the target price.

Because market prices were high during the export boom of themid-1970s, the then-existing farm policies had little effect. Concernarose, however, about the much larger price instability that had ac-companied the export growth in the absence of government stocks. A3-year CCC loan program, known as the Farmer Owned Reserve, wasestablished by the Food and Agriculture Act of 1977. In exchange fora higher loan rate, a farmer who satisfies any acreage reduction re-quirements can place commodities in the Farmer Owned Reserve fora 3-year period. After the first year, the loan is interest free. The De-partment of Agriculture pays for the storage cost for all years of theloan. In exchange, the farmer agrees not to sell the grain until themarket price rises to a specified release price.

Although the Farmer Owned Reserve was designed as a bufferstock scheme for stabilizing market prices, in practice the price bandshave been altered frequently. In particular, since the 1980 embargoof grain sales to the U.S.S.R., the Farmer Owned Reserve loan rate

135


has at times been set high enough to provide incentives to producefor storage under the program. This is contrary to its objective ofproviding price insurance when the market price falls below its long-run equilibrium level.

With the onset of the global recession and the strengthening of thedollar 2 years ago, farm exports fell and farm prices dropped wellbelow loan rates. There were bumper crops in 1981 and 1982, andstocks in the Farmer Owned Reserve and in CCC inventories bur-geoned. With no imminent increase in exports foreseen, a Federalpolicy decision was made early in 1983 to offer farmers payment-in-kind if they would reduce their crop acreage in 1983. Farmers foundthis proposition so lucrative that they cut back their harvested acre-age by 55 million acres from the previous year. In addition, a devas-tating drought struck, drastically reducing production of corn, soy-bean, and cotton in particular. The payment-in-kind program is notviewed as a permanent addition to the instruments of Federal farmpolicy.

POLICIES THAT AUGMENT DEMAND

Farm production has grown more rapidly than demand duringmost of the past 50 years, exerting downward pressure on farmprices. Several Federal policies have attempted to increase domesticand foreign demand in order to provide some price support tofarmers.

Consumer Policies

A number of Federal programs directly related to food have soughtto aid low-income consumers, who spend a larger fraction of theirincome on food. When the government began purchasing agricultur-al commodities to support farm prices and farm income in the 1930s,certain commodities were distributed free to the urban poor and un-employed. Direct distribution of surplus commodities acquired by theCCC continues to this day, for example, the recent distribution ofsurplus cheese and other CCC-owned products. In addition, the gov-ernment subsidizes school lunches and donates commodities toschools. These include meats, fruits, vegetables, eggs, and poultry.

The largest program is the food stamp program, which had abudget cost in fiscal 1983 of $11.2 billion. This program distributesfood stamps to low-income consumers to augment their purchasingpower in a form that must be spent specifically on food. Neverthe-less, because food stamps substitute for cash within a householdbudget, low-income consumers tend to spend only about 12 centsmore on food for each dollar's worth of food stamps received. Thefood stamp program probably added less than 1 percent to aggregateconsumer expenditures on food in 1983. This program is mainly a


welfare program for low-income consumers rather than a program toexpand food demand.

Agricultural Trade Policy

A country's agricultural trade policy is generally a consequence ofits domestic price support programs* Major changes in a country'strade policy, therefore, generally require changes in that country'sdomestic agricultural policy as well.

When price supports are set above the world market-clearing level,they have particularly adverse side effects for internationally tradedcommodities. Unless trade is constrained, a large trading country likethe United States cannot support the domestic price of a commoditywithout also supporting its price for farmers in all other tradingcountries. When the support price exceeds the world market price onexport products, the U.S. Government withdraws enough suppliesfrom the market to raise the world price to the domestic supportlevel. Exports fall, raising the world price for the commodity. Thishigher price encourages farmers in other countries to expand theirproduction capacity. This has occurred for tobacco, cotton, andwheat—at various times among our most important export crops.

To support the domestic price of goods that we import, the gov-ernment must buy up domestic production and even imported sup-plies until the world market price is bid up to the support level. Thisappears to be happening today under the price support program forhoney, although this is not typical. Instead, by authority of Section22 of the Agricultural Adjustment Act of 1933, as amended in 1935,quotas or fees can be imposed on imports of any product whose do-mestic program is threatened by imports because of price supportsset above the market-clearing level. The United States currently hassuch import quotas on sugar, dairy products, cotton, and peanuts.The United States received a waiver for these quotas in the 1950s bythe General Agreement on Tariffs and Trade.

Although there is no price support program for beef, the MeatImport Act of 1979 mandates annual quotas to limit imports whendomestic supplies are large. Voluntary export restraints have beennegotiated with the principal beef exporting countries to avoid trig-gering the beef import quota.

In 1954, Public Law 480 created the Food for Peace program as ameans of reducing the large CCC stocks acquired through price sup-port purchases. This act and subsequent amendments provided fordonations of commodities to poor countries and sales for local cur-rencies. These funds are used for development projects or local ex-penses of the U.S. Government, such as embassy operation. Almost40 percent of all U.S. grain exports in the 1960s were under PublicLaw 480. While concessional sales have helped to reduce burden-

137


some government inventories and to develop new markets for U.S.farm products, the years when government stocks have been largesthave often failed to coincide with years of crop shortfalls in develop-ing countries.

Government stocks also have been reduced through export subsi-dies. Export subsidies on agricultural products are permitted underthe General Agreement on Tariffs and Trade, subject to certain con-ditions. In particular, export subsidies must not be used to obtainmore than an "equitable" share of world exports or to "materiallyundercut" other suppliers' prices. Export subsidies were used by theUnited States to avoid accumulating larger CCC stocks from the1960s until 1972. In recent years, "blended credit" and special subsi-dized sales have been used to encourage other countries, particularlythe EC, to reduce their farm export subsidies. "Blended credit" con-sists of a mixture of no-interest loans "blended" with guaranteed ornonguaranteed commercial credit.

Export subsidies set up a two-price system that permits producerscollectively to charge a higher price in the domestic market, wheredemand is less price responsive, and a lower price in the exportmarket, where demand is more sensitive to price changes. By thismeans, total revenue to producers is increased. Total revenue to pro-ducers is, of course, further enhanced by the fact that farmers receivethe higher domestic price for all they sell, but taxpayers pay theentire cost of the export subsidy.

The target price system can also act as an export subsidy undercertain circumstances. Unless sufficient acreage reduction is required,target prices tend to cause larger production and lower market pricesthan would otherwise occur. Such price reductions have the sameeffect, when viewed from other countries' perspective, as export sub-sidies, unless loan rates are set at or above the long-run worldmarket-clearing prices. For example, it appears that the wheat loanrates were sufficiently low in 1977, 1978, and 1979, that the targetprices did depress market prices. Since 1980, however, the wheat loanrates have been set at such high levels that exports have been reduced.

The United States generally endorses free trade. During the var-ious rounds of multilateral trade negotiations, the United States hasregularly urged that trade in agricultural commodities be treated si-multaneously with other goods, only to see it split off for separatetreatment. The various rounds of trade negotiations have significant-ly lowered tariffs but have been relatively unsuccessful at achievingsimilar reductions in nontariff barriers, the principal barriers to tradein agricultural commodities.

138


On several occasions in the 1970s, the U.S. Government embar-goed exports of certain agricultural products—either globally or toselected destinations. Exports of soybeans, for example, were embar-goed in 1973 to hold down domestic prices to livestock producerswho use soybean meal as an input, and indirectly to protect domesticconsumers from higher prices of livestock products. In 1980 a partialembargo was imposed on grain sales to the U.S.S.R. in response to theinvasion of Afghanistan. As a result of these embargoes, questionshave been raised about the reliability of the United States as a supplierand about the sanctity of U.S. export contracts. This Administrationhas publicly stated that farm exports will not be selectively embargoedin the future, and has entered into long-term sales agreements withChina and the U.S.S.R.

Since 1981 the adverse trade effects of the strong dollar, thirdworld debt problems, and high price supports have motivated legisla-tive requests for special export assistance through price or creditsubsidies and expanded export credit guarantees. Credit guaranteeshave become a major tool in the effort to maintain U.S. farm exports.In addition, public expenditures in support of U.S. agriculturalexport promotion and foreign market development activities have in-creased.

NET EFFECTS OF FARM PROGRAMS

Table 4-4 lists the major Federal farm programs for the most im-portant American farm products. In fiscal 1983 the Federal price andincome support programs cost the taxpayer more than $28 billion,but this number tells only part of the story. Price supports and re-strictive marketing and import practices impose an additional cost onconsumers by reducing their purchasing power.

Federal farm policies tend to have two opposing effects on con-sumer prices. Public support for agricultural research and develop-ment has produced a stream of productivity-increasing, cost-reducingtechnological improvements, which have lowered market prices. Foodprice reductions benefit the poor in particular, because they spend alarger fraction of their income on food than do middle- and upper-income groups.

Offsetting this positive effect on consumer prices are public poli-cies that artificially raise farm product prices above the market-clear-ing level through price supports and restrictive marketing and tradepractices. By raising food prices, these policies tend to reduce con-sumers' purchasing power. Because the policies alter relative prices,they also distort the mix of products consumed. They have stimulat-ed the development of synthetic substitutes for natural products, forexample, high-fructose corn sweeteners and low-calorie sweeteners

139


TABLE 4-4.—Major Federal farm programs by commodity, 1982

Satesrank

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Commodity

Beef cattle and calves

Dairy

Feed grains

Soybeans...

Hogs

Wheat

Poultry and eggs

Vegetables

Fruits and tree nuts

Cotton

Tobacco

Hay

Rice

Sugar beets and cane

Peanuts

Billions of dollars

Farm salesvalue

29.9

18.4

16.1

12.4

10.6

9.8

9.5

8.1

6.7

4.9

3.3

2.1

1.7

1.7

.8

Value of netexports

= 1.2

- . 3

6.4

6.2

.5

6.9

.4

.0

.1

2.0

1.2

.0

1.0

- . 8

.2

Nature of program

Import restrictions.

Price supports.Import quotas.Classified pricing.

Price supports.Deficiency payments.Acreage restrictions.Storage incentives for participants.

No effective program (price supports).

Section 32 purchases.

Price supports.Deficiency payments.Acreage restrictions.Storage incentives for participants.


Some products free market, but some import restric-tions and marketing orders.


Some products free market, but'some import restric-tions and many marketing orders.


Price supports.Deficiency payments.Acreage restrictions.Import quotas.

Price supports.Acreage and marketing controls.

No program.

Price supports.Deficiency payments.Acreage restrictions.

Price supports.Import quotas, fees, and duties.

Price supports.Acreage restrictions.Import quotas.Domestic marketing quotas.

Sources: Department of Agriculture and Council of Economic Advisers.

for sugar, synthetic fibers for cotton and wool, margarine for butter,nondairy creamers for cream, and artificial cheese for natural cheeseon frozen pizzas. Such substitutions have offset part of the adverseeffects of price-enhancing policies on consumer welfare. Finally, low-income consumers have realized some benefits through income-aug-menting programs such as food stamps and commodity distribution.

Public policies also affect the farm sector's export performance.Past public investments in agricultural research account for part ofthe increase in farm exports. At least in the long run, export demandis elastic, so this export growth has increased agricultural export rev-enue. On the other hand, policies that administratively set U.S. farmsupport prices above the world market-clearing level tend to reduce


export revenue in the long run. This occurred in the 1960s and againfor some commodities in the early 1980s. Such policies prevent agri-culture from realizing its full potential as a trading sector.

What matters to producers is how government policy affects thenet returns to their land, labor, and capital. For a given technology,any public policy that raises the price of products or lowers the costof purchased goods and services raises net returns. This has been theeffect of price supports, import quotas, and export subsidies, as wellas of cheap water and cheap energy policies. On the other hand, theprice supports on grains have raised the price of feed to the livestockand poultry sectors. In this way, public policy raises the net returnsto one set of farmers, while lowering those to another.

different rates of protection to different sectors tend to cause in-efficient resource allocation. Resources tend to move to where theyearn the highest returns. If public policy artificially raises the returnsin one sector relative to another, this will attract excessive investmentand result in excess capacity. Inefficient resource allocation lowersthe potential production of the economy as a whole and reduces percapita income. When public policy diverts, say, investment capital orwater from more to less productive uses, this lowers national income.

While farming has changed a great deal since the 1930s, farmpolicy instruments have not been adapted to the changing structureof farming and the environment in which it operates. Average salesof commercial farmers have grown rapidly, and the benefits fromfarm programs tend to be concentrated on the largest producers, de-spite payment limitations for some programs. Moreover, the benefitsfrom the programs have tended to become capitalized into landvalues, thereby increasing landowners' wealth. Once this happens,land values can fall unless the government continues to support theproduct price. The threat of reduced land values and reduced returnson past capital investments provides farmers with a strong incentiveto lobby against reductions in price supports, even when it hasbecome obvious that existing price supports are well above market-clearing levels. The prospect of continued price supports thus createsfalse expectations and encourages investments that would be unprof-itable if price supports fell. Farmers who act in good faith upon theseexpectations feel they have been cheated if price supports are laterreduced or eliminated. Nevertheless, short of paying farmers to retireresources from production, the only way to induce the needed re-source adjustment is to allow capital losses and attempt to ease theadjustment by reducing price supports gradually.

Public policy appears to have induced excessive investment in partsof U.S. agriculture at various times. The cost of these misallocationsdoes not always show up in the Federal budget. For example, sugar

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producers and processors enjoy substantial income transfers as aresult of protection from imports. Because of the way the programoperates, the consumer bears all of the cost of these income trans-fers. Nevertheless, the costs are no less real than if the prices weresupported by direct Federal Government purchases.

GUIDELINES FOR FUTURE FARM POLICY

Modern American agriculture has become well integrated into theworld market and into the rest of the U.S. economy. As exports havegrown, total demand for American agricultural products has becomemore price responsive, but the variability of that demand has also in-creased. This deepens the sector's susceptibility to periodic excesscapacity, as at the present. When the Agriculture and Food Act of1981 was passed, most observers thought that real farm prices wouldrise through the 1980s. In less than a decade, we have gone fromfears of worldwide food shortages to such large stocks that we paidfarmers to reduce harvested acreage by 55 million acres in 1983.This experience illustrates the need for flexibility in setting farm sup-port prices. The present U.S. farm policies support the price to farm-ers in countries that compete with us for export markets and impedeour ability to export. We need to allow prices to reach market-clear-ing levels if we wish to compete in the export market. If this is notdone, a significant part of the resources in American agriculture willremain underemployed until the total quantity of these resources issignificantly reduced.

Price supports do little to help farmers with below-average incomebecause benefits are distributed in proportion to sales. A more effi-cient and equitable way to help low-income farmers would be totransfer income to them directly. While most commercial farmers donot have low average incomes, their incomes are variable, becausevariability in weather and in exports create instability in both supplyand demand. The resulting instability in cash flow makes modernAmerican farming a risky business.

There are better ways to reduce risk besides outright price sup-ports. One is through insurance. Historically, when farmers lacked in-surance markets in which to insure against fluctuations in yield andprices, the government provided price supports and various forms ofsubsidized crop insurance. Today farmers can ensure a specific pricethrough forward contracting or selling futures contracts, althoughrelatively few avail themselves of this opportunity. Farmers generallyprefer not to commit themselves early, worried that they may lose theopportunity to sell at a higher price later if the market price rises.

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This year trading in commodity futures options is scheduled to re-commence on a trial basis for the first time in 50 years. With a putoption, crop producers will be able to buy the right to sell theirfuture production at a specified price without incurring the obliga-tion to sell at that price. This may be more attractive to producersthan selling on the futures market. In a similar manner, livestock pro-ducers will be able to buy insurance against increases in the price oftheir feed by buying call options. Thus, the resumption of trading incommodity futures options will allow farmers to insure against pricerisk. If the experiment is successful, there will be less need for theFederal Government to provide price insurance through price sup-ports.

Buffer stock programs such as the Farmer Owned Reserve are de-signed to reduce variability in agricultural commodity prices. If theseprograms are continued, the acquisition price should be set belowthe expected long-run world market-clearing price. Setting the acqui-sition price too high would reduce exports and support the wholeworld market price structure. Stocks would become excessive, as hap-pened in 1981 and 1982. In addition, the price band needs to be ad-justed over time on the basis of world price movements, as is nowdone with soybeans, to reflect long-run trends in market conditions.

Agriculture, like other trading sectors, is strongly affected by inter-est rates and the value of the dollar. Therefore, macroeconomicpolicy is as important to farmers as farm policy. Special measures toshield one sector from the adverse effects of macroeconomic policydraw resources away from other sectors and place a greater adjust-ment burden on them. It would be more efficient to alter the ma-croeconomic policies that are damaging the traded goods sectors.

Because the United States is a large agricultural trading country, ithas a large interest in further liberalization of agricultural trade andin securing more satisfactory rules concerning use of agriculturalexport subsidies. In past rounds of multilateral trade negotiations,substantial progress was made in lowering tariff barriers to agricul-tural trade. However, little progress on reducing nontariff barriers,such as quotas and variable import levies, has occurred. If we hopeto persuade other countries to liberalize access to their markets forour exports, we have to be ready to offer freer access to our marketfor their exports. Freer access would also tend to stimulate economicgrowth in developing countries, and, over the longer run, increasetheir demand for our exports.

American agriculture has a long and remarkable record of produc-ing abundant supplies of wholesome food for a growing Nation andfor export around the world. But, the budget cost of farm programshas reached a level that is not sustainable. We must adopt policies to


encourage the necessary resource adjustment. National income wouldlikely increase as a result of more efficient resource allocation, con-sumers would pay an even smaller fraction of their income for foodthan they do now, and farmers would benefit from greater economichealth of their industry.

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CHAPTER 5

Financial Market DeregulationOVER THE PAST FEW YEARS, financial markets have undergone

sweeping changes of a magnitude not seen since the 1930s. Despitethese changes, the process of market restructuring and regulatoryreform remains incomplete. Additional regulatory changes of historicdimensions are being debated. The shape and scope of these reformswill be important to the American economy for decades to come.

The issues in financial regulation are many and complex. They in-clude the safety and soundness of financial institutions, the problemsof dealing constructively with changing technology, and the reductionof regulatory burdens to the maximum extent possible. Similar con-cerns are important in other industries where regulatory reform isbeing debated. But the financial regulatory reform issues are in manyrespects far larger.

Financial regulation is not simply a matter of protecting poorly in-formed investors—the usual focus of consumer protection regula-tion—but of protecting everyone. In the financial crises experiencedin 1933 and earlier in U.S. history, well-informed, prudent investorsand depositors found themselves ruined financially. From painful ex-perience, we know that a failure of public policy with respect to fi-nancial markets can create damage that extends far beyond the finan-cial services industry. Financial market failure can mean economy-wide failure—recession, widespread unemployment, and bankrupt-cies.

The essential functions of financial regulation are to ensure thesafety and soundness of the financial system, and to foster efficientallocation of capital by promoting competition and limiting opportu-nities for fraud and self-dealing. The competitive capital markets inthe United States, long encouraged by public policy, have providedhighly efficient links between the providers of funds and the users offunds, directing resources into the most productive investments inthe economy. But instability in financial markets has been a continualconcern, and at times a highly disruptive fact, throughout U.S. histo-ry. The challenge for regulatory policy is to maintain stability whilerealizing the benefits of competition.


MAJOR HISTORICAL FORCES SHAPING FINANCIALREGULATION

It is best to begin the analysis of the key financial regulatory issuesby considering the major forces that have shaped the industry andled to the present regulatory environment. These forces have includ-ed public reaction to periods of financial instability that occurred inthe 1930s and earlier, public concerns over the credit powers of fi-nancial institutions and their ties with other institutions, and strongcompetitive pressures coming from both within and among the var-ious segments of the industry.

FINANCIAL INSTABILITY

Much of our inherited regulatory structure involves extensive andfar-ranging legislation enacted in response to crisis. Periods of acutefinancial instability have resulted in the disappearance of major insti-tutions and the introduction of new governmental regulations. Forexample, in the 1860s, problems of Civil War finance and increasingcurrency disorders led the Congress to establish the national bankingsystem and the Office of the Comptroller of the Currency. The Con-gress also defined the arrangements under which national bankswould issue a national currency. Later, a series of banking panics—periods of numerous bank failures and bank suspensions of pay-ments—culminating with the panic of 1907, created demands for astronger Federal mechanism to prevent instability. This led to the es-tablishment of the Federal Reserve System in 1913.

In the 1930s, the collapse of the banking system and the Great De-pression led to major banking and securities acts that set the basicstructure of our banking and financial regulation. The legislation,among other things, established the Federal Deposit Insurance Cor-poration, the Federal Home Loan Bank System, and the Securitiesand Exchange Commission.

The basic problem of financial instability that existed before exten-sive Federal involvement to stabilize the system arose because bank-ing is based on a fractional reserve system. Banks accept depositspayable on demand. To meet depositors' demands, banks maintainreserves of cash and liquid assets that are a fraction of total deposits.In normal circumstances, the net drain on a bank's cash and liquidassets is small, because some depositors are putting funds into thebank while others are taking funds out. Moreover, if one bank is run-ning short, another bank ordinarily has surplus funds. Bank fundscan be borrowed and lent in the interbank market, known as the Fed-eral funds market. This market is extremely large and well devel-oped.

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In the financial panics that occurred in the 1930s and earlier, how-ever, depositors came to distrust banks; they withdrew funds and heldthem in the form of currency. One bank's deposit drain was notoffset by another bank's deposit inflow. Because bank assets consistpartly of cash reserves but mostly of loans to households and busi-nesses, banks experiencing cash drains were forced to curtail lending,and perhaps to liquidate outstanding loans. As a result, borrowerswere forced to scramble for funds. Business activity and employmentfell, and interest rates on business and consumer borrowing oftenrose.

As the business contractions continued, previously sound firmsfound that they could not service their debt, nor could unemployedworkers pay theirs. Banks that had been unaffected by the developingcrises found that their once sound loan portfolios had become shaky.Fearing more bank failures, depositors rushed to withdraw fundsfrom those sound banks. As the downward pressures accumulated,the financial crises deepened.

This brief description of the development of financial crises showsthat a financial system based on fractional reserve banking is poten-tially unstable: given a big enough shock or disturbance, rational andpredictable responses by banks, businesses, and households will tendto make the problem worse. There need be no villains for a financialcrisis to occur. A crisis could develop even though every participantacted responsibly.

Two types of governmental institutions now serve to prevent a fi-nancial panic from cascading into a collapse of the banking system.First, the Federal Deposit Insurance Corporation, the Federal Savingsand Loan Insurance Corporation, and the National Credit Union Ad-ministration provide deposit insurance so that the failure of one un-healthy institution will not produce panic runs on healthy institu-tions. Second, the Federal Reserve System, as the Nation's centralbank, stands ready to provide extra liquidity to the banking system.When a scramble for a relatively fixed amount of currency threatensto produce a crisis, the Federal Reserve can increase the totalamount available, thus meeting extraordinary demands. A scramblefor currency forces cumulative reductions in the total money stock,but the Federal Reserve can prevent the process from starting in thefirst place by using its policy instruments to keep the money stockgrowing reasonably smoothly.CREDIT POWERS OF FINANCIAL INSTITUTIONS

A major theme running through U.S. financial history is that ofconcern over the power of financial institutions, primarily banks, aslenders, and not just as depositories. This concern is responsible for

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many banking and financial market regulations. Issues of competitionand concentration, of fair and reasonable interest rates, and of equi-table access to credit, have long been controversial topics in the reg-ulatory debates.

It is essential that monetary and credit issues be kept analyticallyseparate. We have tended to extend regulation over the credit activi-ties of financial firms because of incomplete understanding of themonetary functions of banks. For example, although there is no evi-dence to support this proposition, bank failures in the early 1930swere attributed in part to the role of banks in the securities business.This belief led to provisions in the Banking Act of 1933 (Glass-Stea-gall Act) requiring the separation of banking and securities activities.Similarly, regulations setting minimum margin requirements for secu-rities purchases, prohibiting the payment of interest on demand de-posits, and limiting the interest paid on time and savings deposits,were based on the view that regulation of the credit markets was nec-essary to ensure financial stability.

The evidence, however, indicates that banking abuses are notthemselves the basic cause of financial instability. A steady stream ofbank failures occurred in the 1920s without causing generalized fi-nancial stress. On the other hand, in the absence of a proper govern-mental monetary framework, there is a danger of banking system col-lapse even if all banks individually pursue sound and conservativebanking policies.

THE FORCES OF COMPETITION

Competitive pressures have been an important force in shaping thefinancial industry. Yet much of the legislation of the 1930s, and inother periods as well, has been designed to restrict competition, par-ticularly in banking, so as to maintain financial stability. Much of thislegislation rested on faulty analysis. Indeed, restrictions on competi-tion have not only led to costly inefficiencies in the provision of fi-nancial services and reduced consumer choice, but also may havecontributed to instability.

The forces of competition in financial markets are powerful. Theorganized exchanges and over-the-counter markets in standardized fi-nancial instruments are obviously highly competitive. What is less ob-vious is the competitive nature of transactions involving nonmarketa-ble financial instruments. For example, a bank's loan to a small busi-ness or a household, which is ordinarily not a marketable financialinstrument, is often negotiated in a competitive setting. In manyareas of the country borrowers can choose among numerous possiblelenders. By shopping around, they can select the most favorable com-

148


bination of interest rate, terms, and service. In doing so, they con-strain lenders to provide competitive loan rates and terms.

Although most financial markets are highly competitive for mostparticipants, there are exceptions. In some cases geographical restric-tions reduce the competition in local markets because financial firmsfrom other areas are denied entry. The loss of competition primarilyaffects smaller local businesses and households; larger businesses canplace deposits with, and obtain credit from, the larger financial firmscompeting in regional or national markets.

One measure of the depth of competition among financial firms inthe United States is that there are more than 35,000 independentbanks, mutual savings banks, savings and loan associations, andcredit unions with approximately 100,000 offices nationwide. To besure, some part of this large number may reflect unit banking andother restrictions, but it is likely that even without such restrictionsthe number of depository institutions would be large. In addition, in-surance companies, securities firms, money market mutual funds, fi-nance companies, and other types of financial institutions competewith * the depository institutions in providing many services.Table 5-1 provides data on the numbers and assets of these institu-tions. Finally, many large borrowers can bypass financial intermediar-ies altogether by selling stocks, bonds, and commercial paper directlyto the market.

TABLE 5-1.—Number and assets of selected financial institutions as of December 31, 1982

Type of institutionAssets

(millions)

Commercial banks

Branches

Savings and loan associations1...

Branches

Mutual savings banks

Branches

Credit unions 2

Money market mutual funds3

Life insurance companies

SEC-registered broker-dealers

1,862,724

706,045

174,197

76,120

221,558

588,163

1 Data are preliminary.2 Excludes approximately 3,400 nonfederally insured State credit unions.3 Data as of December 29, 1982 for funds reporting to Donoghue's Money Fund Report.

Source: Compiled by Council of Economic Advisers.

There is an important consequence of this competitive environ-ment. Many of the regulations put in place in the 1930s that weredesigned to prevent "excessive competition" have been eroded bypressure for efficiency and innovation. In many instances profitabilitycan be improved by avoiding costly regulation. When firms find waysto avoid regulation, other firms are attracted to similar strategies,

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both to maintain their profitability and to protect their competitivepositions.

Although the forces of competition usually prevail in the long run,the costs of unnecessary regulation should not be ignored. Theamount of unproductive labor devoted to regulatory compliance andavoidance is far from trivial. Moreover, established firms can findtheir market positions, expertise, and capital eroded as they attemptto cope with outmoded regulatory constraints while competingagainst less constrained firms. Regulation, more than restrainingcompetition, forces it into new channels. As a result, resource alloca-tion is distorted and unnecessary costs are imposed on consumers,shareholders, and taxpayers.

The importance of the competitive constraint on financial regula-tion can hardly be overemphasized. But neglect of it in the past hasled to many of the regulatory problems the Nation has faced. Impor-tant recent examples include the market distortions engendered byceilings on the interest rates financial institutions were permitted topay to their depositors, and the growing banking competition fromnonbanking firms such as securities firms that are not subject to tra-ditional banking regulations.

Many observers decry the effects of competition in breaking downregulation, but it is not possible to obtain the benefits of competi-tion—the market constraint on interest rates, the incentives for effi-ciency and innovation, and the dispersion of economic power—with-out having these same forces work toward the avoidance of regula-tion. Indeed, competition may break down unwise regulation thatnever should have existed.

It is often the case that legislation designed to solve one problemcreates others. Most observers agree that the danger of a financialcrisis has been reduced to an extremely low level. However, depositinsurance, interest rate controls, and other restrictions on bank activ-ities introduced in the 1930s—initiatives viewed at the time as con-tributing to financial stability—have had unexpected side effects.

Recent legislation, the Depository Institutions Deregulation andMonetary Control Act of 1980 and the Garn-St Germain DepositoryInstitutions Act of 1982, have begun to deal with these new issues.Fortunately, the new legislation has been enacted in a setting verydifferent from the crisis atmosphere existing in the 1930s. To besure, recent years have seen major stresses on the financial system;the failure rate of financial institutions has risen. But the drivingforce behind recent and newly proposed legislation has been an at-tempt to modernize the regulation of financial markets and institu-tions—to retain what is essential in earlier legislation and sweep awaywhat has proved unnecessary or counterproductive.

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CEILINGS ON INTEREST RATES

The market's response to interest rate ceilings on time and savingsdeposit accounts provides an example of regulatory avoidance in ahighly competitive market and the unnecessary costs incurred in theprocess. Interest rate ceilings evolved from the legislation of the1930s. The intent was to restrain "excessive price competition/' thenthought to have contributed to the banking collapse in 1933. It wasalso felt that the introduction of Federal insurance of bank depositsgave the government a special responsibility to protect the commer-cial banking industry from competitive pressures that might strain theresources of the insurance funds.

Until 1966 interest rate ceilings on commercial bank deposits wereintermittently changed to remain above market interest rates. In1966, however, market interest rates rose significantly above the ratesthrift institutions were earning on their long-term mortgage portfo-lios, threatening their solvency. The ceilings on bank rates were al-lowed to become binding in an attempt to prevent commercial banksfrom bidding funds away from mortgage lending. To prevent thriftinstitutions from engaging in a self-destructive bidding war, ceilingswere also extended to federally chartered savings and loan institu-tions and mutual saving banks.

In the short run, this emergency 1966 legislation may have helpedto stave off the bankruptcy of some thrifts. However, as the "emer-gency" ceilings were extended year by year, the artificially low rate ofinterest on bank and thrift accounts encouraged savers to withdrawtheir funds from financial intermediaries in favor of other forms ofsaving. This phenomenon came to be known as disintermediation.Chart 5-1 shows savings deposit inflows at banks and thrifts againstthe interest rate gap between the ceiling on passbook accounts andmarket rates. It illustrates the volatility of deposit flows with bindinginterest rate ceilings in place.

In many ways the effects of the ceilings were the opposite of thoseintended. For example, the ceilings were intended to ensure a stableflow of mortgage funds. However, they actually led to widespreaddisintermediation whenever rising market interest rates made othersavings vehicles more attractive, so that they effectively destabilizedthe flow of mortgage money. The ceilings were supposed to make iteasier for lower-income families to afford housing by lowering mort-gage rates. In fact, the interest rate ceilings advantaged wealthier in-vestors who could meet minimum balance requirements on higheryielding accounts, and who had access to unregulated investments.As a result, the greatest burden of the regulation was borne by small-

151


Chart 5-1.

Billions of dollars

Savings Deposit Inflows versusthe Interest Rate Gap

Percentage points15

10

5

0

-5

10

15

n

1 f •

^^^ L %» ' /^\1"

w1

-

-

1 1 1

Monthly

Savings Deposit Inflows^(left scale)

'i .; • A/

1 1,7 • i,i -'• y • (V;; ; i

•• / ' ">,

Interest Rate Gap-3/(right scale)

1 1 1 1 1 1 1 1

AI/ 'V/ ' V . . iII / 1*1 11

1 V* I T

'.II

1 1

1

In iI 1rl \\u*i if i

i

-2

1965 1967 1969 1971 1973 1975 1977 1979

-^Change in savings deposits at commercial banks and thrift institutions (seasonally adjusted averagesof dally figures).

-^Ceiling on passbook savings accounts at commercial banks less rate on 3-month Treasury bills(both measured in percent per annum).

Sources: Department of the Treasury and Board of Governors of the Federal Reserve System.

er savers. Moreover there is little evidence to suggest that the rateceilings were effective in keeping mortgage interest rates down.

Rate ceilings were often effectively circumvented through nonpricecompetition and through investment in unregulated instruments. Ex-tensive branching, free checking and financial services, expensivepromotions, and "free" gifts were among the many forms of implicitinterest that banks and saving institutions used to attract customers.As market interest rates rose through the 1970s, the diversion offunds into unregulated instruments led to attempts to "tune" theceiling structure for different categories of deposits. The number ofdifferent accounts subject to ceilings went from 2 in 1965 to 24 by

152


1979. These attempts to restrain disintermediation were not very suc-cessful. A new ceiling-free investment vehicle, the money marketmutual fund, became increasingly popular. Balances in these ac-counts jumped from $6.4 billion in 1978 to $150.9 billion by 1981.

Unintended effects and widespread opportunities for avoiding theceilings, among other things, led to the passage of the Depository In-stitutions Deregulation and Monetary Control Act in 1980, whichmandated the gradual removal of ceilings by 1986. At the Adminis-tration's request the Depository Institutions Deregulation Committeehas accelerated the phaseout of rate ceilings. By the end of 1983fewer than one-fourth of interest-bearing deposits were in rate-re-stricted accounts.

DEREGULATION AND MONETARY CONTROL

Interest rate ceilings not only provoked bouts of disintermediation,but also damaged the ability of the Federal Reserve to measure andcontrol the money stock. The ceilings also reduced the stability ofthe link between changes in the monetary aggregates and changes innominal income, making the task of managing monetary policy moredifficult.

When market interest rates rose significantly above ceiling rates,funds flowed out of traditional financial intermediaries, new depositcategories were defined by the regulators, and money market mutualfunds emerged to offer deposit-like accounts that were beyond thedirect control of the monetary authorities. As a result, market reac-tion to binding interest rate controls resulted not only in a less pre-dictable environment for making monetary policy, but also in concep-tual changes in the definitions of the monetary aggregates.

The 1980 Depository Institutions Deregulation and Monetary Con-trol Act contained provisions that, when full adjustment to them iscompleted, will significantly improve the potential for accurate Feder-al Reserve control over the monetary aggregates. For one, the actmandated a phaseout of interest rate ceilings on interest-bearing ac-counts. The Garn-St Germain Depository Institutions Act of 1982continued the process by authorizing a new ceiling-free account, themoney market deposit account. Both steps should prevent circum-stances in which these components of the broader monetary aggre-gate, M2, become suddenly less attractive than savings vehicles notincluded in M2. As a result, new episodes of large-scale disinterme-diation are unlikely to occur.

A proposal currently being discussed, that would go still further inthe direction of decontrolling deposit interest rates, would allowbanks to pay interest on ordinary demand deposit accounts, and

153


would require the Federal Reserve to pay interest on required re-serves held against deposits. The cost of paying interest on reservescould be offset by increasing taxes or charges on institutions subjectto reserve requirements. There are good arguments for such a pro-posal. Paying interest on reserves would eliminate the disadvantagethat deposit accounts subject to reserve requirements have in relationto nonreservable accounts, such as money market mutual fund ac-counts. But perhaps the strongest is that once portfolio adjustmentsassociated with the change are completed, paying interest on depositsand reserves would tend to stabilize Ml velocity—the ratio of grossnational product (GNP) to the narrowly defined money stock, Ml—and therefore facilitate monetary policy.

One cause of fluctuations in velocity is changes in the opportunitycost of holding money—the difference between market interest ratesand interest rates on deposit accounts. Because ordinary demand de-posits do not earn interest, the willingness of individuals and busi-nesses to hold deposit balances changes inversely with market inter-est rates. For example, when market rates rise, depositors may at-tempt to economize on their holdings of non-interest bearing depos-its by acquiring interest-earning assets. In the process, monetary ve-locity rises; for any given level of GNP, depositors hold less money.

Changes in the velocity of money complicate the job of stabilizingnominal incomes. If interest were paid on both demand deposits andreserves, the spread between the rate that competition would forcebanks to pay on those deposits and the rate that could be earned onother assets would reflect the resource costs associated with provid-ing transactions services to depositors. As a result, the opportunitycost of holding money would be more stable, and it is likely that thiswould tend to stabilize Ml velocity.

Another provision in the Depository Institutions Deregulation andMonetary Control Act that has improved the climate for monetarycontrol is the imposition of uniform reserve requirements for mosttypes of accounts. Under the legislation, the Federal Reserve is em-powered to set reserve requirements, not only for member banks, butalso for nonmember banks and nonbank depository institutions, suchas savings and loans, mutual savings banks, and credit unions. Thereserve requirements cover all transaction accounts, including nego-tiable order of withdrawal (NOW), Super-NOW, and other automatictransfer accounts. Uniform reserve requirements are being phased ingradually. The process will be complete in 1987.

When uniform reserve requirements are fully phased in, the linkbetween reserves and transactions balances should be tighter than inthe past. Transaction deposits at depository institutions have beensubject to widely varying treatment. These institutions have faced dif-

154


ferent reserve requirements depending on their size, location, andwhether they were members of the Federal Reserve System. SomeState-chartered institutions have not been subject to any reserve re-quirements. As deposits have shifted among accounts subject to dif-ferent reserve requirements, the lending and money-creating capacityof the banking system would change without any change in thesupply of reserves. Thus, the relationship between reserves and de-posits has been subject to unexpected changes. Uniform reserve re-quirements will reduce this source of variability, and enhance theability of the Federal Reserve to control the money stock.

GEOGRAPHICAL AND LINE-OF-BUSINESS RESTRICTIONS ONDEPOSITORY INSTITUTIONS

Depository institutions have historically been subject to a numberof Federal and State laws that restrict their entry into new geographi-cal markets and nonbanking lines of business. These laws were gen-erally intended to prevent capital outflows from rural areas into fi-nancial centers and to stabilize the banking system. However, there islittle evidence that they have served either purpose. Instead, theyhave impeded the development of integrated financial service compa-nies and resulted in a financial services sector with smaller and morenumerous firms than would have otherwise developed. They alsohave impeded the development of businesses that offer both financialand nonfinancial services, despite possible economies from such astructure.

Technological changes, limited deregulation, and the introductionof bank-like services by securities firms and others have eroded theforce of these legal prohibitions and encouraged some expansion anddiversification by banking firms. These changes have intensified thedebate over further loosening geographical and line-of-business re-straints. At issue is whether further deregulation will lead to more ef-ficient and competitive financial services markets or promote concen-tration, instability, and undesirable trade practices.

GEOGRAPHICAL MARKET REGULATION

A complex set of Federal and State laws governs expansion of de-pository institutions into new geographical markets. In general, thecontrolling law depends on the type of institution, whether it is char-tered under Federal or State law, and the State in which it is located.

The most cumbersome restrictions are those imposed on commer-cial banks. With few exceptions, interstate branching is prohibited forbanks, whether national or State chartered. Intrastate branching ofboth national and State banks is controlled by the law of the host


State. Historically, most States have restricted intrastate branching,either by prohibiting it altogether or limiting the number or locationof branches (Table 5-2). Some relaxation of these restrictions has oc-curred, but approximately half the States still place some limitationson intrastate branching. Federal geographical restrictions generallyconform to State policies.

TABLE 5-2.—State restrictions on intrastate branch banking, selected years, 1929-83

[Number of States]

Classification 1929 1951 1961 1983

Branching prohibitedBranching permitted but geographically limited..Unlimited branching 9 17 19

18

24

Sources: American Bankers Association and Board of Governors of the Federal Reserve System.

The restrictions on geographical expansion by State savings andloan associations are similar to those on banks, except that manyfewer States limit intrastate branching. There are no statutory limita-tions, intrastate or interstate, on branching by Federal savings andloan associations. However, the Federal Home Loan Bank Boardlimits interstate branching except where necessary to rescue failinginstitutions, and it observes the limitations imposed by the few Statesthat do restrict intrastate branching of State-chartered savings andloans.

States generally enacted geographical restrictions on bank expan-sion for two reasons. First, it was thought that such restrictionswould prevent the outflow of funds from localities into financial cen-ters and thereby increase the availability of loans to farmers andsmall businesses. Second, the laws were intended to preserve localownership and management of banks.

There is no evidence that branching limitations do in fact constrainthe flow of loanable funds. Interinstitutional and interregional capitalmarkets are so well developed that local deposits are as easily loanedout across the country as across the neighborhood.

Even the effect of these laws in promoting local control is ques-tionable. Depository institutions have been able to circumvent theprohibitions either by using holding companies or by offering onlylimited services in geographical areas where they cannot establishregular branches. In all but five of the States that impose restrictionson intrastate bank branching, for example, bank holding companiesmay be used to create a statewide banking system by acquiring multi-ple charters. The growth in the use of multibank holding companiesover the past 20 years, from approximately 50 independent compa-nies holding less than 10 percent of total bank deposits to more than600 companies with over 57 percent of total bank deposits, is attrib-

156


utable in substantial part to the ease with which they can be used tocircumvent intrastate branching limitations.

Until the enactment of the Bank Holding Company Act of 1956,the holding company structure could be used to circumvent interstateas well as intrastate branching prohibitions. Provisions of the act,however, prevent a bank holding company from acquiring more thana small interest in a bank outside the States in which it is already en-gaged without the approval of the State to be entered.

In 1970 changes to the Bank Holding Company Act permittedmost banking-related services to be offered interstate, except for de-posit-taking. The 1970 changes also narrowed the definition of"bank" to include only institutions that both accept demand depositsand make commercial loans. As a result, bank holding companies andothers have been able to establish interstate networks of "nonbankbanks," consumer finance companies, mortgage companies, and thelike, that escape regulation by either not accepting deposits or notmaking commercial loans. More recently, the Garn-St Germain De-pository Institutions Act of 1982 empowered bank regulatory au-thorities to permit acquisition of failing institutions across State lines.

These changes, plus recent advances in communications and dataprocessing technologies that appear to have reduced the costs ofmanaging multi-office banks, have led to a substantial increase in thelevel of interstate banking activity. Of approximately 55,000 officesengaging in banking-related activities, more than 7,800 are now lo-cated outside the home State of the parent entity. Even these num-bers understate the amount of interstate banking activity becausethey do not reflect the substantial use of shared interstate automatedteller machine networks or the phenomenal growth in the provisionof bank-like services by interstate securities firms.

The rapid pace at which de facto interstate banking is emerging—despite seemingly substantial legal barriers—is one obvious indica-tion of the strength of the forces for change within the financial serv-ices industry. These forces are also manifest in the numerous propos-als for changes in both Federal and State law. Three New EnglandStates have recently adopted laws that provide for entry by out-of-State banks headquartered in other New England States with similarlaws, and similar regional reciprocal entry arrangements are underactive consideration in several other areas of the country. OtherStates have modified their banking laws to permit at least some entryfrom out-of-State, and the evolutionary movement away from intra-state limitations continues. At the Federal level, a number of legisla-tive proposals are now pending that would reduce Federal restric-tions on interstate banking.


ECONOMIC ISSUES IN GEOGRAPHICAL MARKET DEREGULATION

If geographical restrictions are relaxed, the number of independentbanking entities would almost certainly be reduced. States with unit-banking laws presently have approximately 107 independent bankingentities per million residents, compared with 72 for limited branchingStates and only 20 for States with unrestricted branching. The mostcredible explanation is that branching restrictions impede access bylarge banks to deposit accounts and small loan business outside theirhome territories. Deposit accounts have historically been the lowestcost source of funds for banks, and full-service branches are impor-tant in marketing consumer and small business loans. Impededaccess has therefore inhibited the growth of large firms and favoredsmaller firms.

However, geographical market deregulation would probably in-crease the number of banking offices operating in most communities."Unit-banking*' States, those that prohibit all branching, have ap-proximately 182 commercial bank offices per million residents com-pared with 243 offices per million residents for other States. Al-though other factors may contribute to the difference, branching pro-hibitions are probably a significant reason for the lower ratio ofbanking offices to population in unit-banking States.

On balance, these two changes should increase competition andbenefit consumers. The relevant market for retail deposits and smallloan customers is compact—the locality or even the neighborhood.Although geographical market deregulation is likely to decrease thetotal number of depository institutions nationally, each competitorwill compete in more local markets. Moreover, the number of poten-tial entrants into each local market will also increase.

Nor would deregulation eliminate all smaller institutions. A recentstudy concluded that there are unlikely to be large, if any, economiesof scale for most important banking services. The best existing dataindicate that the costs of providing traditional banking services reacha minimum for institutions in the $50 million to $100 million assetrange. Moreover, it does not appear that most bank customers willpay a premium to bank with interstate firms. The experience inStates without intrastate branching restrictions is that many small in-stitutions survive and prosper. In fact, smaller banks and thrifts notonly coexist with larger ones, but generally have higher profitabilityon bank assets. Although some institutions, particularly less well-managed ones, will disappear as separate entities, they will mostlikely be acquired by more efficiently run organizations that will op-erate them as branches.


LINE-OF-BUSINESS RESTRICTIONS

Federal law embodies a long-standing policy of separating bankingfrom unrelated lines of commerce. Today, as a general rule, banksmay not engage in nonfinancial businesses unrelated to banking,either directly or through subsidiaries, nor may bank holding compa-nies or their affiliates. Similar, though somewhat less stringent, pro-hibitions apply to savings and loan associations and holding compa-nies controlling two or more savings and loan charters. Holding com-panies that control a single savings and loan association or anynumber of "nonbank" banks, however, are not subject to Federalline-of-business limitations.

The line separating commercial banking from other financial serv-ices is much less distinct. Until the 1930s, State and national banksregularly engaged in underwriting and dealing in securities, often cir-cumventing legal prohibitions by pursuing such activities through af-filiated companies. Because of the popular belief that banks had con-tributed to the Great Crash by promoting speculative securities andunloading worthless issues into trust and customer accounts, theBanking Act of 1933 (the Glass-Steagall Act) was passed. Provisionsof the act attempted to divorce banking and the securities industry bybarring banks from underwriting or dealing in nonbank securities,whether debt or equity.

The Glass-Steagall separation is incomplete in a number of ways.First, the act's prohibitions against the affiliation of banks with secu-rities firms apply only to banks that are members of the Federal Re-serve System, and not to the many State-chartered nonmembers. Allbanks, however, are prohibited from underwriting securities directly,and securities firms may not take deposits. Second, Glass-Steagallallows all banks to distribute and trade in general obligation govern-ment securities. Third, the act authorizes banks to buy and sell anysecurities for the account of bank customers, provided that suchtransactions are "without recourse" against the bank.

Until recently, the gaps in the Glass-Steagall Act, except those per-mitting trading in government securities, were inconsequential.Banks did not aggressively pursue brokerage business because regu-latory restraints made it unprofitable. In January 1983 these re-straints were relaxed, and as a result thousands of depository institu-tions now engage in securities brokering.ECONOMIC ISSUES IN LINE-OF-BUSINESS DEREGULATION

Proposals to ease line-of-business restrictions on depository institu-tions have spurred much debate. Proponents argue that economic ef-ficiency would be increased by permitting these institutions to under-write and deal in securities and by expanding their power to engage


in collateral lines of business such as insurance underwriting andsales, real estate development, and management consulting. Oppo-nents argue that these changes would increase the riskiness of bank-ing, result in unacceptable concentrations of market power, lead toself-dealing and conflict-of-interest abuses by banking firms, and beunfair to bank competitors.

Product-line deregulation may promote economic efficiency in twoways. First, it may reduce the total cost of providing multiple servicesby consolidating their provision within a firm. Such savings can resultfrom spreading fixed costs over more activities, improving communi-cations, and effecting synergies in production. Second, customersmay benefit from the extra convenience associated with conductingtheir business with a single firm.

The magnitude of the economic benefits from relaxing line-of-busi-ness restrictions is uncertain. Specific cost data for depository institu-tions and their customers are limited, and reliable estimates of thecost savings from product line deregulation do not exist. Over thepast several years, however, several large firms have integrated over abroad spectrum of businesses, including insurance, real estate, andsecurities underwriting and brokering. Although it is too early toassess the economic success of these ventures, their development isevidence that the market believes that substantial economies from theintegration of these businesses are possible. Indeed, much of thepressure for reconsidering line-of-business restrictions on banks hascome from members of the banking community who argue that relax-ation of these restrictions is necessary for them to meet competitionfrom nonbanking firms offering integrated services.

Product line diversification does, however, raise issues of someconcern regarding banking stability. The existence of Federal depositinsurance gives insured institutions an incentive to take undue risksin the hope of earning greater than normal returns. Accordingly,much of the supervisory efforts of banking regulators is directed atpreventing excessively risky banking practices. As a practical matter,as the range of business activities increases, it may become muchmore difficult for regulators to thwart excessive risk-taking.

The Administration's proposed legislation, the Financial Institu-tions Deregulation Act, strikes a balance by easing restrictions onnonbanking activities but requiring that they be conducted only byseparate corporate affiliates that are not bank subsidiaries. This ap-proach has two significant advantages. First, by removing nonbankingactivities to affiliates, the bank itself can be regulated and supervisedon the basis of the traditional methods developed by the regulatoryagencies over many years. Second, because the affiliates are to besubsidiaries of the holding company rather than of the bank itself,

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the bank would be insulated from any financial problems that occurin the subsidiary.

There is, of course, no way to guarantee that difficulties in an affil-iate will not affect the bank. But with proper safeguards the problemscan be minimized. Moreover, it is important to recognize that at-tempts to seal off banking from collateral activities is a recipe for anendless expansion of regulation. Brokerage firms are now expandingbank-like activities rapidly. Extending regulation to these bank com-petitors would simply push regulatory avoidance to another channel.There is, in addition, far more danger of financial instability from un-regulated banking substitutes than from properly supervised bankspermitted to expand their powers within well-designed corporatestructures.

A similar point may be made with respect to predictions that in-creases in self-dealing and conflicts of interest will result from repealof Glass-Steagall. The potential for these abuses is already present inboth commercial and investment banking. For example, broker-deal-ers already represent both purchasers and sellers, deal for their ownaccount, provide investment advice, manage mutual funds, and act asfiduciaries with respect to trust or discretionary accounts. Bank trustdepartments may transact in the securities of bank customers.

In fact, legal and market forces have limited self-dealing and con-flict-of-interest abuses. Legal standards governing fiduciary behaviorare strict, and the conduct of fiduciaries is subject to regulation. Inaddition to legal mechanisms, market forces are extremely important.Systematic abuses by a bank's trust department would, for example,reduce the return on the portfolios it manages, causing it to losebusiness to competitors. Although one cannot say that no suchabuses will occur, existing controls should keep them to a minimum.

Line-of-business deregulation also poses issues of fairness. Oppo-nents of changes to existing law have argued that depository institu-tions could operate collateral lines of business with low-cost capital,benefiting from access to the Federal Reserve's discount window, andan implicit subsidy from Federal deposit insurance. They charge, forexample, that some industrial companies and retailers have acquireda deposit-taking "nonbank" bank or a single savings and loan associ-ation to finance their own activities or customer purchases of theirproducts and services with low-cost capital.

This argument ignores the fact that the profitability of a consoli-dated enterprise cannot be increased by charging an affiliated busi-ness or customer a submarket rate of interest. Any attempt to do sowill reduce the profitability of the bank, leaving the earnings of theenterprise unchanged. In other words, if a bank has access to low-cost capital, it will be profitable to its owner even if the bank pro-


vides no financing whatsoever for the parent company or its custom-ers. As long as the capital market is competitive, the cost-of-fundsdifferential between financing customers from bank deposits on theone hand and from selling commercial paper on the other will onlybe enough to cover the costs of operating the bank and to earn thegoing rate of return on the assets invested in the bank.

Another argument is that financial intermediaries would be able tocompete unfairly by tying loans to the purchase of other services. Itis not likely, however, that many financial intermediaries would findtying arrangements advantageous. Tying arrangements are a way inwhich a firm with market power can circumvent laws against pricediscrimination and increase its profits by selling different customersdifferent quantities of tied-in products. It is unlikely that many bankshave such market power, but even if some do, they could directlyprice discriminate by charging different interest rates to different cus-tomers.

Banking organizations, however, enjoy certain regulatory and taxadvantages over nonbank competitors, particularly securities firms.Banks are largely exempt from regulation under Federal and Statesecurities laws and, therefore, could enjoy a cost advantage inbroker-dealer, underwriting, and investment management activities.Moreover, in determining taxable income depository firms maydeduct interest paid on deposits, even if they are used to financeholdings of tax-free securities. This provision of the tax law may givethem an advantage in carrying inventories of securities relative tononbank securities dealers.

The problem of asymmetrical tax and regulatory treatment couldbe solved, either by modifying tax and securities laws or by allowingonly affiliated entities to undertake such activities. The latter ap-proach has been adopted in the Administration's Financial Institu-tions Deregulation Act. Under this act affiliated entities would not beexempt from the securities laws, nor be subject to favorable tax treat-ment.

DEPOSIT INSURANCE REFORM

In today's financial market, the traditional depository institutions,commercial banks, and thrifts compete with money market mutualfunds and brokerage firms in offering highly liquid deposit accountsthat pay competitive rates of interest. Commercial banks and thrifts,however, retain a unique position relative to their newer competitors,because their liabilities are federally insured. The system of Federaldeposit insurance was created as part of the Banking Act of 1933.Under this law the Federal Deposit Insurance Corporation (FDIC) in-


sures deposit accounts for banks that are members of the corpora-tion. A year later the Federal Savings and Loan Insurance Corpora-tion (FSLIC) was established to provide a similar arrangement for thesavings and loan industry.

The purpose of the FDIC was to eliminate the financial panics andbank runs that had long plagued the economy, one of which culmi-nated in the collapse of the banking system in 1933. Measured bythat criterion, deposit insurance has been tremendously successful.There is wide agreement that earlier problems with financial marketinstability were not solved by creating a national currency, nor by im-posing reserve requirements on banks, nor by the establishment ofthe Federal Reserve System, but by deposit insurance. Chart 5-2 il-lustrates the dramatic decline in bank failures after the FDIC was es-tablished.

Chart 5-2

Number

Bank Failures

4000

3500

3000

2500

2000

1500

1000

500

0

—

-

-

-

-

/

I t I

Number (Enlarged Scale)

60

40

1

AI l l l l l l l

0

-

A

1960 1970

4~H~ht44J I I I i I I I I I I I i I I I ] I 111 I I 111111 I 111 I I

IJI l l l l l l

1980

-

I I IIJO.

1921 1930 1940 1950 1960 1970 1980

Note.—Data for 1983 estimated.

Sources: Comptroller of the Currency and Federal Deposit Insurance Corporation.


The volume of deposits insured by the FDIC and FSLIC has in-creased greatly in recent years as coverage limits have been raisedand as new insured accounts have been introduced. Since 1950, thelimits have increased at faster rates than inflation, and now stand at$100,000 per depositor. The introduction of money market depositaccounts in mid-December 1982 and ceiling-free Super-NOW ac-counts in January 1983, and the elimination of ceilings on most smalltime deposit accounts in October 1983 have also produced increasesin the amount of insured deposits, as many customers have switchedout of the uninsured accounts issued by money market mutual fundsinto the insured deposit accounts issued by banks and thrifts.

Federal deposit insurance gives banks, savings and loans, andcredit unions an advantage in the competition for funds, and altersthe structure of incentives in the industry. To some extent these ad-vantages have been offset by competition-inhibiting restrictions onthe amount of interest payable on deposit accounts, on allowable ac-tivities, and on opportunities for expansion into new markets. Inrecent years, deregulation and private market innovation have elimi-nated or reduced the force of many of these restrictions on competi-tion, thereby increasing efficiency in the industry. However, the FDICand the Federal Home Loan Bank Board, the parent of FSLIC, haveargued that their ability to control risk-taking by institutions offeringinsured accounts has been impaired in the new environment. As aresult, the deposit insurance system is currently being reassessed.

Because most of the expansion in the range of opportunities avail-able to insured depository institutions has taken place only recently,conclusive evidence on the effect of these changes on failure rates ofinsured institutions and the dollar magnitude of actual payouts is dif-ficult to determine. There has been a large increase in the number offailures in recent years. But this increase can be attributed primarilyto the depth of the recent recession, which has exacerbated problemsassociated with insufficient diversification and mismatches betweenasset and liability maturity structures at some institutions that havelong existed.

Nevertheless, changes in the risk characteristics of financial institu-tions that are taking place now may have a significant effect on fail-ure rates in the future. In addition, financial institutions are still re-fining their strategies and tactics in the new financial environment,and so further changes in market practices can be expected.

THE IMPACT OF DEPOSIT INSURANCE

If deposit insurance were unavailable, depositors would have in-centives to evaluate the riskiness of a depository institution's balancesheet and policies, because their deposits would be at risk. The exist-

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ence of these incentives, and competition among intermediaries forfunds, would impose strong discipline on managers to adopt soundportfolio policies. One obvious consequence of insuring deposits isthat the incentives of insured depositors to evaluate risk are eliminat-ed, so that market discipline is greatly diminished. As a result, it isup to the insurer either to design an insurance system that providesthe correct incentives for the intermediaries or to impose restrictionson intermediaries that limit possibilities for excessive risk-taking.

Currently, the premiums charged by the FDIC and FSLIC are pro-portional to the amount of assessable deposits regardless of the riski-ness of the intermediary's assets. Under this system, insured institu-tions have an incentive to take on more risk than they would other-wise, either by making riskier loans or by increasing leverage. Doingso does not subject them to higher premiums, and they obtain thebenefits of the higher yields that normally accompany the assumptionof greater risk.

With premiums unrelated to risk, therefore, regulation of insuredintermediaries is justified. It is not coincidental that many restrictionson competition accompanied the introduction of deposit insurance inthe Banking Act of 1933. In fact, the primary thrust of financial legis-lation through the 1930s, much of which is still in place, was to sup-plant or limit competition in the market for financial services, both toprevent bank failures and to protect the assets of the insuring agen-cies.

The undesirable consequences associated with many of these re-strictions have already been discussed. To some extent the restric-tions have simply redirected competition into other areas, some ofwhich are socially wasteful, and have caused the industry to evolve ina less efficient manner than it otherwise would have. Moreover, tothe extent that competition has been limited, the restrictions haveserved to reduce incentives to lower costs, and therefore prices.Reform must focus on incentives for limiting risk, rather than on re-strictions on competition.

PROPOSALS FOR REFORM

Many proposals have been advanced to strengthen private incen-tives to control risk-taking by institutions offering insured accounts.The proposals can be grouped into the following categories:

• Tie insurance premiums to some measure of risk.• Strengthen capital requirements.• Increase the risk exposure of large depositors.• Strengthen disclosure requirements.• Privatize all or part of the deposit insurance system.


It appears that none of these proposals, taken alone, offers a com-pletely satisfactory solution, but a combination could accomplish thegoal of strengthening private incentives to control risk-taking, whilepreserving stability of the financial system.

Relate Insurance Premiums to Risk

Charging insurance premiums that reflect the riskiness of an insti-tution's balance sheet and management capabilities is a solution withgreat theoretical appeal. If the premium paid to the insurer were ac-tuarily fair, in the sense of covering the expected losses of the insur-er given the risk and capital of the firm and the terms of the insur-ance contract, the incentive to take on additional risk at the expenseof the insuring agency would disappear. This approach would seemto obviate the need for extensive regulatory constraints. Insured in-stitutions would be free to structure their assets and liabilities and tocompete in the financial marketplace on terms of their own choosing.Those electing to adopt aggressive strategies with respect to risk andreturn would simply pay higher premiums to compensate the insurerfor their higher expected claims.

There are problems with risk-related premiums, however, stem-ming from the difficulties associated with measuring risk properlyand determining an appropriate schedule of premiums. One impor-tant measurement problem arises from the role that diversificationplays in reducing risk. The riskiness of a portfolio cannot be evaluat-ed simply by examining the riskiness of individual assets. Portfoliorisk depends more on the interrelationships among the assets andhow they match up with the structure of liabilities.

Banks and thrifts have traditionally faced different types of portfo-lio risks. This is reflected in the experiences of failed or troubled in-stitutions in these two industries. A major cause of bank problemsand failures has been insufficient diversification. For example, manyof the banks that have recently failed, or are now experiencing diffi-culties, had heavily invested in real estate loans, loans to the oil andgas industry, or to foreign borrowers. For savings and loans the prin-cipal problem has been excessive exposure to interest rate risk—theresult of borrowing short, by accepting deposits either payable ondemand or with comparatively short duration, and lending long, bywriting long-term, fixed-rate mortgages. Until recently, savings andloans were subject to regulatory and tax provisions that encouragedthem to accept substantial interest rate risk, since the provisions pro-vided strong incentives to invest in long-term fixed-rate mortgagesand since they were prohibited from reducing their exposure byother means.

In principle it is possible to quantify certain types of risk, for exam-ple, interest rate risk, provided that complete enough balance sheet


information is available. However, other types of portfolio risks aremore difficult to assess objectively. The bank examination process,though important, contains subjective elements that make it unsuit-able as an exclusive basis for setting premiums.

For these reasons, sole reliance on risk-based insurance premiumsis impracticable. However, risk-based premiums may play a usefulrole as part of a package of reforms designed to deter excessive risk-taking. To implement a risk-based system, the elements of risk thatare measured must be clearly related to failure, and the premiumstructure must not create perverse incentives for institutions toassume other risks that are not used as a basis for premiums. Giventhe limited present ability to meet these criteria, premium differen-tials across risk categories should probably be kept small, at least ini-tially.

Strengthen Capital Requirements

Ratios of deposits to bank capital for the banking .and thrift indus-tries have increased steadily over the past 30 years. Under thepresent policy for pricing insurance, it may be advantageous forowners of insured intermediaries to drive these ratios to very highlevels, unless other restrictions are in place. Strengthening capital re-quirements would be advantageous for two reasons. First, the addi-tional capital would directly provide an extra margin of safety bothfor the insuring agencies and uninsured depositors. Second, by plac-ing more of an intermediary's own capital at risk, incentives to con-trol risk-taking would be strengthened.

It may be desirable to allow strengthened capital requirements tobe satisfied either through the issuance of new equity or subordinat-ed debt—bonds whose claim on bank assets is subordinate to theclaims of depositors and the insuring agencies, but prior to theclaims of equity holders. Bondholders would be another class of in-vestors with incentives to monitor an intermediary's practices.

Proposals that rely solely on strengthened capital requirementswithout any other reforms have some serious drawbacks. For one, thequestion of the appropriate level of capital should not be addressedapart from the riskiness of the rest of an institution's portfolio—twoinstitutions with identical ratios of deposits to capital can representvery different risks to the insuring agency. There are also problemswith properly measuring net worth. Large discrepancies can exist be-tween true and accounting values of assets and liabilities. The meas-ure of true net worth that many prefer—the market's estimate—isgenerally not available since the majority of financial institutions arenot publicly held. Further, the market value of banks that are publiclytraded may reflect the guarantees that are implicit in deposit insur-ance.


Increase the Risk Exposure of Large Depositors

Many observers have argued that any reform of the deposit insur-ance system should include provisions that would increase the riskexposure of large depositors as a way of imposing greater market dis-cipline. Insured depositors presently have little or no incentive toevaluate the soundness of an intermediary. If virtually all depositorsare effectively insured, the discipline of the market that would comefrom private sector scrutiny of the intermediary's policies is lost. Theexistence of ceilings on the amount of insured deposits in any givenaccount suggests that some large depositors are at risk, so that inter-mediaries competing for their business would be subject to privatesector scrutiny. However, this discipline has not been important inrecent years.

The reasons for the current lack of market discipline differ some-what for savings and loans and commercial banks. Savings and loanshave few uninsured deposits—fewer than 4 percent of total depositsat the end of 1982. In contrast many banks have sizable uninsureddeposits. The FDIC has estimated that as of June 1983 approximately27 percent of all domestic deposits in commercial banks were unin-sured. For large banks with more than $10 billion in deposits thefigure is approximately 40 percent, and for the largest money centerbanks the figure approaches 80 percent. However, particularly formedium- and large-sized banks, the FDIC's procedure for handlingfailures—which involves arranging a merger with a sound bank whilecovering the failed bank's losses—has meant that few uninsured de-positors have suffered losses. Since the establishment of the FDIC,no depositor has ever incurred a loss as a result of a failure of amember bank with more than $1 billion in total deposits.

A recent FDIC report submitted to the Congress on the subject ofdeposit insurance reform stresses the importance of restoring theperception that large depositors are at risk, possibly by abandoningthe policy of arranging mergers. However, as recently as October1983, the FDIC provided de facto insurance for uninsured depositorsat a large bank by arranging a merger. The FDIC appears to face aclassic problem in its management of bank failures: it would like torepresent itself as being willing to permit uninsured depositors tosuffer losses so as to restore private incentives to monitor risk, butfor any given failure the FDIC often finds it cheaper to assume thelosses in the process of arranging a merger. Moreover, under presentarrangements, doing otherwise might require a lengthy bankruptcyproceeding perhaps lasting years and tying up billions of dollars ofassets and deposits. If the institution were large, this could be highlydisruptive.

168


One factor complicating the task of increasing the risk exposure oflarge depositors is the emergence of the deposit brokerage industry.In recent years a network of brokers has emerged to parcel large de-posits into insurable increments and place them in financial institu-tions nationwide. Deposit brokers perform the useful function of fa-cilitating interregional flows of funds. However, they also have beenknown to place insured funds in banks without any credit analysis, orworse yet, place them in known problem banks in order to collecthigher fees. In an attempt to check this type of activity, both theFDIC and FSLIC have recently announced that problem institutionswould be subject to limitations on the amount of brokered depositsthey could accept.

A common prescription for increasing market discipline is to lowerthe limits on insured accounts. However, the emergence of the de-posit brokerage industry suggests that unless the limits are loweredvery substantially, the impact may be slight. A more promising way toaccomplish large reductions in the coverage levels, and at the sametime protect small depositors, would be to return to the fractionalcoverage scheme that was a part of the original Federal deposit in-surance legislation. The act President Roosevelt signed into lawcalled for full coverage of the first $10,000 of a deposit, 75 percentcoverage of the amounts between $10,000 and $50,000, and 50 per-cent coverage for amounts above $50,000. This plan never tookeffect, as a temporary plan adopted by the Congress was extendedindefinitely. A partial coverage plan of this type is in effect in theUnited Kingdom, where 75 percent of deposits in failed banks are re-imbursed up to a ceiling amount.

There is one significant advantage of a fractional coverage system.When a failure takes place, depositors maintaining funds above theceiling amount for full coverage could receive immediate payment upto the amount of their coverage. Additional amounts could be paidlater, depending on what is realized from the failed institution's port-folio. As a result, the disruptive effects on the payments system thatcould be associated with the liquidation of a large institution's port-folio would be minimized.

There is, however, an important tradeoff associated with imple-menting a fractional coverage system. In order for market disciplineto be a credible deterrent to excessive risk-taking by financial inter-mediaries, uninsured depositors must be prepared to move funds outof troubled institutions. Exposing large depositors to greater risk,therefore, increases the likelihood of deposit flight from those insti-tutions. Because deposits can be moved quickly and cheaply to a newinstitution, such a system might mean that an intermediary subject tomoderate but well-reported problems would experience deposit out-


flows that could prevent its recovery. The recent expansion of accessto the Federal Reserve discount window to both nonmember banksand thrift institutions should be important in preventing unwarranteddeposit flights from causing the failure of marginal institutions.

Improve Disclosure

Any proposal that relies heavily on increased market disciplineshould be accompanied by improved disclosure and strengthened re-porting requirements. Federal bank regulators have not required in-sured institutions to carry assets and liabilities on their balancesheets at market value, or until recently to report financial informa-tion that would permit an assessment of the interest rate risk andcredit risk to which an institution is exposed. However, the Securitiesand Exchange Commission does now require bank holding compa-nies to report some market value data and data that could lead to anassessment of interest rate and credit risk.

Privatize Deposit Insurance

The provision of deposit insurance is now a virtual Federal monop-oly. Consequently, it is impossible to use market measures to assessthe performance of the FDIC and FSLIC in setting premiums, eitherunder the current system or under a new system with variable premi-ums. Further, if incorrect assessments were applied under a system ofrisk-related premiums, the insured institutions might have few othersources of insurance. In principle, a private market for deposit insur-ance would seem to avoid these problems; market forces could berelied upon to guarantee that intermediaries were evaluated fairly. Inaddition, private insurers would have an incentive to share many ofthe costs of monitoring their behavior. Privatizing deposit insurancemight, therefore, be another means of bringing the discipline of themarket to bear on financial institutions.

It may be possible to introduce some elements of a joint public-private deposit insurance system. There is already some private par-ticipation in the market for financial guarantees. For example, at leastone major money market mutual fund has obtained private insurancefor its shareholders, and private insurance of mortgages and creditunion deposits is well established.

It is not likely, however, that responsibility for insuring depositscan be shifted to any great extent to the private sector. Some ulti-mate Federal guarantee may be necessary to maintain public confi-dence. In addition deposit insurance was established primarily toprotect against the risk of a banking crisis—the prospect of manybank failures occurring simultaneously. It is precisely this kind of riskthat the private insurance industry is least equipped to handle.


SUMMARY

The benefits of a credible deposit insurance system should beachievable in an environment with fewer restrictions than the presentone, provided certain basic reforms are implemented. A deposit in-surance system tied to risk would be a significant reform. Strength-ened capital requirements, the introduction of fractional coverage forrelatively large accounts, and improved disclosure should also playroles. A deposit insurance system relying more heavily on incentivesof this kind can be expected to involve significantly lower net coststhan restrictions on entry, activities, and the pricing of financial serv-ices that serve either to limit competitive pressures in the market-place, or to redirect competition into other areas.

REFORM OF THE REGULATORY STRUCTURE

Today the regulatory structure is characterized by considerableoverlap and duplication of function among numerous Federal andState authorities. In December 1982 the Administration announcedthe creation of the Task Group on Regulation of Financial Services,chaired by the Vice President to study Federal regulation of financialinstitutions and to develop proposals for comprehensive reform. Aprincipal objective of the Task Group has been to address the over-lap and duplication in Federal banking regulation.

The regulatory structure for depository institutions developed in apiecemeal fashion over many decades. Until the Civil War, all bank-ing activities, with only minor exceptions, were conducted by State-chartered institutions. Between 1863 and 1865 the Congress enactedlegislation that was designed to force State banks to recharter underFederal law. State-chartered banks did not disappear, however, large-ly because State bank regulations were often less stringent than Fed-eral regulations. Hence a dual banking system developed, in whichbanks could operate with either a Federal or State charter, under thejurisdiction of separate regulatory authorities. This aspect of the reg-ulatory structure for banking, and more recently thrifts, has playedan important role in shaping the industry. It has fostered innovationby permitting many possible paths of evolution instead of one. Twoimportant examples of innovations first permitted by State regulatorsare branch banking and NOW accounts.

Successive layers of Federal regulation of commercial banks wereapplied in response to financial crises and the emergence of new in-stitutions and forms of organization. A bank today can hold a nation-al charter, in which case it is supervised by the Comptroller of theCurrency, or a State charter. All nationally chartered banks are alsomembers of the Federal Reserve System, but State-chartered banks


can be either members, in which case they are regulated by the Fed-eral Reserve Board, or nonmembers, in which case they are regulatedby the FDIC. However, holding companies of both national banksand State nonmember banks also fall under the jurisdiction of theFederal Reserve. Because of tax, regulatory, and financing advan-tages, the holding company form of organization has become domi-nant. As a result, the Federal Reserve has at least some jurisdictionover the majority of commercial banking entities, particularly thelarger ones. Although Federal deposit insurance is not mandatory forState-chartered banks, virtually all commercial banks are members ofthe FDIC, and so come under its jurisdiction as well. Chart 5-3 illus-trates the complexity of current arrangements.

Chart 5-3Existing Regulation of

Banks and Their Holding CompaniesDecember 31,1983

Regulatory Agencies -

Board ofGovernors

of theFederalReserveSystem

I

fn

Comptrollerof the

Currency

1I

NATIONALBANK

HOLDINGCOMPANY

FederalDeposit

InsuranceCorporation

(

StateBank

Departments

STATEMEMBER

BANK

j

i

Securitiesand

ExchangeCommission

1J

HOLDINGCOMPANY

rSTATENON-

MEMBERBANK

HOLDINGCOMPANY

Departmentof

Justice

Types of Regulated Firms -

-^Antitrust enforcement only.Source: Vice President's Task Group on Regulation of Financial Services.

Because several agencies typically share responsibility for regulat-ing a particular bank, and because different banks are regulated bydifferent agencies, depending on their charter and form of organiza-tion, gaps and overlaps of regulatory power among the many agen-cies have developed. In addition, these agencies have sometimes hadconflicting objectives and motivations in dealing with regulatory


issues. For example, the Federal Reserve has traditionally exerted aconservative influence, while the chartering agencies at both the Fed-eral and State levels have been more inclined to encourage growthand development.

An advantage of the regulatory structure for the savings and loanindustry is that the problems of duplication of effort and gaps andoverlaps of authority are much less pronounced, since the FHLBBperforms the functions that three separate Federal agencies—theFederal Reserve, the Comptroller of the Currency, and the FDIC—now perform for commercial banks. Of course, if federally insured, aState-chartered savings and loan association is regulated by bothFSLIC and its State-chartering agency.

In the 1930s when separate regulatory structures were establishedfor commercial banks, thrifts, and securities dealers, those firms com-prised distinct industries with little competition across industry lines.Because of differences in the products and services offered (for ex-ample, between brokerage houses and commercial banks), or be-tween customer groups (for example, commercial borrowers usingcommercial banks and small savers and home buyers using savingsand loan associations), regulatory decisions applying to those indus-tries could be made independently. Consequently, there was, at first,little reason to consider reform of the regulatory structure.

In recent years the lending and investment powers of thrift institu-tions have been broadened as a result of both Federal and State leg-islation. As a result of these new powers, thrift institutions may nowengage, with some limitations, in virtually all the activities that arelawful for commercial banks. This new state of affairs has highlighteddifferences in their regulation and supervision. For example, it is nowlegally possible for a thrift institution to become functionally equiva-lent to a commercial bank, while remaining eligible for regulatoryprograms designed to create incentives for traditional thrift activities.

In addition, banks and thrifts now face aggressive new competitionfrom brokerage firms, money market mutual funds, and "nonbank"banks in their traditional markets. At the same time, technologicalchange, notably computer-based accounting and communication, hasopened up opportunities for substantial increases in the scope ofbusiness across a broadening range of products and customergroups. As a result, there has been renewed interest in reforms thatwould produce a level playing field on which the various providers offinancial services could compete on equal terms, and that wouldpermit emerging economies in the provision of financial services tobe exploited to the fullest extent possible.

The long-standing opportunities banks have had for selecting acharter and form of organization that places them under different


primary regulators, and the growing similarities in the legal powersof banks and thrifts, have implications for the behavior of the regula-tory agencies. The various regulatory agencies must offer sufficientlyattractive terms to institutions operating under their charters tomaintain their existing clientele bases and to attract new firms. Thereare different opinions as to whether this situation is desirable. Oneview is that the present scheme leads to "competition in laxity" andtherefore insufficient restraints on unsound practices. Another view isthat it tends to eliminate the most onerous regulatory strictures, andfosters innovation and efficiency.

Because of the enormous changes that have occurred in financialmarkets in recent years, the regulatory structure has become progres-sively out of date. As a result the case for regulatory reform is nowvery strong. The Administration's Task Group on Regulation of Fi-nancial Services is expected to issue its report in early 1984. Thereport will focus debate and attention on a specific set of legislativeproposals to streamline Federal regulation and reduce the overlapbetween Federal and State regulators.

CONCLUSIONS

Of all the goals of financial regulation the goal of financial stabilityis paramount. In the 1930s, financial instability was widely attributedto the natural operation of competitive markets, and this view sup-ported a very substantial extension of regulatory controls over finan-cial markets. More recently, however, a renewed respect for the effi-ciency of competitive markets has developed, as well as increased rec-ognition of the costs of regulation. Regulation tends to spread in un-productive directions and often causes industries to evolve less effi-ciently than they otherwise would. For these reasons, the promotionof efficiency by furthering competition is also an important regula-tory goal. The purpose of regulation should not be to protect poorlymanaged individual firms from failure, but rather to prevent suchfailures from shaking the stability of the financial system as a whole.Regulations should be designed to achieve stability of the system,while individual firms are afforded the maximum possible freedom tocompete and innovate.


CHAPTER 6

Review and OutlookIN 1983 THE U.S. ECONOMY experienced a year of vigorous cy-

clical recovery. As the economy snapped back from recession, em-ployment increased by 4.0 million persons and the unemploymentrate fell by 2.5 percentage points. Real gross national product (GNP),the broadest measure of output, rose by 6.1 percent, while industrialproduction rose by 16.1 percent. These gains in employment andoutput were achieved in an environment in which the rate of inflationcontinued to decline—the increase in the consumer price index of3.8 percent was the lowest in 11 years. Both productivity and realwages rose, continuing an advance that began in 1982. For bothseries the 2-year increase was the largest in 6 years. Major stock priceindexes rose significantly through the first half of the year and thenleveled off, while interest rates increased somewhat starting in thespring. The U.S. dollar appreciated in the foreign exchange market,continuing a trend that began in late 1980.

The performance of the economy involved much more than asimple reversal of the output declines experienced during the reces-sion. The decline in inflation and resumption of productivity growthare expected to provide the base for a long continuing expansion incoming years. The Administration's outlook for 1984 and economicassumptions through 1989 are described in the final section of thischapter, following the review of the economy's performance in 1983.

REVIEW OF THE 1983 ECONOMY

Gains in output were widespread across most sectors of the econo-my. By the end of 1983 the expansion was 1 year old—the quarterlydating of the business cycle trough is the fourth quarter of 1982,while the monthly dating is November 1982. In discussing the 1983recovery a comparison with other recoveries is useful. Table 6-1 pro-vides summary information on the other recoveries since 1949. FromTable 6-1 it can be seen that in 1983 real GNP grew slightly less andemployment considerably more than over the comparable period of atypical recovery. Indeed, the employment gain was larger than expe-rienced in any of the seven recoveries reported in Table 6-1 with the


exception of the recovery following the 1949 trough. Industrial pro-duction in 1983 rose somewhat more rapidly than over the first yearof a typical recovery.

TABLE 6-1.—Growth in output and employment over first year of business cycle recoveries

[Percent change, except as noted}

Quarter and month of business cycle trough

First 4quarters

after trough

Real GNP

First 12 months after trough

Industrialproduction

Civilianemployment

Civilianunemploy-ment rate

(percentagepoint

change)

1982 IV (November)..

1949 IV (October)1954 II (May)1958 II (April)1961 I (February)1970 1V (November)....1975 1 (March)1980 III (July)

Average of seven recoveries'Average of five recoveries2..

6.1

13.37.48.47.04.76.74.2

7.46.8

15.7

27.714.020.913.46.2

15.29.7

15.313.9

3.6

4.42.93.41.42.13.31.9

2.82.6

- 2 . 3

- 3 . 7-1 .6-2 .2= 1.4

.1-1 .0= .5

= 1.5-1 .2

1 Excludes 1982.2 Excludes 1949, 1980, and 1982.Note.—Business cycle troughs are as determined by the National Bureau of Economic Research.Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), and

Board of Governors of the Federal Reserve System.

In order to provide a reference standard for interpreting thegrowth of GNP and its components in 1983, a "typical** recovery maybe defined by averaging the first year of business expansion follow-ing the earlier cyclical troughs listed in Table 6-1 excluding those in1949 and 1980. The strength of the recovery from the 1949 troughwas greatly distorted by the outbreak of the Korean war in mid-1950and the accompanying expectation of a renewal of wartime produc-tion and price controls. The expansion from the 1980 trough lastedonly 12 months—a recovery only half the length of any recovery inthe last 50 years.

A perspective on the composition of the expansion in real GNP isprovided in Table 6-2. The major categories of real GNP are report-ed in terms of percentage point contributions to the total change inGNP over the four quarters of 1983. For example, real personal con-sumption expenditures accounted for 3.6 percentage points of thetotal 6.1 percent growth in real GNP; by comparison, during the firstfour quarters of the typical postwar recovery, personal consumptionaccounted for 3.6 percentage points out of the total 6.8 percent in-crease in real GNP. The major conclusion to be drawn fromTable 6-2 is that the magnitude and composition of the 1983 expan-sion was similar in most respects to the typical first four quarters ofbusiness expansion following a cyclical trough.


TABLE 6-2.—Contribution ofGNP components to total GNP growth over first year of business cyclerecoveries

[Percentage point change]

ItemTypicalpostwar

recovery2

6.8

3.61.3

.5

.0

1.0

1.8

- . 4.0

- . 4

.3

-.3

5.0

Real GNP ...

Personal consumption expendituresDurable goods

Nonresidential fixed investmentProducers' durable equipment .Structures

Residential investment

Change in business inventories

Net exports of goods and servicesExportsImports (minus denotes increase)

Government purchases of goods and servicesFederal

Federal excluding CCC3

State and local

Final sales4

1 Preliminary.2 Recoveries following business cycle troughs in 1954 II, 1958 II, 1961 I, 1970 IV, and 1975 I.3 Memo item not usually reported in national income and product account tables.4 Real GNP less change in business inventories.Note.—Business cycle troughs are as determined by the National Bureau of Economic Research.Source: Department of Commerce (Bureau of Economic Analysis).

Fluctuations in output over the business cycle are ordinarily largerfor durable consumption and investment goods than for other sec-tors. In 1983 despite apparently high real (inflation adjusted) interestrates, durable consumption, business fixed investment, residential in-vestment, and inventories all experienced growth matching or ex-ceeding that of the typical postwar recovery, based on the accountingin Table 6-2. Business investment in equipment was especiallystrong.

This strong performance can be attributed to several factors. Bothdisposable personal income and after-tax business profits recoveredsignificantly from their 1982 levels. Relative prices for consumer du-rable goods and fixed investment goods fell. Tax policies, especiallyaccelerated depreciation allowances, increased the after-tax return onbusiness investment. The rising stock market probably also contribut-ed both to the demand for durable goods and business fixed invest-ment. The decline in mortgage rates that began in mid-1982 was im-portant for the housing recovery.

Rising profits and incomes are likely to have a large effect on in-vestment expenditures in the early stages of the recovery when theswing in output from contraction to expansion is relatively large anddisposable personal income and business cash flow increase signifi-cantly. Later in the expansion, output and income growth tend to


slow relative to business investment as firms approach high utiliza-tion rates. At this stage, interest rates become more important in de-termining the level of investment and subsequent growth in totaloutput.

In addition, business fixed investment may have been subject to"accelerator" effects. As final demand rises, so too does the capitalstock needed to produce the higher volume of goods and services ef-ficiently. With a resumption of economic expansion, even a relativelysmall increase in the desired capital stock may result in a substantialincrease in the rate of investment spending. Inventory investmentalso tends to increase with rising final sales in order to keep the ratioof inventories to sales within the desired range. An expansion of in-ventories requires additional production, further increasing the useof existing capacity. These types of effects are likely to play a signifi-cant role through 1984.

Expenditures on consumer durables and housing may have beenaffected by a similar phenomenon. During recessions, with realincome growing slowly or falling, desired stocks of housing and con-sumer durables rise slowly if at all. Most purchases reflect replace-ment demand. In the early recovery phase, with rising employmentand income, purchases of consumer durables may expand rapidly asefforts to increase stocks of durables and housing create additionaldemand above normal replacement demand.

In 1983 total real domestic demand rose by 7.4 percent, andexport demand added another 0.3 percent. However, of this 7.8 per-cent increase of aggregate demand, 1.7 percentage points were satis-fied by imports of goods and services. Thus, U.S. real output andincome rose by 6.1 percent; in an accounting sense, net exports re-duced real GNP growth by 1.4 percentage points in 1983 comparedto a reduction of 0.4 percentage point for a typical recovery. As canbe seen from Table 6-2, the decline in net exports in 1983 was morea reflection of growing imports than of declining exports. However,exports had declined significantly in 1982; thus, the small growth inexports in 1983 was from a depressed base.

Government purchases of goods and services declined over thefour quarters of 1983 by an amount sufficient to lower GNP by 0.4percentage point in the accounting reported in Table 6-2. State andlocal government purchases grew more slowly than is typical of thefirst four quarters of recovery. Total real Federal purchases actuallydeclined somewhat as a rise in Federal defense purchases was morethan offset by a fall in nondefense purchases. It is important to note,however, that a comparison of real Federal purchases in the fourthquarter of 1983 with those in the fourth quarter of 1982 is distortedby a large shift from net purchases to net sales (which include pay-


ment-in-kind) of agricultural commodities by the Commodity CreditCorporation (CCC). As shown in Table 6-2, Federal expenditures ex-cluding CCC contributed 0.3 percentage point of GNP growth com-pared to a negative contribution of 0.3 percentage point for the typi-cal recovery.

In summary, the major differences in the composition of GNPgrowth between the 1983 and the typical recovery are these: a) non-residential fixed investment rose more than usual in the 1983 recov-ery; b) net exports, which fall somewhat in the typical recovery, fellsubstantially in 1983; and c) Federal purchases, which are usuallyabout unchanged, fell in 1983 due to an atypical swing in CCC pur-chases.

PERSONAL INCOME AND CONSUMPTION

Over the course of the year real personal income rose by 4.0 per-cent, while real disposable income grew somewhat more rapidly, by5.1 percent, reflecting the third stage of the Administration's tax re-duction program. These increases in both personal and disposableincome continued advances that started in 1982.

As shown in Table 6-3, the 4.0 percent rise in real personalincome reflected a 5.1 percent rise in real payroll disbursements andrelated fringe income. Higher employment and hours worked and anincrease in real hourly earnings all contributed to this increase.Other sources of income including interest and dividend income,rental income, and proprietors' income recorded a 4.7 percent in-crease. Real net transfer payments declined 3.7 percent as unemploy-ment payments dropped, and as the surge in employment produced alarge increase in contributions to social insurance. Federal personalincome tax liabilities fell by 6.2 percent while other taxes—largelyState and local—rose by 11.1 percent.

Increases in consumption expenditures were widespread acrossvarious product categories. As is typical of periods of cyclical recov-ery, the expansion of real consumption expenditures was led by ex-penditures on durable goods. Real consumer durables expenditures,which in 1982 were below their 1978 level, rose substantially in 1983.Expenditures on automobiles, representing about 43 percent of totalconsumer durables expenditures, rose by 19.3 percent. Furniture andhousehold equipment, linked to the housing recovery, grew by 11.5percent and other durables by 8.4 percent.

In real terms, the services component of personal consumption ex-penditures has grown every quarter since the first quarter of 1954,reflecting stable growth of services generally, and especially of imputedservices of owner-occupied dwellings which represent one-quarterof total services outlays. The nondurable goods sector—of which


TABLE 6-3.—Real household income, consumption, saving, and residential investment, 1979-83

[Percent change, fourth quarter to fourth quarter and 5-year average]

Item 1979 1980 1981 1982 1983 *5-yearaver-

Income by type-.

Labor income3

Other income4

Net transfer payments5..

Personal income

Less: Federal tax paymentsOther tax and nontax payments6

Disposable personal income

-0 .2

115

1.0

1.6

1.111.9- . 1

3.4

3.03.8

3.4

- 0 . 9- 3 . 611.8

- . 3

- 4 . 94.5

.1

5.14.7

-3 .7

4.0

- 6 . 211.1

5.1

1.23.25.2

2.0

1.23.9

2.1

Personal consumption expenditures...

Personal saving

Personal saving rate (percent)7

2.1

11.4

5.9

.1

19.1

6.0

1.7

29.1

6.6

2.5

- 2 7 . 6

5.8

5.4

- 1 . 2

4.8

2.3

- 2 . 4

5.8

Housing starts9

Single family

Multifamily

Mobile (manufactured) home shipments8

Residential investment

-23.1

-29.2-7 .9

- 9 . 9

- 8 . 3

- 4 . 0

- 5 . 0- 2 . 0

- 4 . 3

-13.6

- 4 2 . 2

^44.937.1

12.3

-19.6

44.9

50.136.6

11.7

3.0

34.2

26.647.8

9 25.5

38.2

- 3 . 4

-5 .71.6

- 3 . 3

1 Preliminary.2 Based on annual data.3 Wage and salary disbursements and other labor income.4 Proprietors' income, rental income, personal dividend income, and personal interest income.r>Transfer payments less personal contributions for social insurance.6 State and local tax and nontax payments plus Federal nontax payments.7 Annual average.8 Units.9 Based on data through November 1983.Note, jncome items, consumption, and saving deflated by the personal consumption deflator; residential investment deflated

by the residential deflator.Sources: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census) and Council of Economic Advisers.

food represents about one-half and clothing about one-quarter—fluc-tuates over the cycle but is dominated by trend. Real nondurableconsumption rose 4.7 percent over the year.

By the second quarter of 1983, the vigorous recovery had alreadylifted durable consumption expenditures above the prior peak quar-ter in 1978. The increase began in the fourth quarter of 1982 whenspecial promotional efforts by the automobile industry and decliningfuel prices increased auto sales and substantially reduced inventories.

The growth of consumer spending in 1983 exceeded that of dis-posable income. Hence, the personal saving rate fell over the courseof the year. The average rate for the year, 4.8 percent, was below the5.8 percent rate in 1982 and substantially below the 6.9 percent aver-age for the 1950-80 period. In comparing 1983 to prior recoveries, itis better to examine the average saving rate for the year because thepersonal saving rate can be rather volatile from quarter to quarter.There has been no consistent pattern for the saving rate over thefirst year of business cycle recoveries. In this stage of the cycle, sub-


stantial declines on the order of the 1983 decline are certainly notunknown; for example, in the first year of recovery following the1954 trough the saving rate averaged 6.0 percent, down from anaverage of 7.2 percent over the preceding four quarters. The mainissue concerning the 1983 personal saving rate is that it declinedfrom a 1982 level that was already considerably below the averagefor the last three decades.

The decline in the saving rate in 1983 may reflect in part the ef-fects of a vigorous stock market advance in encouraging rising con-sumer spending. After rising 27 percent from its July low to Decem-ber 1982, the Standard & Poor's composite index rose by another 19percent over the 6 months ending June 1983. The index ended theyear at about its June level, having increased the value of outstandingstock held by households by about $500 billion from July 1982. Thisstock market advance was somewhat larger than the average overcomparable phases of previous business cycles.

RESIDENTIAL INVESTMENT

In 1983 monthly housing starts fluctuated between an annual rateof 1.5 million and 1.9 million units, averaging 1.7 million units, thehighest level since the 1.75 million units reached in 1979. The in-crease in starts from 1982 was the largest year-to-year advance inover 35 years. In addition, mobile homes—not included in the startsfigure—averaged about 300,000 units, bringing total new dwellingunits to about 2 million. About two-thirds of the starts were single-family units and one-third were in structures with two units or more,a split that was about typical of the average in the 1970s. Expendi-tures on residential housing construction increased 38.2 percent inreal terms from the fourth quarter of 1982.

The recovery in new housing construction was accompanied by arise in sales of existing homes, which rose 16.4 percent in the first 11months of 1983. Total gross mortgage originations for one- to four-family nonfarm housing in the first 9 months of 1983 was over $148billion compared to $65 billion in 1982. The proportion of mortgageloans devoted to refinancing was the highest ever recorded, with amajor portion devoted to refunding short-term financing, which waswidely used in 1981-82 when long-term mortgage money was scarceand rates high.

Over the first three quarters of 1983, thrift institutions providedabout one-half of the net increase in mortgage borrowings, includingmortgages and mortgage-backed pool and agency securities. Thismarked a return to the market share that prevailed in the 1970s. In1982 thrift institutions contributed less than 10 percent of the in-crease in net mortgage borrowings, as mortgages were swapped for


agency securities in an attempt to increase liquidity. The rising sharefor the thrifts reflects a variety of factors including a lower averagelevel of mortgage rates and the introduction of new, more competi-tive savings instruments. There was a large flow of savings into thethrifts; their total deposits were at a rate of $143 billion over the firstthree quarters of 1983 compared to $55 billion for the same periodin 1982.

Of even more significance, perhaps, has been the growth of mort-gage-backed certificates. Unfortunately much of this growth reflectsgovernmental activity that has probably stunted the growth of pri-vately issued certificates. Federally sponsored mortgage-backed poolpurchases of home mortgages that are used to back pass-through cer-tificates exceeded $67 billion at an annual rate over the first 9months of 1983. Combined with a total of $12 billion of home mort-gages acquired by Federal, State, and local government credit agen-cies, government participation—chiefly as a mortgage market inter-mediary—exceeded two-thirds of the $116 billion net dollar volumein the home mortgage market.

The increase in housing construction and mortgage lending wasspurred by increases in disposable income and employment and bythe decline in mortgage interest rates that occurred over the secondhalf of 1982. Compared to mortgage rates in the middle of 1982 theaverage rate in 1983 reduced the monthly payment on a 20-year term$60,000 mortgage by about $120.

BUSINESS FIXED INVESTMENT

Real nonresidential fixed investment grew by 11.5 percent over thefour quarters of 1983. Strength was concentrated in business equip-ment while nonresidential structures investment declined 2.7 percent.

Real expenditures on producers5 durable equipment rose 18.3 per-cent from the fourth quarter of 1982 to the fourth quarter of 1983.This rapid growth reflected the relatively short lead times on manyequipment purchases, a rising capital utilization rate as the recoveryproceeded, and the investment incentives in the 1981 and 1982 taxlegislation. The growth was particularly strong in the office, comput-ing, and accounting machinery category, and in cars and trucks. Realoutlays for office equipment have almost doubled since 1979, reflect-ing the high productivity of computers in many lines of activity.Growth in business purchases of motor vehicles accounted for 29percent of the total rise in equipment expenditures.

The decline in real expenditures on structures reflects the depress-ing effects of high interest rates, long lead times in large constructionprojects, and excess capacity existing at the beginning of 1983. Office


building had been especially strong before 1983; office constructionpeaked in late 1982 at a level three times greater than in 1977.

A sharp drop in the relative price of business fixed investment wasan important element in the rise in investment. The fixed-weightprice index for nonresidential fixed investment rose by 1.3 percent in1983. By comparison, the fixed-weight index for final sales rose by4.2 percent in 1983.

INVENTORY INVESTMENT

Inventory fluctuations are important in the business cycle process.Inventories have a buffer stock role, permitting a more constant rateof production in the face of transitory demand fluctuations. Undernormal circumstances demand fluctuations for individual firms* prod-ucts largely offset one another; growth in aggregate demand and inaggregate inventories is relatively smooth. Over a business cycle,however, demand fluctuations are larger and more pervasive. Then,inventories tend to be destabilizing as aggregate inventory adjust-ments move in the same direction as final demand. The impact ontotal output of a change in aggregate demand is then amplified by aninventory cycle. In 1983 inventory accumulation did not begin untilthe third quarter, in contrast to the usual recovery pattern in whichaccumulation begins somewhat sooner. In each of the first two quar-ters of 1983 the decline in inventories was smaller than in the priorquarter. Consequently, the swing in inventory investment from anunusually large liquidation of $22.7 billion (1972 dollars) in the lastquarter of 1982 to an accumulation of $7.5 billion in the last quarterof 1983 added significantly to the growth in production over theyear.

With final sales rising and inventories declining in the first half ofthe year and rising only modestly in the second half, the real busi-ness inventories/final sales ratio, shown in Chart 6-1, fell substantiallyover the course of 1983. By the fourth quarter of the year that ratio,at 3.02, was below the average of 3.33 in the fourth quarter of previ-ous recoveries. The lean inventory situation at the close of the yearreflects the effects of high interest rates and conservative inventorymanagement policies. It could also be a consequence of underesti-mating the growth of final demand. With inventories lean at the endof 1983, predicted future gains in final demand will likely be met byincreases in production and employment rather than by reductions ininventories.THE FARM ECONOMY

Reflecting the combined effects of a severe drought and the pay-ment-in-kind (PIK) program, agricultural output fell in 1983. From


Chart 6-1

Real Business Inventories/Final Sales Ratio

Ratio

3.7

3.6

3.5

3.4

3.3

3.2

3.1

3.0 -

Seasonally Adjusted

0 I I I I I I I I I I I I i I I I I I I I I 1 I I

1 9 6 1 6 3 6 5 6 7 6 9 7 1 7 3 7 5 7 7 7 9 8 1 8 3


the fourth quarter of 1982 to the fourth quarter of 1983 real farmoutput fell 16.5 percent to $33.9 billion. Reflecting the decline inoutput, real farm inventories, excluding those under governmentloans, fell $2.9 billion. Real exports of agricultural products wereroughly unchanged, falling only $0.4 billion. Nominal exports, how-ever, rose 13.6 percent, to $37.6 billion, in the fourth quarter of1983 as agricultural export prices rose 16.3 percent over the year.

The cost of Federal programs to support farm incomes probablyexceeded total net farm income in 1983. Farm production expensesfell in 1983, for only the third time since 1940. This was primarilydue to the reductions in acreage under cultivation that farmers madein reponse to the PIK program. The decline had significant adverseeffects on producers of farm inputs including fertilizers, other chemi-cals, and seeds. The farm situation is discussed in detail in Chapter 4of this Report.


THE INTERNATIONAL SECTOR

Exports of goods and services in constant (1972) dollars roseslowly in 1983, but imports of goods and services grew at a muchfaster rate (Table 6-2). The result was a decline of net exports inconstant dollars, from a surplus of $23.0 billion in the fourth quarterof 1982 to a surplus of only $2.5 billion in the fourth quarter of1983.

In the national income and product accounts net exports measuredin constant (1972) dollars registered a surplus while net exports incurrent dollars registered a deficit. The difference is due to a higherprice deflator for imports than for exports. Further, the currentaccount deficit in the balance of payments accounts, which is widelydiscussed, is considerably larger than the net exports deficit in thenational income accounts. Most of that difference is accounted forby the fact that the balance of payments accounts include, and thenational income accounts exclude, transfer payments and governmentinterest payments to foreigners. However, the interpretation of majortrends in the foreign sector is little affected by alternative accountingsystems. By either measure, the deficit has been rising in current dol-lars, and the surplus has been declining in constant dollars.

The merchandise trade balance, which has been in deficit since1976, further deteriorated in 1983. However, the United States has asubstantial surplus from investment income and a smaller surplus inthe "other services" component of net exports.

One cause of the decline in net exports in 1983 was the strongdollar, which made imported goods and services relatively lessexpensive to American buyers and exported goods and services rela-tively more expensive to foreign buyers. U.S. exports also were limit-ed by the problems of financially troubled debtor nations, particular-ly those in Latin America. Another cause was the earlier recovery inthe United States relative to that abroad. In 1983 the rate of increaseof real GNP in the United States was three times that expected forthe other 23 industrialized countries that are members of the Organi-zation for Economic Cooperation and Development (OECD). Asoutput and income in the United States grew rapidly over the courseof the year, imports of goods and services also grew. However, withthe expansions in the economies of major trading partners laggingbehind that in the United States, growth in demand for U.S. exportsof goods and services was restrained.

These events demonstrated an important result of the growing in-tegration of the world economy. In 1983 countries outside theUnited States had a substantial influence on U.S. output, and the vig-orous recovery in the United States was a source of stimulus to the


world economy. These matters are discussed in more detail in Chap-ter 2 of this Report

GOVERNMENT PURCHASES OF GOODS AND SERVICES

Growth in government purchases of goods and services was not amajor element propelling the expansion of output in the economy in1983.

Over the year, Federal purchases of goods and services in 1972dollars fell by $7.5 billion. The decline was a consequence of a spe-cial factor not likely to recur in 1984, namely a swing in CCC pur-chases of $12.6 billion. CCC purchases in the fourth quarter of 1982were unusually large, while the PIK program and the drought led tonet sales of commodities in the fourth quarter of 1983. Excluding theCCC component, real Federal purchases rose by 4.4 percent over thefour quarters of the year. In 1972 dollars national defense purchasesrose from $81.4 to $85.6 billion, while the nondefense purchasesother than CCC rose from $33.3 to $34.1 billion.

The growth in State and local government purchases of goods andservices was small in real terms. Over the four quarters of the yearexpenditures rose by only 0.6 percent. The small growth in pur-chases continues a pattern that has been apparent for several years.Indeed, in real terms, purchases for the entire year of 1983 areslightly below their level in 1979.

The fixed-weight price index for Federal purchases increased 2percent over 1983, while the State and local price index rose 5.4percent.

EMPLOYMENT, UNEMPLOYMENT, AND PRODUCTIVITY

Employment, as measured by the household survey, rose by 4.0million persons over the 12 months of 1983. As shown in Chart 6-2,the civilian unemployment rate, after reaching a peak in Novemberand December of 1982, dropped by 2.5 percentage points over thenext 12 months, the largest 12-month decline in 32 years.

Changes in the unemployment rate are the result of conditions de-termining labor force growth—growth in the working-age population,and changes in the fraction of that population participating in thelabor force—and changes in employment. Labor force participationrates and employment details are reported in Table 6-4. The in-crease in employment was by far the largest determinant of the de-cline in the unemployment rate. Civilian employment, as measuredby the household survey, grew by 3.6 percent over the 12 monthsfollowing the cycle trough in November 1982, an above-average in-crease compared to previous postwar recoveries.


Chart 6-2

Civilian Unemployment Rate

Percentage point change

.5

0

-.5

-1.0

-1.5

-2.0

-2.5

-3.0

__

— j

iJ- If

A» /~ /; /L']1

( I

/ ^

f '

1

\A\ \\ i

i

i•\\- . W A

\\\ 1982-83 Cycle

\

I I

Trough=0

—

Average of 5 Preceding Cycles1'

/ —K/V / /

/ " V ^^v

—

—

i i i i i-10 Trough 12 24 60 72 8436 48

Months from Trough-^Excludes 1949 and 1980 cycles.

Sources: Department of Labor and Council of Economic Advisers.

Lower growth in working-age population, taken alone, reduced theunemployment rate by 0.4 percentage point compared to what itwould have been with average population growth. The number of 16to 19 year olds, the population group that provides many of the newadditions to the labor force, actually declined over the year. Thelabor force participation rate was essentially unchanged over theyear. Thus the slower-than-average labor force growth in this recov-ery is a demographic phenomenon; it is not an unusual economic re-sponse of participation rates to labor market conditions.

Above-average growth in employment raised the employment topopulation ratio—the ratio of civilian employment to working-agepopulation—by 1.7 percentage points. At the end of 1983, 58.8 per-cent of the population was employed, compared to postwar peaks of60.1 percent in February and December 1979.

All demographic groups have shared in the recovery. Employmentgains were strong among blacks, particularly among black men over20 years of age, who experienced an 8.5 percent employment gain


TABLE 6-4.—Labor market developments, 1979-83

[Fourth quarter of indicated year]

Component

Change in civilian employment

Mates 20 years and overFemales 20 years and overBoth sexes 16-19 years

WhiteBlack and other

Civilian unemployment rate2

Males 20 years and overFemales 20 years and overBoth sexes 16-19 years

WhiteBlack and other . . .

Participation rate3

Males 20 years and over ..Females 20 years and overBoth sexes 16-19 years

WhiteBlack and other . ........

1979 1980 1981 1982 1983

Percent change from year earlier >

2.3

154.1

= .8

2.23.3

- 0 . 2

- 51.6

- 6 . 2

- . 1-.6

0.6

22.8

- 8 . 6

' .7- .1

1.0

14.8

- 7 . 3

1.2.4

3.5

3 640

- . 6

344.2

Percent l

5.9

445.7

16.2

5.211.2

63.8

79.651057.8

64.062.3

7.4

6 26.7

18.2

6.513.8

63.7

79.151556.2

64.061.8

8.2

7 17.2

21.0

7.215.4

63.8

78.752.354.6

64.161.5

10.6

9 99.0

24.1

9.518.7

64.0

78.752 954.1

64.462.1-

8.5

7 87.2

20.6

7416.4

64.0

7R453 253.2

64 S61.5

1 Seasonally adjusted.2 Unemployed as percent of civilian labor force.3 Civilian labor force as percent of civilian noninstitutional population.Note.—Data relate to persons 16 years and over.Source: Department of Labor, Bureau of Labor Statistics.

over the year. However, the employment picture for black teenagers(aged 16 to 19) remains bleak. Compared to white teenagers, blackteenagers have lower participation rates. In addition, the unemploy-ment rate for black teenagers was twice as high as that for whiteteenagers. Consequently, fewer than 20 percent of black teenagersare employed, compared with almost 50 percent of white teenagers.

Job opportunities for Hispanics improved markedly during 1983.Employment among Hispanics grew by 10.4 percent, more than twicethe increase in the working-age Hispanic population. The Hispanicunemployment rate fell from 15.5 percent in December 1982 to 11.6percent in December 1983.

Following a period of little growth from 1977 to early 1982, laborproductivity began to rise in the third quarter of 1982. Productivitytrends in the economy are most reliably measured for the nonfarmbusiness sector, which accounts for about 83 percent of total GNP.Nonfarm business output and related measures are shown on Table6-5.

Productivity began to rise before the end of the last recession asemployment continued to drop after output leveled off. Productivityin the nonfarm business sector rose at a 1.8 percent annual rate in


TABLE 6-5.—Output, productivity, costs, and prices in the nonfarm business sector, 1979-83


Item 1979

0.2

- 2 . 1

9.2

11.6

8.5

1980

- 0 . 8

2

10.8

10.5

10.6

1981

1.0

1.2

9.0

7.7

9.4

1982

- 2 . 6

.8

7.2

6.3

3.7

1983 *

8.3

3.5

4.9

1.3

3.6

5-yearaver-

Output

Output per hour

Compensation per hour..

Unit labor cost

Implicit price deflator....

1.0

.6

8.5

7.9

7.5

1 Preliminary.2 Based on annual data.Note.—Data relate to all persons.Source: Department of Labor, Bureau of Labor Statistics.

the last two quarters of 1982 and at a 3.5 percent rate over 1983. Inthe recovery unemployment fell without a lag. Consequently, the un-employment rate fell more rapidly than usual for the increase inoutput.

PRICES, WAGES, COMPENSATION, AND PROFITS

Over the 12 months from December 1982 to December 1983 con-sumer prices rose by 3.8 percent and producer prices by 0.6 percent.For consumer prices the increase was the smallest since 1972; forproducer prices the 12-month increase was the lowest for any calen-dar year since 1964. Table 6-6 provides detail for major componentsof the price indexes, and also a comparison of the past year's infla-tion with the average rate over the last 5 years.

T A B L E 6-6.—Price changes, 1979-83


Item 79

9.38.2

12.810.7

12.814.08.9

1980

10.110.2

12.512.2

12.412.611.7

1981

8.88.7

9.510.2

7.36.89.1

1982

5.14.4

4.55.2

3.63.54.1

1983 i

4.34.0

3.34.3

.9

.42.3

5-yearaver-

a g e 1 2

7.97.5

8.88.7

7.87.97.6

GNP price measures:

Fixed-weighted index..Implicit deflator

Consumer prices:s

All itemsAll items less food and energy..

Producer prices—finished goods:

Total..Consumer goodsCapital equipment..

1 Preliminary.2 Based on annual data.3 All urban consumers.Source: Department of Commerce (Bureau of Economic Analysis) and Department of Labor {Bureau of Labor Statistics).

189


Inflation as measured by the consumer price index for all urbanconsumers (CPI-U) was somewhat higher over the second half thanover the first half of 1983 (Chart 6-3). Over the 6 months endingJune the CPI-U rose at a 2.9 percent annual rate; over the 6 monthsending December, the annual rate was 4.7 percent. To some extentthe slight increase in inflation over the course of the year reflectedthe timing of changes in energy prices which fell in the first quarterdue to reductions in crude petroleum prices.

Chart 6-3

Percent change

Change in the Consumer Price Index12-Month Change in the CPI-U

16

14

12

10

8

6

4

2

0

-

- A

\ /

i t I I i

V

I t I I I I I

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Source: Department of Labor.

Reflecting the drought and unexpectedly large acreage reductionsfor the PIK program, food prices rose more rapidly in the secondhalf of the year than they had in the first. The tendency towardslightly higher inflation as the year progressed is indicated by the factthat the CPI-U, excluding food, energy, and shelter, rose at a 4.1percent rate over the first 6 months and at a 5.8 percent rate overthe 6 months ending in December.

190


The tendency toward a slight increase in inflation over the yearwas also registered by the producer price index. Over the 6 monthsending June, the index for total finished goods fell at an annual rateof 0.9 percent, but over the second half of the year this index rose ata 2.0 percent annual rate. Even so, inflation by this measure waslower than that in the recession phase of the cycle. The GNP implicitprice deflator, the broadest measure of inflation, rose by 4.0 percentover the four quarters of the year.

The rate of increase of money wages declined in 1983. An impor-tant contributor to this decline was the slack in labor markets. How-ever, the reduction in the rate of inflation was also important asmany wage increases are tied, formally or informally, to the rate ofprice inflation. Collective bargaining agreements with escalatorclauses ordinarily tie wages to the consumer price index for urbanwage earners and clerical workers (CPI-W), which differs from theCPI-U primarily with respect to the method used to measure housingcosts. Over the 12 months ending December, the CPI-W rose 3.2percent, slightly less than the CPI-U increase of 3.8 percent.

Based on the first three quarters of 1983, it appears that for thesecond consecutive year both union and nonunion wage increaseswere less than the previous year, as contracts and wage patterns es-tablished in the highly inflationary 1980-81 environment representeda diminishing portion of wage agreements. Major collective bargain-ing agreements negotiated in the first three quarters of 1983 have re-sulted in wage adjustments that are the lowest for the entire 15-yearperiod over which these data have been collected, and less than halfthe rate of increase when the parties last negotiated.

Because price increases in 1983 were lower than wage increases,real hourly wages rose, as they had in 1982. As shown in Table 6-7,the adjusted hourly earnings index for the private nonagriculturalsector (production or nonsupervisory workers) rose by 3.9 percentover the four quarters of 1983, compared to 6.0 percent for the pre-vious four quarters. In constant (1977) dollars the increase in thehourly earnings index was 0.9 percent in 1983 compared to 1.5 per-cent in 1982. These gains in real hourly earnings may be comparedto declines averaging 2.7 percent per year from 1978 to 1981.

In addition to the higher real hourly earnings, an increase in aver-age weekly hours worked raised average weekly earnings. Averageweekly hours in the nonagricultural sector rose from 34.8 in Decem-ber 1982 to 35.2 in December 1983. The net result of higher hoursand higher real hourly earnings was an increase of 2.4 percent inaverage real weekly earnings over the 12 months ending inDecember.

191


TABLE 6-7.—Changes in wages and compensation, 1979-83


Measure 1979 1980 1981 1982 198315-yearaver-

age I*

Adjusted hourly earnings index3

Real adjusted hourly earnings index...

Employment cost index4

Union workersNonunion workers..

Nonfarm business sector:6

Compensation per hourReal compensation per hour..

8.0

- 4 . 3

8.7

9.08.5

9.2-3.2

9.6

-2 .7

9.0

10.98.1

10.8-1 .6

8.3

- . 9

8.8

9.68.5

9.0- . 5

6.0

1.5

6.3

6.56.1

7.22.6

3.9

,9

"5.0

«5.2*5.0

7.5

- 1 . 2

7.6

8.37.2

8.5- . 3

1 Preliminary.2 Based on annual data.3 Private nonfarm employees.4 Wages and salaries, private nonfarm industry workers.6 Third quarter 1982 to third quarter 1983.6 All persons.Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), and

Council of Economic Advisers.

Overall, 1983 was an excellent year for real incomes. With a higherreal hourly wage, higher average hours worked by those employed,rising employment, and the third stage of the Administration's tax re-duction program, real per capita disposable personal income rose 4.1percent over the year. This increase was the highest since 1977.

The combination of restrained increases in money wages and con-tinued productivity growth served to hold the increase in unit laborcosts to only 1.3 percent. This increase was the lowest since 1965.

Corporate profits before tax totaled about $205 billion in 1983.Corporate profits after tax were about $130 billion, a level wellabove 1982 but still below 1981.

FINANCIAL MARKETS

Most market interest rates rose somewhat over the 12 months of1983. In December 1982 the 3-month Treasury bill rate averaged 7.9percent; in December 1983 it averaged 9.0 percent. Over this sameperiod 30-year Treasury bonds rose from 10.5 percent to 11.9 per-cent, and Aaa corporate bonds rose from 11.8 percent to 12.6 per-cent. The effective new home mortgage closing rate fell over thecourse of the year, from 13.7 percent in December 1982 to 12.5 per-cent in December 1983.

The Standard 8c Poor's composite stock price index rose sharplyover the year, with all of the gains coming in the first half. In Decem-ber 1983 the average was 17.9 percent above its level 12 months ear-lier. This rise was on top of the 27 percent increase in the secondhalf of 1982.

192


As shown in Table 6-8, the credit markets absorbed a very largeflow of financing in 1983. Reflecting record U.S. Government defi-cits, Treasury debt in the hands of the public rose by $187 billionover the year. As noted above, the markets also financed a very largeflow of mortgages.

TABLE 6-8.—Funds raised in credit markets by the nonfinancial sector of the economy, 1979-83

[Billions of dollars, except as noted]

Sector 1979 1980 1981 1982 19831

Total funds raised ,

Households

Business

Federal Government

State and local government...

Foreign

Funds raised as percent of GNP...

406.2

176.4

151.7

37.4

20.5

20.2

16.8

370.4

117.5

126.1

79.2

20.3

27.2

14.1

404.4

120.6

159.6

87.4

9.7

27.2

13.7

411.0

86.3

111.5

161.3

36.3

15.7

13.4

509.1

149.4

95.9

205.9

42.7

15.0

15.6

1 Average of first three quarters at seasonally adjusted annual rate.Note.—Detail may not add to total due to rounding.Sources: Department of Commerce (Bureau of Economic Analysis) and Board of Governors of the Federal Reserve System.

The nonfinancial corporate sector did not place significant de-mands on the credit markets in 1983. As cash flow rose markedly dueto the strength of the recovery, corporations obtained most of theirfunds from internal sources. Despite increases in business fixed in-vestment outlays and a move from inventory liquidation to accumula-tion within the year, the nonfinancial corporate sector is estimated tohave borrowed about $33 billion in the first three quarters of 1983,well below the amount borrowed over the same period in 1982. The1983 borrowing was also considerably less than the amount bor-rowed in the second half of 1981. The strong stock market led to asignificant increase in common stock offerings. Over the first threequarters of the year, gross proceeds from primary public offerings ofcommon stock totaled $33.8 billion, compared to $25.4 billion overthe entire year of 1982. As reported in Table 6-8, funds raised bynonfinancial business through debt and equity issues together havebeen falling since 1981.

Growth in the monetary aggregates in the first half of 1983 washigh. Ml grew at a 14.5 percent annual rate, up somewhat from the11.2 percent annual rate over the last 6 months of 1982. The twoother monetary aggregates reported by the Federal Reserve, M2 andM3, grew at rates of 16.4 percent and 10.5 percent, respectively, overthe same period. These two aggregates had grown at rates of 10.5percent and 10.7 percent, respectively, over the last 6 months of1982. The high rates of money growth in the first half of the yearwere the result of an accommodative monetary policy stance that had

193


the effect of avoiding sizable changes in interest rates during aperiod in which the Federal Reserve was uncertain about the signifi-cance of the large deposit flows associated with new deposit instru-ments.

The new money market deposit accounts (MMDAs), first offered bydepository institutions in mid-December 1982, attracted $320 billionby March 1983. Funds in MMDAs, which are included in M2 and M3but not in Ml, grew to about $370 billion at the end of the year.Another significant innovation was the introduction in early Januaryof Super-NOW Accounts which have unlimited checkwriting privi-leges and are not subject to interest rate ceilings. Funds in these ac-counts, which are included in Ml, grew to about $27 billion by theend of March, and to $37 billion by the end of the year.

Most of the adjustment to the new accounts appears to have takenplace early in the year. In addition, most of the funds flowing intoMMDAs seem to have come from other components of M2. BetweenDecember 1982 and March 1983, while MMDAs were attracting $320billion, general purpose and broker/dealer money market mutualfunds lost $28 billion and conventional time and savings accountslost $162 billion. The components of Ml and M2 are shown in Table6-9.

TABLE 6-9.—Components of Ml and M2t 1979-83

[Averages of daily figures; billions of dollars; seasonally adjusted, except as noted]

Item

Currency

Plus: Demand deposits2

Other checkable deposits

Equals: M l

Plus* Savings deposits

Money market deposit accounts (MMDAs)3 4

Small time deposits

Overnight repurchase agreements (RPs) and overnight Eurodollars4

Money market mutual fund balances (excluding institution ac-counts) 4.

Equals: M2 «

December

1979

106.3

2657

17 0

389 0

423 1

o635 9

21.2

33 4

1,497.5

1980

116 2

2709

269

4141

400 7

o7317

28.4

614

1,630.3

1981

123.2

2409

76 6

440 6

344 4

o828 6

36.1

150 9

1,794.9

1982

132.8

244 0

1013

478 2

3593

43 2

8591

44.3

182 2

1,959.5

1983 J

146.0

247.9

1271

5211

312 3

372 4

792.1

56.1

1380

2,184.6

1 Preliminary.2 Includes travelers checks.3 Introduced December 14, 1982.4 Not seasonally adjusted.6 M2 will differ from the sum of components by a consolidation adjustment that represents the estimated amount of demand

deposits and vault cash held by thrift institutions to service time and savings deposits.Source: Board of Governors of the Federal Reserve System.

194


In the middle of 1983 the Federal Reserve became less accommo-dative in its provision of reserves. As a result, interest rates rosemoderately. Also, the greatest part of the portfolio adjustment to theintroduction of the new deposit accounts was probably complete bythat time. Growth of the monetary aggregates slowed; over the 6months ending in December, Ml, M2, and M3 grew at annual ratesof 3.7 percent, 6.8 percent, and 8.2 percent, respectively.

In February the Federal Reserve announced 1983 target growthranges for M2 and M3. But because of the uncertainty it felt over theeffect of the new accounts on the demand for money, the Federal Re-serve announced only a "monitoring" range for Ml, which was set at4 to 8 percent from its average level in the fourth quarter of 1982.The M2 target growth range was set at 7 to 10 percent from its aver-age level in February and March. The M3 range was set at 6.5 to 9.5percent from its average level in the fourth quarter of 1982. Follow-ing rapid growth in Ml over the first half of 1983, in July the FederalReserve revised the Ml growth range to 5 to 9 percent from its aver-age level in the second quarter. Chart 6-4 shows Ml and its targetranges in 1983.

THE OUTLOOK FOR 1984

Table 6-10 summarizes the basic elements in the Administration'seconomic projections for 1984 and corresponding data for 1983. Therate of growth in real GNP is expected to decline as is typical in thesecond year of expansion. Real GNP is projected to grow at 4.5 per-cent over 1984. The unemployment rate is expected to fall to anaverage of 7.6 percent in the fourth quarter of the year.

The inflation rate as measured by the GNP implicit price deflator isexpected to rise slightly in 1984, to 5.0 percent over the four quar-ters of the year. The slight increase in projected inflation reflects theview that 1983 inflation was depressed to some degree by cyclicalfactors and two special factors that seem unlikely to recur in 1984.The two special factors were the decline in energy prices early in1983 and the continuing appreciation of the foreign exchange valueof the dollar over the year. These cyclical and special factors shouldbe viewed as transitory disturbances to the underlying rate of infla-tion determined by money growth and trends in the income velocityof money.

The Administration's economic outlook is based on an analysis ofbusiness cycle regularities and other information, including forecasts,obtained from the private sector. The projections for real GNP andinflation in 1984 are close to the median of private sector forecasts

195


Chart 6-4

Billions of dollars*

M1: Actual versus Target Range

600

575

550

525

500

475

450

425

-

-

—

4Q 81 to 4Q 82

' - 5.5%

. • 2 .5%

-

-

2Q83to4Q83 J^,

^ ^ —4Q 82 to 4Q 83

—

_

I I I I I I I I I I I I I I I I I I I I IJ F M A M J J

1982

A S O N D J F M A M J J1983

A S O N D

M Monthly averages of daily figures, seasonally adjusted.Source: Board of Governors of the Federal Reserve System.

for those variables. Further details on the Administration's outlookare reported in Table 6-10.

THE OUTLOOK FOR 1985-89

The Administration's economic assumptions for 1985-89 are re-ported in Table 6-11. These economic assumptions reflect the Ad-ministration's view on probable basic economic trends under the as-sumption that the Federal budget deficit and the rate of moneygrowth decline over time. A different set of economic assumptionswould, of course, be appropriate if different policies were pursued.

Because economic outcomes are dependent on numerous condi-tions other than the assumed economic policies, it is appropriate thatthe long-run economic assumptions reflect underlying trends. More-over, because the primary use of the long-term economic assump-

196


TABLE 6-10.—Economic outlook for 1984

Item 19831 1984forecast

Percent change (fourth quarter to fourth quarter):

Real gross national product 6.1 4.5

Personal consumption expenditures..Nonresidential fixed investmentResidential investmentFederal purchasesState and local purchases

GNP implicit price deflator

Compensation per hour2

Output per hour2

Level in fourth quarter:3

Unemployment rate (percent)4

Housing starts (millions of units, annual rate)..

5.411.538.2

- 6 . 0.6

4.1

4.6

3.2

8.4

1.7

2.09.56.03.74.2

5.0

5.5

2.1

7.6

1.8

1 Preliminary.2 Nonfarm business, all persons.3 Seasonally adjusted.4 Unemployed as percent of total labor force including persons in the Armed Forces stationed in the United States.

Sources: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census), Department of Labor (Bureau ofLabor Statistics), and Council of Economic Advisers.

TABLE 6-11.—Administration economic assumptions, 1984-89

[Calendar years, except as noted]

Item

Employment (millions) l

Unemployment rate (percent)2

Consumer prices3

Real GNP

Real compensation per hour4

Output per hour4

1984 1985 1986 1987 1988 1989

Level

106.3

7.8

4.4

5.3

.5

1.9

108.4

7.6

4.6

4.1

1.3

2.1

110.7

7.3

113.2

6.8

Percent change

4.5

4.0

1.5

1.8

4.2

4.0

1.9

1.5

116.0

6.1

3.9

4.0

1.9

1.0

118.3

5.7

3.6

3.9

1.8

.9

1 Employment series includes persons in the Armed Forces stationed in the United States.2 Unemployed as percent of total labor force. See footnote 1.3 Wage earners and clerical workers.4 Nonfarm business, all persons.

Source-. Council of Economic Advisers.

tions is program and budget planning, no issue of Federal policy de-pends on precise predictions of year-to-year fluctuations in GNP.

The Administration's economic assumptions for 1985-89 involvehigher real growth and lower inflation than many private forecastersare predicting; Administration and private sector nominal GNPgrowth rates are similar. Compared to many private forecasts the Ad-ministration's higher real growth assumption probably reflects a dif-ferent fiscal policy assumption and a different analysis of the growth

197


prospects for the U.S. economy. The underlying fiscal assumption isthat reduced growth in Federal spending and lower budget deficitswill enhance the economy's long-run growth. The Administration'sreal growth assumptions are based on the assumption that labor pro-ductivity growth will be higher than that over the last decade, reflect-ing an environment of lower inflation and higher rates of saving andcapital formation. In contrast, many private forecasters seem to beanticipating a continuation of the low productivity growth that char-acterized the 1970s.

GROWTH IN REAL GNP

Administration policies are designed to achieve a long, sustainableeconomic expansion that takes the economy back to full employmentwith declining inflation. The assumption of 4.0 percent growth inreal GNP for the 1985-88 period is a trend or average growth rateprojection; the economy may grow somewhat more or less rapidly inany given year. In the Administration's view, any attempt to induce asubstantially higher real growth rate by monetary stimulus might betemporarily successful, but growth accelerated in this way would notbe sustainable. The result would soon be rising inflation and anotherrecession.

The Administration's real growth assumption falls to 3.6 percentby the fourth quarter of 1989. This assumption for 1989 does notreflect a "forecast" as that term is normally used, but rather the rec-ognition that the economy's long-run growth potential most likely isbelow 4 percent. For example, over the 33-year period between thebusiness cycle troughs in 1949 and 1982, real growth averaged 3.4percent per year.

The Administration's economic assumption of 4 percent realgrowth for the 1985-88 period, therefore, assumes a gradual increasein the utilization of the economy's labor and capital resources. For anumber of reasons, however, it is impossible to determine the specif-ic year in which real GNP growth will slow. One of the principal rea-sons for this indeterminacy is that the sustainable level of resourceutilization is not known with precision; moreover, that level can bealtered through changes in microeconomic policies. The underlyingrate of growth of the economy is not known with precision either.The importance of this factor is well illustrated by a simple calcula-tion. A difference of only 0.1 percentage point in the underlyinggrowth rate accumulates to 0.5 percentage point in 5 years, sufficientin one direction to permit 4.0 percent real GNP growth to continueafter 1989, or, in the other direction, to cause growth to slow in 1988instead of 1989. The year-to-year variations in real GNP growth rates

198


require an allowance for errors several times the size of the one inthis illustration.

Another perspective on the Administration's real growth assump-tions may be obtained by comparing them with real growth followingprior business cycle troughs. Under the Administration's economicassumptions, average annual real GNP growth over the 7 years fromthe cycle trough in the fourth quarter of 1982 to the fourth quarterof 1989 is 4.3 percent. Real growth over comparable periods follow-ing prior business cycle troughs, excluding the ones in 1949 and1980, averaged 3.8 percent. The highest of these 7-year growth ratesfollowed the 1961 trough; the rate for that period was 5.0 percent.The lowest was 3.0 percent following the 1954 and 1975 troughs.

A visual perspective on the Administration's real GNP assumptionsthrough 1989 can be obtained from Chart 6-5. This chart showsactual quarterly real GNP from 1970 through 1983, and projectedreal GNP from 1984 through 1989. Superimposed on the chart is atrend line fit to the data from the business cycle peak in the fourthquarter of 1969 to the business cycle peak in the third quarter of1981 and then projected forward.

From the chart it can be seen that the Administration's economicassumptions take real GNP back to the indicated trend line by 1989.Differences in the way the trend is fit would affect the relationshipbetween the 1989 trend and assumed levels of real GNP.

INFLATION

As seen in Table 6-11, the Administration has assumed a graduallydeclining rate of inflation over the 1985-89 period. This assumptionreflects the view that the goal of stability in the general price level isappropriate because inflation not only is costly and inequitable inand of itself but also is disruptive of economic growth and employ-ment stability. Also, eliminating inflation can be expected to reducevolatile changes in inflationary expectations, which are a major con-tributing factor to business cycle fluctuations.

The gradual reduction in inflation assumed by the Administrationdoes not depend on a policy assumption that such a result will be"forced" by deliberate actions to choke off economic growth when-ever there is any sign of a rise in inflation. Rather, the decline in in-flation is the anticipated outcome of the assumed steady and predict-able monetary and fiscal policies. As with real growth, it is expectedthat inflation may sometimes be higher and sometimes lower thanthe Administration's assumption, but that the trend will be downwardas indicated.

199


Chart 6-5

Billions of 1972 dollars

2000

Real Gross National ProductForecast and Trend

1800

1600

1400

1200

1000 -

Seasonally Adjusted Annual Rates

Trend X / \/ Forecast

I I I I I I I I I I I I I I I I 1 1

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988

Note.—Trend fitted from data for 1969 fourth quarter through 1981 third quarter.Sources: Department of Commerce and Administration Forecast.

INTEREST RATES

Given the assumed decline in the inflation rate, it is reasonable toassume that the expected rate of inflation will also decline, therebyreducing the inflation premium in nominal interest rates. In addition,under the assumptions of a declining budget deficit and a more stableeconomic environment, the real rate of interest should decline,ultimately reaching a level approximating the real rate prior to theonset of the inflationary 1970s.

Interest rates, of course, have been quite variable historically andvery difficult to forecast. Although the Administration's economicpolicies are designed to produce a more stable economy than in the1970s, interest rate fluctuations around the declining trend should beanticipated.

200


THE FULL EMPLOYMENT AND BALANCED GROWTH ACT OF1978

The Full Employment and Balanced Growth (Humphrey-Hawkins)Act of 1978 sets certain national economic goals and requires thatthe Economic Report of the President, together with the Annual Report ofthe Council of Economic Advisers, provide an analysis of the Nation'sprogress toward meeting those goals. This section contains such ananalysis. In addition, as required by the act, it contains an InvestmentPolicy Report. The requirement for such a report reflects the findingof the Congress, stated in this act, that "high rates of capital forma-tion are necessary to ensure adequate rates of capacity expansion andproductivity growth, compliance with governmental health, safety,and environmental standards, and the replacement of obsolete pro-duction equipment.'*

ECONOMIC GOALS

In setting goals for the unemployment and inflation rates in theBalanced Growth Act, the Congress was mindful of the fact that "ag-gregate monetary and fiscal policies alone have been unable toachieve full employment and production . . . and reasonable pricestability." In the act, the Congress made clear that exclusive concen-tration on any one goal could impede progress in achieving othergoals.

A central economic goal of the Congress, as indicated by the title"Full Employment and Balanced Growth Act,'' was and is theachievement of full employment. That goal is also a high priority forthis Administration.

A key observation from experience over the last two decades is thatrising inflation has been associated with rising unemployment. Eachtime inflation accelerated, as measured by the change in the consum-er price index—to 6.0 percent over the 12 months of 1969, to 12.2percent in 1974, and to 13.4 percent in 1979—a temporary boost inemployment was achieved at the cost of a subsequent recession.Moreover, the recessions became more serious. The unemploymentrate rose from a monthly low of 3.4 percent in May 1969 to a month-ly peak of 6.1 percent in December 1970; from 4.6 percent in Octo-ber 1973 to 9.0 percent in May 1975; from 5.6 percent in May 1979to 7.8 percent in July 1980; and from 7.2 percent in April 1981 to10.7 percent in November 1982. As interest rates rose to newpeaks—the monthly 3-month Treasury bill rate reached 7.9 percentin 1970, 9.0 percent in 1974, 15.5 percent in 1980, and 16.3 percentin 1981—strains accumulated in the financial system. Few accuratelyforecasted the severity of these recessions, and consequently it was

201


difficult for both the private sector and the Federal Government todeal with them. During each recession some businesses were forcedinto bankruptcy and unemployment rose sharply.

From this experience it is clear that rising unemployment andrising inflation can occur together. Indeed, each time prices acceler-ated substantially it proved impossible to avoid higher unemploy-ment. Moreover, economic expansion and essentially stable, or de-clining, inflation can also occur together, as they did in the early1960s, 1975-76, and most especially 1983. The tradeoff from infla-tionary economic policies is between lower unemployment temporar-ily and higher unemployment a short time later.

The Administration is committed to macroeconomic policy de-signed to avoid this boom-bust cycle and to achieve long-run bal-anced growth through steady and sustainable policies. Stable andpredictable policies offer the greatest promise of achieving a highrate of employment over an extended period of years, with the small-est risk that the economy will experience severe recession.

The Balanced Growth Act set a goal that unemployment notexceed 3 percent among individuals aged 20 and over, and 4 percentamong individuals aged 16 and over, by 1983. The act also set aninflation goal of 3 percent by 1983 and zero by 1988, provided thatachieving the inflation goal did not impede achieving the unemploy-ment goal. Finally, the act provided that the President could, if hedeemed necessary, recommend modification of the timetables forreaching these goals.

Given the experience of the last two decades, recounted very brief-ly above, it is clear that the essential ingredient of Federal policies tofurther the employment and inflation goals of the Balanced GrowthAct must be sustainability. Table 6-11 above, which reports the Ad-ministration's economic assumptions for 1984-89, provides a timeta-ble for progress toward the employment and inflation goals of theact. This table is pursuant to the act's requirement that this AnnualReport contain numerical goals. Reflecting the situation inherited bythe Administration when it assumed office and the severity of the1981-82 recession, the table does not project complete realization ofthe act's unemployment and inflation rate goals, but substantial prog-ress toward them.

INVESTMENT POLICY REPORT

The 1983 Annual Report of the Council of Economic Advisers contained,in Chapter 4, an extensive analysis of capital formation issues. Thatanalysis serves as the foundation for this much briefer report.

Updating the information published a year ago, and as discussed inmore detail earlier in this chapter, 1983 was a year of rising invest-

202


ment spending from the recession trough. Nevertheless, for the fullyear 1983 real gross business fixed investment rose by only 1.1 per-cent over 1982 and'real net investment fell by 11.4 percent, howev-er, rising equipment investment over the course of 1983 suggeststhat the investment incentives in the tax acts of 1981 and 1982 arenow having the desired effect.

In addition to the investment incentives in the tax law, a higherrate of investment is being encouraged by the lower rate of inflation.Lower inflation increases the real value of capital depreciation allow-ances. Lower inflation also helps to provide the more stable econom-ic environment needed to reduce risks and make business planningeasier.

The Administration's efforts to provide a stable and more produc-tive business environment conducive to rising investment also in-clude a number of microeconomic policies. Deregulation reducescosts and promotes efficient use of the economy's resources. A gen-eral policy of relying on the market reduces the risks to the profit-ability of investment from future extensions of regulation. Financialderegulation, discussed in Chapter 5 of this Annual Report, can be ex-pected to improve the efficiency with which financial capital is allo-cated. Expanding international trade by resisting protectionism, asdiscussed in Chapter 2, will also assist in raising real growth.


Appendix A

REPORT TO THE PRESIDENT ON THE ACTIVITIES

OF THE

COUNCIL OF ECONOMIC ADVISERS DURING 1983


LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERS,

Washington, D.C., December 31, 1983.MR. PRESIDENT:

The Council of Economic Advisers submits this report on its activi-ties during the calendar year 1983 in accordance with the require-ments of the Congress, as set forth in section 10(d) of the Employ-ment Act of 1946 as amended by the Full Employment and BalancedGrowth Act of 1978.

Sincerely,

MARTIN FELDSTEIN, Chairman

WILLIAM A. NISKANEN

WILLIAM POOLE

207


Council Members and their Dates of Service

Name

Edwin G. NourseLeon H. Keyserling

John D. Clark

Roy BloughRobert C. TurnerArthur F. BurnsNeil H. JacobyWalter W. StewartRaymond J. Saulmer

Joseph S. DavisPaul W. McCrackenKarl BrandtHenry C. WalhchWalter W. HellerJames TobinKermit GordonGardner Ackley

John P LewisOtto EcksteinArthur M. Okun

James S. DuesenberryMerton J. PeckWarren L. SmithPaul W. McCrackenHendrikS. HouthakkerHerbert Stem

Ezra SolomonMarina v.N. WhitmanGary L SeeversWilliam J FellnerAlan GreenspanPaul W. MacAvoyBurton G. MalkielCharles L. SchultzeWilliam D. NordhausLyle E GramleyGeorge C. EadsStephen M. GoldfeldMurray L. WeidenbaumJerry L JordanWilliam A. NtskanenMartin FeldstetnWilliam Poole

Position

Chairman. . . . ...Vice Chairman...Acting ChairmanChairmanMemberVice ChairmanMemberMemberChairman.Member . . . . .Member. .Member.. . . . . .ChairmanMemberMember .MemberMember ..ChairmanMemberMemberMember . . . .ChairmanMemberMemberMember.Chairman.. . . . . .Member.Member . . .MemberChairmanMemberMemberChairman . .MemberMember . .MemberMemberChairmanMember..MemberChairman..MemberMemhprMemberMemberChairmanMemberMemberChairmanMember . . .

Oath of office date

August 9, 1946August 9, 1946November 2,1949 . . . .May 10,1950August 9, 1946May 10, 1950June 29, 1950September 8, 1952March 19, 1953September 15, 1953December 2,1953April 4, 1955December 3, 1956 .May 2, 1955December 3,1956 . . . .November 1, 1958May 7,1959January 29, 1961January 29, 1961.January 29, 1961August 3, 1962November 16,1964May 17 1963September 2, 1964November 16, 1964February 15, 1968 . .February 2, 1966February 15, 1968 . . . .July 1, 1968February 4,1969February 4, 1969February 4, 1969 .January 1, 1972September 9, 1971March 13, 1972 . . .July 23, 1973October 31 1973September 4,1974June 13, 1975 . . . .July 22, 1975January 2 2 , 1 9 7 7 . . .March 18, 1977March 18 1977June 6 1979August 20, 1980February 27, 1981 . . .July 14, 1981June 12, 1981October 14, 1982December 10, 1982 . . .

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, 1975January 20, 1977.November 15, 1976.January 20, 1977.January 20, 1981.February 4, 1979.Mav 27 1980January 20 1981January 20, 1981.August 25, 1982.July 31, 1982.

208


Report to the President on the Activities of theCouncil of Economic Advisers During 1983

The Employment Act of 1946 (P.L. 304-79th Congress), as amend-ed, provides the statutory base for the activities of the Council ofEconomic Advisers. The Council, through the Chairman, providesadvice to the President on a wide range of domestic and internationaleconomic policy issues, assists in the preparation of the President'sEconomic Report to the Congress, and conducts analyses and studieson a wide range of economic issues in support of its primary mission.

Martin Feldstein, William A. Niskanen, and William Poole contin-ued to serve as Council Members in 1983, with Mr. Feldstein asChairman. Mr. Feldstein is on leave from Harvard University wherehe is a Professor of Economics. Mr. Niskanen is on leave from theUniversity of California at Los Angeles where he is a Professor ofBusiness Administration. Mr. Poole is on leave from Brown Universi-ty where he is a Professor of Economics.

MACROECONOMIC POLICIES

As is its tradition, during 1983 the Council devoted much of itstime to assisting the President in the formulation of broad economicpolicy objectives and the programs to carry them out. The develop-ment of economic assumptions and monitoring of current develop-ments, under Mr. Poole, were areas of major interest. Monetarypolicy developments received especially close attention.

Mr. Poole chaired the interagency subcabinet forecasting group,consisting of representatives from the Department of the Treasuryand the Office of Management and Budget, with participation by theDepartment of Commerce. The Chairman of the Council continuedhis responsibility for presenting to the President the economic as-sumptions developed with the Office of Management and Budget andthe Department of the Treasury.

MICROECONOMIC POLICIES

A wide variety of microeconomic issues received Council attentionduring the year. Council Members chaired or participated in numer-ous Cabinet level groups dealing with such issues as internationaltrade, economic statistics, Federal credit programs, alternatives toFederal regulation, Federal housing programs, and fuel economy

209


standards. Mr. Niskanen chaired Cabinet Council working groupsdealing with employee pension legislation.

The Chairman actively participated during the early months of theyear, and then during the late fall budget cycle, in Cabinet level re-views of the Federal budget.

PUBLIC INFORMATION

The Council's Annual Report is the principal medium through whichthe Council informs the public of its work and its views. It is also animportant vehicle for presenting and explaining the Administration'sdomestic and international economic policies. Distribution of theReport in recent years has averaged about 50,000 copies. The Councilalso assumes primary responsibility for the monthly Economic Indica-tors, a publication prepared by the Council's Statistical Office, underthe supervision of Catherine H. Furlong. The Joint Economic Com-mittee issues the Indicators, which has a distribution of approximately10,000 copies. Information is also provided to members of the publicthrough speeches and other public appearances by the Council Mem-bers.

ORGANIZATION AND STAFF OF THE COUNCIL

OFFICE OF THE CHAIRMAN

The Chairman is responsible for communicating the Council'sviews to the President. This duty is performed through discussionswith the President and written reports on economic developments.The Chairman also represents the Council at Cabinet meetings andat many other formal and informal meetings of government officials.He exercises ultimate responsibility for directing the work of the pro-fessional staff.

COUNCIL MEMBERS

The two Council Members are responsible for all subject mattercovered by the Council, including direct supervision of the work ofthe professional staff. Members represent the Council at a wide vari-ety of interagency and international meetings and assume major re-sponsibility for selecting issues for Council attention.

In practice, the small size of the Council permits the Chairman andCouncil Members to work as a team on most policy issues. Therewas, however, an informal division of subject matter among them in1983. Mr. Poole assumed primary responsibility for domestic and in-ternational macroeconomic analysis, economic projections, and mon-etary and financial issues. Mr. Niskanen is primarily responsible for

210


mieroeconomic and sectoral analysis, international trade questions,and regulatory issues.

PROFESSIONAL STAFF

At the end of 1983 the professional staff consisted of the SpecialAssistant to the Chairman, the Senior Statistician, nine senior staffeconomists, five junior staff economists, and three research assist-ants.

The professional staff and their special fields at the end of 1983were:Geoffrey O. Carliner Special Assistant to the Chairman

Senior Staff Economists

Lincoln F. Anderson Macroeconomic AnalysisJeffrey A. Frankel International FinanceStephen K. Halpert ., Legal and Regulatory PolicyWilliam S. Haraf Macroeconomic Analysis and Financial Regu-

lationDavid R. Henderson Health and EnergyLawrence B. Lindsey Public Finance and TaxationRobert L. Thompson Food and AgricultureKathleen P. Utgoff Labor and EmploymentRobert S. Villanueva Macroeconomic Analysis and Housing Policy

Statistician

Catherine H. Furlong.. Senior Statistician

Junior Staff Economists

Kenneth A. Froot International Trade and FinanceGail G. Ifshin Transportation and RegulationWilliam S. Milberg International TradeJohn F. Navratil TaxationCharles N. Schorin Macroeconomic Analysis and Labor

Research Assistants

Andrew G. Berg Fiscal PolicySuzanne G. Greenspun Current Economic ConditionsAndrew R. Myers Macroeconomic Analysis

Catherine H. Furlong, Senior Statistician, continued to be incharge of the Council's Statistical Office. Mrs. Furlong has primaryresponsibility for managing the Council's statistical informationsystem. She supervises the publication Economic Indicators and thepreparation of all statistical matter in the Economic Report. She alsooversees the verification of statistics in memoranda, testimony, and

211


speeches. Natalie V. Rentfro, Linda A. Reilly, and Barbara L. Sibelassist Mrs. Furlong.

In preparing the Economic Report the Council relied upon the edito-rial services of Joseph Foote. Donald Uttrich worked at the Councilduring the fall as an intern.

SUPPORTING STAFF

The Administrative Office of the Council of Economic Advisersprovides general support for the Council's activities. Serving in theAdministrative Office were Elizabeth A. Kaminski, Staff Assistant tothe Council, and Catherine Fibich, Administrative Assistant.

Members of the secretarial staff for the Chairman and CouncilMembers during 1983 were Patricia A. Lee, Susan A. Lindsey, Geor-gia A. O'Connor, and Alice H. Williams. Secretaries for the profes-sional staff were Carolyn L, Bazarnick, Bessie M. Lafakis, RosemaryM. Rogers, Margaret L. Synder, and Lillie M. Sturniolo.

DEPARTURES

The Council's professional staff are in most cases on leave of ab-sence from universities, other government agencies, or research insti-tutions. Their tenure with the Council is usually limited to 1 or 2years. Senior staff economists who resigned during the year and theirsubsequent affiliations were Daniel J. Frisch (Department of theTreasury), Thomas J. Kniesner (University of North Carolina), PaulR. Krugman (Massachusetts Institute of Technology), Evan R. Kwerel(Federal Communications Commission), Thomas S. McCaleb (FloridaState University), Stephen K. McNees (Federal Reserve Bank ofBoston), Glenn L. Nelson (University of Minnesota), Lawrence H.Summers (Harvard University), Adrian W. Throop (Federal ReserveBank of San Francisco), and Benjamin Zycher (California Institute ofTechnology). Eric I. Hemel, Special Assistant to the Chairman,joined the Federal Home Loan Bank Board.

Staff economists who resigned during the year were N. GregoryMankiw (Harvard Law School and the Massachusetts Institute ofTechnology) and Robert H. Meyer (The Brookings Institution).

Junior staff economists who resigned in 1983 were Christopher B.Ballinger (University of California, Berkeley), John H. Cochrane(University of California, Berkeley), John S. Earle (Stanford Universi-ty), Thomas W. Gilligan (Washington University, St. Louis), David S.Reitman (Stanford University), and Dan C. Roberts (Chase Manhat-tan Bank).

212


Appendix B

STATISTICAL TABLES RELATING TO INCOME,

EMPLOYMENT, AND PRODUCTION


C O N T E N T S

NATIONAL INCOME OR EXPENDITURE:Page

B-l. Gross national product, 1929-83 220B-2. Gross national product in 1972 dollars, 1929-83 222B-3. Implicit price deflators for gross national product, 1929-83 224B-4. Fixed-weighted price indexes for gross national product, 1972

weights, 1959-83 226B-5. Changes in gross national product, personal consumption expendi-

tures, and related price measures, 1929-83 227B-6. Gross national product by major type of product, 1929-83 228B-7. Gross national product by major type of product in 1972 dollars,

1929-83 229B-8. Gross national product by sector, 1929-83 230B-9. Gross national product by sector in 1972 dollars, 1929-83 231B-10. Gross national product by industry, 1947-82 232B-ll. Gross national product by industry in 1972 dollars, 1947-82 233B-12. Gross domestic product of nonfinancial corporate business, 1929-

83 234B-l 3. Output, costs, and profits of nonfinancial corporate business,

1948-83 235B-14. Personal consumption expenditures, 1929-83 236B-15. Gross and net private domestic investment, 1929-83 238B-16. Gross and net private domestic investment in 1972 dollars, 1929-

83 239B-17. Inventories and final sales of business, 1946-83 240B-18. Inventories and final sales of business in 1972 dollars, 1947-83 241B-19. Relation of gross national product, net national product, and na-

tional income, 1929-83 242B-20. Relation of national income and personal income, 1929-83 243B-21. National income by type of income, 1929-83 244B-22. Sources of personal income, 1929-83 246B-23. Disposition of personal income, 1929-83 248B-24. Total and per capita disposable personal income and personal con-

sumption expenditures in current and 1972 dollars, 1929-83 249B-25. Gross saving and investment, 1929-83 250B-26. Saving by individuals, 1946-83 251B-27. Number and median income (in 1982 dollars) of families and per-

sons, and poverty status, by race, selected years, 1947-82 252POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY:

B-28. Population by age groups, 1929-83 253B-29. Population and the labor force, 1929-83 254B-30. Civilian employment and unemployment by sex and age, 1947-83 .. 256B-31. Unemployment by duration and reason, 1947-83 257

215


B-32. Civilian labor force participation rate and civilian employment/population ratio, 1948-83 258

B-33. Unemployment rate, 1948-83 259B-34. Civilian labor force participation rate by demographic characteris-

tic, 1954-83 260B-35. Civilian unemployment rate by demographic characteristic, 1948-

83 261B-36. Unemployment insurance programs, selected data, 1950-83 262B-37. Wage and salary workers in nonagricultural establishments, 1929-

83 263B-38. Average weekly hours and hourly earnings in selected private non-

agricultural industries, 1947-83 264B-39, Average weekly earnings in selected private nonagricultural indus-

tries, 1947-83 265B-40. Productivity and related data, business sector, 1947-83 266B-4L Changes in productivity and related data, business sector, 1948-83. 267

PRODUCTION AND BUSINESS ACTIVITY:B-42. Industrial production indexes, major industry divisions, 1929-83.... 268B-43. Industrial production indexes, market groupings, 1947-83 269B-44. Industrial production indexes, selected manufactures, 1947-83 270B-45. Capacity utilization rate in manufacturing, 1948-83 271B-46. New construction activity, 1929-83 272B-47. New housing units started and authorized, 1959-83 274B-48. Nonfarm business expenditures for new plant and equipment,

1947-84 275B-49. Sales and inventories in manufacturing and trade, 1947-83 276B-50. Manufacturers' shipments and inventories, 1947-83 277B-51. Manufacturers' new and unfilled orders, 1947-83 278

PRICES:B-52. Consumer price indexes, major expenditure classes, 1946-83 279B-53. Consumer price indexes, selected expenditure classes, 1946-83 280B-54. Consumer price indexes, commodities, services, and special

groups, 1939-83 282B-55. Changes in consumer price indexes, 1958-83 283B-56. Changes in consumer price indexes, commodities and services,

1948-83 284B-57. Producer price indexes by stage of processing, 1947-83 285B-58. Producer price indexes by stage of processing, special groups,

1974-83 287B-59. Producer price indexes for major commodity groups, 1947-83 288B-60. Changes in producer price indexes for finished goods, 1950-83 290

MONEY STOCK, CREDIT, AND FINANCE:B-61. Money stock measures and liquid assets, 1959-83 291B-62. Components of money stock measures and liquid assets, 1959-83... 292B-63. Commercial bank loans and investments, 1939-83 293B-64. Total funds raised in credit markets by nonfinancial sectors, 1975-

83 294B-65. Federal Reserve Bank credit and reserves of depository institu-

tions, 1929-83 296B-66. Aggregate reserves of depository institutions and monetary base,

1959-83 297

216


B-67. Bond yields and interest rates, 1929-83 298B-68. Consumer credit outstanding, 1950-83 300B-69. Net change in consumer credit outstanding, 1950-83 301B-70. Mortgage debt outstanding by type of property and of financing,

1939-83 302B-71. Mortgage debt outstanding by holder, 1939-83 303

GOVERNMENT FINANCE:B-72. Federal budget receipts, outlays, and debt, fiscal years 1974-85 304B-73. Federal budget receipts and outlays, off-budget outlays, and debt,

fiscal years 1929-85 306B-74. Relation of Federal Government receipts and expenditures in the

national income and product accounts to the unified budget,fiscal years 1983-85 307

B-75. Government receipts and expenditures, national income and prod-uct accounts, 1929-83 308

B-76. Federal Government receipts and expenditures, national incomeand product accounts, 1959-85 309

B-77. State and local government receipts and expenditures, nationalincome and product accounts, 1946-83 310

B-78. State and local government revenues and expenditures, selectedfiscal years, 1927-82 311,

B-79. Interest-bearing public debt securities by kind of obligation, 1967-83 312

B-80. Maturity distribution and average length of marketable interest-bearing public debt securities held by private investors, 1967-83, 313

B-81. Estimated ownership of public debt securities, 1976-83 314

CORPORATE PROFITS AND FINANCE:B-82. Corporate profits with inventory valuation and capital consumption

adjustments, 1929-83 315B-83. Corporate profits by industry, 1929-83 316B-84. Corporate profits of manufacturing industries, 1929-83 317B-85. Sales, profits, and stockholders' equity, all manufacturing corpora-

tions, 1950-83 318B-86. Relation of profits after taxes to stockholders' equity and to sales,

all manufacturing corporations, 1947-83 319B-87. Sources and uses of funds, nonfarm nonfinancial corporate busi-

ness, 1946-83 320B-88. Current assets and liabilities of U.S. corporations, 1940-83 321B-89. State and municipal and business securities offered, 1934-83 322B-90. Common stock prices and yields, 1949-83 323B-91. Business formation and business failures, 1940-83 324

AGRICULTURE:B-92. Farm income, 1929-83 325B-93. Farm output and productivity indexes, 1929-83 326B-94. Farm input use, selected inputs, 1929-83 327B-95. Indexes of prices received and prices paid by farmers, 1946-83 328B-96. U.S. exports and imports of agricultural commodities, 1940-83 329B-97. Balance sheet of the farming sector, 1929-84 330

INTERNATIONAL STATISTICS:B-98. Exchange rates, 1967-83 331B-99. U.S. international transactions, 1946-83 332

217


B-100. U.S. merchandise exports and imports by principal end-use catego-ry, 1965-83 334

B-101. U.S. merchandise exports and imports by area, 1974-83 335B-102. U.S. merchandise exports and imports by commodity groups,

1965-83 336B-103. International investment position of the United States at year-end,

selected years, 1970-82 337B-104. World trade: Exports and imports, 1965, 1970, 1975, and

1979-83 338B-105. World trade balance and current account balances, 1965, 1970,

1975, and 1979-83 339B-106. International reserves, selected years, 1952-83 340B-107. Growth rates in real gross national product, 1960-83 341B-108. Industrial production and consumer prices, major industrial coun-

tries, 1960-83 342B-109. Civilian unemployment rate, and hourly compensation, major in-

dustrial countries, 1960-83 343


General

Detail in these tables may not addUnless otherwise noted,Symbols used:

p Preliminary.Not available

all dollar

(also, not

Votes

to totals because of rounding.figures are in current dollars.

applicable).


NATIONAL INCOME OR EXPENDITURE

TABLE B-l.—Gross national product, 1929-83

[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]

Year or quarter

Grossnation-

alprod-uct

Personal consumptionexpenditures

TotalDura-

blegoods

Non-dura-

blegoods

Serv-

Gross private domestic investment

Total

Fixed investment

Total

Nonresidential

Total Struc-tures

Pro-ducers

dur-able

equip-ment

Residential

Total

Non-farmstruc-tures

Farmstruc-tures

Pro-ducers

dur-able

equip-ment

Change

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983 ".

1981:

\\ZZZZIllIV

1982:

HI

IV

1983:

\\ZZ'Z'ZinIV *

103.455.890.9

100.0125.0158.5192.1210.6212.4209.8233.1259.5258.3

286.5330.8348.0366.8366.8400.0421.7444.0449.7487.9

506.5524.6565.0596.7637.7691.1756.0799.6873.4944.0

992.71,077.61,185.91,326.41,434.21,549.21,718.01,918.32,163.92,417.8

2,631.72,954.13,073.03,309.5

2,866.62,912.53,004.93,032.2

3,021.43,070.23,090.73,109.6

3,171.53,272.03,362.23,432.0

77.345.867.0

71.080.888.699.4

108.2119.5143.8161.7174.7178.1

192.0207.1217.1229.7235.8253.7266.0280.4289.5310.8

324.9335.0355.2374.6400.5430.4465.1490.3536.9581.8

621.7672.2737.1812.0888.1976.4

1,084.31,204.41,346.51,507.2

1,668.11,857.21,991.92,158.6

1,802.81,835.81,886.11,904.1

1,938.91,972.82,008.82.046.9

2,073.02,147.02,181.12,233.1

9.23.56.7

7.89.76.96.56.78.0

15.820.422.925.0

30.829.829.132.531.838.637.939.336.842.4

43.141.646.751.456.463.068.070.180.585.7

85.297.2

111.1123.3121.5132.2m200.2213.4

214.7236.1244.5278.6

236.9233.4243.5230.8

239.4242.9243.4252.1

258.5277.7282.8295.2

37.722.335.1

37.042.950.858.664.371.982.790.996.694.9

98.2108.8113.9116.5118.0122.9128.9135.2139.8146.4

151.1155.3161.6167.1176.9188.6204.7212.6230.6247.8

265.7278.8300.6333.4373.4407.3441.7478.8528.2600.0

668.8733.9761.0804.3

716.3730.6741.1747.7

749.7754.7766.6773.0

777.1799.6814.8825.9

30.320.125.2

26.228.231.034.337.139.645.350.455.358.2

63.068.574.080.686.192.199.2

105.9112.8121.9

130.7138.1147.0156.1167.1178.7192.4207.6225.8248.2

270.8296.2325.3355.2393.2437.0485.7547.4618.0693.7

784.5887.1986.4

1,075.7

849.6871.8901.5925.6

949.7975.2998.9

1,021.8

1,037.41,069.71,083.51,112.0

16.21.49.3

13.117.99.95.87.2

10.630.734.045.935.3

53.859.252.153.352.768.471.069.261.978.1

75.974.885.490.997.4

113.5125.7122.8133.3149.3

144.2166.4195.0229.8228.7206.1257.9324.1386.6423.0

401.9474.9414.5471.3

455.5472.1495.8476.2

422.9432.5425.3377.4

404.1450.1501.1529.8

14.53.08.8

10.913.48.16.48.1

11.724.334.441.138.4

47.048.949.052.954.362.466.367.963.472.5

72.972.579.284.991.7

103.7111.6112.5125.4139.5

141.0158.8184.8211.3214.5213.0246.0301.0360.1

411.7456.5439.1478.2

444.7457.1462.2461.8

448.6443.7430.2433.8

443.5464.6492.5512.1

10.62.45.9

7.59.46.05.06.9

10.116.923.026.324.4

27.331.331.334.534.238.544.047.042.045.9

48.548.052.254.861.072.783.183.990.7

101.3

103.9107.9121.0143.3156.6157.7174.1205.2248.9290.2

308.8352.2348.3347.7

333.1347.6360.6367.6

361.3352.7342.3337.0

332.1336.3351.0371.2

5.11.02.0

2.33.01.91.41.92.86.97.79.08.7

9.511.411.612.913.414.617.718.417.217.6

18.819.120.120.522.427.030.130.332.436.7

38.740.544.151.055.955.458.864.478.798.3

110.9133.4141.9131.4

121.6129.4137.0145.5

144.7144.2140.0138.6

132.9127.4130.9134.5

5.51.43.9

5.26.44.13.75.07.39.9

15.317.315.7

17.819.919.721.520.823.926.328.624.928.3

29.728.932.134.438.745.853.053.758.264.6

65.267.476.992.3

100.7102.3115.3140.8170.2191.9

197.9218.8206.4216.3

211.5218.3223.6222.1

216.5208.5202.2198.4

199.3208.8220.2236.8

3.9.6

2.9

3.44.02.21.41.31.57.4

11.414.913.9

19.817.617.718.420.123.922.320.921.426.6

24.524.527.030.130.730.928.528.634.838.2

37.150.963.868.057.955.372.095.8

111.2118.6

102.9104.390.8

130.5

111.6109.5101.794.3

87.391.087.996.8

111.3128.4141.5140.8

3.6

27

3.23.61.91.21.11.46.7

10.413.712.8

18.616.416.517.319.022.821.219.720.325.3

23.323.225.828.929.429.627.127.233.336.5

35.448.961.565.654.852.4

107.0114.0

98.199.886.0

125.5

107.5105.297.089.5

83.286.183.491.2

106.7123.3136.3135.6

See next page for continuation of table.


TABLE B-l.—Cross national product, 1929-83—Continued


Year or quarter

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983p

1981:I||Illtv

1982:I||||fIV

1983:|||IllIV p

Net exports of goods andservices

Netexports

1.14

1.2

1 815.2

- 1 917

_ 57.8

1196.965

22443.2132.5305.37 33.31.4

556.6647.6

10 1886.5634342

674 1

.714 213.426 813 840

- 1 . 113.2

23 926 317.4

-10.6

31.921.122 829 2

29 933.3

.95.6

17 0- 8 . 5

-18.3-32.6

Exports

7.02.44.6

546.15.04.65574

15.120 217.516 3

14 419 719.118 018.721025.028124.224.8

28 929.931834.238 841 144.647 352 457 5

65 768 877.5

109 6146.2154 9170 9182 7218.7281.4

338 8368 8347.6335.8

367.3369.2367.53710

358 4364.5346.0321.6

326 9327.1341.1348.1

m ports

5.92.03.4

364.74.86.5727.97.38.3

10.59.8

12 215.315.916.716.218.019.820 821.023.4

23 423.325 426.628.832 338.141048153 3

59 064 776.795 4

132.8128.1157 1186 7219.8268.1

314 8342 5330.2346.4

335.4348.1344.7341.7

328 5331.2345.0316.1

309 9335.6359.4380.7

Government purchases of goods andservices

Total

8.88.2

13.5

14 224.959.888.997.082.827.525.532.038.4

38.560.175.682.575.875.079.487.195.097.6

100 3108.2118 0123.7129.8138 4158.7180 2199 0208 8

2201234 9253.1270 4304.1339.9362 1393 8431.9474.4

537 8595 7649.2690.2

576.3583.5600.3622.8

629 8631.6655.7679.7

,677 4683.4698.3701.7

Federal

Total

1.42.15.2

6.116.952.081.389.474.617.612.716.720.4

18.738.352.457.547.944.545.950.053.953.9

53 757.463 764.665.267 378.890.998 097.6

95.796 2

101.7102 0111.0122.7129.2143 4153.6168.3

197.0229.2258.7275.2

215.7220.4232.4248.5

249.7244.1261.7279.2

273.5273.7278.1275.6

Nation-al

defense

1.2

2213.749.479.787 473.514.89.0

10.713.2

14 033.545.848.641.138.440.244 045.645.6

44 547.051150.349 049 460.371576 976 3

73.670 273.172 877.083.086 092 8

100.3111.8

131.2154 0179.4200.3

143.3151.2154.9166.7

1681175.2183.6190.8

194 4199.4201.2206.2

Non-de-

fense

3.9

3.93.22.61.62.01.12.83.76.07.2

4.74.86.58.96.86.05.75.98.38.3

9310.412 714.316.217 818.519.521221.2

11126 028.529,133.939.743.250 653.356.5

65.975.279.374.9

72.469.277.581.8

81.768.978.188.5

79.174.376.969.4

Stateandlocal

7.46.18.3

8,18.07.87.57.68.29.9

12.815.318.0

19.821.823.225.027.830.633.537.141.143.7

46.550.854.359.064.671.179.889.3

1010111.2

124.4138.7151.4168.5193.1217.2232.9250.4278.3306.0

340.8366.5390.5415.0

360.5363.2367.9374.3

380.0387.5394.0400.5

404.0409.7420.2426.1

Finalsales

101.757.490.5

97.8120.6156.7192.8211.6213.5203.5233.5254.8261.4

279.7320.5344.8366.3368.4394.1417.0442.6451.2482.2

503.6522.2558.8590.7632.1681.2741.9789.3865.5934.2

989.51,070.01,175.71,307.91,420.11,556.11,706.21,895.32,137.42,403.5

2,641.52,935.63,097.53,316.4

2,855.72,897.52,971.43,017.9

3,047.13,081.43,095.63,165.9

3,210.93,286.63,353.73,414.3

Percent changefrom preceding

periodl

Grossnation-

alprod-uct

6.64.27.0

10.025.026.721.39.6

.9- 1 . 211.111.3

10.915.55.25.4

.09,05.45.31.38.5

3.83.67.75.66.98.49.45.89.28.1

5.28.6

10.111.88.18.0

10.911.712.811.7

8.812.24.07.7

20.56.6

13.33.7

1.46.62.72.5

8.213.311.58.6

Finalsales

5.3

8.123.230.023.09.8

.9-4 .714.89.12.6

7.014.67.66.2

.67.05.86.11.96.9

4.43.77.05.77.07.88.96.49.77.9

5.98.19,9

11.28.69.69.6

11.112.812.4

9.911.15.57.1

16.16.0

10.66.4

3.94.6l.S9.4

5.89.88.4l.t

1 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here.Source: Department of Commerce, Bureau of Economic Analysis.


TABLE B-2.—Gross national product in 1972 dollars, 1929-83

[Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates]

Year orquarter

Grossnationalproduct


TotalDurablegoods

Non-durablegoods

Services

Gross private domestic investment

Total

Fixed investment

Total

Nonresidential

TotalStruc-tures

Produc-ers'

durableequip-ment

Residential

Total

Non-farmstruc-tures

Farmstruc-tures

Produc-ers'

durableequip-ment

Changein

busi-nessinven-tories

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983".

1981:

IIIII....IV....

1982:I

315.7222.1319.8344.1400.4461.7531.6569.1560.4478.3470.3489.8492.2534.8579.4600.8623.6616.1657.5671.6683.8680.9721.7

737.2756.6800.3832.5876.4929.3984.8

1,011.41,058.11,087.61,085.61,122.41,185.91.254.31,246.31,231.61,298.21,369.71,438.61,479.41,475.01,513.81,485.4

215.1170.5219.8229.9243.6241.1248.2255.2270.9301.0305.8312.2319.3

337.3341.6350.1363.4370.0394.1405.4413.8418.0440.4452.0461.4482.0500.5528.0557.5585.7602.7634.4657.9

672.1696.8737.1767.9762.8779.4823.1864.3903.2927.6931.8956.8970.2

1,534.8 1,011.4

IIIIV

1983:IIIIll

1,510.11,512.51,525.81,506.9

1,485.81,489.31,485.71,480.7

1,490.11,525.1

953.6954.7962.9955.7

961.4968.8971.0979.6

986.71,010.6

1.553.4 1,016.01.570.5 1,032.2

20.910.718.6

21.224.215.714.013.014.425.430.132.535.5

42.639.138.042.142.551.148.848.645.350.7

51.449.354.759.764.872.678.479.588.391.8

89.198.2

111.1121.3112.3112.7126.6138.0146.8147.2

137.5141.2139.8156.0

145.4140.5143.9134.8

138.5139.5138.2143.2

145.8156.5157.9163.6

98.182.9

115.1

119.9127.6129.9134.0139.4150.3158.9154.8155.0157.4

161.8165.3171.2175.7177.0185.4191.6194.9196.8205.0

208.2211.9218.5223.0233.3244.0255.5259.5270.5277.3

283.7288.7300.6307.4302.5307.5321.9333.4344.4353.1355.6362.5364.2376.3

359.8362.7363.6363.8

362.6363.5364.7366.0

368.9374.7378.1383.3

96.176.986.1

88.891.895.5

100.2102.8106.3116.7120.9124.7126.5

132.9137.2140.9145.6150.5157.6165.0170.3175.9184.8

192.4200.2208.8217.8229.8240.9251.8263.7275.6288.8

299.3309.9325.3339.2348.0359.3374.7393.0412.0427.3438.8453.1466.2479.2

448.3451.5455.5457.1

460.4465.7468.2470.4

472.0479.4480.1485.3

55.88.4

33.6

44.555.829.518.119.727.770.970.082.165.4

93.593.983.085.383.1

103.8102.697.087.5

108.0

104.7103.9117.6125.1133.0151.9163.0154.9161.6171.4

158.5173.9195.0217.5195.5154.8184.5214.2236.7236.3

208.5227.6194.5218.4

222.7229.5236.3221.7

199.7201.4198.4178.4

190.0210.2230.7242.5

51.213.232.0

38.343.824.318.022.031.458.770.276.669.8

83.080.278.783.885.396.196.895.589.3

100.9

101.2100.9109.7117.5125.9140.1146.2142.7152.6160.4

154.8165.8184.8200.4183.9161.5176.7200.9220.7229.1212.9219.1203.9220.7

219.7220.7220.2215.7

209.9204.9199.8201.1

205.4215.6227.0235.0

37.510.420.9

25.830.417.614.018.727.642.148.951.146.0

50.052.952.156.355.461.365.466.259.363.6

66.966.772.075.182.797.4

108.0105.6109.5116.8

113.8112.2121.0138.1135.7119.3125.6140.3158.3169.9

165.8174.4166.1168.0

170.9173.4177.0176.3

173.6167.1163.3160.5

159.9163.0170.1178.9

21.15.08.7

10.012.06.84.25.58.3

18.917.418.417.9

19.220.720.622.623.625.428.328.426.827.4

29.530.231.631.934.440.643.442.042.845.0

43.942.844.147.443.638.339.540.444.649.148.852.553.449.8

50.151.653.554.6

54.354.053.052.2

50.348.349.650.8

16.45.5

12.1

15.818.510.99.8

13.219.223.231.532.628.1

30.832.231.533.731.835.937.037.832.536.2

37.436.540.443.148.356.864.563.666.871.8

69.969.376.990.792.181.186.199.9

113.7120.8117.0121.9112.7118.2

120.8121.7123.5121.8

119.3113.1110.3108.3

109.6114.7120.5128.1

13.72.8

11.1

12.513.36.74.03.43.8

16.621.325.623.8

33.027.326.627.529.934.831.529.230.037.4

34.234,337.742.543.142.738.237.143.143.6

41.053.763.862.348.242.251.260.762.459.1

47.144.737.852.7

48.847.343.139.4

36.337.836.540.6

45.552.656.856.1

13.02.5

10.4

11.612.36.03.53.03.4

15.319.723.822.1

31.325.725.126.128.533.530.027.828.635.9

32.932.836.340.941.541.236.635.441.341.7

39.251.661.559.945.339.848.757.959.556.3

44.242.135.250.1

46.344.840.536.8

33.935.234.137.8

43.050.054.153.3

0.6.2.6

.8

.9

.6

.4

.4

.31.11.31.51.4

1.31.31.21.21.1.9

1.01.0.9

1.0

.81.0.9.9.9.8

0.1



TABLE B-2.—Gross national product in 1972 dollars, 1929-83—Continued


Year or quarter

1929.19331939

19401941...19421943194419451946194719481949

19501951....19521953..19541955....19561957.19581959

19601961196219631964...19651966196719681969

1970197119721973197419751976197719781979

1980198119821983"..

1981:|IIHIIV..

1982:IIIIllIV

1983:1IIHI.IV P

Net exports of goods andservices

Netexports

37.4

3.4

4.43.2

- . 6- 5 9-6 .2- 3 713.218 910.810.7

5.91017.94 86.973

10.11185.62.7

7.78.57.59.4

12 810.16.55.41.9.9

3.916

715.527 832 225.422.024 037.2

50 343.028.911.7

48.344.139 839.9

35.233.424.023.0

20.512 31142.5

Exports

16.79.1

14.3

15.516.411.49.8

10.513.827.332 226.325.8

23.628.627.9?6.627.830.735.338.033.233.8

38.439.341.844.850351.754.456.761.265.0

70.571.077 597.3

108.5103 5110.1112.9126.7146.2

1591159.7147.3138.9

160.6160.7159.0158.7

151.8154.5146.4136.5

137.3136.2140.7141.5

Imports

12 98.6

10.9

11.113.212.015.716.817 514.013 315.515.2

17.718.520.021.820.923.425.226127.631.1

30.730.934.335.437 541.647.951.359.364.1

66.669.376 781.880771484.790.9

102.7109.0

108 8116.7118.4127.2

112.4116.6119.1118.8

116.6121.1122.4113.5

116.8123.9129.2139.0

Government purchases of goods andservices

Total

41042.963.0

65.397.8

191.62713300.42654

93.175 784.796.8

98.1133.7159.8170.1156.0152.3153.51612169.8170.6

172.8182.9193.2197.6202 6209.8229.7248.5260.2257.4

251.1250.12531253.3260 3265 2265.2269.2274.6278.3

284 3286.5291.8293.3

285.6284.1286 8289.6

289.4285.8292.2299.7

292.9292.1295 2293.2

Federal

Totat

7010.922.8

26.761.0

157.4239 6269.7233 7

58.236 342.849.2

47.382.2

107.2114 796.188 286.890 693.491.4

90.495.3

102.8101.8100 2100.3112.6125.1128.1121.8

110.6103 7101795.996 697 496.8

100.4100 3102.1

106 4110.4116.6118.0

107.3107.91118114.5

114.5110.3116.9124.4

118.4117 6118 9116.9

Nation-al

de-fense

... .

73168.366.966 464.965.465.767.4

70 073.678.884.2

71.073.374.475.7

75.577.880.481.4

82.784.284.285.6

Non-de-

fense

28 527.629.731031.835.034.734.8

36 436.837.833.7

36.334.637.438.7

39.132.536.543.0

35.733.434.731.2

Stateandlocal

33 932.040.3

38.636.834.331730.731734.939 441.947.5

50.851.552.755.359.964.166.770.676.479.2

82.487.590.495.8

102 4109.5117.1123.4132.1135.6

140.5146.41514157.4163.6167 8168.4168.8174.3176.2

177.9176.1175.2175.4

178.3176.2175.0175.1

174.9175.4175.3175.2

174.5174.5176.3176.3

Finalsales

3110227.0318.2

337.9388.4456.55315571.4564 0466.1470 6484.3496.6

524.2565.6596.5622.1618.2649.8665.8682.2682.7714.7

733.7753.7792.4825.0869 3917.5968.0999.2

1,049.11,076.6

1,081.81,114.31175 71,237.11,234.71238 41,290.41,356.41,422.61,472.2

1,479.41,505.31,494.81,537.2

1,507.01,503.61,509.71,500.9

1,495.91,492.71,487.01,503.4

1,505.51,530.51,549.71,563.0

Percent changefrom preceding

periodl

Grossnation-

alprod-uct

6.6-2 .2

7.8

7.616.315.315.17.1

- 1 5-14.7

-1 .74.1

.5

8.78.33.73.8

-1 .26.72.11.8

- . 46.0

2.22.65.84.05.36.06.02.74.62.8

~3A5.75.8

- . 6-1 .2

5.45.55.02.8

- . 32.6

- 1 . 93.3

9.0

3̂ 6- 4 . 9

- 5 . 51.0

- 1 . 0- 1 . 3

2.69.77.64.5

Finalsales

- 3 . 16.3

6.214.917.516 47.5

- 1 3-17.4

102.92.5

5.67.95.54.3

- . 65.12.52.5

47

2.72.75.14.15.45.55.53.25.02.6

3̂ 05.55.2

- . 2

4.25.14.93.5

.51.8

"is

6.8- . 9

1.6- 2 . 3

- 1 . 3- . 8

- 1 . 54.5

.66.85.13.5

1 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here.

Source: Department of Commerce, Bureau of Economic Analysis.


TABLE B-3.—Implicit price deflators for gross national product, 1929-83

[Index numbers, 1972=100, except as noted; quarterly data seasonally adjusted]

Year orquarter

Grossnational

product1


Total Durablegoods

Non-durablegoods

Services

Gross private domestic investmentL

Fixed investment

Total

Nonresidential

Total Structures

Pro-ducers'

dur-able

equip-ment

Residential

TotalNon-farmstruc-tures

Farmstruc-tures

19291933193919401941194219431944194519461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983 *1981:

IIIIllIV

1982:

ll"!!!!!!!!!!!!IllI V

1983:|

in

iv *.

32.7625.1328.4329.0631.2334.3236.1437.0137.9143.8849.5552.9852.49

53.5657.0957.9258.8259.5560.8462.7964.9366.0467.6068.7069.3370.6171.6772.7774.3676.7679.0682.5486.7991.4596.01100.00105.75115.08125.79132.34140.05150.42163.42

178.42195.14206.88215.63

189.83192.56196.94201.22

203.36206.15208.03210.00

212.83214.55216.44218.53

35.926.930.5

30.933.236740.142.444.147.852.956.055.8

56.960.662.063.263.764.465.667.869.270.6

71.972.673.774.875.977.279.481.484.688.4

92.596.5

100.0105.7116.4125.3131.7139.3149.1162.5

179.0194.1205.3213.4

189.1192.3195.9199.2

201.7203.6206.9209.0

210.1212.5214.7216.3

44.232.535.9

36740.043.746.751.355.562.167.870.370.5

72.276.376.777.275.075.677.780.981.383.883.884.385.486.287.186.886.788.291.193.3

95799.0

100.01017108.2117.3123.9129.2136.4145.0

156.2167.3174.8178.6

162.9166.1169.3171.2

172.9174.2176.1176.1

177.3177.5179.1180.4

38.426.830.5

30.933.639.143746.247.852.158.762.360.3

60.765.866.566.366.666.367.369.471.071.4

72.673.373.974.975.877.380.181.985.389.4

93.696.6

100.0108.5123.4132.5137.2143.6153.4169.9

188.1202.5209.0213.8

199.1201.4203.8205.5

206.8207.6210.2211.2

210.6213.4215.5215.5

31.626.129.2

29.530.832.434.236.137.338.841.744.446.047.449.952.655.457.258.460.162.264.166.0

67.969.070.471772.774.276.478.781.986.0

90.595.6

100.0104.7113.0121.6129.6139.3150.0162.3

211.6224.5

189.5193.1197.9202.5

206.3209.4213.4217.2

219.8223.1225.7229.1

28.322.427.728.530.733.535.737.037.241.349.053.754.9

56760.962.363.163.665.068.571.171.071.8

72.171.872.272.372.974.076.378.882.287.0

91.1957

100.0105.5116.7131.9139.2149.8163.2178.5

193.4208.4215.3216.6

202.4207.2210.0214.1

2137216.6215.32157

215.9215.5217.0217.9

28.322.928.229.131.033.935.936.836740.046.951.553.0

54.559.160.161.261762.967.371.070.972.2

72.572.072.573.173.874776.979.582.886.7

91.396.2

100.0103.8115.4132.2138.6146.3157.2170.8

186.2201.92097206.9

194.9200.5203.7208.5

208.1211.1209.6209.9

207.7206.3206.3207.5

24.319.223.0

23.424.928.432.433.833.936.644.048.848.4

49.355.156.357.456.557.662.464.963.964.2

63.763.363.664.164.966.469.272.275.881.5

88.294.5

100.0107.7128.2144.8149.0159.4176.4200.2

227.4254.2265.8264.0

242.6250.5255.9266.6

266.4267.1264.3265.4

264.026372637264.5

33.426.232.032.834.937.337.338.037.942.848.653.056.057.861.762.663.865.566.671.175.576.678.3

79.479.379.479780.180.682.184.387.289.9

93.297.2

100.0101.8109.3126.2133.9141.01497158.8

169.1179.5183.1182.9

175.1179.3181.0182.4

181.5184.4183.3183.2

181.8182.1182.7184.9

28.220.726.6

27.430.032.434.938.140.844.653.758.158.7

60.064.466.466.967.168.771.071.471.271.1

71.471.371.570.971.272.374.677.0807877

90.594.8

100.0109.1120.3131.0140.7158.0178.3200.5

218.5233.5240.2247.4

228.8231.6235.7239.2

240.8240.9240.9238.4

244.9243.9249.0251.2

27.819.826.3

27.229731.834.337.340.043.953.057.558.1

59.563.865.866.366.668.270.570.970.770.6

70.970.971.170.570.872.074.376780.587.5

90.3947

100.0109.4120.8131.6141.3159.0179.82027

221.6237.1244.0250.5

232.1234.9239.4243.3

245.0244.8244.9241.5

248.2246.8251.9254.2

28.619.523.4

23.626.630.735.740.842.946.652.857.358.0

59.463.865766.266.568.370.670.970.870.7

71.170771.270.670.972.274.276780.687.5

90.695.0

100.0109.2120.5131.91407157.0180.02027

218.1234.0245.9251.4

225.5231.4235.8239.2

240.6246.5242.4249.9

248,2249.8251.5254.9



TABLE B-3.—Implicit price deflators for gross national product, 1929-83—Continued

[Index numbers, 1972=100, except as noted; quarterly data seasonally adjusted]

Year or quarter

192919331939

1940194119421943194419451946194719481949

195019511952....1953195419551956195719581959

1960196119621963196419651966196719681969

197019711972197319741975197619771978..1979

1980198119821983p

1981:|IIIII..IV

1982:1||IllIV

1983:1||IllIV P

Exports andimports of goods

and services'

Exports

42 226.5321

34.937.343 646.851.953.655.462.866.563.1

61.068 868.667 567.268.571.074 073.173.5

75.276.176.076 311179.481983.585 588.5

93.297.0

100 0112.7134 8149 6155 3161.9172 6192.5

212.9230.8236.0241.7

228.7229 72312233.8

236.1236.0236 3235.6

238 0240 2242 5246.0

Imports

45.523.631.0

32.835.440.041.342.744.951.862.367.864.6

68.882.679.976 777.277.178.479 676.175.2

76.175.574.275.276.811179 479.981183.2

88.693.3

100 0116.7164.6179.6185.6205.5214 1246.1

289.4293.4278.9272.3

298.5298.5289.4287.7

281.8273.62818278.5

265.4270.72781274.0

Government purchases of goods and services

Total

21.519.221.4

21.725.531.232.832.331.229.633.637.739.7

39.245.047.348 548.649.251.754 056.057.2

58.059.161.162.664.166.069172.576 581.1

87.793.9

100 0106.7116.8128.2136.6146.3157 3170.4

189.2207.9222.5235.3

201.8205.4209.3215.1

217.6221.0224 4226.8

231.3234.0236 5239.3

Federal

Total

20 519.422.7

22.727.833 034.033.131.930.235.039.041.4

39.646 648.950149.950.452.955157.759.0

59.460.262.063.565167.170 072.776 580.1

86.692.7

100 0106.3114 9126.0133 5142.81531164.8

185.2207.7222.0233.3

201.0204.2207 9217.0

218.0221.3223 8224.4

230.9232.7233 8235.8

Nationaldefense

iob'o106.61151124.9132 4141.9152 7166.0

187.5209.3227.7237.8

201.9206.42083220.0

222.7225.1228 3234.3

234.9236 7238 8240.7

Non-defense

IIII

iob!d105.6114.2128.2135.7144.6153.8162.5

180.8204.5210.0222.0

199.3199.7207.0211.2

209.1212.3213.9205.7

221.7222.6221.7222.2

Stateandlocal

21.819.120.7

20.921.722 823.724.825.828.532.436.437.8

38.942.344.145 246.547.650.252.653.855.1

56.558.060.161.663.164.968.272.476.482.0

88.694.7

100.0107.0118.0129.4138.3148.4159.7173.7

191.5208.1222.9236.6

202.2206.1210.2213.8

217.3220.9224.7228.5

231.6234.8238.3241.6

Finalsales

32 725.328.4

29.031.034 336.337.037.943.749.652.652.6

53.356 757.858959.6

" 60.562.664 966.167.5

68.669.370.571.611174.276.679.082.586.8

91.596.0

100.0105.7115.0125.7132.2139.7150.3163.3

178.6195.0207.2215.7

189.5192.7196.8201.1

203.7206.4208.2210.6

213.3214.7216.4218.4

Percentfrom prf

perk

GNPimplicitprice

deflator

0.0- 2 . 1- . 8

2.27.5995.32.42.4

15.712.96.9

- . 9

2.16.61.41.61.22.23.23.41.72.4

1.6.9

1.81.51.52.23.23.04.45.1

5.45.04.25.88.89.35.25.87.48.6

9.29.46.04.2

10.65.99.49.0

4.35.63.73.8

5.53.33.63.9

changeseeding)d2

Finalsales

implicitprice

deflator

-2 .6- . 9

1.87.2

1065.62.12.2

15.313.76.0

1.3622.01.91.21.83.33.61.92.1

1.71.01.81.51.52.13.23.14.45.2

5.45.04.15.78.89.35.25.77.58.7

9.49.26.34.1

8.76.98.88.9

5.35.53.44.7

5.22.83.23.8

1 Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports ofgoods and services.2 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here. Quarterlychanges are at annual rates.



TABLE B-4.—Fixed-weighted price indexes for gross national product, 1972 weights, 1959-83

[Index numbers, 1972—100, except as noted; quarterly data seasonally adjusted]

Year or quarterGross

nationalproduct

Personalcon-

sumptionexpendi-

tures

Gross private domesticinvestment1

Fixed investment

Total Presi-dential

Residen-tial

Exports andimports of goods

and services1

Exports Imports

Government purchases of goods and services

Total

Federal

Total Nationaldefense

Non-

Stateandlocal

Percentchange

from

grossnationalproduct

weight-ed priceindex*

1959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983 P

1981:

\CZZZZZIIIIV

1982:

\\ZZZZZZIIIIV

1983:IIIIlliv p.ZZZ"Z

69.8

70.871.672.473.274.1

75.377.579.883.187.3

91.896.2

100.0106.0115.9

126.4133.7142.2153.3167.8

184.2201.8214.7223.9

195.8199.5203.8208.0

210.7213.1216.2218.7

220.6222.9225.5228.0

73.1

74.174.875.576.377.2

78.280.182.085.088.7

92.796.6

100.0106.1117.1

126.3133.0141.2151.6166.3

184.8201.7213.2222.0

196.4199.9203.6207.0

209.4211.3214.7217.4

218.3220.9223.3225.8

74.4

74.774.474.274.074.3

75.277.079.382.587.3

91.295.8

100.0105.8117.9

132.3140.2151.8167.0185.4

204.1221.1231.5235.1

215.1219.1223.3227.2

229.7231.5232.8232.5

235.6235.2237.4238.6

74.1

74.574.374.474.775.3

76.177.980.383.387.0

91.696.3

100.0104.0116.5

132.9139.9148.5160.9177.2

195.9213.7225.7230.3

207.2211.9215.7219.8

222.4225.2227.2228.6

229.9230.1230.9231.6

74.9

74.974.773.972.672.6

73.575.377.581.087.8

90.694.9

100.0109.2120.5

131.2140.8158.0178.4200.8

219.5235.0242.4244.3

230.0232.9237.5241.2

243.4243.4243.3240.0

246.5244.9249.7252.0

73.4

75.076.076.076.377.1

79.481.883.385.588.5

93.197.0

100.0112.6137.4

151.8156.9164.0174.9197.2

218.4238.3244.1249.2

235.2237.6239.5241.3

243.7244.8244.2243.9

245.8247.4249.8253.6

75.0

76.075.273.774.776.3

77.178.879.380.783.0

88.493.3

100.0116.7161.5

175.1178.7195.0210.1244.5

304.4319.4309.4299.5

321.9324.3316.2315.7

315.6309.1306.7306.1

303.2298.2299.4299.0

56.9

58.359.561.362.864.4

66.269.272.476.481.3

87.994.0

100.0106.9117.9

129.2137.3147.0158.4173.2

193.8212.2226.4236.9

206.1210.1213.4219.3

222.2224.6227.5231.4

233.7235.2238.3240.6

58.5

59.660.561.763.365.3

67.169.671.575.779.8

86.792.9

100.0106.7117.0

128.0135.4145.0155.4169.5

192.7215.0230.6238.1

208.0212.4215.0224.5

227.1228.8230.8235.6

237.0236.2238.7240.3

100.0106.9117.5

127.9135.6145.5156.5171.7

196.7220.1236.7244.0

212.3217.5220.0230.6

233.2234.9236.6241.9

242.9241.8244.7246.4

100.0106.1115.6

128.3135.0143.6152.6164.0

182.6201.7215.0222.9

196.9199.4202.2208.7

211.6213.0215.8219.7

221.7221.9223.3224.6

55.8

57.458.961.062.563.9

65.668.873.176.982.3

88.794.8

100.0107.0118.4

130.0138.5148.4160.4175.7

194.5210.4223.6236.2

204.9208.5212.4215.8

218.9221.9225.3228.6

231.5234.5238.0240.9

1.51.11.21.11.2

1.72.93.04.15.0

5.24.84.06.09.4

9.15.86.37.89.5

9.89.56.44.3

10.27.98.9

5.34.75.94.7

3.44.34.74.5

1 Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports ofgoods and services.

2 Quarterly changes are at annual rates.



TABLE B-5.—Changes in gross national product, personal consumption expenditures, and related price

measures, 1929-83

[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]

Year or quarter

Gross national product

Currentdollars

Con-stant

(1972)dollars

Implicitprice

deflator

Chainpriceindex

Fixed-weight-ed price

index(1972

weights)

Personal consumption expenditures

Currentdollars

Con-stant

(1972)dollars

Implicitprice

deflator

Chainpriceindex

Fixed-weight-ed price

index(1972

weights)

19291933193919401941194219431944194519461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983 P

1981:IIIIllIV

1982:IIIIllIV

1983:IIIIllIV P

6.6- 4 . 2

7.0

10.025.026.721.3

9.6.9

- 1 . 211.111.3- . 510.915.55.25.4

.09.05.45.31.38.53.83.67.75.66.98.49.45.89.28.15.28.6

10.111.8

8.18.0

10.911.712.811.7

8.812.24.07.7

20.56.6

13.33.7

- 1 . 46.62.72.5

8.213.311.58.6

6.6- 2 . 2

7.8

7.616.315.315.17.1

- 1 . 5-14 .7

- 1 . 74.1

.58.78.33.73.8

- 1 . 26.72.11.8

- . 46.02.22.65.84.05.36.06.02.74.62.8

- . 23.45.75.8

- . 6

- 1 . 25.45.55.02.8

- . 32.6

- 1 . 93.3

9.0.7

3.6- 4 . 9

- 5 . 51.0

- 1 . 0- 1 . 3

2.69.77.64.5

0.0- 2 . 1

- . 82.27.59.95.32.42.4

15.712.96.9

- . 92.16.61.41.61.22.23.23.41.72.41.6

.91.81.51.52.23.23.04.45.15.45.04.25.88.89.35.25.87.48.69.29.46.04.2

10.65.99.49.0

4.35.63.73.8

5.53.33.63.9

1.61.21.41.31.41.93.13.04.35.05.34.94.16.09.19.25.76.17.68.98.99.46.54.4

9.67.69.08.2

5.65.25.95.0

3.64.34.54.6

1.51.11.21.11.21.72.93.04.15.05.24.84.06.09.49.15.86.37.89.59.89.56.44.3

10.27.98.98.4

5.34.75.94.7

3.44.34.74.5

- 5 . 74.66.0

13.89.7

12.28.8

10.520.312.5

8.01.97.87.94.85.82.77.64.95.43.27.44.53.16.05.56.97.58.15.49.58.46.98.19.6

10.29.49.9

11.011.111.811.910.711.37.38.4

14.77.5

11.43.9

7.57.27.57.8

5.215.1

6.59.9

- 2 . 05.3

4.65.9

- 1 . 02.92.86.2

11.11.62.12.35.61.32.53.81.86.52.92.11.05.42.62.14.53.85.55.65.12.95.33.72.23.75.84.2

2.25.65.04.52.7

.52.71.44.2

5.9.5

3.5- 3 . 0

2.43.1

.93.6

2.910.0

2.26.5

- 3 . 8- J1.37.4

10.89.05.84.18.3

10.75.8

- . 32.06.52.31.9

.91.01.93.32.21.91.91.01.51.61.41.82.92.44.04.54.64.33.75.7

10.17.65.15.87.09.0

10.28.45.84.0

8.37.07.77.0

5.04.06.54.1

2.24.64.23.1

1.71.11.11.41.21.52.72.53.84.54.64.33.66.1

10.47.75.36.07.39.3

10.79.05.94.2

9.97.37.87.0

5.23.96.45.1

2.34.74.24.5

Note.—Changes are based on unrounded data and may differ slightly from changes computed from data shown elsewhere in thesetables.



TABLE B-6.—Gross national product by major type of product, 1929-83

[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year orquarter


Finalsales

Inven-tory

change

Goods

Total

Total Finalsales

Inven-tory

change

Durable goods Nondurable goods

Finalsales

Inven-tory

changeFinalsales

Inven-tory

change

Services Struc-tures

1929..1933..1939..

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970...1971....1972....1973..197419751976.1977.1978.,1979

198119821983 p.

1981:

nZIlliv

1982:

li'.'.ZZIII

IV

1983:

IIZZ"IIIIV P.

103.455.890.9

100.0125.0158.5192.1210.6212.4209.8233.1259.5258.3

286.5330.8348.0366.8366.8400.0421.7444.0449.7487.9

506.5524.6565.0596.7637.7691.1756.0799.6873.4944.0

992.71,077.61,185.91,326.41,434.21,549.21,718.01,918.32,163.92,417.8

2,631.72,954.13,073.03,309.5

2,866.62,912.53,004.93,032.2

3,021.43,070.23,090.73,109.6

3,171.53,272.03,362.23,432.0

101.757.490.5

97.8120.6156.7192.8211.6213.5203.5233.5254.8261.4

279.7320.5344.8366.3368.4394.1417.0442.6451.2482.2

503.6522.2558.8590.7632.1681.2741.9789.3865.5934.2

989.51,070.01,175.71,307.91,420.11,556.11,706.21,895.32,137.42,403.5

2,641.52,935.63,097.53,316.4

2,855.72,897.52,971.43,017.9

3,047.13,081.43,095.63,165.9

3,210.93,286.63,353.73,414.3

1.7-1 .6

2.24.51.8

- . 6-1 .0-1 .0

6.4

~47- 3 . 1

6.810.33.1

- l ! 56.04.71.3

- 1 . 55.7

3.02.36.36.05.69.9

14.110.37.99.8

3.27.7

10.218.514.1

- 6 . 911.823.026.514.3

=9.818.5

-24.5=6.9

10.915.033.614.3

=25.7-11.2-4 .9

= 56.4

= 39.4-14.5

8.517.7

56.127.049.0

56.072.593.7

120.4132.3128.9125.3139.8154.4147.7

162.4189.5194.6203.1196.1214.5223.3232.3228.2248.5

254.2257.4278.5290.3309.8338.4375.0389.4421.3450.2

459.9485.3529.6604.1646.7694.0771.1855.0958.6

1,065.6

1,140.61,291.81,280.91,362.0

1,260.81,273.91,325.21,307.5

1,281.11,290.81,286.61,264.8

1,292.21,346.81,388.91,419.9

54.428.648.6

53.868.091.9

121.0133.3129.9118.9140.3149.7150.8

155.6179.2191.5202.7197.6208.5218.6231.0229.7242.9

251.3255.0272.2284.3304.2328.5360.9379.1413.4440.4

456.6477.7519.4585.6632.5700.9759.3832.0932.1

1,051.3

1,150.41,273.41,305.41,368.9

1,249.91,258.81,291.61,293.2

1,306.81,302.01,291.51,321.2

1,331.61,361.31,380.41,402.2

1.7- 1 . 6

.4

2.24.51.8

- . 6= 1.0= 1.0

6.4

1 J- 3 . 1

6.810.3.3.1

-is6.04.71.3

= 1.55.7

3.02.36.36.05.69.9

14.110.37.99.8

3.27.7

10.218.514.1

-6 .911.823.026.514.3

=9.818.5

-24.5- 6 . 9

10.915.033.614.3

-25.7-11.2-4 .9

-56.4

-39.4-14.5

8.517.7

16.15.4

12.4

15.423.834.554.258.550.131.844.448.050.0

56.266.472.577.873.981.485.991.384.490.8

93.392.7

102.9109.4118.9131.6147.0153.5167.9178.5

179.2187.1207.4237.6250.7279.4312.5354.9402.1454.3

482.0524.3516.3549.0

520.4525.6535.7515.6

517.2516.8512.0519.0

520.9545.7555.9573.5

1.4

"'.3

1.23.11.0.0

- . 6- 1 . 3

5.31.41.0

- 1 . 8

3.66.11.21.5

- 2 . 53.42.1

.5=2.8

3.1

1.6

l ! 42.74.06.7

10.25.54.76.4

~2l87.2

13.112.0

=8.47.7

10.419.110.5

- 4 . 13.6

= 15.5-4 .2

= 1.48.1

14.0- 6 . 3

-20.8=2.5

6.4=45.0

-38.2=8.913.117.4

38.323.236.2

38.444.257.466.874.879.887.195.9

101.7100.9

99.4112.8119.0124.9123.7127.1132.7139.6145.3152.1

158.0162.4169.3174.9185.3196.9213.9225.6245.5261.9

277.5290.6312.0348.0381.8421.5446.7477.2530.1597.0

668.4749.1789.1819.9

729.6733.2755.9777.6

789.6785.2779.5802.2

810.6815.7824.5828.7

0.3- 1 . 1

.1

1.01.4.7

- . 6

~\l1.1

-1 .937

- 1 . 3

3.24.22.0

- 1 . 11.02.62.6

.81.32.5

1.32.42.83.31.63.23.94.93.13.4

3.34.83.05.32.21.54.2

12.67.33.8

-5 .714.8

=9.1=2.8

12.36.9

19.620.6

=4.9- 8 7

-11.3= 11.4

= 1.2- 5 7=4.5

35.925.934.4

35.740.850.863.072.377.068.871.677.282.2

88.5103.5113.9121.6126.2136.1146.2158.7167.7179.8

193.8207.0222.0237.1255.0273.3299.0326.5358.2391.9

429.9472.0519.0571.5636.1705.2779.3867.2972.2

1,089.7

1,225.21,374.21,511.11,637.8

1,319.21,34971,392.51,435.5

1,460.61,496.41,527.21,560.5

1,588.41,623.41,651.01,688.5

11.42.97.5

8.311.814.08.76.16.5

15721728.028.4

35.637.839.442.044.549.552.253.053.859.5

58.560.264.569.372.979.382.083.694.0

101.8

102.9120.3137.3150.8151.4150.0167.6196.1233.1262.5

265.9288.0281.0309.7

286.5288.9287.3289.2

2797283.0276.9284.3

290.9301.9322.3323.6



TABLE B-7.—Gross national product by major type of product in 1972 dollars, 1929-83

[Billions of 1972 dollars; quarterly data at seasonally adjusted annual rates]

Year orquarter


Finalsales

Inven-tory

change

Goods

Total

Total Finalsates

Inven-tory

change

Durable goods Nondurable goods

Finalsates

Inven-tory

changeFinalsales

Inven-tory

change

Services Struc-tures

Autooutput

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963..196419651966196719681969

197019711972197319741975197619771978 ,1979

1980198119821983 *

1981:IIIIllIV

1982: .tHtil[V

1983:tIIIllIV p.

315.7222.1319.8

344.1400.4461.7531.6569.1560.4478.3470.3489.8492.2

534.8579.4600.8623.6616.1657.5671.6683.8680.9721.7

737.2756.6800.3832.5876.4929.3984.8

1,011.41,058.11,087.6

1,085.61,122.41,185.91,254.31,246.31,231.61,298.21,369.71,438.61,479.4

1,475.01,513.81,485.41,534.8

1,510.11,512.51,525.81,506.9

1,485.81,489.31,485.71,480.7

1,490.11,525.11,553.41,570.5

311.0227.0318.2

337.9388.4456.5531.5571.4564.0466.1470.6484.3496.6

524.2565.6596.5622.1618.2649.8665.8682.2682.7714.7

733.7753.7792.4825.0869.3917.5968.0999.2

1,049.11,076.6

1,081.81,114.31,175.71,237.11,234.71,238.41,290.41,356.41,422.61,472.2

1,479.41,505.31,494.81,537.2

1,507.01,503.61,509.71,500.9

1,495.91,492.71,487.01,503.4

1,505.51,530.51,549.71,563.0

4.6- 4 . 9

1.6

6.212.05.2

- 2 . 3- 3 . 612.2- . 25.5

- 4 . 4

10.613.74.31.5

-2 .27.75.81.5

- 1 . 87.0

3.53.07.87.57.1

11.816.812.29.0

11.1

3.88.1

10.217.211.6

- 6 . 77.8

13.316.07.3

-4 .48.5

- 9 . 4-2 .4

3.08.9

16.16.0

-10.2- 3 . 4- 1 . 3

-22.7

-15.4-5 .4

3.87.5

144.397.5

154.3

171.7198.6221.4263.3287.3278.5238.3237.7244.8240.3

261.5283.7292.1306.8292.7316.7320.9321.7311.6332.5

335.8338.0361.3372.2393.8422.6456.4463.4483.1496.0

486.9497.2529.6572.3562.5547.4587.2628.1662.0677.7

668.1692.6661.6687.0

691.2692.3703.2683.7

668.1664.6661.6652.1

656.9681.8699.0710.4

139.7102.3152.7

165.5186.6216.2263.3289.6282.2226.2237.9239.4244.7

250.9270.0287.8305.3294.9309.0315.1320.2313.4325.5

332.3335.0353.5364.7386.7410.8439.6451.2474.1484.9

483.2489.1519.4555.1550.9554.2579.4614.8645.9670.4

672.5684.1671.0689.4

688.2683.4687.1677.7

678.3668.1663.0674.8

672.3687.2695.3702.9

4.6- 4 . 9

1.6

6.212.05.2

.1- 2 . 3- 3 . 612.2- . 25.5

- 4 . 4

10.613.74.31.5

-2 .27.75.81.5

- 1 . 87.0

3.53.07.87.57.1

11.816.812.29.0

11.1

3.88.1

10.217.211.6

- 6 . 77.8

13.316.07.3

- 4 . 48.5

- 9 . 4- 2 . 4

3.08.9

16.16.0

-10.2-3 .4- 1 . 3

-22.7

-15.4-5 .4

3.87.5

40.417.535.5

43.157.875.7

118.8135.9121.260.375.577.378.3

86.198.2

107.9116.2109.0117.2117.8119.4109.2113.6

115.6114.7125.7132.5143.0157.2174.0178.3187.4193.0

187.5188.7207.4236.1234.1230.2242.7264.7285.4299.1

290.4292.5276.1291.2

298:9294.8295.1281.2

280.9276.5271.6275.3

277.0291.1294.1302.4

3.5- 2 . 1

.7

3.48.23.5

.7- 1 . 8- 3 . 710.81.41.6

- 2 . 9

5.59.01.72.3

- 3 . 74.52.9

.9- 3 . 4

3.9

2.0- . 14.23.45.18.2

12.36.65.47.2

.03.07.2

12.79.4

- 6 . 45.46.9

11.86.2

- 1 . 91.6

- 6 . 5- 1 . 5

- 1 . 54.45.8

- 2 . 4

- 9 . 1- 1 . 1

3.2-18.9

-15.7- 3 . 7

5.87.7

99.384.9

117.2

122.4128.7140.5144.4153.7161.0165.8162.4162.1166.4

164.8171.8179.9189.1185.9191.9197.2200.8204.3211.9

216.6220.3227.8232.2243.7253.6265.6272.9286.7291.9

295.7300.4312.0319.0316.8324.0336.7350.1360.5371.3

382.1391.7394.9398.3

389.4388.7392.0396.5

397.4391.6391.3399.4

395.2396.1401.2400.5

1.1- 2 . 8

.9

2.83.81.7

- . 6

1.3- 1 . 6

3.8- 1 . 5

5.14.72.6

- . 81.53.22.9

.61.63.1

1.63.03.74.21.93.64.55.63.63.9

3.75.13.04.52.2

= .32.46.34.31.1

- 2 . 56.9

- 2 . 9- . 9

4.54.5

10.38.4

- 1 . 0- 2 . 3- 4 . 6- 3 . 8

.3- 1 . 7- 2 . 0

- . 2

127.4110.7135.2

139.9158.5193.9242.0263.7263.0200.8188.1192.5198.3

207.4231.3243.2247.5249.1260.1270.2282.4287.6299.4

312.5326.9341.5356.2374.0390.7412.6434.1453.0469.2

482.4497.8519.0542.8562.8575.9595.0617.3644.7670.7

687.7702.7712.2725.2

696.9700.0705.4708.5

707.1712.8713.9715.0

717.8723.0727.0732.9

43.914.030.3

32.543.346.326.218.118.839.144.652.453.6

65.964.365.569.374.380.780.579.781.789.8

89.091.797.4

104.1108.6116.0115.9113.9122.0122.5

116.3127.3137.3139.1121.0108.3116.0124.4131.9131.0

119.1118.5111.6122.6

121.9120.3117.2114.7

110.6111.9110.2113.6

115.4120.3127.3127.1

12.313.918.0

23.019.317.122.621.629.823.024.518.623.2

25.321.226.028.729.435.734.831.838.537.4

29.838.941.646.437.135.745.350.750.347.0

39.442.638.549.9

44.045.943.437.2

33.140.542.038.3

44.946.053.155.6



TABLE B-8.—Gross national product by sector, 1929-83



nationalproduct

Gross domestic product

Total

Business1

Total * Nonfarm l Farm

Statis-tical

discrep-ancy

House-holdsand

insti-tutions

Government2

Total FederalStateandlocal

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983 '

1981:IIIIllIV

1982:IIIIllIV

1983:IIIIllIV *

103.455.890.9

100.0125.0158.5192.1210.6212.4209.8233.1259.5258.3

286.5330.8348.0366.8366.8400.0421.7444.0449.7487.9

506.5524.6565.0596.7637.7691.1756.0799.6873.4944.0

992.71,077.61,185.91,326.41,434.21,549.21,718.01,918.32,163.92,417.8

2,631.72,954.13,073.03,309.5

2,866.62,912.53,004.93,032.2

3,021.43,070.23,090.73,109.6

3,171.53,272.03,362.23,432.0

102.655.590.5

99.6124.5157.9191.6210.1212.0209.0231.8257.9256.9

284.8328.7345.7364.6364.5397.3418.5440.5446,6484.6

502.9520.7560.5591.8632.3685.2750.3793.7866.7937.1

985.41,068.51,175.01,310.41,414.41,531.91,697.51,894.92,134.32,375.2

2,586.42,904.53,025.73,263.4

2,819.02,865.92,955.22,977.9

2,974.53,020.63,044.23,063.5

3,127.23,227.93,314.13,384.0

95.449.180.6

112.6139.9162.8174.2172.8183.8210.0234.9231.5

257.5294.4307.3324.9323.9354.0372.1390.8393.1428.3

442.0455.7490.6517.2551.6598.4652.6685.1745.4803.2

837.3907.1998.6

1,118.71,206.41,301.71,447.31,624.01,837.22,052.1

2,228.12,509.02,594.62,802.0

2,434.82,475.52,558.42,567.2

2,555.22,593.82,610.12,619.1

2,675.52,769.82,849.82,912.7

84.743.872.9

81.8103.1127.7149.3156.2152.7164.4188.2213.1212.2

236.3268.3283.4302.3302.3333.9355.7373.7372.2410.6

424.2435.7468.1495.0532.2577.7628.4663.3725.0782.1

813.1875.4963.4

1,068.01,155.01,247.31,396.31,574.21,781.01,982.1

2,158.22,432.82,520.02,730.9

2,354.42,399.82,483.92,493.1

2,482.42,521.82,536.62,539.1

2,601.82,700.52,779.02,842.4

9.74.66.3

6.48.9

13.015.315.316.018.820.223.318.8

20.022.922.220.319.718.818.618.420.719.0

20.220.220.420.519.321.922.822.122.625.1

25.827.631.949.947.748.945.948.458.771.6

67.781.174.171.0

75.479.886.682.5

79.570.370.975.8

74.972.768.367.9

1.1.7

1.4

1.1.6

- . 8- 1 . 8

2.74.1

l!5- 1 . 6

.6

1.33.21.72.32.01.3

- 2 . 1-1 .2

.2- 1 . 3

- 2 . 4

~U1.7

-121.4

-1.1- 3 . 9

- 1 . 54.13.3

.83.75.55.11.4

-2 .6- 1 . 5

2.3- 4 . 9

.5

5.1- 4 . 2

-12.0- 8 . 5

-6 .71.72.54.2

-1 .2- 3 . 5

2.52.5

2.91.72.3

2.42.52.93.23.74.14.55.15.65.9

6.46.97.27.88.19.19.8

10.511.412.3

13.814.415.516.617.819.221.123.426.129.4

32.335.438.642.145.850.655.660.567.875.6

85.396.2

107.0114.9

92.794.997.2

100.2

103.3105.6108.5110.8

112.2114.1115.6117.7

4.34.77.6

7.89.4

15.125.632.235.220.816.717.419.4

20.927.431.231.932.534.236.639.142.144.0

47.150.554.358.062.967.676.585.195.2

104.5

115.8126.0137.8149.6162.2179.6194.6210.3229.3247.4

273.0299.3324.1346.5

291.5295.5299.6310.5

316.0321.2325.7333.7

339.5344.1348.8353.6

0.91.23.4

3.55.0

10.620.927.229.814.69.48.9

10.0

10.716.218.918.617.818.419.019.620.520.9

21.722.624.125.227.028.332.435.639.341.9

44.846.850.151.954.959.062.466.371.775.7

82.992.8

101.1106.1

90.290.891.598.5

99.5100.1100.7104.2

105.6106.0106.2106.6

3.53.54.2

4.34.44.54.74.95.46.27.38.59.4

10.111.212.313.314.715.817.619.621.623.1

25.527.930.232.935.939.344.149.555.962.6

71.179.387.797.7

107.3120.6132.3144.0157.6171.8

190.0206.5223.0240.4

201.32047208.1212.0

216.5221.1225.0229.5

233.8238.1242.6246.9

1 Includes compensation of employees in government enterprises.2 Compensation of government employees.3 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here.



TABLE B-9.—Gross national product by sector in 1972 dollars, 1929-83



nationalproduct

315.7222.1319.8

344.1400.4461.7531.6569.1560.4478.3470.3489.8492.2

534.8579.4600.8623.6616.1657.5671.6683.8680.9721.7

737.2756.6800.3832.5876.4929.3984.8

1,011.41,058.11,087.6

1,085.61,122.41,185.91,254.31,246.31,231.61,298.21,369.71,438.61,479.4

1,475.01,513.81,485.41,534.8

1,510.11,512.51,525.81,506.9

1,485.81,489.31,485.71,480.7

1,490.11,525.11,553.41,570.5

Total

313.2220.9318.2

342.8398.7460.1530.3567.7559.3476.4467.8486.8489.4

531.8575.6596.9619.8612.1653.0666.5678.3676.2716.8

732.0751.0793.8825.6868.9921.4977.5

1,003.91,050.01,079.7

1,077.61,112.81,175.01,239.21,229.01,217.81,282.61,352.81,418.71,453.2

1,449.31,488.21,462.31,513.3

1,484.81,488.01,500.31,479.6

1,462.51,465.01,463.11,458.6

1,469.21,504.41,531.11,548.5

<iross domestic product

Business *

Total*

271.5180.0261.0

282.7327.6361.8385.6403.6397.9385.5393.8412.0409.8

448.7478.0492.8515.6508.5547.0557.4566.1561.7600.0

610.1625.1663.2691.6730.3777.7824.0842.0882.1907.1

904.8938.6998.6

1,060.71,047.41,032.41,095.41,163.71,224.31,255.6

1,248.21,285.81,259.61,309.8

1,282.31,285.71,298.11,277.2

1,259.91,262.11,260.41,255.9

1,266.11,301.21,327.51,344.4

Nonfarm1

244.7152.5231.3

254.6299.8335.3362.1370.1362.8358.6367.0389.0383.4

419.4447.2463.7484.3477.0516.0531.5539.5532.0574.0

584.2596.3631.5659.7701.3749.6794.1812.8855.6881.9

875.4901.7963.4

1,028.41,0124

994.51,059.51,129.51,193,51,222.4

1,211.91,247.71,220.41,273.2

1,243.91,247.71,261.21,237.9

1,220.81,224.01,223.41,213.2

1,227.51,265.11,290.91,309.3

Farm

23.624.925.2

24.526.228.627.727.125.625.824.025.825.6

27.025.826.427.728.429.328.928.229.327.8

29.228.928.829.628.829.828.229.529.029.5

31.132.631.931.631.833.632.133.132.634.2

35.040.639.036.6

35.840.143.143.5

42.437.335.740.6

39.237.735.533.9

Statistspalcat

discrep-ancy

3.12.64.6

3.61.6

- 2 . 1- 4 . 2

6.49.41.12.9

- 2 . 8.8

2.45.02.63.63.11.8

- 3 . 0- 1 . 7

.3- 1 . 9

- 3 . 3- .22.92.3.2

- 1 . 61.7

- . 3- 2 . 5- 4 . 4

- 1 . 74.23.3.7

3.24.43.81.0

- 1 . 8- 1 . 0

1.3- 2 . 5

.2

.0

2.7- 2 . 2- 6 . 1- 4 . 2

- 3 . 3.8

1.22.0

- .6- 1 . 6

1.11.1

House-holdsandinsti-

tutions

15.612.215.1

16.115.916.415.215.115.015.116.016.717.3

18.318.718.619.319.421.422.523.124.224.7

26.627.028.128.929.830.932.634.335.437.0

36.737.638.639.439.340.540.941.543.344.6

45.546.446.747.5

46.446.446.346.6

46.646.646.846.9

47.147.347.648.0

Government2

Total

26.228.842.1

44.055.281.9

129.4149.1146.475.958.058.162.3

64.779.085.585.084.184.686.789.190.392.2

95.398.9

102.5105.2108.8112.7120.8127.7132.4135.7

136.1136.7137.8139.1142.3144.9146.3147.7151.2153.0

155.6156.0156.1156.0

156.1156.0155.9155.9

156.1156.3156.0155.8

155.9156.0156.0156.1

Federal

5.26.6

16.9

18.629.656.7

105.0125.2121.849.729.829.231.3

32.746.251.649.647.245.945.645.844.544.5

45.246.248.348.248.548.753.057.258.058.2

55.252.550.148.248.548.448.548.649.349.0

49.650.050.550.8

49.849.950.150.1

50.250.350.550.7

50.850.850.850.8

Stateandlocal

21.022.125.2

25.425.625.224.523.924.626.228.229.031.0

32.032.833.935.436.938.641.043.345.847.7

50.152.754.357.060.464.067.970.574.477.4

80.984.287.790.893.896.597.899.1

101.9104.1

106.0106.0105.6105.2

106.3106.1105.7105.8

105.9106.0105.4105.1

105.1105.1105.2105.2

Restof theworld

1929193319391940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983 *>

1981:IIIIllIV

1982:IIIIllIV

1983:IIIIllIV

1 Includes compensation of employees in government enterprises.2 Compensation of government employees.3 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here.Source: Department of Commerce, Bureau of Economic Analysis.


TABLE B-10.—Gross national product by industry, 1947-82


Year

194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

198019811982

Grossnation-atprod-uct

233.1259.5258.3

286.5330.8348.0366.8366.8

400.0421.7444.0449.7487.9

506.5524.6565.0596.7637.7

691.1756.0799.6873.4944.0

992.71,077.61,185.91,326.41,434.2

1,549.21,718.01,918.32,163.92,417.8

2,631.72,954.13,073.0


Agricul-ture,forestry,

andfisheries

20.824.019.5

20.823.823.121.320.7

19.919.719.521.920.2

21.421.521.922.021.0

23.824.824.225.027.8

28.630.835.453.852.2

53.351.254.666.079.6

76.890.684.3

Mining

6.89.48.1

9.310.210.110.610.9

12.413.413.512.412.3

12.612.712.813.113.4

13.514.214.615.316.1

17.617.419.021.732.2

38.843.047.452.066.8

96.0126.5116.1

Pnncon-

struction

9.111.511.5

13.015.416.617.117.2

18.520.621.421.022.8

23.224.025.727.429.8

32.835.937.541.346.3

48.953.659.466.369.2

69.976.686.6

102.1115.7

119.8124.6122.4

Manufacturing

Total

66.274.772.1

83.798.7

103.0112.1106.4

120.9126.8131.4123.8141.3

143.8144.4157.9167.4179.4

197.7216.6222.3242.8256.7

252.2265.6292.5326.1340.7

358.2410.4464.8518.7563.2

581.5644.4630.9

Dura-ble

goods

33.538.137.1

45.855.458.965.960.8

70.673.777.769.781.2

82.181.391.597.6

105.3

118.0130.4133.6146.0154.5

146.2153.9173.2195.9201.3

207.6240.0277.7316.7344.3

350.4389.8367.8

Non-durablegoods

32.736.535.0

37.943.344.146.245.6

50.353.253.754.160.0

61.763.166.469.874.2

79.786.388.796.8

102.2

105.9111.7119.3130.2139.4

150.6170.4187.1202.0218.9

231.1254.6263.1

Trancirans-portationand

publicutilities

20.523.123.4

25.729.231.032.932.6

35.638.340.240.443.7

45.847.450.253.056.3

60.565.368.674.080.0

85.793.8

104.3114.3122.9

135.7152.6170.9193.3209.6

231.9262.4279.7

Ufhnlownoie-sale

andretailtrade

44.248.448.0

51.356.458.559.860.8

66.270.473.975.281.9

84.286.392.196.1

104.7

112.6121.5130.1144.4157.0

166.5181.4199.5221.5241.5

266.2291.4322.3362.3401.4

428.8474.2490.2

Fi-nance,insur-ance,andreal

estate

23.226.228.6

31.935.238.742.846.5

50.053.557.662.467.3

71.675.480.685.391.0

98.0105.9114.2123.8133.6

142.4156.4169.8184.9202.0

216.2238.6275.5317.4358.3

398.7461.6507.1

Services

20.221.922.6

24.025.927.529.430.5

34.037.340.242.346.3

49.252.356.160.065.3

70.878.486.194.2

105.3

114.4123.6136.5153.1167.5

186.2208.2234.3265.9302.4

342.6387.6431.1

Govern-mentmeniand

govern-mententer-prises

19.320.222.5

23.830.835.336.436.9

38.540.744.047.150.0

53.456.761.165.971.2

76.786.496.3

108.1118.2

130.514L8155.4167.8182.7

202.0220.4237.2259.1279.6

308.1337.5363.4

QtatictidlallSII-

nn\Cdl

discrep-ancy

1.5- 1 . 6

.6

1.33.21.72.32.0

1.3-2 .1- 1 . 2

.2- 1 . 3

- 2 . 4— 12X1.7.1

- 1 . 21.4

— 3-i\- 3 . 9

- 1 . 54.13.3.8

3.7

5.55.11.4

- 2 . 6- 1 . 5

2.3- 4 . 9

.5

Baefnesiof the

world

1.21.61,4

1.62.12.32.22.3

2.83.23.53.03.3

3.63.94.64.95.5

5.95.65.96.76.9

7.39.2

10.916.019.8

17.320.523.529.642.6

45.349.647.3

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


TABLE B-ll.—Gross national product by industry in 1972 dollars, 1947-82

[Billions of 1972 dollars]

Year

194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

198019811982


470.3489.8492.2

534.8579.4600.8623.6616.1

657.5671.6683.8680.9721.7

737.2756.6800 3832.5876.4

929.3984.8

101141,058.11,087.6

1,085.61,122.41,185.91,254.31,246.3

1,231.61,298.21,369.71,438.61,479.4

1,475.01,513.81,485.4


Agri-culture,forest-ry, andfisher-

ies

26.328.228.0

29.328 429.230.5313

32.131.731132.230.6

32131.831732.531.8

32.831.332 632132.7

34.435 935.435 335.8

37.135.836.937.038.9

39.945.644.2

Min-ing

10.811.39.9

11.112111.912.211.8

13.213.913 812.713.3

13 513.613 914.515.1

15.716.517 017 618.2

18.918 419.019 219.2

18.919.119.520.120.8

21.622.521.6

Con-struc-tion

22.926.526.5

29.332.533.834.836.0

38.240.940.942.145.5

46146.748449.952.2

54.454.653 456.955.8

53.457 959.460153.3

48.352.855.058.858.2

52.250.547.7

Manufacturing

Total

114.9121.4115.1

131.1146.0150.8161.1149.6

165.7166.9167.7153.3171.2

1718172.0186 7202.2216.7

236.7254.9254 3268.2277.2

261.2266.8292.53253311.7

289.6317.4339.2357.2367.0

351.0361.1336.1

Dura-ble

goods

68.572.066.3

78.189.994.3

102.691.7

103.4102.5102.988.8

100.9

101.099.5

110.0119.5129.8

144.6157.3157.4165.5170.3

155.2156.4173.2194 2186.3

168.8187.2202.9217.4223.4

210.2217.2197.4

Non-durablegoods

46.449.448.8

53.056.156.558.557.9

62.364.464.864.570.3

70 872.576 782.886.8

92.097.696 9

102.7106.8

106.01104119.31311125.3

120.8130.1136.3139.8143.6

140.8144.0138.7

Trans-por-

tationand

publicutil-ities

42.342.139.2

41.245,545.546.645.8

49.752.153.251.955.4

57 558.661565.068.1

73.479.481688.292.6

94.997.9

104.3110 6111.9

113.5118.6125.1134.2140.0

139.6142.9138.9

Whole-saleand

retailtrade

75.978.079.8

87.588.391.093.994.5

103.1106.2107.9107.8115.4

117.5118.7126.3131.1139.1

148.2156.3160.1169.9173.6

176.4185.5199.5211.1207.0

209.7220.2231.0244.6250.7

246.0251.8248.0

Fi-nance,insur-ance,andreal

estate

54.756.659.8

63.966.770.973.977.3

81.885.889 893.498.5

102 7107.3113 3116.8122.1

128.5133.9139 4145.7152.9

155.8162.6169.8177.2184.5

187.9194.8207.2217.8229.4

235.6245.4251.0

Serv-ices

55.957.557.6

59.760.861.662.762.9

67.670.974.176.280.8

83 586.690 394.098.8

103.1109.0115.0118.8124.0

126.7128.4136.5144.8147.9

148.5154.7164.3174.2183.0

189.1198.7203.5

Govern-mentand


68.769.273.3

75.690.096.996.395.2

95.797.8

100.4101.7104.0

107.7111.6115.5118.7123.1

127.8136.9144.1148.9152.5

152.9153.9155.4157.2161.2

164.3165.7167.5171.7174.3

177.5177.9177.6

Sta-tis-ticaldis-

crep-ancy

2.9- 2 . 8

.8

2.45.02.63.63.1

1.8-3 .0-1 .7

.3-1 .9

-3 .3

2.92.3

.2

-1 .61.7

- . 3- 2 . 5-4 .4

- 1 . 74.23.3

3.2

4.43.81.0

- 1 . 8- 1 . 0

1.3-2 .5

.2

Resid-ual1

-7 .4-1 .2

- . 6

.8

.22.64.14.6

4.23.4

94.54.0

314.432

-1 .51.7

2.33.06.76.24.6

4.71.2.0

- 2 . 5- 6 . 5

-4 .2- . 26.04.9

- 8 . 1

-4 .6- 5 . 8

65

Restof theworld

2.53.02.7

3.03.73.93.740

4.55.15.54.64.9

525.7656.97.5

7.9747S8?7.9

8.0

10.915117.3

13.815.616.919.926.3

25.725.623.1

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

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


T A B L E B-12.—Gross domestic product of nonfinancial corporate business, 1929-83


Year orquarter

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

19601961....19621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983 »

1981:

IllIV

1982:IIIIllIV

1983:

\\ZZ1IIIIV »

Grossdomes-

ticproduct

ofnon-

financialcorpo-

ratebusiness

50.124.443.7

50.465.682.998.7

102.195.399.3

120.0137.3133.5

151.9174.5182.3195.0191.9216.7231.6242.3236.3266.0

277.0285.0311.3331.8358.4393.6431.5454.1500.2544.1

563.7609.9678.0759.4818.9890.0

1,001.31,128.41,276.21,416.8

1,540.71,739.91,776.71,918.4

1,683.31,718.81,778.61,778.9

1764 91,780.21,786.81,775.0

1,817.61,892.41,957.8

Capitalconsump-

tionallow-anceswith

capitalconsump-

tionadjust-ment

5.54.34.84.95.46.16.26.36.57.69.3

10.911.7

12.614.615.816.817.919.121.823.824.825.8

26.827.528.429.430.832.735.638.942.647.1

52.257.362.667.979.594.9

104.8115.7130.9149.6

170.0192.2210.0218.2

183.0189.1195 3201.3

204 02084212.3215.1

215.3216.7219.6221.2

Total

44.520.239.0

45.460.276.892.495.888.891.8

110.7126.4121.8

139.3159.9166.6178.2174.0197.6209.8218.5211.6240.2

250.2257.5283.0302.3327.6360.9395.9415.2457.6497.0

511.4552.6615.5691.6739.4795.1896.5

1,012.71,145.31,267.3

1,370.71,547.71,566.81,700.2

1,500.21,529.71583 31^5777

1560 81,571.81,574.51,559.8

1,602.31,675.71,738.2

Indi-rectbusi-nesstax,

cTC.

3.43.85.15.56.46.87.38.18.9

10.111.212.112.6

14.115.216.818.217.419.220.822.422.825.4

28.330.133.035.638.441.142.945.851.558.0

63.470.576.783.789.797.1

105.3112.6122.0130.5

147.6176.5179.0196.9

172.1176.2178 6179*0

176 2177.7179.6182.4

186.4197.6201.1202.7

Met domestic product

Domestic income

Total

41.216.333.9

40.053.870.085.287.779.981.699.6

114.3109.2

125.2144.7149.7160.0156.6178.4189.0196.1188.8214.8

221.9227.3249.9266.8289.3319.8353.0369.5406.1439.1

448.1482.1538.7607.9649.7697.9791.2900.1

1,023.31,136,7

1,223.01,371.21,387.81,503.2

1,328.11,353.51404 61*3987

1 384 6U94.11,394.91,377.4

1,415.91,478.11,537.1

Compen-sation

ofemploy-

ees

32.316.728.2

31.239.851.062.265.161.967.279.187.885.3

94.7110.2118.3128.7126.5138.5151.4159.1155.9171.6

181.1185.1199.8210.7226.3246.1273.5291.9322.8358.5

378.4402.0447.0506.2556.5581.1654.4738.5844.3958.1

1,046.51,155.81,198.61,269.3

1,123.71,146.41173 2l] l79J

1187 71,199.71,205.61,201.2

1,222.41,253.91,283.71,317.4

Corporate profits with inventory vatuatior

TrttatlOldl

7.5- 2 . 1

4.27.4

12.717.721.821.617.113.819.725.622.9

29.633.430.230.028.638.335.934.930.240.1

37.438.345.651.257.767.772.268.873.367.5

52.762.172.778.663.686.1

107.3129.5142.1134.7

120.3150.2124.0174.5

148.1145.1158.8149^0

127 7126.5127.5114.3

133.9165.7194.5

Prnfitcrroiiisbefore

tax

8.4.6

6.18.8

16.420.123.622.217.822.029.131.824.9

38.539.133.834.932.142.041.839.833.743.1

39.739.544.248.955.465.270.366.372.969.4

56.865.476.696.0

105.3107.3135.0156.5178.4191.8

177.8183.0131.5151.9

195.3177.218711722

137 0136̂ 6134.4117.9

119.7149.0173.8

consumption adjustments

Prof-itstax

liabili-ty

1.2.5

1.42.77.5

11.213.812.610.28.6

10.811.89.3

16.921.217.818.515.620.220.119.116.220.7

19.219.520.622.824.027.229.527.733.433.1

27.029.833.640.042.041.252.659.666.969.2

67.065.541.255.1

71.763.067 5599

45 74X642.033.6

41.855.063.9

Profit >

Profits after tax

Total

7.3.1

4.76.19.08.99.89.67.6

13.418.320.015.6

21.617.916.016.416.421.821.820.717.522.4

20.520.123.526.231.438.040.838.639.536.2

29.835.643.056.063.366.182.396.8

111.5122.5

110.8117.590.396.7

123.6114.2119.61124

91493.092.484.4

77.994.0

109.8

Divi-Honrleoenas

5.12.03.33.53.93.73.94.14.14.85.56.06.07.57.17.17.37.48.59.09.39.3

10.0

10.610.611.412.613.715.616.817.519.119.1

18.518.520.121.121.425.730.131.937.739.8

43.753.557.264.9

50.252.255 256^3

55 255.758.559.2

63.365.665.165.7

Undis-tributedprofits

2.2= 1.9

1.42.65.05.25.85.63.58.6

12.814.09.6

14.110.88.89.19.0

13.412.7U.48.2

12.4

9.99.5

12.213.517.722.424.021.220.417.1

11.317.122.935.041.940.452.264.973.882.8

67.164.033.131.8

73.462.064 556*1

36 237^333.925.1

14.528.444.8

and capital

Inven-tory

valua-tion

adjust-ment

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- .3

- 1 . 7- 2 . 7- 1 . 5

— 3-3-2

.3

.0

.1- .5

- 1 . 2- 2 . 1- 1 . 6- 3 . 7- 5 . 9

- 6 . 6- 4 . 6-6 .6

-20.0-40.0= 11.6-14.7-16.2-24.0-43 .1

-42.9-23.6- 8 . 4- 9 . 8

-36.7-22.6— 19 4- 1 5 J

— 55-8!5-9 .0

-10.3

-1 .7-10.6-18.3-8 .5

Capitalconsump-

tioniion

adjust-ment

- 1 . 4=-.6

- 1 . 1

- 1 . 2- 1 . 3-1 .2- .9-.3- .2

- 3 . 0- 3 . 5- 4 . 0- 3 . 9

- 3 . 9-4 .6- 4 . 5-3 . 9-3 .2- 2 . 0- 3 . 2-3 .4-3 .2- 2 . 7

- 2 . 1- 1 . 5

1.42.32.93.73.94.0

- 4.04.02.41.32.72.6

- 1 . 8- 9 . 7

-13.0-10.8-12.3-13.9

- 1 4 . 7- 9 . 1

.832.5

-10 .5-9 .6- 8 8

76

—38- 1 . 6

2.16.7

15.927.339.047.7

Netinter-est

1.41.71.51.41.31.31.11.01.0.7.8.9

1.0.9

1.11.21.31.51.61.72.22.73.13.53.94.54.85.36.17.48.7

10.113.1

17.018.019.123.029.630.829.532.136.943.9

56.365.265.259.3

56.362.172 670*C

69 26L961.861.9

59.758.658.960.2

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


TABLE B-13.—Output, costs, and profits of nonfinancial corporate business, 1948-83

[Quarterly data at seasonally adjusted annual rates]

Year orquarter

Gross domesticproduct of

nonfinancialcorporate

business (billionsof dollars)

Currentdollars

1972dollars

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

Totalcostand

profi t2

Capitalconsump-

tionallow-anceswith

capitalconsump-

tionadjust-ment

Indi-rectbusi-nesstax,

etc.*

Compen-sation

ofemploy-

ees

Corporate profits withinventory valuation and

capital consumptionadjustments

TotalProfits

taxliability

Profitsaftertax4

Netinterest

Outputper hour

of allemploy-

ees(1972dollars)

Compen-sation

per hourof all

employ-ees

(dollars)

1948

1949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983 "...

1981:

I

IV

1982:

IIIIllIV

1983:

137.3133.5

151.9174.5182.3195.0191.9

216.7231.6242.3236.3266.0

277.0285.0311.3331.8358.4

393.6431.5454.1500.2544.1

563.7609.9678.0759.4818.9

890.01,001.31,128.41,276.21,416.8

1,540.71,739.91,776.71,918.4

1,683.31,718.81,778.61,778.9

1,764.91,780.21,786.81,775.0

1,817.61,892.41,957.8

229.7219.9

247.5270.2275.2292.0283.4

315.1324.1328.3313.4347.4

358.4367.2399.7426.3455.6

495.2530.7543.0578.9604.0

599.6626.8678.0731.9708.2

694.2745.5795.8846.3876.1

859.5887.5857.7893.9

883.7888.7898.6878.9

864.3860.5859.5846.4

856.0885.8909.4

0.598.607

.614

.646

.663

.668

.677

.688

.715

.738

.754

.766

.773

.776

.779

.778

.787

.795

.813

.836

.864

.901

.940

.9731.0001.0381.156

1.2821.3431.4181.5081.617

1.7931.9602.0722.146

1.9051.9341.9792.024

2.0422.0692.0792.097

2.1232.1362.153

0.047.053

.051

.054

.057

.058

.063

.061

.067

.073

.079

.074

.075

.075

.071

.069

.068

.066

.067

.072

.074

.078

.087

.091

.092

.093

.112

.137

.141

.145

.155

.171

.198

.217

.245

.244

.207

.213

.217

.229

.236

.242

.247

.254

.252

.245

.241

0.053.057

.057

.056

.061

.062

.061

.061

.064

.068

.073

.073

.079

.082

.083

.083

.084

.083

.081

.084

.089

.096

.106

.113

.113

.114

.127

.140

.141

.141

.144

.149

.172

.199

.209

.220

.195

.198

.199

.204

.204

.207

.209

.215

.218

.223

.221

0.382.388

.383

.408

.430

.441

.446

.439

.467

.484

.497

.494

.505

.504

.500

.494

.497

.497

.515

.538

.558

.594

.631

.641

.659

.692

.786

.837

.878

.928

.9981.094

1.2181.3021.3971.420

1.2721.2901.3061.342

1.3741.3941.4031.419

1.4281.4161.412

0.112.104

.120

.124

.110

.103

.101

.122

.111

.106

.097

.116

.104

.104

.114

.120

.127

.137

.136

.127

.127

.112

.088

.099

.107

.107

.090

.124

.144

.163

.168

.154

.140

.169

.145

.195

.168

.163

.177169

.148

.147

.148

.135

.156

.187

.214

0.051.042

.068

.079

.065

.063

.055

.064

.062

.058

.052

.060

.054

.053

.052

.053

.053

.055

.056

.051

.058

.055

.045

.047

.049

.055

.059

.059

.071

.075

.079

.079

.078

.074

.048

.062

.081

.071

.075

.068

.053

.051

.049

.040

.049

.062

.070

0.060.062

.051

.045

.045

.040

.046

.057

.049

.048

.045

.056

.051

.051

.062

.067

.074

.082

.080

.076

.069

.057

.043

.052

.058

.053

.030

.065

.073

.088

.089

.075

.062

.095

.097

.134

.086

.092

.102

.101

.095

.096

.099

.095

.108

.125

.144

0.004.004

.004

.004

.004

.004

.005

.005

.005

.007

.009

.009

.010

.011

.011

.011

.012

.012

.014

.016

.017

.022

.028

.029

.028

.031

.042

.044

.040

.040

.044

.050

.065

.074

.076

.066

.064

.070

.081

.079

.072

.073

.070

.066

.065

5.2065.433

5.5365.7275.9976.2486.469

6.6736.7766.8477.0747.092

7.1157.4507.6647.8497.555

7.7748.0028.1448.2168.201

8.1268.3328.373

2.5892.684

2.7972.8872.9983.0893.213

3.3163.4923.6803.9454.209

4.4914.7785.0525.4295.937

6.5077.0247.5588.1988.969

9.89410.85011.700

8.2908.3198.3928.323

8.3428.3308.4098.421

8.4928.6278.716

10.54110.73010.95711.171

11.46311.61411.79511.952

12.12612.21312.304

1 Output is measured by gross domestic product of nonfinancial corporate business in 1972 dollars.2 This is equal to the deflator for gross domestic product of nonfinancial corporate business with the decimal point shifted two

places to the left.3 Indirect business tax and nontax liability plus business transfer payments less subsidies.4 With inventory valuation and capital consumption adjustments.

Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).


TABLE B-14.—Personal consumption expenditures, 1929-83


Year or quarter

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

I960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983"

1981:

IIIIIIV

1982:III . . . .IllIV

1983:

||tilIV P

Personalconsump-

tionexpendi-

tures

77.345.867.0

71.080.888.699 4

108.2119.5143.8161.7174.71781

192 0207.12171229.7235 8253.7266 0280.4289 5310 8

324 9335 0355 2374 6400 543044651490 3536.9581.8

6217672.27371812.0888.19764

1,084.31204 41346 51,507.2

166811857 2199192,158.6

1,802.81835 8188611,904.1

1938 91972 82 008 82,046.9

2 073 02147 0218112,233.1

Durablegoods

9.23.56.7

7.89.76.96.56.78.0

15.820.422.925 0

30.829.829.132.531.838.637 939.336 842.4

43.141646.751456.463 068.070180.585.7

85 297.2

1111123.3121.5132 2156.8178 2200 2213.4

214 7236.1244 5278.6

236.9233 4243 5230.8

239 4242 9243 4252.1

258.5277 7282 8295.2

Nondura-ble goods

37.722.335.1

37.042.950.858.664.371.982.790.996.694 9

98 2108.8113.9116.5118 0122.9128 9135.2139 8146.4

1511155 316161671176 91886204 7212 6230.6247.8

265 7278 8300 6333.4373.4407 3441.7478 8528 2600.0

668 8733 97610804.3

716.3730 67411747.7

749 7754 7766 6773.0

7771799 6814 8825.9

Services

30.320.125.2

26.228.231.034.337.139.645.350.455.358.2

63.068.574.080.686.192.199.2

105.9112.8121.9

130.71381147.01561167.1178 7192.4207 6225.8248.2

270 8296.23253355.2393.2437 0485.7547.4618 0693.7

784 5887.1986 4

1,075.7

849.6871.89015925.6

949.7975 29989

1,021.8

1,037.41069 71 083.51,112.0

Durable good;

Motorvehicles

and parts

3.31.12.3

2.83.5

.8

.81.04.16.68.0

10.6

13.712.211.313.913.017.815.817.214.818.9

19.717 821.524 426.130 030.430136.338.7

36 245.452.457.150.455 872.684.895 796.6

90 7101.6109 9132.8

103.998.5

107 796.5

106.4107 6109 4116.1

118.4133 9135 6143.2

Furnitureand

householdequip-ment

4.71.93.4

3.84.84.63.93.84.58.4

10.611.511.3

13.714.014.014.614.616.217.116.916.617.8

17.717.918.920.322.824.711129.532.334.1

35.237.241.747.150.653.559.165.772.881.8

86.393.393.5

101.8

92.793.393.893.4

91.793.993.594.9

97.3100.8102.9106.4

Other

1.2.5

1.0

1.11.31.61.92.12.53.23.33.43.2

3.33.63.94.14.24.65.05.25.45.8

5.85.86.36.77.68.39.9

10.511.813.0

13.914.616.919.220.522.925.211131.735.1

37.741.241.144.0

40.341.542.040,9

41.341.440.541.0

42.943.144.345.7

Nondurable goods

Food

19.511.519.1

20.223.428.433.236.740.647.452.354.252.5

53.960.463.464.465.467.269.973.676.479.1

81.183.285.587.892.798.9

106.6109.6118.7127.5

138.9144.2154.9172.1193.7213.6230.6249.8275.9311.6

345.1375.9396.9422.5

367.7373.7378.9383.2

388.1394.7400.4404.5

411.7419.6426.4432.4

Clothingand

shoes

9.44.67.1

7.58.8

11.013.414.616.518.218.820.119.3

19.621.221.922.122.123.124.124.324.726.1

26.727.428.729.531.933.536.638.242.145.5

46.850.655.461.464.869.675.382.692.499.1

104.6115.3119.C125.6

112.1115.0116.8117.2

118.4119.0119.2119.6

120.0126.4125.1130.9



TABLE B-14,—Personal consumption expenditures, 1929-83—Continued


Year orquarter

Nondurable goods—cont'd

Gasolineand oil

Fuel oitand coal Other

Services

Housing 1Household operation

Total Electricityand gas Other

Transpor-tation

Other

Total Medicalcare

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983 P

1981:|IIIll "...IV

1982:IIIIIIIV

1983:IIIIllIV '

1.81.52.2

2.32.62.11.31.41.83.44.04.85.3

5.56.16.87.47.88.69.410.210.611.3

12.012.012.612.913.514.716.017.018.620.7

22.423.925.428.636.640.444.048.151.266.6

84.894.691.590.6

93.194.895.195.6

94.089.691.391.1

87.390.393.191.6

1.61.21.4

1.51.71.92.02.02.22.53.03.43.1

3.43.53.43.43.53.83.94.14.24.0

3.83.73.74.04.14.44.74.84.74.5

4.44.55.06.27.78.29.810.711.916.1

18.620.720.020.9

20.320.721.120.9

19.419.620.920.2

17.721.223.021.6

5.43.55.3

5.66.47.58.79.610.811.312.814.114.7

15.817.618.319.319.220.321.623.024.025.9

27.529.031.132.834.637.240.943.046.549.6

53.255.559.865.070.575.582.187.696.9106.6

115.7127.4133.5144.8

123.1126.4129.2130.8

129.8131.9134.8137.7

140.4142.1147.2149.5

11.78.19.4

9.710.411.211.812.312.814.216.017.919.6

21.724.327.029.832.234.336.739.342.045.0

48.151.254.758.061.465.569.574.179.887.0

93.9102.7112.5123.8137.4149.8166.5185.9209.6236.0

266.2302.0334.1363.6

288.0297.0306.6316.5

323.8329.7337.8345.2

352.6359.5367.2375.2

4.02.83.8

4.04.34.85.25.96.46.87.58.18.5

9.510.411.112.012.614.015.216.217.318.5

20.121.022.223.424.826.328.030.032.235.0

37.741.045.249.655.263.371.681.190.199.3

113.0128.4144.3154.8

121.7125.8130.5135.5

140.2144.6145.2147.1

145.9155.4155.8162.2

1.21.11.4

1.51.51.61.71.81.92.12.32.62.9

3.33.74.14.55.05.56.16.57.17.6

8.38.89.49.9

10.410.911.512.213.114.2

15.417.018.820.524.029.232.938.542.947.8

57.666.876.382.0

62.965.168.271.0

74.977.276.276.8

74.182.883.387.6

2.91.72.4

2.62.73.23.54.14.54.75.15.45.6

6.26.77.07.57.68.59.29.7

10.210.9

11.812.212.813.614.415.416.517.819.220.8

22.224.026.429.131.234.138.742.647.251.5

55.461.668.072.9

58.860.762.364.5

65.367.469.070.3

71.872.672.574.6

2.61.52.0

2.12.42.73.43.74.05.05.35.85.9

6.26.77.17.87.98.28.69.09.3

10.1

10.711.211.712.212.813.715.016.217.619.5

22.025.127.528.830.933.238.646.451.256.3

61.165.568.472.9

65.464.566.065.9

66.568.069.869.2

70.170.974.076.6

12.07.7

10.0

10.311.212.213.915.216.419.421.723.624.1

25.627.028.831.033.335.638.741.444.348.3

51.754.858.362.568.173.379.987.296.2

106.8

117.2127.4140.1153.0169.8190.7209.0234.1267.1302.0

344.3391.3439.6484.3

374.5384.5398.4407.7

419.2432.9446.1460.3

468.8483,9486.6498.0

2.21.52.1

2.22.42.62.93.33.64.55.56.36.4

6.97.38.08.99.7

10.311.012.013.114.3

15.416.418.019.522.323.926.028.431.436.5

41.045.951.457.464.573.783.396.5

108.4124.1

145.1173.6196.6213.4

162.8169.9177.9183.9

188.7194.4199.9203.5

207.0211.7215.1219.7

1 Includes imputed rental value of owner-occupied housing.Source: Department of Commerce, Bureau of Economic Analysis.


TABLE B-15.—Gross and net private domestic investment, 1929-83


Year or quarter

Grossprivatedomes-

ticinvest-ment

Less:Capital

con-sumption

allow-anceswith

capitalcon-

sumptionadjust-ment

Equals: Net private domestic investment

Total

Net fixed investment

Total

Presidential

TotalStruc-tures

Pro-ducers'durableequip-ment

Residential

TotalNon-farmstruc-tures

Farmstruc-tures


192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

19701971.. . .1972.197319741975.1976. ..1977 .19781979

1980 . . .1981. .1982

1983"

1981:

\\ZZZZ.IIIIV

1982:|IIillIV

1983:ItltilI V

16.21.49.3

13.117.99.95.87.2

10.630.734.045.935.3

53.859.252.153.352.768.471.069.261.978.1

75.974.885.490.997.4

113.5125.7122.8133.3149.3

144.2166.4195.0229.8228.7206.1257.9324.1386.6423.0

401.9474.9414.5471.3

455.5472.1495.8476.2

422.9432.5425.3377.4

404.1450.1501.1529.8

9.77.48.7

9.110.011.211.511.712.214.017.320.221.8

23.527.229.331.032.734.838.741.743.544.9

46.347.549.050.652.956.060.765.972.1

88.196.5

106.4116.5136.0159.3175.0195.2222.5256.0

293.2329.5359.2377.4

314.8324.2334.4344.6

349.3356.1363.0368.3

370.8373.3381,7383.6

6.5-6 .0

.6

4.17.9

-1 .3-5.7-4.6-1.616.616.625.613.5

30.332.022.822.420.033.632.327.518.433.2

29.627.336.540.344.557.565.057.061.269.3

56.269.988.6

113.392.746.882.8

128.9164.1167.0

108.7145.455.393.9

140.7147.9161.4131.6

73.676.462.39.1

33.376.8

U9.4146.2

-4 .5.1

1.93.4

-3 .0-5 .0-3 .6

- . 610.317.120.916.6

23.521.719.721.921.627.627.626.119.927.5

26.724.930.234.438.947.650.946.653.359.5

52.962.378.494.878.553.771.0

105.9137.7152.7

118.5127.079.9

100.8

129.8132.9127.8117.3

99.387.667.265.5

72.791.3

110.9128.5

3.1-3 .5

- . 6

.72.0

-2 .5-3 .5-1 .7

1.36.6

10.211.38.1

9.610.79.1

10.89.1

11.913.914.38.1

10.6

12.310.914.015.319.728.935.431.933.638.1

33.931.137.051.949.230.334.350.773.689.0

77.089.759.044.6

1.7-1.6-1 .0

- . 7- . 3

-1 .7-2.6-2 .0-1.2

2.42.12.72.3

2.93.93.84.85.15.97.97.96.46.4

7.37.37.97.89.1

12.914.813.814.516.6

16.315.616.620.718.913.114.116.023.333.7

36.249.148.836.8

1.4-1 .8

.3

1.42.2

- . 7- . 9

244.28.28.65.8

6.76.75.36.04.06.06.06.41.84.2

5.03.66.17.5

10.616.020.618.219.121.5

17.615.520.431.230.317.320.234.750.455.3

40.940.610.27.8

1.7-1 .0

,8

1.21.5

- . 6-1.6-1.9-1 .8

3.76.89.78.5

13.911.010.611.112.515.713.711.811.816.9

14.414.016.219.019.118.715.514.719.821.3

19.031.241.342.929.323.436.855.264.063.7

41.537.320.856.2

1.7- . 9

.8

1.11.4

- . 5-1.4-1.7^1.6

3.46.49.17.9

13.410.610.310.812.215.613.411.711.616.7

14.313.916.118.818.918.615.314.519.621.0

18.930.940.942.528.423.136.554.563.363.2

41.237.721.356.6

-0.1- .1- .0

.0

.0- .1- .1- .1

~2.3.4.4

.3

.3

3̂

.0

.1

.1

- . 0

!o.0.0

- . 0.0.0

- . 1- . 0

.2

- ! 2- . 4

.2- . 2

~'.\

-2

-'.9

0.0- . 0

.0

.0

.0- . 0- . 1- . 1- . 1

,12

\\

.2

.1

.1

.1

.1

.1

.1

.1

.1

.2

.1

.1

.1

.1

.2

.2

.2

.2

.3

.4

.4

.5

.6

7.5.5.6.6

.6

.5

.3

.4



TABLE B-16.—Gross and net private domestic investment in 1972 dollars, 1929-83

[Billions of 1972 dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

Less: Equals: Net private domestic investment

Grossprivate

domes-tic

invest-ment

55.88.4

33.6

44.555.829.518.119.727.770.970.082.165.4

93.593.983.085.383.1

103.8102.697.087.5

108.0

104.7103.9117.6125.1133.0151.9163.0154.9161.6171.4

158.5173.9195.0217.5195.5154.8184.5214.2236.7236.3

208.5227.6194.5218.4

222.7229.5236 3221J

199.7201.4198 4V8A

190.0210 2230724Z5

con-sumption

allow-

anceswith

capitalcon-

sumptionadjust-ment

33.633.032.1

32.433.133.332.632.132.334.036.138,540.7

42.845.347.549.852.154.256.558.660.361.6

63.365.066.969.071.674.878.782.887.191.6

96.1100.2106.4110.8116.1120.8125.1129.9135.8143.0

149.8155.9162.5169.1

153.7155.1156.6158.2

159.7161.6163 1165*5

166.3167 8170717L5

Total

22.3-24.6

1.5

12.222.7

=3.8= 14.6= 12.4=4.636.933.943.624.7

50.748.735.435.631.149.546.138.427.246.4

41.438.950.756.061.477.284.372.174.579.8

62.473.688.6

106.879.334.059.484.3

100.993.3

58.771.632.049.3

69.074.479.763.5

40.039.835 312^9

23.742.460 07i!o

Total

17.7-19.8

- .1

6.010.6

- 9 . 0-14.7-10 .1- 1 . 024.834.138.129.1

40.135.031.134.133.341.840.336.929.039.3

37.935.942.948.554.365.467.559.965.568.8

58.765.678.489.667.740.851.671.184.986.0

63.163.141.451.7

66.065.563.657.5

50.243.236.6

39.147.856 2615

Net fixed investment

Nonresidential

Total

11.7-14.7

- 3 . 1

1.65.7

- 7 . 3-10.2- 5 . 1

3.616.621.521.614.8

17.017.815.117.514.719.021.120.412.215.4

17.616.120.121.627.339.446.740.841.044.4

37.732.737.050.343.423.025.636.349.254.6

44.347.533.329.5

Struc-tures

7.8= 8.5- 4 . 0

- 2 . 6— 7

-5^8- 8 . 2- 6 . 6- 3 . 6

6.85.05.85.0

6.17.26.98.59.1

10.412.812.310.210.2

11.811.912.812.414.319.821.719.319.220.5

18.616.616.619.414.98.89.39.5

13.016.5

15.317.917.513.3


3.8= 6.2

.9

4.26.3

- 1 . 5- 2 . 0

1.57.29.8

16.515.89.7

10.910.68.29.05.68.68.38.12.05.2

5.84.27.39.1

13.019.725.021.521.823.9

19.116.120.430.928.514.216.326.836.238.1

29.129.615.716.2

Total

6.0- 5 . 1

3.0

4.35.0

- 1 . 8- 4 . 5- 5 . 0- 4 . 6

8.212.616.514.4

23.217.116.016.618.622.819.216.516.923.9

20.319.822.826.927.026.020.819.124.524.3

21.032.941.339.324.317.826.034.735.631.4

18.715.68.2

22.2

Reside

Non-farmstruc-tures

6.2- 4 . 6

3.0

4.14.7

- 1 . 6- 4 . 1- 4 . 6- 4 . 1

7.711.915.613.5

22.416.515.516.118.222.718.816.316.623.6

20.219.622.626.726.825.820.618.924.324.0

20.932.640.938.923.517.525.834.235.131.0

18.415.78.3

22.2

mtial

Farmstruc-tures

- 0 . 2=.5

.0

.2

.2- .1- .3- .4_ 4

A.6.8.7

.6

.5

.4

.4

.3

.0

.2

.1

.1

.1

- .1.1.0.0.1

- .1.0.0

- .1= .1

- .3- .2= .2- . 3

.2-.2- . 1

.1

.0- .1

- . 1— .4— 3= .3


0.0.0.0

.1

.1

.0— .1— 1

.0

.1

.2

.2

.1

.2

.1

.1

.1

.1

.1

.1

.1

.1

.2

.1

.1

.1

.2

.2

.2

.2

.2

.3

.4

.4

.5

.6

.7

.6

.4

.4

.5

.5

.5

.4

.3

.2

.3

Change

inbusi-ness

inven-tories

4.6=4.9

1.6

6.212.05.2

.1=2.3=3.612.2-25.5

-4 .4

10.613.74.31.5

-2 .27.75.81.5

= 1.87.0

3.53.07.87.57.1

11.816.812.29.0

11.1

3.88.1

10.217.211.6

=6.77.8

13.316.07.3

=4.48.5

-9 .4- 2 . 4

3.08.9

1616.0

= 10.2- 3 4

1322 7

-15.4

~3£7.5

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983 "

1981:Iif!"Z"HIiv

1982:IIIIllIV

1983:IIIIllIV P.



TABLE B-17.—Inventories and final sales of business, 1946-83

[Billions of dollars, except as noted; seasonally adjusted]

Quarter

Fourth quarter:1946194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983 "

1981:

||IIIIV

1982:

iiIllIV

1983:|||IIIIV

Inventories1

Total

72.082.687.278.7

98.0110.5109.21101107.6

114.8124.0127.6127.3132.0

136 0137.9144 6150.4156.2

170.5187.4199.4213.5234.6

244.0260.8288.7357.7434.4

439.4473.6519.5602.3705.0

775.4819.3798.4816.9

791.2802.2811.9819.3

810.4814.6814.9798.4

791.5793.9807.5816.9

Farm

22.725122.919 8

26.128.326.024 623.8

22.522.924 325.624.4

25 625.927 327.626.5

29.929 629.530 633.3

32.336 745.666.662.4

64 560.659973.981.9

86.383 780.782.4

85 687.583.183.7

86.888.584 680.7

84.382.681.982.4

Total

49.357 564.359 0

71982.283.185 583.9

92 2101.0103 3101.7107.6

11041121117 3122 7129.7

140.6157 8169.9182 9201.3

211.62241243.1291.2372.0

374 9413.0459 6528.3623.1

689.0735 6717.7734.6

705 6714.7728 8735.6

723.67261730 3717.7

707.1711.3725.5734.6

Manu-facturing

26.729.332.528.9

35.243.444.446.444.3

48.854.554.853.255.7

56 657.760 962.966.4

71.581788.795 2

104.8

108.4109 9116.8141.1189.6

189 8207.5224 7254.2306.6

341.4363 2341.5343.1

350 7355.4362.9363.2

355.7351.4349.4341.5

332.7334.9341.1343.1

Jonfarm

Whole-sale

trade

10.110.511.711.8

13.814.614.815.015.3

16.617.918.218.320.0

20.420.S21.523.124.4

26.329.932.434.337.7

41.744.949.460.276.9

77.386.998.7

114.6135.7

155.9164 6163.5167.3

159 6160.6162.5164.6

160.6164.4165.0163.5

159.1159.2164.1167.3

Retailtrade

11.413.115.114.0

17.518.017.718.318.5

20.921.722.922.923.9

25.324.926.327.629.0

31.934.635.339.042.8

44.350 555.764.874.1

74 682.993.7

109.0121.0

128.0139 4141.3153.0

129 8133.4137.3139.4

137.3139.0143.2141.3

143.3145.6149.3153.0

Other

3.54.65.04.3

5.46.16.25.85.9

6.06.97,37.38.0

8.18.78.69.29.9

10.911.613.514.416.0

17.318.821.225.031.3

33.335.742.550.659.8

63.868.471.371.1

65.465.466.168.4

69.971.372.771.3

72.171.671.171.1

Finalsales 2

16.018.319.619.5

21.724.626.127.227.5

29.731.432.733.735.6

36.938.841.143.746.2

51.054.157.663.367.4

70.877.285.894.5

102.0

113.6124.1138.9159.5176.9

194.6212.7223.0241.3

202.0205.0210.4212.7

215.1217.1217.9223.0

226.2232.0236.8241.3

Inventorsales

Total

4.504.514.444.03

4.534.494.184.053.91

3.863.953.903.773.71

3.693.553.523.443.38

3.343.463.463.373.48

3.453.383.373.794.26

3.873.823.743.783.99

3.983.853.583.39

3.923.913.863.85

3.773.753.743.58

3.503.423.413.39

Minal

Non-farm3

3.083.143.273.02

3.323.343.183.153.05

3.103.223.163.013.02

2.992.892.852.812.81

2.762.922.952.892.99

2.992.902.833.083.65

3.303.333.313.313.52

3.543.463.223.04

3.493.493.463.46

3.363.343.353.22

3.133.073.063.04

1 End of quarter.2 Quarterly totals at monthly rates. Business final sales equals final sales less gross product of households and institutions,

government, and rest of the world, and includes a small amount of final sales by farms.3 Ratio based on total business final sales, which includes a small amount of final sales by farms.Note, The industry classification of inventories is on an establishment basis and is based on the 1972 Standard Industrial

Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948.Source: Department of Commerce, Bureau of Economic Analysis.


TABLE B-18.—Inventories and final sales of business in 1972 dollars, 1947-83

[Billions of 1972 dollars, except as noted; seasonally adjusted]

Quarter

Fourth quarter:194719481949

19501951195219531954

19551956195719581959

I9601961196219631964

19651966196719681969

19701971197219731974

1975197619771978.1979

1980198119821983 p

1981:1IIHIIV..

1982:|IItilIV...

1983:|IIHIIV

Inventories »

Total

1161121.6117.2

127.71414145.7147.2145.0

152.8158.61601158.3165.3

168.81718179 7187.2194 3

2061222.9235.1244.1255.1

258.9267 0277.2294 4306.0

299.2307 0320.3336 3343.6

339.2347 7338 3335.9

340.0342 2346 2347.7

345.2344 3344 0338.3

334.5333.13341335.9

Farm

25 726.726.2

27.529130.430.231.1

31.530.731432.432.4

32.833 234 535.7351

36.236.036.837.037.3

37.739 239.842141.8

43.041140.840 843.2

40 944 243440.5

41.142 243 344.2

44.544 243 843.4

43.342.841540.5

Totat

90 594.891.0

100.2112.3115.4117.1114.0

121.2127.8128 7125.9132.9

136.1138 6145.2151.5159.2

169.9186.8198.3207.0217.8

221.2227 8237.4252 3264.2

256.3265 9279.5295 5300.4

298 4303 5294 9295.5

298.9300 0303 0303.5

300.7300.2300 2294.9

291.2290.3292 5295.5

1

Manu-facturing

47 448.846.2

49.360062.764.560.9

64.369.168 766.169.1

69.971775.678.282.0

87 097.2

1041108.4112.8

112.91118114.41218130.9

127.113091341139 8145.0

1459147 9139 6136.9

146.8147 2149 0147.9

146.0144.3143 0139.6

136.5136.3136 6136.9

Yonfarm

Whole-sale

trade

16 017.217.2

19.219.720.120.320.6

22.122.822.522.524.6

25.125 726.628.429.9

31635.337 838.941.2

44.045 947.950 454.1

52.255 559.763 564.7

66267 267.166.8

66.166.266 567.2

66.567.667 767.1

65.464.765 766.8

Retailtrade

18 320.319.8

23.023.023.023.623.7

26.526.827.827.528.7

30.329 831.633.034.5

37.440.040.043.045.9

46.151254.658 858.3

55.858863.167 366.1

63.265 665.168.8

63.164.265.265.6

64.964.866.165.1

65.966.367.368.8

Other

878.67.8

8.79.59.68.78.8

8.49.29.89.8

10.5

10.711411.412.012.8

13.814.316.316.817.9

18.219 020.521420.9

21.120 822.624 924.6

23.022 823.223.0

23.022.522.222.8

23.423.423.423.2

23.423.022.923.0

Finalsales2

33 234.434.6

36.939 841.643.043.1

45.646.547.148.149.7

50.753155.358.360.9

66.167.570.173.874.7

75.278984.787.285.0

88.192.297.6

103.0105.4

104.9105.9106.6111.4

106.6106.4106.8105.9

105.8105.5105.1106.6

106.8108.9110.3111.4

Inventorsales

Total

3 503.533.38

3.463 553.513.423.36

3.353.413.403.293.33

3.333.243.253.213.19

3.123.303.363.313.41

3.443.383.273.383.60

3.403.333.283.273.26

3.233.283.183.02

3.193.223.243.28

3.263.273.273.18

3.133.063.033.02

Minal

Non-farm3

2 732.762.63

. 2.722 822.782.722.64

2.662.752.732.622.68

2.682.612.622.602.61

2.572.772.832.812.92

2.942 892.802.893.11

2.912.882.862.872.85

2.842.862.772.65

2.802.822.842.86

2.842.852.862.77

2.732.672.652.65

1 End of quarter.2 Quarterly totals at monthly rates. Business final sates equals final sales less gross product of households and institutions,

government, and rest of world, and includes a small amount of final sales by farms.3 Ratio based on total business final sales, which includes a small amount of final sales by farms.Note.—The industry classification of inventories is on an establishment basis and is based on the 1972 Standard Industrial

Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948.Source: Department of Commerce, Bureau of Economic Analysis.


TABLE B-19.—Relation of gross national product, net national product, and national income, 1929-83



nationalproduct

Less:Capital

consump-tion

allowanceswith

capitalconsump-

tionadjustment

Equals:Net

nationalproduct

Less:

Indirectbusinesstax andnontaxliability

Busi-ness

transferpay-

ments

Statis-tical

discrep-ancy

Plus:Subsidies

lesscurrentsurplus

ofgovern-mententer-prises

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983 "..

1981:IIIIllIV

1982:IIIIllIV

1983:IIIIllIV ",..

103.455.890.9

100,0125.0158.5192.1210.6212.4209.8233.1259.5258.3

286.5330.8348.0366.8366.8400.0421.7444.0449.7487.9

506.5524.6565.0596.7637.7691.1756.0799.6873.4944.0

992.71,077.61,185.91,326.41,434.21,549.21,718.01,918.32,163.92,417.8

2,631.72,954.13,073.03,309.5

2,866.62,912.53,004.93,032.2

3,021.43,070.23,090.73,109.6

3,171.53,272.03,362.23,432.0

9.77.48.7

9.110.011.211.511.712.214.017.320.221.8

23.527.229.331.032.734.838.741.743.544.9

46.347.549.050.652.956.060.765.972.180.0

88.196.5

106.4116.5136.0159.3175.0195.2222.5256.0

293.2329.5359.2377.4

314.8324.2334.4344.6

349.3356.1363.0368.3

370.8373.3381.7383.6

93.748.482.2

91.0115.0147.3180.7198.9200.2195.8215.7239.3236.5

263.0303.6318.7335.8334.1365.3383.0402.3406.2443.0

460.2477.0516.1546.1584.8635.0695.3733.7801.3864.0

904.7981.1

1,079.51,209.91,298.21,389.91,543.01,723.21,941.42,161.7

2,338.52,624.62,713.82,932.1

2,551.72,588.42,670.52,687.6

2,672.12,714.12,727.72,741.3

2,800.72,898.72,980.53,048.4

7.17.19.4

10.111.311.812.814.215.517.118.420.121.3

23.425.327.729.729.632.235.137.538.741.8

45.448.051.654.658.862.665.370.278.986.6

94.3103.7111.5120.9129.1140.1151.7165.7178.2189.6

213.4250.0258.3285.8

244.0249.1252.4254.3

252.6256.0259.9264.8

270.6285.8291.1295.7

0.6.7.5

.4

.5

.5

.5

.5

.5

.5

.6

.7

.91.01.21.11.21.41.51.61.8

2.02.02.12.42.72.83.03.13.43.9

4.14.44.95.55.87.47.98.69.3

10.3

11.712.914.115.5

12.512.813113.4

13.714.014.314.7

15.015.315.716.1

1.1

l.A

1.1.6

- . 8- 1 . 8

2.74.1

1.5-1 .6

1.33.21.72.32.01.3

- 2 . 1-1 .2

.2- 1 . 3

-2 .4- . 1

17

- L 21.4

- . 3

- 1 9

- 1 . 54.13.3

.83.75.55.11.4

=2.6

2.3- 4 . 9

.5

5.1-4 .2

-12.0- 8 . 5

-6 .71.72.54.2

- 1 . 2- 3 . 5

2.5

- 0 . 2- . 0

.4

.4

.1

.1

'.B.7.9

- . 2

- . 3

.1- . 1

-.5

- . 0.7.7

1.1.1

.41.71.81.11.71.62.51.61.41.9

2.92.63.83.41.12.41.03.13.73.4

5.56.49.5

16.3

5.66.56.47.2

7.26.48.0

16.6

12.311.815.825.2

Source: Department of Commerce, Bureau of Economic Analysts.


TABLE B-20.—Relation of national income and personal income, 1929-83


Year or quarter Nationalincome

Less:

Corporateprofitswith

inventoryvaluation

andcapital

consump-tion

adjust-ments

Netinterest

Contribu-tions for

socialinsurance

Wageaccruals

lessdisburse-

ments

Plus:

Govern-ment

transferpayments

topersons

Personalinterestincome

Personaldividendincome

Businesstransfer

payments

Equals:

Personalincome

192919331939

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....

1980198119821983 *...,

1981:

ItIllIV

1982:III....

1983:

IIIIV P.

84.839.971.4

79.7102.7135.9169.3182.1180.7178.6194.9219.9213.6

237.6274.1287.9302.1301.1330.5349.4365.2366.9400.8

415.7428.8462.0488.5524.9572.4628.1662.2722.5779.3

810.7871.5963.6

1,086.21,160.71,239.41,379.21,550.51,760.31,966.7

2,116.62,373.02,450.42,646.9

2,295.82,337.22,423.42,435.6

2,419.72,448.92,458.92,474.0

2,528.52,612.82,686.9

9.0- 1 . 7

5.3

8.614.119.323.523.619.016.622.329.427.1

33.938.736.136.335.245.543.743.338.549.6

47.648.656.662.169.280.085.182.489.185.1

71.483.296.6

108.394.9

110.5138.1167.3192.4194.8

175.4192.3164.8226.3

194.7185.0197.6192.0

162.0166.8168.5161.9

181.8218.2248.4

4.74.13.6

3.33.33.12.72.42.21.82.32.42.7

3.03.54.04.45.35.96.67.99.6

10.3

11.413.014.716.418.321.024.427.630.034.8

41.446.551.260.276.184.587.2

102.5121.7153.8

192.6249.9261.1247.2

223.7242.6268.0265.3

265.0268.3256.4254.7

248.3243.8246.1250.4

0.2.3

2.1

2.32.83.54.55.26.16.15.85.45.9

7.18.59.09.1

10.111.512.914.915.218.0

21.121.924.327.328.730.038.843.447.955.0

58.664.674.292.4

104.3110.9126.0140.6161.8186.9

203.7237.0253.0272.3

231.7234.8239.0242.5

249.9252.4254.3255.4

265.4270.1274.4279.1

0.0.0.0

.0

.0

.0

.2- . 2

.0- . 0

.0

.0- . 0

.0

.1- . 0_ . l

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.6

.0- . 1

!o.0.0.2

- . 2

- . 0.1

- . 0- . 4

- . 1.0.0.0

.0- 1 . 3

- . 4.0

0.91.52.5

2.72.62.72.53.15.6

10.811.210.611.7

14.411.612.112.915.116.217.320.124.325.2

27.030.831.633.434.837.641.649.556.462.8

76.190.099.8

114.0135.4170.9186.4199.3214.6240.0

285.9324.3360.4387.9

311.9314.9332.8337.4

340.9350.3366.1384.3

383.6390.0386.8391.4

6.95.55.4

5.35.35.25.15,25.96.67.68.18.7

9.710.511.212.513.714.916.718.820.322.5

25.026.429.032.235.639.744.448.353.461.1

69.474.880.993.9

112.4123.2132.5152.8179.4218.7

266.0341.3366.2366.3

308.7329.8361.9364.7

364.9371.9364.8363.1

357.2357.1369.9381.0

5.82.03.8

4.04.44.34.44.64.65.66.37.07.2

8.88.58.58.89.1

10.311.111.511.312.2

12.913.314.415.517.319.119.420.221.922.4

22.222.624.126.529.129.936.539.645.350.8

56.862.866.470.5

59.661.964.565.3

65.665.666.467.9

68.869.370.972.9

0.6.7.5

.4

.5

.5

.5

.5

.6

.8

.91.01.21.11.21.41.51.61.8

2.02.02.12.42.72.83.03.13.43.9

4.14.44.95.55.87.47.98.69.3

10.3

11.712.914.115.5

12.512.813.113.4

13.714.014.314.7

15.015.315.716.1

85.047.072.4

77.995.4

122.6150.8164.5170.0177.6190.1209.0206.4

227.2254.9271.8287.7289.6310.3332.6351.0361.1384.4

402.3417.8443.6466.2499.2540.7588.2630.0690.6754.7

811.1868.4951.4

1.065.21,168.61,265.01,391.21,540.41,732.71,951.2

2,165.32,435.02,578.62,741.9

2,338.32,394.22,490.92,516.6

2,528.12,563.22,591.32,632.0

2,657.72,713.62,761.92,834.2


243


TABLE B-21.—National income by type of income, 1929-83


Year orquarter

Nationalincome1

Compensationof employees

TotalWages

andsalaries

Supple-ments

towages

andsal-

aries2

Proprietors' income with inventory valuation and capital consumptionadjustments

Total

Farm

TotalPropri-etors'

in-come3

Capitalconsump-

tionadjust-ment

Nonfarm

TotalPropri-etors'

in-come4

Inven-tory

valua-tion

adjust-ment

Capitalconsump-

tionadjust-ment

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

196019611962196319641965196619671968196919701971197219731974.19751976197719781979

198019811982.1983 "

1981:IIIIllIV

1982:1||IllIV

1 9 8 3 :

II. ..IllIV »

84.839 971.4

79.7102 7135.9169 3182.1180 7178 6194 9219 9213.6

237 62741287.93021301.1330.5349.4365.2366.9400.8

415.7428.8462.0488.5524.9572 4628.1662 2722.5779.3810.78715963.6

1,086.21,160.71,239.41,379.21,550.51,760.31,966.7

2,116.62,373.02,450.42,646.9

2,295.82,337.22,423.42,435.6

2,419.72,448.92,458.92,474.0

2,528.52,612.82,686.9

51.129.548.1

52.164.885.3

109.5121.2123.1118.1129.2141.4141.3

154.8181.0195.7209.6208.4224.9243.5256.5258.2279.6

294.9303.6325.1342.9368.0396.5439.3471.4519.9572.9

612.0652.2718.0801.3877.5931.4

1,036.31,152.11,301.11,458.1

1,599.61,769.21,865.71,990.1

1,718.81,750.91,791.71,815.6

1,834.21,859.91,879.51,889.0

1,923.71,968.72,011.82,056.0

50.529.046.049.962.182.1

105.8116.7117.5112.0123.1135.5134.7

147.0171.3185.3198.5196.8211.7228.3239.3240.5258.9

271.9279.5298.0313.4336.1362.0398.4427.0469.6515.7

548.7581.5635.2702.6765.2806.4889.9983.2

1,106.51,237.4

1,356.61,493.21,568.11,664.0

1,451.71,478.11,512.61,530.6

1,542.71,563.91,579.81,586.0

1,610.61,647.11,681.51,716.6

2.32.73.23.84.55.66.06.15.96.6

7.89.7

10.411.011.613.215.217.217.720.6

23.024.127.129.531.834.540.944.450.357.2

63.270.782.898.7

112.3125.0146.4168.9194.6220.7

243.0276.0297.6326.1

267.1272.8279.2285.0

291.6296.0299.7302.9

313.1321.6330.3339.3

15.05.9

11.8

13.017.524.229.130.431.836.735.940.936.4

38.743.243.441.841.242.943.945.347.747.6

47.248.649.950.552.556.960.561.264.067.0

66.269.476.993.888.790.094.1

103.9118.5132.1

117.4120.2109.0128.6

121.1118.9123.5117.1

111.2104.9103.6116.2

120.6127.2126.7139.7

6.12.54.4

4.46.4

10.112.012.012.414.915.117.612.8

13.716.115.113.112.511.511.211.113.210.9

11.712.112.312.010.813.114.112.612.714.6

14.315.018.732.826.524.619.119.126.331.9

21.830.521.521.0

26.529.135.031.3

27.416.815.826.0

22.221.015.525.3

6.32.64.5

4.56.5

10.312.212.212.715.215.718.213.5

14.416.916.013.913.312.212.112.114.111.9

12.612.913.012.811.513.814.913.513.715.7

15.616.420.434.629.028.022.823.331.337.8

28.938.429.929.4

34.137.043.139.6

35.725.124.234.6

30.629.423.933.6

= 0 . 2- . 0

.1

-3

~'.S- . 7

.9- . 9- . 9

-1 .0

- . 9

- . 7- . 7

~'.B- . 9

- 1 . 0-1 .2

- 1 . 3- 1 . 4- 1 . 6- 1 . 8=2.5-3 .4- 3 . 7- 4 . 3-5 .0-5 .9

- 7 . 1= 8.0- 8 . 4- 8 . 4

-8.2-8.3-8.4-8.6

- 8 . 4- 8 . 4- 8 . 4- 8 . 3

8.93.37.4

8.611.114.117.118.419.421.820.823.323.6

25.027.228.228.628.731.432.734.234.536.7

35.536.537.638.541.743.846.448.651.352.5

51.954.458.161.062.265.475.084.892.2

100.2

95.689.787.4

107.6

94.789.888.585.8

83.788.187.890.2

98.4106.2111.2114.4

3.97.68.6

11.714.417.118.319.323.321.823.122.2

25.126.426.927.627.630.531.833.133.235.3

34.235.336.437.240.242.745.347.550.651.9

51.754.558.162.365.867.477.186.894.9

103.2

100.3

97.3

97.490.3

84.7

85.384.586.0

91.096.8

100.6100.9

0.1- . 5- . 2

- . 0- . 6- . 4— 2- i l- . 1

- 1 . 7- 1 . 5

- . 4.5

- 1 . 1- . 3

.2— 2-.0— 2= !5= .3= .1=-.0

.0

.0- . 0- . 0_ i-'.2= .2= .2- . 4- . 5

- . 5=.6- . 7

- 2 . 0- 3 . 7-1 .2-1 .2- 1 . 2-2 .0-2 .9

- 3 . 1- 1 . 5- . 6- . 9

- 2 . 6- 1 . 4-1 .2- 1 . 0

- . 1= .8- . 7- . 8

— 2- L I- 1 . 5

- . 6

1 National income is the total net income earned in production. It differs from gross national product mainly in that it excludesdepreciation charges and other allowances for business and institutional consumption of durable capital goods and indirect businesstaxes. See Table B-19.

2 Employer contributions for social insurance and to private pension, health, and welfare funds; workers' compensation; directors'fees; and a few other minor items.



TABLE B-21.—National income by type of income, 1929-83—Continued


Year or quarter

192919331939

19401941194219431944194519461947...19481949

1950195119521953195419551956195719581959

1960196119621963196419651966 !."....196719681969

19701971197219731974197519761977...19781979

1980198119821983 '

1981:1....

)||"IV

1982:

IIIIIIV

1983:|UIllI V

Rental income of persons

adjustment

Total

4.92.22.6

2.73.14.04.44.54.65.55.35.76.1

7.17.78.8

10.011.011.311612.212.913.6

14 515.015.816.517.118.018.719 719.519.6

19.720.221.022 623.523.023.524 826 627.9

31.541449 954.8

37.439.942 745.6

47 449 050 952.3

54154.853.956.2

Rentalincome

ofpersons

5.72.33.1

3.33.95.05.65.96.27.37.78.58.9

10.011.012.213.414.414.815 215.916.717.4

18 018.419.119.720.221.222.323 624.025.2

25.827.129.032135.336.839.244050 056.2

63.977 086 393.4

71.774.878 782.6

84 785 787 687.4

91692.294.095.7

Capitalcon-

sumptionadjust-ment

08- . 1

6

- . 6_ 8

- 1 . 0- 1 2- 1 . 4- 1 6-1 .8- 2 . 5-2 .8

28

- 2 . 9- 3 3

34- 3 4

33- 3 . 5

3 6- 3 . 6

38- 3 . 8

35- 3 . 4

3 4- 3 . 2- 3 . 2- 3 . 3- 3 . 6

39- 4 . 5

56

- 6 . 1- 6 . 9

8095

-11.8-13.8

15 619123 4

-28.3

-32.435 636 5

-38.6

34 3-34.9

36 0-37 .1

37 336 736 7

-35.2

37 5-37.4-40.0-39.4

Corporate profits with inventory valuation and capital consumption adjustments

Total

9.0-1 .7

5.3

8.614119.323 523.619016.622.329.427.1

33.938 736.136 335.245.543 743.338 549.6

47 648.656 662.169.280.085.182 489.185.171.483.296.6

108 394.9

110.51381167 3192 4194.8

175.4192 3164 8226.3

194 7185.0197 6192.0

162 0166 8168 5161.9

1818218.2248.4

Profits with inventory valuation adjustment and withoutcapital consumption adjustment

Total

10.5- 1 . 2

6.5

9.815420.524 524.019 319.625.933.431.1

37.943.340.640.238.447.546 946.641652.3

49 750.055159.766.076.080.978184.980.8

68.982.094.0

105 696.7

120.61516178 5205 1209.6

191.7203 3165 9195.5

207 1196.4208 3201.5

167 7170 3168 3157.2

168 0192.7210.8

Profits

Profitsbeforetaxes

10.01.07.2

10.017.921.725324.219 824.831.835.629.2

42.944.539.641.238.749.249 648.141952.6

49 849.755 059.666.577.283.079 788.586.7

75.486.6

100.6125 6136.7132.1166 3194 72291252.7

234.6227 0174 2205.3

243.9219.0227 7217.2

173 2178 8177 3167.5

169 7203.3229.1

Profitstax

liability

1.4.5

2.87.6

11.414.112.910.79.1

11.312.410.2

17.922.619.420.317.622.022 021.419 023.6

22 722.824 026.228.030.933.732 539.239.5

34.237.541.649 051.650.663 811183 287.6

84.882 859 275.7

91.780.483 775.6

60.361.460 854.0

61.576.084.9

Profits after tax

Total

8.6.4

5.7

7.210.310.311.211.39.1

15.720.523.219.0

25.021.920.220.921.127.227 626.722.928.9

27 126.931133.438.546.349.447 249.447.2

41.349.058.976 685.181.5

102.5122 0145 9165.1

149.8144.11151129.6

152.2138.6144 0141.7

112.9117.4116.5113.5

108.2127.2144.1

Divi-dends

5.82.03.8

4.0444.3444.6465.66.37.07.2

8.8858.5889.1

10.311111.511312.2

12 913.314 415.517.319.119.420 222.022.5

22.522.924.427 029.930.837 440 847 052.7

58.664 768 773.3

61.363.766 467.3

67 767 868 870.4

71472.073.775.9

Undis-tributedprofits

2.8-1 .6

2.0

3.2586.0676.745

10.214.216.211.8.

16.213 411.812111.916.916 615.211616.7

14 313.616 617.921.227.229.927 027.324.7

18.826.134.549 655.250.765.181298 9

112.4

91.279.546 456.3

90.974.977 674.4

45.249.547 743.1

36.755.270.4

Inven-tory

valua-tion

adjust-ment

0.5-2 .1

— 7

- . 2- 2 5- 1 . 2

- 83

- 653

-5 .9-2 .2

1.9

50-1 .2

1.0-1 .0

3-1 .7

2715

_ 33

_ 2.30.1

- . 5- 1 . 2- 2 . 1-1 .6-3 .7-5 .9

-6 .6-4 .6-6 .6

-20.0-40.0-11.6-14.7-16.2-24.0-43.1

-42.9-23.6

- 8 . 4-9 .8

-36.7-22.6-19.4-15.7

-5 .5-8 .5-9 .0

-10.3

-1 .7-10.6-18.3- 8 . 5

Capitalcon-

sumptionadjust-ment

14- . 6

-1 .1

- 1 . 2- 1 3-1 .2- 1 0

_*2-3 .0-3 .6-4 .0-3 .9

-4 .0- 4 . 6- 4 . 5- 3 . 9-3 .2-2 .0

3234

-3 .227

- 2 . 0141.52.53.14.04.24.34.34.3

2.51.32.72.7

-1 .8-10.1-13.5-11.3-12.7-14.8

-16.3-11.0

- 1 . 130.8

-12.4-11.4-10.7

-9 .5

-5 .6- 3 . 5

.14.7

13.925.637.646.3

Netinterest

4.74.13.6

3.3333.1272.4221.82.32.42.7

3.03.54.04.45.35.9667.99.6

10.3

11.413.014.716.418.321.024.427.630.034.8

41.446.551.260.276.184.587.2

102.5121.7153.8

192.6249.9261.1247.2

223.7242.6268.0265.3

265.0268.3256.4254.7

248.3243.8246.1250.4

3 With inventory valuation adjustment and without capital consumption adjustment.4 Without inventory valuation and capital consumption adjustments.Source: Department of Commerce, Bureau of Economic Analysis.


TABLE B-22.—Sources of personal income, 1929-83


Year or quarter Personalincome

Wage and salary disbursements1

Total

Commodity-producingindustries

Total Manu-facturing

Distrib-utiveindus-tries

Serviceindus-tries

Govern-mentand


Otherlabor

Proprietors' incomewith inventoryvaluation and

capitalconsumptionadjustments

Farm

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 ».

1 9 8 1 :IIIIII. . . .IV... .

1 9 8 2 :IIIIII . . . .IV.. . .

1 9 8 3 :IIIIII. . . .IV »..

85.047.072.4

77.995.4

122.6150.8164.5170.0177.6190.1209.0206.4

227.2254.9271.8287.7289.6310.3332.6351.0361.1384.4

402.3417.8443.6466.2499.2540.7588.2630.0690.6754.7

811.1868.4951.4

1,065.21,168.61,265.01,391.21,540.41,732.71,951.2

2,165.32,435.02,578.62,741.9

2,338.32,394.22,490.92,516.6

2,528.12,563.22,591.32,632.0

2,657.72,713.62,761.92,834.2

50.529.046.0

49.962.182.1

105.6116.9117.5112.0123.1135.5134.8

147.0171.3185.4198.6196.8211.7228.3239.3240.5258.9

271.9279.5298.0313.4336.1362.0398.4427.0469.6515.7

548.7580.9635.2702.7765.7806.4889.9983.2

1,106.31,237.6

1,356.71,493.21,568.11,664.4

1,451.71,478.11,512.31,530.6

1,542.81,563.81,579.81,586.0

1,610.71,648.41,681.91,716.7

21.59.8

17.4

19.727.539.149.050.445.946.054.261.157.8

64.876.382.089.685.793.1

100.6104.2100.0109.6

113.1113.7121.8126.9135.4146.0161.0168.3183.4199.6

203.0208.3227.3254.3274.7275.0307.3343.6389.4438.4

468.1509.5509.2529.6

497.5506.9518.2515.5

514.8513.7508.9499.5

508.6522.2537.8549.8

16.17.8

13.6

15.621.730.940.942.938.236.542.547.144.6

50.359.364.171.267.573.879.482.478.686.8

89.789.896.7

100.6107.1115.5128.0134.1145.8157.5

158.2160.3175.4196.2211.4211.0237.4266.0299.2333.9

354.6385.3383.8402.7

375.9386.1391.6387.5

386.2386.8384.8377.4

385.4397.4409.2418.6

15.68.8

13.3

14.216.318.020.122.724.831.035.237.537.7

39.844.346.949.750.153.457J60.560.864.8

68.269.372.876.381.487.294.4

100.9110.0120.8

130.3139.4152.1168.3184.6195.6216.6239.5270.7303.4

330.7361.6378.8397.2

351.5359.4366.9368.4

371.6378.1381.9383.5

386.4394.3398.9409.2

8.45.27.1

7.58.19.09.9

10.911.914.316.117.918.5

19.821.523.124.926.128.631.333.635.638.5

41.444.147.250.254.458.964.771.379.689.7

98.3106.7118.2131.3145.6159.7177.4197.7226.6259.7

297.6337.7374.1411.5

325.3331.1342.1352.4

357.6369.1381.2388.5

396.4407.3416.4425.9

5.05.28.2

8.510.216.026.633.034.920.717.519.020.8

22.629.233.334.434.936.638.841.044.146.0

49.252.456.360.064.969.978.386.496.6

105.5

117.1126.5137.5148.7160.9176.1188.7202.4219.5236.2

260.3284.4306.0326.1

277.4280.8285.1294.2

298.7303.0307.7314.5

319.2324.6328.8331.8

0.5.4.6

.6

.7

.91.11.51.82.02.42.72.9

3.74.65.25.96.17.08.09.09.4

10.6

11.211.813.014.015.717.819.921.725.228.5

32.536.743.048.855.864.575.989.4

102.5114.9

128.0143.5156.6173.4

137.6141.5145.7149.4

152.4155.4158.2160.4

164.3170.1176.4182.7

6.12.54.4

4.46.4

10.112.012.012.414.915.117.612.8

13.716.115.113.112.511.511.211.113.210.9

11.712.112.312.010.813.114.112.612.714.6

14.315.018.732.826.524.619.119.126.331.9

21.830.521.521.0

26.529.135.031.3

27.416.815.826.0

22.221.015.525.3

1 The total of wage and salary disbursements and other labor income differs from compensation of employees in Table B-21 in that itexcludes employer contributions for social insurance and the excess of wage accruals over wage disbursements.



TABLE B-22.—Sources of personal income, 1929-83—Continued


Year or quarter

Rentalincome

ofpersons

withcapital

con-

Personaldividendincome

adjust-ment

Personalinterestincome

Transfer payments

Total

Old-age,survivors,disability,

andhealthinsur-ance

benefits

Govern-ment

unem-ployment

insur-ance

benefits

Veteransbenefits

Govern-ment

employ-ees

retire-ment

benefits

Aid tofamilies

withdepend-

entchildren(AFDC)

Other

Less:Persona!contribu-tions for

socialinsurance

Nonfarmpersonalincome2

192919331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

19701971197219731974197519761977197819791980198119821983 "

1981:

IIlljIV

1982:IIJlitIV

1983:

\\.ZZZIIIIV p

4.92.22.6

2.73.14.04.44.54.65.55.35.76.1

7.1778.8

10.011.011.311.612.212.913.6

14.515.015.816.517.118.018.719.719.519.6

19.720.221.022.623.523.023.524.826.627.9

31.541.449.954.8

37.439.942.745.6

47.449.050.952.3

54.154.853.956.2

5.82.03.8

4.04.44.34.44.64.65.66.37.07.2

8.58.58.89.1

10.311.111.511.312.2

12.913.314.415.517.319.119.420.221.922.4

22 222.624.126.529.129.936.539.645.350.8

56.862.866.470.5

59.661.964.565.3

65.665.666.467.9

68.869.370.972.9

6.95.55.4

5.35.35.25.15.25.96.67.68.18.7

9.710.511.212.513.714.916.718.820.322.5

25.026.429.032.235.639.744.448.353.461.1

69.474.880.993.9

112.4123.2132.5152.8179.4218.7

266.0341.3366.2366.3

308.7329.8361.9364.7

364.9371.9364.8363.1

357.2357.1369.9381.0

1.52.13.0

3.13.13.13.03.66.2

11.311.711.312.5

15.212.613.114.116.217.518.721.625.927.0

28.932.833.835.837.440.444.752.659.866.7

80.194.4

104.7119.5141.2178.3194.3207.9223.8250.3

297.6337.2374.5403.5

324.4327.7345.9350.7

354.6364.2380.4399.0

398.5405.3402.6407.5

0.0

.0

.1

.1

.2

.2

.3

.4

.5

.6

.7

1.01.92.23.03.64.95.77.38.5

10.2

11.112.614.315.216.018.120.825.530.232.9

38.544.549.660.470.181.492.9

104.9116.2131.8

154.2182.0204.5222.8

171.0173.4190.5192.8

195.0197.3209.3216.5

217.4221.1223.8229.0

0.4

.5

!4.1.1.4

1.1.8.9

1.9

1.5.9

1.11.02.21.51.51.94.12.8

3.04.33.13.02.72.31.92.22.12.2

4.05.85.74.46.8

17.615.812.79.79.8

16.115.624.825.5

16.115.014.416.8

19.023.224.932.2

29.030.022.620.6

0.6

.5

'.5

LO3.07.07.05.95.3

7.74.64.34.14.24.44.44.54.74.6

4.65.04.74.84.74.94.95.65.96.7

7.78.89.7

10.411,814.514.413.813.914.4

15.016.116.416.7

16.015.916.016.4

16.416.216.316.6

16.916.616.616.5

0.1

.3

'.3.4.4.5

7.7.9

1.01.11.21.41.51.71.92.22.52.8

3.13.43.74.24.75.26.16.97.68.7

10.211.813.816.019.0

29!032.736.943.049.354.258.5

47.449.249.850.9

51.554.555.155.8

56.658.359.359.7

1.01.11.31.41.51.71.92.32.83.5

4.86.26.97.27.99.2

10.110.610.711.0

12.413.513.414.3

13.313.513.613.5

13.313.413.313.5

14.114.414.314.5

0.81.41.7

1.71.81.81.82.02.02.1

2.52.93.3

3.53.63.84.14.14.34.54.95.35.8

6.26.46.77.37.88.39.2

10.211.112.5

15.017.419.021.125.632.835.136.940.746.3

56.960.861.265.6

60.660.661.660.3

59.459.761.664.3

64.564.966.067.1

1.21.82.22.32.02.12.22.2

2.93.43.84.04.65.25.86.76.97.9

9.39.7

10.311.812.613.317.820.622.926.2

27.930.734.542.647.950.455.561.169.881.1

88.7104.6112.0119.5

102.2103.6105.6106.8

110.7111.7112.7112.9

116.5118.6120.5122.5

159.9171.9188.2190.4

210.2235.4253.1271.3

- 273.9295.5318.0336.6344.4369.8

386.7401.6427.1449.7483.7522.6568.9611.9672.1733.9

790.0846.5925.3

1,023.71,131.81,229.11,359.31,506.51,689.71,899.3

2,119.52,377.02,527.62,691.2

2,285.82,337.92,427.92,456.6

2,471.32,516.82,546.02,576.5

2,606.12,663.32,716.62,779.0

2 Personal income exclusive of farm proprietors' income, farm wages, farm other labor income, and farm net interest.Note.—The industry classification of wage and salary disbursements and proprietors' income is on an establishment basis and is

based on the 1972 Standard Industrial Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948.Source: Department of Commerce, Bureau of Economic Analysis.


TABLE B-25.—Disposition of personal income, 1929-83


Year or quarter Personalincome

Less:Personaltax andnontax

payments

Equals:Dispos-

ablepersonalincome

Less: Personal outlays

Total

Personalcon-

sumptionexpendi-

tures

Interestpaid by

consum-ers tobusi-ness

Per-sonal

transferpay-

mentsto

for-eigners

(net)

Equals:Personalsaving

Percent of disposablepersonal income

Personal outlays

Total

Personalconsump-

tionexpend-

itures

1929...1933...1939...

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

1950 .1951 .1952..1953..1954..1955.1956..1957 .1958.1959

1960196119621963....1964....1965....19G6196719681969

197019711972197319741975197619771978 :::::;1979

1980198119821983 *

1981:I

1982:III ....

1983:I

IV P....

85.047.072.4

77.995.4122.6150.8164.5170.0177.6190.1209.0206.4

227.2254.9271.8287.7289.6310.3332.6351.0361.1384.4

402.3417.8443.6466.2499.2540.7588.2630.0690.6754.7

811.1868.4951.4

1,065.21,168.61,265.01,391.21,540.41,732.71,951.2

2,165.32,435.02,578.62,741.9

2,338.32,394.22,490.92,516.6

2,528.12,563.22,591.32,632.0

2,657.72,713.62,761.92,834.2

2.61.42.4

2.63.35.917.818.920.818.721.421.018.5

20.628.934.035.532.535.439.742.442.146.0

50.452.156.860.358.664.974.582.197.2115.7

115.8116.7141.0150.7170.2168.9196.8226.4258.7301.0

336.5387.4402.1406.3

370.7383.8398.9396.1

400.2404.2399.8404.1

401.8412.6400.1410.6

82.445.670.0

75.392.2

116.6133.0145.6149.1158.9168.7188.0187.9

206.6226.0237.7252.2257.1275.0292.9308.6319.0338.4

352.0365.8386.8405.9440.6475.8513.7547.9593.4638.9

695.3751.8810.3914.5998.3

1,096.11,194.41,314.01,474.01,650.2

1,828.92,047.62,176.52,335.6

1,967.62,010.42,092.02,120.5

2,127.92,159.02,191.52,227.8

2,255.92,301.02,361.72,423.6

79.146.567.8

72.081.889.4

100.1109.0120.4145.2163.5176.9180.4

194.7210.0220.4233.7240.1258.5271.6286.4295.4317.3

332.3342.7363.5384.0411.0442.1477.7503.6551.5598.3

639.5691.1757.7835.5913.2

1,001.81,111.91,236.01,384.6

•1,553.5

1,718.71,912.42,051.12,222.5

1,855.31,890.21,942.31,961.5

1,997.02,031.92,068.42,107.0

2,134.22,209.52,245.92,300.1

77.345.867.0

71.080.888.699.4

108.2119.5143.8161.7174.7178.1

192.0207.1217.1229.7235.8253.7266.0280.4289.5310.8

324.9335.0355.2374.6400.5430.4465.1490.3536.9581.8

621.7672.2737.1812.0888.1976.4

1,084.31,204.41,346.51,507.2

1,668.11,857.21,991.92,158.6

1,802.81,835.81,886.11,904.1

1,938.91,972.82,008.82,046,9

2,073.02,147.02,181,12,233.1

.9

.7

.5

!5

LO1.41.7

2.32.52.93.63.84.45.15.55.66.1

7.07.37.88.89.9

11.112.012.513.815.6

16.717.719.522.324.124.426.730.737.445.5

49.654.358.162.7

51.753.555.356.5

57.057.858.559.1

60.261.463.665.8

0.3.2.2

.2

.2

.1

.2

.4

.5

.7

.7

.7

.5

.4

.4

.4

.5

.5

.4

.5

.5

.4

.4

.4

.4

.5

.6

.6

.7

.7

.9

.8

.9

1.11.11.11.31.0.9.9.9

3.3- 0 . 9

2.2

3.410.327.232.936.628.713.75.2

11.17.5

11.916.117.418.517.016.421.322.323.621.1

19.723.023.321.929.633.736.044.341.940.6

55.860.752.679.085.194.382.578.089.496.7

110.2135.3125.4113.1

112.2120.2149.7159.0

130.8127.1123.0120.8

121.791.5

115.8123.5

96.0102.096.9

35.588.876.775.374.880.891.496.994.196.0

94.292.992.792.793.494.092.792.892.693.8

94.493.794.094.693.392.993.091.992.993.6

92.091.993.591.491.591.493.194.193.994.1

94.093.494.295.2

94.394.092.892.5

93.994.194.494.6

94.696.095.194.9

93.8100.595.6

94.287.676.074.774.380.190.595.993.094.8

92.991.691.391.191.792.390.890.990.791.8

92.391.691.892.390.990.590.589.590.591.1

89.489.491.088.889.089.190.891.791.391.3

91.290.791.592.4

91.691.390.289.8

91.191.491.791.9

91.993.392.492.1



TABLE B-24.—Total and per capita disposable personal income and personal consumption expenditures in

current and 1972 dollars, 1929-83

[Quarterly data at seasonally adjusted annual rates, except as noted]

Year or quarter

Disposable personal income

Total (billions ofdollars)

Currentdollars

1S72dollars

Per capita(dollars)

Currentdollars

1972dollars

Personal consumption expenditures

Total (billions ofdollars)

Currentdollars

1972dollars

Per capita(dollars)

Currentdollars

1972dollars

Popula-tion

(thou-sands) 1

82.445.670.0

75.392.2

116.6133.0145.6149.1158.9168.7188.0187.9

206.6226.0237.7252.2257.1275.0292.9308.6319.0338.4

352.0365.8386.8405.9440.6475.8513.7547.9593.4638.9

1,828.92,047.62,176.52,335.6

1,967.62,010.42,092.02,120.5

2t127.92,159.02,191.52,227.8

2,255.92,301.02,361.72,423.6

229.5169.6229.8

244.0277.9317.5332.1343.6338.1332.7318.8335.8336.8

362.8372.6383.2399.1403.2426.8446.2455.5460.7479.7

489.7503.8524.9542.3580.8616.3646.8673.5701.3722.5

751.6779.2810.3864.7857.5874.9906.8942.9988.8

1,015.7

1,021.61,054.71,060.21,094.3

1,040.71,045.61,068.11,064.3

1,055.11,060.21,059.31,066.1

1,073.81,083.01,100.11,120.3

676363534

570691865973

1,0521,0661,1241,1701,2821,259

1,3621,4651,5151,5811,5831,6641,7411,8021,8321,911

1,9471,9912,0732,1442,2962,4482,6132,7572,9563,152

3,3903,6203,8604,3154,6675,0755,4775,9656,6217,331

8,0328,9069,3779,968

8,5888,7579,0889,188

9,1999,3159,4309,562

9,6619,834

10,06910,307

1,88313491,754

1,8472,0832,3542,4292,4832,4162,3532,2122,2902,257

2,3922,4152,4412,5012,4832,5822,6532,6602,6452,709

2,7092,7422,8132,8653,0263,1713,2903,3893,4933,564

3,6653,7523,8604,0804,0094,0514,1584,2804,4414,512

4,4874,5874,5674,671

4,5434,5544,6404,612

4,5624,5744,5584,576

4,5994,6294,6904,764

77.345.867.0

71.080.888.699.4

108.2119.5143.8161.7174.7178.1

192.0207.1217.1229.7235.8253.7266.0280.4289.5310.8

324.9335.0355.2374.6400.5430.4465.1490.3536.9581.8

621.7672.2737.1812.0888.1976.4

1,084.31,204.41,346.51,507.2

1,668.11,857.21,991.92,158.6

1,802.81,835.81,886.11,904.1

1,938.91,972.82,008.82,046.9

2,073.02,147.02,181.12,233.1

215.1170.5219.8

229.9243.6241.1248.2255.2270.9301.0305.8312.2319.3

337.3341.6350.1363.4370.0394.1405.4413.8418.0440.4

452.0461.4482.0500.5528.0557.5585.7602.7634.4657.9

672.1696.8737.1767.9762.8779.4823.1864.3903.2927.6

931.8956.8970.2

1,011.4

953.6954.7962.9955.7

961.4968.8971.0979.6

986.71,010.61,016.01,032.2

634364511

537605657727781854

1,0171,1221,1921,194

1,2661,3421,3831,4391,4521,53515811,6371,6621,755

1,7971,8231,9041,9792,0872,2142,3662,4672,6742,870

3,0313,2373,5113,8314,1524,5214,9725,4686,0486,695

7,3268,0788,5819,213

7,8697,9968,1948,250

8,3828,5118,6448,785

8,8789,1769,2999,497

1,7651,3561,678

1,7401,8261,7881,8151,8441,9362,1292,1222,1292,140

2,2242,2142,2302,2772,2782,3842,4102,4162,4002,487

2,5012,5112,5832,6442,7512,8682,9793,0323,1603,245

3,2773,3553,5113,6233,5663,6093,7743,9244,0574,121

4,0934,1614,1804,317

4,1624,1594,1834,141

4,1564,1794,1794,204

4,2264,3194,3324,390

121,878125,690131,028

132,122133,402134,860136,739138,397139,928141,389144,126146,631149,188

151,684154,287156,954159,565162,391165,275168,221171,274174,141177,073

180,760183,742186,590189,300191,927194,347196,599198,752200,745202,736

205,089207,692209,924211,939213,898215,981218,086220,289222,629225,106

227,694229,916232,118234,297

229,097229,580230,187230,797

231,304231,790232,387232,990

233,501233,984234,564235,138

1 Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1960. Annual data are forJuly 1 through 1958 and are averages of quarterly data beginning 1960. Quarterly data are averages for the period. Data beginning1970 reflect results of the 1980 census of population.

. Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).


TABLE B-25.—Gross saving and investment, 1929-83


Year orquarter

Gross saving

Total

Gross private saving

Total Personalsaving

Grossbusinesssaving*

Government surplus ordeficit ( - ) , national income

and product accounts

Total FederalStateandlocal

Capitalgrants

receivedby theUnitedStates(net ) 2

Gross investment

Total

Grossprivate

domesticinvest-ment

Netforeigninvest-ment 3

1929193319391940194119421943194419451946194719481949

1950195119521953195419551956195719581959

15.9.9

19601961196219631964196519661967196819691970197119721973197419751976197719781979

1980198119821983 »1981:

IIIIllIV

1982:I

IV....1983:

IIIIV..

8.813.518.610.75.42.45.2

35.141749.835.6

50.756.951.049.850.967.575.975.262.678.3

81.178.786.793.6104.0120.2127.3125.7136.0153.6

148.9161.6186.6235.5227.8218.9257.9309.1374.8422.7

405.9483.8405.8436.0

461.8475.8507.6490.1

434.4439.5397.9351.3

398.5420.6455.4

14.92.2

11.014.222.442.049.654.344.729.627.341.439.042.750.854.856.758.164.470.774.375.379.978.083.090.592.9

106.3119.7128.6139.9142.0143.6

158.6180.3189.2227.7234.5282.7294.4326.9374.0407.3435.4509.6521.6567.8

468.8485.2531.6552.8

514.1520.7524.9526.6

541.5535.0587.2

3.3- . 92.23.4

10.327.232.936.628.713.75.2

11.17.5

11.916.117.418.517.016.421.322.323.621.119.723.023.321.929.633.736.044.341.940.6

55.860.752.679.085.194.382.578.089.496.7

110.2135.3125.4113.1

112.2120.2149.7159.0

130.8127.1123.0120.8

121.791.5

115.8123.5

11.63.1

10.812.114.816.717.616.015.922.130.231.530.734.837.438.241.147.949.452.051.758.7

58.360.067.271.076.786.092.795.6

100.0103.0102.8119.7136.6148.7149.4188.4211.9248.9284.6310.6325.2374.3396.1454.8

356.6365.1381.9393.8

383.3393.6401.9405.8

419.8443.5471.4

1.0-1 .4-2.2- . 7

-3 .8= 31.4=44.1-51.8-39.5

5.414.48.4

-3 .48.06.1

-3 .8-6 .9- 7 . 1

3.15.2

.9-12.6-1 .6

3.1-4 .3-3 .8

.7-2 .3

.5-1 .3

-14.2-6 .0

9.9-10.6-19.4-3 .3

7.8-4.7

-63.8-36.5-17.8

.814.3

-30.7-26.9

-115.8-131.8

-8 .1-10.6-25.2-63.7

-79.7-81.2

-127.0-175.3

-142.9-114.4-131.8

1.2-1 .3-2 .2-1 .3- 5 . 1

-33.1-46.6-54.5-42.1

3.513.48.3

-2 .69.26.5

-3 .7- 7 . 1-6 .0

4.46.12.3

-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

-11.5-69.3-53.1-45.9-29.5-16.1-61.2-62.2

-147.1-182.9

-43.4-47.3-62.4-95.8

-108.5-113.2-158.3-208.2

-183.3-166.1-187.3

- 0 . 2

~'.Q

.61.31.82.52.72.61.91.0.1

- 7-1 .2

- . 4- . 0

.1-1 .1- 1 . 3

- . 9-1 .4-2 .4

~A.5

~!o- i l l

.11.51.92.6

13.513.46.85.5

16.628.030.330.430.635.331.351.0

35.336737.332.0

28.832.031.332.9

40.451.755.5

0.9.7.7.0

«-2.0.0.0.0.0

1.11.21.1.0.0

1.11.11.11.1

.0

.0

.0

.0

.0

.0

.0

.0

17.01.6

10.314.719.29.83.75.29.3

35.643.248.336.252.060.152.752.152.968.873.874.062.877.078778.688.895.3

104.2119.01287125.4133.91497

147.41657189.9236.3231.5224.4263.0310.4372.3421.2408.2478.9406.2436.1

466.8471.6495.54817

427.7441.3400.5355.5

397.4417.1457.9472.0

16.21.49.3

13.117.99.95.87.2

10.630.734.045.935.353.859.252.153.352.768.471.069.261.978.175.974.885.490.997.4

113.5125.7122.8133.3149.3

144.2166.4195.0229.82287206.1257.9324.1386.6423.0

401.9474.9414.5471.3

455.5472.1495.8476.2

422.9432.5425.3377.4

404.1450.1501.1529.8

0.8.2

1.01.51.3

- . 1- 2 . 1-2 .0-1 .3

4.99.32.4.9

-1 .8.9.6

-1 .3

A2.84.8

.9-1 .2

2.83.83.44.46.85.43.02.6

.6

.43.2

- 7- 5 . 1

6.52.9

18.35.1

-13.6-14.3

-1 .88.34.0

-8 .3-35.2

11.3- . 5- . 35.5

4.887

-24.8-21.9

-6 .7-33.0-43.2-57.8

1 Undistributed corporate profits with inventory valuation and capital consumption adjustments, corporate and noncorporate capitalconsumption allowances with capital consumption adjustment, and private wage accruals less disbursements.

2 Allocations of special drawing rights (SDRs), except as noted in footnote 4.9 Net exports of goods and services less net transfers to foreigners and interest paid by government to foreigners plus capital grants

received by the United States, net.4 In February 1974, the U.S. Government paid to India $2,010 million in rupees under provisions of the Agricultural Trade

Development and Assistance Act. This transaction is being treated as capital grants paid to foreigners, i.e., a - $ 2 . 0 billion entry incapital grants received by the United States, net.



TABLE B-26.—Saving by individuals, 1946-83 *


Year orquarter Total

Increase in financial assets

Total

Check-able

depos-its

andcur-

rency

Timeandsav-ingsde-

posits

Moneymarket

fundshares

Govern-ment

securi-ties2

Securities

Corpo-rateequi-ties3

Othersecuri-ties4

Insur-anceand

pensionre-

serves5

Otherfinan-

cialas-

sets6

Owner-occu-pied

homes

Net investment i n 1

Con-sumerdura-bles

Non-cor-

poratebusi-nessas-

sets8

Less: Net increase indebt

Mort-gagedebton

non-farm

homes

Con-sumercredit

Otherdebt 8 9

1946194719481949

24.620.124.320.9

18.813.29.19.9

5.6.1

- 2 . 9- 2 . 0

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

198019811982

1981:I

IV

1982:IIIIllIV

1983:

ii"Z

30.634.731.332.528.2

34.137.236.534.138.0

36.735.942.046756.8

65.072.877.080.571.5

86.495.6

109.3132.0128.3

153.0165.1169.5196.0202.9

236.1286.7306.9

222 2259.8320.8344.0

287.0272.5334.7333.1

320.7255.6292.5

13.719.123.222.822.2

28.030.228.631.637.4

32.135.440.146.655.7

58.857.969.875.665.2

81.5102.1131.5148.5147.3

174.3210.5235.4275.3293.6

323.1354.2365.2

294.0356.4379.8386.3

316.2347.1389.6409.9

414.6405.4439.:

1.61.02.2

1.21.8

- . 43.81.0

1.0- . 9

- 1 . 24.25.3

7.62.49.9

11.1- 2 . 5

8.912.213.914.17.4

6.915.720.122.522.0

3.825.823.0

42.76.25.5

25.9.7

19.945.2

75.450.817.1

7.88.19.1

8.69.4

11.913.911.0

12.018.326.126.226.1

27.819.035.331.1

9.1

43.667.774.463.655.7

83.4107.5107.5100.378.5

125.666.3

120.5

21.092.688.962.7

113.397.987.0

183.3

272.8163.2218.0

2.4

1.3- . 0

.26.9

34.4

29.2107.524.7

148.459.9

137.384.3

38.240.588.1

-68.1

-105 .2- 6 2 . 7

- 6 . 5

- 1 . 51.61.31.8

- . 1- . 62.52.51.0

5.83.92.3

- 2 . 510.1

2.21.41.3.6

4.8

3.711.3

- 1 . 25.2

25.9

-5 .4-12.2

2.724.228.3

25.011.718.233.656.0

39.558.159.7

3.089.773.066.7

54.064.137.881.8

22.196.850.0

.3- 2 . 1- 2 . 6

- 2 . 1- . 7

- 4 . 7- 7 . 5- 2 . 8

- 1 . 7- 5 . 5- 5 . 1- 5 . 8- . 6

- 3 . 8-4 .6- 3 . 5- 5 . 1

-15.2

.0-31 .6

3.5

-17.9-28.6-55.8-24.3

-8 .612.2

10.0

7.628.67.9

- 0 . 9- . 8

.0

- . 7.3.0

.81.21.01.1

2.4.1.1

1.4. .4

1.32.45.27.9

10.0

6.96.54.9

11.16.8

4.48.66.5

13.613.9

-2 .6- 7 . 3

-17.6

-14.4-5 .9

- 2 0 . :11.8

-33.9-29.4

-16.4-27.3

3.2

5.35.45.35.6

6.96.37.77.97.8

8.59.59.5

10.411.9

11.512.112.713.916.1

16.919.218.619.821.5

23.927.429.433.036.2

43.552.467.473.868.2

89.6101.8120.4

76.7103.5117.7109.4

104.3120.5119.6137.2

145.9140.6139.8

2.82.42.21.6

1.91.92.02.12.1

2.12.52.83.53.3

3.64.33.22.93.2

3.74.46.78.14.0

5.45.8

11.48.3

11.1

13.619.218.929.635.8

37.933.630.9

34.639.133.727.0

22.940.637.027.6

15.49.7

3.66.79.18.4

11.811.711.312.312.7

16.715.613.212.316.3

14.812.713.514.315.0

13.511.715.716.3

13.620.728.031.025.2

23.536.153.265.771.8

52.648.326.1

53.052.247.940.2

28.328.524.227.4

32.545.656.8

6.19.09.8

10.6

14.811.38.6

10.17.1

12.28.57.73.67.3

7.04.38.5

11.815.0

20.223.121.127.026.3

20.026.634.640.428.4

26.540.049.656.752.5

32.839.735.3

45.838.445.229.4

35.536.933.135.5

36.450.651.5

2.31.86.91.8

6.84.52.31.01.9

2.91.22.72.65.0

3.64.77.59.89.2

13.310.810.210.012.7

11.517.520.626.610.6

5.83.3

14.;23.322.4

3.42?J21.530.126.621.0

11.75.62.3

8.24.8

- 4 . 7

3.64.74.64.4

6.76.66.27.68.7

12.211.28.99.5

12.8

11.712.214.116.217.5

17.013.812.516.918.6

14.126.241.446.538.0

40.661.490.8

111.5121.2

98.378.855.8

97.271.857.6

64.947.655.057.7

89.1106.3127.8

3,13.73.23.2

4.81.65.34.21.5

7.23.92.9

.58.0

4.42.56.38.99.8

10.66.55.7

11.510.8

5.414.719.824.3

9.9

9.625.440.248.845.4

4.924.118.3

26.331.532.36.3

2.635.911.123.6

28.149.549.1

- 0 . 42.22.82.2

5.03.72.71.95.5

6.43.23.86.07.2

4.96.57.2

10.710.8

14.312.217.619.219.4

20.730.344.243.835.4

26.937.951.964.770.8

72.677.453.5

77.488.674.569.0

33.768.151.760.7

53.895.173.4

1 Saving by households, personal trust funds, nonprofit institutions, farms, and other noncorporate business.2 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.* Corporate and foreign bonds and open market paper.5 Private life insurance reserves, private insured and nonjnsured 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 nontife insurance claims for noncorporate business.7 Purchases of physical assets less depreciation.8 Includes data for corporate farms.9 Other debt consists of security credit, policy loans, and noncorporate business debt.



TABLE B-27.—Number and median income (in 1982 dollars) of families and persons, and poverty status,

by race, selected years, 1947-82

Year

Families l

Num-ber

(mil-lions)

Medianincome

Below poverty levelTotal

Num-ber

(mil-lions)

Rate

Femalehouseholder

Num-ber

(mil-lions)

Rate

Persons. below

poverty level

Num-ber

(mil-lions)

Rate

Median income of persons 14 years oldand nup.r with income 2

Males

Altpersons

Year-round

full-timeworkers

Females

Allper-sons

Year-roundfull-time

work-ers

ALL RACES

1947

1950

195519601961196219631964

19651966 319671968196919701971197219731974 3

19751976197719781979 *

198019811982

WHITE

19701971197219731974 3

19751976197719781979 4

198019811982

BLACK

19701971197219731974 3

19751976197719781979 *

198019811982

37.2

39.9

42.945.546.447.147.548.0

48.549.250.150.851.6

52.253.354.455.155.7

56.256.757.257.859.6

60.361.061.4

46.547.648.548.949.4

49.950.150.550.952.2

52.753.353.4

4.95.25.35.45.5

5.65.85.85.96.2

6.36.46.5

$13,098

13,308

15,92618,31718,50419,00519,70120,442

21,28322,40222,93423,94924,837

24,52824,51325,64826,17525,254

24,60425,36325,50026,09926,047

24,62623,76123,433

25,44525,43526,64727,35726,244

25,58926,34526,66427,17627,180

25,65824,95924,603

15,60815,34915,83715,78915,671

15,74415,67115,23216,09615,391

14,84614,07913,598

8.28.48.17.67.2

6.75.85.75.05.0

5.35.35.14.84.95.55.35.35.35.5

6.26.97.5

3.73.83.43.23.4

3.83.63.53.53.64.24.75.1

1.51.51.51.51.51.51.61.61.61.71.82.02.2

18.118.117.215.915.0

13.911.811.410.09.7

10.110.09.38.88.8

9.79.49.39.19.210.311.212.2

8.07.97.16.66.87.77.17.06.96.98.08.89.6

29.528.829.028.126.927.127.928.227.527.828.930.833.0

2.02.02.02.01.8

1.91.71.81.81.8

2.02.12.22.22.32.42.52.62.72.63.03.33.4

.8

.91.01.01.01.01.11.21.21.21.31.41.5

42.442.142.940.436.4

38.433.133.332.332.7

32.533.932.732.232.132.533.031.731.430.432.734.636.3

25.026.524.324.524.8

25.925.224.023.522.325.727.427.9

54.353.553.352.752.250.152.251.050.649.449.452.956.2

39.939.638.636.436.1

33.228.527.825.424.125.425.624.523.023.4

25.925.024.724.526.129.331.834.4

17.517.816.215.115.7

17.816.716.416.317.219.721.623.5

7.57.47.77.47.27.57.67.77.68.18.69.29.7

22.221.921.019.519.0

17.314.714.212.812.1

12.612.511.911.111.212.311.811.611.411.7

13.014.015.0

9.99.99.08.48.6

9.79.18.98.719.010.211.112.0

33.532.533.331.430.331.331.131.330.631.032.534.235.6

$9,63510,30412,10413,29913,51713,95114,22114,460

15,36715,78116,05416,59116,927

16,58016,45217,18917,49816,54315,877.15,98316,12416,17915,664

14,67814,29913,950

17,42817,24818,02918,36017,33016,67916,84916,88916,94516,36315,61215,17214,748

10,33410,28610,92011,10610,7389,97110,14510,02210,15110,299

9,3829,0228,838

$15,28917,71218,27118,59219,13819,554

20,18520,68721,07221,68022,823

22,83022,95424,31424,90923,80523,19623,49924,00423,76423,244

22,45921,96121,655

23,48323,60025,19125,63024,26923,73224,20024,49524,20523,915

23,10022,47622,232

15,99616,13817,01117,27417,38717,66117,33216,88718,53917,38216,25315,90315,790

$4,394

3,821

4,0374,1114,1284,2834,3264,509

4,6534,8735,2075,6025,613

5,5615,7395,9976,0736,033

6,0716,0636,2776,0195,787

5,7635,7935,887

5,6335,8346,0366,1326,101

6,1346,1146,3736,0915,842

5,7955,8575,967

5,1285,1125,6395,5345,508

5,5725,7625,5035,4355,350

5,3655,2045,263

$9,86010,74110,78111,03211,21111,546

11,67511,97412,13612,67413,368

13,52313,58713,96614,09214,042

13,84314,09414,03914,26414,004

13,57813,22113,663

13,76113,74514,24014,33114,161

13,87614,20214,12814,39914,127

13,70913,44113,847

11,27612,13612,18212,15313,069

13,25713,27813,20513,34513,016

12,78612,13912,376

^ h e term "family" refers to a group of two or more persons related by blood, marriage, or adoption and residing together; all suchpersons are considered members of the same family. Beginning 1979 based on householder concept and restricted To primary families,

beginning 1979, data are for persons 15 years and over.3 Based on revised methodology; comparable with succeeding years.4 Based on 1980 census population controls; comparable with succeeding years.

Note.—The poverty level is based on the poverty index adopted by a Federal interagency committee in 1969. That index reflecteddifferent consumption requirements for families based on size and composition, sex and age of family householder, and farm-nonfarmresidence. Minor revisions implemented in 1981 eliminated variations in the poverty thresholds based on two of these variables, farm-nonfarm residence and sex of householder. The poverty thresholds are updated every year to reflect changes in the consumer priceindex. For further details see "Current Population Reports," Series P-60, No. 138.

Source: Department of Commerce, Bureau of the Census.


POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY

T A B L E B-28.—Population by age groups, 1929-83[Thousands of persons]

July 1 TotalAge (years)

Under 5 5-15 16-19 20-24 25-44 45-64 65 andover

1929

1933

1939

19401941194219431944

19451946194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983

121,767

125,579

130,880

132.1221331402134,860136,739138,397

139,928141,389144,126146,631149,188

152,271154,878157,553160,184163,026

165,931168,903171,984174,882177,830

180,671183,691186,538189,242191,889

194,303196,560198,712200,706202,677

205,052207,661209,896211,909213,854

215,973218,035220,239222,585225,055

227,704229,849232,057234,249

11,734

10,612

10,418

10,57910,85011,30112,01612,524

12,97913,24414,40614,91915,607

16,41017,33317,31217,63818,057

18,56619,00319,49419,88720,175

20,34120,52220,46920,34220,165

19,82419,20818,56317,91317,376

17,16617,24417,10116,85116,487

16,12115,61715,56415,73516,063

16,45716,94317,372

26,800

26,897

25,179

24,81124,51624,23124,09323,949

23,90724,10324,46825,20925,852

26,72127,27928,89430,22731,480

32,68233,99435,27236,44537,368

38,49439,76541,20541,62642,297

42,93843,70244,24444,62244,840

44,81644,59144,20343,58242,989

42,50842,09941,29840,42839,552

38,82038,04637,620

9,127

9,302

9,822

9,8959,8409,7309,6079,561

9,3619,1199,0978,9528,788

8,5428,4468,4148,4608,637

8,7448,9169,1959,54310,215

10,68311,02511,18012,00712,736

13,51614,31114,20014,45214,800

15,28915,68816,03916,44616,769

17,01717,19417,27617,28817,242

17,13616,68216,205

10,694

11,152

11,519

11,69011,80711,95512,06412,062

12,03612,00411,81411,79411,700

11,68011,55211,35011,06210,832

10,71410,61610,60310,75610,969

11,13411,48311,95912,71413,269

13,74614,05015,24815,78616,480

17,20218,15918,15318,52118,975

19,52719,98620,49920,94621,297

21,61221,94621,935

35,862

37,319

39,354

39,86840,38340,86141,42042,016

42,52143,02743,65744,28844,916

45,67246,10346,49546,78647,001

47,19447,37947,44047,33747,192

47,14047,08447,01346,99446,958

46,91247,00147,19447,72148,064

48,47348,93650,48251,74953,051

54,30255,85257,56159,40061,379

63,47465,49667,625

21,076

22,933

25,823

26,24926,71827,19627,67128,138

28,63029,06429,49829,93130,405

30,84931,36231,88432,39432,942

33,50634,05734,59135,10935,663

36,20336,72237,25537,78238,338

38,91639,53440,19340,84641,437

41,99942,48242,89843,23543,522

43,80144,00844,15044,28644,390

44,49344,47644,474

6,474

7,363

8,764

9,0319,2889,5849,86710,147

10,49410,82811,18511,53811,921

12,39712,80313,20313,61714,076

14,52514,93815,38815,80616,248

16,67517,08917,45717,77818,127

18,45118,75519,07119,36519,680

20,10720,56121,02021,52522,061

22,69623,27823,89224,50225,134

25,71426,26026,824

Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950.


253


TABLE B-29-—Population and the labor force, 1929-83

[Monthly data seasonally adjusted, except as noted]

Period

Civiliannoninsti-tutionalpopula-tion1

Resi-dent

ArmedForces *

Laborforce

includ-ing

resi-dent

ArmedForces

Employ-ment

includingresidentArmedForces

Civilian labor force

Total

Employment

Total Agri-cultural

Nonagri-cultural

Unemploy-ment

Unemploy-ment rate

Allwork-

Civil-ian

work-ers

Labor forceparticipation

rate

Total3

1929...

1933...

1939...

19401941194219431944

194519461947

194719481949

1950195119521953 *..1954

19551956....195719581959

I960'..19611962 ̂..19631964

19651966196719681969....

197019711972 5..1973«..1974

1975197619771978»..1979

1980198119821983

Thousands of persons 14 years of age and over Percent

99,84099,90098,64094,64093,220

94,090103,070106,018

101,827103,068103,994

104,995104,621105,231107,056108,321

109,683110,954112,265113,727115,329

117,245118,771120,153122,416124,485

126,513128,058129,874132,028134,335

137,085140,216144,126147,096150,120

153,153156,150159,033161,910164,863

167,745170,130172,271174,215

49,180 47,630 10,450

51,590

55,230

55,64055,91056,41055,54054,630

53,86057,52060,168

38,760

45,750

47,52050,35053,75054,47053,960

52,82055,25057,812

10,090

9,610

9,5409,1009,2509,0808,950

8,5808,3208,256

37,180

28,670

36,140

37,98041,25044,50045,39045,010

44,24046,93049,557

Thousands of persons 16 years of age and over

1,1692,1432,3862,2312,142

2,0641.9G51,9481,8471,788

1,8611,9002,0612,0062,018

1,9462,1222,2182,2532,238

2,1181,9731,8131,7741,721

1,6781,6681,6561,6311,597

1,6041,6451,6681,676

63,37764,16064,52465,24665,785

67,08768,51768,87769,48670,157

71,48972,35972,67573,83975,109

76,40177,89279,56580,99082,972

84,88986,35588,84791,20393,670

95,45397,826100,665103,882106,559

108,544110,315111,872113,226

60,08762,10462,63663,41062,251

64,23465,76466,01964,88366,418

67,63967,64668,76369,76871,323

73,03475,01776,59078,17380,140

80,79681,34083,96686,83888,515

87,52490,42093,67397,679100,421

100,907102,042101,194102,510

59,35060,62161,286

62,20862,01762,13863,01563,643

65,02366,55266,92967,63968,369

69,62870,45970,61471,83373,091

74,45575,77077,34778,73780,734

82,77184,38287,03489,42991,949

93,77596,15899,009102,251104,962

106,940108,6/0110,204111,550

57,03858,34357,651

58,91859,96160,25061,17960,109

62,17063,79964,07163,03664,630

65,77865,74666,70267,76269,305

71,08872,89574,37275,92077,902

78,67879,36782,15385,06486,794

85,84688,75292,01796,04898,824

99,303100,39799,526

100,834

7,8907,6297,658

7,1606,7266,5006,2606,205

6,4506,2835,9475,5865,565

5,4585,2004,9444,6874,523

4,3613,9793,8443,8173,606

3,4633,3943,4843,4703,515

3,4083,3313,2833,3873,347

3,3643,3683,4013,383

49,14850,71449,993

51,75853,23553,74954,91953,904

55,72257,51458,12357,45059,065

60,31860,54661,75963,07664,782

66,72668,91570,52772,10374,296

75,21575,97278,66981,59483,279

82,43885,42188,73492,66195,477

95,93897,03096,12597,450

1,550

12,830

9,480

8,1205,5602,6601,070

670

1,0402,2702,356

2,3112,2763,637

3,2882,0551,8831,8343,532

2,8522,7502,8594,6023,740

3,8524,7143,9114,0703,786

3,3662,8752,9752,8172,832

4,0935,0164,8824,3655,156

7,9297,4066,9916,2026,137

7,6378,273

10,67810,717

5.23.22.92.85.4

4.34.04.26.65.3

5.46.55.45.55.0

4.43.73.73.53.4

4.85.85.54.85.5

8.37.66.96.05.8

7.07.59.59.5

3.2

24.9

17.2

14.69.94.71.91.2

1.93.93.9

3.93.35.9

5.33.33.02.95.5

4.44.14.36.85.5

5.56.75.55.75.2

4.53.83.83.63.5

4.95.95.64.95.6

8.57.77.16.15.8

7.17.69.79.6

59.760.160.059.759.6

60.060.760.360.159.9

60.060.059.559.359.4

59.559.860.260.360.8

61.060.760.961.361.7

61.662.062.663.564.0

64.164.264.364.4


254


TABLE B-29.—Population and the labor force, 1929-83—Continued

[Monthly data seasonally adjusted, except as noted]

Period

Civiliannoninsti-tutionalpopula-tion1

Resi-dent

ArmedForces *

Laborforce

includ-ing

resi-dent

ArmedForces

Employ-ment

includingresidentArmedForces

Civilian labor force

Total

Employment

Total culturalNonagri-cuttural

Unemploy-ment

Unemploy-ment rate

Allwork-ers2

Civil-ian

work-ers

Labor forceparticipation

rate

Total2 Civil-ian4

Thousands of persons 16 years of age and over Percent

1981:JanFebMar...

May....June...

July....Aug....Sept...OctNov....Dec...

1982:JanFebMar....AprMay....June...


1983:JanFebMar...,AprMay...,June..,

July...,Aug...Sept..OctNov...,Dec...

169,104169,280169,453169,641169,829170,042

170,246170,399170,593170,809170,996171,166

171,335171,489171,667171,844172,026172,190

172,364172,511172,690172,881173,058173,199

173,354173,505173,656173,794173,953174,125

174,306174,440174,602174,779174,951175,121

1,6321,6321,6361,6331,6271,629

1,6481,6641,6611,6541,6591,665

1,6561,6641,6711,6681,6651,664

1,6741,6891,6701,6681,6601,665

1,6671,6641,6641,6711,6691,668

1,6641,6821,6951,6951,6851,688

109,657109,899110,233110,598110,834110,063

110,237110,345109,918110,631110,828110,547

110,731111,167111,335111,569112,207111,797

112,073112,162112,349112,358112,583112,538

112,344112,352112,399112,646112,619113,573

113.489113,799113,924113,561113,720113,824

101,583101,849102,245102,707102,723102,008

102,353102,302101,674101,978101,814101,250

101,338101,474101,425101,266101,844101,317

101,177101,252101,082100,814100,696100,644

100,821100,836100,980101,277101,431102,411

102,889103,166103,571103,665104,291104,629

108,025108,267108,597108,965109,207108,434

108,589108,681108,257108,977109,169108,882

109,075109,503109,664109,901110,542110,133

110,399110,473110,679110,690110,923110,873

110,677110,688110,735110,975110,950111,905

111,825112,117112,229111,866112,035112,136

99,951100,217100,609101,074101,096100,379

100,705100,638100,013100,324100,15599,585

99,68299,81099,75499,598100,17999,653

99,50399,56399,41299,14699,03698,979

99,15499,17299,31699,60699,762100,743

101,225101,484101,876101,970102,606102,941

3,4213,3553,3673,5363,3763,340

3,3053,3653,3573,3933,4103,231

3,3813,3913,3803,3753,4533,339

3,4173,3803,3663,4433,4993,429

3,4203,4153,3863,3923,3743,479

3,4993,4493,3083,2403,2573,356

96,53096,86297,24297,53897,72097,039

97,40097,27396,65696,93196,74596,354

96,30196,41996,37496,22396,72696,314

96,08696,18396,04695,70395,53795,550

95,73495,75795,93096,21496,38897,264

97,72698,03598,56898,73099,34999,585

8,0748,0507,9887,8918,1118,055

7,8848,0438,2448,6539,0149,297

9,3939,6939,91010,30310,36310,480

10,89610,91011,26711,54411,88711,894

11,52311,51611,41911,36911,18811,162

10,60010,63310,3539,8969,4299,195

7.47.37.27.17.37.3

7.27.37.57.88.18.4

8.58.78.99.29.29.4

9.79.7

10.010.310.610.6

10.310.210.210.19.99.8

9.39.39.18.78.38.1

7.57.47.47.27.47.4

7.37.47.67.98.38.5

8.68.99.09.49.49.5

9.99.9

10.210.410.710.7

10.410.410.310.210.110.0

9.59.59.28.88.48.2

64.264.364.464.664.664.1

64.164.163.864.164.264.0

64.064.264.264.364.664.3

64.464.464.464.464.464.4

64.264.164.164.264.164.6

64.564.664.664.364.464.4

63.964.064.164.264.363.8

63.863.863.563.863.863.6

63.763.963.964.064.364.0

64.164.064.164.064.164.0

63.863.863.863.963.864.3

64.264.364.364.064.064.0

1 Not seasonally adjusted.2 Unemployed as percent of labor force including resident Armed Forces.3 Labor force including resident Armed Forces as percent of noninstitutional population including resident Armed Forces.4 Civilian labor force as percent of civilian noninstitutional population.6 Not strictly comparable with earlier data due to population adjustments as follows: Beginning 1953, introduction of 1950 census

data added about 600,000 to population and about 350,000 to labor force, total employment, and agricultural employment. Beginning1960, inclusion of Alaska and Hawaii added about 500,000 to population, about 300,000 to labor force, and about 240,000 tononagricultural employment. Beginning 1962, introduction of 1960 census data reduced population by about 50,000 and labor force andemployment by about 200,000. Beginning 1972, introduction of 1970 census data added about 800,000 to civilian noninstitutionalpopulation and about 333,000 to labor force and employment. A subsequent adjustment based on 1970 census in March 1973 added60,000 to labor force and to employment. Beginning 1978, changes in sampling and estimation procedures introduced into thehousehold survey added about 250,000 to labor force and to employment. Unemployment levels and rates were not significantlyaffected.

Note.—Labor force data in Tables B-29 through B-35 are based on household interviews and relate to the calendar week includingthe 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.

255


TABLE B-30.—Civilian employment and unemployment by sex and age, 1947-83

{Thousands of persons 16 years of age and over; monthly data seasonally adjusted]

Civilian employment Unemployment

Year ormonth Total

Males

Total 16-19years

20yearsandover

Females

Total 16-19years

20yearsandover

Total

Males

Total 16-19years

20yearsandover

Females

Total 16=19years

57,03858,34357,651

58,91859,96160,25061,17960,109

62,17063,79964,07163,03664,630

65,77865,74666,70267,76269,305

71,08872,89574,37275,92077,902

78,67879,36782,15385,06486,794

85,84688,75292,01796,04898,824

99,303100,39799,526100,834

99,68299,81099,75499,598

100,17999,653

99,50399,56399,41299,14699,03698,979

99,15499,17299,31699,60699,762

100,743

101,225101,484101,876101,970102,606102,941

40,99541,72540,925

41,57841,78041,68242,43041,619

42,62143,37943,35742,42343,466

43,90443,65644,17744,65745,474

46,34046,91947,47948,11448,818

48,99049,39050,89652,34953,024

51,85753,13854,72856,47957,607

57,18657,39756,27156,787

56,67756,75856,59456,53956,81256,166

56,07356,09956,02855,91855,81855,765

55,80355,79355,89556,05956,21656,844

57,07157,06957,27957,40757,85558,043

2,2182,3442,124

2,1862,1562,1072,1361,985

2,0952,1642,1152,0122,198

2,3612,3152,3622,4062,587

2,9183,2533,1863,2553,430

3,4093,4783,7654,0394,103

3,8393,9474,1744,3364,300

4,0853,8153,3793,300

3,5613,5483,5113,4483,5573,240

3,2113,3233,2923,2983,3103,282

3,2953,2853,2223,2293,2533,352

3,3063,2653,3323,2673,3983,385

38,77639,38238,803

39,39439,62639,57840,29639,634

40,52641,21641,23940,41141,267

41,54341,34241,81542,25142,886

43,42243,66844,29444,85945,388

45,58145,91247,13048,31048,922

48,01849,19050,55552,14353,308

53,10153,58252,89153,487

53,11653,21053,08353,09153,25552,926

52,86252,77652,73652,62052,50852,483

52,50852,50852,67352,83052,96353,492

53,76553,80453,94754,14054,45754,658

16,04516,61716,723

17,34018,18118,56818,74918,490

19,55120,41920,71420,61321,164

21,87422,09022,52523,10523,831

24,74825,97626,89327,80729,084

29,68829,97631,25732,71533,769

33,98935,61537,28939,56941,217

42,11743,00043,25644,047

43,00543,05243,16043,05943,36743!487

43,43043,46443,38443,22843,21843,214

43,35143,37943,42143,54743,54643,899

44,15444,41544,59744,56344,75144,898

1,6911,6821,588

1,5171,6111,6121,5841,490

1,5471,6541,6631,5701,640

1,7681,7931,8331,8491,929

2,1182,4682,4962,5262,687

2,7352,7302,9803,2313,345

3,2633,3893,5143,7343,783

3,6253,4113,1703,043

3,1913,2023,2163,2243,2193,174

3,1613,1403,1743,1493,1363,052

3,0963,0643,0533,0162,9633,052

3,0313,1173,0472,9933,0133,055

14,35414,93615,137

15,82416,57016,95817,16417,000

18,00218,76719,05219,04319,524

20,10520,29620,69321,25721,903

22,63023,51024,39725,28126,397

26,95227,24628,27629,48430,424

30,72632,22633,77535,83637,43438,49239,59040,08641,004

39,81439,85039,94439,83540,14840,313

40,26940,32440,21040,07940,08240,162

40,25540,31540,36840,53140,58340,847

41,12341,29841,55041,57041,73841,843

2,3112,2763,637

3,2882,0551,8831,8343,532

2,8522,7502,8594,6023,740

3,8524,7143,9114,0703,786

3,3662,8752,9752,8172,832

4,0935,0164,8824,3655,156

7,9297,4066,9916,2026,137

7,6378,273

10,67810,717

9,3939,6939,910

10,30310,36310,480

10,89610,91011,26711,54411,88711,894

11,52311,51611,41911,36911,18811,162

10,60010,63310,3539,8969,4299,195

1,6921,5592,572

2,2391,2211,1851,2022,344

1,8541,7111,8413,0982,420

2,4862,9972,4232,4722,205

1,9141,5511,5081,4191,403

2,2382,7892,6592,2752,714

4,4424,0363,6673,1423,120

4,2674,5776,1796,260

5,4115,4825,6745,8625,8946,119

6,2936,3366,6726,8286,9846,969

6,6836,7566,6736,7226,6046,409

6,2486,2006,0495,7595,4575,258

270256353

318191205184310

274269300416398

426479408501487

479432448426440

599693711653757

966939874813811

913962

1,0901,003

1,0371,0551,0591,0961,1071,054

1,0861,0911,1091,1181,1371,133

1,0601,0391,0781,0401,0211,057

1,0311,050984950861866

1,4221,3052,219

1,9221,029

9801,0192,035

1,5801,4421,5412,6812,022

2,0602,5182,0161,9711,718

1,4351,1201,060

993963

1,6382,0971,9481,6241,957

3,4763,0982,7942,3282,308

3,3533,6155,0895,257

4,3744,4274,6154,7664,7875,065

5,2075,2455,5635,7105,8475,836

5,6235,7175,5955,6825,5835,352

5,2175,1505,0654,8094,5964,392

619717

1,065

1,049834698632

1,188

9981,0391,0181,5041,320

1,3661,7171,4881,5981,581

1,4521,3241,4681,3971,429

1,8552,2272,2222,0892,441

3,4863,3693,3243,0613,018

3,3703,6964,4994,457

3,9824,2114,2364,4414,4694,361

4,6034,5744,5954,7164,9034,925

4,8404,7604,7464,6474,5844,753

4,3524,4334,3044,1373,9723,937

144153223

195145140123191

176209197262256

286349313383385

395405391412413

506568598583665

802780789769743

755800886825

865918831870901811

921906902902908

861827855867836916

828835792771757756

1 See footnote 5, Table B-29.Note.—See Note, Table B-29.Source: Department of Labor, Bureau of Labor Statistics.

256


TABLE B-31.—Unemployment by duration and reason, 1947-83

[Monthly data seasonally adjusted1]

Year or monthTotalunem-ploy-ment

Duration of unemployment

Lessthan 5weeks

5-14weeks

15-2627

weeksandover

Aver-age

(mean)dura-

tion inweeks

Mediandura-

tion inweeks

Reason for unemployment

Joblosers

Jobleavers

Reen-trants en-

trants

Thousands of persons 16years of age and over

Thousands of persons 16years of age and over

194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983

1982:JanFebMar

May.;;;.;JuneJulyAugSeptOctNovDec

1983:JanFebMar

May";;;JuneJulyAugSeptOctNovDec

2,3112,2763,637

3,2882,0551,8831,8343,532

2,8522,7502,8594,6023,740

3,8524,7143,9114,0703,786

3,3662,8752,9752,8172,832

4,0935,0164,8824,3655,156

7,9297,4066,9916,2026,137

7,6378,27310,67810,717

9,3939,6939,91010,30310,36310,480

10,89610,91011,26711,54411,88711,894

11,52311,51611,41911,36911,18811,162

10,60010,63310,3539,8969,4299,195

1,2101,3001,756

1,4501,1771,1351,1421,605

1,3351,4121,4081,7531,58^

1,7191,8061,6631,7511,697

1,6281,5731,6341,5941,629

2,1392,2452,2422,2242,604

2,9402,8442,9192,8652,950

3,2953,4493,8833,570

3,8823,8093,9183,9793,9123,579

3,9873,8993,9473,8813,9613,898

3,6003,7323,5353,5953,5683,630

3,5293,6333,7403,5043,3283,382

704669

1,194

1,055574516482

1,116

815805891

1,3961,114

1,1761,3761,1341,2311,117

983779893810827

1,2901,5851,4721,3141,597

2,4842,1962,1321,9231,946

2,4702,5393,3112,937

3,0883,1163,1203,2443,3123,435

3,3303,2803,5103,4583,4853,419

3,3313,1693,1733,1393,0122,950

2,8412,9512,7842,7252,6162,504

234193428

425166148132495

366301321785469

503728534535491

404287271256242

428668601483574

1,3031,018913766706

1,0521,1221,7081,652

1,2151,4801,5981,6021,6471,646

1,7691,8591,8641,9512,1312,077

1,9541,9281,8611,6911,7741,593

1,7941,5971,3831,3721,3371,284

164US256

3571378478

317

336232239667571

454804585553482

351239177156133

235519566343381

1,2031,3481,028648535

8201,1621,7762,559

1,1821,2681,3511,5001,6121,803

1,8201,8512,0432,2502,3542,583

2,6692,6852,7262,7052,7362,893

2,6042,4812,5062,2832,1902,085

8.610.0

12.19.78.48.0

11.8

13.011.310.513.914.4

12.815.S14.714.013.3

11.810.48.78.47.8

8.611.312.010.09.8

14.215.814.311.910.8

11.913.715.620.0

13.414.114.014.414.816.0

15.416.116.617.217.418.4

19.419.119.219.220.221.4

21.319.920.220.120.219.6

4.54.4

4.96.36.25.25.2

8.48.27.05.95.4

6.56.98.7

10.1

7.27.57.78.18.49.1

9.69.8

10.110.4

11.39.8

10.410.811.910.8

10.19.49.49.59.49.0

1,2291,0701,017

1,8112,3232,1081,6942,242

4,3863,6793,1662,5852,635

3,9474,2676,2686,258

5,3145,2755,6465,9095,9166,172

6,4046,3856,8907,3597,3617,114

6,8106,8646,8486,7676,7536,525

6,2356,1335,9385,6015,2265,017

438431436

550590641683760

827903909874880

891923840830

829928876904.870841

831836784787790826

826830888816808799

752799858866868855

945909965

1,2281,4721,4561,3401,463

1,8921,9281,9631,8571,806

1,9272,1022,3842,412

2,0832,2852,2852,3482,4272,389

2,4852,4122,4432,2422,5762,684

2,5572,5052,4602,4912,4042,436

2,4152,4792,3622,3222,2502,246

396407413

504630677649681

823895953885817

872981

1,1851,216

1,0771,1191,0811,0991,1551,069

1,2231,2921,2791,3001,2421,282

1,1991,1881,1821,2511,2461,412

1,2291,2141,2341,1271,1541,150

1 Because of independent seasonal adjustment of the various series, detail will not add to totals.Note.—See footnote 5 and Note, Table B-29.Source: Department of Labor, Bureau of Labor Statistics.

257


TABLE B-32.—Civilian labor force participation rate and civilian employment/population ratio, 1948-83

[Percent; monthly data seasonally adjusted]

Year or month

194819491950195119521953195419551956195719581959 .I960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831982:

JanFebMarAprMayJuneJulyAugSeptOctNovDec

1983:JanFebMarApr/ayJuneJulyAugSeptOctNovDec

Civilian labor force participation rate1

Total

58.858.959 259.359058.958859360.059 659.559 359.459 358.858 758.758 959.259 659 660.160.460.260460.861361.261662.363 263.763.863 964 064.0

63 763.963.964 064.364.064.164.064.164.064.164.0

63.863 863 863.963.864.364 264 364.364.064.064.0

Bothsexes16-19

52.552.251852.251350.248348950.949 647.446 747.547 046.245 244.545 748.248 448 349.549.949.751953.754 854.054 556.057 857.956.755 454153.5

54 254.854.254 555.552.453.253.954.154.254.553.7

53.553153 253.052.654.753 754 453.852.853.353.7

Males20

over

88.688.588 488.488 388.087 887 687.686 986.686 386.085 784.884 484.283 983.683 483.182.882.682.181681.381080.379 879.779 879.879.479 078 778.5

78 678.778.778 879.078.878.878.678.978.878.878.6

78.278 278 278.478.478.778 778 678.678.478.478.3

Fe-males

20

over

31.832.333 334.034133.934 235436.436 536.937 037.638 037.838338.939440.141141.642.743.343.343 744.445 346.047 048.149 650.651.352152 753.1

52 252.452.652 652.953.053.053.052.852.752.953.0

53.052 952 952.952.853.253 153 353.453.253.253.2

White

58 258 759.459158.958 758.858 858.358 258.258.458.759 259.359.960.260.160460.861461.561862.563 363.964.164 364 364.3

64 064.364.264 464.664.364.464.464.564.364.464.4

64.164164 064.164.064.564 464 664.664.464.564.5

Blackand

other

64 364.364.964.464.864.364.564.163.263.063.162.963.062 862.262.161.860.960 260.560 359.659 860.462 262.261.761361662.1

61161.361.561161.761.261.661.961.762.161.962.2

61.962 062 162.262.162.762 462 362.361.561.461.5

Civilian employment/population ratio2

Total

56.655.456.157.357 357.155 556.757.557.155.456.056.155.455.555.455.756.256.957 357.558.057.456.657 057.857 856.156857.959 359.959.259.057 857.9

58 258.258.158 058.257.957.757.757.657.357.257.1

57.257 257 257.357.357.958158 258.358.358.658.8

Bothsexes16-19years

47.745.245.547.946.946.442 343.545.343.939.939.940.539.139.437.437.338.942.142 242.243.442.341.343 545.946 043.344 246.148 348.546.644.641541.5

42 342.442.342142.840.640.441.241.341.341.440.7

41.241040 740.640.541.841.542 042.141.442.542.9

Males20

yearsandover

85.883.784.286.186.285.983 584.384.683.881.282.381.980.880.980.680.981.281.581581.381.179.778.578478.677 974.875.175.676.476.574.674.071.871.4

72.672.772.472 372.571.971.771.571.471.170.970.7

70.670 570 770.870.971.571.871771.872.072.372.5

Fe-males

20yearsandover

30.730.631.632.633.032.932 333.834.935.034.635.135.735.635.836.336.937.638.639 340.041.141.240.941342.242.842.343.544.846.647.748.148.648.448.8

48.448.448.448 248.548.748.648.648.448.148.148.2

48.248 248 248.448.448.648.949 049.349.249.449.4

White

"55.256.557,356.855.355.955.955.355.455.355.556.056.857.257.458.057.556.857.458.258.356.757.558.660.060.660.060.058.858.9

59.259.359.159 059.358.958.858.858.658.458.358.2

58.358 258 258.458.458.959.159 359.459.459.859.9

Blackand

other

58 05R759.5

56.757 557:95fi?56.35fi?57.057 R58.4

5R058.156.854.954155.C

51.4s?n52.5

55.253 65? 6

51.0

51 751.451.2

51.250.950.951.050.550.650.350.4

50.350 750 fi50.650.651.0

51 ?51.551.251.551.5

1 Civilian labor force as percent of civilian noninstitutional population in group specified.2 Civilian employment as percent of civilian noninstitutional population in group specified.Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-29.Source: Department of Labor, Bureau of Labor Statistics.

258


TABLE B-33.— Unemployment rate, 1948-83

[Percent; monthly data seasonally adjusted]

Year ormonth

Unemploy-ment rate,

allworkers l

Unemployment rate, all workers*

Allcivil-ian

work-ers

Males

Total16-19

years

20yearsand

Females

Total16-19

years

20yearsand

Bothsexes

16-19

years

WhiteBlackand

other

Experi-encedwageand

salaryworkers

Mar-ried

men,spousepresent

19481949

1950....1951195219531954

19551956195719581959

19601961196219631964

1965196619671968....1969

1970197119721973197419751976197719781979

198019811982....1983....

1982:Jan....Feb....Mar....

wfay".June...

July....Aug....Sept...Oct....Nov....Dec...

1983:Jan....Feb. .MarADr .May .June.

July..Aug..Sept..Oct...,Nov..,Dec...,

5.23.22.92.85.4

4.34.04.26.65.3

5.46.55.45.55.0

4.43.73.73.53.4

4.85.85.54.85.58.37.66.96.05.8

7.07.59.59.5

8.58.78.99.29.29.4

9.79.7

10.010.310.610.6

10.310.210.210.19.99.8

9.39.39.18.78.38.1

8.68.99.09.49.49.5

9.99.9

10.210.410.710.7

10.410.410.310.210.110.0

9.59.59.28.88.48.2

8.78.89.19.49.49.8

10.110.110.610.911.111.1

10.710.810.710.710.510.1

9.99.89.69.18.68.3

9.814.3

12.78.18.97.9

13.5

11.611.112.417.115.3

15.317.114.717.215.8

14.111.712.311.611.4

15.016.615.913,915.620.119.217.315.815.9

18.320.124.423.3

22.622.923.224.123.724.5

25.324.725.225.325.625.7

24.324.025.124.423.924.0

23.824.322.822.520.220.4

7.67.78.08.28.28.7

9.09.09.59.8

10.010.0

8.58.98.99.39.39.1

9.69.59.69.8

10.210.2

10.09.99.99.69.5

8.312.3

11.48.38.07.2

11.4

10.211.210.614.313.5

13.916.314.617.216.6

15.714.113.514.013.3

15.617.216.715.316.619.718.718.317.116.4

17.219.021.921.3

21.322.320.521.321.920.4

22.622.422.122.322.522.8

21.821.321.922.322.023.1

21.521.120.620.520.119.8

9.213.4

12.28.28.57.6

12.6

11.011.111.615.914.6

14.716.814.717.216.2

14.812.812.912.712.2

15.316.916.214.516.019.919.017.816.416.1

17.819.623.222.4

22.022.621.922.822.922.5

24.023.623.723.924.124.3

23.122.723.623.423.023.6

22.722.821.821.620.220.1

3.55.6

4.93.12.82.75.0

3.93.63.86.14.8

5.06.04.95.04.6

4.13.43.43.23.1

4.55.45.14.35.07.87.06.25.25.1

6.36.78.68.4

7.67.88.08.38.28.4

8.79.09.29.69.6

9.19.29.18.98.88.6

8.28.28.07.77.37.1

5.98.9

9.05.35.44.59.9

8.78.37.9

12.610.7

10.212.410.910.89.6

8.17.37.46.76.4

8.29.9

10.09.09.9

13.813.113.111.911.3

13.114.217.317.8

15.416.116.616.717.016.9

17.517.518.118.618.718.9

18.918.218.618.718.518.6

17.917.917.316.716.116.3

4.36.8

6.03.73.43.26.2

4.84.44.67.35.7

5.76.85.65.65.0

4.33.53.63.43.3

4.85.75.34.55.38.27.36.65.65.5

6.97.39.39.2

8.28.48.79.19.19.2

9.59.49.8

10.110.510.5

10.110.110.09.99.89.4

9.19.18.88.58.17.9

3.5

4.61.51.41.74.0

2.62.32.85.13.6

3.74.63.63.42.8

2.41.91.81.61.5

2.63.22.82.32.75.14.23.62.82.8

4.24.36.56.5

5.45.45.66.06.16.5

6.86.87.27.57.57.5

7.27.27.17.17.06.7

6.26.36.15.75.55.2

1 Unemployed as percent of labor force including resident Armed Forces.2 Unemployed as percent of civilian labor force in group specified.3 Data for 1949 and 1951-54 are for April; 1950, for March.

Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table 8-29


259


TABLE B-34.—Civilian labor force participation rate by demographic characteristic, 1954-83

[Percent;1 monthly data seasonally adjusted]

Year or month

Allcivil-ian

work-ers

White

Total

Males

Total 16-19years

20yearsandover

Females

Total 16-19years

20

andover

Black and other

Total

Males

Total 16-19years

20yearsandover

Females

Totat 16-19years

1954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983

1982:JanFebMar

June

JulyAugSeptOctNovDec

1983:JanFebMarAprMay ,June


58.8

59.360.059.659.559.3

59.459.358.858.758.7

58.959.259.659.660.1

60.460.260.460.861.3

61.261.662.363.263.7

63.863.964.064.0

63.763.963.964.064.364.0

64.164.064.164.064.164.0

63.863.863.863.963.864.3

64.264.364.364.064.064.0

58.2

58.759.459.158.958.7

58.858.858.358.258.2

58.458.759.259.359.9

60.260.160.460.861.4

61.561.862.563.363.9

64.164.364.364.3

64.064.364.264.464.664.3

64.464.464.564.364.464.4

64.164.164.064.164.064.5

64.464.664.664.464.564.5

85.6

85.485.684.884.383.8

83.483.082.181.581.1

80.680.780.480.2

80.079.679.679.479.4

78.778.478.578.678.6

78.277.977.477.1

77.477.677.577.677.977.3

77.377.377.677.577.577.3

76.876.976.876.976.977.3

77.377.377.377.177.377.2

57.6

58.660.459.256.555.9

55.954.553.853.152.7

54.155.956.355.956.8

57.557.960.162.062.9

61.962.364.065.064.8

63.762.460.059.4

61.260.960.660.862.757.9

58.059.559.359.360.059.5

59.159.259.158.658.959,9

59.759.960.058.659.659.8

87.8

87.587.686.986.686.3

86.085.784.984.484.2

83.983.683.583.283.0

82.882.382.081.681.4

80.780.380.280.180.1

79.879.579.278.9

79.179.379.279.379.479.3

79.279.179.479.379.279.1

78.678.778.678.778.779.0

79.078.979.078.978.978.9

33.3

34.535.735.735.836.0

36.536.936.737.237.5

38.139.240.140.741.8

42.642.643.244.145.2

45.946.948.049.450.5

51.251.952.452.7

51.952.152.252.452.652.5

52.752.652.552.452.552.6

52.652.452.352.452.252.8

52.753.053.052.852.852.9

40.6

40.743.142.240.139.6

40.340.639.838.737.8

39.242.642.543.044.6

45.645.448.150.151.7

51.552.854.556.757.4

56.255.455.054.5

54.455.254.355.955.654.3

55.154.855.455.555.354.2

55.054.354.953.953.055.4

54.655.954.553.853.954.6

32.7

34.035.135.235.535.6

36.236.636.537.037.5

38.038.839.840.441.5

42.242.342.743.544.4

45.346.247.348.749.8

50.651.552.252.5

51.651.852.052.052.352.4

52.552.452.352.152.352.5

52.452.252.152.252.252.6

52.552.752.852.752.752.8

64.3

64.364.964.464.864.3

64.564.163.263.063.1

62.963.062.862.262.1

61.860.960.260.560.3

59.659.860.462.262.2

61.761.361.662.1

61.161.361.561.161.761.2

61.661.961.762.161.962.2

61.962.062.162.262.162.7

62.462.362.361.561.461.5

85.2

85.085.184.384.083.4

83.082.280.880.280.0

79.679.078.577.676.9

76.574.973.974.0735

71.971.271.672.672.5

71.570.671.071.3

70.470.670.870.871.070.6

71.071.171.171.571.471.4

70.970.670.971.771.172.7

72.371.871.570.670.870.5

61.2

60.861.558.857.355.5

57.655.853.551.549.9

51.351.451.149.749.6

47.444.746.046.347.2

42.942.343.645.444.0

43.541.740.640.9

40.142.342.039.940.736.9

38.341.741.341.840.940.6

40.438.939.539.139.345.6

42.541.942.340.241,040.0

87.1

87.887.887.087.186.7

86.285.584.283.984.1

83.783.382.982.281.4

81.480.078.678.678.0

76.876.176.277.177.1

75.975.075.475.6

74.874.775.075.475.575.6

75.875.575.575.875.875.9

75.275.175.476.275.676.6

76.776.175.574.975.174.7

46.1

46.147.347.248.047.7

48.248.348.048.148.5

48.649.349.549.349.8

49.549.248.849.349.3

49.450,451.253.553.7

53.653.653.954.4

53.553.753.853.154.053.6

54.054.353.954.354.054.5

54.554.854.954.554.754.5

54.354.454.654.053.554.0

31.0

32.736.333.231.928.2

32.932.833.132.631.7

29.533.535.234.834.6

34.131.232.334.434.1

35.633.633.638.037.8

35.934.534.533.4

34.135.734.531.434.330.7

35.736.135.835.035.035.3

33.332.031.734.833.035.6

32.734.733.533.132.933,8

1 Civilian labor force as percent of civilian noninstitutional population in group specified.Note.—Data relate to persons 16 years of age and over.See footnote 5 and Note, Table B 29.Source: Department of Labor, Bureau of Labor Statistics.

260


TABLE B-35.—Civilian unemployment rate by demographic characteristic, 1948-83

[Percent;1 monthly data seasonally adjusted]

Year or month

Allcivil-ian

work-ers

White

Total

Males

Total 16-19years

20yearsandover

Females

Total16-19years

20

andover

Black and other

Total

Males

Total 16-19years

20yearsandover

Females

Total16-19years

19481949

19501951195219531954

1955..1956..1957..1958..1959..

I960..1961..1962..1963..1964.

19651966..196719681969

19701971 . . . .197219731974

1975...1976...1977...1978...1979...

1980...1981...1982...1983...

1982:Jan...Feb...Mar..

June..


1983:Jan....Feb....Mar...Apr....May...June..

fczzSfczziNovDec

8.68.99.09.49.49.5

9.99.9

10.210.410.710.7

10.410.410.310.210.110.0

9.59.59.28.88.48.2

7.77.88.08.38.38.7

9.19.19.49.7

10.010.0

13.4

11.310.511.515.714.0

14.015.713.715.914.7

12.910.510.710.110.0

13.715.114.212.313.5

18.317.315.013.513.9

16.217.921.720.2

20.820.520.221.821.021.7

22.522.122.222.622.722.8

21.521.422.621.420.420.4

20.320.718.919.817.617.5

10.4

9.19.79.5

12.712.0

12.714.812.815.114.9

14.012.111.512.111.5

13.415.114.213.014.5

17.416.415.914.414.0

14.816.619.018.3

18.419.417.818.918.617.6

19.118.719.119.919.820.4

19.018.719.619.119.419.7

18.418.217.416.916.616.5

5.98.9

9.05.35.44.59.9

8.78.37.9

12.610.7

10.212.410.910.89.6

8.17.37.46.76.4

8.29.9

10.09.09.9

13.813.113.111.911.3

13.114.217.317.8

16.116.616.717.016.9

17.517.518.118.618.718.9

18.918.218.618.718.518.6

17.917.917.316.716.116.3

5.89.6

9.44.95.24.8

10.3

8.87.98.3

13.711.5

10.712.810.910.58.9

7.46.36.05.65.3

7.39.18.97.79.2

13.612.712.311.010.4

13.214.118.218.5

16.717.517.217.517.9

17.818.219.520.119.820.3

19.919.219.319.819.819.6

19.118.717.716.816.115.9

14.4

13.415.018.426.825.2

24.026.822.027.324.3

23.321.323.922.121.4

25.028.829.726.931.5

35.235.136.634.031.3

34.437.544.045.0

40.345.643.143.947.6

44.741.844.544.348.647.0

44.743.243.946.549.147.4

46.048.548.241.739.041.1

9.9

8.47.47.6

12.710.5

9.611.710.09.27.7

6.04.94.33.93.7

5.67.36.95.86.9

11.610.610.08.78.5

11.312.116.216.5

14.714.715.215.215.415.7

15.816.217.518.117.618.2

18.117.517.517.917.517.2

16.916.315.414.914.314.0

8.46.15.74.19.2

8.58.97.3

10.89.4

9.411.911.011.210.7

9.28.79.18.37.8

9.310.911.410.610.8

13.913.613.913.012.3

13.114.316.417.1

14.515.615.716.216.515.8

17.016.816.616.917.517.3

17.717.117.817.517.217.6

16.617.116.716.616.116.7

20.6

19.222.820.228.427.7

24.829.230.234.731.6

31.731.329.628.727.6

34.535.438.434.434.5

38.338.839.638.135.6

36.538.343.844.6

42.642.142.341.146.741.5

48.049.843.841.343.242.5

42.741.441.645.341.445.9

44.744.744.848.346.648.1

1 Unemployment as percent of civilian labor force in group specified.

Note.—See footnote 5 and Note, Table B-29.

Source: Department of Labor, Bureau of labor Statistics.

261


TABLE B-36.—Unemployment insurance programs, selected data, 1950-83

Year or month

All programs

Coveredemploy-ment1

Insuredunemploy-

ment{weeklyaver-

a g e ) "

Totalbenefits

paid(millions

dolfars)2 *

State programs

Insuredunem-

ploymentInitialclaims

Exhaus-tions8

Insuredunemploy-ment aspercent

ofcovered

Total(millions

ofdollars)4

Averageweeklycheck

(dollars) o

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

198019811982

1982:Jan....Feb....Mar...

May...June..

July...Aug...

S3!NovDec

1983:JanFebMar

fczJune....July...Aug...Sept..Oct....NovDec

Thousands Weekly average; thousands

34,30836,33437,00638,07236,62240,01842J5143,43644,41145,728

46,33446,26647,77648,43449,63751,58054,73956,34257,97759,999

59,52659,37566,45869,89772,45171,03773,45976,41988,80492,062

92,65993,300

« 91,628

1,6051,0001,0691,0672,0511,3991,3231,5712,7731,860

2.0712,9941,946

U.9731,7531,4501,1291,2701,1871,177

2,0702,6082,1921,7932,5584,9373,8463,3082,6452,592

3,8373,4104,590

4,6814,7234,8924,7604,3874,328

4,4954,3984,2824,3914,6355,074

5,4595,4375,1344,6423,9473,481

3,2742,9172,5802,4782,602

1,467.6862.9

1,043.51,050.62,291.61,560.21,540.61,913.04,290.62,854.3

3,022.84,358.13,145.13,025.92,749.22,360.41,890.92,221.52,191.02,298.6

4,209.36,154.05,491.14,517.36,933.9

16,802.412,344.810,998.99,006.99,401.3

16,175.415,287.123,774.8

1,836.01,904.52,298.12,141.11,871.92,003.9

1,966.72,034.12,004.41,928.12,065.32,410.0

2,463.32,349.72,780.22,182.91,908.51,798.0

1,412.31,425.41,167.41,066.51,147.8

1,513969

1,044990

1,8701,2651,2151,4462,5101,684

1,9082,2901,783

* 1,8061,6051,3281,0611,2051,1111,101

1,8052,1501,8481,6322,2623,9862,9912,6552,3592,434

3,3503,0474,061

3,9413,9073,8943,8323,5863,329

3,1102,9912,8962,8482,7992,729

236208215218304226227270369277

331350302

7 298268232203226201200

296295261247363478386375346388488460533

3,5773,5823,7753,9823,9724,011

3,9884,1364,3794,6154,6354,428

563529574573579560

539617654659618546

509485493484458411

384414393403405397

616774828086

828380838792

100991021029087

4.62.82.92.85.23.53.23.66.44.4

4.85.64.44.33.83.02.32.52.22.1

3.44.13.52.73.56.04.63.93.32.9

3.93.54.6

4.14.14.34.64.54.6

4.64.75.05.35.35.1

4.54.54.54.44.13.8

3.63.53.43.33.33.2

1,373.1840.4998.2962.2

2,026.91,350.31,380.71,733.93,512.72,279.02,726.73,422.72,675.42,774.72,522.12,166.01,771.32,092.32,031.62,127.9

3,848.54,957.04,471.04,007.65,974.9

11,754.78,974.58,357.27,717.28,612.9

13,761.113,262.120,650.0

1,765.11,783.42,075.51,849.91,573.41,736.3

1,682.11,747.31,711.31,647.31,820.02,138.0

2,205.62,052.42,370.71,816.51,587.91,537.3

1,298.21,337.21,104.41,010.81,094.2

20.7621.0922.7923.5824.9325.0427.0228.1730.5830.41

32.8733.8034.5635.2735.9237.1939.7541.2543.4346.17

50.3454.0256.7659.0064.2570.2375.1678.7983.6789.67

98.95106.70119.39

114.95117.05117.44117.90118.33118.32

117.67119.22121.03122.90123.46123.55

124.29124.47125.56124.85124.49123.44

121.59121.42121.36123.06109.33

**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).

3 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 benefitprograms. Does not include FSB (Federal supplemental benefits), SUA (special unemployment assistance), and Federal SupplementalCompensation 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.8 For total unemployment only.7 Programs include Puerto Rican sugarcane workers for initial claims and insured unemployment beginning July 1963.8 Latest data available for all programs combined. Workers covered by State programs account for about 97 percent of wage and

salary earners.Source: Department of Labor, Employment and Training Administration.

262


TABLE B-37.— Wage and salary workers in nonagricultural establishments, 1929-83

[Thousands of persons; monthly data seasonally adjusted]

Year ormonth

Totalwageand

salaryworkers

Manufacturing

TotalDurablegoods

Non-durablegoods

MiningConstruc-

tion

Transpor-tation

andpublic

utilities

Whole-saleand

retailtrade

Finance,insur-ance,andreal

estate

Services

Government

Federal

19291933193919401941194219431944194519461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983"1982: Jan

FebMar....

May!!!!June...July....Aug....

Nov...Dec...

1983: Jan....Feb....Mar...Apr....May...June..July...Aug...Sept..Oct....Novp.Dec".

31,32423,69930,60332,36136,53940,10642,43441,86440,37441f65243,85744,86643,75445,19747,81948,79350,20248,99050,64152,36952,85351,32453,26854,18953,99955,54956,65358,28360,76563,90165,80367,89770,38470,88071,21473,67576,79078,26576,94579,38282,47186,69789,82390,40691,15689,596

90,39690,41790,20790,02490,01689,77589,45089,26489,23588,93888,78588,665

88,74688,81489,09089,42189,84490,15289,74890,85191,08791,41391,644

10,7027,397

10,27810,98513,19215,28017,60217,32815,52414,70315,54515,58214,44115,24116,39316,63217,54916,31416,88217,24317,17415,94516,67516,79616,32616,85316,99517,27418,06219,21418,44719,78120,16719,36718,62319,15120,15420,07718,32318,99719,68220,50521,04020,28520,17018,85318,67819,52819,45019,30819,16019,07818,91818,80218,66618,55518,35818,22218,19318,24418,24518,26718,37618,49318,58218,73318,79318,87119,06419,18219,271

4,7155,3636,9688,823

11,08410,8569,0747,7428,3858,3267,4898,0949,0899,349

10,1109,1299,5419,8339,8558,8299,3739,4599,0709,4809,6169,816

10,40511,28211,43911,62611,89511,20810,63611,04911,89111,92510,63811,07711,59712,27412,76012,18712,10911,10010,93111,62511,56111,46911,35011,28911,16911,09510,96110,86210,68510,57710,55910,59410,60810,61710,68910,78810,84410,96111,02211,08111,23511,32611,394

5,5645,6226,2256,4586,5186,4726,4506,9627,1597,2566,9537,1477,3047,2847,4387,1857,3417,4117,3217,1167,3037,3377,2567,3737,3807,4587,6567,9308,0078,1558,2728,1587,9878,1028,2628,1527,6357,9208,0868,2318,2808,0988,0617,7537,747

7,9037,8897,8397,8107,7897,7497,7077,7057,6937,6737,6457,6347,6507,6377,6507,6877,7057,7387,7727,7717,7907,8297,8567,877

1,087744854925957992925892836862955994930901929898866791792822828751732712672650635634632627613606619623609628642697752779813851958

1,0271,1391,1431,0211,2161,2191,2181,2041,1771,1501,1251,1131,1001,0821,0661,0531,0371,0141,006

997994

1,0031,0171,0231,0261,0441,0441,053

1,512824

1,1651,3111,8142,1981,5871,1081,1471,6832,0092,1982,1942,3642,6372,6682,6532,6462,8393,0392,9622,8173,0042,9262,8592,9483,0103,0973,2323,3173,2483,3503,5753,5883,7043,8894,0974,0203,5253,5763,8514,2294,4634,3464,1883,9113,9493,9674,0013,9573,9433,9713,9333,9163,8933,8753,8473,8433,8153,9053,7903,7573,7863,8603,9333,9744,0144,0384,0604,0964,110

3,9162,6722,9363,0383,2743,4603,6473,8293,9064,0614,1664,1894,0014,0344,2264,2484,2904,0844,1414,2444,2413,9764,0114,0043,9033,9063,9033,9514,0364,1584,2684,3184,4424,5154,4764,5414,6564,7254,5424,5824,7134,9235,1365,1465,1655,0814,9435,1425,1365,1235,1175,1175,0995,0755,0565,0545,0335,0195,0084,9794,9664,9634,9884,9934,9924,9844,3415,0315,0195,0275,024

6,1234,7556,4266,7507,2107,1186,9827,0587,3148,3768,9559,2729,2649,3869,742

10,00410,24710,23510,53510,85810,88610,75011,12711,39111,33711,56611,77812,16012,71613,24513,60614,09914,70515,04015,35215,94916,60716,98717,06017,75518,51619,54220,19220,31020,54720,40120,50820,42620,46120,44720,42720,45420,45420,43820,41020,38020,34420,32020,25620,35520,34320,35020,32920,35620,49420,52920,58020,61220,66620,70520,732

1,4941,2801,4471,4851,5251,5091,4811,4611,4811,6751,7281,8001,8281,8881,9562,0352,1112,2002,2982,3892,4382,4812,5492,6292,6882,7542,8302,9112,9773,0583,1853,3373,5123,6453,7723,9084,0464,1484,1654,2714,4674,7244,9755,1605,2985,3405,4565,3205,3225,3265,3285,3315,3395,3425,3445,3515,350513565,3675,3745,3845,3915,4235,4355,4515,4655,4885,4995,5035,5235,537

3,4252,8613,5023,6653,9054,0664,1304,1454,2224,6975,0255,1815,2405,3575,5475,6995,8355,9696,2406,4976,7086,7657,0877,3787,6207,9828,2778,6609,0369,498

10,04510,56711,16911,54811,79712,27612,85713,44113,89214,55115,30316,25217,11217,89018,61919,06419,68518,91918,97018,95718,98419,02019,04619,08319,09719,13619,14419,18719,21519,23819,26219,35619,47819,54619,56819,77019,33519,91319,95620,05120,122

533565905996

1,3402,2132,9052,9282,8082,2541,8921,8631,9081,9282,3022,4202,3052,1882,1872,2092,2172,1912,2332,2702,2792,3402,3582,3482,3782,5642,7192,7372,7582,7312,6962,6842,6632,7242,7482,7332,7272,7532,7732,8662,7722,7392,7532,7412,7372,7372,7332,7312,7382,7372,7392,7352,7422,7462,7472,7482,7422,7422,7382,7562,7422,7382,7462,7782,7642,7712,771

Note.—Data in Tables B-37 through B-39 are based on reports from employing establishments and relate to full- and part-time wageand salary workers in nonagricultural establishments who worked during or received pay for any part of the pay period which includesthe 12th of the month. Not comparabje with labor force data (Tables B-29 through B-35), which include proprietors, setf-employedpersons, domestic servants, and unpaid family workers; which count persons as employed when they are not at work because ofindustrial disputes, bad weather, etc., even if they are not paid for the time off; and which are based on a sample of the working-agepopulation. For description and details of the various establishment data, see "Employment and Earnings."


263


TABLE B-38.—Average weekly hours and hourly earnings in selected private nonagricultural industries,

1947-83

[For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted]

Year ormonth

19471948.1949..1950195119521953195419551956195719581959

I960196119621963...1964 !.196519661967 "1968196919701971...19721973..1974197519761977.197819791980198119821983 P

1982:JanFebMarAprMayJuneJulyAugSeptOctNovDec

1983:JanFebMarAprMay ::JuneJulyAugSeptOctN o vD e c

Totalprivatenon-

agricul-tural »

40 340*039*439.839.939.939.639.139.639.338.838.539.038638!638.738.838.738.838.638037.837.737.136 937.036 936.536136.136 035*835.735 335.234 835.0

34.335.134.934.935.034.934.934.834.834.734.734.8

35.134.534.834.935.135.135.035.035.235.335.235.2

Average weekly hours

Manufac-turing

40440039.140.540.640.740.539.640.740439.839 240.339 739.840.440.540.741241.440 640.740.639.839 940.540 740.039 540.140 340.440.239 739.838 940.1

37.539.539.039 039.139.139.139.038.838.939.039.0

39.739.239.540.140.040.140.240.340.840.640.640.5

Con-struction

38 238137.737.438.138.937.937.237.137 537*036.837.036 736.937.037.337.237.437.637 737.337.937.337 236.536 836.636 436.836 536.837.037 036.936 737.2

35.137.037.136 837.336.837.136.836.536.336.436.8

38.936.636.536.937.237.237.337.237.536.536.537.0

Whole-saleand

retailtrade

40 540 440*540.540.540.039.539.539.439138>38638.838 638.338.238.137.937.737.136 636.135.735.335134.934 634.233 933.733 332.932.632 232 231.931.9

31.732.031.931932*031.932.032.031.931.931.832.1

31.931.431.731.731.932.031.931.831.832.132.032.1

Average gross hourly earnings,

Totalprivate

non-agricul-tural1

$113112251.2751.3351.451.521.611.651.711801.891952.022 092.142.222.282.362 462.562 682.853.043.233 453.703 944̂ 244 534^865 255696.166.667̂ 257 67&01

7.537.547.567 597̂ 657.677.707.737.737.767.787.82

7.887.917.917.957.978.008.037.988.088.138.138.17

current dollars

Manufac-turing

$12161.3271.3761.4391.561.641.741.781,851952.042102.192 262.322.392.452.532 612.712 823.013.193.353 573.824 094^424.835.225686176.707.277̂ 998.508.84

8.398.358.388 438*478.518.548.568.578.588.618.63

8.688.768.758.788.798.828.858.848.878.948.999.00

Con-struction

$1 5401.7121.7921.8632.022.132.282.382.452 572.712 822.933 073.203.313.413.553 703.894114.414.795.245 696.066416'817.317718108669.279 94

10*8211.6211.91

11.5911.4011.46114811*5711.5711.6311.6511.6611.7711.7111.88

11.8612.0012.0012.0211.8611.8511.8211.8311.9611.9211.8811.94

Whole-saleand

retailtrade

$0 94010101.0601.1001.181.231.301.351.401471.541601.661711.761.831.891.972 042.142 252.412.562.722 883.053 233.483 733.974 284 675.065485̂ 926,216.49

6.096.096.126146!l86.206.236.246.246.296.326.33

6.356.396.406.436.456.496.516.526.546.596.596.61

Adjusted hourly earnings,private nonagricultural

Index.1977-100

Currentdollars

21623 424.525.427.328.730.331.332.434 035.737.238.539 841.042.443.644.846.448.450 853.957.561365 769.874180.086 792*9

100 0108*2116.8127 3138*9148 3155*1

144.9145.1145.5146 4147*5148.0148.8149.6150.0150.7151.1151.9

152.7153.4153.4154.0154.6154.8155.2155.0155.9156.8156.8157.6

1977dollars3

58 558.962.364.063.665.568.770.573.375.976.978.080.081483.085.086.387.589.090.392.294.095.095.7983

101.2101198.397 699*0

100 0100.597.493 592*693 394.7

93.193.193.593 891592.892.893.093.193.193.494.1

94.795.395.094.894.794.894.794.094.294.494.394.6

total2

Percent changefrom a year

earlier4

Currentdollars

8.34.73.77.55.15.63.33.54.95.04.23.53.43.03.42.82.83.64.35.06.16.76.6726.2628.0847.2768.27.990S.l6.84.6

8.37.57.27 i1.27.07.06.66.16.25.76.0

5.45.75.45.24.84.64.33.63.94.13.83.7

1977dollars

0.75.82.7

-.63.04.92.64.03.51.31.42.6182.02.41,51.41.71.52.12.01.1.7

273.0

= 1- 2 . 8

- 71.4Id.5

=3.1- 4 0-L0

.81.5

.1

.1

.67.7.1.7.7

1.21.21.12.0

1.82.41.61.21.42.12.11.21.21.41.0.5

1 Also includes other private industry groups shown in Table B-37.2 Adjusted for overtime (in manufacturing only) and for interindustry employment shifts.3 Current-dollar earnings index divided by the consumer price index for urban wage earners and clerical workers on a 1 9 7 7 - 1 0 0

base.4 Monthly data are computed from indexes to two decimal places and are based on data not seasonally adjusted.Note.—See Note, Table B-37.Source: Department of Labor, Bureau of Labor Statistics.

264


TABLE B-39.—Average weekly earnings in selected private nonagricultural industries, 1947-83

[for production or nonsupervisory workers; monthly data seasonally adjusted, except as noted]

Year or month

1947194819491950195119521953195419551956195719581959I960196119621963196419651966196719681969197019711972 .. . ...197319741975197619771978197919801981. ..19821983*1982:

JanFebMarAprIVfayJuneJulyAugSeptOctNovDec

1983:JanFebMarAprMay ....JuneJulyAugSeptOctNovp

Dec

Average gross weekly earnings

Total privatenonagricultural1

Currentdollars

$45.5849.0050.2453.1357.8660.6563.7664.5267.7270 7473.3375.0878.7880.6782 6085.9188.4691.3395.4598.82

10184107.73114.61119.83127 31136.90145 39154.76163.53175.45189 00203.70219.91235.10255 20266.92280.35

258 28264 65263.84264.89267 75267.68268.73269.00269 00269 27269.97272.14

276 59272.90275.27277.46279 75280.80281.05279.30284.42286 9928618287.58

1977dollars"

$123.52123.43127.84133.83134.87138.47144.58145.32153.21157.90158.04157.40163.78164.97167.21172.16175.17178.38183.21184.37184.83187.68189.44186.94190 58198.41198 35190.12184.16186.85189 00189.31183.41172.7417013167.87171.15

165 88169 87169.56169.69169 78167.93167.54167.18166.98166 32166.96168.61

17148169.61170.45170.8517142171.85171.37169.48171.85172.7817198172.62

Manufac-turing

(currentdollars)

$49.1353.0853.8058 2863.3466 7570.4770.4975.3078 7881.1982.3288.2689.7292 3496.5699 23

102.97107.53112.19114.49122.51129.51133.33142 44154.71166 46176.80190.79209 32228 90249 27269.34288 62318 00330.65354.48

314 63329 83326.82328.77331 18332.74333.91333.84332 52333 76335.79336.57

344 60343.39345.63352 0835160353.68355.77356 2536190362 96364 99364.50

Construc-tion

(currentdollars)

$58.8365.2367.5669.6876.9682 8686.4188.5490.9096 38

100.27103.78108.41112.67118 08122.47127.19132.06138 38146.26154.95164.49181.54195.4521167221.19235 89249.25266.08283.73295 65318.69342.99367.78399 26426.45443.05

40681421 80425.17422.4643156425.78431.47428.72425 59427 25426.24437.18

46135439.20438.00443.54441 19440.82440.89440.08448.50435 08433 62441.78

Wholesaleand retail

traHa(currentdollars)

$38.0740.8042.9344 5547.7949.2051.3553.3355.1657 4859.6061.7664.4166.0167.4169.9172.0174.6676.9179.3982.3587.0091.3996.02

101.09106.45111.76119.02126.45133.79142.52153.64164.96176.46190 62198.10207.03

193 05194 88195.23195.87197.76197.78199.36199.68199.06200 65200.98203.19

202.57200.65202.88203.83205.76207.68207.67207.34207.97211.54210 88212.18

Percent change froma year earlier, total

privatenonagricultural3

Currentdollars

7.52.5588.94.85.11.25.0453.72.44.92.42.44.03.03.24.53.53.15.86.44.66.27.56.26.45.77.37.77.88.06.98.54.65.0

3.7635.14.85.34.84.94.34.03.43.44.4

6.83.14.34.74.64.94.83.76.06.45.65.8

1977dollars

-0 .13.64.7

.82.74.4

.55.43 1.1

.71.43.01.71.82.7.6.2

1.5.9

-1 .31.94.1

- .0- 4 . 1-3 .1

1.51.2.2

- 3 . 1- 5 . 8- 1 . 5- 1 . 3

2.0

-4 .1-1 .0-1 .3-1 .4- 1 . 1-2 .0-1 .3-1 .4- . 9

-1 .6-1 .1

.5

3.1- . 2

.6

1.22.42.51.33.23.72.62.5

1 Also includes other private industry groups shown in Table B-37.2 Earnings in current dollars divided by the consumer price index on a 1977=100 base.3 Based on data not seasonally adjusted.Note.—See Note, Table B-37.Source: Department of Labor, Bureau of Labor Statistics.

265


TABLE B-40.—Productivity and related data, business sector, 1947-83

[1977=100; quarterly data seasonally adjusted]

Output per hourof all persons

Busi-ness

sector

Nonfarmbusiness

sector

Output l

Busi-ness

sector

Nonfarmbusiness

sector

Hours of allpersons2

Busi-ness

sector

Nonfarmbusiness

sector

Compensation perhour3

Busi-ness

sector

Nonfarmbusiness

sector

Real compensationper hour4

nesssector

Nonfarmbusiness

sector

Unit labor cost

Busi- Nonfarmbusinesssector

Implicit pricedeflator»

Busi-ness

sector

Nonfarmbusiness

sector

194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983 ".....

IIIllIV

1983:

if""!".....;IllIV

43.746.046.7

50.451.853.555.256.1

58.358.960.462.364.2

65.267.369.972.575.6

78.380.782.585.385.5

86.289.292.494.792.5

94.597.6

100.0100.699.4

98.9101.3101.2103.8

100.5101.1102.3101.2

101.11007101.1101.9

102.5103.9104.2104.8

49.952.053.1

56.357.258.659.560.4

62.762.964.065.567.7

68.370.372.875.178.1

80.582.584.086.886.5

86.889.793.095.392.9

94.797.8

100.0100.699.1

98.4100.3100.2103.4

100.1100.1101.199.9

100.099.9

100.4100.8

101.7103.5104.0104.3

35.037.236.5

39.842.143.545.444.6

48.149.349.849.052.6

53.554.457.459.963.5

67.871.573.176.879.0

78.480.786.191.789.9

88.293.8

100.0105.5107.8

106.5109.8106.7111.0

109.2109.8111.2108.9

107.2106.9106.6106.0

107.1110.4112.4113.9

34.036.035.3

38.641.142.544.343.4

47.048.348.948.051.8

52.553.556.659.162.8

67.271.272.776.678.8

78.080.385.891.789.8

87.893.7

100.0105.7108.0

106.5109.3106.3110.9

109.2109.4110.5108.2

106.5106.7106.5105.4

106.7110.2112.5114.2

80.280.778.1

78.981.381.482.279.5

82.583.782.578.881.9

82.080.882.182.683.9

86.688.688.690.192.5

91.090.593.296.897.3

93.396.0

100.0104.9108.5

107.6108.4105.4106.9

108.6108.6108.7107.7

106.0106.2105.4104.0

104.5106.2107.9108.7

68.169.266.6

68.771.972.674.571.9

74.976.876.473.276.5

77.076.177.878.780.5

83.586.386.588.291.1

89.889.592.396.296.7

92.795.8

100.0105.0109.0

108.2109.0106.0107.3

109.1109.2109.4108.2

106.5106.8106.0104.6

104.9106.5108.2109.5

17.018.418.7

20.022.023.424.925.7

26.428.129.931.232.6

33.935.236.838.240.2

41.744.647.050.754.2

58.262.066.171.378.0

85.592.9

100.0108.6118.7

131.2143.9155.1163.1

139.7142.2145.5148.2

151.6153.9156.5158.7

160.7162.1163.6166.4

18.520.120.6

21.823.825.126.527.3

28.330.031.732.934.2

35.736.838.339.641.4

42.845.447.951.554.8

58.762.566.771.778.5

86.093.0

100.0108.6118.4

130.7143.5154.7163.5

139.3141.8145.1147.7

151.3153.5156.1158.3

161.0162.7164.2166.0

46.146.447.6

50.551.353.456.458.0

59.662.664.465.567.7

69.571.373.775.578.4

80.183.385.388.389.6

90.892.895.797.395.9

96.398.9

100.0100.999.1

96.595.997.499.2

96.396.195.695.6

97.197.497.198.0

99.499.298.999.5

50.150.552.5

55.055.457.259.961.6

64.066.868.268.971.1

73.074.676.778.480.9

82.284.786.989.690.6

91.593.596.697.896.4

96.899.0

100.0100.998.9

96.195.697.199.4

96.095.895.395.4

96.997.196.997.8

99.599.699.399.3

38.940.040.1

39.842.543.845.145.9

45.247.749.550.250.7

52.152.352.752.753.1

53.355.356.959.463.4

67.569.571.575.384.4

90.595.1

100.0108.0119.5

132.7142.1153.3157.1

139.0140.7142.3146.4

149.9152.9

155.6

156.9156.0156.9158.8

37.038.638.9

38.841.542.844.445.2

45.147.649.550.250.5

52.352.452.652.753.1

53.255.057.059.363.4

67.669.771.775.384.5

90.895.1

100.0108.0119.5

132.8143.0154.4158.1

139.2141.6143.5147.8

151.3153.6

157.1

158.3157.2157.8159.2

38.140.840.3

41.044.044.544.945.3

46.047.649.249.850.8

51.651.952.653.253.7

54.756.457.960.363.2

66.069.071.375.382.4

90.494.7

100.0107.5117.2

128.1140.1147.7153.2

136.3138.2141.5144.3

145.5147.5148.5149.4

151.5152.5153.8155.2

36.639.139.4

40.142.843.544.445.0

46.047.649.349.750.9

51.651.952.753.353.9

54.856.358.160.463.3

66.369.371.374.081.6

90.094.6

100.0107.1116.5

128.1140.4148.6154.1

136.2138.4141.8145.0

146.4148.3149.1150.5

152.4153.4154.7155.9

1 Output refers to gross domestic product originating in the sector in 1972 dollars.2 Hours of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily onestablishment data.3 Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes anestimate of wages, salaries, and supplemental payments for the self-employed.4 Hourly compensation divided by the consumer price index for all urban consumers.

5 Current dollar gross domestic product divided By constant dollar gross domestic product.Source: Department of Labor, Bureau of Labor Statistics.

266


TABLE B-41.—Changes in productivity and related data, business sector, 1948-83

[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]

Year or quarter

Output per hourof all persons

Businesssector

Nonfarmbusiness

sector

Output1

sector

Nonfarmbusinesssector

Hours of allpersons2

Businesssector

Nonfarmbusinesssector

Compensation perhour3

sector

Nonfarmbusiness

sectorBusiness

sector

per hour*

Nonfarmlusinesssector

Unit labor cost

sectorNonfarmbusiness

sector

Implicit pricedeflator*

Nonfarmlusinesssector

19481949

19501951195219531954

1955195619571958...1959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983*

1981:IIIIllIV

1982:

\\""Z'"ZIIIIV

1983:I

5.31.5

7.92.83.23.21.6

4.01.02.53.13.2

1.53.33.83.74.3

3.53.12.33.3

.2

3.63.52.6

- 2 . 4

2.23.32.4

.6-1 .2

- . 52.4

- . 12.6

5.92.24.7

- 4 . 1

- . 4- 1 . 6

1.73.3

4.32.0

6.01.72.31.71.4

3.9.3

1.72.43.4

2.93.63.23.9

3.12.51.93.3

- . 3

.33.33.72.4

- 2 . 5

2.03.22.2

.6- 1 . 5

- . 71.9

- . 13.1

5.2.4

3.8-4.4

.1- . 42.31.3

3.77.12.31.0

6.1-1 .9

9.15.83.34.3

- 1 . 8

7.92.61.0

- 1 . 67.3

1.61.75.54.36.0

6.85.52.25.12.9

3.06.66.6

- 2 . 0

- 2 . 06.46.65.52.3

-1.33.1

-2.84.0

8.32.35.2

- 7 . 8

- 6 . 3- 1 . 0- 1 . 1- 2 . 3

4.212.77.85.3

6.0-1.9

9.46.53.44.2

-2.0

8.22.81.2

-1.97.9

1.51.85.84.46.4

6.95.92.15.32.9

-1.02.96.96.8

-2.0

-2.26.76.75.72.2

-1.42.7

-2.84.4

7.8

4.3- 8 . 3

- 6 . 2

- . 6- 4 . 1

4.913.78.96.0

0.7- 3 . 3

1.12.9

.11.0

- 3 . 3

3.81.5

- 1 . 5- 4 . 5

3.9

.2- 1 . 5

1.6.6

1.6

3.22.3

.01.72.6

- 1 . 6— 53*03.9

.4

- 4 . 13.04.14.93.5

- . 8.7

- 2 . 71.4

2.3.1.5

-3.9

-6.0.6

-2.7-5.4

2.16.56.53.0

1.6- 3 . 8

3.14.61.02.5

- 3 . 4

4.12.5

- . 5- 4 . 2

4.4

.6- 1 . 1

2.21.12.4

3.73.4

.32.03.2

- 1 . 3- . 43.14.3

.5

- 4 . 13.44.45.03.7

- . 7.7

- 2 . 71.2

2.4.5.5

- 4 . 0

- 6 . 21.2

-2 .9- 5 . 3

1.26.26.45.0

8.51.6

7.19.86.46.43.2

2.56.56.54.44.3

4.23.84.63.75.2

3.97.05.37.87.0

7.36.66.58.09.4

9.68.67.78.69.4

10.59.77.75.2

11.57.49.67.5

9.46.46.75.7

8.62.9

5.88.85.55.63.2

3.66.05.73.84.0

4.33.24.03.54.5

3.46.05.57.56.5

7.06.66.77.69.4

9.68.17.58.69.0

10.49.87.85.6

11.57.39.67.6

10.05.87.25.8

6.84.33.84.5

0.72.6

6.01.74.15.72.8

2.84.92.91.63.5

2.62.73.42.53.8

2.24.02.43.51.5

1.32.23.11.6

-1 .4

.52.61.2

.9- 1 . 7

- 2 . 6- . 61.51.9

.8-1.0-2.2

.3

6.31.1

-1.03.7

5.8- . 7

- 1 . 12.2

0.83.9

.73.24.82.7

3.94.42.21.03.2

2.72.12.82.23.2

1.73.02.63.21.1

1.02.23.31.3

-1 .4

.42.21.0

.9-2 .0

- 2 . 8- . 61.62.3

6.8.5

- . 63.7

7.2.1

- . 9- . 2

6.93.03.11.6

- 1 . 45.53.91.31.0

2.7.5.7.0.8

.33.83.04.46.7

6.42.92.95.3

12.1

7.35.15.18.0

10.7

11.17.17.92.5

5.35.04.7

12.2

3.3-2 .2

2.34.8

4.1.9

- . 26.93.13.91.7

- . 35.73.91.4

.6

3.5.3.4.2.6

.33.53.54.16.8

6.63.12.85.0

12.2

7.54.85.28.0

10.7

11.17.77.92.4

6.06.95.6

12.6

3.0- 2 . 6

1.53.5

7.0-1.0

1.67.41.1

.91.0

1.63.33.51.32.0

1.4.6

1.51.11.0

1.93.02.74.04.9

4.54.43.45.59.5

9.84.75.67.59.0

9.29.45.43.7

11.25.69.98.2

5.52.83.33.7

1 Output refers to gross domestic product originating in the sector in 1972 dollars.2 Hours of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily on

establishment data.3 Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an

estimate of wages, salaries, and supplemental payments for the self-employed.4 Hourly compensation divided by the consumer price index for all urban consumers.5 Current dollar gross domestic product divided by constant dollar gross domestic product.

Note.—Data relate to all persons engaged in the sector. Percent changes are based on original data and therefore may differ slightlyfrom percent changes based on indexes in Table B-40.


267


PRODUCTION AND BUSINESS ACTIVITY

TABLE B-42.—Industrial production indexes, major industry divisions, 1929-83

[1967 ==100; monthly data seasonally adjusted]

Year or month

1967 proportion

192919331939

194019411942194319441945194619471948. ...1949

1950195119521953195419551956195719581959

I960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983"1982:JanFebMarAprM a y . .June' 'JulyAug ,SeptOctNovDec

1983:JanFebMarAprMayJuneJulyAugSeptOctNov p

Dec

Totalindustrialproduction

100.00

21.613.7217

25 031.636 344.047.440.735.039441.138 844.948.750.654.851.958.561161.957.964.866.266.772.276.581.789.897.8100 01063111.1

107 8109.6119 7129 8129 3117 8130.5138.21461152.5147 0151.0138 6147.7

140 7142.9141.7140.2139.2138.7

138.8138.4137.3135 7134 9135.2

137.4138.1140.0142 6144 4146.4149 7151.8153.8155.01561156.9

Manufacturing

Total

87.95

22.814.021.5

25.432.437.847.050.942.635.339.440.938.7

45.048.650.655.251.558.260.561.257.064.265.465.671.575.881.089.797.9100 0106.4111.0106 4108.2118.9129 8129.4116 3130.3138.4146 8153.6146.7150.4137.6148.5

138 5140.9140.1138.7137.9137.7138.1138.0137.1135.0134.0134.5

136.7138.2140.4143.1145.1147.4150 6152.8155.1156.4157 2157.8

Dura-ble

51.98

22.59.117.723.531.439.954.259.945.231.637.739.335.7

43.548.951.958.751.859.261.161.653.961.962.961.868.673.178.389.098.9100.0106.5110.6102.3102.4113.71271125.7109.3122.3130.0139.7146.4

136.7140.5124.7134.6

127 1129.3128.2126.7126.1125.5125.9124.9123.5120.3119.3119.9

122.5123.9126.3129.1131.0133.2136 8138.8141.6143.0144.0145.0

Non-durable

35.97

23.219.926.1

27.533.334.637.138.638.539.741.342.742.046.748.349.251.251.657.260.161.161.667.769.371.575.880.085.290.996.7100.0106.2111.5112.3116.6126.5133.8134.6126.4141.8150.5156.9164.0161.2164.8156.2168.5

155.1157.8157.3156.1155.0155.3155.7156.9156.7156.2155.3155.6

157.4159.0160.7163.3165.4167.8170.6172.9174.6175.8176.3176.3

Min-ing

6.36

43.130.642.146.849.751.352.556.255.154.261.364.457.1

63.870.069.471.269.977.982.082.175.378.7

80.380.883.186.489.993.298.2100.0104.2108.3112.2109.8113.1114.7115.3112.8114.2118.2124.0125.5132.7142.2126.1116.5

144.5142.4138.1134.1128.9123.5120.1116.9114.7115.9116.8118.4

121.9115.6112.6111.6112.8112.6115.0116.1117.1118.6120.9123.4

Utili-ties

5.69

7.46.7

10.7

11.813.314.916.517.517.818.620.122.423.911131.033.736.539.343.948.251.553.959.363.467.072.077.083.688.795.5100.0108.4117.3124.5130.5139.4145.4143.7146.0151.7156.5161.4166.0168.3169.1168.7172.7

171.8170.4170.0171.0170.9169.4167.7168.5167.5167.8166.7164.2

163.1162.0165.8169.3169.7169.8176.0179.3179.3176.9178.8183.4


268


TABLE B-43.—Industrial production indexes, market groupings, 1947-83

[1967 = 100; monthly data seasonally adjusted]

Year or monthTotal

industrialproduction

Final products

Total

Consumer goods1

TotalAuto-

motiveproducts

Homegoods

Equipment

Total Busi-De-

fenseand

space

Inter-mediateproducts

Materials2

TotalDura-

blegoods

Non-durablegoods

1967 proportion 100.00 47.82 27.68 2.83 5.06 20.14 12.63 7.51 12.89 39.29 20.35 10.47

39.441.138.8

44.948.750.654.851.9

58.561.161.957.964.8

66.266.772.276.581.7

89.897.8

100.0106.3111.1

107.8109.6119.7129.8129.3

117.8130.5138.2146.1152.5

147.0151.0138.6147.7

140.7142.9141.7140.2139.2138.7

138.8138.4137.3135.7134.9135.2

137.4138.1140.0142.6144.4146.4

149.7151.8153.8155.0156.1156.9

38.640.038.8

43.747.250.754.151.3

55.458.660.357.663.2

65.365.871.475.579.7

87.695.9

100.0106.2109.6

105.3106.3115.7124.4125.1

118.2127.6135.9142.2147.2

145.3149.5141.5147.2

142.8144.1143.3142.6142.2142.1

142.5141.2140.0138.7138.3139.5

140.1138.9139.9142.8144.5146.4

149.0150.7152.1152.9154.2155.4

42.443.743.4

49.649.150.253.252.9

59.061.262.662.168.1

70.772.277.181.385.9

92.697.3

100.0105.9109.8

109.0114.7124.4131.5128.9

124.0137.1145.3149.1150.8

145.4147.9142.6151.9

139.6141.8141.5142.1143.6144.8

145.8144.1143.4142.2141.3142.0

143.6143.4144.3147.7150.4152.4

154.8156.3157.3157.1157.8158.7

45.347.447.0

59.152.347.159.555.4

73.660.663.550.563.3

72.566.180.187.791.9

113.3112.8100.0119.4118.1

98.8124.4141.4153.0132.8

125.8155.7175.6179.9167.7

132.8137.9129.5158.2

109.2117.5125.0129.9138.9143.0

149.7135.5135.5123.6120.7128.7

136.2144.3142.6144.9152.2160.0

167.0168.1172.9171.0171.9178.1

37.539.136.2

49.943.043.048.644.9

53.055.754.551.459.0

59.461.366.571.878.4

88.997.9

100.0106.4113.2

110.2115.6129.5142.5136.8

118.8134.1141.9147.7149.2

138.9142.0129.1141.8

126.3130.6129.9131.1129.1129.9

130.4131.4128.9128.1126.8124.3

129.1128.8132.8138.1141.8143.2

144.9146.4148.8149.3148.1149.4

30.632.228.7

31.143.351.956.349.3

50.455.357.551.556.5

58.157.363.767.571.4

80.794.0

100.0106.5109.3

100.194.7

103.8114.5120.0

110.2114.6123.0132.8142.2

145.2151.8139.8140.8

147.2147.3145.9143.4140.4138.4

138.0137.3135.2134.0134.2136.1

135.3132.7133.8136.2136.5138.2

141.0143.1144.9147.1149.3150.8

38.039.534.5

37.045.251.253.346.8

50.858.861.151.557.9

59.457.762.765.873.7

84.497.7

100.0105.5112.5

107.01041118.0134.2142.4

128.2135.4147.8160.3171.3

173.2181.1157.9153.2

172.2171.6169.0164.9159.9156.7

154.9153.9150.5147.1146.4148.1

146.6142.7143.7146.9147.7150.2

153.3156.6158.7161.5164.4165.8

10.312.112.7

14.936.651.461.654.2

49.748.550.750.953.7

55.156.064.969.967.7

74.988.1

100.0108.2104.0

88.578.879.981.482.4

80.079.881.386.593.4

98.2102.7109.4119.9

105.2106.5107.0107.2107.7107.6

109.5109.5109.5111.9113.6115.9

116.4116.1117.0118.2117.6118.0

120.4120.2121.8122.9123.9125.7

41.944.342.0

48.851.350.954.554.3

61.764.464.463.069.5

70.071.475.779.985.2

90.696.2

100.0106.3112.9

112.9116.7126.5137.2135.3

123.1137.2145.1154.1160.5

151.9154.4143.3156.9

143.4146.3145.2143.7142.6141.9

142.8144.7143.7141.6141.8141.5

143.7145.3147.8150.8152.2154.5

158.1162.2165.4166.5167.2167.6

39.541.237.6

45.049.850.556.151.8

61.362.862.856.565.2

66.166.272.176.782.9

92.4100.7100.0106.5112.5

109.2111.3122.3133.9132.4

115.5131.7138.6148.3156.4

147.6151.6133.7145.3

137.2140.4138.5136.2134.3133.5

133.0132.8132.0130.0128.4127.8

132.0134.9137.6139.7141.7143.7

147.8149.7152.2153.9154.9155.3

38.339.435.3

44.450.551.660.352.0

63.763.963.853.764.064.863.370.475.181.9

93.8103.3100.0106.2112.1

103.8104.9117.7134.6132.7

109.1128.0136.1149.0157.8

143.0149.1125.0138.7

129.7132.4130.7128.1126.6126.6

126.0125.1123.0118.5116.4116.5

121.5125.3128.7132.4134.7137.0

141.1144.2147.4149.5150.9150.9

45.9

52.554.954.754.462.1

63.265.871.375.682.2

90.397.5

100.0108.8115.7

115.4120.2132.9142.2142.6

126.6147.8155.6165.6175.9

171.5174.6157.5174.9

156.8164.2162.0160.3156.6153.5

152.3154.5158.5158.2157.3155.6

159.7164.0167.5168.7172.1174.3

177.0178.0182.3185,0185.1184.9

1 Also includes clothing and consumer staples, not shown separately.2 Also includes energy materials, not shown separately.Source: Board of Governors of the Federal Reserve System.

269


TABLE B-44.—Industrial production indexes, selected manufactures, 1947-83

[1967=100; monthly data seasonally adjusted]

Year or month

1967 proportion

194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983 P.

1982:JanFebMarAprMayJune



JulyAugSeptOctNov P.Dec"

Durable manufactures

Primarymetals

Total

6.57

63.365.855.4

69.775.869.278.563.5

82.582.078.562.372.7

72.471.176.382.392.8

102.1108.4100.0104.3113.8

106.6100.2112.1126.7123.1

96.4109.7111.1119.9121.3

102.3107.975.385.4

89.788.583.076.475.272.8

72.972.973.269.663.663.5

73.177.981.283.184.984.8

85.587.590.695.192.091.1

Ironand

4.21

70.1

93.291.588.266.576.5

77.774.277.384.395.9

105.2108.4100.0103.2112.6

104.796.1

107.1122.3119.8

95.8104.8103.8113.2113.2

92.499.861.7

79.678.573.065.162.458.0

58.157.456.454.147.546.6

59.064.366.968.569.569.7

71.875.178.284.080.5

Fabri-catedmetalprod-ucts

5.93

49.950.845.8

56.159.958.566.059.4

67.868.870.663.371.0

71.169.475.477.882.6

90.897.2

100.0105.6107.9

102.4103.5112.1124.7124.2

109.9123.9131.0141.6148.5

134.1136.4114.8120.4

120.7121.4121.1119.1115.8115.0

115.5114.3U2.3107.6107.0107.3

107.6110.3113.9115.3115.5118.5

122.7126.0127.4127.2129.3129.7

Non-elec-trical

machin-ery

9.15

39.039.233.4

37.547.751.954.046.1

50.658.057.948.656.7

56.955.462.166.375.6

85.098.8

100.0101.8109.3

104.4100.2116.0133.7140.1

125.1134.5143.6153.6163.7

162.8171.2149.0150.6

160.9160.0157.3153.7150.0147.4

147.1147.2144.9140.4139.6139.2

138.0136.2138.6143.1146.1149.5

154.2157.3158.3159.5162.9163,0

Electri-cal

machin-ery

8.05

22.223.021.6

29.629.834.039.034.7

39.943.142.839.247.6

51.654.862.964.768.4

81.797.9

100.0105.5111.9

108.1107.7122.2143.1143.8

116.5134.8145.4159.4175.0

172.8178.4169.3185.8

168.2172.9172.6172.2170.9170.8

170.3169.7167.0165.4165.5165,5

169.5168.9173.8177.2180.1182.4

188.3189.2195,8198.7200.6203.7

Transportationequipment

Total

9.27

31.834.834.9

41.846.654.268.059.2

68.066.070.755.863.2

65.461.571.178.080.0

95.1102.0100.0111.1108.4

89.597.9

108.2118.3108.7

97.4111.1122.2132.5135.4

116.9116.1104.9117.4

96.6102.0104.4105.9110.0111.6

112.7107.0105.3100.8100.2103.7

106.3109.6110.1111.4113.8116.6

119.7121.1124.7125.5125.8128.2

Motorvehicles

andparts

4.50

60.5

81.265.869.051.066.2

74.765.579.888.390.7

115.9113.9100.0120.3116.5

92.3118.6135.8148.8128.2

111.1142.0161.1169.9159.9

119.0122.3109.8136.9

90.498.6

105.6110.7119.8124.0

127.21167113.5103.0101.7108.8

U3.9123.0123.2125.5130.4136.2

142,3144.3150.9150.9152.5157.1

Lumberand

prod-ucts

1.64

58.961.354.1

65.765.564.768.468.0

75.975.068.869.979.3

74.778.282.586.392.7

96.3100.0100.0105.5107.9

105.6113.8120.8126.0116.2

107.6123.2131.2136.3136.9

119.3119.1112.6

99.2104.9103.5106.2110.6112.2

116.9120.3119.9117.2119.1121.4

130.0130.2128.7132.1135.8137.4

141.3141.6142.3141.7142.0

Nondurable manufactures

Apparelprod-ucts

3.31

57.860.359.7

64.363.166.367.266.4

73.375.074.972.880.1

81.782.285.589.192.2

97.499.9

100.0102.9106.7

101.4104.7109.4117.3114.3

107.6125.7134.2134.2134.4

127.0120.4

Printingand

publish-ing

4.72

43.345.446.6

48.949.749.752.054.1

59.563.265.463.968.2

71.071.373.977.882.6

87.994.6

100.0103.2107.4

107.0107.1112.7118.2118.2

U3.3122.5127.6131.5136.9

139.6144.2144.1152.9

145.6146.4145.9144.2143.8142.6

143.9145.3144.3142.0141.7142.8

141.3144.0145.9145.7145.2147.4

152.0157.8161.7162.7163.1163.2

Chem-icalsand

prod-ucts

7.74

19.721.321.0

26.229.731.133.634,1

39.842.745.246.654.3

56.459.265.771.878.8

87.895.7

100.0109.5118.4

120.4125.9143.6154.5159.4

147.2170.9185.7197,4211.8

207.1215.6196.1

196.7201.3200.3198.6193.6193.2

194.1195.6196.4194.1192.8195.9

197,6202.3205.7208.5211.0214.7

218.3220.3224.1228.1228.3

Foods

8.75

55.855.255.9

57.959.060.261.462.7

66.370.171.172.976.5

78.680.983.486.490.4

92.496.0

100.0102.6106.1

108.9112.8116.8120.9124.0

123.4133.0138.8142.7147.5

149.6152.1151.1

151.1151.7150.8149.7150.5151.0

151.0150.7149.0151.5152,0152.8

154.4153.0152.0153.7155.6157.7

159.9159.3158.2157.6


270


TABLE B-45.—Capacity utilization rate in manufacturing, 1948-83

[Percent; quarterly data seasonally adjusted]

Year orquarter

19481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983"

1979:IIfIIIIV

1980:IIIIllIV

1981:1IIIllIV

1982:1IIIllIV

1983:

IIIllIV

FRB series1

Totalmanufac-

turing

82 574.2

82.885.885489 280 3

87186.483 775.2819

80 277.481683 5856

89 691186.987 286.3

79.578 583.587 683.7

72.979.682.284.786.0

79.679 471.175.3

87.286.285 784.8

83.878.376.479.7

80.680.880.375.9

72.971.671.069.0

70.773.877.479.2

Durablegoods

87.187 285.9

76.574 680.787 283.1

70.377181.186.086.7

77.878 268.272.4

89.187.485 884.4

83.076.573.978.0

79.279 879 274.3

70.569.168.165.1

67.270.774.777.1

Non-durablegoods

86.887187.0

83.984 087.488184.7

76.683 085.085.686.3

81.881174.878.9

86.986.386 485.6

85.080.779.781.9

82.482 081878.0

75.874.774.874.0

75.177.880.781.9

Primaryprocess-

ing

87 276.2

88.590.284.989.480.6

92.189.784.775.483.4

79.877.981.683 887.8

91.191485.787 788.5

82.982 388.192 487.8

73.882 384.687.989.5

80.380 868.976.0

90.389.689 888.5

87.278.074.881.3

83.582.681975.2

71.568.868.666.8

70.574.678.380.5

Advancedprocess-

ing

80 073.3

79.883485.989380.1

84.384 583.175.181.1

80.477 281.783 484.6

88.991287.786 985.2

77.676 481.085 081.5

72.578280.982.984.0

79.278 772.375.0

85.484.483 482.8

82.278.577.378.7

79.179 779 476.3

73.773.172.370.2

71.173.576.978.5

Commerce series2

Totalmanufac-

turing

86.086 084.085 085.0

81.080 083.086 083.0

77.081083.083.682.5

77.576170.0

84.483.381780.7

80.175.876.278.0

78.178.375 972.1

72.271.269.167.5

69.873.375.5

Durablegoods

88.087.083.084.084.0

78.078.082.085.082.0

76.081.084.084.482.7

76.674 666.5

85.284.081680.0

79.774.174.777.8

77.277.074.170.1

69.867.665.263.4

66.370.3111

Non-durablegoods

85.086.085.086.086.0

83.083.085.086.084.0

79.082.082.082.682.3

78.778.174.6

83.382.481.881.7

80.677.978.178.3

79.480.078.474.7

75.276.074.272.8

74.377.179.1

Primary-processed

goods

89.088 087.086.087.0

83.082.085.089 085.0

76.082.083.084.283.8

76.975.666.5

85.284.283 282.6

80.874.973.978.1

78.078.075.670.9

70.166.565.663.9

68.171.274.0

Advanced-processed

goods

85.085 083.084 084.0

79.080 082.084 082.0

77.081083.083.381.9

77.876 471.8

84.082.980979.7

79.776.277.477.9

78.278.576.172.7

73.273.870.969.3

70.674.476.3

1 For description of the series, see "New Federal Reserve Measures of Capacity and Capacity Utilization," Federal Reserve Bulletin, July1983.

2 Quarterly data are for last month in quarter. Annual data are averages of the four indexes, except for 1965 (December index) and1966-67 (averages of June and December indexes). For description of the series, see "Survey of Current Business," July 1974.

Sources: Board of Governors of the Federal Reserve System and Department of Commerce (Bureau of Economic Analysis).

271


TABLE B-46.—New construction activity, 1929-83

[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]

Year or month

1929

1933

1939 ...

19401941194219431944 ,.

1945 ..1946

New series

194719481949

19501951195219531954

19551956 .. . ..195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

198019811982

newconstruc-

tion

10.8

2.9

8.2

8.712.014.18.35.3

5.814 3

20 026.126.7

33.635 436 839.141.4

46.547 649150 055.4

54 756.460 264.868.0

74 176 878 587.594.3

95 2110 3124.4138 4139.2

135.91511173 8205.6230.4

230 7239 4232.0

Private construction

Total

8.3

1.2

4.4

5.16.23.42.02.2

3.4121

16.721.420.5

26.726.226 027.929.7

34.834.935134.639.3

38939 342 345.547.7

52 052 852 959.966.3

67180 494.2

105 9100.9

951112 0135 7159.7181.6

175 71861181.0

Residentialbuildings1

Total2

3.6

.5

2.7

3.03.51.7.9.8

1.36.2

9.913.112.4

18.115.915 816.618.2

21.920.219 019.824.3

23 023.125 227.928.0

27 925 725 630.633.2

31943 354.359 750.4

46.560 581093.499.0

87 386 674.8

Newhousing

units

3.0

.3

2.3

2.63.01.4

i

.6

.74.8

7.810.510.0

15.613.212 913.414.9

18.216.114 715.419.2

17 317.119 421.721.8

21719 419024.025.9

24.335144.950.140.6

34.447 365 775.878.6

63162 751.9

Nonresidential buildings and otherconstruction1

Total

4.7

.8

1.7

2.12.71.71.11.4

2.15.8

6.98.28.0

8.610.310.211.311.5

12.914.716114.815.1

15916.217 217.619.7

24127 127 329.333.1

35.337 240.046.250.5

48.651454 766.282.6

88.499 5

106.2

Com-mercial3

1.1

.1

.3

.3

.4

.2

.0

.1

.21.2

1.01.41.2

1.41.5111.82.2

3.23.6363.63.9

424.7515.05.4

7.89.4

9.811613.515 515.9

12.812 814 818.624.9

29 934 237.3

Indus-trial

0.9

.2

.3

.4

.8

.3

.2

.2

.61.7

1.71.41.0

1.12.12.32.22.0

2.43.13.62.42.1

2.92.82.82.93.6

6.06.8

6.55.44.76.27.9

8.07.27.7

11.015.0

13.817.017.3

Other4

2.6

.5

1.2

1.31.51.2

.91.1

1.33.0

4.25.55.9

6.16.76.87.37.2

7.38.09.08.89.0

8.98.79.29.7

10.7

15.516.9

19.020.121.824.526.7

27.831.532.236.742.7

44.748.251.5

Public construction

Total

2.5

1.6

3.8

3.65.8

10.76.33.1

2.42.2

3.34.76.3

6.99.3

10.811.211.7

11.712.714.115.516.1

15.917.117.919.420.4

22.124.025.527.628.0

28.129.930.232.538.3

40.939.138.245.948.8

55.053.351.1

Federal

0.2

.5

.8

1.23.89.35.62.5

1.7.9

.81.21.5

1.63.04.24.13.4

2.82.73.03.43.7

3.63.93.94.03.9

4.04.03.53.43.3

3.34.04.44.95.3

6.37.07.38.48.6

9.610.410.2

State andlocal'

2.3

1.1

3.1

2.42.01.3

.7

.6

.71.4

2.53.54.8

5.26.36.67.18.3

8.910.011.112.112.3

12.213.314.015.416.5

18.020.022.124.224.6

24.825.925.827.633.0

34.632.130.937.540.2

45.442.940.8


272


TABLE B-46.—New construction activity, 1929-83—Continued

[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]

Year or monthTotalnew

construc-tion

Private construction

Total

Residentialbuildings1

Total 2New

housingunits

Nonresidential buildings and otherconstruction *

Total Com-mercial 3

Indus-trial Other*

Public construction

Total Federal State andlocal6

1982:JanFeb....Mar....Apr....May....June...


1983:JanFeb....Mar....Apr....May....June...

July....Aug....Sept...OctNov. .

224.3223.5226.8228.8230.9233.4

230.8231.6230.7234.1243.7240.2

247.9243.0241.9247.4254.8264.3

274.2282.0285.4271.9271.9

175.4174.3175.5177.9180.9182.9

180.8179.5178.2181.9190.5190.8

195.0194.3194.9199.5206.0214.7

222.8228.5232.6223.0223.2

71.268.369.671.975.275.5

73.872.771.776.481.286.0

89.793.696.1

102.0107.5113.5

122.3127.1129.1121.7118.3

49.248.7S0.448.750.149.3

51.452.653.053.655.858.6

63.468.872.377.382.287.9

92.794.895.092.291.1

104.2106.0105.9105.9105.8107.4

107.0106.8106.5105.5109.3104.8

105.3100.898.797.598.5

101.2

100.5101.4103.4101.3105.0

36.136.937.137.536.538.6

37.837.638.037.037.936.9

38.236.735.533.633.335.9

35.936.336.936.138.0

18.218.418.217.717.818.2

17.216.916.517.116.715.6

15.214.314.313.213.013.1

12.214.213.210.511.5

50.050.850.650.751.550.5

52.052.351.951.454.752.2

52.049.849.050.752.252.2

52.450.953.454.655.4

48.949.251.350.950.050.4

50.052.252.552.253.249.4

52.948.747.047.948.749.6

51.453.552.848.948.6

9.79.9

10.510.09.99.9

10.310.410.810.610.810.1

10.510.511.011.110.19.9

11.711.111.310.510.4

39.239.340.840.940.140.5

39.741.741.741.642.439.3

42.438.236.136.838.639.7

39.842.441.538.438.2

1 Beginning I960, farm residential buildings included in residential buildings; prior to 1960, included in nonresidential buildings andother construction.

2 Total includes additions and alterations and nonhousekeeping units, not shown separately.3 Office buildings, warehouses, stores, restaurants, garages, etc.4 Religious, educational, hospital and institutional, miscellaneous nonresidential, farm (see also footnote 1), public utilities, and all

other private.5 Includes Federal grants-in-aid for State and local projects.Source: Department of Commerce, Bureau of the Census.

273


TABLE B-47.—New housing units started and authorized, 1959-83

[Thousands of units]

Year or month

New housing units started

Private and public1

Total(farm andnonfarm)

Nonfarm

Private (farm and nonfarm)1

TotalType of structure

1 unit 2 to4units

5 unitsor more

New private housing units authorized2

Total

Type of structure

l u n i t 2 to 4units

5 units

1959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983 "...

1982:Jan....Feb...Mar..,Apr...May..June..

July...Aug...Sept..Oct...Nov...Dec...

1983:Jan....Feb...Mar...May'"June..

July...Aug...Sept..Oct...Nov...Dec".

1,553.7

1,296.11,365.01,492.51,634.91,561.0

1,509.71,195.81,321.91,545.41,499.5

1,469.02,084.52,378.52,057.51,352.5

1,171.41,547.6

12,001.72,036.11,760.0

1,312.61,100.31,072.11,712.6

47.652.078.785.199.291.8

107.297.2

108.3111.5110.083.4

92.996.7

135.8136.4175.5173.8

161.9177.8156.8159.9137.3107.7

1,531.3

1,274.01,336.81,468.71,614.81,534.0

1,487.51,172.81,298.81,521.41,482.3

1,517.0

1,252.21,313.01,462.91,603.21,528.8

1,472.81,164.91,291.61,507.61,466.8

1,433.62,052.22,356.62,045.31,337.7

1,160.41,537.51,987.12,020.31,745.1

1,292.21,084.21,062.21,703.1

877911920911

1,028910

1,1851,0461,1341,1421,3611,280

1,6941,7841,6051,5061,8071,736

1,8041,9041,6641,6541,7551,667

1,234.0

994.7974.3991.4

1,012.4970.5

963.7778.6843.9899.4810.6

812.91,151.01,309.21,132.0

892.21,162.41,450.91,433.31,194.1

852.2705.4662.6

1,066.9

283.0

257.4338.7471.5590.8

108.4 450.0

86.661.171.680.985.0

84.8120.3141.3118.368.1

64.085.9

121.7125.0122.0

109.591.180.0

114.9

422.5325.1376.1527.3571.2

535.9780.9906.2795.0381.6

204.3289.2414.4462.0429.0

330.5287.7319.6521.3

1,208.3

998.01,064.21,186.61,334.71,285.8

1,239.8971.9

1,141.01,353.41,323.7

1,351.51,924.62,218.91,819.51,074.4

939.21,296.21,690.01,800.51,551.8

1,190.6985.5

1,000.51,593.7

938.3

746.1722.8716.2750.2720.1

709.9563.2650.6694.7625.9

646.8906.1

1,033.1882.1643.8

675.5893.6

1,126.11,182.6

981.5

710.4564.3546.4894.3

77.1

64.667.687.1

118.9100.8

84.861.073.084.385.2

132.9148.6117.064.3

63.993.1

121.3130.6125.4

114.5101.888.3

132.7

Seasonally adjusted annual rates

192.9

187.4273.8383.3465.6464.9

445.1347.7417.5574.4612.7

616.7885.7

1,037.2820.5366.2

199.8309.5442.7487.3444.8

365.7319.4365.8566.6

585561607583622617

625651683716868842

1,1261,1031,0081,0011,1831,127

1,0321,1351,0311,0021,097972

708368658586

968790667979

10011710011796123

135

no11790133151

222267245263321207

464308361360414359

468564497388528486

637659516562525544

800820883880951924

1,065928

1,0291,1541,2271,326

1,4471,4791,4671,5361,6351,761

1,7821,6521,5061,6301,6421,549

448451475462489513

507515576657738753

866835859841940

1,013

920874837880911898

7273807610587

8588948795111

120114126141136147

137133130142142141

280296328342357324

473325359410394462

461530482554559601

725645539608589510

1 Units in structures built by private developers for sate upon completion to local public housing authorities under the Department ofHousing and Urban Development "Turnkey" program are classified as private housing. Military housing starts, including those financedwith mortgages insured by FHA under Section 803 of the National Housing Act, are included in publicly owned starts and excluded fromtotal private starts.

2 Authorized by issuance of local building permit: in 16,000 permit-issuing places beginning 1978; in 14,000 places for 1972-77; in13,000 places for 1967-71; in 12,000 places for 1963-66; and in 10,000 places prior to 1963.

3 Not available separately beginning January 1970.Source: Department of Commerce, Bureau of the Census.

274


TABLE B-48.—Nonfarm business expenditures for new plant and equipment, 1947-84


Year or quarter

194719481949

19501951195219531954

19551956195719581959

I9601961196219631964

19651966196719681969

19701971197219731974

19751976 ,..197719781979

1980198119821983319843

1982:I11IllIV

1983:1ItIllIV3

1984:|3| | 3

Total

21.80254623.54

25 3230.83315933.5833.13

36 5844.7648.1242.1744.78

486347.82512853.2561.66

70 4382.2283 4288.4599.52

105 61108.53120 25137.70156.98

157 71171.45198.0823124270.46

295 63321.49316.43303.20333.32

326.9532187313J6303.18

293.03293 46304 70321.60

323.07325.42

Plant

8.4710 3810.19

11.0013.1113.1213.8314.09

16 0719.3920.9619.3919.92

20 9421.14221622.2825.01

27 3332.2732 2235.5440.59

44 2746.6849 3656.5864.30

65 2371.1280.1992 63

105.75

117 57133.35134.58

139.07137 52134 43127.32

125 40125 60130 59

Equip-ment

13.3315 0813.35

14.3217.7118.4619.7519.03

20.5125.3727.1622.7824.86

27 7026.68291230.9836.65

431049.95512152.9158.93

613361.8570 8981.1292.67

92 48100.33117.89138 60164.68

178 06188.14181.86

187.89184 34179 33175.86

167.62167 8617412

Plant and equipment

Manufacturing

Total

8.739 257.32

7 7311.07121212.4312.00

12 5016.3317 5012.9813.76

16 3615.5316 0317.2721.23

25 4131.3732 2532.3436.27

36 9933.6035 4242.3753.21

54 9259.9569.2279 7298.68

115 81126.79119.68111.18125.98

127.47122 76118 26110.23

109.86108 79111 12114.97

119.00120.96

Dura-ble

goods

3.393.542.67

3.225.125.755.715.49

5.878.198.596.216.72

8287.437 818.64

10.98

13 4917.2317 8317.9319.97

19 8016.7818 2222.7527.44

26 3328.4734.0440 4351.07

58 9161.8456.4451.4559.87

60.3958.2856 6150.51

50.7448.4853.0653.52

57.1858.09

Non-durablegoods

5.345 714.64

4.515.956 376.726.51

6 628.158916.777.04

8 088.108 228.63

10.25

119214.1514 4214.4016.31

171916.8217 2019.6225.76

28 5931.4735.1839 2947.61

56 9064.9563.2359.7466.11

67.0864 48616559.72

591260 3158 0661.45

61.8162.86

Total

13.07162116.22

17.5919.76194721.1621.13

24 0828.4330 6229.1931.02

32 2832.2935 2535.9940.43

45 0250.84511856.1163.25

68 6274.9384 8295.33

103.78

102 79111.50128.8715152171.77

179 81194.70196.75192.01207.34

199.4919911195 51192.95

183.17184.67193 59206.62

204.08204.47

Min-ing

0.69.93.88

.841.111211.251.29

1311.641.691.431.35

1.291.261.411.261.33

1.361.421381.441.77

2 022.672 883.314.62

6107.449.24

10 2111.38

13 5116.8615.4512.0013.48

17.4316.3814 5713.41

12.0310.9111.9313.14

12.2513.68

Nonmanufacturing

Transpor-tation

2.212.662.30

2.383.052.992.972.42

2 603.073.352.343.17

3.192.823.263.364.46

5.466.436.346.797.04

6 955.936727.418.23

8.688.899.40

10 6812.35

12 0912.0511.9511.2510.96

12.0012.1711.2912.33

11.0410.8811.0012.10

10.7811.42

Publicutili-ties

1.642.673.28

3.4?3.753.964.614.23

4.264.785.955.745.46

5.405.205.125.335.80

6.497.829.33

10.5211.70

13.0314.7016.2617.9719.83

19.9822.3726.7929.9533.96

35.4438.4041.9542.6244.17

40.3541.4543.0243.00

41.6141.4842.2245.17

41.8242.30

Tradeand

serv-ices1

6.136.927.13

8.378.838.058.949.59

11.4913.6413.6814.1115.40

16.1516.5318.2718.5720.38

22.1324.6923.0225.3128.31

29.7734.2040.0045.5347.79

46.2349.3056.5468.6679.26

81.7986.3386.9588.0296.35

87.8288.7486.8884.36

82.3885.8591.0692.79

96.9895.03

Com-munication

andother2

2.403.042.63

2.583.033.253.383.60

4.425.305.965.585.63

6.256.487.197.478.46

9.5810.4911.1112.0614.43

16.8517.4318.9621.1223.30

21.8023.5126.9032.0234.83

36.9941.0640.4638.1142.38

41.8740.3639.7539.84

36.1135.5437.3843.42

42.2542.03

1 Wholesale and retail trade; finance, insurance, and real estate; and personal, business, and professional services.2 "Other" consists of construction; social services and membership organizations; and forestry, fisheries, and agricultural services.3 Planned capital expenditures reported by business in late October-December 1983, corrected for biases.Source: Department of Commerce, Bureau of Economic Analysis.

275


TABLE B-49-—Sales and inventories in manufacturing and trade 1947-83

[Amounts in millions of dollars; monthly data seasonally adjusted]

Year or month

Total manufacturing andtrade

Sales1 Inven-tories2 Ratio3

Manufacturing

Sales1 Inven-tories2 Ratio3

Merchant wholesalers

Sates1 Inven-tories2 Ratio'

Retail trade

Sales1 Inven-tories2

194719481949

19501951195219531954

19551956195719581959

19601961196219631964

1965 :..,1966196719681969

19701971197219731974

19751976197719781979

198019811982

1982:JanFehMarAprMayJune


1983:JanFebMarAprMay

JulyAugSept..OctNov P

35,26033,788

38,59643,35644,84047,98746,443

51,69454,06355,87954,20159,729

60,82761,15965,66268,99573,682

80,28387,18790,34898,104105,003

107,448116,017130,030153,412177,625

182,230204,277229,624260,307297,663

327,284356,099344,179

340,746345,687347,061344,934353,110349,742

347,676343,426342,882336,905338,722338,391

345,337341,490348,009351,100363,925373,572372,434374,358380,089382,209386,841

52,50749,497

59,82270,24272,37776,12273,175

79,51687,30489,05287,09392,129

94,71395,594101,063105,480111,503

120,907136,790144,796155,697169,343

177,556187,766201,950233,237285,807

288,375318,544351,036398,890450,736

492,885526,152511,942

523,647521,291520,440523,370519,119521,040

521,145521,257521,000519,797513,888511,942

507,550507,665503,222504,796505,658505,521

505,826510,430513,883515,999518,291

1.421.53

1.361.551.581.581.60

1.471.551.591.601.50

1.561.541.501.491.47

1.451.471.561.541.55

1.621.581.491.411.45

1.571.481.461.441.43

1.451.441.51

1.541.511.501.521.471.49

1.501.521.521.541.521.51

1.471.491.451.441.391.35

1.361.361.351.351.34

15,51317,31616,126

18,63421,71422,52924,84323,355

26,48027,74028,73627,24730,286

30,87930,92333,35735,05837,331

40,99544,87046,48750,22853,501

52,80555,90663,02372,93784,794

86,59598,802113,202126,905143,936

154,391168,129159,177

157,498160,740160,162159,118163,007163,120

162,417160,016160,458154,194154,318154,543

158,239158,081161,803163,065167,965173,920

172,598175,989178,590176,790181,029

25,89728,54326,321

31,07839,30641,13643,94841,612

45,06950,64251,87150,24152,945

53,78054,88558,18660,04663,409

68,18577,95284,66490,61898,202

101,651102,658108,238124,628157,792

159,934175,193189,195210,415241,113

264,114282,333264,902

280,794280,941279,337278,468276,356274,912

274,629273,809271,675270,786267,920264,902

262,117260,856257,304257,397258,149257,390

258,176259,834260,021260,816260,988

1.581.571.75

1.481.661.781.761.81

1.621.731.801.841.70

1.751.741.701.691.64

1.601.621.761.741.77

1.901.831.671.581.65

1.841.691.611.571.57

1.661.641.73

1.781.751.741.751.701.69

1.691.711.691.761.741.71

1.661.651.591.581.541.48

1.501.481.461.481.44

6,8086,514

7,6958,5978,7829,0528,993

9,89310,51310,47510,25711,491

11,65611,98812,67413,38214,529

15,61116,98719,44820,84622,609

23,94326,25729,58438,01447,748

46,62350,69455,98766,11778,680

92,658100,67395,363

96,70696,89899,19897,34899,29098,019

95,79094,34192,52791,80691,91291,389

94,79092,24592,94392,58697,529100,479

100,315100,568102,297104,578103,831

7,9577,706

9,2849,88610,21010,68610,637

11,67813,26012,73012,73913,879

14,12014,48814,93616,04817,000

18,31720,76524,83326,13428,624

32,03835,04538,63345,37256,948

56,69764,07872,31185,68598,394

112,341116,986118,790

117,266115,029115,861119,423118,132119,828

119,854119,190119,537120,162118,349118,790

117,564116,417116,591117,498115,855115,630

115,745116,813118,410119,882119,555

1.131.19

1.071.161.121.171.18

1.131.191.231.241.15

1.221.201.161.151.14

1.151.151.241.231.22

1.271.271.241.111.07

1.211.191.211.201.18

1.141.131.24

1.211.191.171.231.191.22

1.251.261.291.311.291.30

1.241.261.251.271.191.15

1.151.161.161.151.15

10,20011,13511,149

12,26813,04613,52914,09114,095

15,32115,81116,66716,69617,951

18,29418,24919,63020,55621,823

23,67725,33024,41327,03028,893

30,70033,85337,42242,46245,082

49,01254,78160,43567,28675,047

80,23587,29889,640

86,54288,04987,701

90,81388,603

89,46989,06989,89790,90592,49292,459

92,30891,16493,26395,44998,43199,173

99,52197,80199,202

100,841101,981

14,24116,00715,470

19,46021,05021,03121,48820,926

22,76923,40224,45124,11325,305

26,81326,22127,94129,38631,094

34,40538,07335,29938,94542,517

43,86750,06355,07963,23771,067

71,74479,27389,530

102,790111,229

116,430126,833128,250

125,587125,321125,242125,479124,631126,300

126,662128,258129,788128,849127,619128,250

127,869130,392129,327129,901131,654132,501

131,905133,783135,452135,301137,748

1 Monthly average for year and total for month.2 Seasonally adjusted, end of period.3 Inventory/sales ratio. For annual pew

inventories at end of month to sales for month.average inventories to average monthly sales; for monthly data, ratio of

Note.—Earlier data are not strictly comparable with data beginning 1958 for manufacturing and beginning 1967 for wholesale andretail trade.

The inventory figures in this table do not agree with the estimates of change in business inventories included in the gross nationalproduct since these figures cover only manufacturing and trade rather than allijusiness, and show inventories in terms of current bookvalue without adjustment for revaluation.


276


TABLE B-50.—Manufacturers' shipments and inventories, 1947-83

[Millions of dollars; monthly data seasonally adjusted]

Shipments'

Total

Dura-ble

goodsindus-tries

Non-durablegoodsindus-tries

Inventories2

Total

Durable goods industries

TotalMate-

rials andsupplies

Workin

proc-Finished

goods

Nondurable goods industries

TotalMate-

rials andsupplies

Workin

proc-ess

Finishedgoods

15,51317,31616,12618,63421,71422,52924,84323,355

26,48027,74028,73627,24730,286

30,87930,92333,35735,05837,331

40,99544,87046,48750,22853,50152,80555,90663,02372,93784,794

86,59598,802113,202126,905143,936154,391168,129159,177

157,498160,740160,162159,118163,007163,120162,417160,016160,458154,194154,318154,543

158,239158,081161,803163,065167,965173,920

172,598175,989178,590176,790181,029

6,6947,5797,191

8,84510,49311,31313,34911,82814,07114,71515,23713,56315,609

15,88315,61617,26218,28019,63722,22124,64925,26727,65929,437

28,18829,95434,02439,68644,228

43,65650,68959,26767,84876,06077,55083,87276,843

76,46378,52578,73077,80879,68079,197

78,85677,25076,41972,47873,00573,495

77,74477,76979,59580,24182,66986,582

85,64687,91888,97088,22892,191

8,8199,7388,935

9,78911,22111,21611,49411,527

12,40913,02513,49913,68414,677

14,99615,30716,09516,77817,69418,77420,22021,22022,57024,064

24,61725,95229,00033,25040,567

42,93948,11353,93559,05767,87676,84184,25782,334

81,03582,21581,43281,31083,32783,923

83,56182,76684,03981,71681,31381,048

80,49580,31282,20882,82485,29687,338

86,95288,07189,62088,56288,838

25,89728,54326,321

31,07839,30641,13643,94841,61245,06950,64251,87150,24152,945

53,78054,88558,18660,04663,40968,18577,95284,66490,61898,202

101,651102,658108,238124,628157,792

159,934175,193189,195210,415241,113264,114282,333264,902

280,794280,941279,337278,468276,356274,912

274,629273,809271,675270,786267,920264,902

262,117260,856257,304257,397258,149257,390

258,176259,834260,021260,816260,988

13,06114,66213,060

15,53920,99123,73125,87823,710

26,40530,44731,72830,25832,07732,37132,54434,63235,86638,506

42,25749,92055,00558,87564,739

66,78066,28970,25081,398

101,739102,874112,581121,575137,834160,554

174,547186,222175,200

185,238185,200184,319184,053183,378182,811182,099181,543180,520179,675177,061175,200

172,506171,572169,377169,814170,734169,840

169,693170,576170,385170,628170,934

8,9667,8949,19410,41710,60810,03210,776

10,35310,27910,81011,06811,97013,32515,48916,45517,37618,693

19,18219,75920,86026,02835,151

33,92037,54840,25645,21152,67855,13757,95352,543

57,71057r54156,68456,53855,88955,61855,35454,92754,35553,96953,10052,543

51,45351,41050,01650,26850,58250,333

50,13750,84951,00651,01651,389

10,7209,721

10,75612,31712,83712,38713,06312,77213,20314,15914,87116,191

18,07521,93925,00527,33630,408

29,84828,65030,78835,54542,603

43,36946,34550,59958,66469,314

76,99981,10777,908

80,51280,47380,24680,08079,89079,80279,04478,89178,77678,97378,30877,908

77,14176,42075,89676,01876,68675,928

76,08176,11676,27076,85776,619

6,2066,0406,3487,5658,1257,8398,239

9,2459,0639,6629,92510,34410,85412,49113,54714,16315,639

17,75117,88018,60119,82323,985

25,58628,69030,72033,95938,562

42,41147,16244,749

47,01647,18647,38947,43547,59947,39147,70147,72547,38946,73345,65344,749

43,91243,74243,46543,52843,46643,579

43,47543,61143,10942,75542,926

12,83613,88113,261

15,53918,31517,40518,07017,90218,66420,19520,14319,98320,868

21,40922,34123,55424,18024,903

25,92828,03229,65931,74333,46334,87136,36837,98843,23056,053

57,06062,61267,62072,58180,55989,56796,11189,702

95,55695,74195,01894,41592,97892,10192,53092,26691,15591,11190,85989,702

89,61189,28487,92787,58387,41587,550

88,48389,25889,63690,18890,054

8,3178,167

8,5568,9718,7758,6629,080

9,0829,4939,8139,978

10,131

10,44811,15511,71512,28912,724

13,15013,68314,67618,13223,699

23,54225,83327,40129,31232,477

36,19437,72635,140

37,63037,65337,13337,28936,99036,632

36,64636,38935,80135,46535,50935,140

35,36035,25734,81534,72234,59234,989

35,03135,81436,17636,11636,115

2,4722,4402,5712,7212,8642,8282,944

2,9463,1103,2963,4063,511

3,8064,2044,4214,8485,122

5,2745,6655,9826,7078,175

8,8379,933

10,99611,92113,750

15,70415,99514,241

15,80415,49715,37515,37315,26715,301

15,36415,30614,94914,77214,60814,241

14,37814,47714,16414,34714,17414,206

14,44114,44014,47714,70814,813

7,4097,415

7,6668,6228,6248,4918,845

9,3809,738

10,44410,79611,261

11,67412,67313,52314,60615,617

16,44817,01917,33018,39124,179

24,68126,84629,22331,34834,332

37,66942,39040,321

42,12242,59142,51041,75340,72140,168

40,52040,57140,40540,87440,74240,321

39,87339,55038,94838,51438,64938,355

39,01139,00438,98339,36439,126

1 Monthly average for year and total for month.2 Book value, seasonally adjusted, end of period.Note.—Data beginning 1958 are not strictly comparable with earlier data.Source: Department of Commerce, Bureau of the Census.

277


TABLE B-51.—Manufacturers' new and unfilled orders, 1947-83

[Amounts in millions of dollars; monthly data seasonally adjusted]

Year or month

New orders1

Total

Durable goodsindustries

Total

Capitalgoodsindus-tries,non-

defense

Non-durablegoods

industries

Unfilled orders2

TotalDurablegoods

industries

Non-durablegoods

industries

Unfilled orders—shipmentsratio3

TotalDurablegoods

industries

194719481949195019511952195319541955195619571958195919601961196219631964

19651966196719681969

19701971197219731974

197519761977197819791980198119821982:JanFebMar

(Jayi;June....JulyAugSept....OctNovDec

1983:JanFebMar

ft::::June....JulyAugSept....OctNov

15,25617,69315,614

20,11023,90723,20423,58622,335

27,46528,36827,55927,00230,724

30,23531,10433,43635,52438,357

42,10046,40247,05650,68753,950

52,03855,98364,16776,25987,26885,14999,543115,061131,616147,466156,142167,924157,371

157,694159,115159,576157,846159,466159,986158,913155,700156,572152,362152,604157,382

162,871157,757162,587166,025169,874178,489

175,455178,302180,961181,802185,484

6,3888,1266,63310,16512,84112,06112,14710,768

14,99615,36514,11113,29016,003

15,30315,75917,37418,70920,652

23,27826,17725,82528,11629,871

27,38829,99835,06442,93046,85342,01951,39861,11172,40979,51379,34183,72575,103

76,69577,35778,17676,73676,35376,15775,56372,96572,34870,73571,06776,180

82,35577,44979,95183,10184,45690,905

88,23489,97890,99693,36696,524

6,9037,660

6,7387,4448,62210,97112,67311,01112,79915,29119,45823,231

23,25924,05920,687

21,86022,40721,70822,80620,30619,93219,93118,74120,21720,12719,98319,679

20,50719,17520,03222,59222,22824,289

21,58023,02825,21326,00324,436

8,8689,5668,981

9,94511,06611,14311,43911,566

12,46913,00313,44813,71214,720

14,93215,34516,06116,81517,70518,82320,22521,23122,57124,079

24,65025,98629,10433,33040,415

43,13048,14553,95059,20767,95376,80184,19982,268

80,99881,75881,40081,11083,11383,82983,35082,73584,22481,62781,53781,202

80,51680,30882,63682,92485,41887,584

87,22188,32489,96588,43688,960

34,47330,73624,04541,45667,26675,85761,17848,266

60,00467,37553,18347,37052,732

45,08047,40748,57754,32766,88280,07198,401104,547109,926115,422

106,158107,147121,061161,256191,102

173,829182,499205,675262,671305,453325,908323,346300,971

323,542321,917321,331320,059316,518313,384309,880305,564301,678299,846298,132300,971

305,599305,268306,053309,015310,922315,488

318,348320,664323,032328,041332,498

28,57926,61919,622

35,43563,39472,68058,63745,250

56,24163,88050,35244,55949,37342,51444,37545,96551,27063,691

76,29894,575100,576105,950111,250

101,566102,119114,725153,876185,560

165,930174,211197,215252,385294,230315,185313,337291,764

313,570312,402311,848310,776307,449304,409301,116296,831292,760291,017289,079291,764

296,374296,049296,407299,270301,053305,374

307,963310,024312,048317,185321,520

5,8944,1174,4236,0213,8723,1772,5413,016

3,7633,4952,8312,8113,359

2,5663,0322,6123,0573,1913,7733,8263,9713,9764,1724,5925,0276,3367,3805,542

7,8988,2888,460

10,28611,223

10,72310,0099,207

9,9729,5159,4839,2839,0698,975

8,7648,7338,9188,8299,0539,207

9,2259,2199,6469,7459,86910,114

10,38510,64010,98410,85610,978

3.42

3.633.873.353.093.01

2.782.632.692.803.10

3.333.813.703.853.75

3.653.383.313.914.19

3.803.343,313.643.92

3.853.823.81

3.933.843.823.883.773,77

3.753.763.713.853.803.81

3.753.793.683.693.643.55

3.603.583.543.603.53

1 Monthly average for year and total for month.2 Seasonally adjusted, end of period.3 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.


278


PRICESTABLE B-52.—Consumer price indexes, major expenditure classes, 2946-83

[1967=100]

Year ormonth

Allitems

Food and

Total l Food

Housing

Total2 ShelterFuel and

otherutilities»

House-hold

furnish-ingsand

oper-ation ^

Appareland

upkeep

Trans-portation

Medicalcare

Enter-tainment

Othergoods

andservices

Ener-gy 3

1946194719481949

1950195119521953195419551956195719581959

58.566.972.171.4

72.177.879.580.1

1960196119621963196419651966196719681969

1970,1971,1972.1973197419751976197719781979

1980198119821983

1982:Jan..Feb..Mar...

May"MayJune


1983:JanFebMar

MayJune

JulyAugSept

NovDec

80.580.281.484.386.687.3

88.789.690.691.792.994.597.2

100.0104.2109.8

116.3121.3125.3133.1147.7161.2170.5181.5195.4217.4

246.8272.4289.1298.4

282.5283.4283.1284.3287.1290.6

292.2292.8293.3294.1293.6292.4

293.1293.2293.4295.5297.1298.1

299.3300.3301.8302.6303.1303.5

100.0103.6108.8

114.7118.3123.2139.5158.7172.1177.4188.0206.3228.5

248.0267.3278.2284.4

273.6275.8275.6276.5278.1280.2

280.8279.9280.1279.6279.1279.1

280.7281.6283.2284.6285.0284.7

2847284.9285.3285.7285.3286.5

58.170.676.673.5

74.582.884.383.082.881.682.284.988.587.1

88.089.189.991.292.494.499.1

100.0103.6108.9

114.9118.4123.5141.4161.7175.4180.8192.2211.4234.5

254.6274.6285.7291.7

281.0283.3283.0283.9285.5287.8

288.5287.4287.6287.0286.4286.5

288.1289.0290.5291.9292.4292.0

292.0292.2292.6292.9292.5293.9

60.665.2

70.9

72.877.278.780.881.782.383.686.287.788.6

90.290.991.792.793.894.997.2

100.0104.0110.4

118.2123.4128.1133.7148.8164.5174.6186.5202.3227.6

263.3293.5314.7323.1

306.1307.3306.7309.4313.8317.5

319.2320.1319.7320.7319.0316.3

317.9318.5318.6320.3321.8323.1

324.5324.8326.4326.8327.0327.4

76.578.279.180.483.485.186.0

87.888.589.690.792.293.896.8

100.0104.8113.3

123.6128.8134.5140.7154.4169.7179.0191.1210.4239.7

281.7314.7337.0344.8

328.3329.5327.6331.4336.7340.9

342.8344.2342.6342.8340.7335.9

338.3339.2339.3341.7342.7343.6

345.3346.6348.5349.8351.1351.8

83.083.585.187.389.991.793.8

95.997.197.398.298.498.398.8

100.0101.3103.6

107.6115.0120.1126.9150.2167.8182.7202.2216.0239.3

278.6319.2350.8370.3

336.2337.1339.3339.2345.4352.2

354.7356.3359.5363.4362.2364.1

365.4364.6363.8363.6369.3373.6

375.5375.1376.4374.4371.3370.6

91.390.989.989.991.992.393.1

93.893.793.894.695.095.397.0

100.0103.8107.7

111.5115.7118.3121.6135.3151.0160.1167.5177.7190.3205.4221.3233.2238.5

228.4230.2231.6232.6233.4233.7

234.1233.4234.2235.4235.1235.7

235.8236.7237.6239.0238.4238.6

238.9238.0238.9349.4239.9240.5

67.578.283.380.1

79.086.185.384.684.584.185.887.387.588.2

89.690.490.991.992.793.796.1

100.0105.4111.5

116.1119.8122.3126.8136.2142.3147.6154.2159.6166.6

178.4186.9191.8196.5

187.3188.0191.1191.9191.5190.8

189.7191.8194.9195.5195.4193.6

191.0192.0194.5195.5196.1195.6

195.0197.3200.4200.7200.7199.3

50.355.561.866.4

68.272.577.379.578.377.478.883.386.089.6

89.690.692.593.094.395.997.2

100.0103.2107.2

112.7118.6119.9123.8137.7150.6165.5177.2185.5212.0

249.7280.0291.5298.4

289.9288.0285.1282.9285.6292.8

296.1296.2295.3295.5295.8294.8

293.0289.9287.4292.3296.2298.3

300.4302.4303.7305.0306.3306.3

44.448.151.152.7

53.756.359.361.463.464.867.269.973.276.4

79.181.483.585.687.389.593.4

100.0106.1113.4

120.6128.4132.5137.7150.5168.6184.7202.4219.4239.7

265.9294.5328.7357.3

313.4316.2318.8321.7323.8326.4

330.0333.3336.0338.7342.2344.3

347.8351.3352.3353.5354.3355.4

357.7360.0361.2362.9364.9366.2

100.0105.7111.0

116.7122.9126.5130.0139.8152.2159.8167.7176.6188.5

205.3221.4235.8246.0

229.2231.2232.8233.9234.4235.6

236.6237.4238.3240.3239.9240.1

241.5243.1244.6244.6244.8245.4

246.0246.6247.5249.1249.5249.5

100.0105.2110.4

116.8122.4127.5132.5142.0153.9162.7172.2183.3196.7

214.5235.7259.9288.3

248.4250.3252.2253.8255.0255.8

257.2258.3266.6271.2273.8276.6

279.9281.6281.9283.2283.6284.5

287.5289.0294.4296.8298.1298.6

90.190.391.8

94.294.494.795.094.696.397.8

100.0101.5104.2

107.0111.2114.3123.5159.7176.6189.3207.3220.4275.9

361.1410.0416.1419.3

416.4413.0406.1395.7402.1418.6

424.5424.5424.2425.0422.6419.9

414.5406.7399.9410.0421.3427.3

430.1429.8429.3425.1419.9418.0

1 Includes alcoholic beverages, not shown separately.2 Series beginning 1967 not comparable with series for earlier years.3 See tables B-53 and B-54.

Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.Data beginning 1983 incorporate a rental equivalence measure for homeowners' costs and therefore are not strictly comparable with

earlier figures. See Economic Report of the President, February 1983 for homeownership costs as measured prior to 1983.


279


TABLE B-53.—Consumer price indexes, selected expenditure classes, 1946-83

[1967-100]

Year or month

Food and beverages

Tota l l

Food

Total homeAwayfromhome

Shelter

Total

Renters' costs

TotalRent,resi-

dential

Home-owners'

Mainte-nanceand

Fuel and other utilities

Total

Household fuels

Total

Fuel oil,coal,and

bottledgas

(piN)and

electric-ity

194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831982:

Jan

Mar...

MayJuneJulyAugSeptOctNovDec

1983:JanFebMarAprMayJuneJulyA 8SeptOctNovDec

100.0103.6108.8114.7118.3123.2139.5158.7172.1177.4188.0206.3228.5248.0267.3278.2284.4

273.6275.8275.6276.5278.1280.2280.8279.9280.1279.6279.1279.1

280.7281.6283.2284.6285.0284.7

284.7284.9285.3285.7285.3286.5

58.170.676.673.574.582.884.383.082.881.682.284.988.587.1

89.991.292.494.499.1

100.0103.6108.9

114.9113.4123.5141.4161.7175.4180.8192,2211.4234.5

254.6274.6285.7291.7

281.0283.3283.0283.9285.5287.8288.5287.4287.6287.0286.4286.5

288.1289.0290.5291.9292.4292.0292.0292.2292.6292.9292.5293.9

73.579.876.777.6S6.387.886.285.884:184.487.291.0

89.690.491.092.293.295.5

100.3100.0103.2108.2

113.7116.4121.6141.4162.4175.8179.5190.2210.2232.9251.5269.9279.2282.2

275.3278.0277.1277.9279.8282.6282.8280.8280.6279.4278.3277.8

279.3280.3281.9283.4283.8283.0282.8282.5282.5282.3281.4283.0

59.261.165.168.0

68.970.170.872.274.977.279.3

81.483.285.487.388.990.995.1

100.0105.2111.6

119.9126.1131.1141.4159.4174.3186.1200.3218.4242.9

267.0291.0306.5319.9

299.3301.2302.4303.6304.8305.9307.6308.7309.8310.7311.4312.6

314.5315.2316.5318.0318.6319.3319.8321.0322.2323.9324.8325.5

76.578.279.180.483.485.186.0

87.888.589.690.792.293.896.8

100.0104.8113.3

123.6128.8134.5140.7154.4169.7179.0191.1210.4239.7281.7314.7337.0344.8

328.3329.5327.6331.4336.7340.9342.8344.2342.6342.8340.7335.9

338.3339.2339.3341.7342.7343.6

345.3346.6348.5349.8351.1351.8

70.473.276.280.383.284.385.987.589.190.491.792.994.095.095.996.998.2

100.0102.4105.7

110.1115.2119.2124.3130.6137.3144.7153.5164.0

103.0

100.0

100.8101.2101.4101.8102.2102.5

103.1103.7104.4104.8105.0105.1

176.0191.6208.2224.0236.9

217.8218.6219.6220.1221.8222.6224.8226.0226.9228.9230.2230.8

102.5

232.2233.1233.6234.5235.1235.9237.1238.2239.5240.4241.3242.0

100.0

100.7100.9100.9101.7102.0102.2

102.7103.0103.5103.9104.3104.5

71.272.474.177.280.581.883.2

84.685.986.587.789.591.395.2

100.0106.1115.0

124.01337140.7151.0171.6187.6199.6214.7233.0256.4

285.7314.4334.1346.3

326.7328.2327.2331.6334.5336.1334.7335.9338.4339.4339.0337.8

342.9339.4339.9343.6344.3345.1

346.1347.9346.6351.1353.4354.7

83.083.585.187.389.991.793.8

95.997.197.398.298.498.398.8

100.0101.3103.6

107.6115.0120.1126.9150.2167.8182.7202.2216.0239.3278.6319.2350.8370.3

336.2337.1339.3339.2345.4352.2354.7356.3359.5363.4362.2364.1

365.4364.6363.8363.6369.3373.6375.5375.1376.4374.4371.3370.6

100.0101.4103.4107.9115.3120.1128.4160.7183.8202.3228.6247.4286.4

349.4407.0446.2469.2

426.9427.6430.5428.2438.0448.4452.0454.0458.5464.5461,9464.0

463.5461.5459.7459.2468.3475.2477.7476.5478.3474.4468.1467.4

51.358.468.670.372.776.578.081.581.282.385.990.388.789.8

89.291.091.593.2S2.794.697.0

100.0103.1105.6110.1117.5118.5136.0214.6235.3250.8283.4298.3403.1556.0675.9667.9628.0

686.0683.1664.0641.3644.6

. 656.6659.9659.9662.8677.2691.3688.5

671.1654.0625.3610.6621.0620.0

619.3619.0623.2624.7623.9623.9


280


TABLE B-53.—Consumer price indexes, selected expenditure classes, 1946-83—Continued

[1967=100]

Year or month

194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831982: '

JanFebMarAprMayJune...:::::...:::::::::::::::::::::::JulyAugSeptoct!.::::::::::::::::;:::NovDec

1983:JanFebMarAprMayJuneJulyHUESeptOctNovDec

Transportation

Total

50.355.561866.468.272.577 379.578.377 478.883.386.089.689.690 692.593.094.395.997.2100 0103.2107.2112.7118 6119.9123 8137.7150 6165 5177.2185 5212.0249.7280 0291.5298.4

289 9288.02851282 9285 6292.82961296 2295 3295.5295.8294.8

293 0289.9287.4292.3296 2298.3300 4302 4303 7305.0306.3306.3

Total2

54.361.568 272.372.575.880.882.480.378.980.184.787.491.190.691.393.093.494.796.397.5100.0103.0106.5111.1116.6117.5121.5136.6149.8164 6176.6185.0212.3249.2277 5287.5293.9

286.6284.5281.3278.82815288.9292.3292.42911291.1291.4290.4

288 4285.2282.7287.5291.7293.8296 0298 0299 2300.4301.7301.8

Private transportatiof

N e wcars

69.2"75 682.883.487.494 995.894.390 993.598 4101.5105.9104.5104 5104.1103.5103.2100.999.1100 0102.8104.4107.6112 0111.0111 1117.5127 6135 7142.9153 8166.0179.3190 2197.6202.6

197 4195.5194 4196 0197 5198.1198 6198 7197 7197.7199.0200.1

2010201.3201.2201.12016201.620142021202 7204.3206.2207.0

Usedcars

89.275.971.869.177.480.289.583.686 994.896.0100.199.497.0100.0

104.3110 2110.5117 6122.6146 4167 9182.8186.5201.0208.1256 9296.4329.7

280.5279.7280.928512914298.2302.4304 4304 6306.7310.5312.6

3110309.1309.3312.7317.1322.7329 6336 8343 9350.4356.1357.6

Motorfuel3

54.962.270 472.371.873.975 880.382 583 686.590 088.889.992 591491.991.891.494.997.0100 0101.4104.7105.6106 3107.61181159.9170 8177 9188.2196 3265.6369.1410 9389.4376.4

4061399.2384 1366 9370 6392.4400 2398 4394 2390.7388.3381.7

372 2359.7348.8367.6380 7385.9389 0389 4387 0382.5378.3375.4

l

Auto-mobilemainte-nanceand

repair

52.056.459 661.162.367.068.672.374.876 579.582 483.785.587.289 390.491.692.894.596.2100 0105.5112.2120.6129.2135.1142 2156.8176 6189 7203.7220 6242.6268.3293 6315.8330.0

305.5307.7310.2311.9313 6316.0318.0319.2320 6321.9322.3323.1

324 4325.9326.6327.4328.7329.5329 83310332 3333.5335.2335.4

Other

100 0103.4109.7119.2128 4129.1127 8132.414121631177.3184 6198.6222.62413257.8260.8

253 3253.4254.52551255 7258.7260 8260 8260 0261.4260.7259.6

259 9259.7259.2258.4258 7258.1258 6260 0260 8263.3265.6266.8

Publictranspor-tation

34.436.040 745.248.954.057 561.365 567 470.011176.178.381.084 687.488.590.191.995.2100 0104.6112.7128.5137 7143.4144 8148.0158.6174 2182.4187.8200.3251.6312 0346.0362.6

334 9336.8336.7339.33421345.6347.2348.1353 3356.3356.0355.6

357.7355.2354.5361.1359.2361.2363.2365.0366.6368.2370.3369.0

Medical care

Total

44.448.151152.753.756.359.361.463.464 867.269 973.276.479.181483.585.687.389.593.4100.0106.1113.4120.6128.4132.5137.7150.5168.6184.7202.4219.4239.7265.9294.5328.7357.3

313.4316.2318.8321.7323.8326.4330.0333.3336.0338.7342.2344.3

347.8351.3352.3353.5354.3355.4357.7360.0361.2362.9364.9366.2

Medicalcarecom-

modities

76.281.886.187.488.591.091.892.693.794.796.799.3102.8104.4104.5103 3101.7100.8100.5100.2100.5100.0100.2101.3103.6105.4105.6105.9109.6118.8126.0134.1143.5153.8168.1186.5205.7223.3

195.9197.7200.0202.4204.1205.6206.5208.2209.9211.6212.9213.7

215.3216.7218.6221.2222.5223.2224.2225.4226.3227.5228.9229.9

Medi-calcareserv-ices

40.143.546 448.149.251.755.057.058.760 462.865 568.772.074.977 780.282.684.687.392.01000107.3116.0124.2133.3138.2144.3159.1179.1197.1216.7235.4258.3287.4318.2356.0387.0

339.4342.4345.1348.0350.2353.0357.3361.0364.0366.9371.0373.4

377.4381.5382.2382.8383.5384.6387.2389.8391.0392.9395.0396.2

1 Includes alcoholic beverages, not shown separately.2 Includes direct pricing of new trucks and motorcycles, beginning September 1982.3 Includes direct pricing of diesel fuel and gasohol beginning September 1981.* Not available.Note.—Data beginning id78 are for all urban consumers; earlier data are for urban wage earners and clerical workers.Data beginning 1983 incorporate a rental equivalence measure for homeowners' costs and therefore are not strictly comparable with

earlier figures. See Economic Report of the President, February 1983 for homeownership costs as measured prior to 1983.Source: Department of Labor, 8ureau of labor Statistics.

281


TABLE B-54.—Consumer price indexes, commodities, services, and special groups, 1939-83

[1967=100]

Year ormonth

Allitems

Commodities

Ailcom-

moditiesFood

Commodities less food

All DurableNon-

durable

Services

Allservices

Medi-cal

careserv-ices

Serv-icesless

medi-cal

care

Special indexes

Allitemslessfood

Allitemsless

energy

Allitemslessfoodand

ener-gy

Ener-gy1

1939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

197019711972.19731974.1975.1976.1977.1978.1979.

1980.1981.1982.1983.

1982:JanFebMar....AprApiMalay...,June,.,

July...,Aug...,Sept..OctNov...Dec...,

1983:JanFebMar...

J&jZ.June..July...Aug...Sept..Oct....Nov...Dec...

41.6

42.044.148.851.852.753.958.566.972.171.4

72.177.879.580.180.580.281.484.386.687.3

88.789.690.691.792.994.597.2

100.0104.2109.8

116.3121.3125.3133.1147.7161.2170.5181.5195.4217.4

246.8272.4289.1298.4

282.5283.4283.1284.3287.1290.6

292.2292.8293.3294.1293.6292.4

293.1293.2293.4295.5297.1298.1299.3300.3301.8302.6303.1303.5

40.2

40,643.349.654.054.756.362.475.080.478.3

78.885.987.086.785.985.185.988.690.690.7

91.592.092.893.694.695.798.2

100.0103.7108.4

113.5117.4120.9129.9145.5158.4165.2174.7187.1208.4

233.9253.6263.8271.5

258.8259.5258.8258.9261.5265.1

266.5266.4266.6267.5267.8267.7

267.2266.7266.7269.2270.9271.6272.5273.4274.5275.0275.2275.5

34.6

35.238.445.150.349.650.758.170.676.673.5

74.582.884.383.082.881.682.284.988.587.1

88.089.189.991.292.494.499.1

100.0103.6108.9

114.9118.4123.5141.4161.7175.4180.8192.2211.4234.5

254.6274.6285.7291.7

281.0283.3283.0283.9285.5287.8

288.5287.4287.6287.0286.4286.5

288.1289.0290.5291.9292.4292.0292.0292.2292.6292.9292.5293.9

47.7

48.050.456.058.461.664.168.176.882.781.5

81.487.588.388.587.586.987.890.591.592.7

93.193.494.194.895.696.297.5

100.0103.7108.1

112.5116.8119.4123.5136.6149.1156.6165.1174.7195.1

222.0241.2250.9259.0

245.9246.0245.2245.0247.8251.9

253.5253.8253.9255.4256.0255.8

254.4253.2252.4255.4257.6258.9260.2261.4262.9263.6264.1263.8

48.5

48.151.458.460.365.970.974.180.386.287.4

88.495.196.495.793.391.591.594.495.997.3

96.796.697.697.998.898.498.5

100.0103.1107.0

111.8116.5118.9121.9130.6145.5154.3163.2173.9191.1

210.4227.1241.1253.0

233.4233.7233.5235.8239.8243.2

244.7244.6244.1246.0246.6247.3

247.3247.1247.4248.7249.5251.2252.9254.3256.4258.7261.0261.8

44.3

44.746.751.653.856.658.662.972.277.876.3

76.282.082.483.183.583.585.387.688.289.3

90.791.291.892.793.594.897.0

100.0104.1108.8

113.1117.0119.8124.8140.9151.7158.3166.5174,3198.7

235.2257.5261.6266.3

260.2260.1258.4255.0256.2261.2

263.0263.6264.6265.7266.1264.7

262.4260.5258.9263.0266.3267.3268.4269.6270.6270.2269.5268.5

43.5

43.644.245.646.447.548.249.151.154.356.9

58.761.864.567.369.570.972.775.678.580.8

83.585.286.888.590.292.295.8

100.0105.2112.5

121.6128.4133.3139.1152.1166.6180.4194.3210.9234.2

270.3305.7333.3344.9

323.9325.3325.5328.4331.8334.9

337.0338.9339.7340.3338.6335.6

337.9338.9339.4341.2342.6344.0345.6346.8349.0350.2351.0351.6

32.5

32.532.733.735.436.937.940.143.546.448.1

49.251.755.057.058.760.462.865.568.772.0

74.977.780.282.684.687.392.0

100.0107.3116.0

124.2133.3138.2144.3159.1179.1197.1216.7235.4258.3

287.4318.2356.0387.0

339.4342.4345.1348.0350.2353.0

357.3361.0364.0366.9371.0373.4

377.4381.5382.2382.8383.5384.6387.2389.8391.0392.9395.0396.3

47.2

77.680.482.5

85.286.788.189.691.293.296.4

100.00104.9112.0

121.3127.7132.6138.3151.0164.7177.7190.6206.9230.1

266.6302.2328.6338.1

320.0321.1321.1324.0327.5330.7

332.5334.1334.8335.1332.9329.3

331.4332.2332.7334.5336.0337.4338.9339.9342.2343.3344.1344.5

47.348.752.153.655.756.959.464.969.670.3

71.175.777.579.079.579.781.183.885.787.3

88.889.790.892.093.294.596.7

100.0104.4110.1

116.7122.1125.8130.7143.7157.1167.5178.4191.2213.0

244.0270.6288.4298.3

281.4282.1281.7282.9286.0289.7

291.5292.5292.9294.0293.6292.1

292.6292.6292.4294.7296.5297.8299.3300.5302.3303.2303.9304.0

83.986.387.0

88.389.390.491.692.994.397.3

100.0104.4110.3

117.0122.0126.1133.8146.9160.2169.2179.8193.8213.1

238.0261.7279.3289.3

272.1273.4273.6275.7278.3280.7

282.C282.7283.1284.0283.6282.5

283.8284.7285.6287.0287.6288.2289.2290.3292.1293.4294.4295.0

83.385.287.0

88.389.390.591.693.094.396.6

100.0104.6110.7

117.6123.1126.9131.3142.2155.3165.5175.8188.7207.0

232.8257.1276.1287.0

268,5269.5269.8272.2274.9277.3

278.7279.8280.4281.5281.2279.9

281.1282.0282.6284.0284.7285.5286.8288.2290.2291.8293.2293.6

90.190.391.8

94.294.494.795.094.696.397.8

100.0101.5104.2

107.0111.2114.3123.5159.7176.6189.3207.3220.4275.9

361.1410.0416.1419.3

416.4413.0406.1395.7402.1418.6

424.5424.5424.2425.0422.6419.9

414.5406.7399.9410.0421.3427.3430.1429.8429.3425.1419.9418.0

1 Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel. Motor oil, coolant, etc. also included through 1982.Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.Data beginning 1983 incorporate a rental equivalence measure for homeowners' costs and therefore are not strictly comparable with

earlier figures. See Economic Report of the President, February 1983 for homeownership costs as measured prior to 1983.Source: Department of Labor, Bureau of Labor Statistics.


TABLE B-55.—Changes in consumer price indexes, 1958-83

[Percent change]

Year or month

1958195919601961196219631964196519661967196819691970197119721973197419751976197719781979

1980198119821983

1982:JanFebMarAprMayJune ..JulyAygSeptOct .NovDec

1983:Jan ..Feb .MarAprMayJune ..JulyAugSeptOctNovDec

All items

Dec.to

Dec1

1.81.51.5

71.216li2193.430476.15.5343.488

12.27.04.86.890

13.3

12.48.93.93.8

Yearto

Year

27.8

1.6101.1121.3172.929425459433362

11.0915.86577

113

13.510 46.13.2

All items lessfood

Dec.to

Dec1

1.62.31.0111.2161.0163.3354.95.76.5313.056

12.27.16.26.385

14.0

12.99.94.04.1

Yearto

Year

2.31.91.7101.2131.3142.3344.45.56.04.63.03.99.99.36.66.57.2

11.4

14.610.96.63.4

All items lessenergy

Dec.to

Dec1

191.41.4

81.2181.3193.531496.45.6333.583

11.56.74.66.892

11.1

11.7864.24.4

Yearto

Year

2.9.8

1.5111.2131.4153.2284.45.76.14.33.46.19.89.15.66.37.8

10.0

11.710.06.73.6

All items fessfood andenergy

Dec.to

Dec1

1.82.2

.8151.1181.2153.33 95.16.16.63.13.04.7

11.36.76.16.48.5

11.3

12.19.64.54.9

Yearto

Year

232.11.5111.3121.5142.435465.86.2473.1358.39.26.66,2739.7

12.510.47.43.9

All items less food,energy, and shelter

Dec.to

Dec1

4.65.05.73.22.63.5

11.36.47.05.26.57.2

9.99.46.15.0

Yearto

Year

4.64.85.14.92.43.07.68.97.06.05.76.9

8.89.57.75.2

Change from preceding month

Unad-justed

0.4

- i l.4

1.01.2.6

2

-2-A

2.0.1.7.5

.4

.3

.5

i2.1

Sea-sonally

ad-justed

0.3.1o.2

1.01.1.6.3.1.40

2- . 2

.1

.5

.2

.4

.4

.5

.4

.3

.3

Unad-justed

0.2.2

".41.11.3.6.3.1.4

- . 1

20

—1

.6

.4

.5

ie

io

Sea-sonally

ad-justed

0.20

- . 1.2

1.11.2.6.4.1.4

- . 0

3- . 3

i6.6

.5

isi4.2

Unad-justed

0.4

i l.8.9.9.5.2.1.3

4

5.3

.2

.2

.3

.4

.6

.4

.3

.2

Sea-sonally

ad-justed

0.4.5.1

i8.7.5.4.2.2

-'.2

4.3

i4.3

.4

.4

.4

.5

.4

.3

Unad-justed

0.2

.91.0

.9

.5

.4

.2

.4- . 1

4.3

isi3.5.5

'.6

Sea-sonally

ad-justed

0.4.5.1

.8

.8

.6

.4

.1

.2

*2

5

i2.4.3.3.6.5

.5A.3

Unad-justed

0.3.4.7.7

i6.4

i8.6.3

3.4.4.4.2

.4

.5

'.6.5.1

Sea-sonally

ad-justed

0.5.4.6.5

.5

i4.S

i5

5.4.3

'.2A.6.5

'.6.4.3

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.Data beginning 1983 incorporate a rental equivalence measure for homeowners' costs and therefore are not strictly comparable with


283


TABLE B-56.—Changes in consumer price indexes, commodities and services, 1948-83

[Percent change]

Year ormnn+h

19481949195019511952... .19531954...1955195619571958 . .1959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983

Alt items

Dec.to

Dec.1

2.7- 1 . 8

5859

.965.4

293.0181.515.7

121.61.2193.4304.76.15.53.4348.8

12.27.04.86.89.0

13.312.48.93.93.8

Yearto

year

7.8- 1 . 0

1.0792.2

8.5

- . 4153.627

.8161.0111.21.3172.9294.25.45.94.3336.2

11.09.15.86.57.7

11.313.510.46.13.2

Commodities

Total

Dec.to

Dec1

1.7-4 .1

7.759

- . 76

- 1 . 4- . 4262.613.6

110101.4.8

162.5253.85.54.02.934

10.412.76.33.36.18.9

13,011.16.03.62.9

Yearto

year

7.2- 2 . 6

.6901.3

- 3- . 9- . 9

93.123

.19

.9

.91.11.22.6183.74.54.73.43 07.4

12.08.94.35.87.1

11.412.28.44.02.9

Food

Dec.to

Dec.1

- 0 . 8- 3 . 7

9.674

- 1 . 113

- 1 . 6- . 9312.822

- . 831

- . 91.51.91.4343.9124.37.22.24.347

20.112.26.5

.68.0

11.810.210.24.33.12.6

Yearto

year

8.5- 4 . 0

1.411.11.8

- 1 5

- 1 . 47

3.34.2

- 1 . 61.01.3.91.4

1.32.25.0

.93.65.15.53.043

14.514.48.53.16.3

10.010.98.67.94.02.1

Commoditiesless food

Dec.to

Dec1

5.3- 4 . 8

5.746

2- ? . 4

0252.2

.81.5

- . 3.6,7

1.2.4.7

1.93.13.74.54.82.32 55.0

13.26,25.14.97.7

14.311.56.73.83.1

Yearto

year

7.7- 1 . 5

=.175

.92

- 1 . 1— 7

103.1111.3

4.3.7.7.8.6

1.4263.74.24.13.8223.4

10.69.25.05.45.8

11.713.88.64.03.2

Services

Total

Dec.to

Dec.1

6.13.63.6524.6421.92.33.14.52.73.72.71.91.72.31.82.64.94.06.17.48.24.13.66.2

11.38.17.37.99.3

13.714.213.04.34.8

Yearto

year

6.34.83.2534.44 33.32.0254.0382.9332.01.92.01.92.23.94.45.26.98.15.63.84.49.39.58.37.78.5

11.015.413.19.03.5

Medical careservices

Dec.to

Dec1

7.02.13.35.85.5362,63.24.14.54.94.63.83.53.02.62.63.58.17.97.47.08.35.33.85.8

13.310.310.79.09.2

10.610.012.711.26.1

Yearto

Year

6.73.72.3516.4363.02.9404.34.94.84.03.73.23.02.43.25.48.77.38.17.17.33.74.4

10.312.610.19.98.69.7

11.310.711.98.7

Energy2

Dec.to

Dec.1

-0 .74.315

- 1 . 12.1

=-.8- . 22.01.81.41.73.14.53.12.8

16.821.611.66.97.28.0

37.418.111.91.3

Yearto

year

0.21.72.6

.3

.3- . 41.81.62.21.52.72.73.92.88.0

29.310.67.29.56.3

25.230.913.51.5

8

1 Changes from December to December are based on unadjusted indexes.2 Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel. Motor oil, coolant, etc. also included through 1982.Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.Data beginning 1983 incorporate a rental equivalence measure for homeowners' costs and therefore are not strictly comparable with


284


TABLE B-57.—Producer price indexes by stage of processing, 1947-83

[1967=100]

Year or month

194719481949

19501951195219531954

19551956195719581959

19601961196219631964

1965.1966196719681969.

19701971197219731974

19751976197719781979

1980198119821983 '. . ..


JulyAugSept. .OctNovDec

1983: iJanFebMarApr .MayJune ,


Finished goods

Totalfinishedgoods

74.079.977.6

79.086.586 085.185.3

85 587.991.193.293.0

93.793.794 093.794.1

95.798.8100 0102.8106.6

110.3113.7117.2127.9147.5

163.4170.6181.7195.9217.7

247.0269 8280.7285.2

277 9277.9277.3277.3277.8279.9

281.7282.3281.22841284 9285.5

283 9284.1283.42831284 2285.0

285.728612851287 9286.8287.1

Consumer foods

Total

82 890.483.1

84 795.294 389.488.7

86 586.389.394 590.1

92.191.792 591.491.9

95 4101.6100 0103.6110.0

113 5115.31217146.4166.9

181.0180.4189 9207.2226.2

239.5253 6259.3261.8

256 4258.2257.1260.0262.3263.4

260.6259.7259 9257 7257 4258.3

258 4261.0261.1262 9262 6261.2

260.7260 7263 3264 3261.8264.0

Crude

99 4107.1101.3

92 2105.9112 8105.294.7

98 898 797.4

103 594.3

100.696.197 095.598.2

98 6104.8100 0107.5116.0

116 3115.81212160.7180.8

181.2193.92010216.8233.1

237.2263 8252.7259.5

280 6282.5263.3266.6259.9254.7

241.0239.2228 2232 42361247.6

232 9240.8247.9265 8267 2251.2

247 1259 9269 8289 8272.8269.1

Proc-essed

80.287.680.1

83 493.291386.787.6

84 484.387.993.189.5

90.790.991790.790.8

94.9101.0100 0103.0108.9

113.1115.11217143.9164.6

181.3177.8187 3204.6223.8

237.8250 6257.7259.9

252 1254.0254.5257.3260.3262.0

260.2259.4260.6257 9257 2257.1

258 5260.7260.1260.52601260.0

259.8258.7260.5259 9258.7261.5

Finished goods excluding consumer foods

Total

1*6*61*6"102.6105.4

109.1113.1115 4120.1.139.3

156.2166.1177.7190.7213.3

247.8273 3285.8290.9

283.0282.4281.9281.1281.0283.4

286.7287.9286.3290 8292 0292.5

290 3289.6288.7287.7289 3290.8

291.8292.5290.3293 7293.0292.6

Consumer goods

Total

79 084.082.2

83 589.588 389.189.4

90192.394.694 795.9

96.396.296 096.095.9

96 698.1100 0102.1104.6

107 7111.4113 5118.6138.6

153.1162.6174 3186.7211.5

250.8276 5287.8291.3

285.2284.9284.0282.3281.8284.8

288.8290.2288.9293 3294 8295.0

2914290.3288.9287.3289 4291.6

292.8293 52913293 8293.0292.5

Durable

74.679.781.8

82.788.288.989.690.3

91294.397.198.499.6

99.298.898.397.898.2

97.998.5100.0102.2104.0

106.9110.8113.3115.4125.9

138.2144.5152.8166.9183.2

206.2218.6226.7233.1

226.2224.0223.9224.1225.0225.9

226.7227.5223.0231.0231.2'232.0

231.7232.9231.9232.2232.9233.1

233.4233.8228.9235.4235.3235.7

Non-durable

80 785.882.3

83 690.087 888.688.9

89 491.193.292.694.0

94.794.794 895.194.8

95.997.8100 0102.2105.0

108.3111.7113.6120.5146.8

163.0174.8189.3200.0231.3

283.9319.6333.6335.3

329.3330.3328.8325.7324.3328.7

335.3337.2338.3340.0342.5342.2

336.6333.7332.0328.7332.0335.7

337.7338.6338.6337.9336.6335.3

Capitalequipment

55 460.463.4

64 971.272 473.674.5

76 782.487.589 891.5

91.791.892 292.493.3

94.496.81000103.5106.9

112.0116.6119.5123.5141.0

162.5173.4184.6199.2216.5

239.8264.3279.4287.3

276.2275.0275.8277.2278.1279.2

280.2280.7278.7283.2283.8284.9

285.2285.6285.6286.2286.5286.7

287.2287.7285.4290.9290.3290.5

finishedconsumergoods

80 586.582.5

83 991.890 789.289.1

88 589.892.494.493.6

94.594.394.694.194.3

96.199.4100.0102.7106.6

109.9112.9116.6129.2149.3

163.6169.7180.7194.9217.9

248.9271.3281.0284.6

278.3278.6277.7277.3277.7280.1

282.1282.8281.9284.3285.3285.6

283.5283.7282.7282.3283.6284.6

285.2285.7285.1287.1285.8286.1



TABLE B-57.—Producer price indexes by stage of processing, 1947-83—Continued

[1967 = 100]

Year or month

Intermediate materials, supplies, and components

TotalFoodsand

feeds'Other

Materials andcomponents

Formanufac-

turing

Forcon-

struction

Proc-essedfuelsand

lubri-cants

Con-tainers Supplies

Crude materials for further processing

Total

Food-stuffsand

feed-stuffs

Other

Total Fuel Other

194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971 z".197219731974

19751976197719781979

1980198119821983 >

1982:JanFebMar

fezz...JuneJulyAugSeptOcfNovDec

1983: *JanFebMar

dfayiZZJune


72.478.375.2

78.688.185.586.086.5

88.192.094.194.395.6

95.695.094.995.295.5

96.899.2

100.0102.3105.8

109.9114.1118.7131.6162.9

180.0189.1201.5215.6243.2

280.3306.0310.4312.4

311.0311,1310.6309.9309.8309.9

311.1310.8310.5309.9309.9310.1

309.2309.9309.5308.7309.7311.3

312.8314.0315.7316.0315.7315.8

100.099.4

102.7

109.1111.7118.5168.4200.2

195.3185.3190.5203.1226.1

252.6250.3239.4247.8

238.8239.4237.7240.9245.0245.1

243.6240.2238.1234.4234.4235.1

236.4238.8238.0243.6244.4242.8

244.0250.9262.2258.2257.1256.6

70.076.174.2

77.787.084.385.385.7

88.392.695.094.896.4

96.895.595.395.095.6

96.998.9

100.0102.5106.1

109.9114.3118.9128.1159.5

178.6189.4202.3216.5244.4

282.3310.1315.7317.2

316.4316.4316.0315.1314.6314.7

316.1316.0315.9315.5315.5315.7

314.6315.2314.8313.6314.6316.4

318.0318.7319.8320.4320.1320.3

72.177.874.5

78.188.584.886.286.3

88.492.694.895.296.5

96.595.394.794.995.9

97.499.3

100.0102.2105.8

110.0112.8117.0127.7162.2

178.7185.4195.4208.7234.4

265.7286.1289.8293.3

290.4290.9290.4290.6291.4289.8

289.2288.7289.9289.4288.7288.3

288.6291.1290.2291.0291.9292.4

294.1294.7296.3296.4296.1297.0

66.073.173.2

77.084.383.785.185.5

88.993.594.094.096.6

95.994.694.294.595.4

96.298.8

100.0105.0110.8

112.6119.7126.2136.7161.6

176.4188.4203.4224.7247.4

268.3287.6293.7301.7

292.0293.0293.3294.0293.7294.5

294.3293.5294.2293.7293.6294.7

296.5298.8299.6300.9301.2302.4

302.9303.7302.8303.5304.0304.6

85.596.988.2

89.993.992.893.493.3

93.396.2

101.996.095.6

98.299.499.098.196.0

97.499.2

100.097.698.5

105.0115.2118.9131.5199.1

233.0250.1282.5295.3364.8

503.0595.4591.7566.8

604.4596.8593.0579.9570.9581.1

600.7603.8592.3590.0593.0595.0

577.9565.4564.2543.3547.8562.0

567.9572.0579.2579.9574.0568.5

66.869.870.1

72.084.579.980.081.5

82.688.692.594.794.2

95.594.795.994.794.0

95.898.4

100.0102.4106.3

111.4116.6121.9129.2152.2

171.4180.2188.3202.8226.8

254.5276.1285.6286.6

282.5285.5286.3287.0287.0286.5

286.3285.4285.3285.1284,9285.0

285.0285.3285.2284.8285.8285.9

286.1286.3287.3288.3289.3289.5

77.581.076.3

78.988.888.884.386.3

84.887.188.090.091.2

90.791.893.895.294.3

95.299.4

100.0101.0102.8

108.0111.0115.6140.6154.5

168.1179.0188.7198.5218.2

244.5263.8272.1277.0

269.8270.4270.6272.1273.4273.4

273.1272.6272.2272.0272.8273.0

273.1273.5273.9275.5275.6275.6

276.2277.9280.1280.4281.0281.0

101.2110.996.0

104.6120.1110.3101.9101.0

97.197.699.8

102.099.4

97.096.597.595.494.5

99.3105.7100.0101.6108.4

112.3115.1127.6174.0196.1

196.9202.7209.2234.4274.3

304.6329.0319.5323.6

318.4321.6320.0322.6328.3325.6

323.4319.8316.1312.0313.2312.7

313.9320.2321.6325.8325.8323.3

320.6327.1328.3324.5324.1327.8

111.7120.8100.3

107.6124.5117.2104.9104.9

95.193.197.2

103.096.2

95.193.895.792.990.8

97.1105.9100.0101.3109.3

112.0114.2127.5180.0189.4

191.8190.2192.1216.2247.9

259.2257.4247.8252.3

242.6248.3247.9254.4262.6259.9

255.5249.6242.9236.3236.3237.1

239.6249.3249.1256.8256.5252.1

248.4256.4257.4253.9252.0256.2

100.0102.2106.8

112.7117.0128.0162.5208.9

206.9228.5245.0272.3330.0

401.0482.3473.9477.2

481.5479.3475.2469.9470.2467.7

469.8471.0473.7474.8478.6475.3

473.6473.0477.7474.6475.4476.8

476.2479.6481.1476.7479.5482.1

66.678.778.3

77.979.479.982.779.0

78.884.489.290.391.9

92.892.692.193.292.8

93.596.3

100.0102.3106.6

122.6139.0148.7164.5219.4

271.5305.3372.1426.8507.6

615.0751.2886.1931.5

812.9824.5839.7851.2864.8883.9

901.3906.9923.5917.2954.7952.2

930.7937.7961.8941.6935.9936.7

927.8926.9931.2911.2915.2921.4

90.6100.791.6

104.7120.7104,6100.198.2

103.8107.6106.2102.2105.8

101.4102.5102.0100.7102.4

104.5106.7100.0102.1106.9

109.8110.7121.9161.5205.4

188.3206.7212.2233.1284.5

346.1413.7376.8372.0

399.5394.8387.1378.8376.6

369.2369.5369.5371.9369.2365.8

368.0366.0366.8367.0369.0370.5

371.6375.6376.6375.3377.7379.6

1 Data have been revised through August 1983 to reflect the availability of late reports and corrections by respondents. All data aresubject to revision 4 months after original publication.

2 Intermediate materials for food manufacturing and feeds.Source: Department of Labor, Bureau of Labor Statistics.


TABLE B-58.—Producer price indexes by stage of processing, special groups, 1974-83

[1967=100]

Year or month

Finished goods

Total FoodsEner-

gy

Excluding foods andenergy

Total

Capi-tal

equip-ment

Con-sumergoods

exclud-

andenergy

Intermediate materials, supplies,and components

TotalFoodsand

feeds1

Ener-gy

Other

Crude materials for furtherprocessing

Total

Food-stuffsand

feed-stuffs

Ener-gy

Other

197419751976197719781979

1980198119821983 2

1982:JanFebMar

June


1983: 2

JanFebMar

. SE

NovDec

147.5163.4170.6181.7195.9217.7

247.0269.8280.7285.2

277.9277.9277.3277.3277.8279.9

281.7282.3281.2284.1284.9285.5

283.9284.1283.4283.1284.2285.0

285.7286.1285.1287.9286.8287.1

166.9181.0180.4189.9207.2226.2

239.5253.6259.3261.8

256.4258.2257.1260.0262.3263.4

260.6259.7259.9257.7257.4258.3

258.4261.0261.1262.9262.6261.2

260.7260.7263.3264.3261.8264.0

215.2252.4282.3326.7347.7469.9

701.3835.4822.9784.0

842.3832.6814.0775.3758.2789.8

834.7844.3843.5839.8854.0845.7

811.1788.0774.1749.2769.0791.1

794.1797.6797.0789.3778.5769.4

133.3148.5156.8166.3178.7194.7

216.4235.1248.6256.1

244.7244.6245.2246.4247.3248.1

248.8249.5247.9252.8253.2254.2

253.8254.5254.4254.9255.3255.6

256.5256.9254.6258,7258.6258.8

141.0162.5173.4184.6199.2216.5

239.8264.3279.4287.3

276.2275.0275.8277.2278.1279.2

280.2280.7278.7283.2283.8284.9

285.2285.6285.6286.2286.5286.7

287.2287.7285.4290.9290.3290.5

129.1141.0148.1156.6168.0183.3

204.2220.1232.6239.9

228.6229.0229.5230.6231.5232.1

232.6233.3232.0236.9237.3238.2

237.5238.5238.2238.7239.2239.5

240.5240.9238.7242.0242.2242.4

162.9180.0189.1201.5215.6243.2

280.3306.0310.4312.4

311.0311.1310.6309.9309.8309.9

311.1310.8310.5309.9309.9310.1

309.2309.9309.5308.7309.7311.3

312.8314.0315.7316.0315.7315.8

200.2195.3185.3190.5203.1226.1

252.6250.3239.4247.8

238.8239.4237.7240.9245.0245.1

243.6240.2238.1234.4234.4235.1

236.4238.8238.0243.6244.4242.8

244.0250.9262.2258.2257.1.256.6

188.7220.8236.8267.3280.3348.6

484.9573.6570.8545.8

582.6575.7572.2560.2552.0561.4

579.3582.2571.6569.0571.2572.5

556.8545.3543.7524.3528.0541.0

546.4550.1556.7557.4552.1547.2

156.7174.7185.0196.1210.4234.2

261.8283.4290.1294.7

289.4290.2290.2290.7291.1290.1

289.6289.2290.2290.1289.9290.0

290.5292.4292.3293.1293.7294.3

295.4295.8296.4297.0297.2298.0

196.1196.9202.7209.2234.4274.3

304.6329.0319.5323.6

318.4321.6320.0322.6328.3325.6

323.4319.8316.1312.0313.2312.7

313.9320.2321.6325.8325.8323.3

320.6327.1328.3324.5324.1327.8

189.4191.8190.2192.1216.2247.9

259.2257.4247.8252.3

242.6248.3247.9254.4262.6259.9

255.5249.6242.9236.3236.3237.1

239.6249.3249.1256.8256.5252.1

248.4256.4257.4253.9252.0256.2

223.0266.9283.1323.5362.5439.9

586.1783.4801.5791.2

801.5796.9788.8778.5784.0792.0

799.4801.7808.6815.6829.9821.2

812.1799.9801.6793.3790.9791.1

786.3785.8788.1780.0781.7783.6

198.3165.0191.0190.1209.2253.0

269.4266.0238.1250.3

250.3249.9248.5246.8243.7234.3

232.9233.3233.1230.3227.0227.4

230.7237.8244.3244.7247.5249.7

251.9257.7258.7256.9260.3263.3

1 Intermediate materials for food manufacturing and feeds.2 Data have been revised through August 1983 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.


TABLE B-59.—Producer price indexes for major commodity groups, 1947-83

[1967=100]

Year or month

194719481949

1950195119521953195419551956195719581959

1960196119621963.196419651966196719681969

1970197119721973197419751976197719781979

198019811982..1983 a

1982:JanFebMarAprNfay

June ~zzJulyAugSeptOctNovDec

1983:2

JanFebMarAprMayJune

JulyAugSeptoct :;;NovDec

Farm products and processedfoods and feeds

Total

94 3101589.6

93 9106 9102 796.095 791290 693 798193.5

93.793 794.793 893 297.1

103 5100.0102 4108.0

111.7113 9122.41591177.4184 2183.1188.8206.6229.8

244.72515248.9253.9

246 0248.4247.5251.6255.8255.3

2524249.6247.4243.8243 9244.8

245.8250.4250.6254 7254.7252.5

251.5255 7255 5257 9256.0257.8

Farmproducts

109 4117.5101.6

106 7124.2117 2106.2104 798.296 999.5

103 997.5

97.296 398.096 094.698.7

105 9100.0102 5109.1

111.0112 9125.0176 3187.7186 7191.0192.5212.5241.4

249.4254 9242.4248.2

242 2247.1244.7250.6256.5252.7

246 6240.8234.5229.2230 7232.6

233.2240.7241.5250 5250.4247.4

244.3253 5253 5255 2251.0254.0

Processedfoods and

feeds

82 988.780.6

83492.791687.488 985.084 987.491889.4

89.591.091.992 592.395.5

101.2100.0102 2107.3

112.1114 5120.81481170.9182 6178.0186.1202.6222.5

241.2248 7251.5256.0

2471248.1248.1251.1254.4255.8

254 6253.5253.5250.8250.2250.5

251.7254.7254.5256 0256.1254.3

254.4255 8255 5258 3257.6258.8

Industrial commodities

Total

70 876.975.3

78 086.184184.885 086.990 893.393 695.3

95.394 894.894 795.296.498 5

100.0102 5106.0

110.01141117.9125 9153.81715182.4195.1209.4236.5

274.83041312.3315.8

3118311.6311.0309.9309.6310.6

312 8313.2312.7314.3315 0315.2

313.9313.9313.5312 4313.6315.3

316.5317 5317 3318 7318.3318.4

Textileproducts

andapparel

103.6108.198.9

102.7114.61034100.898 698.798.798.897.098.4

99.597.798.698.599.299.8

100.1100.0103.7106.0

107.1109.0113.6123.8139.1137 9148.2154.0159.8168.7

183.5199 7204.6204.9

205.0205.6205.0205.4205.4205.0

204.1204.2204.3204.1203.9202.6

202.7202.6203.4203 5204.3204.7

205.3205 7206 0206 4207.0207.2

Hides,skins,

leather,and

relatedproducts

83 384.279.9

86 399.180181.377 677.381982.082 994.2

90.891.792.790090.394.3

103.4100.0103 2108.9

110.31141131.31431145.1148 5167.8179.3200.0252.4

248.9260 9262.6271.4

261.8261.6260.6263.4263.2261.8

263.1262.0263.5263.2263 2264.1

266.7264.3264.9267 4269.4271.2

272.3275 5274 7274 7277.3278.3

Fuels andrelated

products,and

power*

76.990.586.2

87.190.390.192.691.391.294.099.195.395.3

96.197.296.796.393.795.597.8

100.098.9

100.9

106.2115.2118.6134.3208.3245.1265.6302.2322.5408.1

574.0694.5693.2665.9

705.1697.8689.7670.6662.2677.3

701.1705.6700.4698.8706.1703.4

683.6668.6658.0644 8651.9665.5

668.7674 36717672 7667.1662.1

Chemicalsand alliedproducts1

93.795.987.6

88.9101.796 597.798998.599.1

101.2102.0101.6

101.8100.799.197,998.399.099.4

100.099.899.9

102.2104.1104.2110.0146.8181.3187.2192.8198.8222.3

260.3287.6292.3292.9

292.9293.6294.6294.3295.0293.3

291.6291.6290.7289.9290.5289.6

289.3290.5289.82913291.1290.8

293.7294 9294 4296 4296.4296.6



TABLE B-59.—Producer price indexes for major commodity groups, 1947-83—Continued

[1967 = 100]

Year or month

194719481949

195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976...19771978...1979

1980198119821983 2

1982:JanFebMarAprIVfayJuneJulyAugSeptoct :...:NovDec

1983: 2

JanFebMarAprMavJuneJulyAugSeptOctNovDec

Industrial commodities—Continued

Rubberand

plasticproducts

70.572.870,585.9

105.495.589.190.4

102 4103.8103.4103.3102.9103.199.296 396.895 595.997 8

100.01034105.3108 3109.1109 3112.4136 2150.2159 2167.6174 8194.3217 4232.62414243.4

237.3239 3240.8241.12421242.5242 0242.6242.5242.22417242.2

242.9242.32418243 0243 2243.1243.4243 7244 5245.1243.8244.1

Lumberand

woodproducts

73.484.077.7

89.397.294.494.392.697198.593.592.498.895.391.091693.595 495.9

100 2100.0113 3125.3113 6127.3144 3177.2183 6176.9205 6236.3276 0300.4

288 9292.8284 7307.3

285.5285 2285.3286.5284 6289.0288 6284.2283.0279.4279 9285.6

293.3303.1305 8307 2308 0314.8314.6313 9306 0306.1306.0308.8

Pulp,paper,

andallied

products

72.575.772.4

74.388.085.785.585.587 893.695.496.497.398.195.296395.695496.298 8

100.0101.1104.0

108 2110.1113 4122.11517170.41794186.4195 6219.0249 2273.8288 7297.7

285.5286 3287.4288.5289.6289.52891289.3289.4289.8289.8290.5

293.6294.2294.8295.4296 0297.0297.8298.82991300.4302.0302.7

Metalsand

metalproducts

54.962.563.066.373.873.976.376.982.189.291.090.492.392.491.991.291.393 896.498.8

100.0102.6108.5116 6118.7123 5132.81719185.61959209.02271259.3286 4300.43016307.1

304.7304 2302.9303.1302.8299.3299 5299.2301.8301.6300.5299.9

300.3304.7304.4304.63061306.3307.3308.2310.9310.7310.3311.4

Machineryand

equipment

53.758.261.0

63.170.570.672.273.475.781.887.689.491.392.091.992.092.292.893.996.8

100.0103.2106.5111.4115.5117.9121.7139.4161.4171.0181.7196.1213.9

239 8263.3278 8286.4

274.12754276.2277.6278.2278.6279.6279.9280.2281.1281.8282.4

283.3284.3284.7285.4286.0286.2287.4287.4287.5287.8288.1288.8

Furnitureand

householddurables

77.081.682.984.791890.191992.993 395.898.399.199.399.098.497 797.097 496.998 0

100.0102 8104.9

107 5110.01114115.2127 9139.71456151.5160 4171.3187 7198.5206 9213.9

203.5204 6205.5206.0206.5207.0206 8208.1208.3208.9208.9209.2

210.7212.5212.3212.8213 6214.0214.8214.9214.9215.1215.4215.3

Non-metallicmineral

products

66.371.673.575.480180.183 385.187 591.394.895 897.097.297.697 697.197 397.5984

100.0103.7107.7

112 9122.41261130.2153 2174.0186.3200.5222 8248.6283 0309.5320 2325.3

315.6319.0319.9320.2321.2320.9321.1320.5321.2321.1321.2320.5

321.5322.3322.0324.1324.1324.5325.1326.3327.2327.9328.9329.2

Transpor-tationequip-ment:Motor

vehiclesand

equip-ment3

64.170.875.7

75.379 484.083 683.886 391.295.198.1

100.398.898.698 697.898398.598 6

100.0102.8104.81087114.91180119.2129.2144.6153.8163.7176.0190.5

208.8237.62513256.8

250.8246.8246.8247.2249.2251.1252.0252.8244.6257.8257.8258.1

257.0256.3255.4255.9256.2256.5256.6256.8248.9261.1260.3260.4

Miscella-neous

products

73.576.578.0

79.283983.485 686.486 587.690.292 092.293.093.393 794.595 295.997.7

100.0102.2105.2109.9112.9114.6119.7133.1147.7153.7164.3184.3208.7

258.8265.7276.4289.5

268.3273.5m imimi271.5273.4272.0279.5285.4285.2290.4

285.7288.8287.4287.4287.1288.0291.5292.0291.3291.2291.4292.5

1 Prices for some items in this grouping are lagged and refer to 1 month earlier than the index month.2 Data have been revised through August 1983 to reflect the availability of late reports and corrections by respondents. All data are

subject to revision 4 months after original publication.3 Index for total transportation equipment is not shown but is available beginning December 1968.



TABLE B-60,—Changes in producer price indexes for finished goods, 1950-83[Percent change]

Year or month

1950195119521953195419551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983 2

1982:JanFebMarz-JuneJulyAus.SeptOctNovDec

1983: *JanFebMarz-JuneJulyAugSeptOct...NovDec

Totalfinishedgoods

Dec.to

Dec1

10.42.9

- 2 . 2.5.1

1.24.23.2

.5_ 4

1.8

.1- . 2

5

3.32.21.63.14.8

2.23.23.8

11.818.36.63.76.99.2

12.8

11.87.13.7.6

Yearto

year

1.89.5

.6- 1 . 0

.2

.22.83.62.3

— 2

.80.3

4̂

1.73.21.22.83.7

3.53.13.19.1

15.310.84.46,57.8

11.113.59.24.01.6

Finishedconsumer

foods

Dec.to

Dec*

13.35.3

- 5 . 92.2

- 1 . 9

- 2 . 93.65.3

.4- 3 7

5.2- 1 . 8

.51.3

4

9.11.4

- . 44.88.2

- 2 . 55.98.0

22.513.0

5.5- 2 . 5

6.911.77.4

7.51.42.12.2

Yearto

year

1.912.4- . 9

- 5 . 2.8

- 2 . 5

H.55.8

- 4 72.2

.4

.91.2

5

3.86.5

- 1 . 63.66.2

3.21.65.6

20.314.0

8.4- . 35.39.19.2

5.95.92.21.0

Finished goods excluding consumer foods

Total

Dec.to

Dec. *

2.43.4

4.32.12.16.6

21.27.26.26.98.3

14.8

13.38.84.1

.0

Yearto

year

2.62.7

3.53.72.04.1

16.012.16.37.07.3

11.9

16.210.34.61.8

Consumergoods

Dec.to

Dec.1

8.2.9

- 1 . 11.6

3

1.72.51.7.2.8.43

- . 1.11

.91.72.12.02.9

3.92.02.07.4

20.56.76.06.78.5

17.5

14.28.54.2

- . 8

Yearto

year

1.67.2

- 1 . 3.9.3

.82.42.5

.11.3.4

- . 1

~0.1

.71.61.92.12.4

3.03.41.94.5

16.9

10.56.27.27.1

13.3

18.610.24.11.2

Capitalequipment

Dec.to

Dec1

10.33.4

.82.311

5.68.34.31.31.0.1.2.3.59

1.53.93.13.04.6

4.92.42.05.3

22.68.26.47.37.98.8

U.49.23.92.0

Yearto

year

2.49.71.71.712

3.07.46.22.61.9

.2

.1

.4

.210

1.22.53.33.53.34.84.12.53.3

14.215.26.76.57.98.7

10.810.25.72.8

Finishedenergygoods

Dec.to

Dec1

16.411.512.18.5

58.0

27.814.1- . 1

- 9 . 0

Yearto

year

17.311.815.76.4

35.1

49.219.1

- 1 . 5- 4 . 7

Finished goodsexcludingfoods and

energy

Decto

Dec.1

6.15.66.38.39.4

10.77.84.91.8

Yearto

year

11.45.66.17.59.0

11.18.65.73.0

Percent change from preceding month

Unad-justed

0.90

- . 20.2.8.6.2

- . 41.0

.3

.2

- . 6.1

- . 2.1.4.3

.2

.31.0

- . 4.1

Sea-son-allyad-

justed

0.4

-.30*1.0

.5

.5

'.$.3

- 1 . 1.2

0.2.5.1.4.2

-22

Unad-justed

1.4.7

- . 41.1.9.4

- 1 . 1- . 3

1.8

- . 1.3

.01.0.0.7

- . 1- . 5

~'.Q1.0..4

- . 9.8

Sea-son-allyad-

justed

1.1.6

I'.S.3

-1.6

4̂.0

0.2

1.0

LI

- . 7.4.7

1.1-1.0

Unad-justed

0.7

-.2

- ! o.9

1.2- 61.6.4.2

- . 8

- ' .3

~'.S

.3

.2- . 81.2

-'.I

Sea-son-

ajusted

0.2i

- ! 3- . 3- . 11.21.1.62.5.8.3

1.4.1

- . 4- . 3

'.B.3.4.0.0.1,1

Unad-justed

0.7- . 1- . 3- . 6

1.11.4.54

1.5.5.1

- 1 . 2- . 4- . 5

.6

.7

.8

.4

.27.9

- . 3- . 2

Sea-son-allyad-

justed

0.1- . 1- . 6-..5

~L41.4.64.7.9.3

- 2 . 0- . 3

~'.S1.1.4.3

- ! o.1.0

Unad-justed

0.8- . 4

.3

.3

.4

.4

.27

1.6.2

.1

.10

.1

.1

.2

.2- . 81.9

- . 2.1

Sea-son-allyad-

justed

0.5- . 1

.5

l5.6.4.61

.0

.4

.5

~A.3

— 1.2.3.2.6.2.3

0.2

Unad-justed

- 0 . 5- 1 . 2- 2 . 2=4.8- 2 . 2

4.2

5.71.2

7.7- 1 . 0

- 4 . 1- 2 . 8- 1 . 8- 3 . 2

2.62.9

.4

.4- . 1

- 1 . 0- 1 . 4- 1 . 2

Sea-son-allyad-

justed

- 0 . 6- 1 . 8- 3 . 7- 4 . 0

2.64.4

5.51.0

4.4

2.0- . 8

- 4 . 2- 3 . 4

3.12.52.23.1

.2

.3

' l- L 0

- - 1 . 0

Unad-justed

1.0- . 0

.5A.3

.3

*62.0

A

- . 2.3

- . 0.2.2.1.4

- . 91.6

- . 0

Sea-son-allyad-

justed

0.3.2.4.4.4.6.3.52.5

i

- . 9.6

!o.2.4.4.4

- . 0.1.3

1 Changes from December to December are based on unadjusted indexes.2 Data have been revised through August 1983 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.


MONEY STOCK, CREDIT, AND FINANCE

TABLE B-61.—Money stock measures and liquid assets, 1959-83

[Averages of daily figures; billions of dollars, seasonally adjusted]

Year and month

Ml

Sum ofcurrency,demanddeposits,travelers'

checks, andother

checkabledeposits(OCDs) 1

141.0

141.8146.5149.2154.7161.8169.5173.7185.1199.4205.8216.5230.7251.9265.8277.5291.1310.4335.5363.2389.0414.1440.6478.2521.1

447.8448.0448.6449.3452.4453.4454.4458.3463.2468.7474.0478.2

482.1491.1497.6496.5507.4511.7515.5516.7517.1517.9518 3521.1

M2M1 nineMl piUS

overnight RPsand

Eurodollars,MMMF

balances(general

purpose andbroker/dealer),

MMDAs, andsavings andsmall timedeposits 2

297.8

312.3335.5362.7393.2424.7

459.1480.2524.8566.9590.2

627.9712.7805.3861.2908.6

1,023.01,163.51,286.41,388.51,497.51,630.31,794.91,959.52,184.6

1,810.11,815.81,828.91,835.21,850.61,864.51,880.91,903.61,917.01,929.71,945.01,959.5

2,010.02,050.82,069.92,074.82,096.22,114.42,126.32,136.92,145.42,161.62,174.62,184.6

M3

M2 plus largetime deposits.term RPs, andinstitution-only

balances3

299.0

314.3339.4369.7404.0439.9480.3503.2555.7604.3613.2674.5773.0882.0979.2

1,061.41,161.71,296.31,451.81,613.51,758.41,936.72,167.92,377.62,599.8

2,181.82,191.62,210.92,224.12,240.72,260.22,283.42,317.92,333.92,352.02,370.22,377.6

2,403.32,430.72,447.12,453.92,476.22,498.82,510.32,528.32,543.82,561.32,586.02,599.8

L

M3 plus otherliquid assets

388.5

403.4430.5465.8503.5540.1584.1614.9667.2729.9764.4

815.8902.5

1,022.81,141.61,246.81,371.91,522.41,711.01,922.92,131.82,343.62,622.02,896.7

2,644.42,668.12,692.72,710.32,737.62,767.02,798.22,823.62,840.52,866.02,882.52,896.7

2,930.62,960.22,987.53,005.83,031.33,058.63,087.83,115.63,136.93,153.4

Percent change from year or 6months earlier4

Ml

0.63.31.83.74.64.82.56.67.73.25.26.69.25.54.44.96.68.18.37.16.56.48.59.0

7.46.67.17.57.75.93.04.76.68.89.8

11.2

12.614.815.412.214.614.514.310.78.08.84.33.7

M2

4.97.48.18.48.08.14.69.38.04.16.4

13.513.06.95.5

12.613.710.67.97.98.9

10.19.2

11.5

10.78.79.08.38.07.98.09.99.9

10.610.510.5

14.216.116.615.616.216.411.98.67.48.57.66.8

M3

5.18.08.99.38.99.24.8

10.48.71.5

10.014.614.111.08.49.4

11.612.C11.19.C

10.111.99.79.3

11.29.39.49.28.68.79.5

11.911.411.8l l . S10.7

10.S10.C9.98.99.1

10.59.18.28.18.S9.18./

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"..


JulyAugSept....OctNovDec

1983:JanFebMarAprMayJune....

JulyAugSept....OctNovDec. . .

1 Net of demand deposits due to foreign commercial banks and official institutions.2 M2 will differ from the sum of components shown in Table B-62 by a consolidation adjustment that represents the estimated

amount of demand deposits and vault cash held by thrift institutions to service time and savings deposits.3 M3 will differ from the sum of components shown in Table B-62 by a consolidation adjustment that represents the estimated

amount of overnight RPs held by institution-only money market mutual funds.4 Monthly percent changes are from 6 months earlier at a compound annual rate.

Note.—See Table B-62 for components, except travelers checks not shown separately.



TABLE B-62.—Components of money stock measures and liquid assets, 1959-83

[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]

Pferiod

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 p..

1982:JanFebMar

fezJune


1983:JanFebMar

rfay"IJune

July

B :NovDec ^.....

Cur-rency

29.0

28.929.530.632.534.3

36.338.340.443.446.1

49.152.656.861.567.9

73.980.688,697.5

106.3

116.2123.2132.8146.0

124.0124.7125.2126.3127.4128.2

128.8129.6130.5131.3131.9132.8

134.2135.6137.0138.0139.3140.3

140.9141.8143.0144.2145.3146.0

De-mand

de-pos-its i

111.6

112.5116.5118.1121.7127.0

132.5134.6143.9155.1158.8

166.3176.8193.6202.5207.4

214.1224.4239.7253.8262.0

266.8236.4239.8243.1

238.9235.5233.8233.3233.1232.3

232.1232.5234.0236.0237.6239.8

239.4238.7240.1238.9242.5244.0

245.8244.5243.4242.9241.6243.1

Otherchecka-

bledepos-

its(OCDs)

0.0

.0

.0

.0

.1

.1

.1

.1

.1

.1

.1

.1

.2

.2

.3

.4

.92.74.28.4

17.0

26.976,6

101.3127.1

80.483.485.185.387.488.4

89.191.894.397.0

100.1101.3

104.5112.5116.0115.0120.9122.7

124.2125.8126.0126.0126.5127.1

Over-night

chase

Ss(RPs)

net, plusover-nightEuro-

dollarsNSA

0.0

.0

.0

.0

.0

.0

.0

.0

.0

.02.2

1.32.32.85.35.6

5.810.614.720.321.2

28.436.144.356.1

39.738.039.136.840.140.3

41.842.441.543.945.244.3

47.348.948.850.655.156.0

52.752.153.056.555.256.1

Money marketmutual fund

(MMMF)balances

Gen-eralpur-

Bbrok-

er/dealerNSA

0.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.11.7

2.72.42.46.4

33.4

61.4150.9182.2138.0

154.7156.0159.7161.8164.9170.1

172.9182.3185.1187.6191.1182.2

166.7159.6154.0146.7141.1139.7

138.8139.1137.6137.8138.7138.0

Insti-tutiononly

NSA

0.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0,0.0.2

.4

.6

.93.19.5

14.936.047.640.2

35.333.634.834.335.636.6

40.447.148.249.349.947.6

46.145.243.541.040.439.2

38.638.439.139.940 640.2

Moneymarketdeposit

accounts(MMOAs)

NSA

0.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0,0

43.2372.4

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.043.2

189.1277.7320.5341.2356.8367.3

368.4366.3366.9367.43691372.4

Sav-ings

146.4

159.1175.5194.8214.4235.2

256.9253.1263.7268.9263.7

259.9291.6321.2327.0338.8

388.8453.0491.6481.2423.1

400.7344.4359.3312.3

347.7346.9346.6345.9346.6347.2

345.0346.7350.0358.0366.4359.3

335.1325.7322.7321.5323.1325.0

323.5322.1320.6318.8316 4312.3

Smalldenom-inationtimede-

posits*

11.4

12.514.820.125.529.2

34.455.077.8

100.5120.4

152.2190.5232.1266.0288.0

338.1391.0446.0521.8635.9

731.7828.6859.1792.1

826.6833.1840.7847.2852.5859.3

872.9879.8883.2878.0874.9859.1

797.4755.1733.8725.7720.1722.1

735.1748.0757.7771.0784 4792.1

iSrinationtimede-

posits2

1.2

2.03.96.9

10.715.2

21.223.130.937.520.4

45.057.673.2

111.2144.5

129.9118.2145.2194.9222.2

258.9302.6333.8329.2

304.4309.9315.8321.2322.1327.4

332.1334.9336.1339.6340.4333.8

310.7297.9296.2300.2299.2304.1

305.6311.6317.7319.9324 9329.2

Termrepur-chase

ments(RPs)

NSA

0.0

.0

.0

.0

.0

.0

.0

.0

.0

.02.6

1.62.73.56.98.1

8.414.219.527.130.1

34.837.240.349.3

35.635.735.638.137.036.3

34.537.036.437.739.440.3

40.640.841.742.745.344.5

42.844.845.143.748 749.3

TermEuro-

dollars(net)

NSA

0.7

.81.41.61.92.4

1.72.12.12.92.7

2.22.73.65.48.0

9.713.118.429.041.5

48.065.380.0

68.372.874.077.983.884.7

83.780.980.681.179.680.0

81.183.585.988.489.989.8

89.689.889.590.4

Sav-

bonds

46.1

45.746.546.948.149.0

49.650.251.251.851.7

52.054.357.660.463.2

67.271.776.480.279.5

72.367.767.9

67.867.867.767.767.767.7

67.667.567.567.667.867.9

68.168.568.869.269.669.8

70.070.270.470.6

Short-term

Treas-ury

secu-rities

38.6

36.737.039.840.738.5

40.743.238.746.159.5

49.236.341.150.053.5

76.880.889.799.3

128.7

156.9176.3217.6

179.9186.9190.0190.7192.1197,2

202.9204.1203.6210.3214.5217.6

219.3219.3224.5230.5231.4237.2

252.1262.9264.5262.1

Bank-ers'

ances

0.5

.81.01.01.11.2

1.51.61.72.23,2

3.33.53.34.7

10.6

8.48.8

11.821.626.7

31.640.644.9

41.140.639.940.241.341.6

42.041.341.442.843.144.9

45.343.242.041.240.840.2

41.443.543.342.3

Com-mer-cial

paper

3.6

5.15.26.87.79.1

10.214.417.822.534.0

34.532.735.241.950.1

48.051.762.979.297.0

98.1104.2108.8

105.5108.4110.3109.7112.1115.7

118.7112.0113.7112.3J07.3108.8

113.5115.1119.2122.5123.4122.9

124,4121.0125.3126.6

'Demand deposits at all commercial banks other than those due to domestic banks, the U.S. Government, and foreign banks andofficial institutions less cash items in the process of collection and Federal Reserve float.

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.Travelers checks are a component of money stock but are not shown here.See also Table B-61.Source: Board of Governors of the Federal Reserve System,


TABLE B-63.—Commercial bank loans and investments, 1939-83


Year and month

End of month l

1939- Dec1940: Dec1941- Dec1942: Dec1943: Dec1944: Dec1945- Dec1946: Dec1947- Dec1948: Dec

1948: Dec1949- Dec1950: Dec1951: Dec1952: Dec1953: Dec1954- Dec1955: Dec1956: Dec1957- Dec1958: Dec1959- DecI960: Dec1961- Dec1962: Dec1963- Dec1964: Dec1965- Dec1966: Dec1967: Dec1968- Dec1969: Dec . .1970: Dec1971: Dec1972- DecAverage for month2

1972: Dec1973- Dec .1974: Dec1975: Dec1976- Dec1977- Dec1978: Dec1979: Dec1980- Dec1981- Dec1982- Dec1983- Dec p

1983:JanFebMarAprMayJuneJuly .AugSeptOctNovDec P .

Total loansand

investments

40.743.950 767.4851

105.5124.0114 0116.3

L 114.3

113 0118.7124 71302139.11431153.1157.61616166.41812188.7197 4212.82312250.2272 330013161352 0390.2401.7435.5485 7558.0

572.6647.8713.6745.2804.6891.5

1,013.51,135.91,239.61,316.31,412.01,566.8

1428 21,436.31,450.11,460.61474 41,488.01,499.91,513.21,520.31,532.91,548.91,566.8

Loans

Total

17.218.821719.219121.626.131138.142.5

Commercialand

industrial

Seasonally adjustet

41.542.051156.562.866269.180.688191.595 6

110.51167123.6137 3153.7172 9198 2213.92313258.2279.4292.0320 9378.9

390.5460.5520.1517.4555.0632.5747.0849.9915.1973.9

1,042.01,131.7

1045 01,048.71,056.31,059.51,063.31,070.61,080.91,091.01,096.31,104.11,115.71,131.7

39.442143.947.652.158.469 578.686 295.9

105.7110.0116 2130.4

137.5165.4196.9189.6190.9210.9245.9291.2326.8358.0392.3413.1

395.2394.9396.2392.9392.9395.0399.2402.5402.6404.7407.8413.1

Investments

U.S.Treasurysecurities

16.317.821841.459877.690.674 869.262.6

i

62 366.461160462.262 267.660.357 256.965157.759 965.364.761.560.757153.559460.751.257.860 662.6

65.858.553.682.2

100.899.893.894.5

110.0111.0130.9188.1

139 8144.5151.0157.8166.1171.2172.9174.4176.9182.3186.2188.1

Othersecurities

7.17.4726.8616.37.3819.09.2

9.210.312 413414.214 716.416.816.317.920.520.520.823.929.235.038.744.848.761.371.371.185.7

104.2116.5

116.3128.8139.9145.6148.8159.3172.8191.5214.4231.4239.2247.0

243.3243.1242.8243.4245.0246.2246.1247.8247.1246.5247.1247.0

Loans plusloans soldto bankaffiliates

283.3294.7323.7381.5

393.1464.8524.8521.8558.7637.1750.7852.9917.8976.7

1,044.91,134.1

1,048.01,051.61,059.31,062.41,066.11,073.31,083.51,093.51,098.91,106.71,118.21,134.1

1 Data are for December 31 call dates.2 Data are prorated averages of Wednesday figures for domestically chartered banks and averages of current and previous month-end

data for foreign-related institutions. Lease financing receivables are included in total loans and investments and in total loans.Note.—Beginning December 1981, levels have been reduced because of shifts from U.S. banking offices to International Banking

Facilities (IBFs).Source: Board of Governors of the Federal Reserve System.


TABLE B-64.—Total funds raised in credit markets by nonfinancial sectors, 1975-83


Item 1975 1976 1977 1978 1979 1980 1981

Total net borrowing by domestic nonfinancial sectors..

U.S. Government

Treasury issuesAgency issues and mortgages..

Private domestic nonfinancial sectors...

Debt capital instruments

Tax-exempt obligations..Corporate bondsMortgages

Home mortgagesMulti-family residential..CommercialFarm

Other debt instruments-

Consumer credit..Bank loans n.e.c.Open-market paper

By borrowing sector: Total..

State and local governments..HouseholdsNonfinancial business

FarmNonfarm noncorporate..Corporate

Foreign net borrowing in United States..

BondsBank loans n.e.c...Open-market paperU.S. Government loans..

Total domestic plus foreign..

Total funds supplied to domestic nonfinancial sectors..

Private domestic nonfinancial sectors

Deposits and currency..

Checkable deposits and currency..Time and savings depositsMoney market fund sharesSecurity repurchase agreements...Foreign deposits

Credit market instruments-

Foreign funds

At banksCredit market instuments

U.S. Government and related loans, net...U.S. Government cash balancesPrivate insurance and pension reserves...Other sources

Net credit market borrowing by nonfinancial sectors

193.0

85.4

85.8

107.6

100.9

16.127.257.6

42.0

A34.6

6.79.6

-10.4=2.6

10.1107.6

13.752.141.8

8.512.520.9

11.3

6.2

2.0

2.S

204.4

243.5

69.0

69.1

174.5

123.6

15.722.885.1

63.93.9

11.65.7

50.9

25.44.54.0

16.9

174.5

15.289.569.8

10.215.444.2

19.3

8.65.61.93.3

262.8

319.4

56.8

57.6- . 9

262.6

171.1

21.922.9

126.3

94.07.1

18.17.1

91.6

40.227.1

2.921.3

262.6

15.4137.3110.0

12.328.069.7

13.5

5.13.12.43.0

332.9

369.8

53.7

55.1-1 .4

316.2

199.7

28.421.1

150.2

112.29.2

21.77.2

116.5

37.45.2

25.1

316.2

19.1169.4127.6

14.632.480.6

33.8

4.219.16.63.9

403.6

386.0

37.4

38.8-1 .4

348.6

211.2

30.317.3

163.6

120.07.8

23.911.8

137.5

45.451.211.129.7

348.6

20.5176.4151.7

21.434.496.0

20.2

3.92.3

11.22.9

406.2

343.2

79.2

79.8- . 6

264.0

192.0

30.326.7

135.1

96.78.8

20.29.3

72.0

4.936.7

5.724.8

264.0

20.3117.5126.1

14.433.778.1

27.2

11.510.14.7

370.4

377.2

87.4

87.8- . 5

289.8

158.4

21.922.1

114.5

75.94.3

24.69.7

131.5

24.154.719.233.4

289.8

9.7120.6159.6

16.339.6

103.7

27.2

5.43.7

13.94.2

404.4

Direct and indirect supply of funds to credit markets

193.0

152.0

101.2

15.683.3

1.3

'$

50.7

-2 .5

-8 .66.1

11.9-1 .7

29.73.7

243.5

178.1

133.4

17.8111.7

1.7

44.7

10.6

- 4 . 515.2

1.1

3*319.5

319.4

189.1

148.6

25.5119.3

111.3

40.6

41.0

1.439.6

4.14.3

51.429.4

369.8

225.8

152.2

25.5110.3

6.97.52.0

73.6

44.6

6.538.0

- 6 . 66.8

62.237.1

386.0

270.3

151.4

26.782.234.46.61.5

118.9

23.0

27.6- 4 . 6

11.6.4

49.131.6

343.2

254.4

180.0

15.3127.8

29.26.51.1

74.4

1.5

-21.723.2

1.8-2 .6

65.422.6

377.2

308.9

221.7

27.683.6

107.52.5

.5

87.2

7.3

-8 .716.0

6.8- 1 . 1

73.2-17.9



TABLE B-64.—Total funds raised in credit markets by nonfinancial sectors, 1975-83—Continued

[Billions of dollars; quarterly data at seasonally adjusted annual rates}

Item1982 1983

Net credit market borrowing by nonfinancial sectors

Total net borrowing by domestic nonfinancial sectors

U.S. Government

Treasury issues ,

Agency issues and mortgages ,


Debt capital instruments

Tax-exempt obligationsCorporate bonds ,Mortgages

Home mortgages ,Multi-family residentialCommercialFarm

Other debt instruments

Consumer creditBank loans n.e.cOpen-market paperOther

By borrowing sector: Total

State and local governmentsHouseholdsNonfinancial business

FarmNonfarm noncorporateCorporate

Foreign net borrowing in United States „

BondsBank loans n.e.cOpen-market paperU.S. Government loans

Total domestic plus foreign

Total funds supplied to domestic nonfinancial sectors


Deposits and currency

Checkable deposits and currencyTime and savings depositsMoney market fund sharesSecurity repurchase ageementsForeign deposits

Credit market instruments

Foreign funds

At banksCredit market instruments -,

U.S. Government and related loans, netU.S. Government cash balancesPrivate insurance and pension reservesOther sources


331.8

95.6

98.1

- 2 . 5

236.2

138.931J11.595.7

63.45.6

19.37.3

97.3

2.671.79.5

13.4

236.2

18.175.1

142.9

7.631.5

103.9

11.6

3.1-10.4

16.42.5

381.8

118.3

118.5- . 2

263.6

140.6

51.710.078.9

48.22.8

23.54.5

123.0

35.968.53.6

15.1

263.6

40.5100.0123.0

10.537.874.8

13.9

1.7.2

8.53.5

442.7

206.5

206.8- . 3

236.1

146.9

47.424.874.8

56.6- 3 . 717.34.5

89.2

11.155.7

- 2 . 825.2

236.1

30.478.4

127.3

10.826.590.0

11.9

12.8-11.2

.59.8

427.0

224.4

224.9

- . 5

202.5

185.371.329.184.9

60.5.3

19.84.4

17.2

23.621.8

-23.3- 4 . 9

202.5

56.293.752.7

7.323.322.0

25.3

8.8- 3 . 117.42.2

343.4 395.8 454.5 452.3 429.7 598.1 499.4

413.9

196.3

196.2.1

217.6

184.3

38.618.5

127.2

97.65.7

24.9- 1 . 0

33.3

28.18.5

-18 .515.2

217.6

29.8117.470.4

- 2 . 935.3

38.0

15.9

3.224.6

-16.84.8

576.5

264.1

264.4

- . 3

312.4

263.283.123.3

156.7

115.99.9

29.41.5

49.2

49.5- . 9

-14.114.7

312.4

72.8162.177.4

.844.831.9

21.5

5.55.37.63.1

491.6

157.2

157.4- . 2

334.4

228.7

32.86.3

189.6

133.08.0

42.75.7

105.8

49.115.614.926.2

334.4

25.5168.8140.0

7.968.963.3

7.7

1.6- 8 . 010.43.7

Direct and indirect supply of funds to credit markets

331.8

217.6

185.1

28.2125.538.2

.3- 7 . 1

32.5

- 7 . 7

-21 .313.7

1.312.179.828.6

381.8

272.2

147.3

-5 .7107.140.5

1.9

3.5

125.0

9J-38.9

48.6

4.1-16 .3

91.021.1

442.7

300.9

212.0

21.2105.388.1

1.3- 4 . 0

89.0

-46 .6

-59 .913.2

25.424.186.852.1

427.0

328.1

172.3

41.6188.7

-68.111.9

- 1 . 9

155.8

4.19.1

- 5 . 0

14.04.1

86.1- 9 . 3

413.9

329.0

289.1

78.7282.2

-105.221.7

11.7

39.9

-12 .0-43.8

31.8

-16 .3-10 .4

88.035.5

576.5

346.9

174.6

61.0172.9

-62.7.4

3.0

172.3

52.08.7

43.3

23.125.190.638.8

491.6

332.7

253.0

14.0223.7- 6 . 518.83.0

79.7

25.3

20.45.0

52.1-10.9

93.1- . 6

295


TABLE B-65.—Federal Reserve Bank credit and reserves of depository institutions, 1929-83

[Averages of daily figures; millions of dollars]

Year and month

Reserve Bank credit outstanding

Total

U.S.Governmentand Federal

securities

Borrowings ofdepositoryinstitutions

Total Seasonal

Other

Reserves of depositoryinstitutions1

Total Required Excess

1929: Dec1933: Dec1939: Dec1940: Dec1941: Dec1942: Dec1943: Dec1944: Dec1945: Dec1946: Dec1947: Dec1948: Dec1949: Dec1950: Dec1951: Dec1952: Dec1953: Dec1954: Dec1955: Dec1956: Dec1957: Dec1958: Dec1959: DecI960: Dec1961: Dec1962: Dec1963: Dec1964: Dec1965: Dec1966: Dec1967: Dec1968-. Dec1969: Dec1970: Dec1971: Dec1972: Dec1973: Dec1974: Dec1975: Dec1976: Dec1977: Dec1978: Dec1979: Dec1980: Dec1981: Dec1982: Dec1983: Dec1983:

JanFebMar

fezJuneJulyAugSeptOctNovDecp.

1,6432,6692,6122,3052,4046t03511,91419,61224,74424,74622,85823,97819,01221,60625,44627,29927,10726,31726,85327,15626,18628,41229,43529,06031,21733,21836,61039,87343,85346,86451,26856,61064,10066,70874,25576,85185,64293,96799,651107,632116,382129,330139,896143,250151,920159,659171,531

157,519155,365155,883159,250160,130162,133164,799163,698168,182169,202167,773171,531

4462,4322,5102,1882,2195,54911,16618,69323,70823,76721,90523,00218,28720,34523,40924,40025,63924,91724,60224,76523,98226,31227,03627,24829,09830,54633,72937,12640,88543,76048,89152,52957,50061,68869,15871,09479,70186,67992,108100,328107,948117,344126,276127,895137,796146,358160,352

144,305143,324144,130146,808148,397150,406152,921153,670157,545158,236156,767160,352

80195

3

490

265334157224134118142657

1,59344124683968871055790687149304327243454557238765

1,086321107

1,0491,29870312762

558874

1,4731,617642697748

500557852993902

1,7141,3821,5731,441837912748

413213125413482116533396

333953829812117219819114211996

39614299114180482658654702822729842607

1,1191,3801,3061,0271,1541,4121,7031,4941,5431,4931,7251,9702,3682,5542,5042,5142,5472,1393,3165,5144,6994,9904,7084,6436,5857,4167,2427,87611,11212,14713,73813,48212,60410,431

12,71411,48410,90111,44910,83110,01310,4968,4559,19610,12910,09410,431

2,3952,588

11,47314,04912,81213,15212,74914,16816,02716,51717,26119,99016,29117,39120,31021,18019,92019,27919,24019,53519,42018,89918,93219,28320,11820,04020,74621,60922,71923,83025,26027,22128,03129,26531,32931,35335,06836,94134,98935,13636,47141,57243,972

3 40,09741,91841,85340,124

41,86239,79738,03938,65038,28238,41538,94738,66037,91638,13738,14440,124

2,34721,822

6,4627,4039,422

10,77611,70112,88414,53615,61716,27519,19315,48816,36419,48420,45719,22718,57618,64618,88318,84318,38318,45018,51419,55019,46820,21021,19822,26723,43824,91526,76627,77428,99331,16431,13434,80636,60234,72734,96436,29741,44743,57840,06741,60641,35339,179

41,31639,36237,60238,17437,83337,93538,44038,21437,41837,63237,61539,179

2 7665,0116,6463,3902,3761,0481,2841,491

900986797803

1,027826723693703594652577516482769568572536411452392345455257272165219262339262172174125394*30312500945

546435437476449480507446498505529945

1 Beginning December 1959, part of currency and cash held by member banks allowed as reserves; beginning November 1960 all suchcurrency and cash allowed.

Beginning November 1972, includes reserve deficiencies on which Federal Reserve Banks were allowed to waive penalties for atransition period in connection with bank adaptation to Regulation J as amended effective November 9, 1972. Transition period endedafter second quarter 1974.

Effective November 1975, includes reserve deficiencies on which penalties are waived over a 24-month period when a nonmemberbank merges into an existing member bank, or when a nonmember bank joins the Federal Reserve System.2 Data are for licensed banks only.

3 Includes all reserve balances of depository institutions plus vault cash at institutions with required reserve balances plus vault cashequal to required reserves at other institutions.4 Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve requirements less required reserves. (Thismeasure of excess reserves is comparable to the old excess reserves concept published historically.)



TABLE B-66.—A \regate reserves of depository institutions and monetary base, 1959-83

[Averages of daily figures; billions of dollars]

Year and month

1959: Dec

I960- Dec1961: Dec1962- Dec1963: Dec1964- Dec

1965: Dec1966- Dec1967: Dec1968- Dec .. ..1969- Dec

1970- Dec1971: Dec1972: Dec1973- Dec1974: Dec.

1975: Dec1976: Dec . .1977- Dec1978: Dec1979- Dec

1980: Dec1981- Dec1982: Dec1983- D e c


JulyAugsept::::::::::::::::::::::::::": :OctNovDec

1983:JanFeb.MarAprMayJune


Adjusted -for changes in reserve requirements1

Seasonally adjusted

Reserves of depository institutions

Total2

14.04

14 2214.6814 9815.3215 84

16.4316 4517.9418 9119.16

201521.5023.7024 8526.25

26.3826 8028 0029.4430.71

32.4633 7536.2337.59

34.0034.0534 2234.3434 4234.55

34 5534.70351135 3735.8336.23

35 6336 1036 8037 1537.1337.61

37.8037.6937.7237 6237.4137.59

Nonbor-rowed

13.10

141514.5514 7214.9915.57

15.9915 9117.7118.1618.04

19 8221.3822.6523 5625.52

26.2526.7427 4328.5729.24

30.77331135.6036.81

32.4832.2632 6732.7733 3033.34

33 8634.18341734 8935.2135.60

35 1035 5236 0136 1436.1835.98

36.3536.1536.2836 7836.5036.81

Required

13.54

13 4814.1014 4114.8315.43

16.0116.1117.5618.4818.87

19 9021.3223.4124 5525.99

26.1126.5227 8129.2130.38

31.9433 4335.7337.03

33.5833.7433 8634.0734 0634.24

34 2434.3934 7234 9635.4335.73

35 0935 6636 3736 6836.6837.13

37.2937.2537.2237 1236.8837.03

Mone-tarybase3

43.4

43.644.746.048.350.7

53.355.459.063.166.0

70.175.181.587.595.4

101.7109.0118.3128.8139.3

151.1158 8171.1186.5

159.8160.81615162.5163 8164.9

165 4166.4167 7168 8169.8171.1

1719173 8176 1177 3178.8180.3

181.1182.1183.4184 6185.5186.5

Not seasonally adjusted

Reserves of depository institutions

Total2

14.32

14 4914.9615.2415.5616.09

16.7116.7618.2319.0019.35

20.2721.5123.9225.1126.51

26.6827.2728.4629.9131.26

33.4134 6136.9638.37

35.9233.9933.6334.1233.9733.81

341334.1434.8235 4236.0936.96

37 6135 9736 0636 9136.6436.79

37.3437.0637.3937 6837.6938.37

Nonbor-rowed

13.37

14.4214.8214.9815.2315.82

16.2716.2318.0118.2518.23

19.9321.3822.8723.8125.78

26.5527.2127 8929.0429.79

31.7233 9836.3337.59

34.4032.2032.0732.5532.8532.61

33.4433.6333.8834 9535.4736.33

37 0835 3935 2635 9035.6935.15

35.8935.5235.9536 8436.7937.59

Required

13.81

13.7514.3714.6715.0715.68

16.2916.4217.8618.5719.07

20.0221.3323.6424.8126.25

26.4126.9928.2729.6830.93

32.8934.2936.4637.81

35.5033.6933.2633.8533.6133.50

33.8133.8334.4335.0235.6936.46

37.0635.5435.6236.4436.1936.31

36.8336.6236.89371837.1737.81

Mone-tarybase3

44.3

44.545.647.049.351.7

54.556.660.164.167.2

71.276.082.989.096.9

103.3111.1120.5131.3141.7

154.4161.9174.4190.0

161.3159.0159.3161.6163.0164.2

166.0166.2167.3168.7171.0174.4

173.2171.8173.6176.3177.8179.6

181.7181.8182.9184.4186.7190.0

Reserve aggregates include required reserves of member banks and Edge Act corporations and other depository institutions.Discontinuities associated with the implementation of the Monetary Control Act, the inclusion of Edge Act corporation reserves, andother changes in Regulation D have been removed. Beginning with the week ended December 23, 1981, reserves aggregates have beenreduced by shifts of reservable liabilities to international banking facilities (IBFs). On the basis of reports of liabilities transferred toIBFs by U.S. commercial banks and U.S. agencies and branches of foreign banks, it is estimated that required reserves were lowered onaverage by $10 to $20 million in December 1981 and $40 to $70 million in January 1982.

2 Reserve balances with Federal Reserve Banks (which exclude required clearing balances) plus vault cash at institutions with requiredreserve balances plus vault cash equal to required reserves at other instititions.3 Includes reserve balances and required clearing balances at Federal Reserve Banks in the current week plus vault cash held twoweeks earlier used to satisfy reserve requirements at all depository institutions plus currency outside the U.S. Treasury, Federal ReserveBanks, the vaults of depository institutions, and surplus vault cash at depository institutions.


297


TABLE B-67 .—Bond yields and interest rates, 1929-83

[Percent per annum]

Year

U.S. Treasury securities

Bills(new issues)l

3-month 6-month

Constantmaturities2

3years

10years

Corporatebonds

(Moody's)

Aaa

High-grade

munici-pal

bonds(Stand-ard &

Poor's)

New-home

mortgageyields

(FHLBB)3

Com-mercialpaper, 6months4

Prime ratecharged by

banks5

Discountrate,

FederalReserveBank of

New York5

Federalfundsrate6

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.

0.515

.023

.014

.103

.326

.373

.375

.375

.375

.5941.0401.102

1.2181.5521.7661.931.953

1.7532.6583.2671.8393.405

2.9282.3782.7783.1573.549

3.9544.8814.3215.3396.677

6.4584.3484.0717.0417.886

5.8384.9895.2657.22110.041

11.50614.02910.6868.63

3.832

3.2472.6052.9083.2533.686

4.0555.0824.6305.4706.853

6.5624.5114.4667.1787.926

6.1225.2665.5107.57210.017

11.37413.77611.0848.75

2.471.63

2.473.193.982.844.46

3.983.543.473.674.03

4.225.235.035.687.02

7.295.655.726.957.82

7.496.776.698.299.71

2.852.40

2.82

4.73

4.49

3.01

2.842.772.832.732.72

2.622.532.612.822.66

2.622.862.963.202.90

5.90

7.76

4.96

4.754.334.283.913.61

3.293.053.243.473.42

3.243.413.523.743.51

4.27

4.71

2.76

2.502.102.362.061.86

1.671.642.012.402.21

1.982.002.192.722.37

3.183.653.32

11.5514.4412.9210.45

4.33

4.123.883.954.004.19

4.284.925.075.656.67

7.356.166.216.847.56

7.997.617.428.419.44

11.4613.9113.0011.10

3.063.363.893.794.38

4.414.354.334.264.40

4.495.135.516.187.03

8.047.397.217.448.57

8.838.438.028.739.63

11.9414.1713.7912.04

3.533.884.714.735.05

5.195.085.024.864.83

4.875.676.236.947.81

9.118.568.168.249.50

10.619.758.979.49

10.69

13.6716.0416.1113.55

2.532.933.603.563.95

3.733.463.183.233.22

3.273.823.984.515.81

6.515.705.275.186.09

6.896.495.565.906.39

8.5111.2311.579.47

5.895.82

5.816.256.466.977.80

8.457.747.607.968.92

9.009.009.029.56

10.78

12.6614.7015.1412.57

5.85

1.73

.59

.56

.53

.66

.69

.73

.75

.811.031.441.49

1.452.162.332.521.58

2.183.313.812.463.97

3.852.973.263.553.97

4.385.555.105.907.83

7.715.114.738.159.84

6.325.345.617.99

10.91

12.2914.7611.898.89

5.50-6.00

1.50-4.00

1.50

1.501.501.501.501.50

1.501.50

1.50-1.751.75-2.00

2.00

2.072.563.003.173.05

3.163.774.203.834.48

4.824.504.504.504.50

4.545.635.616.307.96

7.915.725.258.03

10.81

7.866.846.839.06

12.67

15.2718.8714.8610.79

5.16

2.56

1.00

1.001.00

U.0071.0071.0071.0071.00

1.001.341.50

1.591.751.751.991.60

1.892.773.122.153.36

3.533.003.003.233.55

4.044.504.195.165.87

5.954.884.506.447.83

6.255.505.467.46

10.28

11.7713.4211.028.50

1.782.733.111.573.30

3.221.962.683.183.50

4.075.114.225.668.20

7.184.664.438.73

10.50

5.825.045.547.93

11.19

13.3616.3812.269.09


298


TABLE B-67.—Bond yields and interest rates, 1929-83—Continued

[Percent per annum]

Yearand

month


July....Aug....Sept...OctNovDec

1981:JanFebMar....

t-June...

July....Aug....Sept...OctNovDec

1982:JanFebMar....z-June...July....Aug....Sept...OctNovDec

1983:JanFebMar....

June...July....Aug....Sept...OctNov....Dec...

U.S. Treasury securities

Bills(new issues)1

3-month

12.03612.81415.52614.0039.1506.995

8.1269.259

10.32111.58013.88815.661

14.72414.90513.47813.63516.29514.557

14.69915.61214.95113.87311.26910.926

12.41213.78012.49312.82112.14812.108

11.9149.0068.1967.7508.0428.013

7.8108.1308.3048.2528.198.829.129.399.058.718.718.96

6-month

11.85112.72115.10013.6189.1497.218

8.1019.443

10.54611.56613.61214.770

13.88314.13412.98313.43415.33413.947

14.40215.54815.05714.01311.53011.471

12.93013.70912.62112.86112.22012.310

12.23610.1059.5398.2998.3198.225

7.8988.2338.3258.3438.208.899.299.539.198.908.899.14

Constantmaturities2

3years

10.8812.8414.0512.029.448.91

9.2710.6311.5712.0113.3113.65

13.0113.6513.5114.0915.0814.29

15.1516.0016.2215.5013.1113.66

14.6414.7314.1314.1813.7714.48

14.0012.6212.0310.629.989.88

9.649.919.849.769.66

10.32

10.9011.3011.0710.8710.9611.13

10years

10.8012.4112.7511.4710.189.78

10.2511.1011.5111.7512.6812.84

12.5713.1913.1213.6814.1013.47

14.2814.9415.3215.1513.3913.72

14.5914.4313.8613.8713.6214.30

13.9513.0612.3410.9110.5510.54

10.4610.7210.5110.4010.3810.85

11.3811.8511.6511.5411.6911.83

Corporatebonds

(Moody's)

Aaa

11.0912.3812.9612.0410.9910.58

11.0711.6412.0212.3112.9713.21

12.8113.3513.3313.8814.3213.75

14.3814.8915.4915.4014.2214.23

15.1815.2714.5814.4614.2614.81

14.6113.7112.9412.1211.6811.83

11.7912.0111.7311.5111.4611.74

12.1512.5112.3712.2512.4112.57

Baa

12.4213.5714.4514.1913.1712.71

12.6513.1513.7014.2314.6415.14

15.0315.3715.3415.5615.9515.80

16.1716.3416.9217.1116.3916.55

17.1017.1816.8216.7816.6416.92

16.8016.3215.6314.7314.3014.14

13.9413.9513.6113.2913.0913.37

13.3913.6413.5513.4613.6113.75

High-grade

munici-pal

bonds(Stand-ard &

Poor's)

7.218.049.098.407.377.60

8.088.628.959.119.55

10.09

9.6510.0310.1210.5510.7310.56

11.0312.1312.8612.6711.7112.77

13.1612.8112.7212.4511.9912.42

12.1111.1210.619.599.979.91

9.459.489.168.969.039.519.469.729.579.649.799.90

New-home

mortgageyields

(FHLBB)3

11.8711.9312.6213.0313.6812.66

12.4812.2512.3512.6113.0413.28

13.2713.5414.0214.1514.1014.67

14.7215.2715.2915.6516.3815.87

15.2515.1215.6715.8415.8915.40

15.7015.6814.9814.4113.8113.69

13.4913.1613.4112.4212.6712.36

12.5012.3812.5412.2512.3412.42

Com-mercialpaper, 6months4

12.6613.6016.5014.939.298.03

8.299.61

11.0412.3214.7316.49

15.1014.8713.5914.1716.6615.22

16.0916.6215.9314.7211.9612.14

13.3514.2713.4713.6413.0213.79

13.0010.8010.869.218.728.50

8.158.398.488.488.319.03

9.369.689.288.989.099.50

Prime ratecharged by

banks (high-low)5

15.25-15.2516.75-15.2519.50-16.7520.00-19.5019.00-14.0014.00-12.00

12.00-11.0011.50-11.0013.00-11.5014.50-13.5017.75-14.5021.50-17.75

21.50-20.0020.00-19.0019.00-17.5018.00-17.0020.50-18.0020.50-20.00

20.50-20.0020.50-20.5020.50-19.5019.50-18.0018.00-16.0015.75-15.75

15.75-15.7517.00-15.7516.50-16.5016.50-16.5016.50-16.5016.50-16.50

16.50-15.5015.50-13.5013.50-13.5013.50-12.0012.00-11.5011.50-11.50

11.50-11.0011.00-10.5010.50-10.5010.50-10.5010.50-10.5010.50-10.5010.50-10.5011.00-10.5011.00-11.0011.00-11.0011.00-11.0011.00-11.00

Discountrate,

FederalReserveBank of

New York(high-low)5

12.00-12.0013.00-12.0013.00-13.0013.00-13.0013.00-12.0012.00-11.0011.00-10.0010.00-10.0011.00-10.0011.00-11.0012.00-11.0013.00-12.00

13.00-13.0013.00-13.0013.00-13.0013.00-13.0014.00-13.0014.00-14.00

14.00-14.0014.00-14.0014.00-14.0014.00-14.0014.00-13.0013.00-12.00

12.00-12.0012.00-12.0012.00-12.0012.00-12.0012.00-12.0012.00-12.00

12.00-11.5011.50-10.0010.00-10.0010.00-9.509.50-9.009.00-8.50

8.50-8.508.50-8.508.50-8.508.50-8.508.50-8.508.50-8.508.50-8.508.50-8.508.50-8.508.50-8.508.50-8.508.50-8.50

Federalfundsrate6

13.8214.1317.1917.6110.989.479.039.61

10.8712.8115.8518.90

19.0815.9314.7015.7218.5219.10

19.0417.8215.8715.0813.3112.37

13.2214.7814.6814.9414.4514.15

12.5910.1210.319.719.208.95

8.688.518.778.808.638.989.379.569.459.489.349.47

1 Rate on new issues within period; bank-discount basis.2 Yields on the more actively traded issues adjusted to constant maturities by the Treasury Department."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.4 Bank discount basis; prior to November 1979, data are for 4-6 months paper.5 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 bv 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, usuallythe one at which most transactions occurred.

7 From October 30, 1942, to April 24, 1946, a preferential rate of 0.50 percent was in effect for advances secured by Governmentsecurities maturing in 1 year or less.

Sources: Department of the Treasury, Board of Governors of the Federal Reserve System, Federal Home Loan Bank Board (FHLBB),Moody's Investors Service, and Standard & Poor's Corporation.

299


TABLE B-68.—Consumer credit outstanding, 1950-83

[Amount outstanding (end of month); millions of dollars, seasonally adjusted]

Year and monthTotal

consumercredit

Installment credi t1

Total Automobile Revolving2 Mobile home 3 Other

Noninstalimentcredit4

December: '1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

198019811982




JulyAugSeptOctNov

24,95626,49631,72735,79537,13344,12347,98450,84151,28459,075

63,52566,13472,35181,05590,713101,063107,413112,676123,790134,129

139,355155,537175,286200,894210,634219,772244,932284,599332,849377,486

381,689405,654423,852

408,610408,861407,891411,377413,562416,313

417,209417,134418,089418,885420,333423,852

427,975427,887430,867434,101437,670443,245

448,618452,202455,519460,993467,084

15,16615,85920,12123,87024,47029,80932,66034,91434,73640,421

44,33545,43850,37557,05664,67472,81478,16281,78390,11299,381

103,905116,434131,258152,910162,203169,387190,725226,646269,392307,115

308,137326,274339,316

328,059328,781328,999330,634332,142333,884

334,276334,343335,180335,593336,897339,316

342,041342,776345,358347,629350,325354,731

359,571362,959365,334370,219374,890

6,0355,9817,6519,7029,75513,48514,49915,49314,26716,641

18,10817,65620,00122,89125,86529,37831,02431,13634,35236,946

36,34840,52247,83553,74054,24157,27967,79882,890101,863116,523

116,808125,323130,235

125,956126,102125,783126,258126,970127,727

127,628127,271127,473127,694128,824130,235

130,860130,627131,848132,537133,850135,823

138,244140,765141,050142,822144,060

2,0223,563

4,9008,2529,39111,31813,23214,46716,50536,42745,00453,174

54,65058,72262,830

58,85858,99759,45760,14460,78461,458

61,86762,00762,12062,30262,32662,830

62,89862,76363,94064,85765,37166,581

67,40267,71568,19469,33970,639

2,4337,1719,46813,50514,58214,38214,53014,89715,19916,843

17,30218,28018,912

18,36818,39418,35918,44718,53618,631

18,74418,91018,93218,93218,92018,912

19,33219,53619,47519,49719,51419,665

19,80619,87620,02620,12820,235

9,1319,87812,47014,16814,71516,32418,16119,42120,46923,780

26,22727,78230,37434,16538,80943,43647,13850,64753,73858,872

60,22460,48964,56474,34780,14883,25991,89292,432107,326120,575

119,377123,949127,339

124,877125,288125,400125,785125,852126,068

126,037126,155126,655126,665126,827127,339

128,951129,850130,095130,738131,590132,662

134,119134,603136,064137,930139,956

9,79010,63711,60611,92512,66314,31415,32415,92716,54818,654

19,19020,69621,97623,99926,03928,24929,25130,89333,67834,748

35,45039,10344,02847,98448,43150,38554,20757,95363,45770,371

73,55279,38084,536

80,551

78,89280,74381,42082,429

82,93382,79182,90983,29283,43684,536

85,93485,11185,50986,47287,34588,514

89,04789,24390,18590,77492,194

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 berepaid (or with the option of repayment) in two or more installments. Credit secured by real estate is generally excluded.

2 Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Prior to1968, included in "other," except gasoline companies, included in noninstaliment 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 intoconsumer credit.

3 Not reported separately prior to July 1970.4 Noninstaliment 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 Boardon a regular basis. Data are shown here as a general indication of trends.


300


TABLE B-69.—Net change in consumer credit outstanding, 1950-83

[Change from preceding period; millions of dollars, seasonally adjusted]

Year and monthTotal

consumercredit

Installment cred i t 1

TotalAuto-mobile

Revolv-ing *

Mobilehome3 Other

Nonin-stallmentcredit4

December:1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980...1981...1982...




July....Aug....Sept...OctNov....

4,7101,5405,2314,0681,3386,9903,8612,857443

7,791

4,4502,6096,2178,7049,65810,3506,3505,26311,11410,339

5,22616,18219,74925,6089,7409,138

25,16039,66748,25044,637

4,20323,96518,198

2,956251

-9703,4862,1852,751

896- 7 5955796

1,4483,519

4,123- 8 82,9803,2343,5695,575

5,3733,5843,3175,4746,091

3,220693

4,2623,749600

5,3392,8512,254-1 7 85,685

3,9141,1034,9376,6817,6188,1405,3483,6218,3299,269

4,52412,52914,82421,6529,2937,184

21,33835,92142,74637,723

1,02218,13713,042

1,785722218

1,6351,5081,742

39267

837413

1,3042,419

2,725735

2,5822,2712,6964,406

4,8403,3882,3754,8854,671

1,539— 541,6702,051

533,7301,014994

-1,2262,374

1,467-4522,3452,8902,9743,5131,646112

3,2162,594

-5984,1747,3135,905501

3,03810,51915,09218,97314,660

2858,5154,912

633146

-319475712757

-99-357202221

1,1301,411

625-2331,221689

1,3131,973

2,4212,521285

1,7721,238

2,0221,541

1,3373,3521,1391,9271,9141,2352,038

19,9228,5778,170

1,4764,0724,108

136139460687640674

40914011318224

504

68-1351,177917514

1,210

821313479

1,1451,300

2,4334,7382,2974,0371,077-200

148367302

1,644

459978632

26-35888995

113166220

-12

420204-612217

151

14170150102107

1,681747

2,5921,698547

1,6091,8371,2601,0483,311

2,4471,5552,5923,7914,6444,6273,7023,5093,0915,134

1,352265

4,0759,7835,8013,1118,633540

14,89413,249

-1,1984,5723,390

92841111238567

216

-3111850010

162512

1,612899245643852

1,072

1,457484

1,4611,8662,026

1,490847969319738

1,6511,010

603621

2,106

5361,5061,2802,0232,0402,2101,0021,6422,7851,070

7023,6534,9253,956

4471,9543,8223,7465,5046,914

3,1815,8285,156

1,171- 4 7 1

-1,1881,851

6771,009

504-142

118383144

1,100

1,398- 8 2 3

398963873

1,169

533196942589

1,420

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 berepaid (or with the option of repayment) in two or more installments. Credit secured by real estate generally excluded.

2 Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Prior to1968, 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 intoconsumer 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 Boardon a regular basis. Data are shown here as a general indication of trends.

Note.—See also Table B-68.


3014 2 4 - 4 5 6 0 - 8 4 - 2 0Digitized for FRASER

http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

TABLE B-70.—Mortgage debt outstanding by type of property and of financing, 1939-83


End of yearor quarter

Allproper-

ties

Farmproper-

ties

Nonfarm properties

Total1- to 4-familyhouses

Multi-familyproper-

ties

Com-mercialproper-t ies 1

Nonfarm properties by type of mortgage

Government underwritten

Total2

1- to 4-family houses

TotalFHA

insured

VAguar-

anteed

Conventional3

Total1- to 4-familyhouses

1939

19401941194219431944

19451946194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

198019811982

1981: IIIIllIV

1982: IIIIllIV

1983:I

35.5

36.537.636.735.334.7

35.541.848.956.262.7

72.882.391.4101.3113.7

129.9144.5156.5171.8190.8

207.5228.0251.4278.5305.9

333.3356.5381.2410.9441.4

474.2526.5603.4681.6744.3

806.1893.0

1,022.61,173.61,337.7

1,471.81,583.31,655.2

1,497.61,533.31,561.71,583.3

1,602.91,624.31,632.21,655.2

1,682.61,724.11,774.2

6.6

6.56.46.05.44.9

4.84.95.15.35.6

6.16.77.27.78.2

9.09.810.411.112.1

12.813.915.216.818.9

21.223.125.127.429.2

30.332.235.841.346.3

51.156.663.670.882.7

92.0101.7106.8

94.597.5100.0101.7

103.9105.5106.4106.8

106.9107.7108.8

28.9

30.031.230.829.929.7

30.836.943.950.957.1

66.775.684.293.6

105.4

120.9134.6146.1160.7178.7

194.7214.1236.2261.7287.0

312.1333.4356.1383.5412.2

443.8494.3567.7640.3698.0

755.0836.4958.9

1,102.81,255.1

1,379.81,481.51,548.4

1,403.21,435.81,461.71,481.5

1,498.91,518.81,525.81,548.4

1,575.71,616.41,665.3

16.3

17.418.418.217.817.9

18.623.028.233.337.6

45.251.758.566.175.7

88.299.0

107.6117.7130.9

141.9154.6169.3186.4203.4

220.5232.9247.3264.8283.2

298.1328.3372.2415.5451.2

495.0560.7657.8770.6891.1

987.01,065.31,114.2

1,004.11,028.41,047.81,065.3

1,076.91,089.51,096.21,114.2

1,133.31,161.81,198.4

5.6

5.75.95.85.85.6

5.76.16.67.58.6

10.111.512.312.913.5

14.314.915.316.818.7

20.323.025.829.033.6

37.240.343.947.352.2

60.170.182.893.1

100.0

100.6104.5111.5120.7128.4

137.1136.4140.3

138.1139.3140.2136.4

137.7138.3138.4140.3

142.2145.4147.7

7.0

6.97.06.76.36.2

6.47.79.1

10.210.8

11.512.513.414.516.3

18.320.723.226.129.2

32.436.541.146.250.0

54.560.164.871.476.9

85.695.9

112.7131.7146.9

159.3171.2189.6211.4235.6

255.7279.9293.9

261.0268.1273.7279.9

284.3291.0291.2293.9

300.2309.2319.3

1.8

2.33.03.74.14.2

4.36.39.8

13.617.1

22.126.629.332.136.2

42.947.851.655.259.3

62.365.669.473.477.2

81.284.188.293.4

100.2

109.2120.7131.1135.0140.2

147.0154.1161.7176.4199.0

225.1238.9248.9

229.1233.6237.0238.9

240.5241.6246.8248.9

252.5261.1

1.8

2.33.03.74.14.2

4.36.19.3

12.515.0

18.822.925.428.132.1

38.943.947.250.153.8

56.459.162.265.969.2

73.176.179.984.490.2

97.3105.2113.0116.2121.3

127.7133.5141.6153.4172.9

195.2207.6217.9

198.8202.7205.9207.6

209.0209.8214.8217.9

222.1230.0

1.8

2.33.03.74.14.2

4.13.73.85.36.9

8.59.7

10.812.012.8

14.315.516.519.723.8

26.729.532.335.038.3

42.044.847.450.654.5

59.965.768.266.265.1

66.166.568.071.481.0

93.6101.3108.0

95.798.1

100.0101.3

102.0102.7106.2108.0

110.8115.8

0.22.45.57.28.1

10.313.214.616.119.3

24.628.430.730.430.0

29.729.629.930.930.9

31.131.332.533.835.7

37.339.544.750.056.2

61.667.073.682.092.0

101.6106.2109.9

103.1104.6105.9106.2

107.0107.1108.6109.9

111.3114.3

27.1

27.728.227.125.825.5

26.530.634.137.340.0

44.749.154.961.569.3

78.086.894.6

105.5119.4

132.3148.5166.9188.2209.8

231.0249.3267.9290.1312.0

334.6373.5436.5505.3557.8

608.0682.3797.2926.4

1,056.1

1,154.71,242.61,299.5

1,174.01,202.21,224.81,242.6

1,258.41,277.21,278.91,299.5

1,323.21,355.3

14.5

15.115.414.513.713.7

14.316.918.920.822.6

26.328.933.238.043.6

49.355.160.467.677.0

85.595.5

107.1120.5134.1

147.4156.9167.4180.4193.0

200.8223.1259.2299.2329.9

367.3427.1516.2617.3718.1

791.8857.7896.3

805.2825.7841.9857.7

868.0879.7881.4896.3

911.2931.8

1 Includes negligible amount of farm loans held by savings and loan associations.2 Includes FHA insured multifamily properties, not shown separately.3 Derived figures. Total includes multifamily and commercial properties, not shown separately.

Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations.

302


TABLE B-71.— Mortgage debt outstanding by holder, 1939-83


End of yearor quarter Total

Major financial institutions

TotalSavingsand loanassocia-

tions

Mutualsavingsbanks

Commer-cial

banks1

Lifeinsur-ancecom-

panies

Other holders

Federaland

relatedagen-cies2

Individ-uals andothers

1939

19401941194219431944

1945..1946..1947..1948..1949..

1950..1951..1952..1953..1954..

19551956195719581959

19601961196219631964

19651966196719681969

1970..1971..1972..1973..1974..

1975..1976..1977..1978..1979..

1980..1981..1982..

1981: IIIIllIV

1982: I..

IV

1983: I....II...

35.5

36.537.636.735.334.7

35.541.848.956.262.7

72.882.391.4

101.3113.7

129.9144.5156.5171.8190.8

207.5228.0251.4278.5305.9

333.3356.5381.2410.9441.4

474.2526.5603.4681.6744.3

806.1893.0

1,022.61,173.61,337.7

1,471.81,583.31,655.2

1,497.61,533.31,561.71,583.3

1,602.91,624.31,632.21,655.2

1,682.61,724.11,774.2

18.6

19.520.720.720.220.2

21.026.031.837.842.9

51.759.566.975.185.7

99.3111.2119.7131.5145.5

157.6172.6192.5217.1241.0

264.6280.8298.8319.9339.1

355.9394.2450.0505.4542.6

581.2647.5745.0848.2938.6

997.21,040.81,023.7

1,007.01,023.31,034.01,040.8

1,041.71,042.91,027.01,023.7

1,029.81,049.81,080.3

3.8

4.14.64.64.64.8

5.47.18.9

10.311.6

13.715.618.422.026.1

31.435.740.045.653.1

60.168.878.890.9

101.3

110.3114.4121.8130.8140.2

150.3174.3206.2231.7249.3

278.6323.0381.2432.8475.7

503.2518.5482.2

507.6515.4519.0518.5

516.1513.0493.9482.2

475.7473.1481.3

4.8

4.94.84.64.44.3

4.24.44.95.86.7

8.39.9

11.412.915.0

17.519.721.223.325.0

26.929.132.336.240.6

44.647.350.553.556.1

57.962.067.673.274.9

77.281.688.195.298.9

99.9100.097.8

99.7100.0100.0100.0

97.596.394.497.8

105.4119.2128.1

4.3

4.64.94.74.54.4

4.87.29.4

10.911.6

13.714.715.916.918.6

21.022.723.325.528.1

28.830.434.539.444.0

49.754.459.065.770.7

73.382.599.3

119.1132.1

136.2151.3179.0214.0245.2

263.0284.5301.7

266.7273.2279.0284.5

289.4294.0298.3301.7

30.57312.7324.1

5.7

6.06.46.76.76.7

6.67.28.7

10.812.9

16.119.321.323.326.0

29.433.035.237.139.2

41.844.246.950.555.2

60.064.667.570.072.0

74.475.576.981.486.2

89.291.696.8

106.2118.8

131.1137.7141.9

132.9134.7136.0137.7

138.8139.5140.4141.9

143.0144.7146.9

5.0

4.94.74.33.63.0

2.42.01.81.82.3

2.83.54.14.64.8

5.36.27.78.0

10.2

11.512.212.611.812.2

13.517.520.925.131.1

38.346.454.664.882.1

101.0116.6140.3170.4215.7

256.6289.1354.8

263.5271.4279.9289.1

301.0315.1332.8354.8

374.6394.8412.9

11.9

12.012.211.711.511.5

12.113.815.316.617.5

18.419.320.421.723.2

25.327.129.132.335.1

38.443.146.349.552.7

55.258.261.465.971.2

79.985.998.9

111.4119.7

123.8128.9137.2155.0183.4

218.1253.3276.6

227.2238.6247.8253.3

260.2266.3272.3276.6

278.2279.6280.9

1 Includes loans held by nondeposit trust companies, but not by bank trust departments.2Includes former Federal National Mortgage Association (FNMA) and new Government National Mortgage Association (GNMA), as well

as Federal Housing Administration, Veterans Administration, Public Housing Administration, Farmers Home Administration, and in earlieryears Reconstruction Finance Corporation, Homeowners Loan Corporation, and Federal Farm Mortgage Corporation. Also includes GNMAPools and U.S.-sponsored agencies such as new FNMA, Federal Land Banks, and Federal Home Loan Mortgage Corporation. Other U.S.agencies (amounts small or current separate data not readily available) included with "individuals and others.

Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations.

303


GOVERNMENT FINANCE

TABLE B-72.—Federal budget receipts, outlays, and debt, fiscal years 1974-85

[Millions of dollars; fiscal years]

DescriptionActual

1975 1976 1977 1978 1979

BUDGET RECEIPTS AND OUTLAYS:

Total receipts

Federal fundsTrust fundsInterfund transactions..

Total outlays

Federal fundsTrust fundsInterfund transactions....

Total surplus or deficit ( - ) . .

Federal fundsTrust funds

OUTSTANDING DEBT, END OF PERIOD:

Gross Federal debt

Held by Government agencies..Held by the public

Federal Reserve System..Other

279,090

187,505116,683-25,098

324,245

240,081109,261-25,098

-45,154

-52,5767,422

544,131

147,225396,906

84,993311,913

298,060

201,099131,750-34,789

364,473

269,921129,341-34,789

-66,413

-68,8222,409

631,866

151,566480,300

94,714385,586

355,559

241,312150,560-36,313

400,506

295,756141,063-36,313

-44,948

_ 54 444

9^496

709,138

157,295551,843

105,004446,839

399,561

270,490165,568-36,498

448,368

331,991152,874-36,498

-48,807

-61,50112,694

780,425

169,477610,948

115,480495,468

463,302

316,366186,988-40,052

490,997

362,396168,653-40,052

-27,694

-40,03018,335

833,751

189,162644,589

115,594528,996

BUDGET RECEIPTS...

Individual income taxesCorporation income taxesSocial insurance taxes and contributions.Excise taxesEstate and gift taxesCustoms dutiesMiscellaneous receipts:

Deposits of earnings by Federal Reserve System.All other

BUDGET OUTLAYS..

National defense l

International affairsGeneral science, space, and technology.EnergyNatural resources and environmentAgricultureCommerce and housing credit.TransportationCommunity and regional development.Education, training, employment, and social servicesHealthSocial security and medicare2

Social securityMedicare

Income securityVeterans benefits and servicesAdministration of justiceGeneral governmentGeneral purpose fiscal assistanceNet interestAllowancesUndistributed offsetting receiptsx

Composition of undistributed offsetting receipts:Employer share, employee retirementx

Rents and royalties on the Outer Continental Shelf..

279,090

122,38640,62184,53416,5514,6113,676

5,777935

324,245

86,5097,0733,9912,1857,3431,6615,61210,3903,74115,88212,87077,53264,65812,87450,16016,5992,9512,9137,187

23,245

298,060

131,60341,40990,76916,9635,2164,074

5,4512,576

364,473

89,6195,7404,3733,1318,1812,4953,79613,4384,76718,74915,67789,73673,90315,83460,78418,4333,3242,6687,235

26,711

355,559

157,62654,892

106,48517,5487,3275,150

5,908623

400,506

97,2414,9914,6794,154

10,0275,537

10214,6406,348

20,99917,246

104,41485,06819,34561,04718,0383,6022,9419,499

29,878

399,561

180,98859,952

120,96718,3765,2856,573

6,641778

448,368

104,4956,1114,7465,837

10,9807,7173,337

15,44511,07226,47518,485

116,62993,86122,76861,48518,9783,8103,4429,601

35,441

-13,602

-11,174-2,428

-14,386

-11,724-2,662

-14,879

-12,505-2,374

-15,720

-13,461-2,259

463,302

217,84165,677

138,93918,7455,4117,439

8,327925

490,997

116,3426,2635,0516,863

12,1336,1912,579

17,4689,544

29,69320,477

130,567104,07326,49566,35919,9314,1693,8558,372

42,615

-17,476

-14,209-3,267

1 Starting in 1985 military retired pay will be financed from a trust fund in the income security function. The national defensefunction will include accrual charges to pay for retirement benefits earned by currently active duty personnel, and these will be offset inthe undistributed offsetting receipts (employer share, employee retirement). The data for the earlier years have been adjusted to becomparable to this new usage.

2 The Social Security Amendments of 1983 require that social security and medicare show in the budget as a separate function. Inprevious budgets social security was in the income security function and medicare was in the health function. The data in this tablenave been reconstructed to be comparable for all years shown.


304


TABLE B-72.—Federal budget receipts, outlays, and debt, fiscal years 1974-85—Continued

[Millions of dollars; fiscal years]

DescriptionActual

1980 1981 1982 1983

Estimates

1984 1985

BUDGET RECEIPTS AND OUTLAYS:

Total receipts


Total outlays


Total surplus or deficit ( - ) ..

Federal funds...Trust funds

OUTSTANDING DEBT, END OF PERIOD:

Gross Federal debt

Held by Government agencies..Held by the public

Federal Reserve System..Other

517,112

350,856210,930-44,674

576,675

419,220202,129-44,674

-59,563

-68,3648,801

914,317

199,212715,105

120,846594,259

599,272

410,422239,413-50,563

657,204

475,171232,596-50,563

-57,932

-64,7496,817

1,003,941

209,507794,434

124,466669,968

617,766

409,253268,407-59,894

728,375

526,113262,155-59,894

-110,609

-116,8606,252

1,146,987

217,560929,427

134,497794,929

600,562

382,432317,368-99,238

795,969

600,920294,287-99,238

-195,407

-218,48823,081

1,381,886

240,1161,141,770

155,527986,243

670,071

420,009331,511-81,449

853,760

628,789306,420

-81,449

-183,689

-208,78025,091

1,591,573

266,8031,324,770

745,127

464,246393,460

-112,578

925,492

687,221350,850

-112,578

-180,365

-222,97542,610

1,828,388

310,6181,517,770

BUDGET RECEIPTS

Individual income taxesCorporation income taxesSocial insurance taxes and contributionsExcise taxesEstate and gift taxesCustoms dutiesMiscellaneous receipts-.

Deposits of earnings by Federal ReserveSystem

All other

BUDGET OUTLAYS

National defense x

International affairsGeneral science, space, and technologyEnergyNatural resources and environmentAgricultureCommerce and housing creditTransportationCommunity and regional developmentEducation, training, employment, and social serv-

icesHealthSocial security and medicare2

Social securityMedicare

Income securityVeterans benefits and servicesAdministration of justiceGeneral governmentGeneral purpose fiscal assistanceNet interestAllowancesUndistributed offsetting receipts1

Composition of undistributed offsetting receipts-.Employer share, employee retirement l

Rents and royalties on the Outer ContinentalShelf

517,112

244,06964,600

157,80324,3296,3897,174

11,767981

576,675

133,99510,8825,7266,312

13,8564,8577,788

21,13210,072

30,79523,148

150,648118,55932,08986,41121,1854,5824,1338,584

52,511

599,272

285,91761,137

182,72040,839

6,7878,083

12,834956

657,204

157,51311,2506,358

10,27713,5655,5333,953

23,3959,395

31,42426,858

178,733139,58439,14999,24322,9914,7624,4056,856

68,734

617,766

297,74449,207

201,49836,311

7,9918,854

15,186975

728,375

185,30810,1057,0804,68112,99514,8893,86720,5707,166

26,32927,435

202,531155,96446,567107,02223,9584,7034,4486,393

84,995

600,562

288,93837,022

208,99435,3006,0538,655

14,4921,109

795,969

209,9018,9957,7453,99912,66922,2064,422

21,3856,936

26,60628,655

223,311170,72452,588122,15624,8465,0994,7846,454

89,774

670,071

293,26066,606

239,49438,1955,9229,064

14,3523,179

853,760

237,54613,5028,2913,46312,30210,6933,805

26,1237,594

28,68330,665

240,225179,16161,064112,46225,7996,0215,6526,741

108,239

-19,942

-15,842

-4,101

-28,041

-17,903

-10,138

-26,099

-19,849

-6,250

-33,976

-23,484

-10,491

-34,047

-25,347

-8,700

745,127

328,41076,540

270,68338,4435,6459,370

14,7991,238

925,492

272,04017,4928,8183,144

11,34614,319

1,12727,0617,586

27,89332,916

260,321190,63969,683

114,36026,723

6,1405,7446,658

116,138938

-35,273

-27 ,873

- 7 , 4 0 0

Note.—Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning withfiscal year 1977. 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.

Refunds of receipts are excluded from receipts and outlays.

See "Budget of the United States Government, Fiscal Year 1985" for additional information.

Sources: Department of the Treasury and Office of Management and Budget.

305


TABLE B-7'3.—Federal receipts and outlays, off-budget outlays, and debt, fiscal years

1929-85[Billions of dollars]

Fiscal year

1929

1933

1939

19401941 . ...194219431944

19451946194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971 .197219731974

19751976Transition quarter197719781979

19801981198219831984 2

1985

Budget

Receipts

3.9

2.0

5.0

6.48.6

14.423.644.3

45 239.338.441.839.4

39.551.666.269.669.7

65 574.580.079 679.2

92.594.499 7

106.6112.7

116.8130 9148.9153 0186.9

192.8187 1207 3230.8263.2

27912981

81.2355.6399.6463 3

517.1599 3617.8600 6670.1745.1

Outlays

3.1

4.6

8.8

9.513.635.178.591.3

92 755.234.529.838.8

42.645.567.776.170.9

68 570.576.782 692.1

92.297.8

106 8111.3118.6

118.4134 7157.61781183.6

195.7210 2230 7245.6267.9

324 2364 594.2

400.5448.44910

576.7657 2728.4796 0853.8925.5

Surplus ordeficit

0.7

- 2 . 6

3.9

3.1- 5 . 020.8

-54.9-47.0

- 4 7 515.93.9

12.0.6

3.16.11.5

- 6 . 51.2

- 3 04.13.229

-12.9

.3- 3 . 4

71- 4 . 8

5.9

- 1 . 638

-8 .725 2

3.2

2.823 023 4

-14.8-4 .7

45 266 4

-13.0-44.9-48.8- 2 7 7

-59.657 9

-110.6- 1 9 5 4-183.7-180.4

Off-budgetoutlays

0.11.4

8.1731.88.7

10.412.5

14.221017.312.416.214.8

Budgetand off-budget

surplus ordeficit

-14.9- 6 . 1

-53 .2-73.7

14.7-53 .6-59 .2-40 .2

-73.8- 7 8 9

-127.9-207.8

199.9-195.2

Gross Federal debt (endof period)

Total

48.2

50.757.579.2

142.6204.1

2601271.0257.1252.0252.6

256.9255.3259.1266.0270.8

274.4272.8272.4279 7287.8

290.9292.9303.3310.8316.8

323.2329.5341.3369 8367.1

382.6409.5437 3468.4486.2

544.1631.9646.4709.1780.4833.8

914.31,003.91,147.01,381.91,591.61,828.4

Held bythe public

41.4

42.848.267.8

127.8184.8

235.2241.9224.3216.3214.3

219.0214.3214.8218.4224.5

226.6222.2219.4226.4235.0

237.2238.6248.4254.5257.6

261.6264.7267.5290 6279.5

284.9304.3323.8343.0346.1

396.9480.3498.3551.8610.9644.6

715.1794.4929.4

1,141.81,324.81,517.8

1 Not strictly comparable with later data.2 Estimates.Note.—Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning with

fiscal year 1977. 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 aseparate fiscal period known as the transition quarter.

Data for 1929-39 are according to the administrative budget and those beginning 1940 according to the unified budget.Refunds of receipts are excluded from receipts and outlays.See "Budget of the United States Government, Fiscal Year 1985" for additional information.Sources: Department of the Treasury and Office of Management and Budget.

306


TABLE B-74.—Relation of Federal Government receipts and expenditures in the national income and

product accounts to the unified budget, fiscal years 1983-85

[Billions of dollars; fiscal years]

Receipts and expenditures 1983

Estimate

1984 1985

RECEIPTSTotal budget receipts..,

Government contribution for employee retirement (grossing)..Other netting and grossingAdjustment to accrualsGeographic exclusionsOthlr

Federal sector, national income and product accounts, receipts..

EXPENDITURESTotal budget outlays

Lending and financial transactionsGovernment contribution for employee retirement (grossing)..Other netting and grossingDefense timing adjustmentBonuses on Outer Continental Shelf land leasesGeographic exclusionsOther

Federal sector, national income and product accounts, expenditures...

600.6

12.29.49.7

- 1 . 4.2

630.7

796.0

816.4

670.1

13.012.1

- 2 . 2-1 .7

691.3

853.8

875.5

745.1

14.413.58.3

- 1 . 9.2

779.2

925.5

-5 .712.29.41.07.4

- 4 . 91.0

- 7 . 013.012.1

.65.1

-5 .13.0

- 4 . 814.413.5

- 1 . 94.0

- 5 . 32.4

947.8

Note.—See Note, Table B-73.See Special Analysis B, "Special Analyses, Budget of the United States Government, Fiscal Year 1985" for description of these

categories.Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and

Budget.

307


TABLE B-75.—Government receipts and expenditures, national income and product accounts, 1929-83


Calendar year or quarter

1929 .19331939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983"

1981:1IIIIIIV

1982:1IIIIIIV

1983:1IIIllIV P

Total government

Receipts

11.39.3

15.4

17.725.032.649.251.253.251.056.958.955.9

69.085.290.194.689.9

101.1109.7116.2115 0129.4

139.5144 8156.7168.5174.0188.3212.3228.2263 1296.7

302.8322.6368.3413.1455.2470 5538 4605.4681.9765.1

838.3957.2972.5

1,040.1

938.2948.1974 0968.4

962.9973 9975.0978.3

999 21,044.61,050.6

Expendi-tures

10.310.717.6

18.428 864.093.3

103.092.745.642.550.559.3

61.079.293.9

101.697.098.0

104.5115.2127 6131.0

136.4149 1160.5167.8176.3187.8213.6242.4269 1286.8

313.4342.0371.6405.3460.0534 3574 9623.3681.1750.8

869.0984.1

1,088.31,171.9

946.3958.79991

1,032.2

1,042.7105511,101.91,153.7

1142 11,159.01,182.41204 0

Surplus ordeficit

nationalincome

andproduct

accounts

1.0- 1 . 4

2.2

_ j

-3^8-31 .4-44.1-51.8

39.55.4

14.48.4

- 3 . 4

8.06.13.8

- 6 . 9-7 .1

3.15.2

.9- 1 2 6

- 1 . 6

3.14 3

- 3 . 8.7

- 2 . 3.5

- 1 . 314.2609.9

-10.6-19.4

- 3 . 37.84.7

63 836 5

-17.8.8

14.3

30.7-26.9

-115.8-131.8

- 8 . 1-10.6

25 2-63.7

-79.7812

-127.0-175.3

-142 9-114.4-131.8

Federal Government

Receipts

3.82.76.7

8.615.422.939.341.042.539.143.243.238.7

50.064.367.370.063.772.678.081.978 789.8

96.1981

106.2114.4114.9124.3141.8150.5174 4196.9

191.9198.6227.5258.6287.8287 33318375.2431.6493.6

540.9627.0617.4643.3

617.4622.6638 8629.2

619.5622 2615.2612.6

623 3652.6645.2

Expendi-tures

2.64.08.9

10.020.556.185.895.584.635.629.834.941.3

40.857.871.177.169.868.171.979.688 991.0

93.11019110.4114.2118.2123.8143.6163.7180 5188.4

204.3220.6244.3264.2299.3356 6384 8421.1461.0509.7

602.1689.2764.4826.2

660.8669.97012725.0

728.0735 4773.5820.9

806.6818.7832.5847.0

Surplus ordeficit(-),

nationalincome

andproductaccounts

1.2- 1 . 3- 2 . 2

- 1 . 3- 5 . 133.1

-46.654.5

-42.13.5

13.48.3

- 2 . 6

9.26.53.7

- 7 . 16.04.46.12.3

-10.31.1

3.0- 3 9- 4 . 2

.3- 3 . 3

.5- 1 . 8

-13.2608.4

12.4-22.0-16.8

- 5 . 6-11.5

69 353145.9

-29.5-16.1

-61.262.2

-147.1-182.9

-43.4-47.3-62.4

95.8

-108.5-113.2-158.3-208.2

-183.3-166.1

187.3

State and locagovernment

Receipts

7.67.29.6

10.010 410.610.911.111.613.015.417.719.5

21.323.425.427.429.031.735.038.542.046.4

49.954 058.563.269.575.184.893.6

107 3120.2

135.4153.0178.3195.0211.4237 7267 8297.7327.6352.0

386.1418.1439.1483.3

411.3415.9421.6423.4

425.9436.8442.8450.7

461.7478.7492.7

Expendi-tures

7.87.29.6

9.39.18.88.48.59.0

11.114.417.620.2

22.523.925.527.330.232.935.939.844.346.9

49.854.458.062.868.575.184.394.7

107.2118.7

133.5150.4164.8181.6204.6232.2251.2269.7297.3321.5

355.5382.7407.8432.3

376.0379.2384.3391.4

397.2404.8411.4417.8

421.3427.0437.1443.5

Surplus ordeficit(-),

nationalincome

andproductaccounts

02- . 1

.0

.6131.82.52.72.61.91.0.1

- . 7

- 1 . 2- . 4

.0

.11.1

- 1 . 3- . 91.4

- 2 . 4- .4

.1- . 4

.5

.51.0

- . 0.5

-1 .1.1

1.5

1.92.6

13.513.46.85.5

16.628.030.330.4

30.635.331.351.0

35.336.737.332.0

28.832.031.332.9

40.451.755.5

Note.—Federal grants-in-aid to State and local governments are reflected in Federal expenditures and State and local receipts Totalgovernment receipts and expenditures have been adjusted to eliminate this duplication.


308


TABLE B-76.—Federal Government receipts and expenditures, national income and product accounts,

1959-85


Year or quarter

Receipts

Total

Personaltax andnontax

receiptsaccruals accruals

Corpo-rate

profitstax

Indirectbusinesstax andnontax

Contri-butions

forsocialinsur-ance

Expenditures

Total1

Pur-chases

of goodsand

servicesTo

persons

Transferpayments

Toforeign-

ers

Grants-in-aid to

Stateandlocal

govern-ments

Netinter-estpaid

Subsi-diesless

currentsurplus

ofgovern-

mententer-prises

Surplusor

deficit(-),

nationalincome

andproduct

accounts

Fiscal year:2

19591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984 31985 3

Calendar year:1959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983 »

1982:IIIIllIV

1983:IIIIllIV *.

85.494.895.0

104.0110.0115.6120.0132.7146.0159.9189.8194.8192.4213.4240.7271.6283.4314.9365.9414.3480.8525.9610.3627.8630.7691.3779.2

89.896.198.1

106.2114.4114.9124.3141.8150.5174.4196.9191.9198.6227.5258.6287.8287.3331.8375.2431.6493.6540.9627.0617.4643.3

619.5622.2615.2612.6

623.3652.6645.2

38.242.543.647.349.650.751.457.564.471.490.294.087.9

100.5107.4122.7127.5137.2166.4186.5222.6250.4289.3310.4295.3302.1340.8

39.943.644.748.651.548.653.961.767.579.795.192.690.3

108.2114.7131.3125.8147.3170.1194.9230.6257.7298.6304.7295.8

306.5308.5300.6303.0

297.7304.2286.9294.3

21.422.320.022.723.325.727.130.830.333.136.832.931.934.241.243.441.852.558.967.376.169.970.551.354.374.893.5

22.521.421.522.524.626.128.931.430.036.136.130.633.536.643.345.143.654.661.671.374.270.367.546.559.3

47.648.447.842.1

48.659.866.6

12.013.213.314.215.015.616.915.515.817.118.619.220.019.920.721.422.224.324.527.229.135.553.650.350.756.655.4

12.513.413.614.615.316.216.515.616.318.019.019.320.420.021.221.723.923.425.028.129.439.056.448.353.9

49.547.747.948.3

48.656.055.555.3

13.916.718.119.922.123.624.528.935.538.344.248.852.658.971.584.291.9

101.0116.2133.3153.1170.0196.9215.7230.4257.8289.5

14.917.618.320.523.124.025.033.136.740.746.749.354.462.779.589.894.1

106.5118.5137.2159.5173.9204.5217.9234.4

215.8217.6218.9219.3

228.5232.6236.2240.2

91.291.398.1

106.2111.7117.2118.5132.7154.9172.2184.6195.5212.9232.7255.7278.2328.8370.7411.2450.4495.6576.5668.1740.0816.4875.5947.8

91.093.1

101.9110.4114.2118.2123.8143.6163.7180.5188.4204.3220.6244.3264.2299.3356.6384.8421.1461.0509.7602.1689.2764.4826.2

728.0735.4773.5820.9

806.6818.7832.5847.0

54.852.955.861.063.765.964.672.486.095.098.097.194.9

100.6101.1104.5117.9125.1139.8150.4164.1189.3218.5251.0274.7292.6340.0

53.953.757.463.764.665.267.378.890.998.097.695.796.2

101.7102.0111.0122.7129.2143.4153.6168.3197.0229.2258.7275.2

249.7244.1261.7279.2

273.5273.7278.1275.6

19.920.623.625.126.527.428.431.837.242.748.755.067.776.187.2

101.8131.4153.8166.6178.7197.8234.6273.5304.1338.5347.0367.8

20.121.625.025.627.027.930.333.540.146.050.661.372.780.593.3

114.5146.3158.8169.6181.8205.0246.2280.9314.8338.7

296.5305.3320.1337.;

335.3341.0337.5340.9

1.81.82.12.12.12.22.22.32.22.12.22.02.32.82.73.03.13.03.23.54.14.85.86.16.27.48.5

1.81.92.12.22.22.22.22.32.22.12.12.22.62.72.63.23.13.23.33.84.25.35.76.35.8

6.05.95.87.6

5.06.06.06.4

6.26.96.97.68.39.8

10.912.714.817.819.222.626.832.640.441.648.457.566.374.779.186.790.183.485.791.895.6

6.86.57.28.09.1

10.411.114.415.918.620.324.429.037.540.643.954.661.167.577.380.588.787.983.986.5

82.585.183.085.0

85.886.787.286.5

5.66.86.46.47.17.78.28.79.6

10.411.913.514.014.015.719.621.725.228.433.540.650.767.782.290.6

108.6117.1

6.26.86.26.87.38.08.49.29.8

11.312.714.113.814.418.020.723.126.829.135.242.453.473.284.996.7

79.782.388.689.1

88.491.8

101.0105.7

2.52.43.34.14.04.14.34.85.24.14.75.57.06.59.27.66.06.26.99.79.9

10.412.513.220.328.118.8

2.12.64.04.23.94.54.65.54.74.55.26.56.37.97.85.56.95.88.29.59.2

11.512.415.822.8

13.412.714.222.8

18.618.222.331.9

- 5 . 83.4

- 3 . 1-2 .2-1 .7- 1 . 5

1.4.0

- 8 . 9-12 .3

5.2- . 7

-20 .5-19.2-14.9

-6 .6-45.4-55.8-45.3-36.1-14.8-50.7-57.8

-112.2-185.7-184.2-168.6

- 1 . 13.0

- 3 . 9-4 .2

- 3 . 3.5

- 1 . 8-13.2- 6 . 0

8.4-12.4-22.0-16.8

-5 .6-11 .5-69 .3-53.1-45.9-29 .5-16.1-61.2-62.2

-147.1-182.9

-108.5-113.2-158.3-208.2

-183.3-166.1-187.3

1 Includes an item for the difference between wage accruals and disbursements, not shown separately.2 Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning with fiscal

year 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), thefiscal year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 19/6 is a separatefiscal period known as the transition quarter.

3 Estimates.Sources: Department of Commerce (Bureau of Economic Analysis) and Office of Management and Budget.

309


TABLE B-77.—State and local government receipts and expenditures, national income and product accounts,

1946-83


Calendar yearor quarter

1946194719481949

1950195119521953 .1954

19551956..19571958..1959

19601961..196219631964

1965.1966.19671968..1969

19701971.197219731974

19751976.1977.19781979

198019811982..1983 P

1981:1...||IIIIV

1982:IIIIII.IV

1983:1||IIIIV P

Receipts

Total

13.015 417.719.5

21.323 425.427 429.0

31.735 038.542.046.4

49.954.058.563.269.5

75184 893.6

107.3120.2

135.4153 0178.3195.0211.4

237.7267.8297 7327.6352.0

386.1418.1439.1483.3

4113415.9421.6423.4

425 9436.8442 8450.7

461.7478 7492.7

Personaltax andnontax

receipts

1.5172.12.4

2.5283.0323.5

3.94 55.05.46.1

6.77.48.28.8

10.0

10 912 814.617.520.6

23.226 432.836.039.0

43.149.656 363.870.4

78.888.797.4

110.5

85 087.490.392.3

93 795.699 3

101.2

104.1108 4113.31164

Corpo-rate

profitstax

accruals

0.56.7.6

.89.88.8

1.0101.01.01.2

1.21.31.51.71.8

20222.53.13.4

3.54 15.05.86.5

7.19.3

11111.913.4

14.515.312.716.4

16 714.915.514.2

12 713.113 011.9

12.916 218.4

Indirectbusinesstax andnontax

accruals

9.310 712.213.3

14.615 917.418 819.9

21.623 825.727.229.3

32.034.437.039.442.6

46149 754.060.967.6

75.083 391.599.7

107.4

116.2128.3140 7150.0160.2

174.4193.5210.0232.0

187 3190.9196.6199.3

203 0208.3212 0216.6

222.0229 9235.6240.4

Contribu-tions for

socialinsurance

0.67.8.9

1.1141.6172.0

2.1232.62.83.1

3.43.73.94.24.7

50576.77.28.3

9.210 211.513.014.6

16.819.522 124.727.4

29.732.635.137.9

31732.332.833.4

34 034.735 436.1

36.937 538.238.9

Federalgrants-in-

aid

1.11.72.02.2

2.3252.6282.9

3.13.34.25.66.8

6.57.28.09.1

10.4

11114 415.918.620.3

24.429 037.540.643.9

54.661.167 577.380.5

88.787.983.986.5

90 590.486.484.2

82 585.183.085.0

85.886.787.286.5

Expenditures

Total»

11.114.417.620.2

22.523 925.527 330.2

32.935 939.844.346.9

49.854.458.062.868.5

75184 394.7

107.2118.7

133.5150 4164.8181.6204.6

232.2251.2269 7297.3321.5

355.5382.7407.8432.3

376 0379.2384.3391.4

397 2404.84114417.8

421.3427 0437.1443.5

Pur-chases

ofgoodsand

services

9.912.815.318.0

19.821823.225 027.8

30.633 537.141.143.7

46.550.854.359.064.6

71179 889.3

101.0111.2

124.4138 7151.4168.5193.1

217.2232.9250 4278.3306.0

340.8366.5390.5415.0

360 5363.2367.9374.3

380 0387.5394 0400.5

404.0409 7420.2426.1

Trans-ferpay-

mentsto

per-sons

1.72.33.03.0

3.63 13.3353.6

3.8394.34.85.1

5.45.86.06.46.9

738 19.4

10.512.2

14.717 319.320.720.9

24.627.629 732.835.0

39.743.345.649.3

42 543.243.744.0

44 445.046.047.1

48.349.049.450.5

Netinterest

paidlessdivi-

dendsreceived

0.2.1.1.1

.10.00.1

.1

.1

.1

.1

.1

.1

.1

.1

.11

_ 37

- . 9- 1 . 1

14

- 2 . 0- 1 7-1 .9- 3 . 3

50

- 5 . 1- 4 . 5

53-7 .9

-13.8

-18.9-21.1-22 .1-25.5

-21.0213

-21.3-21.0

- 2 1 0-21.4-22.3-23.6

-24.6-25.2-25.8-26.4

Subsi-diesiess

currentsurplus

ofgovern-

mententer-prises

07- .8

8- . 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 . 7-5 .9

- 6 . 1-6 .0- 6 . 3- 6 . 5

-6 .0-5 .9-5 .9-6 .0

-6 .2- 6 . 3- 6 . 3-6 .2

- 6 . 3- 6 . 4- 6 . 5- 6 . 7

Surplusor

deficit(-),

nationalincome

andproduct

accounts

1.91.0.1

- . 7

-1 .2_ 4- . 0

.1- 1 . 1

1 3- .914

- 2 . 4- . 4

.1- . 4

.5

.51.0

- . 0.5

- 1 . 1.1

1.5

1.92.6

13.513.46.8

5.516.628.030.330.4

30.635.331.351.0

35.336.737.332.0

28.832.031.332.9

40.451.755.5

1 Includes an item for the difference between wage accruals and disbursements, not shown separately.Source: Department of Commerce, Bureau of Economic Analysis.

310


TABLE B-78.—State and local government revenues and expenditures, selected fiscal years, 1927-82

[Millions of dollars]

Fiscal year1

General revenues by source2

TotalProperty

taxes

Salesand

grossre-

ceiptstaxes

Individu-al

incometaxes

Corpo-ration

netincometaxes

Revenuefrom

FederalGovern-

ment

Allother3

General expenditures by function2

Total Education High-ways

Publicwelfare

Allother4

1927

1932193419361938

19401942194419461948

1950195219531954

19551956195719581959

1960196119621963

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..

7,271

7,2677,6788,3959,228

9,60910,41810,90812,35617,250

20,91125,18127,30729,012

31,07334,66738,16441,21945,306

50,50554,03758,25262,890

62,26968,44374,000

83,03691,197101,264114,550130,756

144,927167,541190,214207,670228,171

256,176285,157315,960343,278382,322

423,404456,182

4,730

4,4874,0764,0934,440

4,4304,5374,6044,9866,126

7,3498,6529,3759,967

10,73511,74912,86414,04714,983

16,40518,00219,05420,089

19,83321,24122,583

24,67026,04727,74730,67334,054

37,85242,87745,28347,70551,491

57,00162,52766,42264,94468,499

74,96981,918

470

7521,0081,4841,794

1,9822,3512,2892,9864,442

5,1546,3576,9277,276

7,6438,6919,4679,82910,437

11,84912,46313,49414,456

14,44615,76217,118

19,08520,53022,91126,51930,322

33,23337,51842,04746,09849,815

54,54760,64167,59674,24779,927

85,97193,636

153218

224276342422543

788998

1,0651,127

1,2371,5381,7541,7591,994

2,4632,6133,0373,269

3,2673,7914,090

4,7605,8257,3088,90810,812

11,90015,22717,99419,49121,454

24,57529,24633,17636,93242,080

46,42650,785

92

7949113165

156272451447592

593846817778

744890984

1,0181,001

1,1801,2661,3081,505

1,5051,6951,929

2,0382,2272,5183,1803,738

3,4244,4165,4256,0156,642

7,2739,17410,73812,12813,321

14,14315,033

116

2321,016948800

945858954855

1,861

2,4862,5662,8702,966

3,1313,3353,8434,8656,377

6,9747,1317,8718,722

8,66310,00211,029

13,21415,37017,18119,15321,857

26,14631,34239,25641,82047,034

55,58962,44469,59275,16483,029

90,29486,945

1,793

1,6431,4491,6041,811

1,8722,1232,2692,6613,685

4,5415,7636,2526,897

7,5848,4659,2529,69910,516

11,63412,56313,48914,850

14,55615,95117,250

19,26921,19723,59826,11829,971

32,37436,16240,21046,54151,735

57,19161,12468,43679,86495,466111,599127,864

7,210

7,7657,1817,6448,757

9,2299,1908,86311,02817,684

22,78726,09827,91030,701

33,72436,71140,37544,85148,887

51,87656,20160,20664,816

63,97769,30274,678

82,84393,350102,411116,728131,332

150,674168,550181,357198,959230,721

256,731274,215296,983327,517369,086

407,449435,323

2,235

2,3111,8312,1772,491

2,6382,5862,7933,3565,379

7,1778,3189,39010,557

11,90713,22014,13415,91917,283

18,71920,57422,21623,776

23,72926,28628,563

33,28737,91941,15847,23852,718

59,41365,81469,71475,83387,858

97,216102,780110,758119,448133,211

145,784154,573

1,809

1,7411,5091,4251,650

1,5731,4901,2001,6723,036

3,8034,6504,9875,527

6,4526,9537,8168,5679,592

9,4289,844

10,35711,136

11,15011,66412,221

12,77013,93214,48115,41716,427

18,09519,02118,61519,94622,528

23,90723,05824,60928,44033,311

34,60334,545

151

444889827

1,069

1,1561,2251,1331,4092,099

2,9402,7882,9143,060

3,1683,1393,4853,8184,136

4,4044,7205,0845,481

5,4205,7666,315

6,7578,2189,857

12,11014,679

18,22621,11723,58225,08528,155

32,60435,90639,14041,89847,288

54,12158,050

3,015

3,2692,9523,2153,547

3,8623,8893,7374,5917,170

8,86710,34210,61911,557

12,19713,39914,94016,54717,876

19,32521,06322,54924,423

23,67825,58627,579

30,02933,28136,91541,96347,508

54,94062,59769,44678,09692,180

103,004112,472122,476137,731155,277

172,941188,155

1 Fiscal years not the same for all governments. See Note.2 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 licenses and other taxes and charges and miscellaneous revenues.4 Includes expenditures for hospitals, health, social insurance administration, veterans' services, air transportation, water transport

and terminals, parking facilities, police protection, fire protection, correction, protective inspection and regulation, sewerage, naturalresources, parks and recreation, housing and urban renewal, sanitation other than sewerage, general control, financial administration,general public buildings, interest on general debt and unallocable items.

Note.—Data for fiscal years listed from 1962-63 to 1981-82 are the aggregations of data for government fiscal years which endedin the 12-month period from July 1 to June 30 of those years. Data for 1963 and earlier years include data for government fiscal yearsending during that particular calendar year.

Data are not available for intervening years.


311


TABLE B-79.—Interest-bearing public debt securities by kind of obligation, 1967-83


End of yearor month

Totalinterest-bearingpublicdebt

securities

Marketable

Total Treasurybills

Treasurynotes

Treasurybonds*

Nonmarketabfe

TotalU.S.

savingsbonds

Foreigngovern-

mentand

publicseries3

Govern-ment

accountseries

Other3

Fiscal year:196719681969

19701971197219731974

19751976197719781979

1980198119821983

1982:JanFebMar

May"!;."!!!!!;;;!;June




322,286344,401351,729

369,026396,289425,360456,353473,238

532,122619,254697,629766,971819,007

906,402996,495

1,140,8831,375,751

1,032,6781,042,1981,059,8151,064,5381,066,4101,078,431

1,083,2961,108,1311,140,8831,136,8261,160,4891,195,496

1,199,5991,213,7421,242,9931,242,0671,289,8971,318,111

1,320,6711,346,9151,375,7511,383,2651,387,8601,400,906

4 210,672226,592226,107

232,599245,473257,202262,971266,575

315,606392,581443,508.485,155506,693

594,506683,209824,422

1,024,000

726,542737,532752,620755,833755,688763,995

774,077801,427824,422824,662852,463881,476

888,659907,652937,751935,478957,347978,929

985,7091,010,3711,024,0001,035,3301,044,3131,050,892

58,53564,44068,356

76,15486,67794,648

100,061105,019

128,569161,198156,091160,936161,378

199,832223,388277,900340,733

250,562254,037256,212254,880256,114256,007

262,009273,066277,900283,923293,531311,820

308,099314,882331,884325,939325,213334,299

337,581340,413340,733339,969335,310343,815

49,10871,07378,946

93,489104,807113,419117,840128,419

150,257191,758241,692267,865274,242

310,903363,643442,890557,525

374,357382,070395,042399,700398,408406,925

411,070427,426442,890438,068454,229465,030

472,986481,300494,431494,904513,626527,142

527,183544,158557,525566,159575,252573,376

97,41891,07978,805

62,95653,98949,13545,07133,137

36,77939,62645,72456,35571,073

83,77296,178

103,631125,742

101,623101,426101,366101,253101,166101,063

100,998100,935103,631102,672104,702104,627

107,574111,471111,436114,635118,508117,488

120,946125,800125,742129,202133,751133,701

111,614117,808125,623

136,426150,816168,158193,382206,663

216,516226,673254,121281,816312,314

311,896313,286316,461351,751

306,136304,666307,195308,705310,722314,436

309,218306,704316,461312,164308,026314,020

310,940306,090305,243306,589332,550339,182

334,961336,544351,751347,935343,547350,015

51,21351,71251,711

51,28153,00355,92159,41861,921

65,48269,73375,41179,79880,440

72,72768,01767,27470,024

67,58167,37867,16367,03467,08267,122

67,13267,14867,27467,51467,80167,719

67,81468,04268,24168,53368;91969,140

69,46669,74770,02470,35170,61970,466

1,5143,7414,070

4,7559,270

18,98528,52425,011

23,21621,50021,79921,68028,115

25,15820,49914,64111,450

18,92018,38419,64119,44618,39517,457

16,64315,60614,64114,62714,86314,691

14,01812,68512,39211,96311,14411,405

11,19311,05211,45011,50010,51210,448

56,15559,52666,790

76,32382,78489,598

101,738115,442

124,173130,557140,113153,271176,360

189,848201,052210,462234,684

196,393195,722196,707198,538201,290205,954

201,502199,896210,462205,717199,903205,427

203,031199,125196,970197,593222,446225,041

220,607221,357234,684230,324226,214231,887

2,7312,8283,051

4,0685,7593,6543,7014,289

3,6444,883

16,79727,06727,400

24,16423,71824,08535,593

23,24323,18223,68423,68723,95523,902

23,94124,05424,08524,30525,45926,183

26,07726,23927,64028,50030,04133,596

33,69634,38935,59335,76036,20237,214

1 Includes Treasury bonds and minor amounts of Panama Canal and postal savings bonds.2 Nonmarketable certificates of indebtedness, notes, bonds, and bills in the Treasury foreign series of dollar-denominated and foreign-

currency denominated issues.3 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 fiscalyear is on an October 1-September 30 basis.

Source-. Department of the Treasury.

312


TABLE B-80.—Maturity distribution and average length of marketable interest-bearing public debt securitiesheld by private investors, 1967-83

End of year or month

Amountout-

standing,privately

held

Maturity class

Withinlyear

I t o 5years

5 to 10years

10 to 20years

20 yearsand over

Average length

Millions of dollars Years

Fiscal year:196719681969.

19701971197219731974

19751976197719781979

1980198119821983





150,321159,671156,008

157,910161,863165,978167,869164,862

210,382279,782326,674356,501380,530

463,717549,863682,043862,631

590,139604,671619,030613,576618,699628,997

634,556660,583682,043685,969708,769736,148

750,274766,075795,087789,629810,150831,309

835,893857,935862,631883,287888,932893,991

56,56166,74669,311

76,44374,80379,50984,04187,150

115,677151,723161,329163,819181,883

220,084256,187314,436379,579

284,171290,697295,476289,000290,476293,266

295,118309,446314,436321,081327,565346,321

348,444351,150367,383360,536363,465373,669

375,845380,424379,579384,406383,761394,088

53,58452,29550,182

57,03558,55757,15754,13950,103

65,85289,151113,319132,993127,574

156,244182,237221,783294,955

183,843194,457200,544199,278203,612207,106

206,380217,258221,783218,673235,443239,263

245,990256,133262,985259,420276,825282,444

279,730294,000294,955303,810309,516298,262

21,05721,85018,078

8,28614,50316,03316,38514,197

15,38524,16933,06733,50032,279

38,80948,74375,74999,174

54,37049,12052,61255,3295436158,425

63,02266,34775,74975,94472,64477,569

79,75881,07787,01388,95885,31490,979

92,42093,97499,174101,94199,893106,043

6,1536,1106,097

7,8766,3576,3588,7419,930

8,8578,0878,42811,38318,489

25,90132,56933,01740,826

34,06935,81935,82235,56535,70135,651

35,58333,09733,01733,06535,75035,677

35,70836,84636,83736,79739,97539,949

39,85041,08640,82641,07343,08243,058

12,96812,67012,337

8,2727,6456,9224,5643,481

4,6116,65210,53114,80520,304

22,67930,12737,05848,097

33,68634,57834,57634,40434,54934,549

34,45334,43537,05837,20637,36737,318

40,37440,86940,86943,91844,57144,268

48,04848,45148,09752,05752,68052,540

Months

544

33332

22233

3434

444444

433333

443344

444444

152

8631

11

87

1137

90

111

010010

01111101110

00

101110

011133

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.

313


TABLE B-81.—Estimated ownership of public debt securities, 1976-83

[Par values; * billions of dollars]

End of month

1976:JuneDec

1977:JuneDec

1978:JuneDec

1979:JuneDec

1980:JuneDec

1981:MarJuneSeptDec

1982:MarJuneSeptDec

1983:MarJuneSept

Totalpublicdebt

securi-ties

620.4653.5

674.4718.9

749.0789.2

804.9845.1

877.6930.2

964.5971.2997.9

1,028.7

1,061.31,079.61,142.01,197.1

1,244.51,319.61,377.2

Held byGovern-

mentaccounts

149.6147.1

151.2154.8

161.1170.0

178.5187.1

194.9192.5

190.9199.9208.1203.3

202.5211.7216.4209.4

201.2229.3239.0

Held

FederalReserveBanks

94.497.0

102.2102.8

110.1110.6

109.7117.5

124.5121.3

119.0120.0124.3131.0

125.6127.0134.4139.3

136.7141.7155.4

Held by private investors

Total

376.4409.5

421.0461.3

477.8508.6

516.6540.5

558.2616.4

654.6651.2665.4694.5

733.3740.9791.2848.4

906.6948.6982.7

Com-mercialbanks^

91.4103.5

102.798.9

97.895.0

86.188.1

97.4112.1

117.0119.7112.7111.4

116.1116.1117.8131.4

153.2171.6176.3

Nonbank investors

Total

285.0306.0

318.3362.4

380.0413.6

430.5452.4

460.8504.3

537.6531.5552.7583.1

617.2624.8673.4717.0

753.4777.0806.4

Individuals 3

Total

96.1101.6

104.9107.8

109.0114.0

115.5118.0

116.5117.1

105.2107.4109.7110.8

112.5114.1115.6116.5

116.7121.3

"128.5

Sav-

bonds4

69.672.0

74.476.7

79.180.7

80.679.9

73.472.5

70.469.268.368.1

67.567.467.668.3

68.869.7

"70.6

Othersecur-rities

26.529.6

30.531.1

29.933.3

34.938.1

43.144.6

34.838.241.442.7

45.046.748.048.2

47.951.6

"57.9

Insur-ancecom-

panies

14.416.2

18.119.9

19.720.0

20.921.4

22.324.0

25.626.427.629.0

32.132.534.839.1

"42.4"44.8

Moneymar-ket

funds

0.81.1

.8

.9

1.31.5

3.85.6

5.33.5

14.59.0

11.421.5

25.722.438.642.6

44.828.324.0

Corpora-tions5

23.323.5

22.118.2

17.317.3

18.617.0

14.019.3

17.019.918.017.9

16.917.621.624.5

27.232.8

"35.5

Stateandlocal

govern-ments6

33.339.2

45.850.9

58.162.8

68.971.8

75.984.4

88.593.3

"95.7"99.5

"102.9'107.3"112.1'113.4

Foreignand

interna-tional7

69.878.1

87.9109.6

119.5137.8

119.7123.7

122.8134.3

142.9141.4135.5141.4

140.8141.9141.6149.4

156.1160.0

"160.8

Otherinves-tors8

47.246.3

38.755.1

55.160.2

83.194.9

104.0121.7

143.9134.1

"154.8"163.0

"186.3"189.0"209.1"231.5

1 U.S. savings bonds, series A-F and J, are included at current redemption value.2 Includes domestically chartered banks, U.S. branches and agencies of foreign banks, New York investment companies majority owned by foreign banks,

and Edge Act corporations owned by domestically chartered and foreign banks.3 Includes partnerships and personal trust accounts.4 Includes U.S. savings notes. Sales began May 1, 1967, and were discontinued June 3 0 , 1 9 7 0 .5 Exclusive of banks and insurance companies.6 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.

314


CORPORATE PROFITS AND FINANCE

TABLE B-82.—Corporate profits with inventory valuation and capital consumption adjustments, 1929-83


Year or quarter

192919331939

19401941194219431944

19451946194719481949

19501951195219531954

19551956195719581959

I9601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983"

1981:1IIIllIV

1982:1IIIIIIV . ..

1983:

IIIll

Corporateprofits withinventoryvaluation

and capitalconsumptionadjustments

9.01753

8614.119.323 523.6

19 016.622.329 427.1

33.938 736.136.335.2

45.543.743.338.549.6

47.648.656.662.169.2

80.085182.489185.1

71.483 296 6

108.394.9

110.51381167.3192.4194.8

175.4192.3164.8226.3

194.7185.0197.6192.0

162.0166.8168.5161.9

181.8218.2248.4

Corporateprofits tax

liability

1.45

1.4

2.87.6

11.414.112.9

10.79.1

11.312.410.2

17.922 619.420.317.6

22.022.021.419.023.6

22.722.824.026.228.0

30.933 732.539 239.5

34.237 541649.051.6

50.663 872.783.287.6

84.882.859.275.7

91.780.483.775.6

60.361.460.854.0

61.576.084.9

Corporate profits after tax with inventoryvaluation and capital consumption adjustments

Total

7.7- 2 3

3.9

5.86.57.99.5

10.7

8.47.5

11.017.016.9

16.016116.716.017.5

23.421.821.819.526.0

24.925.832.635.941.2

49.151449.950 045.6

37.245 755 059.343.3

59.974 394.6

109.1107.2

90.6109.5105.6150.6

103.1104.6113.8116.5

101.7105.3107.6107.9

120.3142.2163.4

Dividends

5.8203.8

4.04.44.34.44.6

4.65.66.37.07.2

8.8858.58.89.1

10.311.111.511.312.2

12.913.314.415.517.3

19.119 420.222 022.5

22.522.924 427.029.9

30.837 440.847.052.7

58.664.768.773.3

61.363.766.467.3

67.767.868.870.4

71.472.073.7

Undistributedprofits with

inventoryvaluation

and capitalconsumptionadjustments

1.94.3

.1

1.82.13.65.06.1

3.81.94.7

10.09.7

7.27.68.27.28.4

13.110.710.38.2

13.8

12.112.518.220.423.9

30.032.029.727.923.1

14.822.830.532.313.4

29.136.953.762.254.5

32.144.837.077.4

41.840.947.549.2

34.037.538.937.5

48.970.189.7



TABLE B-83.—Corporate profits by industry, 1929-83


Year orquarter

Corporate profits with inventory valuation adjustment and without capital consumption adjustment

Total

Domestic industries

Total

Financial1

Total

Federal

servebanks

Other

Nonfinancial

TotalManufac-turing2

Trans-portation

andpublic

utilities

Whole-saleand

retailtrade

Other

Restof theworld

19291933193919401941194219431944194519461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983"1981:

IIIIllI V

1982:IIIIllIV

1983:IIIIll

10.5-1.26.59.8

15.420.524.524.019.319.625.933.431.137.943.340.640.238.447.546.946.641.652.349.750.055.159.766.076.080.978.184.980.868.982.094.0105.696.7120.6151.6178.5205.1209.6191.7203.3165.9195.5

207.1196.4208.3201.5

167.7170.3168.3157.2

168.0192.7210.8

10.2-1.26.19.615.020.124.123.518.918.924.932.229.936.741.538.738.436.445.144.143.539.149.646.746.851.555.861.871.576.773.779.774.662.474.985.392.080.4

107.6137.4163.4185.4179.0161.9179.7144.1173.5

182.5175.0186.5174.7

147.0148.5147.6133.1

147.8172.2187.4

1.3.3.8

1.01.11.21.31.61.72.11.72.63.13.13.64.04.54.64.85.05.25.76.87.27.07.36.86.97.58.59.0

10.411.112.114.115.315.915.011.817.123.131.030.326.920.320.931.4

23.920.418.818.1

15.520.422.225.5

29.833.831.9

0.0.0.0.0.0.0.0.1.1.1.1.2.2.2.3.4.4.3.3.5.6.6.7

1.0.8.9

1.01.11.41.72.02.53.13.63.33.44.55.75.76.06.27.79.6

11.914.515.414.9

13.314.115.215.6

15.315.915.714.9

14.414.615.2

1.3.3.8.9

1.01.21.31.61.62.01.62.32.93.03.33.74.14.34.54.54.65.16.06.26.36.45.85.86.26.87.07.98.08.6

10.711.911.49.36.2

11.116.923.320.715.05.85.5

16.5

10.66.43.72.5

.34.66.5

10.6

15.419.216.8

8.9- 1 . 5

5.38.6

14.018.922.821.917.316.823.229.626.833.537.934.733.931.840.339.138.333.542.939.539.844.249.054.964.068.264.869.363.550.260.870.076.065.495.8

120.3140.3154.4148.6134.9159.4123.2142.1

158.6154.6167.7156.5

131.5128.1125.4107.6

118.0138.4155.5

5.2- . 43.35.59.5

11.813.813.29.79.0

13.617.616.220.924.621.722.019.926.024.724.019.426.423.623.326.029.332.339.341.938.541.236.626.634.140.745.539.052.669.278.386.985.672.986.759.069.4

88.588.093.376.9

60.961.465.548.3

53.768.178.2

1.8.0

1.01.32.03.44.43.92.71.82.23.03.04.04.64.95.04.75.65.95.85.97.07.47.88.49.3

10.011.011.810.710.810.38.28.59.08.76.1

10.014.517.820.615.917.118.717.520.6

20.115.719.119.8

18.019.817.314.9

17.420.422.5

1.0- . 5

.71.21.42.23.03.23.33.84.65.54.55.05.04.83.83.85.04.54.44.65.94.95.05.85.97.58.18.29.1

10.410.59.5

11.713.413.912.521.322.426.626.927.123.632.827.634.2

29.031.333.337.8

30.227.425.227.5

27.833.936.7

0.9- . 7

.3

.61.11.51.61.61.52.12.93.63.13.63.73.33.13.43.64.14.03.63.63.63.73.94.45.15.66.36.56.96.15.96.56.98.07.9

11.914.217.620.020.121.321.119.117.8

21.019.721.922.0

22.419.517.416.9

19.216.018.1

0.2.0.3.3.4.4.4.4.3.7

1.01.31.11.31.71.91.82.02.42.83.12.52.73.03.23.63.94.24.54.24.45.26.16.57.18.6

13.716.313.014.315.119.730.629.923.721.822.0

24.621.421.826.9

20.721.720.724.1

20.220.523.4

1 Consists of the following industries: Banking; credit agencies other than banks; security and commodity brokers, dealers, andservices; insurance carriers; regulated investment companies; small business investment companies; and real estate investment trusts.

2 See Table B-84 for industry detail.

Note.—The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning1948, and on the 1942 SIC prior to 1948.


316


TABLE B-84.—Corporate profits of manufacturing industries, 1929-83


Year or quarter

Corporate profits with inventory valuation adjustment and without capital consumption adjustment

Totalmanufac-

turing

Durable goods

Total

Pri-marymetalindus-tries

Fabri-catedmetalprod-ucts

Machin-ery,

exceptelectri-

cal

Electricandelec-tronicequip-ment

Motorvehicles

andequip-ment

Other

Nondurable goods

Total

Foodand

kindredprod-ucts

Chemi-calsand

alliedprod-ucts

Petro-leumandcoalprod-ucts

Other

192919331939

1940194119421943194419451946194719481949

5.2- . 43.3

5.59.5

2.6- . 41.7

3.1 2.43.14.65.75.95.26.67.8

10.08.1

8.911.49.9

10.19.4

11.811.910.710.012.7

12.011.912.013.114.416.318.117.619.117.7

16.517.818.321.225.833.638.840.242.648.4

52.558.049.251.6

57.953.165.655.6

50.546.952.647.1

43.649.956.9

11.813.813.29.7

1950195119521953195419551956....1957....1958....1959....

1960196119621963196419651966196719681969

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

1980198119821983 f.

1981:I

1982:III....

1983:III

9.013.617.616.2

20.924.621.722.019.926.024.724.019.426.4

23.623.326.029.332.339.341.938.541.236.6

26.634.140.745.539.052.669.278.386.985.6

72.986.759.069.4

88.588.093.376.9

60.961.465.548.3

53.768.178.2

7.44.52.45.87.58.1

12.013.211.711.910.514.312.813.39.3

13.7

11.611.414.016.317.923.023.820.922.218.9

10.216.322.424.313.218.930.438.144.337.1

20.428.6

9.817.8

30.734.827.721.3

10.414.512.91.2

10.018.321.3

1.61.5

2.33.11.92.51.72.93.03.01.92.3

2.01.61.62.02.53.13.62.71.91.4

.71.62.25.42.92.11.13.53.5

2.73.8

- 5 . 4- . 9

- 1 . 6- 1 . 1

- . 6

1.01.11.31.42.02.42.42.32.0

1.11.52.12.51.63.03.84.44.95.2

4.24.63.23.6

4.03.43.12.1

1.21.3

1.62.32.31.91.71.72.12.01.42.1

1.81.92.32.53.33.94.54.14.13.7

2.92.94.34.62.94.76.38.89.48.9

7.49.74.82.1

8.99.79.8

10.2

1.21.31.51.41.21.11.21.51.31.7

1.31.31.51.61.72.73.02.92.82.3

1.21.92.83.0

.42.13.45.66.55.1

5.26.44.33.1

1.42.1

3.12.42.42.62.14.12.22.6

.93.0

3.02.54.04.94.76.25.13.95.54.7

1.25.05.95.7

.11.97.29.48.94.7

- 3 . 8- . 6

.46.9

-2.03.0

-2.2-1.3

- 3 . 83.43.3

-1 .2

3.05.6

10.2

1.81.7

2.62.82.62.62.93.53.23.12.93.5

2.73.13.54.04.45.15.24.95.74.9

2.94.35.76.22.94.37.68.8

11.09.8

4.74.92.53.0

1.91.6

1.61.41.71.81.62.21.81.82.12.4

2.22.32.32.72.72.83.23.23.23.0

3.23.52.92.42.88.66.96.86.05.7

6.08.97.36.7

10.08.39.18.3

6.77.38.07.2

6.96.96.3

1.71.8

2.32.82.32.22.23.02.82.82.53.5

3.13.23.23.64.04.64.94.35.24.5

3.94.45.26.05.66.58.37.98.37.1

6.07.24.96.0

2.81.9

2.32.72.32.82.73.03.32.62.12.5

2.52.22.22.12.42.93.23.93.73.2

3.53.53.05.0

10.59.6

12.611.613.820.7

28.227.824.821.2

25.123.736.326.0

27.221.926.823.5

15.920.024.7

3.72.8

2.74.43.63.32.93.64.13.63.34.3

4.24.14.34.65.36.06.86.37.06.9

5.96.47.27.86.88.9

11.013.814.514.8

12.314.112.217.7

14.514.513.314.1

10.411.913.213.4

16.017.419.1

Note.—The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning1948, and on the 1942 SIC prior to 1948.


4 2 4 - 4 5 6 0 - 8 4 - 2 1317


TABLE B-85.—Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-83


Year orquarter

All manufacturing corporations

Sales(net)

Profits

Beforeincometaxes1

Afterincometaxes

Stock-holders'equity2

Durable goods industries

Sales(net)

Profits

Beforeincometaxes1

Afterincometaxes


Nondurable goods industries

Sales(net)

Profits

Beforeincometaxes1

Afterincometaxes


19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

1970197119721973

1973: IV

New series:

1973: IV

1974

19751976197719781979

198019811982

1980:

IIIIllIV

1981:III

Ill

IV

1982:IIIIllIV

1983:

I

181.9245.0250.2265.9248.5

278.4307.3320.0305.3338.0

345.7356.4389.4412.7443.1

492.2554.2575.4631.9694.6

708.8751.1849.5

1,017.2

275.1

236.6

1,060.6

1,065.21,203.21,328.11,496.41,741.8

1,912.82,144.72,039.4

465.7466.3464.2516.6

520.8549.6539.9534.4

502.9521.9508.0506.6

493.4529.4537.2

23.227.422.924.420.9

28.629.828.222.729.7

27.527.531.934.939.6

46.551.847.855.458.1

48.152.963.281.4

21.4

20.6

92.1

79.9104.9115.1132.5154.2

145.8158.6108.2

39.535.933.237.2

39.045.640.034.0

29.030.927.820.5

24.434.736.3

12.911.910.711.311.2

15.116.215.412.716.3

15.215.317.719.523.2

27.530.929.032.133.2

28.631.036.548.1

13.0

13.2

58.7

49.164.570.481.198.7

92.6101.370.9

24.822.421.024.4

24.428.925.222.9

19.020.017.814.1

15.722.223.3

83.398.3

103.7108.2113.1

120.1131.6141.1147.4157.1

165.4172.6181.4189.7199.8

211.7230.3247.6265.9289.9

306.8320.8343.4374.1

386.4

368.0

395.0

423.4462.7496.7540.5600.5

668.1743.4770.2

643.9658.1670.5699.7

718.4739.4753.5762.3

757.5765.0775.2783.0

787.0802.3819.3

116.8122.0137.9122.8

142.1159.5166.0148.6169.4

173.9175.2195.3209.0226.3

257.0291.7300.6335.5366.5

363.1381.8435.8527.3

140.1

122.7

529.0

521.1589.6657.3760.7865.7

889.1979.5913.1

219.8218.7212.6238.0

234.1257.2245.1243.0

225.3239.4224.4224.0

222.8245.8246.1

12.915.412.914.011.4

16.516.515.811.415.8

14.013.616.818.521.2

26.229.225.730.631.5

23.026.533.643.6

10.8

10.1

41.1

35.350.757.969.672.4

57.467.234.7

15.813.511.916.2

16.720.716.413.4

10.712.68.52.9

7.913.512.9

6.76.15.55.85.6

8.18.37.95.88.1

7.06.98.69.5

11.6

14.516.414.616.516.9

12.914.518.424.8

6.3

6.2

24.7

21.430.834.841.845.2

35.641.621.7

9.78.27.2

10.4

10.112.710.38.5

6.88.15.31.5

39.947.249.852.454.9

58.865.270.572.877.9

82.384.989.193.398.5

105.4115.2125.0135.6147.6

155.1160.4171.4188.7

194.7

185.8

196.0

208.1224.3239.9262.6292.5

317.7350.4355.5

308.0312.6317.2332.8

339.4349.7354.2358.3

351.2354.5358.3358.1

359.9368.3376.5

95.1128.1128.0128.0125.7

136.3147.8154.1156.7168.5

171.8181.2194.1203.6216.8

235.2262.4274.8296.4328.1

345.7369.3413.7489.9

135.0

113.9

531.6

544.1613.7670.8735.7876.1

1,023.71,165.21,126.4

245.9247.6251.6278.6

286.7292.4294.8291.3

277.6282.6283.6282.6

270.6283.6291.1

10.312.110.010.49.6

12.113.212.411.313.9

13.513.915.116.418.3

20.322.622.024.826.6

25.226.529.637.8

10.6

10.5

51.0

44.654.357.262.981.8

88.491.373.6

23.722.421.321.0

22.324.923.520.6

18.318.319.417.6

16.621.223.4

6.15.75.25.55.6

7.07.87.56.98.3

8.28.59.2

10.011.6

13.014.614.415.516.4

15.716.518.023.3

6.7

7.0

34.1

27.733.735.539.353.5

56.959.649.3

15.114.213.714.0

14.216.214.914.3

12.311.912.512.6

10.913.715.1

43.551.153.955.758.2

61.366.470.674.679.2

83.187.792.396.3

101.3

106.3115.1122.6130.3142.3

151.7160.5172.0185.4

191.7

182.1

199.0

215.3238.4256.8277.9308.0

350.4393.0414.7

335.9345.5353.3366.9

379.1389.7399.4404.0

406.3410.5416.8425.0

427.2434.0442.8

1 In the old series, "income taxes" refers to Federal income taxes only, as State and local income taxes had already been deducted.In the new series, no income taxes have been deducted.

2 Annual data are average equity for the year (using four end-of-quarter figures).

Note.—Data are not necessarily comparable from one period to another due to changes in accounting procedures, industryclassifications, sampling procedures, etc. For explanatory notes concerning compilation of the series, see "Quarterly Financial Report forManufacturing, Mining, and Trade Corporations,' Department of Commerce, Bureau of the Census.


318


TABLE B-86.—Relation of profits after taxes to stockholders' equity and to sales, all manufacturing

corporations, 1947-83

Year or quarter

194719481949

19501951195219531954. . .

19551956.195719581959

I960 .1961196219631964

19651966196719681969

1970197119721973

1973: IV

New series:1973- IV

1974

1975197619771978...1979

198019811982

1980:1IIIllIV ....

1981:

||IIIIV

1982:IIIIllIV

1983:|IIIll ..

Ratio of profits after income taxes (annualrate) to stockholders' equity—percent1

Allmanufacturingcorporations

15 616 011.6

15.412.110.310.59.9

12.612.310 98.6

10 4

9.2899.8

10 311.6

13 013.411712.1115

9.397

10.612.8

13.4

14 3

14.9

11613 914.215 016.4

13 913 69.2

15 413.612.514.0

13 615 613.412.0

10110.5927.2

8011.111.4

Durablegoods

industries

14 415 712.1

16.913.011.111.110.3

13.812.81138.0

10.4

8.5819.6

10111.7

13 814.211712.2114

8.390

10.813.1

12.9

13 3

12.6

10 313 714.516 015.4

1121196.1

12 610.69.1

12.6

12 014 611.69.5

779.2591.7

539.28.7

Nondurablegoods

industries

16.616.211.2

14.111.29.79.99.6

11.411.810.69.2

10.4

9.89.69.9

10.411.5

12.212.711.811.911.5

10.310 310.512.6

14.0

15.3

17.1

12 914 213.814 217.4

16.315 211.9

18.016.415.615.2

15 016 614.914.2

12 111.612 011.9

10 312.713.6

Profits after income taxes per dollar ofsales—cents

Allmanufacturingcorporations

6.77.05.8

7.14.94.34.34.5

5.45.34.84.24.8

4.44.34.54.75.2

5.65.65.05.14.8

4.04.14.34.7

4.7

5.6

5.5

4.6545.35.45.7

4.84.73.5

5.34.84.54.7

47534.74.3

3.83.83.52.8

324.24.3

Durablegoods

industries

6.77.16.4

7.75.34.54.24.6

5.75.24.83.94.8

4.03.94.44.55.1

5.75.64.84.94.6

3.53.84.24.7

4.5

5.0

4.7

4.15.25.35.55.2

4.04.22.4

4.43.83.44.4

4.3494.23.5

3.03.42.4

.7

2.13.43.3

Nondurablegoods

industries

6.76.85.4

6.54.54.14.34.4

5.15.34.94.44.9

4.84.74.74.95.4

5.55.65.35.25.0

4.54.54.44.8

5.0

6.1

6.4

5.15.55.35.36.1

5.65.14.4

6.15.75.55.0

5.05.55.14.9

4.44.24.44.5

4.04.85.2

1 Annual ratios based on average equity for the year (using four end-of-quarter figures). Quarterly ratios based on equity at end ofquarter only.

Note.—Based on data in millions of dollars.See Note, Table B-85.Source: Department of Commerce, Bureau of the Census.

319


TABLE B-87.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-83


Year orquarter

Sources

Total

18.727.028.919.9

42.136.429.927.829.6

52.744.943.441.956.3

48.656.360.168.473.9

91.897.694.7

113.5115.5

102.3125.3151.6192.5190.3

157.0211.0254.1317.5345.7

333.2365.8308.6

348.8386.4353.0375.1

302.8329.9327.4274.5

323.4396.3387.7

Internal1

8.112.919.119.5

18.020.221.921.723.9

29.529.531.530.336.0

35.436.542.846.551.8

58.562.663.665.064.4

61.873.585.091.785.6

119.7134.2157.4175.7188.8

189.5230.6240.5

217.3223.5237.2244.7

233.5240.2244.0244.3

250.7270.3291.1

External

Total

10.614.19.7

.4

24.016.28.06.15.7

23.215.411.911.720.2

13.219.817.322.022.1

33.335.031.148.551.1

40.551.866.6

100.7104.7

37.376.896.7

141.8156.9

143.7135.268.1

131.5163.0115.8130.4

69.389.783.430.2

72.7126.096.6

Credit market funds

Total

6.98.46.53.1

8.110.59.55.76.5

10.212.812.310.512.3

12.112.912.812.514.1

18.523.827.827.732.3

35.337.243.456.770.2

30.854.772.480.588.2

90.992.284.1

73.0120.493.182.4

102.889.989.054.6

69.277.180.1

Securi-ties and

mort-gages

3.65.46.74.9

4.26.48.06.06.7

6.47.5

10.410.58.1

7.510.79.48.47.8

7.614.319.115.014.6

26.332.826.420.726.3

38.738.235.832.820.9

52.422.645.2

42.840.2

3.04.4

24.838.639.677.8

64.784.133.3

Loansand

short-termpaper

3.33.0

-.2- 1 . 8

3.94.11.4

- .4- .2

3.75.31.9

- .04.2

4.62.23.44.06.2

11.09.58.7

12.617.7

9.04.4

16.936.043.9

- 7 . 916.536.647.767.3

38.569.738.9

30.280.390.178.0

78.051.349.4

-23.2

4.5- 6 . 946.7

Other2

3.75.83.3

- 2 . 7

15.95.7

- 1 . 5.5

- .8

13.12.5

- .41.27.9

1.26.94.69.58.0

14.811.23.3

20.918.8

5.314.623.244.034.5

6.522.124.361.368.8

52.743.0

-15.9

58.642.622.848.0

-33.4-.2

- 5 . 6-24.4

3.548.816.5

Uses

Total

16.825.625.318.3

40.437.629.228.027.8

49.140.839.138.551.2

41.451.055.560.464.9

82.791.388.5

106.0115.3

98.7122.7149.1191.9190.1

150.9201.8237.6293.6346.7

320.1324.3251.0

348.4343.4301.3304.1

232.1279.3270.5222.0

276.2338.7338.4

Capitalexpendi-tures 3

18.117.320.314.8

24.030.224.625.722.9

32.636.834.927.737.0

37.536.743.244.750.1

61.074.772.275.483.7

80.086.099.0

121.5137.9

109.7148.3175.1201.6219.4

221.2261.6231.2

231.6253.9289.4271.5

242.4242.2240.1200.2

202.4252.9281.5

Increasein

financialassets

- 1 . 48.45.03.5

16.47.44.62.34.9

16.54.04.2

10.814.2

3.914.212.315.714.8

21.816.616.330.631.6

18.736.750.170.552.2

41.253.562.592.0

127.3

98.962.719.7

116.889.511.932.6

-10 .337.130.321.8

73.885.856.9

Discrep-ancy

(sourcesless uses)

194619471948....1949

1950....19511952....1953....1954....

1955....1956....1957....1958....1959

19601961....19621963....1964....

19651966....1967....1968....1969....

1970....1971....1972....19731974

19751976197719781979

198019811982

1981:IIIIllIV

1982IIIIllIV

1983:III

1.91.43.61.6

1.7- 1 . 2

.6- . 11.8

3.54.14.33.45.0

7.25.34.68.09.0

9.16.46.27.5

.2

3.62.62.4

.5

.2

6.09.2

16.523.8

- 1 . 0

13.141.657.7

.543.151.771.1

70.850.556.952.5

47.257.649.3

1 Undistributed profits (after inventory valuation and capital consumption adjustments), capital consumption allowances, and foreignbranch profits, dividends, and subsidiaries' earnings retained abroad.

2 Consists of tax liabilities, trade debt, and direct foreign investment in the United States.3 Plant and equipment, residential structures, inventory investment, and mineral rights from U.S. Government.


320


TABLE B-88.—Current assets and liabilities of U.S. corporations, 1940-83

[Billions of dollars, except as noted]

End ofperiod

SEC series:5

19401941194219431944194519461947 .19481949195019511952195319541955195619571958195919601961

SEC series:5

196119621963196419651966196719681969 ..197019711972 .19731974

QFR-FRB series:7

197419751976197719781979198019811982 .

1982:IIIIIIIV

1983:III

Current assets

Total Cash1

U.S.Govern-

mentsecurities2

Notesand

accountsreceiv-

able

Inven-tories

Othercurrentassets

Current liabilities

Total

Notesand

accountspayable

Othercurrentliabil-ities

Networkingcapitaf

Currentratio3

All corporations4

60.372.983.693.897.297.4

108.1123.6133.0133.1161.5179.1186.2190.6194.6224.0237.9244.7255.3277.3289.0306.8

13.113.917.621.621.621.722.825.025.326.528.130.030.831.133.434.634.834.937.436.337.241.1

2.04.0

10.116.420.921.115.314.114.816.819.720.719.921.519.223.519.118.618.822.820.120.0

24.028.027.326.926.525.930.738.342.443.056.861.567.468.573.688.997.7

102.2109.7120.6129.2139.2

19.825.627.327.626.826.337.644.648.945.355.164.965.867.265.372.880.482.281.988.491.895.2

1.51.41.31.31.42.41.71.61.61.41.72.12.42.43.14.25.96.77.59.1

10.611.4

32.840.747.351.651.745.851.961.564.460.779.892.696.198.999.7

121.0130.5133.1136.6153.1160.4171.2

23.226.426.026.326.825.731.637.639.337.548.354.959.359.561.776.183.986.690.4

101.0106.8114.6

9.614.321.325.324.920.120.323.925.023.331.637.836.839.438.045.046.646.546.252.053.656.6

27.532.336.342.145.651.656.262.168.672.481.686.590.191.894.9

103.0107.4111.6118.7124.2128.6135.6

1.8381.7911.7671.8181.8802.1272.0832.0102.0652.1932.0241.9341.9381.9271.9521.8511.8231.8381.8691.8111.8021.792

Nonfinancial corporations6

254.7269.7288.2305.6336.0364.0386.2426.5473.6492.3529.6599.3697.8790.7

735.4759.0827.4912.7

1,043.71,214.81,327.01,419.31,425.4

1,418.01,417.21,441.81,425.4

1,436.51,464.2

34.837.139.840.542.841.945.548.247.950.253.359.066.371.1

73.282.188.297.2

105.5118.0126.9131.8144.0

121.8124.1126.9144.0

139.7145.7

16.516.816.715.814.413.010.311.510.67.7

11.010.612.812.3

11.119.023.518.217.216.718.717.422.4

16.516.518.922.4

25.827.5

97.9103.2110.5119.9134.1146.6155.3173.9197.0206.1221.1248.2288.5322.1

265.8272.1292.9330.3388.0459.0506.8530.3511.0

533.4531.2534.2511.0

517.9534.3

95.0100.5106.8113.1126.6142.8153.1166.0186.4193.3200.4225.7263.9313.6

319.5315.9342.5376.9431.8505.1542.8585.1575.2

591.6587.6596.5575.2

573.2570.5

10.512.114.416.318.119.722.026.931.635.043.855.866.471.7

65.969.980.390.1

101.1116.0131.8154.6172.6

154.7157.9165.3172.6

179.9186.2

123.7132.4145.5156.6178.8199.4211.3244.1287.8304.9326.0375.6450.9530.4

453.4451.6495.1557.1669.5807.3889.3976.3977.8

987.0988.7

1,007.6977.8

986.3997.7

84.488.797.0

104.9121.5137.5147.1168.8199.2211.3220.5282.9340.3402.3

269.8264.2282.1317.6383.0460.8513.6558.8552.8

552.9554.9562.7552.8

543.2551.6

39.343.748.551.757.361.964.275.388.693.6

105.592.7

110.7128.1

183.6187.4213.0239.6286.5346.5375.7417.5425.0

434.0433.8444.9425.0

443.1446.1

131.0137.3142.7149.0157.2164.6174.9182.4185.7187.4203.6223.7246.9260.3

282.0307.4332.4355.5374.3407.5437.8442.9447.6

431.0428.5434.2447.6

450.2466.5

2.0592.0371.9811.9511.8791.8251.8281.7471.6461.6151.6251.5951.5481.491

1.6221.6811.6711.6381.5591.5051.4921.4541,458

1.4371.4331.4311.458

1.4561.468

1 Includes time certificates of deposit.2 Includes Federal agency issues.3 Total current assets divided by total current liabilities.4 Excludes banks, savings and loan associations, and insurance companies.5 Based on data from "Statistics of Income," Department of the Treasury.6 Excludes banks, savings and loan associations, insurance companies, investment companies, finance companies (personal and

commercial), real estate companies, and security and commodity brokers, dealers, and exchanges.7 Based on data from "Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations," Federal Trade Commission. See

"Federal Reserve Bulletin," July 1978, for details regarding the series. Effective mid-1982, responsibility for the Quarterly FinancialReport was transferred to the Department of Commerce, Bureau of the Census.

Note.—SEC series not available after 1974.Sources: Board of Governors of the Federal Reserve System, Federal Trade Commission, Department of Commerce (Bureau of the

Census), and Securities and Exchange Commission.

321


TABLE B-89.—State and municipal and business securities offered) 1934-83


Year or quarter

Stateand

municipalsecurities

offeredfor cash(princi-

palamounts)

Business securities offered for cash 1

Totalofferings

Type of security

Commonstock 2

Preferredstock

Bondsand

notes

Industry of issuer

Manufac-turing3

Electric,gas, andwater4

Transpor-tation5

Communi-cation

Other

19341939

19401941194219431944

19451946194719481949

1950195119521953195419551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

1975197619771978 6

1979

1980198119821983: First three

quarters

1982:IIIIllIV

1983:IIIIll

9391,128

1,238956524435661

7951,1572,3242,6902,907

3,5323,1894,4015,5586,9695,9775,4466,9587,4497,681

7,2308,3608,558

10,10710,54411,14811,08914,28816,37411,460

17,76224,37022,94122,95322,82429,32633,84545,06046,21542,261

47,13346,13477,179

61,427

12,77017,62718,89227,890

17,23927,25716,931

397

2,164

2,6772,6671,0621,1703,2026,0116,9006,5777,0786,052

6,3627,7419,5348,8989,51610,24010,93912,88411,5589,748

10,15413,16510,70512,21113,95714,78217,38524,01421,26125,997

37,45143,22939,70531,68037,82053,63253,31454,22929,94937,248

67,12665,88872,152

81,673

12,78114,62918,42826,314

28,17833,27720,218

19

87

1081103456163397891779614736

8111,2121,3691,3261,2132,1852,3012,5161,3342,027

1,6643,2941,3141,0112,6791,4731,9011,9273,8857,640

7,0379,485

10,7077,6424,0507,4148,3058,0477,7248,816

19,28225,22623,197

34,725

4,3436,0214,5688,265

11,74513,2559,725

6

98

183167112124369758

1,127762492425

631838564489816635636411571531

409450422343412724580881636691

1,3903,6833,3713,3412,2733,4592,8033,9161,7571,964

3,1941,6964,948

6,523

5821,0911,6831,592

3,5451,7171,261

372

1,979

2,3862,389917990

2,6704,8554,8825,0365,9734,890

4,9205,6917,6017,0837,4887,4208,0029,9579,6537,190

8,0819,4208,96910,85610,86512,58514,90421,20616,74017,666

29,02330,06125,62820,70031,49742,75942,20642,26620,46826,468

44,65038,96644,007

40,429

7,8557,51812,17816,456

12,89118,3059,233

67

604

992848539510

1,061

2,0263,7012,7422,2261,414

1,2003,1224,0392,2542,2682,9943,6474,2343,5152,073

2,1524,0773,2493,5143,0465,4147,05611,0696,9586,346

10,64711,6516,3984,83210,51118,65215,49613,7574,4836,643

20,85715,28713,239

19,751

1,7971,3363,7356,371

6,2168,9744,561

1331,271

1,2031,357

472477

1,4222,3192,1583,2572,1872,320

2,6492,4552,6753,0293,7132,4642,5293,9383,8043,258

2,8513,0322,8252,6772,7602,9343,6664,9355,2936,715

11,00911,72111,31410,26912,83615,89314,41813,7049,1389,937

13,74613,24516,408

9,711

3,2423,9324,0595,175

3,6203,9072,184

176

186

32436648161609

1,454711286755800

813494992595778893724824824967

718694567957982

7021,4941,6391,5641,779

1,2531,148860811

1,0053,6374,6493,2181,2511,640

2,3061,8832,093

3,040

366253594880

1,283862895

902571

399612760882720

1,1321,4191,4621,424717

1,0501,8341,3031,1052,189945

2,0031,9751,7752,172

5,2915,8404,8364,8723,9324,4663,5624,4432,9594,482

6,8655,8673,895

5,428

116619

1,1202,040

2,0881,8721,468

21

103

15996421109211329293

1,008946

1,3001,0581,0682,1382,0372,7572,6192,4261,9912,733

3,3833,5272,7613,9574,9804,7873,1674,3965,6718,985

9,25212,86716,29810,8979,63210,98315,19419,11312,12014,547

23,35629,60836,520

43,742

7,2618,4908,921

11,848

14,97017,66211,110

1 Business securities offered include securities offered by corporate and non-corporate business enterprises such as limitedpartnerships. Beginning 1978 excludes private placements.

2 Common stock combines the conventional ownership shares of corporate business and securities issued by non-corporate business,e.g., limited partnership interests, voting trust certificates and condominium securities.

3 Prior to 1948, also includes extractive, radio broadcasting, airline companies, commercial, and miscellaneous company issues.4 Prior to 1948, also includes telephone, street railway, and bus company issues.5 Prior to 1948, includes railroad issues only.6 Beginning 1978, business security offerings exclude private placements.

Note.—Covers substantially all new issues of State, municipal, and business securities offered for cash sale in the United States inamounts over $100,000 and with terms to maturity of more than 1 year; excludes notes issued exclusively to commercial banks,intercorporate transactions, and issues to be sold over an extended period, such as employee-purchase plans. Closed-end investmentcompany issues are included beginning 1973.

Sources: Securities and Exchange Commission, "The Commercial and Financial Chronicle," and "The Bond Buyer."

322


TABLE B-90.—Common stock prices and yields, 1949-83

Year or month

1949

19501951...19521953195419551956195719581959

1960196119621963196419651966196719681969

197019711972197319741975..1976197719781979

1980198119821983





Common stock prices1

New York Stock Exchange indexes (Dec

Composite

9.02

10.8713.0813 8113 6716 1921 5424 4023 6724 5630 73

30 0135.3733 4937 5143 7647 39461550.7755.3754.67

45.7254 2260.2957 4243.8445.7354.4653.6953 7058.32

68.1074.0268.9392.63

67.9166.1663.8666.9767.0763.10

62.8262 9170.2176.1079.7580.30

83.2584.7487.5090.6194.6196.43

96.7493.9696.7096.7895.3694.92

Industrial

46 1851.9758.0057.44

48.0357 9265.7363.0848.0850.5260.4457.8658 2364.76

78.7085.4478.18

107.45

76.8574.7871.5175.5975.9771.59

71.3770 9880.0886.6790.7692.00

95.3797.26

100.61104.46109.43112.52

113.21109.50112.76112.87110.77110.65

Transpor-tation

50.2653.5150.5846.96

32.1444.3550.1737.7431.8931.1039.5741.0943 5047.34

60.6172.6160.4189.36

62.0459.0955.1957.9156.8453.07

53.4053 9861.3966.6471.9273.40

75.6579.4483.2885.2689.0792.22

92.9188.0694.5695.4197.6898.79

. 31, 1965=50)2

Utility

45.4145.4344.1942.80

37.2439.5338.4837.6929.7931.5036.9740.9239 2238.20

37.3538.9139.7547.00

39.3038.3238.5739.2039.4037.34

37.20381940.3642.6743.4642.93

45.5945.9245.8946.2247.6246.76

46.6146.9448.1648.7348.5047.00

Finance

44.4549.8265.8570.49

60.0070.3878.3570.1249.6747.1452.9455.2556 6561.42

64.2573.5271.9995.34

70.9970.5069.087L4469.1663.19

61.5962 8469.6680.5988.6686.22

85.6686.5793.2299.07

102.45101.22

99.6095.7697.0094.7994.4894.25

DowJones

industrialaverage3

179.48

216.31257.64270.76275 97333 94442 72493 01475.71491.66632.12

618 04691.55639.76714.81834 05910 88873.60879.12906.00876.72

753.19884.76950.71923.88759.37802.49974.92894.63820 23844.40

891.41932.92884.36

1,190.34

853.41833.15812.33844.96846.72804.37

818.41832 11917.27988.71

1,027.761,033.08

1,064.291,087.431,129,581,168.431,212.861,221.47

1,213.931,189.211,237.041,252.201,250.011,257.64

Standard& Poor's

compositeindex

(1941-43=10) 4

15.23

18.4022.3424.5024.7329 6940 4946 6244.3846.2457.38

55 8566.2762.3869.878137881785.2691.9398.7097.84

83.2298 29

109.20107 4382.8586.16

102.0198.2096 02

103.01

118.78128.05119.71160.41

117.28114.50110.84116.31116.35109.70

109.38109 65122.43132.66138.10139.37

144.27146.80151.88157.71164.10166.39

166.96162.42167.16167.65165.23164.36

Common stock yields(percent)5

Dividend-priceratio6

6.59

6.576.135.805.804 954 084 094.353.973.23

3 472.983.373.173 013 003.403.203.073.24

3.833142.843 064.474.313.774.625 285.47

5.265.205.814.40

5.956.066.285.995.976.28

6.316 325.635.124.924.93

4.794.744.594.444.274.26

4.214.354.244.254.314.32

Earnings-priceratio7

15.48

13.9911.829.47

10 268 577 957 557.896 235.78

5 904.625.825 505 325 596.635.735.676.08

6.455 415.507 12

11.599.158.90

10.7912 0313.46

12.6611.9611.60

13.23

12.93

11.26

8.99

8.12

7.49

8.01

1 Averages of daily closing prices, except New York Stock Exchange data through May 1964 are averages of weekly closing prices.2 Includes all the stocks (more than 1,500) listed on the New York Stock Exchange.3 Includes 30 stocks.4 Includes 500 stocks.5 Standard & Poor's series, based on 500 stocks in the composite index.6 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 ratios are averages of quarterly ratios.

Note.—All 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.

323


TABLE B-91.—Business formation and business failures, 1940-83

Year or month

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1970197119721973197419751976197719781979

198019811982 P.

1982: JanFebMarAprMayJune


1983: JanFebMarAprMayJune

JulyAugSeptOctNov

Indexof net

businessformation(1967 =

100)

101.986.4

90.689.593.391.791.098.496.692.492.298.7

95.592.193.795.298.6

100.299.4

100.0106.8112.9

106.4108.5115.9114.9109.2107.0115.6123.2128.2128.3

122.4118.6113.2

Newbusinessincorpo-rations

(number)

132,916112,89796,34685,640

93,09283,77892,946

102,706117,411139,915141,163137,112150,781193,067

182,713181,535182,057186,404197,724203,897200,010206,569233,635274,267

264,209287,577316,601329,358319,149326,345375,766436,170478,019524,565

533,520581,242566,942

Business failures1

Businessfailurerate2

63.054.444.616.46.54.25.2

14.320.434.4

34.330.728.733.242.041.648.051.755.951.8

57.064.460.856.353.253.351.649.038.637.3

43.841.738.336.438.442.634.828.423.927.8

42.161.389.0

Seasonally adjusted

113.2115.6113.5115.2114.7112.1

112.4112.6110.4111.5112.9114.4

111.4113.3112.7112.0114.8116.4

115.2114.4115.8118.8118.0

43,33047,23446,89946,87646,99545,936

44,52546,98145,55245,53048,47457,507

49,99948,29648,03248,90350,21150,992

48,60152,82850,445

66.277.077.673.480.3

103.6

72.9

Number of failures

Total

13,61911,8489,4053,2211,222

8091,1293,4745,2509,246

9,1628,0587,6118,862

11,08610,96912,68613,73914,96414,053

15,44517,07515,78214,37413,50113,51413,06112,3649,6369,154

10,74810,3269,5669,3459,915

11,4329,6287,9196,6197,564

11,74216,79425,346

1,5351,8542,0881,8821,9412,452

1,631

Liability size class

Under$100,000

13,40011,6859,2823,1551,176

7591,0033,1034,8538,708

8,7467,6267,0818,075

10,22610,11311,61512,54713,49912,707

13,65015,00613,77212,19211,34611,34010,83310,1447,8297,192

8,0197,6117,0406,6276,7337,5046,1764,8613,7123,930

5,6828,233

730843986877931

1,077

727

$100,000and over

219163123664650

126371397538

416432530787860856

1,0711,1921,4651,346

1,7952,0692,0102,1822,1552,1742,2282,2201,8071,962

2,7292,7152,5262,7183,1823,9283,4523,0582,9073,634

6,0608,561

8051,0111,1021,0051,0101,375

904

Amount of current liabilities(millions of dollars)

Total

166.7136.1100.845.331.730.267.3

204.6234.6308.1

248.3259.5283.3394.2462.6449.4562.7615.3728.3692.8

938.61,090.11,213.61,352.61,329.21,321.71,385.71,265.2

941.01,142.1

1,887.81,916.92,000.22,298.63,053.14,380.23,011.33,095.32,656.02,667.4

4,635.16,955.2

645.1913.5836.0

1,309.32,850.51,020.3

1,425.6

Liability size class

Under$100,000

119.9100.780.330.214.511.415.763.793.9

161.4

151.2131.6131.9167.5211.4206.4239.8267.1297.6278.9

327.2370.1346.5321.0313.6321.7321.5297.9241.1231.3

269.3271.3258.8235.6256.9298.6257.8208.3164.7179.9

272.5405.8

35.039.748.241.044.953.1

35.7

$100,000and over

46.835.420.515.117.118.851.6

140.9140.7146.7

97.1128.0151.4226.6251.2243.0322.9348.2430.7413.9

611.4720.0867.1

1,031.61,015.61,000.01,064.1

967.3699.9910.8

1,618.41,645.61,741.52,063.02,796.34,081.62,753.42,887.02,491.32,487.5

4,362.66,549.3

610.1873.7787.8

1,268.32,805.5

967.1

1,389.9

1 Commercial and industrial failures only. Excludes failures of banks and railroads and, beginning 1933, of real estate, insurance,holding, and financial companies, steamship lines, travel agencies, etc.

2 Failure rate per 10,000 listed enterprises.Sources: Department of Commerce (Bureau of Economic Analysis) and Dun & Bradstreet, Inc.

324


AGRICULTURE

TABLE B-92.—Farm income, 1929-83


Year or quarter

192919331939

19401941..19421943194419451946194719481949

1950195119521953195419551956195719581959

19601961.. .19621963196419651966196719681969

19701971. . . .1972197319741975.197G19771978.1979

1980. .198119821983 P

1981:I||IIIIV

1982:1IIIllIV

1983:\p.

llp . .Ill"IV

Income of farm operators from farming

Gross farm income

Total»

13 86.9

10 7

11314.319 923 324.025 429.632 436 530.8

33.138 337.834 434 233.534 034.839.037 9

38 940 542.343 442.346.550.550 551.856.4

58.862171.299.098.3

100 6102.9108.7127 2150.4

1501167.1162.2158 6

161.2165 1172.2169.7

168.4158.5155 9165.8

156.41531154.1170.6

Cash marketing receipts

Total

11.35.37.9

8.411.115 619.620.521724.829 630.227.8

28.532.932.531029.829.530 429.733.533.6

34 235.236.537 537.339.443.442 844.248.2

50.552 761.186.992.488 995.496.2

112 9131.8

140 5142.3144.6142 4

141.9138 5145.7143.0

147.6142.0142 3146.3

144.51413145.0138.8

Livestockand

products

6.22.84.5

496.590

11.511.412 013.816 517.115.4

16.119.618.216 916.316.016.417.419.218 9

19 019 520.220 019.921.925.024 425.528.6

29.530 535.645.841.343 146.347.659 268.6

67 869.270.270 7

69.269 570.168.0

70.771.070 268.9

71.570 870.170.3

Crops

5.12.533

354.6658.19.297

11.013113.112.4

12.413 214.314113.613.514 012.314.214 7

15 315 716.317 417.417.518.418 418.719.6

21.022 325.541.151.145 849.048.653 763.2

11173.174.4717

72.769 075.675.0

76.971.072 177.4

73.070 574.968.5

Value ofinventorychanges2

- 0 . 1- .2

.1

.3

.41.1.1

- .4- .4

.0- 1 . 8

1.7- . 9

.81.2.9

- . 6.5.2

- .5.6.8.0

.4

.3

.6

.68

1.017.1.1

.01.4.9

3.4-1 .6

3.4- 1 . 5

1.18

4.9

- 5 . 37.6

- 1 . 9- 8 . 8

3.11019.57.9

2.0- 1 . 7- 3 . 5- 4 . 2

-8 .6- 9 . 9

-12.3-4 .4

Produc-tion

expenses

7.74.46.3

6.97.8

10.011.612.313.114.517.018.818.0

19.522.322.821.521.822.222.723.725.827.2

27.428.630.331.631.833.736.538.239.542.1

44.547.151.764.671.075.082.788.999.5

118.1

128.6137.0140.1136.0

135.1136 5137.8138.6

141.0141.5140.3137.6

136.6135.1135.3137.0

Net farm

Currentdollars

6.22.64.4

4.56.59.9

11.711.712.315.115.417.712.8

13.615.915.013.012.411.311.311.113.210.7

11.512.012.111.810.512.914.012.312.314.3

14.415.019.534.427.325.620.119.811132.3

21.530.122.122.6

26.128.634.431.1

27.417.015.628.2

19.818.018.833.6

income

1967dollars3

12.06.6

10.6

10.714.720.222.722.222.825.823.024.517.9

18.920.518.816.215.414.113.813.115.212.3

13.013.313.312.811.313.714.412.311.813.0

12.412.415.625.918.515.911.810.914.214.8

8.711.07.67.6

9.910.712.511.0

9.75.95.39.6

6.76.16.3

11.1

1Cash marketing receipts and inventory changes plus Government payments, other farm cash income, and nonmoney incomefurnished 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 consumer price index (Department of Labor).

Source: Department of Agriculture, except as noted.

325


TABLE B-93.—Farm output and productivity indexes, 1929-83

[1977 = 100]

Year

1929

1933

1939

19401941194219431944

19451946 .. .194719481949

1950 . ..1951195219531954

1955195619571958 .. .1959

I9601961 ....196219631964 ....

19651966 . .. ..196719681969

19701971197219731974

19751976197719781979

1980198119821983"

Farm output

Total»

44

42

48

5052585759

586058

CO

CM

i—

CO

CO

C

C

63666666

6969677374

7676778079

8279838585

8492919388

9597100104111

10311811799

Crops2

Total3

48

43

49

5152585558

5659566461

5960626261

6363626968

7270717472

7673777980

7786879284

9392100102113

10111611887

Feedgrains

38

35

40

4144514749

4751395750

5147504951

5454586466

6962626859

7070797578

7192889174

9196100108116

9712112467

Foodgrains

39

27

36

4045484151

5355646253

4949635751

4850476955

6660565965

6767768074

6981778691

10810710093108

121144140117

Oilcrops

6

5

14

1616232320

2019222726

2626262628

3034333936

3843444646

5355566465

6668748771

8674100105129

9911412489

Live-stockandprod-ucts2

50

54

56

5760677269

6866

6467

7073747477

7979787983

8286868991

8991949495

9910010199100

9599100101104

108109107110

Productivity indicators

Farmoutputper

unit oftotalinput

45

46

51

5254585758

5861596361

6161636465

6768697474

7778798282

8683868788

8794949590

9998100102106

101115116105

Cropproduc-tionperacre4

48

43

51

5354595558

5760576460

5959626261

6364657372

7778818381

8583868991

8896999988

9694100105113

9911311599

Farm output perfarm work

Total

9

9

11

1213141414

151616

o

cooo

20222324

2628293335

3739414547

5253586263

6674788179

8994100109119

112131136132

Crops

O

O

CM

C

14151516

1618182020

2222242526

2830333837

4142454749

565963-6668

7079848780

8991100105118

104120127116

lour of

Live-stockandprod-ucts

14

13

14

1415161616

161717

o

oooo

20212223

24252628co

cr

35374043

4549535559

6468737682

8593100109118

129138147149

1 Farm output measures the annual volume of net farm production available for eventual human use through sales from farms orconsumption in farm households.

2 Gross production.3 Includes items not included in groups shown.4 Computed from variable weights for individual crops produced each year.Source: Department of Agriculture.

326


TABLE B-94.—Farm input use, selected inputs, 1929-83

Year

Farm populationApril1

Num-ber

(thou-sands)

Asper-cent

oftotalpopu-

lation2

Farm employment(thousands)3

Total

Fam-ily

work-ers

Hiredwork-

ers

Cropshar-

vested(mil-

lions ofacres)4

Selected indexes of input use (1977=100)

TotalFarmlabor

Farmreal

estate

Me-chanicalpower

andmachin-

ery

culturalchemi-cals5

Feed,seed,andlive-stockpur-

chases6

1929..

1933..

1939..

1940..1941..1942..1943..1944..

19451946194719481949

1950..1951..1952..1953..1954..

19551956195719581959

I960....1961....1962....1963....1964....

1965

1966

1967....1968....1969....

1970....1971....1972....1973....1974....

1975....1976....1977....1978....1979....

1980198119821983'...

30,580

32,393

30,840

30,54730,11828,91426,18624,815

24,42025,40325,82924,38324,194

23,04821,89021,74819,87419,019

19,07818,71217,65617,12816,592

15,63514,80314,31313,36712,954

12,36311,59510,87510,45410,307

9,7129,4259,6109,4729,264

8,8648,253

7 6,1947 6,5017 6,241

7 6,0517 5,79075,620

25.1

25.8

23.5

23.122.621.419.217.9

17.518.017.916.616.2

15.214.213.912.511.7

11.511.110.39.89.3

8.78.17.77.16.7

6.45.95.55.25.1

4.74.54.64.54.3

4.13.8

7 2.87 2.97 2.8

7 2.77 2.57 2.4

12,763

12,739

11,338

10,97910,66910,50410,44610,219

10,00010,29510,38210,3639,964

9,9269,5469,1498,8648,651

8,3817,8527,6007,5037,342

7,0576,9196,7006,5186,110

5,6105,2144,9034,7494,596

4,5234,4364,3734,3374,389

4,3424,3744,1553,9573,774

3,7058 3,641

3,5783,518

9,360

9,874

8,611

8,3008,0177,9498,0107,988

7,8818,1068,1158,0267,712

7,5977,3107,0056,7756,570

6,3455,9005,6605,5215,390

5,1725,0294,8734,7384,506

4,1283,8543,6503,5353,419

3,3483,2753,2283,1693,075

3,0262,9972,8592,6892,501

2,402• 2,324

2,2482,174

3,403

2,865

2,727

2,6792,6522,5552,4362,231

2,1192,1892,2672,3372,252

2,3292,2362,1442,0892,081

2,0361,9521,9401,9821,952

1,8851,8901,8271,7801,604

1,4821,3601,2531,2131,176

1,1751,1611,1461,1681,314

1,3171,3771,2961,2681,273

1,303J 1,3171,3301,344

365

340

331

341344348357362

354352355356360

345344349348346

340324324324324

324302295298298

298294306300290

293305294321328

336337345338349

352366365304

99

93

96

9797100101102

1009898100102

101104104103102

102100

99

97979797

9696979797

9798979898

9699100102105

10310210094

469

457

419

417411421416412

386371351342329

310310296285274

264249231222216

207198189183174

156147143138133

126123117115112

1071031009593

929086

106

99

104

106104102101101

101105106106107

108108107107107

107105104103104

103102103103103

102101103102101

10410210110098

9798100100100

101101102

83

8082858686

8587869092

9698100104107

10410399

99101113

1314151618

1921232424

2627272832

3235384346

4956666973

7581869092

8396100107118

120121111

28

26

37

3942444848

5049515256

5862636365

6669687377

7781838385

928993

96102104107

99

93101100104111

108104105

}Farm population as defined by Department of Agriculture and Department of Commerce, i.e., civilian population living on farms inrural areas, regardless of occupation. See also footnote 7.

2 Total population of United States including Armed Forces overseas, as of July 1.3 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 6-29) because of differences in the method of approach, in concepts ofemployment, and in time of month for which the data are collected.

4 Acreage harvested plus acreages in fruits, tree nuts, and farm gardens.5 Fertilizer, lime, and pesticides.6Nonfarm constant dollar value of feed, seed, and livestock purchases.7 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, and 1982 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;and 6,870 and 3.0, respectively.

8 Previous basis for farm employment series has been discontinued. Employment after 1980 is estimated.

Note.—Population includes Alaska and Hawaii beginning 1960.

Sources: Department of Agriculture and Department of Commerce (Bureau of the Census).

327


TABLE B-95.—Indexes of prices received and prices paid by farmers, 1946-83

[1977=100]

Year or month

Prices received by farmers

Allfarmprod-ucts

Crops

Live-stockand

prod-ucts

Prices paid by farmers

Allcommod-

ities,services,interest,

taxes,and

wagerates1

Production items

Total2

Tractorsandself-pro-

pelledmachin-

ery

Fertil-izer

Fuelsand

energy

Wagerates

Adden-dum:Aver-agefarmrealestatevalueper

acre3

19461947194819491950195119521953195419551956195719581959196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983"1982:JanFebMarAprMayJuneJulyAugSeptOctNovDec

1983:JanFebMar

May"..June...July....Aug....

SNovDec

5260635556666356545150515553

52535353525458555659

60626998105101102100115132

134139133135

132133133135139138137133136128128127

128132134136137134

131139136134135140

5361595254616255565354525251

51525455555355525250

52566091117105102100105116

125134121128

126123120123126125125117124114117114

114118121127129126

125139135134134136

5060655658706456524947515753

53525351495460576067

6767771049498101100124147

144143145141

137143145147151150147148147142139139

142146146145144141137139137135135144

3035383637414240404040424343

44444545454749495153

55586271818995100108123

138150156160

154154155155156156157157157156156156

157158159159160160

160160161161162162

3339434142474744444343444646

46464747474850505052

54576173839197100108125

138148149153

147148149149150151151150149148148148

150151152153154154

152153154153154155

3940424447

49515458688291100109122

136152165174

159159161161161167167167168168168168

168168172172172176

176176177177177177

4550555654575959595857585857

57585857575756555248

4850525692120102100100108134144144137

143143147147146146146146146141141139

139139138138138138

138138138134134136

494950505152535457798893100105137188213210202

217215206199201211214212212211212209

205199191198203204

205206206206203201

2022232222252627272728293032

33333435363841444853

57596369798593100107117126137143147

143143143143143143143143143143143143

147147147147147147

147147147147147147

1113141414161818181919212223

24252627293133353840

42434753667586100109125145158157148

157

148

1 Includes items used for family living, not shown separately.2 Includes other items not shown separately.3 Average for 48 States. Annual data are for March 1 of each year through 1975, for February 1 for 1976 through 1981, and forApril 1 for 1982 and 1983. Monthly data are for first of month.

Source-. Department of Agriculture.

328


TABLE B-96.— U.S. exports and imports of agricultural commodities, 1940-83


Year

Exports

Total1 Feedgrains

Foodgrains2

Oil-seedsand

prod-ucts

Cot-ton

To-bacco

Ani-malsand

prod-ucts

Imports

Total1

Crops,fruits,

andvege-

tables3

Ani-malsand

prod-ucts

Cof-fee

Cocoabeansand

prod-ucts

Agri-cultural

tradebalance

19401941194219431944

19451946194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

198019811982

Jan-Nov:1982....1983....

0.5.7

1.22.12.1

2.33.14.03.53.6

2.94.03.42.83.1

3.24.24.53.94.0

4.85.05.05.66.3

6.26.96.46.36.0

7.37.79.4

17.7"21.9

21.923.023.629.434.7

41.243.336.6

33.732.6

PI(4)

5.96.5

1.21.41.31.51.7

1.41.81.51.41.2

1.41.31.84.75.4

6.24.73.65.56.3

7.99.67.9

.6

.6

.7

.81.0

1.21.21.31.31.3

1.92.22.44.35.7

4.55.16.68.28.9

9.49.69.1

0.2.1.1.2.1

.3

.5

.4

.5

.9

1.01.1.9.5

.5

.71.0.7.4

1.0.9

'.S.7

.5

.4

.5

.5

.3

.4

.6

!91.3

1.01.01.51.72.2

2.92.32.0

.2

.1

.2

.4

.3

.2

.3

.3

.3

.2

.3

.3

.4

.3

.4

.4

.3

.4

.4

.4

.4

.4

.4

.5

.5

.5

0.1

.81.21.3

.9

.9

.7

.5

.4

.3

.5

.3

.4

.5

.6

J.5.6

.6

.6

.6

.7

.91.01.11.61.8

1.72.42.73.03.8

3.84.23.9

3.65 2.8

1.31.71.31.51.8

1.72.32.83.12.9

4.05.24.54.24.0

4.04.04.03.94.1

3.83.73.94.04.1

4.14.54.55.05.0

5.85.86.58.4

10.2

9.311.013.414.816.7

17.416.815.2

14.115.3

()0.1

0.2.3.5.4.3

.4

.4

.4

.6

.4

.71.1.7.6.5

.5

.4

.5

.7

3.35 3.2

0.1.2

.3

.3

.3

.5

.6

'.S

1.11.41.41.51.5

1.41.41.41.21.1

1.01.01.01.01.2

1.11.11.01.2.9

1.21.21.31.71.6

1.72.94.24.04.2

4.22.92.9

- 0 . 8- 1 . 0- . 1

.6

.3

'.S1.2.3.7

- 1 . 1- 1 . 1- 1 . 1- 1 . 3—.9

.2

.6(4 )

1.01.31.21.62.3

2.12.41.91.31.1

1.51.92.99.3

11.7

12.612.010.214.618.0

23.926.621.4

19.717.3

1 Total includes items not shown separately.2 Rice, wheat, and wheat flour.3 Includes nuts, fruits, and vegetable preparations.4 Less than $50 million.5 Total includes major animal products.

Note.—Data derived from official estimates released by the Bureau of the Census, Department of Commerce. Agricultural commoditiesare defined as (1) nonmarine food products and (2) other products of agriculture which have not passed through complex processes ofmanufacture. Export value, at U.S. port of exportation, is based on the selling price and includes inland freight, insurance, and othercharges to the port. Import value, defined generally as the market value in the foreign country, excludes import duties, ocean freight,and marine insurance.


329


TABLE B-97.—Balance sheet of the farming sector, 1929-84


Beginning ofyear

Assets

TotalReal

estateLive-

stock 1Machin-ery andmotor

vehicles

Other physical assets

Crops2

House-hold

equip-mentand

furnish-ings

Financial assets

Depos-itsandcur-

rency

U.S.savingsbonds

Invest-ments incooper-atives

Claims

Total estatedebt

Otherdebt

Propri-etors'

equities

1929

1933...

1939

48.0

30.8

34.1

6.6

3.0

5.1 3.2

9.8

19401941194219431944

19451946194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

1975 3

1976197719781979

19801981198219831984 4

53.054.862.973.684.0

93.8102.9115.9127.4134.6

134.5154.3170.1167.6164.5

168.9173.6182.8191.3207.6

210.2210.9219.3227.6235.8

243.8260.8274.3288.0302.8

314.9326.0351.8394.8478.5

502.6576.3664.2736.5873.4

1,005.51,089.81,083.41,048.81,067.6

33.634.437.541.648.2

53.961.068.573.776.6

77.689.598.5

100.198.7

102.2107.5115.7121.8131.1

137.2138.5144.5150.2158.6

167.5179.2189.1199.7209.2

215.8223.2239.6267.3327.7

359.7418.1496.4554.7655.0

755.9828.4818.9772.5792.0

5.15.37.19.69.7

9.09.7

11.913.314.4

12.917.119.514.811.7

11.210.611.013.917.7

15.215.616.417.315.9

14.517.619.018.820.2

23.523.727.334.142.4

24.529.429.031.951.3

61.460.853.652.951.3

3.13.34.04.95.4

6.55.45.37.4

10.1

12.214.116.717.418.4

18.719.320.220.121.8

22.722.222.523.523.9

24.826.027.429.831.3

32.334.436.639.344.2

54.764.071.077.085.1

96.8102.5108.8111.0113.8

2.73.03.85.16.1

6.76.37.19.08.6

7.67.98.89.09.1

9.68.38.37.69.3

7.78.08.89.39.8

9.29.7

10.09.6

10.6

10.910.711.814.522.0

23.321.322.124.828.0

33.535.936.342.137.0

4.24.14.84.84.7

5.25.67.28.18.9

8.49.6

10.19.69.5

9.710.09.69.69.4

9.28.78.98.88.8

8.48.48.38.89.4

9.610.010.811.912.3

11.211.712.113.816.0

17.219.420.822.623.5

3.23.54.25.46.6

7.99.4

10.29.99.6

9.19.19.49.49.4

9.49.59.49.5

10.0

9.28.78.89.29.2

9.610.010.310.911.5

11.912.413.214.014.9

14.014.514.815.215.5

15.916.216.717.418.2

0.2.4.5

1.12.2

3.44.24.24.44.6

4.74.74.74.64.7

5.05.25.15.15.2

4.74.64.54.44.2

4.24.13.93.83.8

3.73.63.74.04.2

3.83.93.83.94.2

4.03.83.63.53.6

0.8.9.9

1.01.1

1.21.41.51.71.9

2.12.32.52.72.9

3.03.23.53.73.9

4.24.54.85.05.4

5.65.96.26.56.8

7.28.08.89.8

10.9

11.413.414.915.418.3

20.822.824.626.828.2

53.054.862.973.684.0

93.8102.9115.9127.4134.6

134.5154.3170.1167.6164.5

168.9173.6182.8191.3207.6

210.2210.9219.3227.6235.8

243.8260.8274.3288.0302.8

314.9326.0351.8394.8478.5

502.6576.3664.2736.5873.4

1,005.51,089.81,083.41,048.81,067.6

8.5

6.8

6.66.56.46.05.4

4.94.84.95.15.3

5.66.16.77.27.7

8.29.09.8

10.411.1

12.112.813.915.216.8

18.921.223.125.127.4

29.230.332.235.139.5

44.649.655.263.371.4

85.495.5

105.5109.5111.9

3.44.04.13.93.5

3.43.13.54.26.1

6.97.08.08.99.2

9.49.89.5

10.012.6

12.713.414.616.217.6

17.919.520.922.323.1

23.824.127.429.833.8

37.042.048.759.469.4

80.486.596.1

106.8103.2

43.044.352.563.875.1

85.495.0

107.5118.1123.3

122.1141.3155.5151.5147.6

151.2154.9163.4170.8183.9

185.4184.7190.9196.2201.4

207.0220.1230.2240.6252.3

261.9271.5292.2330.0405.2

421.0484.8560.4613.8732.6

839.7907.8881.7832.5852.5

1 Beginning with 1961, horses and mules are excluded.2 Includes all crops held on farms and crops held off farms by farmers as security for Commodity Credit Corporation loans.3 Beginning 1975, data are for farms included in the new farm definition, that is, places with sales of $1,000 or more annually.4 Forecast.

Note.—Beginning 1960, data include Alaska and Hawaii.


330


INTERNATIONAL STATISTICS

TABLE B-98.— Exchange rates, 1967-83

[Cents per unit of foreign currency, except as noted]

Year and month

March 1973

196719681969

19701971197219731974

19751976197719781979

1980198119821983

1982:1IIIllIV

1983:1IIIllIV

March 1973

196719681969

19701971197219731974

19751976197719781979

1980198119821983

1982:1IIIllIV

1983:1IIIII....IV

Belgian franc

2.5378

2.01252.00261.9942

2.01392.05982.27162.57612.5713

2.72532.59212.79113.18093.4098

3.42472.70072.18441.9561

2.41662.22162.10172.0529

2.11102.01781.88381.8357

Netherlandsguilder

34.834

27.75927.62627.592

27.65128.65031.15335.97737.267

39.63237.84640.75246.28449.843

50.36940.19137.42735.035

38.83637.92036.60936.526

37.54535.82033.81633.300

Canadiandollar

100.333

92.68992.80192.855

95.80299.021100.93799.977102.257

98.297101.41094.11287.72985.386

85.53083.40881.01181.136

82.72180.36680.02281.199

81.46381.21481.11080.743

Swedish krona

22.582

19.37319.34919.342

19.28219.59221.02222.97022.563

24.14122.95722.38322.13923.323

23.64719.86015.91413.035

17.43216.92916.22913.660

13.48613.26012.80612.626

French franc

22.191

20.32320.19119.302

18.08718.14819.82522.53620.805

23.35420.94220.34422.21823.504

23.69418.48915.19913.123

16.68615.94914.39614.143

14.51713.40312.56112.251

Swiss franc

31.084

23.10423.16923.186

23.19924.32521.19331.70033.688

38.74340.01341.71456.28360.121

59.69751.02549.19647.605

53.35850.12447.27246.739

49.59548.17846.56346.306

German mark

35.548

25.08425.04825.491

27.42428.76831.36437.75838.723

40.72939.73743.07949.86754.561

55.08944.36241.18639.156

42.63042.04840.26839.998

41.51340.25637.82837.344

United Kingdompound

247.24

275.04239.35239.01

239.59244.42250.08245.10234.03

222.16180.48174.49191.84212.24

232.58202.43174.80151.59

184.61177.95172.41164.81

153.28155.21150.95146.91

Italian lira

0.17604

.16022

.16042

.15940

.15945

.16174

.17132

.17192

.15372

.15338

.12044

.11328

.11782

.12035

.11694

.08842

.07386

.06582

.07932

.07575

.07169

.06968

.07139

.06773

.06351

.06156

Japanese yen

0.38190

.27613

.27735

.27903

.27921

.28779

.32995

.36915

.34302

.33705

.33741

.37342

.47981

.45834

.44311

.45432

.40151

.42096

.42821

.41003

.38614

.38697

.42436

.42109

.41252

.42714

Multilateral trade-weighted value ofthe U.S. dollar (March 1973=100)

Nominal

100.0

120.0122.1122.4

121.1117.8109.199.1101.4

98.5105.6103.392.488.1

87.4102.9116.6125.3

109.9114.0119.8122.2

119.4123.0128.7130.2

Real1

100.0

98.899.2

93.997.393.184.283.2

84.8100.8111.7117.3

106.0109.2115.3116.1

112.1115.3120.5121.3

1 Adjusted by changes in consumer prices.Source: Board of Governors of the Federal Reserve System.

331


TABLE B-99.—U.S. international transactions, 1946-83

[Millions of dollars; quarterly data seasonally adjusted, except as noted. Credits ( + ), debits ( - ) ]

Year orquarter

1946194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

198019811982

1981:IIIIllIV

1982:1IIIllIV

1983:IIIIll"

Merchandise1

Exports

11,76416,09713,26512,213

10,20314,24313,44912,41212,929

14,42417,55619,56216,41416,458

19,65020,10820,78122,27225,501

26,46129,31030,66633,62636,414

42,46943,31949,38171,41098,306

107,088114,745120,816142,054184,473

224,237237,019211,217

60,79360,03157,81258,383

55,63654,99652,24148,344

49,50648,91350,585

Imports

-5,067-5,973-7,557-6,874

-9,081-11,176-10,838-10,975-10,353

-11,527-12,803-13,291-12,952-15,310

-14,758-14,537-16,260-17,048-18,700

-21,510-25,493-26,866-32,991-35,807

-39,866-45,579-55,797-70,499

-103,811

-98,185-124,228-151,907-176,020-212,028

-249,781-265,086-247,606

-65,275-67,373-66,214-66,224

-61,739-60,850-65,319-59,698

58,316-63,574-68,754

2

Net

6,69710,1245,7085,339

1,1223,0672,6111,4372,576

2,8974,7536,2713,4621,148

4,8925,5714,5215,2246,801

4,9513,8173,800

635607

2,603-2,260-6,416

911-5,505

8,903-9,483

-31,091-33,966-27,555

-25,544-28,067-36,389

-4,482-7,342-8,402-7,841

-6,103-5,854

-13,078-11,354

8,810-14,661-18,169

Investment income3

Receipts

7721,1021,9211,831

2,0682,6332,7512,7362,929

3,4063,8374,1803,7904,132

4,6164,9995,6186,1576,824

7,4377,5288,0209,368

10,912

11,74712,70714,76421,80827,587

25,35129,28632,17942,24564,132

72,44586,24384,146

20,68321,71722,04321,801

20,76122,31621,56919,499

17,69719,02720,622

Payments

- 2 1 2- 2 4 5-437- 4 7 6

-559- 5 8 3- 5 5 5- 6 2 4- 5 8 2

- 6 7 6- 7 3 5- 7 9 6- 8 2 5

-1,061

-1,237-1,245-1,324-1,561-1,784

-2,088-2,481-2,747-3,378-4,869

-5,516-5,436-6,572-9,655

-12,084

-12,564-13,311-14,217-21,680-32,914

-42,875-52,760-56,842

-12,477-13,505-13,888-12,892

-13,824-14,779-14,748-13,491

12,608-13,326-13,694

Net

560857

1,4841,355

1,5092,0502,1962,1122,347

2,7303,1023,3842,9653,071

3,3793,7544,2944,5965,040

5,3495,0475,2735,9906,043

6,2317,2718,192

12,15315,503

12,78715,97517,96220,56531,218

29,57033,48327,304

8,2068,2128,1558,909

6,9377,5376,8216,008

5,0895,7016,928

Netmilitarytransac-

tions

- 4 9 3- 4 5 5- 7 9 9- 6 2 1

- 5 7 6-1,270-2,054-2,423-2,460

-2,701-2,788-2,841-3,135-2,805

-2,752-2,596-2,449-2,304-2,133

-2,122-2,935-3,226-3,143-3,328

-3,354-2,893-3,420-2,070-1,653

- 7 4 6559

1,528621

-1,778

-2,286-1,355

179

- 5 8 3- 4 3 5

179- 5 1 5

- 5 1201

54- 2 6

516117

- 2 1

Nettraveland

transpor-tation

receipts

733946374230

- 1 2 0298

83- 2 3 8-269

-297- 3 6 1- 1 8 9- 6 3 3- 8 2 1

- 9 6 4- 9 7 8

-1,152-1,309-1,146

-1,280-1,331-1,750-1,548-1,763

-2,038-2,345-3,063-3,158-3,184

-2,792-2,558-3,565-3,573-2,935

-1,434- 5 9 8

-2,095

- 2 6 6- 1 7 8- 1 8 4

30

- 2 0 8- 5 6 1-557- 7 6 9

935-1,222

- 7 4 5

Otherserv-ices,net3

310145175208

242254309307305

299447482486573

579594809960

1,041

1,3871,3651,6121,6301,833

2,1802,4952,7663,1843,986

4,5984,7115,2726,0135,735

7,1728,0607,822

1,9642,0522,0531,988

2,0501,9141,9061,951

2,1142,2342,092

Balanceon goods

andservices14

7,80711,6176,9426,511

2,1774,3993,1451,1952,499

2,9285,1537,1073,1451,166

5,1326,3466,0257,1679,604

8,2855,9635,7083,5633,393

5,6252,269

-1,94111,0219,147

22,7499,205

-9,894-10,340

4,686

7,47711,523

-3,177

4,8392,3091,8012,571

2,6253,236

-4,854-4,190

2,026-7,832-9,915

Remit-tances,

pensions,and otherunilateral

transfersl

-2,922-2,625-4,525-5,638

-4,017-3,515-2,531-2,481-2,280

-2,498-2,423-2,345-2,361-2,448

-2,308-2,524-2,638-2,754-2,781

-2,854-2,932-3,125-2,952-2,994

-3,294-3,701-3,854-3,881

5 -7 ,186

-4,613-4,998-4,617-5,106-5,649

-7,056-6,931-8,034

-1,495-1,567-1,884-1,986

-2,061-1,802-1,742-2,431

-1,561-1,823-2,061

Balanceon

currentac-

count 14

4,8858,9922,417

873

-1,840884614

-1,286219

4302,7304,762

784-1,282

2,8243,8223,3874,4146,823

5,4323,0312,583

611399

2,331-1,433-5,795

7,1401,962

18,1364,207

-14,511-15,446

- 9 6 4

4214,592

-11,211

3,344742

- 8 3585

5641,434

-6,596-6,621

-3,587-9,655

-11,976

1 Excludes military.2 Adjusted from Census data for differences in valuation, coverage, and timing.3 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.4 In concept, balance on goods and services is equal to net exports and imports in the national income and product accounts (and

the sum of balance on current account and allocations of special drawing rights is equal to net foreign investment in the accounts),although the series differ because of different handling of certain items (gold, extraordinary military shipments, etc.), revisions, etc.


3S2


TABLE B-99.—U.S. international transactions, 1946-83—Continued

[Millions of dollars,- quarterly data seasonally adjusted, except as noted]

Year orquarter

1946194719481949

19501951195219531954

19551956195719581959

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

198019811982

19811IIIIIIV

19821IIIIIIV

19831IIIll P

U.S. assets abroad, net[increase/capital outflow ( - ) ]

Total

-4,099-5,538-4,174-7,270-9,560

-5,716-7,321-9,757

-10,977-11,585

-9,337-12,475-14,497-22,874-34,745

-39,703-51,269-34,785-61,130-64,331

-86,052-110,601-118,045

-23,335-22,170-17,279-47,817

-31,456-40,934-26,099-19,553

-21,699- 6 5 8

-6,429

U.S.officialreserveassets6

6233 315

- 1 7 3 6266

1,75833

4151,256

480

182-869

-1,1652,2921,035

2,145607

1,535378171

1,225570

53870

-1,179

2,4812,349

- 4158

-1,467

-849-2,558

- 3 7 5732

-1,133

-8,155-5,175-4,965

-4,529- 9 0 5

- 4262

-1,089-1,132

- 7 9 4-1,950

-78716

529

OtherU.S.

Govern-mentassets

-1,100- 9 1 0

-1,085-1,662-1,680

-1,605-1,543-2,423-2,274-2,200

1,589-1,884-1,568-2,644

5 366

-3,474-4,214-3,693

4,660-3,746

-5,140-5,078-5,732

-1,361-1,469-1,274

- 9 7 3

8071,489

-2,502- 9 3 4

-1,053-1,162-1,188

U.S.privateassets

-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

-72,757-100,348-107,348

-17,445-19,796-16,001-47,106

29,56038,313

-22,803-16,670

-19,859488

-5,770

Foreign assets in the U.S., net[increase/capital inflow ( + )]

Total

2,2942,7051,9113,2173,643

7423,6617,3799,928

12,702

6,35922,97021,46118,38834,241

15,67036,51851,31964,03638,752

54,92280,67887,866

8,43713,95916,73141,551

27,12431,61217,61311,517

16,45210,95618,487

Foreignofficialassets

1,473765

1,2701,9861,660

134-6723,451- 7 7 4

-1,301

6,90826,87910,4756,026

10,546

7,02717,69336,81633,678

-13,665

15,5665,4303,172

5,517-2,999-5,880

8,792

3,0611,9302,6421,661

491,973

-3,235

Otherforeignassets

8211,939

6411,2311,983

6074,3333,928

10,70314,002

- 5 5 0-3,90910,98612,36223,696

8,64318,82614,50330,358§2,416

39,35675,24884,694

2,92016,95822,61132,760

30,18529,68214,9729,855

16,4038,983

21,722

Alloca-tions ofspecialdrawingrights(SDRs)

867717710

1,139

1,1521,093

1,093

Statisticaldiscrepancy

Total(sum of

the itemswith signreversed)

-1,019- 9 8 9

-1,124- 3 6 0

907

- 4 5 8629

- 2 0 5438

-1,516

219-9,779

1,879-2,654-1,458

5,89710,544

-2,02312,54025,404

29,55624,23841,390

10,4607,470

6325,680

3,7687,887

15,08214,657

8,833- 6 4 4- 8 2

Of which:Seasonaladjust-ment

discrep-ancy

-1,057855

-1,1451,350

- 7 2 9881

-1,1901,042

-212792

-1,355

5 Includes extraordinary U.S. Government transactions with India.6 Consists of gold, special drawing rights, convertible currencies, and the U.S. reserve position in the International Monetary Fund

(IMF).

Note.—Quarterly data for U.S. official reserve assets and foreign assets in the United States are not seasonally adjusted.


4 2 4 - 4 5 6 0 - 8 4 - 2 2 333


TABLE B-100.—U.S. merchandise exports and imports by principal end-use category, 1965-83

[Millions of dollars,- quarterly data seasonally adjusted]

Year or quarter

Exports

Total Agricul-tural

Nonagricultural

Total

Capitalgoodsexceptauto-

motive

Othergoods

Imports

Total

Petro-leumand

products

Nonpetroleum

Total

Indus-trial

suppliesand

materi-als

Othergoods

19651966196719681969

1970..1971..1972..1973..1974..

1975....1976....1977....1978....1979....

1980..1981..1982..

1981:I

IllI V

1982:IIIIII....IV....

1983:III....

26,46129,31030,66633,62636,414

42,46943,31949,38171,41098,306

107,088114,745120,816142,054184,473

224,237237,019211,217

60,79360,03157,81258,383

55,63654,99652,24148,344

49,50648,91350,585

6,3056,9496,4536,2976,098

7,3817,8369,514

17,97722,410

22,24323,38024,33229,90235,595

42,15844,03437,230

12,23010,9949,965

10,845

10,08710,4358,4428,266

9,0098,8309,442

20,15622,36124,21327,32930,316

35,08835,48239,86853,43375,896

84,84691,36596,484

112,152148,879

182,079192,987173,986

48,56549,03747,84747,538

45,54944,56243,79840,077

40,49740,08341,143

8,0528,9079,934

11,11112,422

14,65915,37216,91421,99930,878

36,63939,11339,76646,47158,843

74,17881,54873,816

20,14721,10220,14720,152

19,33719,19518,43116,853

17,34016,95216,731

12,10413,45414,27916,21817,894

20,42920,11022,95431,43445,018

48,20752,25256,71865,68190,036

107,901111,439100,170

28,41827,93527,70027,386

26,21225,36725,36723,224

23,15723,13124,412

21,51025,49326,86632,99135,807

39,86645,57955,79770,499103,811

98,185124,228151,907176,020212,028

249,781265,086247,606

65,27667,37366,21466,224

61,73960,85065,31959,698

58,31663,57468,754

2,0342,0782,0912,3842,649

2,9293,6414,6508,415

26,608

27,01834,57244,98242,31260,482

79,26377,79461,201

20,38620,80119,00817,599

15,47313,36117,23415,133

10,49713,02716,585

19,47623,41524,77530,60733,158

36,93941,93751,14762,08577,204

71,16789,656106,925133,706151,546

170,518187,292186,404

44,89046,57247,20748,624

46,26647,48948,08544,565

47,81950,54752,168

9,12310,2359,956

12,02711,662

12,25013,59516,00219,18827,421

23,62029,14534,95141,30148,494

54,02757,42849,764

13,73014,54814,70814,442

12,83712,20912,62212,096

12,51313,34013,681

10,35313,18014,81918,58021,496

24,68928,34235,14542,89749,783

47,54760,51171,97492,405

103,052

116,491129,864136,640

31,16032,02432,49934,182

33,42935,28035,46332,469

35,30637,20738,487

Note.—Data are on an international transactions basis and exclude military shipments.


334


TABLE B-101.—U.S. merchandise exports and imports by area, 1974-83


Item 1974 1975 1976 1977 1978 1979 1980 1981 1982

1983 first3 quartersat annual

rate1

Exports

Industrial countries..,

CanadaJapanWestern EuropeAustralia, New Zealand,

and South Africa

Other countries, exceptEastern Europe

OPEC2..Other3..

Eastern Europe

Imports

Industrial countries

CanadaJapanWestern EuropeAustralia, New Zealand,

and South Africa

Other countries, exceptEastern Europe

OPEC2..Other3..

98,306

64,487

21,84210,72428,164

3,757

32,082

6,21925,863

1,737

103,811

61,254

22,55412,41424,267

2,019

41,580

17,23424,346

107,088

66,496

23,5379,567

29,884

3,508

37,343

9,95627,387

3,249

98,185

56,117

21,85411,25720,764

2,242

41,334

18,89722,437

114,745

72,335

26,33610,19631,883

3,920

38,287

11,56126,726

4,123

124,22*

67,665

26,65215,53123,003

2,479

55,379

27,40927,970

Eastern Europe.., 977 734 875

120,816

76,970

28,53310,56634,094

3,777

40,951

12,87728,074

2,895

4151,907

79,447

29,86418,56528,226

2,792

70,679

35,77834,901

1,127

142,054

87,948

31,22912,96039,546

4,213

50,213

14,84635,367

3,893

4176,020

99,357

33,75824,54136,618

4,440

74,403

33,28641,117

1,508

184,473

115,930

38,69017,62954,177

5,434

62,630

14,53748,093

5,913

4 212,028

112,809

39,22926,26141,826

5,493

96,137

45,03951,098

224,237

137,152

41,62620,80667,603

7,117

82,942

17,36465,578

4,143

4 249,781

127,908

42,90331,21747,255

6,533

119,142

55,60263,540

237,019

141,918

46,01621,79665,108

8,998

90,639

21,09769,542

4,439

4 265,086

144,339

48,25837,59852,873

5,610

119,194

49,93469,260

211,217

127,326

39,27520,69459,701

7,656

80,142

20,65159,491

3,749

l247,606

144,099

48,47337,68552,908

5,033

102,417

31,51770,900

1,896 1,444 1,553 1,067

198,672

125,371

42,80821,13154,860

6,572

70,884

15,30555,579

2,417

4 254,192

150,536

53,40539,04352,891

5,197

102,295

24,39577,900

1,361

1 Preliminary; seasonally adjusted.2 Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.3 Latin American Republics, other Western Hemisphere, and other countries in Asia and Africa, less members of OPEC.4 Trade with international organizations is included in totals for 1976-82, but not in area detail. This includes imports of

nonmonetary gold from International Monetary Fund in 1976-80; an export of tin to International Tin Council (ITC) in 1981; and animport of tin from ITC in 1982.

Note.—Data are on an international transactions basis and exclude military.


335


TABLE B-102.—U.S. merchandise exports and imports by commodity groups, 1965-83

[Millions of dollars; monthly data seasonally adjusted]

Year ormonth

Totaldomes-tic andforeign

exports2

Merchandise exports1

Domestic exports

Total2

Food,bever-ages,and

tobacco

Crudemateri-als andfuels4

Manu-facturedgoods5

Merchandise imports

General imports6

Total3

Food,bever-ages,and

tobacco

Crudemateri-als andfuels4

Manu-facturedgoods5

Total,c.i.f.

value7

Merchandise trade balance

Exportsless

imports,customs

value

Exportsless

imports,f.a.s.

Exportsless

imports,c.i.f.

19651966196719681969

19701971197219731974

1974*...1975*...1976*...1977*...1978*...1979*...

1980

198119821983

1982:JanFebMar...,

yJune-July...Aug...Sept..Oct....Nov...Dec...

1983-.Jan....Feb....Mar...Apr....May...June..

July...Aug...Sept..Oct....Nov...Dec...

F.a.s. value8 Customs value

26,74229,490

26,39929,054

4,5195,1864,7104,5924,446

5,0585,0766,569

12,93815,233

15,23316,79317,23415,96320,60424,587

30,407

33,20626,97726,979

2,3042,4812,6652,4952,4652,418

1,9022,1531,9262,1282,0511,966

2,3122,2242,3072,0792,0102,194

2,1142,0862,3372,4182,5042,387

4,2734,4044,7264,8655,006

6,6926,4417,091

10,73515,802

15,80215,19716,09518,57920,95728,222

33,719

33,02233,51829,555

3,0063,2683,0122,9432,8802,828

2,6982,6942,7512,6882,4402,420

2,7602,4432,3752,5492,2792,377

2,3822,7812,7562,2892,2342,570

17,43319,218

21,42725,618

4,013 5,4404,590 5,718

11,24414,44615,75620,62423,011

25,90730,41437,76745,00156,202

5,3153,872

31,03034,06337,332

42,65943,54949,19970,82397,998

98,092107,652115,223121,232143,681181,860

220,630

233,677212,193200,486

18,58418,61418,46218,00518,12418,823

18,06017,46317,32016,67115,85216,347

17,39316,32616,75216,07415,56617,008

16,62916,63017,38716,95116,84817,180

30,64633,62636,788

42,02542,91148,39969,73096,634

96,679106,161113,549119,024141,142178,633

216,515

228,899207,076195,917

18,19718,25117,98617,60317,71318,387

17,67117,14316,58416,28415,47615,913

17,00715,98416,33515,72215,18616,652

16,30016,24317,02216,49916,44916,777

20,84423,81826,785

29,34430,44333,74044,73163,523

63,52370,95177,24180,15194,473116,587

143,891

26,88933,22636,043

39,95145,56355,58369,476101,394

4,7015,3655,308

6,2306,4047,3799,23510,701

5,3676,0316,391

6,5427,2688,83813,44631,842

F.a.s. value 8

102,55998,503123,477150,390174,757209,458

244,871

10,7099,92311,89114,22715,74317,735

32,06432,59641,47453,55451,90171,390

18,551 93,973 125,122

55,22351,08064,77576,554100,317112,226

Customs value

154,283139,716132,408

12,35611,95411,82911,55511,78812,536

12,53611,80411,33110,94210,48410,648

11,26310,74311,06210,54510,33111,560

11,12510,85511,18911,24911,19811,314

260,982243,952

22,57319,57020,01917,71420,47721,187

19,84922,93020,58121,00618,89219,154

20,02119,01519,52519,77121,51421,024

21,95022,78222,17524,76323,179

18,350 92,873 142,47517,817 74,404 144,022

1,2451,2171,4551,4431,5411,537

1,4361,6811,7011,6861,4991,414

1,5821,5301,4791,6121,6521,456

1,5601,5511,5871,7221,554

8,2655,8505,7255,0354,9096,175

6,6717,1955,9176,7275,7856,158

5,9114,4134,6554,5115,8455,562

6,0146,5776,4456,8895,892

12,42511,93912,13810,65413,16312,830

11,20013,45612,30411,90310,97810,988

11,98112,56112,67212,85613,35113,249

13,84213,91313,37715,52815,197

28,74535,32038,241

42,42948,34258,86273,573108,392

110,875105,880132,498160,411186,045222,228

256,984

273,352254,885269,878

23,59820,39920,88918,50821,42222,129

20,75623,99221,51821,93219,73720,002

20,96219,90620,38120,67522,47321,964

22,98823,81723,19425,91724,24823,481

4,141837

1,289

2,708-2,014-6,384

1,348-3,396

-4,4679,149

-8,254-29,158-31,076-27,599

-24,241

-27,305-31,759

-3,989- 9 5 6

-1,557291

-2,353-2,364

-1,790-5,467-3,261-4,335-3,041-2,808

-2,628-2,689-2,774-3,697-5,948-4,016

-5,321-6,152-4,788-7,812-6,331

2,283-1,257

-909

230-4,793-9,663

2,752-10,395

-12,7831,772

-17,274-39,179-42,364-40,368

-36 ,354

-39,675-42,691-69,392

-5,015-1,785-2,427

- 5 0 3-3,297-3,306

-2,697-6,529-4,198-5,261-3,885-3,655

-3,569-3,580-3,630-4,601-6,907-4,956

-6,359-7,187-5,807-8,966-7,401-6,301

1 Beginning I960, data have been adjusted for comparability with the revised commodity classifications effective in 1965.2 Department of Defense shipments of grant-aid military supplies and equipment under the Military Assistance Program are excluded

from total exports.3 Total includes commodities and transactions not classified according to kind.4 Includes fats and oils.5 Includes machinery, transportation equipment, chemicals, metals, and other manufactures. Export data for these items include

military grant-aid shipments through 1977 and exclude them thereafter.6 Total arrivals of imported goods other than intransit shipments.7 C.i.f. (cost, insurance, and freight) import value at first port of entry into United States. Data for 1967-73 are estimates.8 F.a.s. (free alongside ship) value basis at U.S. port of exportation for exports and at foreign port of exportation for imports.

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 suppliesfor the U.S. Armed Forces. Exports include shipments under Agency for International Development and Food for Peace programs as wellas other private relief shipments.

Data for 1980 and 1981 include trade of the U.S. Virgin Islands, except that for 1980 Virgin Islands exports are reflected only in thefigures for domestic and foreign exports combined, total domestic exports, and trade balance.

*Data for 1974-79 for domestic and foreign exports combined, total domestic exports, total general imports, and trade balanceinclude trade of the Virgin Islands.

Source: Department of Commerce (Bureau of the Census and International Trade Administration, Office of Trade Information andAnalysis, Trade Performance Division).

336


TABLE B-103.—International investment position of the United States at year-end, selected years, 1970-82


Type of investment 1970

58.6

165.5

14.5

11.1.9

1.9.6

32.1

29.72.5

118.8

75.521.0

13.8

8.5

106.8

26.1

17.71.7

6.7.0

80.7

13.3

22.71.2

34.7

8.8

1972

37.1

199.0

13.2

10.52.0

.5

.2

36.1

34.12.0

149.7

89.927.6

20.7

11.4

161.8

63.2

52.91.6

8.5.2

98.7

14.9

21.21.2

50.7

10.7

1974

58.8

255.7

15.9

11.72.4

1.9.0

38.4

36.32.1

201.5

110.128.2

46.2

17.0

196.9

79.8

58.12.6

18.4.6

117.1

25.1

41.81.7

34.9

13.6

1976

83.8

347.2

18.7

11.62.4

4.4.3

46.0

44.11.9

282.4

136.844.2

81.1

20.3

263.4

104.2

72.68.8

17.25.6

159.1

30.8

53.57.0

54.9

13.0

1978

76.2

447.9

18.7

11.71.6

1.04.4

54.2

52.31.9

375.0

162.753.4

130.8

28.1

371.6

173.0

128.512.7

23.38.5

198.7

42.5

77.78.9

53.6

16.0

1980

120.6

606.7

26.8

11.22.6

2.910.1

63.5

61.91.7

516.4

215.462.5

203.9

34.7

486.1

176.0

118.213.3

30.414.1

310.1

68.4

121.116.174.1

30.4

1981

156.5

716.9

30.1

11.24.1

5.19.8

68.4

67.11.3

618.4

226.463.2

293.0

35.9

560.4

180.9

125.113.3

26.915.6

379.5

90.4

165.318.675.4

29.9

1982

Net international investment position of the United States...

U.S. assets abroad

U.S. official reserve assets

GoldSpecial drawing rights (SDRs)Reserve position in the International Monetary

Fund (IMF)Foreign currency reserves

Other U.S. Government assets..

U.S. loans and other long-term assetsU.S. short-term assets other than reserves

U.S. private assets

Direct investments abroad (book value)Foreign securitiesClaims on foreigners reported by U.S. banks, not

included elsewhereClaims on unaffiliated foreigners reported by

U.S. nonbanks

Foreign assets in the United States..

Foreign official assets

U.S. Government securities1

Other U.S. Government liabilitiesLiabilities reported by U.S. banks, not included

elsewhereOther official assets

Other foreign assets

Direct investments in the United States (bookvalue)

Liabilities reported by U.S. banks, not includedelsewhere

U.S. Treasury securitiesOther U.S. securities2

Liabilities to unaffiliated foreigners reported byU.S. nonbanks

168.6

834.2

34.0

11.15.3

7.310.2

73.9

72.81.2

726.3

221.375.3

402.3

27.3

665.5

189.2

132.513.8

24.918.0

476.3

101.8

229.625.893.3

25.8

1 Includes Treasury and agency issues of securities.2 Corporate and other bonds and corporate stocks.


337


TABLE B-104.— World trade: Exports and imports, 1965, 1970, 1975, and 1979-83

[Billions of U.S. dollars]

Area and country 1965 1970 1975 1979 1980 1981 1982 1983 >

Developed countries3...

United States..CanadaJapan

European Community4

FranceWest Germany....ItalyUnited Kingdom-

Other developed countries

Developing countries

OPEC5.Other..

Communist countries6

U.S.S.REastern Europe..China

TOTAL

Developed countries3

United States....CanadaJapan

European Community4

FranceWest GermanyItalyUnited Kingdom....



OPEC5

Other

Communist countries6...


TOTAL.

129.8

27.58.48.5

65.2

10.217.97.2

13.8

20.2

37.0

10.326.7

23.2

8.211.82.0

190.0

136.8

23.28.78.2

70.5

10.417.67.4

16.1

26.3

38.7

6.432.3

22.5

8.011.61.8

198.0

Exports, f.o.b.2

225.8

43.216.719.3

113.5

18.134.213.219.4

33.0

54.1

16.837.3

34.9

12.818.22.2

314.8

582.8

108.134.155.7

299.5

53.190.234.843.4

85.3

209.5

113.496.1

90.5

33.445.3

7.3

882.8

1,081.6

182.058.3

102.3

577.2

100.7171.872.286.4

161.7

454.6

212.8241.8

169.4

64.976.913.5

1,705.6

1,269.7

220.867.7

130.4

665.9

116.0192.977.7

110.1

184.9

584.8

296.4288.4

201.7

76.486.218.9

2,056.2

1,248.9

233.772.7

151.5

612.4

106.4176.175.3

102.2

178.5

583.5

274.7308.8

205.2

79.483.821.5

2,037.6

235.8

42.714.318.9

118.7

19.129.915.021.9

41.2

56.4

9.946.5

34.1

11.718.52.2

326.3

612.5

105.936.257.8

306.6

54.074.938.553.3

106.0

189.3

52.0137.3

100.8

37.151.37.4

902.6

Imports,

1,175.0

222.257.0

109.8

611.1

107.0159.677.999.6

174.8

399.4

98.9300.5

170.3

58.082.615.6

1,744.7

c.i.f.7

1,411.7

257.062.8

141.3

729.1

134.9188.099.7

115.5

221.5

515.8

132.6383.2

200.4

68.591.220.7

2,127.9

1,346.1

273.470.3

142.9

645.3

121.0163.991.1

102.7

214.2

589.5

155.1434.4

200.0

73.287.519.3

2,135.6

1,191.7

212.371.2

138.4

590.0

96.7176.473.597.0

179.7

508.6

208.2300.4

223.1

87.290.123.5

1,923.4

1,272.0

254.958.4

131.5

615.6

115.7155.486.299.6

211.6

544.8

154.9389.9

203.1

77.887.117.9

2,019.9

1,212.6

198.875.3

146.0

604.8

94.7166.473.391.2

187.8

473.7

169.6304.1

236.6

90.998.024.0

1,922.9

1,313.3

268.462.3

123.4

626.4

106.0151.880.7

100.3

232.8

510.6

139.7370.9

216.6

80.295.219.5

2,040.5

1 Preliminary estimates.2 Free-on-board ship value.3 Includes the OECD countries, South Africa, and non-OECD Europe.4 Includes Belgium-Luxembourg, Denmark, Greece, Ireland, and the Netherlands, not shown separately.5 Includes Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and

Venezuela.6 Includes North Korea, Vietnam, Albania, Cuba, Mongolia, and Yugoslavia, not shown separately.7 Cost, insurance, and freight value, except Eastern Europe (except Hungary) and U.S.S.R., which are f.o.b (free on board).

Sources.- International Monetary Fund, Organization for Economic Cooperation and Development, and Council of EconomicAdvisers.

338


TABLE B-105.— World trade balance and current account balances, 1965, 1970, 1975, and 1979-83

[Billions of U.S. dollars]

Area and country 1965 1970 1975 1979 1980 1981 1982 1983 l

Developed countries3..

United States..CanadaJapan

European Community4

FranceWest GermanyItalyUnited Kingdom

Other developed countries-


OPEC5

Other

Communist countries6..


TOTAL7..

Developed countries3..

United StatesCanadaJapan

European Community4

FranceWest Germany....ItalyUnited Kingdom..



OPEC5

Other

Communist countries9..

U.S.S.REastern EuropeChina

TOTAL..

- 7 . 0

4.3- . 3

.3

- 5 . 3

- . 2.3

_ 2

-2^3

- 6 . 1

- 1 . 63.9

- 5 . 5

.2

.2

.2

- 7 . 9

5.4-1.1

.9

.4- 1 . 6

2.2- . 1

- . 2

World trade balance2

-10.0

.52.4

.4

-5 .2

- 1 . 04.3

- 1 . 8- 2 . 5

- 8 . 2

- 2 . 3

6.9-9 .2

.8

1.1- . 3

.0

-11 .5

-29.7

2.2- 2 . 1- 2 . 1

- 7 . 1

- . 915.3

- 3 . 7- 9 .9

-20.7

20.2

61.4-41.2

-10 .3

-3 .7- 6 . 0

- . 1

-19.8

-93.4

-40.21.3

- 7 . 5

-33.9

- 6 . 312.2

- 5 . 7-13.2

-13.1

55.2

113.9-58.7

- .9

6.9- 5 . 7- 2 . 1

-39 .1

-142.0

-36.24.9

-10.9

-63.2

-18.94.9

-22.0- 5 . 4

-36.6

69.0

163.8-94.8

1.3

7.9- 5 . 0- 1 . 8

-71.7

-97.2

-39.72.48.6

-32.9

-14.612.2

-15.8

-35.7

- 6 . 0

119.6-125.6

5.2

6.2- 3 . 7

2.2

-98.0

-80.3

-42.612.86.9

-25.6

-19.021.0

-12.7-2 .6

-31.9

-36.2

53.3-89.5

20.0

9.43.05.6

-96 .5

Current account balances8

2.3.8

2.0

2.9

.1

.9

.92.0

3.3

18.1-4 .7- . 6

3.4

2.74.0

- . 6

- 3 . 4

-13.0

7.127.3

- 2 0 . 2

-11 .1

- 4 . 6- 6 . 4

- . 1

- . 7

- 2 4 . 7

- . 9- 4 . 1- 8 . 7

- 8 . 6

5.2-6 .2

5.4-1 .2

- 2 . 4

6.2

65.0- 5 8 . 8

- 6 . 5

2.2- 7 . 6- 1 . 1

- 2 5 . 0

- 6 5 . 2

.5- . 9

-10.7

- 3 6 . 5

- 4 . 2-15.9- 9 . 8

7.8

-17.6

8.3111.0

-102.7

-4 .6

1.9- 5 . 5- 1 . 0

-61.5

-31.7

4.5- 4 . 8

5.1

-13 .5

- 4 . 8- 6 . 3- 8 . 413.5

-23.0

13.7

52.0- 3 8 . 3

— .3

- . 1- 3 . 7

3.5

-18 .3

-29.8

-11.52.57.0

- 9 . 5

-12.23.5

- 5 . 6

9.3

-18.3

8.8-16.0-24.8

11.3

4.21.55.6

- 9 . 7

-100.8

-69.712.922.6

-21.6

-11.314.5

- 7 . 4- 9 . 1

- 4 5 . 0

- 3 6 . 8

29.9-66.8

20.0

10.72.84.5

-117.6

- 2 4 . 3

-41.02.5

22.5

3.0

- 5 . 35.31.51.5

-11.3

-31.0

9.2

4.01.24.0

1 Preliminary estimates.2 Exports f.o.b. (free-on-board ship value) less imports c.i.f. (cost, insurance, and freight).3 Includes the OECD countries, South Africa, and non-OECD Europe.4 Includes Belgium-Luxembourg, Denmark, Greece, Ireland, and the Netherlands, not shown separately.5 Includes Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and

Venezuela.6 Includes North Korea, Vietnam, Albania, Cuba, Mongolia, and Yugoslavia, not shown separately.7 Asymmetries arise in global payments aggregations because of discrepancies in coverage, classification, timing, and valuation in the

recording of transactions by the countries involved and because freight charges are attributed to the cost of imports.8 OECD basis.9 Includes only countries listed.

Sources.- International Monetary Fund, Organization for Economic Cooperation and Development, and Council of Economic Advisers.

339


TABLE B-106.—International reserves, selected years, 1952-83

[Millions of SDRs; end of period]

Area and country 1952 1962 1972 1979 1980 1981 1982

1983

Novem-ber

All countries....

Industrial countries-

United StatesCanadaAustraliaJapanNew Zealand

AustriaBelgium...Denmark..FinlandFrance

GermanyIcelandIrelandItalyNetherlands-

NorwaySpainSwedenSwitzerlandUnited Kingdom..

Oil-exporting countries....

AlgeriaIndonesia..IranIraqKuwait

LibyaNigeriaOmanQatarSaudi Arabia....

United Arab Emirates-Venezuela

Non-oil developing countries...

AfricaAsiaEuropeMiddle EastWestern Hemisphere..

49,388

38,582

24,7141,944

9201,101

183

1161,133

150132686

9608

318722953

164134504

1,6671,956

1,699

8431417713150

500

443

8,573

1,2023,407

966825

2,173

62,851

52,535

17,2202,5611,1682,021

251

1,0811,753

256237

4,049

6,95832

3594,0681,943

3041,045

8022,9193,308

2,030

18610821119397

96289

268

583

8,172

1,6352,5501,348

9401,699

147,443

110,282

12,1125,5725,656

16,916767

2,5053,564

787664

9,224

21,90878

1,0385,6054,407

1,2204,6181,4536,9615,201

10,071

454531885720335

2,69434614956

2,303

1,595

26,137

3,1686,6406,4282,4067,494

307,149

180,791

15,1702,9441,359

15,667344

3,8325,3292,5141,204

16,212

43,225125

1,69316,1497,301

3,24110,5502,88015,39115,626

56,318

2,2143,09311,682

2,268

4,9024,235445228

14,790

1,1075,958

68,842

4,31123,2327,4007,442

26,457

355,100

211,904

21,4793,1191,603

20,164in

4,8787,3302,7121,501

24,301

41,430138

2,25520,47710,669

4,7839,8132,89315,19016,851

69,508

3,1534,311

370,051

212,693

25,5023,7171,713

25,083580

5,2795,4512,2461,319

21,991

40,892199

2,29019,6319,562

5,4149,7943,30614,92513,757

75,577

3,3704,416

364,202

211,918

29,9183,4286,05322,001

577

5,5444,7572,1111,42017,850

43,909133

2,39015,10710,723

6,2727,4503,39716,93011,904

70,031

2,3912,959

3,169

10,3728,049692286

18,536

1,6005,579

71,850

4,48024,9688,0608,31126,031

3,583

7,8603,371988339

27,855

2,7757,415

75,450

4,20827,4588,1509,00126,632

5,449

6,5251,4861,283382

26,948

2,0376,365

74,388

3,84634,3946,87410,13219,143

400.135

231,194

30,6684,3107,21124,465

702

5,0075,7814,0101,047

22,503

45,420142

2,53421,44411,432

6,3257,2663,942

15,16511,778

75,847

1,8873,578

4,903

5,2801,0321,352

1,9097,791

82,067

4,37140,671

7,2749,206

20,545

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 Europeancountries, and Cuba (after 1960).

U.S. dollars per SDR (end of period) are: 1952 and 1962-1.00000; 1972-1.08571; 1979-1.31733; 1980-1.27541; 1981-1.6396;1982—1.10311; and November 1983—1.05058.

Source: International Monetary Fund, "International Financial Statistics."

340


TABLE B-107.—Growth rates in real gross national product, 1960-83

[Percent change]

Area and country1961-65annualaverage

5.3

4.75.7

10.0

4.9

5.85.05.23.1

5.6

6.5

7.06.3

4.2

5.03.7

- . 2

5.1

1966-70annualaverage

4.6

3.24.8

11.2

4.5

5.44.26.22.5

4.8

6.6

7.86.3

5.0

5.23.78.3

5.2


3.1

2.65.04.6

2.8

4.02.22.42.1

3.5

7.0

9.06.3

4.1

3.74.75.5

4.0


3.4

3.73.15.0

3.1

3.33.53.81.6

1.7

5.5

5.05.7

2.6

2.31.95.9

3.4

1979

3.2

2.83.25.1

3.1

3.34.14.91.6

2.5

4.8

4.05.2

1.1

.41.07.0

2.5

1980

1.2

- . 4.5

4.4

1.3

1.11.93.9

- 2 . 0

3.4

5.1

1.86.4

1.6

1.7.0

6.1

1.7

1981

1.5

1.93.83.2

- .4

.2

.2- . 1

- 2 . 0

2.1

1.5

- 1 . 32.5

1.6

2.2_ g4.8

1.6

1982

- 0 . 5

-1 .7- 5 . 0

2.5

.4

1.5- 1 . 2

.5

- .8

1.0

1.1.9

2.1

2.2- . 27.4

.8

1983 *

Developed countries 2

United StatesCanadaJapan

European Community3

FranceWest GermanyItalyUnited Kingdom

Other developed countries


OPEC5

Other

Communist countries6

U.S.S.REastern Europe-China

TOTAL.

2.5

4.83.82.0

1.0

.51.2

- 1 . 52.5

- 1 . 2

3.0

3.61.04.0

1 Preliminary estimates.2 Includes the OECD countries, South Africa, and non-OECD Europe.3 Includes Belgium-Luxembourg, Denmark, Greece, Ireland, and the Netherlands, not shown separately.4 Not available.5 Includes Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and

Venezuela.6 Includes North Korea, Vietnam, Albania, Cuba, Mongolia, and Yugoslavia, not shown separately.

Sources: Department of Commerce, International Monetary Fund, Organization for Economic Cooperation and Development (OECD), andCouncil of Economic Advisers.

341


TABLE B-108.—Industrial production and consumer prices, major industrial countries, 1960-83

[1967 = 100]

Year or quarter

19601961196219631964196519661967196819691970197119721973197419751976197719781979

1980198119821983 P

1982:1 . .||IIIIV

1983:IIIIllIVP

I960196119621963196419651966196719681969

1970197119721973197419751976197719781979

1980198119821983

1982:IIIIll ....IV

1983:1IIIIIIV

UnitedStates Canada Japan

EuropeanCommu-nity1

France WestGermany Italy United

Kingdom

Industrial production2

66.266.772.276.581.789.897.8100.0106.3111.1107.8109.6119.7129.8129.3117.8130.5138.2146.1152.5

147.0151.0138.6147.7

141.8139.4138.2135.3

138.5144.5151.8156.0

63.165.671.275.782.689.796.2100.0106.4113.7115.3121.5130.7144.6149.2140.3148.5152.7157.8167.6

165.1166.6148.8

155.5150.5146.8142.1

149.5153.9160.9

43.051.255.461.771.474.283.8100.0115.2133.4151.8155.7167.0190.5183.1163.9182.0189.7201.1215.3

225.2227.5228.4

230.5227.9228.9226.3

228.2231.7239.0

74.778.181.384.891.094.798.4100.0107.4117.6123.3126.1131.7141.4142.3132.8142.6145.9149.7156.8

155.5152.1149.9

151.8151.5149.5146.7

147.9148.7150.7

70737886909398100104114120128135145148139149152155163

161160158

159159155158

159155159

78.482.886.188.996.6102.1103.0100.0109.2123.2131.1133.6138.7147.7145.1137.1149.1152.0154.1161.8

162.3159.9156.2

161160154152

154157157

59.265.571.978.479.282.893.3100.0106.4110.5117.6117.5122.7134.6140.6127.6143.5145.1147.9157.6

166.5162.7159.1

161.0158.6146.6149.8

149.0145.0144.1

83.984.285.087.895.097.899.3100.0107.6111.3111.8111.2113.2123.3120.8114.4118.1124.2127.8132.8

124.1119.2121.7

120.5121.6122.6122.0

123.6123.0125.3

Consumer prices

88.789.690.691.792.994.597.2100.0104.2109.8

116.3121.3125.3133.1147.7161.2170.5181.5195.4217.4

246.8272.4289.1298.4

283.0287.3292.8293.4

293.2296.9300.5303.1

85.986.787.789.290.993.196.5100.0104.0108.8

112.4115.6121.2130.3144.5160.1172.1185.9202.5221.0

243.5273.9303.5321.0

292.2301.2307.6312.6

314.5318.8324.0326.8

68.371.876.782.585.891.696.3100.0105.3110.9

119.3126.5132.3147.9184.0205.8224.9243.0252.3261.3

282.2296.2304.1

300.3303.4304.8307.5

306.5310.1309.0

77.081.184.587.690.894.297.5100.0103.7108.0

113.3120.3127.6138.3156.4176.7195.2214.7229.9250.7

281.4313.4344.3

333.4342.0347.5353.7

359.5366.6372.6

3 78.03 80.685.489.592.594.897.4100.0104.5111.3

117.1123.5131.1140.7160.0178.9196.1214.5233.9259.1

294.2332.7373.1

359.8371.0376.0383.0

393.2404.4413.1

82.984.887.489.992.095.098.4100.0101.6103.5

107.1112.7119.0127.2136.1144.2150.4155.9160.2166.8

175.9186.3196.2

192.7195.4197.6198.9

199.9201.1203.1

74.175.779.285.190.194.296.4100.0101.4104.1

109.2114.4121.0134.0159.7186.8218.1255.2286.2328.5

398.0472.4549.4

523.7539.6562.7589.1

609.7627.5643.0

79.081.685.186.889.693.997.6100.0104.8110.3

117.4128.5137.7150.2174.3216.5252.4292.4316.6359.0

423.6473.9514.7

500.5516.6518.9522.7

525.3536.1543.0

1 Consists of Belgium-Luxembourg, Denmark, France, Greece, Ireland, Italy, Netherlands, United Kingdom, and West Germany. Industrialproduction prior to July 1981 excludes data for Greece, which joined the EC in 1981.

2 All data exclude construction. Quarterly data are seasonally adjusted.3 Data for 1960 and 1961 are for Paris only.Sources: Department of Commerce (International Trade Administration, Office of Trade Information and Analysis, Trade Performance

Division) and Department of Labor (Bureau of Labor Statistics).

342


TABLE B-109.—Civilian unemployment rate, and hourly compensation, major industrialcountries, 1960-83

[Quarterly data seasonally adjusted]

Year or quarterUnitedStates Canada Japan France

WestGermany Italy

UnitedKingdom

Civilian unemployment rate (percent)1

19601961196219631964

19651966196719681969

19701971197219731974

19751976197719781979

1980198119821983

1982:IIIIllIV

1983:IifZIIIIIV

196019611962196319641965196619671968196919701971197219731974

19751976197719781979

198019811982

5.56.75.55.75.2

4.53.83.83.63.5

4.95.95.64.95.6

8.57.77.16.15.8

7.17.69.79.6

8.89.4

10.010.6

10.410.19.48.5

6.56.75.55.24.43.63.43.84.54.45.76.26.25.55.36.97.18.18.47.57.57.6

11.011.9

8.910.512.112.7

12.512.411.711.1

1.71.51.31.31.21.21.41.31.21.11.21.31.41.31.41.92.02.02.32.12.02.22.42.7

2.32.42.42.4

2.72.72.72.6

1.61.41.31.21.31.41.71.82.42.22.42.72.82.72.94.24.65.05.46.16.57.78.7

8.48.78.88.8

8.78.88.8

36.737.739.140.342.042.844.847.050.453.9

57.661.164.469.076.3

85.492.3

100.0108.3118.8

132.7145.8158.2

1.1.6.6.5.4.3.3

1.31.1.6.5.6.7.7

1.63.43.43.53.43.02.94.15.97.3

5.35.76.16.6

7.17.47.57.2

3.22.82.52.12.43.03.33.03.13.12.82.93.43.22.83.23.63.63.73.93.94.34.85.1

5.05.04.64.5

4.95.74.85.0

Hourly compensation (1977 = 100)2

29.729.228.429.230.331.834.436.939.742.747.452.757.662.874.481.796.9

100.099.5

107.3

118.7132.9144.8

6.67.78.89.8

11.012.413.615.317.921.325.430.340.155.067.177.182.3

100.0136.1138.5

144.5157.5143.9

15.216.818.520.322.023.925.327.230.530.932.637.144.758.564.1

88.391.1

100.0124.3149.8

172.2155.9149.5

160.5139.1136.3

2.11.92.73.32.4

2.12.23.23.23.0

3.13.94.23.23.1

4.66.06.36.25.6

7.010.612.3

11.912.112.612.9

13.513.813.6

24.225.927.228.430.2

33.135.836.433.937.042.850.558.264.077.4

96.592.9

100.0125.6162.1

216.0220.4207.8

1 Civilian unemployment rates, approximating U.S. concepts. Data for United Kingdom exclude Northern Ireland. Quarterly data forFrance, West Germany, and United Kingdom should be viewed as less precise indicators of unemployment under U.S. concepts than theannual data. Beginning 1977, changes in the Italian survey resulted in a large increase in persons enumerated as unemployed. However,many also reported tnat they had not actively sought work in the past 30 days. Such persons have been provisionally excluded forcomparability with U.S. concepts; their inclusion would more than double the rates shown for Italy.

2 Hourly compensation in manufacturing, U.S. dollar basis. Data relate to all employed persons (wage and salary earners and the self-employed) in the United States and Canada, and to all employees (wage and salary earners) in the other countries. For France andUnited Kingdom compensation adjusted to include changes in employment taxes that are not compensation to employees, but are laborcosts to employers.


343U.S. GOVERNMENT PRINTING OFFICE : 1984 0 - 424-456 : QL 3


Economic Report of the President 1984 - FRASER · 2018-11-06 · Economic Report of the President...

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